Navigator Holdings Ltd. Q1 2015 Preliminary Results Summary
Business Context and Reporting Period
This Form 6-K filing, dated May 5, 2015, presents the preliminary financial results for Navigator Holdings Ltd. (NYSE: NVGS) for the three months ended March 31, 2015. The Company operates a fleet of semi-refrigerated gas carriers. As of March 31, 2015, the fleet consisted of 27 vessels in operation, with a 28th vessel added in late April 2015. The Company has 10 newbuildings on order for delivery between June 2015 and March 2017.
Key Financial Metrics
| Metric | Q1 2015 | Q1 2014 | Change |
|---|---|---|---|
| Operating Revenue | $74.2 million | $69.8 million | +6.3% |
| Net Operating Revenue | $67.3 million | $59.9 million | +12.4% |
| Net Income | $22.0 million | $16.9 million | +30.5% |
| EBITDA | $44.7 million | $36.0 million | +25.0% |
| Earnings Per Share (Diluted) | $0.40 | $0.31 | +29.0% |
| Cash and Cash Equivalents | $50.5 million | $62.5 million (Dec 31, 2014) | -19.2% (QoQ) |
| Total Debt (Current + Non-Current) | $432.6 million | $417.9 million (Dec 31, 2014) | +3.5% (QoQ) |
Operational Metrics: Average time charter equivalent rate was $887,560 per month ($29,180 per day), up from $871,385 in Q1 2014. Fleet utilization increased slightly to 97.0% from 96.9%.
Material Changes vs. Prior Period
- Revenue Growth: Operating revenue increased by $4.4 million, driven by a higher weighted average number of vessels, improved charter rates, and better utilization. This was partially offset by lower bunker prices.
- Profitability: Net income rose 30.5% despite a $1.8 million write-off of deferred financing costs related to the refinancing of a secured term loan facility.
- Cost Structure: Voyage expenses decreased significantly to $6.9 million from $9.9 million in the prior year, primarily due to falling bunker prices. Vessel operating expenses increased slightly to $18.0 million due to fleet expansion.
- Cash Flow: Net cash provided by operating activities decreased to $26.7 million from $32.2 million, largely due to a $10.9 million increase in prepaid expenses and other current assets. Net cash used in investing activities increased to $51.2 million due to higher payments for vessels under construction.
Outlook, Risks, and Unusual Items
Unusual Items: The Company recorded a $1.8 million non-cash charge for the write-off of deferred financing costs associated with a refinanced term loan facility.
Outlook and Commentary: Management highlighted the successful delivery of the Navigator Triton and the addition of the Navigator Umbrio. The Company expects to receive 10 newbuildings between June 2015 and March 2017. A conference call was held on May 6, 2015, to discuss results.
Risks and Contingencies: Forward-looking statements are subject to risks including future operating results, market conditions (charter rates, supply/demand), availability of crew, drydocking requirements, and the ability to obtain additional financing for capital expenditures. The Company disclaims any obligation to update these statements.
Investor Verification Checklist
- Verify the impact of the $1.8 million deferred financing cost write-off on future interest expense and cash flow.
- Confirm the delivery schedule and financing status of the 10 newbuildings on order.
- Monitor the trend in prepaid expenses, which increased by over $10 million in Q1 2015, affecting operating cash flow.
- Assess the sustainability of the 97.0% fleet utilization rate in the current market environment.
- Review the reconciliation of EBITDA to net income in Appendix A for non-GAAP measure consistency.