管理層發言
Thank you for joining us for Navios Maritime Partners First Quarter 2026 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou; Chief Operating Officer, Mr. Efstratios Desypris; Chief Financial Officer, Ms. Erifili Tsironi; and Chief Trading Officer, Mr. Vincent Vandewalle. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Partners website at www.navios-mlp.com. You'll see the webcasting link in the middle of the page, and a copy of the presentation referenced in today's earnings conference call will also be found there. Now I will review the safe harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call. The agenda for today's call is as follows: First, Ms. Frangou will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners' segment data. Next, Mrs. Tsironi will give an overview of Navios Partners' financial results. Then Mr. Vandewalle will provide an industry overview. And lastly, we'll open the call to take questions. Now I turn the call over to Navios Partners Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?
Good morning, and thank you all for joining us on today's call. I am pleased with our results for the first quarter of 2026, in which we reported net income of $106.3 million and EBITDA of $212.7 million. Earnings per common unit were $3.64 for the quarter, and we announced a $0.06 distribution per unit for the quarter. Last quarter, we spoke about the emergence of a new world order, one in which trade is used as an instrument of national policy. National security considerations are increasingly central to decision-making and governments are asserting greater control over strategic supply chains. The Iranian conflict underscores this shift. It also focuses global awareness on the critical importance of the Strait of Hormuz, a vital artery for the movement of essential commodities, from LNG and crude oil to refined products and fertilizers. We expect this conflict to have lasting implications on trade as countries and companies look to reduce their exposure to this choke point and diversify supply routes to safer areas. It is too early to assess the long-term impact, and we are monitoring developments closely. As you can see on Slide 3, our fleet has an average age of 9.1 years compared with an industry average of 13.7 years for our three segments. Our tanker fleet with an average age of 5.5 years is particularly useful relative to the broader tanker market. Overall, Navios' fleet modernization program has created a fleet that is almost 35% younger than the industry average and more than 60% younger in comparison to the global tanker fleet. Please turn to Slide 4. Navios is a leading maritime transportation company, owning, operating and chartering a modern fleet of 173 vessels across three segments and 15 asset classes. Our fleet is split two-thirds by value with about one-third in each of the tanker, dry bulk and container segments. The overall value of our fleet, including our newbuilding program, is $9.7 billion. As to our fleet in the water, it has $4.6 billion in net vessel equity value. We continue to make headway in reducing our net LTV towards our target of 20%–25%. At the quarter end, we had a net LTV of 28.3%. Our balance sheet is strong with $593 million available liquidity and credit ratings of Ba3 by Moody's and BB by Standard & Poor's. Please turn to Slide 5. Diversification is our strength, coupled with a culture of risk management. Navios can provide significant optionality. You can see this optionality in our actions over the past quarter, which I will discuss in a moment. We are continuously monitoring and assessing risk. We evaluate and structure transactions diligently. We also obtained robust insurance coverage, particularly important during a war environment, and we have implemented many tools to manage operational risks. Please turn to Slide 6. This slide lays out our actions since the beginning of the year as we witnessed increasing values in the tanker space. We were disciplined initially, taking advantage of a strengthening tanker market. We subsequently leveraged the significant VLCC appetite generated by the Iranian conflict. In early 2026, we observed a firming of VLCC values. We used this opportunity to sell VLCCs with an average age of 16 years for $136.5 million. Our thinking at the time was that these prices were 102% above the 20-year average and 18% above the prior historical peak value. If there was any upside left, we thought that it was best for others. Subsequently, the Iranian conflict erupted. Spot VLCC rates were in a frenzy and there was a great appetite for VLCC tonnage. We were able to take advantage of these dynamics by engineering a transaction in which we purchased four newbuilding VLCCs and chartered out each of them for five-year periods at almost $48,000 per day. This charter rate is about 24% above the 20-year average time charter rate. The VLCCs themselves were purchased at values that were only 11% above 20-year averages. This effective arbitrage de-risked our VLCC fleet expansions as we captured $357 million in contracted revenue and reduced the average age of our VLCC fleet by almost 40% to 5.9 years. I know that's a pretty dense sentence, so let me simplify. We expanded our VLCC fleet by almost 60% with minimal risk in a volatile time, and we have options for four more VLCCs that may allow us to continue to expand our fleet further, which we will do if we can do it accretively. Turn now to Slide 7, where we outline what actions we have taken in each of our segments. The net result is summarized on the right-hand part of the slide. Our backlog for contracted revenue is a record high of $4.1 billion. We increased our backlog by 16% — and for the remaining nine months of 2026, we already have excess contracted revenue over cash cost of $179 million, and we materially reduced our fleet average rate, which now stands at 34% below the market. Please now turn to Slide 8. Our diversified fleet provides revenue visibility and market exposure. For the year, we have 53,713 available days, of which 80% are fixed and 20% are open or indexed. I would note that while we generally favor long-term charters until recently, period charters made little sense in the dry bulk sector as the rates were weak for a prolonged period of time. Thus, about 40% of our dry bulk fleet is open or indexed. Please turn to Slide 9, recent development. This slide gives you a snapshot of key financial indicators. First quarter performance was strong. We generated $106.3 million of net income and $212.7 million of EBITDA from $357 million of revenue. Our debt package is designed to mitigate risk and give maximum flexibility. Our 28.3% net LTV is on the path to our target, and 43% of our debt is at a fixed interest rate. In addition, over half of our debt package has no LTV covenant, and we have almost $2 billion of assets that were debt-free. Please turn to Slide 10, where we outline our return of capital program. For the first quarter, we returned about $1.7 million in distributions to our unitholders. This represents a 20% increase from the prior level. In addition, year-to-date in 2026, we repurchased 240,502 units or 0.8% of the float before this repurchase for $15.6 million. Overall, under a $100 million unit repurchase program, we have purchased 5.8% of the units outstanding, which, in a strange quirk of numbers, provides $5.8 value accretion per unit. We have approximately $16.4 million remaining purchase capacity under our original authorization. Please turn to Slide 11. Navios has been executing its strategy through a challenging environment. We are focused on building a platform of excellence. Over the past five years, we have grown contracted revenue by more than 20% to a record high of $4.1 billion. We have an EBITDA run rate of over $750 million and have expanded our fleet value, including a newbuilding program, to $9.7 billion. Importantly, we have not sacrificed financial discipline in achieving these goals. In this process, we reduced our net loan-to-value by 37% to 28.3%. We recognize that there is more work ahead. But in an uncertain world, we believe that our proven platform, combining a diversified fleet with a disciplined risk management culture, positions us to continue delivering value through any market condition. I now turn the presentation over to Mr. Efstratios Desypris, Navios Partners' Chief Operating Officer. Efstratios?
Thank you, Angeliki, and good morning, all. Please turn to Slide 12, which details our operating free cash flow potential for the remaining nine months of 2026. We fixed 73% of available days at a net average rate of $27,859 per day. Contracted revenue exceeds estimated total cash operating cost by $179.2 million, and we have 10,838 remaining open or index-linked days, offering meaningful upside. Moving to Slide 15. Our contracted revenue backlog provides strong earnings visibility in an uncertain market. Taking advantage of the current strong rate environment, we grew contracted revenue by 16%, adding approximately $549 million, of which $483.5 million from eight tankers and $65.2 million from two containership vessels. Total contracted revenue reached a record high of $4.1 billion: $1.7 billion for tankers, $2.1 billion for containerships and $0.3 billion for dry bulk. Charters are extending through 2037 with a diverse group of quality counterparties. Slide 14 summarizes the fleet developments for 2026 year-to-date. During the period, we agreed to acquire four newbuilding VLCCs for $482 million with delivery expected in the second half of 2028. The vessels have been chartered out for about five years at a net rate of $47,763 per day. As previously announced, we also agreed to acquire two scrubber-fitted Japanese newbuilding Capesize vessels for $134.3 million. These vessels are chartered out for five years at a rate linked to the BCI index with an average floor rate of $25,000 per day, an average fixed premium of about $3,000 per day over the index and 50% profit sharing above the floor rate. This structure provides downside protection, stable returns and upside participation. The vessels are expected to be delivered in the second half of 2028 and Q1 of 2029. We also sold five vessels for about $190 million: two VLCCs with an average age of 16 years for $136.5 million, two dry bulk vessels for $22.8 million and one containership for $30 million. Additionally, we took delivery of five newbuilding vessels: three Aframax/LR2 vessels, one MR2 vessel and one 7,900 TEU containership. All vessels delivered are chartered out for an average duration of about five years at a weighted average net daily rate of $29,065. We continue to actively renew our fleet to maintain a young profile. We have 26 newbuilding vessels delivering to our fleet through 2029, representing $2.1 billion of investment. Based on our financing, both agreed and in process, we have about $329 million of equity remaining to be paid. We have mitigated the residual value risk of our newbuilding program with long-term creditworthy charters expected to generate about $1.5 billion in contracted revenue over a five-year average charter duration. I now pass the call to Erifili Tsironi, our CFO, who will take you through the financial highlights. Erifili?
Thank you, Efstratios, and good morning all. I will briefly review our announced financial results for the first quarter of 2026. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. Moving to the earnings highlights on Slide 15. Total revenue for the first quarter of 2026 increased by 17% to $357 million compared to $304 million for the same period in 2025 due to a higher fleet combined time charter equivalent rate despite lower available days. Our combined TCE rate for the first quarter of 2026 increased by 21% to $25,679 per day, while our available days decreased by 3% to 13,104 days compared to Q1 2025. In terms of sector performance, our TCE rate per day was higher in all three sectors as follows: 39% increase to $17,632 for our bulkers, 23% increase to $32,209 for our tankers and 4% increase to $31,696 for our containers. EBITDA, net income and earnings per common unit for the first quarter of 2026 were adjusted as explained in the slide footnote. Adjusted EBITDA for Q1 2026 increased by $51 million to $204 million compared to Q1 2025. The increase was primarily driven by a $53 million increase in revenues, partly mitigated by a $2 million increase in general and administrative expenses, mainly due to the higher euro-dollar exchange rate prevailing during Q1 2026 compared to Q1 2025. Adjusted net income for Q1 2026 increased by $15 million to $98 million. Adjusted earnings and earnings per common unit for the first quarter of 2026 were $3.35 and $3.64, respectively. Turning to Slide 16, I will briefly discuss some key balance sheet data. As of March 31, 2026, cash and cash equivalents, including restricted cash and time deposits in excess of three months were $421 million. In addition, we have $172 million available under three facilities. During the quarter, we paid $21 million under our newbuilding program, net of debt, and we concluded the sale of one vessel for $29 million, adding about $22 million cash after debt repayment. Long-term borrowings, including the current portion and the senior unsecured bond net of deferred fees increased by $12 million to $2.2 billion following the delivery of two newbuildings during the quarter. Net debt to book capitalization improved to 31.2%. Slide 17 highlights our debt structure. At quarter end, we had 55 debt-free vessels, including 17 vessels securing our unutilized revolving credit facilities. We have a diversified financing base consisting of leasing structures in Japan and China, more than 15 active banking relationships and, more recently, a $300 million senior unsecured bond trading in the Oslo Børs. In addition, 43% of our debt is fixed at an average interest rate of 6.2%, while 51% carries no loan-to-value covenant. We have also partially mitigated higher interest rate costs by lowering the average margin on our floating rate debt and bareboat liabilities for the in-the-water fleet to 1.8%. I would like to note that the average margin for the committed floating rate debt of our newbuilding program is 1.5%. Our maturity profile is staggered with no significant volumes due in any single year until 2030 when the bond matures. I'll now pass the call to Vincent Vandewalle, Navios Partners' Chief Trading Officer, to take you through the industry section. Vincent?
Thank you, Eri. Please turn to Slide 19. The Strait of Hormuz closure has created a major energy and shipping shock, affecting about 20% of worldwide crude, product and LNG flows. The disruption has tightened tanker availability and driven freight rates sharply higher. Rates for VLCCs hit all-time highs at $602,000 per day and remain elevated with a significant portion of the fleet trapped inside the Gulf. This shortfall has been partly mitigated by increased crude volumes from the U.S., Brazil and Venezuela heading to both Europe and Asia, adding more ton miles. Product tanker rates have been extremely strong with MR Atlantic round voyages averaging $75,000 per day and Pacific round voyages averaging $36,000 per day since the beginning of the war. Higher fuel costs and security of supply concerns are driving the purchasing and transportation of commodities and finished goods. This has raised rates in the dry bulk sector for both Capes and Panamaxes and has continued to support container time charter rates. The conflicts in the Red Sea and Ukraine continue to add ton miles for most vessel types. With negotiations between the U.S. and Iran moving slowly and the Strait of Hormuz effectively closed, vessel utilization will continue to run at high levels, supporting elevated rates for the near term. Medium-term trade adjustments depend on how long oil prices stay elevated and whether demand for other commodities like coal rise to substitute for LNG or decreased fertilizer availability affects crop supply later this year. Prolonged Hormuz closure could still trigger a global slowdown or a recessionary demand shock, which could affect all shipping markets. Please turn to Slide 20. Navios' direct exposure to the Middle East conflict is limited and our charter and fleet mix position us to benefit from disruption rather than absorb it. In dry bulk, Cape rates have risen from $28,000 per day before the war to $45,000 per day recently as increased coal demand to replace lost Gulf LNG cargoes adds to seasonal strength. Our index-linked charters allow us to benefit from a higher spot market due to these higher coal volumes as well as the seasonally strong iron ore, bauxite and grain volumes. In tankers, VLCC rates peaked at $602,000 per day on March 16, and stood recently at $447,000 per day as tanker supply remains disrupted with charters seeking to control tonnage to benefit from tighter market conditions and to be able to transport any cargoes that become available as oil is released from strategic reserves or from increased production. Most of Navios' vessels are fixed on time charter, providing continued revenue with four ships trading spot or in pools or having profit sharing to capture market upside. In addition, our VLCC newbuildings will provide modern eco ships to replace the older fleet. Container rates have remained elevated as Red Sea diversions continue and the redirection of cargoes bound for the Gulf is adding to ton miles. Our entire containership fleet is fixed on long-term charters, providing for a stable contracted cash flow. Across all three sectors, Navios combines limited direct exposure to the conflict with meaningful upside to the tanker and dry bulk dislocation while preserving contracted cash flow stability. Please turn to Slide 22 for the review of the dry bulk industry. Demand growth for dry bulk trade has been relatively stable over the last 25 years at about 4% average annual ton-mile growth. The current order book stands at about 30% of the total fleet and will remain low due to high newbuilding prices, uncertainty about new fuel regulations and yard availability and general market outlook. The fleet is aging quickly with 39% of the vessels 15 years old, and with all the ships far exceeding those on order, supply should be constrained over the medium term. Please turn to Slide 23. The main driver of dry bulk demand will be strong Atlantic Basin iron ore growth over the next several years with new projects in Guinea, Brazil and Liberia. The largest new project is Simandou in Guinea, which started shipments at the end of last year and is expected to ramp up to 120 million tons by 2027. April's eight shipments jumped fourfold from two in March. Vale in Brazil has three new projects totaling 50 million tonnes expected to start exporting by the end of 2026. Liberia will add 10 million tonnes of exports in 2026. In total, these 180 million tons are all long-haul miles trading, creating demand for an additional 249 Capes. With the current order book of only 207 Capes due in 2028, a further tightening of supply and demand is expected over the next few years, benefiting rates. Overall, the dry bulk market looks positive based on steady long-term demand growth and a constrained supply of vessels. Please turn to Slide 25 for the review of the tanker industry. As to supply, we see a tanker order book of 23%. About 50% of the fleet is already 15 years old, rising quickly in the next few years. With older vessels exceeding the order book and yards offering first deliveries in late 2028 or early 2029, supply is set to be tight for several years. Please turn to Slide 26. The U.S. Office of Foreign Assets Control, OFAC, the EU and the U.K. continue to sanction Russian and Iranian oil revenues and ships delivering their crude and products. The U.S. recently imposed secondary sanctions on certain Chinese refineries that have purchased Iranian crude and have seized two Iranian VLCCs laden with crude oil and disabled the third one that was heading back to Iran to load. These tighter sanctions have two main effects. Sanctioned oil volumes from these countries have more difficulty finding willing buyers, raising demand for compliant barrels and non-sanctioned vessels to carry that oil. With 855 mostly overaged tankers now sanctioned, the fleet has already seen a significant reduction of about 15% of total capacity. The tanker market also looks positive over the medium term based on a low order book compared with an aging and reduced fleet due to sanctions. Please turn to Slide 28 for a review of the container industry. After the COVID pandemic, containership orders were mainly for the biggest units with fleet expansion in large ships set to continue at high levels. Currently, 75% of the order book is for ships with 9,000 TEU capacity or greater and only 21% of the order book is for 2,000 to 9,000 TEU capacity where Navios is most active. Smaller segments of the fleet are well positioned to take advantage of shifting trading patterns. As shown on the right-hand graph, growth in non-mainline trades far exceeds the traditional main trades to the U.S. and Europe due to tariffs and higher growth in developing countries. Trades involving the Southern Hemisphere, mostly served by smaller sized vessels, are expected to see continued healthy growth as this trade shift continues. Overall, Navios' fleet is well positioned within the container market and continues to benefit from long-term employment with our high-quality charters. This concludes our presentation. I would now like to turn the call over to Angeliki Frangou for her final comments. Angeliki?
Thank you, Vincent. And this concludes our formal presentation. We open the call to questions.
分析師問答
Our first question today comes from Omar Nokta with Clarksons Securities.
Always very thorough. Good update on the business and the markets. Just a couple of questions from me. As we kind of think about things, you've had a fairly balanced fleet here across tankers, dry bulk and containers. And also basically, all three are firing, you could say, on all cylinders, obviously, within a cloud of uncertainty. But the cash is starting to come in here a bit more aggressively now, especially as we kind of look forward to Q2 based off what we're seeing in dry bulk. How do you think about how this capital gets deployed as it starts to come in, in bigger amounts? Obviously, you've continued this rejuvenation approach as you've highlighted. But as we think about this cash as it comes in, how do you balance where that goes in terms of keeping it on the balance sheet or paying down debt? Do you double down and add more vessels from here? Do you step up returns to shareholders? How, I guess, do you evaluate these different options given just how strong the cash is starting to come in?
Omar, you know that we are a disciplined company. We have a target of reducing our LTV, which we are now very close to. We generate good cash flows. What we care about is total return of capital to our investors through dividends and buybacks, which is a Board decision that we are very committed to. But very importantly, we also redeploy cash to create NAV. You have been familiar with us, and you have seen when we started consolidating over three years ago what we have done; we doubled our NAV by building good transactions, cash flows, and backlog. That's a lot of effort. This transaction that we announced today is basically this kind of a strategy. It's two different transactions. We sold two VLCCs before the Iranian war started. Why? Because we saw good values. They were 16-year-old vessels, and we saw that the values of the vessels became double the 20-year average value and about 18% above the historical peak. I'm not saying that the market could not have gone up. We don't know. But we preferred to sell those vessels and leave the upside to someone else. Then when the war started, we saw that there was a strong demand for VLCCs. So, we canvassed the area, we spotted a good shipyard with the engines we wanted, and we ordered four newbuildings with options, and we chartered them out for five years. That gave us the ability to fix ordered vessels at values only 11% above the 20-year average on newbuildings, while fixing them for five years at almost 25% above the historical rate. This is the kind of transaction our platform enables, and we will do everything possible to return capital while creating NAV that really drives long-term value for our company. We will take different approaches in different sectors. You saw the way we positioned in 2026: on the dry sector we were more open because we didn't see long-term rates that made sense, and we captured part of today's spot market. So it is a mix of strategies that balances low leverage and our ability to act where we see opportunities.
Angeliki — very good summation of the approach. And I guess you did touch on those newbuildings, which I kind of wanted to ask a bit: clearly, a way in terms of acquiring these newbuildings and de-risking them with charters. And it looks like you're going to be able to pay down a good chunk of that investment in that initial charter. It's interesting because it seems like you canvassed this approach shortly after the war and you were able to secure a contract fairly quickly. As we think about those options that you have, I think you mentioned there's two newbuilding options. What's the likelihood that if you had that — if you place them, you'd be able to repeat this type of charter? Is it that liquid of a time charter market to be able to do that in conjunction? Or would you be taking on some risk by ordering those vessels?
You know the Navios modus operandi; we are not changing the way we act. The issue is that we have two plus two options, and we see interest on the vessels. We are reviewing opportunities, and if we have something attractive, we will exercise. These are options that we can exercise if we like.
Okay. And then maybe just one final — hopefully just a simple accounting question. I think I have in my notes at year-end, the newbuilding installments or the deposits on the balance sheet amounted to about $470 million. Do you have an updated figure for quarter end?
What do you mean — how much we have already paid for the newbuildings?
Yes.
In the quarter, just $21 million. For the cumulative amount, $475 million cumulative and $21 million during the quarter.
Our next question will come from Kristoffer Skeie with Arctic Securities.
Congrats on another good quarter. Angeliki, I must say you are one of few shipowners I talked to right after the beginning of the war who was actually bullish on tankers and that paid out excellent. So, a good call. I just want to ask, given how strong the market is, I want to ask about charter backlog strategy. I mean those four VLCCs were — seems like a really good deal. But going forward, should we expect continued emphasis on locking in similar type deals? So, could we see you sort of taking more value in retaining spot exposure, especially sort of how bright the dry bulk outlook is currently also?
I'll tell you the truth: I never know where the opportunity will come. We watch the market and select the right time. Today, you can see opportunities even in dry bulk to do period charters. On the tankers, we saw a good opportunity for five-year deals at about 18%–20% above the historical rate, and we fixed because it made sense with the exposure we had. On dry bulk today, you see a developing market where it can be a two- to three-year period. This quarter we fixed quite significant backlog of about $550 million, which is significant. But there is always a strategy to add to our long-term charters if we see attractive deals. We are also watching very closely the Strait and how that will shape the world because that is the most important thing we have to be mindful of. If and when the Strait of Hormuz opens, there will be a new world order, and we will have to define what we like to do at that point. We are very mindful of that.
No, sure. And then on those four VLCCs which you added, did you order them straight from the yard? Or were they resale with another owner? And can you comment a bit on terms and option price levels and these things?
No, it's a hard piece of work creating the deal. We have a good team that worked a lot on specifications, machinery, lease structures, due diligence, the yard and the whole package.
So you ordered it straight from the yard. It's a new order. It's nothing that's already in order?
Yes.
And the option price is at the same price?
Yes.
Okay. And final one for me. As you commented net LTV is dropping fast based on fleet in the water, how should we think about the trajectory towards 25% given you have some committed newbuild CapEx and upcoming deliveries? What's your internal view on timing? And when that happens, should we expect buybacks?
We are working towards achieving that target by the end of the year. We're following the bond and doing some prepayments. If you see, we have basically paid down our revolvers. I think by the end of the year we are in a good position to reach the target.
And our next question will come from Stephanie Moore with Jefferies.
I appreciate the very thorough presentation here this morning. I guess I wanted to touch a little bit about capital allocation in some respects. You did sell five vessels year-to-date, and you're taking delivery of several newbuildings. How active do you expect to be on asset sales from here? Which segments or age bands are most likely? Is the goal age reduction, deleveraging, recycling into higher return assets? I would love to get your general thoughts on asset sales and the optionality that creates.
The older vessels are a natural replacement focus for us. We sold on the dry sector vessels that were about 18 years old. Replacements are generally from the older fleet, and depending on opportunity we step in on newbuildings. This is a continued strategy. Over the last three years we sold around 50 vessels and redeployed into younger vessels. For example, we sold two VLCCs that were 16 years old at historically attractive values and redeployed into newbuildings with longer-term charters. We will continue to reduce the average age of our fleet and redeploy where we find maximum value depending on sector opportunities.
No, that's really helpful. And then a higher-level question: with the Hormuz disruption continuing tightening tanker availability and pushing rates higher, what second-order impacts are you watching across your other segments? Anything that we should think about if this conflict persists longer than expected that changes dynamics across your segments given your diversification?
That's a good question. There is a deficit of oil created while the Strait of Hormuz is closed — a deficit that would need to be replenished when the Strait opens unless you have a demand contraction. For every metric ton of gas, roughly two metric tons of coal is an equivalent energy substitute; you will see more coal demand to replace lost LNG cargoes. You may also see more fertilizers and other commodities move on dry bulk. These are macro-level drivers. Absent a demand-constraining scenario or recession, the market will need to replenish inventories which supports ton-mile demand. We are watching very carefully and assessing how to act prudently. One advantage for Navios is our backlog and contracted revenues, which provide security and speed in our ability to act as opportunities arise.
At this time, there are no further questions in queue. I will now turn the meeting back to Angeliki for closing comments.
Thank you. This completes our Q1 results.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.