Navios Maritime Holdings Inc. (NM) Q2 2015 Earnings Call Transcript
Published at 2015-08-20 14:44:04
Angeliki Frangou - Chairman & CEO Tom Beney - SVP Commercial Affairs George Achniotis - CFO Ioannis Karyotis - SVP, Strategic Planning
Ben Nolan - Stifel Amit Mehrotra - Deutsche Bank
Thank you for joining us for this morning’s Second Quarter 2015 Earnings Conference Call for Navios Maritime Holdings. With us today from the company are Chairman and CEO, Mrs. Angeliki Frangou; SVP Commercial Affairs, Mr. Tom Beney, Chief Financial Officer, Mr. George Achniotis; and SVP of Strategic Planning, Mr. Ioannis Karyotis. This conference call is also being webcast. To access the webcast, please go to the Investors section of Navios Maritime Holdings’ website at www.navios.com. You will see the webcasting link. Also on the investor page is a presentation related to this earnings call which our speakers will be referencing throughout the formal remarks. I’d now like to read the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Holdings. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Holdings management and are subject to risks and uncertainties which could cause actual results to differ from the forward-looking statements. Such risks are more fully discussed in Navios Holdings’ filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Holdings does not assume any obligation to update the information contained in this conference call. Thank you. We’ll begin this morning’s conference call with formal remarks from the team and after we’ll open the call to take your questions. Now I’d like to turn the call over to Navios Holdings’ Chairman and CEO, Angeliki Frangou. Angeliki?
Thank you, Laura. And good morning to all of you joining us on today’s call. We reported revenue of $119.8 million and EBITDA of $32.7 million for the second quarter of 2015. We also announced a $0.06 dividend, representing a yield of 7.5%. We have been paying a dividend for over 10 years and remain one of the few companies that have consistently paid the dividend even in a volatile and dark [ph] market. In fact, we have been meticulous about retaining capital to our investors and we have retained about $365 million through dividends and stock repurchases since we commenced this program. Slide 3 provides our company highlights. Navios Holdings controls a diverse fleet of 63 modern vessels with an average age of 7.8 years which is about 11% less than the industry average age. We have developed cost savings through our size and scale in terms of purchasing power and world class employees. As an example, we have operating leverage from our technical capabilities which we believe will be unattainable through the third party providers, because of this discipline our operating expense is 35% below the industry average. Slide 4 highlights our current corporate structure. The value of Navios Holdings primarily derived from five areas; the dry bulk fleet within the Navios Holdings and four principal operating subsidiaries. The market is still valued at total is less than the sum of the parts. Navios Holdings’ [Indiscernible] subsidiaries NMM and NNA are worth over $4 per share which in itself is more than NM’s current share price. We thought that some of the part analysis was worth of emphasis. And slide 5 drills down into the diversified part of the Navios Group. The Group has an enterprise value of about $6.2 billion of which Navios Holdings’ represents about $1.7 billion. One defined feature of the Navios Holdings is that it represents a diversified investment vehicle with modified platform for stability and growth, while Navios Holdings investment is primarily in dry bulk its’ affiliates have investment in tankers containment and port aggregating another $4.5 billion of enterprise value. As I mentioned a moment ago, NM’s current share price represents a dividend discount with owner’s [ph] success share in its public subsidiaries alone. And in determining this discount we have ignored the value of NM’s core fleet plus its 64% in Navios Logistics, in other words, an investment in Navios Holdings effectively gives an investor a free option on NM’s core fleet plus NM’s ownership in Navios Logistics. On Slide 6 we show how we have built a chartering strategy that is penetrating from a dry bulk recovery. We believe that we experience a structural [ph] low in the first quarter of 2015 during which spot market rate was below operating cost and the senior chartered market was not existent [ph] Result, this is a rare event and likely to be sustainable. During the second and third quarter the market has experienced improving charter rates across all brand bulk asset classes. Although more reasonably rates have pulled back mainly in the Capesize segment, however one has to take note that when the BDI reached 509 in Q1 of this year it was the lowest rate in 30 years of record keeping. Since the first quarter, the Capesize spot rates have increased about 3.5 times, Panamax about 2.5 times and Handymax spot rates have increased about 2 times. The industry has rationalized by getting out accelerated scrapping of vessels, minimized new building orderings and introduced vessel deliveries. All these factors assisted the output movement of charter rates as represented by the chart on slide 6. Our chartering strategies allows to castle [ph] these rate improvements through our 51.6% market exposure consisting of industry link and open vessel base, in parts for every $1000 improvement in margin rate for 2015 will result in about $4.9 million in additional cash flow generation. Slide 7 highlights a strong liquidity position. A conservative balance sheet has a net debt-to-book capitalization of 52.6% and cash of $181.3 million. As for our cash requirement the company has no unfunded CapEx and no material debt maturities until 2019. Our liquidity is dedicated to expansion opportunities and our operating needs. Slide 8 provides an overview of our attractive operating leverage and we will involve in this effort because it is a necessary exchange for a transportation company. Unlike many of our competitors, we manage aggressive in-house, by doing so, we generalize the cost savings [Indiscernible] and increase our purchasing power. Focusing on Navios Holdings, you can see that the NM has developed significant efficiencies from economies of scale as our operating expense is 35% below the industry average translating into $28 million in cost reduction for the last 12 months. Navios Holdings has shared these cost savings with the other members of the group. You can see the benefit achieved and transferred to our affiliate’s entity. NMM OpEx is about 20% below the industry average and the NNA OpEx is 19% below the industry average and NAP OpEx is 7% below the industry average. As a significant portion of the value of NM, it is -- important that we are able to manage OpEx cost well. Slide 9 sets forth Navios’ low-cost structure. For 2015, we have fixed 86.2% of our available days including an index-linked charter at an average charter contracted daily charter-out rate of $8,388. Our fleet open days plus days contracted with index-linked charters could provide incremental revenue with an improving charter market. I would like to remind you that and as I do in every quarter, that our breakeven analysis includes all operating expenses, dry docking expense, charter-in expense for our charter-in fleet, G&A expenses as well as interest expense and capital repayments. Slide 10 provides details surrounding the company’s low cash break even rate and cash flow potential. Our 2015 breakeven cost is estimated at $9,598 per day per vessel with breakeven rate will allow NM to enjoy significant cash flow once market improves. Based on the current market rate of $10,000 and $96 per day and using a 4,932 open plus index-linked charter days of our fleet we expect to be $2.5 million cash flow positive net of the dividends from our subsidiaries and dividends paid to our preferred shareholders. As this slide illustrates, by acquiring assets at attractive values and using innovative methods to keep our costs low, we are well positioned for a market recovery. I would like now to turn the call over to Mr. Tom Beney, Navios’ Holding Senior Vice President of Commercial Affair. Tom?
Thank you, Angeliki. Slide 11 presents our core fleet consisting of 63 vessels totaling 6.3 million deadweight. We continue to be one of the largest dry bulk operators in the world established over 60 years ago. We have 37 vessels on the water with an average age of 7.8 years. This is 11% younger than the industry average. Slide 12 shows how dry bulk trade continues to grow. Dry bulk trade has expanded by 5.6% CAGR in the 13 years since China joined the WTO. China and India are the main engines [ph] but other Southeast Asian countries add demand to world trade forecast for 2015 of a global dry bulk trade to grow by an additional 2%, some more growth was expected to be about 3%. Most of this growth is expected to be in the second half of 2015. Net free growth is expected to be between 1% and 2% leaving to favorable supply demand dynamics particularly in the second half of the year. Turning to slide 13, GDP forecast for 2015 and 2016 suggest the need for additional dry bulk vessels, emerging market growth, predominantly in the Asia regions you have the infrastructure and electricity or dry demand for dry bulk. With energy prices falling, GDP receives a stimulus particularly in the largest oil consuming economies such as China, India, Japan, Europe and the USA further aiding increased dry bulk demand as was experienced in the late eighties. Slide 14 shows continued urbanization in China, still production in China remains flat to 2015 versus 2014 with iron ore prices falling by approximately 46% over the last 12 months. The volume of imports are expected to rise 3% in 2015 with the majority of that growth in the second half. Chinese domestic production of iron ore cannot compete with high quality ore coming from Australia and Brazil causing a reduction in production of domestic ore of 10% year-to-date. Furthermore, Chinese iron ore stocks have reduced by about 30%, a large part of the increase in iron ore imports in the second half 2015 is expected to come from Brazil increasing from ton mile significantly. China exported a record 51.7 million metric tons of steel in the first half of 2015 as with 40.2 million metric tons in the first half of 2014, a 28% rise year-to-date leading to unseasonably low steel stocks of Chinese mills. Turning to slide 15, although we have seen China reduce imports of coal, India has filled most of the gap. The Indian government has made electricity production growth a major goal and this will accelerate the growth of the Indian economy in the coming years. Coal will be the major energy source used to produce our electricity, the potential for growth of coal in India is substantial, close to 800 million people, that’s over 2.5 tons of U.S. population use wood based fire to cook with little or no refrigeration. India will use both domestic coal and imported coal but would love the quality of domestic coal, infrastructure bottle necks and other restrictions on domestic coal it is estimated that over the next few years imports will be vital and will grow accordingly. India not only provides a new market for coal but also an increasing ton mile as the country will need to go further afield to source quality coal in the future. As we’ve discussed in slide 15, slide 16 illustrates Indian coal for our generation capacities predicted to grow considerably. We also see other Southeast Asian countries increasing coal power generation capacity creating additional demand for dry bulk vessels. The region is expected to add 200.4 gigawatts of coal fired capacity through 2019 led by India, Vietnam, South Korea and Indonesia. By 2019, this will create an additional coal demand of approximately 512 metric tons. This will undoubtedly reshape the seaborne coal market over the coming years. Turning to the supply of tonnage in slide 17, high levels of non deliveries continue as expected averaging $0.38 so far for 2015. It is being reported that 31.2 million metric tons deadweight have actually delivered year-to-date and it is expected that by year end approximately 51 million deadweight will deliver. In 2016, the predicted order book is only about 66 million metric tons and with expected non-deliveries to continue at about 40% or more the actual tonnage delivered will be considerably less. Fundamentals improved further as disciplines returned to the new building order book at 800,000 deadweight ordered in the second quarter of 2015 we are currently running at an all time low for new orders representing a 98% decline from the all time high in 2007. Today’s market does not encourage further new orders so we expect the order book to remain low. Turning to slide 18, the scrapping phase for the first half of 2015 was the highest phase ever in the market exceeding scrapping for 2014. The Indian monsoon season has reduced scraping activity in the region, but we expect the normal scrapping level to resume shortly for the balance of the year, particular because there’s still a pool of 66 million deadweight vessels 20 years older as potential scrap candidates. 2015 is forecasted to end with an expected 35 million metric tons of dry bulk demolitions representing about 4.6% of the dry bulk fleet. Net of the 51 million deadweight deliveries we see growth between 1% and 2%, the lowest level for many years. Please turn to slide 19, the market experienced the number of short-term influences in the first half of 2015 joining to create a 30-year low in the market with the rates below OpEx for much of the period. Factors such as loss ton miles as high producers of coal and iron ore were taken off the market. At the same time the Chinese reduce coal imports and de-stocking occurred in general in light of price uncertainty and commodities. Furthermore, seasonal high additions to the fleet at the start of 2015 added to the problem. The second half of 2015 looks very different as new iron ore production in Australia and Brazil comes on line. China and Australia trade agreement is facilitating increased shipments and lower net fleet growth combines with other short-term variables to provide all the demand growth potential for the second half of the year. This trends the BDI from a low of 509 in Feb 18 to a high in August of 1,222. The market looks well supported as we progress through second half of 2015 and moving forward. I would now like to turn the call over to our CFO, George Achniotis for the Q2 financial results. George?
Thank you, Tom and good morning all. Please turn to slide 20 for a review of the Navios Holdings financial highlights for the second quarter and first half of 2015. EBITDA for the quarter was $32.7 million compared to adjusted EBITDA of $51.4 million, 2014. EBITDA for the second quarter in first half of 2014 was affected by two non-recurring items, $17.4 million write-off of deferred finance cost due to refinancing of the Navios Logistics unsecured bond and $11.5 million write-down of unrealized loss on shares obtained as part of a settlement of an old claim. The decrease is mainly attributable to a 37% decrease in the Time Charter equivalent rate achieved as there was a significant deterioration in the market where we reach 30-year lows in the BDI in the first half of 2015. The decrease was partially mitigated by $11 million fee gap or equity in net earnings of affiliated companies mainly due to the very good results of Navios Acquisition. EBITDA for the first half of 2015 was $59 million compared to adjusted EBITDA of $111 million in the first half of 2014. The decrease was mainly due to the 41% reduction in the TCE rate achieved in 2015 compared to 2014. The reduction was mitigated by $5 million reduction in G&A expenses. During the quarter we reported net loss of just under $25 million compared to an adjusted net loss of about $8 million in 2014. The reduction is mainly due to the decrease in EBITDA. Net loss for the first half of 2015 was about $51 million compared to an adjusted net loss of $6 million in 2014. Similar to the quarterly results the reduction was mainly due to the decrease in EBITDA and it was mitigated by a decrease in interest expense in depreciation and amortization. Please turn now to slide 21. We continue to maintain a strong balance sheet with a healthy cash balance. At June 30th, 2015 we had $181 million in cash compared to $250 million at December 31st, 2015. The reduction is mainly due to a $16 million participation in the equity rising of Navios Partners in February 2015, about 7.5 million participation in Navios Europe II and a $31 million repayment of debt in January. The debt repayment is reflected in the reduction of the debt balance on our balance sheet by $31 million since the end of the year. Net debt to capitalization was 52.6% compared to 49.3% at the end of the last year. I would like to remind you that the full market value of our investments in our affiliated companies is not reflected on our balance sheet. If these investments were valued – the current market values, our leverage ratios would be even lower. Turning to slide 22, the company continues to provide returns to the shareholders through its uninterrupted dividend. A dividend of $0.06 per share was declared to common shareholders as of September 18th, to be paid on September 25th. On October 15th, the company will also pay dividend of $3.7 million to its preferred equity holders. The total expected cash dividend inflows from the two investments in Navios Partners and Navios Acquisition exit by almost $10 million the annual cash paid out by Navios Holdings to its shareholders. Over the next few slides, we will briefly review our subsidiaries. Please turn to slide 23. Navios Holdings owns 20% of Navios Partners including a 2% GP interest. Navios Partners owns a fleet of 31 vessels. Over a past few quarters the company has diversified into the container segment with the acquisition of 8 vessels with average charted duration of about 8 years. Navios Partners provide significant cash flow to Navios Holdings, since its start of operations annual distributions from Navios Partners have grown by over 170% from under $12 million to $32.5 million annually. By the end of 2015 we expect to receive a total of just under $200 million in distributions since the inception of the company. In addition to the distributions, it has been a 36% appreciation of our investment Partners which is not fully reflected on our balance sheet. Turning to slide 24, Navios Holdings has over 46% interest in Navios Acquisition. Navios Acquisition has grown to become one of the top publicly-listed tanker owners amongst its U.S. and European peers we’re one of the youngest fleets in the water. The fleet consists of 37 tankers with an average age of 4.4 years. In Q4, 2014 Navios Acquisition from Navios Midstream Partners and MLP with 6 VLCCs providing a platform in the water sector for dividend seeking vessels and bring in flexibility and liquidity to NNA. An NNA also provides significant cash flow to Navios Holdings including the expected 2015 dividends, Navios Acquisition will provide over $53 million in distribution since its start of operations in 2010. The values of Navios Holdings interest in Navios acquisition has also grown by 20%. Now we’ll turn the call over to Ioannis Karyotis for his review of the Navios South American Logistics results. Ioannis?
Thank you, George. Slide 25 provides an overview of the business of Navios Logistics, and slide 26 present the Company’s highlights. We are continuing the development of the new iron ore terminal that we service our take-or-pay contract with Vale. We have completed the dredging and civil and mechanical engineering designs. We expect to invest approximately $150 million total in this facility and expect a minimal annual EBITDA of $35 million. On slide 27, we’ll discuss our results. EBITDA and net income in 2014 were affected by a $27.3 million write-off of deferred finance costs and fees related to the refinancing of the 2019 senior notes. To make the comparison to the previous periods meaningful, we have adjusted 2014 EBITDA and net income accordingly. There is no adjustment in the 2015 figures. In the past four years EBITDA has been growing at 20.6% CAGR. EBITDA in Q2, 2015 increased by 6% to $22.7 million, the increase is attributed to better performance in the port terminals and the barge business. Port segment EBITDA increased by 6% to $10.2 million as more cargo moved in both our dry and liquid terminals during the quarter. Port segment revenue was 14% lower due to the reduction in sales of liquid products with the low margin opportunistic trading part of our liquid port activity. Barge segment EBITDA increased by 96% to $9.3 million while revenue decrease by 6% during the same period. The increase in EBITDA and the margin improvement are mainly attributed to the following factors. First, we have performed less iron ore trips [ph] under our COAs, in carrying lower volume expense while we receive the full minimum credit revenue under the contracts. Second, the three convoys under long-term Time Charter-out contracts that commence in Q2 last year operated for the full quarter this year. Third, a reduction of revenue expenses mainly repair and maintenance. Cabotage business EBITDA decreased to $3.2 million compared to $7 million last year mainly due to more schedule dry dock base more of hires [ph], an increased operating cost. Adjusted net income in Q2, 2015 increased by 61% to $9.4 million due to the increase in EBITDA, a reduction in interest expense and an income tax benefit compared to an expense last year that were partially offset by higher depreciation and amortization expenses. Turning to the financial results for the six months period ended June, 30, 2015, revenue increased by 14% to $131.3 million. EBITDA increased by 8% to $38.3 million on the back of strong performance in the port terminals and the barge business segments, and adjusted net income increased by 81% to $10.2 million. Please turn to slide 28. Navios Logistics has a strong balance sheet. Cast at the end of Q2, 2015 was $72 million effectively unchanged compared to the end of 2014? I would like to mention that in June, 2015 we expanded the capital leases of 2 vessels, the Ferni H and San San H for four years. By extending the chartering contracts we deferred our obligation to purchase two vessels from 2016 to 20120 and we will continue to pay a favorable bareboat chartering rate of 3000 per day per vessel for four additional years. Net debt to capitalization was 44% compared to 45% at the end of 2014. Now, I would like to turn the call back to Angeliki.
Thank you, Ioannis. This completes formal presentation. We’ll open the call to questions.
[Operator Instructions] Your first question comes from the line of Ben Nolan of Stifel.
Thank you. Yes. I have two – maybe three questions. My first question relates to just the overarching macro in the dry bulk shipping business, obviously we did see, I guess starting in July really a real surge and Capesize rates in particular, but in the last few weeks we’ve given some of that back. Just curious maybe Angeliki or Tom if you have some color as to what has been driving sort of the retracement of rates in the Capesize market in the last few weeks?
One of the things we have seen is that the market has really moved up. I mean today Capesize is around 12,000 versus we had seen that like went to 16,000. But apart from and were 15 vessels at $17,000, and we saw superior [ph] market opening up. Reality is that also Panamax and Handymax have moved quite significantly, it’s almost two times -- I mean Handymax are now at 9,700 spot market and Panamax is around 8.5. So you have seen a healthy recovery from the 500 of the BDI. Of course there is some iteration because the market run quite significantly for three weeks, but the physical market we can say is in a much better position that what we will indicate of the financial market and what we see as headlines. So physical market we see a strong blended market that exist, Black Sea is very strong, and the physical market indicated better situation than what their financial market.
Okay. And any specific dynamic behind the retracement or is this sort of normal market movement?
I think it’s a usual market movement and in essence that is happening in every market, but let’s not forget that we have – the levels we’re seeing now is double what we had back in February.
Yes. That’s certainly helpful. My next question is little bit more strategic with respect to how you guys are thinking about your own capital structure and some of your investments specifically, one of the areas that has done reasonable well, although it’s given a little bit back here lately, but your rather large investment and Navios Acquisition. At what point do you think about trimming some of your position in order to maybe to upstream additional cash away from the dividend backup to the parent level?
The Navios Holdings stake on Navios Acquisition is $300 million. So we have a large stake there and we receive also dividends of about $18 million from NNA. So, we have $18 million of dividends and we have stake of about $300 million. Easily if we need it we can always use some, but we are very positive about the market conditions, I mean, real market is very strong, I mean, potential NNA is strong it is having a very strong free cash generation certainly I mean we see a very valuable stake there.
Yes. No question about it and obviously it’s an appreciate value and I don’t disagree with the market fundamentals, but ultimately I guess my question is, would you classify that as more of a structural position or at some point, at some price would you potentially sell down part of that stake?
We are open minded to all opportunities, I mean, to be honest, but let’s realize what an obvious – what we have done in Navios Holdings in essence we have a diversified portfolio, so you have a dry bulk company, but two-thirds of your value comes from other areas, be it tankers, product tankers, container and port. So two-thirds of our value comes from there. Sources of dividends are from there. So, that gives us the ability to whether a – gear low in the dry bulk market, not only whether it be a low but also do investment. Let’s not forget that in the second quarter we completed an acquisition of – we have completed Navios Europe II with 14 vessels, 7 containers, 7 dry bulk four years old, at what it may seems the historical low of the cycle. So the flexibility we have as traction gives us the ability to really go in this kind of a market.
Okay. And then my last question relates to the South American business. You mentioned that there was some I guess under utilization of the barge fleet which obviously take-or-pay contract is not big of a deal, but are you guys seeing – has Vale meaningfully cut back on their production out of that region?
Maybe [Indiscernible] Navios treated the investment in Navios Logistics, in the same way we treat ocean vessel, so our contract is take-or-pay, so our investment there is fully protected. So even if we’re getting less cargo we will be paid on the same way with the type of stability. So that’s a very straightforward investment there. As long as there I believe that [Indiscernible] they also have manganese ore, so there is addition ore that they can bring down and we know that these exited even from 1950s was in original investment of U.S. steel.
Okay. But I guess the answer is they are shipping materially less ore at the moment, does that correct?
There might be some less iron ore, but the reality that it is really unaffected, I mean, I remember building convoys tied on a six years contract with Vale and we have no open convoys until end of 2016.
Okay. Perfect. All right. That does it for my questions. Thanks.
Our final question comes from the line of Amit Mehrotra of Deutsche Bank.
Thank you very much. Good afternoon. I have one industry question and two company specific ones. But on the industry you guys see more optimistic on the dry bulk rates and that certain in line with what we were being seeing directionally, but I just wanted to ask you about some of the most recent Chinese import data particularly on the coal side. I mean, we basically saw very nice sort of month on month uptake in imports on coal in July. And the implication is that type of improvement should be sustained just based on sort of what the expectation is for the full year of down 20% and the year to date declines are basically almost double that. So I guess the question is what gets you more comfortable on coal imports? And I’m just talking about China here and not necessarily India offset and what has driven maybe the recent improvement we saw on July, because the point -- the counterpoint there are some secular challenges given China’s own coal reserves and basically that country’s investments in hydro-nuclear power generations. So if you can just sort of talk about your maybe optimism there or lack of optimism on the coals rate into China?
I’d like to go first on why were optimistic, we are not going to be optimistic because we are backing on the coal in China, because in essence if you take historical data, this is a volatile and small percentage of the over needs, I mean you have to realize that around 4 million – 4,000 metric tons – 4 billion metric tons over market they are domestic, so the actual import of 260,000 or 300,000 is a very small percentage. We are optimistic because iron ore we have seen a pure, a clear substitution on the imported iron ore versus domestic, domestic is declining and imported iron ore is declining. And on the coal where you have seen is that the overall – India is having a clear – 250 tons that India is going to be importing is a substantial percentage of their – of what they need. And that is something that is here to stay and continue. What make sense optimistic on Chinese coal is that we see that they decline, the decline they had, it has really been less than people had seen. And that will be – the nuclear is a much longer terms, so it’s not a quick substitution today. What it really affecting the coal market in China is trade agreement with Austria which is net positive and alloy hydro in July for the market, so what it seems is that if you really want to see market drivers, is India coal and iron ore into China because of the substitution effect. And as we know, we have seen that Indonesia export of coal is less which means it will be further upgrade [ph]. So that is a net positive effect. Now for coal it seems that the -- but knowing about coal is going to disappear from China, it has really stabilize and it will be better than all expectations in the beginning of the year. I don’t know if Tom wants to add something there.
I think we had a very big hit in the first half of the year on coal. And what we’re seeing pretty – sorry post of the Australia Trade Agreement is that shipment levels have started to move up on total coal into China. We also saw that the Chinese protecting their coal industry and economical make sense to bring coal into China and particular in the Southern China. So, we think it will be returning back to the more normal pattern. I think structurally a country such as the Indian market is much more interesting. And we can see it’s quite some large increases in the Indian import over the next few years.
Right. But have you seen anything in terms of Chinese rain levels, I mean, I’ve seen, sort of a declines in the reservoir levels of the dams and that maybe have some implication for near terms demand pool. I’m just trying to understand that people are so negative, but at the same time we are potentially, there’s a potential roadmap to seeing some nice year on year sequential improvements for the coal import given what the rain levels are doing in China?
You’re right. The rain levels are down year-on-year versus last the situation last year where we had an abnormally high hydro usage in China. So this year we’ve certainly seen that come off a little bit and we expect to see and we have seen some short term activity and the imports of coal into China.
Okay, very good. One last question from me on the Capital allocation side, its more company specific. Angeliki, you appear very proud of management’s ability to sort of deliver on the dividend commitment and that’s absolutely the case, you should -- the management team should definitely be proud of that, but I sought of understand why there’s a steadfast commitment to the dividend or distribution on the MLP side of the business, but what I’m trying to understand is that if there’s any willingness at the NM entity to reallocate some of the dividends to share repurchase, because the point here is that every one dollar of dividend is worth $1 to shareholders on a present value basis, but $1 of share repurchase could be worth much more overtime given sort of where NM trades relative to sort of the value of the subsidiary and also the value of the company’s owned fleet. So I’m just trying to understand your philosophy on that specifically at the NM level, and if you maybe open to sort of substituting one for the other.
We are very open. And if you have seen our thought [ph] in the mid year range, I think we have of that 365 million that we have over that last ten years, we have given back to our shareholders about 265 is in dividends, with it had said that from the beginning at the time it [Indiscernible] and we gave a consistent in 100 million in buyback. So we view both way as a effective and you have seen us do that in multiple ways.
Okay. Could I just ask one last question, I’m sorry about this, but it’s more for George specifically related to any proactive dry docking and just trying to understand if Navios Holdings is planning on conducting some proactive dry docking in the second half sort of like what we learnt NMM is doing and a lot of other companies are doing and generally I’m just trying to understand does these proactive dry dockings that are seemed to be happening across the dry bulk that during the back half of the year, does that have potential to impact on the supply side of the equation albeit temporarily in 4Q and do you guys have a view on that and maybe that could sort of dry some odd official bump up in rates in already sort of seasonally strong time of the year. Do you have any view on that?
We have done just – I’ll let George talk but one thing I will tell you that we already have done in the first half [Indiscernible] the reason we did it, it makes sense to do it because of the opportunity cost, the opportunity cost was really very low and it made sense and also you avoided, I mean you have managed to not have to spend money on regular authority [ph] improvement that we didn’t have to do it right now. So it was a double benefit and we have done 12 dry dockings. On the second half we have in Q3 in the -- we had about another four dry – five dry dockings in Q3. Usually we try to minimize the number of dry dockings in Q4 because of using the strong Q4.
Okay. Great, that’s all I have. Thank you for answering my questions.
At this time, there are no further questions. I’ll now return the call to Mrs. Angeliki Frangou for any additional or closing remark.
Thank you. This completes our second quarter results.
Thank you for participating in today’s conference call. You may now disconnect.