Navigator Holdings Ltd.

Good morning and afternoon. Thank you for standing by, ladies and gentlemen, and welcome to the Navigator Holdings conference call for the first quarter, 2024 financial results. On today's call, we have Maz Peterzako, Chief Executive Officer, Gary Chapman, Chief Financial Officer, Hoyvan 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 call is being recorded today. As we conduct today's presentation, we'll 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 forecast. 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 will now pass the floor to Maz Peter Zacco, the company's CEO. Please go ahead, Maz.

thank you and good morning thank you all for logging in to this navigator gas earnings call for q1 2024 please yeah i will as always begin with a quick review of the main data point relating to the first quarter of 24 and then i'll talk over the outlook for the year Gary, Eivind and Randy will follow up in a couple of minutes with more detail on our business drivers and results. Also this time, we can present robust revenues for the past quarter with operating revenues almost equal to same period in 2023. The mix is different, though, in that it was driven by higher time charter rates. I'll say a little bit more about that in a minute. Adjusted EBITDA for Q1 set a new record at $74 million, well above the EBITDA of $69 million same period last year. Adjusted net income came in at $23 million. Our cash position remained solid even after we repaid on debt facilities, on our credit revolver, and we also continued deploying capital into our Ethylene terminal expansion. We've returned capital to our shareholders with a $0.05 per share dividend and repurchased owned shares similar to previous quarters. You'll see this continue as we also now declare a further 5% per share dividend plus new share buyback. This will in total be equivalent to 25% of net income following our first quarter result. We're particularly pleased with the commercial result in that we are able to push up our TCE rates to an average above $28,000, which is 11% higher than same period last year. Last year in Q1, our utilization was unusually high at 96%. In Q1 of this year, we achieved utilization closer to 90%, which is more akin to previous quarters. We're quite pleased to see that we managed to generate TCE rates and EBITDA at a record level in this environment. Throughput at our JV ethylene export terminal was slightly down at 220,000 tons for the quarter, but we expect that during this year, we'll reach the total exports near the terminal capacity of 1 million tons per annum. The expansion of the terminal continues on track for completion in Q4 of 2024. And we have now contributed progress payments of $51 million in total to date. Navigators Board approved a new investment in an early stage clean ammonia export project in the U.S. Gulf Coast area. As we said before, we are optimistic about clean ammonia as an energy carrier, and we believe that gas tankers will transport the majority of the clean ammonia volumes. As is the case with Morgan's Point, our key interest lies with the terminal and ship-to-shore logistics. The outlook for our business remains good. We expect utilization to remain near or above 90%, and we continue to renew our expiring time charters at higher rates. With solid demand for transportation on handy-sized gas carriers, older vessels being sold out of international trade, and limited supply from new buildings in our segment, we expect this to continue. We also see a gradual normalization with the Panama Canal, which Oivind will explain in more detail shortly. I'll now hand it over to Gary, and he'll give you a more detailed review of our financial results. Go ahead, Gary.

Thank you very much, Madsen. Very good morning or afternoon to everyone. I'm pleased to report our first quarter 2024 results in which we continued our progress and momentum with, again, some very positive outcomes and a new record adjusted EBITDA, giving ourselves a great platform. On slide six, our total operating revenue was 134.2 million in the first quarter of 2024, with slightly lower but still very healthy utilization of 89.3%, boosted by stronger time chart equivalent rates that were on average $28,339 per day in the quarter, being a marked increase compared to $25,620 per day in the first quarter of 2023. There were further positive effects as a result of having our five navigator greater bay vessels fully operational in the first quarter of 2024 compared to the same quarter in 2023. And both total vessel operating expenses and depreciation in the first quarter of 2024 was slightly up on this quarter last year, also mainly due to having those five navigator greater bay vessels in full operation. The net effect overall for us was a near 14% increase in operating income, up to 36.3 million compared to 31.9 million in the same quarter last year. Our general and administrative costs were well managed in the quarter, coming in slightly lower than the same period in 2023. And our interest expenses were cushioned by interest income earned on our cash balances in the quarter. And the non-cash movement in the mark-to-market valuations of our interest rate swaps was a small loss in this first quarter of 0.4 million, reflecting more stable forward interest rates in recent months. Our income tax line reflects current and mainly deferred taxes, primarily derived from our investment and share of profits in our ethylene export terminal at Morgan's Point. The ethylene terminal throughput volumes, as Mads mentioned, in the first quarter of 2024 were 220,000 tonnes, lower than the same quarter last year by around 29,000 tonnes. However, we currently expect the terminal to remain near its throughput capacity during 2024, with results accordingly. Our new record adjusted EBITDA was 74.1 million. Net income attributable to stockholders of Navigator Holdings was 22.6 million. with EPS for the quarter coming in at 31 cents. The table bottom right gives some further fleet data points, which I'll leave you to read for yourselves. The balance sheet shown on slide seven remains strong with a cash and cash equivalents balance of over $172 million at March 31st and total liquidity, including our undrawn revolving credit, of just over $200 million. This compares to minimum total liquidity covenants on our bank loans and credit agreements of around $50 million. This cash and liquidity balance is after all of our recent buybacks and dividends, after making our scheduled due loan repayments, after making progress payments for our Ethylene Terminal Expansion project, and after repaying an additional $4.7 million on one of our revolving credit facilities. Our net debt capitalisation was just 33% as of March 31st, 2024, and net debt to adjusted EBITDA was 2.4 times for the 12 months to March 31st, 2024. With good market rates and robust utilization, our liquidity has continued its upward trend. We expect that some of our cash will be needed for the remainder of our Ethylene Terminal Expansion project until we finance a proportion of our investment later in the year, and as well for other projects and investments that we're considering that will enhance shareholder returns. There are, of course, a number of projects that we're actively looking at, but meantime, we'll continue to manage our business carefully, reduce our debt, look to our capital distributions and share buybacks, and be good stewards of the business's capital. Looking at our finance situation on slide eight, although we have no low maturities until 2025, we're now actively looking at those, including the $100 million unsecured bond that matures in September 2025, which is likely to be called or extended sometime from March 2025. And as well, the $190 million of remaining 2025 maturities that are likely to be refinanced with new loans or loans of more than $200 million, resulting in a positive liquidity event for the company. The feedback received to date from new and existing lenders is very positive and will provide a further update as part of our second quarter results. You'll see on the top left how Navigator has substantially reduced its net debt to EBITDA in the last 12 months and indeed since 2019, now at around two times. We're continuing to aggressively reduce our debt with more than $100 million of average annual scheduled debt amortization due to occur during 2024 through 2025, which you can see on the top right. Taken with the refinancing work we are now pursuing, we anticipate that our debt maturity profile will look very different by this time next year, with an illustration of that shown in the pro forma graphic on the bottom right. Then on slide nine, we outline our estimated cash breakeven for 2024, which remains at $20,705 per day, which figure includes our scheduled debt repayments and as well our heavier dry dock schedule in this coming year compared to 2023. Even considering this, with such a break-even level relative to today's charter rates, recalling our average TCE for the first quarter of 2024 was 28,339, it of course enables Navigator to generate a very positive EBITDA, not only now, but also throughout the shipping cycle. Then on the right is our daily OPEX guidance for 2024 across our differing vessel size segments, ranging from smaller vessels to our larger, more complex ethylene vessels. And we are also now providing some guidance for the second quarter of 2024, as well as updates for the full year across vessel OPEX, general and admin, depreciation and interest expense. On slide 10, we outline our historic quarterly adjusted EBITDA, showing this first quarter's record figure and demonstrating the very positive and consistent results we were able to report across the whole of 2023, continuing into 2024. We also currently expect the second quarter of 2024 to provide a healthy result. On the right side of slide 10, we show our historic adjusted EBITDA bar for 2023, our last 12 months adjusted EBITDA, and an annualized adjusted EBITDA based on this first quarter. In addition, the EBITDA bars then to the right provide some sensitivity and illustrate an increase in adjusted EBITDA of approximately $18 million for each $1,000 incremental increase in average found charter equivalent rates per day. Then on slide 11, an update on our vessels' scheduled dry docks. We have 17 vessels scheduled for dry docking during 2024 with an expected total of 422 off-hire days and total dry docking capex anticipated of $24.6 million, all of which is fully costed and included in our cash flow plans. So more detail on the expected timing and costs of these dry docks is shown below, noting that four vessels have already successfully completed their docking this year. One is actually scheduled to complete the dry dock today, and 12 more for later in the year. Also, as we have announced before, we are taking these dry dock opportunities to install energy saving technologies on those vessels at a cost of around $4.8 million, with many of those technologies having a very short payback period. Finally, we also provide here some guidance on 2025 and 2026 scheduled dry docks for those that are interested and which guidance remains very similar to previous figures we've disclosed. So at the end of another very solid quarter with record adjusted EBITDA, we've been able to continue our good momentum and provide ourselves with a great foundation for further growth and development. And with that, I'll now hand it over to Oivind who will provide an update on some of those plans and our commercial position. Oivind, please go ahead.