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Will Navios Partners’ 3Q15 Distribution Cut Spur Future Growth?

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Will Navios Partners’ 3Q15 Distribution Cut Spur Future Growth? PART 1 OF 7

Why Navios Partners’ Stock Price Fell 19% after Its 3Q15 Results

52% distribution cut

Navios Maritime Partners (NMM) released its 3Q15 results on November 3 before the market opened, and it conducted an earnings conference call the same day. The company’s results were slightly below market expectations. However, the biggest surprise for the market came in the form of a 52% distribution cut from $1.77 per unit to $0.85 per unit.

Why Navios Partners’ Stock Price Fell 19% after Its 3Q15 Results

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Navios Partners generated earnings per share (or EPS) of $0.13 below the consensus of $0.17. The revenues were also lower at $56 million, slightly below market expectations of $59 million, mainly due to preemptive dry-docking. Its EBITDA (earnings before interest, tax, depreciation, and amortization) was $37 million versus an estimate of $40.8 million.

Scorpio Bulkers (SALT) released its 3Q15 results on November 3, 2015. The results were almost in line with market expectations. Navios Holdings (NM) and Ship Finance International (SFL) are expected to release their results on November 23.

NMM forms 6% of the Yorkville High Income MLP ETF (YMLP), which tracks an index of MLPs weighted in tiers based on their yield.

Strong share price reaction

NMM’s stock price reacted strongly on the dividend cut announcement and closed 19% lower for the day at $5.77. This is a fresh 12-month low for the stock. NMM’s management had previously stated that it is committed to the distribution of $1.77 per unit through 2016. While there was some speculation about whether NMM would be able to sustain such high distributions given the bleak outlook for dry bulk, the cut came as a surprise, as NMM’s management had repeatedly committed to distributions through 2016. Thus, the stock took a beating.

Series overview

In this series, we’ll analyze Navios Partners’ 3Q15 earnings and conference call highlights in detail. We’ll also look at the reasons behind the management’s distribution cut and what it means for the company’s future prospects. We’ll also provide investors additional insight by comparing the company’s performance with that of others in the sector.

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