UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

Dated: September 8, 2022

Commission File No. 333-179250

 

 

NAVIOS SOUTH AMERICAN LOGISTICS INC.

 

 

Aguada Park Free Zone

Paraguay 2141, Of. 1603

Montevideo, Uruguay

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐            No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐            No  ☒

 

 

 

Operating and Financial Review and Prospects

The following is a discussion of the financial condition and results of operations of Navios South American Logistics Inc. (“Navios Logistics” or the “Company”) for each of the three and six month periods ended June 30, 2022 and 2021. All of these financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). You should read this section together with the consolidated financial statements and the accompanying notes included in Navios Logistics’ 2021 annual report filed on Form 20-F with the Securities and Exchange Commission on April 1, 2022 (the “2021 Form 20-F”) and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 6-K.

This report 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 filing 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. Factors that could cause actual results to differ include, but are not limited to, risks relating to: global and regional economic and political conditions; changes in demand for the transportation or storage of grain and mineral commodities and petroleum products; the development of Navios Logistics’ planned Port Murtinho Terminal and Nueva Palmira Free Zone port terminal facilities; the ability and willingness of charterers to fulfill their obligations to the affiliates in which we are invested; prevailing charter rates; changing vessel crews and availability of financing; potential disruption of shipping routes due to accidents, wars, diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the COVID-19 pandemic; the aging of our owned affiliates’ fleets and resultant increases in operations costs; our owned affiliates’ loss of any customer or charter or vessel; the financial condition of our owned affiliates’ customers; changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors; increases in costs and expenses related to the operation of vessels, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance, and general and administrative expenses; the expected cost of, and the ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by charterers; competitive factors in the markets in which Navios Logistics and its owned affiliates operate; risks associated with operations outside the United States; and other factors listed from time to time in the filings Navios Logistics makes with the Securities and Exchange Commission, including its Forms 20-F and Forms 6-K, including the section entitled “Item 3. Key Information — D. Risk Factors” in the 2021 Form 20-F. Navios Logistics expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking 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.

Overview

General

Navios Logistics was incorporated under the laws of the Republic of the Marshall Islands on December 17, 2007. We believe we are one of the largest infrastructure and logistics companies in the Hidrovia region river system, the main navigable river system in the region (the “Hidrovia region”), and on the cabotage trades along the south-eastern coast of South America. We serve our customers in the Hidrovia region through our three existing port storage and transfer facilities (the “Port Terminal Business”). The Port Terminal Business comprises our grain port terminal (the “Grain Port Terminal), our iron-ore port terminal (the “Iron Ore Port Terminal”), and our liquid port terminal (the “Liquid Port Terminal). We complement these three Port Terminals with a diverse fleet of 329 barges and 30 pushboats that operate in our barge business (the “Barge Business”), and eight vessels comprising six tankers, one bunker vessel, and one river and estuary product tanker, all of which operate in our cabotage business (the “Cabotage Business”). We provide transportation for dry cargo (cereals, cotton pellets, soybeans, wheat, limestone (clinker), mineral iron, and rolling stones), liquid cargo (hydrocarbons such as crude oil, gas oil, naphtha, fuel oil and vegetable oils) and liquefied cargo (liquefied petroleum gas or “LPG”).

Port Terminal Business

We own three port-storage and transfer facilities: our Grain Port Terminal, which supports agricultural and forest-related exports; our Iron Ore Port Terminal, which supports mineral-related exports; and our Liquid Port Terminal, which provides tank storage for refined petroleum products. The Grain Port Terminal and the Iron Port Terminal are located in Nueva Palmira, Uruguay,

 

1

and the Liquid Port Terminal is located in San Antonio, Paraguay. Our port facilities in Nueva Palmira have a total static grain-storage capacity of 460,000 metric tons, and a mineral-ore-stockpile capacity of 876,000 tons. Our port facility in San Antonio has a total static storage capacity of 65,660 cubic meters. Our Grain Port Terminal, together with the Iron Ore Terminal, may be collectively referred to in this report as our “Dry Port Terminals.”

Fleet

Our current core fleet consists of a total of 367 owned vessels, barges and pushboats.

The following is the current core fleet as of September 8, 2022:

Navios Logistics Fleet Summary (owned)

 

Pushboats/ Barges/ Inland Oil Tankers Fleet		Number of Vessels				Capacity/BHP				Description
Pushboat fleet			30				107,920 BHP			Various Sizes and Horsepower
Dry Barges			268				474,050 DWT			Dry Cargo
Tank Barges			58				178,948 m3			Liquid Cargo
LPG Barges			3				4,752 m3			LPG
Total			359

 

Product Tanker Fleet		Year Built				DWT				Description
Estefania H			2008				12,000				Double-hulled Product Tanker
Malva H (1)			2008				8,974				Double-hulled Product Tanker
Makenita H			2009				17,508				Double-hulled Product Tanker
Sara H			2009				9,000				Double-hulled Product Tanker
San San H			2010				16,871				Double-hulled Product Tanker
Ferni H			2010				16,871				Double-hulled Product Tanker
He Man H			2012				1,693				Double-hulled Bunker Vessel
Elena H			2018				4,999				Double-hulled Product Tanker
Total							87,916

 

(1)

In August 2022, the Company entered in a memorandum of agreement (“MoA”) for the sale of the Malva H to an unrelated third party.

Chartering Arrangements

We continually monitor developments in the shipping industry and make decisions based on an individual vessel and segment basis, as well as on our view of overall market conditions, in order to implement our overall business strategy. In the Barge Business, we typically operate under a mix of time charters and contracts of affreightment (“CoAs”) having one-to-five year terms (some of which have minimum guaranteed volumes) and spot contracts. In the Cabotage Business, we typically operate under time charters with terms in excess of one year. Some of our charters provide fixed pricing, minimum volume requirements, and adjustment formulas for labor cost and fuel price.

Factors Affecting Navios Logistics’ Results of Operations

For further discussion on factors affecting our results of operations, see also “Item 3. Key Information — D. Risk Factors” included in the 2021 Form 20-F. For information regarding governmental, economic, fiscal, monetary or political policies that could materially affect our operations, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Argentina”, “— Risks Relating to Uruguayan Free Zone Regulation” and “— Other Risks Relating to the Countries in which We Operate” in the 2021 Form 20-F.

 

2

Contract Rates

The shipping and logistics industry has been highly volatile in the recent past. In order to maximize the utilization of our fleet and storage capacity, we must be able to renew the contracts that utilize our fleet and ports upon the expiration or termination of current contracts. This ability depends mainly upon economic conditions in the economic sectors in which the vessels, barges and pushboats operate, changes in the supply and demand for vessels, barges and pushboats and changes in the supply and demand for the transshipment and storage of commodities.

Weather Conditions

In our Barge Business, we transport cargoes along the Paraguay and Parana Rivers from Puerto Caceres (Brazil) to Nueva Palmira (Uruguay) (the “Hidrovia Waterway”). Thus, changes adversely affecting the region, such as low water levels, could reduce or limit our ability to transport cargo effectively along the Hidrovia Waterway. Droughts and other adverse weather conditions, including any possible effects of climate change, could result in a decline in production of the agricultural products Navios Logistics transports, stores, and transships and this could result in a reduction in demand for our port and transportation services. For example, in 2021, throughput of our Grain Port Terminal was affected by lower Uruguayan exports due to reduced Uruguayan soybean production and lower transshipment of grains from Paraguay and Bolivia resulting from a prolonged period of unusually warm weather and a drought in southern Brazil, Paraguay and northern Argentina. These weather conditions resulted in water levels in the Paraná River dropping to their lowest levels in decades, which also adversely affected our Barge Business.

Foreign Currency Transactions

Our operating results, which are reported in U.S. dollars, may be affected by fluctuations in the exchange rate between the U.S. dollar and the Uruguayan peso, Argentine peso, Brazilian real and Paraguayan guarani. We use the U.S. dollar as our functional and reporting currency. Therefore, revenue and expense accounts are translated into U.S. dollars at the exchange rate in effect at the date of each transaction. The balance sheets of our foreign operations are translated using the exchange rate at the balance sheet date except for property and equipment and equity, which are translated at historical rates.

Our subsidiaries in Uruguay, Argentina, Brazil and Paraguay transact their operations in either U.S. dollars or Uruguayan pesos, Argentine peso, Brazilian reais and Paraguayan guaranies, respectively; however, the subsidiaries’ primary cash flows are recorded in U.S. dollars. Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated are recognized in the statement of income/(loss).

Inflation and Fuel Price Increases

The impact of inflation and the effects of the current war in Ukraine on prices in the South American countries in which we operate may not be fully neutralized by equivalent adjustments in the rate of exchange between the local currencies and the U.S. dollar. Specifically, for our Barge and Cabotage Businesses, we negotiated, and will continue to negotiate, fuel price adjustment clauses; however, in some cases, prices that we pay for fuel are temporarily not aligned with the adjustments that we obtain under our freight contracts.

Seasonality

Certain of our businesses have seasonality aspects, and seasonality affects the results of our operations and revenues, particularly in the first and last quarters of each year. With respect to the Dry Port Terminals operations in Uruguay, the high season is mainly from April to September, linked with the South American harvest and the arrival of barges down the river. The high season for the Barge Business is the period between February and July as a result of the South American harvest and higher river levels. During the South American late spring and summer, mainly from November to January, the low level of water in the northern Hidrovia Waterway could adversely affect our operations and volumes transported to the extent that water levels are not high enough to accommodate the draft of a heavily laden vessel. In that case, a vessel may be only partially loaded, generating lower revenue under agreements where revenue is based on volume of cargo loaded. Depending on water levels, such vessels could be prevented entirely from loading and navigating. In addition, low water levels create difficult navigation conditions, causing voyages to last longer and to incur increased voyage expenses. Such circumstances reduce the effective available carrying capacity of the vessel for the year. Our Liquid Port Terminal operations in Paraguay and our Cabotage Business are not significantly affected by seasonality as the operations of the Liquid Port Terminal and Cabotage Business are primarily linked to refined petroleum products.

 

3

Statement of Operations Breakdown by Segments

We report our operations based on three reportable segments: Port Terminal Business, Cabotage Business and Barge Business. The Port Terminal Business segment includes the operating results of our Dry Port Terminals and Liquid Port Terminal operations. Our Dry Port Terminals comprise our Grain Port Terminal and our Iron Ore Port Terminal, each of which is located in an international tax-free trade zone in the port of Nueva Palmira, Uruguay, at the convergence of the Parana and Uruguay rivers. Our Liquid Port Terminal is an up-river port terminal with tank storage for refined petroleum products and oil and gas in San Antonio, Paraguay, approximately 17 miles by river from the capital, Asunción.

Period over Period Comparisons

The following table presents consolidated revenue and expense information for the three and six month periods ended June 30, 2022 and 2021. This information was derived from Navios Logistics’ unaudited condensed consolidated financial statements for the respective periods.

 

(Expressed in thousands of U.S. dollars-except other operating data)		Three month period ended June 30, 2022 (unaudited)				Three month period ended June 30, 2021 (unaudited)				Six month period ended June 30, 2022 (unaudited)				Six month period ended June 30, 2021 (unaudited)
Revenue		$	68,905			$	57,343			$	127,752			$	110,378
Cost of sales			(45,107	)			(40,847	)			(84,176	)			(76,218	)
Gross profit		$	23,798			$	16,496			$	43,576			$	34,160
Administrative expenses			(4,191	)			(3,662	)			(7,777	)			(7,030	)
Other operating income			531				430				684				1,137
Other operating expenses			(1,263	)			(1,013	)			(2,426	)			(1,912	)
Allowance for expected credit losses on financial assets			(83	)			(3	)			(228	)			(148	)
Operating profit		$	18,792			$	12,248			$	33,829			$	26,207
Finance income			40				2,220				56				4,026
Finance costs			(15,668	)			(15,372	)			(31,207	)			(29,928	)
Foreign exchange differences, net and other financial results			3,949				618				3,998				1,695
Profit/(Loss) before tax		$	7,113			$	(286	)		$	6,676			$	2,000
Income tax expense			(741	)			(557	)			(684	)			(337	)
Profit/(Loss) for the period		$	6,372			$	(843	)		$	5,992			$	1,663
Other Operating Data
Grain Port Terminal-tons of cargo moved			1,117,111				797,988				2,062,893				1,380,889
Iron Ore Port Terminal -tons of cargo moved			266,298				349,104				307,685				465,446
Liquid Port Terminal—cubic meters of stored liquid cargos			180,892				128,969				366,974				237,006
Liquid Port Terminal —cubic meters of sales of products			—				500				2,295				5,064
Barge Business—cubic meters of liquid cargos			150,431				167,397				382,660				279,688
Barge Business—dry cargo tons			331,748				371,385				614,537				765,853
Cabotage Business —cubic meters of liquid cargos			517,232				409,061				970,973				900,600
Cabotage Business—available days			691				728				1,411				1,448
Cabotage Business—operating days			572				518				1,076				1,045
Revenues per Segment
Port Terminal Business		$	30,857			$	24,567			$	58,811			$	49,339
Grain Port Terminal		$	13,064			$	8,932			$	23,925			$	16,002
Iron Ore Port Terminal		$	16,179			$	14,104			$	29,917			$	27,394
Liquid Port Terminal		$	1,614			$	1,216			$	3,075			$	2,448
Sales of products—Liquid Port Terminal		$	—			$	315			$	1,894			$	3,495
Barge Business		$	25,312			$	24,672			$	44,828			$	43,458
Cabotage Business		$	12,736			$	8,104			$	24,113			$	17,581

 

4

For the three month period ended June 30, 2022 compared to the three month period ended June 30, 2021

Revenue

The following table presents our revenues for the three month periods ended June 30, 2022 and 2021:

 

		Three month period ended June 30, 2022																Three month period ended June 30, 2021
		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)				Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Time chartering revenue		$	—			$	12,698			$	1,110			$	13,808			$	—			$	8,115			$	2,991			$	11,106
CoA/Voyage revenue			—				288				24,231				24,519				—				138				21,759				21,897
Port terminal revenue			30,857				—				—				30,857				24,252				—				—				24,252
Turnover tax			—				(250	)			(29	)			(279	)			—				(149	)			(78	)			(227	)
Time charter, voyage and port terminal revenues		$	30,857			$	12,736			$	25,312			$	68,905			$	24,252			$	8,104			$	24,672			$	57,028
Sale of Products-Liquid Port Terminal		$	—				—				—				—			$	315				—				—			$	315
Total Revenue		$	30,857			$	12,736			$	25,312			$	68,905			$	24,567			$	8,104			$	24,672			$	57,343

Time Charter, Voyage and Port Terminal Revenues: For the three month period ended June 30, 2022, Navios Logistics’ time charter, voyage and port terminal revenues increased by $11.9 million or 20.8% to $68.9 million, as compared to $57.0 million for the same period during 2021. Revenue from the Port Terminal Business increased by $6.6 million or 27.2% to $30.9 million for the three month period ended June 30, 2022, as compared to $24.3 million for the same period during 2021. The increase was mainly attributable to higher volumes transshipped in the Grain Port Terminal due to increased Uruguayan soybean production and exports and higher tariffs at the Iron Ore Terminal. Revenue from the Cabotage Business increased by $4.6 million or 57.2% to $12.7 million for the three month period ended June 30, 2022, as compared to $8.1 million for the same period during 2021. The increase was mainly attributable to more operating days. Revenue from the Barge Business increased by $0.6 million or 2.6% to $25.3 million for the three month period ended June 30, 2022, as compared to $24.7 million for the same period during 2021. For the three month period ended June 30, 2022, CoA/voyage revenues increased by $2.5 million to $24.2 million, as compared to $21.8 million for the same period in 2021, related to higher liquid cargo moved. The increase in revenue from CoA/voyages was partially mitigated by a $1.9 million decrease in time charter revenues to $1.1 million, as compared to $3.0 million for the same period in 2021.

Sales of Products- Liquid Port Terminal: For the three month period ended June 30, 2022, Navios Logistics’ sales of products decreased by $0.3 million to nil, as compared to $0.3 million for the same period during 2021. This decrease was attributable to the decrease in the Paraguayan liquid port’s volume of products sold.

Cost of Sales

The following table presents our cost of sales for the three month periods ended June 30, 2022 and 2021:

 

		Three month period ended June 30, 2022																Three month period ended June 30, 2021
		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)				Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Time charter, voyage and port terminal expenses		$	5,623			$	598			$	12,076			$	18,297			$	4,876			$	495			$	10,112			$	15,483
Direct vessel expenses			—				8,767				9,027				17,794				—				6,955				9,626				16,581
Cost of products sold-Liquid Port Terminal			(13	)			—				—				(13	)			305				—				—				305
Depreciation and amortization			2,225				1,289				5,515				9,029				2,148				1,317				5,013				8,478
Total cost of sales		$	7,835			$	10,654			$	26,618			$	45,107			$	7,329			$	8,767			$	24,751			$	40,847

 

5

Time Charter, Voyage and Port Terminal Expenses: Time charter, voyage and port terminal expenses increased by $2.8 million or 18.2% to $18.3 million for the three month period ended June 30, 2022, as compared to $15.5 million for the same period during 2021. Time charter and voyage expenses of the Barge Business increased by $2.0 million or 19.4% to $12.1 million for the three month period ended June 30, 2022, as compared to $10.1 million for the same period during 2021, mainly due to higher fuel prices. Port terminal expenses increased by $0.7 million or 15.3% to $5.6 million for the three month period ended June 30, 2022, as compared to $4.9 million for the same period during 2021, mainly due to higher volumes transshipped in the Grain Port Terminal. Time charter and voyage expenses of the Cabotage Business increased by $0.1 million or 20.8% to $0.6 million for the three month period ended June 30, 2022, as compared to $0.5 million for the same period during 2021.

Direct Vessel Expenses: Direct vessel expenses increased by $1.2 million or 7.3% to $17.8 million for the three month period ended June 30, 2022, as compared to $16.6 million for the same period during 2021. Direct vessel expenses of the Cabotage Business increased by $1.8 million or 26.1% to $8.8 million for the three month period ended June 30, 2022, as compared to $7.0 million for the same period during 2021, mainly due to increased crew costs. Direct vessel expenses of the Barge Business decreased by $0.6 million or 6.2% to $9.0 million for the three month period ended June 30, 2022, as compared to $9.6 million for the same period during 2021. Direct vessel expenses include crew costs, victual costs, dockage expenses, lubricants, spares, insurance, maintenance and repairs.

Cost of Products Sold- Liquid Port Terminal: For the three month period ended June 30, 2022, Navios Logistics’ cost of products sold decreased by $0.3 million to nil, as compared to $0.3 million for the same period during 2021. This decrease was attributable to no products sold in the Liquid Port Terminal during the second quarter.

Depreciation and Amortization: For the three month period ended June 30, 2022, Navios Logistics’ depreciation and amortization increased by $0.5 million or 6.5% to $9.0 million, as compared to $8.5 million for the same period during 2021. Depreciation and amortization in the Barge Business increased by $0.5 million or 10.0% to $5.5 million for the three month period ended June 30, 2022, as compared to $5.0 million for the same period in 2021. Depreciation and amortization in the Port Terminal Business increased by less than $0.1 million or 3.6% to $2.2 million for the three month period ended June 30, 2022, as compared to $2.1 million for the same period in 2021. Depreciation and amortization in the Cabotage Business remained stable at $1.3 million for both of the three month periods ended June 30, 2022 and 2021.

Administrative Expenses

Administrative expenses increased by $0.5 million or 14.4% to $4.2 million for the three month period ended June 30, 2022, as compared to $3.7 million for the same period during 2021. This increase was mainly due to an increase in professional fees, salaries and travel expense. Certain of our administrative expenses are directly charged to the business segment incurring the expense, while others are allocated proportionally based on headcount.

Other Operating Income

Other operating income increased by $0.1 million or 23.5% to $0.5 million for the three month period ended June 30, 2022, as compared to $0.4 million for the same period in 2021. Other operating income in the Barge Business increased by $0.1 million to $0.5 million for the three month period ended June 30, 2022, as compared to $0.4 million for the same period of 2021. Other operating income in the Port Terminal Business and Cabotage Business was nil for each the three month periods ended June 30, 2022 and 2021.

Other Operating Expenses

Other operating expenses increased by $0.3 million or 24.7% to $1.3 million for the three month period ended June 30, 2022, as compared to $1.0 million for the same period in 2021. Other operating expenses in the Cabotage Business increased by $0.2 million or 76.6% to $0.4 million for the three month period ended June 30, 2022, as compared to $0.2 million the same period during 2021. This increase was mainly due to increased taxes other than income taxes, resulting from the increased revenues in the Cabotage Business during the period. Other operating expenses in the Barge Business increased by $0.1 million or 10.8% to $0.9 million for three month period ended June 30, 2022, as compared to $0.8 million income for the same period of 2021. This increase was mainly due to increased taxes other than income taxes. Other operating expenses in the Port Terminal Business was nil for each three month period ended June 30 2022 and 2021.

Allowance for Expected Credit Losses on Financial Assets

Allowance for expected credit losses on financial assets increased by $0.1 million to $0.1 million for the three month period ended June 30, 2022, as compared to nil for the same period during 2021.

 

6

Operating Profit/(Loss)

Operating profit increased by $6.6 million or 53.4% to $18.8 million for the three month period ended June 30, 2022, compared to $12.2 million for the same period in 2021. Operating profit in the Port Terminal Business increased by $5.7 million or 34.5% to $22.1 million for the three month period ended June 30, 2022, as compared to $16.4 million for the same period in 2021. The increase was mainly attributable to higher revenue, partially offset by (a) higher port terminal expenses, (b) higher administrative expenses and (c) higher depreciation and amortization. Operating profit in the Cabotage Business increased by $2.5 million or 176.1% to $1.1 million for the three month period ended June 30, 2022, as compared to $1.4 million operating loss for the same period in 2021. The increase was mainly attributable to higher revenue, partially offset by (a) higher direct vessel expenses, (b) higher other operating expenses, (c) higher time charter, voyage and port terminal expenses, and (d) higher administrative expenses. Operating loss in the Barge Business increased by $1.7 million or 59.6% to $4.4 million for the three month period ended June 30, 2022 as compared to $2.7 million for the same period in 2021. The increase was mainly attributable to (a) higher time charter, voyage and port terminal expenses, (b) higher depreciation and amortization, (c) higher administrative expenses, (d) higher other operating expenses, and (e) higher allowance for expected credit losses on financial assets. The increase in Barge Business operating losses was partially offset by (a) higher revenues, (b) lower direct vessel expenses, and (c) higher other operating income.

Finance Income

Finance income decreased by $2.2 million to less than $0.1 million for the three month period ended June 30, 2022, as compared to $2.2 million for the same period in 2022. The overall decrease was mainly due to the repayment in full of the Navios Holdings Loan Agreement on July 30, 2021. Finance income of the Navios Holdings Loan Agreement was allocated into our segments pro rata to the book value of our tangible assets. For further information on finance income, refer to Note 10 of our unaudited condensed financial statements included elsewhere in this report.

Finance Costs

Finance cost increased by $0.3 million or 1.9% to $15.7 million for the three month period ended June 30, 2022, as compared to $15.4 million for the same period in 2022. These variations were mainly attributable to the higher weighted average interest rate for the three month period ended June 30, 2022. The annualized weighted average interest rates of the Company’s total borrowings were 10.16% and 9.96% for the three month periods ended June 30, 2022 and 2021, respectively. The finance costs of our 2025 Notes are allocated into our business segments pro rata to the book value of our tangible assets.

Foreign Exchange Differences, Net and Other Financial Results

Gain from foreign exchange differences, net and other financial results increased by $3.3 million to $3.9 million for the three month period ended June 30, 2022, as compared to $0.6 million for the same period in 2021. Gain from foreign exchange differences, net and other financial results in the Barge Business increased by $2.6 million to $3.9 million for the three month period ended June 30, 2022, as compared to $1.3 million for the same period in 2021. Gain from foreign exchange differences, net and other financial results in the Port Terminal Business increased by $0.5 million to $0.2 million for the three month period ended June 30, 2022, as compared to a $0.3 million loss for the same period in 2021. Loss from foreign exchange differences, net and other financial results in the Cabotage Business decreased by $0.3 million to $0.1 million for the three month period ended June 30, 2022, as compared to $0.4 million for the same period in 2021. The overall gain was mainly attributable to the favorable impact of the fluctuation of the U.S. dollar exchange rate against the local currencies in the different countries where we conduct our operations.

Income Tax Expense

Income tax expense increased by $0.1 million to $0.7 million for the three month period ended June 30, 2022, as compared to $0.6 million for the same period during 2021. Income tax expense of the Barge Business increased by $0.1 million to $0.5 million for the three month period ended June 30, 2022, as compared to $0.4 million for the same period during 2021. Income tax expense of the Cabotage Business remained stable $0.2 million for both the three month periods ended June 30, 2022 and 2021.

Profit/(Loss) for the Period

Profit for the period increased by $7.2 million to $6.4 million for the three month period ended June 30, 2022, as compared to $0.8 million loss for the same period in 2021. Profit for the period in the Port Terminal Business increased by $4.7 million or 41.5% to $15.9 million for the three month period ended June 30, 2022, as compared to $11.2 million for the same period in 2021. The increase

 

7

was mainly attributable to (a) higher operating profit, and (b) higher gain from foreign exchange differences, net and other financial results, partially offset by (a) lower finance income, and (b) higher finance costs. Loss for the period in the Cabotage Business decreased by $2.6 million or 59.8% to $1.8 million for the three month period ended June 30, 2022, as compared to a $4.4 million for the same period in 2021. The decrease in loss was mainly attributable to (a) higher operating profit, (b) lower finance costs, and (c) higher gain from foreign exchange differences, net and other financial results, partially offset by lower finance income. Loss for the period in the Barge Business increased by $0.1 million or 1.0% to $7.7 million for the three month period ended June 30, 2022, as compared to $7.6 million for the same period in 2021. The increase was mainly attributable to (a) lower operating profit, (b) lower finance income, and (c) higher income tax expense, partially offset by higher gain from foreign exchange differences, net and other financial results.

For the six month period ended June 30, 2022 compared to the six month period ended June 30, 2021

Revenue

The following table presents our revenues for the six month periods ended June 30, 2022 and 2021:

 

		Six month period ended June 30, 2022																Six month period ended June 30, 2021
		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)				Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Time chartering revenue		$	—			$	22,678			$	2,523			$	25,201			$	—			$	16,925			$	5,048			$	21,973
CoA/Voyage revenue			—				1,884				42,442				44,326				—				954				38,528				39,482
Port terminal revenue			56,917				—				—				56,917				45,844				—				—				45,844
Turnover tax			—				(449	)			(137	)			(586	)			—				(298	)			(118	)			(416	)
Time charter, voyage and port terminal revenues		$	56,917			$	24,113			$	44,828			$	125,858			$	45,844			$	17,581			$	43,458			$	106,883
Sale of Products-Liquid Port Terminal		$	1,894				—				—			$	1,894			$	3,495				—				—			$	3,495
Total Revenue		$	58,811			$	24,113			$	44,828			$	127,752			$	49,339			$	17,581			$	43,458			$	110,378

Time Charter, Voyage and Port Terminal Revenues: For the six month period ended June 30, 2022, Navios Logistics’ time charter, voyage and port terminal revenues increased by $19.0 million or 17.8% to $125.9 million, as compared to $106.9 million for the same period during 2021. Revenue from the Port Terminal Business increased by $11.1 million or 24.2% to $56.9 million for the six month period ended June 30, 2022, as compared to $45.8 million for the same period during 2021. The increase was mainly attributable to higher volumes transshipped in the Grain Port Terminal due to increased Uruguayan soybean production and exports and higher tariffs at the Iron Ore Terminal. Revenue from the Cabotage Business increased by $6.5 million or 37.2% to $24.1 million for the six month period ended June 30, 2022, as compared to $17.6 million for the same period during 2021. The increase was mainly attributable to more operating days. Revenue from the Barge Business increased by $1.3 million or 3.2% to $44.8 million for the six month period ended June 30, 2022, as compared to $43.5 million for the same period during 2021. For the six month period ended June 30, 2022, CoA/voyage revenues increased by $3.9 million to $42.4 million, as compared to $38.5 million for the same period in 2021, related to higher liquid cargo moved. The increase in revenue from CoA/voyages was partially mitigated by a $2.5 million decrease in time charter revenues to $2.5 million, as compared to $5.0 million for the same period in 2021.

Sales of Products- Liquid Port Terminal: For the six month period ended June 30, 2022, Navios Logistics’ sales of products decreased by $1.6 million or 45.8% to $1.9 million, as compared to $3.5 million for the same period during 2021. This decrease was mainly attributable to the decrease in the Paraguayan liquid port terminal’s volumes of products sold.

 

8

Cost of Sales

The following table presents our costs of sales for the six month periods ended June 30, 2022 and 2021:

 

		Six month period ended June 30, 2022																Six month period ended June 30, 2021
		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)				Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Time charter, voyage and port terminal expenses		$	10,048			$	1,283			$	19,559			$	30,890			$	8,923			$	1,680			$	16,217			$	26,820
Direct vessel expenses			—				16,743				16,968				33,711				—				12,483				16,803				29,286
Cost of products sold-Liquid Port Terminal			1,678				—				—				1,678				3,346				—				—				3,346
Depreciation and amortization			4,378				2,545				10,974				17,897				4,360				2,691				9,715				16,766
Total cost of sales		$	16,104			$	20,571			$	47,501			$	84,176			$	16,629			$	16,854			$	42,735			$	76,218

Time Charter, Voyage and Port Terminal Expenses: Time charter, voyage and port terminal expenses increased by $4.1 million or 15.2% to $30.9 million for the six month period ended June 30, 2022, as compared to $26.8 million for the same period during 2021. Time charter and voyage expenses of the Barge Business increased by $3.4 million or 20.6% to $19.6 million for the six month period ended June 30, 2022, as compared to $16.2 million for the same period during 2021, mainly due to higher fuel prices. Port terminal expenses increased by $1.1 million or 12.6% to $10.0 million for the six month period ended June 30, 2022, as compared to $8.9 million for the same period during 2021, mainly due to higher volumes transshipped in the Grain Port Terminal. The overall increase was offset by a $0.4 million or 23.6% decrease in time charter and voyage expenses of the Cabotage Business to $1.3 million for the six month period ended June 30, 2022, as compared to $1.7 million for the same period during 2021.

Direct Vessel Expenses: Direct vessel expenses increased by $4.4 million or 15.1% to $33.7 million for the six month period ended June 30, 2022, as compared to $29.3 million for the same period during 2022. Direct vessel expenses of the Cabotage Business increased by $4.2 million or 34.1% to $16.7 million for the six month period ended June 30, 2022, as compared to $12.5 million for the same period during 2021, mainly due to increased crew costs. Direct vessel expenses of the Barge Business increased by $0.2 million or 1.0% to $17.0 million for the six month period ended June 30, 2022, as compared to $16.8 million for the same period during 2021. Direct vessel expenses include crew costs, victual costs, dockage expenses, lubricants, spares, insurance, maintenance and repairs.

Cost of Products Sold- Liquid Port Terminal: For the six month period ended June 30, 2022, Navios Logistics’ cost of products sold decreased by $1.6 million or 49.9%, to $1.7 million, as compared to $3.3 million for the same period during 2021. This decrease was mainly attributable to the decrease in the Paraguayan liquid port terminal’s volumes of products sold.

Depreciation and Amortization: For the six month period ended June 30, 2022, Navios Logistics’ depreciation and amortization increased by $1.1 million or 6.7% to $17.9 million, as compared to $16.8 million for the same period during 2021. Depreciation and amortization in the Barge Business increased by $1.3 million or 12.9% to $11.0 million for the six month period ended June 30, 2022, as compared to $9.7 million for the same period during 2021, mainly due to the delivery of the three pushboats and 18 tank barges acquired in the first quarter of 2021 (the “2020 Fleet”). Depreciation and amortization in the Cabotage Business decreased by $0.2 million or 5.4% to $2.5 million for the six month period ended June 30, 2022, as compared to $2.7 million for the same period during 2021. Depreciation and amortization in the Port Terminal Business remained stable at $4.4 million for the six month periods ended June 30, 2022 and 2021.

Administrative Expenses

Administrative expenses increased by $0.8 million or 10.6% to $7.8 million for the six month period ended June 30, 2022, as compared to $7.0 million for the same period during 2021. This increase was mainly due to an increase in professional fees, salaries and travel expense. Certain of our administrative expenses are directly charged to the business segment incurring the expense, while others are allocated proportionally based on headcount.

 

9

Other Operating Income

Other operating income decreased by $0.4 million or 39.8% to $0.7 million for the six month period ended June 30, 2022, as compared to $1.1 million for the same period in 2021. Other operating income in the Port Terminal Business decreased by $0.7 million to nil for the six month period ended June 30, 2022, as compared to $0.7 million for the same period of 2021, mainly due to an insurance claim settlement during the six month period ended June 30, 2021. Other operating income in the Barge Business increased by $0.2 million or 36.6% to $0.7 million for the six month period ended June 30, 2022, as compared to $0.5 million for the same period of 2021. Other operating income in the Cabotage Business was nil for both of the six month periods ended June 30, 2022 and June 30, 2021.

Other Operating Expenses

Other operating expenses increased by $0.5 million or 27.0% to $2.4 million for the six month period ended June 30, 2022, as compared to $1.9 million for the same period in 2021. Other operating expenses in the Barge Business increased by $0.3 million or 29.5% to $1.6 million for six month period ended June 30, 2022, as compared to $1.3 million for the same period of 2021. This increase was mainly due increased taxes other than income taxes. Other operating expenses in the Cabotage Business increased by $0.2 million or 20.8% to $0.8 million for the six month period ended June 30, 2022, as compared to $0.6 million the same period during 2021. This increase was mainly due to increased taxes other than income taxes, derived from an increase in revenues in the Cabotage Business during the same period. Other operating expenses in the Port Terminal Business was nil for each of the six month period ended June 30, 2022 and 2021.

Allowance for Expected Credit Losses on Financial Assets

Allowance for expected credit losses on financial assets increased by $0.1 million or 54.1% to $0.2 million for the six month period ended June 30, 2022, as compared to $0.1 million for the same period in 2021.

Operating Profit/(Loss)

Operating profit increased by $7.6 million or 29.1% to $33.8 million for the six month period ended June 30, 2022, as compared to $26.2 million for the same period in 2021. Operating profit in the Port Terminal Business increased by $9.3 million or 29.1% to $40.9 million for the six month period ended June 30, 2022, as compared to $31.6 million for the same period in 2021. The increase was mainly attributable to (a) higher revenue and (b) lower allowance for expected credit losses on financial assets, partially mitigated by (a) higher time charter, voyage and port terminal expenses, (b) lower other operating income and (c) higher administrative expenses. Operating profit in the Cabotage Business increased by $2.6 million to $1.6 million for the six month period ended June 30, 2022, as compared to $1.0 million loss for the same period in 2021. The increase was mainly attributable to (a) higher revenue, (b) lower depreciation and amortization and (c) lower time charter, voyage and port terminal expenses, partially offset by (a) higher direct vessel expenses, (b) higher other operating expenses and (c) higher administrative expenses. Operating loss in the Barge Business increased by $4.2 million or 94.1% million to $8.6 million for the six month period ended June 30, 2022 as compared to $4.4 million for the same period in 2021. The increase in operating loss in the Barge Business was mainly attributable to (a) higher time charter, voyage and port terminal expenses, (b) higher depreciation and amortization, (c) higher administrative expense, (d) higher other operating expenses, (e) higher direct vessel expenses, and (f) higher allowance for expected credit losses on financial assets, partially offset by (a) higher revenue and (b) higher other operating income.

Finance Income

Finance income decreased by $3.9 million to less than $0.1 million for the six month period ended June 30, 2022, as compared to $4.0 million for the same period in 2021. The overall decrease was mainly due to the repayment in full of the Navios Holdings Loan Agreement on July 30, 2021. Finance income of the Navios Holdings Loan Agreement was allocated into our segments pro rata to the book value of our tangible assets. For further information on finance income, refer to Note 10 to our unaudited condensed financial statements included elsewhere in this report.

Finance Costs

Finance costs increased by $1.3 million or 4.3% to $31.2 million for the six month period ended June 30, 2022, as compared to $29.9 million for the same period in 2021. The overall increases were mainly attributable to the higher weighted average interest rate for the six month period ended June 30, 2022 and the lower capitalized finance cost following the completion of the construction of the six liquid barges during the first quarter of 2021. The annualized weighted average interest rates of the Company’s total borrowings were 10.17% and 10.00% for the six month periods ended June, 2022 and 2021, respectively. The finance costs of our 2025 Notes are allocated into our business segments pro rata to the book value of our tangible assets.

 

10

Foreign Exchange Differences, Net and Other Financial Results

Gain from foreign exchange differences, net and other financial results increased by $2.3 million to $4.0 million for the six month period ended June 30, 2022, as compared to $1.7 million for the same period in 2021. Gain from foreign exchange differences, net and other financial results in the Barge Business increased by $1.9 million to $4.0 million for the six month period ended June 30, 2022, as compared to $2.1 million for the same period in 2021. Loss from foreign exchange differences, net and other financial results in the Cabotage Business decreased by $0.4 million to nil for the six month period ended June 30, 2022, as compared to $0.4 million for the same period in 2021. Loss from foreign exchange differences, net and other financial results in the Port Terminal Business increased by $0.1 million to less than $0.1 million for the six month period ended June 30, 2022, as compared to less than $0.1 million gain for the same period in 2021. The overall gain was mainly attributable to the favorable impact of the fluctuation of the U.S. dollar exchange rate against the local currencies in the different countries where we conduct our operations.

Income Tax (Expense)/Benefit

Income tax expense increased by $0.4 million to $0.7 million for the six month period ended June 30, 2022, as compared to $0.3 million for the same period in 2021. Income tax expense from the Barge Business increased by $1.3 million to $0.4 million for the six month period ended June 30, 2022, as compared to $0.9 million income tax benefit for the same period in 2021. Income tax expense from the Cabotage Business decreased by $0.9 million to $0.3 million for the six month period ended June 30, 2022, as compared to $1.2 million for the same period in 2021.

Profit/(Loss) for the Period

Profit for the period increased by $4.3 million to $6.0 million for the six month period ended June 30, 2022, as compared to $1.7 million for the same period in 2021. Profit for the period in the Port Terminal Business increased by $6.7 million or 30.5% to $28.6 million for the six month period ended June 30, 2022, as compared to $21.9 million for the same period in 2021. The increase was mainly attributable to higher operating profit, partially offset by (a) lower finance income, (b) higher finance costs and (c) lower gain from foreign exchange differences, net and other financial results. Loss for the period in the Cabotage Business decreased by $3.9 million to $3.7 million for the six month period ended June 30, 2022, as compared to a $7.6 million for the same period in 2021. The decrease was mainly attributable to (a) higher operating profit, (b) lower finance costs, (c) lower loss from foreign exchange differences, net and other financial results, and (d) lower income tax expense, partially offset by lower finance income. Loss for the period in the Barge Business increased by $6.2 million or 49.3% to $18.8 million for the six month period ended June 30, 2022, as compared to $12.6 million for the same period in 2021. The increase was mainly attributable to (a) higher operating loss, (b) lower finance income, (c) higher income tax expense and (d) higher finance costs. The increase in loss for the Barge Business was partially offset by higher gain from foreign exchange differences, net and other financial results.

EBITDA Reconciliation to Profit/(Loss)

EBITDA represents profit/(loss) before finance income, finance costs, depreciation and amortization and income taxes. EBITDA is presented because it is used by certain investors to measure a company’s operating performance. EBITDA is a “non-IFRS financial measure” and should not be considered a substitute for profit, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with IFRS 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. Some of these limitations are: (i) EBITDA does not reflect changes in, or cash requirements for, working capital needs; (ii) EBITDA does not reflect the amounts necessary to service interest on our debt and other financing arrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, EBITDA should not be considered as a principal indicator of our performance.

 

11

Three Month Period Ended June 30, 2022

 

		Three month period ended June 30, 2022
(Expressed in thousands of U.S. dollars)		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Profit/(Loss) for the period		$	15,872			$	(1,773	)		$	(7,727	)		$	6,372
Finance income			(16	)			(6	)			(18	)			(40	)
Finance costs			6,362				2,496				6,810				15,668
Depreciation and amortization			2,235				1,289				5,769				9,293
Income tax expense			—				242				499				741
EBITDA		$	24,453			$	2,248			$	5,333			$	32,034

Three Month Period Ended June 30, 2021

 

		Three month period ended June 30, 2021
(Expressed in thousands of U.S. dollars)		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Profit/(Loss) for the period		$	11,220			$	(4,415	)		$	(7,648	)		$	(843	)
Finance income			(815	)			(437	)			(968	)			(2,220	)
Finance costs			5,695				2,889				6,788				15,372
Depreciation and amortization			2,158				1,317				5,354				8,829
Income tax expense			—				159				398				557
EBITDA		$	18,258			$	(487	)		$	3,924			$	21,695

For the six month period ended June 30, 2022

 

		Six month period ended June 30, 2022
(Expressed in thousands of U.S. dollars)		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Profit/(Loss) for the period		$	28,553			$	(3,724	)		$	(18,837	)		$	5,992
Finance income			(22	)			(9	)			(25	)			(56	)
Finance costs			12,291				5,005				13,911				31,207
Depreciation and amortization			4,398				2,545				11,475				18,418
Income tax expense			—				312				372				684
EBITDA		$	45,220			$	4,129			$	6,896			$	56,245

For the six month period ended June 30, 2021

 

		Six month period ended June 30, 2021
(Expressed in thousands of U.S. dollars)		Port Terminal Business (unaudited)				Cabotage Business (unaudited)				Barge Business (unaudited)				Total (unaudited)
Profit/(Loss) for the period		$	21,880			$	(7,596	)		$	(12,621	)		$	1,663
Finance income			(1,470	)			(792	)			(1,764	)			(4,026	)
Finance costs			11,301				5,746				12,881				29,928
Depreciation and amortization			4,380				2,691				10,332				17,403
Income tax expense/(benefit)			—				1,214				(877	)			337
EBITDA		$	36,091			$	1,263			$	7,951			$	45,305

 

12

Liquidity and Capital Resources

We have historically financed our capital requirements with cash flows from operations, equity contributions from stockholders, borrowings under our credit facilities and issuances of debt securities. Our main uses of funds have been capital expenditures for the acquisition of new vessels, new construction and upgrades at the port terminals, expenditures incurred in connection with ensuring that our owned vessels comply with international and regulatory standards, repayments of debt and payments of dividends. We may also use funds to repurchase our outstanding indebtedness from time to time. Repurchases may be made in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms we deem appropriate and subject to our cash requirements for other purposes, compliance with the covenants under our debt agreements, and other factors management deems relevant. In addition, we regularly review opportunities for acquisitions of businesses and additional vessels, development of new facilities and infrastructure, joint ventures and other corporate transactions that may be material to us. In connection with any such transactions, we may need to raise significant amounts of capital, including debt. We do not have any material contractual arrangements for such transactions at this time. See “— Working Capital”, “— Capital Expenditures” and “— Interest-bearing loans and borrowings” included elsewhere in this report for further discussion of our working capital position.

The following table presents cash flow information derived from the unaudited condensed consolidated statements of cash flows of Navios Logistics for the six month periods ended June 30, 2022 and 2021.

 

(Expressed in thousands of U.S. dollars)		Six Month Period Ended June 30, 2022 (unaudited)				Six Month Period Ended June 30, 2021 (unaudited)
Net cash provided by operating activities		$	9,171			$	7,956
Net cash used in investing activities			(4,270	)			(24,559	)
Net cash provided by/(used in) financing activities			161				(10,797	)
Increase/(decrease) in cash and cash equivalents			5,062				(27,400	)
Cash and cash equivalents, beginning of the period			32,580				74,870
Cash and cash equivalents, end of period		$	37,642			$	47,470

Cash provided by operating activities for the six month period ended June 30, 2022 as compared to the six month period ended June 30, 2021:

Net cash provided by operating activities increased by $1.2 million to $9.2 million for the six month period ended June 30, 2022, as compared to $8.0 million for the same period during 2021.

In determining net cash from operating activities, profit is adjusted for the effect of certain non-cash items including depreciation and amortization, which are analyzed in detail in our unaudited condensed Consolidated Statement of Cash Flows for the Six Month Period Ended June 30, 2022 and 2021, included elsewhere in this report.

Profit is adjusted for changes in working capital in order to determine net cash provided by operating activities.

The negative change in working capital of $19.3 million for the six month period ended June 30, 2022 resulted from a $12.6 million increase in trade receivables and contract assets, a $4.7 million decrease in trade and other payables and contract liabilities, a $2.2 million increase in prepayments and other assets, and a $0.2 million decrease in inventories.

The negative change in working capital of $12.9 million for the six month period ended June 30, 2021 resulted from a $14.3 million increase in trade receivables and contract assets, a $2.7 million increase in prepayments and other assets, a $2.4 million increase in inventories, partially offset by a $6.4 million increase in trade and other payables and contract liabilities.

Cash used in investing activities for the six month period ended June 30, 2022 as compared to the six month period ended June 30, 2021:

Net cash used in investing activities decreased by $20.3 million to $4.3 million for the six month period ended June 30, 2022, from $24.6 million for the same period during 2021.

 

13

Cash used in investing activities for the six month period ended June 30, 2022 was mainly the result of (a) $4.3 million in payments for the purchase of tangible assets, including payments for drydock and special surveys, and (b) $0.1 million in payments for the development of our port operations in Port Murtinho region of Brazil.

Cash used in investing activities for the six month period ended June 30, 2021 was mainly the result of (a) $15.4 million in payments for the acquisition of three pushboats and 18 liquid barges, (b) $4.6 million in payments for the purchase of tangible assets, including payments for drydock and special surveys, (c) $3.1 million for the construction of a crane, (d) $1.2 million in payments for the construction of our six new liquid barges, (e) $0.2 million in payments for the construction of our two new tanks, and (f) $0.1 million in payments for the development of our port operations in Port Murtinho region of Brazil.

Cash provided by financing activities for the six month period ended June 30, 2022 as compared to cash used in financing activities for the six month period ended June 30, 2021:

Net cash provided by financing activities increased by $11.0 million to $0.2 million for the six month period ended June 30, 2022, as compared to $10.8 million cash used in financing activities for the same period during 2021.

Cash provided by financing activities for the six month period ended June 30, 2022 was due to $29.0 million in proceeds from long term debt, partially offset by (a) $26.2 million in payments made in connection with the Company’s outstanding indebtedness, (b) $2.4 million in payments for the repayment of the Notes Payable (as defined below), and (c) $0.3 million in payment for the principal portion of our lease liabilities.

Cash used in financing activities for the six month period ended June 30, 2021 was due to (a) $8.2 million in payments made in connection with the Company’s outstanding indebtedness, (b) $2.3 million in payments for the repayment of the Notes Payable (as defined below), and (c) $0.3 million in payment for the principal portion of our lease liabilities.

Interest-Bearing Loans and Borrowings

Senior Notes

2025 Notes

On July 8, 2020, Navios Logistics and its wholly-owned subsidiary Navios Logistics Finance (US) Inc. (“Logistics Finance” and, together with Navios Logistics, the “Co-Issuers”) issued $500.0 million in aggregate principal amount of senior secured notes due 2025 (“the 2025 Notes”), at a fixed rate of 10.75%. The net proceeds from the offering of the 2025 Notes were used to satisfy and discharge the indenture governing the notes issued on April 22, 2014, and due on May 1, 2022, (the “2022 Notes”), to repay all amounts outstanding under the term loan B facility issued on November 3, 2017, (the “Term Loan B Facility”) and to pay certain fees and expenses related to the offering, with the balance used for general corporate purposes.

On or after August 1, 2022, the Co-Issuers may redeem some or all of the 2025 Notes at the redemption prices set forth in the indenture governing the 2025 Notes. In addition, before August 1, 2022, the Co-Issuers may redeem up to 35% of the aggregate principal amount of the 2025 Notes at a price equal to 110.750% of the principal amount of the 2025 Notes to be redeemed plus accrued and unpaid interest, if any, to the redemption date with an amount equal to the net cash proceeds of one or more equity offerings so long as at least 50% of the originally issued aggregate principal amount of the 2025 Notes remains outstanding. Prior to August 1, 2022, the Co-Issuers may also redeem all or a part of the 2025 Notes at a redemption price equal to the sum of: (a) 100% of the principal amount of the 2025 Notes to be redeemed; plus (b) the applicable “make- whole” premium described in the indenture governing the 2025 Notes; plus (c) accrued and unpaid interest, if any, on the 2025 Notes to be redeemed, to (but excluding) the applicable redemption date, subject to the right of holders of the 2025 Notes on the relevant record date to receive interest due on all the relevant interest payment dates. The Co-Issuers may also redeem all, but not less than all, of the 2025 Notes at a price equal to 100% of the principal amount plus accrued and unpaid interest, if any, upon certain changes in law that would trigger the payment of withholding taxes. Furthermore, upon the occurrence of certain change of control events, the Co-Issuers may be required to offer to purchase 2025 Notes from holders at a price equal to 101% of the principal amount plus accrued and unpaid interest, if any.

The 2025 Notes are senior secured obligations of the Co-Issuers and rank equal in right of payment to all of their existing and future senior indebtedness and senior in right of payment to all of their future subordinated indebtedness. The 2025 Notes are fully and unconditionally guaranteed, jointly and severally, by all of the Company’s direct and indirect subsidiaries, other than Logistics Finance. The 2025 Notes are secured by: (i) first priority ship mortgages on four tanker vessels servicing the Company’s Cabotage Business (the (1) Elena H, (2) Makenita H, (3) Sara H and (4) He Man H) owned by certain subsidiary guarantors (such guarantors, the “Mortgaged Vessel Guarantors”) and related assignments of earnings and insurance together with a first priority lien on the capital stock of each Mortgaged Vessel Guarantor; and (ii) an assignment by way of security of the Vale port contract (collectively, the “Collateral”). The 2025 Notes are effectively senior to all existing and future obligations of the subsidiary guarantors that own Collateral to the extent of the value of the Collateral but effectively junior to any existing and future secured obligations of the Co-Issuers and the subsidiary guarantors that are secured by assets other than the Collateral to the extent of the value of any assets securing such other obligations.

 

14

The indenture governing the 2025 Notes contains restrictive covenants that limit, among other things, the ability of the Co-Issuers and their restricted subsidiaries to incur additional indebtedness, pay dividends and make distributions on common and preferred stock, make other restricted payments, make investments, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates, in each case, subject to exclusions, and other customary covenants. The indenture governing the 2025 Notes also contains customary events of default.

As of June 30, 2022 and December 31, 2021, deferred finance costs associated with the 2025 Notes amounted to $14.0 million and $15.9 million, respectively. Finance costs associated with the 2025 Notes amounted to $13.4 million and $26.9 million for the three and six month periods ended June 30, 2022, respectively, and $13.4 million and $26.7 million for the three and six month periods ended June 30, 2021, respectively.

Notes Payable

In connection with the purchase of mechanical equipment for the expansion of its dry port terminal, the Company entered into an unsecured export financing line of credit for a total amount of $42.0 million, including all related fixed finance costs of $5.9 million, available in multiple drawings upon the completion of certain milestones (“Drawdown Events”). The Company incurs the obligation for the respective amount drawn by signing promissory notes (“Notes Payable”). Each drawdown is repayable in 16 consecutive semi-annual installments, starting six months after the completion of each Drawdown Event. Together with each Note Payable, the Company shall pay interest equal to six-month LIBOR. The unsecured export financing line is fully and unconditionally guaranteed by Ponte Rio S.A.. As of June 30, 2022, the Company had drawn the total available amount and the outstanding balance of Notes Payable was $10.1 million.

Finance costs associated with the Notes Payable amounted to $0.1 million and $0.3 million for the three and six month periods ended June 30, 2022, respectively, and $0.2 million and $0.3 million, respectively, for the three and six month periods ended June 30, 2021.

Other Indebtedness

On March 25, 2022, the Company entered into a $5.0 million loan facility with Banco Santander S.A. (the “Santander Facility”) for general corporate purposes. The Santander Facility bears interest at a rate of 4.20% per annum, is repayable in twelve equal quarterly installments with final maturity on March 7, 2026 and is secured by assignments of certain receivables. As of June 30, 2022, the Company had drawn the total available amount and the outstanding balance was $4.7 million.

On March 23, 2022, the Company entered into a $25.0 million loan facility with Banco Bilbao Vizcaya Argentaria (the “2022 BBVA Facility”). The 2022 BBVA Facility was used to repay existing debt with BBVA, and for general corporate purposes. The 2022 BBVA Facility bears interest at a rate of 4.25% per annum, is repayable in quarterly installments with final maturity on July 1, 2025 and is secured by assignments of certain receivables. As of June 30, 2022, the Company had drawn a total of $17.0 million on the 2022 BBVA Facility and the outstanding balance was $17.0 million.

On May 18, 2017, the Company entered into a $14.0 million term loan facility (the “Term Bank Loan”) in order to finance the acquisition of two product tankers. The Term Bank Loan bore interest at a rate of LIBOR (90 days) plus 315 basis points and is repayable in twenty quarterly installments with a final balloon payment of $7.0 million on the last repayment date. On May 18, 2022, the Company repaid the outstanding balance of the loan in full.

On February 28, 2022, the Company entered into a $7.0 million loan facility (the “2022 Term Bank Loan”) in order to repay the Term Bank Loan. The 2022 Term Bank Loan bears interest at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 315 basis points. The 2022 Term Bank Loan is repayable in twelve quarterly installments beginning on August 18, 2022, with a final balloon payment of $2.8 million on the last repayment date. On May 18, 2022, the amount available under this facility was fully drawn. As of June 30, 2022, the outstanding amount of the 2022 Term Bank Loan was $7.0 million. As of June 30, 2022 and December 31, 2021, unamortized deferred finance costs associated with the 2022 Term Bank Loan amounted to $0.1 million and $0.1 million, respectively.

 

15

In December 2020, the Company entered into a $13.5 million seller’s credit agreement for the construction of six liquid barges to be made available by way of credit in six equal tranches. Each drawdown is repayable in 20 quarterly installments starting from the delivery date for each barge. The seller’s credit for the construction of the six liquid barges bears interest at a fixed rate of 8.5% per annum. As of June 30, 2022, the Company had drawn the total available amount and the outstanding balance was $10.0 million. Finance costs associated with the seller’s credit agreement for the construction of six liquid barges amounted to $0.2 million and $0.4 million for the three and six month periods ended June 30, 2022, respectively, and $0.3 million and $0.6 for the three and six month periods ended June 30, 2021, respectively.

In the fourth quarter of 2020, Navios Logistics entered into a purchase agreement with an unrelated third party for the acquisition of the 2020 Fleet. We completed the acquisition on March 22, 2021, which included a $15.0 million seller’s credit agreement. The seller’s credit agreement bears interest at a fixed rate of 5.0% per annum. As at June 30, 2022, the outstanding balance under the seller’s credit agreement was $10.0 million. Finance costs associated with the seller’s credit agreement for the acquisition of the 2020 Fleet amounted to $0.1 million and $0.2 million for the three and six month periods ended June 30, 2022, respectively, and $0.2 million and $0.2 million for the three and six month periods ended June 30, 2021, respectively.

In connection with the loan obligations described herein and other long term liabilities, the Company is subject to certain covenants, commitments, limitations and restrictions.

The Company was in compliance with all such covenants as of June 30, 2022.

The annualized weighted average interest rates of the Company’s total interest-bearing loans and borrowings were 10.16% and 10.17% for the three and six month periods ended June 30, 2022, respectively, and 9.96% and 10.00% for the three and six month periods ended June 30, 2021, respectively.

As of June 30, 2022, an amount of $22.9 million ($23.3 million as of December 31, 2021) was included under “Trade and other payables” in the Company’s unaudited condensed statement of financial position related to accrued interest from its interest-bearing loans and borrowings.

The maturity table below reflects future payments of the long-term interest-bearing loans and borrowings and interest outstanding as of June 30, 2022, for the next five years and thereafter, based on the repayment schedule of the respective loan facilities (as described above).

 

Year		As of June 30, 2022 (Amounts in millions of U.S. dollars)
June 30, 2023		$	76.9
June 30, 2024			75.5
June 30, 2025			68.8
June 30, 2026			503.8
Total		$	725.0

Working Capital Position

In considering whether it is appropriate to prepare the financial statements on a going concern basis, management has reviewed the Company’s future cash requirements, covenant compliance and earnings projections. As of June 30, 2022, Navios Logistics’ current assets totaled $110.9 million, while current liabilities totaled $97.0 million, resulting in a positive working capital position of $13.9 million. Management anticipates that the Company’s primary sources of funds will be available cash, cash from operations and borrowings under existing and new loan agreements. Management believes that these sources of funds will be sufficient for the Company to meet its liquidity needs and comply with its banking covenants for at least twelve months from September 8, 2022, and therefore it is appropriate to prepare the financial statements on a going concern basis.

Capital Expenditures

Since 2018, Navios Logistics has acquired a total of approximately 9.0 hectares of undeveloped land located in the Port Murtinho. The Company plans to develop this land for its port operations. As of June 30, 2022, the Company had paid $2.3 million for the land acquisition and capitalized expenses for the development of its port operations.

 

16

During the first quarter of 2021, Navios Logistics completed the construction of six liquid barges. As of December 31, 2021, a total of $19.5 million was transferred to “Tangible assets” in our unaudited consolidated statement of financial position of which capitalized interest amounted to $1.1 million.

During the first quarter of 2021, Navios Logistics completed the construction of two new tanks in its liquid port terminal. As of December 31, 2021, a total of $1.8 million was transferred to “Tangible assets” in our unaudited consolidated statement of financial position.

On March 22, 2021, Navios Logistics completed the acquisition of a purchase agreement with an unrelated third party for the acquisition of the 2020 Fleet, for a purchase price of $30.0 million. As of December 31, 2021, a total of $32.0 million was transferred to “Tangible assets” in our unaudited consolidated statement of financial position.

During the second quarter of 2021, Navios Logistics completed the installation of a crane in the Grain Port Terminal. As of December 31, 2021, a total of $3.8 million was transferred to “Tangible assets” in our unaudited consolidated statement of financial position.

Dividend Policy

The payment of dividends is at the discretion of Navios Logistics’ board of directors. Any determination as to dividend policy will be made by Navios Logistics’ board of directors and will depend on a number of factors, including the requirements of Marshall Islands law, Navios Logistics’ future earnings, capital requirements, financial condition and future prospects and such other factors as Navios Logistics’ board of directors may deem relevant. Marshall Islands law generally prohibits the payment of dividends other than from surplus, when a company is insolvent or if the payment of the dividend would render the company insolvent. Navios Logistics’ ability to pay dividends is also restricted by the terms of the indenture governing its 2025 Notes.

Because Navios Logistics is a holding company with no material assets other than the stock of its subsidiaries, its ability to pay dividends is dependent upon the earnings and cash flow of its subsidiaries and their ability to pay dividends to Navios Logistics. If there is a substantial decline in any of the markets in which Navios Logistics participates, its earnings will be negatively affected, thereby limiting its ability to pay dividends.

Concentration of Credit Risk

Accounts Receivable and Contract Assets

In each of our businesses, we derive a significant part of our revenues from a small number of customers. We expect that a small number of customers will continue to generate a substantial portion of our revenues for the foreseeable future. For the six month period ended June 30, 2022, our two largest customers, Vale International S.A. (“Vale”) and YPF S.A. (“YPF”), accounted for 21.1% and 11.4% of our revenues, respectively, and our five largest customers accounted for approximately 53.8% of our revenues, with no such customer (other than Vale and YPF) accounting for more than 10% of our revenues. For the six month period ended June 30, 2021, our two largest customers, Vale and YPF, accounted for 23.5% and 10.3% of our revenues, respectively, and our five largest customers accounted for approximately 52.0% of our revenues, with no such customer (other than Vale and YPF) accounting for more than 10% of our revenues. In addition, some of our customers, including many of our most significant customers, operate their own vessels and/or barges as well as their own port terminals. These customers may decide to cease or reduce the use of our services for various reasons, including employment of their own vessels or port terminals as applicable. The loss of any of our significant customers, including our large take-or-pay customers or the change of the contractual terms of any one of our most significant take-or-pay contracts or any significant dispute with one of these customers could materially adversely affect our financial condition and our results of operations.

If one or more of our customers does not perform under one or more contracts with us and we are not able to find a replacement contract, or if a customer exercises certain rights to terminate the contract, we could suffer a loss of revenues that could materially adversely affect our business, financial condition and results of operations. See “Item 3. Key Information — D. Risk Factors — We depend on a few significant customers for a large part of our revenues, and the loss of one or more of these customers could materially and adversely affect our revenues.” in the 2021 Form 20-F.

We could lose a customer or the benefits of a contract if, among other things:

 

•

the customer fails to make payments because of its financial incapacity, the curtailment or cessation of its operations, its disagreements with us or otherwise;

 

•

the customer terminates the contract because we fail to meet their contracted storage needs;

 

17

•

the customer terminates the contract because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged off-hire, or other default under the contract; or

 

•

the customer terminates the contract because the vessel has been subject to seizure for more than a specified number of days.

In July 2022, Vale S.A. announced the closing of the sale of its iron ore, manganese ore and logistics assets in the Midwestern system to J&F Mineracao Ltda., an entity controlled by J&F Investimentos S.A. The Vale port contract entered into between Corporacion Navios S.A., a company controlled by Navios Logistics, and Vale, dated September 27, 2013, remains in full force and effect. Any transfer, novation, or assignment of the Vale port contract or any obligations or rights arising thereunder by Vale is subject to the prior approval of the Navios counterparty.

Cash Deposits with Financial Institutions

Cash deposits in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. Although we maintain cash deposits in excess of government-provided insurance limits we minimize our exposure to credit risk by dealing with a diversified group of major financial institutions.

Legal Proceedings and Commitments and Contingencies

We are is subject to legal proceedings, claims and contingencies arising in the ordinary course of business. When such amounts can be estimated and the contingency is probable, management accrues the corresponding liability. While the ultimate outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not believe the costs, individually or in aggregate, of such actions will have a material effect on our unaudited condensed consolidated financial position, results of operations or cash flows.

The Company issued a guarantee and indemnity letter that guarantees the performance by Petrolera San Antonio S.A. (a consolidated subsidiary) of all its obligations to Vitol S.A. up to $12.0 million. This guarantee expires on March 1, 2023.

On July 22, 2016, the Company guaranteed the compliance of certain obligations related to Edolmix S.A. and Energías Renovables del Sur S.A. (entities wholly owned by the Company) under their respective direct user agreements with the Free Zone of Nueva Palmira, for the amounts of $0.8 million and $0.5 million, respectively.

In September 2020, the Company agreed to a settlement regarding a storage and transshipment contract in the Grain Port Terminal for a total amount to be paid to the Company as a result of the settlement of $4.1 million, which will be collected in three equal installments of $1.4 million on June 1, 2021, 2022 and 2023. In June 2021 and 2022, the Company collected the first and second installments.

On April 28, 2022, the Company entered into a five year finance leasing contract for eight liquid barges to be delivered from the fourth quarter of 2022 through the second quarter of 2023. The finance lease contract is payable by 60 consecutive monthly payments of $26 thousand each, commencing with the delivery date of the applicable barge. At expiration, the Company will have the ability to exercise the purchase option of these barges or extend the term of the finance leasing contract.

Related Party Transactions

As of June 30, 2022 and December 31, 2021, the amounts due to affiliate companies were as follows:

 

		June 30, 2022				December 31, 2021
Peers Business Inc. (Other related party)		$	(15.0	)		$	(15.0	)
Navios Shipmanagement Inc. (Other related party)			(0.3	)			(0.4	)
Total		$	(15.3	)		$	(15.4	)

 

18

Amounts due to affiliate companies do not accrue interest and do not have a specific due date for their settlement apart from the Navios Holdings Loan Agreement (as defined herein) which was repaid as of December 31, 2021 and the Promissory note (as defined herein).

The Navios Holdings Loan Agreement: On April 25, 2019, Navios Logistics agreed to lend Navios Holdings $50.0 million on a secured basis (the “Navios Holdings Loan Agreement”) to be used for general corporate purposes, including the repurchase of Navios Holdings’ 7.375% First Priority Ship Mortgage Notes due 2022 (the “Navios Holdings 2022 Notes”). The secured credit facility was secured by Navios Holdings 2022 Notes purchased with funds borrowed under the Navios Holdings Loan Agreement. The secured credit facility included an arrangement fee of $0.5 million and initially bore fixed interest of 12.75% for the first year and 14.75% for the second year. On December 2, 2019, Navios Logistics agreed to increase the amount available under the Navios Holdings Loan Agreement by $20.0 million. Following this amendment, as a result of the redemption of the 2022 Notes, repayment of the Term Loan B Facility and the issuance of 2025 Notes, (a) the interest rate on the Navios Holdings Loan Agreement decreased to 10.0%, and (b) the maturity of the Navios Holdings Loan Agreement was extended to December 2024.

On June 24, 2020, we entered into a deed of assignment and assumption with our wholly owned subsidiary, Grimaud Ventures S.A. (“Grimaud”) and Anemos Maritime Holdings Inc. in respect of the Navios Holdings Loan Agreement, in which we assigned its legal and beneficial right, title and interest in the Navios Holdings Loan to Grimaud. On June 25, 2020, Grimaud agreed to amend the Navios Holdings Loan Agreement to amend the interest payment date in respect of the Navios Holdings Loan and to allow a portion of the total interest payable in respect of the Navios Holdings Loan to be effected in common shares of Navios Holdings. On July 10, 2020, Navios Holdings issued 2,414,263 shares of common stock to Grimaud and paid Grimaud $6.4 million in satisfaction of the interest payable in respect of the Navios Holdings Loan Agreement as of that date.

Effective as of May 2021, and upon the release of certain collateral, the facility bore interest of 13.0% per annum.

On June 30, 2021, Grimaud entered into a supplemental agreement (the “Supplemental Navios Holdings Loan Agreement”) to the Navios Holdings Loan Agreement, whereby Grimaud and Navios Holdings agreed to amend the Navios Holdings Loan Agreement so that the Navios Holdings Loan Agreement could be repaid or prepaid in full through the issuance of shares of common stock of Navios Holdings (the “Shares”) to Grimaud. The effectiveness of the Supplemental Navios Holdings Loan Agreement was subject to, and contingent upon, a prepayment by Navios Holdings of the Navios Holdings Loan Agreement in the amount of $7.5 million in cash and the effectiveness of a registration statement of Navios Holdings registering the resale of 9,301,542 Shares, among other conditions. On July 13, 2021 following the completion of all conditions precedent, the Shares were transferred to Grimaud and the Navios Holdings Loan Agreement was repaid in full. Subsequently, Grimaud entered into a 10b-5 sales agreement for the sale of the Shares. As of July 30, 2021, the date on which the shares of Grimaud were distributed as dividend to the shareholders of the Company, Grimaud had sold 752,000 shares of common stock of Navios Holdings and generated net proceeds of $3.7 million.

As of December 31, 2021, the full amount outstanding under the Navios Holdings Loan Agreement was repaid. For the three and six month periods ended June 30, 2021, interest income related to the Navios Holdings Loan Agreement amounted to $2.2 million and $3.9 million, respectively, which is included under “Finance income” in the unaudited condensed statement of income/(loss).

Administrative expenses: On August 29, 2019 Navios Logistics entered into an assignment agreement with Navios Corporation (“NC”) and Navios Shipmanagement Inc. (“NSM”), whereby the administrative services agreement originally entered into between Navios Logistics and Navios Holdings on April 12, 2011, first assigned to NC on May 28, 2014 and subsequently amended on April 6, 2016 and January 1, 2022 (extending the term of the agreement to January 1, 2027), was assigned from NC to NSM. Thereafter, NSM will continue to provide certain administrative management services to Navios Logistics. NSM will be reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. Total administrative expenses charged for the three and six month periods ended June 30, 2022 amounted to $0.3 million and $0.6 million, respectively, and $0.3 million and $0.6 million for the three and six month periods ended June 30, 2021, respectively.

Lodging and travel services: Navios Logistics obtains lodging and travel services from Empresa Hotelera Argentina S.A./(NH Lancaster), Divijet S.A., Trace Capital and Pit Jet S.A., all owned by members of the Lopez family, including Claudio Pablo Lopez, Navios Logistics’ Chief Executive Officer and Vice Chairman and Carlos Augusto Lopez, Navios Logistics’ Chief Commercial Officer—Shipping Division, each of whom has no controlling interest in those companies. Total charges were nil for each of the three and six month periods ended June 30, 2022, and nil for each of the three and six month periods ended June 30, 2021, respectively. Amounts payable amounted to nil as of June 30, 2022 and December 31, 2021.

Promissory note: On July 30, 2021, the Company issued a $20.0 million promissory note to Grimaud. The promissory note is payable in four semi-annual equal installments commencing on August 15, 2021. The Company has the ability to defer payment of one of the first three installments, subject to certain conditions. On July 30, 2021, Grimaud entered into an assignment agreement with Peers Business Inc. (“Peers”), whereby the promissory note was assigned to Peers. As of August 15, 2022, the Company paid an amount of $10.0 million relating to the promissory note.

 

19

Quantitative and Qualitative Disclosures about Market Risks

We are exposed to certain risks related to interest rate, foreign currency, fuel price inflation and time charter hire rate fluctuation. Risk management is carried out under policies approved by executive management.

Interest Rate Risk:

Debt Instruments— As of June 30, 2022 and December 31, 2021, the Company had a total of $558.8 million and $558.4 million, respectively, in long-term indebtedness. The debt is U.S. dollar denominated and bears interest at a fixed rate except for the Notes Payable and the 2022 Term Bank Loan, which each bear interest at a floating rate.

Interest rates on the 2025 Notes, the 2022 BBVA Facility, the Santander Facility, the seller’s credit for the construction of six liquid barges and the 2020 Fleet are fixed, and, therefore, changes in interest rates affect the fair values of the indebtedness, which as of June 30, 2022 were $474.4 million, $17.0 million, $4.7 million, $10.0 million and $10.0 million, respectively. Interest rate changes do not affect the related finance cost. The interest on the Notes Payable and the 2022 Term Bank loan is at a floating rate and, therefore, changes in interest rates would affect the interest rate and related finance cost of each instrument. As of June 30, 2022, the amount outstanding under the Company’s floating rate loan facilities was $17.1 million. A change in the LIBOR rate of 100 basis points would increase finance cost for the six month period ended June 30, 2022 by $0.2 million.

For a detailed discussion of Navios Logistics’ debt instruments refer to section “Interest-Bearing Loans and Borrowings” included elsewhere in this report.

Foreign Currency Transactions

We are exposed to foreign currency exchange transaction risk related to funding our operations. For the six month periods ended June 30, 2022 and 2021, approximately 60.2%, and 53.7%, respectively, of our expenses were incurred in currencies other than U.S. dollars. Further, for the six month period ended June 2022, approximately 27%, 22% and 11% of the Company’s $74.1 million of combined costs for: (a) time charter, voyage and port terminal expenses; (b) direct vessels expenses; (c) cost of products; and (d) administrative expenses, net of depreciation (together, the “Combined Cost”), were denominated in Argentinean pesos, Paraguayan guaranies and Uruguayan pesos, respectively. Comparatively, the same foreign currencies accounted for approximately 25%, 18% and 10%, respectively, of our $66.5 million of Combined Cost for the six month period ended June 30, 2021. For the six month periods ended June 30, 2022 and 2021, Brazilian reais accounted for less than 1% of our Combined Cost.

For the six month period ended June 30, 2022, a 1.00% change in the exchange rates between the U.S. dollar and Argentinean pesos, Paraguayan guaranies and Uruguayan pesos would change our profit for the year by $0.2 million, $0.2 million and less than $0.1 million, respectively. Comparatively, a 1.00% change in the same exchange rates would change our profit for the period ended June 30, 2021 by $0.2 million, less than $0.1 million and less than $0.1 million, respectively.

Inflation and Fuel Price Increases

See “Factors Affecting Navios Logistics’ Results of Operations.”

Critical Accounting Policies

The Navios Logistics’ unaudited condensed consolidated financial statements have been prepared in accordance with IFRS. The preparation of these financial statements requires Navios Logistics to make estimates in the application of its accounting policies based on the best assumptions, judgments and opinions of management.

The Company’s most critical accounting policies and estimates are those that involve subjective decisions or assessments and are included in the 2021 Form 20-F. There have been no significant changes during the six month period ended June 30, 2022.

Recent Accounting Pronouncements

The Company’s recent accounting pronouncements are included in the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report.

 

20

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

		Page
NAVIOS SOUTH AMERICAN LOGISTICS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2022 AND DECEMBER 31, 2021			F-2
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME/(LOSS) FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2022 AND 2021			F-3
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2022 AND 2021			F-4
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2022 AND 2021			F-5
CONDENSED NOTES  TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			F-6

 

F-1

NAVIOS SOUTH AMERICAN LOGISTICS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Expressed in thousands of U.S. dollars)

 

		Notes				June 30, 2022 (unaudited)				December 31, 2021
ASSETS
Non-current assets
Tangible assets			5			$	525,875			$	537,128
Assets under construction			5				765				713
Intangible assets			6				151,676				153,062
Right-of-use assets			9				8,205				8,003
Deferred tax assets							70				82
Other assets							1,179				2,873
Total non-current assets						$	687,770			$	701,861
Current Assets
Inventories							8,451				8,611
Trade receivables			4				55,817				44,026
Contract assets			4				569				418
Prepayments and other assets							8,389				6,176
Cash and cash equivalents							37,642				32,580
Total current assets						$	110,868			$	91,811
Total Assets						$	798,638			$	793,672
EQUITY and LIABILITIES
Equity
Issued capital			7				20				20
Share premium							233,441				233,441
Accumulated deficit							(75,361	)			(81,353	)
Total equity						$	158,100			$	152,108
Liabilities
Non-current liabilities
Interest-bearing loans and borrowings			8				524,314				516,374
Promissory note (related party)			10				—				10,000
Lease liabilities			9				7,989			$	7,656
Provisions							710				561
Deferred tax liabilities							10,159				10,495
Income tax payable							20				34
Other non-current liabilities							343				575
Total non-current liabilities						$	543,535			$	545,695
Current liabilities
Trade and other payables			8				57,718				62,325
Contract liabilities			4				2,868				1,473
Interest-bearing loans and borrowings			8				20,369				25,976
Promissory note (related party)			10				15,000				5,000
Lease liabilities			9				1,048				1,095
Total current liabilities						$	97,003			$	95,869
Total liabilities						$	640,538			$	641,564
Total equity and liabilities						$	798,638			$	793,672

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-2

NAVIOS SOUTH AMERICAN LOGISTICS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME/(LOSS)

(Expressed in thousands of U.S. dollars)

 

		Note				Six month period ended June 30, 2022 (unaudited)				Six month period ended June 30, 2021 (unaudited)				Three month period ended June 30, 2022 (unaudited)				Three month period ended June 30, 2021 (unaudited)
Revenue			4			$	127,752			$	110,378			$	68,905			$	57,343
Cost of sales			4				(84,176	)			(76,218	)			(45,107	)			(40,847	)
Gross profit						$	43,576			$	34,160			$	23,798			$	16,496
Administrative expenses			4				(7,777	)			(7,030	)			(4,191	)			(3,662	)
Other operating income							684				1,137				531				430
Other operating expenses							(2,426	)			(1,912	)			(1,263	)			(1,013	)
Allowance for expected credit losses on financial assets			4				(228	)			(148	)			(83	)			(3	)
Operating profit						$	33,829			$	26,207			$	18,792			$	12,248
Finance income							56				4,026				40				2,220
Finance costs							(31,207	)			(29,928	)			(15,668	)			(15,372	)
Foreign exchange differences, net and other financial results							3,998				1,695				3,949				618
Profit/(loss) before tax						$	6,676			$	2,000			$	7,113			$	(286	)
Income tax expense							(684	)			(337	)			(741	)			(557	)
Profit/(loss) for the period						$	5,992			$	1,663			$	6,372			$	(843	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-3

NAVIOS SOUTH AMERICAN LOGISTICS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Expressed in thousands of U.S. dollars)

 

		Issued capital				Share premium				(Accumulated Deficit)/ Retained Earnings				Total Equity
Balance as at January 1, 2022		$	20			$	233,441			$	(81,353	)		$	152,108
Profit for the period			—				—				5,992				5,992
Balance as at June 30, 2022 (unaudited)		$	20			$	233,441			$	(75,361	)		$	158,100
Balance as at January 1, 2021		$	20			$	233,441			$	60,331			$	293,792
Profit for the period			—				—				1,663				1,663
Balance as at June 30, 2021 (unaudited)		$	20			$	233,441			$	61,994			$	295,455

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-4