Navigator Holdings Ltd. Preliminary First Quarter 2020 Results
Navigator Holdings Ltd. Preliminary First Quarter 2020 Results
Highlights
Navigator Holdings Ltd. (the “Company”, “we”, “our” and “us”) (NYSE: NVGS) reported operating revenue of $81.3 million for the three months ended March 31, 2020, compared to $76.1 million for the three months ended March 31, 2019.
* A net loss of $8.5 million (or a loss per share of $0.14) for the three months ended March 31, 2020, which includes COVID-19 related foreign exchange losses of $3.7 million and a $3.0 million loss on the 50/50 joint venture (the “Export Terminal Joint Venture”) relating to the ethylene export marine terminal at Morgan’s Point, Texas (the “Marine Export Terminal”) prior to the commencement of the take-or-pay contracts. This results in a loss relating to our vessels of $1.8 million (or a loss per share of $0.03) compared to a net loss of $3.3 million (or a loss per share of $0.06) for the three months ended March 31, 2019.
* Adjusted EBITDA(1) was $26.0 million for the for the three months ended March 31, 2020, compared to $27.1 million for the three months ended March 31, 2019.
* Fleet utilization improved to 89.0% for the three months ended March 31, 2020 compared to 84.8% for the three months ended March 31, 2019.
* In April 2020 a further long-term throughput commitment was agreed for the Marine Export Terminal, increasing total offtake commitments to approximately 95% of nameplate capacity.
* In March 2020, the Company collaborated with Pacific Gas Pte. Ltd. and Greater Bay Gas Co. Ltd. to form and manage a pool of up to fourteen vessels (“Luna Pool”) commencing in the second quarter 2020. The Luna Pool will focus on the transportation of ethylene and ethane to meet the growing demands of our customers.
* We have achieved a record of 489 days without a Lost-Time-Incident (LTI) across our in-house technical managed fleet of 17 vessels.
* The conversion last year of Navigator Aurora to using ethane for propulsion has resulted in carbon emissions decreasing by approximately 25% for the first quarter, which is the equivalent of taking around 5,000 cars off the road.
The Company’s financial information for the quarter ended March 31, 2020 included in this press release is preliminary and is subject to change in connection with the completion of the Company’s quarter-end close procedures and further financial review. Actual results may differ from these estimates as a result of the completion of the Company’s quarter-end closing procedures, review adjustments and other developments that may arise between now and the time such financial information for the quarter ended March 31, 2020 is finalized.
Recent Developments
Terminal
In April 2020, a further long-term throughput commitment was executed for the Marine Export Terminal, increasing total offtake commitments to approximately 95% of the one million ton annual nameplate capacity. The terminal is now fully functional and the throughput agreements are ramping up. The terminal is expected to operate at a level of approx. 600,000 tons per annum pro-rata until the cryogenic storage tank becomes operational later this year.
The Company did not make any contributions to the Export Terminal Joint Venture during the first quarter, However since March 31, 2020 the Company has contributed $7.5 million to the Export Terminal Joint Venture by drawing down on the Company’s terminal credit facility. This is in addition to the $125.5 million contributed as of December 31, 2019 of our expected share of the approximate $150.0 million capital cost of the Marine Export Terminal.
Luna Pool
In March 2020, the Company collaborated with Pacific Gas Pte. Ltd. and Greater Bay Gas Co. Ltd. to form and manage the Luna Pool, focusing on the transportation of ethylene and ethane to meet the growing demands of our customers. The Luna Pool became operational during the second quarter of 2020, initially with the introduction of seven vessels. It is expected that all 14 will have joined the pool by the end of the second quarter. Currently nine of the 12 vessels in the pool are transporting ethylene, two carrying ethane and one carrying propylene.
Trends
2020 began well in January this year, with healthy utilization of our vessels at 97% and Clarksons’ 12 month timecharter assessment reaching a high of $695,000 per calendar month. This upward trajectory was disrupted by the COVID-19 Pandemic and the subsequent lock-downs, first starting in Asia which were swiftly followed by the rest of the world. As a consequence, our February and March utilization levels fell to 84% and 85% respectively as a result of reduced economic activity. However, LPG demand remained relatively resilient to COVID-19 as it fulfills a fundamental energy need for heating and cooking among the world’s population. Most of the LPG transported in handysize vessels cater for this domestic demand and we expect the traditional intra-continent handysize LPG trades to remain largely unaffected. The larger gas carrier segment is more sensitive to changes in global LPG price arbitrage as well as to the replacement of LPG as a preferred feedstock in the petrochemical sector compared to the handysize segment. The U.S. became the largest exporter of LPG in 2019 and the volume is dependent on both local demand and global pricing which affects the monthly output from the country and more importantly the availability of tons to be shipped. This in turn impacts the rate levels for Very Large Gas Carriers. Handysize vessels distribute a small fraction of the U.S. LPG volume as the vast majority is transported long distance across the Pacific Ocean by larger vessels. By contrast, Handysize vessels are predominately employed in other LPG exporting and consuming areas which are more sheltered from global price arbitrage movements. Whereas the larger gas carrier segments have high price volatility, the handysize quoted timecharter index fell by only 5% to $665,000 per calendar month at the end of the first quarter.
April continued in the same vein as March in terms of utilization of our vessels. However China and many other countries are gradually beginning to ease out of lock-down and re-start manufacturing sites. Ethylene from the Marine Export Terminal re-commenced during May with the cargoes moving world-wide. U.S. produced propylene was exported for the first time in more than a decade on handysize vessels bound for Far Eastern destinations. European producers continued exporting butadiene to East of Suez importers. These deep-sea petrochemical trades provide robust ton-mile demand to the segment. Therefore, combining both LPG and petrochemical trends during the period, we see May utilization of our vessels regaining some lost ground and is on track to reach the approximately 90% level. 2020 has been and continues to be disrupted by COVID-19. Uncertainty remains as to the impact of COVID-19. As more and more countries ease themselves out of lock-downs and re-start their economies it is expected that demand for long haul petrochemical cargoes and regional LPG distribution will increase.
Preliminary First quarter 2020 Results
Supplementary First Quarter Presentation