Navigator Holdings Ltd. Results for the Three and Six Months Ended June 30, 2022

·16 min read
Navigator Holdings Ltd.
Navigator Holdings Ltd.

Highlights

  • Navigator Holdings Ltd. (the “Company”) reported total operating revenues of $123.9 million for the three months ended June 30, 2022, an increase from $85.7 million for the three months ended June 30, 2021. Total operating revenues were $243.7 million for the six months ended June 30, 2022, an increase from $171.4 million for the six ended June 30, 2021.

  • Net income was $14.0 million (earnings per share of $0.18) for the three months ended June 30, 2022, an increase from $0.3 million (earnings per share of $0.01) for the three months ended June 30, 2021. For the six months ended June 30, 2022, net income was $41.1 million (earnings per share of $0.53) compared to $3.1 million (earnings per share of $0.06) for the six months ended June 30, 2021.

  • EBITDA1 was $55.0 million for the three months ended June 30, 2022 compared to $28.8 million for the three months ended June 2021. For the six months ended June 30, 2022, EBITDA was $110.5 million for the six months ended June 30, 2022 compared to $59.8 million for the six months ended June 30, 2021.

  • Maintained strong fleet utilization of 87.4% for the three months ended June 30, 2022, an increase from 85.4% for the three months ended June 30, 2021

  • Debt reduced by $45.9 million during the three months ended June 30, 2022, with cash, cash equivalents and restricted cash standing at $151.2 million as of June 30, 2022.

LONDON and NEW YORK, Aug. 18, 2022 (GLOBE NEWSWIRE) --

Ethylene Export Terminal

Ethylene throughput for the second quarter of 2022 at the Ethylene Export Terminal totaled 268,444 metric tons, a slight increase from the 267,110 metric tons from the previous quarter, and dramatically up from the throughput of 155,428 metric tons during the second quarter of 2021. The ethylene export volumes were primarily discharged in Europe due to the wide pricing arbitrage. Asia has yet to re-start their traditional ethylene imports across the Pacific, as demand is hampered, in particular, by Chinese covid restrictions, reducing consumption and production in the region.

Shipping Trends

The handysize semi-refrigerated and fully-refrigerated 12 month time charter rate assessment increased by $35,000 per calendar month (“pcm”) and $15,000 pcm, respectively, during the second quarter of 2022, to $720,000 pcm and $650,000 pcm, respectively. Recent shipbroker reports are indicating a semi-refrigerated reduction to $700,000 pcm and a slight increase for fully-refrigerated to $655,000 pcm, with the most recent weekly shipbroker reports showing a further increase to $705,000 pcm and $650,000 pcm, respectively. The handysize ethylene 12 month time charter assessment remained unchanged at $900,000 pcm.

Europe continues to import energy, feedstocks, petrochemicals and ammonia from wherever the region can source supply. According to Kpler, approximately 80% of U.S. ethylene exports were transported for European consumption during the second quarter of 2022. This European share declined from a high of 92% during first quarter of 2022, which had increased from a more usual level during the fourth quarter 2021 of 51%. Apart from absolute volumes of U.S. ethylene exports, the final destination has a major impact on the demand for ethylene ship capacity. An Atlantic crossing compared to Pacific crossing halves ethylene vessel demand. The arbitrage remains open to both continents however demand and consumption in China remains challenged following lingering COVID restrictions with the resultant effect on the country’s GDP. We expect an increasing percentage of the ethylene exports to be transported across the Pacific during latter part of the year.

Ethane exports from the U.S. reached record levels in June 2022 of 684,000 mts. The competitiveness of ethane compared to naphtha as a feedstock for the production of ethylene remains and we believe will continue. Our ethylene fleet can be employed in ethylene or ethane as both products require special nickel steel tanks to enable vessels to carry both products at low temperatures. North American LPG exports also reached record levels during the month of June 2022 with 5.1 million tons departing its shores for international markets. The handysize portion of the total natural gas liquids and petrochemical export volumes are approximately 7%, the upward trend in volumes is beneficial as it ultimately increases vessel demand for handysize vessels.

Ammonia continues to grow in importance for the Company. During second quarter of 2022 we increased the number of vessels employed on ammonia charters to seven vessels. This now constitutes 15% of our earnings days which we anticipate will continue to increase.


Reconciliation of Non-GAAP Financial Measures

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2021 and 2022:

 

 

Three months ended

 

Six months ended

 

 

 

June 30,
2021

 

June 30,
2022

 

June 30,
2021

 

June 30,
2022

 

 

 

(in thousands)

 

(in thousands)

 

Net income

 

$

654

 

$

14,370

 

$

3,863

 

$

41,764

 

Net interest expense

 

 

8,584

 

 

11,359

 

 

17,514

 

 

22,235

 

Income taxes

 

 

190

 

 

671

 

 

335

 

 

1,064

 

Depreciation and amortization

 

 

19,473

 

 

31,477

 

 

38,746

 

 

62,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

$

28.901

 

$

57,877

 

$

60,458

 

$

127,882

 

Foreign currency exchange gain on senior secured bonds

 

 

(330)

 

 

(8,218)

 

 

(338)

 

 

(7,441)

 

Unrealized loss/(gain) on non-designated derivative instruments

 

 

269

 

 

5,346

 

 

(278)

 

 

(9,896)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

28,840

 

$

55,005

 

$

59,842

 

$

110,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 EBITDA and Adjusted EBITDA are not measurements prepared in accordance with U.S. GAAP (non-GAAP financial measures). EBITDA represents net income before net interest expense, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA before foreign currency exchange gain or loss on senior secured bonds and unrealized gain or loss on non-designated derivative instruments. Management believes that EBITDA and Adjusted EBITDA are useful to investors in evaluating the operating performance of the Company. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to consolidated net income, cash generated from operations or any measure prepared in accordance with U.S. GAAP, and our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies.

Conference Call Details:

Tomorrow, Friday, August 19, 2022 at 9:00 A.M. E.D.T., the Company’s management team will host a Zoom conference call and slide presentation to discuss the financial results.

Zoom Conference Call Details
Participants should register for the conference call and slide presentation through the following link:
https://us06web.zoom.us/webinar/register/WN_BRynFRuhTEapVu1kG-mIbw

Or join by phone:
United States: +1 929 205 6099
United Kingdom: +44 330 088 5830

For a full list of US and international numbers available, please click on the link below:
US and International numbers

Webinar ID: 881 8184 1110
Passcode: 361151 
The conference call and slide presentation will be available for replay on Navigator’s website (www.navigatorgas.com) under Investors Centre and Key Dates.

Navigator Gas

Attention: Investor Relations investorrelations@navigatorgas.com or randy.giveans@navigatorgas.com

Houston: 1201 Fannin St, Suite 262, Houston, Texas USA 77002. Tel: +1 713 373 6197.
London: 10 Bressenden Place, London, SW1E 5DH. Tel +44 (0)20 7340 4850

Investor Relations / Media Advisors
Nicolas Bornozis / Paul Lampoutis
Capital Link - New York
Tel: +1-212-661-7566
Email: navigatorgas@capitallink.com

About Us
Navigator Holdings Ltd. is the owner and operator of the world’s largest fleet of handysize liquefied gas carriers and a global leader in the seaborne transportation services of petrochemical gases, such as ethylene and ethane, liquefied petroleum gas (“LPG”) and ammonia and owns a 50% share, through a joint venture, in an ethylene export marine terminal at Morgan’s Point, Texas on the Houston Ship Channel, USA. Navigator’s fleet consists of 53 semi- or fully-refrigerated liquefied gas carriers, 21 of which are ethylene and ethane capable.  The Company plays a vital role in the liquefied gas supply chain for energy companies, industrial consumers and commodity traders, with its sophisticated vessels providing an efficient and reliable ‘floating pipeline’ between the parties, connecting the world today, creating a sustainable tomorrow.

FORWARD LOOKING STATEMENTS

Statements included in this press release concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto, including our financial forecast, contain forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements that are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate as described in this press release. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue,” or the negative of these terms or other comparable terminology. These risks and uncertainties include, but are not limited to:

  • global epidemics or other health crises such as the outbreak of COVID-19, including its impact on our business;

  • future operating or financial results;

  • pending acquisitions, business strategy and expected capital spending;

  • operating expenses, availability of crew, number of off-hire days, drydocking requirements and insurance costs;

  • fluctuations in currencies and interest rates;

  • general market conditions and shipping market trends, including charter rates and factors affecting supply and demand;

  • our ability to continue to comply with all our debt covenants;

  • our financial condition and liquidity, including our ability to refinance our indebtedness as it matures or obtain additional financing in the future to fund capital expenditures, acquisitions and other corporate activities;

  • estimated future capital expenditures needed to preserve our capital base;

  • our expectations about the availability of vessels to purchase, or the useful lives of our vessels;

  • our continued ability to enter into long-term, fixed-rate time charters with our customers;

  • the availability and cost of low sulfur fuel oil compliant with the International Maritime Organization sulfur emission limit reductions, generally referred to as “IMO 2020,” which took effect January 1, 2020;

  • our vessels engaging in ship to ship transfers of LPG or petrochemical cargoes which may ultimately be discharged in sanctioned areas or to sanctioned individuals without our knowledge;

  • the impact of the Russian invasion of Ukraine;

  • changes in governmental rules and regulations or actions taken by regulatory authorities;

  • potential liability from future litigation;

  • our expectations relating to the payment of dividends;

  • our ability to successfully remediate the material weakness in our internal control over financial reporting and our disclosure controls and procedures;

  • our expectation regarding providing in-house technical management for certain vessels in our fleet and our success in providing such in-house technical management;

  • our expectations regarding the financial success of the Ethylene Export Terminal and our related Export Terminal Joint Venture or our Luna Pool collaborative arrangements;

  • our expectations regarding the integration, profitability and success of the vessels and businesses acquired in the Ultragas Transaction and the operational and financial benefits from the combined businesses and fleet; and

  • other factors detailed from time to time in other periodic reports we file with the Securities and Exchange Commission.

All forward-looking statements included in this press release are made only as of the date of this press release. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. We expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common stock.

Navigator Holdings Ltd.

Condensed Consolidated Balance Sheets
(Unaudited)

 

December 31, 2021

 

June 30, 2022

 

 

 

 

 

(in thousands, except share data)

 

Assets

 

 

Current assets

 

 

Cash, cash equivalents and restricted cash

$

124,223

 

$

151,216

 

Accounts receivable, net of allowance for credit losses of $982 (December 31, 2021: $1,105)

 

31,906

 

 

24,600

 

Accrued income

 

6,150

 

 

7,687

 

Prepaid expenses and other current assets

 

16,293

 

 

22,992

 

Bunkers and lubricant oils

 

13,171

 

 

14,992

 

Insurance receivable

 

6,857

 

 

7,913

 

Amounts due from related parties

 

16,736

 

 

17,306

 

 

 

 

 

 

 

 

Total current assets

 

215,336

 

 

246,706

 

Non-current assets

 

 

 

 

 

 

Vessels, net

 

1,763,252

 

 

1,709,356

 

Assets held for sale

 

25,944

 

 

 

Property, plant and equipment, net

 

330

 

 

240

 

Intangible assets, net of accumulated amortization of $458 (December 31, 2021: $387)

 

400

 

 

278

 

Equity method investments

 

150,209

 

 

149,319

 

Derivative assets

 

579

 

 

14,405

 

Right-of-use asset for operating leases

 

923

 

 

4,451

 

Prepaid expenses and other non-current assets

 

452

 

 

110

 

 

 

 

 

 

 

 

Total non-current assets

 

1,942,089

 

 

1,878,159

 

 

 

 

 

 

 

 

Total assets

$

2,157,425

 

$

2,124,865

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Current portion of secured term loan facilities, net of deferred financing costs

$

148,570

 

$

222,684

 

Current portion of operating lease liabilities

 

381

 

 

211

 

Accounts payable

 

11,600

 

 

9,067

 

Accrued expenses and other liabilities

 

20,247

 

 

21,305

 

Accrued interest

 

5,211

 

 

5,196

 

Deferred income

 

18,510

 

 

15,508

 

Amounts due to related parties

 

224

 

 

429

 

 

 

 

 

 

 

 

Total current liabilities

 

204,743

 

 

274,400

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Secured term loan facilities and revolving credit facilities, net of current portion and deferred financing costs

 

604,790

 

 

463,472

 

Senior secured bond, net of deferred financing costs

 

67,688

 

 

60,374

 

Senior unsecured bond, net of deferred financing costs

 

98,551

 

 

98,747

 

Derivative liabilities

 

8,800

 

 

12,725

 

Operating lease liabilities, net of current portion

 

522

 

 

4,097

 

Amounts due to related parties

 

54,877

 

 

51,590

 

 

 

 

 

 

 

 

Total non-current liabilities

 

835,228

 

 

691,005

 

 

 

 

 

 

 

 

Total Liabilities

 

1,039,971

 

 

965,405

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock—$.01 par value per share; 400,000,000 shares authorized; 77,264,139 shares issued and outstanding, (December 31, 2021: 77,180,429)

 

772

 

 

773

 

Additional paid-in capital

 

797,324

 

 

797,800

 

Accumulated other comprehensive loss

 

(253)

 

 

(488)

 

Retained earnings

 

316,008

 

 

357,068

 

 

 

 

 

 

 

 

Total Navigator Holdings Ltd. stockholders’ equity

 

1,113,851

 

 

1,155,153

 

Non-controlling interest

 

3,603

 

 

4,307

 

 

 

 

 

 

 

 

Total equity

 

1,117,454

 

 

1,159,460

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

$

2,157,425

 

$

2,124,865

 

 

 

 

 

 

 

 

Navigator Holdings Ltd.

Condensed Consolidated Statements of Income
(Unaudited)

 

Three months ended
June 30,

Six months ended
June 30,

 

 

2021

 

 

2022

 

 

2021

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands except share and per share data)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

$

80,153

 

$

105,875

 

$

160,661

 

$

206,271

 

Operating revenues - Unigas Pool

 

 

 

11,389

 

 

 

 

24,893

 

Operating revenue- Luna Pool collaborative arrangement

 

5,546

 

 

6,653

 

 

10,786

 

 

12,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating revenues

 

85,699

 

 

123,917

 

 

171,447

 

 

243,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage commissions

 

974

 

 

1,569

 

 

2,167

 

 

2,976

 

Voyage expenses

 

17,689

 

 

20,804

 

 

33,305

 

 

41,600

 

Voyage expenses – Luna Pool collaborative arrangement

 

5,663

 

 

6,950

 

 

9,795

 

 

11,540

 

Vessel operating expenses

 

28,826

 

 

38,628

 

 

55,818

 

 

76,679

 

Depreciation and amortization

 

19,473

 

 

31,477

 

 

38,746

 

 

62,819

 

General and administrative costs

 

5,796

 

 

7,827

 

 

12,076

 

 

14,170

 

Profit from sale of vessel

 

 

 

 

 

 

 

(358)

 

Other income

 

(88)

 

 

(109)

 

 

(160)

 

 

(198)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

78,333

 

 

107,146

 

 

151,747

 

 

209,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

7,366

 

 

16,771

 

 

19,700

 

 

34,466

 

Other income / (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange gain on senior secured bonds

 

330

 

 

8,218

 

 

338

 

 

7,441

 

Unrealized (loss) / gain on non-designated derivative instruments

 

(269)

 

 

(5,346)

 

 

278

 

 

9,896

 

Interest expense

 

(8,647)

 

 

(11,471)

 

 

(17,608)

 

 

(22,434)

 

Interest income

 

63

 

 

112

 

 

94

 

 

199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) / income before income taxes and share of result of equity accounted joint ventures

 

(1,157)

 

 

8,284

 

 

2,802

 

 

29,568

 

Income taxes

 

(190)

 

 

(671)

 

 

(335)

 

 

(1,064)

 

Share of result of equity method investments

 

2,001

 

 

6,757

 

 

1,396

 

 

13,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

654

 

 

14,370

 

 

3,863

 

 

41,764

 

Net income attributable to non-controlling interest

 

(394)

 

 

(348)

 

 

(783)

 

 

(704)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to stockholders of Navigator Holdings Ltd.

$

260

 

$

14,022

 

$

3,080

 

$

41,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to stockholders of Navigator Holdings Ltd.:

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

$

0.01

 

$

0.18

 

$

0.06

 

$

0.53

 

Diluted:

$

0.01

 

$

0.18

 

$

0.05

 

$

0.53

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

55,971,121

 

 

77,265,022

 

 

55,935,859

 

 

77,229,234

 

Diluted:

 

56,306,557

 

 

77,582,824

 

 

56,273,533

 

 

77,550,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Navigator Holdings Ltd.

Condensed Consolidated Statements of Cash Flows
(Unaudited)

 

Six Months
ended
June 30,
2021

 

Six Months
ended
June 30,
2022

 

 

 

 

 

(in thousands)

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

$

3,863

 

$

41,764

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

Unrealized gain on non-designated derivative instruments

 

(278)

 

 

(9,896)

 

Depreciation and amortization

 

38,746

 

 

62,819

 

Payment of drydocking costs

 

(10,061)

 

 

(7,792)

 

Amortization of share-based compensation

 

576

 

 

476

 

Amortization of deferred financing costs

 

1,644

 

 

1,964

 

Share of result of equity method investments

 

(1,396)

 

 

(13,260)

 

Impairment of vessel

 

5,400

 

 

 

Profit from sale of vessel

 

 

 

(358)

 

Unrealized foreign exchange gain on senior secured bonds

 

(338)

 

 

(7,441)

 

Other unrealized foreign exchange gain

 

15

 

 

32

 

Changes in operating assets and liabilities

 

 

 

 

 

Accounts receivable

 

(7,617)

 

 

7,306

 

Insurance claim receivable

 

(6,015)

 

 

(1,927)

 

Bunkers and lubricant oils

 

(2,768)

 

 

(1,821)

 

Accrued income and prepaid expenses and other current assets

 

22,588

 

 

(7,894)

 

Accounts payable, accrued interest, accrued expenses and other liabilities

 

3,546

 

 

(4,492)

 

Amounts due to related parties

 

5,907

 

 

(775)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

53,812

 

 

58,705

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Additions to vessels and equipment

 

(323)

 

 

(1,082)

 

Contributions to equity method investments

 

(4,000)

 

 

 

Distributions from equity method investments

 

6,850

 

 

14,150

 

Purchase of other property, plant and equipment

 

(193)

 

 

(36)

 

Net proceeds from sale of vessels

 

 

 

26,449

 

Insurance recoveries

 

411

 

 

871

 

 

 

 

 

 

 

 

Net cash provided by investing activities

 

2,745

 

 

40,352

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from secured term loan facilities and revolving credit facilities

 

18,000

 

 

 

Issuance costs of secured term loan facilities

 

(26)

 

 

 

Repayment of financing of vessel to related parties

 

(3,342)

 

 

(3,287)

 

Repayment of secured term loan facilities and revolving credit facilities

 

(34,104)

 

 

(68,777)

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

(19,472)

 

 

(72,064)

 

 

 

 

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

 

37,085

 

 

26,993

 

Cash, cash equivalents and restricted cash at beginning of period

 

59,271

 

 

124,223

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at end of period

$

96,356

 

$

151,216

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

Total interest paid during the period, net of amounts capitalized

$

15,826

 

$

16,586

 

 

 

 

 

 

 

 

Total tax paid during the period

$

192

 

$

830