Navios South American Logistics Inc. Company Presentation August 2018
Forward Looking Statements and Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Reform Act of 1995. All statements herein other than statements of historical fact, including statements regarding business and industry prospects or future results of operations or financial position, and future dividends or distributions, should be considered forward-looking. Words such as may, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. These forward looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Navios Logistics at the time this presentation was made. Although Navios Logistics believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Logistics. Actual results may differ materially from those expressed or implied by such forward-looking statements. Included among the factors that, in management s view, could cause actual results to differ materially from the forward-looking statements contained in this report are changes in any of the following: (i) demand and/or charter and contract rates for our vessels and port facilities; (ii) production or demand for the types of dry and liquid products that are transported by our vessels or stored in our ports; (iii) operating costs including, but not limited to, changes in crew salaries, insurance, provisions, repairs, maintenance and overhead expenses; (iv) changes in interest rates; and other factors listed from time to time in the Navios Logistics filings with the Securities and Exchange Commission, including its Form 20Fs and Form 6Ks. Navios Logistics expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forwardlooking statements contained herein to reflect any change in Navios Logistics expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. EBITDA represents Net Income/(Loss) attributable to Navios Logistics stockholders before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA excluding certain items as described under Earnings Highlights. EBITDA is presented because it is used by certain investors to measure a company's operating performance. EBITDA and Adjusted EBITDA are non-gaap financial measures and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. While EBITDA is frequently used as a measure of operating performance, the definition of EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation. Wood Mackenzie Notice on Market and Industry Data: The information upon which the Wood Mackenzie report is based has either been supplied to Wood MacKenzie by Navios Logistics or comes from Wood Mackenzie own experience, knowledge and databases. The opinions expressed in the Wood Mackenzie report are those of Wood Mackenzie. They have been arrived at following careful consideration and enquiry but we do not guarantee their fairness, completeness or accuracy. The opinions, as of this date, are subject to change. We do not accept any liability for your reliance upon them. Informa Agribusiness Data: This material was produced for Navios South American Logistics, Inc. Informa Agribusiness Consulting ( Informa ) has used the best and most accurate information available to complete this study. Informa is not in the business of soliciting or recommending specific investments. The use of this material should consider the market risks inherent in any financial investment opportunity. Furthermore, while Informa has extended its best professional efforts in completing this material, the liability of Informa to the extent permitted by law, is limited to the professional fees received in connection with this project. 2
Navios Logistics Overview 3
Navios Logistics within the Navios Universe Scale, experience and relationships Global brand, industry relationships and reputation Economies of scale ~ 200 vessel fleet managed Ship management in the public company Track record of value creation through the cycle Importance to NSAL Access to deal flow Professional management team Alignment of interest (1) Excludes the two drybulk vessels agreed to be sold to Navios Partners (2) Includes the two drybulk vessels agreed to be acquired from Navios Holdings (3) Includes one 4,563 TEU containership expected to be delivered in Q3/Q4 2018 Special Purpose Vehicles Navios Europe I & II 24 vessels: 12 Containers, 5 Panamax, 2 Handymax, 5 Product Tankers Navios Maritime Midstream Partners L.P. (NYSE: NAP) 6 VLCCs Navios South American Logistics Inc. Port terminal facilities, barging & coastal cabotage Navios Maritime Holdings Inc. (NYSE: NM) 70 dry bulk vessels: 35 owned, 35 chartered-in (1) Navios Maritime Acquisition Corporation (NYSE: NNA) 35 vessels: 26 product tankers, 7 VLCCs, 2 chemical tankers Navios Maritime Containers Inc. (N-OTC: NMCI) 26 container vessels (3) Navios Maritime Partners L.P. (NYSE: NMM) 40 vessels: 14 Capes, 18 Panamaxes, 3 Ultra- Handymaxes, 5 Containers (2) 4
Navios Logistics Ownership Structure Navios Maritime Holdings Inc. NYSE: NM Navios South American Logistics Inc. (Marshall Islands) Peers Business Inc. 63.8% Ownership 36.2% Ownership Barge Business Port Terminals Cabotage Business 338 barges and push boats transporting dry and liquid cargoes across the river system Push boats Dry barges Oil barges LPG barges 1 floating dry dock Grain Terminal Nueva Palmira, Uruguay (tax free zone) 460,000 mt storage capacity 8 million tons annual transshipment capacity Iron Ore Terminal Nueva Palmira, Uruguay (tax free zone) 700,000 mt storage capacity 10 million tons annual transshipment capacity Fuel Terminal San Antonio, Paraguay 45,660 m3 storage capacity Refined product transportation along the Argentinean coast Six ocean going product tankers One river tanker One bunker vessel 5
Navios Logistics Highlights Leading Logistics Provider in the Hidrovia Region Focus on Contracted Cash Flow Strong Counterparties Scale and Strong Asset Base Provide Operating Efficiency Favorable Market Fundamentals Seasoned Management Team with Strong Track Record and Established Brand Largest independent grain terminal in Hidrovia Largest independent mineral terminal in Hidrovia One of the largest independent liquid terminals in Paraguay One of the largest, most versatile river barge fleets serving a diverse set of industries One of the largest Argentinean product cabotage fleet with an average age of 9 years $1.2 billion estimated 20-year aggregate EBITDA (1) from Vale port contract based on minimum guaranteed quantity Strategic positioning with fixed rate contracts and CoAs with minimum volume guarantees Long-term relationships with high contract renewal rates Diverse group of large, high-quality counterparties ADM, Bunge, Cargill, Dreyfus, Vale, Vitol, YPF among others Economies of scale provide low costs per ton transported Integrated terminal, barge and cabotage network offers substantial operating leverage Robust growth in exports of commodities Hidrovia system and coastal cabotage are critical infrastructure for region Strategic relationships Experienced management team Long operating history in region (1) Assuming operating costs similar to the operating costs of Navios Logistics existing dry port terminal, including contracted tariff escalations and adjustments 6
Integrated Transportation and Storage Services Port Terminals Grain Port Iron Ore Port Liquid Port Barge Business Cabotage Business Assets Grains transfer and storage port terminal in Nueva Palmira, Uruguay Iron ore transfer and storage port terminal in Nueva Palmira, Uruguay Liquid port in San Antonio, Paraguay 272 dry barges 36 tank barges 27 pushboats 3 LPG barges 1 floating dry dock 6 Product tankers (8,974 17,508 dwt) 1 Bunker Vessel (1,693 dwt) 1 River tanker (5,000 dwt) Commodities transported or stored Agricultural commodities (grains, soybeans, etc) Iron ore, manganese ore Liquid cargo (primarily diesel fuel and naphtha) Dry cargo Liquid cargo LPG Refined oil products Typical Customer Contracts Long-term storage and transshipment contracts 20-year storage and transshipment contract with Vale Storage and transshipment contracts Sale of products Time charters and CoAs (1-6 years) Spot contracts Time charters (1-3 years average duration) Spot contracts Geographic Region Strategic location in Uruguay for exports of Hidrovia region s grains Strategic location in Uruguay for exports of Corumba region s minerals Strategic location for imports into land-locked Paraguay Hidrovia river system Argentinean coastal trade 7
Largest Independent Logistics Provider in Hidrovia Port Terminals Cabotage Business Barge Business Grain Port Largest Independent in the Hidrovia DWT ( 000) 140 120 Top 5 Argentinean Coastal Cabotage Players by Tonnage (1) 122 # Barges & Pushboats 600 500 485 Top 5 Players (3) Iron Ore Port 100 80 60 40 93 86 50 400 300 200 338 241 241 188 Largest Independent in the Hidrovia 20 17 100 Liquid Port 0 National Shipping Antares NSAL Maruba ONA 0 (2) Ultrapetrol NSAL Interbarge ADM Hidrovias do Brazil One of the Largest Independent Liquid Ports in Paraguay Key Benefits of Large Scale Lower operating costs Greater market presence Higher quality charterers Strong strategic relationships (shipyards, commercial banks, etc.) (1) Includes vessels 5,000 29,000 DWT, includes bareboat chartered-in tonnage where known; Source: Drewry (2) Restructured through US bankruptcy proceeding (3) Estimated real capacity; Source: Informa Economics, please see disclaimer on page 2 8
Navios Logistics Presence Throughout Supply Chain Barge Transportation 338 barges and push boats Dry and liquid cargos 1 floating dry dock Dry Ports Liquid Port Iron ore Grains Liquid cargo Bolivia Argentina Brazil Paraguay Uruguay Port Terminals Paraguay Fuel Port Terminal Loading / Unloading 45,660 m 3 storage capacity Uruguay Grain Port Terminal Loading / Unloading 460,000 mt grain storage space Drying & conditioning facility 8 million tons annual transshipment capacity Uruguay Iron Ore Port Terminal Loading / Unloading 700,000 mt initial minerals storage space 10 million tons annual transshipment capacity Cabotage Exports 6 ocean going tankers 1 bunker vessel 1 river tanker Distribution of oil products 9
Market Overview 10
Favorable Market Fundamentals of Hidrovia Runs over 4,500 kilometers across the agricultural heartland of South America VENEZUELA COLOMBIA ECUADOR Navios Oil Products Terminal PERU CHILE BOLIVIA ARGENTINA Source: Drewry, USDA July 2018 GUYANA SURINAME PARAGUAY URUGUAY Coastal Cabotage Trade FRENCH GUIANA BRAZIL Hidrovia River System Navios Grains and Iron Ore Port Terminals Growing exports of grain and mineral commodities - Region accounts for ~54% of global soybean production - Significant exporter to emerging market economies, such as China - Produces some of the highest quality iron ore Stable growth in oil demand - 69% of Argentina s refining capacity is located near the Hidrovia and in the River Plate - Paraguay does not produce any crude oil and relies on imports through the river system Reliance on waterborne transportation - Shortage of highway or rail infrastructure alternatives - River system provides access to Atlantic Ocean and global export markets - River barges and coastal tankers are the most costefficient method of transportation Hidrovia comparable in length to Mississippi river system with approximately 10% of the barges 11
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18P 18/19E 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18P 18/19E Million Metric Tons Strategically Positioned to Serve the Soybean Production Hidrovia Region Soybean Production Uruguay Soybean Production 250.0 60% 4.0 200.0 150.0 55% 50% Region % of World 3.5 3.0 2.5 2.0 100.0 1.5 50.0 45% 1.0 0.5 0.0 40% 0.0 Soybean Production Region % of World Hidrovia region accounts for ~ 54% of world soybean production Note: Crop years for Soybean Production according to USDA definition, P = Preliminary, E = Estimate Source: Drewry, USDA July 2018 12
The Corumba Region Minerals Production Million Metric Tons 10.0 8.0 6.0 4.0 2.0 0.0 Thousand Metric Tons 2000 1500 1000 500 0 1.9 2.2 2.3 2.7 0.4 1.1 0.3 0.4 0.4 0.6 0.9 0.8 0.7 1.1 0.5 0.7 1.0 1.2 1.2 4.5 4.7 4.9 0.8 0.4 1.5 1.6 0.3 0.2 1.4 1.1 1.0 3.7 1.1 0.2 0.5 2.0 1.8 2.0 1.9 1787 1719 140 121 1415 1517 1519 1489 120 104 1218 100 92 1023 84 75 75 792 821 80 744 746 721 744 718 759 780 827 63 68 71 57 54 54 58 63 64 65 60 47 47 40 Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Q2:15 Q3:15 Q4:15 Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Vale Corumba Iron Ore (LHS) Vale Urucum Iron Ore (LHS) MMX Iron Ore (LHS) Vale Urucum Manganese Ore (LHS) Average iron ore price (RHS) Source: Drewry, Vale, MMX, Bloomberg Note: MMX production was stopped in Q2 2013 due to the restructuring of the MMX Group and there is no available production data since for the mine; Lease of MMX s iron ore assets and mining rights was assigned to Vetorial 6.2 1.8 0.2 1.4 2.8 7.4 1.5 0.3 1.5 8.2 7.4 1.5 0.5 0.3 0.4 1.8 2.0 4.1 4.6 4.5 6.4 0.6 2.1 3.8 5.2 0.7 1.7 2.8 3.0 3.1 0.7 0.4 0.0 0.7 1.9 2.4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 Vale Corumba Iron Ore Vale Urucum Iron Ore Vale Urucum Manganese Ore MMX Iron Ore 1.6 0.3 1.3 $/t 20 0 13
Corumba Price Premium and Improved Logistics Support Production Growth High quality iron ore commands price premium The region s mines produce lump ore of exceptional quality in terms of Fe grade and trace elements The Corumbá mines ore quality matches demand growth trends, especially in higher growth Direct Reduced Iron (DRI) applications Price premium of high grade ore expected to grow further over time given the geological erosion of seaborne iron ore serving Asian markets 2017 FOB Price for Corumba Lump Ore 100.1 Higher profitability supports production growth Corumba mine output is expected to rebound to approximately 5 mm tons in the short term, and up to 10-13mm tons by 2025 Annual production was 5-8mm tons during 2010 to 2015 The significant premium for Corumba lump ore provides an attractive netback margin supporting regional production volume growth The new purpose-built NSAL terminal improves export logistics, further enhancing operational efficiency and profitability for the Corumba mines Corumba Mines Production Forecast (million tons per annum) 48.2 Significant price premium for 67% Fe Corumba Lump Ore Up to 9.0-10.0 Up to 13.0-14.0 51.9 Sinter Fines 62% Fe FOB Price 3.0 2.5-5.0 $/ton Sources: Wood Mackenzie, June 2018 2016A 2017E-2018E 2019E-2020E 2025E 14
Hidrovia Region: Stable Growth in Oil Demand ( 000 barrels per day) 2,603 2,572 2,534 2,487 2,589 2,674 2,953 3,073 2,937 3,209 3,554 3,665 3,838 3,942 4,068 3,965 3,819 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Argentina Bolivia Brazil Paraguay Uruguay CAGR 2000-2016 Argentina 3.9% Bolivia 3.2% Brazil 2.1% Paraguay 2.8% Uruguay 1.4% Total 2.4% Argentina s total oil demand was about 700,000 bpd in 2016 Argentina s total oil refining capacity is about 627,000 bpd 69% of Argentina s refining capacity is located near the Hidrovia and in the River Plate Estuary Paraguay does not produce any crude oil and relies on imports through the river system Source: Drewry 15
Fresh Water Availability vs. Population: Grain Exports = Virtual Water Trade North & Central America Europe Asia Water requirement equivalent of main food products Product Unit Equivalent water in m3 per unit 15% 8% South America 26% 6% 8% 13% 36% Africa 11% 13% % of Global Water Supply % of Global Population 60% Australia & Oceania 5% <1% Fresh beef kg 15 Fresh lamb kg 10 Fresh poultry kg 6 Cereals kg 1.5 Citrus fruits kg 1 Palm oil kg 2 Puls, roots and tubers kg 1 This table gives examples of water required per unit of major food products, including livestock, which consume the most water per unit. Cereals, oil crops, and pulses, roots and tubers consume far less water. Source: SIWI and IWMI, 2004 Global Virtual Water Imbalances Will Continue to be a Driver of Agricultural Trade Source: Web site of the UNESCO/IHP Regional Office of Latin America and the Caribbean 16
Q2 & H1 2018 Financial Highlights 17
Navios Logistics Q2 and H1 2018 Earnings Highlights Navios Logistics Port Terminals Barge Business Cabotage Business (in $ 000) Three months ended June 30, 2018 Three months ended June 30, 2017 Y-O-Y Variance Six months ended June 30, 2018 Six months ended June 30, 2017 Y-O-Y Variance Revenue 60,063 59,381 1% 112,331 103,182 9% EBITDA 22,405 19,268 16% 39,211 29,346 34% Net income 3,994 4,430 (10%) 2,947 1,423 107% Revenue 31,452 22,793 38% 56,245 38,381 47% EBITDA 17,350 9,992 74% 28,953 14,349 102% Revenue 18,164 22,198 (18%) 35,161 41,182 (15%) EBITDA 2,240 5,969 (62%) 4,385 11,540 (62%) Revenue 10,447 14,390 (27%) 20,925 23,619 (11%) EBITDA 2,815 3,307 (15%) 5,873 3,457 70% Revenue ($ million) EBITDA ($ million) 2% CAGR 188.0 234.7 247.0 237.1 268.8 251.0 220.3 212.6 103.2 112.3 32.5 39.0 48.1 56.8 10% CAGR (1) 68.8 80.4 68.1 62.5 29.3 39.2 2010 2011 2012 2013 2014 2015 2016 2017 H1 H1 2010 2011 2012 2013 2014 2015 2016 2017 H1 2017 2018 2017 (1) EBITDA for the year ended December 31, 2014 has been adjusted to exclude $27.3 million loss on bond extinguishment H1 2018 18
Navios Logistics Q2 2018 Balance Sheet Selected Balance Sheet Data (in $'000) June 30, 2018 December 31, 2017 Cash & cash equivalents (inc. restricted cash) 70,403 79,888 Accounts Receivable 37,482 25,726 Deposits for vessels, port terminals and other fixed assets, net 8,255 36,849 Vessels port terminal and other fixed assets, net 550,865 529,009 Total Assets 860,222 868,015 Senior notes, net of deferred financing costs 369,827 369,260 Current portion of long term debt 5,885 5,254 Long term debt, net of current portion 124,037 127,123 Notes payable, current 4,681 4,711 Notes payable, noncurrent 24,266 26,398 Stockholders Equity 282,222 279,275 Book Capitalization 810,918 812,021 Net Debt / Book Capitalization 57% 56% 19
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