Navigator Holdings Ltd.

Thank you for standing by, ladies and gentlemen, and welcome to the Navigator Holdings first quarter 2023 earnings call. With us today, we have Mr. Maz Peterzako, Chief Executive Officer, Mr. Niall Nolan, Chief Financial Officer, Mr. Oiven Lindeman, Chief Commercial Officer, and myself, Randy Givens, Executive Vice President of Investor Relations and Business Development in North America. I must advise you today that this conference is being recorded. Now, as we conduct today's presentation, we will be making various forward-looking statements. These statements include, but are not limited to, the future expectations, plans, and prospects from both a financial and operational perspective, and 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 results. Additional information about these factors and assumptions are included in our annual and quarterly reports filed with the Securities and Exchange Commission. With that, I now pass the floor to Mads Peter Zatko, the company's chief executive officer. Please go ahead, Mads.

Thank you. Good morning and thanks a lot for taking part in our earnings call today. I'll start off by providing a brief overview of our Q1 result and then hand it over to Niall or even Randy for more color on our results and recent events. Our first quarter result came in stronger than the previous quarters with revenues at $136 million, adjusted EBITDA just below $70 million and net income of $19 million. The result was mainly driven by higher charter rates and higher vessel utilization. Our balance sheet is robust with cash of $191 million at the end of Q1. Net debt increased slightly due to the financing that we raised for the second-hand vessel acquisitions that we made in the quarter. The initial $50 million share purchase program has been completed and a further $25 million authorized as part of our new return of capital program. So this is opening up for both dividends and further share buybacks. commercially our utilization was very high just over 96 percent compared to our guidance of 95 and the 94 that we reached in q4 2022 terminal throughput ran above nameplate capacity right above 250 000 tons as previously announced we grew our vessel capacity through the acquisition of five efficient modern secondhand vessels vessels that we commercially managed for the past few years The takeover was completed faster than originally planned, a strong effort and result created by our team. Expansion of our ethylene export terminal at Morgans Point has started. This flex train will allow for up to 2 million tons of additional export capacity. The capex for Navigator's share is expected to be around $125 million and to be completed by the end of next year. outlook continues to look good q2 utilization is expected to hover around 90 it's below q1 but it's high in a historical context time charter rates are robust and voting well for earnings in q2 the terminal throughput in q2 is expected to remain strong around 265 000 tons and the ethylene is in high demand in both europe and asia This current robust demand for seaborne gas transport is well complemented by a modest handy size order book and also an aging global fleet of gas tankers. With this brief overview, I'll just hand it over to Niall for a more detailed review of our financials. Go ahead, Niall.

Thank you, Mads, and good morning. The quarterly net income of $18.8 million and the adjusted EBITDA of $69 million, as we show on slide six here, are the highest quarterly result for many years. In fact, since the first quarter of 2016. And we expect that trajectory to continue. This improvement in results was positively impacted by increased total operating revenues, which were $136 million for the quarter, $16.2 million greater than the $119.8 million for the comparative first quarter of last year, but also importantly, a 10.3% increase from the $123.3 million revenue achieved during the last quarter, Q4 of 2022. The quarter-on-quarter increase was as a result of increases in charter rates, which rose to $25,620 per day from $22,933 per day for the first quarter of last year. This quarter's average charter rate was also $2,000 a day increased from the $23,621 achieved during the last quarter. In addition to increases in charter rates, utilization also increased during the quarter to 96.2% compared to 89.5% for the comparative quarter of last year, and an increase of 2% from the strong 94.1% achieved in Q4 of 2022. Our Greater Bay joint venture, which is 60% owned by us, acquired three additional vessels during the first three months of this year. The second 17,000 cubic meter, 2018-built ethylene-capable gas carrier, Navigator Solar, on the January 17th, and two 22,000 cubic meter, 2019-built ethylene carriers, Navigator Castor and Navigator Equator, on March 24th and March 27th, respectively. This also increased vessel available days, which contributed to an increase in revenue during the quarter. And the joint venture acquired its fifth and for now final vessel on April the 13th, a further 22,000 cubic meter 2019 built ethylene carrier named Navigator Vega. We had two vessels in dry dock for the scheduled surveys during the first quarter. And these were in dry dock for a total of 30 days and cost $3.3 million. For the remainder of 2023, it is expected that seven vessels will enter dry dock at a total budgeted cost of $8.6 million. The operating revenue from the Luna pool was $7.2 million for the quarter, representing our share of the other participants' net revenues. with voyage expenses from the Luna pool of $5 million representing the other participants' share of our net revenues from the pool. Consequently, the other participants' vessels contributed $2.2 million to us during the quarter. But following the acquisition of the fifth vessel by the Greater Bay Joint Venture last month, which was owned by the other participant in the Luna pool, Going forward, the revenue from these vessels will become fully consolidated into our financial statements and will not feature as operating revenues or voyage expenses from the Lunapool collaborative arrangements. Voyage expenses decreased by $3.6 million or 17.2% during the first quarter to $17.2 million, which had the effect of reducing revenue by the same amount as voyage expenses are passed through costs. Our vessel operating expenses increased by 9.5% to $41.7 million for the first quarter compared to the first quarter of last year, which resulted in vessel operating expenses per vessel per day, increasing quarter on quarter by 9.4%. to $8,580 per day. However, this was a reduction from the $9,058 per day incurred during the fourth quarter of last year as we continue to focus on our vessel operating costs. Depreciation of our vessels increased slightly by $500,000 or 1.6% as the additional Greater Bay joint venture vessels joined the fleet. depreciation for 2023 is expected to be approximately $132 million following the acquisition of these Greater Bay vessels, and we depreciate our vessels to their scrap or recycling value on their 25th anniversary. Other income, which is $96,000, relates to management fees earned from the other participants, the other participant for our management of the Luna pool. We will not receive these third party management fees going forward as the five vessels to which they relate have been purchased and will be fully consolidated, as I mentioned. There was an unrealized loss on our derivative instruments of $4.5 million during the first quarter as the fair value of our fixed interest rate swaps reduced. This compares to a $15.2 million gain for the first quarter of last year as a consequence of the then expected future spike in interest rates following the initial Russian invasion of Ukraine. Interest expense for the first quarter was $13.3 million compared to $11 million for the first quarter of 2022 as a result of further rises in interest rates on that proportion of our debt that is subject to floating rates. We have fixed interest rates or have entered into interest rate swaps for 45.1% of our debt at the end of March at LIBOR or software levels that are fixed at rates between 0.36% and 2.07%. The tax charge for the quarter was $1.2 million, which predominantly relates to both cash and deferred taxes on our share of the profits from the ethylene export terminal. And our share of profits from the terminal was $5.1 million for the quarter, down from $6.5 million for the comparative first quarter of last year, as a result of a throughput of 250,731 tons compared to 267,100 tons during the first quarter of last year, as well as some reduced charges per ton, as some of the charges are correlated to U.S. domestic natural gas prices. Net profit, net income for the first quarter, therefore, was $18.8 million or $25 cents per share however adjusting for the non-realized losses on the derivative instruments adjusted net income was 23 million dollars giving an earnings per share of 30 30 cents per share On slide seven, the balance sheet remains very strong with an increased cash balance of $190.9 million at March 31st against a minimum liquidity covenant on our bank loans and credit agreements of $50 million. This cash balance is after the purchase of 2.6 million shares of common stock for a total of $33.6 million, or an average price of 12.73 cents. The strong cash balance will be utilized for capital redistribution, our ethylene terminal expansion project, and also we keep the market under review for accretive secondhand vessel acquisitions. At March 31 our debt stood at just over a billion dollars, an increase of $141.8 million since December 31, principally as a result of drawdowns on the loan to partially fund the acquisition of the three vessels referred to earlier acquired by the Greater Bay Joint Venture. We also executed a new $200 million secure term loan on March 20th, refinancing 10 vessels previously secured across two secure term loans that were due to mature later this year. The new loan is for a term of six years, maturing in 2029. An interest on it is at software plus a margin of 2.1%. And the loan was fully drawn down on March 28th. Following the entering into these two loans, the company now has no loan maturities until 2025, as shown on slide eight. We outlined the estimated cash break-even for 2023 on slide 9 at $19,470 per day. This low level relative to the charter rate market enables us to generate positive EBITDA throughout the full shipping cycle. In the box on the right-hand side of slide 9, we provide our daily OPEX expectations for 2023 across the differing vessel size segments, ranging from $7,500 per day for the smaller vessels to $10,100 per day for the larger, more complex ethylene vessels. We also provide a range for the expected annual spends of G&A costs, depreciation and interest expense. On slide 10, we outline our historical EBITDA, showing a step up over the last six quarters and a further step up this quarter, a trajectory, as I mentioned at the outset, that we expect to continue at least in the near term. On the right hand side of that slide 10, we show our historic 2022 EBITDA bar. Next to it, we have the last 12 months bar, which incorporates the last quarter. and an annualized EBITDA based on the first quarter's results. In addition, the EBITDA bars to the right of those show the effects of an increase on EBITDA were charter rates to increase by increments of $1,000 per day. And finally, before I hand over to Ivan, as this is my last earnings call as CFO of Navigator, I would like to say thank you for listening to my Irish tones over the past decade since the company's IPO in November 2013. And I wish you, the company, and my successor the very best for the future. With that, over to you, Ivan.