Q2 2020 Navigator Holdings Ltd Earnings Call
Please continue to stand by feel confident well begin shortly.
[music].
Keep standing find ladies and gentlemen, I'm looking to navigate to holdings conference call on the second quarter 2025 <unk>.
Mr. David Butters.
Chairman.
Chief Executive Officer, Mr., now known and Chief Financial Officer, Mr., Benjamin Chief Commercial Officer.
At this time all participants are in addition anymore.
After the presentation you may ask a question by pressing star and one on your telephone keypad.
<unk> names.
Sure.
I'd now like to past.
Your first speaker.
Just a button. Please go ahead sir.
Thank you very much and good morning, everyone and welcome to navigate is second quarter earnings call.
Actually we conduct today's conference call, we will be making various forward looking statements.
These statements include but not limited to future expectations plans and prospects.
From both a financial and operational perspective.
These forward looking statements are based on management assumptions for catch an expectation surgeon today's date.
No rest such subject to material risks and uncertainties.
Actual results may save shit differ significantly from my forward looking information and financial for cash additional information about these factors and assumptions are included in our annual and quarterly.
<unk> filed with the Securities and Exchange Commission.
This morning's because will include Harry Deans shortly.
Chief Executive Officer.
That will be followed by Niall Nolan and <unk>.
Harry why don't you pick up the phone from here.
That's right psyche, David Good morning, each of you wanting to tall oak deal what we keep in Sage.
It's not what trends you one week since we took the decision to close I'd also says I'm just stop running our business remotely from our home offices across the globe.
Students acetate Realty company profession, and virtual team works like what's tolls meeting on one of them one thought shops, all taking place over the internet.
Although we all messed the face to face interruptions, we have become a day a chilling information via the many platforms are so disposal well, making sure we didn't lose the human charge.
There has been lost it along the way with numerous unscripted funny moments on what's really captured on the video and audio called <unk>, which has helped keep morales height.
Well actually the technology is what exceptionally well exceeding even the expectations of the least checks all the employees.
I want to treat tribute to the dedication that don't get determination and that they didn't listen Suzy awesome well for one short team.
Hard work I never say never prostitute has enabled our business to literally keep a light. So I'm just seamlessly into your business as usual much to middle east for customers Oh suppliers under <unk>.
That's a company we're not a bunch imagine this phase of the corporate 19 <unk>.
Just stopped sort of <unk> a company offices.
And labor the prevailing government advice, we will therefore be reopening out ultra system that supports the September.
Of course. These also just a bit adopted to ensure the other quit social distance.
We have also implemented numerous hygiene measures to keep a colleague seats.
Oh returns will be a phase one was a team 18 basis with staggered working hours to both through just rest and also to maintain social distancing.
Finally, our key stakeholders, what didn't notice a change I was out technology will ensure our teams continue to into like seamlessly with each other our customers under vessels.
You can only be but following the <unk>, although fraud job unfold and just some Walker <unk> box gained momentum in the quarter.
Improved sentiment on business activity has continued into July and August what's the North American and European economies folding the least China and southeast Asia <unk> Darden's, an attempt to kick start demand on what that manufacturing.
All things being equal this will provide them actually do stimulus to the global economy.
Well, it's actually not broken arbitrage to Asia remains firmly open and the cost of what's healthy pricing differentials, which doesn't Cadiz trades.
Actually excess pizza dying has also continued to move from Europe to Asia us to just as a chemtec sports surplus material to maintain light truck so utilization rates.
I'm very pleased to report the best Mr. Johnson <unk> in Q2, albeit with some favorable tailwinds on.
Foreign exchange on the near breakeven performance overtime and over the course sorry.
The Q2 net income of $3 million was the strongest performance since Q4 2016, almost a first profitable quarter for overreaching ones.
That was also pleasant Thunder runs from the Q1 2022 results well, albeit with considerable headwinds we posted a loss of $8.2 million.
Our underlying best will perform has also improved from Q1 62 by two dollarsmillion to all those.
Results are going to net income of $700000 thrust shipping business.
How should we assume a supplementary presentation well so Q2 net revenue and EBITDA has improved.
I think that's the best second quarter results for a good number of years.
[noise] Sunday night Chicks release, you may recall, the on the Q1 color into makes it.
Managed to relieve almost three dozen through.
Well actually that number has risen substantially on the last few months and we've been able to refresh or something to fight for saying or three hundreds at an 80 of our over June crew members and we've been able to get them. So you see home.
We can tell you to work hard to the just the bought log on to ensure although she said it was get believed that this error on <unk> reunited with their friends and family as quickly as humanly possible.
Do you ever changing local regulations together with you'll be imports troponins restrictions on the constant Israel flight cancellations make less of it actually in task.
Your name it can be landlords into the backlog.
So all of this themselves and see our offices in crude has continued to chip S. The globe celebrity much needed cargoes and thus keeping the global told me talking <unk>.
We continue to work hand in glove with Slog States and classification societies US together, we resolved that many optical inspection and dry docking challenges that being caused by the pipe pandemic.
Finally, it appears that the vital contribution of Csos. During this fund dynamic is slowly starting to be recognized by glut governments across the globe.
I'm very pleased that I can say Morgan's point joint venture athlete terminal I smoked spoke to.
For 200000 tons with at least another 60000 tons expected to be moved in August.
Jim was a record one so I don't know volume of around 60000 tons being exported from the terminal.
This is all the more them often but when you consider this it's been a cheap <unk> either for 60000 cubic meter types, which is currently under construction.
It goes without saying, but these volumes could not being achieved without the close cooperation between navigator gas on a joint venture partners enterprise.
Working closely together.
Able to optimize its roots as well so sure in that there were enough vessels are the right tightened the right place to maximize the ethylene cargoes.
What makes you think truth is coming through the margins I'm very pleased to announce at the time that was profitable in June.
It's really great to see the results of all the hard work and I finally, beginning to filter down to the bottom line.
I don't want to force or mid sized vessels. The navigates eclipse also loaded a world Drexel quantity of 20000 tons of athlete from the terminal for delivery to Asia.
The tender complex is working very well and as you can see from the fourth exhausted the supplemental information pot construction of the ethylene tight as progressing safely on time and on budget what starts up expected in Q4 this year.
The Gen trip, but what I ended 2000 tons, which was a cheap prior to the commissioning of the tank.
How did your beliefs the of Chambal exceeds the nameplate capacity with ease in the future.
Somebody that's a little Phil.
Well, what creates a big jobs and Pacific Das is no still be up and running like operations began in the second quarter with all 14 vessels joining that filled by the end of July.
So that's always been form just right time to enable departments to capitalize on the going for use of ethylene.
Export from or Morgan's point terminal.
Utilization rates, which were running at 80% levels in February March and April claimed to be engine children to 90% Mark.
She loves recent rate has been maintained in July.
Thanks to the Morgan's point volumes, the healthy ethylene arbitrage on a general increase in economic activity.
Once again Handysize Tc rates continue to be there must be less volatile than other sectors and help you pretty resilient with only a marginal 5% reduction in rates within the quarter.
The company continues to be prudent.
Reducing discretionary spend it setting expenditure where possible, while minimizing walking sockets and topics to possess Charleston liquidity.
This can be seen enough operating expenses well shut down in the Q2, 3.5% year on year.
Some of these gains of course will be on whiteboard tight as increased cost of relieving the cruise stops to filter through.
Now in his prepared remarks, we'll give you an update of our refinancing progress as we seek to further increase our liquidity and strengthen our balance sheet.
All in all Chichi was a satisfying quarter for the company on many fronts with improving utilization and profitability.
<unk> gates his leadership and the Nish Handysize shipping segment, coupled with the best agility and flexibility of her fleets how's it should the of business has to date been able to successfully navigate the choppy conditions caused by the corporate 19 pandemic.
Oh segment has not been subject to the wild swings in rates, which we have observed in other sectors.
And as expected the start up of the world's largest actually terminal I saw the NIM immediate impact stimulating you've drilled through ethylene export volumes, which is a real when when somebody gets a gosh.
The oneself the tablet takes a big contract since you wouldn't together with an incremental spot business should ensure the terminal remains profitable going forward.
I combine to start shipping business, which is also in great shape when should the company is well placed to comp flies from increasing economic activity when the uptick at cars.
Well I suppose <unk> I'd like to Hunt your hotel, Seattle, Niall Nolan Niall.
Thank you already and good morning.
The company generated profits as already mentioned to $3 million for the second quarter, which is a significant turnaround from the 8.2 million loss in cards during the first quarter on this year.
The 7.7 billion dollar loss for the compared to second quarter of 2019.
It's $3 million quarterly profits net income includes it to the Hoffman didn't done on gain on foreign currency translation as both the Norwegian kroner on the Indonesian rupiah strengthened relative to the U.S. dollar during the quarter reversing some of the pull that related to exchange losses in card and the first quarter of this year.
In addition, the marine exports ethylene terminal Morgan's point in Houston generated a loss for the quarter up $200000 being our share of the results of the export terminal joint venture.
However, with the commencement of the long term take or pay contracts at the beginning of June the terminal how the throughput.
During the month of approximately 80000 tons and constantly generated a profit although not sufficient to overcome the losses of the part two months.
These anticipated however, the tableau will remain profitable for the remainder of this year.
It doesn't resulted in a profit relating to our vessels for the second quarter Twentytwenty up $700000 again, which is a marked improvement from the 1.8 million dollar last generation during the first quarter.
The operating that's the operating revenue from the vessels was $79.9 million for the three months, an increase of 6.3 million from the $73.6 million generated during the second quarter of 2019.
Net revenue revenue after deducting pop through voyage costs was $65.1 million for the second quarter versus $63.7 million for the first quarter of this year and $57.1 million for the second quarter of 2019.
This increase was in part as a result of average charter rates increasing to $21600 per day.
I'm $20855 per day for the first quarter of this year, a $19940 per day during the compared to second quarter of 2019.
I didn't mention done on the last earnings call associated with the first quarter's results. That's the utilization was increasing during the second quarter, where they persisted in the mid 80% levels largely as a consequence of cold 19, but with the subsequent months of May and June increasing to around the 90% levels.
I was completely average for the three months of the second quarter was 88.3% an increase of the 85.2% achieved during the second quarter of 2019.
You may have noticed a new item on our income statement this quarter with references to pool collaborative arrangements in both operating revenue of 2.6 million and voyage costs 2.9 million.
This is the GAAP required accounting treatment for reflecting the sharing of pools revenue based on proof points and that's effect of this during the second quarter. Following the commencement of the pool on April 1st is that our vessels contributed $300000 to the other participants in the pool during the quarter.
During the first six months the company undertook only pre dry dockings, principally as a result of yard closures associated with the impact of covert 19, our money dry dock yards have no reopened and we've undertaken to Florida Threed Drydockings since the end of the second quarter with apart.
Navigator Grace currently in dry dock.
Leaves the final four vessels requiring dry dock prior to the end of this year.
He's dry dockings, including the fitting a ballast water treatment systems, where necessary are estimated to cost approximately $12 million an exit as previously budgeted. So no anticipated increase as a result of yard soldiers are other effects of covert 19.
That's an operating expenses were $26.5 million for the second quarter or $7661 per vessel per day, a decrease of 3.5% from the $2 million to $7.4 million or $7938 per day in card into compared to second quarter.
2019.
The result of stringent control of cost during these challenging times, but also as a consequence of some costs being deferred until later in the year such as cost associated with crude changes due to the difficulty in arranging international flights as a result to cope with 19.
General and admin costs.
Decreased by 13% to $4.5 million during the three months ended June 30 2020.
It's decreased largely relates to the reversal of foreign exchange losses on the revaluation of an Indonesian rupee a bank account that we in cards during the first quarter.
Interest costs for the second quarter were $11.1 million at 8.9 per cent per cent decrease a 1 million dollar decrease from the $12.2 million in card in the second quarter of 2019, and also decreased from the interest cost of $11.5 million.
<unk> cards during the first quarter.
This is as a result of reductions to U.S. LIBOR, which has now fallen from approximately 2.38% a year ago to justice, 0.26% in June this year.
The share of results of equity attempt to joint venture also known as the results from the ethylene tunnel generators as I mentioned last small loss of $200000.
And as I mentioned at the outset with the profit in June almost fully offsetting those losses of April and May.
I also mentioned a couple of moments ago during the quarter two of <unk> million dollars up to $3.7 million <unk> cope with related foreign exchange losses incurred during the first quarter were reversed in the second quarter.
Net income for the second quarter was that for $20 million and as Harry mentioned, the first quarterly profit since the third quarter of 2018, and the largest profit for over three years.
At June 30, it the cash stood at $53.1 million against our maximum liquidity covenant up $43.1 million.
We had a part or $8.2 million as restricted cash supporting a cross currency interest rate swap relation to our Norwegian kroner bond.
Although since the court rent.
As a result of furthering spend thing of the Norwegian kroner versus the U.S. dollar. This restricted cash is reduced to $1.1 billion as of this morning.
Since the core trend Weve entered into an agreement to amend the tenant credit facility to now to allow an early true up of $34 million, enabling those funds to be immediately drawn for general corporate purposes.
This followed the company contribution of seven and a half million dollars to the export terminal joint venture during the second quarter and afford or $7.5 million since the quarter end, both fully funded by drawdowns from the credit facility.
The total amount available on the credit facility based on the off take agreements is now agreed at $69 million and with $49 million drawn or currently available to be drawn this leaves $20 million available to cover the remaining <unk> commitment to the export terminal joint venture, which we believe to be less than 10 million dollar.
Yes.
Once the storage tank is completed I didn't service by the end of this year any remaining undrawn portion of that loan will be released for general corporate purposes.
There after the loan we convert from a construction loan to a five year term loan.
We also in the process of refinancing one of our vessels loan facilities, which is anticipated to provides an additional cholesterol approximately $30 million.
It's about coupled with the $34 million immediately available from the time those facility under for the release of the restricted cash we provide increased liquidity headroom of approximately $70 million. In addition to the $10 million headroom at June 30 it.
We expect the.
That's a loan facility to be in.
In place by the end of this part quarter.
At June 30, it total debt stood at approximately $860 million.
As previously stated the company does not have any debt facilities maturing until 2022, except for our 100 million dollar Norwegian bond maturing in February of next year.
We are currently assessing the top end markets for potentially refinancing this fund or in the <unk> and are in the process of engaging financial advisors to investigate such opportunities as well as concerns considering alternatives in the event that a couple of markets are not available or not receptive.
And with that I'll hand, you over to wasn't.
Thank you are not and good morning, everyone.
The second quarter highlights role at folks it would do petrochemical demand.
Let's see mentioned during last earnings call. The coffee lockdowns around the work continued from marching through April good utilization hovering around the mid 80% level.
However, with Asian countries, beginning to east regulation, starting from May on birds, we did experience a pickup in demand.
European petrochemical producers restated rounding there not that crackers during the same period, resulting in an access products such as future died which would then subsequently shipped long haul somehow decide hey me refrigerate ships.
The way to Asia to satisfy the pickup in demand.
The same fundamentals threats seeing for appropriately with excess production in North America, finding a home across the Pacific.
Resulting in employment of Handysize tonnage for deep sea voyages.
At the same time with demand picking up primarily in China Korea, Taiwan, Indonesia the.
The ethylene landed price in this region rent from an all time low of $300 that Tom the in April.
Our normalized level around $800 of Tom going from May into June.
Your job screen.
The U.S. domestic ethylene prices remain at the competitive price points ranging between 250 to $300 of comp during the summer peak same period.
Therefore, enabling arbitrage opportunities for ethylene exports.
Exports of ethylene any meaningful volume could only be facilitate and every time you with new terminal capacity.
This new capacity came in the form of our marine export terminal.
Started ramping up throughout for mid May on birds and beat that she and her everyone's expectations. When its enable exports of approximately 80000 tons during the month of June.
60% of all ethylene ships from the United States of America during the month or June including from the target termed out were lifted on navigator controlled tonnage.
During the same bunker a medium sized settling best we'll never get eclipse safely and successfully load that encouraged to date.
Largest single cargo of ethylene of 20000 tons from our terminal to receivers in Taiwan.
Now the knock on effect of the ramping up off the marine export terminals should not be ignore.
I'm decides to lean vessels, which were trading in LPG or propylene abuse to dine in the past.
Now generally employed in the ethylene trade.
Thereby reducing available tonnage capacity from the semi refrigerated part of the Handysize fleet.
Therefore, despite huge uncertain do some fluctuations across the verdict, calling me.
Brought about by the pandemic Handysize quote the 12 month chalk right as you heard from Harry phone they reduced by 5% during the period.
Around 625000 Boes a month.
<unk> BAFTA different compared with for example, very large gas carriers, having their locations falling by more than 50% during this I'm, saying timeframe.
The resilience in the Handysize rates can be attribute it to one simple fundamental reason I'm not expects ability.
Chris all the GAAP cargoes being LPG petrochemicals and ammonia.
The leaving that both swung into action during the wrapping up on the terminal and is a contributing factor.
Increasing market share of American ethylene exports.
[noise] the pool better enables us to being the right place at the right time, [laughter] Lifeat <unk> ability to our customers utilizing the pool platform of 14 vessels.
Yep paying that's still a role to play for navigator U.S. ethane remain price competitive through all the feed stocks into production of ethylene.
This is due to continued robust natural gas liquids production in North America.
We reported Q afar for medium sized ethane ethylene carriers have contracted additional at pain employment.
Meaning that it and as part of our earnings portfolio is set to increase.
Having additional vessels in ethane trade a similar posted their knock on effect to the mom ethylene capable segments.
And at the time that supply for LPG. Another petrochemicals is reduce.
For example.
And one of our medium sized ethylene carriers are carrying ethane instead of ethylene it means that the 20000 tons of ethylene cargo.
Ship from two Handysize vessels.
We shouldn't turn to positively impact utilization and their earnings.
That segment.
Going forward, we got relatively comfortable with the outlook for ethylene.
Considering the performance of the Marine export terminal during the pre bank faith.
Prevailing arbitrage for U.S. ethylene.
Majority of the mindful stems from Asia, which means deep sea voyages.
And our rising market share or ethylene exports for America made possible through additional pool vessels.
Oh wrong would be possible when the L.P.G. steps into the hands besides pitch.
What would it make a read their friends.
50 anticipated effect from project specific.
Additional LPG demand from Repauno, and Pembina ready to ship export terminals I've outlined I've brought to the earnings call information pack.
Incremental handysize LPG demand should have a meaningful impact on utilization on their earnings through the segment.
In addition to what we're seeing to die today.
The ethylene markets.
With that that will hand over to David.
[noise], Thank you long well, even Harry and Nile. So L.A. why don't you open up the call now to culinary please.
Thank you once again, ladies and gentlemen, she would like to ask a question.
And one on your kind of <unk>.
Your name and now.
I'd like to constantly each prescott.
Good question.
And your first question comes from the line Ben Nolan from Stifel. Please go ahead your line.
[laughter] AI ban.
Okay, Great Hey, guys. This is a there's been I have a couple of good have more but I'll try to.
Not overstaying my while from here.
The Oh my first question.
Congratulations on the terminal, obviously, it's going probably better even than it was supposed to good news for.
The caseloads good news for the shifts it's good news for everything.
At this point sounds like almost all the Capex of Don maybe there'll be an expansion are required for a little bit more capex, but my my question really as bigger picture now that kinda out of the way the debt refinancing looks like it should be pretty well in hand.
And I know the stated objective for you guys. You know it has been to look too.
Marry up more of these infrastructure related.
Projects or developments with your shipping expertise.
I'm curious has fundamentally and and I guess right now with everything being wrapped up it's the perfect time to start looking at some of those longer dated development opportunities. How do you think about that how do you.
What's your sort of page what's your angle.
Yeah.
Where are you in terms of being able to really bring something to bear and further.
Projects like that going forward.
[noise], Harry why don't you take that one.
Okay no problem.
I know you doing.
Yeah good.
Yeah, good, saying I know you said a terrible so rob top.
I wish it was so I'm you know we've got a type sell to belt as you as you saw us making great progress and it's on PPI, even on budget, that's been done safely and equally as we saw from digit numbers, we've actually been able to sweat the assets our best of them we saw.
So for me the best de bottleneck is a three d. bolt on that.
So we really don't know what that's terminal is actually capable off until we get that time fully up and running all the signs up quite a pointing in the right direction. Given this through could there be mice to squeeze true with <unk> the time.
You know a de bottleneck on a tight with a as it's a win win for everybody. Because you <unk> you affects costs on the money just drops to the bottom line. So our focus at the moment as to make sure that we complete the jobs that we've gotten Han, but just the the tank on that we we deliver it safely on time and on budget.
We see what's under the who did not time can I think there's a lot more the uptick as I spoke to open in June. So I think that's the first thing, but it's tempting to the rest of the business that's sort of steady as she goes at the moment you know now talk to boats. We've got a a drydocking schedule is pretty pretty heavy or in the second half the year, we know those.
You know a lot a tailwind so potential tailwinds that to be there was no one knows it's going to happen, but coverage that was gonna resurface again, but there's a lot of tailwinds floaters as well because as I've said these terminals or stops into open and that should be a real opportunity for us going forwards.
The new opportunities, we'll assess them a and lights off the other options that we have available to gods and we'll do the things that give us a best fine for a box going forward.
Okay, but it doesn't sound like there where should be expecting there to be in a major new.
Completely out of Blue developments.
Anytime in Atlanta I'm guessing.
That's right that's right, but what we're working hard it's like a strong you know where we're peddling Hobbs on these this offseason, what's in that lots of different opportunities but.
The moment, but focus and was Watson Han.
Got it you're absolutely right Ted to raise that question Ben because.
This terminal that we have them in joint venture with enterprise.
At the end I mean, it's just an integral part of a great.
How did the system.
Exploiting the important and inexpensive.
[noise] petrochemical hydrocarbons being generated in the United States as result of low gas prices.
This is just a small piece of that.
And we have tried to partner with the people who control a lot of that hub at the moment.
That is the enterprise, particularly.
And then global network <unk> well their network late in the United States connected anti every almost every petrochemical plant, especially ethylene plant.
And that is just the beginning there how big is being built up gradually but inevitably great great a flow of hydrocarbons, particularly petrochemical gases did the international knock it.
It's just a whole new thing that didnt never really gotten off.
The ground in the past, but it is in its beginning phase.
Hi terminal, it's a small part.
It will be a participation will grow.
As that grows but we have to clean it through this pandemic and understand what this fog Oh virus is and understand where the economies are the world and going and where to place the ultimate hydrocarbon so would it.
It's there it's delicious it hours to have.
And we look at it eventually but.
We have nothing at the moment.
That is worthy of discussion at today's conference call.
Okay.
Now switching topics a little bit maybe growing then obviously you'd laid out the ethylene.
Arbitrage, although I didn't notice that ethane prices are increasing I believe that there is a new ethane export terminal scheduled to come online pretty soon and taxes.
I asked if ethane prices were to Oh, well first of all do you think that there's a risk that ethane prices were to rise materially in the United States as Mort being export Ed and how does that play in the dynamic for for ethylene exports out of the United States.
Yes, good question Ben.
All the forecast on the <unk> first on the liquid cap production.
That's okay got liquid production in the U.S. are predicting forecasting.
That production on that <unk>, even during this time panels are going forward.
They have a lot of rejections going on there by the putting that thing back into the natural gas a stream.
So there's a lot of excess at pain in the system.
And even with this news.
All this terminal Orbitz and terminal being constructed and complete the.
Q4, I think go this year in need to learn by energy transfer partners as a hell of a lot of but the remaining at exit that thing so.
If prices the price forecast, even after Q4 remains low and if the market. The local domestic markets talk over thinking that that then prices are going into <unk> rise because of the ethane exports and you've probably seen effects of the today, because it's a known quantity and it's unknown infrastructure.
<unk>.
So we are pretty.
Comfortable and in that the ethane would remain competitive.
The cost curve for American to lean producers been remain competitive towards other areas of the word and therefore at two Lee and should remain competitive, but you're right you would have these monthly.
Price adjustments that you're seeing right now on the lean into U.S., there's not so much about at pain.
About some shutdowns some maintenance unforeseen maintenance items various crackers so.
Instead of have being you can buy it still in that $300 sometime they does not the hunger then $80 a ton, which is still pretty competitive to Asian prices today at 760. So.
And remain confident that.
At paying there'll be an excess.
Therefore to gas price will be competitive therefore at two Lee.
It will be competitive.
I don't know whether that's okay.
No that was that was perfect in there and I appreciate it and my last one from a real quickly I'll turn it over the we've seen a number of.
Semi refrigerated vessels that have capacity to do both ethylene LPG, obviously and then in some cases LNG I don't know that you guys have any that can do LNG, but we'll have seen some of those ships and move into the LNG trade as there's been a real proliferation of small scale LNG could you maybe talk through.
How you see that playing out from a supply and demand perspective partnerships and is that something that you guys would look potentially to to become involved.
So it's good to see.
<unk>, the leading capable vessels.
That is also LNG capable go into the LNG trade because it reduces the pool of available actelion ships or any handysize ships.
Oh, that's number of vessels that can do not show gas as well is very limited there's a series of eight ships.
Ah controlled by emails and as far as I, My where one or two of those vessels have entered into the F and G trade. So for our for navigators core business that is a good thing.
In terms of small scale LNG.
That's getting around for a long time and you could probably go small scale LNG conferences every week off the year and there's a lot of tool.
Some projects are happening so I'm I've been implemented its probably going to be more of that going forward in terms of hub and spoke distribution for LNG.
Good various islands and smallpox.
We.
Being gas exports and no old petrochemical gases, how to handle death, and so forth. We think natural gas is pretty easy and straightforward. It's truly a refrigerator that there's no changing or grade, it's really a bus service so.
So our expectation expertise lends itself for that but for the time being we are very much focusing more comfort like sides of the gap shipping and maritime business linking that to shore infrastructure. We have you focus on where does the real growth Dave's under real potential as David mentioned in terms.
So.
Being heavily involved in the emerging.
At petrochemical processing in the U.S. and helping the export coal says that live taves through the word.
Perfect I appreciate it.
Oh [laughter]. Thanks.
Well. Thank you and your next question comes from the line as Sean Morgan Ethical. Please go ahead.
Hey, guys. So.
The the <unk>, the ethylene or the the Morgan's point terminal I guess, we're guiding towards hitting 45000.
Tons per month as of June and you did.
80000, So previously you talked to think about a million.
Tons per year so it.
It that run rate, that's with without the the refrigeration storage capacity you talked about so oh, we now looking at potentially a higher eventual run rate for that for the capacity of this of this facility and what should you previously talked about.
That.
The implementation of the tank or increase is not the volume, but it increase the throughput for the increases the loading phase so the Jefferies would be more efficient so instead of loading a handysize today, taking the two four days.
With the tank your nodes Handysize seen last Monday.
Great easier because schedule.
For the schedule or some of the jet these and the customers. Once you have the time.
So.
Yeah, the throughput borgen won't change.
But you're right that's great.
Farm ins at the terminal.
Pete and everybody's expectations I think that goes through what Harry has been mentioning the last two up to the earnings call is that.
No we're not.
Completely done with his term another one is important to look on the dead and see what is kept below so.
And no promises, but ER during the first signs are very encouraging.
Okay, I want to southern Saudi beat I think it's a you know the fight that we moved to close to 80000 tons is a great sign you know we always we've said many calls that.
Engineers, often build in excess deposits into a infrastructure on its our job to find the right tune to play and infrastructure to make sure that we utilize odd but there's a good sign that we're going they exceeds the 1 million tons capacity and of course, you need things to go your way there's got to be go to make sure there's no Jeff.
Congestion, you're going to make sure the temperature dumping tensions correct.
But there's really positive signs at this a this time I was going to help increase capacity the skills as all of Us hope.
Okay. So if you were able to do 80000 June then should we should we think with the efficiency of loading though that this new storage tank that the the the 1 million tons per annum is somewhat conservative and also does that have an impact on profitability.
That we talked about in the past I think the guidance is around 25 million does does that potentially improves.
On your hitting these volume levels kind of faster than you anticipated.
I'm showing yeah, I like you're doing and onto the same calculation myself.
But I think you have to wait until we get the timing Telford running and just see can do it because you don't do it just for one buttons.
You've got to do it the and the Oh, and then if you say 80 or 98% reliability basis.
So does great cytokines that let's turn the bill to.
Put more volume through it.
<unk>, let's wait until we get there and she can really <unk> and again, that's dependent and other things like I'm being temperature as well, but great signs Ah. So far that said, we're building I'd say the part to use all evens analogy.
Okay.
And then I know the Luna pool, you guys touched on in the presentation, but it's really an accounting reason that you're not separating I'm not the revenue in the voyage costs separately and if it started ramping in April and and you know throughout the quarter to June It just struck me as a little I guess optical.
Weird that the voyage costs exceeded the the allocation of revenue. So can you just maybe help us understand how that how that will change when it's once fully ramped and also if that like accounting.
Anomaly is going to persist.
Let me, let me try and extend not this is it's really depending on which is what each of the ships are doing and based on two points, which are not just similar cost of the fleets within the pool.
But on this because the ships came in at different times during the second quarter as the pool.
Came into action then you do have a bit of an anomaly coming on the where by essentially.
Then the navigator ships gave three under than $30000 to the other pool participants, but if the charter rates on the other.
Other pool participants chips were higher than the never forget our ships then you would see that slow the other way so it can go.
One way or the other it's it's it's really the net effect, but that is relevant.
But it shouldn't be.
Significantly different either way, but you will you will get quarter by quarter, a slight shifts one way our dealer.
Okay. So, but that's that's in the pool that will eventually kind of work itself out and then even out in the long run yeah. Okay. [laughter], that's all I'm pretty small number in it in a volatile quarter volatile in the sense that you'd ships coming in at different times to start up the pool at 300 and Turkey.
And dollar.
In balance is pretty pretty negligible in scheme of things, but you're right. It's it's a thousand so to zero it into that.
I'm showing the other thing to do so they'll thing behind the Thrill site was we actually had a management fee that read just stopped the spot it's even more to be honest, but the best thing about the true is that we've got oxidase morass things I supposed to be can participate on the upside.
With like a single center and 10, you fast so on you still a into the shipyards are in the water.
So with the tool allows us to participate in the upside for breslin coming from our own joint bunch of tell him. It was just suite.
Oh, Okay. So that was in parts and thinking was you can kind of ramp up your ability to to service your own terminal now that you you knew that it was coming online.
Thanks, Thanks, a lot of I'm going to turn it over.
Thank you and your next question comes from I'm on Nocs have from Clarksons <unk>. Please go ahead.
Hey, guys. Thank you you know I was actually going to just maybe about that the lunar pool and you gave pretty good overview.
Isn't the idea really to use us 14 vessels on a sort of a line. So it to work out of the ethane terminal or would they be trending a bit more worldwide.
Oh, sorry.
The pool will go divestments of the pool will go with the monies and right now it's associated with ethylene and particularly with the terminal because that suddenly we are.
Incremental supply of ethylene that needs tonnage.
So.
The global footprint, though the pool.
Is there because the voyages redoing that can be in that quite long so most of them.
Think bar, one I'd trading a bar to our trading ethylene today.
The other two are doing it pains, all are doing seat to related and trades, which you need this activity and capability for.
Which is great. So they're not impinging on the same your reps.
Same refrigerated ships, which we mentioned that in the remarks.
In fact, it's like noble is available to it just happens that most of the voyages that you bet.
Great. Thank you.
Sorry, I no. That's that's helpful. The you know obviously, it's been a wild since we've seen you guys enter into a long term target and you entered into the three year T. C. On one of your I think shifts you've got another one for a year plus yeah, they're both carrying ethane from your from your your file.
Thank you well, how do you think about potential employment opportunities for some of the other vessels do you see.
I know you've just got the three year contract do you see opportunities for more along these lines.
I believe so because of the facts I mean, it goes to Ben lift question about the competitiveness of U.S.S. paying.
Sure affect paying there.
So.
Oh, that's an ethane colm friends many years ago.
Present, there was a are liking it and to the zombie. So he was neither dead nor alive.
And that's happens with that and in periods, it's very active and people commit to long term contracts to cause ethane as a feedstock at endo did that lends itself to structure deals Nox ball.
And then if that turns back to the dead form and now is back again and it.
Relating to also what Ben mentioned that there are infrastructure projects happening in U.S. that are coming for commissioning.
Suddenly.
Burj petrochemical or global petrochemical producers can now.
Start to apply for see more supply coming.
From the U.S., because there's more terminal capacity so it didn't close.
There's not a spot market per se structural moves and that's how you see.
You can see what happened now with mid to longer term contracts on one of our mid size ships.
Got it thank you and maybe just on on the terminal no. The ethane terminal do you have a sensitive.
What percentage of a that will actually be no ethylene versus ethane is it.
Predominately gonna be ethylene is there any as saying that would be coming out of the terminal.
[noise] had the F and part of the terminal is not is not part of the joint venture that then hardly 100% enterprise or.
Peculiarities there there that's a there to debt.
And they both the bulk of the debt this can load ethane and ethylene so.
It.
It lends itself to a beautiful situation whereby ships can colo.
At the same plays at to lean hand at and if the ship is capable.
But so far at least for the lid up two.
And to navigate directives, we have loaded full cargoes to lean.
But colo thing it's possible.
I see okay.
Okay great.
That's it for me I'll leave it there thank you.
Thank you and your next question comes from Randy given from Jefferies. Please go ahead.
Oh, the gentleman has gone.
At a time you.
Great.
Well I'm sad either the tone on ramping faster than expected just that thousands soon I heard you say 60000 in August so assuming somewhere in between July and I guess, how frequent are you seeing nobody is currently and more importantly, bottoming here profitable month, what are your profit expectations.
So the terminal <unk> third quarter.
So I cannot answer the first question on it to lean loading so we are.
Working with enterprise every day.
24, seven to optimize those two Jesse.
And our obviously in our interest is for ethylene.
But to have a ship there.
Everything allowed ROE said, Oh, the day 30, or 31 days of them on in order to maximize throughput.
Well in between in them.
July and August.
There's been some some issues with the lightning storms in Houston, which I'm sure Randy you're very familiar with which impacts yeah, right or matters, which you know safety at first.
There's also conditioning and other things going on with the tank.
And the various maintenance and so forth. So it's not the volume during those two months' isn't so much that.
Weren't able to have a ship on the Dol, but its relating to other factors.
Okay.
You know at any of you answered the next part.
No I would you want to take that tied to the.
Profitability going forward I mean, it I think it's it's going to be consistent with June.
We're expecting throughput notwithstanding what all even said about other about 70000 tons per month of both the July and August September is is unknown just yet so.
We would expect a a.
<unk> above a million dollars per month.
For Q3.
Right.
All right and then I know omars seem some of the charters for through mid size down the ethane side any updates for charters out of the ethylene terminal.
On the ethylene side, we have some existing contracts and the if you read the earnings release got the there to terminate topping out on spot cargos, So there's that make right but.
I'm contracts that to you know navigator or doing a pool is engaged in and also.
Trying to follow the upside on the spot markets, which obviously, we're in a very good position to do because we have more ships through the pool.
Well there there is that there's a mix there.
Got it Okay, and I guess last question probably Berger.
About 300 million dollar bond you and 2021.
No you had to 34 million room in the amended terminal facility then in Kreuziger accrued you. There you have an upcoming refinancing for hopefully another $30 million.
[laughter], forming and liquidity crisis, you know idealism free cash within a month.
Because they'll have to refinance the entire hundred million senior unsecured bond or are you expecting kind of a partial refinancing of that no.
Oh, I I think given the current circumstances already uncertainties surrounding coal that it would be wise to keep as much liquidity headroom as we possibly can so.
Preference would be too to refinance the full amount, but it's given the amount of headroom and we could have.
$120 million of Oh, gosh against a 40 odd million liquidity requirement. It is possible that we could have a lesser amount a refinance or lesser amount, but I think in the current plan that we would be wise to at least infosys is to refinance the for them.
I don't.
Got it.
Okay, well, hey, that's it for me or keep it going.
Yeah.
So we're approaching or.
The 10 o'clock our show unless there's another question, we can wrap it up today.
We do have one more question. It comes from Jamie. It's my friends are you investing.
Go ahead.
Hi, Good morning, gentlemen, thanks for squeezing me in here I'll make just one quick.
Yeah.
[noise]. So we had a good discussion just previous for Randy about the unsecured bond or we've seen in the pipeline into energy infrastructure area. A interest rate cost of have just plummeted right. We've seen a lot of MLP is in such a refinancing 567% unsecured debt at like one or 2% debt now.
I understand shipping always gets kind of discriminated against and the debt markets, but have you seen those those costs coming down as of yet and do you think you can secure a lower interest rate cost any idea what the current kind of spread Darren.
I think I think the the spreads are still out there on that slightly high side. So there is some potential cost savings, but it's not not material from where this fund is currently out.
That said Unfortunately, you have you know one of the most exciting infrastructure assets and eastern seaboard. So hopefully that'll that'll start to gain some attention final question, a you've done a great job you have 95% take or pay on the first phase a June performance was was excellent. We're looking forward to that Utac, what does it take like how many more customers lining up does it take.
Like for you to step forward onto some sort of a phase two.
That's a a very very good question Jay.
Again, we would today, we don't fully understand what we can do for the Asa and we believe there's lots of room there.
To squeeze more the offsite on several utilize it was three de bottlenecks, so what ticket Monday at sign but feel when it coming off in outdoor then of course will help disgusting.
All right hopefully a 2021 topic. Thank you gentlemen, thank you mr.
Well. Thank you all for joining us this morning, and we look forward to a third quarter conference call I feel much. Thank you again.
[noise]. Thank you that does.
Oh. Thank you for joining you may now disconnect.
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