Navigator Holdings Ltd.

conference call for the first quarter 2025 financial results on today's call we have mods peter zakal chief executive officer gary chapman chief financial officer oyvind 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, May 15th, 2025. 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 now pass the floor to Mads Pieterzakko, the company's Chief Executive Officer. Please go ahead, Mads.

Thank you so much. Good morning, good afternoon, and thank you for joining this Navigator Gas Earnings Call for Q1 2025. As a start, I'll just review the key data from our Q1-25 performance, and then I'll go over the outlook for the rest of the year. After that, Gary, Oivind, and Randy will discuss our results in more detail. In the first quarter, we again generated more revenues, up 13%, compared to same period last year. This was a new record quarterly revenue, and it was driven by both high utilization and higher rates. Income from our joint venture terminal was down significantly. Adjusted EBITDA for Q1 was $73 million in line with both same period of 2024 and also Q4. The balance sheet is strong with a robust cash position, even after investments into three secondhand vessels and further investments, installments paid into the MGC new buildings. With the recent $40 million bond tap and the $300 million refinancing proceeds, the cash balance will be substantially stronger this second quarter. I'd like to add that the $300 million refinancing was signed as planned in the middle of the most volatile trade environment that we've seen in decades. And this is at the lowest margins ever for Navigator and also, I think, showing the rock solid support and trust that we have from our banking partners. The return of capital continued in Q1 with both the $0.05 fixed dividend and a share buyback up to, in combination, 25% of net income. We're also pleased to announce another share repurchase authorization in the amount of an additional $50 million, enhancing shareholder returns, earnings per share, and return on equity. Commercially, we pushed TCE rate back up higher and secured average Q1 TCE rates of $30,475. This is 8% higher than both previous quarter and same period last year. We achieved utilization above 92% in line with our guidance and higher than both Q4 of 24 and higher than the same period last year. We're again quite pleased with our ability to maintain robust TCE rates and utilization in a market that was hit by softer ethylene transport demand. To illustrate the softness, throughput at our joint venture ethylene export terminal was limited to 86,000 tons for the quarter. And this is of course much lower than the already soft fourth quarter and much below capacity. This was caused by continued effects from the US cracker turnarounds, leading to reduced domestic supply, leading to higher domestic prices, and as consequence, a narrow arbitrage. We expanded our fleet by acquiring three secondhand ethylene capable vessels at attractive prices. All three have now been taken over and deployed as planned. We also sold Navigator Venus, one of the original Navigator vessels, which was about to reach 25 years of age. The sale secured $17.5 million of cash and a book gain of almost $13 million. Gradual fleet renewal remains a priority, and we are likely to sell more of our older tonnage. The four last months have been challenging, strategically to say the least. It now seems that uncertainty is receding somewhat. We believe that the port fees, as announced by the U.S. trade representative, will not affect navigator gas negatively due to our vessel size and due to us being a service provider to U.S. energy exports. It now also seems that tariffs on Chinese imports from the U.S. may be limited to 10%. I guess in this context, it should be mentioned that over the past five years, China has received less than 10% of ethylene shipped from Morgan's Point. But anyway, much can still change. With our diversified customer base, our trading capability, and strong balance sheet, I believe we remain resilient even if geopolitics take an unexpected turn. April utilization was weaker than usual due to cargo cancellations and some customers posing new vessel fixtures. The effect has now already been reversed and the month of May showed gradual normalization in vessel utilization and likely a record high throughput at Mokens Point. The vessel supply picture remains attractive with a handy size order book of 9%. And in addition to this, now 22% of the global handy size vessels on the water, they're more than 20 years of age. So the supply picture continues to look good. Now I'll pass it over to you, Gary, so you can tell a little bit more about the financial result. Go ahead, please.

Thank you, Mads. Welcome, everybody. As Mads alluded to, we've been really busy in the last few months for all kinds of reasons. Our first quarter 2025 financials show yet another strong result, maintaining our trend over many quarters now, showing the quality and diversity of our business, not least as a result of our flexible fleet, resilient charter rates and utilization, and our operational efficiency and cost controls. This all comes through in the numbers on slide six, where we see TCE jump above $30,000 per day. This leads on to a record high quarterly net operating revenue of $151 million, adjusted EBITDA of $72.8 million in the first quarter of 2025. Utilization was up 92.4%, up 3.1% compared to first quarter 2024. And the average time charter equivalent rate of $30,476 per day in this first quarter is the highest rate achieved by Navigator in almost a decade. You'll see that voyage expenses have increased substantially, partially as a result of our increased fleet size, but primarily as these are pass-through costs to our customers, there being a corresponding increase in operating revenues. Vessel operating expenses were somewhat up compared to the first quarter of 2024 at £47 million, with the increase primarily driven by the timing of maintenance costs incurred during the three months ended March 31, 2025, compared to the same period in 2024. Depreciation is slightly up compared to previous quarters due to our now increased fleet, and our general and admin costs of £8.1 million in the first quarter, whilst up year on year, is down compared to the fourth quarter of 2024. Our unrealised movements on non-designated derivative instruments resulted in a loss in this quarter of $2.3 million, this being related to movements in the fair value of our long-term interest rate swaps, which affects our net income but which has no impact on our cash or liquidity. We also report a lower net interest expense in the first quarter of 2025 compared to the first quarter of 2024, partly due to lower SOFR rates. Other income shown in this quarter of £4.8 million relates to a historic but successful legal settlement for damages caused to navigator Ares in a collision with a container ship some 10 years ago. As we were uncertain about this claim, we did not include any provision in our accounts and so this settlement has gone straight into our income statement for the quarter. This is a full settlement and we don't expect anything further in respect of this particular incident. Our income tax line reflects current tax and mainly deferred taxes, which are significantly down compared to Q1 2024, as they're primarily derived from our investment and share of profits in our ethylene export terminal at Morgan's Point. Randy will shortly explain more, but the ethylene terminal throughput volumes in Q1 2025 were low, as Mads mentioned, at 85,553 tonnes, resulting in us reporting a loss of $0.9 million. But as already mentioned, we're anticipating materially higher throughput back towards more normal trading levels in the second quarter and beyond this year. Then overall, for the first quarter of 2025, net income attributable to stockholders was 27 million, which is our highest quarterly net income in the last three years and the second highest in the last nine years, with basic earnings per share of 39 cents and adjusted net income, which excludes unrealised gains losses on derivative instruments, foreign exchange and other income of 25.5 million dollars or 37 cents per share. Our balance sheet, shown on slide 7, continues to be strong, with a cash, cash equivalents and restricted cash balance of $139 million at March 31st, 2025. This is despite paying out $26.3 million for scheduled loan repayments, over $1.9 million in share buybacks in respect to the fourth quarter of 2024, $21 million as further progress payments towards our MGC Newbill vessels, and a further $4 million final payment for our Ethylene Terminal Expansion project. Our liquidity will be boosted further by a few things not included in these first quarter numbers, such as the £40 million bond tap issue, which settled in early April, the sale of the Navigator Venus, which completed this week, and the debt refinancing that we have signed and that we're targeting to draw down by the end of May 2025. On slide eight, I apologise for the slightly busy slide here, but we've been busy extending our maturities, improving our liquidity and reducing our financing costs. We were able to enter into a new senior secured loan facility in February 2025 to partially finance the purchase of the three German-built 17,000 cubic metre ethane ethylene capable liquefied gas carriers that we've since taken delivery of and of which vessels are already positively contributing to our bottom line. Following our successful issuance of 100 million of new senior unsecured bonds in October 2024, which at the time closed with the lowest spread for an unsecured dollar-denominated shipping bond in the Nordic market since 2008, we took advantage of a favourable market, and on March 28, 2025, we successfully issued a further 40 million tap of our bonds, which also priced at 7.25%. We closed this just three business days before Mr. Trump's Liberation Day announcements. And although we saw some upward movement in interest rates at the time, we believe the tap pricing represented a credit spread that was around 15 basis points tighter than even our original 100 million issue, showing Navigator to be an attractive credit story as well as an attractive equity story. Then on May 2nd, 2025, we entered into a new senior secured term loan and revolving credit facility for up to $300 million that will be used to repay the company's existing September 2020 and October 2023 secured outstanding loan facilities of $143 million and $15 million respectively. and thereafter be available for general corporate purposes. The facility has a tenor of six years, maturing in 2031. Amounts outstanding will bear interest on a quarterly basis at SOFA plus 170 basis points, and the facility is secured by, or to be secured by, eight of the company's vessels. We now have no debt maturities due in the next 12 months. I would just like to take this opportunity to say thank you to the Club of Lenders here for their faith in Navigator and for working with us on this, given the macro environment we have seen just recently. We think our business model is robust and it's good to see others thinking the same also and taking a longer term view as we do. On the right side of this slide is a summary of our main debt movements in the last four months and we also show towards the bottom a pro forma loan to value calculation which we think is important to demonstrate that we're operating conservatively while still trying to be efficient with our balance sheet and looking for opportunities to reduce our cost of finance. On slide nine, our leverage against earnings remains in a strong position with net debt to adjusted EBITDA at 2.6 times for the last 12 months to March 31st, 2025. And our net debt to capitalization was 38% at the end of this first quarter of 2025. As we've shown before, we're continuing to make substantial debt repayments with around $124 million of average annual scheduled debt amortisation payments expected across the coming three years, 2025 to 2027. And again, the last bullet, we've finished the quarter with a healthy cash balance, despite the many calls on our funds, where we're actively pursuing a number of important workstreams. On slide 10, this is one of our most important slides as it shows our estimated all-in cash breakeven for 2025, which at $20,600 per day is significantly below our average TCE revenue for this first quarter of 2025 of $30,476 per day and is materially unchanged from the estimate we provided on our last earnings call back in March. The estimated cash break-even figure is an all-in figure and it includes our forecast scheduled debt repayments and our dry docking costs. On the right is our updated OPEX guidance for 2025 across our differing vessel segments, ranging from 8,050 per day for our smaller vessels to 11,100 per day for our larger, more complex ethylene vessels. This guidance is unchanged from our last quarterly call in March. And following below is guidance for this year and for the first quarter of 2025 across vessel OPEX, general and admin costs, depreciation and cash interest expenses in dollar terms. The full year guidance for vessel OPEX for 2025 towards the bottom is now slightly higher in total than the previous guidance given in March, as we now have a net two extra vessels across the remainder of the year. Slide 11 outlines our historic quarterly adjusted EBITDA, adding this first quarter solid figure and demonstrating yet another very positive and consistent result, as seen for many quarters now. And this is despite a slightly prolonged dip in the ethylene arbitrage, which Oivin will cover shortly, and which has impacted the results from our terminal this quarter. On the right side, we show our historic adjusted EBITDA for 2024, our last 12 months adjusted EBITDA, and an annualized adjusted EBITDA based on the first quarter's result. In addition, the EBITDA bars then to the right provide some sensitivity and illustrate an increase in adjusted EBITDA of approximately $19 million for each $1,000 incremental increase in average time charter equivalent rates per day. Then in terms of our vessel's dry dock schedule, projected costs and time taken, we've moved this slide to the appendix, as although this is very important information, the slide itself is quite heavy and you don't need me to read it out to you. The only point I want to make is that we're continuing to invest in our energy and fuel saving initiatives, which we believe are great investments to make for both financial and environmental reasons, typically having very short payback periods. So with that, and having been able to report some strong results and activities this quarter, I will hand you over to Oivind, who can guide us through our commercial environment amidst some of the macro uncertainties we have all been seeing. Thank you, Oivind.