Navigator Holdings Ltd.

Thank you very much, and good morning everyone, and welcome to Navigator's second quarter earnings call. As we conduct today's conference call, we will be making various forward-looking statements. These statements include, but not limited to, future expectations, plans, and prospects from both a financial and an operational perspective. These forward-looking statements are based on management assumptions Forecasts and Expectations as of today's date and are as such subject to material risks and uncertainties. Actual results may differ significantly from our forward-looking information and financial forecasts. Additional information about these factors and assumptions are included in our annual and quarterly reports filed with the Securities and Exchange Commissions. This morning's speakers will include Harry Dean Shonley, Chief Executive Officer. That will be followed by Niall Noland and Oeyvind Lindeman. So Harry, why don't you pick up the phone from here.

Perfect. Thank you, David, and good morning to everyone on the call. I hope you're all well, as you can see. It's now over 21 weeks since we took the decision to close our offices. and to start running our business remotely from our home offices across the globe. Through necessity, we have become very proficient in virtual team working with town halls, meetings and one-on-one catch-ups all taking place over the internet. Although we all miss the face-to-face interaction, we have become adept at sharing information via the many platforms at our disposal while making sure we didn't lose the human touch. There has been a lot of laughter along the way, with numerous unscripted funny moments unwittingly captured on the video and audio conferences, which has helped keep morale high. Thankfully, the technology has worked exceptionally well, exceeding even the expectations of the least tech-savvy employees. I want to pay tribute to the dedication, the dogged determination, and the boundless enthusiasm of our onshore team. Their hard work and Never Say Never Attitude has enabled our business to literally keep the lights on and to seamlessly ensure business as usual, much to the relief of our customers, our suppliers and our seatfarers. As a company, we're now about to emerge from this phase of the COVID-19 lockdown and to start to return to our company offices. In light with the prevailing government's advice, we will therefore be reopening our offices from the 1st of September. Of course these offices have been adapted to ensure adequate social distancing and we have also implemented numerous hygiene measures to keep our colleagues safe. Our return will be a phase one with a team A team B basis with staggered working hours to both reduce risk and also to maintain social distancing. Thankfully our key stakeholders weren't even noticed the change. and our technology will ensure our teams continue to interact seamlessly with each other, our customers and our vessels. The economic reboot following the COVID-19 lockdown, although fragile and prone to some local setbacks, gained momentum in the quarter. Improved sentiment and business activity has continued into July and August. with the North American and European economies following the lead of China and Southeast Asia by relaxing their lockdowns in an attempt to catch that demand and with its manufacturing. All thanks to NICO, this will provide a much needed stimulus for the global economy. Both ethylene and propion arbitrage to Asia remain firmly open in the quarter with healthy pricing differentials which has encouraged trade. XFU Design has also continued to move from Europe to Asia as producers attempt to export surplus material to maintain high cracker utilization rates. I am very pleased to report the business returns to profit in Q2, albeit with some favourable tailwinds on foreign exchange and the near break-even performance of our terminal over the quarter. The Q2 net income of $3 million was our strongest performance since Q4 2016 and was the first profitable quarter for over 18 months. It was also a pleasant turnaround from the Q1 2020 result, where, albeit with considerable headwinds, we posted a loss of $8.2 million. Our underlying vessel performance also improved from Q1 to Q2 by $2.5 million, resulting in a net As you will see in the supplementary presentation, both our Q2 net revenue and EBITDA has improved, giving us the best second quarter results for a good number of years. Turning now to crew leave, you may recall that on the Q1 call I intimated that we had managed to relieve almost three dozen crews. Thankfully that number has risen substantially in the last few months. and we've been able to refresh over 75% or 380 of our overdue crew members and we've been able to get them safely home. We continue to work hard to reduce the backlog and to ensure all our seafarers get the leave they deserve and are reunited with their friends and family as quickly as is humanly possible. The ever-changing local regulations together with new or re-imposed travel restrictions and the constant threat of flight cancellations make this a bit of a Herculean task but we are now making real inroads into the backlog. Throughout all of this uncertainty our officers and crew have continued to traverse the globe delivering much needed cargoes and thus keeping the global economy turning. We continue to work hand in glove with flag states and classification societies as together we resolve the many practical inspection and dry docking challenges that have been caused by the pandemic. Finally, it appears that the vital contribution of seafarers during this pandemic is slowly starting to be recognised by governments across the globe. I'm very pleased to announce that our Morgan's Point adventure F-Wing terminal has now exported over 200,000 tonnes with at least another 60,000 tonnes expected to be moved in August. June was a record month with a phenomenal volume of around 80,000 tonnes being exported from the terminal. This is all the more remarkable when you consider that this has been achieved without the aid of our 60,000 cubic metre tank which is currently under construction. It goes without saying that these volumes could not have been achieved without the close cooperation between Navigator Gas and our joint venture partner Enterprise. Working closely together, we were able to optimise the throughput whilst ensuring that there were enough vessels at the right time and the right place to maximise the effluent cargoes. With increasing throughput has come improving margins and I'm very pleased to announce that the terminal was profitable in June. It was really great to see the results of all our hard work now finally beginning to filter down to the bottom line. And amongst the first, a mid-sized vessel, the Navigator Eclipse, also loaded a world record quantity of 20,000 tonnes of ethylene from the terminal for delivery to Asia. The terminal complex is working very well and as you can see from the photographs in the supplemental information pack, construction of the ethylene tank is progressing safely, on time and on budget, where staff have expected in Q4 this year. The June throughput of around 80,000 tonnes, which was achieved prior to the commissioning of the tank, has only added to our belief that our terminal will exceed the nameplate capacity with ease in the future. Coming now to our lunar fuel, the fuel with Greater Bay Gas and Pacific Gas is now fully up and running. Live operations began in the second quarter, with all 14 vessels joining the fuel by the end of July. The fuel has been formed just at the right time, to enable the partners to capitalise on the growing volumes of ethylene for export from our Morgan's Point Terminal. Utilisation rates, which were running at mid 80% levels in February, March and April, climbed in May and June to around the 90% mark. This utilisation rate has been maintained in July, no doubt thanks to the Morgan's Point volumes, the healthy ethylene arbitrage and a general increase in economic activity. Once again, Andy's IPT rate continues to be dramatically less volatile than other sectors and have been pretty resilient with only a marginal 5% reduction in rates within the quarter. The company continues to be prudent, reducing discretionary spend, deferring expenditure where possible whilst minimising working capital and capex to preserve cash and liquidity. This can be seen in our operating expenses which are down in Q2 3.5% year-on-year. Some of these gains of course will wind over time as the increased cost of relieving the crew starts to filter through. Now in this prepared remarks we'll give you an update of our refinancing progress as we seek to further increase our liquidity and strengthen our balance sheet. All in all Q2 was a satisfying quarter for the company on many fronts with improving utilisation and profitability. Navigators' leadership in the niche, handy sized shipping segment, coupled with the versatility and flexibility of our fleet, has ensured that our business has, to date, been able to successfully navigate the choppy conditions caused by the COVID-19 pandemic. Our segment has not been subject to the world's swings in rates, which we have observed in other sectors. And as expected, The start-up of the world's largest ethylene terminal has had an immediate impact, stimulating new fuel-through-ethylene export volumes, which is a real win-win for Navigator Gas. The onset of the terminal take-a-day contracts in June, together with incremental sports business, should ensure the terminal remains profitable going forward. That, combined with our shipping business, which is also in great shape, will ensure the company is well-placed to capitalize from increasing economic activity when the uptick occurs. With those few remarks, I'd like to hand you over to our CFO, Niall Nolan. Niall?

Thank you, Harry, and good morning. The company generated profits, as Harry mentioned, of $3 million for the second quarter, which is a significant turnaround from the $8.2 million lost incurred during the first quarter of this year. and the $7.7 million loss for the comparative second quarter of 2019. This $3 million quarterly profit, or net income, includes the $2.5 million gain on foreign currency translations of both the Norwegian kroner and the Indonesian rupiah, for instance, relative to the US dollar during the quarter, reversing some of the COVID-related exchange losses incurred in the first quarter of this year. In addition, the Marine Exports Ethylene Terminal at Morgans Point in Houston generated a loss for the quarter of $200,000, being our share of the results of the export terminal joint venture. However, with the commencement of the long-term take-up whole contract at the beginning of June, the terminal had a throughput during that month of approximately 80,000 tons and consequently generated a profit, although not sufficient to overcome the losses of the prior two months. It is anticipated, however, that the terminal will remain profitable for the remainder of this year. This then resulted in a profit relating to our vessels for the second quarter 2020 of $700,000, again, which is a marked improvement from the $1.8 million loss generated during the first quarter. The operating revenue from the vessels was $79.9 million for the three months, an increase of $6.3 million. from the $73.6 million generated during the second quarter of 2019. Net revenue, revenue after deducting pass-through voyage costs, was $65.1 million for the second quarter versus $63.7 million for the first quarter of this year and $57.1 million for the second quarter of 2019. This increase was in part as a result of average charter rates increasing to $21,600 per day, up from $20,855 per day for the first quarter of this year, and $19,940 per day during the comparative second quarter of 2019. As we mentioned on the last earnings call associated with the first quarter's results, that the utilization was increasing during the second quarter. with April still in the mid 80% levels largely as a consequence of COVID-19 but with this subsequent month of May and June increasing to around the 90% levels. Consequently, the average for the three months of the second quarter was 88.3%, an increase of the 85.2% achieved during the second quarter of 2019. You may have noticed a new item on our income statement this quarter with references to pool collaborative arrangements in both operating revenue of £2.6 million and voyage costs of £2.9 million. This is the gap required accounting treatment for reflecting the sharing of pool revenue based on pool points. The net effect of this during the second quarter following the commencement of the pool on April 1st is that our vessels contributed $300,000 and the other participants in the Luna pool during the quarter. During the first six months, the company undertook only three dry dockings, principally as a result of yard closures associated with the impact of COVID-19. However, many dockyards have now reopened and we've undertaken a further three dry dockings since the end of the second quarter, with the third navigated grave currently in dry dock. That leaves the final four vessels requiring dry docks prior to the end of this year. These dry dockings, including the fitting of ballast water treatment systems where net straight, are estimated to cost approximately $12 million in exit as previously budgeted, but no anticipated increase as a result of yard closures or other effects of COVID-19. Vessel operating expenses were $26.5 million for the second quarter or $7,661 per vessel per day, a decrease of 3.5% from the $27.4 million or $7,938 per day incurred in the comparative second quarter of 2019. This is a result of stringent control of costs during these challenging times, but also as a consequence of some costs being deferred until later in the year, such as costs associated with crew changes due to the difficulty in arranging international flights as a result of COVID-19. General and admin costs decreased by 13% to $4.5 million during the three months ended June 3, 2020. This decrease largely relates to the reversal of foreign exchange losses and the revaluation of an Indonesian rupiah bank account Thank you very much. which have now fallen from approximately 2.38% a year ago to just 0.26% in June this year. The share of results of equity accounted joint venture, also known as the results from the Ethylene Terminal, generated, as I mentioned, a small loss of $200,000. And as I mentioned at the outset, with the profit in June almost fully offsetting those losses of April and May. I also mentioned a couple of moments ago that during the quarter, $2.5 million of the $3.7 million of COVID-related foreign exchange losses incurred during the first quarter were reversed in the second quarter. Net income for the second quarter was therefore $3 million, and as Harry mentioned, the first quarterly profit since the third quarter of 2018, and the largest profit for over three years. At June 30th, the cash stood at $53.1 million, against our maximum liquidity covenant of $43.1 million. We had a further $8.2 million as restricted cash, supporting a cross-currency interest rate swap relating to our Norwegian kroner bond. Although since the quarter ends, as a result of further strengthening of the Norwegian kroner versus the US dollar, This restricted tax has reduced to $1.1 million as of this morning. Since the quarter-end, we have entered into an agreement to amend the Terminal Questions Authority to allow an early throw-up of $34 million, enabling those funds to be immediately drawn for general corporate purposes. This followed a capital contribution of $7.5 million to the Export Terminal Joint Venture during the second quarter, and a further $7.5 million since the quarter end, both fully funded by drawdowns from the Credit Facility. The total amount available on the Credit Facility based on the off-take agreements is now agreed at $69 million and with $49 million drawn or currently available to be drawn, this leaves $20 million available to cover the remaining capital commitments to the Export Terminal Joint Venture, which we believe to be less than $10 million. Once the storage tank is completed and in service by the end of this year, any remaining undrawn portion of that loan will be released for general corporate purposes. Thereafter, the loan will convert from a construction loan to a five-year term loan. We are also in the process of refinancing one of our vessel loan facilities, which is anticipated to provide an additional cash draw of approximately $30 million This amount, coupled with the $34 million immediately available from the terminal facility and the further relief of the restricted cash, will provide increased liquidity headroom of approximately $70 million in addition to the $10 million headroom at June 30th. And we expect the vessel loan facility to be inflate by the end of this third quarter. At June 30th, total debt stood at approximately $860 million. As previously stated, the company does not have any debt facilities maturing until 2022, except for our $100 million Norwegian bond maturing in February of next year. We are currently assessing the capital markets for a potential refinance of this bond and are in the process of engaging financial advisors to investigate such opportunities, as well as considering alternatives in the event that capital markets are not available or not receptive. and with that, I'll hand you over to Oeyvind.