Navigator Holdings Ltd. (NYSE:NVGS) Q1 2025 Earnings Call Transcript

Navigator Holdings Ltd. (NYSE:NVGS) Q1 2025 Earnings Call Transcript May 16, 2025

Randall Giveans: Thank you for standing by, ladies and gentlemen, and welcome to the Navigator Holdings Conference Call for the First Quarter 2025 Financial Results. On today’s call we have Mads Peter Zacho, Chief Executive Officer; Gary Chapman, Chief Financial Officer; Oeyvind Lindeman, Chief Commercial Officer; and myself, Randy Giveans, Executive Vice President of Investor Relations and Business Development in North America. I must advise you that this conference call is being recorded today. As we conduct today’s presentation, 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, May 15, 2025.

Actual results may differ significantly from our forward-looking information and financial forecast. 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 now pass the floor to Mads Peter Zacho, the company’s Chief Executive Officer. Please go ahead, Mads.

Mads Zacho: Thank you so much. Good morning, good afternoon, and thank you for joining this Navigator Gas earnings call for Q1 2025. As a start, I’ll just review the key data from our Q1 ’25 performance, and then I’ll go over the outlook for the rest of the year. After that, Gary, Oeyvind and Randy will discuss our results in more detail. In the first quarter, we again generated more revenues, up 13% compared to same period last year. This was a new record quarterly revenue, and it was driven by both high utilization and higher rates. Income from our joint venture terminal was down significantly. Adjusted EBITDA for Q1 was $73 million, in line with both same period of 2024 and also Q4. The balance sheet is strong with a robust cash position even after investments into three second-hand vessels and further investments — installments paid into the MGC newbuildings.

With the recent $40 million bond tap and the $300 million refinancing proceeds, the cash balance will be substantially stronger this second quarter. I’d like to add that the $300 million refinancing was signed as planned in the middle of the most volatile trade environment that we’ve seen in decades. And this is at the lowest margins ever for Navigator and also, I think, showing the rock-solid support and trust that we have from our banking partners. The return of capital continued in Q1 with both the $0.05 fixed dividend and a share buyback up to, in combination 25% of net income. We’re also pleased to announce another share repurchase authorization in the amount of an additional $50 million, enhancing shareholder returns, earnings per share and return on equity.

Commercially, we pushed TCE rate back up higher and secured average Q1 TCE rates of $30,475. This is 8% higher than both previous quarter and same period last year. We achieved utilization above 92%, in line with our guidance and higher than both Q4 of ’24 and higher than the same period last year. We’re again quite pleased with our ability to maintain robust TCE rates and utilization in a market that was hit by softer ethylene transport demand. To illustrate the softness, throughput at our joint venture Ethylene Export Terminal was limited to 86,000 tons for the quarter, and this is, of course, much lower than the already soft fourth quarter and much below capacity. This was caused by continued effects from the U.S. cracker turnarounds, leading to reduced domestic supply, leading to higher domestic prices and as a consequence, a narrow arbitrage.

Q&A Session

We expanded our fleet by acquiring three secondhand ethylene capable vessels at attractive prices. All three have now been taken over and deployed as planned. We also sold Navigator Venus, one of the original Navigator vessels, which was about to reach 25 years of age. The sale secured $17.5 million of cash and a book gain of almost $13 million. Gradual fleet renewal remains a priority, and we are likely to sell more of our older tonnage. The four last months have been challenging strategically to say the least. It now seems that uncertainty is receding somewhat. We believe that the port fees as announced by the U.S. Trade Representative will not affect Navigator Gas negatively due to our vessel size and due to us being a service provider to U.S. energy exports.

It now also seems that tariffs on Chinese import from the U.S. may be limited to 10%. I guess in this context, it should be mentioned that over the past five years, China has received less than 10% of ethylene shipped from Morgan’s Point. But anyway, much can still change. With our diversified customer base, our trading capability and strong balance sheet, I believe we remain resilient even if geopolitics take an unexpected turn. April utilization was weaker than usual due to cargo cancellations and some customers pausing new vessel fixtures. The effect has now already been reversed and the month of May showed gradual normalization in vessel utilization and likely a record high throughput at Morgan’s Point. The vessel supply picture remains attractive with a handysize order book of 9%.

And in addition to this, now 22% of the global handysize vessels on the water, they are more than 20 years of age. So the supply picture continues to look good. Now I’ll pass it over to you, Gary, so you can tell a little bit more about the financial results. Go ahead, please.

Gary Chapman: Thank you, Mads. Welcome, everybody. As Mads alluded to, we’ve been really busy in the last few months for all kinds of reasons. Our first quarter 2025 financials show yet another strong result, maintaining our trend over many quarters now, showing the quality and diversity of our business, not least as a result of our flexible fleet, resilient charter rates and utilization and our operational efficiency and cost controls. This all comes through in the numbers on Slide 6, where we see TCE jump above $30,000 per day. This leads on to a record high quarterly net operating revenue of $151 million, adjusted EBITDA of $72.8 million in the first quarter of 2025. Utilization was up 92.4%, up 3.1% compared to first quarter 2024.

And the average time charter equivalent rate of $30,476 per day is — in this first quarter is the highest rate achieved by Navigator in almost a decade. You’ll see that voyage expenses have increased substantially, partially as a result of our increased fleet size, but primarily as these are pass-through costs to our customers, there being a corresponding increase in operating revenues. Vessel operating expenses were somewhat up compared to the first quarter of 2024 at $47 million, with the increase primarily driven by the timing of maintenance costs incurred during the three months ended March 31, 2025, compared to the same period in 2024. Depreciation is slightly up compared to previous quarters due to our now increased fleet and our general and admin costs of $8.1 million in the first quarter, whilst up year-on-year, is down compared to the fourth quarter of 2024.

Our unrealized movements on non-designated derivative instruments resulted in a loss in this quarter of $2.3 million, this being related to movements in the fair value of our long-term interest rate swaps, which affects our net income, but which has no impact on our cash or liquidity. We also report a lower net interest expense in the first quarter of 2025 compared to the first quarter of 2024, partly due to lower sulfur rates. Other income shown in this quarter of $4.8 million relates to a historic but successful legal settlement for damages caused to Navigator Aries in a collision with a containership some 10 years ago. As we were uncertain about this claim, we did not include any provision in our accounts, and so this settlement has gone straight into our income statement for the quarter.

This is a full settlement, and we don’t expect anything further in this — in respect of this particular incident. Our income tax line reflects current tax and mainly deferred taxes, which are significantly down compared to Q1 2024 as they’re primarily derived from our investment and share of profits in our Ethylene Export Terminal at Morgan’s Point. Randy will shortly explain more, but the ethylene terminal throughput volumes in Q1 2025 were low, as Mads mentioned, at 85,553 tons, resulting in us reporting a loss of $0.9 million. But as already mentioned, we’re anticipating materially higher throughput back towards more normal trading levels in the second quarter and beyond this year. Then overall, for the first quarter of 2025, net income attributable to stockholders was $27 million, which is our highest quarterly net income in the last three years and the second highest in the last nine years with basic earnings per share of $0.39 and adjusted net income, which excludes unrealized gains, losses on derivative instruments, foreign exchange and other income of $25.5 million or $0.37 per share.

Our balance sheet shown on Slide 7, continues to be strong with a cash, cash equivalents and restricted cash balance of $139 million at March 31, 2025. This is despite paying out $26.3 million for scheduled loan repayments, over $1.9 million in share buybacks in respect to the fourth quarter of 2024, $21 million as further progress payments towards our MGC newbuild vessels, and a further $4 million final payment for our ethylene terminal expansion project. Our liquidity will be boosted further by a few things not included in these first quarter numbers, such as the $40 million bond tap issue, which settled in early April, the sale of the Navigator Venus, which completed this week, and the debt refinancing that we have signed and that we’re targeting to draw down by the end of May 2025.

On Slide 8, I apologize for the slightly busy slide here, but we’ve been busy extending our maturities, improving our liquidity and reducing our financing costs. We were able to enter into a new senior secured loan facility in February 2025 to partially finance the purchase of the three German-built 17,000 cubic meter ethane — ethylene capable liquefied gas carriers that we’ve since taken delivery of and of which vessels are already positively contributing to our bottom line. Following our successful issuance of $100 million of new senior unsecured bonds in October 2024, which at the time closed with the lowest spread for an unsecured dollar-denominated shipping bond in the Nordic market since 2008, we took advantage of a favorable market.

And on March 28, 2025, we successfully issued a further $40 million of our bonds, which also priced at 7.25%. We closed this just three business days before Mr. Trump’s Liberation Day announcements. And although we saw some upward movement in interest rates at the time, we believe the tap pricing represented a credit spread that was around 15 basis points tighter than even our original $100 million issue, showing Navigator to be an attractive credit story as well as an attractive equity story. Then on May 2, 2025, we entered into a new senior secured term loan and revolving credit facility for up to $300 million that will be used to repay the company’s existing September 2020 and October 2023 secured outstanding loan facilities of $143 million and $15 million, respectively, and thereafter be available for general corporate purposes.

The facility has a tenure of six years maturing in 2031. Amounts outstanding will bear interest on a quarterly basis at SOFR plus 170 basis points, and the facility is secured by — or to be secured by eight of the company’s vessels. We now have no debt maturities due in the next 12 months. I would just like to take this opportunity to say thank you to the club of lenders here for their faith in Navigator and for working with us on this given the macroenvironment we have seen just recently. We think our business model is robust, and it’s good to see others thinking the same also and taking a longer term view as we do. On the right side of this slide is a summary of our main debt movements in the last four months, and we also show towards the bottom a pro forma loan-to-value calculation, which we think is important to demonstrate that we’re operating conservatively, while still trying to be efficient with our balance sheet and looking for opportunities to reduce our cost of finance.

On Slide 9, our leverage against earnings remains in a strong position with net debt-to-adjusted EBITDA at 2.6 times for the last 12 months to March 31, 2025. And our net debt to capitalization was 38% at the end of this first quarter of 2025. As we’ve shown before, we’re continuing to make substantial debt repayments with around $124 million of average annual scheduled debt amortization payments expected across the coming three years, 2025 to 2027. And again, the last bullet, we’ve finished the quarter with a healthy cash balance despite the many calls on our funds where we’re actively pursuing a number of important work streams. On Slide 10, this is one of our most important slides as it shows our estimated all-in cash breakeven for 2025, which at $20,600 per day is significantly below our average TCE revenue for this first quarter of 2025 of $30,476 per day and is materially unchanged from the estimate we provided on our last earnings call back in March.

The estimated cash breakeven figure is an all-in figure, and it includes our forecast scheduled debt repayments and our drydocking costs. On the right is our updated OpEx guidance for 2025 across our different vessel segments, ranging from $8,050 per day for our smaller vessels to $11,100 per day for our larger, more complex ethylene vessels. This guidance is unchanged from our last quarterly call in March. And following below is guidance for this year and for the first quarter of 2025 across vessel OpEx, general and admin costs, depreciation and cash interest expenses in dollar terms. The full year guidance for vessel OpEx for 2025 towards the bottom is now slightly higher in total than the previous guidance given in March as we now have a net 2 extra vessels across the remainder of the year.

Slide 11 outlines our historic quarterly adjusted EBITDA, adding this first quarter solid figure and demonstrating yet another very positive and consistent result, as seen for many quarters now. And this is despite a slightly prolonged dip in the ethylene arbitrage, which Oeyvind will cover shortly and which has impacted the results from our terminal this quarter. On the right side, we show our historic adjusted EBITDA for 2024, our last 12 months adjusted EBITDA and an annualized adjusted EBITDA based on the first quarter’s result. In addition, the EBITDA bars then to the right provides some sensitivity and illustrate an increase in adjusted EBITDA of approximately $19 million for each $1,000 incremental increase in average time charter equivalent rates per day.

And in terms of our vessels drydock schedule, projected costs and time taken, we’ve moved this slide to the appendix. Although, this is very important information, the slide itself is quite heavy, and you don’t need me to read it out to you. The only point I want to make is that we’re continuing to invest in our energy and fuel saving initiatives, which we believe are great investments to make for both financial and environmental reasons, typically having very short payback periods. So with that and having been able to report some strong results and activities this quarter, I will hand you over to Oeyvind, who can guide us through our commercial environment amidst some of the macro uncertainties we have all been seeing. Thank you. Oeyvind?

Oeyvind Lindeman: Thank you, Gary, and good morning, good afternoon, everyone. I’ll spend the next few minutes walking you through the freight markets, our utilization trends and the recent impact of tariffs. I’ll also touch on the latest ethylene arbitrage and wrap up with a quick view on vessel supply. So let’s start with the market. If you turn to Page 13, you’ll see the latest time charter assessments across the gas carrier segments. The story here is stability. Rates for our core segments, ethylene and semi-refrigerated vessels, which cover 88% of our fleet, have held firm. That’s reassuring, especially given the recent backdrop of tariffs, trade uncertainties and most people pushing the pause button. Now on to utilization.

On Page 14, it shows the makeup of our earnings base across petrochemicals, LPG and ammonia as well as fleet utilization. We came in strong in the first quarter with utilization of 92.4%, but things took a sharp turn in April. On 10th of April, China imposed tariffs up to 125% on a range of U.S. energy products, including ethane, ethylene and LPG. That made the trade between the two countries completely uneconomical. We had three handysize ethane cargoes to China canceled and 0 new inquiries follow during this time. And we weren’t alone, the industry saw widespread disruptions and cancellations. But right after Easter, China quietly dropped the ethane tariffs back down to 1%. Immediately activity came back. We concluded two ethane fixtures overnight, and that’s how quickly tariffs can swing the markets.

With tariffs down and sentiment improving, utilization is now recovering, and we expect a more normalized trading pattern from May onwards. Our forward cover helps smooth things out. As of today, 41% of our ship days over the next 12 months are fixed at an average rate of $31,040 per day. Now let’s take a closer look at the tariff situation. On the next page, we have the three charts showing the direct impact of the tariff spike. First, on LPG. This isn’t a core trade for us, but the ripple effect has some impact on the overall freight markets and sentiment. The 125% tariff made U.S. to China LPG uneconomical. Cargoes diverted instantly to South Korea, Japan, Indonesia, India, while China turned to Middle East and nearby suppliers to backfill their demand.

These ships increase inefficiencies, which can actually benefit shipping. In the middle chart, you’ll see handysize ethane liftings dropped in April. Not surprising as most of these trades are on a spot basis, all spot activity was put on pause. But with the tariff now back to 1%, I fully expect May volumes to bounce back. On the right, it shows ethylene. China has never been the main buyer of U.S. ethylene. They have, on average, imported about 10% of U.S. ethylene exports during the first five — the last five years. Last year in 2024, just 85,000 tons went to China and have declined since 2023. And yet, our ethylene freight rates are up. It illustrates that China is not an essential driver for U.S. ethylene exports or our ethylene freight markets.

In any event, and similar to ethane and LPG, the 125% tariff shut the trade during April for ethylene. Now, with an 11% tariff and a healthy arbitrage, we could see China come back into play for this commodity. Speaking of arbitrage, the ethylene arbitrage is wide open. On Page 16, if you take a look at the gray line on the left-hand chart, U.S. ethylene prices have come down to around $400 per ton, significantly down. And that’s great news, wait for trade, for our terminal and for freight. The mid-graph shows where freight sits in the ethylene value chain. And if you look in the light blue box, $300 per ton to Europe or Asia on paper, it works for us. Terminal volumes in April were up. And as Mads mentioned, May is shaping up even better. Our terminal is set to use its flex capacity to meet that demand.

On supply on Page 17, it shows the fleet picture. Supply in our Handysize segment remains very manageable, single-digit growth from the yards. A good chunk of the fleet is over 20 years of age. The larger segments are seeing more newbuilds, but we are in a comfortable position in the segments we operate. So to wrap it up, April was turbulent, but the fundamentals are back for ethane and ethylene. Utilization is rising, rates are holding and volumes are flowing through the terminal. So we’re entering May with solid momentum and a bit of spring optimism. With that, I’ll hand over to Randy for the latest corporate developments. Randy?

Randall Giveans: Thank you, Oeyvind. So following up on several announcements we made in recent months, we want to provide some additional details and updates on our recent developments. Starting on Slide 19. We’re pleased to announce our return of capital for the first quarter of 2025. But before we get to that, I want to highlight that during the first quarter, we repurchased more than 136,000 common shares in the open market totaling $1.9 million for an average price of $14.17 per share. Now looking ahead, in line with our return of capital policy and the illustrative table below, we’re returning 25% of net income or a total of $6.8 million to shareholders during the second quarter. The Board has declared a cash dividend of $0.05 per share payable on June 17 to all shareholders of record as of May 29, equating to a quarterly cash dividend payment of $3.5 million.

Additionally, with NVGS shares trading well below estimated NAV of around $27 a share, we will use the variable portion of the return of capital policy for share buybacks. As such, we expect to repurchase $3.3 million of common shares between now and quarter end, such that the dividend and share repurchases together equal 25% of net income, again, $6.8 million in total this quarter. As seen over the past few years, returning capital to shareholders will remain a primary focus for us going forward. And that’s not all for capital returns. Just wait, there’s more. Now looking at Slide 20. Included in our earnings release yesterday afternoon, we announced the Board’s authorization for a new share repurchase program of up to $50 million of NVGS common stock, most likely to be implemented via open market purchases.

To be clear, this new share repurchase authorization is in addition to our quarterly share repurchases connected to our return of capital policy. So the $3.3 million mentioned earlier will not eat into this new $50 million authorization. Now there are several compelling reasons for us to repurchase shares. Buying back a discount boosts our NAV per share, it reduces the share count and increases earnings per share, supports the share price. And as we explained through our five pillars of capital deployment, it diversifies our uses of cash. In terms of funding the buybacks, we recently raised almost $200 million of excess liquidity through the unsecured bond tap, the most recent credit facility refinancing and the sale of the Navigator Venus, which I’ll touch on in a second.

As Gary displayed on Slide 8, a large portion of the excess cash will be used to repay more expensive debt. Some will be used for growth projects, some will be kept on the balance sheet and some will be used for the share repurchase program. And as you can see on the bottom left of the slide, the extremely intelligent equity analysts who cover us agree that our share price is very attractive with lots of upside from here. So all that being said, there are many factors that come into play regarding the timing and scale of incremental repurchases, but we do plan on implementing this program in the near future, especially at the current very cheap share price. Now turning to our Ethylene Export Terminal on Slide 21. As we mentioned on our previous earnings call, U.S. Gulf ethylene cracker turnarounds persisted throughout the first quarter, resulting in reduced U.S. ethylene supply and high U.S. ethylene prices.

As a result, throughput volumes during the first quarter decreased to 85,000 tons. However, as the U.S. crackers ramped production in April, the domestic ethylene price fell from $0.30 a pound or $660 per metric ton to $0.20 a pound or $440 per metric ton, as you can see on the bottom right chart, substantially widening the arbitrage to both Europe and Asia. So this led to throughput in April increasing to a six month high of 66,000 tons. And with the domestic ethylene price now back down to $400 a ton, throughput in May will exceed the volumes in April and the flex train will be utilized soon. So looking at the forward curve for ethylene prices, we expect the terminal throughput to remain fairly strong and our net income from the joint venture to return to historical profitability levels this quarter.

As a reminder, we completed the final flex train CapEx payment of $4 million in January for a total contribution of $128 million, all paid from cash on hand. As for the contracting of the expansion volumes, interest in the offtake contract has increased in recent weeks, and we continue to expect that additional offtake capacity will be contracted in the coming months as new customers continue to request terms. Now finishing on Slide 22. Our fleet renewal program continues to be implemented as we sell our oldest vessels and replace them with modern secondhand tonnage. So starting with the divestiture. Two days ago, we completed the sale of our oldest vessel, Navigator Venus, a 2,000-built, 22,000 cubic meter gas carrier to a third-party for $17.5 million, resulting in a $12.8 million profit to be included in our second quarter net income.

That leaves us with only two of our original vessels built in 2000, and we continue to engage buyers who are showing interest in acquiring those older vessels. On the replacement side, during the first quarter, we took delivery of all three secondhand handysize ethylene carriers that we agreed to acquire in December of 2024, complementing the increased export capacity from our Ethylene Export Terminal joint venture. Now the vast majority of that $83.9 million total purchase price was financed through new debt totaling $74.6 million. So the acquisition only required less than $10 million of our cash. As a result of our recent sale and purchase activity, our current fleet is now 11.9 years of age with an average size of 20,816 cubic meters. So not too young, not too old, not too big, not too small, basically the Goldilocks fleet.

With that, I’ll now turn it back over to Mads for closing remarks.

Mads Zacho: Thanks a lot, Randy. Yes, in summary, I guess, that we can conclude here that Navigator Gas got off to a robust start to 2025. I probably should add here that the past month has added quite a few sleepless nights and probably also some gray hairs. But I think in Q1, we delivered another solid quarter with strong operating cash flows. And we have in front of us a Q2 that maybe started a little bit shaky, but has now returned to almost normal, there I say so. We’ve built resilience by refinancing well ahead of maturity at lower margins and better terms. And this is why we, despite less overall visibility than usual, and continue to pay quarterly cash dividends and add another substantial share buyback program at $50 million.

This buyback program will significantly enhance the shareholder returns, our EPS and our return on equity. We remain confident about the demand fundamentals of the business. Continued growth in U.S. natural gas liquids production and the significant build-out in U.S. export infrastructure over the next four years will support exports and thereby transport demand. Near term we expect the terminal throughput for Q2 to be materially higher than Q1 and with a widening ethylene arbitrage. The vessel supply picture remains attractive with a small handysize order book and an aging global fleet. So thanks a lot for listening. And now I’ll hand it back to you, Randy, and we’ll go to Q&A.

A – Randall Giveans: Thank you, Mads. Operator, we’ll now open the line for some Q&A. [Operator Instructions] So first question, your line should be open.

Unidentified Participant: Hi, Randy. Thank you. Thanks for the update, guys. A couple of questions from my end. I think, Oeyvind, you spent a good amount of time talking about the market in April and how things have improved thus far in May as the tariffs have gotten removed or lowered. Just wanted to ask when the China U.S., say, trade got to a bit of a standstill, as you highlighted, what ended up happening elsewhere? Did you see any cargo opportunities to send to other areas in the Far East or was it just a complete lull in the market?

Oeyvind Lindeman: No. I mean, LPG is quite — it’s a deep market. It’s a big market, and it’s quite fungible, meaning that we can find other outlets. So positively for Navigator in that situation, so no LPG from U.S. to China. So what does China do? They buy from other sources. So we actually did some trades that we haven’t done before, LPG on a handysize from Middle East to China. So usually, those ships are too small for such a long deep sea voyage on LPG, it’s more for the VLGCs, but did happen. And that is a sort of a blip — a positive blip if you see it that way. But LPG generally caused inefficiencies. So ships are waiting fully laden, deviating, different trades going to new places. And generally, that was a positive for the market generally for LPG. Ethane stopped until China announced that no, it’s exempt from import duties, i.e., only 1% going from 126% to 1%. So that’s clearly helpful. So those two things had an impact.

Unidentified Participant: Okay. Thank you. And then just in terms of how we saw things in the first quarter, it seems that your realized rate stayed fairly strong, even as you were highlighting the arbitrage to move cargo, kind of favored going the short-haul route to Europe instead of the Far East. Is that a bit of — would you say that’s a delayed reaction maybe that we will see some of that into the second quarter where we’ll see the softer rate? Because obviously, 30,000 is still quite strong in spite of that shorter half?

Oeyvind Lindeman: I think when there was no [indiscernible] smaller volumes of ethylene going through the terminal in the first quarter and rates were kept high. And now you’re facing a situation whereby — and there’s more volumes. So that’s a positive if you’re thinking about the second quarter. More supply, that’s more volumes that needs to move on the same amount of ships. First quarter, most of it went Transatlantic to Europe, so on ethane and ethylene. Shorter voyages, but now we’re seeing also voyages going to Indonesia and other places or longer. So yes, we are optimistic.

Unidentified Participant: Okay. And one final one, and I’ll turn it over. Maybe to you, Gary, you’ve got the new credit facility in place now that refinances this year’s maturity. You paid for the terminal expansion with your cash resources. And on the last call you mentioned that you’re aiming to put some debt in place on the terminal now that it’s completed. You’ve got the small balance left on that original loan for the pre-expansion part of the terminal. What are you thinking right now in terms of putting some debt on the project now? Any sense of timing or amount?

Gary Chapman: Yeah. I think what we can say is it’s not imminent. I don’t think it’s top of our list. I think it’s something that we’ve been looking at for a while, and I think there are various different things we can look at. Obviously, for Navigator, it’s not ships. So it’s something a little bit different for us to finance. And I think with the contractual situation from the flex train there, we’ve been waiting for that situation, which is coming along nicely. But because we’ve not been in a rush, I think we’ve been prioritizing our more expensive bank debt and our other facilities and getting that out of the way first. But it’s certainly still on our list. But in terms of priority and timing, yes, it’s probably not right at the top of the list. I think we’ve got other things that we can go for first.

Unidentified Participant: Okay. Thanks, Gary. Thanks, guys.

Gary Chapman: Thank you.

Randall Giveans: All right. Next question. Your line should be open.

Charles Fratt: Hi. Just starting off on the buyback program. How do you think about deploying the new buyback program? And is there a mechanism for how you determine the amount of buybacks in any given quarter?

Randall Giveans: Yeah. Thanks for that, Charles. So in terms of scale, looking back over the last couple of years, we bought back around $55 or so million each year. In 2022, we announced the program, the first $50 million share buyback program and implemented it pretty soon thereafter. So certainly planning on putting this one to good use as well. In terms of the scale, there are certain parameters and volume limitations that you can buy back on any given day and kind of an open market share repurchase program. So obviously, we have to stay in line with those. But that said, again, we’re going to do the $3.3 million for sure in terms of share buybacks based on the return of capital policy and the incremental one we plan on utilizing here in the near term as well. So a lot of variables will determine the exact timing and scale of that, but it is something we plan on implementing in the near term.

Charles Fratt: Understood. And just a second question, has volatility that you’ve seen in the market recently changed how you’re approaching the chartering strategy?

Oeyvind Lindeman: Charles, you mentioned we put in a note, which we haven’t done before in terms of our percentage cover over the next 12 months and the average rate of that. That certainly helped in April. I think that 41% is probably a little bit low. So we’re looking to nudge it up a few percentage points. So it’s something we look at. And of course, you are influenced by what’s happening around you. But on a long-term we generally are just shy of 50% on cover because we really — petrochemicals generally is spot driven. So — and we believe in the market is coming back now. And then, of course, it’s beneficial to have some spot open ships.

Charles Fratt: Understood. Thanks for the time.

Randall Giveans: Thanks, Charles. I believe that is it in terms of Q&A. So I’ll turn it back to Mads for one final goodbye.

Mads Zacho: Good. Thanks for staying with us and listening into our Q1 results. I think you can see that this is better-than-expected Q1. It was a quite robust result that we demonstrated here with good cash returns. And of course, that cash return then is translated into returning cash to shareholders. So we are pleased to see that even in a time when things have been very dynamic around us that we can finance our vessels with strong support from our banks, and we can also generate excess liquidity so we can launch another share buyback. We’ve seen that as being a very good instrument in the past to returning shares or capital to shareholders, and this is one that we’ll keep prioritizing. So stay tuned, and thank you so much for listening in.

Randall Giveans: Wait one more second. It looks like we have a late addition to the Q&A. Climent, there he is. Your line is open.

Climent Molins: Hi, team. Thank you for taking my questions. I wanted to delve a bit further into the TCE increase quarter-over-quarter. Was the bulk of the uplift attributable to solid performance on the spot market or was it mostly due to vessels on time charters being rolled at higher rates?

Mads Zacho: You’re muted Oeyvind.

Oeyvind Lindeman: Yeah, hopefully. Mostly on the time charter market, Climent. The spot market was getting a little bit choppy leading into April. So generally attributed to time charter, which proves the point that also customers are viewing 2025 as being quite tight or tighter on ships. So that’s just a reflection of that.

Climent Molins: Right. That’s helpful. And this one is more on the modeling side, but should we expect the co-pay payments on the Ethylene Export Terminall to provide a tailwind to the JV’s contribution in the second quarter?

Oeyvind Lindeman: Yes. I guess — go ahead, Mads.

Mads Zacho: No, no. That will certainly be the case. The deficiency payments tend to vary from contract to contract. So it depends on which the customer is, but typically, they will fall into the following quarter portion of it. So yes, you’ll see a benefit or a positive impact from it.

Climent Molins: That’s helpful. Thank you. Thank you for taking my questions.

Randall Giveans: Absolutely. Thanks for joining. All right. With that, we’re out of time. Thanks again, and we look forward to seeing you all in August.