Q1 2020 Earnings Call
We continue to stand by feel confident well begin shortly.
[music].
Thank you for standing by ladies and gentlemen, and welcome to the navigate to Holdings conference call on the fast cool to 2025 not sure results.
We have with us Mr., David Butters Executive Chairman Mr., Harry Deans, Chief Executive Officer, Mr., Niall Nolan Chief Financial Officer, Mr. way fiddling demand Chief commercial officer.
At this time, all participants are in listen only mode.
They'll be a presentation followed by question not for session.
Which time, if you wish to ask a question. Please press star one on your telephone keypad and wait feel named <unk>.
I must advise you that this conference is being recorded today.
And I know possible to one of your speakers missed about just please go ahead Sir.
Thank you.
Good morning, everyone and welcome to navigate as first quarter 2020 earnings call.
As we conduct todays conference call, we'll be making very as forward looking statements.
These statements that include but not limited to future expectations plans and prospects.
From both the financial and operational perspective.
These forward looking statements are based on management's assumptions forecast and expectations as of today's date and such subject to material risk and uncertainties.
Actual results may differ significantly from our forward looking information and financial forecasts.
Additional information about these factors and assumptions.
Included in our annual and quarterly reports filed with the Securities.
James Commission.
No. We're a few weeks later than normal in reporting I first quarter 2020 real jobs, but considering.
We only filed 2019 20-F about 22 days ago, we believe that the coordination.
Accounting team and why.
It is improving and we will be able to progress from here.
Now many of you know that for the last.
18 months or so we've been talking about navigators 2020.
We believe.
And still believe that drawing 2020, our operational fate would improve dramatically.
Its various infrastructure projects would be completed and lead to a significant pick up in our export volumes on our specialized specials those projects are namely the Mariner East two and Mariner East two X project, along the Delaware River.
The completion of the <unk>.
New Repauno export terminal again on the Delaware River.
Our importing ethylene export terminal in the joint venture with enterprise.
In the Gulf of Mexico, along the Houston ship channel.
Lastly, the important West Coast, Canada in British Columbia exports.
As expected.
It would be completed next year.
No.
Unfortunately shod after we exited 2019 and 2020, we were hijacked by the insidious an unexpected novel Corona virus.
I would shut down global trade and slowed down but did not stop a voyage.
Ironically, we the victims of the hijacked now wearing the face masks what.
But our team will outline this morning.
Why we leave and had hoped.
That we.
Now back on the road, albeit somewhat delayed.
To give us a better insight and all of that we will have a speaking this morning, Harry Deans, Our Chief Executive Officer, Niall Nolan, Chief Financial Officer, and even Lindemann, not chief commercial officer.
So why don't we have Harry began.
Give us an outline of what has happened over the last quarter every.
Oh, Thank you David and good morning, everybody on the coal.
Hope, you're all well on keeping safe.
It's hard to believe that were another enhancing our 11th we took <unk> Darren and offices around the world remain closed on a business is not run remotely from numerous home offices in several countries around the globe.
This is a new normal.
Walking with all entails has become a new more just opened on die.
I'm pleased to say of investment robust information technology platforms and systems has paid off although you know team to interact seamlessly with each other or customers on our vessels.
I'm pleased to cope with my team pandemic show some at least signs of a big thing, China and several other economies, especially in southeast Asia reimburse for Middle <unk>.
<unk> restarted manufacturing, that's providing much needed stimulus for the global economy.
North American Europe, albeit a few months behind also beginning to cautiously ease that you're putting a lot advisors on to talk about plans for phase opening up.
When this happens it should jumpstart booked deduction on consumer demand.
Isn't did how many days on the road to recovery. However, they got your listing of what they will benefit the global economy.
What's that's been severely buffeted by the effects of the pandemic.
And maybe a witness the resurgence of a healthy ethylene arbitrage to Asia.
Differentials doubling from Brexit all time lows in the month.
We've also seen an uptick in both propylene and butadiene export cargoes, let's but just as a tentative baldwin's local supply and demand with global export opportunities to maintain high profit utilization rates.
And anticipation for the steps as be lifted by national governments navigator gas is working hard on a phase we're talking to what plan for onshore personnel.
Oh. This plan is once all the straight forward as it must respect well social doesn't think guidelines on other measures.
We will only retardant when legislation to lose I'm in the company believes it's safe to do so.
It's a libel efficient operations, although the very hard what we do as a company.
Our vessels continue to safely play the trade so fast in the world solutions with much needed cargoes to keep the global economy ticking over.
Singlehandedly see set us up <unk> global trade moving so do you help feed close the unborn humanity.
This is common some considerable personal cost.
You bet could just travel restrictions in corn seen regulations because of what the suspension or heavy curtailment of many flight roots, let's first the company on the third party vonages to temporarily suspend oak through changes until it was safe and feasible to do so.
I'm very pleased to report, but in the last few weeks, we've carefully with meticulous plumbing monies to leave almost three dozen crude from what I'm, saying about vessels.
This is real progress.
Well with many more through waiting for well deserved what would you leave this unfortunately, that's probably the exception rather than the real.
I guess I want to Paul So my heartfelt fine so although offices into for the professionalism dedication and this year determination to keep pulling flowing on people say, it's true Mccollum crisis.
Okay. Thanks to the domestically, but it's a big big fine too. So all in high small these vessels, which collectively have noted going well over 548 days without a lost time incident.
So hopefully I see.
<unk>, what could offset each other well done on stay safe.
Our teams continue to what was the flag states. The classification societies that varies inspection institutions and of course I talk to us to extend the validity of couldn't inspections and certificates or to the spawn or alter mom that your dry dockings I'm inspection, obviously become Judy.
Let's pick mostek approach coupled with the additional nice is our hopes of color put in place I wasn't sure that operations continue without any major disruptions compatible levels to 2019.
Inevitably some routine maintenance work is how to be postponed as covenant restrictions that prevented qualified so party personnel from boarding the vessels.
I'm very pleased to announce the Morgan's point joint venture anything to add <unk>, 95% sold right.
With another take or pay off take agreement signed in April.
The 10, most notably functional on throughput is ramping up with the monthly threats expected to exceed 45000 tons engine.
Well first ramp up we expect to see improving financial returns from a terminal on see them filter through so bottom line.
Oh this is evidenced in the fall exhausting. The so well then pull information part phase two of our terminal joint venture, which is the construction of death in time is progressing safely on time on budget.
Well Nintendo tight picture.
You can get some feel for the huge scale of our to feature like affluent studies Tunc talked doesn't try to be fully operational by the end of the year.
Previously we announced the went up till what's good for gas on Pacific gas and that was not often running.
Well I've operations began the second quarter with all 14 vessels are expected to have joined the linefill by the end of Q2.
We have high hopes of the pill, which will provide customers with increased flexibility on improved access to ethylene ready vessels.
As previously discussed.
At the corporate 19 pandemic ollie's economic impacts became upon our utilization rates dropped from those that chiefs in January running at mid 80% levels and February March and April rates last seen in mid 2019.
It's early days on too early to call a trend or may utilization rates have improved.
Expected to reach who runs the 90% level, which is very encouraging.
This is testament to the increase in global economic activity as well that amazes at least coupled with improving arbitrage activities on the ramping up.
<unk> of our Morgan's point export terminal.
[noise] thankfully handysize Tc rates, the less volatile than other sectors I'd be place either so.
That's the way a marginal 5% reduction in rates at the end of Q1.
Other company, we continue to reduced discretionary spend well minimizing working capital in topics on those preserving cash and liquidity.
That's all I'm weeks or months, we'll take full the steps to increase the liquidity Cinemark is one of which will be outlined by Nile and his prepared remarks.
No I forget isn't a bust resilient and if it's a company our terminals no starting to get fully into stride.
Ladies and gentlemen, please stop by Wall Street connector speaker.
I think I think I shall I shall take over what what sorry, [laughter] how he was on here.
Last sentence. He was just but it was just saying that navigator gas is a robust resilient and it is as a company and our terminal is now starting to get fully into its stride, both operationally and financially.
Our shipping business is ready and well placed to benefit from the economic upturn when there's a cars.
But that she was going to pass it over to me, but I think he was having power cost issues. This morning that.
Challenges are working from home.
So if I may proceed.
And say that's the results of the first quarter old Twentytwenty show, a headline loss of eight and <unk> million dollars.
But this comprises a number of different factors.
Of course this loss includes $3.7 million a foreign exchange losses generally as a result of covert 19 2.5 million up which relates to noncash.
Vince on the cross currency swap associated with our 600 million Norwegian kroner bond.
I wouldn't point 2 million associates with revaluation losses relating to a significant weakening of the Indonesian rupiah here against the U.S. dollar.
We receive Indonesian rupiah from Pertamina for the charter of three of our vessels trading in Indonesia.
A significant part to these losses has reversed since March 31st after the markets have absorbed the initial shocks of covert 19.
Secondly, the courts <unk> quarterly results included three 3 million dollar loss associated with your initial startup operations of the ethylene general.
That's how you mentioned the results for the 10 was improved during the second quarter.
Throughput volumes through the terminal rumbled.
This leaves the losses relating to our vessels for the first quarter 2020, and the amount of $1.8 million compared to a loss of $3.3 million for the first quarter of 2019.
Operating revenue for the vessels was $81.3 million for the first three months, an increase of 5.2 million some to 76.1 million generated during the first quarter of 2019.
This increase was partly as a result.
So utilization increasing from 84.8% for the first quarter last year to 89% for this most recent quarter generating and an additional $3 million revenue.
It's already mentioned Januarys utilization was 93.7, 97.3% before pull that 90 negatively impacted February and March with utilization use utilization levels, reducing to around 85% for those months.
Average charter rates fell back during the quarter to an average of $20855 per day or $634350 per month.
Fair to $21782 per day for the first quarter last year.
However, this first quarter Twentytwenty charter rate. It is an increase of 3.2% from the $20200 per day achieved last quarter.
Fourth quarter of 2019.
During the first quarter the company under took only wouldn't dry docking principally as a result of yard closures associated with the effects of coal that 19 <unk>.
The company has received the necessary dispensations from the relevant authorities for delaying drydockings in these unusual at times.
We were planning a total of tendons write off who's doing twentytwenty had to provision cost us approximately $12.2 million, but at least three of these maybe pushed back into 2021, depending on the and the impact and longevity of the effects of covert 19.
It wasn't that's another navigator been together in dry dock in China and another another scheduled for July this year.
That's an operating expenses were $27.4 million for the first quarter or $7925 per vessel per day.
Decrease of 7% from the $29.5 million or 8618.
Dollars per vessel per day in card in different parts of period of 2000 2019.
General and admin costs increased by 25.6% to $6 million for three months ended.
March 2020.
This increase primarily relates to crystallized foreign exchange losses on the revaluation of the Indonesian we pay a bank account at March 31st we've had which increased general and administrative costs would be 1%.
Since the end of March the Indonesian rupiah has regained lost ground against the U.S. dollar and as of yesterday. This 1.2 million dollar loss at March 31st has reduced by about $750000.
Interest for the first quarter.
Was 12.4 million.
<unk> million dollars I wouldn't point 8 million I wouldn't 0.8% increase or $200000 from the interest in cards in the first quarter of 2019.
It's small increase is as a result of expensing interest relation to 10 10, the ethylene terminal, whereas for the first quarter last year interest associated with the terminals construction was capitalized.
However, the reduction in U.S. labor most of our debt has it has in a large part offset this additional interest expense.
Yeah, Bill in terms of generated a loss of $3 million during the quarter, which is generally associated with the initial startup operations.
Turning to began operations in December last year, that's Hari mentioned annoyed will discuss later the ethylene 10 is now fully operation.
To put volumes ramping up.
I didn't mention at the outset covert 19 related foreign exchange losses accounted for $3.7 million the initial startup costs of <unk>.
The operations of the treatment cost $3 million and the best has made a loss of $1.8 million, taking the total to 8.5 million dollar loss for the quarter or 14 cents per share against loss of $3.3 million or six cents per share for the first quarter of 2019.
Hi stood at $51 million at March 31st against the required liquidity covenant of $43.7 million.
In addition to the company had a restricted cash bonds at $15.2 million, providing touched collateral against the unrealized losses on its most current see interest rate swap.
The company wasn't compliance with all financial covenants on old its debt facilities at March 31st 2020.
However in the event, that's the Norwegian krone weakens further against the U.S. dollar.
Additionally, touch security would be required to be deposited into the collateral the talent, that's providing much headroom on our liquidity maintenance covenants.
That said the exchange rate between the Norwegian kroner. The U.S. dollar yesterday enables the cash do acquired fashion lots are to be the juice to $9.3 million from the March 31st Department of $15.2 million.
Also seeking to provide additional liquidity headroom by considering the refinancing of one of our that's Oh.
Loan facilities, which could provide in addition touched all for approximately $13 million I'm drawing down on the tell me credit facility, which could provide a photo $40 million.
We didn't make any capital contributions to the export tons a joint venture during the first quarter of Twentytwenty.
However, since the quarter end, we did contribute $7.5 million to the JV and finance this contribution by admission drawdown on the company's terminal credit facility.
<unk>, therefore, no contributors and I can get older than $33 million of the total anticipated cost.
$150 million of the terminal.
It's on the credit facilities in the amount of $75 million and although the thanks I've only formally approved a total available amounted to $36 million. Thus far we believe that as the ethylene terms is now approximately 95% constructed the full $75 million will be available.
Against which we have utilized $7 million and there's only $17 million of capital contributions to the joint venture to make over the course of next six to 12 months.
About the balancing amount would increase our touched position and our liquidity covenant headroom.
At March 31st total debt stood at $871.4 million.
Although the company does not have any debt facilities maturing during twentytwenty. It does have 100 million dollar Norwegian bond maturing in February 2021, thereby requiring the reliability to be moved from the long term liabilities to current liabilities in our balance sheet for the first time.
As we refer to last quarter.
Had anticipated we find incident this bond with a like for like buttons prior to that hold at 19 outbreak over in the event a couple markets do not sufficiently return to enable their with financing of despondent coming months, well considering alternatives, which include either an extension to the maturity or a couple did raise in the form of instead of.
He's back for a number of our vessels.
Without thank you.
How did you over twice.
Thank you Mark.
HM.
Uh huh.
Clarksons 12 month contractor assessment for semi refrigerated vessels.
Increased from $645000 a month.
The $695000 a month in January.
Acting on encouraging start of the average utilization nothing hurt at 97%.
At the end of January became apparent that the Korean 19, or something more than a localized <unk> <unk>.
The World Health organization declared it to be an emergency event national concern on the Turkey as of January and categorize it as on a pandemic on the 11th of March.
Our eastern countries went into locked down which was 50 fold by the restaurants to work.
As we all know economic activity, a fairly drastically impacting the mom for shipping services.
As you heard from Hereon lives.
Oh, yeah listen to reduce the didn't mean, 80% levels slips ever in March and April and the Clarksons assessment declined 5% to 665000 barrels a month.
And the corker.
I'm just size LPG demand remain largely on the affected us the key source of demand for this product is relatively in Alaska.
Associated with domestic usage for eating and cooking.
This demand is less affected by commodities substitutes and price volatility, which in comparison influences the larger gas carriers in a more profound way.
For example of enough size sufficiently price competitive compared to LPG.
The petrochemical industry will evaluate the cracker economics, and take positions, whether or not to switch feedstock.
Lets substitution effect has been evident during the recent Pierre period with low oil price.
The majority of LPG being exported from the U.S. goes long hole on larger vessels and fluctuations in the amount of exports either due to price arbitrage position seasonal domestic demand as a large impact on this.
A very large cats carrier segment.
Handysize vessels, however, a catching for regional distribution.
It is only moving a fraction of <unk> annual working million, Tom the LPG exports from the.
During the first quarter.
I haven't vessels transported only hundred thousand comes from the U.S. for local distribution.
And this 100000 tons is only 10% of the LPG volumes navigated carried on our Deciles elsewhere in the bar during the same period.
Not surprisingly global petrochemical demand fell during the cold period.
Less manufacturing and less consumption.
Some pockets of the industry I've been doing well, though with increasing demands for food caustic soda food packaging.
Personal protection equipment, such as we see everyday face masks.
Generally European and American producers is lower domestic a mom or continuously evaluating whether to reduce the operating rates, that's a crackers or export excess petrochemicals. Many are opting for the latter.
We know there's during the month of made.
I picked up in deep sea exports or beat design from Europe Asia.
An ethylene and propylene from America Asia on Handysize vessels.
Logic would dictate the ongoing easing of luck on record lip regulation, so slowly encouraging them off.
Price arbitrage of ethylene for example, we're at an all time low in Asia. During the month of April at $300 that Tom the liver.
But today, it's not more than doubled to reaching seven on those Tom corrick certain delivers.
This is encouraging comes for exports.
And this time as well in with the ramping up Austin Morgan's point ethylene criminal exports.
Oh, the Targa and enterprise estimates its first half twentytwenty ethylene exports more than half of the volume will be handled on navigator owned or controlled.
He said demand is also cooling and Copeland somebody U.S. and that's the time of writing we have two of our invesco's carrying gifts cargos from U.S. to Asia. It is the first time that this trial, that's taking place in more than a decade.
I'm showing some green shoots.
As a result of petrochemical demand slowly picking up how utilization as Joe her since the beginning lost ground and expect to reach to 90%.
Level during the month of rice.
Well well out of the 19 spot vessels.
We have.
Currently employed in deep sea petrochemical voyages.
And six out of the seven available Handysize ethylene carriers at trading ethylene.
There are currently well handysize ethylene vessels operating in the Luna pool.
The two remaining ships expected answered during the month of June.
This book creates a critical mass for us to better service, our customers needs the petrochemical ocean going market is structured.
Oriented for voyage charters I spoke to opportunities there's creates a benefit in deploying a larger fleets to optimize and adds value to clients logistics.
Well you know we are seeing green shoots in terms of ramping up of deep sea petrochemical trades.
Typically for ethylene.
And Handysize hope it just some walk sheltered due to the nature of its tomorrow.
And it slowly reliance on you guys LPG exports.
However, the covert pandemic and its impact on our markets remain uncertain.
As to how it will affect the near term.
With that I would thank you I never has got the goals.
Yes, I think we can now.
Oh for.
Q1 <unk> please.
Thank you very much so ladies and gentlemen, if you. Please ask your question. Please press star one Oh, no telephone keypad complete your name to be an outsourced.
Our first question is from Ben Nolan from Stifel. Please go ahead.
Yeah, good morning, or after in and it's a it's good to hear those comments from Oh, even at the end there about the utilization picking up and I'm more peck camps.
Sort of along those lines I thought it was interesting that you signed the last contract for the ethylene terminal in April and really everything was super locked out or could you maybe talk through what your customer, they're saying or how maybe.
Conversations are going about potential additional contracts for future expansion or some of those kind of things.
About sort of the the longer term outlook of customers with respect to the Mike.
Well, even why don't you handle that one.
Yeah.
On the cost from our perspective a fan.
[noise] literally it's a it's a rate to.
The cost of the.
Dramatic increase of Italy, and delivered price in Asia, but we see in over the last the four weeks.
Well, there's a run on the various ethylene terminals restaurant tool.
In U.S. nearby so at the moment U.S. ethylene prices still.
Remain very attractive competitively attractive at around $250, a ton or less.
And people are trying to buy it that 700 trucks in Asia. So there's arbitrage is really encouraging Fox trades and he's obviously helpful for the existing contractual customers at the terminal to realize increased lives gain so.
Literally that.
The terminal the any available terminals space is being investigated for it to lean exports for the month of June.
And that is why or how are you had mentioned early.
<unk>.
We anticipate June to be quite.
As for estimates around the 45 50000 Cogs.
Okay as far as the Vetscan in June so the question is.
It's just to start off a good run on that's really in Florida over the summer.
All right time will tell.
What age job easily easing up from locked down.
Restarting manufacturing the mom going up.
Back to snow Lake to where it was a.
It's encouraging so.
The terminal operators subtract are trying to optimize all the available jetties phase two export as much as much that they can the U.S. how did the excess volume.
Valuable in the various storage caverns, it's a matter of getting it through the terminal onto the ships and Australia.
I don't know whether that answers your question.
Oh, no that was very.
Go ahead, let me just add one thing I think you made a very important point.
Smack in the middle of the shutdown globally.
We had a customer sign up for a long term 200000 tons a year.
You said something it sounds a hell of a lot in fact.
Concern.
Let me just step back and reflect that in January of next year I was in Houston talking to our counterparts on the.
Terminal.
And the question and conversation Watson about when.
We were going to expand the terminal.
But it was how.
What configuration.
How quickly could we do it and.
The need for it.
Could you.
Three weeks later, we're in the midst of this pandemic and all that conversation is off the table.
But the attractiveness of the expansion is still outstanding because.
The cost to double that size is you know a fraction of what the original cost simply because you don't need a lot of the extra equipment. There you don't need additional storage because he.
Storage is being built right now can accommodate.
A significant expansion a doubling of the side so.
That conversation of course is off the table at the moment, but I do believe that if we have right.
[music].
Any kind of resolution of this pandemic.
We will see that conversation back on the table and move forward on it.
Okay. That's helpful.
But it's I guess, how do you have just.
From my perspective, you, even before we spend another penny over and above the other topics that we've committed to the terminal I think you've heard me say several times, we should be like squeeze the offset so but more on typically engineers loved shiny things and the the build excess capacity into that.
Designs, so I'd be disappointed that we can squeeze at least another <unk> hundred thousand tons through it took us through our existing terminal what's what we've got once a tank is up and running something goes up and then belt expansion already placed into the topics before we have to spend more money on an international War caustic.
Function.
Oh, absolutely fronts.
[laughter], so sort of following on with that are you still under construction for the storage tanks. There's a as all of that's going on changed any of the timing there could you maybe update us on when you expect a story thanks to the operational.
Yeah, No I can do that day, but yeah, we expect a storage tank to Gulf racing towards the end of the year sometime late November LD December.
<unk> affected that in any shape or form.
Okay. That's good to hear and then life and I'll turn it over you guys have by by my Count a handful of vessels that are coming off contract some of them or shorter term, but I think there was some ethane contracts in there as well.
Given sort of the commentary that you outlined on ethylene is there is there good appetite by <unk> to <unk>.
Charter ships on a longer term basis, right now or is that something you're looking to do.
You know anyway, I'm just curious there.
Great I mean, the they are not pool, that's just an operational from month to.
Two months, including May so.
I think we will get a lot of benefit from Bob in terms of critical mass and catering for the customer needs in terms of spoke activities and a contractor right. So that's kind of stuff associated to petrochemical cargoes.
I need to get that straightened out and realize benefits it's from the pool.
Before we talk about.
Consolidating Fred.
Okay.
<unk> incidentally ER and I was really thinking about some of that the mid size I think there as I think one comes off contract next month.
Or are those in the pool.
They are not did the midsize chips.
Which fit the box for navigator in terms of being the most flexible ship so they're at large.
They bring economies of scale for longer voyages.
They could do propylene ethylene ethane LPG all those cargo so in terms of.
Rather they will play a role.
With the Morgan's point ethylene terminal I think so.
Sure.
There are quite large if anybody feels up 20000 tons of ethylene <unk> it'll be a world records. So.
Let's see.
Okay, great alter and everything.
Thank you find match. Our next question is from the night from the line of R&D given some Jefferies. Please go ahead.
Howdy gentleman has gone.
Hi, Randy.
Hey, So a you mentioned that you are they from NERC started who you are great nine 7% fell down to maybe 85% February most of March no, that's where two thirds through the second quarter. So just trying to get a sense for utilization them pets Tc rates compared to that first quarter.
Just to get a combined revenue quarter to quarter.
As we talked on the.
On the call Randy the.
The mid eighties utilization level continued into April.
And then in May we expected to reach the 90% marks is a bit garlic and see.
What cities for June yet.
But may certainly looks to break and they 90% Mark what screen, which is encouraging considering.
Every bean and what Oh that have except the just pandemic threats calls.
Sure a mono and on the rate that.
Right. So that the Clarkson 12 month time charter rates are.
At the end of third quarter.
600.
First quarter 665000, Boes, a month I think last week.
We're down about 616, which is not a big decline considering comparing our segment to other segments. So that's where the independent.
Brokers that setting the market to be at least when the time charter level.
So it's no we're not seeing a.
Great keep died.
But utilization is going up that should be quite positive.
Got it okay huh.
And then it gets its act when they turn into the plant venture you know obviously, congrats on getting that 95% comes out the done the volume side, how many cargos had been export of some that are selling terminal so far and all those going on navigator ships on secondly, it looks like a share results for the G.
He was up 3 million dollar loss during the first quarter.
What do you expectation, so maybe second quarter third quarter kind of run rate when do you expect that to be positive them by how much.
The volume question I can take so first half at summit.
Oh from.
In January to June.
Terminal is expecting to 210000 times.
There was a Bob's 40 45000 tons during first quarter and then.
Second half of May I need to June, but looking at the remainder so it's a big ramp ups from mid may into June, particularly because the arbitrage also it is.
It was encouraging the trade.
So.
I was talking about volume from that's probably the terminal we've done.
52% for that and I would get your ships.
So just about half.
Okay.
I'm on the err on the performance you're right we did.
I have a loss of $3 million for Q1 April what was pretty much of the same the same vintage made the volumes are ramping up in June or would it be fully fully or capacity I think or at least tweet tank capacity. So I wouldn't expect Q2.
Maybe around the break even maybe as much as a million dollar loss, but that that would be the extent of it and then Q3, which is also pretty tank wouldn't be or I need any period thereafter pre tank would be about a million isn't a half of a profit.
And post tank, we've already suggested that the EBITDA wouldn't be around 25, 24 $25 million, which is.
Which is a whatever $6 million a quarter.
Okay.
Good deal that they have a color and keep up the good work if they say.
Thanks.
Our next question is from show Morgan from Medical. Please go ahead.
[noise] [laughter] hey, guys.
So I was wondering you mentioned that the deep sea petrochemical trade, especially going into the far east has been.
Fairly resilient.
Despite cold and despite.
A lot of the trade issues, while China. So I was wondering if you look at some other markets like crude and even larger LPG and LNG China's been kind of shadow banning a lot of a lot of imports from from U.S. suppliers, but it seems like some of.
Some of the propylene Buda dine in some of the products you guys carry on smaller vessels and then a relatively unfazed by that so I was wondering just any insights as to why that was its just stronger demand that just supersedes any kind of trade implications or how would you sort of look at that.
Well.
The Terry situation on properly and that the lead.
That pain.
Got you can seek to get dispensations under the people.
Players stuff.
Hey, somebody U.S. hard working in touching our vessels they as far as I'm aware they have these dispensations from China.
Okay.
They don't they're not facing the tariffs and therefore.
Equally competitive as products from elsewhere.
Well that is why I'm not going from Asia.
From U.S. days.
It's more also to do but the attractiveness of surprise you as the news petrochemicals because of feedstocks so cheap.
Therefore with or without areas, they are competitive and they will move.
And because the crackers are running at high operating margins again because of feedstock is relatively cheap.
For the Europeans.
They are switching or.
Talked about a substitution effect of my style LPG, so that Uh huh.
In Europe, where by more enough size being consumed as feedstock.
Because youre doing enough. So instead of LPG light your feet stuff you get more heavy so see for products being viewed a dime.
They have more beauty dine than normal.
And with a lower domestic demand in Europe, therefore, they have excess.
And the guys is going to buy it isn't age out an Asia.
I guess is two months ahead of the European locked down on the manufacturing processes, and so folks are sort of coming back.
And they are buying these excess Butte design from Europe, Florida, propylene from U.S. or that's sitting for me.
Oh.
Why we've seen utilization pickup in the month of May but.
That those trades are hard to combine during.
Every March April, but they seem to be slowly merging back.
Okay, Great and that's all I have today, so I'd turn it over.
Thank you very much as a reminder, ladies and gentlemen, it still one if you have a question next is from Mike what about please go ahead.
Hi, Good morning, guys how are you.
Right.
Hey, so I wanted to dig in a little bit on the.
The contracting activity from from April obviously stands out is kind of Oh.
Data point that kind of runs against the grain so without getting too much detail you can you give us some color around the duration.
And the rate for a lack of a better Tom I'm on the business that you guys were able to sign in April relative to the business. It underpins the initial investment.
I think I think it's a exactly the same as the as the previous ones.
Well I identical in terms of and ER and turns last right. Yes. That's.
Correct me, if I'm wrong, but I believe that to be the case, yes.
Oh, Yeah, Michael studies, but if someone in terms of duration on the terms of pricing.
Let's say to play.
So how should we actually we think about that it was that a conversation that's been going on sense kind of the inception of.
Terminal itself or should we look at that is as an indication that despite the volatility that you were hazard engage and got a new conversations around either an expansion.
Or tapping into maybe some some capacity beyond nameplates, and we would expect similar economics there.
Is that.
On the run market indication or is that something that's more of a couple legacy price indicator from when you get started this building.
Well, we helping in the <unk> to jump in shopping discussions with counterparty for awhile, but they didnt ask to sign it so I think kittens.
It's do certain Tonight.
The <unk> he wanted to say that when we're in the middle of the cool goods crisis, and so confident or in the or an arbitrage going forward long term so.
Hopefully that on getting <unk>, who might not that's a fair point and.
Certainly positive.
In terms of the the notion of.
Expanding that's something we've heard elsewhere in the midstream space do around around that facility specifically.
You know.
David I think I think you mentioned you know obviously, the the incremental investment what message would be on par with with you know the amount of some cost that went into kind of getting the filling up and running into first place can you give us a big fans of scale around what kind of capital call. We.
I would be looking at it you know if you guys were two to expand that facility and obviously the expanding that on the back of additional business.
I would be would be good news for navigator, but you're trying to get a sense of what the capital pocketbook like specifically or because it seems like that would likely overlap with with some significant refinancing activity are you going to be doing in the next 18 months.
Sure Harry why don't you take that one.
No no problem Mike.
It sounds to gifts until you do the actual study sounds it gives a any numbers, but typically when you spot in the facility the already I because the civils are already there all the concrete in the reinforcing its been done the electricals are there the pump. So there is the jet cheese or they're all the infrastructure there it's Ted.
We cleared this came in on what you'd normally pay for the Greenfield site and it can be anywhere between 50% and 70% over normal newbuilds. So all things being equal once your sweating the assets to whatever you can get them oxen Taposh, it's you too.
She biggie, most logical investment and the industry, because you've already sort of pre invested and all those samples and all the underpinning work that's required for the infrastructure for the tank.
<unk>.
Okay. So the.
Looking at 70% seems they probably reasonable holding it to it but just as in the sense of scale that seem that said that that probably the ballpark, we should be thinking I'm married basis, what yeah Doctor. So that's just a rough rule of thumb, Mike, there's usually used to them and the chemical industry. So.
Okay great.
I got that's all I've got three things out.
Thank you very much our next question from Jae Min myself. Finally, please go ahead.
Hi, good morning, gentlemen, congrats on getting up to 95% on the take or pay.
Mike.
Just dig into that one first our that 95% does that totally fixed price or is it a percentage like on a per ton basis that fluctuates with the ethylene market.
It's a fixed price nothing to do with the Oh.
The problem so used to Mount Bellevue.
Quoted prize of ethylene moves from one day, its or the other that Oh influenced surprise some lumpy.
I have nothing to do it to product.
Excellent that's good to hear and I heard your response to to Mike Webber about a 50% to 70% I sort of Capex spend to model in there I know you're on pause because of coated but if you decided say this fall or next winter to maybe you know pull the trigger and move forward with expansion what would the timeline be between died.
The fed and actually I read a rolling out that capacity.
Out at about one thanks. Good question, it's difficult to say because you'd be walking in amongst the allied plant.
Ah, which is has its own limitations as you can imagine and that's why the topics estimate as a range because all depends on what you've already go and if you're constraints or space et cetera, et cetera. So it's quite difficult to say until you might see properly works up the project and then the proper analysis.
All right it sounds like we'll need to circle back on that one then maybe hopefully we'll get some color. This fall or next winter I just looking at the cash economics at the joint venture. It looks like you had I think you said about 9 million post quarter and then about a.
13 million or so excess Capex left you also mentioned you could draw down some more debt at the joint venture. So how do we think about that in terms of net cash right from from 31 March into the end of 2020, what's what's in that Cashcall at the navigator level.
So the if I understand your question well. This this kinda two questions. One does the facility and wouldn't is what's left to go. So we have we have no paid as of today 133 million up to 150 million expected our budget, albeit does that budgets.
Has some contingency in there so it may not be the 450 million, but assuming it is we've got 17 million to go which is principally the remainder on the tank that the construction of the tank.
So that that's it from the facility. It's a 75 million dollar facility total facility of which we've drawn down so far just stepping into half million dollars up.
So if you take the 17, if you take the $7 million, we've already drawn down and as she will draw down the other $17 million to pay for the remaining tank, there's about 40 odd million $40 million to $50 million, where essentially we have over equitized the investment in the end.
<unk>, so we would draw down on that facility to two rebounds to do it through all three balance those two.
Okay, great well water model that went out as far as looking at remainder of joint venture financing. It sounds like the leverage ratio is is quite low in terms of EBITDA I think you guided a EBITDA up to 25 million I I would I would speculate that you could get you know financing of five times are more is there a pause.
Well, it's you expand that financing it and paulson more cash back to the parent level or are you just going to keep it works out.
It is possible, but you've got to bear in mind that this is a joint venture and there is no debt allowed within the joint venture entity itself.
So each of the.
Well each of the participants I ourselves on enterprise or have to finance.
We are determined that the proportional determine upstairs it in their own in their own entities and consequently, there is no security of the terminal that allowed being given to any debt providers.
And that's a challenge so therefore it out the deck in our case is to do with the quality of the or the existence the quality of the off take agreements, which is why its proportionately being ramped up the off take agreements kick in.
Understandable. Thanks for the color on that end and congrats on getting that up and running.
Thanks.
I live in next set of questions I I'll hand back to your speakers for today.
Okay, well. Thank you very much everyone for joining I should we look forward to our next meeting.
Okay Oh.
Ladies and gentlemen, thank for joining you may now disconnect your line.
[noise].
[noise] well can Peel comes in school. Please continue to stand by you'll conference where begin shortly.
[noise].
You know conference where begins shortly.
[noise].