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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