Navigator Holdings Ltd.

recording in progress navigator holdings conference call for the third quarter 2023 financial results live from houston texas we have with us mr maz peter zacco chief executive officer mr gary chapman chief financial officer mr organ lindeman chief commercial officer and myself randy givens executive vice president of investor relations and business development in north america i must advise you that this conference is being recorded today And 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 the financial and operational perspective and are based on management assumptions, forecasts, and expectations as of today's date. and as such are subject to material risk and uncertainties. Actual results may differ significantly from our forward looking information and financial forecasts. With that, I now pass the floor to Mads Pieterzakko, the company's chief executive officer. Please go ahead, Mads.

Thank you so much, Randy, and good morning and thank you for dialing in to the Navigator Gas Earnings call. First of all, I'd like to tell you how excited I am about introducing you to Gary Chapman, our new CFO who joined Navigator just over a month ago. Gary's long experience as a leader, as well as a shipping and finance professional, has ensured that he's hit the ground running, and he's now already a valued co-part of the Navigator leadership team. You'll soon see and hear more from him. As Gary, he'll review the financial results with you in a couple of minutes. I'll now kick us off by reviewing the highlights of the third quarter and what a quarter it was. We generated operating revenues of $138 million in Q3 2023. This is up a strong 29% compared to the same period last year. Adjusted EBITDA hit a new record, 72 million for Q3, a vast improvement over last year's 42 million, and higher than the results for the same quarters or the recent quarters this year. You may recall that Q3 is seasonally our weakest quarter, so we are pretty excited about this result for Q3. Adjusted earnings per share was 27 cents for Q3 2023. Our cash position remained robust at just below $180 million at quarter end, and that compares to $153 million when we entered 2023. As part of that picture, you should also be aware that this September, we bought $9 million worth of our own unsecured notes in open market using cash on hand. During the quarter, we paid a cash dividend of 5 cents per share and repurchased $3 million worth of our own shares. We also now declare further 5 cents per share dividends plus just over a million worth of new share buybacks following our Q3 result. An important factor in our better operating result was fleet utilization running above 93% in Q3, comparing to just 85% same period last year. At the same time, our average TCE per day earned by our vessels were above $26,000 for Q3 2023 compared to about 22,000 in Q3 2022. Throughput at our joint venture Ethylene Export Terminal were a quarter of a million tons for Q3 2023 compared to 189,000 tons same period last year. The new expansion of the terminal is well underway, and we've already contributed progress payments of 27 million made up of three payments of 9 million in each of April, August, and October this year. We also announced a new investment alongside Yara Growth Ventures to acquire a 14.5% interest in the same fuel solutions. The first green ammonia boundary units are expected to be delivered in 2025. And that means that we are now really kicking off ammonia as a fuel for shipping, and that's a central part of our navigator company strategy. In recent news, you'll have seen that a number of Panama Canal transits are being reduced due to the lack of rainfall in Panama. This will increase the duration of voyages from US to Asia. This in turn will impact tonnage availability and likely our utilization in a positive way. Our utilization expected to hoover around 90% in the final quarter of this year. And TCE rates are typically stronger in the winter period. Ethylene export volumes through the mortgage point terminal is expected to remain near nameplate capacity in Q4. Adding to this, the supply picture remains attractive with a minimum handy size order book and large part of the global fleet is already more than 20 years old. And now I'll hand it over to Gary, who will for the first time present as CFO for Navigator Gas. Here you go, Gary.

Thank you very much Mads and good morning everyone. Slide six please. I'm really pleased to be with you today taking part in the story of Navigator and building on all the great work done up to this point. And I'm pleased to say that the third quarter of 2023 has continued that momentum with some very positive results. We saw operating revenue up 29% to 137.8 million in the third quarter compared to the third quarter of 2022. and up from £135 million in the second quarter of 2023, despite the summer months and hence Q3 traditionally being seasonally quieter. Time Charter Equivalent Rates, or TCE, was strong at £26,278 in the third quarter, as Matt said, up from $22,022 in the third quarter last year. The bottom right table on slide six shows TCE together with utilisation for the quarter, which was 93.4% above the 90% we guided last quarter, driven mainly by our ethylene capable vessels and also ethane movements where there have been higher tonne miles that help us. This utilisation is better than the 89% we reported last quarter and better than the 84.9% we reported this time last year. Although we have seen the overall TCE rate fall just a little compared to last quarter, this has been more than offset by the better utilisation, leaving us with higher operating revenues than last quarter and a strong result overall. So when you have good rates and you have good utilization, you also need to look to your costs and total operating expenses decreased to 102 million compared to 104 million last quarter. If you exclude the one off 5 million profit on the sale of the Navigator Orion that happened in the second quarter this year and 103 million for the same quarter in 2022. Within those total operating expenses, average daily vessel operating expenses decreased by $250 per vessel per day, or 3.2%, to $7,680 per vessel per day for the three months ended September 30, 2023, compared to $7,930 per vessel per day for the three months ended September 30, 2022. Following all of this, this quarter, we're reporting a record adjusted EBITDA of 72.2 million, the fourth quarter in a row that adjusted EBITDA has increased. Depreciation was steady and both interest income and interest expense for the third quarter of 2023 were affected by the higher interest rate environment we're living in today when compared to the figures reported for the third quarter last year, noting that we have fixed interest rates and have entered into interest rate swaps for around 45% of our total debt. Net income attributable to stockholders of Navigator was $19.1 million for the three months ended September 30 compared to $2.4 million for the three months ended September 30, 2022. Earnings per share was $0.26 for the three months ended September 2023 compared to $0.03 per share for the three months ended September 30, 2022. And adjusted earnings per share, excluding unrealised gains and losses on derivative instruments, was 27 cents for the three months ended September 30, 2023, compared to a loss of seven cents for the three months ended September 30, 2022. The Greater Bay Joint Venture, which is 60% owned by Navigator, acquired its final vessel during the second quarter of this year, and the vessel acquisitions under that programme are now complete. This has resulted in an increase in vessel available days during the quarter and going forward. And now our operating revenue from the lunar pool is nil also as the vessels are fully consolidated into our financial statements such that they are no longer featuring as operating revenues or voyage expenses from the lunar pool collaborative arrangements. The share of the results of the company's 50% ownership in the export terminal joint venture was an income of 3.8 million for the three months ended September 30, 2023 with increased volumes exported through the terminal of 249,857 tonnes for the three months ended September 30, compared to 189,140 tonnes for the three months ended September 30 last year. The tax charge for the quarter again relates to current tax and deferred taxes, mainly on our share of profits from the ethylene export terminal. The balance sheet shown on slide seven remains strong with a cash balance of a little over 178 million at September 30. This compares to a minimum liquidity covenant on our bank loans and credit agreements of 50 million. This cash balance is after all of our recent buybacks. The strong cash balance will be used for capital redistribution, the Ethylene terminal expansion, and for projects and investments that can enhance shareholder returns. The increase in net long-term debt is due to the financing of the five Greater Bay joint venture vessels, but noting that our net debt to adjusted EBITDA is now only 2.9 times as at September 30, 2023, giving us a really healthy position to work from and with no low maturities until 2025, as shown on slide eight. Maturities for 2025 include the $100 million senior unsecured bond, which may or may not be refinanced depending on any investment opportunities that may occur. And the two bank facilities totaling 190 million will likely be refinanced at a higher than current loan to value as the vessels serving as collateral are amongst our younger vessels. As a result, we expect that refinancing to be a cash positive event in 2025. On slide nine, we outline the estimated cash breakeven for 2023 at $19,260 per day. This low level relative to charter rates recalling TCE for the third quarter was 26,278, enables us to generate positive EBITDA throughout the shipping cycle. To the right on this slide is daily OPEX expectations for 2023 across our differing vessel size segments ranging from $7,600 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 for vessel OPEX, G&A costs, depreciation and net interest expense. On slide 10, we outline our historical quarterly adjusted EBITDA showing a step up over the past several quarters and a further step up this quarter. On the right of slide 10, we show our historical 2022 adjusted EBITDA bar, our LTN bar incorporating the latest quarter and an annualised adjusted EBITDA based on this quarter result. In addition, the EBITDA bars further to the right of those show the effects of an increase on adjusted EBITDA if average charter rates were to increase by increments of $1,000 per day. Then on slide 11, given the numerous scheduled dry dockings next year, we've included a final slide to help guide on this important topic. We have 19 vessels scheduled for dry docking during 4Q2023 through 4Q2024, with a total of 456 off-hire days and total dry docking capex expected of 24.8 million during 4Q23 through 4Q24. We'll take these opportunities to install energy saving technologies during these dry docks, such as some of those listed here. And we have also guided on 2025 and 2026 dry docks for those that are interested in looking further ahead. So that's the conclusion of the finance section for this third quarter. And I'll now pass the mic to Oyvind. Thank you. Over to you.