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And myself, Randy Giveans, Executive Vice President of Investor Relations and Business Development in North America. I must advise you that this conference is being recorded today. As we conduct today's presentations, we'll be making various forward-looking statements. These statements include, but are not limited to, the future expectations, plans and prospects from both a financial and operational perspective and are based on management assumptions, forecasts, and expectations as of today's date, August 15, 2024 and are subject to material risks and uncertainties. Actual results may differ significantly from our forward-looking information and financial forecasts. Additional information about these factors and assumptions are included in our annual and quarterly reports filed with the Securities and Exchange Commission. With that, I will now pass the floor to Mads Peter Zacho, the company's CEO. Please go ahead, Mads.

Good morning and thank you all for joining this Navigator Gas earnings call for Q2 2024. Please turn to Page 3. To begin with, I'll review the key data on our Q2 '24 performance, and then I'll go over the outlook for the rest of the year. Gary or even Randy will then bring more detail and analysis. Yet again, we generate more revenues during the quarter with operating revenues up 8% compared to the -- both the same period in 2023 and also Q1 of this year. This was driven by both higher rates, but also strong utilization. Adjusted EBITDA for Q2 set yet another Navigator record of $78 million, which is well above the EBITDA of $69 million earned in Q2 of last year. The balance sheet is strong with the robust cash position even after we repaid on our debt facilities. We continued deploying capital into our ethylene terminal expansion and we also bought back shares. The return of capital continued in Q2 with both the $0.05 fixed dividend and the share buyback up to now in combination 25 of -- 25% of net income. This will continue after the Q2 result, and in addition, you probably also noted that during Q2, we bought back 3.5 million shares from BW Group for a total of $51 million at $14.52 per share. Commercially, we continue pushing up rates and secured average Q2 TCE rates of $29,500, which is 9% higher than the same period last year. We achieved utilization above 93%, which is high and more than 4% above the same period last year. We are pleased with the direction and continued improvements in our commercial results across rates and utilization and thereby our operating revenues. Throughput at our joint venture ethylene export terminal was down at 231,000…

Thank you, Mads, and very good morning or afternoon to everyone. Our second quarter 2024 results have continued our progress with, again, some really positive results and another new record high adjusted EBITDA, as Mads mentioned. On Slide 6, our total operating revenue was $146.7 million in the second quarter of 2024 with strong utilization of 93.4% against 89.3% for the first quarter of 2024, and boosted by still stronger time charter equivalent rates that were on average $29,550 per day in the second quarter, compared to $28,339 per day in the first quarter of 2024 and $27,241 per day in the second quarter of last year, 2023. In the second quarter of 2024, our vessel operating expenses were held steady at $43.5 million despite the larger number of vessel drydocks that are taking place in 2024 and depreciation was principally in line with the previous quarter at $33.3 million. We incurred some additional non-recurring general and administrative costs in the quarter related primarily to the secondary public offering of 7 million common shares by the BW Group, of which we concurrently bought back 3.5 million of those shares and they were cancelled. In the second quarter, we also saw a swing in our non-cash unrealized movements on our non-designated derivative instruments compared to the first quarter of 2024, this being related to movements in the market valuation of our long-term interest rate swaps over the quarter, and which movement turned negative, thus impacting our accounting net income figure by just over $4.7 million, but which had no impact on our cash or liquidity. Our income tax line reflects current and mainly deferred taxes, primarily derived from our investment and share of profits in our ethylene export terminal at Morgan's Point. Then overall, net income attributable to stockholders of Navigator…

Thank you, Gary, and good morning and afternoon all. Let's turn to Slide 14. Our earnings days continue to be strongly supported by ammonia and petrochemical shipping demand. We have recently had an uptick in vessels carrying ammonia and we are now back up to employing double-digit 10 vessels in this growing trade. We expect demand for ammonia shipping to continue to be strong for the foreseeable future. Significant growth for ammonia transportation is forecasted towards the end of the decade and we are proactively positioning ourselves today both on the maritime side as well as the infrastructure side to be a major mover and shaker in this emerging market. Randy will shortly give some color to our recent clean ammonia announcement. Petrochemical demand remains relatively robust, providing 45% of our total earnings days. U.S. exports of ethylene and ethane are the major commodities within this category. It is also nice to see that butadiene exports from Europe to Asia has returned. Long-haul butadiene provides positive support to the semi-refrigerated part of our fleet. The second quarter utilization at 93.4% is unseasonably strong. In fact, it is the highest second quarter utilization we have seen for a very long time. The top left graph on Page 15 is illustrating this point. The green dotted line represents our 2024 utilization today. The gray line represents our five-year average utilization and the gray shaded area represents our historic high and lows throughout those years. And as you can see, we're pretty happy with the countercyclicality for our second quarter, and the high levels continued into the third quarter with July coming in at just above 92%. This is well above the average, which puts us in a good trajectory for the next months. The bottom right graph is showing our fully refrigerated…

Thank you, Oeyvind. So yes, following up on several announcements we made in recent months, we want to provide some additional details on those developments regarding some of the announcements. With that, turning to the next Slide, 21, we're pleased to announce our return of capital for the second quarter of 2024, but before we get to that, I want to first highlight that during the second quarter, we repurchased and canceled 117,000 common shares of NVGS in the open market, totaling $2 million for an average price of a little over $17 per share. Additionally, in June, we repurchased and cancelled 3.5 million common shares of Navigator directly from BW Group for $51 million or $14.52 per share. To note, this transaction was done at a discount to the prevailing market price, had no impact to our free float, and has actually helped increase our trading liquidity throughout this summer. So now, looking ahead, in line with our recently announced return of capital policy and the illustrative table below, we're returning 25% of net income, or $5.8 million, to shareholders during this third quarter. The Board has declared a cash dividend of $0.05 per share that's payable on September 24th to all of shareholders of record as of September 3rd, equating to a quarterly cash dividend payment of $3.5 million. Additionally, with our shares still trading well below our NAV of well over $25 per share, we'll use the variable portion of the return of capital policy for share buybacks. As such, we expect to repurchase another 2.3 million of NVGS common shares between now and quarter-end such that the dividend and the share repurchases together equal that 25% of net income, $5.8 million. As seen over the past few years, and especially again this past June, returning capital…

Good. Thanks, Randy. And yes, so I'll just summarize today's presentation and when we look at the financial results for Q2, it was great to see that we posted record quarterly adjusted EBITDA of $78 million and adjusted net income of $25 million. We have the strongest balance sheet in the company's history, as illustrated by the low leverage ratios and the robust cash position, and we'll continue to pay quarterly cash dividends and buy back shares. And as you saw, we did a large share buyback of $51 million or 5% of shares out directly from BW in June. We pushed forward and completed our refinancing project with strong appetite from new and existing lenders. And if you look at our shipping business, the average fleet utilization was 93% for Q2 and the average TCE rate for our vessels was just above 90, 29,500 per day. So that's the highest that we've seen in more than eight years. Semi and fully refrigerated time charter extensions continue at higher levels compared to the same period last year, and the supply picture remains attractive with a small handysize order book and an aging global fleet. On the energy infrastructure, ethylene export volumes through the ethylene export terminal stay at firm levels, and the terminal expansion is on time and on budget with completion set for end of this year. BlueStreak entered into a memorandum of understanding with Uniper to help meet the U.K. government's aim of decarbonizing the power sector. And lastly, we just announced the $2.5 million co-investment alongside lead investor Attis Clean Energy into Ten08 energy. So as you can see here, it's been a really busy summer. We've remained committed to developing Navigator at a high pace, and I hope you can see that all the initiatives that you -- we are putting in front of you here, that they are very well aligned with the strategy that we previously discussed with you. So I'd say just thank you very much for listening in. And back to you, Randy.

Thank you, Mads. So yes, operator, we'll now open the lines for some Q&A. [Operator Instructions] So first question, your line is open.

Is it me? Can you hear me? This is Ben Nolan.

I hear you, Ben. Ben, how's it going?

All right, appreciate it. Thanks, guys. So I've got a couple of questions. The first is, Oeyvind, you were talking about the percentage of the fleet that's doing -- the substantially larger percentage of the fleet that's doing ammonia now. I was curious, is that a function of there just being a lot more ammonia being transported around the world? Or is it you're taking share maybe from other categories or have trading patterns changed? Just curious sort of how you think about appreciating that longer term there is going to be more ammonia, but today, what's driving that push into a greater percentage of the business being ammonia?

Yes. 10 vessels trading ammonia is quite significant. It's great for the business. It's not that we are taking market share from anybody else, but there are changing trade lanes requiring handysize vessels, because they are exactly that. They are handy for plugging holes, servicing, optimizing the different producers and the consumers of ammonia. And it's also a growing market. The world needs more fertilizers in general. So new plants are coming up. So it is increasing growth, which we're participating in and taking advantage of and that will continue. As you mentioned, a great, significant growth will come in a few years, but I think we are starting from a great place today with 10 vessels, which is quite a lot for any ship owner to be servicing that emerging industry.

Okay. All right. Appreciate that. And then I guess for my second question, when thinking about the new CO2 businesses and the new ammonia infrastructure, appreciating that those are early days and you don't have quite line of sight on exactly how those will play out yet, but as you think about planning and strategically where you are, what do you think is a realistic timeframe under which you think actually there would be capital calls and need to deploy capital? I mean, is that a '25 kind of event or are we a number of years away from sort of those really sort of being greenlit and capital needing to be put to work?

We have a pretty active business development portfolio, and there are also a number of projects that we haven't talked about because they are not ready to be talked about because they haven't materialized as Ten08 and BlueStreak have. When you look at Ten08, I think we've been clear on the timeline here that we're talking '29 to '30 before the operations of the facility there, and that means that the shipping investments don't need to happen anytime soon. So that'll be matched to ensure that they are in place at the time of exporting the first ammonia if that goes ahead. I think when it comes to BlueStreak, it's also here a little bit uncertain exactly when it's going to happen. It's going to be pushed towards the end of this decade, but even then, there may be other projects that come into life on the ammonia side or on the CO2 side that can have a shorter fuse than what we just describing here. So it could well be that there would be newbuilding contracts to be matched against chartering contracts with customers on the other side, potentially long-term contracts that would happen for ammonia or for CO2 already within the next year or two.

All right. I appreciate it. Thank you, guys.

And just to make clear here, Ben, that we would not be building those ships on speculation. I mean, we would be going into the ammonia segment and into the CO2 segment, if we have credible counterparts for long-term contracts.

No, understood. Yes. Thank you.

Thank you, Ben. Next caller, your line should be open. I see your hand up here, Omar.

Hi, Randy. Thank you. Well, thanks for the time and clearly the very detailed presentation. You guys have reported just another strong quarter. It looks like it just continues with just the strength in earnings and cash flow generation. So nice to see that the average charter rate at $29,550, it continues to climb, and it's up from $28,300 from the first quarter. It went higher despite maybe some of the indices suggesting that term rates came off just slightly, but then also you had VLGCs coming off. I know obviously you're not in that market and you're carrying a lot more specialized cargo than just straight up propane, but we did see the rates come off for the big ships. So historically we would have thought maybe rates would have -- you would have felt some pressure in the handy segment, but you didn't and in fact rates went higher. So just wanted to get a sense from you, what drove that, I guess, relative outperformance on the part of your fleet.

I think, Omar, we are not 100% insular to what is happening in the VLGC market. However, we do trade on different premises and fundamentals. On the LPG side, which is the direct competition with VLGCs, because that is what they carry only, they are completely different trades. So our -- we showed on a graph there on our semi-refrigerated side, most of our vessels in that -- with that capability are trading LPG and that is regional distribution, and that has not seen the decline or pressure, as you have -- you just mentioned, that the VLGCs have. So it's more to do with the trade, not necessarily that there is direct competition from above at the moment and we're not really seeing that into July either. So that is positive.

Okay. Thanks, Oeyvind. And just kind of following up on your comments in the presentation, you walked through the impact of Hurricane Beryl and that's led to a bit of a correction on the inventories that expect -- you expect it to kind of smooth out or normalize as we get to winter. I guess just in terms of impact here in the third quarter, how do you think that affects both the shipping business and then the terminal business?

I think on the terminal side, as Randy mentioned, they're on take or pay. So with time, it shouldn't really matter. Now, of course, from the shipping side, we are interested in physical volumes being exported. And if you see on one of the throughput slide that we had, July is very low. However, our utilization across the fleet was above 92%, much higher than average for that period of time. So what is really happening is that we are not exporting ethylene on the ships. We are doing some and that goes to Europe. However, ethane is generally picking up the slack. And if we have the freight hat on, we'll take ethane any day, and it's a great cargo connecting the U.S. with the world in terms of petrochemical production. So that is what is really happening. On the ethylene side, we think it's a very short-term thing. There was no damages at any of the crackers because of the hurricane. So these operators are pretty savvy. They turn them down in anticipation to avoid any damage. So they can easily turn it back up, which they are slowly doing now in August. So that will correct itself, and you'll see ethylene exports to climb in parallel with that. That is our expectation. So it was a short-term blip because of this hurricane thing.

Okay. Thank you. And maybe just one final one, Randy, to you perhaps. You mentioned obviously the terminal expansion and that's underway, and you entered into the first offtake agreement and expect a second one here fairly soon. So congrats on that. Just in general, are you able to give any color on that first offtake agreement in terms of whether duration or portion of the facility? And then should we assume kind of profitability in line with the existing contracts? Yes, any color you can give.

Yes. It's multiple years, right? So it's not just a one-year contract, but we don't want to go into the specific duration. Pricing is at least as good as it was for that extension. And then in terms of volumes, it's slightly more than the initial, but again, won't give you the number, but the size of it has gone up a little bit from what they had been of late. So again, the next one's going to be bigger and longer as well, and then we expect incremental offtake contracts by the time the completion is set into mid-December. So by Jan 1, when a lot of these offtake contracts are going to commence, we expect the majority of the expansion capacity to be sold. And again, one more color on the timing. So all the take or pay contracts, if they actually take the cargoes, we get that revenue in the quarter. If they don't, there is some deficiency lag. So they might have a quarter or two to make up for it. So it's not a one-for-one in terms of a take or pay, but over time, as Oeyvind was saying, we will recoup that kind of deficiency earnings for the terminal.

Okay. Got it. Thanks, Randy, for that color. Oeyvind, thank you. Good job, guys. I'll turn it over.

Appreciate it, Omar. Next caller, I think your line should be open. I see your hand here, Climent. You might still be on mute here.

Sorry, can you hear me now?

Hi, Climent. We can hear you.

Sorry about that. Thank you for taking my questions. I wanted to start by asking about the Ten08 investment. You will receive the option to invest up to $100 million in preferred to construct the initial phase, but on potential further investments, would those be as equity or once again as preferred? And secondly, will you have any kind of preference to expel the ammonia volumes with your vessels?

Yep. I'll start. Mads, Oeyvind, please join. So, right, for the first investment, up to $100 million, that will be taken at FID. So again, the $2.5 million is for the pre-feed and feed studies, which, again, back to Ben's question, should take about two years. So really the next capital deployed into Ten08 would likely be '26, and then it would extend throughout the construction period, say, three years through '29. So that's $100 million. For incremental investments, correct, it could be further on the preferred side with kind of a fixed return, potentially some equity upside to it. So we have a lot of optionality with this project, and that was one of the key drivers for this initial investment, was on the optionality. And in terms of the molecules, yes, we certainly would like to move it, similar to what we do with our ethylene export terminal, right? We don't necessarily -- or we don't produce any ethylene, but we liquefy it and then we move a lot of it. So similarly, on this terminal, on the clean ammonia side, certainly we want to help in the -- terminally in the liquefaction and also on the transportation, but if Oeyvind or Mads want to add some more color, please do.

Go ahead, Oeyvind.

That's very straightforward. So some of the offtakers that we are discussing to prefer to have the molecules, the ammonia, the clean ammonia, delivered to their site. And that is where Navigator and Ten08 comes into perfect play, whereby together we can actually provide that service and economics. That then will include vessels, Navigator vessels. So that is very exciting. Likewise, if the offtaker or the user, the end user, would like to buy from the terminal itself, then of course, we are in an excellent position to align with them to discuss what makes most sense logistically to get it to their place. So all in all, pretty good stuff.

That's very helpful. And I have another question, more on the modeling side. You've already discussed that throughput on the ethylene export terminal will come under pressure throughout the quarter, but the take or pay contract should soften the blow. Could you remind us what's kind of the quarterly run rate on the take or pay contract?

Yes. So in a range of what we've kind of shown previously, $4 million to $6 million, but again, we will not collect all of that real time, meaning in three quarter - in 3Q, as you've seen in July, if there are, there will be, some deficiencies, we won't collect those deficiencies likely in the third quarter. Right? It'll take another quarter, maybe two quarters beyond that. So on an average basis, it's 5-ish million dollars. You can look at our chart here kind of on a historical basis, but does that mean in a single quarter it? It might be $3 million and it might be $7 million? Absolutely. So if you look over the long haul, maybe $4 million to $6 million is a good range, but it could certainly go below or above that, depending on the deficiency timing.

Thanks for the color. That's all from me. Thank you for taking my questions.

Thank you, Climent. I believe there's someone else in the Q&A. Oh, here we go. I see your hand. Kristoffer from Arctic. How are you?

I'm good. Thank you. What about yourself?

Well, thank you.

So can you just shed some light on the throughput? I'm not sure if I understood correctly, but what was the terminal that you also operate impacted by the hurricane? And sort of, if that's the case, how long do you see sort of it take for volumes to ramp up because we are seeing on the VLGC side that it take some time?

Yes. Oeyvind, you want to --

Yes. I mean, just to be clear, the terminal itself, no damage, no issue because of the Beryl Hurricane. The issue lies with the wider production system capacity in the area. So they reduced capacity, production capacity during July, but at the same time, of course, there was domestic demand and that ate -- dug into the inventory. So that caused the ethylene price to increase, discouraging ethylene exports to Asia, but European exports remain. So as we mentioned in the prepared remarks, no physical damage. These producers are ramping up because the margins are pretty good. Ethane is super cheap. It makes sense for them to run as hard as they can. So it's not a VLGC parallel. It is a petrochemical thing.

Okay, perfect. And in terms of the ammonia investments that you're potentially doing, can you share some color on sort of how you are looking to price such a preferred equity? And you also mentioned that it may be sort of further investments. So can you also take part of sort of the equity in itself so that you get sort of equity upside and not sort of only a bond type of investment into the facility or production facility?

Yes. I can start on that. In terms of the preferred equity return, we have not disclosed that, but it's well above our cost of capital. We can probably just leave it at that. In terms of equity, the initial investment, the $2.5 million, there is somewhat of an equity component to that, but for the larger investment, we'd probably prefer preferred, pun intended there, just with the stable cash flows that that provides instead of taking commodity risk or some kind of equity exposure to the project on a larger level. So for the initial $2.5 million, there's some equity exposure for the larger, up to $100 million, that would be a fixed preferred rate, again, above our cost of capital for sure. And then incremental investments, correct, it could be a combination of preferred equity, maybe some equity, maybe we take some commodity risk upside. So a lot of options in a few years from now.

Perfect. That's all from me. Thanks.

Thank you. I believe that ends our Q&A. So Mads, final comment?

No, thanks a lot for listening in, and thank you to all the good questions that we had. So it's been a good quarter and we look forward to sharing the news as it comes along and as we develop our business going forward. So thank you and have a fantastic day.