Q2 2026 Navigator Holdings Ltd Earnings Call

August 5, 2026

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Speaker #2: And a tighter arbitrage on ethylene. The underlying demand picture, though, driven by the growing U.S. natural gas liquids production remains fully intact. And the homeless straits situation continues to support demand for U.S.

Mads Zacho: A tighter arbitrage on ethylene. The underlying demand picture, though, driven by the growing US natural gas liquids production remains fully intact. The Hormuz Strait situation continues to support demand for US commodities across LPG, ethane, and petrochemicals. On the supply side, the handysize order book stands at just 11% of the fleet, while 17% of vessels are over 25 years old. The math on the fleet renewal continues to work in our favor. With that, I'll pass on the word to Gary, and please go ahead with a little bit more detail on the financials. Go ahead, Gary.

Speaker #2: commodities across LPG, ethane, and petrochemicals. On the supply side, the handy size order book stands at just 11% of the fleet, while 17% of vessels are over 25 years old.

Speaker #2: The math on the fleet renewal continues to work in our favor. With that, I'll pass on the word to Gary, and please go ahead with a little bit more detail on the financials.

Speaker #2: Go ahead, Gary.

Speaker #3: Thanks, Mads. And hello, everyone. Following on from where we left off on our last call in May this year, the tailwinds we described as we moved through the second quarter did indeed arrive.

Gary Chapman: Thanks, Mads, and hello, everyone. Following on from where we left off on our last call in May this year, the tailwinds we described as we moved through the Q2 did indeed arrive. As Mads has said, we're pleased to report exceptional Q2 results. This is achieved against a backdrop that included continued disruption across key global shipping corridors, including the Strait of Hormuz, which, having limited direct operational or financial impact on us, has acted as a meaningful demand catalyst, pushing customers towards North American supply chains and benefiting our utilization and rates in the quarter. Oeyvind will go more into this shortly.

Speaker #3: And as Mads has said, we're pleased to report exceptional second-quarter results. This was achieved against a backdrop that included continued disruption across key global shipping corridors, including the Strait of Hormuz, which, having limited direct operational or financial impact on us, has acted as a meaningful demand catalyst, pushing customers toward North American supply chains and benefiting our utilization and rates in the quarter.

Speaker #3: Oeyvind will go more into this shortly. Turning to more detail on slide 6, we're reporting an average TCE of 33,946 for the second quarter of 2026, an all-time high, being more than 4,000 dollars per day higher than the 2,9684 in the first quarter of 2026, and over 5,000 dollars per day higher than the 2,8216 in the second quarter of last year.

Gary Chapman: Turning to more detail on slide six, we're reporting an average TCE of $33,946 for the Q2 2026, an all-time high, being more than $4,000 per day higher than the $29,684 in the Q1 2026, and over $5,000 per day higher than the $28,216 in the Q2 of last year. Utilization was above our benchmark at 90.8%, compared to 90.6% in the Q1 2026, and 84.2% in the Q2 of last year. Voyage expenses are showing higher in the Q2 2026, but which are effectively pass-through costs to our customers related to bunker fuel and other such spot voyage costs, and they're reflective of the record total operating revenues that we report in Q2.

Speaker #3: Utilization was above our benchmark at 90.8%, compared to 90.6% in the first quarter of 2026, and 84.2% in the second quarter of last year.

Speaker #3: Voyage expenses are showing higher in the second quarter of 2026, but which are effectively pass-through costs to our customers related to bunker fuel and other such spot voyage costs, and they're reflective of the record total operating revenues that we're reporting this quarter.

Speaker #3: Vessel operating expenses at 47.1 million dollars for the quarter were broadly flat in absolute dollar terms, though up on the basis of dollars per vessel per day at 9,554, compared to 8,905.

Gary Chapman: Vessel operating expenses of $47.1 million for the quarter were broadly flat in absolute dollar terms, though up on the basis of dollars per vessel per day at $9,554 compared to $8,905. This was mainly driven by higher crewing and logistics costs and the timing of project-related expenses incurred in the quarter. Depreciation was down at $31.5 million compared to Q2 of last year, reflecting our reduced fleet size following vessel sales. The sale of the Navigator Pegasus in this quarter brought us the gain of $15.3 million on proceeds of $30.5 million. EBITDA for the quarter was an all-time high of $101.6 million, compared to $80.3 million in Q1 of 2026, and $71.9 million in Q2 of 2025.

Speaker #3: This was mainly driven by higher crewing and logistics costs and the timing of project-related expenses incurred in the quarter. Depreciation was down at 31.5 million dollars, compared to the second quarter of last year, reflecting our reduced fleet size following vessel sales.

Speaker #3: And the sale of the Navigator Pegasus in this quarter brought us the gain of 15.3 million dollars on proceeds of 30.5 million. EBITDA for the quarter was an all-time high of 101.6 million dollars, compared to 80.3 million in the first quarter of 2026, and 71.9 million dollars in the second quarter of 2025.

Speaker #3: Adjusted EBITDA also a record was 86.4 million dollars, up from 65 million dollars in the first quarter of 2026, and significantly higher than the 60.1 million dollars in the second quarter of 2025.

Gary Chapman: Adjusted EBITDA, also a record, was $86.4 million, up from $65 million in Q1 of 2026, and significantly higher than the $60.1 million in Q2 of 2025. As always, Randy will discuss more about our ethylene terminal, but throughput volumes for Q2 were another record high of 374,278 tons. With our share of the terminal's results reflected in the equity method investment income line of $7.1 million for the quarter, up from $4.8 million in Q2 of last year. Our income tax line reflects current tax and deferred tax in relation to our equity investment in the ethylene export terminal, in line with the stronger terminal results for the quarter. Net income attributable to stockholders for Q2 of 2026 was $53.0 million or $0.86 per share.

Speaker #3: As always, Randy will discuss more about our ethylene terminal, but throughput volumes for the second quarter were another record high of 374,278 tons, with our share of the terminal's results reflected in the equity method investment income line of 7.1 million dollars for the quarter, up from 4.8 million dollars in the second quarter of last year.

Speaker #3: Our income tax line reflects current tax and deferred tax in relation to our equity investment in the ethylene export terminal, in line with the stronger terminal results for the quarter.

Speaker #3: Net income attributable to stockholders for the second quarter of 2026 was 53.0 million dollars, or 86 cents per share. Again, the highest Navigator has ever reported, surpassing the previous records set just last quarter.

Gary Chapman: Again, the highest Navigator has ever reported, surpassing the previous record set just last quarter, and well above the $21.5 million or $0.31 per share reported in Q2 of 2025. We continue to actively use strength and build our balance sheet as shown on slide seven. Our cash equivalents, and restricted cash balance was $274 million at 30 June 2026, and this figure was $362 million at close on 03 August 2026. In particular, following the $57 million we drew from our recently closed newbuild vessel financing facility. As a precautionary measure in April 2026, when the war in Iran started, we drew down just over $91 million under our revolving credit facilities, given the geopolitical uncertainty seen at that time.

Speaker #3: And well above the $21.5 million, or $0.31 per share, reported in the second quarter of 2025. We continue to actively use, strengthen, and build our balance sheet, as shown on slide 7.

Speaker #3: Our cash, cash equivalents, and restricted cash balance was $274 million at June 30, 2026, and this figure was $362 million at close on August 3, 2026.

Speaker #3: In particular, following the 57 million dollars we drew from our recently closed new built vessel financing facility. As a precautionary measure, in April 2026, when the war in Iran started, we drew down just over 91 million dollars under our revolving credit facilities, given the geopolitical uncertainty seen at that time.

Speaker #3: And whilst this has of course has not gone away, we expect to repay those revolving facilities in the coming months, based on our ongoing assessment of market conditions.

Gary Chapman: Whilst this of course has not gone away, we expect to repay those revolving facilities in the coming months based on our ongoing assessment of market conditions and as the proceeds from the sale of the Unigas vessel fleet are received. Our healthy liquidity position at 30 June 2026 is after returning $10.6 million to shareholders across dividends and share buybacks, repaying $26.8 million of scheduled loan amortization, and ahead of our agreed sale of the Unigas pool fleet, early repaying $43 million of debt secured against certain of those vessels. We also made $20.8 million of payments towards our newbuild vessels during the quarter. Our share in the Morgans Point ethylene export terminal remains unencumbered. We also own 14 unencumbered vessels at 30 June 2026, eight of which are part of the Unigas fleet to be sold.

Speaker #3: And as the proceeds from the sale of the Unigas vessel fleet are received. Our healthy liquidity position at June 30, 2026, is after returning 10.6 million dollars to shareholders across dividends and share buybacks, repaying 26.8 million dollars of scheduled loan amortization, and ahead of our agreed sale of the Unigas full fleet, early repaying 43 million dollars of debt secured against certain of those vessels.

Speaker #3: We also made 20.8 million dollars of payments toward our new build vessels during the quarter. Our share in the Morganspoint Ethylene Export Terminal remains unencumbered.

Speaker #3: We also own 14 unencumbered vessels at June 30, 2026, 8 of which are part of the Unigas fleet to be sold. And with our bond having 60 million dollars of untapped capacity, we continue to retain significant additional liquidity for if and when needed.

Gary Chapman: With our bond having $60 million of untapped capacity, we continue to retain significant additional liquidity for if and when needed. Looking beyond this quarter, we've paid from our own cash a total of $131.6 million at 30 June 2026 towards the six vessels we have under construction, of which $8.5 million represents capitalized interest under the US GAAP. On 17 July, we drew $57.6 million, as I referred above, from our new $164 million bridge loan facility, recouping 80% of the pre-delivery installments paid to the shipyard to date for the first of our two Panda newbuild vessels. We continue to press forward in maintaining a balanced capital structure.

Speaker #3: Looking beyond this quarter, we've paid from our own cash a total of $131.6 million as of June 30, 2026, toward the six vessels we have under construction, of which $8.5 million represents capitalized interest under US GAAP.

Speaker #3: On July 17, we drew 57.6 million dollars, as I referred above, from our new 164 million dollar bridge loan facility, recouping 80% of the pre-delivery installments paid to the shipyard to date for the first of our two Panda new build vessels.

Speaker #3: We continue to press forward in maintaining a balanced capital structure. On slide 8, across the quarter, and with a very supportive banking group and a strong underlying business, we were again able to return cash to shareholders, use funds for the construction of our new builds, reward shareholders through buybacks, and continue managing and refreshing our debt to meet our financing needs in an efficient and cost-competitive way.

Gary Chapman: On slide eight, across the quarter, and with a very supportive banking group and a strong underlying business, we were again able to return cash to shareholders, use funds for the construction of our newbuilds, reward shareholders through buybacks, and continue managing and refreshing our debt to meet our financing needs in an efficient and cost-competitive way. In the respect of Q1 2026, we returned 30% of net income attributable to stockholders, comprising $6.3 million of share buybacks and $4.3 million of cash dividend, representing $0.07 per share. In respect to Q2 2026, our board yesterday approved an increase such that we will return 35% of net income attributable to stockholders.

Speaker #3: In respect of the first quarter of 2026, we returned 30% of net income attributable to stockholders, comprising $6.3 million of share buybacks and $4.3 million of cash dividends, representing $0.07 per share.

Speaker #3: And in respect of the second quarter of 2026, our Board yesterday approved an increase such that we will return 35% of net income attributable to stockholders. This will comprise $4.3 million of cash dividends, representing $0.07 per share, and we expect the balance will comprise around $14.2 million of share repurchases to take place between now and September 30, 2026.

Gary Chapman: This will comprise $4.3 million of cash dividend, representing $0.07 per share, and we expect the balance will comprise around $14.2 million of share repurchases to take place between now and 30 September 2026. Given the company's strong cash position for Q3 ending 30 September 2026, yesterday our board also approved an increase in the fixed element of the company's capital return policy to $0.08 per share of the company's common stock, while maintaining that the fixed element and the variable element together should equal 35% of net income attributable to stockholders of the company. Just note that the declaration of any dividends and the amount of any such dividends, including with respect to Q3, do remain subject to approval by the company's board of directors following the conclusion of each quarter as normal.

Speaker #3: Given the company's strong cash position for the third quarter ending September 30, 2026, yesterday our board also approved an increase in the fixed element of the company's capital return policy to 8 cents per share of the company's common stock, while maintaining that the fixed element and the variable element together should equal 35% of net income attributable to stockholders of the company.

Speaker #3: Just note that the declaration of any dividends and the amounts of any such dividends including with respect to the third quarter do remain subject to approval by the company's board of directors following the conclusion of each quarter, as normal.

Speaker #3: We've continued to be busy with vessel financings, and we've now closed three transactions relating to our six newbuild vessels. In addition to the March 2026 facility we previously announced, that finances two of those vessels, on June 18, 2026, we secured pre-delivery bridge finance for our first two Panda Ethylene newbuild vessels, and we drew the $57.6 million of that on July 17, as I mentioned earlier.

Gary Chapman: We've continued to be busy with vessel financings, we've now closed three transactions relating to our six newbuild vessels. In addition to the March 2026 facility we previously announced that finances two of those vessels, on 18 June 2026, we secured pre-delivery bridge finance for our first two Panda ethylene newbuild vessels, and we drew $57.6 million of that on 17 July, as I mentioned earlier. At the same time, we obtained committed $205.8 million JOLCO financing to refinance this bridge facility on delivery of the vessels and provide long-term post-delivery financing on very competitive terms. Very recently, only last week on 31 July, we signed a new secured terminal facility for up to $121.8 million to finance approximately 70% of the cost of our two Coral ammonia newbuild vessels, executed at our lowest ever margin, 135 basis points plus SOFR.

Speaker #3: Plus, at the same time, we obtained committed 205.8 million Jolco financing to refinance this bridge facility on delivery of the vessels, and provide long-term post-delivery financing on very competitive terms.

Speaker #3: Then very recently, only last week, on July 31, we signed a new secured terminal facility for up to 121.8 million dollars to finance approximately 70% of the cost of our 2 coral ammonia new build vessels.

Speaker #3: Executed at our lowest ever margin, 135 basis points plus sofa. The facility is available to draw on delivery of the vessels around May and September 2028, respectively, and as always, we'd like to thank our banking group for their continued support.

Gary Chapman: The facility is available to draw on delivery of the vessels around May and September 2028 respectively. As always, we'd like to thank our banking group for their continued support. Net debt for the last 12 months adjusted EBITDA fell to 2.2 times at 30 June 2026, down from 2.5 times at 31 March 2026, and we have only relatively small near and midterm balloons as we work to ensure our debt profile is pushed to the right. Net debt was $653 million, and our loan-to-fleet value ratio remains approximately 31%, or below 30% when you include a reasonable value for our Morgan's Point terminal investment. 55% of the company's debt was either hedged or on a fixed interest rate basis at the quarter end, consistent with the prior quarter.

Speaker #3: Net debt to last 12 months adjusted EBITDA fell to 2.2 times at June 30, 2026, down from 2.5 times at March 31, 2026. And we have only relatively small and mid small near and mid-term balloons, as we work to ensure our debt profile is pushed to the right.

Speaker #3: Net debt was $653 million, and our loan-to-fleet value ratio remains approximately 31%, or below 30% when you include a reasonable value for our Morgans Point terminal investment. Fifty-five percent of the company's debt was either hedged or on a fixed interest rate basis at quarter-end, consistent with the prior quarter.

Speaker #3: We'll continue to prioritize returning capital to shareholders while maintaining balance sheet strength, lowering the cost of our debt where we can, and balancing growth, deleveraging, and shareholder returns, all in a disciplined, deliberate, and careful manner.

Gary Chapman: We'll continue to prioritize returning capital to shareholders while maintaining balance sheet strength, lowering the cost of our debt where we can, and balancing growth, deleveraging, and shareholder returns, all in a disciplined, deliberate, and careful manner. On slide nine, this again highlights two of the core strengths of our Navigator platform, our ability to generate consistent operating cash flow and our structurally lower all-in cash breakeven when isolating for the change in ownership days. Starting with cash flow over the last 12 months to 30 June 2026, the business continued to generate strong underlying operating cash flow with a pre-CapEx cash flow yield averaging around 17%. Post-CapEx free cash flow continues to reflect investment in our newbuild program. Our latest estimate for 2026 all-in cash breakeven is $21,990 per vessel per day, up from $21,230 last quarter.

Speaker #3: On slide 9, this again highlights 2 of the core strengths of our navigator platform. Our ability to generate consistent operating cash flow, and our structurally lower all-in cash break-even when isolating for the change in ownership days.

Speaker #3: Starting with cash flow over the last 12 months to June 30, 2026, the business continued to generate strong underlying operating cash flow, with a pre-capex cash flow yield averaging around 17%.

Speaker #3: Post-capex free cash flow continues to reflect investment in our new build program. Our latest estimate for 2026 all-in cash break-even is 21,990 dollars per vessel per day, up from 21,230 last quarter.

Speaker #3: The increase versus last quarter's estimate principally reflects our agreed sale of the 8 Unigas pool vessels, which reduces the average fleet size across which costs are spread.

Gary Chapman: The increase versus last quarter's estimate principally reflects our agreed sale of the eight Unigas pool vessels, which reduces the average fleet size across which costs are spread. Notwithstanding, our headroom over our TCE revenue remains substantial, even adjusting out the exceptional rate levels we've seen in this quarter. Our cash breakeven figure incorporates over $175 million of operating costs, $114 million of debt amortization, and approximately $44 million of net interest expense. Expense guidance for 2026 is materially unchanged from the guidance provided in our Q1 earnings results presentation when accounting for the change in ownership days, noting that in particular, OpEx and depreciation have reduced accordingly with the upcoming sale of the eight Unigas vessels. Slide 10 outlines our historic quarterly adjusted EBITDA, adding this Q2's results.

Speaker #3: Notwithstanding, our headroom over our TCE revenue remains substantial, even adjusting out the exceptional rate levels we've seen in this quarter. Our cash break-even figure incorporates over 175 million dollars of operating costs, 114 million dollars of debt amortization, and approximately 44 million dollars of net interest expense.

Speaker #3: Expense guidance for 2026 is materially unchanged from the guidance provided in our first quarter earnings, results presentation, when accounting for the change in ownership days.

Speaker #3: Noting that, in particular, OPEX and depreciation have reduced accordingly with the upcoming sale of the 8 Unigas vessels. Slide 10 outlines our historic quarterly adjusted EBITDA.

Speaker #3: Adding this second quarter's results. We now have 14 quarters in a row since the beginning of 2023, where we've reported at least 60 million dollars of quarterly adjusted EBITDA, and with an average of 72 million dollars per quarter over that period.

Gary Chapman: We now have 14 quarters in a row since the beginning of 2023 where we've reported at least $60 million of quarterly adjusted EBITDA and with an average of $72 million per quarter over that period. We've also added for reference some historic data points to this slide showing our share of the terminal's adjusted EBITDA. As we've highlighted previously, our earnings remain sensitive to TCE movements, and we estimate approximately $70 million of annual additional EBITDA uplift or $0.28 per share of annual EPS uplift for every $1,000 increase in TCE rates, all other things being equal. As the previous quarters, an update on our vessel drydock schedule, projected cost, and time taken can be found in the appendix should that detail be of interest to anybody.

Speaker #3: We've also added, for reference, some historic data points to this slide, showing our share of the terminal's adjusted EBITDA. Then, as we've highlighted previously, our earnings remain sensitive to TCE movements, and we estimate approximately $17 million of annual additional EBITDA uplift, or $0.28 per share of annual EPS uplift, for every $1,000 increase in TCE rates, all other things being equal.

Speaker #3: Then, as for previous quarters, an update on our vessel dry dock schedule projected costs and time taken can be found in the appendix, should that detail be of interest to anybody.

Speaker #3: And finally, looking ahead, after an exceptionally strong second quarter, we do expect TCE and utilization to moderate in the third quarter, also consistent with normal seasonal patterns.

Gary Chapman: Finally, looking ahead, after an exceptionally strong Q2, we do expect TCE and utilization to moderate in the Q3, also consistent with normal seasonal patterns. Even so, we expect the business to remain cash generative, and despite the geopolitical uncertainty and market crosswinds that remain, Navigator is in an excellent financial position, and it gives us the confidence and the flexibility to move forward and pursue opportunities as they arise. With that, I'll hand over to Oeyvind to provide the latest commercial update. Oeyvind?

Speaker #3: Even so, we expect the business to remain cash generative, and despite the geopolitical uncertainty and market crosswinds that remain, Navigator is in an excellent financial position. This gives us the confidence and the flexibility to move forward and pursue opportunities as they arise.

Speaker #3: And with that, I'll hand over to Oeyvind to provide the latest commercial update. Oeyvind.

Speaker #2: Thank you, Gary. Good morning, everyone. I'll spend the next few minutes on the Strait of Hormuz and what it's doing to maritime trade lanes.

Oeyvind Lindeman: Thank you, Gary. Good morning, everyone. I'll spend the next few minutes on the Strait of Hormuz and what it's doing to maritime trade lanes, then the ethylene story, our utilization, and I'll wrap up with a quick view on vessel supply and rates. Let's start with the big one, which continues to be the Strait of Hormuz on page 12. The Strait continues to disrupt global shipping lanes and is creating inefficiencies across pretty much every ship segment. Today, only around 20% of the vessels that would normally transit the Hormuz are actually doing so. The rest are either finding employment elsewhere or they're sitting in the Indian Ocean waiting for a green light to resume Middle East loadings. Where do the cargoes come from instead? It's North America. It's really the only region with enough capacity to substitute the lost Middle East supply.

Speaker #2: Then the ethylene story, our utilization, and I'll wrap up with a quick view on vessel supply and rates. So let's start with the big one, which continues to be the Strait of Hormuz on page 12.

Speaker #2: The strait continues to disrupt global shipping lanes and is creating inefficiencies across pretty much every ship segment. Today, only around 20% of the vessels that would normally transit the Hormuz are actually doing so.

Speaker #2: The rest are either finding employment elsewhere or they're sitting in the Indian Ocean waiting for a green light to resume Middle East loadings. And where do the cargoes come from instead?

Speaker #2: It's North America. It's really the only region with enough capacity to substitute the lost Middle East supply. So we're seeing a meaningful number of vessels heading toward the Panama Canal.

Oeyvind Lindeman: We're seeing a meaningful number of vessels heading toward the Panama Canal. Because Panama comes with its own headaches, transit uncertainty, and auction fees that can run into $millions for one-way passage, many ships are going the long way around instead via the Cape of Good Hope. Either way, it's more days at sea. In shipping terms, that is called inefficiency, and inefficiency, at least in the short term, works in our favor. You simply need more ships to move the same amount of cargo from A to B, and that's positive for the supply and demand balance. We're seeing this play out in LPG, in ethane, and in ethylene. Of the three, ethylene is where the impact on our shipping demand has been the biggest. Let's turn to page 13.

Speaker #2: And because Panama comes with its own headaches, transit uncertainty, and auction fees that can run into millions of dollars for one-way passage, many ships are going the long way round instead via the Cape of Good Hope.

Speaker #2: Either way, it's more days at sea. In shipping terms, that is called inefficiency. And inefficiency, y, at least in the short term, works in our favor.

Speaker #2: You simply need more ships to move the same amount of cargo from A to B, and that's positive for the supply and demand balance.

Speaker #2: We're seeing this play out in LPG, in ethane, and in Ethylene. And of the three, Ethylene is where the impact on our shipping demand has been the biggest.

Speaker #2: So let's turn to page 13. Since the strait closed to commercial shipping on the 28th of February, Ethylene exports out of the US have been climbing.

Oeyvind Lindeman: Since the Strait closed to commercial shipping on 28 February, ethylene exports out of the US have been climbing. You can see it on the right of the right-hand graph on March, April, and May were particularly strong. Most of that volume went transatlantic to Europe. Why? Because the arbitrage between US and European pricing was at its widest. You can see this on the left-hand graph with the light blue line sitting above the others, meaning an exporter of US ethylene could, on paper, make the biggest net back selling to European buyers. That picture has shifted over the past couple of months. Both graphs show it. The arbitrage is now widest to Asia, the dark blue line versus the gray line, and that's pulling ethylene across the Pacific. From where we sit, that's good news.

Speaker #2: You can see it on the right of the the right-hand graph on on March, April, and May were particularly strong. Most of that volume went transatlantic to Europe.

Speaker #2: And why? Because the arbitrage between US and European pricing was at its widest. You can see this on the left-hand graph, with the light blue line sitting meaning an exporter of US Ethylene could, on paper, make the biggest net back selling to European buyers.

Speaker #2: That picture has shifted over the past couple of months; both graphs show it. The arbitrage is now widest to Asia—the dark blue line versus the gray line.

Speaker #2: And that's pulling ethylene across the Pacific. From where we sit, that's good news—longer voyages, more ton-miles for the handy-size ethylene segment.

Oeyvind Lindeman: Longer voyages, more ton-miles for the handysize ethylene segment. Ethane pricing, which underpins US competitiveness for both ethane and ethylene, has stayed remarkably flat through all the volatility. Ethane is really the rock in all of this. This is key when thinking about long-term fundamentals. These exports drove our utilization higher, and you can see that on page 14. We averaged 90.8% for the quarter, well above the same Q last year. This is illustrated by the green dotted line on the left-hand graph. Now, toward the end of the quarter, uncertainty crept in. The geopolitics, the Strait itself, the US-Iran memorandum of understanding on ceasefire. Conflicting messages became the norm, like a traffic light flipping from green to orange to red and back again for the Strait transits. That clearly resulted in less activity. Many market participants simply went into wait and see mode.

Speaker #2: And ethane pricing, which underpins U.S. competitiveness for both ethane and ethylene, has stayed remarkably flat through all the volatility. Ethane is really the rock in all of this.

Speaker #2: This is key when thinking about long-term fundamentals. These exports drove our utilization higher, and you can see that on page 14. We average 90.8% for the quarter, well above the same quarter last year.

Speaker #2: This is illustrated by the green dotted line on the left-hand graph. Now, toward the end of the quarter, uncertainty crept in. The geopolitics, the strait itself, the US-Iran memorandum of understanding on ceasefire, conflicting messages became the norm, like a traffic light flipping from green to orange to red, and back again for the strait transits.

Speaker #2: And that clearly resulted in less activity, many market participants simply went into wait-and-see mode. That said, Ethylene seems to have found a floor when looking at the dotted dark blue line on the right-hand graph.

Oeyvind Lindeman: That said, ethylene seems to have found a floor when looking at the dotted dark blue line on the right-hand graph. Volumes have come off the record highs of May, yes, but recent exports are still running above historical average for this time of the year, and that is good to see. Moving to fleet supply on page 15, the order book across the gas segments is largely unchanged from last quarter, which is also applicable for our handysize segment. As Mads mentioned in his opening remarks, we have a low order book both in absolute numbers and as a percentage of the operating fleet of 125 vessels. We believe this is very much manageable going forward. One thing to note, our eight smaller ships, the dark blue box at the bottom middle of the chart, will drop out of the picture by next Q's call we think.

Speaker #2: Volumes have come off the record highs of May, yes, but recent exports are still running above the historical average for this time of year.

Speaker #2: And that is good to see. Moving to fleet supply on page 15, the order book across the gas segments is largely unchanged from last quarter.

Speaker #2: Which is also applicable for our handy size segment. As Mads mentioned in his opening remarks, we have a low order book, both in absolute numbers and as a percentage of the operating fleet of 125 vessels.

Speaker #2: We believe this is very much manageable going forward. One thing to note, our eighth smaller ships, the dark blue box at the bottom middle of the chart, will drop out of the picture by next quarter's call, we think, as they're part of the Unigas transaction we just announced and which was commented on.

Oeyvind Lindeman: As they're part of the Unigas transaction we've just announced and which was commented on. Finally, market rates on page 16. It shows the updated Clarksons 12-month time charter assessment. Rates rose during Q2 on the surge in demand across all vessel classes, including handysize. The assessment has since come back to pre-Hormuz levels. Let's remember, those pre-Hormuz levels were quite robust to begin with. As always, spot rates can run above the 12-month assessment and aren't necessarily captured by this index. To wrap it up, global trade disruption is generally positive for shipping, and we've seen that firsthand, particularly in ethylene exports on seagoing demand for our vessels. These inefficiencies, Panama being a good example, won't disappear anytime soon. What's holding back the record Q2 volumes from carrying straight into Q3 is uncertainty.

Speaker #2: And finally, market rates. On page 16, it shows the updated Clarkson's 12-month time chart reassessment. Rates rose during the second quarter on the surge in demand across all vessel classes, including handy size.

Speaker #2: The assessment has since come back to pre-Hormuz levels. But let's remember, those pre-Hormuz levels were quite robust to begin with. And as always, spot rates can run above the 12-month assessment and aren't necessarily captured by this index.

Speaker #2: So to wrap it up, global trade disruption is generally positive for shipping, and we've seen that firsthand, particularly in Ethylene exports on seagoing demand for our vessels.

Speaker #2: These inefficiencies, Panama being a good example, want to disappear anytime soon. What's holding back the record two-queue volumes from carrying straight into third quarter is uncertainty.

Speaker #2: Market participants, our hesitant to commit beyond critical keep the lights on deals, and are shying away from longer-term transactions. But the market itself remains robust at levels similar to before, almost happen.

Oeyvind Lindeman: Market participants are hesitant to commit beyond critical keep-the-lights-on deals and are shying away from longer-term transactions. The market itself remains robust at levels similar to before Hormuz happened. With that, over to Randy. Randy, what do you got to share?

Speaker #2: With that, over to Randy. Randy, what do you have to share?

Speaker #1: Thank you, Oyvind. I have plenty to share. So as Mads mentioned earlier, there have been several recent developments that we want to provide some additional details and updates on.

Randy Giveans: Thank you, Oeyvind. I have plenty to share. As Mads mentioned earlier, there have been several recent developments that we want to provide some additional details and updates on. Starting on slide 18. During Q2, we paid a $0.07 quarterly cash dividend that totaled $4.3 million, and we repurchased over 270,000 common shares of NVGS in the open market, which totaled $6.3 million at an average price of around $23.19 per share. As we announced in May, our capital return policy currently now includes a fixed quarterly cash dividend of $0.07 per share as part of our quarterly payout percentage of 35% of net income. As a result, we are returning a total of $18.5 million to shareholders during this Q3.

Speaker #1: So starting on slide 18, during the second quarter, we paid a 7 cent quarterly cash dividend that totaled 4.3 million dollars. And we repurchased over 270,000 common shares of NVGS in the open market, which totaled 6.3 million dollars at an average price of around 23 dollars and 19 cents per share.

Speaker #1: As we announced in May, our capital return policy currently now includes a fixed quarterly cash dividend of 7 cents per share, as part of our quarterly payout percentage of 35% of net income.

Speaker #1: So as a result, we are returning a total of 18.5 million dollars to shareholders during this third quarter. The board has declared a cash dividend of 7 cents per share, payable payable on September 1st, to all shareholders of record as of August 19th.

Randy Giveans: The board has declared a cash dividend of $0.07 per share, payable on 1 September to all shareholders of record as of 19 August. That equates to another quarterly cash dividend payment of $4.3 million. Additionally, with our shares trading well below NAV of more than $30 a share, we use the variable portion to return capital via share buybacks. As such, we plan to repurchase $14.2 million of our shares between now and quarter end, that the dividend and the share repurchases together equal 35% of net income, or $18.5 million for the quarter. Wait, there's more. Starting next quarter, the board approved an increase of the fixed quarterly cash dividend amount to $0.08 per share. That's a 14% dividend increase. With a strong balance sheet and consistent earnings, we hope to steadily improve our capital return policy going forward.

Speaker #1: That equates to another quarterly cash dividend payment of 4.3 million dollars. Additionally, with our shares trading well below of NAV of more than $30 a share, we'll use the variable portion to return capital via share buybacks.

Speaker #1: As such, we plan to repurchase 14.2 million dollars of our shares between now and quarter end. So that the dividend and the share repurchases together equal 35% of net income, or 18.5 million dollars for the quarter.

Speaker #1: But wait, there's more. So starting next quarter, the board approved an increase of the fixed quarterly cash dividend amount to 8 cents per share.

Speaker #1: So that's a 14% dividend increase. With a strong balance sheet and consistent earnings, we hope to steadily improve our capital return policy going forward.

Speaker #1: Now, turning to slide 19, throughout the years, we've been saying how attractively valued our shares are, and we continue to put our money where our mouth has been.

Randy Giveans: Now turning to slide 19. Throughout the years, we've been saying how attractive we value our shares are, and we continue to put our money where our mouth has been. Since December 2022, and including our recently declared return of capital to be distributed here in Q3, we will have soon returned over $300 million to shareholders, including $50 million in cash dividends and $256 million of share buybacks. For a quick recap, as you can see on that bottom left chart, we had about 56 million shares outstanding for many years, up until the merger with Ultragas, which happened almost exactly five years ago. We issued 21 million shares in exchange for 18 vessels. Now, since peaking at that 77 million share number in late 2021, we have repurchased 16 million shares at an average price of roughly $16 per share.

Speaker #1: So, since December 2022, and including our recently declared return of capital to be distributed here in the third quarter, we will have soon returned over $300 million to shareholders, including $50 million in cash dividends and $256 million of share buybacks.

Speaker #1: So for a quick recap, as you can see on that bottom left chart, we had about 56 million shares outstanding for many years, up until the merger with Ultra Gas, which happened almost exactly five years ago.

Speaker #1: We issued 21 million shares in exchange for 18 vessels. Now, since peaking at that 77 million share number in late '21, we have repurchased 16 million shares at an average price of roughly $16 per share.

Speaker #1: So our total return of capital equates to around $4.40 per share, based on the average share count of about 70 million shares during the time.

Randy Giveans: Our total return of capital equates to around $4.40 per share based on the average share count of about 70 million shares during the time. A 28% return. As seen over the last few years, we want to reiterate that returning capital to shareholders will remain a priority for us going forward. Now looking at our ethylene export terminal on Slide 20. As previously guided, ethylene throughput volumes increased to a record high of 374,000 tons during Q2, and that's despite an increase in domestic ethylene prices, where multiple European crackers underwent turnarounds. Furthermore, both the European and Asian demand for US ethylene also increased, and that's due to the recent surge in oil-based naphtha prices. The wide arbitrage, driven by much higher international ethylene prices during Q2, led to numerous spot customers buying cargoes from the terminal at fairly robust rates.

Speaker #1: So a 28% return. As seen over the last few years, we want to reiterate that returning capital to shareholders will remain a priority for us going forward.

Speaker #1: Now, looking at our ethylene export terminal on slide 20, as previously guided, ethylene throughput volumes increased to a record high of 374,000 tons during the second quarter.

Speaker #1: And that's despite an increase in domestic Ethylene prices. Where multiple European crackers underwent turnarounds. Furthermore, both the European and Asian demand for US Ethylene also increased, and that's due to the recent surge in oil-based NAFTA prices.

Speaker #1: The wide arbitrage driven by much higher international Ethylene prices during the second quarter led to numerous spot customers buying cargoes from the terminal at fairly robust rates.

Speaker #1: Now, importantly, we've also signed four new offtake contracts this year, with the most recent contract commencing in June. Looking ahead to the third quarter, throughput has decreased this summer due to falling NAFTA prices, global inventory destocking, and the recent restarts of multiple European crackers.

Randy Giveans: Importantly, we've also signed four new offtake contracts this year, with the most recent contract commencing in June. Looking ahead to Q3, throughput has decreased this summer due to falling naphtha prices, global inventory destocking, and the recent restarts of multiple European crackers. Also, summers are hot here in Houston, so that slightly impacts the terminal's operations. However, volume should increase in the coming months, along with the widening of the arbitrage and inventory restocking. Additionally, discussions are ongoing with multiple customers for take-or-pay contracts commencing here in the coming months. The oil price volatility and the geopolitical uncertainties are likely to persist in the near term, thus impacting the exact timing and scale of those new offtake contracts. Looking at our fleet on Slide 21, we continue to rightsize our fleet by selling our older, smaller vessels and those non-core assets.

Speaker #1: Also, summers are hot here in Houston, so that's slightly impacts the terminal's operations. However, volume should increase in the coming months, along with the widening of the arbitrage and inventory restocking.

Speaker #1: Additionally, discussions are ongoing with multiple customers for take-or-pay contracts commencing here in the coming months. Though oil price volatility and the geopolitical uncertainties are likely to persist in the near term, thus impacting the exact timing and scale of those new offtake contracts.

Speaker #1: Now, looking at our fleet on slide 21, we continue to rightsize our fleet by selling our older smaller vessels and those non-core assets. So in April, we sold the Navigator Pegasus, a 2009-built, 22,000 cubic meters semi-ref gas carrier, to a third party for 30.5 million dollars, netting a gain of 15.3 million dollars.

Randy Giveans: In April, we sold the Navigator Pegasus, a 2009-built, 22,000 cubic meter semi-ref gas carrier, to a third party for $30.5 million, netting a gain of $15.3 million. This was the ninth vessel we've sold since 2022, and all of those have an average age of 22 years at the time of sale. To note, each of the vessel sales resulted in a pretty good book gain. On the other hand, during that same time frame, we have purchased eight modern secondhand ethylene carriers, and those have been at an average age of eight years at the time of purchase. We haven't only been selling vessels. Most recently, we signed definitive agreements to sell our eight Unigas vessels for $183 million.

Speaker #1: Now, this was the ninth vessel we've sold since 2022. And all of those have an average age of 22 years at the time of sale.

Speaker #1: To note, each of the vessel sales resulted in a pretty good book gain. Now, on the other hand, during that same time frame, we have purchased eight modern secondhand Ethylene carriers.

Speaker #1: And those have been at an average age of eight years at the time of purchase. So we haven't only been selling vessels. Now, most recently, we signed definitive agreements to sell our eight Unigas vessels for 183 million dollars.

Speaker #1: So after repaying a total of 54 million dollars of associated debt, of which around 18 million was outstanding at the end of June, the net cash proceeds will be around 129 million dollars.

Randy Giveans: After repaying a total of $54 million of associated debt, of which around $18 million was outstanding at the end of June, the net cash proceeds will be around $129 million. These eight vessel sales result in a book gain of about $65 to $70 million. It's more than $1 per share, which we will book upon vessel deliveries here in the coming months, most of which in Q3, maybe some that slip into October. Looking at all of our 17 vessel sales the last four years, including the Unigas vessels, total proceeds expected to be a total of $342 million. After all the debts repaid, total net cash proceeds of $288 million.

Speaker #1: Now, these eight vessel sales result in a book gain of about 65 to 70 million dollars. So it's more than a dollar per share.

Speaker #1: Which we will book upon vessel deliveries here in the coming months. Most of which in the third quarter, maybe some that slip into October.

Speaker #1: So looking at all of our 17 vessel sales the last four years, including the Unigas vessels, total proceeds expected to be a total of 342 million dollars.

Speaker #1: And after all the debts repaid, total net cash proceeds of 288 million dollars. Now, our current fleet consists of 54 vessels with an average fleet age of just over 12 and a half years, and an average size of just over 21,000 cubic meters.

Randy Giveans: Our current fleet consists of 54 vessels with an average fleet age of just over 12 and a half years and an average size of just over 21,000 cubic meters. Excluding the Unigas vessels, our fleet would be slightly younger with an average age of below 12.5 years and slightly larger with an average cubic meters of around 23,000. Lastly, we continue to upgrade our vessels with some energy savings technologies. More details are on Slide 28, and we'll continue to roll out some new artificial intelligence and AI programs to make our fleet even more efficient. Finishing on Slide 22, I want to personally invite you, all of you, to our upcoming 2026 Analyst Investor Day here in Houston, Texas in a few months from now.

Speaker #1: Now, excluding the Unigas vessels, our fleet would be slightly younger, with an average age of below 12.5 years, and slightly larger, with an average cubic meters of around 23,000.

Speaker #1: Lastly, we continue to upgrade our vessels, with some energy savings technologies, more details are on slide 28. And we'll continue to roll out some new artificial intelligence and AI programs to make our fleet even more efficient.

Speaker #1: Now, finishing on slide 22, I want to personally invite you all of you to our upcoming 2026 Analyst Investor Day here in Houston, Texas, in a few months from now.

Speaker #1: So on Tuesday afternoon, November 17th, we'll be hosting our Morgan's Point tours of the Ethylene export terminal and one of our vessels. So just take a look at the picture to the right and imagine yourself climbing on board that beautiful gas carrier and seeing the flex chain chilling Ethylene down to negative 104 degrees Celsius.

Randy Giveans: On Tuesday afternoon, 17 November, we'll be hosting our Morgans Point tours of the ethylene export terminal and one of our vessels. Just take a look at the picture to the right and imagine yourself climbing on board that beautiful gas carrier and seeing the flex train chilling ethylene down to -104 degrees Celsius. It's a thing of beauty. Later that evening, the management team and members of our board of directors will host a dinner for our analysts and investors. On Wednesday morning, 18 November, we'll host company and industry presentations covering the current market trends, a financial update, as well as our medium-term strategy. We'll have lunch, followed by an appreciation event for analysts, shareholders, customers, and partners. I'll personally guarantee that the weather will be much cooler then than it is today in Houston.

Speaker #1: It's a thing of beauty. Later that evening, the management team and members of our board of directors will host a dinner for our analyst and investors.

Speaker #1: Now, on Wednesday morning, November 18th, we'll host company and industry presentations covering the current market trends, a financial update, as well as our medium-term strategy.

Speaker #1: We'll then have lunch, followed by an appreciation event for analysts, shareholders, customers, and partners. So I'll personally guarantee that the weather will be much cooler than than it is today in Houston.

Speaker #1: With that, I'll now turn it back over to Mods for some closing remarks.

Randy Giveans: With that, I'll now turn it back over to Mads for some closing remarks.

Speaker #2: Thank you a lot, Randy. I'll certainly be there. Q2, 2026 was a quarter where everything came together record net income, record EBITDA, record TCE rates, record terminal throughput, all in the same quarter.

Mads Zacho: Thanks a lot, Randy. I'll certainly be there. Q2 2026 was a quarter where everything came together. Record net income, record EBITDA, record TCE rates, record terminal throughput, all in the same quarter. I know that of course doesn't happen by accident. It reflects the strength of the platform that we have built over the years. The numbers speak for themselves, but I want to just take a moment to point to what's all underneath them. Our cash break even sits below $22,000 per day. Leverage has come down to 2.2 times, and financing is now in place for all six new builds. The Unigas sale proceeds are still to come, and that will certainly give us significant financial flexibility going into H2. Q3 may become slightly softer commercially, but expected to remain healthy. TCE and utilization may normalize from record levels.

Speaker #2: And that, of course, doesn't happen by accident. It reflects the strength of the platform that we have built over the years. The numbers speak for themselves, but I want to just take a moment to point to what's all underneath them.

Speaker #2: Our cash break-even sits below $22,000 per day, leverage has come down to 2.2 times, and financing is now in place for all six newbuilds.

Speaker #2: And the Unigas sale proceeds are still to come, and that will certainly give us significant financial flexibility going into the second half. Q3 may become slightly softer commercially, but expect it to remain healthy.

Speaker #2: TCE and utilization may normalize from record levels. Terminal volumes will ease as the Ethylene arbitrage tightens and the European crackers restart. But the structural story has not changed.

Mads Zacho: Terminal volumes will ease as the ethylene arbitrage tightens and the European crackers restart. The structural story has not changed. US ethane remains the lowest cost feedstock in the world. The handysize order book is thin, and the growing share of the existing fleet that's getting too old to remain competitive is right ahead of us. We enter Q3 from a position of real strength, a clean balance sheet, a clear capital return policy, now at 35% of net income, and a fleet that's getting younger and more efficient with every new build delivered and every older vessel being sold. Thanks a lot for listening, and now back to you, Randy.

Speaker #2: US Ethane remains the lowest-cost feedstock in the world. The handy-size order book is thin, and the growing share of the existing fleet that's getting too old to remain competitive is right ahead of us.

Speaker #2: We enter Q3 from a position of real strength, a clean balance sheet, a clear capital return policy, now at 35% of net income, and a fleet that's getting younger and more efficient with every new build delivered and every older vessel being sold.

Speaker #2: So thanks a lot for listening, and now back to you, Randy.

Speaker #1: Thank you, Mods. Operator will now open their lines for some Q&A. So to raise your hand, if you're on your phone, press star 9, then you'll have to unmute yourself by pressing star 6.

Randy Giveans: Thank you, Mads. Operator will now open the lines for some Q&A. To raise your hand, if you're on your phone, press star nine, then you'll have to unmute yourself by pressing star six. Now, if using the Zoom app, just use the raise hand function. First caller, your line should be open.

Speaker #1: Now, if using the Zoom app, just use the raise hand function. First caller, your line should be open.

Speaker #3: Hi, Randy. This is Omar from Clarkson Securities. Yep. Hi. How's it going? Yes. Thanks for the update, and I have a couple of questions.

[Analyst] (Clarksons Securities): Hi, Randy.

Omar Nokta: Hi, Randy.

Randy Giveans: Hey, Omar.

[Analyst] (Clarksons Securities): It's Omar from Clarksons Securities. Yeah. Hi.

Omar Nokta: It's Omar from Clarksons Securities. Yeah. Hi.

Randy Giveans: Hi.

[Analyst] (Clarksons Securities): How's it going?

Omar Nokta: How's it going?

Randy Giveans: Yes.

[Analyst] (Clarksons Securities): Thanks for the update, and I have a couple of questions. I was just jumping back and forth with another call, so I may have missed this in the commentary. I just wanted to ask about the balance sheet, and the drawdown of the $91 million from your revolvers back in April. Early during the Hormuz crisis, it sounded like it was as a precautionary measure. You were fully drawn as of the end of the quarter. Are you still fully drawn as of now? What are your plans near term with that cash? Do you repay it, invest it, or just simply keep it on the balance sheet?

Omar Nokta: Thanks for the update, and I have a couple of questions. I was just jumping back and forth with another call, so I may have missed this in the commentary. I just wanted to ask about the balance sheet, and the drawdown of the $91 million from your revolvers back in April. Early during the Hormuz crisis, it sounded like it was as a precautionary measure. You were fully drawn as of the end of the quarter. Are you still fully drawn as of now? What are your plans near term with that cash? Do you repay it, invest it, or just simply keep it on the balance sheet?

Speaker #3: I was just jumping back and forth with another call, so I may have missed this in the commentary. But I just wanted to ask about the balance sheet.

Speaker #3: And the drawdown of the 91 million from your revolvers back in April, early during the Hormuz crisis, it sounded like it was as a precautionary measure.

Speaker #3: Your fully drawn as of the end of the quarter, are you still fully drawn as of now? And what are your plans near term with that cash?

Speaker #3: Do you repay it, invest it, or just simply keep it on the balance sheet?

Speaker #4: Yeah. Hi, Omar. Yeah, we did cover that in there, but I can cover it again real quick. We did draw it down. It is still fully drawn.

Gary Chapman: Yeah. Hi, Omar. I can cover it again quick. We did draw it down. It is still fully drawn. Our plan is to obviously take a look at the situation, particularly with the proceeds coming in from our Unigas fleet sale. Our plan is to likely repay those revolvers over the course of the next couple of months.

Speaker #4: And our plan is to obviously take a look at the situation, but particularly with the proceeds coming in from our Unigas fleet sale. Our plan is to likely repay those revolvers over the course of the next couple of months.

Speaker #3: Okay. All right, then. Thanks, Gary. That's clear. And then just in terms of the, as we think about things from here, you had your strongest quarter ever in terms of, as you mentioned, revenue and rate and earnings and so on.

[Analyst] (Clarksons Securities): Okay. All right then. Thanks, Gary. That's clear. Just in terms of, as we think about things from here, you had your strongest quarter ever in terms of, as you mentioned, revenue, rate, and earnings and so on. You got nearly $34,000 a day on the handies as an average rate. How do we think about that trending for Q3? You know, arbs have narrowed a bit from the very high levels that we saw back in Q2. They're still elevated. You do expect a bit lower terminal throughput, but we're still seeing headline rates remain elevated. How do you think about that as we think about earnings power from here?

Omar Nokta: Okay. All right then. Thanks, Gary. That's clear. Just in terms of, as we think about things from here, you had your strongest quarter ever in terms of, as you mentioned, revenue, rate, and earnings and so on. You got nearly $34,000 a day on the handies as an average rate. How do we think about that trending for Q3? You know, arbs have narrowed a bit from the very high levels that we saw back in Q2. They're still elevated. You do expect a bit lower terminal throughput, but we're still seeing headline rates remain elevated. How do you think about that as we think about earnings power from here?

Speaker #3: You got nearly $34,000 a day on the handies as an average rate. How do we think about that trending for the third quarter? Ours have narrowed a bit from the very high levels that we saw back in the second quarter.

Speaker #3: They're still elevated. You do expect a bit lower terminal throughput. But we're still seeing headline rates remain elevated. How do you think about that as we think about earnings power from here?

Speaker #3: Is it the utilization that maybe comes off, but the rate itself can hold that this latest level? Or do we see them kind of reverting back to the averages you captured back in the first quarter?

[Analyst] (Clarksons Securities): Is it the utilization that maybe comes off, but the rate itself can hold at this latest level? Do we see them kind of reverting back to the averages you captured back in Q1?

Omar Nokta: Is it the utilization that maybe comes off, but the rate itself can hold at this latest level? Do we see them kind of reverting back to the averages you captured back in Q1?

Randy Giveans: There's a relationship between utilization and rates, Our priority is to obviously try to push both as high as we can. I think the graph from the 12-month time charter assessment, issued by Clarksons, shows this bump in assessment during the last 3 quarters, It come down to pre-Hormuz level, as we commented on, which is pretty strong still.

Oeyvind Lindeman: There's a relationship between utilization and rates, Our priority is to obviously try to push both as high as we can. I think the graph from the 12-month time charter assessment, issued by Clarksons, shows this bump in assessment during the last 3 quarters it come down to pre-Hormuz level, as we commented on, which is pretty strong still. We expect, yes, it's slightly softer than Q2, but it's still quite robust going into Q3 as well.

Speaker #2: This relationship between utilization and rates and our priority is to obviously try to push both as high as we can. I think the graph from the 12-month time charter assessment issued by Clarkson's shows this bump in assessment during the last three quarters, and it come down to pre-Hormuz level as we commented on, which is pretty strong still.

Speaker #2: So we expect, yes, it's slightly softer than the second quarter, but it's still quite robust going into the third quarter as well.

Oeyvind Lindeman: We expect, yes, it's slightly softer than Q2, but it's still quite robust going into Q3 as well.

Speaker #3: All right. Good. Thanks, Oyvind. Those are my questions. I'll hand it over.

[Analyst] (Clarksons Securities): All right, good. Thanks, Oeyvind. Those were my questions. I'll hand it over.

Omar Nokta: All right, good. Thanks, Oeyvind. Those were my questions. I'll hand it over.

Speaker #1: Thank you, Omar. Next caller, your line should be open.

Randy Giveans: Thank you, Omar. Next caller, your line should be open.

Speaker #5: Hey, good morning, guys. You got Spiro here from City. Maybe starting off, want to talk about next strategic steps here. You've secured financing for all your new builds.

[Company Representative] (Citi): Hey, morning, guys. You got Spiro here from Citi. Maybe starting off, want to talk about next strategic steps here. You've secured financing for all your new builds. I believe you contracted most of Morgan's Point at this point, maybe a little bit left. You're reaching what looks like maybe the tail end of the fleet renewal process, for now anyway. A lot of major items checked off that list. Something tells me you're not going to be sitting on your hands, especially with all this liquidity. How should we think about next steps for you? What's on the checklist now, and maybe how to think about the timing when you start to move there?

Spiro Dounis: Hey, morning, guys. You got Spiro here from Citi. Maybe starting off, want to talk about next strategic steps here. You've secured financing for all your new builds. I believe you contracted most of Morgan's Point at this point, maybe a little bit left. You're reaching what looks like maybe the tail end of the fleet renewal process, for now anyway. A lot of major items checked off that list. Something tells me you're not going to be sitting on your hands, especially with all this liquidity. How should we think about next steps for you? What's on the checklist now, and maybe how to think about the timing when you start to move there?

Speaker #5: I believe you contracted most of Morgan's point at this point, maybe a little bit left. You're reaching what looks like maybe the tail end of the fleet renewal process.

Speaker #5: For now, anyway. So a lot of major items checked off that list. But something tells me you're not going to be sitting on your hands, especially with all this liquidity.

Speaker #5: So how should we think about next steps for you? What's on the checklist now? And maybe I think about the timing when you start to move there.

Speaker #2: Yeah. I think by and large, nothing has really changed in terms of our strategy. We are looking for opportunities to consolidate the segments where we are strong.

Mads Zacho: Yeah. I think by and large, nothing has really changed in terms of our strategy. We are looking for opportunities to consolidate the segments where we are strong. That goes for the handysize segment, that goes for the MGC segment. We'll be looking for opportunities here to add to our fleet. If we find modern tonnage at attractive prices, I think those commercial synergies or the underlying case you could say for doing so is very healthy right now, and we'll continue to look around for those. It has been a little bit harder, you could say, given the uncertainty that we are seeing geopolitically right now, which means that the EBITDA spreads, they may have widened a bit when spot rates have been elevated the way they have. That does raise expectations.

Speaker #2: That goes for the handy-size segment. That goes for the MGC segment. So we'll be looking for opportunities here to add to our fleet if we find modern tonnage at attractive prices.

Speaker #2: This is certainly I think those commercial synergies of the underlying case, you could say, for doing so is very healthy right now. And we'll continue to look around for those.

Speaker #2: It has been a little bit harder, you could say, given the uncertainty that we are seeing geopolitically right now, which means that bid our spreads, they may have widened a bit.

Speaker #2: When spot rates have been elevated the way they have, I mean, that does raise expectations. But we also see that there is a big order book on the VLGCs and the MGCs.

Mads Zacho: We also see that there is a big order book on the VLGCs and the MGC. Let's see over the next coming quarters. We're patient people, but over the next couple of quarters and into 2027, 2028, what opportunities will be coming. We enjoy having the financial and strategic flexibility to go and do those transactions when they make sense. All that goes, of course, together with the capital return policy that we have been gradually increasing our return to shareholders, and our plan is to continue to do that in a very measured and predictable manner.

Speaker #2: So let's see over the next coming quarters, and we're patient people. But over the next couple of quarters, and into 2027, 2028, what opportunities will be coming.

Speaker #2: We enjoy having the financial and strategic flexibility to go and do those transactions when they make sense. But I mean, all that goes, of course, together with the capital return policy that we have been gradually increasing our return to shareholders and our plan is to continue to do that in a very measured and predictable manner.

Speaker #5: Great color, Mads. Thanks for that. Second question, maybe just switching gears a bit here to the customer mindset. You talked about customers being apprehensive to contract given all the uncertainty.

[Company Representative] (Citi): Great call, Mads. Thanks for that. Second question, maybe just switching gears a bit here to the customer mindset. You talked about customers being apprehensive to contract given all the uncertainty, maybe you should put a finer point on when the dust settles, how you're thinking about the long-term impacts from this conflict and how that impacts Navigator. Do you see customers signing up for term? Are you seeing new names show up on your customer list? I guess ultimately, what sort of signals do you think customers are waiting for to really start contracting again?

Spiro Dounis: Great call, Mads. Thanks for that. Second question, maybe just switching gears a bit here to the customer mindset. You talked about customers being apprehensive to contract given all the uncertainty, maybe you should put a finer point on when the dust settles, how you're thinking about the long-term impacts from this conflict and how that impacts Navigator. Do you see customers signing up for term? Are you seeing new names show up on your customer list? I guess ultimately, what sort of signals do you think customers are waiting for to really start contracting again?

Speaker #5: But maybe you should put a finer point on when the dust settles, how you're thinking about the long-term impacts from this conflict and how that impacts Navigator.

Speaker #5: Do you see customers signing up for term? Are you seeing new names show up on your customer list? And I guess ultimately, what sort of signals do you think customers are waiting for to really start contracting again?

Speaker #2: That's a good question, Spiro. We, as Randy mentioned, there's new term terminal contract offtake agreements signed post-Hormuz. So clearly, the signaling I think, or what we're hearing from customers, is that definitely reliability on your supply chain for the molecules that you need becomes top priority.

Oeyvind Lindeman: It's a good question, Spiro. As Randy mentioned, there's new terminal contract offtake agreements signed post-Hormuz. Clearly, the signaling, I think, or what we're hearing from customers is that definitely reliability on your supply chain for the molecules that you need becomes top priority. It's not only about price and shortest distance from the producer. The Hormuz has really put that front and center. Reliability is definitely placed along the US Gulf Coast and East Coast in terms of these molecules. Be that LPG, be it ethane, or be it ethylene. I think more interest is coming there. It's obviously quite difficult to commit to a longer-term contract with everything that is happening, the underlying sentiment is being pushed towards the United States of America, and we will benefit from that.

Speaker #2: So it's not only about price and shortest distance from the producer. So the Hormuz is really put that front and center. And reliability is definitely placed in along the US Gulf Coast and East Coast in terms of these molecules.

Speaker #2: So be that LPG, be it ethane, or be it ethylene. So I think more interest is coming there. It's obviously quite difficult to commit to a longer-term contract with everything that is happening.

Speaker #2: But the underlying sentiment is being pushed towards the United States of America, and we will benefit from that.

Speaker #5: Appreciate it, colleague, gentlemen. That's it from me.

[Company Representative] (Citi): Appreciate the call, gentlemen. That's it for me.

Spiro Dounis: Appreciate the call, gentlemen. That's it for me.

Speaker #1: Thanks, Spiro. Next caller, your line should be open.

Randy Giveans: Thanks, Spiro. Next caller, your line should be open.

Speaker #5: Thanks, everyone. Just maybe following up on Spiro's questions here, looking at the terminal performance. Can you talk about how we should think about the fix versus more variable or spot exposed portion of the EBITDA for the quarter here?

[Analyst] (Deutsche Bank): Thanks, everyone. Just maybe following up on Spiro's questions here, looking at the terminal performance, can you talk about how we should think about the fixed versus more variable or spot exposed portion of the EBITDA for the quarter here?

Chris Robertson: Thanks, everyone. Just maybe following up on Spiro's questions here, looking at the terminal performance, can you talk about how we should think about the fixed versus more variable or spot exposed portion of the EBITDA for the quarter here?

Randy Giveans: Specifically at the terminal level?

Speaker #1: Specifically at the terminal level?

Speaker #5: Yes, Randy.

[Analyst] (Deutsche Bank): Yes, Randy.

Chris Robertson: Yes, Randy.

Speaker #1: Yeah. That's a good question. So we haven't gone into the exact details. The majority of the capacity, as been sold on take or pay contracts, but also the spot rates were above the rates that we charge on the kind of time charter or the offtake contract level.

Randy Giveans: Yeah, that's a good question. We haven't gone into the exact details. The majority of the capacity has been sold on take-or-pay contracts. Also, the spot rates were above the rates that we charge on the time charter or the offtake contract level. The volume that was spot is lower than that of contracted. When you bake in the rates at higher levels, it was a pretty even mix there.

Speaker #1: So the volume that was spot is lower than that of contracted. But when you bake in the rates that higher levels, it was a pretty even mix there.

Speaker #5: And Randy, just to follow up on that, you talked a little bit about warmer weather and seasonality here. How should we be thinking about, I guess, an annualized run rate on the terminal?

[Analyst] (Deutsche Bank): Randy, just to follow up on that, you talked a little bit about warmer weather and seasonality here. How should we be thinking about an annualized run rate on the terminal, just taking into account some of that weather pattern and/or regular maintenance or downtimes?

Chris Robertson: Randy, just to follow up on that, you talked a little bit about warmer weather and seasonality here. How should we be thinking about an annualized run rate on the terminal, just taking into account some of that weather pattern and/or regular maintenance or downtimes?

Speaker #5: Just taking into account some of that weather pattern and/or regular maintenance or downtimes.

Speaker #1: Yeah. So the full year, the terminal can do around 1.55 million tons. In the colder months, you can get a little bit above. Nameplate capacity in the warmer months, you're pretty much right at it, maybe slightly under it, especially here in July.

Randy Giveans: Yeah. The full year, the terminal can do around 1.55 million tons. In the colder months, you can get a little bit above nameplate capacity. In the warmer months, you're pretty much right at it, maybe slightly under it, especially here in July, and you live in Houston, you know August. On a full year basis, though, we're still getting the 1.55. That's around 130 or so thousand tons per month. There is some variability there. Obviously, you saw with the chilling train, we were able to do 150,000, 160,000 tons a couple of months, March, April, May, specifically.

Speaker #1: And you live in Houston, you know August. So on a full-year basis, though, we're still getting to 1.55. That's around 130 or so, 1,000 tons per month.

Speaker #1: There is some variability there. Obviously, you saw with the FlexTrain, we were able to do 150, 160,000 tons, a couple of months, March, April, May specifically.

Speaker #1: So there is going to be a little bit of operational impact from the temperatures. But it's more of commercial-driven, right? And then within the offtake contracts, if an offtaker let's just use a round number, has 100,000 tons or 120,000 tons per year, that doesn't mean they have to do 10,000 tons per month, right?

Randy Giveans: There is going to be a little bit of operational impact from the temperatures, but it's more commercial driven. Right? Then within the offtake contracts, if an offtaker, let's just use a round number, has 100,000 tons or 120,000 tons per year, that doesn't mean they have to do 10,000 tons per month. Right? Every quarter there's some minimums and maximums. They may have pulled some in to Q2, maybe not taking as much in Q3, likely taking more in Q4, depending on the widening of the arbitrage. There's a lot of factors at play in terms of forward run rate from these levels.

Speaker #1: So every quarter, there's some minimums and maximums. So they may have pulled some in to second quarter, maybe not taking as much in the third quarter.

Speaker #1: Likely taking more in the fourth quarter, depending on the widening of the arbitrage. So there's a lot of factors at play in terms of kind of forward run rate from these levels.

Speaker #5: Got it. All right. So my second question just relates to some comments that were made during Marine Money this year. So just taking a step back, looking at the general environment, we're in a spot right now where liquefied natural gas prices are elevated and pretty volatile, which generally doesn't play very well to certain price-sensitive buyers or markets.

[Analyst] (Deutsche Bank): Got it. All right. My second question, it just relates to some comments that have always been made during Marine Money this year. Just taking a step back, looking at the general environment, we're in a spot right now where liquefied natural gas prices are elevated and pretty volatile, which generally doesn't play very well to certain price-sensitive buyers or markets, especially in the emerging markets. Do you think Navigator has a role to play here in terms of additional infrastructure projects that could deliver alternative fuel gases other than methane to the market?

Chris Robertson: Got it. All right. My second question, it just relates to some comments that have always been made during Marine Money this year. Just taking a step back, looking at the general environment, we're in a spot right now where liquefied natural gas prices are elevated and pretty volatile, which generally doesn't play very well to certain price-sensitive buyers or markets, especially in the emerging markets. Do you think Navigator has a role to play here in terms of additional infrastructure projects that could deliver alternative fuel gases other than methane to the market?

Speaker #5: Especially in the emerging markets. Do you think Navigator has a role to play here in terms of additional infrastructure projects that could deliver alternative fuel gases other than methane to the market?

Speaker #2: Definitely. We have the wherewithal the balance sheet the knowledge and the floating assets and partners we had the example with Enterprise Product Partners to put in infrastructure to create a supply or for the customers that want it.

Oeyvind Lindeman: Definitely. We have the wherewithal, the balance sheet, the knowledge, and the floating assets and partners. We had the example with Enterprise Products Partners to put in infrastructure to create a supply for the customers that want it. I think we have all the pieces together. I think the environment, as to the previous question, whereby perhaps Asian consumers are looking at perhaps putting in ethylene storage or ethane storage for their businesses as an alternative for naphtha coming from the Strait of Hormuz. I think we have the assets and the knowledge to do it. The biggest challenge is, of course, to land those things. It's definitely something we are trying to develop.

Speaker #2: So I think we have all the pieces together. I think the environment as to the previous question whereby perhaps Asian consumers are looking at perhaps putting in ethylene storage or ethane storage for their businesses as an alternative for NAFTA coming from the Strait of Hormuz.

Speaker #2: So I think we have the assets and the knowledge to do it. So the biggest challenge is, of course, to land those things. But it's definitely something we are trying to develop.

Speaker #5: All right. Thank you. I'll turn it over. Appreciate it.

[Analyst] (Deutsche Bank): All right. Thank you. I'll turn it over. Appreciate it.

Chris Robertson: All right. Thank you. I'll turn it over. Appreciate it.

Speaker #1: Thank you, Chris. Next caller, your line should be open. I see your hand.

Randy Giveans: Thank you, Chris. Next caller, your line should be open. I see your hand.

Speaker #3: Hi. This is Klemen Mullins. I'm from Bali Investors Edge. I wanted to ask about the zinc fuel solutions. Could you talk a bit about the total capex for the project as well as how much of that would be attributable to you net of the grant?

Clement Molins: Hi, this is Clement Molins from Jeune Investisseur. I wanted to ask about the Zen Fuel Solutions. Could you talk a bit about the total CapEx for the project, as well as how much of that would be attributable to you net of the grant? How does the cadence for this CapEx look like if the project goes forward?

Climent Molins: Hi, this is Climent Molins from Value Investor's Edge. I wanted to ask about the Zen Fuel Solutions. Could you talk a bit about the total CapEx for the project, as well as how much of that would be attributable to you net of the grant? How does the cadence for this CapEx look like if the project goes forward?

Speaker #3: How does the cadence for this capex look like if the project goes forward?

Speaker #2: It's very straightforward, Klemen. The Norwegian government have awarded a zinc fuel solutions 442 million NOK, which let's call it 45 million dollars. And that to cover 80% of the capex for the three terminals that they intend to construct on the west coast of Norway.

Oeyvind Lindeman: It's very straightforward, Clement. The Norwegian government have awarded Zen Fuel Solutions NOK 442 million, which let's call it $45 million. That to cover 80% of the CapEx for the three terminals that they intend to construct on the west coast of Norway. Most fantastic large piece of the CapEx is a grant, with no strings attached, which, I think, answers your question.

Speaker #2: So most fantastic large piece of the capex is a grant, which no strings attached, which is, I think, answers your question.

Speaker #3: Yeah. That's helpful. Thanks for the breakdown. And you've already touched on capital allocation, but I wanted to delve a bit deeper on your plans to allocate the proceeds from the sale of the UNIGAS vessels.

Clement Molins: Yeah. That's helpful. Thanks for the breakdown. You already touched on capital allocation, but I wanted to delve a bit deeper on your plans to allocate the proceeds from the sale of the Unigas vessels. Part of it, of the gains, will be used to repurchase shares, but could that be complemented with, let's say, incremental repurchases, or should we expect most of that to be kept on the balance sheet in anticipation of other opportunities?

Climent Molins: Yeah. That's helpful. Thanks for the breakdown. You already touched on capital allocation, but I wanted to delve a bit deeper on your plans to allocate the proceeds from the sale of the Unigas vessels. Part of it, of the gains, will be used to repurchase shares, but could that be complemented with, let's say, incremental repurchases, or should we expect most of that to be kept on the balance sheet in anticipation of other opportunities?

Speaker #3: Part of it, of the gains, will be used to repurchase shares. But could that be complemented with, let's say, incremental repurchases? Or should we expect most of that to be kept on the balance sheet in anticipation of other opportunities?

Speaker #2: Yeah. I mean, and important capital return will take place once the sale has been completed because, as we mentioned, there's a potential net gain of 65 to 70 million dollars.

Mads Zacho: An important capital return will take place once the sale has been completed because, as we mentioned, there's a potential net gain of $65 to $70 billion. With a 35% return on capital return policy, there's going to be a significant contribution coming from that. As to the remainder of it, we haven't earmarked those funds for now. As I mentioned before, we are looking at various opportunities, and it's still this consolidation game that is central to our strategy and then also the infrastructure projects that we are working on. There'll be some growth element to it. It's not going to be something that will tick like a clockwork over the next couple of quarters. It could be lumpy, and it may take some patience. We are very patient investors.

Speaker #2: And with a 35% return on capital return policy, there's going to be a significant contribution coming from that. As to the remainder of it, we haven't earmarked those funds for now.

Speaker #2: As I mentioned before, we are looking at various opportunities. And it's still this consolidation game that is central to our strategy and then also the infrastructure projects that we are working on.

Speaker #2: So there'll be some growth element to it. But it's not going to be something that we will take like a clockwork over the next couple of quarters.

Speaker #2: It'll be it could be lumpy. And it may take some patience. We are very patient investors.

Speaker #3: Thanks for the quote. That's everything from me. I'll turn it over. Thanks for taking my questions.

Clement Molins: Thanks for the call. That's everything for me. I'll turn it over. Thanks for taking my questions.

Climent Molins: Thanks for the call. That's everything for me. I'll turn it over. Thanks for taking my questions.

Speaker #1: Thank you, Klemen. That completes our Q&A. Mads, over to you.

Randy Giveans: Thank you, Clement. That completes our Q&A. Mads, over to you.

Speaker #2: Yeah. No. I just want to say thanks a lot for listening. It was a fantastic quarter. Thank a lot for all the great questions from the analysts and do reach out if you need any further discussion from me, from Randy.

Mads Zacho: Yeah. No, I just want to say thanks a lot for listening. It was a fantastic quarter. Thanks a lot for all the great questions from the analysts. Do reach out if you need any further discussion from me, from Randy. We always appreciate your engagement. All the best and have a fantastic day.

Speaker #2: We always appreciate your engagement. So all the best and have a fantastic day.

[Analyst] (Deutsche Bank): Goodbye

Operator: Goodbye.

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