Navigator Holdings Ltd. Improved Vessel Utilization During Fourth Quarter of 2020
Navigator Holdings Ltd. reported operating revenue of $87.4 million for the three months ended December 31, 2020, compared to $76.1 million for the three months ended December 31, 2019. Operating revenue for the year ended December 31, 2020, amounted to $332.5 million, compared to $301.4 for the year ended December 31, 2019.
Net income was $3.4 million (earnings per share of $0.06) for the three months ended December 31, 2020, the third consecutive profitable quarter. The net loss for the year ended December 31, 2020 was $0.4 million.
Adjusted EBITDA(1) was $32.0 million for the three months ended December 31, 2020, comprising $29.9 million from the operations of the vessels and $2.1 million from our 50/50 joint venture (the “Export Terminal Joint Venture”) relating to the ethylene export marine terminal at Morgan’s Point, Texas (the “Marine Export Terminal”). Adjusted EBITDA(1) was $124.2 million for the year ended December 31, 2020, comprising $118.4 million from the operations of the vessels and $5.8 million the Export Terminal Joint Venture.
Fleet utilization was 91.0% for the three months ended December 31, 2020, and 86.8% for the year ended December 31, 2020.
Successfully completed and commissioned the 30,000 ton ethylene cryogenic storage tank at our Marine Export Terminal, finishing the project safely, on time and below budget.
On January 25, 2021, the Terminal Facility was fully drawn at an aggregate amount of $69.0 million and converted into a five year term loan. The final drawdown on that date was for $18.0 million, of which $4.0 million was used to make a final capital contribution to the Export Terminal Joint Venture, with the remaining $14.0 million to be used for general corporate purposes.
We have achieved a record of 800+ days without a Lost-Time-Incident (LTI) across our in-house technical managed fleet of 17 vessels.
The Company’s financial information for the quarter and year ended December 31, 2020 included in this press release is preliminary and unaudited and is subject to change in connection with the completion of the Company’s year-end close procedures and further financial review, including the audit currently underway by the Company’s independent registered public accounting firm. Actual audited results may differ as a result of the completion of the Company’s year-end closing procedures, review adjustments and other developments that may arise between now and the time such financial information for the year ended December 31, 2020 is finalized.
Ethylene Marine Export Terminal
The construction of the Marine Export Terminal was completed in December with the commissioning of the 30,000 ton cryogenic storage tank and its entering into operations. The full post-tank commitments of the offtake agreements, which have minimum terms of five years, came into effect on January 1, 2021 and provide for a minimum of 938,000 tons of ethylene through the terminal annually.
The Company contributed $2.0 million to the Export Terminal Joint Venture during the fourth quarter of 2020 and since December 31, 2020 a final contribution of $4.0 million was made. The Company has contributed a total of $146.5 million representing our expected full share of the capital cost of the Marine Export Terminal. The Company’s associated Terminal Facility is now fully drawn at $69.0 million, with both of the above contributions drawn from the facility as well as an additional $14.0 million drawn for general corporate purposes. The Terminal Facility has now converted into a five year term loan.
During February and March 2021, operation of the 26 mile pipeline carrying ethylene from caverns at Mt Belvieu, Texas to the Marine Export Terminal halted due to mechanical integrity concerns which impacted terminal volumes for those months. Those concerns have been remedied and the terminal is expected to resume normal operations during the second half od March 2021.
The Company’s vessel utilization rose from a low level in September to a high point of 95% in December, averaging 91% for the fourth quarter of 2020. The increase can partly be attributed to a return to normal for U.S. ethylene pricing after Hurricane Laura and the subsequent ethylene exports from the Marine Export Terminal, in addition to an increase in the demand for LPG seaborne transportation leading into the winter months. As a result, during the fourth quarter of 2020, petrochemical operating days increased by 21% to 1,549 days, LPG operating days increased by 14% to 1,413 days and ammonia operating days increased by 17% to 182 days, in each case when compared to the third quarter of 2020. This is the second quarter in the Company’s history where petrochemical operating days was greater than either of the other two products. 2020 was the first year as a whole where petrochemical operating days matched LPG operating days at 47% each. Of those 1,549 petrochemical operating days, a record 868 days were related to ethane and ethylene transportation.
Navigator Atlas, a 21,000cbm ethylene gas carrier, was the first vessel to load from the on-shore cryogenic storage tank at the Marine Export Terminal on December 23, 2020. The tank will greatly enhance the efficiency at the Marine Export Terminal and is expected to enable it to achieve or exceed the annual nameplate throughput capability of one million tons.
The demand for seaborne transportation of LPG increased significantly during the fourth quarter of 2020, driving Very Large Gas Carriers (“VLGC”) 12-month time charter assessed rates from $960,000 per month at the beginning of the quarter to $1,450,000 per month at the end of the quarter. The Midsize LPG segment saw rates increase from $725,000 per month to $830,000 per month and handysize charter rates rose from $605,000 per month to $655,000 per month during the fourth quarter of 2020.
This increased trend continued into January 2021 with all three segments peaking, before easing off in February. The 12-month time charter broker assessed rates for VLGCs and midsize vessels have reduced by $650,000 and $50,000 per month respectively, to $950,000 and $850,000 per month level, while the handysize sector, being less volatile, has only reduced by $5,000 per month to $690,000 per month.
The February 2021, U.S. winter storms as well as the force majeure at the Marine Export Terminal will impact our utilization for February and March 2021, as both U.S. LPG and ethylene exports have been reduced as a direct consequence. However we expect the fundamentals for both of these products to normalize going into the second quarter of 2021.
The outbreak in early 2020 of the COVID-19 global pandemic has affected most countries in the world restricting trade, closures of companies and ports and limiting the movement of people and goods. It continues to affect the free movement of people and cargoes with the imposition of quarantines and travel restrictions which affect global economic conditions that may impact our business, financial condition and the results of our operations. Although there are numerous national vaccine programs being developed and distributed to the world’s population, the full effects of the vaccines and their ability to combat different mutations or strains of the virus are not fully known and therefore the ultimate longevity of the COVID-19 pandemic is uncertain and an estimate of its ultimate likely impact cannot be made with certainty at this time.
Source: Navigator Holdings Ltd.