Ethylene Export Terminal

Ethylene throughput for the third quarter of 2022 at the Ethylene Export Terminal totaled 189,142 metric tons, a reduction from the 268,444 and 267,110 metric tons throughput in Q2 and Q1 2022, respectively. This reduction was expected as the third quarter is normally the seasonally weakest period of the year. This year’s reduction was a result of an economic slowdown in Europe while Asian demand also remained muted due to ongoing COVID restrictions. Additionally, ethylene production rates were reduced during the third quarter, and both European and Asian inventory levels remained elevated throughout the third quarter, thus the geographical arbitrage was closed due to a tight global price spread. Looking ahead to the fourth quarter of 2022, October 2022 volumes significantly increased to 104,000 tons with another 79,000 tons expected for November, primarily as Asia reopens resulting in multiple cargoes being transported to the Far East for the first time since the second quarter of 2022.

Shipping Trends

During the third quarter of 2022, the handysize fully-refrigerated 12-month time charter rate assessment increased by $25,000 per calendar month (“pcm”) to $680 000 pcm and the handysize semi-refrigerated 12 month time charter rate assessment decreased by $5,000 per calendar month (“pcm”) to $695,000 pcm. Shipbroker reports are indicating an increase for both segments for the fourth quarter of 2022, with fully-refrigerated and semi-refrigerated vessels being quoted at $695,000 pcm and $715,000 pcm respectively.

Ethylene trends witnessed in the second quarter of 2022 continued into July and August with approximately 80% of U.S ethylene exports being transported to Europe and the remainder staying within the Americas. According to Kpler, October 2022 was the first month since November 2021 when most of the ethylene volume went to Asian destinations; 60% of the ethylene volume was shipped transpacific. The total ethylene volume exported from North America during the third quarter of 2022 was 237,000 metric tons (“mts”), an increase of 55,000 mts compared to the third quarter of 2021. North American ethylene exports reached their second-highest monthly exports during October 2022 at 121,000 mts with approximately two thirds of those tons being transported to Asian discharge ports. The seaborne transportation of higher ethylene export volumes and longer distances to discharge ports increases the demand for shipping, which benefits the Company’s handysize ethylene gas carrier segment.

Ethane continued its upward trend during the third quarter of 2022 reaching a record level of 732,000 mts exported during August 2022. 26% of that volume was transported on handysize gas carriers which was the highest level since the last peak during August 2021. U.S.-produced ethane remains one of the most competitive feedstocks for the production of ethylene. We are witnessing a renewed interest in U.S. ethane and ethylene from the international petrochemical industry as producers are seeking ways to remain competitive, either by maintaining their current production using naphtha, switching to cheaper petrochemical feedstocks, including U.S ethane or by importing the derivatives, such as ethylene.

Our vessels employed in the seaborne transportation of ammonia during the third quarter increased from seven to 10 vessels, comprising 25% of our handysize earnings days. Europe imported 613,000 mts of ammonia during October alone, which was a historic record. A record 126,000 mts or 20% of the ammonia volume was loaded in Asian ports, which is an emerging trend with handysize vessels carrying ammonia over significantly longer distances and is increasing our time charter coverage. As such, 53% of our fleet is contracted for the next six months and 41% for the next 12 months. We believe there is an increasing demand for the seaborne transportation of LPG and ammonia for use in energy and food production, which is less sensitive to market fluctuations. The transportation of ammonia and LPG typically remains a time charter business and 12 of our vessels are currently on medium-term time charters.

Petrochemical demand is typically associated with global GDP and has a higher correlation to market volatility. However, U.S. petrochemicals remain competitive with international markets on a comparative basis which suggests that it will play an increasingly important role in balancing supply and demand, enabling areas which are experiencing cost-prohibitive domestic production to continue operation based on U.S. imports.

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 nine months ended September 30, 2021 and 2022:

  Three months ended   Nine months ended
  September 30, 2021   September 30, 2022   September 30, 2021   September 30, 2022
  (in thousands) (in thousands)
Net income $ 7,079     $ 2,859     $ 10,942     $ 44,623  
Net interest expense   10,064       12,996       27,910       36,488  
Income taxes   446       426       781       1,490  
Depreciation and amortization   24,054       32,842       62,800       95,661  
         
EBITDA(1) $ 41,643     $ 49,123     $ 102,433     $ 178,262  
Foreign currency exchange gain on senior secured bonds   (1,372 )     (5,117 )     (1,710 )     (12,558 )
Unrealized loss/(gain) on non-designated derivative instruments   227       (2,541 )     (51 )     (12,437 )
         
Adjusted EBITDA(1) $ 40,498     $ 41,465     $ 100,672     $ 153,267  
         

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, Wednesday, November 16, 2022 at 11:00 A.M. E.S.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_4tfytyysSeWTk5lYq55v0g 

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: International numbersWebinar ID: 831 6550 1509Passcode: 650795 

The conference call and slide presentation will be available for replay on Navigator’s website (www.navigatorgas.com) under Key Dates and All Reports in the Investors Centre section. 

Navigator Gas:

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 Us

Navigator 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. On September 30, 2022, Navigator announced a new joint venture with Greater Bay Gas Co. Ltd. (“Greater Bay”), owned 60% by Navigator and 40% by Greater Bay. 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.

Navigator’s common stock trades on the New York Stock Exchange under the symbol “NVGS”.

IMPORTANT INFORMATION REGARDING 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 expectations regarding the financial success of the Ethylene Export Terminal and our related Export Terminal Joint Venture; or our Luna Pool collaborative arrangement;
  • our expectations regarding the financial success of our Greater Bay Joint Venture, the timing and costs of the anticipated vessel acquisitions by the Greater Bay Joint Venture and the financing thereof by the joint venture, and the anticipating timing, and financing, of our capital contributions to the Greater Bay Joint Venture;
  • 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    September 30, 2022
  (in thousands, except share data)
Assets    
Current assets    
Cash, cash equivalents and restricted cash         $ 124,223     $ 157,097  
Accounts receivable, net of allowance for credit losses of $1,221 (December 31, 2021: $1,105)           31,906       22,118  
Accrued income           6,150       6,530  
Prepaid expenses and other current assets           16,293       23,196  
Bunkers and lubricant oils           13,171       12,849  
Insurance receivable           6,857       3,073  
Amounts due from related parties           16,736       12,826  
     
Total current assets           215,336       237,689  
Non-current assets    
Vessels, net           1,763,252       1,673,802  
Assets held for sale           25,944       8,144  
Property, plant and equipment, net           330       172  
Intangible assets, net of accumulated amortization of $426 (December 31, 2021: $387)            400       260  
Equity method investments           150,209       147,580  
Derivative assets            579       22,426  
Right-of-use asset for operating leases           923       4,062  
Prepaid expenses and other non-current assets           452       293  
     
Total non-current assets           1,942,089       1,856,739  
     
Total assets         $ 2,157,425     $ 2,094,428  
     
Liabilities and stockholders’ equity    
Current liabilities    
Current portion of secured term loan facilities, net of deferred financing costs         $ 148,570     $ 201,650  
Current portion of operating lease liabilities           381       202  
Accounts payable           11,600       7,697  
Accrued expenses and other liabilities           20,247       22,525  
Accrued interest           5,211       3,496  
Deferred income           18,510       20,990  
Amounts due to related parties           224       1,312  
     
Total current liabilities           204,743       257,872  
     
Non-current liabilities    
Secured term loan facilities and revolving credit facilities, net of current portion and deferred financing costs           604,790       447,941  
Senior secured bond, net of deferred financing costs           67,688       55,320  
Senior unsecured bond, net of deferred financing costs           98,551       98,845  
Derivative liabilities           8,800       18,210  
Operating lease liabilities, net of current portion           522       3,737  
Amounts due to related parties           54,877       50,107  
     
Total non-current liabilities           835,228       674,160  
     
Total Liabilities           1,039,971       932,032  
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       797,993  
Accumulated other comprehensive loss           (253 )     (604 )
Retained earnings           316,008       359,513  
     
Total Navigator Holdings Ltd. stockholders’ equity           1,113,851       1,157,675  
Non-controlling interest           3,603       4,721  
     
Total equity           1,117,454       1,162,396  
     
Total liabilities and stockholders’ equity         $ 2,157,425     $ 2,094,428  
     

NAVIGATOR HOLDINGS LTD.Condensed Consolidated Statements of OperationsUnaudited)

         
  Three Months endedSeptember 30,   Nine Months endedSeptember 30,
    2021       2022       2021       2022  
         
  (in thousands except share and per share data)
Revenues        
Operating revenue         $ 87,085     $ 93,960     $ 247,746     $ 300,231  
Operating revenues - Unigas Pool           8,155       9,615       8,155       34,508  
Operating revenue- Luna Pool collaborative arrangement           7,504       3,238       18,290       15,768  
         
Total operating revenues           102,744       106,813       274,191       350,507  
         
Expenses        
Brokerage commissions           1,163       1,430       3,330       4,406  
Voyage expenses           16,775       20,208       50,080       61,808  
Voyage expenses – Luna Pool collaborative arrangement           4,772       3,643       14,567       15,183  
Vessel operating expenses           34,948       38,663       90,766       115,342  
Depreciation and amortization           24,054       32,842       62,800       95,661  
General and administrative costs           7,988       6,137       19,732       19,050  
Profit from sale of vessel                             (358 )
Other income   (98 )     (60 )     (258 )     (258 )
         
Total operating expenses   89,602       102,863       241,017       310,834  
         
Operating income   13,142       3,950       33,174       39,673  
Other income / (expense)        
Foreign currency exchange gain on senior secured bonds   1,372       5,117       1,710       12,558  
Unrealized (loss) / gain on non-designated derivative instruments   (227 )     2,541       51       12,437  
Interest expense   (10,134 )     (13,166 )     (28,074 )     (36,857 )
Interest income   70       170       164       369  
         
Income/ (Loss) before income taxes and share of result of equity accounted joint ventures   4,223       (1,388 )     7,025       28,180  
Income taxes   (446 )     (426 )     (781 )     (1,490 )
Share of result of equity method investments   3,302       4,673       4,698       17,933  
         
Net income   7,079       2,859       10,942       44,623  
Net income attributable to non-controlling interest   (389 )     (414 )     (1,172 )     (1,118 )
         
Net income attributable to stockholders of Navigator Holdings Ltd. $ 6,690     $ 2,445     $ 9,770     $ 43,505  
         
Earnings per share attributable to stockholders of Navigator Holdings Ltd.:        
Basic: $ 0.10     $ 0.03     $ 0.16     $ 0.56  
Diluted: $ 0.10     $ 0.03     $ 0.16     $ 0.56  
Weighted average number of shares outstanding:        
Basic:   69,338,187       77,264,139       60,452,459       77,240,997  
Diluted:   69,673,623       77,574,995       60,789,378       77,559,014  
         

NAVIGATOR HOLDINGS LTD.Condensed Consolidated Statements of Cash Flows(Unaudited)    

         
  Three Months endedSeptember 30,   Nine Months endedSeptember 30,
    2021       2022       2021       2022  
         
  (in thousands except share and per share data)
Revenues        
Operating revenue         $         87,085     $         93,960     $         247,746     $         300,231  
Operating revenues - Unigas Pool                   8,155               9,615               8,155               34,508  
Operating revenue- Luna Pool collaborative arrangement                   7,504               3,238               18,290               15,768  
         
Total operating revenues           102,744       106,813       274,191       350,507  
         
Expenses        
Brokerage commissions                   1,163               1,430               3,330               4,406  
Voyage expenses                   16,775                       20,208                       50,080               61,808  
Voyage expenses – Luna Pool collaborative arrangement                   4,772               3,643               14,567               15,183  
Vessel operating expenses                   34,948               38,663               90,766               115,342  
Depreciation and amortization                   24,054               32,842               62,800               95,661  
General and administrative costs                   7,988               6,137               19,732               19,050  
Profit from sale of vessel                   —               —               —               (358 )
Other income                   (98 )             (60 )             (258 )             (258 )
         
Total operating expenses           89,602       102,863       241,017       310,834  
         
Operating income           13,142       3,950       33,174       39,673  
Other income / (expense)        
Foreign currency exchange gain on senior secured bonds           1,372       5,117       1,710       12,558  
Unrealized (loss) / gain on non-designated derivative instruments           (227 )     2,541       51       12,437  
Interest expense           (10,134 )     (13,166 )     (28,074 )     (36,857 )
Interest income           70       170       164       369  
         
Income/ (Loss) before income taxes and share of result of equity accounted joint ventures           4,223       (1,388 )     7,025       28,180  
Income taxes                   (446 )             (426 )             (781 )             (1,490 )
Share of result of equity method investments                   3,302               4,673               4,698               17,933  
         
Net income                   7,079               2,859               10,942               44,623  
Net income attributable to non-controlling interest   (389 )     (414 )     (1,172 )     (1,118 )
         
Net income attributable to stockholders of Navigator Holdings Ltd. $ 6,690     $ 2,445     $ 9,770     $ 43,505  
         
Earnings per share attributable to stockholders of Navigator Holdings Ltd.:        
Basic: $ 0.10     $ 0.03     $ 0.16     $ 0.56  
Diluted: $ 0.10     $ 0.03     $ 0.16     $ 0.56  
Weighted average number of shares outstanding:        
Basic:   69,338,187       77,264,139       60,452,459       77,240,997  
Diluted:   69,673,623       77,574,995       60,789,378       77,559,014  
         

 

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