Navigator Holdings Ltd. Preliminary Third Quarter 2020 Results (Unaudited)
LONDON, Nov. 12, 2020 /PRNewswire/ --
Highlights
-- Navigator Holdings Ltd. (the "Company", "we", "our" and "us") (NYSE:
NVGS) reported operating revenue of $81.4 million for the three months
ended September 30, 2020, compared to $75.6 million for the three months
ended September 30, 2019.
-- Net income was $1.5 million or an earnings per share of $0.03 for the
three months ended September 30, 2020 compared to a net loss of $2.9
million or a loss per share of $0.05 for the three months ended
September 30, 2019.
-- Adjusted EBITDA((1)) was $31.9 million for the for the three months
ended September 30, 2020, comprising $27.5 million from the operations
of the vessels and $4.4 million from our 50/50 joint venture (the
"Export Terminal Joint Venture") relating to the ethylene export marine
terminal at Morgan's Point, Texas (the "Marine Export Terminal"). This
compared to $29.5 million for the three months ended September 30, 2019.
-- Fleet utilization decreased to 78.8% for the three months ended
September 30, 2020 compared to 84.6% for the three months ended
September 30, 2019.
-- On August 4, 2020, we amended our Terminal Facility to provide for a
total availability of $69.0 million and to enable the immediate drawdown
of $34.0 million for general corporate purposes.
-- On September 10, 2020, issued new senior unsecured $100 million 5-year
bonds at a fixed coupon of 8.00% per annum to refinance the 2017 Bonds
that were scheduled to mature in February 2021.
-- On September 17, 2020, entered into a new $210 million revolving credit
facility to refinance one of its secured credit facilities which enabled
the Company to borrow an additional approximate $30 million for general
corporate purposes.
-- Following the execution of the above facilities, our cash and undrawn
amounts available from our loan facilities has increased significantly
during the quarter, to approximately $120.0 million at September 30,
2020, with no further loan maturities until April 2022.
-- We have achieved a record of 714 days without a Lost-Time-Incident (LTI)
across our in-house technical managed fleet of 17 vessels.
The Company's financial information for the quarter ended September 30, 2020 included in this press release is preliminary and is subject to change in connection with the completion of the Company's quarter-end close procedures and further financial review. Actual results may differ from these estimates as a result of the completion of the Company's quarter-end closing procedures, review adjustments and other developments that may arise between now and the time such financial information for the quarter ended September 30, 2020 is finalized.
Ethylene Marine Export Terminal
The ethylene Marine Export Terminal continues to be operational although throughput has been affected by hurricane Laura, which disrupted power supply to nearby ethylene crackers, reducing the availability of ethylene to export. The 30,000 ton storage tank, which will increase the terminal's throughput capacity, is currently being commissioned and is on schedule to be operational in December. Thereafter the committed offtake agreements, which have minimum terms of five years, are expected to result in approximately 940,000 tons of annual throughput.
The Company contributed $7.5 million to the Export Terminal Joint Venture during the third quarter of 2020 with a draw down on the Company's Terminal Facility. In addition, since September 30, 2020 the Company has contributed a further $2.0 million to the Export Terminal Joint Venture, also drawn from the Terminal Facility. To date the Company has contributed $142.5 million of our expected share of the approximate $146.5 million towards the capital cost of the Marine Export Terminal.
Trends
Notwithstanding the disruptions to the global economy due to the COVID19 pandemic, the commercial environment coming into the third quarter of 2020 was relatively stable. With the Asian markets emerging from governmental lockdowns sooner than those in the West and less susceptible to further pandemic waves, arbitrage opportunities opened and remained into the summer months. The initial demand for ethylene exports from our Marine Export Terminal continued apace into July and the first half of August, including a world record for the largest ethylene cargo ever loaded - 20,000mt on Navigator Eclipse (37,500cbm / MEGC), that was delivered to China.
However, in mid-August, with predictions of hurricane Laura making landfall in Louisiana, ethylene producers initiated precautionary procedures by shutting down various crackers. Hurricane Laura's impact was considerable and long-standing in the Lake Charles area of Louisiana where approximately one quarter of U.S. ethylene production is located. Although minimal physical damage resulted from the hurricane, the local power grid was severely impacted and multiple producers had to wait for the local utility companies to re-establish electricity supply before re-starting their ethylene crackers. This reduction in U.S. domestic ethylene production lead to U.S. ethylene prices rising sharply due to reduced supply, much of which was consumed domestically with only limited volumes available for exports. Expected increased ethylene export volumes for September and October following the severe hurricane season and the impact on the Lake Charles area by hurricane Laura did not materialize, reducing throughput at the terminal as well as our expected earnings days for the ethylene fleet. Our utilization for the spot fleet reduced in September and October as a direct consequence. The ethylene vessels that were ballasting into the U.S. Gulf during this period were forced to compete with semi-refrigerated and fully-refrigerated non-ethylene petrochemical cargoes and LPG, where available.
Electricity is now restored in the Lake Charles area and the ethylene crackers have re-commenced production. U.S. domestic ethylene prices are softening and the market dynamics are returning to what we experienced during the summer months; low U.S. ethylene price creating arbitrage with the rest of the world, thus providing employment for the ethylene fleet. We expect our utilization level to rise as a result of the widening of the ethylene arbitrage for November and December.
As well as lifting the world record ethylene cargo on Navigator Eclipse, our midsize ethylene/ethane carriers had a positive quarter in the ethane market. We extended an existing time charter to a large European chemical player for a further year and concluded a new three year time charter with a large Chinese chemical producer.
Very Large Gas Carriers had a solid quarter, regaining much of the losses of the previous three months, The Baltic spot index rose by 85% during the third quarter of 2020, but in contrast the handy-size vessel twelve month charter assessment declined slightly from $620,000 pcm to $605,000 pcm reemphasizing a stable profile due to the vessels' flexibility in trading in LPG, petrochemicals and ammonia markets.
COVID-19
The impact of COVID-19 continues to affect global economic conditions that effect our business, financial condition and the results of our operations. The ultimate longevity of the COVID-19 pandemic is uncertain and its future effects depend on the spread of the outbreak and the reactions of various national governments to the virus. Therefore, an estimate of the likely impact cannot be made with certainty at this time.
Crew changes remain a challenge, similar to most shipowners, although an increasing number of crew changes have successfully occurred during the quarter, with 49 crew members now with overdue leave of an average of 34 days. Drydocking vessels too has been difficult with some yards closing on short notice. However, drydockings have occurred at various dockyards around the world and the Company has completed five drydocks during the third quarter, with a further three being scheduled for later in 2020.
Results of Operations for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2020
The following table compares our operating results for the three months ended September 30, 2019 and 2020:
Three Months
Three Months
Percentage
Ended September 30, Ended September 30, Change
2019
2020
(in thousands, except percentages)
Operating revenue $75,624 $75,613 0.0%
Operating revenue - Luna Pool
collaborative arrangements 5,738
Total operating revenue $75,624 $81,351 7.6%
Expenses:
Brokerage commissions 1,217 1,220 0.2%
Voyage expenses 13,387 14,584 8.9%
Voyage expenses - Luna Pool
collaborative arrangements 4,525
Vessel operating expenses 26,820 27,221 1.5%
Depreciation and amortization 19,009 19,180 0.9%
General and administrative costs 4,631 6,525 40.9%
Other Income (212)
Total operating expenses $65,064 $73,043 12.3%
Operating income $10,560 $8,308 (21.3%)
Foreign currency exchange gain/
(loss) on senior secured bonds 4,171 (1,612)
Unrealized (loss)/gain on non-
designated derivative instruments (5,197) 2,137
Interest expense (12,406) (9,820) (20.8%)
Write off of deferred financing costs (155)
Interest income 197 52 (73.6%)
Loss before taxes and share of result
of equity accounted joint venture $(2,675) $(1,090) (59.3%)
Income taxes (131) (120) (8.4%)
Share of result of equity accounted
joint ventures (107) 3,147
Net (loss) / income $(2,913) $1,937
Net income attributable to non-
controlling interest (446)
Net (loss) /income attributable to
stockholders of Navigator Holdings
Ltd $(2,913) $1,491
Operating Revenue. Operating revenue was $75.6 million for the three months ended September 30, 2020, principally the same as for the three months ended September 30, 2019. However, there were compensating differences as follows:
-- a decrease in operating revenue of approximately $4.5 million
attributable to decrease in fleet utilization which fell to 78.8% for
the three months ended September 30, 2020 from 84.6% for the three
months ended September 30, 2019;
-- a decrease in operating revenue of approximately $0.9 million
attributable to a decrease in vessel available days of 48 days or 1.4%
for the three months ended September 30, 2020 compared to the three
months to September 30, 2019, primarily due to an increase in the number
of dry dockings undertaken during the three months ended September 30,
2020, compared to the three months ended September 30, 2019;
-- an increase in operating revenue of approximately $4.1 million
attributable to an increase in average monthly time charter equivalent
rates, which increased to an average of approximately $696,166 per
vessel per calendar month ($22,892 per day) for the three months ended
September 30, 2020, compared to an average of approximately $652,314 per
vessel per calendar month ($21,446 per day) for the three months ended
September 30, 2019; and
-- an increase in operating revenue of approximately $1.2 million primarily
attributable to an increase in pass through voyage costs, including
additional canal transits for the three months ended September 30, 2020
compared to the three months ended September 30, 2019
The following table presents selected operating data for the three months ended September 30, 2019 and 2020, which we believe are useful in understanding the basis for movement in our operating revenue.
Three Months
Three Months
Ended Ended
September 30, 2019 September 30, 2020
Fleet
Data:
Weighted
average
number
of
vessels 38.0 38.0
Ownership
days 3,496 3,496
Available
days 3,432 3,384
Operating
days 2,902 2,666
Fleet
utilization 84.6% 78.8%
Average
daily
time
charter
equivalent
rate
(*) $21,446 $22,892
* Non-GAAP Financial Measure--Time charter equivalent: Time charter equivalent ("TCE") rate 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 revenue, less any voyage expenses, by the number of operating days for the relevant period. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses, whereas for voyage charters, also known as spot market charters, we pay all voyage expenses. TCE rate 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., spot charters, time charters and contracts of affreightment) under which the vessels may be employed between the periods. We include average daily TCE rate, as we believe it provides additional meaningful information in conjunction with net operating revenue, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies.
Reconciliation of Operating Revenue to TCE rate
The following table represents a reconciliation of operating revenue to TCE rate. Operating revenue is the most directly comparable financial measure calculated in accordance with U.S. GAAP for the periods presented.
Three Months
Three Months
Ended Ended
September 30, 2019 September 30, 2020
(in thousands, except operating days
and average daily time charter
equivalent rate)
Fleet Data:
Operating revenue
(excluding
collaborative
arrangements) $75,624 $75,613
Voyage expenses
(excluding
collaborative
arrangements) 13,387 14,584
Operating revenue
less Voyage expenses 62,237 61,029
Operating days 2,902 2,666
Average daily time
charter equivalent
rate $21,446 $22,892
Operating Revenue - Luna Pool collaborative arrangements. Pool earnings are aggregated and then allocated (after deducting pool overheads and managers fees) to the Pool Participants in accordance with the Pooling Agreement. Operating revenue - Luna Pool collaborative arrangements was $5.7 million for the three months ended September 30, 2020, which represents our share of pool net revenue generated by the other participant's vessels in the pool. The Luna Pool, which comprises nine of the Company's ethylene vessels and five ethylene vessels from Pacific Gas Pte. Ltd., focuses on the transportation of ethylene and ethane to meet the growing demands of our customers. The Luna Pool became operational during the second quarter of 2020 and consequently there was no Operating Revenue - Luna Pool collaborative arrangements for the three months ended September 30, 2019.
Brokerage Commissions. Brokerage commissions, which typically vary between 1.25% and 2.5% of operating revenue, was $1.2 million for the three months ended September 30, 2020, the same as for the three months ended September 30, 2019.
Voyage Expenses. Voyage expenses increased by $1.2 million or 8.9% to $14.6 million for the three months ended September 30, 2020, from $13.4 million for the three months ended September 30, 2019. Panama Canal transit costs have increased in the three months ended September 30, 2020 as a result of increased trade from the U.S. Gulf to the Far East through the Panama Canal. However bunker costs have reduced as a result of a decrease in bunker prices, although more bunkers have been consumed as the number of voyage charter days increased by approximately 18.2% during the three months ended September 30, 2020, as compared to the three months ended September 30, 2019.
Voyage Expenses - Luna Pool collaborative arrangements. Voyage expenses - Luna Pool collaborative arrangements were $4.5 million for the three months ended September 30, 2020, which represents the other participant's share of pool net revenues generated by our vessels in the pool. The net effect after deducting operating revenue - Luna Pool collaborative arrangements was that the other participant's vessels contributed $1.2 million to our vessels in the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there were no Voyage Expenses - Luna Pool collaborative arrangements for the three months ended September 30, 2019.
Vessel Operating Expenses. Vessel operating expenses increased by 1.5% to $27.2 million for the three months ended September 30, 2020, from $26.8 million for the three months ended September 30, 2019. Average daily vessel operating expenses increased by $115 per vessel per day, or 1.5%, to $7,786 per vessel per day for the three months ended September 30, 2020, compared to $7,672 per vessel per day for the three months ended September 30, 2019.
Depreciation and Amortization. Depreciation and amortization increased by 0.9% to $19.2 million for the three months ended September 30, 2020, from $19.0 million for the three months ended September 30, 2019. Depreciation and amortization included amortization of capitalized drydocking costs of $1.7 million and $1.9 million for the three months ended September 30, 2020 and 2019 respectively.
General and Administrative Costs. General and administrative costs increased by $1.9 million or 40.9% to $6.5 million for the three months ended September 30, 2020, from $4.6 million for the three months ended September 30, 2019. The increase in general and administrative costs includes a loss of $0.5 million on the revaluation of an Indonesian Rupiah bank account for the three months ended September 30, 2020, relative to the three months ended September 30, 2019, additional audit and internal control related costs of $0.3 million and additional terminal insurance of $0.2 million.
Other Income. Other income was $0.2 million for the three months ended September 30, 2020 and consists of management fees for commercial and administrative activities performed by the Company for the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no other income for the three months ended September 30, 2019.
Non-operating Results
Foreign Currency Exchange Gain/Loss on Senior Secured Bonds. Exchange gains and losses relate to non-cash movements on our 600 million Norwegian Kroner 2018 Bonds which are translated to U.S. Dollar at the prevailing exchange rate as of September 30, 2020. The foreign currency exchange loss of $1.6 million for the three months ended September 30, 2020 was as a result of the Norwegian Kroner strengthening against the U.S. Dollar, being NOK 9.4 to USD 1.0 as of September 30, 2020 compared to NOK 9.7 to USD 1.0 as of June 30, 2020.
Unrealized Gain/Loss on Non-designated Derivative Instruments. The unrealized gains on non-designated derivative instruments of $2.1 million for the three months ended September 30, 2020 relates to the fair value movement in our cross-currency interest rate swap and is primarily due to the strengthening of the Norwegian Kroner against the U.S. Dollar. The unrealized loss on this swap for the three months ended September 30, 2019 was $5.2 million.
Interest Expense. Interest expense decreased by $2.6 million, or 20.8%, to $9.8 million for the three months ended September 30, 2020, from $12.4 million for the three months ended September 30, 2019. This is primarily as a result of a reduction in 3-month US LIBOR interest rates.
Write off of Deferred Financing Costs. The write off of deferred financing costs of $0.2 million for the three months ended September 30, 2020 related to a portion of the remaining unamortized deferred financing costs of the $290.0 million secured term loan facility that was fully re-financed prior to its maturity date. No loan refinancing occurred during the three months ended September 30, 2019.
Write off of Redemption Premium on 7.75% Senior Unsecured Bond. In connection with the redemption of the 2017 Bonds, pursuant to which we redeemed all of the outstanding principal amount in September 2020, we incurred $0.2 million in charges that were written off on such bonds on maturity which are presented within interest expense for the three months ended September 30, 2020.
Income Taxes. Income taxes related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore and our consolidated variable interest entity ("VIE"), incorporated in Malta. For the three months ended September 30, 2020, we had a tax charge of $120,000 compared to taxes of $131,042 for the three months ended September 30, 2019.
Share of result of equity accounted joint ventures. The share of result of the Company's 50% ownership in the Export Terminal Joint Venture was a gain of $3.1 million for the three months ended September 30, 2020, primarily as a result of volumes being exported through the Marine Export Terminal following the commencement of the throughput agreements during the second quarter of 2020.
Non-Controlling Interest. We have entered into a sale and leaseback arrangement in November 2019 with a wholly-owned special purpose vehicle ("lessor SPV") of a financial institution. Although we do not hold any equity investments in this lessor SPV, we have determined that we are the primary beneficiary of this entity and accordingly, we are required to consolidate this VIE into our financial results. Thus, the income attributable to the financial institution of $0.4 million is presented as the non-controlling interest in our financial results for the three months ended September 30, 2020.
Results of Operations for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2020
The following table compares our operating results for the nine months ended September 30, 2019 and 2020:
Nine Months
Nine Months Percentage
Ended
September 30, 2020 Change
Ended September 30,
2019
(in thousands, except percentages)
Operating revenue $225,313 $236,739 5.1%
Operating revenue - Luna Pool
collaborative arrangements 8,334
Total operating revenue $225,313 $245,073 8.8%
Expenses:
Brokerage commissions 3,759 3,780 0.6%
Voyage expenses 43,181 46,856 8.5%
Voyage expenses - Luna Pool
collaborative arrangements 7,568
Vessel operating expenses 83,742 81,120 (3.1%)
Depreciation and amortization 56,870 57,541 1.2%
General and administrative costs 14,628 17,542 19.9%
Other Income (329)
Total operating expenses $202,180 $214,078 5.9%
Operating income $23,133 $30,995 34.0%
Foreign currency exchange gain on
senior secured bonds 3,219 4,953 53.9%
Unrealized loss on non-designated
derivative instruments (3,552) (5,470 ) 54.0%
Interest expense (36,768) (32,488 ) (11.6%)
Write off of deferred financing costs (155)
Interest income 617 367 (40.5%)
Loss before taxes and share of result
of equity accounted joint venture $(13,351) $(1,798) (86.5%)
Income taxes (305) (456) 49.5%
Share of result of equity accounted
joint ventures (247) (58) (76.5%)
Net loss $(13,903) $(2,312) (83.4%)
Net income attributable to non-
controlling interest (1,351)
Net loss attributable to stockholders
of Navigator Holdings Ltd $(13,903) $(3,663) (73.7%)
Operating Revenue. Operating revenue increased by $11.4 million or 5.1% to $236.7 million for the nine months ended September 30, 2020, from $225.3 million for the nine months ended September 30, 2019. This increase was principally due to:
-- an increase in operating revenue of approximately $1.3 million
attributable to an increase in fleet utilization which rose to 85.4% for
the nine months ended September 30, 2020 from 84.8% for the nine months
ended September 30, 2019;
-- an increase in operating revenue of approximately $5.8 million
attributable to an increase in average monthly time charter equivalent
rates, which increased to an average of approximately $661,082 per
vessel per calendar month ($21,733 per day) for the nine months ended
September 30, 2020, compared to an average of approximately $640,685 per
vessel per calendar month ($21,063 per day) for the nine months ended
September 30, 2019.
-- an increase in operating revenue of approximately $0.7 million
attributable to an increase in vessel available days of 37 days or 0.4%
for the nine months ended September 30, 2020, primarily due to an
increase in the number of ownership days for the leap year; and
-- an increase in operating revenue of approximately $3.7 million primarily
attributable to an increase in pass through voyage costs for the nine
months ended September 30, 2020 compared to the nine months ended
September 30, 2019.
The following table presents selected operating data for the nine months ended September 30, 2019 and 2020, which we believe are useful in understanding the basis for movement in our operating revenue.
Nine Months
Nine Months
Ended Ended
September 30, 2019 September 30, 2020
Fleet
Data:
Weighted
average
number
of
vessels 38.0 38.0
Ownership
days 10,374 10,412
Available
days 10,193 10,230
Operating
days 8,647 8,737
Fleet
utilization 84.8 % 85.4%
Average
daily
time
charter
equivalent
rate
(*) $21,063 $21,733
* Non-GAAP Financial Measure--Time charter equivalent: Time charter equivalent ("TCE") rate 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 revenue, less any voyage expenses, by the number of operating days for the relevant period. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses, whereas for voyage charters, also known as spot market charters, we pay all voyage expenses. TCE rate 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., spot charters, time charters and contracts of affreightment) under which the vessels may be employed between the periods. We include average daily TCE rate, as we believe it provides additional meaningful information in conjunction with net operating revenue, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies.
Reconciliation of Operating Revenue to TCE rate
The following table represents a reconciliation of operating revenue to TCE rate. Operating revenue is the most directly comparable financial measure calculated in accordance with U.S. GAAP for the periods presented.
Nine Months
Nine Months
Ended Ended
September 30, 2019 September 30, 2020
(in thousands, except operating days
and average daily time charter
equivalent rate)
Fleet Data:
Operating revenue
(excluding
collaborative
arrangements) $225,313 $236,739
Voyage expenses
(excluding
collaborative
arrangements) 43,181 46,856
Operating revenue
less Voyage expenses 182,132 189,883
Operating days 8,647 8,737
Average daily time
charter equivalent
rate $21,063 $21,733
Operating Revenue - Luna Pool collaborative arrangements. Pool earnings are aggregated and then allocated (after deducting pool overheads and managers fees) to the Pool Participants in accordance with the Pooling Agreement. Operating revenue - Luna Pool collaborative arrangements was $8.3 million for the nine months ended September 30, 2020, which represents our share of pool net revenues generated by the other participant's vessels in the pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no Operating Revenue - Luna Pool collaborative arrangements for the nine months ended September 30, 2019.
Brokerage Commissions. Brokerage commissions, which typically vary between 1.25% and 2.5% of operating revenue, marginally increased by 0.6%, to $3.8 million for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019. The increase was primarily due to an increase in operating revenue on which brokerage commissions are based.
Voyage Expenses. Voyage expenses increased by 8.5% to $46.9 million for the nine months ended September 30, 2020, from $43.2 million for the nine months ended September 30, 2019. Panama Canal transit costs have increased significantly in the nine months ended September 30, 2020 as a result of increased trade from the U.S. Gulf to the Far East through the Panama Canal. These transit cost increases are partly off-set by reductions in bunker costs as a result of bunker price decreases, although more bunkers have been consumed as the number of voyage charter days increased by approximately 3.0% during the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019
Voyage Expenses. - Luna Pool collaborative arrangements. Voyage expenses - Luna Pool collaborative arrangements was $7.6 million for the nine months ended September 30, 2020, which represents the other participant's share of pool net revenue generated by our vessels in the pool. The net effect after deducting Operating revenue - Luna Pool collaborative arrangements was that the other participants vessels contributed $0.8 million to our vessels in the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no Voyage Expenses - Luna Pool collaborative arrangements for the nine months ended September 30, 2019.
Vessel Operating Expenses. Vessel operating expenses decreased by 3.1% to $81.1 million for the nine months ended September 30, 2020, from $83.7 million for the nine months ended September 30, 2019. Average daily vessel operating expenses decreased by $281 per vessel per day, or 3.5%, to $7,791 per vessel per day for the nine months ended September 30, 2020, compared to $8,072 per vessel per day for the nine months ended September 30, 2019. This was primarily due to a general underspend in vessel operating expenses across the fleet during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as well as unexpected costs incurred for repairs and maintenance in 2019 which have not reoccurred for the nine months ended September 30, 2020.
Depreciation and Amortization. Depreciation and amortization increased by 1.2% to $57.5 million for the nine months ended September 30, 2020, from $56.9 million for the nine months ended September 30, 2019. Depreciation and amortization included amortization of capitalized drydocking costs of $5.8 million and $5.7 million for the nine months ended September 30, 2020 and 2019, respectively.
General and Administrative Costs. General and administrative costs increased by $2.9 million or 19.9% to $17.5 million for the nine months ended September 30, 2020, from $14.6 million for the nine months ended September 30, 2019. The increase in general and administrative costs was primarily due to a loss of $1.0 million on the revaluation of an Indonesian Rupiah bank account for the nine months ended September 30, 2020 relative to the three months ended September 30, 2019; additional audit and internal control related costs of $1.0 million; additional insurance costs of $0.6 million for the now operational Marine Export Terminal; and the write off of previously capitalized legal costs of $0.5 million relating to the Marine Export Terminal.
Other Income. Other income was $0.3 million for the nine months ended September 30, 2020 and consists of management fees for commercial and administrative activities performed by the Company for the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no other income for the nine months ended September 30, 2019.
Non-operating Results
Foreign Currency Exchange Gain on Senior Secured Bonds. Exchange gains and losses relate to non-cash movements on our 600 million Norwegian Kroner 2018 Bonds which are translated to U.S. Dollars at the prevailing exchange rate as of September 30, 2020. The foreign currency exchange gain of $5.0 million for the nine months ended September 30, 2020 was as a result of the Norwegian Kroner weakening against the U.S. Dollar, being NOK 9.4 to USD 1.0 as of September 30, 2020 compared to NOK 8.8 to USD 1.0 as of December 31, 2019.
Unrealized Loss on Non-designated Derivative Instruments. The unrealized loss on non-designated derivative instruments of $5.5 million for the nine months ended September 30, 2020 relates to the fair value movement in our cross-currency interest rate swap and is primarily due to the weakening of the Norwegian Kroner against the U.S. Dollar. The unrealized loss on this swap for the nine months ended September 30, 2019 was $3.6 million.
Interest Expense. Interest expense decreased by $4.3 million, or 11.6%, to $32.5 million for the nine months ended September 30, 2020, from $36.8 million for the nine months ended September 30, 2019. This reduction in interest expense is primarily as a result of reductions in 3-month US LIBOR interest rates, offset by $2.4 million lower interest costs capitalized on the Marine Export Terminal for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.
Write off of Deferred Financing Costs. The write off of deferred financing costs of $0.2 million for the nine months ended September 30, 2020 related to a portion of the remaining unamortized deferred financing costs of the $290.0 million secured term loan facility that was fully re-financed prior to its maturity date. No loan refinancing occurred in the nine months ended September 30, 2019.
Income Taxes. Income taxes related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore and our consolidated variable interest entity ("VIE"), incorporated in Malta. For the nine months ended September 30, 2020, we had a tax charge of $456,000 compared to taxes of $305,388 for the nine months ended September 30, 2019.
Share of result of equity accounted joint ventures. The share of result of the Company's 50% ownership in the Export Terminal Joint Venture was a loss of $0.1 million for the nine months ended September 30, 2020, primarily as a result of initial losses following the terminal becoming operational in December 2019 being offset by profits since June when the committed offtake agreements became effective. This compared to a loss of $0.2 million for the nine months ended September 30, 2019, which related to costs incurred prior to the Marine Export Terminal becoming operational.
Non-Controlling Interest. We have entered into a sale and leaseback arrangement with a wholly-owned special purpose vehicle ("lessor SPV") of a financial institution. While we do not hold any equity investments in this lessor SPV, we have determined that we are the primary beneficiary of this entity and accordingly, we are required to consolidate this VIE into our financial results. Thus, the income attributable to the financial institution of $1.4 million is presented as the non-controlling interest in our financial results for the nine months ended September 30, 2020.
Reconciliation of Non-GAAP Financial Measures
The following table sets forth a reconciliation of net income attributable to the stockholders of the Company to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2019 and 2020:
(in thousands)
(in thousands)
Three months ended
Nine months ended
September 30,
September 30,
September 30,
September 30,
2019 2020 2019 2020
Net income / (loss) attributable to the stockholders $(2,913) $1,937 $(13,903) $(2,312 )
of Navigator Holdings Ltd.
Net interest expense 12,209 9,923 36,151 32,276
Income taxes 131 120 305 456
Depreciation and amortization 19,009 19,180 56,870 57,541
Depreciation from the Export Terminal Joint Venture 1,262 3,771
EBITDA(1) $28,436 $32,422 $79,423 $91,732
Foreign currency exchange (gain) / loss on senior secured bonds (4,171) 1,612 (3,219) (4,953 )
Unrealized loss / (gain) on non-designated derivative instruments 5,197 (2,137) 3,552 5,470
Adjusted EBITDA(1) $29,462 $31,897 $79,756 $92,249
(1) EBITDA and Adjusted EBITDA are not measurements prepared in accordance with U.S. GAAP (non-GAAP financial measures). EBITDA represents net income attributable to stockholders of the Company before net interest expense, income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA before foreign currency exchange gain or loss on senior secured bonds and unrealized gain or loss on non-designated derivative instruments. 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 prepared in accordance with U.S. GAAP, and our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies. See the table above for a reconciliation of EBITDA and Adjusted EBITDA to net income / (loss) attributable to stockholders of the Company, our most directly comparable U.S. GAAP financial measure.
Our Fleet
The following table sets forth our vessels as of November 12, 2020:
Operating Vessel Year Vessel Size
Employment Current Cargo
Charter
Built (cbm) Status Expiration Date
--- ---
Ethylene/ethane capable semi-refrigerated
Navigator Orion* 2000 22,085
Spot market -
Navigator Neptune* 2000 22,085
Time charter
Ethane
November 2020
Navigator Pluto 2000 22,085
Time charter
LPG
January 2021
Navigator Saturn* 2000 22,085
Contract of affreightment
Ethylene -
Navigator Venus* 2000 22,085
Time charter
Ethane
November 2020
Navigator Atlas* 2014 21,000
Contract of affreightment
Ethylene -
Navigator Europa* 2014 21,000
Contract of affreightment
Ethylene -
Navigator Oberon* 2014 21,000
Spot market -
Navigator Triton* 2015 21,000
Contract of affreightment
Ethylene -
Navigator Umbrio* 2015 21,000
Spot market -
Navigator Aurora 2016 37,300
Time charter
LPG
December 2026
Navigator Eclipse 2016 37,300
Time charter
Ethylene
December 2020
Navigator Nova 2017 37,300
Time charter
Ethane
September 2023
Navigator Prominence 2017 37,300
Time charter
Ethane
December 2021
Semi-refrigerated
Navigator Magellan 1998 20,700
Spot market
LPG -
Navigator Aries 2008 20,750
Time charter
LPG
November 2020
Navigator Capricorn 2008 20,750
Spot market
Butadiene -
Navigator Gemini 2009 20,750
Spot market -
Navigator Pegasus 2009 22,200
Spot market
Propylene -
Navigator Phoenix 2009 22,200
Spot market
Butadiene -
Navigator Scorpio 2009 20,750
Spot market
LPG -
Navigator Taurus 2009 20,750
Spot market
LPG -
Navigator Virgo 2009 20,750
Spot market
LPG -
Navigator Leo 2011 20,600
Time charter
LPG
December 2023
Navigator Libra 2012 20,600
Time charter
LPG
December 2023
Navigator Centauri 2015 21,000
Spot market
Butadiene -
Navigator Ceres 2015 21,000
Time charter
Propylene
December 2020
Navigator Ceto 2016 21,000
Spot market
Butadiene -
Navigator Copernico 2016 21,000
Spot market
Butadiene -
Navigator Luga 2017 22,000
Time charter
LPG
February 2022
Navigator Yauza 2017 22,000
Time charter
LPG
April 2022
Fully-refrigerated
Navigator Glory 2010 22,500
Time charter
Ammonia
June 2021
Navigator Grace 2010 22,500
Time charter
LPG
March 2021
Navigator Galaxy 2011 22,500
Spot market
LPG -
Navigator Genesis 2011 22,500
Time charter
LPG
July 2021
Navigator Global 2011 22,500
Time charter
LPG
November 2020
Navigator Gusto 2011 22,500
Time charter
LPG
December 2020
Navigator Jorf 2017 38,000
Time charter
Ammonia
August 2027
*denotes our owned vessels that operate within the Luna Pool
Conference Call Details:
Tomorrow, Friday, November 13, 2020, at 9:00 A.M. ET, the Company's management team will host a conference call to discuss the preliminary financial results.
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (877) 553-9962 (US Toll Free Dial In), 0(808) 238-0669 (UK Toll Free Dial In) or +44 (0) 2071 928 592 (Standard International Dial In). Please quote "Navigator" to the operator. There will also be a live, and then archived, webcast of the conference call, available through the Company's website (www.navigatorgas.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
A telephonic replay of the conference call will be available until Friday November 20, 2020, by dialing 1(866) 331-1332 (US Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial In) or +44 (0) 3333 009785 (Standard International Dial In). Access Code: 11870348#
Navigator Gas
Attention: Investor Relations Department - investorrelations@navigatorgas.com
New York: 650 Madison Ave, New York, NY 10022. Tel: +1 212 355 5893
London: 10 Bressenden Place, London, SW1E 5DH. Tel: +44 (0)20 7340 4850
About Us
Navigator Holdings Ltd. is the owner and operator of the world's largest fleet of handysize liquefied gas carriers and a global leader in the seaborne transportation of petrochemical gases, such as ethylene and ethane, liquefied petroleum gas ("LPG") and ammonia. Navigator's fleet consists of 38 semi- or fully-refrigerated liquefied gas carriers, 14 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 our sophisticated vessels providing an efficient and reliable 'floating pipeline' between the parties. We continue to build strong, long-term partnerships based on mutual trust, our depth of technical expertise and a modern versatile fleet. The Company also 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 HOLDINGS LTD.
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, 2019
September 30, 2020
---
(in thousands, except share data)
Assets
Current assets
Cash and cash
equivalents $64,820 $60,996
Restricted Cash 1,310 6,060
Accounts receivable,
net of allowance for
credit losses of $188
(December 31, 2019:
nil) 23,462 22,404
Accrued income 6,280 3,727
Prepaid expenses and
other current assets 17,670 24,120
Bunkers and lubricant
oils 9,645 9,665
Insurance Receivable 2,939 3,000
Total current assets 126,126 129,972
Non-current assets
Vessels, net 1,609,527 1,561,367
Property, plant and
equipment, net 1,159 840
Investment in equity
accounted joint
ventures 130,660 145,956
Right-of-use asset
for operating leases 6,781 5,977
Prepaid expenses and
other non-current
assets - 2,543
---
Total non-current
assets 1,748,127 1,716,683
Total assets $1,874,253 $1,846,655
===
Liabilities and stockholders' equity
Current liabilities
Current portion of
secured term loan
facilities, net of
deferred financing
costs $64,703 $62,535
Current portion of
operating lease
liabilities 1,178 1,210
Accounts payable 10,472 14,703
Accrued expenses and
other liabilities 14,124 18,161
Accrued interest 4,424 1,508
Deferred income 14,154 16,320
Amounts due to related
parties 451 613
Total current
liabilities 109,506 115,050
Non-current liabilities
Secured term loan
facilities and
revolving credit
facilities, net of
current portion and
deferred financing
costs 578,676 553,321
Senior secured bond,
net of deferred
financing costs 67,503 62,633
Senior unsecured bond,
net of deferred
financing costs 98,513 98,060
Derivative liabilities 5,769 11,239
Operating lease
liabilities, net of
current portion 6,329 5,267
Amounts due to related
parties 68,055 62,850
Total non-current
liabilities 824,845 793,370
Total Liabilities 934,351 908,420
Commitments and contingencies
Stockholders' equity
Common stock-$.01 par
value per share;
400,000,000 shares
authorized;
55,903,672 shares
issued and
outstanding,
(December 31, 2019:
55,826,644) 558 559
Additional paid-in
capital 592,010 592,868
Accumulated other
comprehensive loss (331) (394)
Retained earnings 347,566 343,752
Total Navigator
Holdings Ltd.
stockholders' equity 939,803 936,785
Non-controlling
interest 99 1,450
Total equity 939,902 938,235
Total liabilities and
stockholders' equity $1,874,253 $1,846,655
===
NAVIGATOR HOLDINGS LTD.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2019 2020 2019 2020
---
(in thousands except share and per share data)
Revenues
Operating revenue $75,624 $75,613 $225,313 $236,739
Operating revenue- Luna Pool collaborative arrangements 5,738 8,334
Total operating revenues 75,624 $81,351 225,313 $245,073
Expenses
Brokerage commissions 1,217 1,220 3,759 3,780
Voyage expenses 13,387 14,584 43,181 46,856
Voyage expenses - Luna Pool collaborative arrangements 4,525 7,568
Vessel operating expenses 26,820 27,221 83,742 81,120
Depreciation and amortization 19,009 19,180 56,870 57,541
General and administrative costs 4,631 6,525 14,628 17,542
Other Income (212) (329)
Total operating expenses 65,064 $73,043 202,180 $214,078
Operating income 10,560 8,308 23,133 30,995
Other income / (expense)
Foreign currency exchange gain / (loss) on senior secured bonds 4,171 (1,612) 3,219 4,953
Unrealized (loss) / gain on non-designated derivative instruments (5,197) 2,137 (3,552) (5,470 )
Interest expense (12,406 ) (9,820) (36,768 ) (32,488 )
Write off of deferred financing costs (155) (155)
Interest income 197 52 617 367
---
Loss before income taxes and share of result of equity accounted joint venture (2,675) (1,090) (13,351) (1,798)
Income taxes (131) (120 ) (305) (456 )
Share of result of equity accounted joint ventures (107) 3,147 (247) (58 )
---
Net (loss) / income (2,913) 1,937 (13,903) (2,312)
Net income attributable to non-controlling interest (446) (1,351)
Net (loss) /income attributable to stockholders of Navigator Holdings Ltd $(2,913) $1,491 $(13,903) $(3,663 )
(Loss) / earnings per share attributable to stockholders of Navigator Holdings Ltd.:
Basic and diluted: $(0.05) $0.03 $(0.25) $(0.07)
Weighted average number of shares outstanding:
Basic: 55,829,239 55,903,672 55,781,276 55,881,948
Diluted: 55,829,239 56,243,608 55,781,276 55,881,948
===
NAVIGATOR HOLDINGS LTD.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months ended
Nine Months ended
September 30, September 30,
2019 2020
---
(in thousands)
Cash flows from operating activities
Net loss $(13,903) $(2,312)
Adjustments to reconcile net income to net cash provided by operating
activities
Unrealized
(gain)/loss on non-
designated
derivative
instruments 3,552 5,470
Depreciation and
amortization 56,870 57,541
Payment of drydocking
costs (9,060 ) (7,307)
Amortization of
share-based
compensation 1,116 859
Amortization of
deferred financing
costs 2,936 3,836
Call option premium
on redemption of
7.75% senior
unsecured bonds - 236
Share of result of
equity accounted
joint ventures 247 58
Unrealized foreign
exchange loss/
(gain) on senior
secured bonds (3,219) (4,953)
Other unrealized
foreign exchange
gain (198) (306)
Changes in operating assets and liabilities
Accounts receivable (6,599) 907
Bunkers and lubricant
oils 343 (20)
Accrued income and
prepaid expenses and
other assets (1,546) (7,285)
Accounts payable,
accrued interest,
accrued expenses and
other liabilities 3,851 6,488
Amounts due to
related parties - 162
---
Net cash provided by
operating activities 34,390 53,374
Cash flows from investing activities
Payments to acquire
ballast water
systems (2,565) (1,756)
Investment in equity
accounted joint
ventures (75,440 ) (15,000)
Purchase of other
property, plant and
equipment (255) (36)
Insurance recoveries 1,130 740
Net cash used in
investing activities (77,130) (16,052)
Cash flows from financing activities
Proceeds from secured
term loan facilities
and revolving credit
facilities 162,000 15,000
Proceeds from
revolving loan
facility - 185,000
Issuance of senior
secured bonds - 100,000
Issuance cost of 8.0%
senior unsecured
bond - (1,963)
Issuance costs of
secured bond (136) (141)
Issuance costs of
unsecured bond
amendment (1,325) -
Issuance costs of
secured term loan
facilities (1,448) -
Issuance costs of
revolving loan
facilities - (1,924)
Issuance costs of
refinancing of
vessel to related
parties - (18)
Repayment of 7.75%
senior unsecured
bonds - (100,236)
Repayment of
financing of vessel
to related parties - (5,208)
Issuance costs of
Terminal Facility (2,765) (72)
Repayment of secured
term loan facilities
and revolving credit
facilities (128,150 ) (226,834)
Net cash provided/
(used in) by
financing activities 28,176 (36,396)
Net decrease in cash,
cash equivalents and
restricted cash (14,564) 926
Cash, cash
equivalents and
restricted cash at
beginning of period 71,515 66,130
Cash, cash
equivalents and
restricted cash at
end of period $56,951 $67,056
===
Supplemental Information
Total interest paid
during the period;
net of amounts
capitalized $35,478 $31,417
===
Total tax paid during
the period $225 $212
===
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto, including our financial forecast. In addition, we and our representatives may from time to time make other oral or written statements that are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate as described in this press release. In some cases, you can identify the forward-looking statements by the use of words such as "may," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue," "scheduled," or the negative of these terms or other comparable terminology. Forward-looking statements appear in a number of places in this press release. These risks and uncertainties include but are not limited to:
-- the completion of the Company's quarter-end close procedures and further
financial review with respect to the Company's financial statements for
the quarter ended September 30, 2020, and other developments that may
arise between now and the disclosure of the Company's final results for
such quarter;
-- global epidemics or other health crises such as the outbreak of
COVID-19, including its impact on our business;
-- future operating or financial results;
-- pending acquisitions, business strategy and expected capital spending;
-- operating expenses, availability of crew, number of off-hire days,
drydocking requirements and insurance costs;
-- fluctuations in currencies and interest rates;
-- general market conditions and shipping market trends, including charter
rates and factors affecting supply and demand;
-- our ability to continue to comply with all our debt covenants;
-- our financial condition and liquidity, including our ability to
refinance our indebtedness as it matures or obtain additional financing
in the future to fund capital expenditures, acquisitions and other
corporate activities;
-- estimated future capital expenditures needed to preserve our capital
base;
-- our expectations about the availability of vessels to purchase, the time
that it may take to construct new vessels, or the useful lives of our
vessels;
-- our continued ability to enter into long-term, fixed-rate time charters
with our customers;
-- the availability and cost of low sulfur fuel oil compliant with the
International Maritime Organization sulfur emission limit reductions,
generally referred to as "IMO 2020," which took effect January 1, 2020;
-- our vessels engaging in ship to ship transfers of LPG or petrochemical
cargoes which may ultimately be discharged in sanctioned areas or to
sanctioned individuals without our knowledge;
-- changes in governmental rules and regulations or actions taken by
regulatory authorities;
-- potential liability from future litigation;
-- our expectations relating to the payment of dividends;
-- our ability to successfully remediate material weaknesses in our
internal control over financial reporting and our disclosure controls
and procedures;
-- our expectation regarding providing in-house technical management for
certain vessels in our fleet and our success in providing such in-house
technical management;
-- our expectations regarding the completion of construction and financing
of the Marine Export Terminal and the financial success of the Marine
Export Terminal and our related Export Terminal Joint Venture; and
-- other factors detailed from time to time in other periodic reports we
file with the Securities and Exchange Commission.
All forward-looking statements included in this press release are made only as of the date of this press release. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. We expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common stock.
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SOURCE Navigator Gas
