Navigator Holdings Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to the Navigator Holdings Conference call on the first quarter 2021 financial results. We have with us Mr. David Butters, Executive Chairman, Mr. Harry Deans, Chief Executive Officer, Mr. Niall Nolan, Chief Financial Officer, and Mr. Oeyvind Lindeman, Chief Commercial Officer. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, please press Star 1 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. And now I pass the floor to one of your speakers. Mr. Butters, please go ahead, sir.

Thank you, and good morning, everyone, and welcome to our quarterly conference call. Now, as we conduct today's conference call, we'll be making various forward-looking statements. These statements include, but not limited to, future... Thank you very much. are included in our annual and quarterly reports filed with the Securities and Exchange Commission. Now, before my handling over the call to one of us, to Harry and our London team, it might be a little bit helpful to look back to where we were at the end of last year. As we entered 2021, we were full of conviction that we had reached Thank you very much. Operating performance not seen since 2015. The February Texas freeze changed all that. Extraordinary natural events shut down the Texas and Louisiana electric grid for weeks and, more importantly, inflicted severe mechanical damage to the area's refining and petrochemical plants. Ethylene became scarce. Prices spiked to global highs. and domestic inventories depleted. No barrels moved through our terminal in March. During this period, we issued a force majeure on our terminal and our tightly scheduled ethylene vessels experienced complete disruption. Nevertheless, we generated positive quality results and an improved balance sheet. January's strong performance Offsetting a very difficult February and March showed us navigators' underlying strength and powerful earnings potential under normalized conditions. As Harry, Niall, and Oeyvind will shortly discuss, since the end of March, conditions have gradually improved, suggesting that we may still be entering into an environment more characteristic of those prevailing at the end of last year and the very beginning of this year. So now, just before I pass the call over to Harry and his team, I would like you to be sure you open up your website to Navigator's site and under the investor presentation section, refer to the supplemental information. I think that you will find to be very helpful as you follow along. So, Henry, why don't you pick up from there, please?

Thanks, David. Good morning to everybody in the call. I hope you're well and keeping safe. I'm pleased to report that Navigator Gas has performed robustly during the period and has had the best start to a year since Q1 2016. This is our fourth profitable quarter in succession, with income translating into an earnings of $0.05 per share. During the period, the company achieved adjusted EBITDA of $31 million, representing a 22% increase in the same period in 2020. This reflects both strong operational performance by the company, as well as the fruition and completion of our significant investment into the business in prior periods. The final capital contribution to our Morgan's Point Ethylene Terminal Joint Venture is was paid in late January, bringing our final investment in the terminal to $146.5 million. The shipping business has performed well during the period, and we look forward to more growth as the macro trading environment improves. And as we have previously announced, we complete the anticipated merger of UltraGas' fleet and business with Navigator. This transformative combination will create a fleet of 56 vessels which will enhance our market offering and provide much-needed flexibility and support to our customers. Ultragas's fleet of 7 more than 22,000 cubic metres handy-sized semi-refrigerated vessels, 5 12,000 ethylene vessels and 6 gas carriers under 10,000 cubic metres will position us to engage new clients in new markets. Through increased We anticipate that the enhanced scale and combined fleet will provide cost savings, significant strategies and efficiencies throughout the business. The additional vessels will allow us to capitalise on the structural growth of LPG and petrochemical gases being exported from the Rapano, Pemina and, of course, our own Morgans Point terminals, all of which are now on stream and ramping up exports. We believe these incremental volumes, combined with the extremely low level of handy-sized new build activity, as can be seen in slide 15 of the supplemental pack, will tighten the market, increase utilization rates, and further improve TCE rates. The proposed ultra-gas transaction is progressing well, and with completion expected early in Q3 2021, on the same commercial terms as agreed on the LOI, This combination is the cashless transaction with approximately 21.2 million shares being issued in Navigator's common stock to Ultranav and the assumption of approximately $197 million in Ultragas net debt as well as its working capital. When complete, the combination will introduce another major Navigator shareholder with long-standing experience in the maritime industry, which we believe will be beneficial for all our shareholders. The transaction is accretive to Navigator's standalone budget in terms of revenue, EBITDA and EPS, and we expect the combination to complete in line with our expectations, subject to concluding definitive binding agreements, board approvals and the other customary closing conditions. We were very pleased to announce in late April that Navigator had successfully won four 12-month time charters with Mitsui. utilising four of our semi-refrigerated handy-sized vessels to transport ambient propane from the newly commissioned Femner terminal in Prince Rupert, Canada to customers in Asia. This is a brand new trade route between the west coast of North America and Asia which by going directly across the Pacific bypasses the need for a Panama transit thus minimising transit times and boosting efficiencies. On its own This one deal ties up over 6% of the total handy-sized semi-refrigerated fleet. Over 6% and approximately between 13% and 18% of the available semi-refrigerated spot vessels. As discussed in a previous call, utilization rates finish 2020 strongly. and they continued into January, reaching 96%, before being hit by the headwinds of the southern freeze and the Mount Bellevue pipeline and subsequent Morgan's Point terminal force mesure in early February. Unsurprisingly, given these issues, utilisation rates dipped to the mid-80s, with the overall fleet utilisation ending the quarter at 88.2%. These rates continued into Q2 as olefin capacity started up and the U.S. domestic olefins pipeline was replenished, bringing with it strong domestic demand and pricing. This offered pressure on export volumes and the ethylene arbitrage. But thankfully, there are plentiful supplies of the most advantaged olefin feedstock in the U.S., ethane, which coupled with olefin overcapacity and the efficient ethylene market has again ensured product is priced to move. and as we've seen recently, the apps have opened again to Europe and to Asia. Our Morgan's Point ethylene terminal has now restarted and is ramping up throughput. We expect June's export volumes to be close to those of January 2021 and we anticipate exports for the remainder of the year to be at nameplate capacity of 1 million tonnes per annum. We are looking forward to running this unit at full rates to see if we can squeeze even more than the 10% incremental capacity we've already identified out of the plant. As previously discussed, the forward order book for new builds now stands at around 5%, with minimal vessel deliveries in 2021, 2022 and 2023. 20% of the entire handy-sized fleet is now more than 20 years old, So there's absolutely no pressure coming from vessel supply in our growing market. At long last, you may say, the three incremental U.S. export terminals have been completed and they're starting to export product. We estimate that these terminals, when running at full capacity, will require around 12 to 19 handy-sized vessels to service them, between 12 and 19. These tailwinds are helped by handy-sized exports, which are also ramping up at Marcus Hook, even before the Mariner East 2X project is completed later in the year. It's no surprise, therefore, that we maintain a positive outlook on short- and medium-term TCE rates and the handy-sized market in general, as there are a lot of factors that are starting to exert upwards pressure on rates. With incremental exports, limited new builds, improving customer sentiment and higher oil prices, it really does feel that we're on the cusp of a significant uptick in utilisation and market rates. With our existing fleet of 38 vessels, our FD&JB terminal now fully funded and fully commissioned, and with the company on the verge of a merger, which will dramatically grow our presence in the speciality LPG pit chem gas sector, Navigator Gas is poised to capitalise on these conditions. We expect that benefit, when it comes, to go straight on to our bottom line. With these few remarks, I'd like to hand you over to our CFO, Niall Norman, who will take you through our Q1 financials. Niall?