Navigator Holdings Ltd. Preliminary second Quarter 2016 Results

08 Aug, 2016, 16:48 ET from Navigator Gas

LONDON, August 8, 2016 /PRNewswire/ --

Highlights 

  • Navigator Holdings Ltd. (NYSE: NVGS) (the "Company") reports revenue of $72.5 million for the three months ended June 30, 2016.
  • Net income was $11.1 million for the three months ended June 30, 2016 with earnings per share of $0.20.
  • EBITDA[1] was $34.2 million for the three months ended June 30, 2016.
  • During the second quarter, on April 14, 2016, we took delivery of a further newbuilding vessel, Navigator Copernico, taking our total fleet to 31 vessels on the water at June 30, 2016.
  • On August 2, 2016 Navigator Aurora, the first of our midsize semi-refrigerated ethane vessels, was delivered. This vessel will commence a ten-year time charter in December 2016.

Since the end of the first quarter of 2016, the handysize LPG seaborne transportation market has seen a significant weakening, and we have been experiencing a reduction in both our vessels charter rates and our vessel utilization. The marketplace has been experiencing an increase in the supply of hydrocarbons, and LPG is competing for market share against both light and heavy hydrocarbons. In addition, the LPG market has been further weakened due to a challenging pricing environment for propane and butane that has narrowed the global arbitrage spread resulting in a reduction of the seaborne transportation of LPG. Three very large gas carriers ("VLGC") cargo stems originating from U.S. were cancelled during June 2016, seven in July 2016 and the same level of cancellations are expected for August 2016. It has been reported that several end users are renegotiating or reneging on their contracts, increasing uncertainty among the LPG participants. Marcus Hook NGL export terminal on the U.S. East Coast has commenced the export of significant amounts of ethane as well as adding fully-refrigerated capability when exporting propane, which has reduced cubic meter mile demand for the handysize semi-refrigerated vessels operating in the Atlantic basin. Our fleet loaded 5 cargos during the first six months of 2016 compared to 11 during first half of 2015. LPG still remains a supply driven product with a fundamental need to price to clear the market, particularly for production areas throughout the world with limited LPG storage capacity. By contrast, the U.S. has natural storage in the vast salt domes of Mont Belvieu, Texas, and producers and marketers face less pressure, in the short term, to reduce prices to export LPG. With U.S. LPG inventories on the rise, arbitrage opportunities may materialize, which we believe would encourage demand.

[1] EBITDA is a non-GAAP financial measure and represents net income before net interest expense, income taxes and depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to consolidated net income or cash generated from operations, as determined by U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is not a recognized measurement under U.S. GAAP. See the table below for a reconciliation of EBITDA to net income, our most directly comparable financial measure calculated accordance with U.S. GAAP.

In January 2016 very large (84,000cbm) and medium size (38,000cbm) fully-refrigerated vessel market charter rates were being quoted at $1.6 million per calendar month ("pcm") and $1.1 million pcm respectively. At the end of the second quarter 2016, market charter rates for the same sized vessels were quoted at $640,000 and $650,000 pcm respectively. The handysize (22,000cbm) semi-refrigerated vessel market charter rates, by comparison were quoted at $920,000 pcm in January 2016 and are currently quoted at $625,000 pcm, resulting in all three segments converging at similar charter rate levels, despite the vast differences in size capacity. The market experienced a similar scenario during 2009/2010 when VLGC charter rates were quoted at levels less than handysize vessel rates. The parallels are evident in 2016; trading patterns for handysized vessels are shifting towards long haul transportation of petrochemical gases, predominantly ethylene and butadiene cargoes. Our capability to participate in petrochemical, LPG and ammonia trades creates more opportunities for us than if our vessels were only capable of trading in one of these three markets. We believe this is also a factor that may help explain why our relatively smaller vessels can earn similar or higher rates than the larger fully-refrigerated vessels. Given the forward curve of hydrocarbon market pricing and the additional vessels coming to the global fleet, however, we expect market softness to continue for the remainder of 2016.

A Form 6-K with more detailed information on our second quarter 2016 financial results is being filed with the U.S. Securities and Exchange Commission simultaneous with this release.

Reconciliation of Non-GAAP Financial Measure 

The following table sets forth a reconciliation of net income to EBITDA for the three months ended June 30, 2016:


   
                                      $'000's
    Net income                     $   11,121
    Net interest expense                7,611
    Income taxes                          202
    Depreciation and
    amortization                       15,275

    EBITDA                         $   34,209

Conference Call Details: 

Tomorrow, Tuesday, August 9, 2016, at 9:00 A.M. ET, the Company's management team will host a conference call to discuss the financial results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (US Toll Free Dial In), 0(800) 953-0329 (UK Toll Free Dial In) or +44 (0)1452-542-301 (Standard International Dial In). Please quote "Navigator" to the operator.

A telephonic replay of the conference call will be available until Tuesday, August 16, 2016 by dialing 1(866) 247-4222 (US Toll Free Dial In), 0(800) 953-1533 (UK Toll Free Dial In) or +44 (0)1452 550-000 (Standard International Dial In). Access Code: 11870348#

Audio Webcast: 

There will also be a live, and then archived, webcast of the conference call, available through the Company's website (http://www.navigatorgas.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Us  

Navigator Gas is the owner and operator of the world's largest fleet of handysize liquefied gas carriers and provides international and regional seaborne transportation of liquefied petroleum gas, petrochemical gases and ammonia for energy companies, industrial users and commodity traders.  Navigator's fleet consists of 38 semi- or fully-refrigerated liquefied gas carriers, including six newbuildings scheduled for delivery by July 2017.

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:

- 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 financial condition and liquidity, including our ability to refinance our indebtedness that matures in 2017 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 receipt of our six newbuildings and the timing of the receipt thereof;

- our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of our vessels;

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

- 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 expectation that we will continue to provide in-house technical management for some vessels in our fleet and our success in providing such in-house technical management; and

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

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.
Consolidated Balance Sheets 
   
                                                    December 31,                   June 30,
                                                        2015                         2016

                                                                        (Unaudited)
    Assets                                            (in thousands except share data)

    Current assets
    Cash and cash equivalents         $                  87,779       $             66,863
    Accounts receivable, net                              9,050                      9,293
    Accrued income                                        5,647                     13,218
    Prepaid expenses and other
    current assets                                        8,754                     10,857
    Inventories                                           3,480                      5,814
    Insurance recoverable                                10,289                      5,881
    Total current assets                                124,999                    111,926

    Non-current assets
    Vessels in operation, net                         1,264,451                  1,345,010
    Vessels under construction                          170,776                    162,283
    Property, plant and
    equipment, net                                          279                        216
    Total non-current assets                          1,435,506                  1,507,509
    Total assets                      $               1,560,505       $          1,619,435

    Liabilities and
    stockholders' equity
    Current liabilities
    Current portion of
    long-term debt, net of
    deferred financing costs          $                  59,024       $            186,236
    Accounts payable                                     11,471                      6,458
    Accrued expenses and other
    liabilities                                           9,065                     12,117
    Accrued interest                                      3,117                      3,543
    Deferred income                                       6,606                      4,804
    Total current liabilities                            89,283                    213,158

    Non-current liabilities
    Secured term loan
    facilities, net of current
    portion and deferred
    financing costs                                     436,131                    339,877
    Senior unsecured bond                               125,000                    125,000
    Total non-current liabilities                       561,131                    464,877
    Total liabilities                                   650,414                    678,035
    Commitments and contingencies
    Stockholders' equity
    Common stock - $.01 par value;
    400,000,000 shares
    authorized; 55,437,695
    shares issued and outstanding,
    (2015: 55,363,467)                                      554                        554
    Additional paid-in capital                          586,451                    587,238
    Accumulated other
    comprehensive loss                                    (465)                      (458)
    Retained earnings                                   323,551                    354,066
    Total stockholders' equity                          910,091                    941,400
    Total liabilities and
    stockholders' equity              $               1,560,505       $          1,619,435


 

                                       Navigator Holdings Ltd.
                                 Consolidated Statements of Income 
                                            (Unaudited) 

   

                                Three months ended                Six months ended
                                     June 30,                         June 30,
                               (in thousands except             (in thousands except
                                   share data)                      share data)
                           2015                 2016           2015                  2016

    Revenues
    Operating
    revenue         $    84,140    $          72,541  $     158,338   $           148,916

    Expenses
    Brokerage
    commissions           1,906                1,508          3,536                 3,009
    Voyage expenses      11,304                9,326         18,175                16,419
    Vessel operating
    expenses             19,342               23,712         37,312                46,117
    Depreciation and
    amortization         13,110               15,275         25,911                29,851
    General and
    administrative
    costs                 2,700                3,103          5,354                 6,060
    Other
    corporate
    expenses              1,170                  683          1,533                 1,233

    Total operating
    expenses             49,532               53,607         91,821               102,689

    Operating income     34,608               18,934         66,517                46,227

    Other
    income/(expense)
    Interest expense     (7,000)              (7,702)       (13,796)              (15,485)
    Write off of
    deferred
    financing costs           -                    -         (1,797)                    -
    Interest
    income                   27                   91             30                   169

    Income before
    income taxes         27,635               11,323         50,954                30,911
    Income taxes           (215)                (202)          (450)                 (396)

    Net income      $    27,420    $          11,121  $      50,504   $            30,515

    Earnings per
    share:
    Basic:          $      0.50    $            0.20  $        0.91   $              0.55
    Diluted:        $      0.49    $            0.20  $        0.91   $              0.55

    Weighted average
    number of shares
    outstanding:                    
    Basic:           55,363,467           55,437,695     55,356,483            55,401,805                     
    Diluted:         55,741,907           55,812,935     55,669,709            55,778,768




                                       Navigator Holdings Ltd.
                              Consolidated Statements of Cash Flows 
                                            (Unaudited) 

   
                                                     June 30,                 June 30,
                                                       2015                     2016
                                                 (in thousands)           (in thousands)

    Cash flows from operating activities
    Net income                                 $         50,504         $         30,515

    Adjustments to reconcile net income
    to net cash

    provided by operating activities
    Depreciation and amortization                        25,911                   29,851
    Payment of drydocking costs                          (4,539)                  (7,309)
    Insurance claim debtor                                    -                     (292)
    Amortization of share-based
    compensation                                            790                      787
    Amortization of deferred financing
    costs                                                 3,232                    1,471
    Unrealized foreign exchange                              69                       25
    Changes in operating assets and
    liabilities
    Accounts receivable                                 (3,444)                    (243)
    Inventories                                          (1,139)                  (2,334)
    Accrued income and prepaid expenses
    and other current assets                             (7,168)                 (10,092)
    Accounts payable, accrued interest
    and other liabilities                                 3,414                   (3,336)

    Net cash provided by operating
    activities                                           67,630                   39,043

    Cash flows from investing activities
    Payment to acquire vessels                           (1,868)                  (1,141)
    Payment for vessels under
    construction                                       (124,991)                 (84,665)
    Purchase of other property, plant
    and equipment                                           (40)                     (25)
    Receipt of shipyard penalty payments                    634                      417
    Insurance recoveries                                    391                    4,700
    Capitalized costs for the repairs of
    Navigator Aries                                           -                   (8,732)

    Net cash used in investing
    activities                                         (125,874)                 (89,446)

    Cash flows from financing activities
    Proceeds from secured term loan
    facilities                                           95,400                   62,300
    Direct financing costs of secured
    term loan facilities                                 (2,400)                    (155)
    Repayment of secured term loan
    facilities                                          (31,057)                 (32,658)

    Net cash provided by financing
    activities                                           61,943                   29,487

    Net increase/(decrease) in cash and
    cash equivalents                                      3,699                  (20,916)

    Cash and cash equivalents at
    beginning of period                                  62,526                   87,779

    Cash and cash equivalents at end of
    period                                     $         66,225         $         66,863

    Supplemental Information
    Total interest paid during the
    period, net of amounts capitalized         $         14,336         $         16,193

    Total tax paid during the period           $            402         $            370

Navigator Gas Attention: Investor Relations Department New York: 399 Park Avenue, 38th Floor, New York, NY 10022. Tel: +1-212-355-5893 London: 21 Palmer Street, London, SW1H 0AD. Tel: +44-(0)20-7340-4850

SOURCE Navigator Gas