Financial Highlights
- On May 14, 2024, the Board of Navigator Holdings Ltd. (NYSE:
NVGS) declared a cash dividend of $0.05 per share for the quarter
ended March 31, 2024, (the “Dividend”) under the Company's
Return of Capital policy. The Dividend will be payable on
June 25, 2024, to all shareholders of record as of the close
of business U.S. E.D.T. on June 4, 2024.
- Also as part of the Company's Return of Capital policy for the
quarter ended March 31, 2024, the Company expects to
repurchase approximately $2.0 million of common stock between May
16, 2024, and June 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 March 31, 2024.
- The Company repurchased 52,630 shares of common stock during
the quarter ended March 31, 2024, at an average price of
$15.20 per share.
- The Company reported total operating revenue of $134.2 million
for the three months ended March 31, 2024, compared to $136.0
million for the three months ended March 31, 2023.
- Net Income attributable to stockholders' of the Company was
$22.6 million for the three months ended March 31, 2024,
compared to $18.8 million for the three months ended March 31,
2023.
- Basic earnings per share was $0.31 for the three months ended
March 31, 2024, compared to $0.25 per share for the three
months ended March 31, 2023. Basic earnings per share adjusted
to exclude realized and unrealized gains or losses on
non-designated derivative instruments of $0.4 million and $4.3
million for the quarters ended March 31, 2024 and 2023
respectively, was $0.31 per share for the three months ended
March 31, 2024, compared to $0.30 per share for the three
months ended March 31, 2023.
- EBITDA1 was $73.7 million for the three months ended
March 31, 2024, compared to $64.6 million for the three months
ended March 31, 2023. Adjusted EBITDA1 was $74.1 million for
the three months ended March 31, 2024, compared to $69.0
million for the three months ended March 31, 2023.
- Debt reduced by $31.1 million to $862.1 million during the
three months ended March 31, 2024, with cash, cash equivalents
and restricted cash standing at $172.2 million as of March 31,
2024.
_______________1 EBITDA and Adjusted EBITDA 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. Management believes that
EBITDA and Adjusted EBITDA are useful to investors in evaluating
the operating performance of the Company. EBITDA and Adjusted
EBITDA do not represent and should not be considered alternatives
to consolidated net income, cash generated from operations or any
measure. Reconciliations of GAAP to non-GAAP financial measures are
in the below section "Reconciliation of Non-GAAP Financial
Measures".
Other Highlights and Developments
Operational Update
Total operating revenue was $134.2 million for the three
months ended March 31, 2024, compared to $136.0 million
for the three months ended March 31, 2023.
Average daily time charter equivalent2 ("TCE") across the
fleet increased to $28,339 for the three months ended
March 31, 2024, compared to $25,620 for the three months ended
March 31, 2023. The average handysize 12-month market
assessment for semi-refrigerated and fully-refrigerated vessels for
first quarter of 2024 increased by $206,000 and $152,000 per
calendar month (“pcm”), to an average of $963,000 pcm and $888,000
pcm respectively, against the first quarter of 2023. The handysize
ethylene market 12-month assessment increased by $320,000 pcm from
$937,000 pcm to $1,257,000 pcm, from the first quarter of 2023 to
the first quarter of 2024. Clarkson's market assessment for first
quarter of 2024 compared with the first quarter of 2023 is
therefore higher on all three segments, by 27%, 20% and 35% for
semi-refrigerated, fully-refrigerated, and ethylene-capable vessel
segments, respectively.
Utilization across the fleet decreased from 91.3% in the fourth
quarter of 2023 to 89.3% in the first quarter of 2024. Utilization
during the first quarter of 2023 was 96.3%. The primary reason for
the decrease in utilization for the first quarter of 2024, compared
to the both first quarter of 2023 as well as the fourth quarter of
2023, is a reduction in activity across our spot fleet in the
semi-refrigerated segment. The utilization for this segment
decreased to 85.2% for the first quarter of 2024 compared to 95.6%
for the first quarter of 2023. The primary driver for the decrease
in utilization was a reduction in LPG demand across all vessel
sizes and a correction downward in the 12-month assessment for the
fourth quarter of 2023 in the ethylene segment.
During the first quarter of 2024 we experienced continued robust
demand for ethane shipping from the U.S. Gulf area to China. The
demand was primarily driven by a continued reduction in available
Panama Canal transits and ethane carriers opting to proceed via the
Cape of Good Hope between the U.S. Gulf and China. Furthermore,
ethylene arbitrage between the U.S. Gulf and the Far East improved,
meaning increased demand from ethylene traders.
In the first quarter of 2024 we had approximately 31 vessels
engaged under time charters, 16 vessels on spot voyage charters and
contracts of affreightment ("CoA") and nine vessels were operated
in the independently managed Unigas Pool. From April 1, 2024, and
12 months out, we have approximately 46% of our available days
covered under time charter with fixed earnings. 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 employed on the spot voyage market.
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 during the first quarter of 2024 was
220,703 metric tons, compared to 250,731 metric tons during the
first quarter of 2023. The decrease was due to reduced throughput
in January 2024. Our share of the results of equity investments are
$4.4 million for the quarter ended March 31, 2024,
compared to $5.3 million for the quarter ended March 31,
2023.
We, together with Enterprise Products Partners L.P, our joint
venture partner, have agreed to invest in the extension of the
Ethylene Export Terminal (the “Terminal Expansion Project”), which
is expected to increase the export capacity from approximately one
million tons per year to at least 1.55 million tons. All major
project equipment has been purchased (much of which has already
been delivered), support infrastructure and new pipes are being
assembled, and construction is expected to occur throughout 2024
with completion scheduled in the fourth quarter of 2024. The first
new multi-year offtake contract has been signed and another offtake
customer has agreed to commercial terms. We continue to 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 which the Company expects
to finance using existing cash resources, distributions from the
Export Terminal Joint Venture during the course of the expansion
and additional debt. Of the expected total of $130 million, $43.0
million has been contributed as of March 31, 2024, $8.0
million of which was contributed during the first quarter of
2024.
Investment in an Early-Stage Clean Ammonia Export
Project
On May 14, 2024, the Company’s Board of Directors approved a
$2.5 million investment in an early-stage clean ammonia export
project in the U.S. Gulf coast area. The Company expects to make
its first monetary contribution to the project in the second or
third quarter of 2024, and we will provide more details as the
project develops. This initial investment is development capital,
and subject to board approval, we also expect to make larger
investments at FID and during the construction phase of the project
towards a terminal and ship-shore logistics.
_______________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”.
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.
Unaudited Results of Operations for the Three months
ended March 31, 2024 compared to the Three months ended March 31,
2023
|
` |
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
Percentagechange |
|
|
|
(in thousands, except Percentage change) |
|
Operating revenues |
$ |
116,610 |
|
$ |
121,020 |
|
|
3.8 |
% |
|
Operating revenues – Unigas Pool |
|
12,192 |
|
|
13,135 |
|
|
7.7 |
% |
|
Operating revenues – Luna Pool collaborative arrangements |
|
7,200 |
|
|
— |
|
|
(100.0 |
)% |
|
Total operating revenue |
|
136,002 |
|
|
134,155 |
|
|
(1.4 |
)% |
|
|
|
|
|
|
|
|
Brokerage commission |
|
1,694 |
|
|
1,626 |
|
|
(4.0 |
)% |
| Voyage
expenses |
|
17,229 |
|
|
14,183 |
|
|
(17.7 |
)% |
| Voyage
expenses – Luna Pool collaborative arrangements |
|
5,028 |
|
|
— |
|
|
(100.0 |
)% |
| Vessel
operating expenses |
|
41,672 |
|
|
42,118 |
|
|
1.1 |
% |
|
Depreciation and amortization |
|
31,831 |
|
|
33,441 |
|
|
5.1 |
% |
| General
and administrative costs |
|
6,755 |
|
|
6,480 |
|
|
(4.1 |
)% |
| Other
income |
|
(96 |
) |
|
— |
|
|
100.0 |
% |
|
Total operating expenses |
|
104,113 |
|
|
97,848 |
|
|
(6.0 |
)% |
|
Operating Income |
|
31,889 |
|
|
36,307 |
|
|
13.9 |
% |
|
|
|
|
|
|
|
|
Unrealized loss on non-designated derivative instruments |
|
(4,251 |
) |
|
(447 |
) |
|
(89.5 |
)% |
| Write
off of deferred financing costs |
|
(171 |
) |
|
— |
|
|
(100.0 |
)% |
| Interest
expense |
|
(13,338 |
) |
|
(15,737 |
) |
|
18.0 |
% |
| Interest
income |
|
583 |
|
|
1,612 |
|
|
176.5 |
% |
|
Income before taxes and share of result of equity method
investments |
|
14,712 |
|
|
21,735 |
|
|
47.7 |
% |
| Income
taxes |
|
(1,164 |
) |
|
(1,206 |
) |
|
3.6 |
% |
| Share of
result of equity method investments |
|
5,302 |
|
|
4,390 |
|
|
(17.2 |
)% |
|
Net Income |
|
18,850 |
|
|
24,919 |
|
|
32.2 |
% |
| Net
income attributable to non-controlling interest |
|
(64 |
) |
|
(2,346 |
) |
|
3565.6 |
% |
|
Net Income attributable to stockholders of
Navigator Holdings Ltd. |
$ |
18,786 |
|
$ |
22,573 |
|
|
20.2 |
% |
Operating Revenues. Operating revenues,
net of address commissions, was $121.0 million for the three months
ended March 31, 2024, an increase of $4.4 million or 3.8% compared
to $116.6 million for the three months ended March 31, 2023. This
increase was primarily due to:
- an increase of approximately $11.0 million attributable to
an increase in average monthly time charter equivalent rates, which
increased to an average of approximately $28,339 per vessel per day
($861,990 per vessel per calendar month) for the three months ended
March 31, 2024, compared to an average of approximately $25,620 per
vessel per day ($779,283 per vessel per calendar month) for the
three months ended March 31, 2023;
- a decrease of approximately $8.3 million attributable to a
decrease in fleet utilization, which declined to 89.3% for the
three months ended March 31, 2024, compared to 96.3% for the three
months ended March 31, 2023;
- an increase of approximately $4.7 million or 4.7%,
attributable to a 190 day increase in vessel available days for the
three months ended March 31, 2024, compared to the three months
ended March 31, 2023. This increase was in part a result of five
handysize vessels acquired by the Navigator Greater Bay Joint
Venture being fully operational during the three months ended March
31, 2024, compared to the three months ended March 31, 2023, in
which three vessels were acquired.
- a decrease of approximately $3.0 million primarily
attributable to a decrease in pass through voyage costs for the
three months ended March 31, 2024, compared to the three months
ended March 31, 2023.
The following table presents selected operating data for the
three months ended March 31, 2024, and 2023, which we believe is
useful in understanding the basis of movements in our operating
revenues.
|
|
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
| * Fleet
Data: |
|
|
|
Weighted average number of vessels |
|
45.0 |
|
|
47.0 |
|
|
Ownership days |
|
4,048 |
|
|
4,277 |
|
|
Available days |
|
4,030 |
|
|
4,220 |
|
| Earning
days |
|
3,879 |
|
|
3,770 |
|
| Fleet
utilization |
|
96.3 |
% |
|
89.3 |
% |
| **
Average daily Time Charter Equivalent |
$ |
25,620 |
|
$ |
28,339 |
|
|
|
|
|
|
|
|
|
* 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: 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 for our
owned vessels, and not the average of all pool 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 endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
|
|
(in thousands, except earning days and
average daily time charter equivalent rate) |
| Fleet
Data: |
|
|
|
*** Operating revenue |
$ |
116,610 |
|
$ |
121,020 |
|
| *** Voyage expenses |
|
17,229 |
|
|
14,183 |
|
| Operating revenue less voyage
expenses |
|
99,381 |
|
|
106,837 |
|
| Earning days |
|
3,879 |
|
|
3,770 |
|
| Average daily time charter
equivalent rate |
$ |
25,620 |
|
$ |
28,339 |
|
|
|
|
|
|
|
|
|
***Operating revenues and voyage expenses excluding
collaborative arrangements and our nine owned vessels in the
independently managed Unigas Pool.
Operating Revenues – Unigas
Pool. Operating revenues – Unigas Pool was $13.1
million an increase of 7.7% for the three months ended March 31,
2024, compared to $12.2 million for the three months ended March
31, 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 March 31, 2024, compared to $7.2 million
for the three months ended March 31, 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, decreased by $0.1 million or 4.0% to $1.6
million for the three months ended March 31, 2024, from $1.7
million for the three months ended March 31, 2023, primarily due to
a decrease in the average brokerage percentage paid.
Voyage Expenses. Voyage expenses decreased
by $3.0 million or 17.7% to $14.2 million for the three months
ended March 31, 2024, from $17.2 million for the three months ended
March 31, 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
March 31, 2024, compared to $5.0 million for the three months ended
March 31, 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 $0.4 million or 1.1% to $42.1
million for the three months ended March 31, 2024, from $41.7
million for the three months ended March 31, 2023. Average daily
vessel operating expenses decreased by $124 per vessel per day, or
1.5%, to $8,265 vessel per day for the three months ended
March 31, 2024, compared to $8,389 per vessel per day for the
three months ended March 31, 2023.
Depreciation and
Amortization. Depreciation and amortization increased
by $1.6 million to $33.4 million for the three months ended March
31, 2024 compared to $31.8 million for the three months ended March
31, 2023. The increase is driven by the acquisition of the five
vessels by the Navigator Greater Bay Joint Venture in 2023.
Depreciation and amortization included amortization of capitalized
drydocking costs of $5.6 million and $4.6 million for the
three months ended March 31, 2024 and 2023, respectively.
General and Administrative Costs. General
and administrative costs decreased by $0.3 million or 4.1% to
$6.5 million for the three months ended March 31, 2024, from $6.8
million for the three months ended March 31, 2023.
Non-Operating Results
Unrealized Gains / (Losses) on Non-Designated Derivative
Instruments. The unrealized loss of $0.4
million on non-designated derivative instruments for the three
months ended March 31, 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 loss of $4.3 million for the three months
ended March 31, 2023.
Interest Expense. Interest expense
increased by $2.4 million, or 18.0%, to $15.7 million for the
three months ended March 31, 2024, from $13.3 million for
the three months ended March 31, 2023. This is primarily a result
of increases in US dollar 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.
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 March 31,
2024, compared to $1.2 million for the three months ended March 31,
2023, primarily related to current tax and a deferred tax gain in
relation to our 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
$4.4 million for the three months ended March 31, 2024,
compared to income of $5.3 million for the three months ended March
31, 2023. The decrease was primarily due to lower volumes exported
through the Ethylene Export Terminal, being 220,703 tons for the
three months ended March 31, 2024, compared to 250,703 tons for the
three months ended March 31, 2023. The decrease was due to reduced
throughput in January 2024.
Non-Controlling Interest. 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 $0.4 million and this is presented as a non-controlling
interest for each period for both the three months ended March 31,
2024, and the three months ended March 31, 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. A gain attributable to Greater Bay of
$1.8 million is presented as part of the non-controlling interest
in our financial results for the three months ended March 31, 2024,
compared to effectively $nil for the three months ended March 31,
2023.
Reconciliation of Non-GAAP Financial
Measures
The following table shows a reconciliation of net income to
EBITDA and Adjusted EBITDA for the three months ended
March 31, 2024 and 2023:
|
|
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
|
|
(in thousands) |
|
Net income |
$ |
18,850 |
|
$ |
24,919 |
|
| Net interest expense |
|
12,755 |
|
|
14,125 |
|
| Income taxes |
|
1,164 |
|
|
1,206 |
|
| Depreciation and
amortization |
|
31,831 |
|
|
33,441 |
|
|
EBITDA1 |
$ |
64,600 |
|
$ |
73,691 |
|
| Unrealized loss on
non-designated derivative instruments |
|
4,251 |
|
|
447 |
|
| Write off of deferred
financing costs |
|
171 |
|
|
— |
|
| Adjusted
EBITDA1 |
$ |
69,022 |
|
$ |
74,138 |
|
|
|
|
|
|
|
|
|
| 1 EBITDA and
Adjusted EBITDA 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.
Management believes that EBITDA and Adjusted EBITDA are useful to
investors in evaluating the operating performance of the Company.
EBITDA and Adjusted EBITDA do not represent and should not be
considered alternatives to consolidated net income, cash generated
from operations or any measure. |
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 March 31, 2024, we had cash, cash equivalents
and restricted cash of $172.2 million.
The Company repaid $23.8 million of the $111.8 million Term Loan
and Revolving Credit Facility held with Credit Agricole in December
2023 and a further $4.7 million during the first quarter of 2024.
The total amount repaid of $28.5 million remains 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.
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
$43.4 million as of March 31, 2024), whichever is
greater.
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 March 31, 2024, we had $873.4 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,
$175.2 million matures during the twelve months ending March
31, 2025, and $698.2 million matures after March 31, 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 at least the next twelve months, taking into account our
existing capital commitments and debt service requirements.
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.
We currently have no newbuildings on order. However, 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 million, of
which $43.0 million has been contributed as of March 31, 2024
which includes $8.0 million contributed during the first 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 three months ended March 31, 2024 and
2023:
|
|
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
|
|
(in thousands) |
|
Net cash provided by operating activities |
$ |
39,257 |
|
$ |
49,122 |
|
| Net cash
provided by/(used in) investing activities |
|
(133,144 |
) |
|
(620 |
) |
| Net cash
(used in)/provided by financing activities |
|
130,908 |
|
|
(33,624 |
) |
| Effect
of exchange rate changes on cash, cash equivalents and restricted
cash |
|
648 |
|
|
(880 |
) |
| Net
increase in cash, cash equivalents and restricted cash |
$ |
37,669 |
|
$ |
13,998 |
|
|
|
|
|
|
|
|
|
Operating Cash Flows. Net cash provided by
operating activities for the three months ended March 31, 2024,
increased to $49.1 million, from $39.3 million for the
three months ended March 31, 2023, an increase of
$9.9 million. This increase was primarily due to an increase
in net income of $6.0 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 $5.9 million during the three months ended March
31, 2024, compared to the three months ended March 31, 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. Ten of our vessels completed their
respective drydockings during the three months ended March 31,
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 $0.6 million for the three months
ended March 31, 2024, primarily related to contributions to our
investment in the Export Terminal Joint Venture via the Terminal
Expansion Project of $8.0 million, offset by distributions received
from our investment in the Export Terminal Joint Venture of
$6.4 million.
Net cash used in investing activities was $133.1 million
for the three months ended March 31, 2023, primarily as a result of
$142.8 million for the acquisition of three vessels by the
Navigator Greater Bay Joint Venture, offset by distributions
received from our investment in the Export Terminal Joint Venture
of $8.4 million.
Financing Cash Flows. Net cash used in
financing activities was $33.6 million for the three months
ended March 31, 2024, primarily as a result of our regular
quarterly debt repayments totaling $31.1 million and
$0.8 million for our share repurchase program.
Net cash provided by financing activities was $130.9 million for
the three months ended March 31, 2023 primarily as a result of the
drawdowns of $130.9 million on our Greater Bay JV Secured Term
Loan to partially finance the acquisition of three vessels; as well
as $20.4 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 $132.2 million; scheduled quarterly loan repayments of
$16.1 million and $28.1 million for our share repurchase
program.
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 $22.3 million was outstanding
as of March 31, 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 March 31, 2024:
| |
|
|
|
|
|
Facility agreement |
Original facility amount |
|
Principal amount outstanding |
|
Interest rate |
Facilitymaturity date |
|
|
(in millions) |
|
|
March 2019 |
|
107.0 |
|
|
61.3 |
|
Term SOFR + 266 BPS |
March 2025 |
|
September 2020 |
|
210.0 |
|
|
158.2 |
|
Comp SOFR + 276 BPS |
September 2025 |
|
October 20193 |
|
69.1 |
|
|
39.7 |
|
Term SOFR + 201 BPS |
October 2026 |
|
August 2021 Amendment and Restatement Agreement |
|
67.0 |
|
|
40.8 |
|
Fixed 378 BPS |
June 2026 |
| DB
Credit Facility A |
|
57.7 |
|
|
15.6 |
|
Comp SOFR + 247 BPS |
April 2027 |
|
Santander Credit Facility A |
|
81.0 |
|
|
22.4 |
|
Comp SOFR + 247 BPS |
May 2027 |
| 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 |
|
December 2022 |
|
111.8 |
|
|
69.2 |
|
Term SOFR + 209 BPS |
September 2028 |
|
Greater Bay JV Secured Term Loan |
|
151.3 |
|
|
139.0 |
|
Term SOFR + 220 BPS |
December 2029 |
| March
2023 Secured Term Loan |
|
200.0 |
|
|
166.7 |
|
Comp SOFR + 210 BPS |
March 2029 |
|
Total |
$ |
1,171.6 |
|
$ |
760.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________3 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 14—Variable Interest Entities to the unaudited condensed
consolidated financial statements for additional information.
March 2023 Secured Term Loan. On March 20,
2023, the Company entered into a senior secured term loan with
Nordea Bank ABP, ABN AMRO Bank N.V., Skandinaviska Enskilda Banken
AB (Publ), and BNP Paribas S.A. to refinance the June 2017 Secured
Term Loan and Revolving Credit Facility and the October 2016
Secured Term Loan and Revolving Credit Facility that were due to
mature in June and October 2023 respectively.
The March 2023 Secured Term Loan has a term of six years,
maturing in March 2029 and is for a maximum principal amount of
$200 million which was fully drawn on March 28, 2023. The available
facility amount shall be reduced quarterly by an amount of $8.3
million, followed, by a final balloon payment in March 2029.
Interest on amounts drawn is payable at a rate of Comp SOFR + 210
BPS.
This loan facility is secured by first priority mortgages on a
total of ten of our owned vessels.
Financial Covenants. All of
the secured term loan facilities and revolving credit facilities
contain financial covenants requiring the borrowers, among other
things, to ensure that:
- the borrowers have liquidity (including undrawn available lines
of credit with a maturity exceeding 12 months) of no less than (i)
$35.0 million or $50.0 million, or (ii) 5% of Net Debt or total
debt, as applicable, whichever is greater; and
- the borrower must maintain a minimum ratio of shareholder
equity or value adjusted 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 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 their 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 and 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 March 31, 2024, we were in compliance with all
covenants under the secured term loan facilities and revolving
credit facilities.
The borrowers are also required to deliver semi-annual
compliance certificates, which include 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.
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.
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 in full 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 $35.0 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 March 31, 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 $60.0 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 and warranty, a cross-default to
other indebtedness, the occurrence of a material adverse effect, or
our insolvency or dissolution.
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 canceled or redeemed and the Company intends to hold the
bonds to maturity.
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
March 31, 2024, $39.7 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
250 basis points. At March 31, 2024, $284.3 million of
our outstanding debt was subject to interest rate swaps and
therefore is not exposed to changes in interest rate movements,
whereas $475.9 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 $4.8 million in annual interest
expense on our indebtedness outstanding as of March 31,
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 the Euro, 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 during the first quarter of 2024. However, we may enter
into derivative or forward contracts to cover our foreign currency
exposure in the future.
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 are subject to fluctuations as a result of 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
March 31, 2024, 33 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 further
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 March 31, 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
March 31, 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 endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
|
|
(in thousands except share and per share data) |
|
Revenues |
|
|
|
Operating revenues |
$ |
116,610 |
|
$ |
121,020 |
|
|
Operating revenues – Unigas Pool |
|
12,192 |
|
|
13,135 |
|
|
Operating revenues – Luna Pool collaborative arrangements |
|
7,200 |
|
|
— |
|
| Total
operating revenue |
|
136,002 |
|
|
134,155 |
|
|
Expenses |
|
|
|
Brokerage commission |
|
1,694 |
|
|
1,626 |
|
| Voyage
expenses |
|
17,229 |
|
|
14,183 |
|
| Voyage
expenses – Luna Pool collaborative arrangements |
|
5,028 |
|
|
— |
|
| Vessel
operating expenses |
|
41,672 |
|
|
42,118 |
|
|
Depreciation and amortization |
|
31,831 |
|
|
33,441 |
|
| General
and administrative costs |
|
6,755 |
|
|
6,480 |
|
| Other
income |
|
(96 |
) |
|
— |
|
|
Total operating expenses |
|
104,113 |
|
|
97,848 |
|
|
Operating Income |
|
31,889 |
|
|
36,307 |
|
|
|
|
|
|
Unrealized loss on non-designated derivative instruments |
|
(4,251 |
) |
|
(447 |
) |
| Write
off of deferred financing costs |
|
(171 |
) |
|
— |
|
| Interest
expense |
|
(13,338 |
) |
|
(15,737 |
) |
| Interest
income |
|
583 |
|
|
1,612 |
|
|
Income before taxes and share of result of equity method
investments |
|
14,712 |
|
|
21,735 |
|
| Income
taxes |
|
(1,164 |
) |
|
(1,206 |
) |
| Share of
result of equity method investments |
|
5,302 |
|
|
4,390 |
|
|
Net Income |
|
18,850 |
|
|
24,919 |
|
| Net
income attributable to non-controlling interest |
|
(64 |
) |
|
(2,346 |
) |
|
Net Income attributable to stockholders of Navigator
Holdings Ltd. |
$ |
18,786 |
|
$ |
22,573 |
|
| Earnings
per share attributable to stockholders of Navigator Holdings
Ltd.: |
|
|
|
Basic: |
$ |
0.25 |
|
$ |
0.31 |
|
|
Diluted: |
$ |
0.25 |
|
$ |
0.31 |
|
| Weighted
average number of shares outstanding in the period: |
|
|
|
Basic: |
|
75,955,162 |
|
|
73,209,771 |
|
|
Diluted: |
|
76,319,753 |
|
|
73,757,164 |
|
|
|
|
|
|
|
|
|
|
NAVIGATOR HOLDINGS LTD.Condensed
Consolidated Statements of Comprehensive
Income(Unaudited) |
| |
|
|
Three months endedMarch 31,
2023 |
|
Three months endedMarch 31,
2024 |
|
|
|
(in thousands) |
|
Net income |
$ |
18,850 |
|
$ |
24,919 |
|
| Other
comprehensive income: |
|
|
|
Foreign currency translation income |
|
165 |
|
|
34 |
|
|
Total comprehensive income |
|
19,015 |
|
|
24,953 |
|
| Total
comprehensive income attributable to: |
|
|
|
Stockholders of Navigator Holdings Ltd. |
|
18,951 |
|
|
22,607 |
|
|
Non-controlling interest |
|
64 |
|
|
2,346 |
|
|
Total comprehensive income |
$ |
19,015 |
|
$ |
24,953 |
|
|
|
|
|
|
|
|
|
|
NAVIGATOR HOLDINGS LTD.Condensed Consolidated Balance
Sheet(Unaudited) |
| |
| |
As at December 31, 2023 |
|
As at March 31, 2024 |
|
|
|
(in thousands, except share data) |
|
Assets |
|
|
|
Current Assets |
|
|
|
Cash, cash equivalents and restricted cash |
$ |
158,242 |
|
$ |
172,240 |
|
|
Accounts receivable, net of allowance for credit losses |
|
34,653 |
|
|
41,024 |
|
|
Accrued income |
|
2,437 |
|
|
6,830 |
|
|
Prepaid expenses and other current assets |
|
17,068 |
|
|
20,855 |
|
|
Bunkers and lubricant oils |
|
9,044 |
|
|
10,574 |
|
|
Insurance receivable |
|
526 |
|
|
1,013 |
|
|
Amounts due from related parties |
|
33,402 |
|
|
20,311 |
|
|
Total current assets |
|
255,372 |
|
|
272,847 |
|
|
Non-current Assets |
|
|
|
Vessels, net |
|
1,754,382 |
|
|
1,726,119 |
|
|
Property, plant and equipment, net |
|
142 |
|
|
156 |
|
|
Intangible assets, net of accumulated amortization |
|
332 |
|
|
299 |
|
|
Equity method investments |
|
174,910 |
|
|
180,932 |
|
|
Derivative assets |
|
14,674 |
|
|
14,227 |
|
|
Right-of-use asset for operating leases |
|
2,873 |
|
|
2,584 |
|
|
Total non-current assets |
|
1,947,313 |
|
|
1,924,317 |
|
|
Total Assets |
$ |
2,202,685 |
|
$ |
2,197,164 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
Current Liabilities |
|
|
|
Current portion of secured term loan facilities, net of deferred
financing costs |
$ |
120,327 |
|
$ |
171,315 |
|
|
Current portion of operating lease liabilities |
|
914 |
|
|
1,151 |
|
|
Accounts payable |
|
11,643 |
|
|
10,556 |
|
|
Accrued expenses and other liabilities |
|
20,847 |
|
|
25,369 |
|
|
Accrued interest |
|
5,488 |
|
|
3,322 |
|
|
Deferred income |
|
25,617 |
|
|
25,979 |
|
|
Amounts due to related parties |
|
606 |
|
|
518 |
|
|
Total current liabilities |
|
185,442 |
|
|
238,210 |
|
|
Non-current Liabilities |
|
|
|
Secured term loan facilities and revolving credit facilities, net
of current portion and deferred financing costs |
|
641,975 |
|
|
560,638 |
|
|
Senior unsecured bond, net of deferred financing costs |
|
90,336 |
|
|
90,435 |
|
|
Operating lease liabilities, net of current portion |
|
3,500 |
|
|
3,160 |
|
|
Deferred tax liabilities |
|
7,016 |
|
|
7,707 |
|
|
Amounts due to related parties |
|
41,342 |
|
|
39,699 |
|
|
Total non-current liabilities |
|
784,169 |
|
|
701,639 |
|
|
Total Liabilities |
|
969,611 |
|
|
939,849 |
|
|
Commitments and Contingencies - Note 11 |
|
|
|
Stockholders’ Equity |
|
|
| Common
stock—$0.01 par value per share; 400,000,000 shares authorized;
73,209,771 shares issued and outstanding (December 31, 2023:
73,208,586) |
|
733 |
|
|
733 |
|
|
Additional paid-in capital |
|
799,472 |
|
|
799,561 |
|
|
Accumulated other comprehensive loss |
|
(152 |
) |
|
(118 |
) |
|
Retained earnings |
|
390,221 |
|
|
411,993 |
|
|
Total Navigator Holdings Ltd. Stockholders’
Equity |
|
1,190,274 |
|
|
1,212,169 |
|
|
Non-controlling interest |
|
42,800 |
|
|
45,146 |
|
|
Total equity |
|
1,233,074 |
|
|
1,257,315 |
|
|
Total Liabilities and Stockholders’ Equity |
$ |
2,202,685 |
|
$ |
2,197,164 |
|
|
|
|
|
|
|
|
|
|
NAVIGATOR HOLDINGS LTD.Condensed Consolidated Statements of
Stockholders’
Equity(Unaudited) |
For the three months ended March 31, 2024:
| |
|
(in thousands, except share data) |
| |
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, 2024 |
73,208,586 |
|
$ |
733 |
|
$ |
799,472 |
$ |
(152 |
) |
$ |
390,221 |
|
$ |
42,800 |
$ |
1,233,074 |
|
| Restricted shares issued |
1,185 |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
| Net income |
— |
|
|
— |
|
|
— |
|
— |
|
|
22,573 |
|
|
2,346 |
|
24,919 |
|
| Foreign currency
translation |
— |
|
|
— |
|
|
— |
|
34 |
|
|
— |
|
|
— |
|
34 |
|
| Dividend declared |
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
| Repurchase of common
stock |
(52,630 |
) |
|
— |
|
|
— |
|
— |
|
|
(801 |
) |
|
— |
|
(801 |
) |
| Share-based compensation
plan |
— |
|
|
— |
|
|
89 |
|
— |
|
|
— |
|
|
— |
|
89 |
|
| March 31,
2024 |
73,157,141 |
|
$ |
733 |
|
$ |
799,561 |
$ |
(118 |
) |
$ |
411,993 |
|
$ |
45,146 |
$ |
1,257,315 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2023:
| |
|
(in thousands, except share data) |
| |
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 |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
| Net income |
— |
|
|
— |
|
|
— |
|
— |
|
|
18,786 |
|
|
64 |
|
18,850 |
|
| Foreign currency
translation |
— |
|
|
— |
|
|
— |
|
165 |
|
|
— |
|
|
— |
|
165 |
|
| Investment by non-controlling
interest |
— |
|
|
|
— |
|
— |
|
|
— |
|
|
20,353 |
|
20,353 |
|
| Repurchase of common
stock |
(2,162,484 |
) |
|
(22 |
) |
|
— |
|
— |
|
|
(28,086 |
) |
|
— |
|
(28,108 |
) |
| Share-based compensation
plan |
— |
|
|
— |
|
|
180 |
|
— |
|
|
— |
|
|
— |
|
180 |
|
| March 31,
2023 |
74,689,819 |
|
$ |
747 |
|
$ |
798,368 |
$ |
(298 |
) |
$ |
354,700 |
|
$ |
31,335 |
$ |
1,184,852 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAVIGATOR HOLDINGS LTD.Condensed
Consolidated Statements of Cash
Flows(Unaudited) |
| |
| |
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
| |
|
|
Cash flows from operating activities |
|
|
|
Net Income |
$ |
18,850 |
|
$ |
24,919 |
|
|
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities |
|
|
|
Unrealized loss on non-designated derivative instruments |
|
4,251 |
|
|
447 |
|
|
Depreciation and amortization |
|
31,831 |
|
|
33,440 |
|
| Payment
of drydocking costs |
|
(2,908 |
) |
|
(4,565 |
) |
|
Share-based compensation expense |
|
180 |
|
|
89 |
|
|
Amortization of deferred financing costs |
|
922 |
|
|
841 |
|
| Share of
results of equity method investments |
|
(5,302 |
) |
|
(4,390 |
) |
| Deferred
taxes |
|
— |
|
|
692 |
|
| Other
unrealized foreign exchange loss/(gain) |
|
(23 |
) |
|
306 |
|
|
Changes in operating assets and liabilities |
|
|
| Accounts
receivable |
|
(3,667 |
) |
|
(6,372 |
) |
|
Insurance claims receivables |
|
322 |
|
|
(1,499 |
) |
| Bunkers
and lubricant oils |
|
(1,915 |
) |
|
(1,531 |
) |
| Accrued
income and prepaid expenses and other current assets |
|
4,599 |
|
|
(7,889 |
) |
| Accounts
payable, accrued interest, accrued expenses and other
liabilities |
|
(3,913 |
) |
|
1,542 |
|
| Amounts
due to/(from) related parties |
|
(3,970 |
) |
|
13,092 |
|
|
Net cash provided by operating activities |
|
39,257 |
|
|
49,122 |
|
|
Cash flows from investing activities |
|
|
|
Additions to vessels and equipment |
|
(142,883 |
) |
|
— |
|
|
Contributions to equity method investments |
|
— |
|
|
(8,000 |
) |
|
Distributions from equity method investments |
|
8,446 |
|
|
6,368 |
|
| Purchase
of other property, plant and equipment and intangibles |
|
28 |
|
|
— |
|
|
Insurance recoveries |
|
1,265 |
|
|
1,012 |
|
|
Net cash used in investing activities |
|
(133,144 |
) |
|
(620 |
) |
|
Cash flows from financing activities |
|
|
| Proceeds
from secured term loan facilities and revolving credit
facilities |
|
291,813 |
|
|
— |
|
| Direct
financing cost of secured term loan and revolving credit
facilities |
|
(3,151 |
) |
|
— |
|
|
Repurchase of share capital |
|
(28,108 |
) |
|
(801 |
) |
|
Repayments under operating lease obligations |
|
— |
|
|
(103 |
) |
|
Repayment of secured term loan facilities and revolving credit
facilities |
|
(148,335 |
) |
|
(31,076 |
) |
|
Repayment of refinancing of vessel to related parties |
|
(1,664 |
) |
|
(1,644 |
) |
| Cash
received from non-controlling interest |
|
20,353 |
|
|
— |
|
|
Net cash (used in)/provided by financing
activities |
|
130,908 |
|
|
(33,624 |
) |
| Effect
of exchange rate changes on cash, cash equivalents and restricted
cash |
|
648 |
|
|
(880 |
) |
|
Net increase in cash, cash equivalents and restricted
cash |
|
37,669 |
|
|
13,998 |
|
| Cash,
cash equivalents and restricted cash at beginning of year |
|
153,194 |
|
|
158,242 |
|
|
Cash, cash equivalents and restricted cash at end of
year |
$ |
190,863 |
|
$ |
172,240 |
|
|
Supplemental Information |
|
|
| Total
interest paid during the period, net of amounts capitalized |
$ |
14,178 |
|
$ |
17,389 |
|
| Total
tax paid during the period |
$ |
169 |
|
$ |
344 |
|
|
|
|
|
|
|
|
|
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
March 31, 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 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 three
months ended March 31, 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;
- the current financial condition and liquidity sources,
including current funds available and forecasted future cash
flows;
- any likely effects of global epidemics or other health
crises,
- the effects of the conflicts in Ukraine and the Gaza region on
the Company’s business, including potential escalations or wider
implications on other countries 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.
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 three months ended March
31, 2024.
Recent Accounting Pronouncements
New accounting standards issued as of March 31, 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 three months ended March 31,
2024.
2. Operating revenues
The following table discloses operating revenues by contract
type for the three months ended March 31, 2024 and 2023:
|
|
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
| |
(in thousands) |
| Operating
revenues: |
|
|
|
Time charters |
$ |
76,392 |
|
$ |
89,089 |
|
|
Voyage charters |
|
40,218 |
|
|
31,931 |
|
|
Voyage charters from Luna Pool collaborative arrangement |
|
7,200 |
|
|
— |
|
|
Operating revenues from Unigas Pool |
|
12,192 |
|
|
13,135 |
|
| Total operating
revenues |
$ |
136,002 |
|
$ |
134,155 |
|
|
|
|
|
|
|
|
|
As of March 31, 2024, 36 of the Company’s 47 operated
vessels (excluding the nine vessels operating within the
independently managed Unigas Pool) were subject to time charters,
24 of which will expire within one year, nine of which will expire
within three years, and three 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 March 31, 2024, are as
follows:
|
|
(in thousands of U.S. dollars) |
| Within 1 year |
242,222 |
| In the second year |
68,840 |
| In the third year |
23,746 |
| In the fourth year |
3,267 |
|
|
|
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 March 31, 2024, was
$2.1 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 March 31, 2024, was $26.0 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 March 31,
2024.
Voyage Charter revenues
Voyage charter revenues, which include revenues from contracts
of affreightment, are shown net of address commissions.
As of March 31, 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
$4.7 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 $15.2 million, respectively, as of
March 31, 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 $0.7 million as of March 31,
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
three months ended March 31, 2023 which was 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 |
|
— |
|
|
5,125 |
|
|
5,125 |
|
|
Write-offs of fully amortized assets |
|
— |
|
|
(2,209 |
) |
|
(2,209 |
) |
|
March 31, 2024 |
|
2,467,396 |
|
|
72,854 |
|
|
2,540,250 |
|
| |
|
|
|
| Accumulated
Depreciation |
|
|
|
|
January 1, 2024 |
|
743,334 |
|
|
39,618 |
|
|
782,952 |
|
|
Charge for the period |
|
27,753 |
|
|
5,635 |
|
|
33,388 |
|
|
Write-offs of fully amortized assets |
|
— |
|
|
(2,209 |
) |
|
(2,209 |
) |
|
March 31, 2024 |
|
771,087 |
|
|
43,044 |
|
|
814,131 |
|
| |
|
|
|
| Net Book
Value |
|
|
|
|
December 31, 2023 |
|
1,724,062 |
|
|
30,320 |
|
|
1,754,382 |
|
|
March 31, 2024 |
$ |
1,696,309 |
|
$ |
29,810 |
|
$ |
1,726,119 |
|
|
|
|
|
|
|
|
|
|
|
|
The cost and net book value of the 36 vessels that were
contracted under time charter arrangements (please read Note
2—Operating Revenue for additional information) was $1,906.7
million and $1,223.3 million, respectively, as of March 31,
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) were $1,382.8 million as of
March 31, 2024 (December 31, 2023:
$1,420.9 million).
The cost and net book value of vessels that are included in the
table above (please read Note 14—Variable Interest Entities for
additional information) were $83.6 million and
$61.7 million, respectively, as of March 31, 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 equity-accounted investees.
As of December 31, 2023, and March 31, 2024, we had
the following participation in investments that are accounted for
using the equity method:
|
|
|
December 31, 2023 |
|
|
March 31, 2024 |
|
|
|
(in thousands) |
|
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 |
% |
| |
|
|
|
|
|
|
Share of results from equity method investments, excluding
amortized costs, recognized in the share of results of equity
method investments for the three months ended March 31, 2024, was
$4.4 million (three months ended March 31, 2023:
$5.3 million).
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 March 31,
2024, we had contributed $198.5 million to the Export Terminal
Joint Venture being our total share of the capital cost for the
construction and ongoing expansion of the Ethylene Export
Terminal.
Cumulative interest and associated costs capitalized on the
investment in the Export Terminal Joint Venture 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 March 31, 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 $5.6 million (December 31, 2023:
$5.8 million). The costs amortized in both the three months
ended March 31, 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 March 31, 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. 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.
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 March 31,
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, and accounts for it using the equity method.
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
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 regularly
approvals and other customary closing conditions. 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.
The table below represents movement in the Company’s equity
method investments, for the year ended December 31, 2023, and
three months ended March 31, 2024:
| |
Year endedDecember 31,
2023 |
|
Three months endedMarch 31, 2024 |
|
|
|
(in thousands) |
|
Equity method investments at January 1, 2023 and 2024 |
$ |
148,534 |
|
$ |
174,910 |
|
| Share of results |
|
20,607 |
|
|
4,390 |
|
| Distributions received from
equity method investments |
|
(30,790 |
) |
|
(6,368 |
) |
| Equity contributions to joint
venture entity |
|
35,000 |
|
|
8,000 |
|
| Equity method investments –
additions |
|
1,559 |
|
|
— |
|
| Total equity method
investments at December 31, 2023 and March 31, 2024 |
$ |
174,910 |
|
$ |
180,932 |
|
| |
|
|
|
|
|
|
5. Secured Term Loan Facilities and Revolving Credit
Facilities
The following table shows the breakdown of all secured term loan
facilities and total deferred financing costs split between current
and non-current liabilities at December 31, 2023 and
March 31, 2024:
|
|
December 31, 2023 |
|
March 31, 2024 |
|
|
|
(in thousands) |
| Current
Liability |
|
|
|
Current portion of secured term loan facilities |
$ |
123,024 |
|
$ |
173,900 |
|
| Less: current portion of
deferred financing costs |
|
(2,697 |
) |
|
(2,585 |
) |
| Current portion of secured
term loan facilities, net of deferred financing costs |
$ |
120,327 |
|
$ |
171,315 |
|
| Non-Current
Liability |
|
|
| Secured term loan facilities
and revolving credit facilities net of current portion, excluding
amount due to related parties |
$ |
646,131 |
|
$ |
564,182 |
|
| Amount due to related
parties* |
|
41,342 |
|
|
39,699 |
|
| Less: non-current portion of
deferred financing costs |
|
(4,156 |
) |
|
(3,544 |
) |
| Non-current secured term loan
facilities and revolving credit facilities, net of current portion
and non-current deferred financing costs |
$ |
683,317 |
|
$ |
600,337 |
|
| |
|
|
|
|
|
|
*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 as a variable interest entity.
March 2023 Secured Term LoanOn March 20, 2023,
the Company entered into a senior secured term loan with Nordea
Bank ABP, ABN AMRO Bank N.V. Skandinaviska Enskilda Banken AB
(Publ), and BNP Paribas S.A. to refinance the June 2017 Secured
Term Loan and Revolving Credit Facility and the October 2016
Secured Term Loan and Revolving Credit Facility that were due to
mature in June and October 2023 respectively.
The March 2023 Secured Term Loan has a term of six years,
maturing in March 2029 and is for a maximum principal amount of
$200.0 million which was fully drawn on March 28, 2023. The
available facility amount shall be reduced quarterly by an amount
of $8.3 million followed by a final balloon payment in March
2029. Interest on amounts drawn is payable at a rate of SOFR plus
210 basis points. This loan facility is secured by first priority
mortgages on a total of ten of our owned vessels.
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 March 31, 2024:
| |
December 31, 2023 |
|
March 31, 2024 |
|
| |
(in thousands) |
| Senior Unsecured
Bonds |
|
|
|
Total bonds cost |
$ |
100,000 |
|
$ |
100,000 |
|
| Less Treasury bonds |
|
(9,000 |
) |
|
(9,000 |
) |
| Less deferred financing
costs |
|
(664 |
) |
|
(565 |
) |
| Total bonds, net of deferred
financing costs |
$ |
90,336 |
|
$ |
90,435 |
|
| |
|
|
|
|
|
|
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 canceled 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 March 31,
2024.
|
|
|
December 31, 2023 |
|
March 31, 2024 |
|
|
|
|
(in thousands) |
| Fair Value Hierarchy
Level |
Fair Value Hierarchy Level |
Fair Value Asset |
Fair Value Asset |
|
Interest rate swap agreements |
Level 2 |
$ |
14,674 |
|
$ |
14,227 |
|
|
|
|
|
|
|
|
|
|
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 March 31, 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 also has a number of existing vessel loan facilities
with associated fixed interest rate swaps. As of March 31,
2024, the interest rate swaps had a fair value of
$14.2 million (December 31, 2023, a fair value of
$14.7 million) and there were unrealized losses of
$0.4 million (December 31, 2023, an unrealized loss of
$7.3 million) on the fair value of the swaps for the three
months ended March 31, 2024 (three months ended March 31, 2023, an
unrealized gain of $4.3 million).
These fixed interest rate swaps are entered into with the
financial institutions which were lenders 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, 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 March 31, 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 March 31, 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 or 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
March 31, 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 March 31,
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 does
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 March 31, 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 March 31, 2024.
The following table includes the estimated fair value and
carrying value of those assets and liabilities where the fair value
does not approximate to 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 |
March 31, 2024 |
| |
(in thousands) |
| Financial
Asset/Liability |
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 |
) |
$ |
(91,910 |
) |
| Secured
term loan facilities and revolving credit facilities
(Note 5) |
Level 2 |
|
$ |
810,497 |
|
$ |
810,497 |
|
Level 2 |
|
$ |
(777,781 |
) |
$ |
(777,781 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 months
ended March 31, 2024 and 2023:
|
|
Three months endedMarch 31, 2023 |
|
Three months endedMarch 31, 2024 |
|
|
Net Income attributable to stockholders of Navigator Holdings
Ltd.(in thousands) |
$ |
18,786 |
|
$ |
22,573 |
|
| Basic weighted average number
of shares: |
|
75,955,162 |
|
|
73,209,771 |
|
| Effect of dilutive potential
share options: |
|
364,591 |
|
|
547,393 |
|
| Diluted weighted average
number of shares |
|
76,319,753 |
|
|
73,757,164 |
|
| |
|
|
|
|
|
|
10. Share-Based Compensation
Share Awards
On March 17, 2024, 31,833 shares which were previously granted
to non-employee directors under the 2013 Plan (as defined below)
with a weighted average grant value of $10.65 per share, vested at
a fair value of $396,321. 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 $10.65,
vested at a fair value of $107,682.
On March 15, 2023, under the Navigator Holdings Ltd. 2013
Long-Term Incentive Plan (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.
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 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 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, 2022, under the 2013 Plan
the Company granted a total of 75,716 restricted shares, 57,402 of
which were granted to non-employee directors and 18,314 of which
were granted to the officers and employees of the Company. The
weighted average value of all shares was $10.65 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 April 4, 2022 the Company
granted 10,000 restricted shares to an officer and employee of the
Company with a weighted average grant value of $12.17 per share. In
April 2022, two non-employee directors resigned from the Board of
the Company, and the 11,538 restricted shares granted to them
vested immediately upon their resignation at an aggregate fair
value of $161,763.
Restricted share grant activity for the year ended
December 31, 2023, and the three months ended March 31, 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 |
|
|
Vested |
|
(41,944 |
) |
|
11.92 |
|
|
|
|
| Balance
as of March 31, 2024 |
|
43,434 |
|
$ |
11.49 |
|
|
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
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 three months ended March 31, 2024, the Company
recognized $89,124 in share-based compensation costs relating to
share grants (three months ended March 31, 2023: $180,355). As of
March 31, 2024, there was a total of $951,697 unrecognized
compensation costs relating to the expected future vesting of
share-based awards (December 31, 2023: $819,919) which are
expected to be recognized over a weighted average period of 0.56
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 three months ended March 31,
2024, were as follows:
| Options |
Number of options outstanding |
|
Weighted average exercise price per
share |
|
Aggregate intrinsic value |
|
|
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 |
|
|
1,180,854 |
|
| Balance
as of December 31, 2023 |
|
547,393 |
|
|
21.08 |
|
$ |
— |
|
| Issuance
during the period |
|
— |
|
|
— |
|
|
— |
|
| Balance
as of March 31, 2024 |
|
547,393 |
|
|
18.25 |
|
$ |
1,180,854 |
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average remaining contractual term of options
outstanding and exercisable at March 31, 2024 was 2.75 years
(December 31, 2023: 2.99 years). During the three months ended
March 31, 2024, the Company recognized $83,990 in share-based
compensation costs relating to options under the 2013 Plan (three
months ended March 31, 2023: a charge of $22,028 relating to
options granted under the 2013 plan). As of March 31, 2024
there was $1,848,835 of total unrecognized compensation costs
relating to non-vested options under the 2013 Plan. As of
March 31, 2024, there were 284,981 share options that had
vested but had not been exercised. The weighted average exercise
price of the share options exercisable as of March 31, 2024
was $18.25 and (December 31, 2023, $21.08).
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 August 8, 2022, July 9, 2021 and August 22,
2023. The employee stock purchase plans have three-year
vesting periods, which will end on August 10, 2025, July 9,
2024 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 $17,081 relating to
employee stock purchase plans for the three months ended March 31,
2024 (for the year ended December 31, 2023: $41,588).
11. Commitments and Contingencies
The contractual obligations schedule set forth below summarizes
our contractual obligations as of March 31, 2024.
|
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
Thereafter |
Total |
|
|
(in thousands) |
|
Secured term loan facilities and revolving credit facilities |
$ |
96,695 |
|
$ |
292,616 |
|
$ |
107,216 |
|
$ |
67,539 |
|
$ |
89,186 |
|
$ |
84,830 |
|
$ |
738,082 |
|
| Ethylene
Export Terminal capital contributions1 |
|
89,348 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
89,348 |
|
| 2020
Bonds |
|
— |
|
|
100,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
100,000 |
|
| Office
operating leases2 |
|
960 |
|
|
1,251 |
|
|
1,054 |
|
|
1,261 |
|
|
— |
|
|
— |
|
|
4,526 |
|
|
Navigator Aurora Facility3 |
|
— |
|
|
— |
|
|
— |
|
|
39,699 |
|
|
— |
|
|
— |
|
|
39,699 |
|
| Total
contractual obligations |
$ |
187,003 |
|
$ |
393,867 |
|
$ |
108,270 |
|
$ |
108,499 |
|
$ |
89,186 |
|
$ |
84,830 |
|
$ |
971,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 We have committed to invest further in terminal
infrastructure, such as expanding our existing Ethylene Export
Terminal. As at March 31, 2024 the remaining capital
contributions required from us to the Export Terminal Joint Venture
for the Terminal Expansion Project are expected to be approximately
$89.35 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 March 31, 2024, was 1.94 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 March 31, 2024, the weighted average
discount rate across the four leases was 2.94% (December 31,
2023: 2.95%).
At March 31, 2024, based on the remaining lease
liabilities, the weighted average remaining operating lease term
was 1.94 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 in 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 March 31, 2024, is presented in the following table:
|
|
December 31, 2023 |
|
March 31, 2024 |
|
|
|
(in thousands) |
|
One year |
$ |
1,027 |
|
$ |
1,283 |
|
| Two years |
|
1,279 |
|
|
1,185 |
|
| Three years |
|
1,066 |
|
|
2,058 |
|
| Four years |
|
1,274 |
|
|
— |
|
| Total undiscounted
operating lease commitments |
$ |
4,646 |
|
$ |
4,526 |
|
| Less: Discount adjustment |
|
(232 |
) |
|
(215 |
) |
| Total operating lease
liabilities |
|
4,414 |
|
|
4,311 |
|
| Less: current portion |
|
(914 |
) |
|
(1,151 |
) |
| Operating lease
liabilities, non-current portion |
$ |
3,500 |
|
$ |
3,160 |
|
|
|
|
|
|
|
|
|
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
March 31, 2024:
|
|
December 31, 2023 |
|
March 31, 2024 |
|
|
|
(in thousands) |
| Cash, Cash Equivalents
and Restricted Cash |
|
|
|
Cash and cash equivalents |
$ |
149,581 |
|
$ |
163,113 |
|
| Cash and cash equivalents held
by VIE |
|
23 |
|
|
380 |
|
| Restricted cash |
|
8,638 |
|
|
8,747 |
|
| Total cash, cash equivalents
and restricted cash |
$ |
158,242 |
|
$ |
172,240 |
|
| |
|
|
|
|
|
|
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 March 31, 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 the 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 March 31, 2024, the
Company has consolidated 100% of OCY Aurora Ltd., the lessor
variable interest entity (‘‘lessor VIE’’) that we have leased
Navigator Aurora from under a sale and leaseback arrangement. The
lessor VIE is a wholly-owned, newly formed special purpose vehicle
(“SPV”) of 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 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.
The Company has performed an analysis and concluded that the
Company exercises 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.
We own a 25% and 40% share in equity of Navigator Crewing
Philippines Inc. (“NCPI”, “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
NCPI 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 NCPI’s and NSSPI’s economic performance.
As of March 31, 2024, the VIE’s had total assets and
liabilities of $174.0 million and $57.7 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 months ended March 31, 2024 and 2023:
|
|
Three months endedMarch 31,
2023 |
|
Three months endedMarch 31,
2024 |
|
|
|
(in thousands) |
| Net income /
(expenses) |
|
|
|
Luna Pool Agency Limited |
$ |
(17 |
) |
$ |
(8 |
) |
| Ocean Yield Malta Limited |
|
(774 |
) |
|
(763 |
) |
| Ultranav Business Support
ApS |
|
(32 |
) |
|
(15 |
) |
|
|
$ |
(823 |
) |
$ |
(786 |
) |
The following table sets out the balances due from related
parties as of December 31, 2023 and March 31, 2024:
|
|
December 31, 2023 |
|
March 31, 2024 |
|
|
|
(in thousands) |
|
Luna Pool Agency Limited |
$ |
30,804 |
|
$ |
16,189 |
|
| Unigas
Pool |
|
2,598 |
|
|
4,122 |
|
|
|
$ |
33,402 |
|
$ |
20,311 |
|
The following table sets out the balances due to related parties
as of December 31, 2023 and March 31, 2024:
| |
December 31, 2023 |
|
March 31, 2024 |
|
|
|
(in thousands) |
|
Ocean Yield Malta Limited |
$ |
41,912 |
|
$ |
40,217 |
|
| Naviera
Ultranav Dos Limitada |
|
36 |
|
|
— |
|
|
|
$ |
41,948 |
|
$ |
40,217 |
|
As of March 31, 2024, Ultranav International ApS held a
29.0% share in the Company and BW Group held a 29.9% share in the
Company and they are our principal shareholders. They may exert
considerable influence on the directors and other significant
corporate actions.
Ultranav Business Support ApS: On August 4, 2021, in connection
with the Company’s acquisition of the fleet and businesses of
Othello Shipping Company S.A. and Ultragas ApS from Naviera
Ultranav Limitada, the Company entered into a Transitional Services
Agreement (“TSA”) with Ultranav Business Support ApS (“UBS”) to
provide back office services, such as accounting and payroll, IT,
treasury, financial controlling, tax and compliance, communications
and CSR, HR, administrative and branding. 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 May 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 first quarter of 2024, payable on June 25, 2024 to all
shareholders of record as of the close of business New York time on
June 4, 2024. The aggregate amount of the dividend is expected
to be approximately $3.7 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 quarter ended
March 31, 2024, the Company expects to repurchase
approximately $2.0 million of common stock between May 16, 2024,
and June 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
March 31, 2024.
Our Fleet
The following table provides details of our vessels as of May
15, 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 |
Time Charter |
Ethane |
July 2024 |
|
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 |
Ethylene |
— |
|
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 |
Time Charter |
Ethylene |
August 2024 |
|
Navigator Castor* |
2019 |
22,000 |
Spot Market |
Ethylene |
— |
|
Navigator Equator* |
2019 |
22,000 |
Time Charter |
Ethane |
June 2024 |
|
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 |
Time Charter |
LPG |
July 2024 |
|
Navigator Capricorn |
2008 |
20,750 |
Time Charter |
LPG |
October 2024 |
|
Navigator Gemini |
2009 |
20,750 |
Time Charter |
LPG |
June 2024 |
|
Navigator Pegasus |
2009 |
22,200 |
Spot Market |
— |
— |
|
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 |
Time Charter |
Ammonia |
June 2024 |
|
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 |
Time Charter |
LPG |
July 2024 |
|
Navigator Yauza |
2017 |
22,000 |
Time Charter |
LPG |
July 2024 |
| 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. First Quarter 2024 Conference Call
Details
Navigator Holdings Ltd. First Quarter 2024 Earnings
Webcast and Presentation
On Thursday, May 16, 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 first quarter of 2024.
Those wishing to participate should register for the webcast
using the following details:
https://us06web.zoom.us/webinar/register/WN_GDgEYvKZQ--jx8wiPerasw
Webinar ID: 886 1481 2123Passcode: 560302
Participants can also join by phone by dialing:
United States: +1 929 436 2866United Kingdom:+44 330 088
5830
A full list of US and international numbers is available via the
following link:International Dial-in numbers
The webcast and slide presentation will be available for replay
on the Company's website (www.navigatorgas.com) shortly after the
end of the webcast. Participants wishing to join the live
webcast are encouraged to do so approximately 5 minutes prior to
the start.
About Navigator Gas Navigator 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”.
For media inquiries or further information, please
contact: Alexander WalsterHead of ESG & Communications
Email: communications@navigatorgas.com Verde, 10 Bressenden
Place, London, SW1E 5DH, UK Tel: +44 (0)7857 796 052, +44
(0)20 7045 4114
Navigator Gas Investor RelationsEmail:
investorrelations@navigatorgas.com, randy.giveans@navigatorgas.com333
Clay Street, Suite 2400, Houston, Texas, U.S.A. 77002Tel: +1 713
373 6197, +44 (0)20 7340 4850
Investor Relations / Media AdvisorsNicolas Bornozis / Paul
LampoutisCapital Link – New YorkTel:
+1-212-661-7566Email: navigatorgas@capitallink.com
Category: Financial
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