Ethylene Export Terminal
Ethylene throughput for the second quarter of 2022 at the
Ethylene Export Terminal totaled 268,444 metric tons, a slight
increase from the 267,110 metric tons from the previous quarter,
and dramatically up from the throughput of 155,428 metric tons
during the second quarter of 2021. The ethylene export volumes were
primarily discharged in Europe due to the wide pricing arbitrage.
Asia has yet to re-start their traditional ethylene imports across
the Pacific, as demand is hampered, in particular, by Chinese covid
restrictions, reducing consumption and production in the
region.
Shipping Trends
The handysize semi-refrigerated and fully-refrigerated 12 month
time charter rate assessment increased by $35,000 per calendar
month (“pcm”) and $15,000 pcm, respectively, during the second
quarter of 2022, to $720,000 pcm and $650,000 pcm, respectively.
Recent shipbroker reports are indicating a semi-refrigerated
reduction to $700,000 pcm and a slight increase for
fully-refrigerated to $655,000 pcm, with the most recent weekly
shipbroker reports showing a further increase to $705,000 pcm and
$650,000 pcm, respectively. The handysize ethylene 12 month time
charter assessment remained unchanged at $900,000 pcm.
Europe continues to import energy, feedstocks, petrochemicals
and ammonia from wherever the region can source supply. According
to Kpler, approximately 80% of U.S. ethylene exports were
transported for European consumption during the second quarter of
2022. This European share declined from a high of 92% during first
quarter of 2022, which had increased from a more usual level during
the fourth quarter 2021 of 51%. Apart from absolute volumes of U.S.
ethylene exports, the final destination has a major impact on the
demand for ethylene ship capacity. An Atlantic crossing compared to
Pacific crossing halves ethylene vessel demand. The arbitrage
remains open to both continents however demand and consumption in
China remains challenged following lingering COVID restrictions
with the resultant effect on the country’s GDP. We expect an
increasing percentage of the ethylene exports to be transported
across the Pacific during latter part of the year.
Ethane exports from the U.S. reached record levels in June 2022
of 684,000 mts. The competitiveness of ethane compared to naphtha
as a feedstock for the production of ethylene remains and we
believe will continue. Our ethylene fleet can be employed in
ethylene or ethane as both products require special nickel steel
tanks to enable vessels to carry both products at low temperatures.
North American LPG exports also reached record levels during the
month of June 2022 with 5.1 million tons departing its shores for
international markets. The handysize portion of the total natural
gas liquids and petrochemical export volumes are approximately 7%,
the upward trend in volumes is beneficial as it ultimately
increases vessel demand for handysize vessels.
Ammonia continues to grow in importance for the Company. During
second quarter of 2022 we increased the number of vessels employed
on ammonia charters to seven vessels. This now constitutes 15% of
our earnings days which we anticipate will continue to
increase.
Reconciliation of Non-GAAP Financial
Measures
The following table sets forth a reconciliation of net income to
EBITDA and Adjusted EBITDA for the three and six months ended June
30, 2021 and 2022:
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30,2021 |
|
June 30,2022 |
|
June 30,2021 |
|
June 30,2022 |
|
|
|
(in thousands) |
|
(in thousands) |
|
Net income |
|
$ |
654 |
|
$ |
14,370 |
|
$ |
3,863 |
|
$ |
41,764 |
|
Net interest expense |
|
|
8,584 |
|
|
11,359 |
|
|
17,514 |
|
|
22,235 |
|
Income taxes |
|
|
190 |
|
|
671 |
|
|
335 |
|
|
1,064 |
|
Depreciation and amortization |
|
|
19,473 |
|
|
31,477 |
|
|
38,746 |
|
|
62,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA(1) |
|
$ |
28.901 |
|
$ |
57,877 |
|
$ |
60,458 |
|
$ |
127,882 |
|
Foreign currency exchange gain on senior secured bonds |
|
|
(330) |
|
|
(8,218) |
|
|
(338) |
|
|
(7,441) |
|
Unrealized loss/(gain) on non-designated derivative
instruments |
|
|
269 |
|
|
5,346 |
|
|
(278) |
|
|
(9,896) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
$ |
28,840 |
|
$ |
55,005 |
|
$ |
59,842 |
|
$ |
110,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 EBITDA and Adjusted EBITDA are not measurements prepared in
accordance with U.S. GAAP (non-GAAP financial measures). EBITDA
represents net income before net interest expense, income taxes,
depreciation and amortization. We define Adjusted EBITDA as EBITDA
before foreign currency exchange gain or loss on senior secured
bonds and unrealized gain or loss on non-designated derivative
instruments. Management believes that EBITDA and Adjusted EBITDA
are useful to investors in evaluating the operating performance of
the Company. EBITDA and Adjusted EBITDA do not represent and should
not be considered alternatives to consolidated net income, cash
generated from operations or any measure prepared in accordance
with U.S. GAAP, and our calculation of EBITDA and Adjusted EBITDA
may not be comparable to that reported by other companies.
Conference Call Details:
Tomorrow, Friday, August 19, 2022 at 9:00 A.M. E.D.T., the
Company’s management team will host a Zoom conference call and
slide presentation to discuss the financial results.
Zoom Conference Call DetailsParticipants should
register for the conference call and slide presentation through the
following
link:https://us06web.zoom.us/webinar/register/WN_BRynFRuhTEapVu1kG-mIbw
Or join by phone:United States: +1 929 205
6099United Kingdom: +44 330 088 5830
For a full list of US and international numbers available,
please click on the link below:US and International
numbers
Webinar ID: 881 8184 1110Passcode: 361151 The conference
call and slide presentation will be available for replay on
Navigator’s website (www.navigatorgas.com) under Investors Centre
and Key Dates.
Navigator Gas
Attention: Investor Relations investorrelations@navigatorgas.com
or randy.giveans@navigatorgas.com
Houston: 1201 Fannin St, Suite 262, Houston, Texas USA 77002.
Tel: +1 713 373 6197. London: 10 Bressenden Place, London, SW1E
5DH. Tel +44 (0)20 7340 4850
Investor Relations / Media AdvisorsNicolas Bornozis / Paul
LampoutisCapital Link - New YorkTel: +1-212-661-7566Email:
navigatorgas@capitallink.com
About UsNavigator Holdings Ltd. is the owner
and operator of the world’s largest fleet of handysize liquefied
gas carriers and a global leader in the seaborne transportation
services of petrochemical gases, such as ethylene and ethane,
liquefied petroleum gas (“LPG”) and ammonia and owns a 50% share,
through a joint venture, in an ethylene export marine terminal at
Morgan’s Point, Texas on the Houston Ship Channel, USA. Navigator’s
fleet consists of 53 semi- or fully-refrigerated liquefied gas
carriers, 21 of which are ethylene and ethane capable. The
Company plays a vital role in the liquefied gas supply chain for
energy companies, industrial consumers and commodity traders, with
its sophisticated vessels providing an efficient and reliable
‘floating pipeline’ between the parties, connecting the world
today, creating a sustainable tomorrow.
FORWARD LOOKING STATEMENTS
Statements included in this press release concerning plans and
objectives of management for future operations or economic
performance, or assumptions related thereto, including our
financial forecast, contain forward-looking statements. In
addition, we and our representatives may from time to time make
other oral or written statements that are also forward-looking
statements. Such statements include, in particular, statements
about our plans, strategies, business prospects, changes and trends
in our business and the markets in which we operate as described in
this press release. In some cases, you can identify the
forward-looking statements by the use of words such as “may,”
“could,” “should,” “would,” “expect,” “plan,” “anticipate,”
“intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,”
“potential,” “continue,” or the negative of these terms or other
comparable terminology. These risks and uncertainties include, but
are not limited to:
- global epidemics or other health crises
such as the outbreak of COVID-19, including its impact on our
business;
- future operating or financial
results;
- pending acquisitions, business strategy
and expected capital spending;
- operating expenses, availability of
crew, number of off-hire days, drydocking requirements and
insurance costs;
- fluctuations in currencies and interest
rates;
- general market conditions and shipping
market trends, including charter rates and factors affecting supply
and demand;
- our ability to continue to comply with
all our debt covenants;
- our financial condition and liquidity,
including our ability to refinance our indebtedness as it matures
or obtain additional financing in the future to fund capital
expenditures, acquisitions and other corporate activities;
- estimated future capital expenditures
needed to preserve our capital base;
- our expectations about the availability
of vessels to purchase, or the useful lives of our vessels;
- our continued ability to enter into
long-term, fixed-rate time charters with our customers;
- the availability and cost of low sulfur
fuel oil compliant with the International Maritime Organization
sulfur emission limit reductions, generally referred to as “IMO
2020,” which took effect January 1, 2020;
- our vessels engaging in ship to ship
transfers of LPG or petrochemical cargoes which may ultimately be
discharged in sanctioned areas or to sanctioned individuals without
our knowledge;
- the impact of the Russian invasion of
Ukraine;
- changes in governmental rules and
regulations or actions taken by regulatory authorities;
- potential liability from future
litigation;
- our expectations relating to the
payment of dividends;
- our ability to successfully remediate
the material weakness in our internal control over financial
reporting and our disclosure controls and procedures;
- our expectation regarding providing
in-house technical management for certain vessels in our fleet and
our success in providing such in-house technical management;
- our expectations regarding the
financial success of the Ethylene Export Terminal and our related
Export Terminal Joint Venture or our Luna Pool collaborative
arrangements;
- our expectations regarding the
integration, profitability and success of the vessels and
businesses acquired in the Ultragas Transaction and the operational
and financial benefits from the combined businesses and fleet;
and
- other factors detailed from time to
time in other periodic reports we file with the Securities and
Exchange Commission.
All forward-looking statements included in this press release
are made only as of the date of this press release. New factors
emerge from time to time, and it is not possible for us to predict
all of these factors. Further, we cannot assess the impact of each
such factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to be materially
different from those contained in any forward-looking statement. We
expressly disclaim any obligation to update or revise any of these
forward-looking statements, whether because of future events, new
information, a change in our views or expectations, or otherwise.
We make no prediction or statement about the performance of our
common stock.
Navigator Holdings Ltd.
Condensed Consolidated Balance
Sheets (Unaudited)
|
December 31, 2021 |
|
June 30, 2022 |
|
|
|
|
|
(in thousands, except share data) |
|
Assets |
|
|
Current assets |
|
|
Cash, cash equivalents and restricted cash |
$ |
124,223 |
|
$ |
151,216 |
|
Accounts receivable, net of allowance for credit losses of $982
(December 31, 2021: $1,105) |
|
31,906 |
|
|
24,600 |
|
Accrued income |
|
6,150 |
|
|
7,687 |
|
Prepaid expenses and other current assets |
|
16,293 |
|
|
22,992 |
|
Bunkers and lubricant oils |
|
13,171 |
|
|
14,992 |
|
Insurance receivable |
|
6,857 |
|
|
7,913 |
|
Amounts due from related parties |
|
16,736 |
|
|
17,306 |
|
|
|
|
|
|
|
|
Total current assets |
|
215,336 |
|
|
246,706 |
|
Non-current assets |
|
|
|
|
|
|
Vessels, net |
|
1,763,252 |
|
|
1,709,356 |
|
Assets held for sale |
|
25,944 |
|
|
— |
|
Property, plant and equipment, net |
|
330 |
|
|
240 |
|
Intangible assets, net of accumulated amortization of $458
(December 31, 2021: $387) |
|
400 |
|
|
278 |
|
Equity method investments |
|
150,209 |
|
|
149,319 |
|
Derivative assets |
|
579 |
|
|
14,405 |
|
Right-of-use asset for operating leases |
|
923 |
|
|
4,451 |
|
Prepaid expenses and other non-current assets |
|
452 |
|
|
110 |
|
|
|
|
|
|
|
|
Total non-current assets |
|
1,942,089 |
|
|
1,878,159 |
|
|
|
|
|
|
|
|
Total assets |
$ |
2,157,425 |
|
$ |
2,124,865 |
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Current portion of secured term loan facilities, net of deferred
financing costs |
$ |
148,570 |
|
$ |
222,684 |
|
Current portion of operating lease liabilities |
|
381 |
|
|
211 |
|
Accounts payable |
|
11,600 |
|
|
9,067 |
|
Accrued expenses and other liabilities |
|
20,247 |
|
|
21,305 |
|
Accrued interest |
|
5,211 |
|
|
5,196 |
|
Deferred income |
|
18,510 |
|
|
15,508 |
|
Amounts due to related parties |
|
224 |
|
|
429 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
204,743 |
|
|
274,400 |
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Secured term loan facilities and revolving credit facilities, net
of current portion and deferred financing costs |
|
604,790 |
|
|
463,472 |
|
Senior secured bond, net of deferred financing costs |
|
67,688 |
|
|
60,374 |
|
Senior unsecured bond, net of deferred financing costs |
|
98,551 |
|
|
98,747 |
|
Derivative liabilities |
|
8,800 |
|
|
12,725 |
|
Operating lease liabilities, net of current portion |
|
522 |
|
|
4,097 |
|
Amounts due to related parties |
|
54,877 |
|
|
51,590 |
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
835,228 |
|
|
691,005 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
1,039,971 |
|
|
965,405 |
|
Commitments and contingencies |
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
Common stock—$.01 par value per share; 400,000,000 shares
authorized; 77,264,139 shares issued and outstanding, (December 31,
2021: 77,180,429) |
|
772 |
|
|
773 |
|
Additional paid-in capital |
|
797,324 |
|
|
797,800 |
|
Accumulated other comprehensive loss |
|
(253) |
|
|
(488) |
|
Retained earnings |
|
316,008 |
|
|
357,068 |
|
|
|
|
|
|
|
|
Total Navigator Holdings Ltd. stockholders’
equity |
|
1,113,851 |
|
|
1,155,153 |
|
Non-controlling interest |
|
3,603 |
|
|
4,307 |
|
|
|
|
|
|
|
|
Total equity |
|
1,117,454 |
|
|
1,159,460 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
2,157,425 |
|
$ |
2,124,865 |
|
|
|
|
|
|
|
|
Navigator Holdings Ltd.
Condensed Consolidated Statements of
Income (Unaudited)
|
Three months endedJune 30, |
Six months endedJune 30, |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands except share and per share
data) |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
$ |
80,153 |
|
$ |
105,875 |
|
$ |
160,661 |
|
$ |
206,271 |
|
Operating revenues - Unigas Pool |
|
— |
|
|
11,389 |
|
|
— |
|
|
24,893 |
|
Operating revenue- Luna Pool collaborative arrangement |
|
5,546 |
|
|
6,653 |
|
|
10,786 |
|
|
12,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
85,699 |
|
|
123,917 |
|
|
171,447 |
|
|
243,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage commissions |
|
974 |
|
|
1,569 |
|
|
2,167 |
|
|
2,976 |
|
Voyage expenses |
|
17,689 |
|
|
20,804 |
|
|
33,305 |
|
|
41,600 |
|
Voyage expenses – Luna Pool collaborative arrangement |
|
5,663 |
|
|
6,950 |
|
|
9,795 |
|
|
11,540 |
|
Vessel operating expenses |
|
28,826 |
|
|
38,628 |
|
|
55,818 |
|
|
76,679 |
|
Depreciation and amortization |
|
19,473 |
|
|
31,477 |
|
|
38,746 |
|
|
62,819 |
|
General and administrative costs |
|
5,796 |
|
|
7,827 |
|
|
12,076 |
|
|
14,170 |
|
Profit from sale of vessel |
|
— |
|
|
— |
|
|
— |
|
|
(358) |
|
Other income |
|
(88) |
|
|
(109) |
|
|
(160) |
|
|
(198) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
78,333 |
|
|
107,146 |
|
|
151,747 |
|
|
209,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
7,366 |
|
|
16,771 |
|
|
19,700 |
|
|
34,466 |
|
Other income / (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange gain on senior secured bonds |
|
330 |
|
|
8,218 |
|
|
338 |
|
|
7,441 |
|
Unrealized (loss) / gain on non-designated derivative
instruments |
|
(269) |
|
|
(5,346) |
|
|
278 |
|
|
9,896 |
|
Interest expense |
|
(8,647) |
|
|
(11,471) |
|
|
(17,608) |
|
|
(22,434) |
|
Interest income |
|
63 |
|
|
112 |
|
|
94 |
|
|
199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) / income before income taxes and share of result of
equity accounted joint ventures |
|
(1,157) |
|
|
8,284 |
|
|
2,802 |
|
|
29,568 |
|
Income taxes |
|
(190) |
|
|
(671) |
|
|
(335) |
|
|
(1,064) |
|
Share of result of equity method investments |
|
2,001 |
|
|
6,757 |
|
|
1,396 |
|
|
13,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
654 |
|
|
14,370 |
|
|
3,863 |
|
|
41,764 |
|
Net income attributable to non-controlling interest |
|
(394) |
|
|
(348) |
|
|
(783) |
|
|
(704) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to stockholders of Navigator
Holdings Ltd. |
$ |
260 |
|
$ |
14,022 |
|
$ |
3,080 |
|
$ |
41,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to stockholders of Navigator
Holdings Ltd.: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
$ |
0.01 |
|
$ |
0.18 |
|
$ |
0.06 |
|
$ |
0.53 |
|
Diluted: |
$ |
0.01 |
|
$ |
0.18 |
|
$ |
0.05 |
|
$ |
0.53 |
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
55,971,121 |
|
|
77,265,022 |
|
|
55,935,859 |
|
|
77,229,234 |
|
Diluted: |
|
56,306,557 |
|
|
77,582,824 |
|
|
56,273,533 |
|
|
77,550,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Navigator Holdings Ltd.
Condensed Consolidated Statements of Cash
Flows (Unaudited)
|
Six MonthsendedJune 30,2021 |
|
Six MonthsendedJune 30,2022 |
|
|
|
|
|
(in thousands) |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net income |
$ |
3,863 |
|
$ |
41,764 |
|
Adjustments to reconcile net income to net cash provided by
operating activities |
|
|
|
|
|
|
Unrealized gain on non-designated derivative instruments |
|
(278) |
|
|
(9,896) |
|
Depreciation and amortization |
|
38,746 |
|
|
62,819 |
|
Payment of drydocking costs |
|
(10,061) |
|
|
(7,792) |
|
Amortization of share-based compensation |
|
576 |
|
|
476 |
|
Amortization of deferred financing costs |
|
1,644 |
|
|
1,964 |
|
Share of result of equity method investments |
|
(1,396) |
|
|
(13,260) |
|
Impairment of vessel |
|
5,400 |
|
|
— |
|
Profit from sale of vessel |
|
— |
|
|
(358) |
|
Unrealized foreign exchange gain on senior secured bonds |
|
(338) |
|
|
(7,441) |
|
Other unrealized foreign exchange gain |
|
15 |
|
|
32 |
|
Changes in operating assets and liabilities |
|
|
|
|
— |
|
Accounts receivable |
|
(7,617) |
|
|
7,306 |
|
Insurance claim receivable |
|
(6,015) |
|
|
(1,927) |
|
Bunkers and lubricant
oils |
|
(2,768) |
|
|
(1,821) |
|
Accrued income and prepaid
expenses and other current assets |
|
22,588 |
|
|
(7,894) |
|
Accounts payable, accrued interest, accrued expenses and other
liabilities |
|
3,546 |
|
|
(4,492) |
|
Amounts due to related parties |
|
5,907 |
|
|
(775) |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
53,812 |
|
|
58,705 |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Additions to vessels and equipment |
|
(323) |
|
|
(1,082) |
|
Contributions to equity method investments |
|
(4,000) |
|
|
— |
|
Distributions from equity method investments |
|
6,850 |
|
|
14,150 |
|
Purchase of other property, plant and equipment |
|
(193) |
|
|
(36) |
|
Net proceeds from sale of vessels |
|
— |
|
|
26,449 |
|
Insurance recoveries |
|
411 |
|
|
871 |
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
2,745 |
|
|
40,352 |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from secured term loan facilities and revolving credit
facilities |
|
18,000 |
|
|
— |
|
Issuance costs of secured term loan facilities |
|
(26) |
|
|
— |
|
Repayment of financing of vessel to related parties |
|
(3,342) |
|
|
(3,287) |
|
Repayment of secured term loan facilities and revolving credit
facilities |
|
(34,104) |
|
|
(68,777) |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
(19,472) |
|
|
(72,064) |
|
|
|
|
|
|
|
|
Net increase in cash, cash equivalents and restricted
cash |
|
37,085 |
|
|
26,993 |
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
59,271 |
|
|
124,223 |
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of
period |
$ |
96,356 |
|
$ |
151,216 |
|
|
|
|
|
|
|
|
Supplemental Information |
|
|
|
|
|
|
Total interest paid during the period, net of amounts
capitalized |
$ |
15,826 |
|
$ |
16,586 |
|
|
|
|
|
|
|
|
Total tax paid during the period |
$ |
192 |
|
$ |
830 |
|
|
|
|
|
|
|
|
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