Navigator Holdings is gearing up for market strength by keeping a higher number of ships in the spot market, as company executives posted operational earnings that reached record levels in the second quarter.
The New York-listed gas carrier owner said in its second-quarter earnings report that it has 15 ships in the spot market, with 32 on time charters and another nine vessels in the Unigas pool.
A year earlier, the company also branded as Navigator Gas, reported having just 11 ships in the spot market, with 31 locked into time charters.
Randy Giveans, the company’s executive vice president for business development and investor relations, said the spot market exposure reflects an optimistic view on the fourth quarter of 2024 and the first quarter of 2025.
“Because if we thought there’s weakness coming, we would time charter all the vessels,” he told TradeWinds. “If we think there’s strength coming, you go more to spot.”
The optimistic outlook came as the London-headquartered owner of handysize and midsize LPG and ethylene carriers reported bottom-line net income of $23.2m for the second quarter, a 12.7% decline compared with the same period of 2023.
But company executives highlighted that without a vessel sale in the second quarter of last year and other non-cash factors typically excluded by analysts, adjusted profit grew to $24.8m from $18.5m.
Chief executive Mads Peter Zacho said the company was particularly pleased with its commercial results, in which it lifted time-charter equivalent rates 11% higher to reach more than $28,000 per day and scored 90% utilisation.
Adjusted Ebitda jumped to $77.6m from $69.3m in the same quarter of the previous year.
“We’re quite pleased to see that we managed to generate TCE rates and Ebitda at a record level in this environment,” Zacho said in a conference call.
Navigator executives acknowledged there has been some spot rate softening in the ongoing third quarter, which is typically the LPG carrier sector’s seasonally weakest period.
Chief financial officer Gary Chapman said the impact of July’s Hurricane Beryl on US ethylene prices made voyages to Asia less competitive, but he described it as a temporary “blip” and noted that the company’s 50%-owned ethylene export terminal has take-or-pay contracts that mean it will eventually be paid anyway for cargoes that were not lifted.
Company executives said time-charter rates have strengthened, and small and handysize LPG carriers are not subject to the volatile swings as larger vessels.
“We think our trends will broadly continue into the third quarter,” Chapman told TradeWinds.
He said that what the company has seen so far in the third quarter and its outlook going forward suggests it might not have another record quarter.
“After you’ve hit three records in a row, as we have done, eventually one of them might not be a new record,” he said. “But does that mean that it’s a bad quarter? No.”
Zacho told analysts that the outlook for the company’s business is good.
“We expect utilisation to remain near or above 90%, and we continue to renew our expiring time charters at higher rates,” he said.
“With solid demand for transportation on handysize gas carriers, older vessels being sold out of international trade and limited supply from newbuildings in our segment, we expect this to continue.”
