Thank you for standing by, ladies and gentlemen. Welcome to the Navigator Holdings Conference Calls on the Third Quarter 2016 Financial Results. We have with us Mr. David Butters, Chairman, President and Chief Executive Officer; Mr. Niall Nolan, Chief Financial Officer; Mr. Oeyvind Linderman, Chief Commercial Officer. At this time all participants in a listen-only mode. [Operator Instructions] This conference is being recorded today, and I now pass the floor to one of your speakers, Mr. Butters. Please go ahead, sir.

Thank you, Melanie. And good morning and welcome to Navigator Gas third quarter earnings conference call. In London with me today is Niall Nolan, our Chief Financial Officer, and Oeyvind Linderman, our Chief Commercial Officer. Both gentlemen will have comments on the quarter's results. Following my introductory remarks Q&A will follow. During our second quarter conference call, we discussed the deteriorating LPG trade which began earlier in that quarter. Among those factors that we mentioned were global glut of cheap hydrocarbons, sluggish world economy, and a limited amount of LPG exports out of the U.S. East Coast, the Sunoco Logistics began exports of contracted ethane volumes to out of markets and pushing out LPG volumes. These factors continue to pressure our handy markets throughout the third quarter and in fact may have accelerated. It is a tribute to our flexible vessels and our keen focus on our charting strategy that we were able to generate a positive $30 million of EBITDA and $0.12 per share of their earnings for the quarter. While we do not consider the quarters financial results to be in anyway satisfactory, we believe progress has been made in building a commercial platform to capture and maintain a dominant position in the growing petrochemical gas market. Navigator has transitioned from being an LPG dependent transporter to a broad-based shipper of LPG and petrochemical gases, it can be seen in the growth in our revenue generated solely by the transporter petrochemical gases in the third quarter which amounted to 45% of our overall revenue contrasted against our first quarters when petrochemical gas transport amounted to only 20%. Oeyvind Linderman will follow with a more detailed discussion on this phenomenon. We're able to adjust to the changing market environment because of the flexibility of our handy-size semi-refrigerated and ethylene…

Thank you, David and good morning. The revenue for the quarter ended September 30, 2016, was $67.7 million continue to be affected by the weak LPG market to decreasing by $2.8 million or 3.9% from revenue generated during the second quarter of this year, and a reduction of $8.5 million or 10.8% from the $78.2 million generated during the three months ended September 30, 2015. Net revenue, that is revenue less voyage expenses decreased by 16% or $11.1 million to $57.9 million for the quarter compared to $69 million generated during the third quarter of 2015. The decrease in net revenue is primarily as a result of the reduction in charter rates. The average charter rate for the three months ended September 30, 2016 reduced to $22,975 per day or $699,000 per month from an average of $27,233 per day during the second quarter of this year, and from $31,081 per day during the third quarter of 2015. This have the effect of reducing net revenue by $20.8 million for this third quarter compared with the same period last year. Vessel utilization was 88.1% for this third quarter which is a slight reduction from the 89.8% achieved during the third quarter of 2015 but a modest improvement from the 86% achieved during the second quarter of this year. Our fleet now stands at 33 vessels following the delivery earlier this year of two handy-sized semi-refrigerated LPG carriers and two mid-sized ethane/ethylene carriers. The average age of the fleet at September 30, 2016 was 6.6 years. The latest a new building to be delivered, our second mid-sized 37,000 cubic meter ethane/ethylene carrier Navigator Eclipse was delivered since the quarter end on October 8. This vessel will enter a nine-month charter later this month to act as a front-runner for Navigator Jorf…

Thank you, Niall and good morning everyone. During 2013, 2014, 2015 Navigators core positioning in owning and operating complex sophisticated gas vessels with the capability to carry all grades at varying temperature was to a larger extent lost as the majority of our earnings was linked to booming LPG market. 85% of the cargos we carried during the last three years were propane and butane, 10% ammonia, and the remaining 3% to 4% petrochemical gases. For Navigator gas, this is now dramatically changing. The single most important shift in 2016 has been our ability to utilize and take advantage of our core positioning, our capability to switch between grades and trade lane. Year-to-date, the petrochemical proportion of volume carried has increased to 14% compared to the traditional 3% to 4%. This may not sound like much, but is very meaningful as it constitutes almost 40% of our total revenue. In terms of the total fleet earning days during the first quarter of this year, LPG constituted 75% with petrochemicals taking up 18%. For this quarter, LPG dropped to 53% with petrochemical gases reaching 41% of our fleet earning days. This dramatic shift is even more evident for our spot fleet. The earning days on our spot ships were split 47% for LPG and 53% for petrochemicals during the first quarter. This quarter in comparison, the LPG proportion reduced to 13% only and petrochemical gases rose to an all-time high of 87%. For this quarter, pretty slightly differently, the 13% of LPG equates to 158 earning days for two vessels. And the 87% of petrochemical gases constitutes 1,038 earning days or a total of 12 vessels; 12 is more than one-third of our entire fleet. Our business is global. During the quarter, we loaded 14% of cargos in South America, 30% in Europe, 23% in Asia, 26% in the Middle East and 8% in the U.S. The most notable change to these figures during the year has been a reduction of our U.S. involvement, principally due to the challenge with LPG arbitrage and an increase in our exposure with Middle East volume. In both these areas, we load petrochemical cargos, which bring about longer ton-mile demand. We are very much encouraged to changing trade patterns in the petrochemical market, and we spent considerable resources enabling our customers to develop and take part in these changes. Their long-short positions today for C2, C3 and C4 products needing handy-sized vessels for deep sea voyages. And we fully expect the geographical disparity between producer and consumer to continue to evolve over the next few years. We are very excited about these developments which as and when they materialize should have a positive impact on our utilization earnings at particular triangulation opportunities. Thank you very much,

Melanie, you can open it to Q&A at this point. Thank you.

[Operator Instructions]. And your first question comes from Jon Chappell from Evercore. Jon, your line is open.

Thank you. Good morning or good afternoon. Oeyvind, I wanted to do touch base on your last comment. As the shift to petrochemicals, or petrochemicals to gas continues; what does that mean for the overall utilization of the semi-U.S. [ph] fleet? And also is there any change there in the rate, whether it's TC rates or whatever that you can earn from those ships in that -- in those particular trades relative to the propane and butane trades that we've become accustomed to over the last several years?

We will always maintain our base of LPG time-charters in the Indonesia, in Middle East, in Europe, and the Caribbean; so that will remain. In the third quarter, we had a coverage, a time-charter coverage of 44%, which is slightly under the norm we've had of 50-50. But going into 2017 if we include various contracts, our ambition to conclude contract of affreightments and so forth. If we include that in utilization for next year, we believe that the coverage should increase and with increased coverage, then the theory will show that the utilization will also follow but as Niall briefly mentioned for third quarter there was a slight nudge up in utilization and that is solely because of the petrochemical trades. As you see the spot fleet, which are trading in the spot market predominantly, those 12 ships were trading petrochemicals.

So then all else equal, if you're doing a petrochemical movement given some of the changing trade patterns that you've discussed in the length of haul, would that offer better utilization through triangulation opportunities and once again, the historical propane and butane trades?

Yes, the LPG trade doesn't necessarily by itself go for any triangulation, but for 8 as we've mentioned before, John, the LPGs spot voyages, the average duration is max 10 days, and the average duration for our deep sea petrochemical shipment can be up to three months for one cargo. So that in itself should lend itself to utilization and also the petrochemical -- the trade -- sometimes they go against LPG trades and therefore offer triangulation. So, yes, it has an impact very much so.

Right, that's very helpful. David, I want to ask you a question on Eclipse -- nine month charter for that one. Now, how does that speak to -- I guess, the appetite for longer-term charter still for the new builds? Was this something that just kind of bridge the gap until -- hopefully, more of the export potential or export capacity was online or has there been a shift now to kind of shorter-term contracts in that business and an inability to get anything over three to five years?

No, this was done at the time when we were negotiating with our customer for the building of the Jorf. They wanted a long-term contract for that carrying of ammonia but we're concerned that they would like to begin earlier than the expected delivery of the Jorf. And we volunteered that, look, we can cover you with one of our new buildings, even though with a much more elaborate and sophisticated vessel, the Eclipse, which is ethane/ethylene capable, we'll cover you well in advance. So this was the time when we negotiated, when the mid-sized vessel market was particularly strong. But we felt it was valuable to do for the customer; and we didn't and at this point, we're quite glad we did because we've got good coverage but it doesn't necessarily say anything, John, about the market for this vessel. That was done probably a year ago and its good front-runner for the Jorf, when it comes off, we'll go directly on it.

Again, broadly speaking, has there been any change in the appetite then for the long-term contracts on the remaining ethylene carriers?

I did give the comments in my prepared remarks about what Jim Teague at Enterprise said, that someone needs a terminal to get that going, it is gaining traction somewhere. We are discussing it with a bunch of companies who are interested in it, but someone has to make that first step, once that step is made the conclusion is simple, you've got have a vessel and the only large capable vessels for that trade are owned by Navigator. So you can assume non-negotiations, it's a tripod type of negotiation; we're involved with everybody. And it's at that point where I think we have to be a little cautious in talking about what it is but bottom-line is, we are confident but this is something painfully -- I know talking about it, it just takes a while, but I think we're coming to that point, partly because of the ethylene plants are going to be coming on-stream, it's '17, there is a need for the staff, there is a quite a spread between ethylene prices here and the Far East. It is something that is compelling. But what we need is someone to step up, be prepared to build what is required, so that we can efficiently and effectively lower our vessels and the business will develop and it will develop overnight, and it will develop in a significant fashion. And we are right at that edge and unfortunately, every -- all the negotiations that are taking place remain confidential and -- but I'm pretty damn confident that by -- soon -- whatever that may mean, we'll be in a great position to talk about how the door is open for this massive amount of ethylene coming on and will go into the international market. And although it will likely go on the larger vessels, simply because the cost per ton-mile, it's so much more efficient in these types of large vessels.

Very helpful. Super last -- super quick last one from a comment from the press release; David you said, you expect the market softness to continue through much of next year. Just quickly, do you think it's bottomed out? I mean it was such a precipitous drop for a six-month period; do you think that we've now hit the low on both, utilization rates and it's just going to bounce along this bottom for much of next year or is there a more downside potential because of whatever reasons, delays in the new capacity or acceleration of ships being delivered which actually seems to be slowing next year?

Yes, it feels as though we are off the bottom, maybe, September or October, may have been the bottom. But let me ask the man on the desk who sees everything every day, his field or even, but -- since we do a fair amount of spot business, it can change at any point. But it feels pretty good, it feels though the worst is behind us, partly because of the growing petrochemical gas absorbing some vessels, partly because of the increased volumes, but Oeyvind -- why don't you give us -- give Jonathan a feel of what you are seeing on a daily basis today.

Remember what David just mentioned, there has been a dramatic drop in the last six months, both on the VLGCs across the whole gas base. So we remain -- I think, we are bottoming out. I think you'll see flat rates for the foreseeable future. With our statistics now and to change that we are seeing and part of -- and particularly petrochemicals, there is a lot of talk about petrochemicals for next year. So almost our entire spot fleet is trading petrochemicals and that's the solution for Navigator; and that is why we believe is going to be flat, we bottom out and that's the way forward for the foreseeable future. So, it's very much petrochemicals, will take the old LPG, there is very few guys talking about LPG long-term charters at the minute because the market is at its knees but petrochemicals is a different field, it's a different horizon that we are part of. I don't know whether that answers your question, but that's -- if you take the numbers in third quarter in terms of what we are doing, which product then that's a quite good indicator of what we will see going forward.

Okay, great. Thank you, Oeyvind. Thanks, David.

Thank you. Your next question comes from Ben Nolan from Stifle. Benefits your line is open.

Hi, this is actually Steven Tittsworth on for Ben. Good morning. I just had a couple of quick questions; the first one is, I noticed the vessel OpEx for the quarter was a little bit lower than it was the previous quarter, about $1.5 million; what was that attributable to?

I think the OpEx for the previous quarter, quarter two at -- just under $8,500 a day, $8445 was slightly inflated because of cost associated with dry dockings. There are -- albeit that the cost of dry dockings are capitalized. There are works which are done at that time, which run through the income statement. So we -- the nine-month rate is just over $8,000 -- $8,091 for the nine months, and we expect the output from the full 12-month to be around that number.

$8,000 to $9,000 per day?

Sorry, $8,000.

Okay, $8,000.

Yes, it was $8,091.

Okay, perfect, thank you. And not to beat a dead horse, but you've talked in great length about moving more to the petrochemical side, which gives you higher utilization charter rates, we are wondering what type of premium are you able to command for transporting in petrochemical compared to LPG?

It's a difficult question. It's a good question, but difficult to answer because it varies so much and we don't have particular indices which will tell you what developed is the benchmark and so forth. It's a small market, deep sea petrochemicals is a small market; everything is predominantly done on a stock basis, private and confidential. So, we know of course what we are doing, but it varies a lot. Some are very high, some are very low; but the important thing here is that with the shortfall of LPG, we are doing petrochemicals.

Okay, perfect. That does me. Thank you for your time.

Thank you. Your next question comes from Doug Mavrinac with Jefferies.

Thank you, operator. Good afternoon, guys. I just had a few follow-ups with you and on a topic that has been beaten like a dead horse now. But on the question that I still had after the beating of the dead horse, when you look at utilization levels and Oeyvind, you've clearly talked about how you've transitioned -- not just in the third quarter but really in the second quarter of moving more of your ships into the petrochemical gas market. But then in your prepared commentary, you talked about what that involves? It involves moving ships away from the U.S. and more towards Middle East exports; and so my question on this topic is how we arrive at the utilization levels that your fleet has been fully transitioned into moving some of those exports, such that when you look going forward, utilization level increases as they'd be just dependent upon more volumes or has the transition not been complete yet. So is your fleet during the third quarter, fully employed based on the transition or do you think they're more utilization level gains to come from having that facility fully in place again in 4Q such that you can see utilization level increases without additional export volumes. Does that make sense?

Yes, it makes sense. It is quite a complex transition to do. And the answer to the question whether we have completed the journey? the answer is no. We still see more appetite, particularly going into next year. So I think what you're seeing is not the end of it, I think we'll maintain. And as and when the opportunities come, we will probably increase the participation in the petrochemical trades. But it will never be 100% because we have a nice base of long-term LPG charters that they're developing for some time and that would be there. But the fall, nano for next year, These is some are terabytes, from term contracts in petrochemicals for next year, there is more chatter on we've ever seen. So let's see whether it materializes but the journey has not ended.

Very helpful, very helpful; thanks for that Oeyvind. And then my second question is about the market that you guys are transitioning away from. And that's the LPG market and it's from the perspective of looking of looking for an inflexion point, looking for a change. And clearly we've seen the trend over the last couple of quarters, but I was reading recently about how the ARB [ph] has reopened between the U.S. and Asia. When you see things like that, is that from your perspective just kind of a blip against the trend where we're continuing to see less demand or is that something where you can start where it will help; the LPG trade, kind of made that inflexion point. So when you see re-openings of certain ARBs, kind of how do you think about that in terms of your strategic positioning of your fleet?

I think any widening of ARB is good for trade. So if the VLGC people, they came to cleanse from 20 to close to 30, it's a good thing. But now of course to add almost 50% increase from a low number -- it's still a low number but of course it's a positive trend, whether it will continue, time will tell. So we take the LPG, that comes, that suits our positions, our ships but what I think is more important, the last month is we coming into winter and we've seen a lot of activity in the North Sea for LPG handy-size, mid-size movements; and we haven't seen that for the entire year. So that's the seasonality, that's something that's going to keep; time will tell. But I think for Navigator, the winter coming -- the winter in Europe is more important than the increase on the Baltic.

Got you, very helpful Oeyvind. And then one final question, this maybe more for Niall, but as it relates to the new $220 million facility that you guys have signed a couple of weeks ago. My question is two-fold, one, is the financing now in place for all the new builds? And then two, how does this, the refinancing portion of it change your amortization schedule on the other two facilities that it replaces?

Well, the first question, yes, it does finance all of the new builds. We've put in the facility in place in December of last year, which financed six of the ships and the Navigator Jorf was the last one; so that's included in this facility. With respect to the amortization -- the amortization is not dissimilar from the -- in absolute terms, it's not dissimilar from the two expiring facilities. There is a small -- there is a bit of increase in the first two years of the facility because we've got three ships in there which are now 16 years of age. So they get amortized quicker than all of the -- rest of them, but then it evens out. And as I say, it's not, in absolute terms, it's not dissimilar from the two expiring facilities.

Okay. And the pricing is better? I think you mentioned, is that correct, Niall?

Yes, to a margin, U.S. LIBOR plus 2.6 rather than an average of 3.18 on the other two facilities.

Okay. Very nice, very nice. That's all I had. Thank you guys for the time.

Thank you. Your next question comes from Fotis Giannakoulis from Morgan Stanley.

Hi guys, this is actually Ben stepping in for Fotis, thanks for taking the call. So it seems that a lot of my questions have already been answered, but just one left. On the supply side of the equation, can you just walk us through recent developments; I know the bulk of the larger carriers has been delivered but there might be pressure on the mid and smaller ships on next year's deliveries. So can you just walk us through these developments and whether you expect demolitions or increased lay-offs or idling to persist from here?

Because we are different as you may know, from the very large gas carriers, and our handy-space, we just outlined, it is a rather robust business and decent business for us, not as profitable as it should be, but quite content with it at the moment. The new building in our section -- in our sector, the handy-sized, semi-refrigerated, did have in it 13 vessels that were being built in Sino-Pacific shipyard that recently was announced as filing for bankruptcy. Now we are not privy to actual details but 13 ethylene capable vessels were being built in that yard and from what we hear, not confirmed -- not all of them are confirmed, but it sounds as though none of those 13 vessels will be built. Now maybe one gets build but it's our understanding -- very little activity is going on in that yard with the exception of completion of a couple of larger vessels that were well advanced prior to the filing of the bankruptcy. That probably is the most significant event as far as new buildings in our sector. But if you were to look and say how much graphing would take place in the handy section, I would say little. I'd say little because it's a relatively young fleet. I would say little, because in spite of the poor performance in the sector, the rates being crushed and over the last six months; we still can make money. So I if you were to talk about various large gas carriers, then I'm not going to be speaking about that business because that is not our business.

All right. Thanks so much for the color, David.

Thank you. Your next question comes from Oyvind Hagen From Nordea.

Hello, guys, thanks for taking my question. I have a quick question on the backlog; I'm looking at the Q3 charter exploration overview and it seems as the [indiscernible] and the Global, all have lost one year firm backlog since the Q2 overview, what's the reason behind this?

They haven't a lost any business.

For example, that Tower is -- now says that charter expiration date is April 2017, whereas in Q2, it said April 2018.

I think there was an option there or there is an option to extend, so I guess we just included term periods and not included options but we have an option in the charter part, that is currently running at.

Okay. But you still expect that option to be exercised?

Well, we never know, it's an option, it will invariably be used again too, if the market -- their option rate is lower than the market, they would declare. If option rate is -- the market is lower than they will renegotiate. So time will tell you. We would never know; but traditionally, the time charter business that we have had in LPG, traditionally is a continuous employment, i.e., 12 months, then as discussed, you revenue at whatever level and then you continue. That is the historic trend in the handy-size LPG market anyway.

Okay. But this is then fair to say that you see slightly lower probability now, the options being called and/or if they will be called it will probably be at a renegotiated rate level?

Yes, I mean if the option is sometime next year, then even the customer probably isn't even thinking about it. So usually the communication, the dialog, it's really ramped up two months, one month prior. So I think it's a bit early to tell, it all depends.

Okay, thank you.

Thank you. And your next question comes from [indiscernible].

Hi, guys. I know some of these questions have been touched upon already, but I just want to quickly go back on contract coverage. Obviously, it's all relative to where the spot market is, but do you see yourself adding further coverage in the near-term or -- and have you kind of changed your targeted coverage ratio going into 2017-2018?

The core LPG charters will probably -- will most likely remain, so the -- that will be LPG in the Baltic, Europe area, Indonesia, Caribbean. But you see petrochemical trades that we're doing, most of the spot fitted in petrochemicals, that point is clear. That market lends itself for its -- spot business, they are not that many contracts -- for certainly not time-charter contracts in that space. So in that regard, yes, we're doing a lot of petrochemicals but the business is still sort of learning of dealing with the deep sea, the large volumes on our ships and will it materialize into some class type of contracts for some of the ships; I believe so but generally -- petrochemicals are down on the spot market.

Okay, thanks. And then you mentioned briefly few ways, we've seen this couple of -- the VLGC guys having few ways that has proven to be in favor of the update of the charter in terms of -- they have been extremely flexible. Can you just speak quickly about how you see that -- the seaway for your vessels?

We have one COA today, and that's with Italy, I can't comment too much, but it's very different, which you probably understand better. Our -- petrochemical is different LPG and handy-size is different than VLGCs. And to answer your question; no, the charters can't nominate a two-day voyage to get out of it.

Okay. Perfect. Thank you very much.

[Operator Instructions]. We do have one final question. I hope may I take this?

Sure.

Thank you. Your final question from John Jendoza [ph] from Clarkson. John your line is open, sir.

Thanks for taking my questions. I apologize, I got disconnected but I want to ask a follow-up question on the SA charter inside of things. And with the recent cancellation of -- since you performed [ph], the ocean yield vessels; that was chartered out through Harping [ph]. Has that opened up an opportunity now with -- one of your open vessels?

We've been in dialog with Subic, everything they tendered, and they are good friends of ours, good customers of ours. And we are always there to help, should they need actually dimension. [Technical Difficulty].

Okay. There are no other questions, Melanie?

No sir, please do continue.

Okay, well. Thank you for joining us, and I just will reflect today is an important day in United States. I hope you have all voted. If you have voted, go out and vote again. It is very exciting time and I'm sorry, I'm not there. But I will talk to you soon in a couple or three months. Thank you.

Thank you, ladies and gentlemen; that does conclude your conference for today. Thank you all for participating. You may all disconnect.