SUMMARY
- Strong volumes at the Marine Export Terminal and high fleet utilization for 1Q 2022
- Expanding the ethylene export terminal in Texas on the horizon
- Optimistic about the LPG market
- Evaluating opportunities for fleet expansion
- Plan to pay future dividends to shareholders
Oeyvind Lindeman, Chief Commercial Officer, and, Randy Giveans, Head of Investor Relations and Business Development in North America of Navigator Holdings Ltd. (“Navigator Gas”) (NYSE:NVGS), discussed with Barry Parker of Capital Link TV, highlighted Navigator’s 1Q22 performance, future strategy and the current state and outlook of the LPG shipping sector. The full interview can be accessed on the Capital Link TV page.
STRONG OUTLOOK ON THE LPG MARKET
Navigator Gas trades on three different sub-segments, Ammonia, LPG, and Petrochemical, and all three segments were quite robust in the first quarter of 2022 because of the Ukraine conflict disrupting traditional supply sources. Europe has had to diversify its supply sources of LPG from North America and this increased distance benefited freight markets. Ammonia needed new sources to meet its demand as 2 million of the 18 million tons transported globally annually trade in the Black Sea. On the petrochemical side, the US has increased production of ethane and propane, and this will continue to benefit Navigator Gas because demand in the US for these two commodities is flat so you have an increase in exports and longer distances which should translate to a more robust freight market.
1Q2022 PERFORMANCE
For the first quarter of 2022, Navigator Gas reported a much-improved financial performance compared to the first quarter of last year because of the performance of Navigator’s three different sub-segments, Ammonia, LPG, and Petrochemical. The ethylene export marine terminal at Morgan’s Point, Texas on the Houston Ship Channel itself performed well in line with expectations. Further, Navigator Gas and its 50 percent joint venture partner, Enterprise are expanding their marine export terminal looking to double the current facility currently exporting 1 million tons of ethylene per year bringing on half of this amount by the end of 2023 and the remaining half in late 2024 or early 2025 increasing to over 2 million tons of export capacity.
FLEET EXPANSION
Navigator’s fleet consists of 53 semi- or fully-refrigerated liquefied gas carriers and market share in the handysize segment remains important to Navigator Gas. Navigator Gas is always evaluating its opportunities for fleet growth either by adding new built and or younger ships as well as looking at consolidation opportunities within the handy size segment, particularly ships that carry petrochemicals. Oeyvind acknowledged that Amonia is a tremendous growth story to use for zero-carbon energy that requires larger ships and could also be an opportunity for Navigator Gas.
CAPITAL ALLOCATION
Navigator Gas is very comfortable with its current debt levels and will continue to pay down its debt taking advantage of its strong cash and free cash flows. Navigator will also look to return capital to shareholders by way of dividends in the near future.
INVESTMENT HIGHLIGHTS
Management believes Navigators’ message is straightforward. In addition to shipping assets, Navigator’s Marine Terminal brings stable visible cash flow and demand to Navigators’ other asset its core fleet. Also, the three commodities that Navigator Gas does concentrate in, Ammonia, LPG, and Petrochemical are all seeing production growth. Today, 4% of Navigator’s business comes from North America and Navigator’s future is in North America.
Capital Link is the investor relations advisor to Navigator Holdings.This content is for informational purposes only and not intended to be investing advice.
