Navios South American Logistics’ growth supports Navios Holdings

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Navios South American Logistics Inc. (Navios Logistics)

Navios Logistics is one of the largest logistics companies in the Hidrovia region of South America and the cabotage trades along the eastern coast of South America. It serves its customers’ storage and marine transportation needs through two port storage and transfer facilities, a diverse fleet of barges and push boats, and eight tanker vessels—six oceangoing vessels and two self-propelled barges that operate in the cabotage business.

Navios Logistics Rev-EBITDA

Second quarter results

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For the second quarter, Navios Logistics recorded revenue of $69.9 million. This figure was an increase of 10.2% from the corresponding quarter a year ago. The company has reached its highest quarterly adjusted EBITDA of $21.4 million since its incorporation, an increase of 22% from the corresponding quarter a year ago. Its adjusted net income increased by 32% to $5.8 million.

Fleet

In the second quarter of 2014, Navios Logistics accepted delivery of 36 newbuild barges in China and positioned them in South America. These barges, along with three second-hand push-boats that were acquired in January 2014, service three six-year time charter contracts, at $14,500 net per day each, with an investment-grade counterparty.

In August 2014, Navios Logistics completed dredging works in its port facility in Nueva Palmira, Uruguay. The works were part of the expansion of its port terminal infrastructure to serve a 20-year storage and trans-shipment agreement with Vale International S.A.

Outlook

Navios Logistics estimates that it will generate approximately $10.0 million annual EBITDA[1. Earnings before interest, tax, depreciation, and amortization] from the three contracts. EBITDA estimates assume expenses approximating current operating costs and 360 revenue days per year per convoy.

The company has a 20-year Vale contract that analysts expect to generate a minimum of $35 million in annual EBITDA in the regional business with six newbuild convoys recently delivered. This arrangement surely offers an advantage over industry peers such as Diana Shipping Inc. (DSX), DryShips Inc. (DRYS), Safe Bulkers Inc. (SB), and Navios Maritime Partners LP (NMM). The Guggenheim Shipping ETF (SEA) tracks these companies.

In the next parts of this series, we’ll discuss why the world economy and broader industry fundamentals support NM and industry peers. We’ll begin with economic growth in India and China.

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