Navigator Holdings Ltd. has announced (Unaudited) Preliminary Second Quarter 2023 Results.
Highlights
- On August 15, 2023, the Board declared a cash dividend of $0.05 per share of the common stock of Navigator Holdings Ltd. (the “Company”, “Navigator”, “we”, “our” and “us”) (NYSE: NVGS), for the quarter ended June 30, 2023 (the “Dividend”). The Dividend will be payable on September 22, 2023, to all shareholders of record as of the close of business New York time on September 8, 2023 which would have equated to a quarterly dividend payment of $3.7 million.
- As part of the Capital Return Policy for the quarter ended June 30, 2023, Navigator expects to repurchase approximately $3.0 million of the Company’s common stock (the “Share Repurchases”) between now and the quarter ending September 30, 2023, subject to operating needs, market conditions and other circumstances, such that the Dividend and Share Repurchases together equal 25% of net income for the quarter ended June 30, 2023
- The company reported operating revenue of $135.3 million for the three months ended June 30, 2023, compared to $123.9 million for the three months ended June 30, 2022.
- Net Income attributable to stockholders’ of Navigator Holdings Ltd. was $26.6 million for the three months ended June 30, 2023, compared to $14.0 million for the three months ended June 30, 2022.
- Earnings per share was $0.36 for the three months ended June 30, 2023, compared to $0.18 for the three months ended June 30, 2022. Adjusted Earnings per share, to exclude profit from vessel sales and unrealized gains or losses on non-designated derivative instruments was $0.25 for the three months ended June 30, 2023, compared to $0.14 for the three months ended June 30, 2022.
- Adjusted EBITDA(1) was, since the Company’s IPO in 2013, a record $69.3 million for the three months ended June 30, 2023, compared to $55.0 million for the three months ended June 30, 2022.
- Fleet utilization increased to 89.0% for the three months ended June 30, 2023, compared to 87.4% for the three months ended June 30, 2022.
- Average daily time charter equivalent (“TCE”) rate was $27,241 for the three months ended June 30, 2023, compared to $24,633 for the three months ended June 30, 2022.
- The Ethylene Export Terminal had throughput volumes during the second quarter of 2023 totaling 277,582 metric tons, compared to 268,444 metric tons during the second quarter of 2022. in line with the quarterly nameplate capacity of 250,000 tons.
- On May 2, 2023, the Company sold and delivered its vessel, Navigator Orion, a 2000-built 22,085 cbm ethylene capable semi-refrigerated handysize carrier to a third party for $20.9 million and generating a profit of sale of approximately $4.9 million.
- On June 20, 2023, the Company announced the signing of a non-binding memorandum of understanding (the “MoU”) with Bumi Armada Berhad (“Bumi Armada”), one of the world’s largest floating infrastructure operators, to establish a joint venture company to provide CO2 shipping and injection solutions in the United Kingdom (the “Bluestreak CO2 Joint Venture”) and that would provide an end-to-end solution for carbon emitters to capture, transport, sequester and store their carbon dioxide emissions in line with the United Kingdom’s Industrial Decarbonisation Strategy. The transaction is subject to the execution of definitive documentation, approvals by the boards of directors of both parties, applicable regulatory approvals and other customary conditions. There can be no assurance that definitive documentation for the joint venture will be executed or that the joint venture will be completed on the terms anticipated or at all.
Ethylene Export Terminal
The Ethylene Export Terminal had a throughput during the second quarter of 2023 totaling 277,582 metric tons, compared to 268,444 metric tons during the second quarter of 2022.
We, together with our joint venture partner have agreed to the Terminal Expansion Project, which is expected to increase the export capacity from approximately one million tons per year to at least approximately 1.55 million tons (up to a maximum of approximately three million tons per year. Long lead items have already been ordered and construction which is expected to be completed in the second half of 2024, has commenced. The total capital contributions required from us to the Export Terminal Joint Venture for the Terminal Expansion Project are expected to be approximately $120-$130 million which the Company expects to finance using existing cash resources, distributions from the Export Terminal Joint Venture during the course of the expansion and additional debt. On April 28, 2023 we made the first capital contribution of $9.0 million towards the project with the second capital contribution of $9.0 million due on August, 18, 2023.
Shipping Trends
The handysize segment has continued its robust performance from the first quarter through the second quarter of 2023.
Utilization across the fleet decreased from 96% in the first quarter of 2023 to 89% through the second quarter of 2023. The decrease is a result of markets coming out of a seasonally busy and stronger winter period. The handysize 12-month market assessment for semi-refrigerated and fully refrigerated vessels decreased by $7,000 per calendar month (“pcm”) down to $750,000 pcm and the handysize ethylene market assessment increased by $26,000 pcm up to $976,000 pcm.
Approximately 65% of the ethylene volume had an Asian destination in the first quarter, with the balance of the volume going to Europe. During the second quarter the ethylene volume going to Asia reduced to about 46%, with an increased volume of 46% going to Europe and the balance of 8% to South American or Middle Eastern destinations. The reduction in Asia-bound volumes had a softening effect on the freight market.
We have 31 vessels engaged in Time Charters (“TC”) and 11 vessels on spot and contracts of affreightment (“CoA”). On June 30, 2023, we had 42% of our ship days covered on Time Charter. Midsize and Fully-Ref vessels are fully employed on Time-Charter, with Semi-Ref and Ethylene capable vessels split across TC and spot.
The fleet has historically experienced summer seasonality with softer utilization compared to the winter period. This year however, the market conditions are providing a stronger backdrop compared to what we have experienced during similar periods for the last years. Our utilization for July 2023 is above the 90% mark which indicates continuation of the positive market fundamentals.
Reconciliation of Non-GAAP Financial Measures
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended June 30, 2023 and 2022:
| Three months ended | Six months ended | |||||||||
| June 30, 2022 | June 30, 2023 | June 30, 2022 | June 30, 2023 | |||||||
| (in thousands) | (in thousands) | |||||||||
| Net income | $ | 14,370 | $ | 27,495 | $ | 41,764 | $ | 46,345 | ||
| Net interest expense | $ | 11,359 | $ | 15,720 | $ | 22,235 | $ | 28,475 | ||
| Income taxes | $ | 671 | $ | 1,984 | $ | 1,064 | $ | 3,149 | ||
| Depreciation and amortization | $ | 31,477 | $ | 32,190 | $ | 62,819 | $ | 64,021 | ||
| EBITDA(1) | $ | 57,877 | $ | 77,390 | $ | 127,882 | $ | 141,991 | ||
| Profit from sale of vessel | — | $ | 4,941 | 4,941 | ||||||
| Unrealized (loss) / gain on non-designated derivative instruments | $ | (5,346 | ) | $ | 3,195 | $ | 9,896 | $ | (1,056 | ) |
| Foreign currency exchange loss/(gain) on senior secured bonds | $ | 8,218 | — | $ | 7,441 | $ | — | |||
| Adjusted EBITDA(1) | $ | 55,005 | $ | 69,254 | $ | 110,545 | $ | 143,047 |
1EBITDA 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 profit on sale of vessel, unrealized gain or loss on non-designated derivative instruments and foreign currency exchange gain or loss on senior secured bonds.
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.