Q3 2024 Navigator Holdings Ltd Earnings Call
It will be muted throughout the meeting.
Speaker Change: All right. Thank you for standing by ladies and gentlemen, and welcome to the Navigator Holdings Conference call for the third quarter 2020 for financial results on today's call, we have Mark Peter Zakho Chief <unk>.
Speaker Change: <unk> Officer, Gary Chapman, Chief Financial Officer.
Speaker Change: Even in domain, Chief commercial officer, and myself, Randy <unk> Executive Vice President of Investor Relations and business development in North America I must advise you that this conference call is being recorded today.
Speaker Change: 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 forecast and expectations as of today's date November seven 2024 and are 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.
Speaker Change: With that I'll now pass the floor to <unk> the company's CEO. Please go ahead Ms <unk>.
Speaker Change: Morning Ann.
Ann: Thank you for joining this navigator gas earnings call for Q3 2020 for essential to page three.
Ann: And to begin with I will review the key data off our Q3 2020 full performance and then I'll go over the outlook for the rest of the year.
Speaker Change: Gary in OIBDA, and Randy will then bring more detail and analysis.
Ann: In the quarter, we generated more revenues up 3% compared to the same period. This was driven by hot higher TCE rates.
Ann: Adjusted EBITDA for Q3 came in at $68 million slightly below the $72 million earned in the seasonally strong Q3 of last year.
Ann: The balance sheet is strong with a robust cash position, even after we repaid on our debt facilities and continue deploying capital into our ethylene terminal expansion.
Ann: The return of capital to continued in Q3 with both the <unk> six dividend and the share buyback.
Ann: <unk> II and in combination 25% of net income.
Ann: This will continue after the Q3 results.
Ann: In October we issued $100 million of new unsecured bonds at 725%.
Ann: This included the tightest spreads of any dollar denominated shipping bond issue in the Nordic market since 2008.
Ann: Commercially we continue pushing up TCE rates and secured an average Q3 TCE rate of just over $29000, which is 11% higher than the same period last year.
Ann: This is remarkable given the somewhat softer market conditions compared to the same quarter of last year.
Ann: We achieved utilization above 90% in line with our guidance, albeit it was below the 93% that we saw same period last year.
Ann: We are overall pleased with our ability to push up TCE rates in the market that was temporarily hit by softer transport demand.
Ann: Throughput at our joint venture ethylene export terminal was significantly down at 122000 tons for the quarter.
Ann: This was caused by hurricane barrel and the following disruption to ethylene production and inventory levels.
Ann: The expansion of the terminal continues on track for completion in Q4, 2020 fall with progress payments continue on.
Ann: We have for some time now talked about the significant opportunities lying ahead for navigator within the transportation of <unk> ammonia. So we are pleased to have announced progress on both fronts.
Ann: And then <unk> we've.
Ann: We have entered into an Mou with juniper and within ammonia, we've committed a small but important investment into <unk>.
Ann: None of these will absorb all produce significant cash flows in the near term, but both are paving the way for new potentially very significant market for navigator.
Ann: We remain confident about the outlook for our business are both the near mid and long term.
Ann: We expect this vessel utilization to be higher in Q4 than what we've seen in Q3, and we expect to continue to renew our filing time charters at higher rates.
Ann: We will also have more available vessel days as this year's intensive dry docking program is coming towards the end.
Ann: We expect the ethylene terminal export volumes to return to near nameplate capacity in Q4.
Ann: With solid demand for transportation on handy size guests serious older vessels being sold out of international trade and limited supply from new buildings at our segment. We expect that these robust market conditions will continue.
Ann: Please turn to page number four.
Ann: On this page, we just want to highlight our consistently improving ranking in the wafer research ESG scorecard, which was just released.
Ann: As you May know the wafer scorecard places particular focus on corporate governance topics like absence of conflict of interest board independence and transparency.
Ann: We are very pleased to be ranked among.
Ann: To be ranked third among the 60 for listed companies.
Ann: And many of these are leaders in the segments and also subject to SEC regulation as we are so that means it's the strong benchmark we are comparing ourselves to.
Ann: Going forward, we will commit ourselves to continue driving forget highest standards and governance and transparency.
Ann: So that was just a summary, and with that I'll just hand, it over to you. Gary. So you can give us a little bit more detail about our financial results. Please go ahead.
Gary Chapman: Sure. Thank you, Matt and welcome everybody third quarter 2024 financial show another robust result, maintaining a solid trend in many recent quarters now.
Speaker Change: Jimmy <unk> on slide seven.
Speaker Change: Following a good operating period adjusted EBITDA was $67 7 million in the third quarter of 2020 full coming from continuing robust charter rates and stable utilization.
Speaker Change: Somewhat offset by marginally lower time charter equivalent rates in this third quarter compared to the second quarter of 2024, as we typically expect huge seasonality.
Speaker Change: Results from our terminal, which I will explain shortly and also slightly elevated general and admin costs.
Speaker Change: Unfortunately, we cant report yet another record quarter. This time to keep context, we consider the results are still strong and we are already seeing the fourth quarter of this year and looking like it will be better than this quarter.
Speaker Change: And overall on our total operating revenue was $141 8 million in the third quarter of 2024 with a still robust utilization of 99%.
Speaker Change: Again, it's 91, 4% on average for the first two quarters of 2024, and continuing very healthy time charter equivalent rates.
Speaker Change: Averaged $29079 per day in the third quarter compared to $28954 per day on average in the first two quarters of 2024 and up from $26728 per day for the third quarter of 2023.
Speaker Change: In the third quarter of 2024 vessel operating expenses was slightly up at $43 5 million compared to the third quarter of 2023.
Speaker Change: That compared to the second quarter of 2024, and depreciation was broadly in line with the previous quarter at $33 3 million and only marginally up compared to the third quarter of 2023.
Speaker Change: Our general and admin costs of $9 4 million in the two.
Speaker Change: Third quarter are down compared to the second quarter of 2024, and there was still slightly elevated compared to our run rate as we booked some further nonrecurring costs in the third quarter, mainly legal costs related to the secondary public offering of 7 million common shares the BW group recalling that we concurrently bought by $3 5 million of those chassis switch for them.
Speaker Change: Household.
Speaker Change: Our noncash unrealized movements on our non designated derivative instruments resulted in a further loss in the third quarter from $5 2 million against a loss in the second quarter of 2024, and $1 6 million and a loss of $1 million in the third quarter of 2023. This all being related to movements in the fair market value of our long term interest rate swaps, which effects on net.
Speaker Change: Income.
Speaker Change: But which had no impact on our cash flow and liquidity.
Speaker Change: Also reported a noncash unrealized gain on foreign exchange in the third quarter of $3 2 million.
Speaker Change: Our income tax line reflects current taxing mainly deferred taxes, primarily derived from our investments in sharing with profits in our ethylene export terminal at Morgan's point.
Speaker Change: And overall net income attributable to stockholders of Navigator Holdings Ltd was $18 $2 million with a basic earnings per share between <unk> <unk> and adjusted net income, which excludes unrealized gains and losses on derivative instruments and foreign currency being $20 1 million or <unk> 29 per share.
Speaker Change: Ethylene terminal throughput volumes in Q3, 2024, or 121634 tons, resulting in a contribution of $2 $2 million from our ethylene terminal joint venture and as usual Randy will give some more detail on the terminal shortly.
Speaker Change: Our balance sheet shown on slide eight remains very strong with a cash and cash equivalents balance of over $127 million at September 32024.
Speaker Change: This is despite paying out $24 $1 million for scheduled loan repayments in share buybacks in the second quarter $8 million in progress payments for ethylene terminal expansion project and on September four 2024, we repaid a further $40 million against one of our revolving credit facilities.
Speaker Change: These repay revolving credit facilities remain available for us.
Speaker Change: To be redrawn, meaning that our total available liquidity at September 32024 was over $196 million.
Speaker Change: Currently anticipate further positive cash generation from our operations in the fourth quarter.
Speaker Change: On slide nine we recently closed two transactions that have helped us to push out some of our debt maturities.
Speaker Change: As we improve our liquidity and at the same time lower our average cost of debt.
Speaker Change: In August 2024, we entered into a new six year secured term loan and revolving credit facility of up to $147 $6 million, which was used to refinance our existing March 2019 secured loan facility than most to mature in March 2025 to repurchase on October 29, and the navigator Aurora pursuant to our existing opportunity with 2000.
Speaker Change: 19 sale leaseback arrangement and also for general corporate and working capital purposes.
Speaker Change: This new facility intended to released just over $43 million in additional liquidity to the company on improved terms from our existing 2019 facility and was fixed at a new lower margin of 190 basis points compared to the facility that it replaced and which margin is significantly below the margin within the then existing sale and leaseback arrangement.
Speaker Change: We're also very pleased to repeat that the margin of 190 basis points includes a sustainability linked adjustment to five basis points, reflecting our continued commitment to concentrating our efforts on the environmental impacts of our fleet.
Speaker Change: Then on October 17, 2024, the company successfully issued $100 million of new senior unsecured bonds in the Nordic bond market.
Speaker Change: 824 bonds will mature in October 2029, and better fixed coupon of seven 5% per annum and we used the proceeds to call and cancel our previous 2020 bonds that paid a coupon of 8% and.
Speaker Change: On this call transaction settled on November <unk> 2024.
Speaker Change: We then have one debt maturity due in just over one year's time in September 2025, which refinancing as already being planned to which May result in a positive liquidity event for the company again, and we will provide more updates on this as it progresses.
Speaker Change: On slide 10, our leverage remains in a strong position and reducing quarter on quarter with net debt to adjusted EBITDA of $2 three times for the 12 months to September 32024, and our net debt to capitalization was under 32% as of September 32024.
Speaker Change: We're continuing to reduce our debt with more than $100 million of average annual scheduled debt amortization payments during 2024 through 2027 and without refinancing work streams. We're also looking to target further reductions in the average cost of our debt.
Speaker Change: There remain a couple of cash calls in the fourth quarter of 2024 total around $63 million from our terminal expansion project that is still scheduled to be paid from cash on hand until potential new financing arrangements are completed likely in 2025.
Speaker Change: Just to note that there may be some smaller capex contributions for the expansion project that ended up schedule. In Q1 2025 is projects invoices closed at three <unk>.
Speaker Change: Potently, noting that Q1 2025 is also when revenues from the capacity expansion are expected to commence.
Speaker Change: On slide 11, we outline our latest estimated cash breakeven for 2024, <unk> thousand 930 tonnes per day, which is a slight increase per day compared to the previous quarter estimate, but which figure is one and includes our scheduled debt repayments and a heavier drydock schedule. This year.
Speaker Change: Even considering this breakeven level relative to today's charter rates recalling that average TCE for the third quarter was $29079 provide.
Speaker Change: Provides very substantial headroom to navigate to generate positive EBITDA throughout the shipping cycle.
Speaker Change: As usual on the Rockies, our daily Opex guidance for 2020 full across our different vessel segments, ranging from a smaller vessels to a larger more complex ethylene vessels.
Speaker Change: And following the <unk> guidance for the fourth quarter of 'twenty 'twenty four as well as updates for the full year across vessel Opex general and admin costs depreciation and net interest expense.
Speaker Change: All of which are substantially unchanged from the guidance given in our second quarter 2020 for presentation.
Speaker Change: Slide 12 outlines our historic quarterly adjusted EBITDA, showing this third quarter steady figure and demonstrating yet again and they're very positive and consistent results. We've been able to report for many quarters now and despite a temporary dip in the ethylene arbitrage this quarter, which always and will cover shortly we currently expect our results to continue that trend in the fourth quarter of 2024.
Speaker Change: Yeah.
Speaker Change: On the right side of Slide 12, Michel our historic adjusted EBITA for 2023 in the last 12 months adjusted EBITDA on an annualized adjusted EBITDA based on the average of the three quarters results.
Speaker Change: In addition, the EBITDA loss, then to provide some sensitivity and illustrates an increase in adjusted EBITDA of approximately $18 million for each $1000 increments and the average time charter equivalent rates today.
Speaker Change: Then on slide 13, we have 18 vessels schedule for Drydocking during 2024 of which 12 were completed as at September 30, with an expected total for the 18 vessels of 594 off hire days and total Drydocking capex estimated to be $31 $8 million all of which as we.
Speaker Change: Often say is scheduled fully costed and included in our cash flow loans.
Speaker Change: As we set out before some further detail on the expected timing and cost of these Drydocks then Chamberlain.
Speaker Change: Also as we've explained previously we takeout dry dock opportunities to install energy saving technologies on our vessels at a total cost of around $4 $8 million in 2024 with many of these technologies, having this very short payback period, helping us to improve our environmental impact improve our operating efficiency and kind of a better data to make.
Speaker Change: Further future improvements.
Speaker Change: On slide 14, we wanted to provide some more color on our recent bond issues.
Speaker Change: Many of you will know the bond market todays issuer friendly I mean.
Speaker Change: Therefore from previous 2020 bond coming up for maturity in 2025, we decided somewhat opportunistically to refinance that bond early.
Speaker Change: Given the terms, we believed we could achieve and as the bond market environment can change appropriately.
Speaker Change: We were able to mobilize quickly and get to a 100 million tonne a book that was oversubscribed with many high quality names eventually settling at a coupon of seven 5%.
Speaker Change: We issued $100 million of bonds that have $200 million of apartments borrowing limit, giving us flexibility to potentially drill up to a further $100 million in the future.
Speaker Change: The bond priced as months as mentioned with the tightest spread for any U S. Dollar denominated shipping bond in the Nordic markets since the financial crisis in 2008 at 371 basis points and we have data to show that point on slide 15, and there are some well known names on this list.
Speaker Change: Navigator has a long history of bond issuances, and we think making the top of this list demonstrates that we have over time strengthen that credit story substantially from our initial bond in 2012 to today and even since 2020.
Speaker Change: And although we are in a favorable market, which we recognize we would not be at the top of this list. If it was not also a strong reflection.
Speaker Change: Okay.
Speaker Change: He lost Gary oil and are you still there yes.
Speaker Change: Okay, let's move on to the commercial side.
Speaker Change: Okay.
Speaker Change: Thank you Brandi.
Speaker Change: I've been part of the bond stores in 2012 and.
Speaker Change: The tightest margins for 15 years is quite an achievement and represents.
Speaker Change: We're not navigate has come from the strong position we were at so onto the commercial slides.
Speaker Change: So the demand for our transportation services continues to originate primarily from the petrochemicals and ammonia industries Mr.
Speaker Change: <unk> account for two thirds of our fleet employment.
Speaker Change: The remaining one third serves LPG customers.
Speaker Change: We guided to approximately 90% utilization for the quarter and ended the period at 91% a strong result.
Speaker Change: During the third quarter is historically somewhat slower compared to the rest of the year.
Speaker Change: Additionally, we actively manage the impact of the U S. Gulf Hurricane season by switching what vessels, we could from ethylene ethane trades.
Speaker Change: Limiting the downside.
Speaker Change: As mentioned in our last call Hurricane barrel made landfall in the Houston area in early July adversely affecting ethylene production and exports.
Speaker Change: I'll provide more detail on this in the next two slides in brief however.
Speaker Change: Adverse impact with short lift.
Speaker Change: Today ethylene prices have returned to competitive levels and exports through mortgage points back to nameplate capacity.
Speaker Change: This has led to strong utilization in October reaching nearly 94%.
Speaker Change: Consequently, we are guiding high utilization for the fourth quarter compared to the third quarter.
Speaker Change: Which was still a strong quarter by the way.
Speaker Change: Turning to page 18, we can see more details on American petrochemical exports. It's no surprise to see continued growth in U S natural gas production.
Speaker Change: It is always reassuring to check the EIA website for the latest figures because they keep going up.
Speaker Change: The increase in NGL production keeps U S gas prices slow which is important.
Speaker Change: And you should join US in Houston next week for our Investor day to learn more about the current market dynamics and most important more important than industry outlook, especially for NGL production for the remainder of the decade.
Speaker Change: In any case, here's a sneak peak the forecast.
Speaker Change: <unk> for our business by the way.
Speaker Change: Back to the hurricane the middle graph clearly shows the impact of hurricane barrel during this period.
Speaker Change: Anthem and producers reduced operations, resulting in down capacity.
Speaker Change: Represented by the light Blue area.
Speaker Change: Production cuts aren't ideal when we're looking to have excess supply for export markets.
Speaker Change: Fortunately this has now corrected.
Speaker Change: With cracker operating levels back to pre hurricane rates.
Speaker Change: This was expected by the industry and as positive to our business.
Speaker Change: The year on year exports of ethylene and ethane on handy size vessels from the U S are displayed in the right hand graph.
Speaker Change: Following the bold salmon Pink line, you can see a dip.
Speaker Change: Due to hurricane barrel, but today the situation has normalized with October volumes actually exceeding those of prior year October months.
Speaker Change: So it is very important.
Speaker Change: We previously mentioned that the post hurricane correction of ethylene prices are back to normalized levels and is a key element for ethylene exports. So on page 19.
Speaker Change: The bottom graph illustrates the significant price correction.
Speaker Change: The Gray line, representing the domestic price of U S ethylene.
Speaker Change: Peaked in July and August as you can see there.
Speaker Change: But it's now returned to normal levels.
Speaker Change: This price adjustment has widened the arbitrage to Europe and Asian markets.
Speaker Change: The middle graph shows various points in the ethylene value chain freight rates.
Speaker Change: Based on August latest pricing assessment now is supporting $270 per ton for freight to Asia.
Speaker Change: This compared to 170 tons.
Speaker Change: Dollar per ton when we held our second quarter earnings call in Middle of August the.
Speaker Change: The $100 per ton difference in freight.
Speaker Change: <unk> represents a meaningful difference.
Speaker Change: $1 2 million to be exact but typical handy sized cargo.
Speaker Change: 12000 metric tons.
Speaker Change: In addition to higher freight rates physical volumes through the terminal have returned to nameplate capacity with.
Speaker Change: With 86000 tons passing through our terminal in October being.
Speaker Change: Being the largest volume for more than six months.
Speaker Change: Higher freight rates have increased volume.
Speaker Change: Obviously, a positive for us.
Speaker Change: On page 20, we.
Speaker Change: We see a positive trend in freight assessments.
Speaker Change: The Green line, representing our ethylene vessels.
Speaker Change: Recent the reason.
Speaker Change: The dark Blue line four semi refrigerated vessels also.
Speaker Change: Compared to the very large gas carrier indexing Black our segment has not experienced the same downside volatility in recent months strong demand for petrochemicals ammonia on short seat regional LPG distribution.
Speaker Change: Our vessels well employed.
Speaker Change: Overall, the demand for our transport services is shaping up nicely on.
Speaker Change: On the supply side as shown on page 21. This situation remains manageable for the handy sized segment.
Speaker Change: The order book is unchanged at 8% of the 16 fleet, while 22% of vessels are over 20 years.
Speaker Change: H.
Speaker Change: I am trying to go more into detail on some of these topics next week in Houston, So come on down there Randy may even have a fun Chris wood prices just like last time, I will stop here and leave the mic to him Randy.
Randy: Thank you <unk> a nice teaser following up on several announcements we made in recent months, we want to provide additional details on some of those updated developments regarding those announcements. So on slide 23, we are pleased to announce our return of capital for the third quarter of 2024 now before we get to that I want to highlight that during the third quarter, we repurchased roughly one.
Randy: 142000 common shares of NBS in the open market totaling $2 3 million for an average price of $16 67 per share now looking ahead in line with our recently announced return of capital policy and Neil statistic table below we're returning 25% of net income or four <unk>.
Speaker Change: $6 million to shareholders. During this fourth quarter. The board has declared a cash dividend of <unk> <unk> per share payable on December 17th just in time for Christmas to all shareholders of record as of November 25, 2024, and that equates to a quarterly cash dividend payments totaling $3 5 million.
Speaker Change: Additionally, with our shares trading well below estimated NAV of greater than $27 per share. We will use the variable portion of the return of capital policy for additional share buybacks as such we expect to repurchase one $1 million of <unk> common shares between now and quarter end such that the dividend.
Speaker Change: And share repurchases together equal 25% of net income or $4 6 million this quarter now.
Speaker Change: <unk> seen over the past few years, and especially again this past June returning capital to shareholders will remain a primary focus for us turning to slide 24 in August we announced new building orders for two new 48500 cubic meter capacity liquefied ethylene gas carriers.
Speaker Change: The price of $102 $9 million each the vessels are scheduled to be delivered in early and mid 2027.
Speaker Change: We also have an option for two additional new buildings matching the current orders in terms of specifications and price to note. These vessels will be the largest in our fleet.
Speaker Change: Fuel fuel engines for ethane there'll be made retrofit ready for using ammonia in the future as the fuel and be able to change that through both the old and the new Panama Canal locks now most importantly, these ethylene carriers will support our ethylene terminal expansion as customers who are looking at signing offtake contracts are also looking at securing their ship.
Speaker Change: Needs as such discussions are ongoing with multiple customers interested in chartering the ships and we expect to fix one or both vessels on time charters prior to delivery.
Speaker Change: Lastly in terms of vessel financing, we've already paid the initial 10% deposit totaling $20 million in September and we expect to complete financing arrangements. Some time next year now.
Speaker Change: Now turning to our soon to be completed ethylene export terminal expansion on slide 25.
Speaker Change: Following us on our previous announcement regarding the expansion of the terminal. The project continues to progress nicely as many of you will see in person next week engineering is complete construction is well underway and the expected completion date remains next month. The project remains on budget with capital contributions required from us to the joint venture for the project.
Speaker Change: Still expect it to be less than $130 million to date, we've made progress payments totaling $67 million and the remaining capex is expected to be paid from cash on hand until possible new financing arrangements are completed next year now as you can see on the bottom left chart.
Speaker Change: Throughput depth in July and August as several ethylene crackers, along the U S. Gulf Coast experienced some planned and unplanned outages, coupled with the negative headwinds literally of hurricane barrel.
Speaker Change: Since then U S. Ethylene production has rebounded widening that geographical price arbitrage and leading to increased throughput at our terminal in both September and October as though even alluded to which should bode well for fourth quarter volumes and cash flow.
Speaker Change: <unk> seen in recent years, the third quarter is seasonally the softest for throughput, but the contracts are take or pay so the annual cash flow over time is expected to remain firm. Despite some quarterly movements Astro.
Speaker Change: As for contracting the expansion volumes, the second and larger than the new multi year off take contract is likely to be signed in November or December as the customer has already agreed to commercial terms and we continue to expect that additional capacity will be contracted in the coming months now, finishing on slide 26, and following up on or even limitation I too want to personally and.
Speaker Change: Each of you to our 2020 for analyst and Investor Day next week here in Houston, Texas Tuesday afternoon November 12, we're going to host our tours at the ethylene terminal as well as on our vessels that will be loading ethylene later that evening the management team and members of our board, we will host a dinner for analysts and investors and then the next day Wednesday November 13.
Speaker Change: We will host company and industry presentations covering current market trends, our financial update as well as our medium term strategy will then have lunch followed by an appreciation event for all of our analysts shareholders customers and partners. So every week in Houston is nice and Sunny, but let me check here.
Speaker Change: Yes, the weather next week will be a specialty pleasant and will match, our outlook clear and bright with that I'll now turn it over to <unk> for closing remarks.
Speaker Change: Okay. Thanks, a lot Ryan and I.
Speaker Change: I will just.
Speaker Change: To sum it all up for you before we go to the Q&A.
Speaker Change: In summary, we delivered a solid Q3, and we have in front of us that Q4 that has come off to a strong start.
Speaker Change: We have the strongest balance sheet in the company's history as illustrated by our low leverage ratio and robust cash position.
Speaker Change: We stay ahead of the curve when it comes to refinancing and refinance well ahead of maturities when we deem that funding is cheap and plentiful.
Speaker Change: This way, we have driven down low margins to the lowest level ever for navigator.
Speaker Change: We continue to pay quarterly cash dividends and buyback shifts and we will continue to look for opportunities to increase capital distribution to our shareholders.
Speaker Change: The vessel supply picture remains attractive with a small handy size order book.
Speaker Change: And an aging global fleet.
Speaker Change: And energy infrastructure volumes through the ethylene export terminal are recovering well after this summer hurricane season.
Speaker Change: The terminal expansion is on time and on budget with completion set for December 24.
Speaker Change: I think all of this aligns the stars really well.
Speaker Change: For all of 2025 business, perhaps very well indeed.
Speaker Change: Because this week the people.
Speaker Change: State selected a new precedent come come January.
Speaker Change: Trump's campaign has emphasized the opportunity and need for the U S to grow energy production and export so drill baby drill.
Speaker Change: Catchphrase.
Speaker Change: We believe that this should bode well for NGL production and exports.
Speaker Change: In addition to this the Trump campaign has also focused on the need to.
Speaker Change: Reducing the U S trade deficit with its trading partners in particular, China.
Speaker Change: We think that this will result in China by more commodities from the U S, including LPG ethylene ethane and eventually also clean ammonia.
Speaker Change: So all in all an election outcome that will lead to strong demand for the energy infrastructure that navigator to lupus.
Speaker Change: Thanks, a lot for listening in and back to you Randy.
Speaker Change: Thank you mods and very well said operator, we will now open the lines for some Q&A. So to raise your hand press star nine and then you'll have to and mute yourself by pressing star six now it's using zoom Jesse as the raise hand function first question your line should be open.
Speaker Change: Hi, Randy.
Speaker Change: You.
Speaker Change: Got it.
Speaker Change: Good morning, and good afternoon, everybody. Thanks for today's update obviously, a lot of good detail a lot of things happening.
Speaker Change: More towards the positive side for sure.
Speaker Change: A couple of questions from me on the terminal I guess, maybe just first if I recall.
Speaker Change: No I think you had mentioned that you had some hurricane barrel disruptions that affected throughput and reported income from from the terminal I know, it's a small amount in the Grand scheme, but just wanted to double check and confirm.
Speaker Change: The contract basically these are take or pay so youre going to be compensated no matter. What eventually for those lost volumes is just maybe a little.
Speaker Change: In terms of when that Rajiv.
Speaker Change: Okay.
Speaker Change: Exactly yeah, so more so with the take or pay contracts if they take the commodity they pay immediately if they do not they have either a quarter or two depending on the contract to make that up or pay deficiencies. So yes, we do expect to receive some of those cash flows that we did not received in the third quarter. Both in the fourth quarter of 'twenty four and into early 2000 <unk>.
Speaker Change: 25, and just to make sure we are clear on the hurricane barrel impact no impact to the terminal itself. They had one small little tree that was down all of the impact was to the ethylene production facilities along the U S. Gulf Coast. So the terminal was a savings out.
Speaker Change: Okay. Thanks, very much for that and then maybe just a bit broadly kind of on just the terminal situation in the Gulf and then Randy we've talked about this before one of the big themes here I guess for me the commodity propane export story in the U S is we're seeing record volumes, leaving the country.
Speaker Change: Seems to be a limit at this point to what the ports can handle.
Speaker Change: Are you seeing.
Speaker Change: One are you seeing demand.
Speaker Change: The ship.
Speaker Change: Regular propane out of your terminal.
Speaker Change: And are there big fees that could potentially be received for doing so and then and I guess.
Speaker Change: Is that even a nonstarter if potentially the infrastructure isn't there to send propane to your terminal any any kind of thoughts on that.
Speaker Change: Correct, yes, the infrastructure at Morgan's point is for ethane and ethylene only so there is the only commodities that are being exported out of Morgan's point at this time.
Speaker Change: So no no appetite or no opportunities for propane exports in the near term now right. If you could give us a few years to change some things around potentially but that will not be happening anytime soon.
Speaker Change: Okay Alright. Thank you and then last one just on my side.
Speaker Change: The slide with the new building two shifts there you've got you've got plenty of time until those deliver and it seems like your order does with anticipation that theres going to be strong demand for them you do have those two options.
Speaker Change: I believe mature or expire in the next couple of weeks any any thoughts on what you intend to do.
Speaker Change: Yes regarding those options.
Speaker Change: And just add a few words, yes, I'll ask my colleagues to supplement.
Speaker Change: We have the options they need to be declared by <unk>.
Speaker Change: November 21, so that means that we still have just two weeks.
Speaker Change: Before declaring them, we have a board meeting in Houston next week and this is when we're going to discuss them. So.
Speaker Change: Time works really well for us so that we maximize the optionality here and to ensure that we have support with us when we discuss it and decided on it.
Speaker Change: Great. Thank you.
Speaker Change: That's good color and I will stay tuned thanks, very much I'll pass it over thank you.
Speaker Change: Thanks Omar.
Speaker Change: Next caller your line should be open.
Speaker Change:
Speaker Change: I wanted to ask about the.
Speaker Change: So the new builds I know you'd mentioned that you were looking to time charter those out one or two of them.
Speaker Change: And just what should we sort of be expecting.
Speaker Change: Hmm.
Speaker Change: Mostly from a duration, but also from a rate perspective, if you could give us any color on that that'd be helpful.
Speaker Change: I can just say a little bit about the duration here.
Speaker Change: When you listened into the conference call and I will comment on how we see the market developing ahead of us.
Speaker Change: Rather confident that we will continue to see a tightening in the demand supply balance over time and that of course should speak towards us ensuring that we don't say too much color on our books in general.
Speaker Change: On the other hand, we also appreciate we are conservative or you could say cautious people. So we also like the long term contract cover for that we have on a couple of follow vessels. So it gives a good balance sheet, let's say between self despite exposure and the long term.
Speaker Change: Charter contracts that we have in place so we're a little bit.
Speaker Change: The glass half full people, so having a mix of some short term copper and some long term copper is ideal for us a lot of it depends on when we're going to go with the board next week and deciding on declaring the options or not but.
Speaker Change: Certainly lots of demand from our customer side right now too.
Speaker Change: Into.
Speaker Change: Contracts.
Speaker Change: Varying duration that being you could say short too.
Speaker Change: And all the way up to five years plus.
Speaker Change: As well so we are right now having those discussions internally to how we exactly structure that but.
Speaker Change: But we would probably like to have a little bit of a mix across the two old potentially to four vessels.
Speaker Change: Okay. That's when it comes to when it comes to rates.
Speaker Change: Not so much we can say you can pitch entries.
Speaker Change: Hi.
Speaker Change: I can't comment too much on that.
Speaker Change: Steve.
Steve: The rates up to cover certain things from our expectations.
Speaker Change: We'll cross that bridge when we get there.
Speaker Change: Okay, Yeah, and then more broadly on the time charter contracts for the current fleet can you sort of talk about.
Speaker Change: What that sort of <unk>.
Speaker Change: Balance is currently and what the expectations are you you mentioned you wanted to sort of capture some of the upside but are you looking to sort of short term increase or decrease time charters, obviously, when the time charters would be rolling off.
Speaker Change: What's sort of the game.
Speaker Change: <unk> plan there.
Speaker Change: Yes, Frank.
Frank: With the strengthening market, particularly now in the fourth quarter, but we are seeing generally our short term forecast is taking.
Speaker Change: Taking more spot versus time charter cover.
Speaker Change: The time charter that we do do are also shorter in nature. So from six to 12 months, but overall, a little bit more spot exposure because of the strong fundamentals in the markets.
Speaker Change: With with shorter extensions on the ships that are on time charter.
Speaker Change: Okay, Great. That's all I had thank you. Thanks, Brian can also slides 30, and 31 of the earnings presentation kind of go through the full list and you'll see there the ethane ethylene.
Speaker Change: Very little very little time charter exposure.
Speaker Change: Especially for next year and beyond and then more so on the fully refrigerated vessels. The semi reps those are the ones who are really focusing on the time charter and you can see that in that fleet list.
Speaker Change: So looking forward to seeing you next week.
Speaker Change: Yeah.
Speaker Change: All right next caller your line should be open as well.
Speaker Change: Yeah.
Speaker Change: I believe it's a po.
Speaker Change: You might have to press star six.
Speaker Change: Okay. Operator, maybe you go to the next caller and have broken back.
Speaker Change: Oh, there's Po Po.
Speaker Change: Hello, Don on.
Speaker Change: On mute yourself, though David Joe.
Speaker Change: Can you hear us though.
Speaker Change: Okay.
Speaker Change: Should we try comment and come back to it though.
Speaker Change: Hey, Randy Thank you for taking my questions Hey clinic.
Speaker Change: Following up on the questions on the chartering front.
Speaker Change: You mentioned you retire 13, your semi and fully refrigerated vessels at higher rates relative to last year and I was wondering could you provide some further insight on the delta between the two.
Speaker Change: It depends a little bit on the ship on each customer and niche trades.
Speaker Change: Yeah.
Speaker Change: But the if.
Speaker Change: If you look at third quarter. If you just use the third quarter was the conference call for that.
Speaker Change: <unk> 29 on average versus 26, so that's a 10% uplift already there across the entire fleet.
Speaker Change: Year on year.
Speaker Change: So we are definitely looking at pushing that.
Speaker Change: And testing the limits of where it can go and that's what we're doing at the moment with the fleet with the fleet in the spot market on the time charters that were trying to extend.
Speaker Change: Makes sense thanks for the color.
Speaker Change: And I also want to ask about Blue streak, you signed a memorandum of understanding a few months ago.
Speaker Change: And I was wondering could you give us an update on how the conversations are going and whether we should expect at <unk>.
Speaker Change: A few years.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: With the unit per.
Speaker Change: On a unit per Mou. They are currently now going and evaluating the current work that we.
Speaker Change: We have done with them is a pre feed study.
Speaker Change: And then their plan is to go into feed study at some point during next year in parallel the UK government needs to put into regulation.
Speaker Change: Support carbon capture shipping sequestration for the C. O. Two so it's a it's a process that takes time.
Speaker Change: All going well, maybe something next year, but it takes them three or four years to actually construct all the infrastructure pieces that needs to go into it. So it's towards the end of the decade, all going well where things can be <unk>.
Speaker Change: Thanks.
Speaker Change: Revenue generate that so stay tuned, but it's a longer game.
Speaker Change: Sure. Thank you that's all for me. Thank you for taking my questions.
Speaker Change: Yeah.
Speaker Change: Thank you for Matt.
Speaker Change: Let's see here Poe I believe you submitted the questions let me pull those up.
Speaker Change: For the new building options any wiggle room on extending those out or is there a firm exploration of later this month.
Speaker Change: Hi, Ken maybe to take that one.
Speaker Change: Yeah.
Speaker Change: The yard in the CLO market right now and you can see that there's a lot of demand for the slots that means that the options that are being granted right now of extremely short duration in general.
Speaker Change: I guess the answer is no we don't have an opportunity to extend the options.
Speaker Change: Extend the options SSL right now.
Speaker Change: Perfect.
Speaker Change: For the export terminal is coming up in the completion in 2000 <unk> of 24 or next year, yes. The completion of construction and expansion is late December so a little over a month from now or six seven weeks from now and then they ramp time is very limited right. It's literally switching a damper switch and I know many end.
Speaker Change: Investors will be able to hear and see all about this next week, but yes, we expect that to be fully operational and up and running by January 2025.
Speaker Change: So I think that is it for the Q&A mods any final words.
Speaker Change: Just wanted to repeat what you said before and it has come down two to Houston, and then have a look at our.
Speaker Change: At our terminal at our ship when it's loading and then meet with management and our board and we can have a good discussion about our business. So.
Speaker Change: Youre welcome and thanks, a lot for listening in.
Speaker Change: Thank you all.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Goodbye.