Navigator Holdings Ltd. Preliminary second Quarter 2016 Results
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
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