Navigator Holdings Ltd. Q4 FY2024 earnings call

• Q4 2024 saw revenues increase 2% year-over-year due to higher utilization. Adjusted EBITDA for Q4 was over $73 million, exceeding both the same period prior year and Q3.
• The balance sheet remained strong with a robust cash position despite debt repayments, including the final December installment of $50 million on the terminal expansion project.
• Return of capital continued in Q4 with a $0.05 fixed dividend and a share buyback up to 25% of net income. $100 million of new unsecured bonds were issued at 7.25%, the tightest spread for a dollar-denominated shipping bond in the Nordic market since 2008.
• Commercially, TCE rates were maintained high with average Q4 TCE rates of $28,341, and utilization was above 92%, higher than Q3 and the same period prior year.
• Ethylene export terminal throughput for Q4 was 159,000 tons, lower than Q4 2023 but the terminal expansion was completed on time and on budget in December. Options for two mid-size ethylene carriers were exercised, a time charter agreement for the first MGC vessel was signed, and three handysize ethylene carriers were acquired for $83.9 million.

In the fourth quarter of 2024, Navigator Holdings generated revenues up 2% compared to the same period the previous year, driven by slightly higher utilization. Adjusted EBITDA for Q4 came in at just over $73 million. Total operating revenue for the quarter was $144 million with a robust utilization of 92.2% and average time charter equivalent (TCE) rates of $28,341 per day. Petrochemicals such as ethane, ethylene, propylene, and butadiene make up 46% of the firm's total earnings days.

• Expect vessel utilization to remain high in Q1 2025, close to Q4 levels, and robust TCE rates to continue.
• Estimated cash breakeven for 2025 is $20,610 per day, providing substantial headroom for positive EBITDA.
• OpEx guidance for 2025 varies by vessel size, with higher costs than 2024 due to three additional vessels in the fleet.
• Refinancing workstreams are ongoing to reduce the average cost of debt.

• Geopolitical tension limits the ability to do longer-term forecasting.
• Trade friction could negatively impact the arbitrage and rates if tariffs are imposed on the products the firm transports.

Q: Ben Nolan asked about chartering of ships with contracts rolling off, and where the contract market is relative to current levels.

A: Mads Peter Zacho stated that the semi-refrigerated market and ethylene market for handysize will strengthen as the arbitrage widens, with the arbitrage for US-produced ethylene to the world having widened by nearly $200 over the last two months.

Q: Spiro Dounis inquired about Morgan's Point terminal operations and vessel sales.

A: Gary Chapman mentioned the terminal is fully operational but not fully utilized, and Mads Peter Zacho said vessel sales negotiations are ongoing with interested buyers at various stages.

Q: Omar Nokta asked about the domicile change and new build chartering.

A: Mads Peter Zacho and Gary Chapman discussed the domicile change process as moving the business closer to its operations, and Omar was informed that chartering of new builds is profitable but specific rate details were not shared.

Q: Poe Fratt asked about terminal offtake, asset values, and domicile costs.

A: Randy Giveans provided color on the offtake range being greater than 90% but not at full capacity, Gary Chapman noted asset values are not highly liquid, and Gary Chapman stated domicile costs are spread over quarters with legal costs minimized where possible.

Q: Climent Molins asked about terminal capacity and timeline.

A: Gary Chapman discussed the terminal's flex capacity and long-term potential for increasing throughput, noting it may take several years to reach maximum capacity as midstream infrastructure continues to develop