Navios Maritime Holdings Inc.

Navios Maritime Holdings Inc.

$2.27
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New York Stock Exchange
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Marine Shipping

Navios Maritime Holdings Inc. (NM) Q3 2015 Earnings Call Transcript

Published at 2015-11-23 13:05:10
Executives
Angeliki Frangou - Chairman and CEO Tom Beney - SVP, Commercial Affairs George Achniotis - CFO Ioannis Karyotis - SVP, Strategic Planning
Analysts
Christian Wetherbee - Citigroup Noah Parquette - JPMorgan Ben Nolan - Stifel Nicolaus Amit Mehrotra - Deutsche Bank
Operator
Thank you for joining us for this morning’s Navios Maritime Holdings Third Quarter 2015 Earnings Conference Call. With us today from the Company are Chairman and CEO, Mrs. Angeliki Frangou; SVP of Commercial Affairs, Mr. Tom Beney, Chief Financial Officer, Mr. George Achniotis; and SVP of Strategic Planning, Mr. Ioannis Karyotis. This conference call is being webcast. To access the webcast, please go to the Investors section of Navios Maritime Holdings’ Web site at www.navios.com. You'll see the webcasting link in the middle of the page and a copy of the presentation referencing today's earnings conference call will also be there. 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 numerous material risks and uncertainties which could cause actual results to differ materially from forward-looking statements. Such risks are more fully discussed in Navios Holdings’ filings with the Securities and Exchange Commission including the Company's most recent 20-F. The information discussed in this conference call should be understood in light of such risks. Navios Holdings does not assume any obligation to update the information contained in this 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 questions. I’d now like to turn the call over to Navios Holdings’ Chairman and CEO, Mrs. Angeliki Frangou, Angeliki?
Angeliki Frangou
Thank you, Laura. Good morning to all of you joining us on today’s call. For the third quarter of 2015, we recorded revenue of $131 million and adjusted EBITDA of $39.5 million. As you know, we have experienced an extended period of weakness that is virtually unprecedented in our history, with the BDI having a year-to-date average lower than at any time since 1986. We responded to this prolonged period of weakness by adjusting our return of capital to our shareholders. We have initiated a share repurchase program, while we have suspended dividend payment. The annual savings from the suspended dividend program will provide additional balance sheet strength and the opportunity to reinvest funds accretively. The share repurchase program entails a $25 million commitment over a two-year period. We intend to use this program opportunistically. However, to illustrate the purchasing power of this program, we would be able to buy about 13% of shares outstanding at current prices. The decision to suspend dividends was a difficult one. We are proud of having given dividends for 39 consecutive quarters. Shareholder who owned our shares for this period, received a total of $2.59 per share, when coupled with the share price of around $1.50, the total value would have been around $4.09 per share. Senior management owns about 30% of the company. So, we're intimately aware of the consequences of this dividend suspension but feel that reducing our capital commitment and flexibility, redeploying cash towards our share repurchase program will be in the best long-term interest of our stakeholders, particularly our shareholders. Please now turn to Slide 3. Navios Holdings' controls a diverse fleet of 65 modern vessels with an average age of 7.7 years which is about 13% less than the industry average age. We have developed the cost savings from our size and scale in terms of purchasing power and world-class employees. 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 about 35% below industry average. Slide 4 highlights our current corporate structure. Navios Holdings volume primarily derived from five areas, the dry bulk fleet of Navios Holdings and four principal operating subsidiaries. The market is valued at total is less than some of the parts. Navios Holdings ownership interest in NMM and NNA are worth over $3 per share which in itself is more than NM’s current share price. Slide 5 provides a historical overview of the BDI. The difficult market is highlighted by the fact that 2015 earmarked 30-every year low of 509 in the first quarter which was then surpassed in the fourth quarter. The year-to-date average of the BDI is 735, also the lowest recorded since 1986. We thought that the some of the part analysis that I mentioned earlier was worthy of emphasis. The Slide 6 drills down to the diversified part of Navios Group. The Group has an enterprise value of about $5.5 billion of which Navios Holdings represents about $1.5 billion. One defined feature of the Navios Holdings is that it represents a diversified investment vehicle with multiple platforms for stability and growth. While Navios Holdings invests in primarily dry bulk, its affiliates have investments in tankers, containers for aggregating another $4 billion of enterprise value. NM’s current share price represents a significant discount to owners in its public subsidiaries alone. And in determining the discount, we have ignored the value of NM’s core fleet plus its 64% interest 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. Slide 7, we show how we have positioned NM to weather the current difficult market. As mentioned earlier, NM investment in subsidiaries provides compensation to the weakness [ph] in the dry bulk market. NM owns 46.5% economic interest in Navios Acquisition, a public project company, demonstrating significant financial and operating strength. Navios Partners’ distributions have been rebalanced and configured [ph] to reflect a current stressed dry bulk charter market. And Navios Logistics provide stable growth and exposure to port and logistic business in South America. Our balance sheet is strong with $174.5 million of cash as of September 30, 2015. And flexibility; we have about 80% of our total debt in bonds that have no loan-to-value maintenance covenants. We also issued non-dilutive perpetual preferred stock, which we are not obliged to reveal. We expect to receive $29.1 million in annual distributions from subsidiaries and we will have $25.8 million annual savings from our dividend suspension. We have 49.2% of our available fixed days in a seasonally low first half of 2016, while we are only 35.8% fixed for the second half, a large benefit from a recovery in the market. Finally, our scale provides us operating efficiencies with our operating expense about 35%, below industry average. Please now turn to Slide 8, where we detail an alternative way to return capital to our shareholders. We have put in place a $25 million share repurchase program which will be active for two years. That program will be funded through $25.8 million in annual savings from our common share dividend suspension and $14.4 million available through dividend from subsidiaries net of the dividend paid to our preferred stockholders. Slide 9 highlights our strong liquidity position. A conservative balance sheet has net debt to book capitalization of 53.5% and cash of $174.5 million. As to our cash requirement, this Company has no unfunded CapEx and no material debt maturity until 2019. Our liquidity is dedicated to expansion opportunities and our operating needs. Slide 10 provides an overview of our operating leverage and we will involve in this effort, because it is an essential scale for a transportation company. Unlike many of our competitors, we manage our vessels in-house; by doing so, we have internal lines of cost savings as with the economies scale and increase the purchasing power. Focusing on Navios Holdings, as you can see NM has developed significant efficiencies from the economies of scale and that OpEx of 35% below industry average. This equals to $25.1 million in the cost reduction in the last 12 months. Navios Holdings has shared this cost savings within the Group. You can see the benefit achieved and transferred to our affiliate entities. NNM OpEx is 20% below industry average, NNA OpEx is about 18% below industry average, NNA OpEx is about 7% below the industry average. As a significant portion of the value of NM is derived through these entities, it is important that we are able to manage OpEx cost well. Slide 11 sets for Navios low cost structure. For 2016, we have fixed 42.4% of our available days including our index linked day, at an average contracted daily charter out rate of $11,917 per day. Our fleet open days, plus days contracted with index linked charters will provide incremental revenue with an improving charter market. I would like to remind you as I do in every quarter that our breakeven analysis includes all operating expenses, dry bulk expense, charter-in expense for our charter-in fleet, G&A expenses as well as interest and capital repayments. At this point, I would like to turn the call over to Mr. Tom Beney, Navios Holdings’ Senior Vice President of Commercial Affairs. Tom?
Tom Beney
Thank you, Angeliki. Slide 12 presents our core fleet consisting of 65 vessels totaling 6.7 million deadweight. We continue to be one of the largest dry bulk operators in the world, established over 60 years of journey. We have 59 vessels on the water with an average age of 7.7 years. This is 13% younger than the industry average. Turning to Slide 13, GDP forecast for 2015 and 2016 suggest continued dry bulk demand. Emerging market growth, predominantly in the Asian region drives demand. In the largest oil consuming economies such as China, Indian, Japan, Europe and the USA, low energy prices tend to stimulate GDP growth overtime further aiding increased dry bulk demand, as was experienced in the late 80s. The current slowdown in China contributes for the current unseasonable down cycle in dry bulk rates. Market sentiment has deteriorated as the fourth quarter has failed to produce the expected peak rates of the year so far. Today the BDI is at a one year low and a 30 year cyclical low. Analysts predict steel production at its lowest level since 2012 and coal seaborne trade continues to disappoint with warmer weather in Western Europe and the USA during the peak demand season. Slide 14 shows continued urbanization in China and worldwide iron ore trade. Steel production in China remains flat for 2015 versus 2014 with iron ore prices falling by approximately 40% over the last 12 months. The volume of imports are expected to rise 2% in 2015, with the majority of that growth in the second half of ’15. Through September seaborne iron ore imports have increased by only 0.6%, with most of that increase coming from Australia with limited turmoil effect. Chinese domestic production of iron ore cannot compete with high quality ore coming from Australia and Brazil, causing a reduction in production of the domestic iron ore of about 10% year-to-date. Overall current total world iron ore trade is expected to increase by 17 million tonnes this year or only 1.3%. This will be led by increases from Australia and Brazil, but will include reductions in Canadian, Swedish and African iron ore shipments. Australia sales of 2015 are forecast to rise by approximately 58 million metric tonnes, whereas Brazil sales are forecast to rise by approximately 22 million metric tonnes, impacting tonne loss. These projections did not include the effects of this market tragedy which may have further impacts on trade price in 2016. China export is a record 81.9 million metric tonnes of steel through September ’15 versus 64 million metric tonnes in the same period last year, a 28% rise year-to-date supporting Chinese steel production. Turning to Slide 15, as you can see in the upper right, world seaborne trade in coal is expected to contract this year by 50 million metric tonnes or 4.1%. This is due primarily to China reducing imports significantly year-on-year. Through September, Chinese imports have declined by 30% to 145 million tonnes and European imports have declined by 10 million tonnes down 7.5%. In contrast, Indian imports through July have increased by 21 million tonnes or 19% over 2014, although the pace of imports have slowed since the beginning of the year. Over the long-term coal will continue to be a major energy source used to produce electricity. The potential for coal used in India is substantial, close to 800 million people, that’s over 2.5 times the U.S. population use wood based fire to cook and have little or no refrigeration. Southeast Asia has over 200 gigawatts of coal fire generation on the construction or planned to be operational between now and 2019. Much of the coal for these parts will be imported by sea. For example, Vietnam has become a net coal importer this year primarily due to the start up of Vietnamese coal fired electricity generation. Turning to the supply of tonnage on Slide 16, high levels of non-deliveries continue as expected, averaging 36% so far for 2015. It has been reported that 43.7 million metric tonnes deadweight have actually delivered year-to-date and it is expected that by year-end a total of 51 million deadweight will deliver. In 2016 the forecast order is about 74 million metric tonnes deadweight and with expected non-deliveries continuing at about 40% or more the actual tonnage delivered will be about 44 million metric tonnes of deadweight, considerably less than 2015 and prior years. Turning to Slide 17, the scrapping pace for the first half of 2015 was the highest pace ever as freight levels were below OpEx for a large part of the period. Q1, we saw 9.5 million metric tonnes scrapped, in Q2 we accelerated to 10.7 million metric tonnes scrapped. The Indian monsoon season more recently Diwali have reduced the scrapping activity in the region during the third quarter to 3.7 million metric tonnes. We expect scrapping to accelerate for the balance of the year and into next year. 63 million metric tonnes deadweight of vessels, 20 years and older and the BDI below 500 encourages scrapping. 2015 is forecast to align with an expected 30 million metric tonnes deadweight of dry bulk demolitions, representing about 4% of the dry bulk fleet. Net of the 51 million metric tonnes deadweight deliveries we’d see growth of about 2.8% this year in the fleet, the lowest level for many years. With a declining order book for 2017 and 2018, and potential for increased scrapping at rates stay low, net fleet growth is expected to remain very low. I would now like to turn the call over to our CFO George Achniotis for the Q3 financial results. George?
George Achniotis
Thank you, Tom. Please turn to Slide 18 for a review of the Navios Holdings’ financial highlights for Q3 and the nine months 2015. Adjusted EBITDA for the quarter was 39.5 million compared to adjusted EBITDA of 42.4 million in 2014. EBITDA for the third quarter as of nine months of 2015 was adjusted to exclude 1.8 million loan cash flows on available for sale securities. The nine months of 2014 was affected by two non-recurring items, the 17.4 million write-off of deferred finance cost due to the 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 in adjusted EBITDA is mainly attributable to a 26% decrease in the Time Charter equivalent rate achieved reflecting the prolonged downturn of the market. The decrease was partially mitigated by 12 million increase in pickup of equity in earnings of affiliated companies mainly due to the very good results of Navios Acquisition. It was also mitigated by either strong performance of Navios South American Logistics which posted a 44% increase in its EBITDA. During the quarter, we reported adjusted net loss of 20.3 million or $0.23 per share, compared to an adjusted net loss of 16.6 million in 2014. The reduction is mainly due to the decrease in EBITDA. Adjusted EBITDA for the nine months of 2015 was 98.5 million compared to 153.6 million in 2014. The decrease was mainly due to a 26% reduction in the TCE rate achieved in 2015 compared to '14. The reduction was mitigated by the improved results of NNA in logistics and by 6.6 million reduction in G&A expenses. Adjusted net loss for the first nine months of 2015 was 71.8 million compared to an adjusted net loss of 22.3 million in 2014. Similar to the quarterly results, the reduction was mainly due to a decrease in EBITDA and it was mitigated by a decrease in interest expense and in depreciation and amortization. Please turn now to Slide 19. We continue to maintain a strong balance sheet with a healthy cash balance. As of September 30, 2015, we had 174 million in cash compared to 250 million at December 31, 2014. The reduction is mainly due to a $16 million participation in equity raising of Navios Partners in February 2015, about 13 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 up by $31 million since the end of the year. Net debt to book capitalization was 53.5% compared to 49.3% at the end of last year. Over the next slides we will briefly review our subsidiaries. Please turn to Slide 20. Navios Holdings owns 20% of Navios Partners including a 2% GP interest. Navios Partners owns a fleet of 31 vessels. Over the past few quarters, the Company has diversified into the container segment with the acquisition of 8 vessels with average charter duration of over 8 years. During the quarter, Navios Partners refurbished dividend to $0.85 providing significant admission coverage for the next five years. Navios Partners provides significant cash flows to Navios Holdings by the end of 2015 we expect to receive a total of about 194 million in distributions since the inception of the Company. Turning to Slide 21, Navios Holdings has over 46% interest in Navios Acquisition. Navios Acquisition has grown to become one of the largest publicly-listed tanker owners among its U.S. and European peers with one of the youngest fleet in the water. The fleet consists of 39 tankers with an average age of under 5 years. In Q4, 2014 Navios Acquisition from Navios Midstream Partners an MLP with 6 VLCCs providing a platform in the water sector for dividend seeking investors and bringing flexibility and liquidity to NNA. Navios Acquisition also provides significant cash flow to Navios Holdings, including the expected 2015 dividends Navios Acquisition will provide over 53 million in distributions since the start of operations in 2010. Now we'll turn the call over to Ioannis Karyotis for his review of the Navios South American Logistics results, Ioannis?
Ioannis Karyotis
Thank you, George. Slide 22 provides an overview of the Navios Logistics business and Slide 23 presents the Company's highlights. We are continuing the development of a new iron ore terminal. We have concluded all critical procurement, including the mechanical equipment supplier and the general contractor. We expect to invest approximately 150 million in total in this facility and expect a minimum annual EBITDA of 35 million under our take or pay contract with Vale. Slide 24, reviews our results. EBITDA and net income for the nine month period ended September 30, 2014 was 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 nine months 2014 EBITDA and net income. There is no adjustment in the 2015 figures. In the past four years EBITDA has been growing at 20.6% CAGR. This growth rate has continued in the first nine months of 2015. EBITDA in Q3 2015 increased by 44% to 26.2 million, port segment EBITDA increased by 11% to 9.7 million as more cargo moved in our dry terminal during the quarter. Port segment revenue was 37% lower due to a reduction in sales of liquid products with the low margin opportunistic trading part of our liquid port activity. Barge segment’s EBITDA increased by 110% to 11.9 million. The increase in EBITDA is mainly attributed to the fact that we performed less iron ore trips under our COAs, in carrying lower volume expenses while we have the full minimum granted revenue under our contracts. Our operating expenses also decreased and mainly due to reduction in repair and maintenance costs. Cabotage business EBITDA increased 23% to 4.5 million, mainly due to more operating days during the quarter. Adjusted net income in Q3, 2015 increased by 246% to 10.6 million mainly due to the increase in EBITDA. Turning to the financial results for the nine month period ending September 30, 2015, revenue increased by 2% to 198.6 million, EBITDA increased by 21% to 64.5 million on the back of strong performance in the port terminals and barge business segments, and adjusted net income increased by 139% to 20.9 million. Please turn to Slide 25. Navios Logistics had a strong balance sheet. Cast at the end of Q3, 2015 was 87.3 million compared to 71.9 million at the end of 2014. Net debt to book capitalization was 42% compared to 45% at the end of 2014. Now, I would like to turn the call back to Angeliki.
Angeliki Frangou
Thank you, Ioannis. This completes the presentation and we open the call to questions.
Operator
[Operator Instructions] Your first question comes from the line of Christian Wetherbee of Citigroup.
Christian Wetherbee
Wanted to touch first one the decision on the dividend relative to the buyback, I guess I'm just kind of curios how you guys think about sort of the value proposition of the shares currently relatively to maintaining some level of dividend and then also how you contemplate sort of debt repayment over that period of time as well, I guess I just want to kind of understand how you guys balance all of those demands?
Angeliki Frangou
I mean, we gave that dividend very consistently over 39 quarters, we saw that the current environment would not have been prudent to continue as the market really hasn’t deteriorated and we thought that this gave an opportunity to us either purchase back our shares and was certainly attractive and also -- you've strengthened your balance sheet and you're having in terms of contemplate further our positions. We're thinking about 39 million from our subsidiaries and with that in mind and cutting our dividend and of course cutting anything [indiscernible] about a 15 million per year so you see why we decided on this problem. So, the share buyback if you take a look is a most tax efficient way of really return of capital to your investors.
Christian Wetherbee
And when you think about sort of the timing of that you differ to say that you'll be putting most of -- to see your program you generate roughly half of the total program per year, so is that the way we should think about the pace of buybacks?
Angeliki Frangou
The program is, Christian program is opportunistic and it is really on returning capital to that investors, I mean we're fully aligned with our investors, 30%, the management owns 30% of the shares of NM and then it can totally opportunistic and is always contemplated together with our position of vessels, whether that is balanced assuming what is more attractive.
Christian Wetherbee
And when you think about the repayment schedule I know you mentioned no major I think maturities until 2019, but this year and next is there anything that we should be think -- I think there's something baked into your breakeven, I just want to a get a sense of what's coming due this year and next?
Angeliki Frangou
It's a normal capital repayment, I mean 80% if you remember of the balance sheet of NM in the bonds which they don't have -- the 20% is in bank debt of which we have a headroom of over 20%, and is a normal amortizing debt.
Christian Wetherbee
And then I guess just finally on South American, on the logistics business just want to make sure, as the port business continues to ramp-up and the investments that are completed how should we think about the timing of sort of ramp-up development of the iron ore port and then ultimately of the contract, when that rolls in?
Angeliki Frangou
The take-or-pay contract on the port of Vale is a 35 million minimum on the minimum guarantee as the contracts on the port is finishing in the second half, so from 2017 you can -- based on the numbers at least a minimum 35 or is equal to the more normalized level of about 50 million. So, you have the take-or-pay that will be for 20 years and from completion itself and that will affect you will see it in 2017.
Operator
Your next question comes from a line of Noah Parquette of JPMorgan.
Noah Parquette
Just wanted to follow-up on the repurchase program, are you guys open to also or even either or retiring some of the public bonds or the preferred in the open market, as easy cash flow going forward?
Angeliki Frangou
I think the company we will review I mean we have declared -- we have a buyback with it for 2 years. And the company will be opportunistic on every part of the capital production or acquisition of assets.
Noah Parquette
And then on the logistics sides, can you just remind me where maybe it’s George that how much capital expenditures are left and kind of what the timing of that is and maybe the funding plans?
George Achniotis
We have plans on the quarter about 40 million until the end of September and then the total coverage that we have budgeted for the completion of the quarter is 150 million as you know. So we have a remainder of 110 million to be spent through the Q4 2015 and throughout 2016. On the financing as we know we have about 87 million of cash in the balance sheet and we also have as we have mentioned in the past, secured sellers’ credit for the part of the CapEx as it relates to the equipment. So it is we are fully funded to complete the CapEx at this moment.
Angeliki Frangou
The credit rate is around $42 million.
Noah Parquette
And then just one final question, as you guys look to reduce your exposure to dry bulk, I mean what are the chartered in vessels that are coming off over the next 12 months that you know you could let go?
Angeliki Frangou
There is about three vessel at the timing and of course there is also some as of last -- next year that will be coming in which is -- so there is a net effect but some are coming at low rates so this is an ongoing renewal of this fleet.
Operator
Your next question comes from the line of Ben Nolan of Stifel.
Ben Nolan
Several questions, a couple on the South American business but the first related to South American business is that is an area that you guys have for many years now I guess talked about finding a way to extract some of the value. As things get a little bit tighter from a cash flow perspective at the corporate level, how do you think about your possibly of finding a way to monetize at least a portion of that investment, i.e. dividends or selling a portion of it or how do you think about that asset in your portfolio?
Angeliki Frangou
As long as we get the -- obviously now this is a diversified portfolio so you have like Navios 3 companies, Navios Partners and Navios Acquisition and Logistics, so you have other areas that are linked within publically listed so from an issue of -- we are not relaying on particularly on Navios Logistics. Navios Logistics has a really attractive around [indiscernible] from the Board, so this is something that we have to be patient to complete that. And as the ramp-up on the rate from the core come into the numbers I wouldn’t see that as a first line or the event that we will be looking firstly.
Ben Nolan
And so along with that and looking at the quarter and I believe that George mentioned one of things that really helped and it was a very nice quarter was that the barge, some of the barges weren’t active, but still received full payment under the take-or-pay contract and that reduced the expense as well maintained the revenue high, when do those contracts begin to roll off just because it's a benefit now but obviously at some point it's not being utilized than that might not be defiantly?
Angeliki Frangou
That’s a very good question, we have in end of 2015 you have the roll off of some of the contracts, but I want to remind you that there exists on grains is a number one -- the soybean imported to China this year was a direct core level. So the Navios Logistics and various dates on to commodities. Grains and iron ore. So in essence grains and the expansion of the grain business, we provide additional contract and additional cover. So this is something that you have plenty of time and the bulks are dry bulks that can be used for both. We have covers for all of them. So this is not a difficult way to be really reallocate some of the convoys.
Ben Nolan
And then lastly on a more corporate level, now that you guys have suspended the dividend and obviously reduced the dividend at the partnership I am curious how you view the cash burn. Is it possible to maybe given this current rate environment say how much cash you work through on a either quarterly or an annual basis at least roughly going forward?
Angeliki Frangou
Actually we feel very comfortable with the cash we have. And if you see and you do your own model you will see that the Company is starting with 174 million as of Q3 for 2016. We are -- and with dividends from subsidiaries, and suspending dividend payment gives us a lot of flexibility. I want to remind you also that we have 50% of our available days fixed at about $12,000 a day for the first half that gives us also a good cushion because it’s at a good level as we enter 2016.
Ben Nolan
And just to clarify that cash balance of 173 million that does include the cash of South American, correct?
Angeliki Frangou
Yes, yes.
Operator
Your final question comes from the line of Amit Mehrotra of Deutsche Bank.
Amit Mehrotra
Angeliki I wanted to ask kind of a range of question associated with OpEx is it not necessarily applicable to Navios. But many of the large dry bulk companies have reported significant declines in OpEx on a per vessel basis the utilization rates have actually not gone much if at all. And it’s my understanding that most of the OpEx that is fixed over half, it’s crew and salaries, lubricants, oil and insurance are pretty are fixed. So just wanted to get your understanding on where you think all this discretionary declines in OpEx is coming from and is there may be a bigger concern or question here about risk management vis-à-vis fleet operations in the current market?
Angeliki Frangou
Amit I cannot comment for other people but obvious that has grown for a long time and we have a platform we operate always 160 vessels. So the way you build economies of -- the savings is from purchasing of spare parts, paints, lubricants from discounts on your insurances and this is where you really mean a platform is really working. In our operating expense also we include the dry bulk and so we are unique on that. So doing your job is not something that is exceptional but really keeping all the savings of the economies of scale within the Company is important and that is something that you do it over a period of time. So it’s nothing to do with really I mean the crew is a crew and this is -- and actually we have seniority bonuses for multiple years because we like to keep a crew of -- to be with our Company and to train them. But financial barriers can provide them -- can provide quite significant savings. And that’s how we managed to be 35% below industry average we have $3,654 which is quite a useful in today’s environment.
Amit Mehrotra
Let me just ask one follow-up specific to NM. We have seen the price of the bonds come down a little bit in the current backdrop, but I think NM has some ex-annuity streams in the form of NNA and even NMM even after the dividend cut there and now the dividend cut at the NM level. And then also the NSAL, the EBITDA stream from the NSAL obviously with Ben it is a question we talked sort of the take-or-pay. Can you just talk a little bit about NM in terms of the fixed revenue streams on NNA, NMM and then also on NSAL, how much of the EBITDA that you expect to receive is actually going to be fixed over say a duration of time whether it’s two, three, four years. If you could just offer any more color on that, I’d appreciate it?
Angeliki Frangou
Yes, so the dividend stream from our subsidiaries after the resetting and amend we feel solid for the next five years, even in the current environment. So we are attaining about 39 million from the two subsidiaries and we have a 64% ownership in a company that is growing at a very strong 20% EBITDA growth. So this is the outlook just from the two public -- just deriving from the two public subsidiaries is almost over $2 and a half dollars so you can see that it really provides it over $2 that provides us a good value and we are having about if you take the two stakes it’s about 350 million of value just from the stakes from that.
Amit Mehrotra
One last question for me is, on how sort of other companies sort of navigate the current market vis-à-vis discussions with bank. I know Navios has long and deep relationships obviously but most companies do not and so given that obviously banks are not natural holders of vessels, what do you think the banks need to see to sort of offer things like amortization holidays and/or covenant release for these other companies. And basically Angeliki, I mean and I am asking you, if a CEO of a company were to come to you and ask you for advice on what would you tell them in order -- how to position themselves to maybe have a most productive outcome in these types of discussions?
Angeliki Frangou
I think that you need to be very straight forward than what is the problem having on.
Operator
Thank you. I'll now turn the call to Ms. Angeliki Frangou for any additional or closing remarks.
Angeliki Frangou
Thank you. This completes our third quarter earnings. Thank you.
Operator
Thank you for participating in today's conference call. You may now disconnect.