Navigator Holdings Ltd. (NYSE:NVGS) Q4 2023 Earnings Call Transcript March 14, 2024
Navigator Holdings Ltd. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Mads Peter Zacho: Thank you for standing by, ladies and gentleman, and welcome to the Navigator Holdings’ conference call for the Fourth Quarter 2023 Financial Results. On today’s call, we have Gary Chapman, Chief Financial Officer; Oeyvind Lindeman, Chief Commercial Officer; and myself, Mads Peter Zacho, CEO. I must advise you that this conference is being recorded today. As we conduct today’s presentation, we’ll be making various forward-looking statements. These statements include, but are not limited to, the future expectations, plans and prospects from both a financial and operational perspective and are based on management’s assumptions, forecasts and expectations as of today’s date and are such subject to material risks and uncertainties.
Actual results may differ significantly from our forward-looking information and financial forecast. Additional information about these factors and assumptions are included in our annual and quarterly reports filed with the Securities and Exchange Commission. With that, please go ahead to Page #3, and we’ll get going on the presentation. Good morning, everybody, and thanks a lot for taking part in this Navigator Gas earnings call. I’ll begin with an overview of the highlights for the fourth quarter of 2023, and then I’ll talk a little bit about the outlook for the year that we just started. As always, Gary and Oeyvind will follow up in a couple of minutes with more color on our business. We generated a solid top-line with growth in operating revenues compared to both Q3 ’23 and same period 2022.
This was mainly driven by higher time charter rates. Adjusted EBITDA for Q4 was equal to the record of $72 million that we set in Q3, and it was a significant improvement over last year’s $55 million. The progress was reflected in adjusted net income, which more than doubled compared to same period last year. Our cash position remained robust even when we repaid on our credit revolver and invested into our ethylene terminal expansion. In Q4, we continued paying the cash dividend of $0.05 per share, and we repurchased own shares similar to previous quarters. You’ll see this continue as we now also declare a further $0.05 per share in dividends and some additional share buybacks. This will, in total, be equivalent to 25% of our net income following our fourth quarter results.
The average TCE, or time charter equivalent, rate per day earned by our vessels reached more than $28,000 for Q4 2023. This compares to less than $24,000 in Q4 of 2022. Fleet utilization stayed above 90% in Q4, and that was just shy of the utilization that we achieved in Q3 and same period 2022. Utilization at or above 90% typically allows for higher TCE rates. Throughput at our joint venture Ethylene Export Terminal was slightly down at 208,000 tonnes for the quarter, but it was nevertheless brought to a total of the terminal capacity of 1 million tonnes per annum. The expansion of the terminal continues to be on track for completion in Q4 ’24, and in ’23, we contributed progress payments of $35 million, made up of four payments of around $9 million each in April, August, October and December.
The outlook for our business remains robust. We expect utilization to remain near 90%, and we continue to renew our expiring time charters at higher rates. With solid NGL production and thereby demand for transportation on handysize gas carriers, combined with limited supply from new buildings in our segment, we expect this to continue. We also do not expect that the trade patterns through Panama Canal and Suez will be restored in the near future, which may lead to more cubic meter miles transport work for us. We work intensively with our customers to improve the efficiency and avoid idling or ballast voyages. The most recent examples of backhaul in propylene from Asia is a great example of that joint work. With that, I’ll just hand it over to Gary for more detail of our financial results.
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