Marketplace Roundtable
Marketplace Roundtable

Episode · 4 months ago

Value Investor's Edge Live #51

ABOUT THIS EPISODE

Welcome to a special edition of the Marketplace Roundtable podcast featuring J mincemeyer of value investor's edge. J first began contributing to seeking Alpha in two thousand and eleven, building up a large following through his work covering shipping stocks, probably about as comprehensively as they're covered anywhere online or in print. Since two thousand and fifteen, J has run the value investor's edge marketplace service here at seeking Alpha. The service offers intensive coverage of deep value opportunities in the shipping, energy, MLP and industrial sectors. You can subscribe to value investors edge by going to seeking Alpha Dot com and typing j mince Meyer, that's M I N T Z M Y E R or value investors edge, into the search board at the top of the site. Before we began, a brief disclaim. Seeking Alpha is a website where authors from around the world share their ideas and analysis on the soccer board. The marketplaces our platform for authors to run investing analysis and idea services so that readers can take their investing to the next level. Nothing on this podcast should be taken as investment advice. And now you're host, J minsmeyer. Good morning, everybody, welcome to another iteration of value investor's edge live. Were recording the morning of June seven twenty two, and we're hosting navigator holdings for the first time on value investor's edge stock symbol in the G S. we're hosting their management team, Oivan de Lindemann, who is the chief commercial officer, and Randy Gibbs, who is head of project development and also investor relations. Good Morning, gentlemen, good afternoon to you, Randy. I here you're in Greece. Thanks for joining us. Absolutely my pleasure. Thank you, Jake and Oivan, you're joining us from London. Is that right? That is correct. So you have both from from Greece on London on the line today. So right, thank you. You know, fantastic cross Atlantic afternoon for both of you. Well, anyways, it's to have a navigator on the call today. I just disclosures for again. Of course, nothing on the call today constitutes official investment advice or company guidance anything like that. We're just trying to learn a little bit more about navigator. Uh. Look, I mean one of the reasons we have you online today is, you know, mvgs, navigator holdings has been a sleepy company for a long time. Just a lot of stuff going on behind the scenes, but, you know, not a lot of pr not a lot of big changes, Um, but let's let's talk about that. What what does navigator Holdings look like today? What what are some of the structural changes that you can talk about that have shifted your car focus, because the navigator today is definitely not the same as it was two or three years ago. Okay, it's a very good question and it's an important question because you're absolutely correct that the opportunity on the future growth of navigator, on the position today, is uh visualized today because of the whole thing of a whole host of things that we're gonna talk about. But it's it was, it has been there for some time, but it's been taking longer time than we had taught because of various market dynamics and so forth. But essentially, since I started that navigate in two thousand and seven, where we had five vessels, and to today, where we have fifty three vessels and the world's largest Etaly in export terminal, it's been quite a journey, but we're not finished yet. But what really what has remained at the core J is our seaborn logistics service, offering of reliable, efficient and safe transportation of ammonia, LPG and pet two chemicals. So that has remained throughout the fifteen years that I've been here. It needs about flexibility, making something complex, because these gases are one of the most complex gases to transport in liquid form, simple for our customers and the assets we have make us able to do these different product groups, which we can talk about later. But what is perhaps even more interesting is the latest development with navigator going up three more, in other words moving along the value chain. So not only do we do shipping with the vessels we do own, but we we have entered into agreements from infrastructure, so supporting the US production of natural gas liquids and facilitating those competitively priced and attractive molecules to international markets. So the infrastructure piece at navigator holdings today, compared to navigator holdings with just vessels, those two combine is very powerful. Why?...

Because the infrastructure side brings long term visible cash flow which the shipping side ends not to have because it's more cyclical. But the infrastructure also create the mom or our vessels. When it comes to Italy, so those two combined I think is a great um sort of starting point for this discussion. Yeah, it's it's certainly a very interesting development. Of course, the the ethylene export facility joint venture you unveiled. I mean that was several years ago with enterprise, probably partners, but it's really kind of grown into its own and I realized that over the last quarter you actually produced above the nameplate capacity. So that was that was pretty good to see. Where do you see the majority of your kind of your medium the longer term growth coming from? Is it? Is it going to be a mixed growth? Is it gonna be partly expanding and consolidating the fleet and terminals, or do you think kind of the fleet is right size and you're gonna be focused mostly on these export terminals? I think we are intrinsically linked to U as production growth of natural gas liquids and that is going up and up. On the people that are more intelligent than me and I have more wherewithal in US production or all prediction growth and that is attained. It is propane, but it's also the midstream companies ambition to create the feedstock and create derivatives like proplyin and etaline for exports. So we do all that because our assets can do that and we have an etaline terminal. So I think with the with US growth, navigator will benefit tremendously. Our export volumes are part of our business stemming from the US. Have Gone from high, too high. It's about at the moment, going from ten percent five six years ago. So we are linked with the North America Shale gas growth. In terms of the assets then, Um, we it's a bit of a combination between ships and infrastructure because of the reason we just talked about the balance between long term stable cash flows, which is great, which the infrastructure will provide, and a little bit more cyclical upside on the shipping side. Those two, I think, are equally important to navigate your going forward. So yes, the medium growth lies with additional ships, not because we need additional ships per se, but there are different trade routes and what's happening in North America and elsewhere in the world changing trade routes. We might have different ship classes size. But then determine all side expanding it, which will be talking about in a minute. I'm sure our the terminals, Europeans have a huge challenge today because they don't have the infrastructure to replace displaced volume from Eastern European Eastern Europe, so they need to build infrastructure to accommodate and so forth. So there's a whole host opportunity for navigator too to invest and grow in the medium term, both on the infrastructure, expanding what we have in the US creating new ventures elsewhere, be it Europe or even Asia, to facilitate this connection between with our ships and the terminals, producers and end users. So I think they are linked. So it's not either or. Yeah, thanks for that, or even that. Yeah, very comfortive answer and you know that. I guess the shorter that is is all the above right, and they kind of feed off each other and you know, it is, you know, critical to remember. Of course the shipping does bring, you know, the core backbone of what navigator holdings has been, but you want to, you know, facilitate more growth and more stability with terminals, and I think that makes sense. I think that's something missing in some of the valuations. When we look across the LPG and Lergy Shipping Space. It's been hard for these companies to command strong valuations because of, I think, the volatility inherent in shipping. So I want you're you're totally correct. I didn't want to kind of pivot a little bit and talk about specifically the ethylene export facility you have with enterprise. Um. You know, enterprise suggested recently that there was an investor day and they suggested, I mean, I don't I don't even know if they suggested. I mean the outright said, Um, that they wanted to expand that operation. Um, but I haven't seen, of course, a formal announcement or a fit a final investment decision. I haven't seen a formal press release from navigator. So, Um, Randy, I don't want to be too premature, but since you're the new project development lead, what can you tell us about that project?...

Yeah, Jay, thanks. As you mentioned, I was at that Enterprise Investor Day here in Houston, Um, and yes, they announced that one of their projects going forward will be the expansion of the then export terminal at Morgan's point. Clearly we are a fifty fifty point tenture partner with that. Um, what they guided to? I would just say what they stated publicly first, Um was to looking at expanding the capacity by fift by the end of and then another fifty percent from the original million tons. UH, late early, so full year the plan is to have two million tons plus of capacity for eth the lean exports. So backing up the step, where are we today? Right, so the million ton capacity has been available to us for quite some time, but clearly was all over the board, especially the first quarter. I knew it all too well, being in used in the Texas freeze really impacted operations there at the terminal, as well as a lot of the ethnlet feed into the refrigeration facility. So exports were very low for a while throughout twenty one. Start to pick up a little bit in June and July, uh, and then in the back after the year again now December, January, March, April, May, all around a hundred thousand tons of months. Putting that into perspective, nameplate capacity is eighty three thousand tons of months. So five the last six months we've been doing more than tw above nameplate capacity. So clearly now the demand is there Um and again. Enterprise has already announced that they are going to be expanding that. In terms of our involvement, as you mentioned, we are the fifty fifty joint at your partner Um. So clearly that is something we are highly interested in and looking at some options. They are around the scale, around the timing, around the cost Um. There's a few different ways to expand the operations there at Morgan's point. So we are certainly an active dialogue Um, maybe here in Houston, with our our partner enterprise for that. So we have not announced anything or given anything exactly, as your right, press releases around that yet because we're still uh deciding the best route going forward. But the terminal is going to be expanded and we are likely going to be involved. Yeah, thanks, Randy, and and I know there's, you know, commercial sensitivity is on exactly. You know how much you can say. But you know, enterprising they want to expand the terminal by the end of next year. I mean that's less than eighteen months. That's basically eighteen months right, twelve to eighteen months. So Um, is that? I mean, is that commercially feasible? It would that just be, you know, adding a little bit of infrastructure through the current existing land. I mean what how can they turn that around that fast? Yeah, you know, just to give you some context, four years ago, when we built the initial ethynine facility for the liquid faction. We also built a tank, write a storage tank, and then some of the pipelines connecting to the birthing capacity and the dock capacity there at Morgen's point. So we can do both ethane and ethylene. So for that tank that we constructed, we built it two size for an expansion, for doubling of the capacity. So there is no new tank that needs to be built. There's no new types that need to be built, from the tank to the berths and the docks for the exports. So the only component that needs to be added, and I don't want to oversimplify it, Um is just the new chilling right, a new liquid faction facility. So that is part of the big reason how we can bring it online and as enterprises saying eighteen months or so, as opposed to two and a half years where a full project require. Okay, so that second part, you know, the first fifty. It sounds like you can just do a quick Bolton expansion. UH, that larger ambition to do growth by four Um is that possible in the current existing field or wouldout be a whole new project? Yeah, that's that. Those are the options we're looking at right. So we um, we have our own engineering consulting firm that we have. Obviously enterprises doing theirs as well. Um, we're looking at bids and proposals from BBC firms and all these things. So we're doing all the due diligence for that to confirm the timing and that timeline, what the cost would be to fit it in that timeline, um, and then the two or three options to get that capacity up and running in that timeline. And then again, if it takes an extra three months but we save maybe that's worth it. Or if it takes three months faster and only cost ten percent more, maybe that's worth it right. So a lot of variables were still discussing, but what Enterp as the saying, Um, certainly is feasible and something that...

...we're obviously looking at. I don't think they're just coming out and throwing numbers around without significant due diligence behind it. Yeah, certainly, and I know you said you have the engineering team looking at it. So you probably don't have a firm Um you know, economic projection out of that. So I guess we'll have to circle back later and talk about that. But I would imagine that the returns and the margin on the expansion would be significantly higher than the original project, right, because it's just a chiller and you're gonna add fifty revenue. Right. Yeah, the cost will definitely be less, right, no question about that, than the original million tons Um. And now the current facility we have all take contracted. That's why we were able to just a week and a half ago on earnings call, increase our guidance for the IBADA for that first million tons between thirty and thirty five million Um, so about eight million a quarter in take off, one point six million for siation. So actual earnings are going to be in the load amid twenty four six million or so IBADA million in that range Um. So that's on the existing right and that is all the contracts for the off take for the new facility. Clearly there's a lot of variables. They are how much do we want to have off take committed? Um? You know the the term of the off take. The duration of that will affect the rates. So there's probably a wider range for annual IBADA on this second million tons. But yeah, that you will use all the assumptions you want, but the costs will be less. To answer that part of the question. Yeah, no, certainly, certainly, randy, that makes sense. You know, you mentioned of course capacity is committed the off take and I know that's kind of the enterprise model as well, as is high off take fixed. But you also mentioned you're you're producing an exporting above nameplate. So does that mean? You know rough Napkin math, but does that mean that Delta is all sort of marketing and that's high profit, high margin stuff, or is that some sort of contract as well? Yeah, yes, to know it could be right, but it's mostly on the contract side. So within the one year time frame that the off takers have their taker pay commitments, they have quarterly maximums, right, and quotas. That the Max they can take. So let's just have a fictitious number. If one off taker had two hundred thousand tons a year of the million, they can't take all two hundred thousand tons of January, right. Um, so it's a on a quarterly basis they could take let's call it fifty thousand tons. So there's a there's a little bit of them and flow around. What the terminal began export, uh, and what it does exports. So again, May and June, Um, I'm sorry, April and May. Sorry, is about a hundred thousand tons. That's what we've can guide into. Um, June will be less than that. Right. Part of it is because the off take out of it has been committed, but a big part of it is those new quarterly quotas reset July one and we have already gotten, you know, nominations for off take for cargoes then. So we do not want to enter July one without anything in the tank. So we want to use the last I don't know, a week or so to get a little margin, fill the tank a little bit. So that's why exports in June will certainly not be a hundred thousand. They're not going to completely fall for the cliff either. We're kind of guiding to similar numbers for the first quarter, which was two hundred and sixty seven thousand. So if we did around a hundred in April in May, that means June will be I don't know, six seventy Um, so still above nameplate capacity. Right, name plates two hundred fifty thousand per quarter, but it won't be a hundred thousand because of that. Those components I just mentioned and we want to enter the third quarter, Um, to be able to hit July one running with the off take that's already been nominated. Certainly know that that. That makes sense and that's part of why you want to do well. Enterprise and you together want to do the upgrades right so that you could operate more sustainably at those at those levels. No, that makes sense. Um. Are Are there any other kind of last question for you, Randy, before we get back to maybe some of the more shipping stuff. But Um, are there any more terminal projects like this that are on the table? I mean, I imagine. I mean there's lots of midstream companies in the United States, there's lots of hydrocarbon production going on, there's a lot of European demand. Um. Is there anything else going on? Um, I know you can't formally announce anything, but have you looked at other projects? Is there a potential in the next year or two that we might see other stuff going on as well? Nope, I'm just sitting around here and used to know I'm kidding. Um. Yes, I I came on because I and obviously the navigator corporation. All the company wants to do more in terms of terminal in terms of energy infrastructure, especially in the US Gulf coast. I am based in Houston for that reason, right. So it is certainly something we're looking at from a US export and we think that's...

...story is going to persist, that Western Europe and Asia will be looking to the US for more hydrocarbons, for more petrochemicals and G Ls, all of these things. So that is certainly something we're looking at, open to hoping for Um. And then on the import side, as or even mentioned a few minutes ago, Europe is short a lot of these commodities. Asia is short, Um. And what we've seen on the LEN G side with bringing in F S R use or committing to import re gasification terminals. A lot of the same applies to LPG and N G L S and Ethane and ethylene and propylene and hydrogen and all these other commodities. Um. So impley port to terminals at the consuming regions, nations in Europe and Asia is something we're looking at as well. Yeah, but both sides of the shipping stream. Huh? That's that's pretty interesting. So I guess thanks, Randy, and I guess we'll turn it over to even real quick. I want to pivot back a little bit and talk about the shipping markets and of course you do a little a bit areathing. You do that the LPG, you do the Ethane and ethylene Um. You know how are those shipping markets right now? And I know the LPG shipping markets have significantly strengthened earlier this year. Is that the same for the niche products, ethane and ethylene? And then is there any prospects for some longer term charter covering? I think that's been one of the weaknesses, I think, of navigator and not to see, of course you appears as well, is that there's no charter cover in these markets. It's pretty much all spot. Is that going to change? Perhaps? Yeah, I think. I think it's important to understand that. Going back to initial comments, that we our assets and our sort of core is that of flexibility. So I think we're one of the few companies that do LPG, Petro Chemical Gases, all Petro Chemical Gases, and I'm on them. Each of those three markets of different drivers and different fundamentals. So, for for the audience here, I'm on is used for crop growth, so it enhances agriculture production. LPG is a very versatile source of hydrocarbons. Less you two emission to compared to enough to I oi can be used in the whole host of different applications. competro chemical gases are used in many, many, many household things, face masks, um you know, textiles, everything for installation. So they all have different, different drivers and I think that is important. So when you talk about if an LPG, if the LPG market is strong, some of our ships go into that. If that weekends and Petrochemical Market Strengthens, then some of the ships go into that. So that dynamic is important to kind of grasp, at least scratch the surface on. But you're correct. So what happened in first quarter is that? Well, unfortunately, in February, twenty four, the February, something happened and of course it was a wake up call for Europe to say, okay, our sourcing of at ten of LPG of all hydro garments from Eastern Europe may not be such a wise thing. So they have to who else is going to pick up the slack? And then you have to look across the Atlantic to America, and America is the want to to turn on the tabs and provide that, and you know there's a there's a scene between and therefore LPG rates Gone Up. That happened also to navigator. Some of our ships went into LPG in the Atlantic Um at the same time, almonia also was positively impacted. So we have seven out of our ships are doing ammonia. Ukraine used to be a reliable supplier of ammonia via usually. So the gas is produced, ammonia is produced in Russia and it comes out in the Black Sea. That stopped. The world needs ammonia for crop growth and therefore what happens is that the consumers, the importers, will have to look further a field. So what is happening in LPG is also happening in ammonia, whereby the usual traditional trade lanes, the link between them or distance between them, have increased. And if you know shipping, if supply, you know the availability of ships is constant, but the ships have to go longer, travel longer distance system you're you're in for a more optimistic freight environment, and that that's exactly what happened during for support. Yeah, certainly. I mean it seems like we're seeing that not just the person LPG and your mark it's but almost in...

...all shipping markets right just the inefficiencies that we've seen globally. Product ankers as well, of course, have been bullied by that. Um, you know, one of the one of the issues Um and and sort of the LPG markets. And you have several peers Um and, you know, there's a vance gas, there's B l a LPG, there's Dorian Um. I must disclose I do have a long position a vance gas on the Oslo. But you know, a lot of these companies for years and years and years have treated a massive discounts to net asset value and at the same time these companies are selling ships on the open market, on the secondary market for, you know, at those Nav Levels. So it's not just some spreadsheet number, it's, you know, verifiable Nav and yet these companies have traded at fifty of their Nav and even today a company like avants trades at like a thirty discount. B W is a like a thirty percent discount. Um navigator seems to be in a position where, if you pull this off, if you get these terminals put in place, you can trade at have maybe above Nev and maybe for you and now have might not even be the right calculation anymore. It might be an eavy to even don multiple right if it's more sustainable. Um where I'm going with this is, is there a potential to consolidate some of this market? Is that something that navigator is interested in doing, or are you kind of just happy with the fleet you have and you're just going to focus mostly on the terminals? Evaluation questions is keen observation. So we have this infrastructure part of our business which is not fully understood by by some investor or investor community, which should give higher a bita multiple and so forth, compared to the shipping, which is traditional maps. So you're you're absolutely correct. How should your value navigate? And then, and that is also why Randy is here, to to explain to to the world the difference and the value of it. So I think that's an important factor to to bring to the four that it is not just an aid to be shipping company that is faced with a whole lot of uncertainty. But there's something else there that we talked about, the infrastructure that keeps it a bit more sustainable, at least on the cash both side one of your earlier questions was I forgot to talk with was coverage. You mentioned that the shipping companies helping these as a segment doesn't really have covered. So we so we generally typically throughout our training history of time, charter cover to create that protection for siglicality. So we still have that. So in our market, particularly not attained side and ammonia side. Then back to the point that we can do all these different things because of our assets. Attained and ammonia tends to be longer term and we have a bunch of longer term contracts, which is good at healthy levels, but we have that attribute to to our company. I think that's important. It's not only a spot voids charter cyclical thing, but in terms of consolidation, of course consolidation in a pure shipping market is always attractive. M consolidation is always welcome. You remove one conversation from from the marketplace, however, in the handy size segment, which is core for navigator, about the two cubic size, which is hundred fifty gals barrels, sort of give and take. For US audience, there are only hundred and twenty ships on the water and so the consolidation opportunity within existing as it's it's quite limited because we know we know all the ships, we know all the players, we know how they perform and so forth. So yes, there's certainly a little bit of room for Constellation, but it's not huge and that's okay because the segment is small and that's quite of the uniqueness of it. So there are barriers to entry in the handy size segment and we are the largest player in that segment and we one of our strategies is to defend and maintain that position. So whether that as that is consolidation, whether it is additional assets, new builds, we'll see. The other question perhaps is then, where is the growth? Is it in handy size? Absolutely, for petrock chemicals, with the actual in terminal potential expansion, new terminals in the Patrick Chemical side, for alpg growth and for ammonia growth. Ammonia's huge future. The ship ships...

...would probably be a little bit bigger. So that is an opportunity for navigator to get into in time and that could be consolidation, secondhand, etcetera, etcetera. Certainly so. So do you you have any interesting in sort of the larger VL GC type space. Or is that completely an encore or not? It I mean the the V of G C, very large gas care segment. They trade one product, which is probing, and it's typically from us to to Asia, to Europe and it's from at least to Asia. So it's very basic. It's very simple business model and you can count the ships, you can count the cargos. It's very transparent, which is which is fine. If you play in a commodity space Um, with a lot of ships, um market share for each individual participant and it's a cyclical play. There's a commodity play. So navigator is not that so on the VLGC side is probably further removed from where navigator wants to be in five years time. But it's more selective. If it's eating, which is a week, consider a Petri Chemical v ELS's large eaten carriers and long term charter. That could be something and we've been vocal about that before. Ammonia. Ammonia as a big future. I mentioned Um. Those ships probably a little bit bigger with ammonia's fuel and so forth, but it's a different again, we're playing on those three strengths of being able to understand and have the wherewithal in ammonia, LPG and Patrick Chemicals and each one of different drivers, and that's kind of my my point. But be do you see commodity trade? Probably not mapping it. Yeah, I know, certainly. It certainly makes sense. I mean it's hard to have much of an edge when it's just a pure commodity market. Um, the reason B L GCS, of course, in the past, came across my radar is because of the extreme discount we have seen in the publicly traded stocks. Of course, as a company right buying the ships, you don't have that same discount. Right, that's more of an equity type investment play. But anyways, I want to pivot a little bit here. Um, as as we're coming up on we have ten minutes or so left here. I want to talk about your balance sheet and and what you can support with the current structure, because I know you you that's refinancing you. You did the merger last year. Um, you know, at the same time you're looking at these new terminals and Randy talked a little bit about the projects you're looking into. How much growth can you do with the current balance sheet? Is it possible to add you know, two or three projects without issuing equity. Is that something you can feasibly do here? Yeah, Jake, US a good us on the balance sheet. Ending the first quarter, obviously that's our most recent filings here, we had about a hundred and sixty eight million in cash, another twenty three million in undrawn kind of liquidity. So let's call it total liquidity in terms of cash and availability. Fifty million dollars is are minimum bank covenants, so onety. Sorry, one, N one there in cash. In terms of kind of debt right now we're at about net debt to cap. If we're assuming, I don't know, taking the kind of consensus that's the midst of around two hundred fifty million. That's about three times right debt Tobatbada forwo on average, if you say we have seven hundred and fifty million debt. So, all that being said, our lavatory shows are in good shape from the balance sheet. In terms of available liquidity, we have a pretty aggressive debt am or profile. We'll do about a hundred million dollars in debt Amor this year. In terms of maturities, we only have one maturity and that's a fifty million component coupled with the thirty one million second tronch on that same facility. So eighty one million, and don't thrown a lot of numbers here, but eighty one million in maturities this year and next to be refinanced. What we're assuming for about a hundred million, maybe one can so that's another thirty million. So you have plus you're getting another twenty to thirty just in terms of the kind of net liquidity from the refinancing. Operating cash flow is around thirty to fifty million, depending on what your assumptions are. On a quarterly basis. Um Very little maintenance capex for the ships. So all that being said, we have a lot of cash and a lot of cash flow coming the ethnlet export terminal. Um. You know the range of that could be and you would.

I'll give them big rains here just to not get too tight, but anywhere between a hundred and fifty and two hundred fifty million dollars right. So let's just take the midpoint of two hundred. That's a hundred million from US um. But obviously that's spread out over eight quarters, maybe more eight to ten quarters. Um. Same thing on some secondhand projects or vessels, if we're looking at that, other import terminals. So, all that being said, we could certainly do multiple projects over the next two to three years with existing cash on hand, in addition to the free cash flow that is going to be expected in coming in subsequent quarters. And all of that includes a knock bond, seventy three million dollars that we have maturing in November of twenty three that we will likely repay early. Right, we can call that at one oh one um here in the fall, I think, October time drink. So, all that being said, in terms of liquidity and cash and Balance Sheet, there's certainly enough for Um many projects over the next two years. Yeah, thanks, Randie. That that's a really helpful breakdown and, of course, lots and numbers there. I think it would be great, you know, in your next investor relations deck or or presentation or or what not, to short to sort of show that, I mean not, you know, maybe not as details you just did, but Um to illustrate. Look, we have all this liquidity. We're going to build more liquidity from refinancing because, uh, you know, I think that's one thing that makes folks nervous, Um, you know, when they when they hear there are several projects coming up, they're like, oh no, you know, the company needs to raise a lot of equity, and it sounds like you can do I mean, you just said you can do several of these internally self funded. And these are high margin projects too, I mean at least compared to shipping. So Um, it's it's very interesting stuff. Um. One question related to the balance sheet and related to cash flows. Um, what about shareholder retterms? I mean, and navigator's been around for a long time but has never really been a dividend. There hasn't really there hasn't been a repurchase. Is that going to change? Yes, I'll say that, candidate. Obviously, as you know, I my days at Jeffreys and multiple conversations, including in the series in recent years, very big proponent of shareholder returns. Um. Obviously, when you're treating a big discounts to the NAB, which we still are, the share buybacks make a lot of sense. Now in our case, obviously the daily trading liquidity isn't huge right, a hundred and fifty thousands, so maybe two hundred thousand shares a day. Um, that's it. You know, if share price gets crazy, we are certainly willing and able to repurchase shares. Now, in terms of the dividend, I'll give you a few things. One B W owns B W group, our chairman owns another right. So they are clearly will be fans of dividends as well. Now, in our current growth story, are we looking to pay a dividend this quarter, next quarter? Probably not right when you have this ethnlean next sport terminal, when you have some creative acquisitions and some other projects on the come. That said, once you see that cash flow locked in and some more that cash flow visibility and stability coming over the coming years, maybe some more time charters, as organ was alluding to, then it makes sense for a diven end. Maybe something stable, not huge, but relatively stable Um with some upside for the kind of excess earnings that we are hoping for and frankly, preparing and expecting here in the coming years. So, all that being said, it's a long answer to a short question, but shareholder returns will be an important feature of navigator going forward. Yeah, thanks, ndie. No, I mean that's a that's a big change for for navigator. I mean, as you said, you were an analyst for for several years and, you know, covering this sector, covering all the shipping companies and navigator never happened at how the dividends. So that would be a huge change, even if it's, you know, a year from an hour or six months from now and not, you know, tomorrow or something. Um, you know, even I want to circle back to you real quick, and you know this is a follow up that I should thrown in there earlier, but you mentioned ammonia and you know I wanted to kind of ask about sort of e s g specific climate change specific sort of play there. Um, do you see navigator playing a bigger role specifically in ammonia, and is there any other market like? I mean, I don't want to get too far off here. There's a lot of crazy stuff, but I mean I've heard talks about like CEO to transport, things like that, carbon capture. Is anything else that the navigator might be involved in? Absolutely. So let's talk about Harmon the forest commonia as a huge future in and as a fuel, zero admitted fuel. However, it's not gonna go from zero two hundred over the next two years. It's more probably more a ten year phase.

So what you'll see first is that ammonia ships carrying ammonia as cargo can then use ammonia as fuel, and that will be the first wave and then it might be commercialized into other ship segments, ball containers, what have you. So but we are luckily in the gas space. So for us this makes a hell of a lot of sense because we do trade carry ammonia today. We have the competency pot operationally, commercially and technically to to do it. But there's no reason why we shouldn't participate and encouraged the industry to reduce, to open the opportunity for the industry and others to to take, to take this opportunity of zero carbon, zero carbon fuel. But it'll happen. It will happen with the faults, like navigator first. So we are following that, those the developments closely. We have an approvalent principle for for ship designed to to have ammonia engine fueld. So probably inve onwards you you'll see things happening more speedily and these will be on long term contracts. Okay, which is which is part of the part of the attraction Um. But you still need ammonia to be produced either by renewables, which is very expensive today, or you need carbon capture. So you have an ammonia plant, the traditional way you capture the carbon and store it, which you can do in the US. You're blessed with the geography there and you have lost caves to put it in, and then you brew ammonia and you can export that. So but that those things will happen, I believe, and navigate you will play an important role in that and that's a huge growth opportunity for navigator in parallel with all the petro chemical stuff we've been talking about. In terms of C O two, we have a joint venture in CEO two transportation. So That's part of the CCS carbon capture and storage um it is a liquid gas under pressure and temperature. Our Name is navigating gas. It should be one of our business dreams. Is it gonna Happen Tomorrow? No. Is it gonna happen over the next ten years? Yes. The first phase you will have to be subsidized by governments because it's usually expensive. We are participating in a couple of projects to to construct CEO two ships on Long Term Charter in the CCS value chain. Um so stay tuned. But definitely those alternative that's all it alternative, E. S, G. reduct carbon, etcetera. Yeah, very important to an navigator and there's no reason we shouldn't play or have a bigger role to play in those because there's money and then too. Yeah, certainly it's very exciting venture, especially ammonia. I think it is really exciting. The the COOT transport is obviously very speculative and in a completely new market. But Hey, if there's enough government subsidies and long term contracts, then uh, you know, you know better than idea what the economics are. Very, very exciting stuff. So you know, as we close out here, UM, and I'll give a bast word to you as well even, but you know, we've had randy on here before to talk about songs as as a lead jefferies shipping analyst, and you know I can obviously I can't ask you about your opinions of other shipping stocks now anymore, Andy, so I missed that that that would be not appropriate now. But Um, what you know? What incentivized you or what encourage you to make that transition from an analyst to Jeffrey's right focused on the entire shipping sector into working navator. You want to talk about that a little bit and I think that would be a good hivot as well. And too. You know, why should we be excited about a navigator? You know what? What? What's what's the selling point here? Sure thing. Yeah, thanks, Jake Um. Yeah, and I agree. I still follow shipping markets and have good to talk about some other shipping stocks of your portfolio should not be navigator, but it should be in your portfolio. So that's for everyone's Um. It's a advice for everyone. But all that being said, in terms of navigating, there was three things about Um why I switched. One was the company, two was the role and three is the timing right. So for the company, I've always been a fan of navigator. Frankly, the management team, uh, we participate in the I P O at Jefferiespeck in so I've known the management team for seven or eight years doing Nonjo, Nonjo. Rochow's speaking in them often Um and just great corporate governance. Great just company, really a leader in the LPG shipping business, especially in kind of the handy size subsector of that. The the lean export terminals, all these other things.

So really big fan of navigator for quite some time. The role itself, right, it's half investor relations, which I really enjoy doing it for eleven years at Jeffreys, talking to clients, pitching stocks, all of these things. Um, I like that and I like pitching navigator now, right. Um. So, in terms of the investor relations component of the opportunity, I really enjoy. And also the other half time is business development. Um, working with enterprise on this dethin lane project, working with others for other projects. Um So, doing a lot of stuff in and around the US Gulf Coast area and here in Houston. So the the role itself is very dynamic and gives me kind of the best of both worlds in terms of the projects and the business development, as well as kind of the equity side on the investor relations. And then the timing, right, I'm certainly bullish on LPG and everything, just to give you a little inside baseball. So I was presented with this opportunity in mid January, let's call it. Um So, doing some due diligence, talking with the enterprise, joint venture, Um, kind of partners day here and others, Um, and everything sounded good, and good things to stay on navigator entering the year. You can go back into the jeffreys recordings and navigator was the top five pick right. So I was very bullish on on navigator entering this year. I accepted this role mid February, around my birthday, the fifteen. Two weeks later the the outlook got that much better, frankly, right with the whole rush of Ukraine, situation in western Europe coming over to the US and the America's for all things energy and hypercarbons and pet cans Um. So the timing, I think it was pretty good in mid February and obviously the last few months have kind of proved me right so far. And then going forward, just with the whole energy transition Um, just what we're doing on the business development project side, what we've got going on on some other things. As I mentioned earlier, the balance sheet is in great position. We have options now and opportunities and returning capital and also doing growth and all these other things. So for those three reasons I love Jeffreys. It was a great eleven years there Um. So there's are many things I miss about it and I really enjoyed. Obviously it wouldn't have been there eleven years and I didn't. But at the same time I'm very excited about this opportunity, Um, and really betting my Frank Day career right at least the next ten years on navigator and navigator gas and I'm really uh, enjoying it these first two months and looking forward to uh, towards the him. Yeah, thanks, thanks, Randy. I mean we've known each other for a long time now. I think it's been at least four or five years, and so, you know, very happy for you to have made that transition and and glad to have you still active in the industry. You've been such a contributor to shipping. So eve been the last word to you. Um, what differentiates navigator from the other gas companies out there and why should investors go with you guys, as opposed to another, another shipping alternative? It's very straightforward, it's very basic. It's to the opening remarks, whereby its infrastructure short side, combined with a highly attractive fleet that provides this um stability, sustainable stability in cash flows and opportunities. So we connect, we connect to the customers in a much better way. We can influence in a much better way and because of that and the information is for us, for the commercial team, it's much, much better because we have this uh, this quality inside on the terminal side of who is doing what and and and so forth. That benefits the shipping in a much higher, more positive way than if you're just an A to B commodity ship. We're highly we're participating in the green transition. Is Very important. Um We are an extension of the midstream. You midstream business, so the U S midstream businesses want to watch our enterprise and you transfer target resources all these guys because they have to reach in a bigger way international markets. That's the only way for them to grow and we are there with them, step by step, providing that opportunity for them on the virtual pipeline through our ships. And I think with that comes tremendous opportunity and I don't think that there's any other shipping company, Um listed company in the gas space that have that have that position. So I think if you if you bet on America, you bet on navigator because the entrance into lint a huge growth potent. Yeah, that's at the fantastic clothing that. If you want to bet on America and American energy bet on navigator. I like it now. Thank you, even for for boiling it down and really differentiating yourself from your peers, and thank you, Mandy, for ustrating the potential of the terminals and your...

...personal reasons for joining navigator as well. Thank you, both gentlemen, for joining us this morning and this afternoon. For both of you, thank you our poems. Thanks again for having this includes another iteration of value investor's edge live we just hosted navigator holdings, Stock Symbol, N VGS, chief commercial officer, or even Lindemann, and head of investor relations and project development, Randy Gibbons. As a reminder, nothing on the call today constitute's official company guidance or investment recommendations of any form. This is recorded on the morning of June seven two thousand twenty two, but about ten am eastern time.

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