Navigator Holdings Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to the Navigator Holdings Conference Call on the fourth quarter 2021 financial results. We have with us Mr. Doug Von Appen, Chairman, Mr. Niall Nolan, Chief Financial Officer, Mr. Oivin Lindeman, Chief Commercial Officer, and Mr. Michael Schroeder, Operating Officer of the company. At this time, all participants are in the 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 keyboard and wait for the automated message advising your line is open. I must advise you that this conference is being recorded today, and now I pass the floor to one of your speakers. Mr. Appen, please go ahead, sir.

Good morning, everyone. Welcome to the NavigatorCast. fourth quarter earnings call, and I'm glad to give some introductory comments. As we conduct today's conference call, we will be making various forward-looking statements. These statements include, but are not limited to, the future expectation plans and prospects from both a financial and operational perspective. These forward-looking statements are based on management assumptions, forecasts, and expectations 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 Commission. Today's call will include comments from Niall Nolan, our Chief Financial Officer, and Eugen Lindemann, our chief commercial officer. As we are confronting special geopolitical times in Europe and in shipping, I wanted to share some thoughts with you. Of course, the overriding news of the last two weeks is Russia's invasion of Ukraine. The future geopolitical scenario in Europe is being reshaped as we speak. The sudden invasion of Ukraine will have major ramifications. not just for the energy market, but also for the security and well-being of Europe. Major ramifications in the energy, commodity, and shipping markets have already started. We all want to know the impact on shipping, but without knowing the end game of this invasion and the imposed sanctions, we can't estimate the scope and duration of potential disruptions. Praising sanctions to the Russian economy and its companies has impacted trade supply chains already and is increasing commodity prices. Open markets and free trade are about buying from the nearest, most competitive source. The political tensions and sanctions normally increased on miles because of shifting trade patterns, which require cargo shipping over longer distances. This, of course, supports increased trade rates. Europe will seek to become less dependent from Russian fossil fuels, oil, refined products, natural gas, LPG, coal, and others, which of course is not easy to tackle short term. Now, talking about Navigator, I would like first to thank the staff of the company for their continued hard work during the final quarter of 2021. As a result of their dedication to our company during the period, we started this year in a stronger position. Another thank you should go to the executive management team comprised by Niall, our CFO, by Oyvind, our chief commercial officer, and Michael Schroeder, our chief operating officer. They have been working very well together and leading the company as a strong team the last five months. Now let's go to slide three where we have some highlights. Operating revenues were up 26% compared to Q3 2021. And before impairment losses, net income was $16.7 million, up 149% when compared to the $6.7 million of Q3 2021. Neat utilization increased compared to the same period in 2020. Furthermore, the company has seen increased ethylene volumes from its Morgans Point ethylene terminal joint venture in Houston as well as increasing ethane exports from the United States, primarily due to pricing competitiveness compared with oil. In addition, we continue to see new synergies and contributions to our revenue as a result of the ultra-gas merger, and are delighted by the new opportunities this has brought us. In the face of uncertainty with world events, the company can be confident that its robust balance sheet, long cash positions, Flexibility and unique position in the market will continue to facilitate further growth. I would like to take this opportunity to welcome Dr. Anita Odedra to the Board of Directors of Navigator Gas. Anita was appointed as of 10th March, and we look forward to welcoming her to the Navigator Board and to benefiting from her considerable industry experience. In this exciting time for Navigator, Dr. Odedra will be an extremely valuable contributor to our Board of Directors. Okay, I would like now to hand over the call to Niall Nolan, our Chief Financial Officer, who will give you a more detailed financial review. Thank you.

Thank you, Dag, and good morning. During the fourth quarter of 2021, the company, as Dag mentioned, generated a net income of $16.7 million, or $0.22 per share, before impairment losses on nine vessels of 63.7 million. This is shown on slide six. This is considerably higher than the net income of 3.4 million for the fourth quarter of 2020, or the net income of 6.7 million for the previous quarter, Q3 of 2021. And this 16.7 million is the highest quarterly net income since the first quarter of 2016. and relates to market improvements across the shipping segments, as well as increased volumes through the ethylene marine export terminal. Adjusted EBITDA for the fourth quarter was $55.2 million, compared to $32 million for the fourth quarter of 2020, and $40.3 million for Q3 of 2021. Total vessel operating revenue for the quarter was $129.4 million, compared to $87.4 million for the comparative period of last year, and the $102.7 million generated during the prior quarter, third quarter of 2021. The $42 million increase in revenue between the fourth quarters of this year and last was in part as a result of the seven additional handy-sized vessels joining the fleet as part of the Ultragas transaction in August 2021, which accounted for $11.5 million of that increase, and another $15.9 million as a result of revenues derived from the Unigas pool, representing revenues from the smaller Unigas vessels. As a reminder, the Unigas fleet consisted of 18 vessels, seven of which are handy-sized 22,000 cubic meter semi-refrigerated vessels, similar to those operated by Navigator, and 11 were smaller 4,000 to 12,000 LPG or ethylene vessels. Two of the older, smaller vessels have now been sold. The 1999 Happy Bride was sold in October 2021 for $4.75 million, and the 1999-built Happy Bird was sold for $6.1 million earlier this month. Average charter rates rose, too, to approximately $22,500 per day, or $684,300 per month for the fourth quarter, up from $21,123 per day for the fourth quarter of 2020, which accounted for an additional $5.1 million to total revenues. And utilization, too, nudged up from 91% for the quarter a year ago to 91.4% for this quarter. Three vessels were in dry dock for scheduled surveys during the fourth quarter, taking a total of 88 days. In total, 14 vessels have dry docked during the 12 months of 2021, at a total cost of $19.2 million. The company did not have any other capital expenditure during 2021 and does not have any planned capital expenditure for 2022 other than dry dockings. Operating revenue from the pool was $8.3 million for the quarter, representing our share of the other participants' revenues, which voids expenses from the Luna pool of $6.4 million, representing the other participants' share of our revenues from the pool. Consequently, our vessels had a net benefit of $1.9 million from the pool during the fourth quarter of 2021, compared to a $600,000 deficit from the fourth quarter of 2020. Voyage expenses increased by $5.4 million during the quarter to $21.9 million, principally as a result of the additional vessels in the fleet, most of which are under voyage charters, thereby incurring these pass-through voyage expenses. And we see bunker costs, which form part of voyage expenses, increasing dramatically as a result of the situation in Ukraine, as there is concern about the shortage of oil globally as a result of possible energy sanctions against Russia. Vessel operating expenses, or OPEX, increased by 43.8% to $40.8 million for the fourth quarter, all of which was a result of the additional vessels in the fleet. Vessel operating expenses per vessel per day actually reduced by $120 per day to $8,000 per day per vessel for the quarter, compared to $8,119 per vessel per day during the fourth quarter of 2020. I referred to impairment losses on vessels of 63.7 million at the beginning of my remarks. This related to impairment on nine generally older vessels, following a review in which we reduced the accounting estimated useful life of all vessels from 30 years to 25 years. As a result, the future cash flows of these vessels could not support the then carrying values of the nine vessels, leading to this impairment loss. As a result of shortening the estimated economic life of all vessels in our fleet to 25 years, Depreciation from Q1 2022, i.e. this quarter we're living in, will increase to approximately $30.9 million from a current level of around $25.7 million per quarter based on the existing fleet. General and administrative costs increased by $3.9 million to $10.3 million for the quarter. ostensibly as a result of incorporating the G&A costs of UltraGas of $1.4 million, severance costs of $1.1 million, and one-off legal and other costs associated with the UltraGas transaction of $1.3 million. And finally, other income being management fees earned from the other participant for our management of the Luna Pool was $100,000 for the quarter. Interest expense for the fourth quarter was $10.7 million, an increase of $1.6 million, or 18% on the fourth quarter of last year, all of which was as a result of interest on the additional debt taken on as part of the UltraGas transaction. That debt amounted to approximately $197 million and attracts interest at U.S. LIBOR, which is subject to a fixed rate swap of around 2%. plus a bank margin, which varies depending on the facility, of between 1.9 and 2.65 percent. Our share of results from the ethylene marine export terminal was a profit of $6.4 million for the quarter, based on 241,500 tons of ethylene throughput charges. In addition, depreciation for the terminal was $1.5 million, giving an EBITDA for the quarter from the terminal of $8 million. On slide seven, we've got the balance sheet, which is showing the company had a cash balance of $124 million at December 31st, and a further $22.9 million available from undrawn revolving credit facilities associated with our secured vessel loans. Our minimum liquidity covenant from our various bank loans and credit agreements is a maximum of $50 million. Our total debt at December 31st was $932.8 million, comprising of loan facilities secured by our vessels of approximately $707 million, a credit facility associated with the terminal of $54.4 million, and two Norwegian bonds in aggregate amounting to $171.7 million. One vessel loan, as is outlined on slide eight, matures this current year. comprising of three six-year-old vessels in the amount of $50 million. And we're in the process of negotiating the refinancing of that facility, as well as focusing on refinancing two other facilities that mature in the second half of next year, 2023. Earlier this year, on January 14th, we sold Navigator Neptune, a 2000-built ethylene carrier for $21 million, The vessel acted as security under one of our outstanding Norwegian bonds, and in accordance with the terms of that bond, we tendered an offer for the net sale proceeds of $20.6 million to those bondholders at 102% of par, but there were no acceptances, and the bondholders preferring instead to retain the bonds, which have a maturity of November 2023. Consequently, the net proceeds from the sale of the vessel have been released to the company for general corporate purposes. The company does have an existing call option on that bond at a redemption rate of 102.864%. And that's it for me. I'll now pass you over to Wyvern for his remarks.