Navigator Holdings Ltd.
Preliminary Results for the Three and Nine Months Ended September 30, 2019
- Navigator Holdings Ltd. (the “Company”, “we”, “us” and “our”) reported operating revenue of $75.6 million for the three months ended September 30, 2019, compared to $80.8 million for the three months ended September 30, 2018.
- Net loss was $2.9 million (loss per share of $0.05) for the three months ended September 30, 2019 (which includes a $1.0 million non-cash loss on exchange rate movements), compared to net income of $0.6 million for the three months ended September 30, 2018.
- Adjusted EBITDA1 was $29.5 million for the three months ended September 30, 2019 compared to $30.4 million for the three months September 30, 2018.
- We have contracted with seven new customers during the third quarter, as well as a twelve-month charter with a major petrochemical producer for one of our ethane-capable midsize vessels at a rate in excess of $30,000 per day.
- A fourth long term throughput agreement has been signed for the Marine Export Terminal with a major petrochemical producer, increasing total offtake commitments to approximately 75% of nameplate capacity. The committed contracts cover a period of five to seven years.
- Our 50/50 joint venture relating to our ethylene export marine terminal at Morgan’s Point, Texas (the “Marine Export Terminal”) is forecast to be operational on time and on budget with our first loading scheduled for December 2019.
- Following the technical management takeover of Navigator Prominence we have now taken 16 vessels into in-house management.
- On October 29, 2019, the Company closed a sale and leaseback transaction to refinance Navigator Aurora. The sale price agreed was $77.5 million, with the buyer paying 90% of the vessel’s value, or $69.75 million and a seller’s credit representing the remaining 10%. From the proceeds, $44.5 million was used to repay the vessel’s secured tranche of the December 2015 secured term loan facility. Simultaneous with this sale, the Company entered into a bareboat charter for the vessel for a period of up to 13 years, with break clauses at years 5, 7 and 10.
Our medium size gas carriers successfully performed two ‘firsts’ during the third quarter of 2019. Competitive U.S. butane pricing enabled our customers to transport tons to India, adding significant ton mile to the medium size segment, which we believe was the first trade of its kind, as Middle East exports have typically catered for India’s import needs. Also made possible due to competitive U.S. priced natural gas liquids (“NGLS”), one of our medium sized gas carriers transported ethane from the U.S. Gulf to China, which we believe was the first medium sized ethane cargo moving trans-pacific, also indicating longer ton mile in the segment. Our four medium sized vessels were fully utilized during the quarter, and we expect this to continue for the remainder of the year. Medium sized gas carrier 12 month time charter rates increased from approximately $540,000 per calendar month (“pcm”) at the beginning of the quarter to current rates of approximately $740,000 pcm.
The handysize segment remained flat during the third quarter with 12 month time charter rates hovering around $545,000 pcm to current rates of $575,000 pcm, experiencing a time-lag for the positive effects from stronger freight markets for the larger segments above. Geopolitical tension in the Middle East resulted in the introduction of substantial war risk premiums on shipping through the Straits of Hormuz, which made spot movements of LPG and petrochemical cargoes less economical. It appears that only the Very Large Gas Carrier (“VLGC”) market has been able to absorb these increased premiums on their trades.
The handysize segment is continuously expanding its footprint creating new trades that increase incremental demand. We have contracted with seven new clients during the third quarter, putting the handysize’s versatility to practice in new markets in China and in Africa. One example is a new Indian coastal propylene cabotage trade, which balances the domestic market. This is the first time we have engaged one of our handysize vessels for this trade.
The belief in a stronger freight market is underpinned by newbuilding order activity in the market. Six medium-sized gas carriers and two handysize ethylene carriers were confirmed ordered during the third quarter, all with anticipated delivery time within two years.
The Marine Export Terminal is on schedule to commence operations at the end of the year, which will add incremental product supply to the market. Additional U.S. and Canadian export terminals are scheduled to be commissioned in 2020 requiring semi-refrigerated handysize vessels. A continuing healthy freight market for the medium and large gas carriers is believed to be having a positive effect on the handysize segment.