Navigator Holdings Ltd. (NVGS) Q3 2026 Earnings Call Transcript

Randy Giveans: Welcome to The third quarter 2026 financial results. On today's call, we have Mads Peter Zacho, Chief Executive Officer, Gary Chapman, Chief Financial Officer, Øyvind Lindeman, Chief Commercial Officer, and myself, Randy Giveans, Chief Investor Relations Officer. I must advise you that this conference call is being recorded today. As we conduct today's presentation, we will be making various forward-looking statements, and 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 our assumptions, forecasts, and expectations as of today's date, November 4th, 2026, and as such, are subject to material risk and uncertainties. Actual results may differ significantly from our forward-looking information and financial results. Additional information about these factors and assumptions are included in our annual and quarterly reports filed with the SEC. With that, I now pass the floor to our CEO, Mads Peter Zacho. Please go ahead.

Mads Peter Zacho: Thank you. Good morning and good afternoon, and thank you so much for joining this Navigator earnings call for Q3 2026. Before I turn to the quarter, let me briefly touch on the Middle East. Conditions in the Strait of Hormuz have not materially improved, and from our perspective, and since we have not had any ships trading in the strait over the past eight months, the effect continues to be primarily commercial and positive. The disruption is supporting U.S. natural gas liquids and petrochemical exports, while longer voyages continue to add ton-miles. Please turn to slide number four. Q3 was another strong quarter for Navigator Gas. We delivered record reported net income and EPS, supported by gains from our vessel sales. At the same time, our underlying business remained solid through what we had expected would be a seasonally softer quarter. TCE averaged just over $30,000 per day. Utilization was softer during July and August, but importantly, recovered to around 94% in September. That recovery has continued unabated into the start of the fourth quarter. For me, the key message this quarter is not really so much where we started Q3, it is where we finished it and the position that we are in today. Our markets are firm. Our balance sheet is stronger, with net leverage now down to 1.7x adjusted EBITDA. We have completed the Unigas transaction, generating approximately $183 million of proceeds and around $70 million of profit across Q3 and Q4. Again, evidence to how we consistently sell high-quality yet older non-core assets well above book value, and thereby generating solid sales gains. All six of our new buildings are now fully financed at some of the lowest margins ever achieved by Navigator. Our planned U.K. redomiciliation remains on track, with shareholder approval to be sought on November 16th, 2026, and completion targeted by year-end 2026. More importantly, the fundamentals around our core markets continue to strengthen. U.S. export capacity for natural gas liquids, such as propane and ethane, continues to grow. The handysize order book remains very limited at around 7%, while 17% of the existing fleet is already more than 25 years of age. That is the supply and demand picture that we really like. Looking into Q4, we are seeing higher utilization and higher TCE rates. We also expect volumes at our ethylene export terminal to recover from the seasonally softer third quarter. We end the final quarter of the year with good momentum, very strong balance sheet, and considerable flexibility to continue investing in the business while returning substantial capital to the shareholders. Over to you, Gary. Please tell us a little bit about the financial details.

Gary Chapman: Thanks, Mads, and hello, everyone. Following on from our last call in August, the third quarter unfolded broadly as we anticipated. After our exceptional second quarter, chartering activity moderated in the early part of the third quarter as customers reduced inventories and delayed purchases. But importantly, that did not pause the underlying picture. Utilization recovered to approximately 94% in September. At the same time, we completed sales under the Unigas transaction, reduced our leverage, further funded our newbuild program, and continued to return capital to shareholders. So the financial story this quarter is not simply our reported profit, but also the strengthening of our platform beneath it. Turning to slide six, average TCE was $30,314 per day, down from last quarter's all-time high of close to $34,000, and only about 2% below the $30,966 of the third quarter a year ago. This was a moderation we guided to back in August. Utilization was 87.9% for the quarter, compared with 90.8% last quarter and 89.3% in the third quarter of 2025. It was very much a quarter of two halves, around 85% in July and August, recovering to approximately 94% in September, with utilization remaining firm through October. Total operating revenues were $155 million, slightly above the $153 million in the third quarter of 2025. Voyage expenses were higher, principally reflecting higher bunker costs on spot voyages, which are largely passed through in revenue to our customers. Vessel operating expenses in the quarter were $42.8 million, down 13% on last year, reflecting our reduced fleet size, and also down on a per vessel per day basis at $8,928 from $9,275 a year ago, reflecting the timing of costs and project-related expenses. However, our forecast for vessel operating expenses for the full-year remains at $9,250 per day per vessel. Reported EBITDA reached a record $120.8 million, and net income attributable to stockholders was $78.3 million, or $1.28 per share. The principal driver was the approximately $48 million of profit on vessel sales completed during the quarter. To distinguish the underlying operating result from those disposal gains, adjusted EBITDA was $67.8 million. Adjusted net income attributable to stockholders was $25.4 million, and adjusted EPS was $0.42. Compared to the same period last year, although this third quarter, we experienced fewer earnings days, marginally lower TCE, and a slightly lower contribution from the ethylene export terminal, partly offset by lower operating costs, reported earnings reached a record while underlying earnings remained solid. The sales gains demonstrate clear value realization from our fleet, but the adjusted figures provide a cleaner view of recurring quarterly performance, and on both measures, the business remained profitable and cash generative. Moving to slide seven, we had another busy quarter of disciplined capital allocation. First, we delivered the second quarter shareholder return we had committed to. We repurchased 661,482 shares for approximately $14.2 million and paid the $0.07 cash dividend. Together, that was a return of capital of $18.5 million, or 35% of second quarter net income attributable to stockholders. During the third quarter, we also repaid $28.9 million of scheduled amortization against our debt, repaid a further $201.5 million of debt, including $156.7 million of revolving facilities that remain available for us to redraw, and paid $21.4 million to the shipyards for our newbuild programs. Set against this, in the third quarter, we received $129.9 million net proceeds from asset sales between July and September. We drew $72.5 million from a combination of debt facilities towards our newbuild vessels, and we received $12.7 million as net cash distributions from our equity investments, together with some insurance recoveries. Overall, at September 30th, cash and cash equivalents totaled $221 million, and restricted cash was $48 million. Including the $156.7 million of undrawn vessel facilities, total liquidity was approximately $425.8 million, of which approximately $378 million was available, i.e., excluding our restricted cash. By October 31st, total liquidity had risen to approximately $482 million, or approximately $434 million as available, excluding the restricted cash. Equity, excluding non-controlling interest, was $1.3 billion, up from $1.23 billion at the start of the year. The key message here is that the Unigas vessel sales did more than generate an accounting gain. It converted non-core assets into cash, removed associated debt, and simplified the fleet, while preserving substantial liquidity for our newbuild program and other disciplined uses of capital. Slide eight shows how we have used the proceeds from our fleet sales to strengthen our balance sheet, with debt reduced, our newbuilds fully financed on attractive terms, and returns going to shareholders. For the third quarter, our board yesterday declared a dividend of $0.08 per share, the higher fixed element we announced in August being a 14% increase, payable on December 3rd to shareholders of record on November 17th. We currently anticipate repurchasing $22.6 million of shares by December 31st, subject to the terms of our capital return policy and applicable approvals. Together, that is a return of capital of $27.4 million, or 35% of net income attributable to stockholders. As a reminder, our policy applies to reported net income attributable to stockholders, and that includes profits on sales of vessels. Our newbuild financing, as mentioned, during the quarter, we drew $72.5 million of secured pre-delivery finance as shipyard milestones were reached on three of our Panda ethane ethylene vessels. In parallel, long-term financing is now in place for all six newbuild vessels, including our two ammonia vessels, which were secured at a margin of 135 basis points over SOFR from delivery. In August 2026, we also repaid $26.7 million and refinanced the remaining $47.9 million of our $74.6 million facility with a new facility that matures in 2031, thus pushing out the maturity. We have now paid $153 million to the shipyards for our six vessels under construction, with a further $10 million of capitalized interest, which together make up the $163 million of vessels under construction you will see on our balance sheet. Our share in the Morgan's Point terminal remains unencumbered, as were nine of our vessels at September 30th. Two of those were Unigas vessels delivered to buyers in October, leaving us with seven unencumbered vessels today. At September 30th, net debt to last 12 months adjusted EBITDA was 1.7x, falling from over two times at the end of June 2026. Net debt was just short of $500 million, compared with approximately $653 million at June 30th, a reduction of about $153 million. Net debt now represents approximately 25% of the on-water fleet market value, or 21%, including a valuation of our Morgan's Point terminal investment. This characterizes the overall balance sheet we have discussed on previous calls. We want to invest in attractive growth, maintain an efficient but conservative balance sheet, and return capital. We believe this quarter shows that these priorities can reinforce one another when asset sales, our newbuild program, financing, and operating cash flows are managed together. Slide nine brings back the two strengths I highlighted last time: dependable operating cash flow and a low all-in cash breakeven. Our latest estimated all-in cash breakeven for 2026 is $21,720 per vessel per day. Against the third quarter TCE of $30,314 per day, we continue to see meaningful headroom of approximately $8,600 per day, or about 40% of cash breakeven, even after seeing some normalization from our second quarter record operating results. The breakeven estimate includes more than $175 million of forecast operating expenses, approximately $111 million of debt amortization, and approximately $42 million of net interest expense. Full-year 2026 guidance is $175 million-$177 million for vessel operating expenses, $39 million-$42 million for cash G&A, $123 million-$124 million for depreciation, and $42 million-$43 million for net interest expense. For the fourth quarter, guidance can be found also on the slide. As we said last quarter, the sale of the smaller Unigas vessels changes the denominator over which some of our costs are spread. The more relevant point, however, is that the remaining fleet continues to produce a solid margin over the all-in cash break-even, while our guidance begins to reflect the fleet transition away from the smaller vessels, more of which will be seen as we enter 2027. Slide 10 is our consistency story. Reported EBITDA of $120.8 million was a record, but the number I would draw your attention to is adjusted EBITDA of $67.8 million, because it extends a consistent run, 15 consecutive quarters since the start of 2023, with at least $60 million of adjusted EBITDA, averaging $72 million over that period. That consistency is the more durable story behind quarter-to-quarter movements in utilization and terminal throughput. Our earnings remain sensitive to freight rates. On a full-year basis, we estimate that each additional $1,000 per day of TCE could add approximately $17 million of annual adjusted EBITDA, equivalent to approximately $0.28 in annual EPS, all else being equal. This is a sensitivity, not guidance, but it illustrates the operating leverage within our platform. Looking ahead, the moderation in the early part of the quarter was consistent with the pattern we described in August, but utilization recovered to approximately 94% in September and remained firm through October. We therefore currently expect fleet utilization, TCE, and terminal earnings to improve sequentially in the fourth quarter, subject, of course, to the forward-looking statements Randy read at the start. The drydock schedule, projected costs, and off-hire days are included in the appendix on slide 27 as usual, to help with modeling for those that are interested. To bring it all together, reported earnings were a record, helped by vessel gains, but underlying performance was solid and as guided. Net debt is down $153 million to $500 million. Leverage is 1.7x last 12 months adjusted EBITDA. Total liquidity was $482 million at October 31st, and we are returning $27.4 million under our 35% policy, including an $0.08 cash dividend, with all six of our newbuilds now financed. All of that gives us the confidence and flexibilities to pursue opportunities as they arise. With that, I will hand over to Øyvind for the commercial update. Øyvind, please go ahead.

Øyvind Lindeman: Thank you, Gary, and good morning, everyone. If there is one thing to take away from my section today, it is this: ships are sailing further to deliver the same cargoes. When voyages get longer, you need more ships, which tightens the market. Keep that in mind as we go through the next few slides. Let us start with the choke points on slide 12. On the left is the Strait of Hormuz. Gas carrier traffic is still running at only a fraction of normal levels. You can see a pickup in recent months, but much of that are ships sailing through in laden condition, transferring cargo ship-to-ship near Oman and returns. That is a very inefficient logistics, and it is not an indication of normal trade coming back. In the middle is the Panama Canal. There are fewer slots, higher costs, and longer waits at both the old and the new locks. We don't expect this to get any better over the next few months. As you can see on the right-hand side, many ships trading from the U.S. to Asia are going the long way around via the Cape of Good Hope. Every one of those detours ties up more ships. Now to slide 13 and U.S. ethylene exports. When Hormuz closed on February 28th, buyers rushed to secure supply. The only place to look for substitute supply was the U.S., and you can see that on the right-hand slide. U.S. exports peaked in March, April, and May. Then in June and July, buying paused. Talk of possible U.S.-Iran peace negotiations made customers wait and see. When the disruption didn't go away, buyers came back. For us, that played out in three ways: where the cargoes go, how busy our ships are, and what we earn. Let me take them one at a time. First, where the cargoes go. Early on, Chinese buyers had plenty of inventory, so Europe took most of the U.S. ethylene exports. That has changed. On the left, look at the gap between the gray line, which is the U.S. ethylene price, and the dark blue line, which is the Asian price. That's now the widest spread, so the cargoes are heading to Asia. On the right graph, you can see Asia's share go from zero in the second quarter to around three-quarters by September. Why does that matter for shipping? A round trip from Morgan's Point to Asia takes more than twice as long as one to Europe, and even longer if we need to head via Cape of Good Hope. It's the same cargo with more than twice the ship time. Second, how busy our ships are, on slide 14. Longer voyages mean fewer ships are free for the next cargo. If you follow the green dashed line on the left, our utilization jumped almost 8 points in September to 94%. For the quarter as a whole, we ran at 87.9% above the five-year average. This isn't just an ethane and ethylene story. LPG demand was picking up too, so both markets were pulling in the same direction. Thirdly, what we earn. When ships get busier, rates follow. We saw it right after Hormuz closed, and we're seeing it again now. Ethylene spot rates have nearly doubled from the quiet months of June and July. To be fair, ethylene export volumes from the quarter were a bit below what we hoped, but rates firmed into quarter end, nearing the levels we saw just after the closure, and we expect volumes to pick up over the coming months. Now, turning to fleet supply on slide 15. The short version is that Handysize picture looks healthy, and it hasn't changed much since last quarter. The order book is around 7% of the fleet, the lowest of any of the gas carrier segments, with deliveries spread over the next three years. That's a good place to be. On top of that, around 17% of the Handysize fleet is over 25 years old, so depending on how many of those ships get scrapped, the fleet could actually shrink over the next few years. On the demand side, there's plenty coming. Industry sources such as Argus Media forecast around 37 million tons of additional LPG export capacity globally coming by 2030, more ethane export capacity from the U.S., and several million tons of new ammonia production. All of that needs ships, and not just the big ones. It needs midsize and handysize ships as well. That's why the orders for larger ships don't worry us too much. To back it up, if you missed it, I'll reiterate what Enterprise Products Partners communicated at their recent earnings call. They raised their 2025 to 2030 Permian NGL production growth forecast from previously 23% to 34% on the back of increasing gas-to-oil ratios for each barrel produced. Permian keeps on giving to the NGL industry. Finally, rates on slide 16. Over the past few months, the market has gone from fair to strong. This chart shows 12-month time charter rates. What stands out is how strong LPG is across VLGCs, midsize, and handysize. In fact, semi-refrigerated handysize LPG rates have nearly caught up with ethylene-capable vessels. Ethylene charters are a small market with only a few deals to compare against, so I wouldn't read too much into that. But the bigger point is this. Because we can trade in both petrochemicals and LPGs, our earnings are more resilient than if we were just in one. To wrap up, September's strong utilization has carried on through October, and rates are firming across LPG, ethane, and ethylene. I'll mirror what Mads and Gary mentioned before me. We started the fourth quarter on a good footing. With that, I'll hand it over to Randy.

Randy Giveans: Thank you, Øyvind. Following up on some of the earlier comments, there have been several recent developments that we want to provide some additional details on. Starting on slide 18. During the third quarter, we paid $0.07 quarterly cash dividend totaling $4.3 million, and we repurchased over 660,000 common shares of NVGS in the open market, and that totaled $14 million for an average price of less than $21.50 per share. As previously announced, our capital return policy now includes a higher fixed quarterly dividend of $0.08 per share within our overall payout target of 35% of net income. Accordingly, we're returning a total of $27.4 million to shareholders during this fourth quarter. Of this amount, approximately $4.9 million will be paid as dividends, with the remaining $22.6 million to be allocated to share repurchases between now and the end of the year. At the current share price, we plan on repurchasing 1 million shares over the next two months. Given that NVGS shares continue to trade at a significant discount to our net asset value of more than $32 per share, we believe these share buybacks remain one of the most attractive uses of capital and a highly accretive way to create shareholder value. With a strong balance sheet, robust earnings, and our upcoming newbuilding deliveries, we hope to continue to steadily improve our capital return policy in the coming quarters and years. Looking at our ethylene export terminal on slide 19. As previously guided, terminal throughput declined to 264,000 tons during the third quarter as European demand softened, international arbitrage narrowed, and customers worked through inventories that had been built earlier in the year. Looking ahead to the fourth quarter, where we are today, and as seen on the bottom left chart, throughput is on the rise due to higher naphtha prices, global inventory restocking, and a stronger pull from Asia, which has also boosted the tonnage demand for cargoes from Morgan's Point to the Far East. Commercial activity remains very strong. In addition to the four new offtake contracts that have been signed since January, the widening arbitrage and increasing international ethylene demand has led numerous customers to engage in conversations for new take-or-pay contracts beginning in 2027. At the same time, we expect the remaining capacity available during the fourth quarter to be marketed at firm spot rates. As shown in the chart on the bottom right, the U.S. is expected to maintain a substantial cost advantage for many years, supported by structurally low domestic ethylene prices. Turning to our fleet on slide 20, we continue to execute on our fleet renewal program through the sale of older non-core assets while preparing to take delivery of the first of six highly efficient newbuildings. Beginning with the vessel sales, we recently completed the sale of eight vessels operating in the Unigas pool and shares in the pool company itself for around $183 million. These transactions generated a total book gain of $70 million, with $48 million recognized during the third quarter and the remaining $22 million expected in the fourth quarter. Following these sales, our fleet now consists of 46 vessels with an average age of 12.8 years and an average capacity of 22,900 cubic meters. On the growth side, our newbuilding program consists of four mid-sized dual-fuel liquefied ethane/ethylene carriers and two mid-sized ammonia-fueled liquefied ammonia carriers. The total shipyard cost is $586 million, of which $153 million has already been paid. Importantly, we have secured $461 million of debt financing on very attractive terms. As a result, around 21% of the total shipyard cost on a weighted average basis needs to be funded by our equity, with the rest being covered by debt. We expect to get some cash back as the newbuildings are delivered. The first of these six newbuildings will be delivered next month and will immediately commence its time charter, and we will take delivery of our remaining newbuildings throughout the next two years. These vessels will further strengthen our competitive position, enhance our customer service offering, and support long-term value creation for shareholders. Finishing on slide 21, I would like to personally invite all of you again to join us in Houston for our 2026 Analyst Investor Day, which takes place in just two weeks. Tuesday afternoon, November 17th, we will host our tours at the Morgan's Point Ethylene Export Terminal and climb aboard one of our vessels, subject to availability, as they are in very high demand. Later that evening, the management team and members of our board will also host a dinner for our analysts and investors. And the next day, Wednesday, November 18th, we will host company and industry presentations covering market trends, a financial update, as well as our medium-term strategy. We will then have lunch, followed by an appreciation event for analysts, shareholders, customers, and partners. The outlook for the weather is only surpassed by the outlook for our business. The best is yet to come. With that, I will now turn the call back over to Mads for closing remarks.

Mads Peter Zacho: Thanks a lot, Randy. Let me finish with three takeaways from today. First of all, Q3 demonstrated the resilience of our business. The quarter started more slowly, as we expected, but utilization recovered strongly in September and remained firm through October. Rates are improving, tonnage volumes are increasing, and we expect both TCE and utilization to be higher in the fourth quarter. Second, we continue to execute on the transformation of our fleet and our company. The Unigas exit is now complete. At the same time, all six newbuildings are fully financed, with the first vessel due for delivery next month. So we are replacing smaller and older vessels with larger, more efficient ships, and we are doing so while we are maintaining considerable financial flexibility. Third and last, our balance sheet and capital return remain clear strengths. Net leverage is down to 1.7x adjusted EBITDA. Available liquidity has increased to $434 million by the end of October. And for Q3, we are returning 35% of net income to shareholders through the increased cash dividend and share buybacks. If we are looking ahead, the fundamentals remain attractive. U.S. exports continue to grow, longer voyages are adding ton-miles, the Handysize order book remains limited, and our flexible fleet allows us to benefit from strong demand across LPG, ethane, ethylene. So we enter the final quarter of the year with improving markets, a stronger balance sheet, and a clear path for continued fleet renewal and growth. We are in a strong position right now, and we intend to use that position with discipline. Thanks a lot for listening. Back to you, Randy.

Randy Giveans: Thank you, Mads. Operator, we will now open the lines for some Q&A. To raise your hand, you can press star nine, and then you will have to unmute yourself by pressing star six. Or if joining us on Zoom, just use the raise hand function. First question, your line should be open.

Chris Robertson: Hi. Thank you, Randy. This is Chris Robertson at Deutsche Bank. Thanks for taking my questions. Guys, I just wanted to focus on the ethylene terminal for a moment, especially around the commentary around some contracted cargoes. When you guys are thinking through that, should we think about contracted cargo capacity on more of a short-term quarterly basis? Is there a percentage of total annual capacity currently on contract? If so, what's the average length of those contracts? Maybe what's the current floor in terms of net profitability that the contracts currently provide?

Randy Giveans: Hey, Chris. We haven't disclosed all of those numbers. The majority of the offtake or the capacity is sold going forward. Some of those are shorter-term contracts, some of those are multi-year contracts. So we really have a portfolio approach. We're still marketing the remainder of the capacity. So, to keep that commercial advantage, we're not going to disclose the specific numbers you're requesting, but we do expect profitability to continue even if only the contracted volumes are sold next year.

Chris Robertson: Got it. Thanks, Randy. For a follow-up, as you guys are looking around potentially with your current midstream partner, as well as other players in the market, are there some interesting or attractive opportunities in kind of the smaller scale export terminal infrastructure space, whether it's in the Gulf Coast or perhaps the Northeast? Which region maybe looks interesting for potential opportunities?

Mads Peter Zacho: We do have a portfolio of business development opportunities, and that does include terminal or infrastructure assets. So, we do. I think the markets that we are the most comfortable with, where we do most of our trading, that would be the U.S. East Coast, and it would be Europe. So those remain, you could say, the top on the list in terms of finding good outlets, either on the export or the import side.

Chris Robertson: Thank you, Mads. I will turn it over. Thank you, guys.

Randy Giveans: Thank you, Chris. Next caller, your line should be open.

Speaker 5: Hi.

Randy Giveans: Chad, we heard you for a minute there.

Speaker 5: Okay, sorry about that.

Randy Giveans: There you go.

Speaker 5: About kind of $430 million of available liquidity kind of post the Unigas sales, and just wanted to get your latest thoughts on kind of the priority list for using some of this capacity and maybe how you are balancing maybe some potential consolidation opportunities in your vessel classes versus accretive buybacks.

Mads Peter Zacho: Yeah, it is a good and pressing question. I think if you just step back for a little bit, given the geopolitical surroundings right now, and I think our ability to forecast, if we just look back over the last couple of years, I mean, forecasting some of the events that have come in and impacted our business, our visibility is not super great now. And that in itself speaks for maybe running the balance sheet a little bit stronger right now than we probably would have in, let us say, three, four, five years back. That being said, we do not, for our day-to-day operations, need the level of cash that we have on the balance sheet right now. And I think arguably, you could also say that the leverage ratios that we are running right now are maybe a little bit lower than they could be. That means that we do have capital available, and I think a mixed approach where we prioritize growth and capital return at the same time. When it comes to growing the business, we did order six vessels one, two years ago. During 2026, we haven't bought a lot of assets, so maybe we're a little bit behind on that front, and we continue to look for consolidation opportunities. It's not so easy. At a time when the rates are strong, the sellers of secondhand tonnage, they have high price expectations, and we're not necessarily interested in going out overpaying for those assets. So, we may have to be a little bit patient here, but it's definitely high on our agenda. I think we're quite pleased with the new buildings that we ordered one and two years ago. We think we got them at good prices, and we think the outlook for deploying them profitably, it's still the case. So, we also don't want to rule out, you could say, doing more new buildings in the short to mid-term. That being said, we'll be very disciplined about it. We'll be very predictable, and it'll be organic evolution, so to speak, in growing our business. On the other hand, capital return, I think we have the capacity to continue or even exceed what we've done in the past, where we have returned via the capital return policy significant amounts of capital, but on the other hand, also taking the opportunity from time to time to do ad hoc share buybacks. We've done about once a year over the past three years, and that's definitely in the cards that when we see weakness in our share price, that's a good opportunity to deploy some of that cash. So, expect more of the same. We will be growing our business in a very disciplined manner, but on the other hand, continue, if not increasing, the capital return.

Speaker 5: Okay, got it. That's very helpful. Maybe just second question, wanted to touch on some of the charter rates you're seeing. It sounds like, you know, step down in third quarter, but sounds like there's several tailwinds into fourth quarter. Just want to get your latest thoughts on kind of outlook for charter rates in the fourth quarter relative maybe to what you saw with record levels in the second quarter, and any kind of initial kind of outlook that you can provide into 2027.

Øyvind Lindeman: Utilization is up in mid-90%, which is great, which we commented on. When you saw on that rate slide, both handysize ethylene and handysize LPG rates were up. That is the difference between second quarter and going into fourth quarter. What that means is that ethylene, ethane is up to where it is very strong, almost at the same levels that we saw in second quarter. But in addition to, those LPG rates are also pulling in the right direction. So we have two of our main ship segments, LPG and petrochemical, moving in the same sort of tightening market, which is great to see and be part of.

Speaker 5: Okay, perfect. Thanks for the time today.

Øyvind Lindeman: Thank you.

Randy Giveans: Thanks, Chad. Next caller, your line should be open.

Speaker 6: Thanks, Randy, and Mads, Øyvind, and Gary. A good update. My question actually was just on the last one that Spiro was asking, just in terms of, and Øyvind, you sort of answered it, but just wanted to get a maybe slight deeper response. Q2 is obviously a record in terms of revenue, but the earnings, you had a slight dip in Q3 as you telegraphed, but now it looks like the fourth quarter's really started off on very firm footing. Randy, you mentioned, I think it was in your closing remarks, that the best is yet to come. Do you think that that's as quick as Q4 being the record in terms of relative, I say, to Q2? Do you think it can actually exceed your performance then?

Mads Peter Zacho: I think we tend to be a little bit cautious on predicting, you could say, the exact financial performance of the year. I think it's more the underlying drivers that we like to comment on, and I think here, the utilization and the rates input that Øyvind has given you, where utilization, yeah, mid-90%, the beginning of the quarter, which is strong, and we see that unabated going into November. That's one data point. The other data point is that now it's broader, the recovery in the rates. It's not only on the ethylene rates, it's also on the semi-refs. That should give you some guidance as to how we see that play out. But going as far as you could say, predicting whether we'll be above Q2 operating or not, I think we'll just refrain from that.

Speaker 6: That's fair. I appreciate your comments, Mads. Maybe just a follow-up on that. Your first ethylene MGC that's delivering, I think in December?

Mads Peter Zacho: Yeah.

Speaker 6: You put that on a charter. Just want to get a sense, is that a long-term contract, or is this more of a one or two voyages upon delivery? Any sense you can give us in terms of what that contract profile looks like?

Øyvind Lindeman: I think we have disclosed it in the fleet list. There is a one-year charter that commences upon delivery of the ship at very healthy rates. The other, the two last newbuildings, so the LPG ammonia ships that we have there on five-year charters, and the three remaining ethane ethylene vessels that are being delivered next year, June, September, December, are all being affirmed and worked at the moment. We are hoping that that will land into place soon and we can announce.

Speaker 6: Thanks, Øyvind. Just maybe a follow-up on those final three. Is it thinking also something similar to one year, or is there a bit of a go-both?

Øyvind Lindeman: We like to have a little mix. Some are longer, some are shorter, so we will see.

Speaker 6: Very good. All right. Thank you, guys. I will pass it back.

Øyvind Lindeman: Thanks.

Randy Giveans: Thanks so much. Next caller, your line should be open.

Jostein Aschjem: Hello, guys. This is Jostein Aschjem from DNB calling. You mentioned the high price expectation among potential candidates for consolidation, and Randy also mentioned the $32 NAV. How do you sort of balance between the growth prospects versus the high prices on older tonnage? Is there potential to do some divestments going forward as well? What is sort of your targets in terms of fleet size going forward as well? Thank you.

Mads Peter Zacho: Yeah. No, it's a good question, and we have been quite active in selling older non-core tonnage over the past year, and we will continue. I mean, once our ships are getting past the 20-year mark, we tend to offer them for sale. We have one today, Navigator Pluto, it is more than 25 years of age. So that may be sold over the next half year or so. So we will continue to focus on rejuvenating our fleet by selling some of the older non-core or less flexible assets. So expect that to be happening also, not quite to the speed that you saw with the eight Unigas vessels being sold just over the last quarter or so, but a few here and there. That begs the question, so what does that mean in terms of your fleet size? Now, you shouldn't count them one for one, because if we are selling, let us say, a 12,000 cubic meter Unigas vessel, it is a very different ship in terms of earnings capacity compared to a 48,000 cubic meter mid-size ethylene carrier. So the capacity in the new building book that we have, it is actually going up both when you calculate the value or when you calculate the capacity of the ships. That being said, we will be looking to gradually, over time, grow our fleet. You mentioned the discount that we are trading at to our NAV. We are keenly aware that doing share buybacks when our share price is way below the NAV will remain to be our key priority. We will balance those priorities about deploying capital as capital return, because that is a good way to spend the money, but also maintaining, you could say, a healthy business overall that has some long-term duration. Those are the two concerns that we are balancing, and I think we have ample opportunity with the cash flow that we are generating and with the strong balance sheet that we have, that we can actually do both things at the same time.

Jostein Aschjem: Yeah, thank you very much for the extensive answer. Maybe moving a bit back to the market as well. You mentioned in the report that you see some tailwinds from very strong markets across the larger vessels as well for the VLGCs, VLECs, and also MGCs. How do you see the impact from MGCs, maybe my most predominantly for your vessel fleets impacting the rates into Q4 versus Q3?

Øyvind Lindeman: I think it's very helpful. Both the very large gas carriers and the medium gas carrier segments are doing very well. That supports our ambitions and our rates for the handysize LPG ships. They're all in tandem pointing upwards. We're all doing well on the rate side.

Jostein Aschjem: Very good. Thank you very much.

Øyvind Lindeman: Thanks.

Randy Giveans: Thanks for joining, Jostein. Next caller, I see your hand here, Climent.

Climent Molins: Hi, guys. Thank you for taking my questions. Most has already been covered, but I wanted to follow up on Omar's questions on time charters. With spot rates at very elevated levels and term contracts also creeping up, sorry about that, is there any appetite to further increase your term cover? Or even, what kind of quotes are you currently seeing for one-year contracts for ethylene-capable handies or the usual semi-refs?

Øyvind Lindeman: I refer back to that chart, which is actually a 12-month time charter assessment done by Clarksons ship brokers. Both ethylene and LPG semi-ref is about $1.04 million, $1.05 million per month. That is the rate level that is being quoted. Now we see some of the shorter ones are higher, some of the longer ones are a little bit below, but it is a good guidance across the fleet. I think if you are running some modeling, just use those numbers.

Climent Molins: Makes sense. Thank you. That is everything. I will turn it over.

Randy Giveans: Thanks so much. I believe that is the end of our Q&A. Mads, turn over to you for closing remarks.

Mads Peter Zacho: Just want to say thank you all for listening in. I thank you a lot for all the good questions that were asked. If you need any further elaboration, please do come back to us. We will be happy to discuss our business and answer your questions. Hopefully, give us a call. Give Randy a call.