Q1 2021 Navigator Holdings Ltd Earnings Call
Okay.
Thank you for standing by ladies and gentlemen, and welcome to the need for Gates of Holdings Conference call on the first quarter 2021 financial results.
We have with US Mr. David Butters, except for the chairman Mr. Harry Deans, Chief Executive Officer, Mr. Tom Nolan Chief Financial Officer, Mr off the end of Lindemann, Chief Commercial officer at this time all participants are in a listen only mode. There will be a presentation followed by a question and answer session.
And which time if you wish to ask the question. Please press star 1 on your telephone keypad and wait for your name to be announced I must advise you that this conference is being recorded today and now I pass the floor to 1 of your speakers. Mr. Butters. Please go ahead Sir.
Thank you and good morning, everyone and welcome to our quarterly conference call.
Alex We conduct today's conference call, we'll be making various forward looking statements. These statements include but not limited to future expectations plans and prospects from both of the financial and operational perspective. These forward looking statements of based on management assumptions and forecasts and expectations of.
Today is as of today's date.
And the Red Sox subject to material risks and uncertainties.
Actual results may differ a significant amount of forward looking information and financial forecasts and additional information about these factors and assumptions are.
And I were included in.
In our annual and quarterly reports filed with the Securities and exchange goodness.
And before we might handling over the call for 1 of us to hurry and our London team and might be a little bit helpful to look back to where we were at the end of last year.
As we enter 2021, and we were full of conviction that we had reached inflection point that we had been working on and waiting for for the past number of years.
Our export terminal, but it's operational.
And the critically important storage tank has just been commissioned and mid December.
It was good and the operating results for the December and January confirmed.
And the next plan nation point.
That we were about to achieve operating for for them and it's not seen since 2015.
The February Texas free changed all of that.
Extraordinary natural advantage shut down the Texas, and Louisiana and electric grid for weeks and more importantly, and inflicted severe mechanical GAAP damage to the areas of refining and petrochemical plants.
At the lean became scarce prices spike to global highs and domestic inventories depleted.
No barrels moved through our terminal in March.
During this period, we issued a force majeure on a channel.
And tightly scheduled ethylene that vessels experienced complete disruption.
Nevertheless, we generated positive quantum 2 years out and an improved balance sheet.
January was strong performance of.
Setting a very difficult February and March.
Killed us and navigators underlying strength and powerful earnings potential and.
And the normal normalized conditions.
And Harry and I, Illinois of and will shortly discuss.
Since the end of March conditions have gradually improved suggesting that we may still be entering into an environment more characteristic of those prevailing at the end of last year and the very beginning of this year.
So now it's just before I pass the call over to Harry and his team I would like you to be sure and you open up the website to navigators.
Site and under the Investor Presentation's checked and refer to the supplemental information.
I think that you will find it could be very helpful. As you follow along.
And so Harry why don't you pick up from there. Please.
Thanks, David.
Good morning, everybody and the Cold I hope you are well and keeping safe I.
And I'm pleased to report the navigates the gas has performed robustly during the period and huh.
And the best the 2 years since Q1.2016.
This is our fourth profitable quarter and succession with income translates again and to an earnings of 5 <unk> per share.
During the peak of the company achieved adjusted EBITDA of $71 million, representing a 22% increase and the same period and 2020.
This reflects both strong operational performance by the company as well as the fruition and completion of our significant investment and to the business and Prague Tvs the.
The final capital contribution to our Morgan's point of ethylene terminal joint venture was paid in late January and bringing our final investment and the terminal 2 of 146 million.
Dollars.
The shipping business has performed well during the peak and we.
I look forward to another so 2 more growth as the macro trading environment improves.
And as we have previously of nice we can.
Please for the anticipated merger of Ultra gasses fleet and business with navigator.
This transformative combination will create a fleet of 56 vessels, which will enhance our market offering and provide much needed flexibility and support to our customers.
Ultra gas its fleet of 7 more than 22000 cubic meters handy size semi refrigerated vessels 512000, ethylene vessels and 6 gas Cali is under 10000 cubic meters will position us to engage new clients and new markets through increased coverage and geographical reach.
We anticipate the the enhanced scale and combined fleet will provide cost savings significant synergies and efficiencies throughout the business.
The addition of vessels will allow us to capitalize on the structural growth of LPG and petrochemical gases being exported from the panel Pamela and of course, our road and Morgans point and terminals and all of which scenario and the stream and ramping up the exports.
We believe these incremental volumes combined with extremely low level of Hanmi size newbuild activity as can be seen and slide 15 of the supplemental part.
Will tighten the market.
And increased utilization rates and further improve TCE rates.
Yes.
The proposed at the gas transaction is progressing well and with completion expected early in Q3.2021 on the same commercial terms other agreed on the LOI.
This combination is the cashless transaction with approximately $21.2 million shares been issued the navigators common stock to ultra and up on the assumption of approximately $197 million and the ultra golf's net debt as well as working capital.
When complete the combination of will introduce another major navigate to shareholder with longstanding experience and the maritime industry, which we believe will be beneficial for all of our shareholders.
The transaction is accretive to the obligates the standalone budget in terms of revenue EBITDA and EPS and we expect the combination to complete.
In line with the expectations subject to conclude the definitive binding agreements board approvals on the other customary closing conditions.
We were very pleased to notice in late April the navigator had success. The 1 for 12 month time charters with Mitsui.
Utilizing photo of our semi refrigerated handy sized vessels to transport ambient propane from the newly commissioned Pam the terminal in Prince Rupert, Canada to customers and Asia.
So this is the brand new trades between the West Coast of North America, and Asia, where just by going directly across the Pacific bypasses the need for of Panama Transit, Thus minimizing tries it volumes and boosting efficiencies.
On it so and this 1 deal ties up over 6% of the total handy sized semi refrigerated fleet over 6% and approximately between 13 and 18 per se and of the available semi refrigerated spot vessels.
As discussed in the previous call and utilization rates for these 2020 strongly and the.
The continued into January reaching 96% before being hit by the headwinds of the southern free on the Belvieu pipeline and subsequent Morgan's point in terms of the force majeure and early February.
On the surprisingly given these issues utilization rates.
And with the overall fleet utilization of the ending the quarter 88, 2%.
These are the continued into Q2 as the olefin capacity started up on the U S. Domestic olefins pipeline was replenished, bringing with the strong domestic demand and pricing.
This will put pressure on the export volumes on the ethylene the arbitrage.
Well the thankfully there are plentiful supplies of the most advantage also of the feedstock and the U S ethane, which coupled with the olefin overcapacity on the efficient as the market has again its share of product is priced to move unless you've seen recently the ops of opened again to Europe to Asia.
Our mortgage point of ethylene terminal has now restarted and is ramping up throughput. We expect June export volumes to be close to the voice of January 2021, and we.
Anticipate exports for the remainder of the year to be at nameplate capacity of 1 million tonnes per annum.
We are looking forward to running this unit and fill rates and to see if we can score squeeze even more and the 10% incremental capacity we've already identified of the plant.
As previously discussed the forward order book for new builds and <unk>.
And 5% with minimal vessel deliveries in 'twenty, 1 'twenty 2.2023.
20% of the entire handy size fleet is now more than 20 years old. So there's absolutely no pressure coming from vessel supply and our growth market.
At long last you may see the 3 increments of U S export terminals have been completed and they're starting to export product.
We estimate the these terminals when running at full capacity will require of around 12 to 19 handy sized vessels to service them between 12 and 19.
These tailwind of helped by Hanmi size exports, which are also ramping up at Marcus Hook, even before the Moc Mariner East 2 ex project is completed later in the year.
And it's no surprise there for that we maintain a positive outlook on short and medium term TCE rates and the handy sized market in general is there a lot of factors are starting to exempt upwards pressure on rates.
Well the thing to mental exports limited, new builds and improving customer sentiment on higher oil prices.
It does feel that we're on the cost of a significant uptake and utilization on a market raise.
What are the what's our existing fleet of 30 vessels are asking the JV terminal now fully funded and fully commissioned and will.
The company on the verge of of merger, which will dramatically grow our presence and the speciality LPG pet Chem gas sector navigator gas is poised to capitalize on these conditions.
We expect that benefit when it comes to go straight on to our bottom line.
With these few remarks I'd like to hand, you over to our CFO Niall Nolan, who will take you through our Q1 financials.
Thank you Harry and good morning, all.
The company generated net income of $2.8 million during the first quarter 2021, which compares very favorable to the loss of $8.2 million made and the first quarter of last year last year of of course was negatively impacted by the initial market reaction to COVID-19, as the world at large and reactive.
Nervously to what was about to unfold.
The thought of.
For the year on the lasting effects of the pandemic would still be impacting our lives.
You said that the recent quarter's profit has been the best as Harry has mentioned since the first quarter of 2016.
The total operating revenue from the vessels during the first quarter was $85.7 million.
For the half million dollars from the $81.3 million generated of joined the first quarter of last year, but slightly behind the $87.4 million generated during the previous quarter of Q4 of 2020.
Average charter rates during the most recent quarter were $21950, a day or 667 and $830 per month and increase from the 2.
<unk> thousand $850 per day, and the first quarter of last year as well as an increase from the $21100 achieved last quarter.
Utilization of however was more challenging during the quarter.
As both David and Jorge mentioned January started very strongly with the utilization of 96%, but following the mechanical integrity issues with the 16 mile pipeline between the ethylene caverns and.
At Mount Belvieu, and our terminal the creating of force measure as well as the Texas Winter freeze that initially hit on February 15th the vessels, we had lined up to load the ethylene at the terminal at that time, we're unable to do so and had to suddenly find alternative employment.
This affected the earnings and utilization fell to the mid 80 percents during February and March resulting in overall utilization of 88, 2% for the first quarter.
And this compared with 89% for the first quarter of last year.
And 91% for the fourth quarter of 2020.
Hello, NEPOOL earnings, which are derived from the current 14 vessels in the pools are aggregated and allocated to prove the participants in accordance with pool points, resulting in a net gain to the company of $1.1 million for the quarter from the other participants vessels in the pool.
3 vessels entered dry dock for their scheduled surveys during the first quarter of taking a total of 70 days the cost of these.
The 2 dockings were completed during the quarter was approximately $2.7 million and.
In total of 14 vessels are scheduled to be dry docked during 2021 for and anticipated aggregate 300 days and an estimated total cost of $18 million.
The following the final.
Capital contribution towards the construction of the terminal early or in the first quarter Drydocking costs are the only remaining planned capital expenditures for the company during 2021.
And.
Voyage expenses decreased $1.9 million during the quarter to $15.6 million from 17, and the half million for the from the first quarter of 2020. These.
These are pass through costs reflected in revenue and the reduction resulted from both reduced bunker prices and bunker consumptions.
Vessel operating expenses were $27 million for the first quarter equating to $7892 per vessel per day, which is the 1 and a half per cent decrease from the vessel Opex and cards during the first quarter of 2020.
General and admin costs were $6.3 million for the first quarter of 3% reduction on the $6.5 million and cards during the first quarter of last year.
And the other income of $72000 for the first quarter relates to management and management fees received from the other participants in our.
For our management of the Luna pool.
Interest costs for the first quarter were $9 million 22, 3% less and the first quarter of last year, primarily as a result of reductions and U S. LIBOR.
U S labor at the beginning of 2020 prior to COVID-19 was 196%, whereas at the beginning of 2021 and as it remains the case today U S libraries of approximately 0.24%.
Due to the issues with the terminal pipeline referred to earlier and the weather in Texas during the quarter. The share of results of the equity account of joint venture where of loss of $600000 for the quarter.
However, as often refer to volumes are picking up and returning to normal we did receive our first cash distribution of $850000 from the JV during the quarter based on the operational performance of the January 2021 net.
Net income for the first quarter was therefore $2.8 million of 5 <unk> per share compared to a loss for the first quarter of 2020 of $8.2 million are of loss per share of <unk> 14 cents.
Cash at March 31.
Stood at $85.2 million and increase from the 59.3 million at the end of December 2021.
We had a further $37.6 million available for from Undrawn revolving credit facilities associated with our secured vessel loans, taking total available cash of $222.8 million.
In January we made the expected final capital distribution of $4 million towards the construction of the ethylene terminal taking our total contributions for the terminal.
$146.5 million, which is under the budget set 2 years ago before construction and startup.
And it was delivered on time and safely of Signet as significant success, given the pandemic related challenges of the past 12 months.
We drew this $4 million capital contribution from the terminal credit facility during the quarter as well as a further $14 million, which was available for general corporate purposes, resulting in the facility, becoming fully drawn at $69 million.
And the reaching construction and practical completion at the beginning of the quarter. The terminal facility was converted into a 5 year amortizing term loan attracting interest at U S LIBOR, plus 2.7 and 5%.
Our total debt at March 31st stood at $849.6 million, which incorporates 6 bank loan facilities secured on our vessels the terminal facility and to Norwegian bonds and.
There are no maturities on any of these facilities during 2021 and with the exception of and $18 million repayment. In March 2022, there are no maturities of any facility until late in 2022.
And with that I'll hand, you over to Ivan.
Thank you.
And the morning everybody.
If you take a look at page 8 of the supplemental presentation.
The ethylene graph graph is quite telling on the right hand side and it shows the global ethylene prices have gone through a roller coaster of the last 6 months.
At year and U S ethylene price stood at $700 a ton the.
Dark Blue line and U S. Ethylene exports reached the aggregate Aida from both cargo terminal and our joint venture terminal of 100000 ton.
And nearly 80000 tonnes a day with ex.
And what it through our joint venture of terminal.
Now we consider our total of 100000 tonnes per month and.
Normal state of operations from the U S.
Today, the U S ethylene prices quoted at $670 per tonne nearly half of what it was during the peak in April.
And the U S ethylene prices projecting further backwardation and are you reducing in the future and exports are increasing as the result of this widening arbitrage to international market.
And why is that well we are seeing the fundamental of continued cheap ethane available in the U S and excess domestic production getting back up.
Which will move the market to a more normal state of play.
And that is good for us the export volume for reacting positively increasing month on month as you can see on page 9 illustrating the aggregate U S ethylene exports.
As you can see the exports of moving towards what we call the normal state of 100000 total.
100000 tonnes per month for July.
The high oil scenario for further underpins the attractiveness of these derivatives produced by natural gas liquids.
To put into perspective, these 100000 tons of ex.
Of export of ethylene per month transient translates into about 16, and this buy ethylene vessel demand.
Rich from a fleet of 38 ships on the water today.
Captured nearly half the available tonnage which is quite extraordinary.
We're also of about the delivered the last of the for handy sized semi refrigerated ships to the Canadian West Coast LPG project as the.
The Harry just mentioned.
The first 3 of already successfully loaded from this new terminal.
And discharge in northeast Asia.
This is all incremental demand 2 hour of segment for LPG vessels are effectively removed from the spot market.
The reporting the rest of the fleet and.
In addition, it is the first structural hand, this type of trade for LPG in the Asia region with prospects of more to follow.
The Repowering of terminal and New Jersey is now operational.
The the first hand, the first cargo from this facility in April and with <unk>.
And 2 subsequent cargos in may of.
This translate into incremental demand for 1 semi refrigerated vessels.
But please note of demand for 1 additional vessel may not sound, so much better and a pool of all of them is 63 unit every new opportunity can influence the supply and demand balance in our segment.
1 of the short term challenges facing the general LPG export markets for the for all LPG ship owners is the lack of arbitrage today from the U S.
This is less impactful for the specific handy sized projects that we have mentioned.
And that affects the shipping industry as a whole.
Today U S. Propane is priced at 1 dollar per gallon roughly compared to about half of our dollar per gallon at the same period during 2019, and 2020 and the inventory levels and Mont Belvieu.
The lower historically by about 10 million barrels today.
At the same time domestic propane consumption has increased by 10% during the last couple of months and the EIA gives and interesting explanation.
<unk> been working from home due to Covid restrictions and many of you haven't had the heat their houses with LPG under normal circumstances, they would have gone to the offices.
And generally use of electricity or natural gas for heating.
And once the LPG fundamentals normalize we expect total LPG exports to revert back to 2019 levels supporting the wider business.
In conclusion, though the <unk>.
Ours are very much the lining for Arris segment and for navigator gas the.
The ethylene fundamentals the reverting back.
Back to where they should be.
Creating demand for our ethylene Luna pool the.
And the incremental demand from the hands of size terminals are starting to take effect.
We have a historic low order book negating any impact on the tonnage situation.
Therefore, the overall market dynamics over the next half year show many similarities to what created the handy sized high of 2015.
And.
The pricing myself and I say this but back to normal is good for navigator.
Thank you very much.
And you can open up the call Center question and answers now.
Thank you very much the ladies and gentlemen, as a reminder, if you wish to ask a question. Please press star 1 on your telephone keypad and wait for your name to be NAV.
Our first question for today is from Sean Morgan from Evercore. Please go ahead. Your line is open.
Hey, guys.
And we've talked a lot about back to normal on the call and it's kind of <unk> and a bit of athene, but back to normal.
As you know.
Havent had a lot of normal because there's been all of these sort of 1 off disruptions that are sort of macro related and exogenous to the company. So if we look at January is maybe a good benchmark for the <unk>.
For the ethylene export terminal what does Q2 look like in terms of of you know kind of utilization that you see it and I.
Over the quarter of kind of of normalizing quarter, and how does that compare with with Q3, if we can kind of hold the rates that we've seen in June so far.
Thanks Rong.
And it kind of.
But illustrate part of the answer to your question is on page 9 the U S ethylene export graph.
And you can see the middle of sort of peak, there, which we call normal operation and everything was as per of standard being 100000 tons exported from the U S. During that period of December January.
And then of course, we know what happened and you see the growth and through March April may.
And the utilization as the result Didnt.
Exceed 90% it continued and so does the same vein as the first quarter because of that value SEC on that graph snow, but then and then June is kicking up as you can see picking up and then July our expectation is back up to the the 100000.
Aggregate, Mark with roughly 80% from the joint venture terminal.
Mhm.
And then in terms of the actual dollar contribution for the income statement are we still kind of targeting.
It's been really lumpy, obviously b b.
Because of all these the sort of 1 offs, but we think and maybe like 9 million a quarter is that like a good is that still kind of a good estimate of art was 10% Debottlenecking and maybe bring that a little higher.
And Sean Yeah, I mean, the terminal for Q2 is still going to be lumpy because of the reasons of both David mentioned at the outset of noise and subsequently.
And from from what when we're talking about normal we're talking about from June onwards, and we have said that at that at that level. It would be around the $20 million to $25 million of EBITDA and on an annualized basis, So it's about $6 million per quarter.
Yeah and in fact, if I can just squeeze in 1 macro question real quick.
In terms of the U S demand I appreciate that the spreads are widening and and that's going to be very advantageous but.
Are you sort of the.
And putting a much more normal scenario for for when we get back to the colder winter months and essentially like a lower domestic consumption and so that that spread can kind of being maintained for through the end of the year.
Yes, I think the on the ethylene spread.
Our sort of belief.
Our belief is that that's not very much is not relating to so much the seasonality.
Because of the feedstock of ethane.
Now if you talk about propane and LPG, yes, there is some seasonality and the U S market because traditionally consumption goes up and the winter for obvious reasons, but what has caused kind of narrowing of LPG arbitrage from the U S. Not ethylene LPG is the.
The lack of reduction and production during the the freeze.
The increased consumption and as I've mentioned about people working from home was quite interesting.
And therefore, the arbitrage sort of shocked reduces trade of LPG and now we don't do our business is less LPG from the U S and the spot market and we do a lot now because of the projects we have talked about and they are projects and that's contracted and so far as the less impact.
But I think that LPG arbitrage will sort of <unk>.
The increase again in general and once the historic inventory levels get back up to where the supposed to be and.
And that is ongoing.
Okay, Alright, alright. Thanks, Thanks for the time guys. Thanks, Sean.
Okay.
And our next question for today is from Randy given from Jefferies. Please go ahead.
Okay.
Randy Your line is open please ask your question.
Yeah.
Your line is open. Please go ahead and ask the question.
Okay.
Okay.
We might take another call if there is another 1.
Yes that will need for the next question Ben Nolan from Stifel. Please go ahead.
Good morning, Ben.
Okay.
I have a couple of though.
So and.
As you laid out, especially with the addition of <unk>.
And the.
The independent of volumes are now all of the you know within the course of the.
The month and a half.
The 13, I think you said, 13% to 18% of all of the semi refrigerated vessels.
The vessels of our showed of dedicated to that.
Okay, that's great at the same time.
Yeah that day.
And I point terminal is coming back online.
Or I guess is now back online.
Any color as to what you think is a reasonable assumption for utilization for you guys and the third quarter now that things are sort of.
For your thought there would be.
Yes, I think.
Look it's all positive so if you talk about third quarter.
The payment of the ship the last 1 is delivering.
And about 10 days time. So then that is concluded.
The ethylene terminal is getting back up to normal state as we have discussed from July onwards.
And you also have the merger happening in third quarter. So all of these thing Sheila.
In our utilization rates trending positive for.
The second quarter and the first quarter I mean, that's quite logical.
Right, but.
When you say positive I mean are we talking mid ninety's or what what sort of if third quarter is the new.
Run rate, what what does that run rate look like do you think.
Good day utilization number and quarter for us would be and 90% plus 90.
Okay.
And then and then to that and I.
And it's just been keeping an eye on the day rate and they've been okay, but they haven't really moved and I thought that they might.
With the addition of again independent of terminal.
And the vessels sort of.
Being incrementally taken out of the market.
Do you think that's coming.
Or what is it the fact that the LPG.
Our base and quite open and off and that sort of is keeping a cap on day rates or what what would you sort of attribute that to or I might just being unreasonable.
And the textbook.
And on supply and demand balance so we remove available ships and there is no.
<unk> to replace that with therefore, it should be positive now it's not like turning on the switch and it happened overnight.
The expectations is that it is happening but over a short period of time.
Okay. So it's your and.
The patient and that the day rates are probably moving up.
And that's been coming up okay.
And then and then lastly.
For me.
And I could keep going but randy might be and the background summer Ah the.
As it relates to the ethylene terminal and things are kind of getting back up and running.
I know pre the of free is that you guys had made mention that you were maybe talking with customers about potential addition, the contracts and expansion and all of these kind of things and color as you're sort of whether that has.
And our recommenced dor.
And if if you.
Do you feel like there is.
And the incremental long term business there.
That could be coming around the corner sometime soon.
You will meet the ticket David for you because it takes it.
Harry why don't you answer that.
That would be helpful. Yeah. Okay. Thanks, David Thanks for the question, Brian Yes, we're obviously, we're anxious to get the terminal up and running to full capacity and as I said in my prepared remarks, we we think we've identified 10% of who can squeeze.
But we haven't really run the floor.
And we would run it fly word semi optimistic there'll be more tons available and as we've spoken about several times and this call of the best of the bottleneck of the free 1.
We're spending a lot of money and we want to see some return from that money and see flow back to the bottom line, but were constantly in discussion with customers about expanding on the call.
And discussion with customers about plans for the future for that terminal.
What we need to do now is actually sweat the assets and run and run reliably.
Does the answer your question yes.
Yeah.
And that sort of the the next or I suppose what you're saying is before we should expect to see any incremental announcements or whatever you kind of need to get.
A little bit of time under your belt and full utilization and <unk>.
And of course is that the us.
Yes, let's sweat the assets and sell of I don't know.
As we've talked again before and this call the.
The cheapest incremental ton of expansion capacity will be on our term and also of anybody is going to another dollar and to ethylene terminals obs and our joint venture partners because all of the infrastructure is already there and you've got the civil and you've got the you've got the the jetties and other infrastructure, so all things being equal.
And any any ethylene.
Terminal expansion will bring our terminal, it's just a matter of time.
Alright, okay.
And.
Since the channel of became operational and over a year ago.
What happened.
The first came the pandemic that really not the pants off of everything and negative pricing of oil zone.
And Kim of college, the Hurricane and the.
Summer of last a week.
With shutdown and electricity and distorted pricing and availability of ethylene.
And just as we were getting ramped up again the.
And along came the deep freeze now.
And you're trying to plan if Europe.
Our buyer of ethylene and particularly of long term, but you don't know what to look at at the moment, it's been such a distorted market.
And those things have to settle down a bit.
And as Harry says first focus on.
Debottleneck and getting an extra 10 of 20% and out of the existing capacity.
And then as things settle down and negotiations and long term supply and and how to get those long term share buy barrels up and running and whether that's an expansion of the happy.
The new facility.
That would be the decision and that's the way it.
And it Couldnt make any decision here and the last year and the highest impossible.
Right Okay.
And that's what well.
And maybe if you have the a little bit last question and just as a reminder, our.
Capital allocation.
And the priorities of our near term debt repayment of debt.
Fair.
Part of the terminal.
No and general yeah, but the the company's capital allocation of that.
Should expect you to be focused on debt repayment of debt there.
Sorry, yes, yes, yes, okay alright.
Alright, I appreciate it thanks.
Yes.
Thank you.
And as a reminder, if you wish to ask a question. Please press star 1 on your telephone keypad.
We have had Mr. Given the come through again Randy Your line is open. Please go ahead and asked the question.
Yes.
Howdy gentlemen, can you hear me now.
And Don on the loud and clear.
The United and it feels so good.
2 questions for me first does the ultra gas merger does that limit and future plans for maybe the expansion of the ethylene terminal and secondly, now that you have acquired some small LPG carriers.
Is there any appetite for further acquisitions and consolidation on the small LPG side.
The first 1 let me ticket Randy no it doesn't so.
And the emergence of cashless emerge as you know, which is wonderful the dozen overleverage our balance sheet.
And that will give us much more opportunity. So there is no either or.
Okay.
And the second question on the on the small of.
Vessels.
No.
Randy we're sort of looking at sort of against <unk>, and we can't wait to actually get and because as you know we're not like to discuss certain things ahead of close of the of the merger. So we can't wait to get and talk more.
More details with our new part of the ultra gas to find out.
How do these vessels operate and where the opera and look for other opportunities with them and we know there than the very strong pill called.
Called the unit gas pool, which has been around for a long period of time and those guys manage those vessels very efficiently and very well.
Got it alright.
And then I don't know if you answered this earlier clearly I had some phone issues, but I'll ask it.
Obviously on the Pembina Parnell, great to see those both online and were you able to quantify how many maybe handy size semi ref vessels will be employed on those projects on the annual basis and I know you showed some cargoes per month and your slide deck. The teams you have and an annual number on how many of those losses are pulled out of the market.
Yes so.
And the excellent question first part of easy to and Theres, the Perm in Ottawa, and therefore shifts on 12 month charters. So day. So they will then reflect for ship demand and on annual basis now Theyre also talking about the fifth ship, so there might be more coming from that opportunity on the other side.
On the Atlantic side of the Repowering of terminal.
And we are below the 2 cargoes in may and that translated to a full employment for 1 ship.
And that went to the Caribbean. So if those tonnes go further a feel involved and need more ships now the specification of our nameplate capacity of the Repowering of to the best of my knowledge is 20000 barrels per day or even more now in the month of May and they only the pen.
And so have.
So safe to say that that terminal once fully operational and that they've got the experience under their belt should be at least 2 and the size ships on an annual basis. So if you combine both of them then it'll be 6 or 7.
And that is overnight going from zero to that number and our latest segment is pretty cool.
Sure clearly.
Impactful.
I'm, a thorough and the third question because I think of at the end of the Q, which is completely my fault sorry, you mentioned the current utilization I think high to mid 80% range continuing decline is.
And is that your expectation for <unk> and <unk> now is that as the run rate and how is that higher utilization impacted some of the spot handy sized shipping rates.
So utilization as.
And as we've talked about on this call from Q1 for Q2, it's pretty much.
Yes.
And straight line for it.
Or is that the vein so.
As you just mentioned now.
Thank you will spend question.
Earlier in terms of third quarter and for the reasons, we discussed those project.
Italy, and ramping up and so forth et cetera, we expect utilization for the third quarter to be 90 flow.
Okay, and then in terms of impact on rates and that should represent a normal state. So we're talking about the back to normalization.
Definitely our expertise of hopefully the.
But for the month of airlines.
And is that kind of the the threshold for when you really start to see rate inflection and trying to get the impact on rates.
Past the past experience that for.
And at least though if you go back 5 months to January where we have 90% of your hotel.
And we felt that and being able to push the market in the right direction in terms of freight.
So by if anything the past experience is anything to go by.
And once you get to 90, plus you are getting into the zone, whereby you can actually.
Moving the needle.
Got it alright.
Alright, well, thanks again for the patient and it's been along for years, but great to see things heading and the right direction. Thank you.
Thanks, Randy and thank you Matt.
Thank you, ladies and gentlemen, I'll now hand back to your speakers for any closing comments.
Okay, well, thank you very much for joining us this morning and.
Hopefully you don't have any other disruptions.
And for our next call and look forward to that thank you very much.
Thank you very much the ladies and gentlemen that does conclude the call. Thank you all for joining and participating you may now disconnect.
Okay.
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