Financial Highlights
- On August 14, 2024, the Board of Navigator Holdings Ltd. (NYSE:
NVGS) declared a cash dividend of $0.05 per share for the quarter
ended June 30, 2024, (the “Dividend”) under the Company's
Return of Capital policy. The Dividend will be paid on
September 24, 2024, to all shareholders of record as of the
close of business U.S. E.D.T. on September 3, 2024.
- Also as part of the Company's Return of Capital policy for the
quarter ended June 30, 2024, the Company expects to repurchase
approximately $2.3 million of common stock between August 16, 2024,
and September 30, 2024, 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 June 30, 2024.
- The Company repurchased 116,737 shares of common stock in the
open market during the quarter ended June 30, 2024, at an
average price of $17.12 per share, totaling $2.0 million as part of
the Company's Return of Capital policy related to the quarter ended
March 31, 2024.
- On June 13, 2024, the Company closed a secondary public
offering of a total of 7.0 million shares of common stock by BW
Group, as the selling shareholder, at a public offering price of
$15.00 per share. The Company did not offer any of its shares of
common stock in the offering and did not receive any proceeds from
the sale of its common stock by the selling shareholder in the
offering. In addition, concurrently with the closing of the
offering, the Company purchased from the underwriters 3,500,000 of
the shares of common stock offered by BW Group in the offering, at
a price per share of $14.52, which was equal to the price per share
paid by the underwriters to the selling shareholder in the
offering. The share repurchase was funded with cash on hand.
- The Company reported total operating revenue of $146.7 million
for the three months ended June 30, 2024, compared to $135.3
million for the three months ended June 30, 2023.
- Net Income attributable to stockholders of the Company was
$23.2 million for the three months ended June 30, 2024,
compared to $26.6 million for the three months ended June 30,
2023.
- EBITDA1 was $76.0 million for the three months ended
June 30, 2024, compared to $77.4 million for the three months
ended June 30, 2023.
- Adjusted EBITDA1 was $77.6 million for the three months ended
June 30, 2024, compared to $69.3 million for the three months
ended June 30, 2023.
- Basic earnings per share attributable to stockholders1 was
$0.32 for the three months ended June 30, 2024, compared to
$0.36 per share for the three months ended June 30, 2023.
- Basic earnings per share attributable to stockholders1 adjusted
to exclude unrealized gains or losses on non-designated derivative
instruments and any profit or loss on the sale of any vessel was
$0.34 per share for the three months ended June 30, 2024,
compared to $0.25 per share for the three months ended
June 30, 2023.
- The Company reduced its debt by $35.1 million to $826.2 million
during the three months ended June 30, 2024, with cash, cash
equivalents, and restricted cash standing at $138.5 million as of
June 30, 2024. Together with available but undrawn credit
facilities of $28.5 million, the Company's total liquidity as at
June 30, 2024 was $167.0 million.
____________________1 EBITDA, Adjusted EBITDA, Adjusted Net
Income Attributable to stockholders of Navigator Holdings Ltd.,
Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per
Share are not measurements prepared in accordance with U.S. GAAP.
EBITDA represents net income before net interest expense, income
taxes, depreciation and amortization. We define Adjusted EBITDA as
EBITDA before profit/loss on sale of vessel, unrealized gain/loss
on non-designated derivative instruments and foreign currency
exchange gain or loss on senior secured bonds. Adjusted Net Income
Attributable to stockholders of Navigator Holdings Ltd. represents
net income attributable to stockholders of Navigator Holdings Ltd.
before unrealized (gain)/loss on non-designated derivative
instruments and (profit)/loss from sale of vessel. Management
believes that EBITDA, Adjusted EBITDA, Adjusted Net Income
Attributable to stockholders of Navigator Holdings Ltd., Adjusted
Basic Earnings per Share and Adjusted Diluted Earnings per Share
are useful to investors in evaluating the operating performance of
the Company. EBITDA, Adjusted EBITDA, Adjusted Net Income
Attributable to stockholders of Navigator Holdings Ltd. Adjusted
Basic Earnings per Share and Adjusted Diluted Earnings per Share do
not represent and should not be considered alternatives to
consolidated net income, earnings per share, cash generated from
operations or any measure.
Other Highlights and Developments
Operational Update
Total operating revenue was $146.7 million for the three
months ended June 30, 2024, compared to $135.3 million for the
three months ended June 30, 2023.
Average daily time charter equivalent2 ("TCE") across the fleet
increased to $29,550 for the three months ended June 30, 2024,
compared to $27,241 for the three months ended June 30,
2023.
Utilization across the fleet increased to 93.4% for three months
ended June 30, 2024 compared to 89.3% for three months ended March
31,2024 and 89.0% for the three months ended June 30, 2023. The
increase in utilization was primarily driven by improved market and
LPG trading conditions for the semi-refrigerated vessels.
During the three months ended June 30, 2024 the arbitrage
between the price of ethylene in the U.S. compared to the price of
ethylene in the rest of the world increased resulting in higher
demand for ethylene to be shipped from the U.S.. Although the
Panama Canal suffered from a reduction in available transits during
the three months ended December 31, 2023 and March 31, 2024 due to
drought conditions that reduced water levels in the man-made Gatún
Lake which holds the water supply that operates the canal, the
number of vessel transits returned back close to historical levels
in the second quarter of 2024. This resulted in shorter sea
passages, particularly for handysize ethylene-capable vessels as
they were able to proceed via the Panama Canal rather than
undertake the longer voyage via the Cape of Good Hope.
For the three months ended June 30, 2024, we had on average 32
vessels engaged under time charters, 15 vessels on spot voyage
charters and contracts of affreightment ("CoA") and nine vessels
were operated in the independently managed Unigas Pool. For the
12-month period commencing July 1, 2024, we have 43% of our
available days covered under time charter with fixed earnings. In
this period our midsize and fully refrigerated vessels are almost
exclusively employed on time charters, our semi-refrigerated
vessels are employed under time charters and spot voyage charters,
and most of our ethylene-capable vessels are expected to be
employed on the spot voyage market.
The average handysize 12-month forward looking market assessment
for semi-refrigerated and fully-refrigerated vessels for the second
quarter of 2024 decreased by $34,000 and $50,000 per calendar month
(“pcm”), to an average of $928,000 pcm and $837,000 pcm
respectively, compared to the first quarter of 2024. The handysize
ethylene 12-month forward looking market assessment decreased by
$60,000 pcm or 5% from $1,257,000 pcm to $1,198,000 pcm in the
second quarter of 2024 compared to the first quarter of 2024.
Ethylene cargo spot rates are expected to decrease in the three
months ended September 30, 2024 due to a narrowing ethylene
arbitrage between the U.S. and the rest of the world. The decrease
is due to a strengthening U.S. domestic ethylene price caused by
production disruptions arising from Hurricane Beryl, as well as
unplanned maintenance shutdowns at several production plants,
however we expect some ethylene cargoes to be substituted by ethane
exports due to an increase in the competitiveness of U.S.
ethane.
Ethylene Export Terminal
We own a 50% share in an ethylene export marine terminal at
Morgan’s Point, Texas (the “Ethylene Export Terminal”) through a
joint venture (the "Export Terminal Joint Venture"). The Ethylene
Export Terminal throughput for the three months ended June 30,
2024, was 230,857 metric tons, compared to 277,582 metric tons for
the three months ended June 30, 2023. Our share of the results of
our equity investment in the Ethylene Export Terminal was
$4.7 million for the three months ended June 30, 2024,
compared to $6.0 million for the three months ended June 30,
2023.
We, together with Enterprise Products Partners L.P, our joint
venture partner, have agreed to invest in an expansion of the
Ethylene Export Terminal (the “Terminal Expansion Project”). The
expansion is expected to increase the export capacity from
approximately one million tons of ethylene per annum to at least
1.55 million tons per annum. All major project equipment has been
delivered with support infrastructure and new pipes being
assembled, with operations scheduled to commence in late December
2024. The first new multi-year offtake contract related to the
expansion has been signed, and another customer has agreed to
extend and upsize its current offtake with the associated contract
expected to be signed during the third quarter of 2024. We expect
that additional capacity will be contracted during the remainder of
the construction phase.
The total capital contributions required from us to the Export
Terminal Joint Venture for the Terminal Expansion Project are
expected to be approximately $130 million. The Company expects to
finance this using existing cash resources, distributions from the
Export Terminal Joint Venture during the course of the expansion
and additional debt. Of the expected total of $130 million, $59
million has been contributed as of June 30, 2024, with $16
million of that contributed during the three months ended June 30,
2024.
____________________2 TCE is not calculated in accordance with
U.S. GAAP. For a reconciliation of TCE to operating revenue, the
most directly comparable financial measure calculated in accordance
with U.S. GAAP, please see below under “Reconciliation of Operating
Revenues to TCE”.
Bluestreak CO2
On July 24, 2024 Bluestreak CO2 Limited, the 50/50 joint venture
relating to the previously announced non-binding memorandum of
understanding between Navigator Gas and Bumi Armada Berhad (“Bumi
Armada”) announced that it has entered into a memorandum of
understanding (the “MoU”) with international energy company Uniper
(UK) Limited (“Uniper”). Under the MOU the parties have agreed to
collaborate to explore the feasibility of implementing a
jetty-moored floating liquid CO2 storage facility and liquid CO2
carrier solution, for the export of CO2 from Uniper’s proposed
Grain Carbon Capture project on the Isle of Grain, United
Kingdom.
The parties to the MoU anticipate that Bluestreak CO2, by
leveraging the expertise and experience of Navigator Gas and Bumi
Armada, could design, and ultimately implement a comprehensive CO2
value chain. The value chain is expected to be comprised of liquid
CO2 shuttle tankers capable of loading from and delivering to
either a floating carbon storage unit or a floating carbon storage
and injection unit. The complete value chain is expected to
transport liquid CO2 safely and reliably, and provide buffer
storage capability. The CO2 is intended to be subsequently injected
into offshore storage aquifers and/or depleted oil and gas
reservoirs in a controlled manner, with surveillance and management
of the permanent storage location.
Bumi Armada and Navigator Gas anticipate entering into
definitive documentation for the Bluestreak CO2 joint venture by
the end of the fourth quarter of 2024. The joint venture is subject
to the execution of such definitive documentation, approvals by the
respective boards of directors of Navigator Gas and Bumi Armada,
applicable regulatory approvals and other customary closing
conditions. There can be no assurance that definitive documentation
for the Bluestreak CO2 joint venture transaction will be executed
or that the joint venture will be completed on the terms or the
timing anticipated, or at all. There also can be no assurance that
the value chain for shipment, storage and injection of CO2 will be
designed and implemented as anticipated or at all.
Return of Capital Policy
The Company’s current Return of Capital policy, which is subject
to operating needs and other circumstances, is based on paying out
quarterly cash dividends of $0.05 per share of common stock and
returning additional capital in the form of additional cash
dividends and/or Share Repurchases (as defined below), such that
the two elements combined equal at least 25% of net income for the
applicable quarter.
As part of the Return of Capital policy, we expect to repurchase
the Company’s common stock (the “Share Repurchases”) and any such
Share Repurchases will be made via open market transactions,
privately negotiated transactions or any other method permitted
under U.S. securities laws and the rules of the U.S. Securities and
Exchange Commission.
Declarations of any dividends in the future, and the amount of
any such dividends, are subject to the discretion of the Company’s
Board. The Return of Capital policy does not oblige the Company to
pay any dividends or repurchase any of its shares in the future and
it may be suspended, discontinued or modified by the Company at any
time, for any reason. Further, the timing of any Share Repurchases
under the Return of Capital policy will be determined by the
Company’s management and will depend on market conditions, legal
requirements, stock price, and other factors.
Ten08 Clean Ammonia Investment
On August 8, 2024, the Company announced a $2.5 million
co-investment alongside lead investor Attis Clean Energy (“Attis”)
in the clean ammonia developer Ten08 Energy LLC (“Ten08”).
Ten08 is developing an industrial-scale hybrid blue and green
ammonia production export facility on the Gulf Coast of Texas with
the goal of producing the most competitively priced ammonia
molecule to help decarbonize the power, shipping, fertilizer, and
chemicals industries. The first phase, comprising 1.4 million
metric tonnes per year of ultra-low carbon ammonia production, is
expected to commence operations in late 2029 or early 2030.
In return for our initial investment of $2.5 million we will
also receive an option to make a larger investment of up to $100
million at the time of final investment decision of the production
facility. This larger investment would take the form of preferred
equity towards construction of an export terminal and associated
export infrastructure, with potential further investments in
subsequent expansions. We expect to pay $1.25 million in August
2024 and a further $1.25 million in late 2024 or early 2025.
August 2024 Senior Secured Term Loan and
Revolving Credit Facility.
On August 9, 2024, the Company entered into a Senior Secured
Term Loan and Revolving Credit Facility (the “August 2024
Facility”) with Crédit Agricole Corporate and Investment Bank, ING
Bank N.V., and Skandinaviska Enskilda Banken AB (Publ), to
refinance its March 2019 secured term loan that was due to mature
in March 2025, to fund the repurchase of the Navigator Aurora
pursuant to the Company’s existing October 2019 sale and leaseback
arrangement related to that vessel which, based on a termination
notice we issued to the lessor in May 2024, will terminate in
October 2024, and for general corporate and working capital
purposes. The August 2024 Facility has a term of six years maturing
in August 2030, is for a maximum principal amount of $147.6
million, decreases quarterly followed by a final balloon payment in
August 2030 of $63.9 million, and bears interest at a rate of Term
SOFR plus 190 basis points, which margin includes a 5-basis point
sustainability-linked element.
Unaudited Results of Operations for the three months
ended June 30, 2024 compared to the three months ended June 30,
2023
|
` |
Three months ended June 30, 2023 |
|
Three months ended June 30, 2024 |
|
Percentagechange |
|
|
|
(in thousands, except Percentage change) |
|
Operating revenues |
$ |
122,120 |
|
$ |
131,601 |
|
7.8 |
% |
| Operating revenues – Unigas
Pool |
|
13,060 |
|
|
15,075 |
|
15.4 |
% |
| Operating revenues – Luna Pool
collaborative arrangements |
|
155 |
|
|
— |
|
(100.0 |
)% |
| Total operating
revenue |
|
135,335 |
|
|
146,676 |
|
8.4 |
% |
| |
|
|
|
| Brokerage commission |
|
1,735 |
|
|
1,869 |
|
7.7 |
% |
| Voyage expenses |
|
18,604 |
|
|
17,123 |
|
(8.0 |
)% |
| Voyage expenses – Luna Pool
collaborative arrangements |
|
514 |
|
|
— |
|
(100.0 |
)% |
| Vessel operating expenses |
|
42,999 |
|
|
43,494 |
|
1.2 |
% |
| Depreciation and
amortization |
|
32,190 |
|
|
33,349 |
|
3.6 |
% |
| General and administrative
costs |
|
8,223 |
|
|
11,320 |
|
37.7 |
% |
| (Profit)/loss from sale of
vessel |
|
(4,941 |
) |
|
— |
|
(100.0 |
)% |
| Total operating
expenses |
|
99,324 |
|
|
107,155 |
|
7.9 |
% |
| Operating
Income |
|
36,011 |
|
|
39,521 |
|
9.7 |
% |
| Unrealized gain/(loss) on
non-designated derivative instruments |
|
3,195 |
|
|
(1,581 |
) |
(149.5 |
)% |
| Interest expense |
|
(17,016 |
) |
|
(16,174 |
) |
(4.9 |
)% |
| Interest income |
|
1,296 |
|
|
1,550 |
|
19.6 |
% |
| Income before taxes
and share of result of equity method investments |
|
23,486 |
|
|
23,316 |
|
(0.7 |
)% |
| Income taxes |
|
(1,984 |
) |
|
(1,161 |
) |
(41.5 |
)% |
| Share of result of equity
method investments |
|
5,993 |
|
|
4,687 |
|
(21.8 |
)% |
| Net
Income |
|
27,495 |
|
|
26,842 |
|
(2.4 |
)% |
| Net income attributable to
non-controlling interest |
|
(889 |
) |
|
(3,602 |
) |
305.2 |
% |
| Net Income
attributable to stockholders of Navigator Holdings
Ltd. |
$ |
26,606 |
|
$ |
23,240 |
|
(12.7 |
)% |
| |
|
|
|
|
|
|
|
|
Operating Revenues. Operating revenues,
net of address commissions, was $131.6 million for the three months
ended June 30, 2024, an increase of $9.5 million or 7.8% compared
to $122.1 million for the three months ended June 30, 2023. This
increase was primarily due to:
- an increase of approximately $8.5 million attributable to
an increase in average monthly time charter equivalent rates, which
increased to an average of approximately $29,550 per vessel per day
($898,823 per vessel per calendar month) for the three months ended
June 30, 2024, compared to an average of approximately $27,241 per
vessel per day ($828,582 per vessel per calendar month) for the
three months ended June 30, 2023;
- an increase of approximately $5.4 million attributable to
an increase in fleet utilization, which increased to 93.4% for the
three months ended June 30, 2024, compared to 89.0% for the three
months ended June 30, 2023;
- a decrease of approximately $3.0 million or 2.9%,
attributable to a 122 day decrease in vessel available days for the
three months ended June 30, 2024, compared to the three months
ended June 30, 2023. This decrease was in part a result of
increased drydocking during the three months ended June 30, 2024,
compared to the three months ended June 30, 2023; and
- a decrease of approximately $1.5 million primarily
attributable to a decrease in invoiced pass through voyage expense
for the three months ended June 30, 2024, compared to the three
months ended June 30, 2023.
The following table presents selected operating data for the
three months ended June 30, 2024 and 2023, which we believe is
useful in understanding the basis of movements in our operating
revenues.
| * Fleet
Data: |
Three months ended June 30,2023 |
|
Three months ended June 30, 2024 |
|
| |
|
|
|
Weighted average number of vessels |
|
47.2 |
|
|
47.0 |
|
| Ownership days |
|
4,296 |
|
|
4,277 |
|
| Available days |
|
4,268 |
|
|
4,146 |
|
| Earning days |
|
3,800 |
|
|
3,874 |
|
| Fleet utilization |
|
89.0 |
% |
|
93.4 |
% |
| ** Average daily Time Charter
Equivalent |
$ |
27,241 |
|
$ |
29,550 |
|
| |
|
|
|
|
|
|
* Fleet Data - Our nine owned smaller vessels
in the independently managed Unigas Pool and the vessels owned by
Pacific Gas in our Luna Pool prior to their acquisition by the
Navigator Greater Bay Joint Venture are not included in this
data.
** Non-GAAP Financial Measure—Time charter
equivalent: TCE is a measure of the average daily revenue
performance of a vessel. TCE is not calculated in accordance with
U.S. GAAP. For all charters, we calculate TCE by dividing total
operating revenues (excluding collaborative arrangements and
revenues from the Unigas Pool), less any voyage expenses (excluding
collaborative arrangements), by the number of earning days for the
relevant period. TCE excludes the effects of the collaborative
arrangements as earning days and fleet utilization, on which TCE is
based, is calculated only in relation to our owned vessels. Under a
time charter, the charterer pays substantially all of the vessel's
voyage related expenses, whereas for voyage charters, also known as
spot market charters, we pay all voyage expenses. TCE is a shipping
industry performance measure used primarily to compare
period-to-period changes in a company’s performance despite changes
in the mix of charter types (i.e., voyage charters, time charters
and contracts of affreightment) under which the vessels may be
employed. We include average daily TCE, as we believe it provides
additional meaningful information in conjunction with net operating
revenues. Our calculation of TCE may not be comparable to that
reported by other companies.
Reconciliation of Operating Revenues to TCE
The following table represents a reconciliation of operating
revenues to TCE. Operating revenues are the most directly
comparable financial measure calculated in accordance with U.S.
GAAP for the periods presented.
|
|
Three months ended June 30, 2023 |
Three months ended June 30, 2024 |
|
|
(in thousands, except earning days and
average daily time charter equivalent rate) |
|
*** Operating revenue |
$ |
122,120 |
|
$ |
131,601 |
| *** Voyage expenses |
|
18,604 |
|
|
17,123 |
| Operating revenue less voyage
expenses |
|
103,516 |
|
|
114,478 |
| |
|
|
| Earning days |
|
3,800 |
|
|
3,874 |
| Average daily time charter
equivalent rate |
$ |
27,241 |
|
$ |
29,550 |
| |
|
|
|
|
|
***Operating revenue and voyage expenses excluding Luna Pool
Collaborative Arrangements and our nine owned vessels in the
independently managed Unigas Pool.
Operating Revenues – Unigas
Pool. Operating revenues – Unigas Pool was $15.1
million an increase of 15.4% for the three months ended June 30,
2024, compared to $13.1 million for the three months ended June 30,
2023, and represents our share of the revenues earned from our nine
vessels operating within the independently managed Unigas Pool,
based on agreed pool points.
Operating Revenues – Luna Pool Collaborative
Arrangements. Luna Pool earnings were aggregated and then
allocated (after deducting pool overheads and manager's fees) to
the pool participants in accordance with the Pooling Agreement.
Operating revenues - Luna Pool collaborative arrangements was $nil
for the three months ended June 30, 2024, compared to $0.2 million
for the three months ended June 30, 2023, and represented our share
of pool net revenues generated by the other participant’s vessels
in the pool, prior to the acquisition of the vessels by Navigator
Greater Bay Joint Venture. This decrease was a result of the
Company no longer accounting for any of the pool vessels’ earnings
under the Luna Pool collaborative arrangement following the
acquisition of the final vessel Navigator Vega on April 13,
2023.
Brokerage Commissions. Brokerage
commissions, which typically vary between 1.25% and 2.5% of
operating revenues, increased by $0.2 million or 7.7% to $1.9
million for the three months ended June 30, 2024, from $1.7
million for the three months ended June 30, 2023, primarily due to
an increase in operating revenue on which brokerage commission is
based.
Voyage Expenses. Voyage expenses decreased
by $1.5 million or 8.0% to $17.1 million for the three months ended
June 30, 2024, from $18.6 million for the three months ended June
30, 2023. These voyage expenses are pass through costs,
corresponding to a decrease in operating revenues of the same
amount.
Voyage Expenses – Luna Pool Collaborative
Arrangements. Voyage expenses – Luna Pool
collaborative arrangements were $nil for the three months ended
June 30, 2024, compared to $0.5 million for the three months ended
June 30, 2023. These Voyage expenses – Luna Pool collaborative
arrangements represent the other participant’s share of pool net
revenues generated by our vessels in the pool, prior to the
acquisition of the vessels by Navigator Greater Bay Joint Venture.
This decrease was a result of the Company no longer accounting for
any of the pool vessels’ earnings under the Luna Pool collaborative
arrangement following the acquisition of the final vessel Navigator
Vega on April 13, 2023.
Vessel Operating Expenses. Vessel
operating expenses increased by $0.5 million or 1.2% to $43.5
million for the three months ended June 30, 2024, from $43.0
million for the three months ended June 30, 2023. Average daily
vessel operating expenses increased by $35 per vessel per day, or
0.4%, to $8,535 vessel per day for the three months ended
June 30, 2024, compared to $8,500 per vessel per day for the
three months ended June 30, 2023.
Depreciation and
Amortization. Depreciation and amortization increased
by $1.2 million to $33.3 million for the three months ended June
30, 2024 compared to $32.2 million for the three months ended June
30, 2023. Depreciation and amortization included amortization of
capitalized drydocking costs of $5.6 million and
$4.6 million for the three months ended June 30, 2024 and
2023, respectively.
General and Administrative Costs. General
and administrative costs increased by $3.1 million or 37.7% to
$11.3 million for the three months ended June 30, 2024, from $8.2
million for the three months ended June 30, 2023.The increase
is in part due to non-recurring costs related to the public
offering of a total of 7.0 million common shares by BW Group
incurred in the three months ended June 30, 2024.
Non-Operating Results
Unrealized (Loss)/ Gains on Non-Designated Derivative
Instruments. The unrealized loss of $1.6
million on non-designated derivative instruments for the three
months ended June 30, 2024, relates to fair value losses on
interest rate swaps associated with a number of our secured term
loan and revolving credit facilities, as a result of a decrease in
forward Secured Overnight Financing Rate (“SOFR”) interest rates,
compared to an unrealized gain of $3.2 million for the three months
ended June 30, 2023.
Interest Expense. Interest expense
decreased by $0.8 million, or 4.9%, to $16.2 million for the
three months ended June 30, 2024, from $17.0 million for
the three months ended June 30, 2023. This is primarily a result of
increases in U.S dollar SOFR rates, offset by a reduction in debt
due to scheduled quarterly repayments and repayments made against
our available revolving credit facilities.
Income Taxes. Income taxes relate to taxes
on our subsidiaries and businesses incorporated around the world
including those incorporated in the United States of America.
Income taxes were $1.2 million for the three months ended June 30,
2024, compared to $2.0 million for the three months ended June 30,
2023, primarily related to movement in current tax and a deferred
tax in relation to our equity investment in the Ethylene Export
Terminal.
Share of Result of Equity Method
Investments. The share of the result of the Company’s
50% ownership in the Export Terminal Joint Venture was income of
$4.7 million for the three months ended June 30, 2024,
compared to income of $6.0 million for the three months ended June
30, 2023. The decrease was primarily due to lower volumes exported
through the Ethylene Export Terminal in May 2024, being 230,857
tons for the three months ended June 30, 2024, compared to 277,582
tons for the three months ended June 30, 2023.
Non-Controlling Interests. The Company entered
into a sale and leaseback arrangement in November 2019 with a
wholly-owned special purpose vehicle of a financial institution
(“Lessor SPV”). Although we do not hold any equity investments in
this Lessor SPV, we have determined that we are the primary
beneficiary of this entity and accordingly, we are required to
consolidate this variable interest entity ("VIE") into our
financial results. The net income attributable to the Lessor SPV
was $0.7 million for the three months ended June 30, 2024, and $0.4
million for the three months ended June 30, 2023.
Navigator Greater Bay Joint Venture
In September 2022, the Company entered into the Navigator
Greater Bay Joint Venture to acquire five ethylene vessels,
Navigator Luna, Navigator Solar, Navigator Castor, Navigator
Equator, and Navigator Vega. The joint venture is owned 60% by the
Company and 40% by Greater Bay Gas Co Ltd., ("Greater Bay"). The
Navigator Greater Bay Joint Venture is accounted for as a
consolidated subsidiary in our consolidated financial statements,
with the 40% owned by Greater Bay accounted for as a
non-controlling interest. $2.9 million is presented as part of the
non-controlling interest in our financial results to Greater Bay
for the three months ended June 30, 2024, compared to $0.6 million
for the three months ended June 30, 2023.
Reconciliation of Non-GAAP Financial
Measures
The following table shows a reconciliation of Net Income to
EBITDA and Adjusted EBITDA for the three and six months ended
June 30, 2024 and 2023:
|
|
Three months ended June 30, 2023 |
Three months ended June 30,2024 |
Six months endedJune 30, 2023 |
Six months ended June 30, 2024 |
|
|
(in thousands) |
|
Net Income |
$ |
27,495 |
|
$ |
26,842 |
|
$ |
46,345 |
|
$ |
51,761 |
| Net interest expense |
|
15,720 |
|
|
14,624 |
|
|
28,475 |
|
|
28,749 |
| Income taxes |
|
1,984 |
|
|
1,161 |
|
|
3,149 |
|
|
2,367 |
| Depreciation and
amortization |
|
32,190 |
|
|
33,349 |
|
|
64,021 |
|
|
66,790 |
|
EBITDA3 |
|
77,389 |
|
|
75,976 |
|
|
141,990 |
|
|
149,667 |
| Unrealized (gain)/loss on
non-designated derivative instruments |
|
(3,195 |
) |
|
1,581 |
|
|
1,056 |
|
|
2,028 |
| (Profit)/loss from sale of
vessel |
|
(4,941 |
) |
|
— |
|
|
(4,941 |
) |
|
— |
| Adjusted
EBITDA3 |
$ |
69,253 |
|
$ |
77,557 |
|
$ |
138,105 |
|
$ |
151,695 |
____________________3 EBITDA, Adjusted EBITDA, Adjusted Net
Income Attributable to stockholders of Navigator Holdings Ltd.,
Adjusted Basic Earnings per Share and Adjusted Diluted Earnings per
Share are not measurements prepared in accordance with U.S. GAAP.
EBITDA represents net income before net interest expense, income
taxes, depreciation and amortization. We define Adjusted EBITDA as
EBITDA before profit/loss on sale of vessel, unrealized gain/loss
on non-designated derivative instruments and foreign currency
exchange gain or loss on senior secured bonds. Adjusted Net Income
Attributable to stockholders of Navigator Holdings Ltd. represents
net income attributable to stockholders of Navigator Holdings Ltd.
before unrealized (gain)/loss on non-designated derivative
instruments and (profit)/loss from sale of vessel. Management
believes that EBITDA, Adjusted EBITDA, Adjusted Net Income
Attributable to stockholders of Navigator Holdings Ltd., Adjusted
Basic Earnings per Share and Adjusted Diluted Earnings per Share
are useful to investors in evaluating the operating performance of
the Company. EBITDA, Adjusted EBITDA, Adjusted Net Income
Attributable to stockholders of Navigator Holdings Ltd., Adjusted
Basic Earnings per Share and Adjusted Diluted Earnings per Share do
not represent and should not be considered alternatives to
consolidated net income, earnings per share, cash generated from
operations or any measure.
The following table shows a reconciliation of Net Income
attributed to stockholders of Navigator Holdings Ltd. to Adjusted
Net Income attributable to stockholders of Navigator Holdings Ltd.,
for the three and six months ended June 30, 2024 and 2023:
|
|
Three monthsended June 30,2023 |
Three months ended June 30,2024 |
Six months ended June 30, 2023 |
Six months ended June 30, 2024 |
|
|
(in thousands except earnings per share and number of
shares) |
|
Net Income attributable to stockholders of Navigator Holdings
Ltd. |
|
26,606 |
|
|
23,240 |
|
45,392 |
|
|
45,813 |
| Unrealized (gain)/loss on
non-designated derivative instruments |
|
(3,195 |
) |
|
1,581 |
|
1,056 |
|
|
2,028 |
| (Profit)/loss from sale of
vessel |
|
(4,941 |
) |
|
— |
|
(4,941 |
) |
|
— |
| Adjusted Net Income
attributable to stockholders of Navigator Holdings
Ltd.3 |
$ |
18,470 |
|
$ |
24,821 |
$ |
41,507 |
|
$ |
47,841 |
| |
|
|
|
|
| Basic earnings per share |
$ |
0.36 |
|
$ |
0.32 |
$ |
0.61 |
|
$ |
0.63 |
| Diluted earnings per
share |
$ |
0.36 |
|
$ |
0.32 |
$ |
0.60 |
|
$ |
0.62 |
| |
|
|
|
|
| Adjusted Basic earnings per
share3 |
$ |
0.25 |
|
$ |
0.34 |
$ |
0.55 |
|
$ |
0.66 |
| Adjusted Diluted earnings per
share3 |
$ |
0.25 |
|
$ |
0.34 |
$ |
0.55 |
|
$ |
0.65 |
| |
|
|
|
|
| Basic weighted average number
of shares |
|
73,745,894 |
|
|
72,458,773 |
|
74,847,093 |
|
|
72,834,272 |
| Diluted weighted average
number of shares |
|
74,329,162 |
|
|
72,883,133 |
|
75,321,626 |
|
|
73,320,149 |
| |
|
|
|
|
|
|
|
|
|
|
Unaudited Results of Operations for the six months ended
June 30, 2024 compared to the six months ended June 30,
2023
|
|
Six months ended June 30, 2023 |
|
Six months ended June 30, 2024 |
|
PercentageChange |
|
|
|
(in thousands, except Percentage Change) |
| Operating revenues |
$ |
238,730 |
|
$ |
252,621 |
|
5.8 |
% |
| Operating revenues – Unigas
Pool |
|
25,252 |
|
|
28,210 |
|
11.7 |
% |
| Operating revenues – Luna Pool
collaborative arrangements |
|
7,355 |
|
|
— |
|
(100.0 |
)% |
| Total operating
revenue |
|
271,337 |
|
|
280,831 |
|
3.5 |
% |
| |
|
|
|
| Brokerage commission |
|
3,429 |
|
|
3,495 |
|
1.9 |
% |
| Voyage expenses |
|
35,833 |
|
|
31,306 |
|
(12.6 |
)% |
| Voyage expenses – Luna Pool
collaborative arrangements |
|
5,542 |
|
|
— |
|
(100.0 |
)% |
| Vessel operating expenses |
|
84,671 |
|
|
85,612 |
|
1.1 |
% |
| Depreciation and
amortization |
|
64,021 |
|
|
66,790 |
|
4.3 |
% |
| General and administrative
costs |
|
14,978 |
|
|
17,800 |
|
18.8 |
% |
| (Profit)/Loss from sale of
vessel |
|
(4,941 |
) |
|
— |
|
(100.0 |
)% |
| Other income |
|
(96 |
) |
|
— |
|
(100 |
)% |
| Total operating
expenses |
|
203,437 |
|
|
205,003 |
|
0.8 |
% |
| Operating
Income |
|
67,900 |
|
|
75,828 |
|
11.7 |
% |
| Unrealized loss on
non-designated derivative instruments |
|
(1,056 |
) |
|
(2,028 |
) |
92.0 |
% |
| Write off of deferred
financing costs |
|
(171 |
) |
|
— |
|
— |
|
| Interest expense |
|
(30,354 |
) |
|
(31,911 |
) |
5.1 |
% |
| Interest income |
|
1,879 |
|
|
3,162 |
|
68.3 |
% |
| Income before taxes
and share of result of equity method investments |
|
38,198 |
|
|
45,051 |
|
17.9 |
% |
| Income taxes |
|
(3,149 |
) |
|
(2,367 |
) |
(24.8 |
)% |
| Share of result of equity
method investments |
|
11,296 |
|
|
9,077 |
|
(19.6 |
)% |
| Net
Income |
|
46,345 |
|
|
51,761 |
|
11.7 |
% |
| Net income attributable to
non-controlling interest |
|
(953 |
) |
|
(5,948 |
) |
524.1 |
% |
| Net Income
attributable to stockholders of Navigator Holdings
Ltd. |
$ |
45,392 |
|
$ |
45,813 |
|
0.9 |
% |
| |
|
|
|
|
|
|
|
|
Operating Revenues. Operating revenues,
net of address commissions, was $252.6 million for the six
months ended June 30, 2024, an increase of $13.9 million or 5.8%
compared to $238.7 million for the six months ended June 30, 2023.
This increase was principally due to:
- an increase in operating revenues of
approximately $19.6 million attributable to an increase
in average monthly time charter equivalent rates, which increased
to an average of approximately $28,953 per vessel per day ($880,647
per vessel per calendar month) for the six months ended June 30,
2024, compared to an average of approximately $26,418 per vessel
per day ($705,911 per vessel per calendar month) for the six months
ended June 30, 2023;
- a decrease in operating revenues of
approximately $2.8 million attributable to a decrease in fleet
utilization, which declined to 91.4% for the six months ended June
30, 2024, compared to 92.6% for the six months ended June 30,
2023;
- an increase in operating revenues of
approximately $1.6 million or 0.8% attributable to a 67 day
increase in vessel available days for the six months ended June 30,
2024, compared to the six months ended June 30, 2023.
- a decrease in operating revenues of
approximately $4.5 million primarily attributable to a
decrease in pass through voyage costs for the six months ended June
30, 2024, compared to the six months ended June 30, 2023.
The following table presents selected operating data for the six
months ended June 30, 2024 and 2023, which we believe are useful in
understanding the basis for movement in our operating revenues.
|
|
|
Six months endedJune 30,
2023 |
|
|
|
Six months endedJune 30,
2024 |
|
| * Fleet
Data: |
|
|
|
Weighted average number of vessels |
|
47 |
|
|
|
47 |
|
|
Ownership days |
|
8,344 |
|
|
|
8,554 |
|
|
Available days |
|
8,298 |
|
|
|
8,365 |
|
|
Earning days |
|
7,680 |
|
|
|
7,644 |
|
|
Fleet utilization |
|
92.6 |
% |
|
|
91.4 |
% |
|
** Average daily Time Charter Equivalent |
$ |
26,418 |
|
|
$ |
28,953 |
|
|
|
|
|
|
|
|
|
|
* Fleet Data - Our nine owned smaller vessels
in the independently managed Unigas Pool and the vessels owned by
Pacific Gas in our Luna Pool prior to their acquisition by the
Navigator Greater Bay Joint Venture are not included in this
data.
** Non-GAAP Financial Measure—Time charter
equivalent: TCE is a measure of the average daily revenue
performance of a vessel. TCE is not calculated in accordance with
U.S. GAAP. For all charters, we calculate TCE by dividing total
operating revenues (excluding collaborative arrangements and
revenues from the Unigas Pool), less any voyage expenses (excluding
collaborative arrangements), by the number of earning days for the
relevant period. TCE excludes the effects of the collaborative
arrangements as earning days and fleet utilization, on which TCE is
based, is calculated only in relation to our owned vessels. Under a
time charter, the charterer pays substantially all of the vessel's
voyage related expenses, whereas for voyage charters, also known as
spot market charters, we pay all voyage expenses. TCE is a shipping
industry performance measure used primarily to compare
period-to-period changes in a company’s performance despite changes
in the mix of charter types (i.e., voyage charters, time charters
and contracts of affreightment) under which the vessels may be
employed. We include average daily TCE, as we believe it provides
additional meaningful information in conjunction with net operating
revenues. Our calculation of TCE may not be comparable to that
reported by other companies.
Reconciliation of Operating Revenues to TCE
The following table represents a reconciliation of operating
revenues to TCE. Operating revenues are the most directly
comparable financial measure calculated in accordance with U.S.
GAAP for the periods presented.
|
|
Six months endedJune 30,
2023 |
Six months endedJune 30,
2024 |
|
|
(in thousands, except earning daysand
average daily time charter equivalent rate) |
| Fleet
Data: |
|
|
|
*** Operating revenue |
$ |
238,730 |
|
$ |
252,621 |
| *** Voyage expenses |
|
35,833 |
|
|
31,306 |
| Operating revenue less voyage
expenses |
$ |
202,897 |
|
$ |
221,315 |
| |
|
|
| Earning days |
|
7,680 |
|
|
7,644 |
| Average daily time charter
equivalent rate |
$ |
26,418 |
|
$ |
28,953 |
| |
|
|
|
|
|
***Operating revenue and voyage expenses excluding Luna Pool
Collaborative Arrangements and our nine owned vessels in the
independently managed Unigas Pool.
Operating Revenues – Unigas
Pool. Operating revenues – Unigas Pool was
$28.2 million for the six months ended June 30, 2024, an
increase of 11.7% compared to $25.3 million for the six months
ended June 30, 2023 and represents our share of the revenues earned
from our nine vessels operating within the Unigas Pool, based on
agreed pool points.
Operating Revenues – Luna Pool Collaborative
Arrangements. Luna Pool earnings
were aggregated and then allocated (after deducting pool overheads
and managers' fees) to the pool participants in accordance with the
Pooling Agreement. Operating revenues - Luna Pool collaborative
arrangements was $nil for the six months ended June 30, 2024,
compared to $7.4 million for the six months ended June 30,
2023 and represented our share of pool net revenues generated by
the other participant’s vessels in the pool, prior to the
acquisition of the vessels by Navigator Greater Bay Joint Venture.
This decrease was a result of the Company no longer accounting for
any of the pool vessels’ earnings under the Luna Pool collaborative
arrangement following the acquisition of the final vessel Navigator
Vega on April 13, 2023.
Brokerage Commissions. Brokerage
commissions, which typically vary between 1.25% and 2.5% of
operating revenues, increased by $0.1 million to
$3.5 million for the six months ended June 30, 2024 an
increase of 1.9% compared to $3.4 million for the six months
ended June 30, 2023, primarily due to an increase in operating
revenues on which brokerage commissions are based.
Voyage Expenses. Voyage expenses decreased
by $4.5 million or 12.6% to $31.3 million for the six
months ended June 30, 2024, from $35.8 million for the six
months ended June 30, 2023. These voyage expenses are pass through
costs, corresponding to a decrease in operating revenues of the
same amount.
Voyage Expenses – Luna Pool Collaborative
Arrangements. Voyage expenses – Luna Pool
collaborative arrangements were $nil for the six months ended June
30, 2024, compared to $5.5 million for the six months ended
June 30, 2023. These Voyage expenses – Luna Pool collaborative
arrangements represent the other participant’s share of pool net
revenues generated by our vessels in the pool, prior to the
acquisition of the vessels by Navigator Greater Bay Joint Venture.
This decrease was primarily a result of the arrangements ending
with the acquisition of the final vessel Navigator Vega on April
13, 2023.
Vessel Operating Expenses. Vessel
operating expenses increased by $0.9 million or 1.1% to
$85.6 million for the six months ended June 30, 2024,
from $84.7 million for the six months ended June 30, 2023.
Average daily vessel operating expenses increased by $93 per vessel
per day, or 1.1%, to $8,493 per vessel per day for the six months
ended June 30, 2024, compared to $8,400 per vessel per day for the
six months ended June 30, 2023.
Depreciation and
Amortization. Depreciation and amortization increased
by $2.8 million to $66.8 million for the six months ended
June 30, 2024, from $64.0 million for the six months ended
June 30, 2023. Depreciation and amortization included amortization
of capitalized drydocking costs of $11.2 million and 9.0 million
for the six months ended June 30, 2024 and 2023, respectively.
General and Administrative Costs. General
and administrative costs increased by $2.8 million or
18.8% to $17.8 million for the six months ended June 30, 2024,
from $15.0 million for the six months ended June 30,
2023. The increase is in part due to non-recurring costs related to
the public offering of a total of 7.0 million common shares by BW
Group incurred in the six months ended June 30, 2024.
Non-operating Results
Unrealized Loss on Non-designated Derivative
Instruments. The unrealized loss of
$2.0 million on non-designated derivative instruments for
the six months ended June 30, 2024 relates to a fair value loss on
interest rate swaps across a number of our secured term loan and
revolving credit facilities, as a result of a decrease in forward
SOFR interest rates relative to the fixed rates applicable on these
secured term loan and revolving credit facilities. This is compared
to an unrealized loss on non-designated derivative instruments of
$1.1 million for the six months ended June 30, 2023.
Interest Expense. Interest expense
increased by $1.6 million, or 5.1%, to $31.9 million for
the six months ended June 30, 2024, from
$30.4 million for the six months ended June 30, 2023.
This is primarily a result of increases SOFR rates and the draw
down of facilities that provided financing for the acquisition of
five ethylene carriers by the Navigator Greater Bay Joint Venture,
offset by repayments made against our available revolving credit
facilities.
Income Taxes. Income taxes relate to taxes
on our subsidiaries and businesses incorporated around the world
including those incorporated in the United States of America.
Income taxes were $2.4 million for the six months ended June
30, 2024, compared to $3.1 million for the six months ended
June 30, 2023, primarily as a result of movements in current and
deferred taxes on our portion of the profits from the Ethylene
Export Terminal.
Share of Result of Equity Method
Investments. The share of the result of the Company’s
50% ownership in the Export Terminal Joint Venture was an income of
$9.1 million for the six months ended June 30, 2024, compared
to an income of $11.3 million for the six months ended June 30,
2023. This decrease is a result of reduced throughput rates of
464,072 tons for the six months ended June 30, 2024, compared to
528,313 tons for the six months ended June 30, 2023.
Non-Controlling Interest. We entered into a
sale and leaseback arrangement in November 2019 with a wholly-owned
special purpose vehicle of a financial institution (“Lessor SPV”).
Although we do not hold any equity investments in this Lessor SPV,
we have determined that we are the primary beneficiary of this
entity and accordingly, we are required to consolidate this VIE
into our financial results. The net income attributable to the
Lessor SPV was $1.2 million and this is presented as a
non-controlling interest for both the six months ended June 30,
2024 and six months ended June 30, 2023.
In September 2022, the Company entered into the Navigator
Greater Bay Joint Venture to acquire five ethylene vessels,
Navigator Luna, Navigator Solar, Navigator Castor, Navigator
Equator and Navigator Vega. The joint venture is owned 60% by the
Company and 40% by Greater Bay Gas. The Navigator Greater Bay Joint
Venture is accounted for as a consolidated subsidiary in our
consolidated financial statements, with the 40% owned by Greater
Bay Gas accounted for as a non-controlling interest. A gain
attributable to Greater Bay Gas of $4.7 million is presented
as the non-controlling interest in our financial results for the
six months ended June 30, 2024 compared to $0.3 million for the six
months ended June 30, 2023.
Liquidity and Capital Resources
Liquidity and Cash Needs
Our primary sources of funds are cash and cash equivalents, cash
from operations, undrawn bank borrowings and proceeds from bond
issuances. As of June 30, 2024, we had cash, cash equivalents
and restricted cash of $138.5 million.
The Company repaid $23.8 million of the $111.8 million Term Loan
and Revolving Credit Facility held with Crédit Agricole in December
2023 and a further $4.7 million during the first quarter of 2024.
As of June 30, 2024 we have $28.5 million available to be
redrawn by the Company in accordance with the terms of the Term
Loan and Revolving Credit Facility which matures in September 2028.
As a result, on June 30, 2024 we had available liquidity of
$167.0 million.
Our secured term loan facilities and revolving credit facilities
require that the borrowers have liquidity of no less than (i)
$35.0 million or $50.0 million, as applicable to the
relevant loan facility, or (ii) 5% of total debt (which was
$41.6 million as of June 30, 2024), whichever is
greater.
On August 9, 2024, the Company entered into the August 2024
Facility with Crédit Agricole Corporate and Investment Bank, ING
Bank N.V., and Skandinaviska Enskilda Banken AB (Publ), to
refinance its March 2019 secured term loan that was due to mature
in March 2025, to fund the repurchase of the Navigator Aurora
pursuant to the Company’s existing October 2019 sale and leaseback
arrangement related to that vessel which, based on a termination
notice we issued to the lessor in May 2024, will terminate in
October 2024, and for general corporate and working capital
purposes. The August 2024 Facility has a term of six years maturing
in August 2030, is for a maximum principal amount of $147.6
million, decreases quarterly followed by a final balloon payment in
August 2030 of $63.9 million, and bears interest at a rate of Term
SOFR plus 190 basis points, which margin includes a 5-basis point
sustainability-linked element.
Our primary uses of funds are drydocking and other vessel
maintenance expenditures, voyage expenses, vessel operating
expenses, general and administrative costs, insurance costs,
expenditures incurred in connection with ensuring that our vessels
comply with international and regulatory standards, financing
expenses, quarterly repayment of bank loans and the Terminal
Expansion Project. We also expect to use funds in connection with
our Return of Capital policy. In addition, our medium-term and
long-term liquidity needs relate to debt repayments, repayment of
bonds, potential future vessel newbuildings, related investments,
vessel acquisitions, and or related port or terminal projects.
As of June 30, 2024, we had $836.7 million in
outstanding obligations, which includes principal repayments on
long-term debt, including our bonds, commitments in respect of
the Navigator Aurora Facility (as defined below) and office
lease commitments. Of the total outstanding obligations,
$122.1 million matures during the twelve months ending
June 30, 2025, and $714.5 million matures after
June 30, 2025.
We believe, given our current cash balances, that our financial
resources, including the cash expected to be generated within the
year, will be sufficient to meet our liquidity and working capital
needs for the next twelve months from August 14, 2024, taking
into account our existing capital commitments and debt service
requirements. In September 2025 the Company has debt obligations
falling due, including a $210 million secured term facility with a
balloon repayment of $136 million and the maturity of our unsecured
2020 Bonds in an amount of $91 million. The Company is planning to
refinance the secured term facility and the 2020 Bonds, however if
the Company’s refinancing efforts are not successful there could be
a material adverse effect on the Company’s liquidity and its
financial position.
Capital Expenditures
Liquefied gas transportation by sea is a capital-intensive
business, requiring significant investment to maintain an efficient
fleet and to stay in regulatory compliance.
Although we currently have no contracted newbuildings on order
we may place newbuilding orders or acquire additional vessels as
part of our growth strategy.
We may invest further in terminal infrastructure, such as the
expansion of our existing Ethylene Export Terminal. The total
capital contributions required from us to fund our share of the
construction cost of the Terminal Expansion Project are expected to
be approximately $130.0 million, of which $59.0 million has been
contributed as of June 30, 2024, which includes $16.0 million
contributed during the second quarter of 2024.
Cash Flows
The following table summarizes our cash, cash equivalents and
restricted cash provided by/(used in) operating, investing and
financing activities for the six months ended June 30, 2024 and
2023:
|
|
Six months ended June 30, 2023 |
|
Six months ended June 30, 2024 |
|
|
|
(in thousands) |
|
Net cash provided by operating activities |
$ |
71,272 |
|
$ |
116,509 |
|
|
Net cash (used in) investing activities |
|
(160,601 |
) |
|
(8,342 |
) |
|
Net cash (used in)/provided by financing activities |
|
115,947 |
|
|
(130,357 |
) |
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
574 |
|
|
2,404 |
|
|
Net increase/(decrease) in cash, cash equivalents and restricted
cash |
$ |
27,192 |
|
$ |
(19,786 |
) |
| |
|
|
|
|
|
|
Operating Cash Flows. Net cash provided by
operating activities for the six months ended June 30, 2024,
increased to $116.5 million, from $71.3 million for the
six months ended June 30, 2023, an increase of $45.2 million.
This increase was primarily due to an increase in net income of
$8.5 million (after adding back the non-cash unrealized gains/loss
on derivative instruments and our share of the result from equity
method investments); and due to changes in working capital of $36.9
million during the six months ended June 30, 2024, compared to the
six months ended June 30, 2023.
Net cash flow from operating activities principally depends upon
charter rates attainable, fleet utilization, fluctuations in
working capital balances, repairs and maintenance activity, amount
and duration of drydocks and changes in foreign currency rates.
We are required to drydock each vessel once every five years
until it reaches 15 years of age, after which we drydock vessels
approximately every two and a half years. Drydocking each vessel,
including travelling to and from the drydock, can take
approximately 30 days in total being approximately 5-10 days of
voyage time to and from the shipyard and approximately 15-20 days
of actual drydocking time. Six of our vessels completed their
respective drydockings during the six months ended June 30,
2024,
We estimate the current cost of a five-year drydocking for one
of our vessels is approximately $1.0 million, a ten-year drydocking
cost is approximately $1.3 million, and the 15-year and 17-year
drydocking costs are approximately $1.5 million each (including the
cost of classification society surveys). As our vessels age and our
fleet expands, our drydocking expenses will increase. Ongoing costs
for compliance with environmental regulations are primarily
included as part of drydocking, such as the requirement to install
ballast water treatment plants, and classification society survey
costs, with a balance included as a component of our operating
expenses.
Investing Cash Flows. Net cash used in
investing activities was $8.3 million for the six months ended
June 30, 2024, primarily related to contributions to our investment
in the Export Terminal Joint Venture via the Terminal Expansion
Project of $24.0 million, offset by distributions received
from our investment in the Export Terminal Joint Venture of
$14.7 million.
Net cash used in investing activities was $160.6 million
for the six months ended June 30, 2023, primarily as a result of
$191.7 million for the acquisition of four vessels by the
Navigator Greater Bay Joint Venture, offset by proceeds from the
sale of a vessel of $20.7 million and distributions received
from our investment in the Export Terminal Joint Venture of
$16.9 million.
Financing Cash Flows. Net cash used in
financing activities was $130.4 million for the six months
ended June 30, 2024, primarily as a result of our regular quarterly
debt repayments totaling $66.2 million, our quarterly dividend
payments of $7.3 million and $53.6 million under our
Return of Capital policy and our other share repurchase
programs.
Net cash provided by financing activities was
$115.9 million for the six months ended June 30, 2023
primarily as a result of the drawdowns of $123.6 million on our
Greater Bay JV Secured Term Loan to partially finance the
acquisition of four vessels; as well as $27.3 million received
as a capital contribution from the non-controlling interest for
those vessels; a drawdown of $200.0 million on our March 2023
Secured Term Loan, which provided the financing to repay two
maturing secured term loan facilities totaling $183.3 million;
and offset by $44.6 million under our Return of Capital policy
and our other share repurchase programs.
Terminal Facility
General. In March 2019, Navigator Ethylene
Terminals LLC (“Marine Terminal Borrower”), our wholly-owned
subsidiary, entered into a Credit Agreement (the “Terminal
Facility”) with ING Capital LLC and SG Americas Securities, LLC for
a maximum principal amount of $75.0 million, to be used for the
payment of capital contributions to our Export Terminal Joint
Venture for construction costs of our Ethylene Export
Terminal.
Term and Facility Limits. The Terminal Facility
is now converted into a term loan with a final maturity of December
31, 2025. Based on the committed throughput agreements for the
Ethylene Export Terminal, a total of $69.0 million was drawn under
the Terminal Facility of which $18.5 million was outstanding
as of June 30, 2024.
Interest. The Terminal Facility is subject to
quarterly repayments of principal and interest. Interest is payable
at a rate of Compounded SOFR ("Comp SOFR") plus 275 to 300 basis
points over the remaining term of the facility. We have entered
into floating to fixed interest rate swap agreements for
approximately 80% of the amounts drawn under the Terminal Facility.
The Comp SOFR element of the interest rate payable by the Marine
Terminal Borrower under these interest rate swap agreements is
0.369% and 0.3615% per annum.
Financial Covenants. Under the Terminal
Facility, the Marine Terminal Borrower must maintain a minimum debt
service coverage ratio (as defined in the Terminal Facility) for
the prior four calendar fiscal quarters (or shorter period of time
if data for the prior four fiscal quarters is not available) of no
less than 1.10 to 1.00.
Restrictive Covenants. The
Marine Terminal Borrower can only pay dividends if the Marine
Terminal Borrower satisfies certain customary conditions, including
maintaining a debt service coverage ratio for the immediately
preceding four consecutive fiscal quarters and the projected
immediately succeeding four consecutive fiscal quarters of not less
than 1.20 to 1.00 and where no default or event of default has
occurred or is continuing. The Terminal Facility also limits the
Marine Terminal Borrower from, among other things, incurring
further indebtedness or entering into mergers and divestitures. The
Terminal Facility also contains general covenants that require the
Marine Terminal Borrower to vote its interest in the Export
Terminal Joint Venture to cause the Export Terminal Joint Venture
to maintain adequate insurance coverage and maintain its property
(but only to the extent the Marine Terminal Borrower has the power
under the organizational documents of the Export Terminal Joint
Venture to cause such actions).
Secured Term Loan Facilities and Revolving Credit
Facilities
General. Navigator Gas L.L.C., our wholly-owned
subsidiary, and certain of our vessel-owning subsidiaries have
entered into various secured term loan facilities and revolving
credit facilities as summarized in the table below. For additional
information regarding our secured term loan facilities and
revolving credit facilities, please read “Item 5—Operating and
Financial Review and Prospects—B. Liquidity and Capital
Resources—Secured Term Loan Facilities and Revolving Credit
Facilities” in the Company's 2023 Annual Report.
The table below summarizes our secured term loan and revolving
credit facilities as of June 30, 2024:
| |
|
|
|
|
|
Facility agreement |
Original facility amount |
Principal amount outstanding |
Interest rate |
Facilitymaturity date |
| |
(in millions) |
|
|
March 2019 |
$ |
107.0 |
$ |
59.0 |
Term SOFR + 266 BPS |
March 2025 |
| September 2020 |
|
210.0 |
|
150.8 |
Comp SOFR + 276 BPS |
September 2025 |
| October 20194 |
|
69.1 |
|
38.1 |
Term SOFR + 201 BPS |
October 2026 |
| DB Credit Facility A |
|
57.7 |
|
13.2 |
Comp SOFR + 247 BPS |
April 2027 |
| Santander Credit Facility
A |
|
81.0 |
|
20.2 |
Comp SOFR + 247 BPS |
May 2027 |
| August 2021 Amendment and
Restatement Agreement |
|
67.0 |
|
37.8 |
Fixed 378 BPS |
June 2026 |
| December 2022 |
|
111.8 |
|
61.3 |
Term SOFR + 209 BPS |
September 2028 |
| DB Credit Facility B |
|
60.9 |
|
24.1 |
Comp SOFR + 247 BPS |
December 2028 |
| Santander Credit Facility
B |
|
55.8 |
|
23.3 |
Comp SOFR + 247 BPS |
January 2029 |
| March 2023 Secured Term
Loan |
|
200.0 |
|
158.4 |
Comp SOFR + 210 BPS |
March 2029 |
| Greater Bay JV Secured Term
Loan |
|
151.3 |
|
136.3 |
Term SOFR + 220 BPS |
December 2029 |
| Total |
$ |
1,171.6 |
$ |
722.5 |
|
|
____________________4 The October 2019 loan
facility relates to the Navigator Aurora Facility held within a
lessor entity (for which legal ownership resides with a financial
institution) that we are required to consolidate under U.S. GAAP
into our financial statements as a variable interest entity. Please
read Note 4—Variable Interest Entities to the unaudited
condensed consolidated financial statements for additional
information.
August 2024 Secured Term Loan and Revolving Credit
Facility. On August 9, 2024, the Company entered into the
August 2024 Facility with Crédit Agricole Corporate and Investment
Bank, ING Bank N.V., and Skandinaviska Enskilda Banken AB (Publ),
to refinance its March 2019 secured term loan that was due to
mature in March 2025, to fund the repurchase of the Navigator
Aurora pursuant to the Company’s existing October 2019 sale and
leaseback arrangement related to that vessel which, based on a
termination notice we issued to the lessor in May 2024, will
terminate in October 2024, and for general corporate and working
capital purposes. The August 2024 Facility has a term of six years
maturing in August 2030, is for a maximum principal amount of
$147.6 million, decreases quarterly followed by a final balloon
payment in August 2030 of $63.9 million, and bears interest at a
rate of Term SOFR plus 190 basis points, which margin includes a
5-basis point sustainability-linked element.
Financial Covenants. Our
secured term loan facilities and revolving credit facilities
contain financial covenants requiring the borrowers, among other
things, to ensure that:
- borrowers maintain a certain level of cash and cash equivalents
based on the number of vessels in the facilities, up to an amount
of $50 million and;
- borrowers must maintain a minimum ratio of shareholder equity
to total assets, or value adjusted total assets, of 30%.
Restrictive Covenants. The
secured facilities provide that the borrowers may not declare or
pay dividends to shareholders out of operating revenues generated
by the vessels securing the indebtedness if an event of default has
occurred and is continuing. The secured term loan facilities and
revolving credit facilities also typically limit the borrowers
from, among other things, incurring further indebtedness or
entering into mergers and divestitures. The secured facilities also
contain general covenants that require the borrowers to maintain
adequate insurance coverage and to maintain the vessels. In
addition, the secured term loan facilities include customary events
of default, including those relating to a failure to pay principal
or interest, a breach of covenant, representation or warranty, a
cross-default to other indebtedness and non-compliance with
security documents.
Other than as stated, our compliance with the financial
covenants listed above is measured as of the end of each fiscal
quarter. As of June 30, 2024 we were in compliance with all
covenants under our secured term loan facilities and revolving
credit facilities.
The borrowers are also required to deliver semi-annual
compliance certificates, which include providing valuations of the
vessels securing the applicable facility from an independent ship
broker. Upon delivery of the valuation, if the market value of the
collateral vessels is less than 125% to 135% of the outstanding
indebtedness under the applicable facilities, the borrowers must
either provide additional collateral or repay any amount in excess
of 125% to 135% of the market value of the collateral vessels, as
applicable. This covenant is measured semi-annually on June 30 and
December 31 each year.
2020 Senior Unsecured Bonds
General. On September 10, 2020, we issued
senior unsecured bonds in an aggregate principal amount of $100
million with Nordic Trustee AS as the bond trustee (the “2020
Bonds”). The net proceeds of the issuance of the 2020 Bonds were
used to redeem in full all of our previously outstanding 2017
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 $9.0 million of the 2020 Bonds in
the open market using cash on hand. These purchased 2020 Bonds have
not been cancelled or redeemed and the Company intends to hold the
bonds to maturity.
Interest. Interest on the 2020 Bonds is payable
at a fixed rate of 8.0% per annum, calculated on a 360-day year
basis. Interest is payable semi- annually in arrears on March 10
and September 10 of each year.
Maturity. The 2020 Bonds mature on September
10, 2025 and become repayable on that date.
Optional Redemption. We may redeem the 2020
Bonds, in whole or in part at any time. Any 2020 Bonds redeemed; up
until September 9, 2023 will be priced at the aggregate of the net
present value (based on the Norwegian government bond rate plus 50
basis points) of 103.2% of par and interest payable up to September
9, 2023; from September 10, 2023 up until September 9, 2024, are
redeemable at 103.2% of par; from September 10, 2024 up until
March 9, 2025, are redeemable at 101.6% of par; and from March 10,
2025 to the maturity date are redeemable at 100% of par; in each
case, in cash plus accrued interest.
Additionally, upon the occurrence of a “Change of Control Event”
(as defined in the bond agreement for the 2020 Bonds, (the “2020
Bond Agreement”)), the holders of 2020 Bonds have the option to
require us to repay such holders’ outstanding principal amount of
2020 Bonds at 101% of par, plus accrued interest.
Financial Covenants. The 2020 Bond Agreement
contains financial covenants requiring us, among other things, to
ensure that:
- we and our subsidiaries maintain a minimum liquidity of no less
than $35 million; and
- we and our subsidiaries maintain an
Equity Ratio (as defined in the 2020 Bond Agreement) of at least
30%.
Our compliance with the covenants listed above is measured as of
the end of each fiscal quarter. As of June 30, 2024, we were
in compliance with all covenants under the 2020 Bonds.
Restrictive Covenants. The 2020 Bonds provide
that we may declare or pay dividends to shareholders provided the
Company maintains a minimum liquidity of $60 million unless an
event of default has occurred and is continuing. The 2020 Bond
Agreement also limits us and our subsidiaries from, among other
things, entering into mergers and divestitures, engaging in
transactions with affiliates or incurring any additional liens
which would have a material adverse effect. In addition, the 2020
Bond Agreement includes customary events of default, including
those relating to a failure to pay principal or interest, a breach
of covenant, false representation or warranty, a cross-default to
other indebtedness, the occurrence of a material adverse effect, or
our insolvency or dissolution.
Lessor VIE Debt
In October 2019, we entered into a sale and leaseback
transaction to refinance one of our vessels, Navigator Aurora¸ with
a lessor, OCY Aurora Ltd, a special purpose vehicle (“SPV”) and
wholly owned subsidiary of Ocean Yield Malta Limited. The SPV was
determined to be a VIE. We are deemed under U.S. GAAP to be the
primary beneficiary of the VIE, and as a result, we are required to
consolidate the SPV into our results. The loan described below
under “—Navigator Aurora Facility” relates to the VIE. Although we
have no control over the funding arrangements of this entity, we
are required to consolidate this loan facility into our financial
results.
Upon the occurrence of a “Change of Control Event” (as defined
in the sale and leaseback agreement), the lessor has the option to
require us to repurchase Navigator Aurora at 103% of the
outstanding lease amount, plus costs and expenses directly
attributable to the termination of the lessor’s financing
arrangements, such as break costs for swap arrangements.
Navigator Aurora Facility In October 2019, the
SPV, which owns Navigator Aurora, entered into secured financing
agreements for $69.1 million consisting of a USD denominated loan
facility, the “Navigator Aurora Facility”. The Navigator Aurora
Facility is a seven year unsecured loan provided by OCY Malta
Limited, the parent of OCY Aurora Ltd., The Navigator Aurora
Facility is subordinated to a further bank loan where OCY Aurora
Ltd is the guarantor and Navigator Aurora is pledged as security.
The Navigator Aurora Facility bears interest at 3-month Term SOFR,
a credit adjustment spread, plus a margin of 185 basis points and
is repayable by the SPV with a balloon payment on maturity. As of
June 30, 2024, $38.1 million in borrowings were
outstanding under the Navigator Aurora Facility (December 31,
2023, $41.3 million).
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance
with U.S. GAAP, which requires us to make estimates in the
application of our accounting policies based on our best
assumptions, judgments and opinions. On a regular basis, management
reviews the accounting policies, assumptions, estimates and
judgments to ensure that our consolidated financial statements are
presented fairly and in accordance with U.S. GAAP. However, because
future events and their effects cannot be determined with
certainty, actual results could differ from our assumptions and
estimates, and such differences could be material. For a
description of our material accounting policies, please read Note
2—Summary of Significant Accounting Policies to the Company's 2023
Annual Report.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates and
foreign currency fluctuations, as well as inflation. We use
interest rate swaps to manage some of our interest rate risks. We
do not use interest rate swaps or any other financial instruments
for trading or speculative purposes.
Interest Rate Risk
We are exposed to the impact of interest rate changes through
borrowings that require us to make interest payments based on SOFR.
Our wholly-owned subsidiaries and certain of our vessel-owning
subsidiaries are party to secured term loan and revolving credit
facilities that bear interest at rates of SOFR plus between 185 and
276 basis points. At June 30, 2024, $269.5 million of our
outstanding debt was subject to interest rate swaps and therefore
is not exposed to changes in interest rate movements, whereas
$453.0 million was subject to variable interest rates. Based
on this, a hypothetical increase in SOFR of 100 basis points would
result in an increase of $4.5 million in annual interest
expense on our indebtedness outstanding as of June 30,
2024.
We use interest rate swaps to reduce our exposure to market risk
from changes in interest rates. The principal objective of these
contracts is to minimize the risks and costs associated with our
floating-rate debt. The Company is exposed to the risk of credit
loss in the event of non-performance by the counterparty to the
interest rate swap agreements.
Foreign Currency Exchange Rate Risk
Our primary economic environment is the international shipping
market. This market utilizes the U.S. Dollar as its functional
currency. Consequently, most of our revenues are in U.S. Dollars
although some charter hires are paid in Indonesian Rupiah. Our
expenses however are in the currency invoiced by each supplier, and
we remit funds in various currencies. We incur some vessel
operating expenses and general and administrative costs in foreign
currencies, primarily Euros, Pound Sterling, Danish Kroner, and
Polish Zloty, and therefore there is a transactional risk that
currency fluctuations could have a negative effect on our cash
flows and financial condition. We believe these adverse effects
would not be material and we have not entered into any derivative
contracts to mitigate our exposure to foreign currency exchange
rate risk as of June 30, 2024.
Inflation
We are exposed to increases in operating costs arising from
various vessel operations, including crewing, vessel repair costs,
drydocking costs, insurance and fuel prices as well as from general
inflation, and we are subject to fluctuations as a result of
general market forces. Increases in bunker costs could have a
material effect on our future operations if the number and duration
of our voyage charters or Contract of Affreightment ("COA")
increases. In the case of the 47 vessels owned and commercially
managed by us as of June 30, 2024, 32 were employed on time
charter and as such it is the charterers who pay for the fuel on
those vessels. If our vessels are employed under voyage charters or
COA, freight rates are generally sensitive to the price of fuel.
However, a sharp rise in bunker prices may have a temporary
negative effect on our results since freight rates generally adjust
only after bunker prices settle at a higher level.
Credit Risk
We may be exposed to credit risks in relation to vessel
employment and at times we may have multiple vessels employed by
one charterer. We consider and evaluate the concentration of credit
risk continuously and perform ongoing evaluations of these
charterers for credit risk. At June 30, 2024, no more than
four of our vessels were employed by the same charterer. We invest
our surplus funds with reputable financial institutions, and at
June 30, 2024, all such deposits had maturities of no more
than three months, in order to provide the Company with flexibility
to meet all requirements for working capital and capital
investments.
| |
|
NAVIGATOR HOLDINGS LTD. UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTSCondensed Consolidated Statements of
Operations (Unaudited) |
| |
| |
Three months ended June 30, 2023 |
|
Three months ended June 30, 2024 |
|
Six months ended June 30, 2023 |
|
Six months ended June 30, 2024 |
|
|
|
(in thousands except share and per share data) |
| Revenues |
|
|
|
|
|
Operating revenues |
$ |
122,120 |
|
$ |
131,601 |
|
$ |
238,730 |
|
$ |
252,621 |
|
| Operating revenues – Unigas
Pool |
|
13,060 |
|
|
15,075 |
|
|
25,252 |
|
|
28,210 |
|
| Operating revenues – Luna Pool
collaborative arrangements |
|
155 |
|
|
— |
|
|
7,355 |
|
|
— |
|
| Total operating revenue |
|
135,335 |
|
|
146,676 |
|
|
271,337 |
|
|
280,831 |
|
| Expenses |
|
|
|
|
| Brokerage commission |
|
1,735 |
|
|
1,869 |
|
|
3,429 |
|
|
3,495 |
|
| Voyage expenses |
|
18,604 |
|
|
17,123 |
|
|
35,833 |
|
|
31,306 |
|
| Voyage expenses – Luna Pool
collaborative arrangements |
|
514 |
|
|
— |
|
|
5,542 |
|
|
— |
|
| Vessel operating expenses |
|
42,999 |
|
|
43,494 |
|
|
84,671 |
|
|
85,612 |
|
| Depreciation and
amortization |
|
32,190 |
|
|
33,349 |
|
|
64,021 |
|
|
66,790 |
|
| General and administrative
costs |
|
8,223 |
|
|
11,320 |
|
|
14,978 |
|
|
17,800 |
|
| Other income |
|
— |
|
|
— |
|
|
(96 |
) |
|
— |
|
| (Profit)/loss from sale of
vessel |
|
(4,941 |
) |
|
— |
|
|
(4,941 |
) |
|
— |
|
| Total operating expenses |
|
99,324 |
|
|
107,155 |
|
|
203,437 |
|
|
205,003 |
|
| Other
Income/(expense) |
|
|
|
|
| Operating
Income |
|
36,011 |
|
|
39,521 |
|
|
67,900 |
|
|
75,828 |
|
| Unrealized gain/(loss) on
non-designated derivative instruments |
|
3,195 |
|
|
(1,581 |
) |
|
(1,056 |
) |
|
(2,028 |
) |
| Write off of deferred
financing costs |
|
— |
|
|
— |
|
|
(171 |
) |
|
— |
|
| Interest expense |
|
(17,016 |
) |
|
(16,174 |
) |
|
(30,354 |
) |
|
(31,911 |
) |
| Interest income |
|
1,296 |
|
|
1,550 |
|
|
1,879 |
|
|
3,162 |
|
| Income before taxes
and share of result of equity method investments |
|
23,486 |
|
|
23,316 |
|
|
38,198 |
|
|
45,051 |
|
| Income taxes |
|
(1,984 |
) |
|
(1,161 |
) |
|
(3,149 |
) |
|
(2,367 |
) |
| Share of result of equity
method investments |
|
5,993 |
|
|
4,687 |
|
|
11,296 |
|
|
9,077 |
|
| Net
Income |
|
27,495 |
|
|
26,842 |
|
|
46,345 |
|
|
51,761 |
|
| Net income attributable to
non-controlling interest |
|
(889 |
) |
|
(3,602 |
) |
|
(953 |
) |
|
(5,948 |
) |
| Net Income
attributable to stockholders of Navigator Holdings
Ltd. |
$ |
26,606 |
|
$ |
23,240 |
|
$ |
45,392 |
|
$ |
45,813 |
|
| |
|
|
|
|
| Earnings per share
attributable to stockholders of Navigator Holdings Ltd.: |
|
|
|
|
|
Basic: |
$ |
0.36 |
|
$ |
0.32 |
|
$ |
0.61 |
|
$ |
0.63 |
|
|
Diluted: |
$ |
0.36 |
|
$ |
0.32 |
|
$ |
0.60 |
|
$ |
0.62 |
|
| Weighted average number of
shares outstanding in the period: |
|
|
|
|
|
Basic: |
|
73,745,894 |
|
|
72,458,773 |
|
|
74,847,093 |
|
|
72,834,272 |
|
|
Diluted: |
|
74,329,162 |
|
|
72,883,133 |
|
|
75,321,626 |
|
|
73,320,149 |
|
| |
|
NAVIGATOR HOLDINGS LTD.Condensed
Consolidated Statements of Comprehensive
Income(Unaudited) |
| |
| |
Three months endedJune 30,
2023 |
|
Three months endedJune 30,
2024 |
|
Six months endedJune 30,
2023 |
Six months endedJune 30,
2024 |
|
|
|
(in thousands) |
|
Net Income |
$ |
27,495 |
|
$ |
26,842 |
|
$ |
46,345 |
$ |
51,761 |
|
| Other comprehensive
income: |
|
|
|
|
| Foreign currency translation
(expense)/income |
|
(113 |
) |
|
(326 |
) |
|
52 |
|
(292 |
) |
| Total comprehensive
income |
$ |
27,382 |
|
$ |
26,516 |
|
$ |
46,397 |
$ |
51,469 |
|
| |
|
|
|
|
| Total comprehensive income
attributable to: |
|
|
|
|
| Stockholders of Navigator
Holdings Ltd. |
$ |
26,493 |
|
$ |
22,914 |
|
$ |
45,444 |
$ |
45,521 |
|
| Non-controlling interest |
|
889 |
|
|
3,602 |
|
|
953 |
|
5,948 |
|
| Total comprehensive
income |
$ |
27,382 |
|
$ |
26,516 |
|
$ |
46,397 |
$ |
51,469 |
|
| |
|
NAVIGATOR HOLDINGS LTD.Condensed
Consolidated Balance
Sheet(Unaudited) |
| |
| |
As at December 31, 2023 |
As at June 30, 2024 |
|
|
(in thousands, except share data) |
|
Assets |
|
|
|
Current Assets |
|
|
|
Cash, cash equivalents and restricted cash |
$ |
158,242 |
|
$ |
138,456 |
|
|
Accounts receivable, net of allowance for credit losses |
|
34,653 |
|
|
19,200 |
|
|
Accrued income |
|
2,437 |
|
|
7,702 |
|
|
Prepaid expenses and other current assets |
|
17,068 |
|
|
16,750 |
|
|
Bunkers and lubricant oils |
|
9,044 |
|
|
12,643 |
|
|
Insurance receivable |
|
526 |
|
|
2,757 |
|
|
Amounts due from related parties |
|
33,402 |
|
|
25,278 |
|
|
Total current assets |
|
255,372 |
|
|
222,786 |
|
|
Non-current Assets |
|
|
|
Vessels, net |
|
1,754,382 |
|
|
1,698,087 |
|
|
Property, plant and equipment, net |
|
142 |
|
|
174 |
|
|
Intangible assets, net of accumulated amortization |
|
332 |
|
|
284 |
|
|
Equity method investments |
|
174,910 |
|
|
193,340 |
|
|
Derivative assets |
|
14,674 |
|
|
12,647 |
|
|
Right-of-use asset for operating leases |
|
2,873 |
|
|
2,322 |
|
|
Total non-current assets |
|
1,947,313 |
|
|
1,906,854 |
|
|
Total Assets |
$ |
2,202,685 |
|
$ |
2,129,640 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
Current Liabilities |
|
|
|
Current portion of secured term loan facilities, net of deferred
financing costs |
$ |
120,327 |
|
$ |
118,450 |
|
|
Current portion of operating lease liabilities |
|
914 |
|
|
1,234 |
|
|
Accounts payable |
|
11,643 |
|
|
9,513 |
|
|
Accrued expenses and other liabilities |
|
20,847 |
|
|
26,124 |
|
|
Accrued interest |
|
5,488 |
|
|
5,137 |
|
|
Deferred income |
|
25,617 |
|
|
25,596 |
|
|
Amounts due to related parties |
|
606 |
|
|
505 |
|
|
Total current liabilities |
|
185,442 |
|
|
186,559 |
|
|
Non-current Liabilities |
|
|
|
Secured term loan facilities and revolving credit facilities, net
of current portion and deferred financing costs |
|
641,975 |
|
|
579,113 |
|
|
Senior unsecured bond, net of deferred financing costs |
|
90,336 |
|
|
90,533 |
|
|
Operating lease liabilities, net of current portion |
|
3,500 |
|
|
2,867 |
|
|
Deferred tax liabilities |
|
7,016 |
|
|
8,404 |
|
|
Amounts due to related parties |
|
41,342 |
|
|
38,088 |
|
|
Total non-current liabilities |
|
784,169 |
|
|
719,005 |
|
|
Total Liabilities |
|
969,611 |
|
|
905,564 |
|
|
Commitments and Contingencies - Note 11 |
|
|
|
Stockholders’ Equity |
|
|
| Common stock—$0.01 par value
per share; 400,000,000 shares authorized; 69,595,255 shares issued
and outstanding at June 30, 2024 (December 31, 2023:
73,208,586) |
|
733 |
|
|
697 |
|
|
Additional paid-in capital |
|
799,472 |
|
|
799,940 |
|
|
Accumulated other comprehensive loss |
|
(152 |
) |
|
(444 |
) |
|
Retained earnings |
|
390,221 |
|
|
375,135 |
|
|
Total Navigator Holdings Ltd. Stockholders’
Equity |
|
1,190,274 |
|
|
1,175,328 |
|
|
Non-controlling interest |
|
42,800 |
|
|
48,748 |
|
|
Total equity |
|
1,233,074 |
|
|
1,224,076 |
|
|
Total Liabilities and Stockholders’ Equity |
$ |
2,202,685 |
|
$ |
2,129,640 |
|
|
|
|
NAVIGATOR HOLDINGS LTD.Condensed
Consolidated Statements of Stockholders’
Equity(Unaudited) |
|
|
|
For the six months ended June 30, 2024: |
|
|
|
|
(in thousands, except share data) |
|
|
Common stock |
|
|
|
|
|
| |
Number ofshares |
|
Amount $0.01 par value |
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Non-Controlling Interest |
Total |
|
|
January 1, 2024 |
73,208,586 |
|
$ |
733 |
|
$ |
799,472 |
$ |
(152 |
) |
$ |
390,221 |
|
$ |
42,800 |
$ |
1,233,074 |
|
| Restricted shares issued |
56,036 |
|
|
1 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
1 |
|
| Net income |
— |
|
|
— |
|
|
— |
|
— |
|
|
45,813 |
|
|
5,948 |
|
51,761 |
|
| Foreign currency
translation |
— |
|
|
— |
|
|
— |
|
(292 |
) |
|
— |
|
|
— |
|
(292 |
) |
| Dividend Paid |
— |
|
|
— |
|
|
— |
|
— |
|
|
(7,312 |
) |
|
— |
|
(7,312 |
) |
| Repurchase of common
stock |
(3,669,367 |
) |
|
(37 |
) |
|
— |
|
— |
|
|
(53,587 |
) |
|
— |
|
(53,624 |
) |
| Share-based compensation
plan |
— |
|
|
— |
|
|
468 |
|
— |
|
|
— |
|
|
— |
|
468 |
|
| June 30,
2024 |
69,595,255 |
|
$ |
697 |
|
$ |
799,940 |
$ |
(444 |
) |
$ |
375,135 |
|
$ |
48,748 |
$ |
1,224,076 |
|
For the three months ended June 30, 2024:
|
|
(in thousands, except share data) |
|
|
Common stock |
|
|
|
|
|
| |
Number of shares |
|
Amount $0.01 par value |
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Non-Controlling Interest |
Total |
|
|
April 1, 2024 |
73,157,141 |
|
$ |
733 |
|
$ |
799,561 |
$ |
(118 |
) |
$ |
411,993 |
|
$ |
45,146 |
$ |
1,257,315 |
|
| Restricted shares issued |
54,851 |
|
|
1 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
1 |
|
| Net income |
— |
|
|
— |
|
|
— |
|
— |
|
|
23,240 |
|
|
3,602 |
|
26,842 |
|
| Foreign currency
translation |
— |
|
|
— |
|
|
— |
|
(326 |
) |
|
— |
|
|
— |
|
(326 |
) |
| Dividend Paid |
— |
|
|
— |
|
|
— |
|
— |
|
|
(7,312 |
) |
|
— |
|
(7,312 |
) |
| Repurchase of common
stock |
(3,616,737 |
) |
|
(37 |
) |
|
— |
|
— |
|
|
(52,786 |
) |
|
— |
|
(52,823 |
) |
| Share-based compensation
plan |
— |
|
|
— |
|
|
379 |
|
— |
|
|
— |
|
|
— |
|
379 |
|
| June 30,
2024 |
69,595,255 |
|
$ |
697 |
|
$ |
799,940 |
$ |
(444 |
) |
$ |
375,135 |
|
$ |
48,748 |
$ |
1,224,076 |
|
For the six months ended June 30, 2023:
|
|
(in thousands, except share data) |
|
|
Common stock |
|
|
|
|
|
|
|
Number of shares |
|
Amount $0.01 par value |
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Non-Controlling Interest |
Total |
|
|
January 1, 2023 |
76,804,474 |
|
$ |
769 |
|
$ |
798,188 |
$ |
(463 |
) |
$ |
364,000 |
|
$ |
10,918 |
$ |
1,173,412 |
|
| Restricted shares issued March
15, 2023 |
47,829 |
|
|
1 |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
1 |
|
| Net income |
— |
|
|
— |
|
|
— |
|
— |
|
|
45,392 |
|
|
953 |
|
46,345 |
|
| Foreign currency
translation |
— |
|
|
— |
|
|
— |
|
52 |
|
|
— |
|
|
— |
|
52 |
|
| Investment by non-controlling
interest |
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
27,270 |
|
27,270 |
|
| Repurchase of common
stock |
(3,350,282 |
) |
|
(34 |
) |
|
— |
|
— |
|
|
(44,596 |
) |
|
— |
|
(44,630 |
) |
| Share-based compensation
plan |
— |
|
|
— |
|
|
609 |
|
— |
|
|
— |
|
|
— |
|
609 |
|
| June 30,
2023 |
73,502,021 |
|
$ |
736 |
|
$ |
798,797 |
$ |
(411 |
) |
$ |
364,796 |
|
$ |
39,141 |
$ |
1,203,059 |
|
For the three months ended June 30, 2023:
| |
(in thousands, except share data) |
| |
Common stock |
|
|
|
|
|
| |
Number of shares |
|
Amount $0.01 par value |
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Non-Controlling Interest |
Total |
|
|
April 1, 2023 |
74,689,819 |
|
$ |
747 |
|
$ |
798,368 |
$ |
(298 |
) |
$ |
354,700 |
|
$ |
31,335 |
$ |
1,184,852 |
|
| Net income |
— |
|
|
— |
|
|
— |
|
— |
|
|
26,606 |
|
|
889 |
|
27,495 |
|
| Foreign currency
translation |
— |
|
|
— |
|
|
— |
|
(113 |
) |
|
— |
|
|
— |
|
(113 |
) |
| Investment by non-controlling
interest |
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
6,917 |
|
6,917 |
|
| Repurchase of common
stock |
(1,187,798 |
) |
|
(11 |
) |
|
— |
|
— |
|
|
(16,510 |
) |
|
— |
|
(16,521 |
) |
| Share-based compensation
plan |
— |
|
|
— |
|
|
429 |
|
— |
|
|
— |
|
|
— |
|
429 |
|
| June 30,
2023 |
73,502,021 |
|
$ |
736 |
|
$ |
798,797 |
$ |
(411 |
) |
$ |
364,796 |
|
$ |
39,141 |
$ |
1,203,059 |
|
|
See accompanying notes to condensed unaudited consolidated
financial statements. |
|
NAVIGATOR HOLDINGS LTD.Condensed
Consolidated Statements of Cash
Flows(Unaudited) |
| |
| |
Six months ended June 30, 2023 |
|
Six months ended June 30, 2024 |
|
| Cash flows from
operating activities |
|
|
|
Net Income |
$ |
46,345 |
|
$ |
51,761 |
|
| Adjustments to
reconcile net income to net cash provided by operating
activities |
|
|
| Unrealized loss on
non-designated derivative instruments |
|
1,056 |
|
|
2,028 |
|
| Depreciation and
amortization |
|
64,021 |
|
|
66,790 |
|
| Payment of drydocking
costs |
|
(4,327 |
) |
|
(9,929 |
) |
| Profit from sale of
vessel |
|
(4,941 |
) |
|
— |
|
| Share-based compensation
expense |
|
609 |
|
|
468 |
|
| Amortization of deferred
financing costs |
|
1,937 |
|
|
1,692 |
|
| Share of results of equity
method investments |
|
(11,296 |
) |
|
(9,077 |
) |
| Deferred taxes |
|
— |
|
|
1,393 |
|
| Repayments under operating
lease obligations |
|
— |
|
|
(320 |
) |
| Other unrealized foreign
exchange gain |
|
(133 |
) |
|
(805 |
) |
| Changes in operating
assets and liabilities |
|
|
| Accounts receivable |
|
(5,258 |
) |
|
15,452 |
|
| Insurance claims
receivables |
|
(3,751 |
) |
|
(3,243 |
) |
| Bunkers and lubricant
oils |
|
(2,147 |
) |
|
(3,600 |
) |
| Accrued income and prepaid
expenses and other current assets |
|
(1,355 |
) |
|
(5,811 |
) |
| Accounts payable, accrued
interest, accrued expenses and other liabilities |
|
1,260 |
|
|
1,586 |
|
| Amounts due to/(from) related
parties |
|
(10,748 |
) |
|
8,124 |
|
| Net cash provided by
operating activities |
|
71,272 |
|
|
116,509 |
|
| Cash flows from
investing activities |
|
|
| Additions to vessels and
equipment |
|
(191,727 |
) |
|
— |
|
| Contributions to equity method
investments |
|
(9,000 |
) |
|
(24,003 |
) |
| Distributions from equity
method investments |
|
16,934 |
|
|
14,650 |
|
| Purchase of other property,
plant and equipment and intangibles |
|
(129 |
) |
|
— |
|
| Net proceeds from sale of
vessel |
|
20,720 |
|
|
— |
|
| Insurance recoveries |
|
2,601 |
|
|
1,011 |
|
| Net cash used in
investing activities |
|
(160,601 |
) |
|
(8,342 |
) |
| Cash flows from
financing activities |
|
|
| Proceeds from secured term
loan facilities and revolving credit facilities |
|
323,561 |
|
|
— |
|
| Direct financing cost of
secured term loan and revolving credit facilities |
|
(3,548 |
) |
|
— |
|
| Repurchase of share
capital |
|
(44,594 |
) |
|
(53,587 |
) |
| Repayment of secured term loan
facilities and revolving credit facilities |
|
(183,299 |
) |
|
(66,203 |
) |
| Repayment of refinancing of
vessel to related parties |
|
(3,439 |
) |
|
(3,255 |
) |
| Cash received from
non-controlling interest |
|
27,266 |
|
|
— |
|
| Dividends paid |
|
— |
|
|
(7,312 |
) |
| Net cash (used
in)/provided by financing activities |
|
115,947 |
|
|
(130,357 |
) |
| Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
574 |
|
|
2,404 |
|
| Net increase in cash,
cash equivalents and restricted cash |
|
27,192 |
|
|
(19,786 |
) |
| Cash, cash equivalents and
restricted cash at beginning of year |
|
153,194 |
|
|
158,242 |
|
| Cash, cash equivalents
and restricted cash at end of year |
$ |
180,386 |
|
$ |
138,456 |
|
| |
|
|
| Supplemental Information |
|
|
| Total interest paid during the
period, net of amounts capitalized |
$ |
26,236 |
|
$ |
28,112 |
|
| Total tax paid during the
period |
$ |
1,004 |
|
$ |
716 |
|
| |
|
|
|
|
|
|
Notes to the Condensed Consolidated
Financial Statements (Unaudited)
1. General Information and Basis of
Presentation
General Information
Navigator Holdings Ltd. (the “Company”), the ultimate parent
company of the Navigator Group of companies, is registered in the
Republic of the Marshall Islands. The Company has a core business
of owning and operating a fleet of liquefied gas carriers. As of
June 30, 2024, the Company owned and operated 56 gas carriers
(the “Vessels”) each having a cargo capacity of between 3,770 cbm
and 38,000 cbm, of which 25 were ethylene and ethane-capable
vessels.
The Company entered into a joint venture (the “Navigator Greater
Bay Joint Venture”) with Greater Bay Gas Co. Ltd. (“Greater Bay
Gas”) in September 2022, which joint venture entity has acquired
two 17,000 cbm, 2018-built ethylene-capable liquefied gas carriers
and three 22,000 cbm, 2019-built ethylene capable liquefied gas
carriers. The vessels are currently commercially managed through
the in-house Luna Pool and technically managed by a third party, PG
Shipmanagement of Singapore.
The Company owns a 50% share, through a joint venture (the
“Export Terminal Joint Venture”), of an ethylene export marine
terminal at Morgan’s Point, Texas on the Houston Ship Channel (the
“Ethylene Export Terminal”), capable of exporting in excess of one
million tons of ethylene per year.
Unless the context otherwise requires, all references in the
consolidated financial statements to “our”,” we” and “us” refer to
the Company.
Basis of Presentation
These unaudited interim condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”) for interim financial information and related
Securities and Exchange Commission (“SEC”) rules for interim
financial reporting. Accordingly, they do not include all of the
information and footnotes required by U.S. GAAP for complete
financial statements. In our opinion, all adjustments consisting of
normal recurring items, necessary for a fair statement of financial
position, operating results and cash flows have been included in
the unaudited interim condensed consolidated financial statements
and related notes. The unaudited interim condensed consolidated
financial statements and related notes should be read in
conjunction with the audited consolidated financial statements and
related notes for the year ended December 31, 2023 included in
our Annual Report on Form 20-F filed with the SEC on March 27, 2024
(the “2023 Annual Report”). The year-end condensed balance sheet
data was derived from the audited financial statements but does not
include all disclosures required by accounting principles generally
accepted in the United States of America. The results for the six
months ended June 30, 2024, are not necessarily indicative of
results for the year ending December 31, 2024, or any other
future periods.
The accompanying unaudited condensed consolidated financial
statements include the accounts of the Company, its subsidiaries
and variable interest entities (“VIE”) for which the Company is a
primary beneficiary and are also consolidated (please read Note
14—Variable Interest Entities for additional information). All
intercompany accounts and transactions have been eliminated on
consolidation.
The results of operations are subject to seasonal and other
fluctuations and are therefore not necessarily indicative of
results that may otherwise be expected for the entire year.
Management has evaluated the Company’s ability to continue as a
going concern and considered the conditions and events that could
raise substantial doubt about the Company’s ability to continue as
a going concern within 12 months after these financial statements
are issued. As part of the assessment, management has considered
the following:
- our current financial condition and liquidity sources,
including current funds available and forecasted future cash
flows;
- the severity and duration of any world events and armed
conflicts, including the Russian-Ukraine war, conflicts in the
Israel-Gaza region and the potential for broader conflict in the
Middle East involving Iran and other nations, and associated
repercussions to supply and demand for oil and gas and the economy
generally as well as possible effects of trade disruptions;
- environmental regulations such as those affecting vessels'
Energy Efficiency Existing Ship Index (“EEXI”); and
- the total capital contributions required for the Terminal
Expansion Project (as defined below).
Management has determined that it is appropriate to continue to
adopt the going concern basis in preparing the financial
statements.
In September 2025, which is outside the 12-month going concern
period, the Company has debt obligations falling due, including a
$210 million secured term facility with a balloon repayment of
$136.0 million and the maturity of our unsecured 2020 Bonds in
an amount of $91 million. The Company is planning to refinance
the secured term facility and the 2020 Bonds, however if the
Company’s refinancing efforts are not successful there could be a
material adverse effect on the Company’s liquidity and its
financial position.
A discussion of the Company’s significant accounting policies
can be found in the Company’s consolidated financial statements
included in the Company's 2023 Annual Report. There have been no
material changes to these policies in the six months ended June 30,
2024.
Recent Accounting Pronouncements
New accounting standards issued as of June 30, 2024 may
affect future reporting by Navigator Holdings Ltd. Refer to the
Company's 2023 Annual Report for a comprehensive list of accounting
pronouncements. There are no other new accounting pronouncements
that are expected to have a material impact on the financial
reporting by the Company for the six months ended June 30,
2024.
2. Operating Revenues
The following table discloses operating revenues by contract
type for the three and six months ended June 30, 2024 and 2023:
|
|
Three months ended June 30, 2023 |
Three months ended June 30, 2024 |
Six months ended June 30, 2023 |
Six months ended June 30, 2024 |
| |
(in thousands) |
|
Time charters |
$ |
78,319 |
$ |
86,278 |
$ |
154,711 |
$ |
175,367 |
| Voyage charters |
|
43,801 |
|
45,323 |
|
84,019 |
|
77,254 |
| Voyage charters from Luna Pool
collaborative arrangement |
|
155 |
|
— |
|
7,355 |
|
— |
| Operating revenues from Unigas
Pool |
|
13,060 |
|
15,075 |
|
25,252 |
|
28,210 |
| Total operating
revenues |
$ |
135,335 |
$ |
146,676 |
$ |
271,337 |
$ |
280,831 |
| |
|
|
|
|
|
|
|
|
As of June 30, 2024, 32 of the Company’s 47 operated
vessels (excluding the nine vessels operating within the
independently managed Unigas Pool) were subject to time charters,
26 of which will expire within one year, five of which will expire
within three years, and one of which will expire between three to
five years from the balance sheet date (December 31, 2023: 38
of the Company’s 47 operated vessels were subject to time charters,
27 of which will expire within one year, five of which will expire
within three years and six of which will expire between three to
five years). The estimated undiscounted cash flows for committed
time charter revenues that are expected to be received on an annual
basis for ongoing time charters, as of June 30, 2024, are as
follows:
|
|
(in thousands of U.S. dollars) |
|
Within 1 year |
196,750 |
|
In the second year |
64,995 |
|
In the third year |
17,113 |
|
In the fourth year |
1,177 |
|
|
|
For time charter revenues accounted for under ASC 842, the
amount of accrued income on the Company’s unaudited condensed
consolidated balance sheet as of June 30, 2024, was
$0.9 million (December 31, 2023: $1.0 million). The
amount of hire payments received in advance under time charter
contracts, recognized as a liability and reflected within deferred
income on the Company’s unaudited condensed consolidated balance
sheet as of June 30, 2024, was $25.6 million
(December 31, 2023: $25.6 million). Deferred income
allocated to time charters will be recognized ratably over time,
which is expected to be within one month from June 30,
2024.
Voyage Charter revenues
Voyage charter revenues, which include revenues from contracts
of affreightment, are shown net of address commissions.
As of June 30, 2024, for voyage charters and contracts of
affreightment services accounted for under ASC 606, the amount of
contract assets reflected within accrued income on the Company’s
unaudited condensed consolidated balance sheet was
$6.8 million (December 31, 2023: $1.3 million).
Changes in the contract asset balance at the balance sheet dates
reflect income accrued after loading of the cargo commences but
before an invoice has been raised to the charterer, as well as
changes in the number of the Company’s vessels contracted under
voyage charters or contracts of affreightment.
The period opening and closing balance of receivables from
voyage charters, including contracts of affreightment, was
$18.3 million and $6.9 million, respectively, as of
June 30, 2024 (December 31, 2023: $5.1 million and
$18.3 million, respectively) and is reflected within net
accounts receivable on the Company’s unaudited condensed
consolidated balance sheet.
The amount allocated to costs incurred to fulfill a contract
with a charterer, which are costs incurred following the
commencement of a contract or charter party but before the loading
of the cargo commences, was $1.1 million as of June 30,
2024 (December 31, 2023: $1.0 million) and is reflected
within prepaid expenses and other current assets on the Company’s
unaudited condensed consolidated balance sheet.
Voyage and Time charter revenues from Luna Pool
collaborative arrangements
Revenues from the Luna Pool collaborative arrangements for the
six months ended June 30, 2023 which were accounted for under ASC
808 – Collaborative Arrangements, represent our share of pool net
revenues generated by the other Pool Participant’s vessels in the
Luna Pool. These include revenues from voyage charters and
contracts of affreightment, which are accounted for under ASC 606
in addition to time charter revenues, which are accounted for under
ASC 842. Following the acquisition of the final of five vessels by
Navigator Greater Bay Joint Venture on April 13, 2023, revenues
from the Luna Pool vessels are no longer accounted for under ASC
808 – Collaborative Arrangements.
3. Vessels
| |
Vessels |
Drydocking |
|
Total |
|
| |
(in thousands) |
| Cost |
|
|
|
|
January 1, 2024 |
$ |
2,467,396 |
$ |
69,938 |
|
$ |
2,537,334 |
|
|
Additions |
|
— |
|
10,398 |
|
|
10,398 |
|
|
Write-offs of fully amortized assets |
|
— |
|
(5,319 |
) |
|
(5,319 |
) |
|
June 30, 2024 |
|
2,467,396 |
|
75,017 |
|
|
2,542,413 |
|
| |
|
|
|
| Accumulated
Depreciation |
|
|
|
|
January 1, 2024 |
|
743,334 |
|
39,618 |
|
|
782,952 |
|
|
Charge for the period |
|
55,504 |
|
11,189 |
|
|
66,693 |
|
|
Write-offs of fully amortized assets |
|
— |
|
(5,319 |
) |
|
(5,319 |
) |
|
June 30, 2024 |
|
798,838 |
|
45,488 |
|
|
844,326 |
|
| |
|
|
|
| Net Book
Value |
|
|
|
|
December 31, 2023 |
|
1,724,062 |
|
30,320 |
|
|
1,754,382 |
|
|
June 30, 2024 |
$ |
1,668,558 |
$ |
29,529 |
|
$ |
1,698,087 |
|
| |
|
|
|
|
|
|
|
|
The cost and net book value of the 32 vessels that were
contracted under time charter arrangements (please read Note
2—Operating Revenue for additional information) was $1,670.7
million and $1,090.9 million, respectively, as of June 30,
2024 (December 31, 2023: $1,776.0 million and
$1,236.0 million, respectively, for 34 vessels contracted
under time charters).
The net book value of vessels that serve as collateral for the
Company’s secured term loan and revolving credit facilities (please
read Note 5—Secured Term Loan Facilities and Revolving Credit
Facilities, for additional information) was $1,363.6 million as of
June 30, 2024 (December 31, 2023:
$1,420.9 million).
The cost and net book value of vessels that are owned by lessor
VIEs and which are included in the table above (please read Note
14—Variable Interest Entities for additional information) were
$83.6 million and $60.8 million, respectively, as of
June 30, 2024 (December 31, 2023: $83.6 million and
$66.1 million, respectively).
4. Equity Method Investments
Interests in investments are accounted for using the equity
method and are recognized initially at cost and subsequently
include the Company’s share of the profit or loss and other
comprehensive income of the equity-accounted investees. We disclose
our proportionate share of profits and losses from equity method
unconsolidated affiliates in the statement of operations and adjust
the carrying amount of our equity method investments on the balance
sheet accordingly.
Share of results from equity method investments, excluding
amortized costs, recognized in the share of results of equity
method investments for the six months ended June 30, 2024, was $9.2
million (six months ended June 30, 2023: $11.3 million).
As of December 31, 2023, and June 30, 2024, we had the
following participation in investments that are accounted for using
the equity method:
| |
December 31, 2023 |
June 30, 2024 |
|
Enterprise Navigator Ethylene Terminal L.L.C. (“Export Terminal
Joint Venture”) |
50 |
% |
50 |
% |
| Unigas International B.V.
(“Unigas”) |
33.3 |
% |
33.3 |
% |
| Dan Unity CO2 A/S |
50 |
% |
50 |
% |
| Luna Pool Agency Limited
(“Pool Agency”) |
50 |
% |
50 |
% |
| Azane Fuel Solutions AS
("Azane") |
14.5 |
% |
14.5 |
% |
| Bluestreak CO2 Limited
("Bluestreak") |
50 |
% |
50 |
% |
| |
|
|
|
|
The table below shows the movement in the Company’s equity
method investments, for the year ended December 31, 2023, and
six months ended June 30, 2024:
|
|
Year ended December 31,
2023 |
|
Six months ended June 30, 2024 |
|
|
|
(in thousands) |
|
Equity method investments at January 1, 2023 and 2024 |
$ |
148,534 |
|
$ |
174,910 |
|
| Share of results |
|
20,607 |
|
|
9,077 |
|
| Distributions received from
equity method investments |
|
(30,790 |
) |
|
(14,650 |
) |
| Equity contributions to joint
venture entity |
|
35,000 |
|
|
24,003 |
|
| Equity method investments –
additions |
|
1,559 |
|
|
— |
|
| Total equity method
investments at December 31, 2023
and June 30, 2024 |
$ |
174,910 |
|
$ |
193,340 |
|
| |
|
|
|
|
|
|
Enterprise Navigator Ethylene Terminal L.L.C. (“Export
Terminal Joint Venture”)
In January 2018, the Company entered into definitive agreements
creating the Export Terminal Joint Venture. As of June 30,
2024, we had contributed $214.5 million to the Export Terminal
Joint Venture being our total share of the capital cost for the
construction of the Ethylene Export Terminal and the ongoing
Terminal Expansion Project.
Cumulative interest and associated costs capitalized on our
investment in the Ethylene Export Terminal are being amortized over
the estimated useful life of the Ethylene Export Terminal, which
began commercial operations with the export of commissioning
cargoes in December 2019. As of June 30, 2024 the unamortized
difference between the carrying amount of the investment in the
Export Terminal Joint Venture and the amount of the Company’s
underlying equity in net assets of the Export Terminal Joint
Venture was $5.4 million (December 31, 2023:
$5.6 million). The costs amortized in both the six months
ended June 30, 2024, and 2023, was $0.2 million and this is
presented in the share of results of the equity method investments
within our consolidated statements of operations.
Unigas International B.V. ("Unigas B.V.")
Unigas B.V. based in the Netherlands is an independent
commercial and operational manager of seagoing vessels capable of
carrying liquefied petrochemical and petroleum gases on a worldwide
basis. Unigas B.V. is the operator of the Unigas pool. The Company
owns a 33.3% equity interest in Unigas B.V. and accounts for it
using the equity method. It was recognized initially at fair value
and subsequent to initial recognition the consolidated financial
statements will include the Company’s share of the profit or loss
and other comprehensive income.
Dan Unity CO2 A/S ("Dan Unity")
In June 2021, one of the Company’s subsidiaries entered into a
shareholder agreement creating joint venture Dan Unity CO2 A/S, a
Danish entity, to undertake commercial and technical projects
relating to seaborne transportation of CO2.
We account for our investment using the equity method and we
exercise joint control over the operating and financial policies of
Dan Unity CO2 A/S. As of June 30, 2024, we have recognized the
Company’s initial investment at cost along with the Company’s share
of the profit or loss and other comprehensive income of equity
accounted investees.
Luna Pool Agency Limited ("Pool Agency")
In March 2020, the Company collaborated with Pacific Gas Pte.
Ltd. and Greater Bay Gas Co. Ltd. ("Greater Bay Gas”) to form and
manage the Luna Pool. As part of the formation, Luna Pool Agency
Limited (the “Pool Agency”) was incorporated in May 2020. The pool
participants jointly own the Pool Agency on an equal basis, and
both have equal board representation. As of June 30, 2024, we
have recognized the Company’s initial investment of one British
pound in the Pool Agency within equity method investments on our
consolidated balance sheet. The Pool Agency has no activities other
than as a legal custodian of the Luna Pool bank account and there
will be no variability in its financial results as it has no income
and its minimal operating expenses are reimbursed by the Pool
Participants.
Azane Fuel Solutions AS ("Azane")
Azane, a joint venture between ECONNECT Energy AS and Amon
Maritime AS, both of Norway, was founded in Norway in 2020 as a
company that develops proprietary technology and services for
ammonia fuel handling to facilitate the transition to green fuels
for shipping. The Company acquired a 14.5% equity interest in Azane
on October 25, 2023. It was recognized initially at cost.
Subject to customary conditions, Azane intends to build the
world’s first ammonia bunkering network, with Yara Clean Ammonia
("Yara") already pre-ordering 15 units from Azane. The first green
ammonia bunkering units are scheduled to be delivered in 2025
enabling a low-carbon fuel offering to shipowners. 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 the broadening of its offerings in ammonia fuel
handling technology.
Bluestreak CO2 Limited ("Bluestreak")
Bluestreak is a 50% joint venture between the Company and Bumi
Armada, one of the world’s largest floating infrastructure
operators. The joint venture aims to provide an end-to-end solution
for carbon emitters to capture, transport, sequester and store
their carbon dioxide emissions in line initially with the United
Kingdom’s Industrial Decarbonisation Strategy. It is anticipated
that the Bluestreak joint venture will design and implement a value
chain of shuttle tankers delivering to a floating carbon storage
unit or a floating carbon storage and injection unit. The complete
value chain is expected to safely and reliably transport and
provide buffer storage of liquid carbon dioxide. The Bluestreak
joint venture is subject to the execution of definitive
documentation, approvals by the respective boards of directors of
the Company and Bumi Armada, applicable regulatory approvals and
other customary closing conditions.
5. Secured Term Loan Facilities and Revolving Credit
Facilities
The following table shows the breakdown of all secured term loan
facilities, revolving credit facilities and total deferred
financing costs split between current and non-current liabilities
at December 31, 2023 and June 30, 2024:
|
|
December 31, 2023 |
|
June 30, 2024 |
|
|
|
(in thousands) |
| Current
Liability |
|
|
|
Current portion of secured term loan facilities and revolving
credit facilities |
$ |
123,024 |
|
$ |
120,815 |
|
| Less: current portion of
deferred financing costs |
|
(2,697 |
) |
|
(2,365 |
) |
| Current portion of secured
term loan facilities and revolving credit facilities, net of
deferred financing costs |
$ |
120,327 |
|
$ |
118,450 |
|
| Non-Current
Liability |
|
|
| Secured term loan facilities
and revolving credit facilities net of current portion, excluding
amount due to related parties |
$ |
646,131 |
|
$ |
582,139 |
|
| Amount due to related
parties* |
|
41,342 |
|
|
38,088 |
|
| Less: non-current portion of
deferred financing costs |
|
(4,156 |
) |
|
(3,026 |
) |
| Non-current secured term loan
facilities and revolving credit facilities, net of current portion
and non-current deferred financing costs |
$ |
683,317 |
|
$ |
617,201 |
|
*Amount due to related parties relates to the Navigator Aurora
Facility held within a lessor entity (for which legal ownership
resides with a financial institution) that we are required to
consolidate as a variable interest entity under U.S. GAAP into our
financial statements.
6. Senior Unsecured Bonds
In September 2020, the Company issued senior unsecured bonds in
an aggregate principal amount of $100 million with Nordic
Trustee AS as the bond trustee (the “2020 Bonds”). The net proceeds
of the issuance of the 2020 Bonds were used to redeem in full
previously issued bonds. The 2020 Bonds are governed by Norwegian
law and listed on the Nordic ABM which is operated and organized by
Oslo Børs ASA.
The 2020 Bonds bear interest at a rate of 8.0% per annum and
mature on September 10, 2025. Interest is payable semi-annually in
arrears on March 10 and September 10.
The following table shows the breakdown of our senior unsecured
bonds and total deferred financing costs as of December 31,
2023 and June 30, 2024:
| |
December 31, 2023 |
|
June 30, 2024 |
|
| |
(in thousands) |
|
Total bonds cost |
$ |
100,000 |
|
$ |
100,000 |
|
| Less Treasury bonds* |
|
(9,000 |
) |
|
(9,000 |
) |
| Less deferred financing
costs |
|
(664 |
) |
|
(467 |
) |
| Total bonds, net of deferred
financing costs |
$ |
90,336 |
|
$ |
90,533 |
|
* In September 2023, we purchased $9.0 million of the 2020
Bonds in the open market using cash on hand. These purchased 2020
Bonds have not been cancelled or redeemed and the Company intends
to hold the bonds to maturity.
7. Derivative Instruments Accounted for at Fair
Value
The following table includes the estimated fair value of those
assets and liabilities that are measured at fair value on a
recurring basis as of December 31, 2023 and June 30,
2024.
|
|
|
December 31, 2023 |
June 30, 2024 |
|
|
|
(in thousands) |
|
|
Fair Value Hierarchy Level |
Fair Value Asset |
Fair Value Asset |
|
Interest rate swap agreements |
Level 2 |
$14,674 |
$12,647 |
|
|
|
|
|
The Company uses derivative instruments in accordance with its
overall risk management policy to mitigate the risk of unfavorable
fluctuations in foreign exchange and interest rate movements.
The Company held no derivatives designated as hedges as of
December 31, 2023 or June 30, 2024.
Fair value is a market-based measurement that is determined
based on assumptions that market participants would use in pricing
an asset or a liability. The fair value accounting standard
establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in the valuation methodologies in measuring fair
value:
Level 1—Observable inputs that reflect quoted prices
(unadjusted) for identical assets or liabilities in active
markets.
Level 2—Include other inputs that are directly or indirectly
observable in the marketplace.
Level 3—Unobservable inputs which are supported by little or no
market activity.
Interest Rate risk
The Company has a number of existing vessel loan facilities with
associated fixed interest rate swaps. As of June 30, 2024, the
interest rate swaps had a positive fair value to the Company of
$12.6 million (December 31, 2023, a positive fair value
to the Company of $14.7 million). There were unrealized losses
of $1.6 million on the fair value of the swaps for the three
months ended June 30, 2024 (three months ended June 30, 2023, an
unrealized gain of $3.2 million). There were unrealized losses
of $2.0 million on the fair value of the swaps for the six
months ended June 30, 2024 (six months ended June 30, 2023, an
unrealized loss of $1.1 million).
These fixed interest rate swaps are typically entered into with
the financial institutions which are lenders under on the loan
facilities. The interest rate payable by the Company under these
interest rate swap agreements is between 0.3615% and 2.137%. The
interest rate receivable by the Company under these interest rate
swap agreements is 3-month SOFR, calculated on a 360-day year basis
and which resets every three months.
All interest rate swaps above are remeasured to fair value at
each reporting date and have been categorized as level two on the
fair value measurement hierarchy. The remeasurement to fair value
has no impact on the cash flows at the reporting date. There is no
requirement for cash collateral to be placed with the swap
providers under these swap agreements and there is no effect on
restricted cash as of June 30, 2024.
Foreign Currency Exchange Rate risk
All foreign currency-denominated monetary assets and liabilities
are revalued and are reported in the Company’s functional currency
based on the prevailing exchange rate at the end of the period.
These foreign currency transactions fluctuate based on the strength
of the U.S. Dollar. The remeasurement of all foreign
currency-denominated monetary assets and liabilities at each
reporting date results in unrealized foreign currency exchange
differences which do not impact our cash flows.
Credit risk
The Company is exposed to credit losses in the event of
non-performance by the counterparties to its interest rate swap
agreements. As of June 30, 2024, the Company is exposed to
credit risk as the interest rate swaps were in an asset position
from the perspective of the Company. In order to minimize
counterparty risk, the Company only enters into derivative
transactions with counterparties that are reputable financial
institutions, highly rated by a recognized rating agency.
The fair value of our interest rate swap agreements is the
estimated amount that we would pay/receive to sell or transfer the
swap at the reporting date, taking into account current interest
rates and the current credit worthiness of the swap counterparties.
The estimated amount is the present value of future cash flows,
adjusted for credit risk. The Company transacts all of these
derivative instruments through investment-grade rated financial
institutions at the time of the transaction. The amount recorded as
a derivative asset or liability could vary by a material amount in
the near term if credit markets are volatile or if credit risk were
to change significantly.
The fair value of our interest rate swap agreements at the end
of each period is most significantly affected by the interest rate
implied by the benchmark interest yield curve, including its
relative steepness. Interest rates and foreign exchange rates have
experienced significant volatility in recent years in both the
short and long term. While the fair value of our swap agreements is
typically more sensitive to changes in short-term rates,
significant changes in long-term benchmark interest, foreign
exchange rates and the credit risk of the counterparties of the
Company also materially impact the fair values of our swap
agreements.
8. Fair Value of Financial Instruments Not Accounted for
at Fair Value
The principal financial assets of the Company as of
June 30, 2024, and December 31, 2023, consist of cash,
cash equivalents, and restricted cash and accounts receivable. The
principal financial liabilities of the Company as of June 30,
2024, and December 31, 2023, consist of accounts payable,
accrued expenses and other liabilities, secured term loan
facilities, revolving credit facilities and the 2020 Bonds and do
not include deferred financing costs.
The carrying values of cash, cash equivalents and restricted
cash, accounts receivable, accounts payable, accrued expenses and
other liabilities are reasonable estimates of their fair value due
to the short-term nature or liquidity of these financial
instruments.
Fair value is a market-based measurement that is determined
based on assumptions that market participants would use in pricing
an asset or a liability. The fair value accounting standard
establishes a three-tier fair value hierarchy, which prioritizes
the inputs used in the valuation methodologies in measuring fair
value:
Level 1—Observable inputs that reflect quoted prices
(unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly
observable in the marketplace.Level 3—Unobservable inputs which are
supported by little or no market activity.
The 2020 Bonds are classified as a level two liability and the
fair values have been calculated based on the most recent trades of
the bond on the Oslo Børs prior to June 30, 2024. These trades
are infrequent and therefore not considered to be an active
market.
The fair value of secured term loan facilities and revolving
credit facilities is estimated to approximate the carrying value in
the balance sheet since they bear a variable interest rate, which
is reset quarterly. This has been categorized at level two on the
fair value measurement hierarchy as of June 30, 2024.
The following table includes the estimated fair value and
carrying value of those assets and liabilities where the fair value
approximate carrying value. The table excludes cash, cash
equivalents, restricted cash, accounts receivable, accounts
payable, accrued expenses and other liabilities because the fair
value approximates carrying value and, for accounts receivable and
payable, are due in one year or less.
|
|
December 31, 2023 |
June 30, 2024 |
| |
(in thousands) |
| |
Fair Value Hierarchy Level |
Carrying Amount (Liability) |
|
Fair Value (Liability) |
|
Fair Value Hierarchy Level |
CarryingAmount (Liability) |
|
Fair Value (Liability) |
|
|
2020 Bonds (Note 6) |
Level 2 |
$ |
(91,000 |
) |
$ |
(91,455 |
) |
Level 2 |
$ |
(91,000 |
) |
$ |
(91,114 |
) |
| Secured term loan facilities
and revolving credit facilities (Note 5) |
Level 2 |
$ |
(810,497 |
) |
$ |
(810,497 |
) |
Level 2 |
$ |
(741,042 |
) |
$ |
(741,042 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Earnings per share
Basic earnings per share is calculated by dividing the net
income available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted
earnings per share is calculated by adjusting the weighted average
number of common shares used for calculating basic earnings per
share for the effects of all potentially dilutive shares. The
following table shows the calculation of both the basic and diluted
number of weighted average outstanding shares for the three and six
months ended June 30, 2024 and 2023:
|
|
Three months endedJune 30,
2023 |
Three months endedJune 30,
2024 |
Six months ended June 30, 2023 |
Six months ended June 30, 2024 |
|
Net Income attributable to stockholders of Navigator Holdings
Ltd.(in thousands) |
$ |
26,606 |
$ |
23,240 |
$ |
45,392 |
$ |
45,813 |
| Basic weighted average number
of shares: |
|
73,745,894 |
|
72,458,773 |
|
74,847,093 |
|
72,834,272 |
| Effect of dilutive potential
share options: |
|
583,268 |
|
424,360 |
|
474,533 |
|
485,877 |
| Diluted weighted average
number of shares |
|
74,329,162 |
|
72,883,133 |
|
75,321,626 |
|
73,320,149 |
| Earnings per share
attributable to stockholders of Navigator Holdings Ltd.: |
|
|
|
|
| Basic earnings per share |
$ |
0.36 |
$ |
0.32 |
$ |
0.61 |
$ |
0.63 |
| Diluted earnings per
share |
$ |
0.36 |
$ |
0.32 |
$ |
0.60 |
$ |
0.62 |
| |
|
|
|
|
|
|
|
|
10. Share-Based Compensation
Share Awards
On April 15, 2024, under the Navigator Holdings Ltd. 2023
Long-Term Incentive Plan (the “2023 Plan”) the Company granted a
total of 54,851 restricted shares, 41,291 of which were granted to
non-employee directors and 13,560 of which were granted to the
officers and employees of the Company. The weighted average value
of the 54,851 shares granted was $15.03 per share. The restricted
shares granted to the non-employee directors vest on the first
anniversary of the grant date and the restricted shares granted to
the officers and employees of the Company vest on the third
anniversary of the grant date.
On March 17, 2024 under the Navigator Holdings Ltd. 2013
Long-Term Incentive Plan (the “2013 Plan”), 31,833 shares which
were previously granted to non-employee directors under the 2013
Plan with a weighted average grant value of $12.45 per share,
vested at a fair value of $487,045. In addition, on March 17, 2024,
10,111 shares which were granted in 2021 to officers and employees
of the Company, all of which had a weighted average grant value of
$10.26, vested at a fair value of $154,698.
On June 30, 2023, 15,627 shares, which were previously granted
to an officer of the Company under the 2013 Plan with a weighted
average grant value of $9.84 per share, were accelerated to vesting
at a fair value of $203,307.
On March 17, 2023, 45,864 shares which were previously granted
to non-employee directors under the 2013 Plan with a weighted
average grant value of $10.65 per share, vested at a fair value of
$553,120. In addition, on March 19, 2023, 12,159 shares which were
granted in 2020 to officers and employees of the Company, all of
which had a weighted average grant value of $7.90 vested at a fair
value of $157,581.
On March 15, 2023, under the 2013 Plan the Company granted a
total of 47,829 restricted shares, 36,327 of which were granted to
non-employee directors and 11,502 of which were granted to the
officers and employees of the Company. The weighted average value
of the shares granted was $12.45 per share. The restricted shares
granted to the non-employee directors vest on the first anniversary
of the grant date and the restricted shares granted to the officers
and employees of the Company vest on the third anniversary of the
grant date.
Restricted share grant activity for the year ended
December 31, 2023, and the six months ended June 30, 2024, was
as follows:
|
|
Number of non-vested restricted shares |
|
Weighted average grant date fair value |
Weighted average remaining contractual term
(years) |
|
Balance as of January 1, 2023 |
115,693 |
|
$ |
10.16 |
1.04 |
| Granted |
47,829 |
|
|
12.45 |
|
| Vested |
(78,144 |
) |
|
10.16 |
|
| Balance as of
December 31, 2023 |
85,378 |
|
|
11.44 |
0.81 |
| Granted |
54,851 |
|
|
15.03 |
|
| Vested |
(41,944 |
) |
|
11.92 |
|
| Balance as of June 30,
2024 |
98,285 |
|
$ |
13.24 |
1.12 |
We account for forfeitures as they occur. Using the graded
straight-line method of expensing the restricted stock grants, the
weighted average estimated value of the shares calculated at the
date of grant is recognized as compensation cost in the unaudited
condensed consolidated statement of operations over the period to
the vesting date.
During the six months ended June 30, 2024, the Company
recognized $281,557 in share-based compensation costs relating to
share grants (six months ended June 30, 2023: $457,751). As of
June 30, 2024, there was a total of $717,882 unrecognized
compensation costs relating to the expected future vesting of
share-based awards (December 31, 2023: $400,282) which are
expected to be recognized over a weighted average period of 1.12
years (December 31, 2023: 0.81 years).
Share options
Share options issued under the 2013 Plan are exercisable between
the third and tenth anniversary of the grant date, after which they
lapse. The fair value of any option issued is calculated on the
date of the grant based on the Black-Scholes valuation model.
Expected volatility is based on the historic volatility of the
Company’s stock price and other factors. The expected term of the
options granted is anticipated to occur in the range between 4 and
6.5 years. The risk-free rate is the rate adopted from the U.S.
Government Zero Coupon Bond.
The movements in the outstanding share options during the year
ended December 31, 2023, and the six months ended June 30,
2024, were as follows:
| |
Number of options outstanding |
|
Weighted average exercise price per
share |
Aggregate
intrinsic value5 |
|
Balance as of January 1, 2023 |
$ |
320,856 |
|
$ |
20.99 |
$ |
— |
| Forfeited during the year |
|
(35,875 |
) |
|
22.35 |
|
— |
| Issuance during the year |
|
262,412 |
|
|
15.45 |
|
— |
| Balance as of
December 31, 2023 |
|
547,393 |
|
|
18.25 |
|
53,100 |
| Expired during the period |
|
(143,538 |
) |
|
24.29 |
|
— |
| Balance as of June 30,
2024 |
$ |
403,855 |
|
$ |
16.10 |
$ |
609,648 |
____________________5 The aggregate intrinsic value of stock
options is calculated as the difference between the exercise price
of the stock options and the fair value of the Company’s common
stock for options that had exercise prices lower than the fair
value of the Company’s share price.
The weighted-average remaining contractual term of options
outstanding and exercisable at June 30, 2024 was 3.49 years
(December 31, 2023: 2.99 years). During the six months ended
June 30, 2024, the Company recognized $69,405 in share-based
compensation costs relating to options granted under the 2013 Plan
(six months ended June 30, 2023: a charge of $121,078 relating to
options granted under the 2013 Plan). As of June 30, 2024
there was $1,693,100 of total unrecognized compensation costs
relating to non-vested options under the 2013 Plan
(December 31, 2023: $1,142,618). As of June 30, 2024,
there were 131,443 share options that had vested but had not been
exercised with a weighted average exercise price of $18.21 (As of
December 31, 2023, there were 274,981 share options that had
vested but had not been exercised with a weighted average exercise
price of $21.38).
The Company has employee stock purchase plans in place which is
a savings-related share scheme where certain employees have the
option to buy common stock at a 15% discount to the share price at
the grant dates of July 9, 2021, August 8, 2022 and August 22,
2023. The employee stock purchase plans have three-year
vesting periods, which will end on July 9, 2024, August
10, 2025 and August 22, 2026. 1,185 shares have been issued
since the inception of the scheme. Using the Black-Scholes
valuation model, the Company recognized compensation costs of
$34,186 relating to employee stock purchase plans for the six
months ended June 30, 2024 (six months ended June 30, 2023:
$30,085).
11. Commitments and Contingencies
The schedule below summarizes our contractual obligations as of
June 30, 2024.
|
|
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
Thereafter |
Total |
|
|
(in thousands) |
|
Secured term loan facilities and revolving credit facilities |
$ |
61,567 |
$ |
292,616 |
$ |
107,216 |
$ |
67,539 |
$ |
89,186 |
$ |
84,830 |
$ |
702,954 |
| Ethylene Export Terminal
capital contributions1 |
|
70,931 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
70,931 |
| 2020 Bonds |
|
— |
|
100,000 |
|
— |
|
— |
|
— |
|
— |
|
100,000 |
| Office operating leases2 |
|
680 |
|
1,266 |
|
1,058 |
|
1,267 |
|
— |
|
— |
|
4,271 |
| Navigator Aurora
Facility3 |
|
— |
|
— |
|
— |
|
38,088 |
|
— |
|
— |
|
38,088 |
| Total contractual
obligations |
$ |
133,178 |
$ |
393,882 |
$ |
108,274 |
$ |
106,894 |
$ |
89,186 |
$ |
84,830 |
$ |
916,244 |
| 1 |
|
We have committed to invest
further in terminal infrastructure, such as expanding our existing
Ethylene Export Terminal. As at June 30, 2024 the remaining
capital contributions required from us to the Export Terminal Joint
Venture for the Terminal Expansion Project are expected to be
approximately $71 million. |
| |
|
|
| 2 |
|
The Company occupies office space
in London with a lease that commenced in January 2022 for a period
of 10 years with a mutual break option in January 2027, which is
the fifth anniversary of the lease commencement date. The annual
gross rent under this lease is approximately $1.1 million,
with an initial rent-free period of 27 months, of which 13 months
of the rent free period is repayable in the event that the break
option is exercised. |
| |
|
|
| |
|
The Company entered into a lease
for office space in Houston that expires on March 31, 2025. The
annual gross rent under this lease is approximately $60,000. |
| |
|
|
| |
|
The lease term for our
representative office in Gdynia, Poland was revised during 2021 for
an amended period to May 31, 2025. The gross rent per year is
approximately $64,000. |
| |
|
|
| |
|
The Company occupies office space
in Copenhagen, Denmark with a lease that commenced in September
2021 that expires in June 2025. The gross rent per year is
approximately $180,000. |
| |
|
|
| |
|
The weighted average remaining
contractual lease term for the above four office leases on
June 30, 2024, was 2.47 years (December 31, 2023: 3.88
years). |
| |
|
|
| 3 |
|
The Navigator Aurora Facility is
a loan facility held within a lessor entity (for which legal
ownership resides with financial institutions) that we are required
to consolidate under U.S. GAAP into our financial statements as a
variable interest entity. Please read Note 14—Variable Interest
Entities to our consolidated financial statements. |
| |
|
|
12. Operating Lease Liabilities
The Company’s unaudited condensed consolidated balance sheet
includes a right-of-use (“ROU”) asset and a corresponding liability
for operating lease contracts where the Company is a lessee. The
discount rate used to measure the lease liability presented on the
Company’s unaudited condensed consolidated balance sheet is the
incremental cost of borrowing since the rate implicit in the lease
cannot be determined.
The liabilities described below are for the Company’s offices in
London, Gdynia, Copenhagen and Houston which are denominated in
various currencies. At June 30, 2024, the weighted average
discount rate across the four leases was 2.93% (December 31,
2023: 2.95%).
At June 30, 2024, based on the remaining lease liabilities,
the weighted average remaining operating lease term was 2.46 years
(December 31, 2023: 3.17 years ).
Under ASC 842, the ROU asset is a non-monetary asset and is
remeasured into the Company’s reporting currency using the exchange
rate for the applicable currency as at the adoption date of ASC
842. The operating lease liability is a monetary liability and is
remeasured quarterly using current exchange rates, with changes
recognized in a manner consistent with other foreign
currency-denominated liabilities within general and administrative
expenses in the unaudited condensed consolidated statements of
comprehensive income.
A maturity analysis of the annual undiscounted cash flows of the
Company’s operating lease liabilities as of December 31, 2023
and June 30, 2024, is presented in the following table:
|
|
December 31, 2023 |
|
June 30, 2024 |
|
|
|
(in thousands) |
|
One year |
$ |
1,027 |
|
$ |
1,327 |
|
| Two years |
|
1,279 |
|
|
1,143 |
|
| Three years |
|
1,066 |
|
|
1,801 |
|
| Four years |
|
1,274 |
|
|
— |
|
| Total undiscounted
operating lease commitments |
|
4,646 |
|
|
4,271 |
|
| Less: Discount adjustment |
|
(232 |
) |
|
(170 |
) |
| Total operating lease
liabilities |
|
4,414 |
|
|
4,101 |
|
| Less: current portion |
|
(914 |
) |
|
(1,234 |
) |
| Operating lease
liabilities, non-current portion |
$ |
3,500 |
|
$ |
2,867 |
|
13. Cash, Cash Equivalents and Restricted
Cash
The following table shows the breakdown of cash, cash
equivalents and restricted cash as of December 31, 2023 and
June 30, 2024:
|
|
December 31, 2023 |
June 30, 2024 |
|
|
(in thousands) |
|
Cash and cash equivalents |
$ |
149,581 |
|
$ |
128,703 |
|
| Cash and cash equivalents held
by VIE |
|
23 |
|
|
411 |
|
| Restricted cash |
|
8,638 |
|
|
9,342 |
|
| Total cash, cash equivalents
and restricted cash |
$ |
158,242 |
|
$ |
138,456 |
|
Amounts included in restricted cash represent cash in blocked
deposit accounts that are required to be deposited in accordance
with the terms of a number of secured term loans with banking
institutions. These funds are not available for daily operational
use.
14. Variable Interest Entities
As of December 31, 2023 and June 30, 2024, the Company
has consolidated 100% of PT Navigator Khatulistiwa, a VIE for which
the Company is deemed to be the primary beneficiary, i.e. it has a
controlling financial interest in this entity with the power to
direct the activities that most significantly impact the entity’s
economic performance and has the right to residual gains or the
obligation to absorb losses that could potentially be significant
to the VIE. The Company owns 49% of PT Navigator Khatulistiwa
common stock, all of its secured debt and has voting control. All
economic interests in the residual net assets reside with the
Company. By virtue of the accounting principle of consolidation,
transactions between PT Navigator Khatulistiwa and the Company are
eliminated on consolidation.
In October 2019, the Company entered into a sale and
leaseback to refinance one of its vessels, Navigator Aurora, with
OCY Aurora Ltd., a Maltese limited liability company. OCY Aurora
Ltd. is a wholly owned subsidiary of Ocean Yield Malta Limited,
whose parent is Ocean Yield ASA, a listed company on the Oslo stock
exchange. The Company does not hold any shares or voting rights in
OCY Aurora Ltd. Under U.S. GAAP the entity, OCY Aurora Ltd, is
considered to be a VIE.
As of December 31, 2023, and June 30, 2024, the
Company has consolidated 100% of OCY Aurora Ltd., the lessor
variable interest entity (‘‘lessor VIE’’). We have leased Navigator
Aurora from OCY Aurora Ltd. under a sale and leaseback arrangement.
The lessor VIE is a special purpose vehicle (“SPV”) wholly owned by
OCY Aurora Ltd. a financial institution. The Company has concluded
that it has a variable interest in the SPV because the bareboat
charter has fixed price call options to acquire the Navigator
Aurora from the SPV at various dates throughout the 13 year
lease/bareboat charter term, commencing from the fifth year,
initially at USD 44.8 million. The call options are considered
to be variable interests as each option effectively transfers
substantially all of the rewards from Navigator Aurora to us and
limits the SPV’s ability to benefit from the rewards of
ownership.
The Company has performed an analysis and concluded that we
exercise power through the exercise of the call options in the
lease agreement. The call options, although not an activity of the
SPV, if exercised would significantly impact the SPV’s economic
performance as the SPV owns no other revenue generating assets. The
options transfer to the Company the right to receive benefits as
they are agreed at a predetermined price. The SPV is protected from
decreases in the value of the vessel, as if the vessel’s market
value were to decline, the call option provides the SPV protection
up to the point where it would not be economically viable for the
Company to exercise the option. In addition, the Company has the
power to direct decisions over the activities and care of the
vessel which directly impact its value such as for the day-to-day
commercial, technical management and operation of the vessel.
Following the above, the SPV is categorized under U.S. GAAP as a
VIE and the Company has concluded it is the primary beneficiary and
must therefore consolidate the SPV within its financial
statements.
We own a 25% and 40% share in equity of Navigator Crewing
Services Philippines Inc. (“NCSPI”, “Navigator Crewing”) and
Navigator Gas Services Philippines Inc. (“NSSPI”), respectively.
These companies were established primarily to provide marine
services as principals or agents to ship owners, ship operators,
managers engaged in international maritime business and business
support services, respectively.
The Company has determined that it has a variable interest in
NCSPI and NSSPI and is considered to be the primary beneficiary as
a result of having a controlling financial interest in the entities
and has the power to direct the activities that most significantly
impact NCSPI’s and NSSPI’s economic performance.
As of June 30, 2024, the Company's VIE’s had total assets
and liabilities of $171.0 million and $58.7 million
respectively which have been included in the Company’s consolidated
balance sheet as of that date (December 31, 2023: $179.8
million and $61.4 million, respectively).
15. Related Party Transactions
The following table summarizes our transactions with related
parties for the three and six months ended June 30, 2024 and
2023:
|
|
Three months endedJune 30,
2023 |
|
Three months endedJune 30,
2024 |
|
Six months endedJune 30,
2023 |
|
Six months endedJune 30,
2024 |
|
|
|
(in thousands) |
| Net income / (expenses) |
|
|
|
|
|
Luna Pool Agency Limited |
|
(17 |
) |
|
(28 |
) |
|
(17 |
) |
|
(36 |
) |
| Ocean Yield Malta Limited |
|
(774 |
) |
|
(732 |
) |
|
(1,589 |
) |
|
(1,495 |
) |
| Ultranav Business Support
ApS |
|
(32 |
) |
|
(16 |
) |
|
(108 |
) |
|
(31 |
) |
| |
$ |
(823 |
) |
$ |
(776 |
) |
$ |
(1,714 |
) |
$ |
(1,562 |
) |
The following table sets out the balances due from related
parties as of December 31, 2023 and June 30, 2024:
|
|
December 31, 2023 |
June 30, 2024 |
|
|
(in thousands) |
|
Luna Pool Agency Limited |
$ |
30,804 |
$ |
20,546 |
| Unigas Pool |
|
2,598 |
|
4,732 |
| |
$ |
33,402 |
$ |
25,278 |
The following table sets out the balances due to related parties
as of December 31, 2023 and June 30, 2024:
| |
December 31, 2023 |
June 30, 2024 |
|
|
(in thousands) |
|
Ocean Yield Malta Limited |
$ |
41,912 |
$ |
38,593 |
| Naviera Ultranav Dos
Limitada |
|
36 |
|
— |
| |
$ |
41,948 |
$ |
38,593 |
As of June 30, 2024, Ultranav International ApS held a
30.5% share in the Company and BW Group held a 21.4% share in the
Company and they are our principal shareholders. They may exert
considerable influence on the directors and other significant
corporate actions.
The Company entered into a Transitional Services Agreement
(“TSA”) with Ultranav Business Support ApS (“UBS”) to provide
office and reception services. The Company pays UBS a monthly fee
for services provided. The TSA agreement with UBS can be terminated
by the Company by giving six-months' notice.
16. Subsequent Events
On August 9, 2024, the Company entered into the August 2024
Facility with Crédit Agricole Corporate and Investment Bank, ING
Bank N.V., and Skandinaviska Enskilda Banken AB (Publ), to
refinance its March 2019 secured term loan that was due to mature
in March 2025, to fund the repurchase of the Navigator Aurora
pursuant to the Company’s existing October 2019 sale and leaseback
arrangement related to that vessel which, based on a termination
notice we issued to the lessor in May 2024, will terminate in
October 2024, and for general corporate and working capital
purposes. The August 2024 Facility has a term of six years maturing
in August 2030, is for a maximum principal amount of
$147.6 million, decreases quarterly followed by a final
balloon payment in August 2030 of $63.9 million, and bears
interest at a rate of Term SOFR plus 190 basis points, which margin
includes a 5-basis point sustainability-linked element.
On August 14, 2024, the Company's Board of Directors declared a
cash dividend of $0.05 per share of the Company’s common stock for
the three months ended June 30, 2024, payable on September 24,
2024 to all shareholders of record as of the close of business New
York time on September 3, 2024. The aggregate amount of the
dividend is expected to be approximately $3.6 million, which
the Company anticipates will be funded from cash on hand. Also as
part of the Company's Return of Capital policy for the three months
ended June 30, 2024, the Company expects to repurchase
approximately $2.3 million of common stock between August 15, 2024,
and September 30, 2024, subject to operating needs, market
conditions, and other circumstances, such that the Dividend and
Share Repurchases together equal 25% of net income for the three
months ended June 30, 2024
Our Fleet
The following table provides details of our vessels as of
August 14, 2024:
|
Operating Vessel |
YearBuilt |
Vessel Size(cbm) |
EmploymentStatus |
CurrentCargo |
Time CharterExpiration Date |
|
Ethylene/ethane capable semi-refrigerated
midsize |
|
|
|
|
|
| Navigator Aurora |
2016 |
37,300 |
Time Charter |
Ethane |
December 2026 |
| Navigator Eclipse |
2016 |
37,300 |
Time Charter |
Ethane |
March 2026 |
| Navigator Nova |
2017 |
37,300 |
Time Charter |
Ethane |
September 2026 |
| Navigator Prominence |
2017 |
37,300 |
Time Charter |
Ethane |
March 2025 |
| |
|
|
|
|
|
| Ethylene/ethane
capable semi-refrigerated handysize |
|
|
|
|
|
| Navigator Pluto* |
2000 |
22,085 |
Spot Market |
Ethane |
— |
| Navigator Saturn |
2000 |
22,085 |
Time Charter |
Ethane |
September 2024 |
| Navigator Venus* |
2000 |
22,085 |
Spot Market |
Ethane |
— |
| Navigator Atlas* |
2014 |
21,000 |
Spot Market |
— |
— |
| Navigator Europa* |
2014 |
21,000 |
Time Charter |
Ethane |
December 2024 |
| Navigator Oberon* |
2014 |
21,000 |
Spot Market |
— |
— |
| Navigator Triton* |
2015 |
21,000 |
Spot Market |
Ethane |
— |
| Navigator Umbrio* |
2015 |
21,000 |
Time Charter |
Ethane |
January 2025 |
| Navigator Luna* |
2018 |
17,000 |
Spot Market |
Ethylene |
— |
| Navigator Solar* |
2018 |
17,000 |
Spot Market |
Ethylene |
— |
| Navigator Castor* |
2019 |
22,000 |
Spot Market |
Ethylene |
— |
| Navigator Equator* |
2019 |
22,000 |
Dry Dock |
— |
— |
| Navigator Vega* |
2019 |
22,000 |
Spot Market |
Ethylene |
— |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Ethylene/ethane
capable semi-refrigerated smaller size |
|
|
|
|
|
| Happy Condor** |
2008 |
9,000 |
Unigas Pool |
— |
— |
| Happy Pelican** |
2012 |
6,800 |
Unigas Pool |
— |
— |
| Happy Penguin** |
2013 |
6,800 |
Unigas Pool |
— |
— |
| Happy Kestrel** |
2013 |
12,000 |
Unigas Pool |
— |
— |
| Happy Osprey** |
2013 |
12,000 |
Unigas Pool |
— |
— |
| Happy Peregrine** |
2014 |
12,000 |
Unigas Pool |
— |
— |
| Happy Albatross** |
2015 |
12,000 |
Unigas Pool |
— |
— |
| Happy Avocet** |
2017 |
12,000 |
Unigas Pool |
— |
— |
| |
|
|
|
|
|
| Semi-refrigerated
handysize |
|
|
|
|
|
| Navigator Aries |
2008 |
20,750 |
Spot Market |
LPG |
— |
| Navigator Capricorn |
2008 |
20,750 |
Time Charter |
LPG |
October 2024 |
| Navigator Gemini |
2009 |
20,750 |
Time Charter |
LPG |
August 2025 |
| Navigator Pegasus |
2009 |
22,200 |
Time Charter |
LPG |
October 2024 |
| Navigator Phoenix |
2009 |
22,200 |
Time Charter |
Ammonia |
September 2024 |
| Navigator Scorpio |
2009 |
20,750 |
Time Charter |
LPG |
January 2026 |
| Navigator Taurus |
2009 |
20,750 |
Spot Market |
Ammonia |
— |
| Navigator Virgo |
2009 |
20,750 |
Time Charter |
LPG |
April 2025 |
| Navigator Leo |
2011 |
20,600 |
Time Charter |
LPG |
December 2024 |
| Navigator Libra |
2012 |
20,600 |
Time Charter |
LPG |
March 2025 |
| Atlantic Gas |
2014 |
22,000 |
Time Charter |
LPG |
April 2025 |
| Adriatic Gas |
2015 |
22,000 |
Time Charter |
LPG |
November 2024 |
| Balearic Gas |
2015 |
22,000 |
Spot Market |
LPG |
— |
| Celtic Gas |
2015 |
22,000 |
Spot Market |
LPG |
— |
| Navigator Centauri |
2015 |
21,000 |
Time Charter |
LPG |
May 2025 |
| Navigator Ceres |
2015 |
21,000 |
Time Charter |
LPG |
June 2025 |
| Navigator Ceto |
2016 |
21,000 |
Time Charter |
LPG |
May 2025 |
| Navigator Copernico |
2016 |
21,000 |
Time Charter |
LPG |
May 2025 |
| Bering Gas |
2016 |
22,000 |
Spot Market |
LPG |
— |
| Navigator Luga |
2017 |
22,000 |
Spot Market |
LPG |
— |
| Navigator Yauza |
2017 |
22,000 |
Spot Market |
LPG |
— |
| Arctic Gas |
2017 |
22,000 |
Spot Market |
LPG |
— |
| Pacific Gas |
2017 |
22,000 |
Time Charter |
LPG |
November 2024 |
| |
|
|
|
|
|
| Semi-refrigerated
smaller size |
|
|
|
|
|
| Happy Falcon** |
2002 |
3,770 |
Unigas Pool |
— |
— |
| |
|
|
|
|
|
|
Fully-refrigerated |
|
|
|
|
|
| Navigator Glory |
2010 |
22,500 |
Time Charter |
Ammonia |
June 2025 |
| Navigator Grace |
2010 |
22,500 |
Time Charter |
Ammonia |
January 2025 |
| Navigator Galaxy |
2011 |
22,500 |
Time Charter |
Ammonia |
December 2024 |
| Navigator Genesis |
2011 |
22,500 |
Time Charter |
Ammonia |
January 2025 |
| Navigator Global |
2011 |
22,500 |
Time Charter |
Ammonia |
December 2024 |
| Navigator Gusto |
2011 |
22,500 |
Time Charter |
Ammonia |
March 2025 |
| Navigator Jorf |
2017 |
38,000 |
Time Charter |
Ammonia |
August 2027 |
* denotes our owned vessels that operate within the Luna Pool**
denotes our owned vessels that operate within the independently
managed Unigas Pool
PART II. Second
Quarter 2024 Conference
Call Details
Navigator Holdings Ltd. Second
Quarter 2024 Earnings
Webcast and Presentation
On Thursday, August 15, 2024, at 10:00 A.M. E.D.T., the
Company’s management team will host an online webcast to present
and discuss the financial results for the second quarter of
2024.
Those wishing to participate should register for the webcast
using the following details:
https://us06web.zoom.us/webinar/register/WN_w1P5ivrjSiSmi-9s_QhfLw
Or join by phone:
|
United States: |
|
+1
929 436 2866 |
| United Kingdom: |
|
+44 330 088 5830 |
| |
|
|
For a full list of US and international numbers
available, please click on the link below:
International Dial-in numbers
Webinar ID: 874 3717 2163Passcode: 277557
The conference call and slide presentation will
be available for replay on Navigator Gas’ website
(www.navigatorgas.com) under Financials and Quarterly Results in
the Investors Centre section.
About Navigator GasNavigator Holdings Ltd.
(described herein as “Navigator Gas” or the “Company”) is the owner
and operator of the world’s largest fleet of handysize liquefied
gas carriers and a global leader in the seaborne transportation
services of petrochemical gases, such as ethylene and ethane,
liquefied petroleum gas (“LPG”) and ammonia and owns a 50% share,
through a joint venture, in an ethylene export marine terminal at
Morgan’s Point, Texas on the Houston Ship Channel, USA. Navigator
Gas’ fleet consists of 56 semi- or fully-refrigerated liquefied gas
carriers, 25 of which are ethylene and ethane capable. The Company
plays a vital role in the liquefied gas supply chain for energy
companies, industrial consumers and commodity traders, with its
sophisticated vessels providing an efficient and reliable ‘floating
pipeline’ between the parties, connecting the world today, creating
a sustainable tomorrow.
Navigator Gas’ common stock trades on the New York Stock
Exchange under the symbol “NVGS”.
Navigator Gas
|
Attention: |
|
Investor Relations investorrelations@navigatorgas.com |
| |
|
and
randy.giveans@navigatorgas.com |
| Address: |
|
333 Clay Street, Suite 2480,
Houston, Texas, U.S.A. 77002 |
| Tel: |
|
+1 713 373 6197 and +44 (0)20
7340 4850 |
| |
|
|
Investor Relations / Media AdvisorsNicolas
Bornozis / Paul LampoutisCapital Link – New YorkTel:
+1-212-661-7566Email: navigatorgas@capitallink.com
Forward looking statementsThis press release
contains certain “forward-looking” statements (as defined by the
Securities and Exchange Commission) concerning plans and objectives
of management for future operations or economic performance, or
assumptions related thereto. In addition, we and our
representatives may from time to time make other oral or written
statements that are also forward-looking statements. In some cases,
you can identify the forward-looking statements by the use of words
such as “may,” “could,” “should,” “will,” “would,” “expect,”
“plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,”
“predict,” “propose,” “potential,” “continue,” “scheduled,” or the
negative of these terms or other comparable terminology.
These forward-looking statements involve many risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements. These risks and
uncertainties include but are not limited to those set forth in the
periodic reports Navigator files with the U.S. Securities and
Exchange Commission.
All forward-looking statements included in this press release
are made only as of the date of this press release. New factors
emerge from time to time, and it is not possible for us to predict
all of these factors. Further, we cannot assess the impact of each
such factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to be materially
different from those contained in any forward-looking statement. We
expressly disclaim any obligation to update or revise any
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.
Category: Financial
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