Q12024 Navigator Holdings Ltd Earnings Call

Randall Giveans: On today's call, we have Mads Peter Zacho, Chief Executive Officer, Gary Chapman, Chief Financial Officer, Oeyvind Lindeman, Chief Commercial Officer, and myself, Randy Givens, Executive Vice President of Investment Relations and Business Development in North America. I must advise you that this conference call is being recorded today.

Call, we have Mark Peter Zakho, Chief Executive Officer, Gary Chapman, Chief Financial Officer, Mohit, <unk>, Chief commercial officer, and myself, Randy given executive Vice President of Investor Relations and business development in North America I must advise you that this conference call is being recorded today as we conduct today's presentation, we'll be making various.

Randall Giveans: As we conduct today's presentation, we will be making various forward-looking statements. These statements include, but are not limited to, future expectations, plans, and prospects from both a financial and operational perspective and are based on management assumptions, forecasts, and expectations as of today's date and are, as such, subject to material risks and uncertainty. Actual results may differ significantly from our forward-looking information and financial forecasts.

Forward looking statements. These statements include but are not limited to the future expectations plans and prospects from both a financial and operational perspective and are based on management assumptions forecast and expectations as of today's date and are.

Speaker Change: As such subject to material risks and uncertainties actual results may differ significantly from our forward looking information and financial forecast additional information about these factors and assumptions are included in our annual and quarterly reports filed with the Securities and Exchange Commission with that I will now pass the floor to Mod Pizza Zakho the company's CEO.

Randall Giveans: Additional information about these factors and assumptions is included in our annual and quarterly reports filed with the Securities and Exchange Commission. With that, I will now pass the floor to Mads Pieterzako, the company's CEO. Please go ahead, Mads.

Please go ahead.

Mads Peter Zacho: Thank you and good morning. Thank you all for logging in to this Navigator Gas Earnings Call for Q1 2024. I will, as always, begin with a quick review of the main data points relating to the first quarter of 2024, and then I'll talk over the outlook for the year. Gary, Oeyvind, and Randy will follow up in a couple of minutes with more detail on our business drivers and results. Also this time, we can present robust revenues for the past quarter, with operating revenues almost equal to the same period in 2023. The mix is different, though, in that it was driven by higher time charter rates. Let's say a little bit more about that in a minute.

Speaker Change: Thank you and good morning. Thank you all for logging into this navigator gas earnings call for Q1 2024. Please yes, I will as always begin with a quick review of the main data points relating to the first quarter of 2004, and then I'll talk over the outlook for the year, Gary oil Ivan and Randy will follow up in a couple of minutes with.

Speaker Change: More detail on our business drivers and results.

Speaker Change: Also this time, we can for central bus revenues for the past quarter with operating revenues almost equal to the same period in 2023, the mix is different though and that it was driven by higher time charter rates.

Speaker Change: I'll say, a little bit more about that in a minute.

Mads Peter Zacho: I just did EBITDA for Q1, and it set a new record at $74 million, well above the EBITDA of $69 million for the same period last year. Adjusted net income came in at $23 million. Our cash position remained solid even after we repaid debt facilities on our credit revolver, and we also continued deploying capital into our ethylene terminal expansion. We returned capital to our shareholders with a $0.05 per share dividend and repurchased owned shares similar to previous quarters. You'll see this continue as we also now declare a further 5% per share dividend plus new share buyback, which will in total be equivalent to 25% of net income following our first quarter results.

Speaker Change: Adjusted EBITDA for Q1.

Speaker Change: Set a new record at $74 million well above the EBITDA of $69 million same period last year.

Speaker Change: Adjusted net income came in at $23 million.

Speaker Change: Our cash position remains solid even after we repaid on debt facilities on our credit revolver and we also continue deploying capital into our ethylene terminal expansion.

Speaker Change: We've returned capital to our shareholders with a <unk> <unk> per share dividend and repurchased one chess similar to previous quarters.

Speaker Change: You will see this continue as we also know to clear a further 5% per share dividend plus new share buyback.

Speaker Change: This will in total would be equivalent to 25% of net income following our first quarter results.

Yeah.

Mads Peter Zacho: We're particularly pleased with the commercial result in that we are able to push up our TCE rates to an average above $28,000, which is 11% higher than the same period last year. In last Gen Q1, our utilization was unusually high at 96%. In Q1 of this year, we achieved utilization closer to 90%, which is more akin to previous quarters. We're quite pleased to see that we managed to generate TCE rates and EBITDA at a record level in this environment.

Speaker Change: We are particularly pleased with the commercial results that we are able to push up our TCE rates to an average above $28000, which is 11% higher than same period last year.

Last year in Q1, our utilization was unusually high at 96%.

Speaker Change: In Q1 of this year, we achieved utilization closer to 90%, which is more akin to previous quarters.

Speaker Change: We're quite pleased to see that we managed to generate TCE rates and EBITDA at a record level in this environment.

Mads Peter Zacho: Throughput at our JV ethylene export terminal was slightly down at 220,000 tons for the quarter, but we expect that during this year, we will reach total exports near the terminal capacity of 1 million tons per annum. The expansion of the terminal continues on track for completion in Q4 of 2025, and we have now contributed progress payments of $51 million in total to date.

Speaker Change: Throughput at our JV ethylene export terminal was slightly down at 220000 tons for the quarter, but we expect that during this year. We reached a total exports near the terminal capacity of 1 million tonnes per annum.

Speaker Change: The expansion of the terminal continues on track for completion in Q4 of 2024.

Speaker Change: And we have now contributed progress payments of $51 million in total to date.

Mads Peter Zacho: Navigator's board approved a new investment in an early stage clean ammonia export project in the U.S. Gulf Coast area. As we said before, we are optimistic about clean ammonia as an energy carrier. And we believe that gas tankers will transport the majority of the clean ammonia volume. As is the case with Morgan's Point, our key interest lies with the terminal and ship-to-shore logistics. The outlook for our business remains good. We expect utilization to remain near or above 90%.

Speaker Change: Navigators Board approved a new investment in an early stage clean ammonia export project in the U S Gulf Coast area.

Speaker Change: As we've said before we are optimistic about clean ammonia as an LNG carrier and we believe that gas tankers will transport the majority of the clean ammonia volumes.

Speaker Change: As is the case with Morgans point, our key interest lies with the terminal and ship to shore logistics.

Speaker Change: The outlook for our business remains good.

Speaker Change: We expect utilization to remain near or above 9%, 90%.

Mads Peter Zacho: And we continue to renew our expiring time charters at a high rate; with solid demand for transportation on handy-sized gas carriers, older vessels being sold out of international trade, and limited supply from new buildings in our segment, we expect this to continue. We also see a gradual normalization with the Panama Canal, which Oeyvind will explain in more detail shortly. I'll now hand it over to Gary, and he'll give you a more detailed review of our financial results. Go ahead, Gary.

Speaker Change: And we continue to renew our expiring time charters at higher rates.

Speaker Change: With solid demand for transportation on handy size just curious.

Speaker Change: Older vessels being sold out of international trade and limited supply from new buildings in our segment. We expect this to continue.

Speaker Change: We also see a gradual normalization with the Panama Canal, which will explain in more detail shortly.

Speaker Change: I'll now hand, it over to Gary and he will give you a more detailed review of our financial results go ahead Gary.

Gary Chapman: Thank you very much, Mads, and a very good morning or afternoon to everyone. I'm pleased to report our first quarter 2024 results, in which we continued our progress and momentum with again some very positive outcomes and a new record adjusted EBITDA, giving ourselves a great platform. On slide 6, our total operating revenue was $134.2 million in the first quarter of 2024, with slightly lower but still very healthy utilization of 89.3%, boosted by stronger time chart equivalent rates that were on average $28,339 per day in the quarter, a marked increase compared to $25,620 per day in the first quarter of 2023.

Gary: Thank you very much Muslim hi, good morning, or afternoon to everyone.

Gary: I am pleased to report first quarter same store results in which we continued our progress and momentum we gained some very positive outcomes and a new record adjusted EBITDA, giving ourselves a great platform.

Speaker Change: On slide six our total operating revenue was $134 2 million in the first quarter of <unk> 24, with slightly lower but still very healthy utilization of 99, 3%.

Speaker Change: By stronger time charter equivalent rates.

Speaker Change: On average $28339 per ton quarter, being a market increase compared to $25620 per tonne.

Speaker Change: First quarter of 2023.

Gary Chapman: There were further positive effects as a result of having our five Navigator Greater Bay vessels fully operational in the first quarter of 2024 compared to the same quarter in 2023. And both total vessel operating expenses and depreciation in the first quarter of 2024 were slightly up on this quarter last year, also mainly due to having those five Navigator Greater Day vessels in full operation. The net effect overall for us was a near 14% increase in operating income, up to $36.3 million compared to $31.9 million in the same quarter last year.

Speaker Change: We will further positive effects as a result of having a high navigate is going to die vessels fully operational in the first quarter of tons transfer compared to the same quarter in tungsten <unk> III.

Speaker Change: And both total vessel operating expenses and depreciation in the first quarter of 2024 slightly upon this quarter last year also mainly due to having those five navigator vessel is in full operation.

Speaker Change: And that's in fact overall for US was a near 14% increase in operating income up to $36 3 million compared to $31 9 million in the third.

Speaker Change: <unk> quarter last year.

Gary Chapman: Our general and administrative costs were well managed in the quarter, coming in slightly lower than the same period in 2023, and our interest expenses were cushioned by interest income earned on our cash balances in the quarter. And the non-cash movement in the mark-to-market valuations of our interest rate swaps was a small loss in this first quarter of 0.4 million, reflecting more stable forward interest rates in recent months. Our income tax line reflects current and mainly deferred taxes primarily derived from our investment and share of profits in our ethylene export terminal at Morgan's Point. The ethylene terminal throughput volumes, as Mads mentioned, in the first quarter of 2024 were 220,000 tonnes, lower than the same quarter last year by around 29,000 tonnes.

Speaker Change: General and administrative costs were well managed in the quarter coming in slightly lower than the same period in <unk> III.

Speaker Change: And our interest expenses were cashing interest income earned on our cash balances in the quarter.

Speaker Change: The noncash movements in the mark to market valuations of our interest rate swaps with a small loss in this first quarter of <unk> 4 million, reflecting more stable or with interest rates in recent months.

Speaker Change: Our income tax line reflects current mainly deferred taxes, primarily derived from our investment in charter confidence in our fleet and export terminal at Morgan's point.

Speaker Change: The ethylene terminal throughput volumes as Matt mentioned.

Matt: Mentioned in the first quarter of tons to ensure with 220000 tons lower than the same quarter last year by around 29000 tons. However, we currently expect the terminal to remain near its throughput capacity during 2024 with results Accordingly.

Gary Chapman: However, we currently expect the terminal to remain near its throughput capacity during 2024, with results accordingly. Our new record adjusted EBITDA was $74.1 million. Net income attributable to stockholders of Navigator Holdings was $22.6 million, with EPS for the quarter coming in at $0.31.

Matt: Our new record adjusted EBITDA was $74 1 million net income attributable to stockholders of Navigator holdings was $22 6 million with EPS for the quarter coming in at 31 cents.

Gary Chapman: The table below right gives some further fleet data points, which I'll leave you to read for yourself. The balance sheets shown on slide seven remain strong, with a cash and cash equivalents balance of over $172 million at March 31st and total liquidity, including our underwritten and revolving credit, of just over $200 million. This compares to minimum total liquidity covenants on our bank loans and credit agreements of around $50 million. This cash and liquidity balance is after all of our recent buybacks and dividends, after making our scheduled two loan repayments, after making progress payments for our Ethylene terminal expansion project, and after repaying an additional $4.7 million on one of our revolving credit facilities.

Matt: The table bottom rock give some further fleet data points, which I'll leave you to read for yourself.

Matt: The balance sheet shown on slide seven remained strong with a cash and cash equivalents balance of over $172 million at March 31.

Matt: Total liquidity, including our Undrawn revolving credit just over $200 million.

Matt: This compares to a minimum total liquidity covenants on our bank loans and credits agreements of around $50 million.

Matt: This cash liquidity balance is after all of our recent buybacks dividends after making our scheduled two loan repayments after making progress payments for our ethylene terminal expansion project and after repaying an additional $4 7 million on one of our revolving credit facilities.

Gary Chapman: Our net debt to capitalization was just 33% as of March 31st, 2024, and net debt to adjusted EBITDA was 2.4 times for the 12 months to March 31st, 2024. With good market rates and robust utilization, our liquidity has continued its upward trend. We expect that some of our cash will be needed for the remainder of our Ethelene Terminal Expansion project until we finance a proportion of our investment later in the year, and as well for other projects and investments that we're considering that will enhance shareholder returns. There are, of course, a number of projects that we're actively looking at.

Matt: Our net debt to capitalization was just 33% as of March 31, 2020 for a net debt to adjusted EBITDA was two four times for the 12 months to March 2024.

Matt: With good market rates and robust utilization our liquidity has continued its upward trend.

Matt: We expect that some of our cash will be needed for the remainder of our ethylene terminal expansion project until we financed the proportion of our investment nitrogen the year and as well for other projects and investments that we're considering but will enhance shareholder returns.

Matt: We are of course, a number of projects that we're actively looking at but meantime, we will continue to manage our business carefully reduce opex look through our capital distributions and share buybacks will be good students of the businesses capital.

Gary Chapman: But in the meantime, we'll continue to manage our business carefully, reduce our debt, look to our capital distributions and share buybacks, and be good stewards of the business's capital. Looking at our finance situation on slide 8, although we have no loan maturities until 2025, we're now actively looking at those, including the $100 million unsecured bond that matures in September 2025, which is likely to be called or extended sometime between March 20 And as well, the $190 million of remaining 2025 maturities that are likely to be refinanced with new loans or loans of more than $200 million, resulting in a positive liquidity event for the company. The feedback received to date from new and existing lenders is very positive, and we will provide a further update as part of our second quarter results.

Speaker Change: Looking at our pilot situation on slide eight although we have no loan maturities until 2025, we're now actively looking at those including the $100 million unsecured bond that matures in September 2025, which is likely to be called our extended sometime from March 25, and as well the $190 million of remaining 2002.

Speaker Change: 95 maturities that are likely to be refinanced with new loans or loans with more than $200 million.

Speaker Change: Resulting in a positive liquidity event for the company.

Speaker Change: The feedback received to date from new and existing loan because he is very positive and we will provide a further update as part of our second quarter results.

Gary Chapman: You'll see on the top left how Navigator has substantially reduced its net debt to EBITDA in the last 12 months and indeed since 2019, now at around two times. We're continuing to aggressively reduce our debt with more than $100 million of average annual scheduled debt amortization due to occur during 2024 through 2025, which you can see on the top right. Taken with the refinancing work we are now pursuing, we anticipate that our debt maturity profile will look very different by this time next year, with an illustration of that shown in the pro forma graphic on the bottom right.

Speaker Change: You'll see on the top last time navigators, a substantially reduced its net debt to EBITDA in the last 12 months and indeed since 2019 now at around two times.

Speaker Change: We're continuing to aggressively reduce our debt with more than $100 million of average annual scheduled debt amortization due to occur during 2024, <unk> 25, which you can see on the top right.

Speaker Change: Taken with the refinancing.

Speaker Change: Assuming we anticipate that our debt maturity profile will look very different by this time next year with an illustration of that shown in the pro forma graphic on the bottom right.

Gary Chapman: Then on slide 9, we outline our estimated cash break even for 2024, which remains at $20,705 per day, which figure includes our scheduled debt repayments and as well as our heavier dried up schedule in this coming year compared to 2023. Even considering this with such a break-even level relative to today's charter rates, recalling that our average TCE for the first quarter of 2024 was 28,339, it, of course, enables Navigator to generate a very positive EBITDA, not only now but also throughout the shipping cycle.

Speaker Change: And on slide nine we outline our estimated cash breakeven for 2024, which remains at $20705 per day, which figure includes our schedule debt repayments as well our heavy drydock schedule in this coming year compared to 2023.

Speaker Change: Even considering this is such a breakeven level relative to today's charter rates recalling our average TCE for the first quarter of 2024 was 28339 with of course enables navigated to generate with very positive EBITDA not only now but also throughout in shipping.

Gary Chapman: Then on the right is our daily OPEX guidance for 2024 across our differing vessel size segments, ranging from smaller vessels to our larger, more complex ethylene vessels. And we are also now providing some guidance for the second quarter of 2024, as well as updates for the full year across FESA LOPEX, general and administrative, depreciation, and interest expenses. On slide 10, we outline our historic quarterly adjusted EBITDA, showing this first quarter's record figure and demonstrating the very positive and consistent results we were able to report across the whole of 2023 and into 2024.

Sure.

Speaker Change: And on the right is our daily Opex guidance for 2024 across our different vessel size segments, ranging from smaller vessels to a larger and more complex ethylene vessels.

Speaker Change: And we are also now providing some guidance for the second quarter of trans transfer as well as updates for the full year across vessel Opex general and admin depreciation and interest expense.

Speaker Change: On slide 10, we outline our historical quarterly adjusted EBITDA, showing this first quarter's record figure and demonstrating a very positive and consistent results. We were able to report across the whole of 2023 continuing into 2024.

Gary Chapman: We also currently expect the second quarter of 2024 to provide a healthy result. On the right side of slide 10, we show our historic Adjusted EBITDA bar for 2023, our last 12 months' Adjusted EBITDA, and an annualized Adjusted EBITDA based on this first quarter. In addition, the EBITDA bars, then to the right, provide some sensitivity and illustrate an increase in adjusted EBITDA of approximately $18 million for each $1,000 incremental increase in average time chart equivalent rates per day.

Speaker Change: We also currently expect the second quarter of 2024 to provide a healthy results.

Speaker Change: On the right on Slide 10, we show our historic adjusted EBITA for 2023.

Speaker Change: Last 12 months adjusted EBITDA on an annualized adjusted EBITDA based on this first quarter in.

Speaker Change: In addition, the EBITDA bars tend to the Reits provide some sensitivity and illustrates an increase in adjusted EBITDA of approximately $80 million for each $1000 incremental increase in average time charter equivalent rates per day.

Oeyvind Lindeman: Then on slide 11, an update on our vessels' scheduled ride up. We have 17 vessels scheduled for dry docking during 2024 with an expected total of 422 off-hire days and total dry docking capex anticipated of $24.6 million, all of which is fully costed and included in our cash flow plan. More detail on the expected timing and cost of these dry docks is shown below, noting that four vessels have already successfully completed their docking this year.

Speaker Change: Then on slide 11, and update on our vessels scheduled dry docks, we have 17 vessels schedule for dry dockings are and trying to ensure with an expected total of 422 off hire days and total drydocking capex anticipated of $24 6 million.

Speaker Change: All of which is fully costed and included in our cash flow plans.

Speaker Change: Some more detail on the expected timing and cost of these products is shown below.

Speaker Change: For vessels have already successfully completed their docking Michigan.

Oeyvind Lindeman: One is scheduled to complete the dry dock today, and 12 more are scheduled for later in the year. Also, as we have announced before, we are taking these dry dock opportunities to install energy-saving technologies on those vessels at a cost of around $4.8 million, with many of those technologies having a very short payback period. Finally, we also provide here some guidance on 2025 and 2026 scheduled dry docks for those that are interested, and which guidance remains very similar to the previous figures we've disclosed.

Speaker Change: One is actually scheduled to complete the dry dock Tonight and 12 more later in the year.

Speaker Change: Also as we've announced before we are taking these dry dock opportunities to install energy saving technologies on those vessels at a cost of around $4 $8 million with many of those technology is having a very short payback.

Speaker Change: Finally, we also provide you some guidance on 2025 and 2026 scheduled dry docks for those that are interested on which guidance remains very similar to the previous statements we disclosed.

Oeyvind Lindeman: So at the end of another very solid quarter with record adjusted EBITDA, we've been able to continue our good momentum and provide ourselves with a great foundation for further growth and development. And with that, I'll now hand it over to Oeyvind, who will provide an update on some of those plans and our commercial position. Oeyvind, please go ahead.

Speaker Change: So at the end of another very solid quarter with record adjusted EBITDA, we've been able to continue our current momentum and provide ourselves with a great Foundation for further growth and development and with that I'll now hand, it over to <unk>, who will provide an update on some of those plans and our commercial position. Please go ahead.

Gary: Thank you Gary.

Oeyvind Lindeman: And hello to everybody. Let's move to slide 13. If we look back on what cargoes have driven our business over the last 10 years or so, we see a couple of clear trends. Firstly, LPG used to be a significant driver of our earnings. However, as you can see on the gray line on the left-hand graph, it has steadily been declining over the last decade or so. Today, it represents only one third of our earnings.

Speaker Change: Hello to everybody.

Speaker Change: Let's move to slide 13.

Oeyvind Lindeman: Secondly, the emergence of ammonia and petrochemical demand is clearly filling the LPG shortfall for Navigator. We are excited about these developments, though, what they contribute to our business today, but also the significant growth projections for each cargo grade going into the future. And this explains why we will be spending some time talking about ethylene and clean ammonia later in the presentation.

Speaker Change: If you look back on what cargoes have driven our business over the last 10 years or so we say a couple of clear trends firstly LPG used to be a significant driver to our earnings days.

Speaker Change: However, as you can see on the Grey line on the left hand graph. It has steadily been declining over the last decade or so.

Speaker Change: Today It represents only one third of our earnings space.

Speaker Change: Secondly, the emergence of ammonia and petrochemical demand is clearly filling the LPG shortfall for navigator.

Speaker Change: We're excited about these developments, though what they contribute to our business today, but also the significant growth projections for each cargo grade going into the future.

Speaker Change: And this explains why we will be spending some time talking about the ethylene and clean ammonia later in the presentation.

Oeyvind Lindeman: Growth of petrochemicals and ammonia is very much linked to North America. North America's significance to Navigator is growing year by year. Now we have tried to show this on the right-hand graph. We sorted the origination of our earning states, i.e.

Speaker Change: Growth of petrochemicals and ammonia is very much linked to North America.

Speaker Change: America's significance to navigator is growing year by year.

Speaker Change: Tried to show there is on the right hand graph, we sorted the origination of our earnings days I E, where does where do our ships load.

Oeyvind Lindeman: Where do our ships load? and then linked it to discharge areas for 2023. The results are illustrated in the graph to the right. And as you can see, a whopping 60% of all our voyages originated in North America, and that's a lot. A few years ago, a few years ago, it was below a quarter.

And then linked it to discharge areas for 2023.

Speaker Change: The results are illustrated in the graph to the right.

Speaker Change: And as you can see a whopping 60% of all our voyages originated in North America, and that's a lot.

Speaker Change: Curious back a few years back it was below a quarter it.

Oeyvind Lindeman: It just reaffirms that we are firmly linked to U.S. gas production growth, U.S. midstream investments, and U.S. downstream olefin infrastructure. We see positive trends in all these areas, which will invariably benefit us. And the 60% is set to increase further as we develop. Turning to US natural gas liquids production on slide 14. US NGL production dipped during the first month of this year but trended positive during March.

Speaker Change: It just reaffirms that we are firmly linked to U S gas production grow U S midstream investments and U S downstream olefin infrastructure.

Speaker Change: We see positive trends in all of these areas, which will invariably benefit us.

Speaker Change: And 60% is set to increase further as we develop.

Speaker Change: Turning to U S natural gas liquids production on slide 14.

Speaker Change: The U S. NGL production during the first month of this year, but trended positive during March.

Oeyvind Lindeman: LPG exports, which come from the MGL barrel, were less volatile. As we have mentioned during previous calls, NGL production, as well as LPG exports, provide a good indication of the health of the freight market. We also need to think about how the Panama Canal situation is impacting the supply. Whether the vessels transit the Panama Canal or the Cape of Good Hope on their way to Asia has a meaningful impact. How so?

Speaker Change: LPG exports, which comes from the NGL barrel for a less volatile.

Speaker Change: As we've mentioned during previous calls.

Speaker Change: NGL production as well as LPG exports provides a good indication of the health of the freight markets.

Speaker Change: We also need to think about how the Panama Canal situation is impacting the supply side.

Speaker Change: The rest vessel transit Panama Canal for Cape of good hope on their way to Asia has a meaningful impact.

Oeyvind Lindeman: Well, US exports During 2023, 55% of all LPG exports headed to Asia, 71% of its ethane exports headed to Asia, and 65% of its ethylene exports headed to Asia, which means that most U.S. exports are impacted by the Panama Canal one way or another. Larger vessels are required to head through the Neo-Panamax locks, the new locks. And according to the Panama Canal authorities, there are no additional transits allowed for these vessel sizes, which in practice means longer voyages.

Speaker Change: So well.

Speaker Change: U S exports during 2023, 55% of all is LPG exports headed to Asia, 71% of US ethane exports headed to Asia, and 65% of its ethylene exports headed to Asia, which means that most of U S exports are impacted by the Panama Canal.

Speaker Change: One way or another.

Speaker Change: Larger vessels are required to head through the neo panamax locks the new locks.

Speaker Change: And according to the Panama Canal authorities. There are no additional transits allows for these vessel sizes, which in practice means longer voyages.

Oeyvind Lindeman: For the hand-designed segment, however, we are now increasingly transiting through the original locks, as daily transits have increased. From 12 to 20 over the last couple of months, against a normal of 26, but a dramatic improvement.

Speaker Change: For the hand the size segment. However, we are now increasingly transit include the original locks has daily transit have increased.

Speaker Change: From 12 to 20 over the last couple of months.

Speaker Change: Against a normal of 'twenty, six but a dramatic improvement.

Oeyvind Lindeman: For our segment, this is actually a good thing. Can this size F-10 trade become more viable against larger vessels needing to head via South Africa? It is also positive for ethylene earnings. A freight, for example, of $400 a ton from the U.S. to Asia. Our daily rates will be higher. Transit in Panama is also better compared to the long run. Although the voyages are shorter, I think the benefits are greater.

Speaker Change: For our segment this is actually a good thing.

Speaker Change: Handy sized ethane trade becomes more viable against larger vessels needing to head via South Africa.

Speaker Change: It is also positive for ethylene earnings.

For example, a $400 a ton.

Speaker Change: From U S to Asia, our day rates will be higher.

Speaker Change: <unk>, Panama compared to the longer run.

Speaker Change: Though the voyages are short term I think the benefits are greater to us.

Oeyvind Lindeman: Staying on ethylene, on page 15, illustrates the importance of U.S. The global seaborne ethylene market for 2023 is 5.3 million metric tons. The traditional ethylene trades have been on smaller ships within Europe or within Asia. However, when Morgan's Point Ethylene Export Terminal commenced its operations in 2019, it started to influence the status quo. New tons were now available, and these tons required to be shipped longer, requiring larger vests. This dynamic is obviously quite positive to us. More tons coming through the expansion will require longer voyages for all the volumes, which will again increase demand for our ethylene shipping services.

Speaker Change: Staying on ethylene on page 15.

Speaker Change: Illustrates the importance of U S exports.

Speaker Change: The global seaborne ethylene market for 2020 of our $5 3 million metric tons.

Speaker Change: The traditional ethylene credits have been on smaller ships within Europe or within Asia.

Speaker Change: When Morgan's point, the ethylene export terminal commenced its operations in 2019.

Speaker Change: Starting to influence the status quo new tons were now available and these tanks required to be shipped longer.

Requiring larger vessels.

Speaker Change: This dynamic is obviously quite positive to us more tonnes coming through the expansion will require longer voyages for all the volumes.

Speaker Change: Which will again increase demand for our ethylene shipping services.

Speaker Change: To note.

Oeyvind Lindeman: The U.S. has gone from being an insignificant supplier of ethylene in the world to reaching 20% of global seaborne supply. And post-expansion, including the flex capacity, the US ethylene market share has the potential to reach half of current global supply. And that's quite impressive.

Speaker Change: <unk> gone from being an insignificant supplier of ethylene.

Speaker Change: Through the work to reaching 20% of global seaborne supply.

Speaker Change: And post expansion in <unk>, including the flex capacity the U S ethylene market share has the potential to reach half of.

Speaker Change: Current global supply and that is quite impressive.

Oeyvind Lindeman: And it goes to show the power of cheap U.S. gas and its ability to change traditional trade patterns. On page 16, we have laid out the US ethylene arbitrage and value. The price points on the left-hand graph are provided by Argus and represent a snapshot of what they assess the market to be at that point in time, which allows us to draw out the various elements in an ethylene-2 market. On paper, it shows that freight can be $380 a ton to reach Asia. $380 a ton on a handy-sized ship via the Panama Canal yields about $40,000 a day for our ethylene ships. And that is what we're seeing today.

Speaker Change: And it goes to show the power of cheap U S gas and its ability to change traditional trade patterns.

Speaker Change: On page 16, we have laid out the U S ethylene arbitrage and value chain.

Speaker Change: The price points on the left hand graph graph is provided by August and represent a snapshot what they assess the market to be at that point in time with allows us to drill out the various elements in the ethylene to market chain.

Speaker Change: On paper it shows that freight.

Speaker Change: It can be $380 per ton to reach Asia.

Speaker Change: <unk> hundred $80 a ton on <unk>.

Speaker Change: <unk> shipped via the Panama Canal.

Speaker Change: Is about $40000 a day for our ethylene ships and that is what we're seeing today.

Oeyvind Lindeman: In addition to product arbitrage, vessel supply has a major influence on freight. And during the first quarter, about 50% of U.S. exports headed to Europe and 50% to Asia. For the second quarter, we already see Asia pulling a larger share.

Speaker Change: In addition to product arbitrage the vessel supply is a major influence on freight now during the first quarter about 50% of U S exports headed to Europe, 50% to Asia.

Speaker Change: For second quarter, we already see Asia pooling, our largest share.

Oeyvind Lindeman: Which means that the majority of this means the majority of longer voyages originating from our terminal. The latest 12-month time charter assessments are shown on page 17. The time charter markets continue to be robust. The handy size assessment, though, is based on a fairly illiquid market with few or no time charters being conducted on a weekly basis compared to others. That said...

Speaker Change: Which means that the majority of this means the majority of longer voyages originating from our terminal.

The latest 12 month time charter assessment are shown on page 17.

Speaker Change: The time charter market continues to be robust the handy sized assessment, though is based on fairly illiquid market with few or no time charters being conducted on a weekly basis compared to others say.

Speaker Change: That said.

Oeyvind Lindeman: The green ethylene line is fairly accurate at about $40,000 a day. The darker and lighter blue lines are representing semi-ref and fully-ref handicap vessels, and it's trending lower compared to what we see on our contract renewals. So we are seeing higher rates than what this graph is showing when we talk about time charter renewals and so forth. The updated fleet composition on page 18 shows a relatively high number of vessels to be delivered in the large size fully refrigerated. It is the complete opposite to what we see in the hand size and small size cats.

Speaker Change: The Green ethylene line is fairly accurate at about $40000 a day.

Speaker Change: The darker in lighter blue alive.

Speaker Change: The lines are representing semi ref and truly Rev handy sized vessels.

Speaker Change: And is trending lower compared to what we see on our contract renewals.

Speaker Change: So we are seeing higher rates than what this graph is showing when we talk about time charter renewals and so forth.

Speaker Change: Okay.

Speaker Change: The updated fleet composition on page 18 shows a relatively high number of vessels to be delivered in the large size truly refrigerated segments.

Speaker Change: It is the complete opposite to what we see in the handy size and small size category.

Oeyvind Lindeman: Both showing a low percentage of vessels on order. It is also worth noting that 21% of the existing hand-decized fleets are about 20 years of age, with many of these vessels becoming candidates for recycling over the next few years.

Speaker Change: Both showing a low percentage of vessels on order.

Speaker Change: Also worth noting that 21% of the existing handy size fleet is above 20 years of age with many of these vessels become candidates for recycling over the next few years.

Oeyvind Lindeman: So to repeat what Mads and Gary just said, we had a very good start to the year, and we see the positive trend continue into the second quarter with increasing rates on average and increasing utilization. Now, I'll hand it over to Randy to give some additional details on recent developments. Randy, it's over to you.

Gary: So to repeat what Matson, Gary just said, we had a very good start of the year and received a positive trend continue into the second quarter, but increasing rates on average and increasing utilization.

Speaker Change: Let me hand, it over to Randy for him to give some additional details on recent developments Randy over to you.

Randall Giveans: Thank you, Oeyvind. Following up on several announcements we made in recent months, we want to provide some additional details on the updated developments regarding those announcements. Starting on slide 20, we are pleased to announce our return of capital for the first quarter of 2024 in line with our recently announced return of capital policy and the illustrated table below. We're returning 25 percent of net income, or 5.7 million dollars, to shareholders this quarter.

Randy: Thank you so following up on several announcements we made in recent months, we want to provide some additional details on updated developments regarding those announcements. So starting on slide 20, we're pleased to announce our return of capital for the first quarter of 2024 in line with our recently announced return of capital policy and the illustrated.

Table below where we're trading 25% of net income or $5 $7 million to shareholders. This quarter. The board has declared a cash dividend of <unk> five per share payable on June 25th 2024 to all shareholders of record as of June 4th 2024, equating to a quarterly.

Randall Giveans: The board has declared a cash dividend of 5 cents per share payable on June 25, 2024, to all shareholders of record as of June 4, 2024, equating to a quarterly dividend payment of 3.7 million dollars. Additionally, with Navigator Gas shares trading well below our NAV of at least $25 a share, we'll use the variable portion of the return of capital policy to repurchase shares. As a reminder, during the first quarter, we repurchased 52,630 common shares totaling $800,000 at an average price of $15.20.

Randy: And payment of $3 7 million.

Randy: Additionally, with navigator gas shares trading well below our NAV of at least $25 a share.

Randy: We use the variable portion of the return of capital policy to repurchase shares as a reminder, during the first quarter, we repurchased 52630, <unk> common shares totaling $800000 at an average price of $15 20.

Randall Giveans: Looking ahead, we expect to repurchase at least $2 million of Navigator common shares between now and the end of the quarter, such that the dividend and the share repurchases together equal 25% of net income. Returning capital to shareholders will remain a core focus for us. Turning to slide 21, and following up on our previous announcement regarding the expansion of our ethylene export terminal, the project is progressing nicely, and engineering is now complete. Most of the key components have been delivered, and construction is now underway with an expected completion date by December. The total capital contribution required from us to the Dremic Venture is expected to be less than $130 million.

Randy: Looking ahead, we expect to repurchase at least $2 million of navigator common shares between now and the end of the quarter such that the dividend and the share repurchase is together equaled 25% of net income returning capital to shareholders will remain a core focus for us turning.

Randy: Turning to slide 21, and following up on a previous announcement regarding the expansion of our ethylene export terminal. The project is progressing nicely engineering is now complete most of the key components have been delivered and construction is now underway with an expected completion date by December the.

Randy: Total capital contribution required from us to the joint venture.

Randy: It is expected to be less than $130 million and to date, we have already made progress payments totaling $51 million.

Randall Giveans: And to date, we have already made progress payments totaling $51 million, with the remaining CapEx expected from cash on hand until new financing agreements are completed later this year. Now, as you can see on the bottom left chart, despite some softness in December and January due to tight commodity spreads and limited vessel availability, throughput is now back above nameplate capacity, with the second quarter off to a strong start. We'd also like to inform you that the first new multi-year offtake contract has been signed, and another offtake customer has agreed to commercial terms likely to be signed this summer.

Randy: With the remaining Capex expected from cash on hand until new financing agreements are completed later this year.

Speaker Change: As you can see on the bottom left chart. Despite some softness in December and January due to tight commodity spreads and limited vessel availability throughput is now back above nameplate capacity with the second quarter off to a strong start.

Speaker Change: I'd also like to inform you that the first new multi year offtake contract has been signed.

Speaker Change: And another Allstate customer has agreed to commercial terms likely to be signed this summer. So we continue to expect the vast majority of the additional capacity will be contracted in the coming months.

Randall Giveans: So we continue to expect the vast majority of the additional capacity will be contracted in the coming months. Now, for a new announcement on slide 22. After a deep vetting process and driven by our firm belief in the immense growth potential of clean ammonia, our board has approved a $2.5 million investment in an early stage clean ammonia export project here along the U.S. Gulf Coast. We expect to make our first monetary contribution in the coming weeks.

Randall Giveans: And although light on details today, we'll be sure to provide more details as the project develops and capital is deployed. Now, this initial investment is development capital for the pre-feed and feed studies and is subject to future board approval. We also expect to make larger investments at FID and during the construction phase of the project, with our focus being on the terminal and ship shore logistics. As evidenced by our numerous vessels currently transporting ammonia, our recent investment in the Zane fuel solutions for ammonia bunkering, our approval and principal for an ammonia fueled vessel, and our recently performed first ship to ship transfer of ammonia, ammonia already is and will continue to be a key focus for Navigator Gas.

Speaker Change: Now for a new announcement on slide 22.

Speaker Change: After a deep vetting process and driven by a firm belief in the immense growth potential with clean ammonia. Our board has approved a $2 $5 million investment in an early stage clean ammonia export project here, along the U S Gulf Coast.

Speaker Change: We expect to make our first monetary contribution in the coming weeks and although light on details today, we'll be sure to provide more details as the project develops and capital is deployed now. This initial investment is development capital for the pre feed and feed studies and subject to future Board approval. We also expect to make larger investments added <unk> enduring.

Speaker Change: The construction phase of the project with our focus being on the terminal and the ship short logistics as evidenced by our numerous vessels currently transporting ammonia. Our recent investment in the Zain fuel solutions for ammonia bunkering or approval in principle for pneumonia fuel vessel and our recently performed first ship to ship transfer of ammonia.

Speaker Change: Ammonia already is and will continue to be a key focus for navigator gas.

Randall Giveans: To note, the US Gulf will be a key producing region of clean ammonia, which will then be exported to high-demand areas around the world, such as Asia for co-firing coal power plants, Europe for cracking into hydrogen and then using for power generation, and across the globe as a clean bunkering tool for ships, as well as to displace conventionally produced ammonia based fertilizer.

Speaker Change: The U S Gulf will be a key producing regions clean ammonia, which will then be exported to high demand areas around the world such as Asia for co firing coal power plants, Europe to cracking into hydrogen and using for power generation and across the globe as a clean bunkering fuel for ships as well as to displace conventionally produced ammonia based.

Randall Giveans: So we're very excited to take this first step into a project that should be a meaningful contributor to our business, and we look forward to telling you more about it in the near future.

Speaker Change: Our advisor so we're very excited to take this first step into a project that should be a meaningful contributor to our business and we look forward to telling you more about it in the near future.

Speaker Change: And finishing on slide 23.

Randall Giveans: To celebrate more than a decade of trading on the New York Stock Exchange, Navigator Gas will be ringing the closing bell at the NYSE on Tuesday, June 25th. We'll start the day with an investor presentation, followed by the bell ringing ceremony, and conclude with a celebratory reception on site. Everything that afternoon. We would love to have you there to learn more about these aforementioned exciting developments and to hear you hooting and hollering as we ring the bell. So, if you'd like to attend, please let me know so we can add you to the guest list. With that, I'll now turn it back over to Mads for his closing remarks.

Speaker Change: To celebrate more than a decade of trading on the New York stock exchange navigator gas will be ringing the closing bell at the NYSE on Tuesday June 20.

Speaker Change: We'll start today with an investor presentation, followed by the Bell ringing ceremony and conclude with the celebratory reception onsite everything that afternoon, we would love to have you there to learn more about these aforementioned exciting developments.

Matt: To hear you hooting and Halloween as we rang the bell so if you'd like to attend please let me know so we can add you to the guest list with that I'll now turn it back over to Matt for closing remarks.

Mads Peter Zacho: Thanks a lot, Randy. You can see here that 2024 has come off to a good start, and as you just heard, we are pretty confident that the year will be one of stronger commercial and financial results. I think we're well-positioned for the future with a strong outlook in our existing core markets, and that's combined with some really exciting opportunities in new emerging markets, such as within the transportation of clean ammonia or CO2.

Matt: Good Thanks, a lot Randy.

Matt: You can see here that 2024 has come off to a good start.

Speaker Change: Hurt we are pretty confident that the year will be one of stronger commercial and financial results.

Speaker Change: I think we are well positioned for the future with a strong outlook in our existing core markets and Thats combined with some really exciting opportunities in new emerging markets such as within the transportation of clean ammonia or COPD.

Mads Peter Zacho: Our balance sheet is in its best shape ever, and it gives us the flexibility to grow our business and return capital to shareholders at the same time. So we're looking into a very exciting 2024, with the best yet to come. So thanks a lot, and back to you, Randy.

Speaker Change: Our balance sheet is in its best shape ever and it gives us the flexibility to grow our business and return capital to shareholders at the same time.

Speaker Change: So we're looking into a very exciting 2024 with our best yet to come so thanks, a lot and back to you Randy.

Randall Giveans: Thank you very much. Operator, we'll now open the lines for some Q&A. So to raise your hand, press star nine, and then you'll have to unmute yourself by pressing star six, or if using Zoom, just use the raise hand function. So first caller, your line should be open here in a second.

Randy: Thank you Marc operator, we'll now open the lines for some Q&A so to raise your hand press star nine and then you'll have done mute yourself by pressing star six or using zone just use the raise hand function. So first caller your line should be open here in a second.

Omar Mostafa Nokta: Hi Randy. Hey guys, thank you. This is Omar Nokta calling from Jeffrey's.

Omar: Hi, Randy Hey, guys. Thank you this is Omar <unk>, calling from Jefferies.

Randall Giveans: Randy, you said it, the hootin' and the hollerin', it's been a nice quarter, it's been a nice series of quarters. You've had your best EVA die ever, and it's noteworthy, I guess, as you mentioned, in the release utilization dip year over year, and you mentioned softer demand. So clearly, there are strong dynamics at play. I guess from just kind of thinking about it, the seasonality, or perhaps the utilization dip year over year, is that a seasonality thing, and was it felt more dramatically than last year, and then how would you say overall activity levels are shaping up as we kind of move past 1Q?

Yes, you said it.

Omar: Holleran.

Speaker Change: It's been a nice quarter, it's been a nice series of quarters, and how would you best EBITDA ever.

Speaker Change: And it's noteworthy I guess as you mentioned in the release utilization dip year over year, and you mentioned softer demand so clearly.

Speaker Change: There are strong dynamics at play I guess from just kind of thinking about it.

Speaker Change: The the seasonality or perhaps how to.

Speaker Change: Thinking about the utilization dip year over year.

Speaker Change: Not a seasonality thing and it was it felt more dramatically than last year and then how would you say.

Speaker Change: Overall activity levels are shaping up as we kind of moved past <unk>.

Mads Peter Zacho: Maybe I can just kick us off and then, Oeyvind, you can take over and give them all a detailed explanation. But I think, looking at the first quarter of last year, that was really the odd one out here. At 96% utilization, it's very difficult to achieve. There will almost always be shifts that, for one reason or another, will be idle for short periods of time, and that means that 96% is not what we should be looking for as a typical robust market. Once we are at 90% or just over that, we are typically able to push up rates, and we consider that to be a robust market, pretty much as we saw in Q1 this year.

Speaker Change: Maybe I could just kick us off and then you can take over and give them more detailed explanation, but I think looking at the first quarter of last year that was really the the odd one out here at 96% utilization, it's very difficult to achieve.

Speaker Change: There will almost always be shifts that for one reason or another will be idle for short periods of time and that means that 96% is not what we should be looking for a.

Speaker Change: Typical robust market once we are at 90% or just over that.

Speaker Change: We are typically able to push up rates and we consider that to be a robust market.

Speaker Change: Pretty much as we saw in Q1 this year, but you can fill in.

Oeyvind Lindeman: But Oeyvind, you can fill in.

Oeyvind Lindeman: Yeah, Omar. One thing to note is that even though utilization was somewhat lower than 12 months ago, the TCE rates are higher, the average TCE rate. So there's obviously a dynamic between utilization and the rate level. And with all the ships trading, you know, it's always a judgment call.

Speaker Change: Yes.

Speaker Change: One thing to note this up to even even though utilization was.

Speaker Change: Somewhat lower.

Speaker Change: 12 months ago, the TCE rates are higher the average TCE rates. So there is obviously a dynamic is the tradeoff between utilization and rate level and with.

Speaker Change: With older ships trading.

Oeyvind Lindeman: Now, you mentioned you'd used the word soft demand. We haven't seen soft demand. Keep the rates up. We had a ship that, for whatever reason, was idle for technical issues, and that each ship that is out of service has a penalty of 2% on that number.

Speaker Change: This adjustment coal now I, you mentioned you'd use the word soft demand, we haven't seen soft demand because.

Speaker Change: TCE rates are up.

Speaker Change: We have a ship that for whatever reason was idle for technical.

Speaker Change: Issues and that is each ship that is out of service as a <unk>.

Speaker Change: Penalty of 2% on that number so if thats had working there would it be above 90%. Thus we have been talking about but I just want to reiterate that 90% is a good market. We are able to push rates. We have shown that during Q1 this year.

Oeyvind Lindeman: So if that had been working, you know, they would be above 90%, as we've been talking about. But I just want to reiterate that 90% is a good market, and we're able to push rates. We have shown that during Q1 this year, TCEs are up, the ethylene trade, and ethane trade are producing about 40 million tons a day, which is the highest we've ever seen. So things are looking bright on that front. Utilization is just a small factor of it.

Speaker Change: <unk> are up.

Speaker Change: The ethylene trade on the ethane trade is producing about 40, a day, which is the highest we've ever seen so things are looking bright on that front utilization is just a small factor of it.

Oeyvind Lindeman: Thanks Oeyvind, that's clear. I appreciate that. And then maybe just kind of shifting gears a bit towards the terminal expansion. You signed your first off-take agreement, which is nice to see.

Speaker Change: Thanks, a lot that's clear I appreciate that.

And then maybe just kind of shifting gears a bit.

The terminal expansion you signed your first off take agreement, which is nice to see and Youre expecting more here.

Randall Giveans: And you're expecting more here ahead of completion. Just wanted to think about the project completion itself, it seems like it's definitely on track for completion at the end of 4Q or during 4Q. What kind of ramp should we expect as we think about starting to generate earnings off of that in 2025? Is there a buildup, or is it basically almost turnkey since there's already a terminal?

The completion just wanted to think about.

Speaker Change: In terms of project completion itself. It seems like it's definitely on track for completion at the end of <unk> or during <unk>.

Speaker Change: What kind of ramp should we expect as we think about starting to generate earnings off of that in 'twenty five as it is there a buildup or is it basically almost turnkey and since it's already in our terminal in existence.

Randall Giveans: Why don't you take this one, Randy? Sure thing. Yeah, howdy, Omar.

Randy: Why don't you take this one Randy sure thing Yeah Howdy Omar.

Randall Giveans: Yes, it's turnkey, right? So there will be maybe a week or two of ramp-up operations, but most of that will happen in November and December. So by January 1st, 2025, we will be fully operational for the entirety of the new capacity.

Randy: Yes, it's turnkey right. So there will be maybe a week or two of ramp up operations, but most of that will happen in November December. So by January one 2025, we will be fully operational for the entirety of the new capacity.

Randall Giveans: Okay, all right, sounds good. And then a final one for me, just on the Ammonia project you highlighted. I know it's still early on and you're putting in the development CapEx. As you kind of think about it and as you move forward, is this something that you expect to do or go alone at Navigator? Or would you look to partner with somebody like an enterprise or somebody similar as you move forward with the potential project?

Speaker Change: Okay, Alright sounds good and then a final one for me just on the ammonia project you highlighted I know it's still.

Speaker Change: Early on and you're putting into development Capex. There as you kind of think about it and as you move forward is this something that you expect to do a go alone navigator or would you look to partner with somebody like enterprise or somebody similar as you move forward with the potential project.

Mads Peter Zacho: I think, inevitably, we would be partnering up in projects like these ones. Typically, the marine infrastructure would be linked up to a production facility or storage facility of some sort, and here we would rely on good on-land partners for that. So I think you should expect that we would be doing joint ventures, as we have very successfully done with Enterprise. But it doesn't have to be Enterprise. We love working with them, and we'd love to do much more with them, but there can also be situations like this one where we do it with other partners.

Speaker Change: I think inevitably we would be partnering up in project size like these ones typically the marine infrastructure would be linked up to a production facility or storage facility of some sort and here we would rely on good on land partners for that.

Speaker Change: I think you should expect that we would be doing joint ventures, as we have very successfully done with with enterprise.

Speaker Change: It doesn't have to be enterprise, we love working with them, we'd love to do much more with them, but they can also be situations like this one where we will do it with with other partners.

Mads Peter Zacho: And just to give some scale to that, the initial enterprise terminal is around $300 million CAPEX in total. The new expansion is another $260 million. On ammonia projects, we're talking billions of dollars. So, certainly with partners, not going at it alone.

Speaker Change: And just to give some scale to that for the initial enterprise terminal is around $300 million Capex in total the new expansions and other $2 60.

Speaker Change: Ammonia projects, we're talking billions of dollars. So certainly with partners go ahead of ourselves.

Omar Mostafa Nokta: Okay. Well, I appreciate that. Thanks, Randy. Thanks, Mads. Thanks, Oeyvind. And thanks, Gary. I'll turn it over.

Speaker Change: Okay, well. Thanks, I appreciate that thanks, Randy Thanks, Mark Thanks, a lot.

Carrie: Thanks, Carrie I'll turn it over.

Omar: Alright, Thank you Omar.

Operator: Next question, your line should be open.

Speaker Change: Next question your line should be open.

Frank Conte: Yeah, great. This is Frank Conte, coming from Stiefel.

Speaker Change: Yeah, Great. This is Frank galanti come from Stifel.

Randall Giveans: And I appreciate that color, Randy, on the sort of investment size for the ammonium project. But can you sort of, and I know it's early stage, but what sort of capacity are you guys looking at for that project? Should it go forward? And what sort of rough capital needs would be from Navigator?

Randy: And I appreciate that color Randy on the sort of.

Randy: Investment size on the ammonia project.

Can you sort of.

Randy: I know, it's early stage, but what sort of.

Randy: Capacity are you guys looking at for that project should go forward and what sort of.

Speaker Change: Would the rough capital needs be from navigator.

Randall Giveans: Yeah, again, hard to really give many details at this point, right? The initial investment is for the pre-feed and feed studies to answer those questions, right? In terms of capacity, is it 1 million tons, 2 million tons, 4 million tons, 6 million tons? So there's a pretty wide range there. And as a result, there's a fairly wide range of what our investment could be, right? It will be a meaningful number and could be a meaningful number.

Speaker Change: Yeah again hard for me to give many details at this point right. The initial investment is for the pre feed and feed studies to answer those questions right in terms of the capacity is at one nine tons 2 million tons 4 million tons 6 million tonnes. So theres, a pretty wide range there and as a result, there is a fairly wide range of what our investment could be.

Speaker Change: It will be a meaningful and could be a meaningful number.

Speaker Change: I don't think it starts with a b in terms of billions, but certainly much much larger than this initial $2 $5 million investment again, sorry, I can't give you too much clarity and color here, but certainly more details to come.

Randall Giveans: I don't think it starts with a B in terms of billions, but certainly much, much larger than this initial $2.5 million investment. Again, sorry, I can't give you too much clarity and color here, but there are more details.

Frank Conte: Sure, no, that's pretty helpful, though. Then sort of for my second question, I wanted to ask about sort of leverage. Obviously, it's coming down, and it still should come down given sort of growing cash flows and only distributing 25% of net income. At what point do you anticipate sort of reexamining that return policy? Like, is there a leverage number you want to get to? Or how do you generally think about that?

Speaker Change: Sure that's very helpful.

Speaker Change: Then sort of for my second question I wanted to ask about.

Speaker Change: Sort of leverage.

Speaker Change: It's coming down.

Speaker Change: <unk> should come down given sort of.

Speaker Change: Growing cash flows and only distributing 25% of net income.

Speaker Change: At what point do you anticipate.

Speaker Change: Sort of reexamine that return policy.

Speaker Change: Is there a leverage number you want to get too or how do you generally think about that.

Mads Peter Zacho: I can just kick us off here and then, Gary, you can supplement me. I think we're in quite a comfortable place right now with the current gearing ratios, and they are probably lower now than I would think would be the steady state for a company like ours. I think it's perfectly appropriate for a company of our structure, where we have a reasonably stable income from the terminal, from our TC, and so on, to have a fair amount of financial gearing.

Speaker Change: I can just kick us off here and then Gary you can you can supplement me I think we are quite comfortable place right now with the current gearing ratios and they are probably.

Gary: Lower now than then I would think would be.

Speaker Change: The steady state for companies like Alice I think it's.

Gary: Perfectly appropriate for a company of our structure way, we have reasonably stable income from terminal from our TC and so on to have a fair amount of financial hearing. So you could say that that we have capacity to do more and this is a reflection of US also looking at growth projects.

Mads Peter Zacho: So you could say that we have the capacity to do more, and this is a reflection of us also looking at growth projects. We have committed to growing Navigator over time, and we haven't deployed a huge amount of money in the past quarters on growing our business. So we are evaluating a couple. We are keenly aware that we are competing against investing in our own stock, so they need to be good projects with good return profiles. So I think we have good capacity for that, and I think we have an interesting portfolio of opportunities at the same time. Gary?

Gary: We have committed to growing navigate overtime and we haven't deployed a huge amount of <unk>.

In the past quarters on on growing our business. So we are evaluating a couple of.

Gary: Keenly aware that we are competing against investing in our own stock.

Gary: So it means to be.

Gary: Good projects with good return profiles. So so I think we have good capacity for that and I think we have an interesting portfolio of opportunities at the same time Gary.

Gary Chapman: Yeah, I would fully agree with all that you said, Mads. We don't have a target.

Gary: Yes, I would.

Speaker Change: I fully agree with your sentiment we don't have a target I think we try to be careful with.

Gary Chapman: I think we try to be careful with our balance sheets and make sure that we choose the right projects and the right uses of those funds. And, you know, sometimes that takes a little bit of time to evaluate and for the right projects to come along. In the meantime, we've got the return of capital policy, and, you know, that gets looked at each quarter by the board. And I think, you know, hopefully, over the coming couple of quarters, we'll be able to, you know, get some news to the market about new projects. That's always our aim.

Speaker Change: Balance sheet and make sure that we choose the right projects and the right uses of those funds.

Speaker Change: Sometimes that takes a little bit of time to evaluate them for the projects to come along in the meantime, we've got the return of capital policy and that gets looked at each quarter by the board.

Speaker Change: <unk>.

Speaker Change: And I think hopefully we will see this coming.

Speaker Change: Quarters that we'll be able to.

Speaker Change: Give some news to the market about new projects Thats always online.

Frank Conte: Great. I really appreciate the call. Thanks very much.

Speaker Change: Great really appreciate the color thanks very much.

Frank Galanti: Thank you Frank.

Operator: Next caller, your line should be open.

Speaker Change: Next caller your line should be open.

Climent Molins: Good morning or afternoon, this is Climent Molins. Thank you for taking my questions. [inaudible] I wanted to start by asking about the offtake agreement you recently added. I'm guessing you cannot provide direct commentary, but could you provide some discussion on how the economics of new offtake agreements compare to the ones you have on existing capacity?

Speaker Change: With learning or an afternoon genetically memory and something about <unk>. Thank you for taking my questions.

Speaker Change: I wanted to start by asking about the Offtake agreement you recently added.

Speaker Change: I'm guessing you cannot provide direct commentary, but could you provide some discussion on how the economics of new offtake agreements compared to the ones you have on existing capacity.

Randy: Go ahead Randy.

Speaker Change: Yes.

Randall Giveans: We can, but we probably won't at this time, right, because we're still in commercial discussions with various additional off-takers. It is for multi-years. It is at a very good return, similar to what we've been earning on the current contracts. So we'll give more clarity and details in the coming months, again, after additional contracts are signed, and we'll give it as an aggregate, right? We don't want to just call out the details on one contract, but we certainly will once we have that portfolio built out.

Speaker Change: Okay.

Speaker Change: We can but we probably wont at this time right because they're selling commercial discussions with various additional off takers is for multi years. It is a very good return similar to what we've been earning on the current contracts. So we will give more clarity and details.

Speaker Change: In the coming months again after additional contracts are signed and we'll give it as an as an aggregate right. We don't want to just call. It the details on one contract we would certainly well once we have that portfolio built out.

Climent Molins: Makes sense. Thanks for the color. You also mentioned you expect to secure new financing for the terminal later this year. Could you provide some insight on the amount of liquidity you expect to free up?

Speaker Change: Makes sense thanks for the color.

Speaker Change: You also mentioned you expect to secure new financing on the Permian later this year could you provide some insight on the amount of liquid do you expect to free up.

Gary Chapman: Yep, I'll let Gary start, but it's a very big range for Gary to provide some color.

Speaker Change: Yes, I'll, let garry start, but it's temporary.

Speaker Change: Big range, but Gary provide some color.

Gary Chapman: Yeah, Climent, that is a slightly tricky question. I think we are looking at a number of different sources of funds for this, just like the company did for the original terminal investment, which was a combination of bond and bank finance way back a few years ago now. So I think we haven't yet made any conclusions or drawn any conclusions. I think at this stage, because we're in a comfortable position, we're not rushing that.

Kevin: Yes, Kevin.

Kevin: Sure.

Speaker Change: Slightly tricky question I think we are looking at a number of different <unk>.

Speaker Change: Sources of funds for this.

Speaker Change: The company did for the original terminal investment which was.

Speaker Change: Combination.

Speaker Change: <unk>.

Speaker Change: <unk> Bank finance.

Speaker Change: A few years ago now.

Speaker Change: So I think we haven't yet made any draw any conclusions I think at this stage because we are in a comfortable position we're not rushing.

Gary Chapman: Our cash position itself allows us to invest from our own equity resources first and foremost. So I think we've got a little bit of time to judge what's the best and also to tie that in with other potential opportunities and projects that may come our way as well. So at this stage, tricky questions to answer, and as Randy said at the beginning, it's quite a wide range.

Speaker Change: Our cash position itself allows us to invest from our own equity resources first and foremost. So I think we've got a little bit of time to judge what's the best and also tie that in with other potential opportunities in projects that might come our way as well so at this stage.

Speaker Change: Tricky question to answer and as Randy said at the beginning it's quite a wide range.

Gary Chapman: By year end, we'll have fully repaid the existing facility on the terminal, so we'll have an asset worth hundreds of millions of dollars that is certainly under leveraged, to give you some scale.

Speaker Change: Yes by year by.

Speaker Change: By year end, but fully repaid the existing facility on the terminals. So we'll have an asset worth hundreds of millions of dollars that is certainly under.

You're levered to give you some scale.

Climent Molins: Yeah, that's very helpful.

Speaker Change: That's very helpful and final question from me Youre currently distributing 25% of net income via repurchases and dividends.

Climent Molins: And final question from me. You're currently distributing 25% of net income via repurchases and dividends. Is there any appetite for additional share repurchases on top of the 25% given the prevailing discount to NAV?

Speaker Change: Is there any appetite for incremental share repurchases on top of the 25% given the prevailing discounter.

Speaker Change: Yeah.

Mads Peter Zacho: I guess I can just kick us off here. I mean, share buybacks are a very efficient tool for returning capital to shareholders, and Navigator is in a position where it's generating a good cash flow. Our balance sheet is strong, so it's a very valid question you're asking here. Last year, we bought back $50 million worth of shares, plus some after each quarter, and we think that worked well for Navigator and for Navigator shareholders, and we do have authorization to do more with the about $20 million extra authorization that we have.

Speaker Change: I guess I can just kick us off here I mean share buybacks is a very efficient tool for returning capital to shareholders and and navigator is in a position where it's generating good cash flow.

Speaker Change: Our balance sheet is strong so it's a very valid question, you're asking here last year, we bought back $50 million worth of shares plus some after each quarter and we think that worked well for navigator and for navigator shareholders.

Speaker Change: And we do have authorization to do more with the.

Speaker Change: Yes about $20 million extra authorization that we have so.

Mads Peter Zacho: So, it is clearly something we're looking at. We also have a stated goal of taking part in consolidating our segment here, and we are expanding the terminal, as we just discussed, and that will require more ethylene vessels to service the new terminal expansion here. So for us, I mean, it's really for us to plan out what we are looking to deploy in terms of capital for CAPEX and schedule it well. So it is a great tool for us, and we just need to get the timing right.

Speaker Change: It is clearly something were looking at we also have a stated goal of taking part in consolidating our segment here and.

Speaker Change: We are expanding the terminal as we just discussed.

Speaker Change: And that will require more ethylene vessels to service.

Speaker Change: The new terminal expansion here, so for US I mean, it's really for us to to plan out.

Speaker Change: What we are looking to deploy in terms of capital of Capex and schedule. It well. So it is a great tool for us and we just need to get the timing right.

Climent Molins: Makes sense. That's all for me. Thank you for taking my questions and congratulations on the board. Thank you.

Speaker Change: Makes sense that's all for me. Thank you for taking my questions and congratulations for the quarter. Thank you.

Speaker Change: Thank you.

Operator: Good. I don't see any other hands.

Speaker Change: Don't see any other hand, so we have one question coming in on the chat ear.

Operator: We have one question coming in on the chat here. Broker assessments for spot rates have shown a strong start to 2024, but with a recent dip lately, as shown on slide 17. How have rates been for your recent pictures? And do you think the second quarter average GCE will exceed the first quarter?

Broker assessments for spot rates have shown a strong start to 2024, but with the recent dip lately as shown on slide 17, how had breakeven for you at our recent pictures and do you think the second quarter average TCE will exceed the first quarter.

Oeyvind Lindeman: We don't normally give guidance for earnings for the next quarter, but what we can say is, and we mentioned in the prepared remarks, that the ethylene wine is fairly accurate there, about $40,000 a day, and that's the green line on that page that the question was referring to. The semi-refrigerated and fully refrigerated handy-sized assessment has dipped, but also, as I mentioned in the prepared remarks, what we see on our ships and the contracting and renewal of those, those are higher than what you see on that graph.

Speaker Change: We don't normally give guidance for earnings for us.

Speaker Change: For next quarter, but what we can say is we.

Speaker Change: You mentioned in the prepared remarks that the ethylene ones.

It's fairly accurate there are about $40000 a day and that's the green line on that page.

Speaker Change: Question was referring to.

Speaker Change: On the semi refrigerated and fully refrigerated handy sized assessment of depth, but also as I mentioned in the prepared remarks that what we see.

Oeyvind Lindeman: And I think the reason why the graph is inaccurate in the sense that the market is illiquid. There are only 127 ships on the water, and all of those 12 month time charges are not fixed every week. So it's a little bit imbalanced there, but what I can say is that we are seeing more positive numbers than what that graph is showing. Hope that answers the question.

Speaker Change: In our ships in the contracting and renewal of those those are higher than what you see on that graph and I think the reason why the graph is.

Speaker Change: In accurate in the sense is that the market is illiquid is only 102007 ships on the water.

Speaker Change: And all of those 12 month time charter fixed every week so.

Speaker Change: It's a little bit the imbalance there, but what I can say is that.

Speaker Change: We are seeing more positive numbers and what that craft is showing.

Speaker Change: That answers the question.

Speaker Change: Sounds good.

Randall Giveans: All right. I think that is the conclusion of our Q&A. So thank you again for joining us on today's call. We'll certainly be around in the coming days and weeks if you have any follow-ups. And we hope to see many of you on Tuesday, June 25th at the New York Stock Exchange. Have a wonderful day.

Speaker Change: Alright, I think that is.

Speaker Change: The conclusion of our Q&A. So thank you again for joining us on today's call. We will certainly be around in the coming days and weeks. If you have any follow ups and we hope to see many of you on Tuesday June 25th at the New York Stock Exchange and have a wonderful day.

Speaker Change: Alright, thank you.

Goodbye.