How To Update Nmm
Register an account on the Nexus website. Download the Nexus Mod Manager (NMM). Install and then run NMM. Confirm the location of Skyrim Special Edition. Select Skyrim Special Edition. Choose where you wish to store downloaded mods (default drive is the one with Skyrim SE installed). Hit OK if an alert window shows.
Image Credit: Navios Maritime Partners, Q2-18 Presentation
Company Overview
Navios Maritime Partners (NMM) is a publicly traded partnership controlled by Navios Maritime Holdings (NM), with a primary focus on dry bulk vessels (mostly spot market exposure) and container vessels with long-term charters. Both of these markets suffered through a terrible 2016, but NMM secured a major refinancing and equity raise in early 2017. They've since reinvigorated the platform by adding several dry bulk vessels and launching a new containership venture.
NMM now directly owns 34 bulk vessels and 5 containerships. In mid-2017, they formed a key spin-off, Navios Containers ('NMCI'), to invest in distressed container tonnage. Thus far, they have invested a total of $65M in 4 private placements, and they control 36% of the outstanding shares (12.45M) along with warrants for 6.8% of the outstanding equity (approx. 2.4M shares @ $5.20 average).
NMM has roughly 171M units outstanding for a market capitalization of just over $340M. NMM is controlled by parent Navios Maritime Holdings, which owns the general partner and around 18% of outstanding units. The following slide illustrates NMM's position in the 'Navios Universe.'
Image Source: NMM Q2-18 Presentation, Slide 3
This report will provide a comprehensive update, building upon our most recent full-length update posted in June 2018. Specifically, we will discuss recent progress, review the Q2-18 results, discuss likely Q3-18 potential, update our fleet valuations, and illustrate forward catalysts.
Nexus Mod Manager
I believe NMM has a fair value of around $3.50/unit, roughly 76% of upside from current levels. This remains my current top idea and our number one portfolio holding at Value Investor's Edge.
I also highly recommend reviewing our previous work from June 2018 along with our original report published in December 2017.
Recent Progress: Dry Bulk Markets And IPO Filings
Throughout the past two months, the dry bulk market has been on a tear, particularly the Capesize sector. I discussed this strength in a recent macro market report and also highlighted the strong dry bulk market in a report on peer Star Bulk Carriers (SBLK). As of writing, Capesize rates have averaged nearly $24k/day during the third quarter and have spent nearly 60 consecutive days above $20k.
Source: VesselsValue, Dry Bulk Rate Chart
These rates are particularly important to NMM's results since they have 11 Capesize vessels on spot or index charters. The Q2 direct average was under $15k, and Q1 was around $13k. Thus far, Q3 is close to $24k.
This segment alone is capable of growing earnings about $9M ($0.05/sh) in a single quarter ($9k boost x 11 vessels x 90 days). Furthermore, NMM has 9 Panamaxes and Ultra-Handys tied to the Panamax (7x) and Supramax (2x) indexes, which are likely up around $2k and $1k q/q. Altogether, earnings at NMM should nearly double on a q/q basis with the potential for Q4 to be even stronger.
NMCI Progress... IPO Soon?
Navios Containers (NMCI) is pursuing an initial public filing, but we haven't seen a confirmed pricing yet. With the Labor Day weekend lurking, we're unlikely to see much action for at least another couple weeks. There hasn't been a major shipping IPO since June 2015, so market challenges clearly persist. NMCI posted updated filings on 10 August, reflective of their Q2-18 earnings results.
Navios Containers has timed their bottom-market investments perfectly, recognizing a huge return on equity in barely over a year. NAV is up over 50%, which implies a pricing in the $7-$8 range. In my previous coverage, I discussed a pricing at $6.50, but given recent progress, I think that's too low. We could easily see something north of $7.00 and still be at a discount.
Source: NMCI Q2-18 Presentation, Slide 8
Although the markets have certainly improved since 2017, there's still significant upside potential. Keep in mind that although the NMCI IPO is likely to unlock value at NMM, they own 36% of this company, so staying private is hardly a bad outcome.
Source: NMCI Q2-18 Presentation, Slide 9
Q2-18 Earnings Review
As part of our research coverage at Value Investor's Edge, we provided earnings previews and exclusive reviews for over 50 firms in the industry. I've included some of our coverage of NMM and NMCI here, along with original focus questions.
Navios Containers Results And Commentary (NMCI)
Full refinancing terms? Additional loans? During their Q1-18 earnings report, NMCI announced a pending $119M sale leaseback transaction and hinted towards other refinancing deals. I was interested to see the full breakdown of new financing.
Results showed us that NMCI has continued with their sale and leaseback transactions, and they've now completed 8 vessels out of a planned 18, raising proceeds of $50.5M out of a planned $119M. These proceeds will be utilized to refinance $92M of outstanding debt, boosting liquidity by nearly $30M. The full cost of this facility isn't disclosed, but when I run an IRR in Excel, I get roughly 5.5% fixed cost on this debt, equivalent to roughly LIBOR+320, but with the benefit of being fixed.
NMCI fixed $36M against the two 8.2k TEU vessels (they paid $67M, 54% financing) on a 7y loan at LIBOR+325. NMCI also fixed $25M against the 10k TEU vessel (paid $50M, 50% financing) on a 4y loan at L+300. Finally, NMCI purchased another ship for $14M, which they expect to finance with $9M of debt on similar terms (64% financing).
The following slide shows the pro forma debt maturity plan, which is a bit misleading because it doesn't show any of the regular amortization payments; however, it still underscores the fact that NMCI has a pretty nice clean sheet.
Source: NMCI Q2-18 Presentation, Slide 14
Free cash flow levels? NMCI produced $16M in EBITDA during Q1-18. They reported $16.7M in EBITDA during Q2-18, but operating cash flow picked up significantly, to nearly $15M. They do have a few above-market charters adding to their results, but this is prior to including some expected positive rolls on original tonnage and prior to taking delivery of new assets.
NMCI seems totally capable of achieving $20-$25M normalized quarterly cash flow, with EBITDA likely in the $120-$150M annualized range based on current expansion plans (inclusive of a range of IPO-funded growth). The following slide illustrates the current 26 vessel fleet capacity.
Source: NMCI Q2-18 Presentation, Slide 13
Note that the $58-$67M cash flow potential does NOT include any of the potential IPO-driven growth. A fully successful IPO (more than $100M raised) could bring us to a full fleet of 35 vessels - note the huge guaranteed cash flow on the bottom 4 vessels. If there's one thing Navios is good at, it's huge dividends in strong markets. NMCI could be a massive payer.
Source: NMCI Q2-18 Presentation, Slide 38
When we factor in these new ships, we're approaching $150M EBITDA and an operating cash flow range north of $100M. Charter rolls start to become more important in 2019, but the 5x Hyundai ships also grow by $6k apiece into 2020 (shift from $24,095 to $30,119/day). That alone brings $11M of pure free cash flow.
It's not hard to imagine NMCI offering annual payouts above $1.00 per share. At a projected IPO pricing of $7-$8, that's a potential forward yield of 12-14%.
IPO timeline update? I believed it made the most sense to price the IPO after showing Q2-18 results and books, but we're now still waiting. Ideally, we'll hear some general commentary soon, and I'm hoping we see a pricing range after Labor Day. I previously discussed $6.50 as a placeholder, deliberately trying to keep expectations lower, but given recent NAV disclosures, a range of $7-$8 seems more fair.
Navios has historically always priced its offerings at a significant premium to NAV, usually playing the yield angle. I believe the HMM dropdowns ($36M apiece, funded by the IPO) are a major component of this strategy/attempt. What sort of levels will we see this time?
Navios Maritime Partners Results And Commentary (NMM)
For those who haven't been paying close attention, the dry bulk market is booming! We recently set fresh 52-week highs for the overall BDI and Capesize rates have been particularly high, 4-6 weeks earlier than usual For example, the 1 August Capesize reading was $26,204/day, up 149% on a y/y basis. Even after rates have tapered back a bit, we're still averaging about $24k/day for the quarter.
Loss of Container And Sagittarius Cash Flow?
As much as I like to celebrate the dry bulk upside, NMM did lose two very lucrative containers, which were generating $6.2M in quarterly revenue and around $4.5M in EBITDA. This knocks earnings back by around 1.5-2.0 cents when depreciation is factored.
The 2006-built Panamax 'Navios Sagittarius' also comes off a long-term charter in September at $26.1k/day. Current rates are likely closer to $12-$14k, so this represents a loss of about $1M per quarter in EBITDA and earnings. This is the last of their legacy bulker charters with the exception of the $29.3k/day 'Navios Melodia' Capesize, which hardly looks excessive in today's market and is fixed until September 2022 anyways.
Altogether, NMM looks set to report around $0.10 in EPS during Q3-18.
Leverage Discussion
NMM is taking a conservative approach to the balance sheet, or at least that's their current spin. They sold two of containerships to NMCI for $67M, repaid $24.2M in debt and collateral adjustment, and they had $42.8M left. They then took this cash and spent $35M of it on two new dry bulk vessels. Overall leverage slightly reduced.
As the balance sheet becomes cleaner, we look towards the 2020 debt maturity. Navios is normally very proactive about rolling their debt, and I expect them to begin addressing the next maturity by early to mid-2019. The Term Loan B matures in Fall 2020 and bears interest at LIBOR+5%. This interest rate is at least 150 bps higher than NMM's credit profile would otherwise require.
Source: NMM Q2-18 Earnings Presentation, Slide 12
This loan was done in early-2017, when NMM was still very risky and leverage was around 20% higher on a D/A basis. I believe they could refinance the whole fleet now for a new facility closer to LIBOR+3.5%, with essentially the same leverage, perhaps even higher leverage.
Enormous Coverage
NMM has huge distribution coverage last quarter and the dry bulk vessels weren't even kicking into full gear yet! NMM reported 5.8x coverage on their $0.02/qtr payout, which still offers a 4% yield.
Source: NMM Q2-18 Earnings Presentation, Slide 15
If NMM paid out $0.10/qtr, they would have still had positive coverage and this would suggest a price of $4/unit at a 10% yield. These payouts depend on a sustainably strong dry bulk market, but if we get a few more months of these levels, I do expect NMM to start to lock up longer-term fixtures.
Capesize Run Has Legs?
We've been discussing the early Capesize run this year, and Navios provides a clear explanation slide as just iron ore alone has the potential to run wild if China keeps up their steel production. As of May 2018, Chinese domestic production of iron was down 36% y/y while steel production was up 6.6% and imports were roughly flat.
Source: NMM Q2-18 Earnings Presentation, Slide 23
The math doesn't add up, and clearly, we need to see a surge. If anything, NM's forecast of 1.09M import tons seems very conservative, especially if China continues on its defensive path of economic stimulus.
Fleet Valuation Update
The latest figures from VesselsValue highlight a current fleet valuation of $763M for the NMM fleet. Additionally, I estimate their remaining above-market charters (5x containers, 1x dry bulk) at nearly $140M. Altogether, I believe the NMM fleet is worth about $900M charter-adjusted. As just one example of the above-market value of the fleet, notice that the 5 containerships are listed at $81.8M, yet NMM has agreed to sell them to NMCI for $180M.
Each quarter, these sales are delayed, NMM generates another $7M in free cash flow, so there's no hurry. I expect most of these vessels to be sold in 2019.
Source: VesselsValue, NMM Fleet Valuations, 29 August 2018
Balance Sheet And NAV
As of Q2-18 financials, NMM had net debt of roughly $372M. This figure is often overstated by other analysts and screeners due to a higher degree of receivables and deferred revenues.
NMM's stake in NMCI is worth roughly $84M at a $6.50 pricing (12.45M shares + 2.4M warrants at a $5.20 strike). If the pricing is done at a more reasonable $7.50, the stake is worth nearly $100M.
Even at a fairly conservative NMCI pricing estimate of $6.50, NMM's NAV is still about $3.60. If we include 2H-18 cash flow and NMCI at $7.50, we surpass $4.00 NAV for NMM by the start of 2019.
Forward Catalysts
There are three clear forward catalysts for NMM:
- Potential NMCI IPO this fall, pricing $7-$8/sh
- Strong Q3-18 earnings, around $0.10 estimated
- A solid refinancing, likely closer to L+350
We've already discussed the IPO and Q3-18 earnings significantly.
Refinancing... Dividends?
A refinancing would save NMM around a penny a quarter and eliminate any near-term overhang. It would also set them up for larger dividends. On the most recent earnings call, NMM management claimed that they need two things to resume huge dividends:
- Longer-term rates improving, and vessels fixed
- Refinancing of the 2020 Term Loan
When pressed on the term loan, they claimed they could repurchase and pursue a refinancing immediately. This means we're just waiting for better rates. Last week, we saw a Capesize fixed for 3 years at $23.3k/day, which is a significantly higher rate compared to recent years.
If NMM fixed 10 of their Capesize vessels at similar rates, those ships alone could support a dividend of about $0.08/qtr. NMM has 34 dry bulk vessels and significant container-related cash flow, so there's clear potential here. 8-10 cents per quarter would be on the low-end of a bullish payout scenario.
Conclusion And Fair Value Target
I continue to remain very bullish on NMM, and it is my largest holding by a significant margin. I believe the stock is currently worth about $3.50/unit, around 76% upside from current pricing levels.
If dry bulk markets continue to improve, this upside could expand further. With NMM trading roughly flat all year, it's clear the market needs more of a catalyst. Ideally, we'll see an IPO and Q3-18 is set for success regardless.
Stay Ahead. No Surprises.
Shipping is a wild sector. I've been covering it for a decade and we've hosted Value Investor's Edge on Seeking Alpha for the past three years. During this time, we've out performed comps by a wide margin and our income portfolio is beating the market by over 10% YTD after a blow-out 2017. We cover shipping, energy, midstream, and industrials and our income portfolio has never been hit with a dividend cut.
Check our service out today with a limited free trial opportunity.
Disclosure:I am/we are long NMM, SBLK, GNK.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
Overview
One of the major bonuses of using the Nexus Mod Manager (NMM) over manually installing your mods is that it makes it a lot easier for you to actually download and install mods off of the Nexus sites. If you do not use a mod manager you have to manually download and save your files to your hard-drive and then either manually extract files in the proper game directories, or use a mod manager to load the files. NMM takes care of all of this in the background, which really speeds up the modding process.
This quick tutorial page assumes that you have already installed NMM and have it setup ready for modding.
Downloading files
In order to install a file, you need to first find the file on the Nexus site you are using and download it using the 'Download with manager' button. NMM comes with a built-in download manager which will automatically download files that you select.
- Navigate to the file page of a file you would like to download and install
- Click on the 'files' tab
- Find the most up-to-date main file listed and press the 'Download with manager' button
What happens next depends on whether you are already running NMM in the background.
- If NMM is already running then the file you selected will be added to the Download Manager tab and the download will start automatically.
- If NMM is not already running then NMM should start automatically, and then continue to add the file to the Download Manager tab and download your file.
Note: Some files may not have a 'Download with manager' button. This is because the author has selected not to allow the button to be shown on that file page. This is normally because the file does not work with NMM.
The Download Manager
The Download Manager tab (located at the bottom of the program by default) is where all your downloads are displayed for the current session. You can download more than one file at a time, and all the files you are currently downloading or have completed downloading will show in the Download Manager tab until you close the program.
When you click the 'Download with manager' button the file you selected will be added to the Download Manager tab. Each download you have running will show details about the progress of your file downloads, including how fast you are downloading, how long NMM thinks your download will take (based on your download speed) and the percentage of the download completed.
You can control certain aspects of your file downloading using the buttons to the left of the download manager. These buttons are:
- Cancel - cancels the selected download in the Download Manager and removes the file from your hard-drive
- Remove - removes the selected download entry from the Download Manager (note: if you remove a completed download this *will not* delete the file! It simply deletes the file from the list in the Download Manager)
- Pause - pauses the download you have currently selected in the Download Manager
- Resume - resumes a paused download, if you have a paused download selected
When a download is completed the 'Overall progress' column will show 100% and the 'Status' column will read as 'Complete'. At this point your file will be added to the 'Mods' tab where you can manage your new file.
Note: when a file is completed it has been fully downloaded but it has not yet been added to your game, you need to activate the mod (details are below)
Activating a file
Once a file download has been completed NMM will automatically add the file to the 'Mods' tab. The Mods tab contains all the mods and files that you have downloaded or added to your game manually.
The Mods tab contains a few details about all the files you are currently using:
- The checkbox tells you whether the mod is activate or inactive.
- An active mod is installed and has been added to your game
- An inactive mod has not been installed in to your game, but is available to be installed
- Name - The name of the file. You can edit this like you would a file on your computer by slowly clicking the name twice
- Version - The version of the mod you have downloaded
- Latest Version - The most up-to-date version of the mod you have downloaded according to the Nexus sites
- If your current version is not the same as the latest version a yellow triangle will be shown, indicating your file is out of date
- Author - The author of the mod
When you download a file it will be added to the Mods tab, but it will not be active (which means it won't show up in the game until you activate it). NMM does not automatically activate mods as there is a chance your downloads will conflict with currently installed files, and we think it's best if you manage this process manually so you do not inadvertently break your game.
To activate and install a mod simply select the mod within the Mods tab and click the 'Activate' button. To deactivate and uninstall a mod simply click the 'Deactivate' button. You can also double-click the mod in the list to activate or deactivate mods. Deactivating mods simply removes the files the mod used from the game folders and removes the content from your game. However it does not delete the archived file, so you can deactivate and activate mods you have within the Mods tab without having to redownload the files.
Once a mod has been activated in the Mods tab it should be installed and added to your game, ready to be used. You do not need to do anything else. Simply run the game.