Navigator Gas: Strengthening Foundations for Long-Term Success

The 2025 Capital Link Company Presentation Series, recently hosted Navigator Gas , the world's largest fleet of handy-sized liquefied gas carriers. The company’s senior management team, Mr. Mads Peter Zacho , CEO; Mr. Oeyvind Lindeman , Chief Commercial Officer; and Mr. Randy Giveans , Executive Vice President for Business Development and Head of Investor Relations discussed Navigator Gas’s current operations, business strategies, and growth outlook. ?

Highlights

• Navigator Gas reported total operating revenues of $141.8 million for Q3 2024, with an adjusted EBITDA of $67.7 million and net income of $18.2 million.
• The company has expanded its fleet with the acquisition of three Handysize ethylene carriers and has ordered four new mid-size ethylene carriers, enhancing its operational capabilities.
• The expansion of the ethylene export terminal at Morgan's Point was completed ahead of schedule and on budget, increasing capacity to 1.55 million tons/year.
• The company has successfully reduced its net debt-to-EBITDA ratio to 2.3 times and has improved liquidity through recent refinancing efforts.
• Navigator Gas maintains a fixed quarterly cash dividend of $0.05 per share and has been actively repurchasing shares as part of its return of capital strategy.

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To watch the full discussion, please visit the following link:

A Robust Fleet and Financial Stability

Navigator Gas’s fleet expanded recently with the acquisition of three additional vessels, bringing the total to 59 semi- or fully refrigerated liquefied gas carriers, with 28 of these capable of transporting ethylene and ethane and alongside four new builds underway. Financially, the company maintains a strong balance sheet with $200 million in cash reserves, a net debt of under $700 million, and an EBITDA of approximately $300 million.

Mr. Zacho emphasized the company’s joint venture with Enterprise in the U.S., which operates an ethylene export terminal that recently increased its capacity from 1 million tons per year to 1.55 million tons per year, a significant achievement completed on time and within budget. He noted that the expansion would enhance Navigator Gas's operational capabilities and service offerings.

Driving Growth with Strategic Planning

Reflecting on the company's history, Mr. Zacho noted that Navigator Gas has 25 years of experience and celebrated the delivery of its first vessel, the Navigator Mars, in March 2000. The company went public in 2013 and has experienced continuous growth, including the merger with Ultragas in 2021. He highlighted Navigator’s capital return policy, including share buybacks and dividends, reflecting a commitment to shareholder value.

Product Versatility and Market Adaptability

Navigator Gas transports a variety of commodities, including LPG, petrochemicals, and ammonia. These products are vital to the energy, consumer goods, and agricultural industries. Their demand continues to grow in tandem with global GDP and population growth. The company’s fleet versatility allows it to adjust between markets depending on the prevailing conditions, ensuring optimized revenue generation.

Mr. Zacho observed that the U.S. government's focus on boosting economic production and reducing energy costs would likely lead to increased exports of energy products, benefiting Navigator Gas. He also addressed the company's readiness to explore opportunities in the CO2 transportation market, preferring a cautious approach to capital deployment in this area until further developments arise.

Performance and Initiatives

Mr. Lindeman discussed the commercial aspects of Navigator Gas's operations. He provided a breakdown of the company's earnings mix, noting that petrochemicals constituted approximately 50% of earnings, with LPG at one-third and ammonia at 16%. Lindeman disclosed that ammonia's demand is driven by its use in fertilizer production and food production, which are essential as global agricultural needs grow.

Furthermore, Mr. Lindeman added that nearly 60% of Navigator's revenues originate from North America, particularly the U.S., and that a significant portion of these exports is directed towards Asia. He remarked on the competitive pricing of U.S. ethane and ethylene, which are in high demand globally, and addressed the supply picture for gas carriers, noting that the order book for handy-sized vessels is low at around 8%, which bodes well for the company’s market position.

Strengthening Foundations

Mr. Giveans provided some additional information on the company's financial performance, particularly the growth in average TCE rates, which have risen to approximately $29,000 per day. He indicated that the cash breakeven point for Navigator Gas remains stable at around $20,000 per day, allowing the company to remain profitable amid rising rates.

He shared that Navigator’s current EBITDA has shown consistent growth, with fourth-quarter 2024 projections indicating a robust performance. Navigator Gas has successfully reduced its net debt-to-EBITDA ratio from 7.5 times in 2019 to 2.3 times currently. This substantial reduction in leverage allows for greater financial flexibility and the capacity to invest in growth opportunities.

Apart from that, Mr. Giveans focused on the company's recent refinancing efforts, which have improved liquidity and reduced interest expenses. The recent issuance of unsecured bonds at a fixed coupon of 7.25% reflects the market's confidence in the company’s stability and growth potential.

New Announcements and Future Outlook

Regarding recent developments, Navigator Gas has declared another quarterly cash dividend and continues to put its share repurchase program to use. The company's return of capital policy includes a fixed dividend of $0.05 per share and a dedication to repurchase shares when the stock trades below its estimated net asset value.

In response to questions regarding the implications of the new U.S. administration under President Trump, Mr. Zacho was optimistic about the potential for increased energy production and exports, which would benefit Navigator Gas. He acknowledged that while there are uncertainties surrounding trade policies, the focus on cheap energy production in the U.S. is likely to create opportunities for the company.

Similarly, Mr. Lindeman addressed concerns about the reopening of the Panama Canal and its impact on the organization's operations. He commented that their vessels traditionally use the old locks of the Panama Canal, which allows for quicker logistics and reliable deliveries, positioning the company positively in the market allowing them to continue their growth which has been continuous since 2019.

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