Navigator Holdings Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; filed April 28, 2022. This is an annual report, not a standalone Q4 filing. Financial statements are prepared under U.S. GAAP and presented in U.S. dollars.
Business context
Navigator owns and operates liquefied-gas carriers transporting LPG, petrochemical gases and ammonia, and holds a 50% interest in an ethylene export terminal in Texas. In August 2021, it completed the Ultragas acquisition, issuing 21.2 million shares and assuming debt and other liabilities. The report describes a 55-vessel fleet at year-end in some sections, but also refers to 53 vessels in others.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total operating revenue | $406.5 million | $332.5 million |
| Operating income (loss) | ($3.0 million) | $41.8 million |
| Net income (loss) attributable to shareholders | ($31.0 million) | ($0.4 million) |
| Basic and diluted loss per share | ($0.48) | ($0.01) |
| Net cash from operating activities | $98.0 million | $44.7 million |
| Cash, cash equivalents and restricted cash at year-end | $124.2 million | $59.3 million |
| Total assets / total liabilities | $2,157.4 million / $1,040.0 million | $1,839.4 million / $897.0 million |
| Adjusted EBITDA (non-GAAP) | $160.3 million | $119.1 million |
Revenue growth reflected the expanded fleet, higher time-charter-equivalent rates and increased Luna Pool and Unigas Pool revenue. The average TCE rate rose to $22,145 per operating day from $21,573; fleet utilization improved to 87.4% from 86.8%. Revenue includes pool arrangements and should not be directly equated with owned-vessel charter revenue. Adjusted EBITDA excludes, among other items, vessel impairment losses and is not a GAAP measure.
Operating expenses increased 40.8% to $409.4 million, including $63.6 million of vessel impairment losses. Vessel operating expenses rose 19.8% to $131.2 million, and depreciation and amortization rose 15.4% to $88.5 million. The company reported $11.1 million of equity-method income, primarily from the export terminal joint venture, versus $0.7 million in 2020.
Gross principal outstanding under secured term-loan and revolving facilities was approximately $815.9 million at year-end; bonds had $168.2 million of principal outstanding ($68.2 million secured and $100.0 million unsecured). The company reported $466.3 million of indebtedness and finance-lease obligations exposed to LIBOR-based interest, net of swaps. It was in compliance with debt covenants at December 31, 2021. Contractual obligations totaled $993.1 million, including $152.1 million due in 2022. Management said available resources were expected to meet liquidity and working-capital needs for at least 12 months.
Material changes and unusual items
- The Ultragas transaction expanded the fleet and added the Unigas Pool; 2021 results include the acquired business only from August 4. The transaction involved $202.9 million in equity consideration and $207.5 million of debt and other liabilities assumed.
- Net operating cash flow more than doubled year over year. Investing cash flow was positive $33.1 million, including acquisition cash and distributions from equity-method investments; financing cash flow was negative $66.1 million, principally reflecting debt repayments.
- The company recorded $63.6 million in vessel impairment losses after reducing estimated vessel useful lives from 30 to 25 years. The filing discusses eight impaired vessels and separately reports a $5.4 million impairment on a vessel held for sale; the precise reconciliation to the reported total should be checked.
- Shares outstanding increased to 77.2 million from 55.9 million, largely due to shares issued to Ultranav. BW Group and Ultranav held approximately 28.3% and 27.5%, respectively, at year-end.
- The Marine Export Terminal handled 628,000 metric tons in 2021, compared with 425,000 in 2020. The joint venture contributed $11.1 million of equity-method income in 2021.
Outlook, risks and controls
Management cited stronger late-2021 shipping conditions: owned-fleet utilization averaged 91.4% in Q4, and broker-reported handysize semi-refrigerated charter rates increased from about $590,000 to $680,000 per calendar month between September and December 2021. The terminal exported 241,500 metric tons in Q4; management indicated first-quarter 2022 volume was expected to be approximately 250,000 metric tons. These are operating trends, not formal earnings guidance.
The Russia-Ukraine conflict is a material uncertainty discussed after year-end. Four Russian-counterparty charters were due to expire in June 2022 or December 2023, and the company said it did not intend to renew them. Approximately 120 Russian and Ukrainian officers served aboard its vessels, creating potential crewing and cost risks. Other key exposures include volatile charter rates, customer concentration (two customers generated 20.7% of 2021 revenue), vessel-value and covenant risk, fuel and interest-rate movements, sanctions, regulation, climate-related requirements, and execution of the Ultragas integration and terminal operations.
The company did not pay common-stock dividends and did not anticipate paying them in the near term. The financial-statement audit opinion was unqualified, but management and the auditor concluded internal control over financial reporting was ineffective because a material weakness in accounting and SEC-reporting expertise remained unremediated. The auditor excluded the acquired Ultragas entities from its internal-control audit; they represented approximately 19% of consolidated assets and 13% of revenue.
Important facts for investors to verify
- Reconcile reported vessel counts across the filing and confirm the post-acquisition fleet composition.
- Verify the impairment charge reconciliation, including the eight-vessel write-down and held-for-sale impairment, and assess the revised useful-life assumptions.
- Review debt maturities, liquidity covenant headroom, collateral valuations and the transition from LIBOR to replacement rates.
- Track charter expirations, customer concentration, Russian-counterparty exposure and crewing availability.
- Monitor Ultragas integration, terminal throughput and joint-venture distributions, alongside remediation of the disclosed material weakness.