Thank you for standing by, ladies and gentlemen and welcome to the Navigator Holdings Conference Call on the Second Quarter 2021 Financial Results. We have with us Mr. David Butters, Executive Chairman; Mr. Harry Deans, Chief Executive Officer; Mr. Niall Nolan, Chief Financial Officer; and Mr. Oeyvind Lindeman, Chief Commercial Officer. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that this conference is being recorded today. And now, I pass the floor to one of your speakers, Mr. Butters. Please go ahead, sir.

Good morning, Laney. Good morning, everyone, and welcome to the Navigator second quarter earnings 2021 conference call. As we conduct today’s conference call, we will be making various forward-looking statements. These statements include, but are not limited to future expectations, plans, and prospects from both the financial and operational perspectives. These forward-looking statements are based upon management assumptions, forecasts, and expectations as of today’s date and are as such subject to material risks and uncertainties. Actual results may differ significantly from our forward-looking information and financial forecast. Additional information about these factors and assumptions are included in our annual and quarterly reports filed with the Securities and Exchange Commission. Now, before I hand off the call to Harry, I just have some brief comments and observations. It was just about two weeks ago when we closed the acquisition of the Ultragas entity, the owner of 18 high-quality LPG vessels. The rest of our team will have more to say about the importance of this transaction later on the call. But first, I want to personally welcome the former Ultragas employees who have recently joined Navigator. From everything I’ve heard and seen, you possess the same professional skills and enthusiasm demonstrated by our own Navigator team over many years. We need you and trust you will continue to enjoy a work environment that excites you and stretches your professional talent. I would also like to formally welcome our three new directors. Peter Stokes and Dag von Appen join us and represent the von Appen family, the ultimate owner of now 28% of Navigator’s common stock. I have known these two gentlemen for over two decades, and I can attest that they are good business people and have strong judgment and fine character. Also joining our Board is Andreas Sohmen-Pao, who comes from a long history in shipping that goes back many decades and crosses several continents. We are very pleased that these three gentlemen have agreed to join the Board, and I am confident that they will contribute significantly to the ongoing success of the Company. I want to observe that Navigator is now a very special entity with two storied shipping companies in the business for many years, each owning a 28% interest in Navigator. It shows tremendous confidence and vision for what Navigator can do. We’ve believed in its potential independently, and now with two real pillars beside us, I think it is an extraordinary situation and a sign of success. So, Harry, let me pass the call over to you and the rest of your team to fill us in on what transpired over these last three months.

Thank you, David, and good morning to everyone on the call. I hope you’re well. As you have seen from our statement today, this quarter continued to be impacted by the aftermath of the southern freeze and other macroeconomic events which have affected income. Despite this, however, this is our fifth profitable quarter in succession with income translating into an earnings per share of $0.01. When combined with the Q1 performance, Navigator Gas had the best start to the year since 2016. Further, our operating revenues increased to $85.9 million, and we achieved an adjusted EBITDA of $28.2 million. Looking into the market more generally, Q2 ‘21 reflects the volatility in the U.S. olefins market caused by well-documented weather-related issues on the U.S. Gulf Coast, which significantly reduced cracker output in the region and led to substantially reduced production, a drawdown in inventories, and a curtailment of exports from the U.S. Gulf. Although production rates have increased, they have not risen as quickly as predicted and have therefore taken some time to replenish the ethylene pipeline. This, coupled with continued production hiccups, patchy cracker reliability, and strong domestic demand and pricing, has favored just domestic supply over exports, which has adversely impacted our shipping business and overall handysize utilization rates. These production headwinds have continued into Q3 and currently show no sign of abating. Although they have been partially offset by U.S. ethane exports and the U.S. propylene import tailwinds, which have helped increase backhaul opportunities for vessels returning to the U.S. Gulf. With ethylene inventories at five-year lows and the hurricane season still upon us, producers have prioritized building inventory over exports. As a result of these headwinds, utilization rates during the period were impacted and dipped to the mid-80s, with overall fleet utilization ending the quarter at 85.4%. These rates have continued into Q3 as olefin capacity restarts and the U.S. domestic olefins pipeline begins to be replenished, bringing with it strong domestic demand and pricing. All of this puts pressure on export volumes and the ethylene arbitrage, which has been extremely volatile. Although we are now well into August, the anticipated bounce back in export volumes and the reopening of the U.S. to Asia ethylene arbitrage has yet to materialize substantively, as can be seen on slides 10 to 12 in the supplemental pack. Product that is moving is going to Europe, which diminishes ton miles and results in a corresponding reduction in the number of vessels required to service that business. This is a short-term hiccup in our journey. Despite the uneven olefin export supply, our business remains on track to capitalize on further growth as the macro trading environment improves. As we’ve previously announced, we integrate the Ultragas fleet and business with Navigator’s. This transformative combination solidifies Navigator Gas as the market leader in the space, creating a stronger, larger, and more diverse fleet of 56 vessels, enhancing our market offering and providing critical flexibility and support to our customers. Ultragas’ fleet of seven modern 22,000 cubic meter handysize semi-ref vessels; five 12,000 cubic meter ethylene vessels; and six gas carriers under 9,000 cubic meters positions us to engage new clients and markets through increased coverage and geographical reach. The enhanced scale and combined fleet provide cost savings, significant synergies, increased buying power, and efficiencies throughout our business, allowing us to capitalize on the structural growth of LPG and petrochemical gases being exported from Repauno, Pembina, and of course, our own Morgan’s Point JV terminals, all of which are now operational. These incremental volumes, combined with extremely low levels of handysize newbuild activity, as seen on slide 19 of the supplemental pack, will, when olefin supply balances normalize and when the U.S. to Asia ethane arbitrage reopens, tighten the market, increase utilization, and further improve TCE rates. The combination of our two businesses and the required due diligence was successful. Our businesses and teams are highly complementary, and we were delighted to complete the transaction on August 4th on the same commercial terms as agreed in the LOI. In addition, the combination has introduced Ultranav and the BW Group as major investors, bringing longstanding experience in the maritime industry, which will benefit all our shareholders, as David highlighted. We welcome the three new directors to the Board who bring with them a wealth of maritime experience and financial knowledge. As discussed, the transaction is accretive to Navigator’s standalone budget in terms of anticipated revenue, EBITDA, and EPS. Moving on from the merger, our core business remains strong. Alongside the four 12-month time charters we previously announced, we are pleased that Mitsui has once again chosen Navigator to increase propane capacity moving from the Pembina terminal in Canada to customers in Asia. Already in Q2, over 125,000 tons of product have been moved along this brand-new trade route between the West Coast of North America and Asia. This demonstrates why going directly across the Pacific, bypassing the need for Panama transit, and minimizing transit times is compelling. The underlying ethylene fundamentals remain unchanged. U.S.-produced tons, due to their advantaged ethane feedstock costs, generate some of the best margins in the world. This ensures product is priced for export when the supply-demand balance returns to normal, resuming export volumes on normalized pricing differentials between the U.S. and Asia. Production from the U.S. Gulf Coast olefin crackers continues to be inconsistent, with many facilities still suffering from poor reliability following several recent outages. This has led to unplanned technical stoppages and shutdowns, which rapidly swung pricing and balances. Our diverse fleet has moved record ethane and propylene volumes, partially offsetting this reduction in volume. We expect stronger winter volumes to underpin utilization rates going forward. Our Morgan’s Point ethylene JV terminal exported 155,000 tons in the quarter and returned to profit as it ramped up following the Q1 pipeline outage. Furthermore, our unique and now increased market position remains challenged, with the forward order book for new builds currently at around 5%, with minimal vessel deliveries in 2021 and 2022. 20% of the entire handysize fleet is now over 20 years old. Thus, there’s really no pressure of vessel oversupply in our growing market. Efficiencies are also on the rise, with increased transit times in the Panama Canal, prolonged dry dockings, and more delays due to COVID affecting vessel transits. With three incremental U.S. export terminals now completed, with Marcus Hook MEII running at 50% and ramping up, and ME2X scheduled for start-up in Q4, we expect volumes to firm in the next few months. Therefore, it is no surprise that we maintain our positive outlook on short and medium-term TCE rates and the handysize market in general, as there are numerous factors expected to exert upward pressure on rates. To summarize, macro trends are all pointing in the right direction. We have strengthened our business through our merger with Ultragas and created a clear market leader in this space. We expect the merger will deliver many synergies, making our business safer and more efficient. Coupled with our 56 vessels, our scale, our flexibility, and the diversity of our fleet, along with unparalleled infrastructure investment, our business is uniquely positioned to seize new market opportunities. This enviable position will ensure we are well-poised to capture market upside when the short-term ethylene supply issues are resolved. With these few remarks, I’d like to hand you over to our CFO, Niall Nolan, who will take you through our Q3 financials. Niall?

Thanks, Harry, and good morning, everybody. We generated a net income of $300,000 for the second quarter of 2021 compared to $3 million for the second quarter of last year. Although last year’s profit was largely due to a reversal of foreign exchange losses made in the first quarter of 2020, following the global market’s initial reaction to COVID. Adjusted EBITDA for this second quarter was $28.2 million, as Harry mentioned. The EBITDA from terminal operations was $3.4 million, resulting from revenue relating to 155,400 ethylene tons during the second quarter. Total operating revenue from the vessels during the quarter was $85.9 million, similar to the $85.7 million generated in Q1 2021, but a 4% or $3.4 million increase from the $82.5 million during the second quarter of last year. This year-on-year increase was achieved due to an increase in average charter rates rising to approximately $22,200 per day or $675,000 per month from around $21,600 per day or $657,000 per month a year ago. Additionally, this quarter's average charter rates increased from last quarter when the average was $21,950 a day. However, utilization remained a challenge, as Harry mentioned, at 85.4% for the second quarter, compared to 88.2% and 88.3% for Q2 last year and Q1 of this year, respectively. Seven vessels were in dry dock for scheduled surveys during the second quarter, totaling 158 days, thereby reducing revenue. This is compared to only two vessels during the second quarter of last year, as COVID limited vessels from going into dry dock. The cost of the five dockings completed during this quarter was approximately $7.5 million. In total, 14 vessels are scheduled to be dry docked during 2021, two of which were completed in Q1, seven this quarter, and five remaining over the next months. The aggregate cost of the 14 dry dockings is estimated to be $19.3 million. Other than dry dockings, the company has no planned cash outlay for capital expenditures during 2021. Voyage expenses increased by $3 million during the quarter to $17.7 million from $14.7 million for the second quarter of last year. These are pass-through costs reflected in increased revenue and stem from a rise in the price of fuel for our vessels. Regarding operating revenue and voyage expenses from the Luna Pool, the operating revenue from the pool of $5.6 million for the second quarter represents our share of the other participants’ revenues, while voyage expenses from the pool of $5.5 million represent the other participants’ share of our revenues from the pool. Vessel operating expenses grew to $28.2 million for the second quarter, equating to $8,336 per vessel per day compared to $7,661 per vessel per day during Q2 last year. Vessel operating expenses were $8,115 per day during the first six months of 2021. Although this is an increase from last year, it is primarily due to COVID deferring some vessel operating expenses to this year. General and administrative costs reached $6.3 million for the quarter, a significant increase from $4.5 million during the second quarter of last year. However, reduced G&A costs last year were largely a result of the reversal of foreign exchange gains mentioned previously. This quarter’s general and administrative costs of $6.3 million were consistent with those incurred during Q1 of this year. Other income of $88,000 for the second quarter or $160,000 for the first six months relates to management fees received from other participants for managing the Luna Pool. Interest costs for the second quarter stood at $8.6 million, $22.3 million lower than the same quarter last year, primarily due to reductions in U.S. LIBOR, which remains low today at approximately 0.15%. Our share of results from the ethylene Marine Export Terminal was a gain of $2 million for the quarter, based on the 155,000 tons mentioned earlier. Additionally, depreciation for the terminal was $1.4 million, yielding an EBITDA of $3.4 million for the quarter from the terminal. The company had cash of $96.4 million at June 30th against the minimum liquidity covenant of $41.4 million. Furthermore, we had an additional $37.6 million available from undrawn revolving credit facilities associated with our secured vessel loans, bringing total cash available to $134 million. Our total debt at June 30th was $828.3 million, covering six bank loan facilities secured by our vessels, a credit facility associated with the terminal, and two Norwegian bonds. Of this debt amount, there are no loan maturities during the remainder of this year, and only an aggregate of $50 million is repayable during 2022. For the third quarter, we will incorporate the results and balance sheet of Ultragas effective from August 1st, the effective date of the transaction. Pro forma details are included in the supplementary information pack on our website. With that, I’ll hand over to Oeyvind.

Thank you, Niall, and good morning to all the callers. Operationally, the second quarter of ‘21 was characterized by both commodity price volatility due to the lasting impact of the Texas freeze and a likely short-term shift of offtakers from the Far East to European shores. Turning to U.S. ethylene pricing first, we saw a peak of $0.64 per gallon at the height of the Texas freeze in February before then seeing a low of $0.26 per gallon during April. As you can expect, this created unique market dynamics during this period, further increasing volatility. More recently, U.S. ethylene rallied from lows, increasing to $0.55 per gallon, following some scheduled plant shutdowns combined with a delay in the start-up of a new cracker. However, corrections in pricing are slower than previously estimated. Despite this, the current Nova ethylene price, which is one of the benchmarks in the states, adjusted from $0.52 per gallon Monday last week to $0.39 per gallon five days later, which is quite a substantial drop. The price of ethane remains competitive on a global basis. Further, oil above $60 per barrel supports the international demand for U.S. ethane and ethylene. Despite the volatility, the U.S. increased second quarter ethylene exports by 40,000 tons to a total of 175,000 tons compared to the first quarter. Our rule of thumb is a nameplate capacity of about 100,000 tons per month, proportioned 80% at the Enterprise Navigator Export Terminal and 20% at Targa Terminal. Therefore, we see a lot of unrealized upside. While our ethylene earnings are influenced by the physical tons exported, they are also influenced by the final destination. During 2020 and the first quarter of ‘21, about three-quarters of the cargoes were shipped across the Pacific to Far East offtakers. Conversely, most volumes during this second quarter, however, headed towards European offtakers, resulting in shorter voyages. Until U.S. ethylene prices revert to a normal and less volatile state, we estimate continued exports to Europe will help keep the arbitrage viable, as can be seen on page 11 in the pack. Most of our handysize ethylene carriers in the Luna Pool are trading in the spot market. Whenever we have open capacity, we actively seek employment opportunities across different petrochemical trades. One important opportunity lies with ethane. Year-to-date, we have exported the same volume of ethane as ethylene from Houston. This component is becoming increasingly vital to our earnings days. In total, our fleet loaded a record 90,000 tons of ethane during June. The increased ethane and ethylene share of our petrochemical earnings days rose to 60% for the quarter compared to 53% in the first quarter. We anticipate record levels of ethane exports from Marcus Hook for 2021, with additional volumes coming from a new Energy Transfer export terminal in Nederland, Texas. We had the pleasure of managing both the inaugural handysize and mediumsized ethane load operations at this terminal during April. It also marked the first time that all our four ethane mediumsized gas carriers are time-chartered, connecting three American ethane export terminals with international markets. During the period, we observed additional demand in propylene with Navigator already exceeding the number of propylene earnings days for the first seven months compared to the entire year of 2020. The arbitrage from east to west is predicted to continue into next year, providing extra ton mile demand to our now expanded semi-refrigerated fleet. Finally, regarding the global LPG trade, we have seen sideways movement. Historically high U.S. LPG prices are not helping export trades. Similarly to ethylene, the U.S. needs to build inventories for the winter, which, combined with high prices, has curtailed exports despite increased production. The somewhat dampened demand for LPG has led to time charter assessments being adjusted across all gas segments during the quarter, with the midsize segment moving from $720,000 per month to $685,000 per month and handysize semi-refrigerated dropping from $670,000 per month to $635,000 per month at the end of the quarter. Despite this, we believe the trend should stabilize and improve in the coming months. Our position rests on eight key items. First, the order book; as Harry mentioned, it is a historically low order book in our segment, which is always a positive. Second, U.S. natural gas liquids; according to the EIA, the U.S. reached the highest level of production in its latest figures, which is set to continue. Third, ethane; new export opportunities for ethane from Nederland, Texas, adding prospects to our growing ethane trade. Fourth, in terms of ethylene; North America’s ethylene pricing is expected to revert back to arbitrage territory to Asia. However, while we wait, volumes are set for Europe. Fifth, propylene; record volumes from propylene exported from East to West are expected to continue. Sixth, handysize LPG exports are rising from the East Coast, including from both Marcus Hook and Repauno, as well as having one vessel heading to the Pacific Coast to partake in the Canadian export program from Prince Rupert terminal. Seventh, consolidation; Navigator and Ultragas handysize fleet are now marketed under one umbrella, improving our service platform for customers and enabling better fleet planning optimization. Lastly, let's not forget ammonia; we have doubled our ammonia time charter coverage from two vessels at the beginning of the year to four vessels at the end of this quarter. We set a record amount of ammonia carried last month, totaling 135,000 tons. We expect ammonia to take a more prominent role in our contract coverage going forward. This concludes the operational segments, and I would like to hand it back to David Butters. Thank you.

I think we can take questions now, if that’s appropriate.

Thank you. And we will now take our first question. Please go ahead. Your line is now open.

Hi, guys. This is Sean Morgan from Evercore. Regarding the terminal throughput, I think you said you did about $155,000, but the base nameplate capacity is supposed to be about 1 million tons per annum. So, regarding the difference between the 250,000 tons you should be able to do in the base nameplate versus what was done during the second quarter, was that operational limitation, or was that due to slower demand relative to this arb that you kind of discussed on the call?

Sean, it was not operational. It related to the pricing of U.S.-produced ethylene. The reasons Harry outlined in detail are that the price was too high, so it made more sense for the producers to sell in the U.S. compared to exporting. The lingering effects from the Texas freeze caused all that disruption. It was all to do with U.S. domestic production and low inventory levels rather than the terminal itself.

Okay. With half of the quarter on the books now, are you seeing the current run rate close to Q2, or have you seen some improvement? Is the demand issue still problematic for Q3 in terms of the terminal exports?

Yes, it’s continuing in the same vein as the second quarter for the throughput themselves. August was low due to unscheduled outages of various plants—there were three plants particularly affected, and a delay of a new one. However, as I mentioned, last week from Monday to Friday, the Nova ethylene price in the U.S. went from $0.52 to $0.39 in one week. Clearly, something is happening. The market is trying to return to a normal state. Some consumers of ethylene are building inventories, hedging themselves for hurricane season. So, fingers crossed that continues. Several dynamics are happening in the U.S. right now. The pricing wants to come down, yet inventory levels are low, causing volatility. But our expectation for September looks higher than August, but not near max capacity as we would like.

And Sean, it’s Harry here. Regarding the terminal, we have take-or-pay contracts in place. If our contracted parties decide not to put the volume down at the terminal, they still have to pay for the capacity. So, there is a lag effect on that, but the deficiency payments our contracted partners make will balance out profitability, even if they don't utilize capacity in line with the contract. Hence, there is a balancing mechanism.

Gentlemen, it’s Randy Giveans from Jefferies. A couple of questions. You mentioned on the last call that fleet utilization is expected to be 90% plus in 3Q ‘21. Is that still the guidance for this quarter? And what is utilization currently?

Utilization is moving sideways, similar to second quarter, mid-80s, due to the reasons we discussed—ethylene moving from the terminal to Europe instead of Asia, and less volume from the terminal itself has impacted utilization. Some slack has been picked up, carrying ethane instead, but it hasn’t outweighed the loss of some ethylene ton mile demand.

Can you give guidance for what your expected throughput will be for the third quarter and net income for the JV for this third quarter? I know you did $155,000 in the second quarter, what kind of number are we looking at for 3Q?

With regards to the terminal, I think we’re going to be in the same sort of ballpark as we were for Q2.

Regarding the Ultragas merger, 11 of the 18 vessels acquired could be considered noncore or certainly smaller than your focused handysize segment. Do you want to operate those smaller vessels, or will you look to sell? Some of your peers seem to be in the market for those smaller 5,000 to 11,000 CBM vessels. If you choose to operate them, do you have any interest in gaining further scale by acquiring additional small LPG vessels from another operator?

The smaller vessels are operated through the Ultragas pool, well established and one of the market leaders in that space. We’ve offered various services for almost as long as I have, over 50 years, which is significant. They are specialists operating those smaller gas carriers up to 15,000 cubic meters. It seems to be working well. We have two great partners in Sloman Neptun and Bernhard Schulte. Not only do we remain part of that pool, but we’re also an owner, and it benefits us to optimize efficiency. In terms of strategy for those vessels, it’s too early to say. We’ll continue with the pool and evaluate our options regarding those vessels. Since we were competitors, we could not exchange sensitive commercial information with Ultragas prior to the merger, so we only had two weeks to explore. Fortunately, we ensured that we had one face to market with customers once the merger closed. Our commercial team worked hard from day one to maintain service and ensure customers were serviced with one voice and one team. The merger is going exceptionally well. We have strong people, good assets, efficient processes, and robust IT. We look forward to sharing these across the company and finding synergies and efficiency optimizations between the two companies.

I have a couple. First, as I reviewed the fleet list, I remember that a number of vessels had contracts or may still have contracts, and I was going to check on their status. Specifically, I believe the Sibur contracts are up for renewal, curious where those stand. Also, is the Braskem ethane contract still in existence? There were COAs on several ethylene vessels, how do those factor into the pool?

Good question, Ben. Ethylene contracts fall under the Luna Pool, and all ships in the pool perform for it. The ethylene contracts, especially with Marubeni, remain intact for several years, which is great. They are operating in the North Sea program as they have since delivery. In terms of ethane, there is renewed strong interest in ethane projects and contracts, especially in the spot market due to a third ethane terminal opening in the U.S. The Braskem trade operates on a spot basis between the U.S. and Mexico. It’s a dynamic situation. We’ve maintained about 50% exposure through time charters while reserving the remainder for market upticks towards year-end.

Utilization has faced various impacts from weather, etc. Are you considering putting a greater percentage of the fleet on time charter contracts to ensure that utilization stays at 90% or higher?

We evaluate every time charter opportunity that arises. When we talk to clients, we determine the best contract type for them, whether it’s time charter, contract of affreightment, spot, or direct continuation contracts. All options are analyzed to appropriately position the fleet for upcoming demand. It’s a good question, and we think about this daily—what the optimal coverage for Navigator is. There’s always a trade-off between rate versus coverage that impacts utilization, which is something we continuously consider.

Lastly, I noticed some of your older vessels, such as Magellan being 23 and some legacy ethylene vessels at 21 years. How do you assess their useful life, or at what point do you begin considering them candidates for sale or recycling?

Yes, some vessels in that 20-plus year category are under constant reassessment to determine their worth. We ensure they provide more value to us than to another operator or through recycling. Our earnings over the last couple of years have shown those vessels are well-utilized, generating returns for the company. We depreciate the vessels over a useful life of 30 years, which we’ve followed for many years.

If you’re depreciating over 30 years and Magellan is 23, does it then stand to reason that there is still useful life expected from your perspective?

That is something currently under review. Certainly, for 30 years, when these ships came into service, and particularly excluding Magellan, the other original ethylene ships are still carrying ethylene. All vessels are still carrying ethylene this year and thus maintain our strategy in servicing the Enterprise Navigator terminal. That will continue. The world has evolved regarding ecology and whether ships will survive 30 years. Technically, they can; however, acceptability from oil majors and the like is under consideration, maybe 25 years may now be the current norm.

Thank you. We have no further questions at this time. I would now like to hand back to management for closing remarks.

Thank you. It was a good call. I look forward to our next one in three months’ time, where we may provide updates on the development of both the ethylene and ethane segments. Thank you for joining us this morning, and I look forward to talking to you again. Thank you.

That does conclude our conference for today. Thank you for participating. You may all disconnect.