On November 13, 2023, the Board declared a cash dividend of $0.05 per share of the common stock of Navigator Holdings Ltd. (the “Company”, “Navigator”, “we”, “our” and “us”) (NYSE: NVGS), for the quarter ended September 30, 2023 (the “Dividend”). The Dividend will be payable on December 21, 2023, to all shareholders of record as of the close of business New York time on December 7, 2023 which would have equated to a quarterly dividend payment of $3.7 million.
As part of the Capital Return Policy for the quarter ended September 30, 2023, Navigator expects to repurchase approximately $1.1 million of the Company’s common stock (the “Share Repurchases”) between November 16, 2023 and December 31, 2023, subject to operating needs, market conditions and other circumstances, such that the Dividend and Share Repurchases together equal 25% of net income for the quarter ended September 30, 2023.
The company reported operating revenue of $137.8 million for the three months ended September 30, 202, compared to $106.8 million for the three months ended September 30, 2022.
Net Income attributable to stockholders’ of Navigator Holdings Ltd. was $19.1 million for the three months ended September 30, 2023, compared to $2.4 million for the three months ended September 30, 2022.
Earnings per share was $0.26 for the three months ended September 30, 2023, compared to $0.03 per share for the three months ended September 30, 2022.
Adjusted Earnings per share, to exclude unrealized gains or losses on non-designated derivative instruments was $0.27 for the three months ended September 30, 2023, compared to a loss of $0.07 for the three months ended September 30, 2022.
Adjusted EBITDA(1) was a record since the Company’s IPO of $72.2 million for the three months ended September 30, 2023, compared to $41.5 million for the three months ended September 30, 2022.
Fleet utilization increased to 93.4% for the three months ended September 30, 2023, compared to 84.9% for the three months ended Septemer 30, 2022.
Average daily time charter equivalent (“TCE”) was $26,278 for the three months ended September 30, 2023, compared to $22,022 for the three months ended September 30, 2022.
The Ethylene Export Terminal had a throughput during the third quarter of 2023 totaling 249,857 metric tons, compared to 189,140 metric tons during the third quarter of 2022.
In September 2023, we purchased an aggregate of $9.0 million of the 2020 Bonds in the open market using cash on hand. These purchased 2020 Bonds have not been canceled or redeemed and the Company intends to hold the bonds to maturity.
On October 25, 2023 the Company announced a new investment alongside Yara Growth Ventures to acquire a 14.5% interest in Azane Fuel Solutions for 2.7 million EUR (approximately $3 million). The first green ammonia bunkering units are scheduled to be delivered in 2025 enabling low carbon fuel offering to shipowners.
Ethylene Export Terminal
The Ethylene Export Terminal had a throughput during the thirdquarter of 2023 totaling 249,857 metric tons, compared to 189,140 metric tons during the third quarter of 2022.
We, together with Enterprise Products Partners L.P, our joint venture partner, have agreed to the Terminal Expansion Project, which is expected to increase the export capacity from approximately one million tons per year to at least 1.55 million tons. Long lead items have already been ordered and construction, which is expected to be completed in the fourth quarter of 2024, has commenced. The total capital contributions required from us to the Export Terminal Joint Venture for the Terminal Expansion Project are expected to be approximately $125 million which the Company expects to finance using existing cash resources, distributions from the Export Terminal Joint Venture during the course of the expansion and additional debt. The Company has made a total of $27 million in capital contributions for the Terminal Expansion Project.
Azane Fuel Solutions Ammonia Bunkering
On Ocober 25, 2023 the Company , together with Yara Growth Ventures, announced that each of them had successfully acquired a 14.5% interest in the Norwegian startup Azane Fuel Solutions AS (“Azane”) for 2.7 million EUR (approximately $3 million). Azane, a joint venture between ECONNECT Energy AS and Amon Maritime AS was founded in Norway in 2020 to develops proprietary technology and services for ammonia fuel handling, to facilitate the transition to green fuels for shipping.
Subject to customary conditions, Azane intends to build the world’s first ammonia bunkering network, with Yara Clean Ammonia already pre-ordering 15 units from Azane. The investment made by Yara and Navigator is expected to enable Azane to begin construction of its first bunkering unit for ammonia supply in Norway, aiming to kickstart the transition to zero-carbon fuels for maritime transportation. Future value creation for Azane is expected to come through international expansion with its bunkering solutions and broaening of its offerings in ammonia fuel handling technology.
Purchase of 2020 Unsecured Bonds
On September 10, 2020, we issued senior unsecured bonds in an aggregate principal amount of $100.0 million with Nordic Trustee AS as the bond trustee (the “2020 Bonds”). The 2020 Bonds are governed by Norwegian law and listed on the Nordic ABM which is operated and organized by Oslo Børs ASA.
In September 2023, we purchased an aggregate of $9.0 million of the 2020 Bonds in the open market using cash on hand. These purchased 2020 Bonds have not been canceled or redeemed and the Company intends to hold the bonds to maturity.
Shipping Trends
Utilization across the fleet increased from 89.0% in the second quarter of 2023 to 93.4% in the third quarter of 2023. Utilization during third quarter of 2022 was 84.9%. The increase in utilization of 8.8% is primarily driven by improvement in the market conditions for the ethylene capable vessels in our fleet.
During the third quarter of 2023, the handsize 12-month market assessment for semi-refrigerated and fully refrigerated vessels increased by $12,000 and $20,000 per calendar month (“pcm”), to $800,000 pcm and $772,000 pcm, respectively. The handysize ethylene market assessment increased by $40,000 pcm to $1,000,000 pcm.
During the third quarter of 2023 we experienced downward pressure on the ethylene arbitrage to Asia, this was balanced by increased activity on ethane movements, both transatlantic and to Asia, the latter being relatively long voyages and increasing the ton/mile. Guiding spot rates on the ethylene segment remained flat during the third quarter of 2023, however utilization and time charter assessments have improved.
We have 32 vessels engaged under time charters (“TC”) and 15 vessels on spot and contracts of affreightment (“CoA”). Our midsize and fully refrigerated vessels are fully employed on time charters, our semi-refrigerated vessels are employed under time charters and voyage charters, and most of the Ethlene capable vessels are employed on the spot market. From October 31, 2023 to October 31, 2024, we currently expect to have 38% of our ship days covered under time charter.
The fourth quarter of 2023 and the first quarter of 2024 are typically busier seasons for our fleet. We expect to see an increase in spot activity and an increase in time charter assessment as well as a continuation of the positive market developments we have recently seen.
Reconciliation of Non-GAAP Financial Measures
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended September 30, 2023 and 2022: