Navigator Holdings Ltd.

Welcome to the Navigator Holdings conference call for the second quarter 2025 financial results. On today's call, we have Mods Peter Zacco, Chief Executive Officer, Gary Chapman, Chief Financial Officer, Oregon Lindeman, Chief Commercial Officer, and myself, Randy Givens, Executive Vice President of Investor Relations and Business Development here in North America. I must advise you that this conference call is being recorded today. 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, August 13th, 2025. and are as such subject to material risk 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 SEC. With that, I now pass the floor to our CEO, Mats Petersakko. Please go ahead, Mats.

Thank you. Good morning and good afternoon, and thanks a lot for joining this Navigator Gas Earnings Call for Q2 2025. As a start, I'll just review the key data on our Q2 2025 performance and then go over the outlook for the rest of the year. After that, as usual, Gary and Oivind and Randy will discuss our results in more detail. Geopolitical backdrop for our Q2 result was certainly unusual and very difficult. Ahead of and during the quarter, we experienced a number of significant challenges, including the announcement of US port tariffs, unprecedented high import tariffs on commodities that we transport, ethane export licenses, which were effective export bans, and new military conflicts flaring up, including the bombing of Iran's nuclear facilities. Several of the conflicts receded during and after Q2, but the effect on our customers and our business during Q2 brought a lot of uncertainty, disruption, and hence lower trade volumes. The quarter also brought new opportunities such as ambient temperature LPG exports out of Iraq to Asia and the opportunity to buy back our own shares at a high discount to our estimated NAV. So this was a quarter of shipping at its worst and at its best. Please turn to slide number four. With that background and moving to our results, in Q2, we generated revenues of $130 million down 12% compared to the same period last year. This reduction is the direct result of customers halting new business and for a time, even in some cases, canceling committed fixtures with us for which we still got paid. However, notwithstanding the backdrop, we generated EBITDA of $72 million and adjusted EBITDA, which excludes a $12 million book gain from selling Navigator Venus of $60 million. And that showed really the resilience of our business. Earnings per share was $0.31. The gain on the sale of Navigator Venus gives credence to the estimated net asset value. We did a lot of work optimizing our capital structure during the second quarter. The balance sheet is very strong with a cash position of $287 million at quarter end. It was supported by the $300 million refinancing, which was signed and drawn down as planned and at the lowest margin ever for Navigator. The return of capital continued in Q2 with both the $0.05 fixed dividend and a share buyback up to, in combination, 25% of net income. We also progressed the additional $50 million share repurchase program, completing $30 million in Q2 and the remainder in July. So done and dusted, 3.4 million shares bought back at an attractive price. Randy will elaborate on this one in a few minutes. Commercially, we achieved average TCE rates of $28,216 per day during Q2. This is lower than the approximately $30,000 achieved in previous quarters. We achieved utilization of 84%, also lower than prior quarters. Our ethylene spot fleet was impacted the most, whereas the semi-rev fleet fared better. Throughput at our joint venture ethylene export terminal rebounded to 268,000 tons for the quarter, which was more than three times Q1, but still below full capacity. We are pleased to announce the two 51,500 cubic meter dual fuel ammonia vessel orders and their associated five-year time charter contracts. The combination of attractive yard prices, the grant from the Norwegian authorities, and expected attractive financing makes this transaction accretive to shareholders and strengthens navigator position in the ammonia supply chain. It's also an important step in our gradual fleet renewal and goes hand in hand with our sale of older vessels like Navigator Venus. We expect to be able to report more sales of older tonnage and associated book gains as the year progresses. Looking forward, we also expect that most of the headwinds that we saw in Q2 are gone. Global trade in commodities we transport have restored during July and into August. So today we see utilization and rates returning to normal levels. We expect LPG exports from Iraq to Asia to continue, and we expect ethylene exports from US to Europe and ethane exports from US to Asia to continue. The latter will be further supported by the opening of enterprise's new Beaumont terminal that will free up more ethane export capacity. This means more business for our ethylene and ethane vessels. Of course, trade discussions between US and its trading partners continue and much can still change. But with our diversified customer base, trading capability and strong balance sheet, we remain resilient even if geopolitics take an unexpected turn. So now over to you, Gary, and talk a little bit more about the details on our financial result, please.

Thank you, Mads, and welcome, everybody. During this quarter, as Mads mentioned, we've seen a number of geopolitical announcements and events across the world that have affected our markets that we were not able to predict or foresee at the beginning of the year, or indeed some of them we were not able to predict at the beginning of the second quarter. However, I'm very pleased to report that despite the unpredictability that we've experienced, we're able to report a healthy set of results. Not as high as we would like, but focusing on our strengths, we've been able to maintain solid progress in many areas across the quarter. And we believe we're also able to look forward to a strong second half of the year. Our second quarter 2025 financials show a healthy result due to the quality, diversity and flexibility of our fleet and business, which allowed us to maintain charter rates and utilization at profitable levels, supported by our operational efficiency and cost controls. On slide six, we report TCE of $28,216 per day, leading to a quarterly net operating revenue of $129.6 million and an EBITDA of $71.9 million. Our lower TCE this quarter came about primarily due to the performance of our ethylene vessels across the quarter, stemming from the trade, licensing, and tariff-related issues that Mads has already mentioned and that Oyvind will also cover. Whilst our fully refrigerated handy-sized fleet also did not perform so well, we only have six vessels in this category. In contrast, our semi-refrigerated and mid-sized vessels performed almost as normal throughout. So overall, the quarter was affected by certain specific global issues that we do not believe are long-term, and we're seeing a bounce back already in our third quarter performance to date. We sold one of our oldest vessels, as mentioned, the Navigator Venus, for net proceeds of £17.5 million, resulting in a strong book gain of £12.6 million in the quarter. And excluding this from EBITDA as the main difference, we get to an adjusted EBITDA result of £60.1 million. Hence the vessel sale in this quarter made up for the sequential drop in earnings, leaving EBITDA for this quarter at £71.9 million, broadly in line with our first quarter of 2025 result. Then for the reasons we've already covered, utilization was 84.2% in the second quarter, down 9.2% compared to the second quarter of 2024. You will see that voyage expenses have decreased by 1.9 million compared to the same quarter last year, mainly due to lower utilization in the second quarter this year, as these are pass-through costs to our customers, hence they're reflective of the decrease in operating revenue. Vessel operating expenses were up compared to the second quarter of 2024 at 47.4 million, with the increase primarily driven by the increase in our fleet following the purchase of the three second-hand vessels in the first quarter of this year, which you can see is reflected in the table shown bottom right, as well as simply the timing of maintenance costs incurred during the three months ended June 30, 2025, compared to the same period in 2024. We do currently expect to close the year on or close to budget for our OPEX costs adjusting for the extra vessels. Depreciation is also slightly up compared to previous quarters due to our now increased fleet. Unrealised movements on non-designated derivative instruments resulted in a loss in the second quarter of 1.4 million, this being related to movements in the fair value of our long-term interest rate swaps, which affects net income but which has no impact on our cash or liquidity. Our income tax line reflects current tax and mainly deferred taxes primarily derived from our investment and share of profits in our ethylene export terminal at Morgan's Point. Randy will shortly explain more about their terminal throughput volumes in the second quarter, but they were up to 268,000 tonnes from 85,000 tonnes in the previous quarter, resulting in us reporting a profit this quarter of $4.8 million. Then overall for the second quarter of 2025, net income attributable to stockholders was $21.5 million, with basic earnings per share of $0.31. Our balance sheet, shown on slide seven, continues to build and be strong with a cash equivalence and restricted cash balance of $287.4 million at June 30, 2025, which if you include our available but undrawn liquidity, was $316 million at the same date. This is despite paying out $26.4 million for scheduled loan repayments, $6.8 million under our return of capital policy in respect to the first quarter of 2025, and a further $29.6 million of share buybacks as part of the new $50 million share repurchase plan. Our liquidity in the quarter was boosted by the $40 million bond tap issue that was settled in early April, the sale of the Navigator Venus, which completed in May, and the debt refinancing that we drew down in mid-June 2025, which added $142 million of net liquidity. Including our available but undrawn revolving facilities, we had $314 million of cash, cash equivalents and restricted cash at close on August the 11th, 2025. On slide eight, we show a summary of the main capital events across the quarter, where with a very supportive banking group and a strong underlying business, we were able to return capital to shareholders, extend our debt maturity, boost our liquidity and reduce our finance costs. We completed our latest share repurchase programme on July 30th, 2025, having bought back $50 million of our common stock, and Randy will also provide some more details on this shortly. We continued to pay out under our return of capital policy at a level of 25% of net income, and we sold one of our oldest vessels, the Navigator Venus, as we've mentioned, for net proceeds of $17.5 million, resulting in a book gain of $12.6 million. Also in May, we entered into a new senior secured term loan and revolving credit facility of up to $300 million that was 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 tenure of six years maturing in twenty thirty one amounts outstanding bear interest on a quarterly basis at software plus a hundred and seventy basis points and the facility is secured by eight of the company's vessels And then 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 US dollar denominated shipping bond in the Nordic market since 2008, we took advantage of favourable market. And on March 28th, 2025, we successfully issued a further 40 million tap of our bonds, which also priced at 7.25%, which funds settled with us in early April, right at the start of the second quarter. The borrowing limit under the bonds is $200 million, hence a further $60 million is available to us as the aggregate principal amount to be issued by the company under the bond term should we choose to do so in the future. We now have only two relatively small debt maturities due in the next 24 months, with balloon payments due in 2026 of $54 million in total. On the right hand side of this slide is a summary of our main debt movements across the last quarter, which also demonstrates our progress in reducing our cost of debt, which is ongoing and which is possible due to the strength of our business and the confidence in Navigator of our banking partners. Our next priority is to close finance in relation to our now six new bill vessels, and this work is already ongoing with several options being pursued. We're currently targeting to complete this work within the next six months. On slide 9, our leverage against earnings remains in a strong position, with net debt to adjusted EBITDA at 2.7 times for the last 12 months to June 30, 2025. In the quarter, we returned $36.4 million to shareholders through a combination of cash dividends and share buybacks, and by the end of July 2025, that figure had risen to $56.8 million as we completed our new $50 million share repurchase programme. We also made substantial loan repayments of £26.4 million in the quarter, as mentioned, and our net debt to on-water fleet value, i.e. loan-to-value ratio, was 34%. And if you include and ascribe a value to our terminal at Morgan's Point, that ratio falls to below 30%. As we have 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, to manage our financial risk, but whilst also still being able to raise more capital to invest and to grow. On slide 10, this remains one of our most important slides showing our estimated all-in cash breakeven for 2025, which at $20,270 per day is significantly below our average TCE revenue, even for this slightly softer second quarter of 2025 of $28,216 per day, the difference being nearly $8,000 per day. The all-in breakeven rate shown here is materially unchanged from the estimate we provided on our last earnings call back in May 2025. And this estimated cash break even figure is all in and includes forecast scheduled debt repayments and our scheduled dry dock commitments. On the right hand side is our updated OPEX guidance for 2025 across our differing vessel size 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 May 2025. And following below is further next quarter and full year guidance across vessel OPEX, general and admin costs, depreciation and net interest expense in total dollar terms. The full year guidance for vessel OPEX towards the bottom is now slightly lower in total than the previous guidance given in May 2025, as we have one less vessel across the remainder of 2025. Net interest expense is also a little lower than the previous guidance given in May 2025. Slide 11 outlines our historic quarterly adjusted EBITDA, adding this second quarter's figures and demonstrating that whilst this quarter was not another record due to the political issues we've discussed, particularly impacting our ethylene and ethane capable vessels, still remains a very positive result. On the right hand side of the slide, we show our historic adjusted EBITDA for 2024 and our last 12 months adjusted EBITDA. In addition, the EBITDA bars then to the right provide some sensitivity and illustrate an increase in adjusted EBITDA of approximately $90 million for each $1,000 incremental increase in average time charter equivalent rates per day. In terms of an update on our vessel's dry dock schedule, projected costs and time taken, we've moved this slide to the appendix, as although this is important information, the slide itself is quite data heavy. On this topic, we're continuing to invest in our energy and fuel saving initiatives, which we believe are great investments to make, both for financial and environmental reasons, where they're also typically showing very short payback periods. So with that very quick run through, I will hand you over to Oivind who can provide some more color on the commercial environment that we have seen and what we are seeing today. Oivind.