Navigator Holdings Ltd. Q3 FY2021 Earnings Call

Thank you for standing by, ladies and gentlemen and welcome to the Navigator Holdings Conference Call on the Third Quarter 2021 Financial Results. We have with us Mr. Dag von Appen, Chairman; Mr. Niall Nolan, Chief Financial Officer; Mr. Oeyvind Lindeman, Chief Commercial Officer; and Mr. Michael Schroder, Operating Officer of the company. 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. Dag von Appen. Please go ahead, sir.

Good morning, everyone. Welcome to the Navigator third-quarter earnings 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 on management assumptions, forecasts, and expectations as of today’s date and are thus subject to material risks and uncertainties. Actual results may differ significantly from our forward-looking information and financial forecasts. Additional information about these factors and assumptions is included in our annual and quarterly reports filed with the Securities and Exchange Commission. Today’s call will include comments from our senior executive team leading the Company, which includes Niall Nolan, our Chief Financial Officer; Oeyvind Lindeman, our Chief Commercial Officer; and Michael Schroder, our Chief Operating Officer. First, I would like to thank everyone in the Company for their exceptional dedication and support during the very busy third quarter. It’s been hard work running operations while completing the merger between Navigator and Ultragas. When we originally set out to merge these two companies, we could only have hoped that our first quarter of combined operations would be as positive as evidenced today and that our two teams would work very well together. This has been our best quarter since 2016, and the Board and I look forward to further synergies being extracted from the merger in the coming months. I also expect an improving gas tanker market going forward. I’m honored to be both a shareholder of Navigator Gas since early August and the Chairman of the Company since September. I can confidently say we find ourselves in a unique position in the global gas and petrochemical logistics market, because we are the maritime link that connects the global petrochemical industry. What interested us in merging Ultragas into Navigator was the unique opportunity to become a larger and integral global logistics provider to our customers, to producers, and end-users of the products we transport. I have referenced my impression of its staff, highly competent gas experts, always pushing the status quo with the Ultragas team, whose vessels complement Navigator very well. I have especially experienced the company’s close relationship with key stakeholders, such as our joint venture partner Enterprise Product Partners and other companies like Energy Transfer. Working closer with midstream companies, producers, and end-users will be immensely important for the Company going forward. One thing is clear, reducing the commoditization of shipping through long-term industrial partnerships underpinned by safe, reliable, and efficient terminal and shipping logistics is the way forward in our journey to become a more efficient, cost-effective, and profitable company. In addition, we shall increasingly focus on innovation, finding effective solutions to reduce greenhouse gas emissions for our company and our customers. I would especially like to thank our former Chairman, David Butters, who resigned during the period after leading Navigator Gas for 15 years and developing Navigator into the leading company in our segment. David’s oversight and guidance to the Board and myself has been invaluable. It is in part thanks to his legacy ambition that we are able to present today’s improving results. In addition, we would like to thank our former CEO, Dr. Harry Deans, who oversaw the Ultragas and Navigator Gas merger during his tenure and has left the Company to pursue new ventures. The Board and I wish him well going forward. Today, the Company is in the very experienced hands of our senior executive committee members, Niall, Oeyvind, and Michael. Finally, let me emphasize that I’m very excited to be part of the larger and stronger Navigator Gas and will, to the best of my capabilities, provide guidance for the interesting journey ahead. With that, I would now like to hand over the call to Oeyvind Lindeman, Chief Commercial Officer of Navigator Gas, who will take you through the relevant commercial matters of the past third quarter. Thank you.

Thank you, Dag, and good morning, everyone. As you have seen from our third-quarter statement, this has been our best quarterly result since the fourth quarter of 2016 and the sixth consecutive positive quarter in a row. This is an exceptional achievement for the company and represents the significant work we’ve done to complete our merger and synergize our two businesses. Looking at our financials, during the quarter, we posted a quarterly net income of $6.7 million or $0.10 earnings per share. Our operating revenue has increased to $102.7 million, and our EBITDA has increased significantly to $40.3 million. This performance is despite the industry headwinds we faced during the quarter, which kept our utilization stubbornly flat around the mid-80% level into the third quarter and the continued impact of the Texas freeze earlier in the year. In addition to these headwinds, the U.S. ethylene arbitrage to international markets narrowed during August due to domestic inventory build as a precautionary measure prior to the annual hurricane season during the late summer. Thankfully, the ethylene industry experienced minimal impact from the various hurricanes that made landfall, resulting in domestic prices adjusting downward. Ethylene export volumes picked up towards the end of the quarter, and the joint venture Marine Export Terminal posted its best three months since it became operational in January 2020. As many of you are aware, this quarter saw the completion of the cashless business and fleet merger with Ultragas on August 4th. Of the 18 vessels, 11 continued to be managed in the Unigas Pool, while 7 handysize semi-refrigerated vessels seamlessly joined Navigator's managed fleet. One smaller, built-in 1999 vessel was subsequently sold. With the merger now complete, we are seeing the combined company better positioned to offer flexibility and logistics service to our customers due to our broader platform of homogenous vessels. We are also starting to see an impact in terms of utilization, as we are now more likely to have a vessel in the right place at the right time, avoiding post-merger unnecessary ballast days. Looking ahead, the fourth quarter to date is showing strong utilization at around the 90% level. The market assessment by third-party ship brokers has turned from negative to positive in September and is now trending upwards. This is illustrated in the supplementary presentation. There are four key factors driving this positive change. First, there is more ammonia needing to be transported on handysize vessels. At the beginning of the year, we had two handysize vessels on time charters for the transportation of ammonia. Today, we have doubled our contracts now to four vessels in this trade. These key vessels previously traded LPG, and other handysize vessels are being completed to fill gaps. Secondly, U.S. ethane continues to be competitively priced, attracting international buyers looking to transfer competitiveness to their own production facilities overseas. We are developing, alongside new customers, the U.S. to Europe virtual pipeline and have contracted incremental ethane with a European oil major during the quarter. Moreover, ethane is not only shipped for the purpose of being used as feedstock; it is now also shipped to be used as energy. Several European customers are seeking to import American ethane to spike the natural gas stream, essentially selling ethane as natural gas and making a profit. Furthermore, we announced earlier this month three long-term ethane charters for our medium-sized gas carriers with our existing partner, Satellite, to connect the U.S. with the cracker in China. This means that all of our four medium-sized ethane carriers are now on time charters, which in total will be contributing $40 million EBITDA on an annual basis. Thirdly, ethylene is finally flowing from our joint venture Ethylene Marine Export Terminal. We are set for record throughput for November and healthy levels for December. The total U.S. exports of ethylene will therefore exceed our anticipated rule of thumb of 100,000 tons per month. Not only is the absolute volume of exports up, but the final destinations are changing. More than two-thirds of the volume is heading to the Far East, as displayed in the pack. This is an important change compared to summer, where most of the volume went to Europe. Voyages across the Pacific more than double the ton-mile demand for each ton exported, which is clearly beneficial for our utilization and market assessment. Finally, there is no letup in North American LPG exports. The continent is continuing its robust export program, consistently putting 4.5 million tons of LPG per month on the water. Today, the rig count is up from a low of 215 in September 2020 to 550 in September 2021. The EIA forecasts a 5 million ton incremental NGL production for next year. The forecasted total LPG exports for 2021 are expected to reach 51 million metric tons of LPG, a 10% growth from last year, constituting 47% of the global seaborne LPG market. New inefficiencies impacting the larger gas carrier segment, such as extensive delays in transiting the new Panama Canal, delay the voyages by more than 15 days, which increases the ton-mile demand and also helps freights. When the larger gas carriers perform well, they compete less with the medium-sized segment. When the medium-sized segment performs well, they are less likely to seek LPG cargo opportunities in the handysize segment. The less downward pressure through the gas carrier segments, the better, and we are witnessing the positive impact of this today. It is important to note that, in addition to less downward pressure on the larger ship size segments, we also see less encroachment within the handysize segment. Today, all of our Luna Pool ethylene vessels are trading ethane or ethylene. This is the first time this has occurred since its launch in April 2020. It means that these vessels are not looking for LPG or other petrochemical cargoes, allowing the handysize semi-refrigerated gas carriers to pursue these opportunities without interference. It also means that the smaller ethylene units in the 12,000 cubic meter class and below are performing better, as the Luna Pool vessels are less likely to be seeking smaller part cargoes. Therefore, looking ahead, our fundamentals look very encouraging, and we expect another strong quarter in the fourth quarter as we see less competition in the sector due to strong demand for LPG transportation and reduced competition within the handysize sub-segment. Incremental ammonia handysize demand, continued robust ethane exports, both to Europe and Asia, and the joint venture ethylene Marine Export Terminal have come into action as U.S. ethylene prices are normalizing. The majority of ethylene demand is now coming from Asia, and the order book continues to be at a low level. Before I hand over to Niall for the financial commentary, I would like to highlight our efforts in exploring potential new business streams. The first is ammonia as fuel. The concept of ammonia as fuel has come to life due to the possibility of zero-carbon emission energy, both for the vessel itself, but also for onshore use. However, ammonia is highly toxic, which represents some challenges associated with its handling and application as fuel. We have worked together with industry specialists, such as DNV-GL over the last two years and have finally been awarded an approval-in-principle. This means that we can confidently engage our customers and shipyards in the development of ammonia-fueled vessels. The second opportunity is CO2 transportation. It is clear that carbon capture storage and sequestration have a role to play as a stepping stone to reduce greenhouse gas emissions. Through our joint venture, Dan-Unity, we have similarly received an approval-in-principle from the American Bureau of Shipping for a container system and ship design for transporting liquefied CO2. Both projects align with our strategic objectives for industrial shipping, serving as the logistics partner directly with producers and end-users. Both opportunities are project-based, implying long-term contracts if and when successful. It also fits with our ambitions to do the right thing regarding maritime emissions, reducing them whenever possible. With those remarks, I would like to hand over to our CFO, Niall Nolan.

Thanks, Oeyvind, and good morning, everybody. As both Dag and Oeyvind have already mentioned, the Company generated a net income of $6.7 million for the third quarter of 2021, the best result for almost five years. This $6.7 million compares favorably to the $1.3 million for the third quarter of last year and $300,000 for last quarter, the second quarter of 2021. Adjusted EBITDA for the third quarter was $40.3 million, compared to $29.6 million for the third quarter a year ago and $28.2 million last quarter. Total operating revenue from the vessels during the quarter was $102.7 million compared to $81.4 million for the comparative period last year, and $85.7 million generated in the last quarter, Q2 2021. The year-on-year increase in revenue was mainly achieved as a result of the additional vessels following the combining of the fleet for both Navigator and Ultragas on August 4th of this year. Ultragas’ fleet consists of 18 vessels, 7 of which are handysize 22,000 cubic meter semi-refrigerated vessels, similar to those operated by Navigator; and 11 are smaller LPG or ethylene vessels, between approximately 4,000 cubic meters and 12,000 cubic meters. These 11 smaller vessels are independently managed by the Unigas Pool, which has operated for over 50 years. Their contribution for the two months of Navigator ownership was $8.2 million and is detailed separately in the income statement. Along with additional vessels, part of the revenue increase was generated due to increased utilization, which rose from 78.8% in Q3 2020 to 84% this quarter, adding an additional $4.4 million to revenue. As I mentioned, we expect utilization to trend upwards in Q4 to at or above 90%. Average charter rates, however, reduced to approximately $21,900 a day or $666,000 per month from around $22,900 a day or $696,000 per month a year ago, which negatively impacted revenue on the quarter by $3 million. All vessels were in dry-dock for scheduled service during the third quarter, taking a total of 101 days, thus affecting revenue. In total, 11 vessels have been dry-docked during the nine months of 2021, with costs of approximately $15.3 million. Other than dry-docking, the Company does not have any planned capital maintenance. Operating revenue from the Luna Pool was $7.5 million for the third quarter and represents our share of the other participants’ revenues, whereas voyage expenses from the Luna Pool of $4.8 million represent the other participants’ share of our revenues from the pool. Net-net, we had a benefit of $2.7 million from the pool during the third quarter. Other voyage expenses increased by $2.2 million during the third quarter to $16.8 million from $14.6 million for the third quarter of last year. These are pass-through costs reflected in increased revenue and primarily rose due to an increase in the price of bunkers for our vessels. Vessel operating expenses increased significantly to $34.9 million for the third quarter from $27.2 million for the third quarter of last year, but this increase was entirely due to additional vessels in the fleet. In fact, vessel operating expenses per vessel per day reduced by $179 per day to $7,607 compared to $7,786 per vessel per day during the same quarter of last year. General and admin costs were $7.7 million for the three months, an increase from $6.5 million incurred during the third quarter of last year, largely due to additional audit fees of $0.5 million and $600,000 of G&A costs associated with Ultragas. Other revenue was $98,000 for the third quarter, representing management fees received from the other participant in our management of the Luna Pool. Interest expense for the third quarter was $10.4 million, which marks an 11% increase from the third quarter of last year, all of which is due to interest on the additional debt taken on as part of the Ultragas transaction. This debt amounted to approximately $200 million and attracts interest at U.S. LIBOR, which is subject to a fixed rate swap of around 2% and a bank margin that varies between 1.9% and 2.65%. Our share of the results from the ethylene terminal was a profit of $3.3 million for the quarter based on 128,400 tons of ethylene throughput. Additionally, depreciation for the terminal was $1.4 million, giving an EBITDA of $4.7 million for the quarter. On the balance sheet, the Company had cash at September 30th of $105.8 million and a further $30.2 million available from undrawn revolving credit facilities associated with secured vessel loans, bringing total available cash resources to $136 million against a minimum liquidity covenant of a maximum of $50 million. Our total debt at September 30th grew to approximately $1 billion, consisting of loan facilities secured by our vessels, approximately $785 million, which incorporates additional debt assumed as part of the Ultragas transactions, details of which are outlined in the supplemental information presentation. A credit facility associated with the terminal totals approximately $58 million, alongside two Norwegian bonds with an aggregate amount of approximately $170 million. There is only one facility that matures next year, in 2022, which is for an amount of $50 million related to three vessels. The new Ultragas-related debt consists of 5 bank loans secured on a total of 13 of the 18 acquired vessels. The other 5 vessels are unencumbered. The bank loans, which in aggregate have biannual repayments of approximately $13.6 million, mature from June 2026 to December 2029. As part of the transaction process, we renegotiated the financial covenants on these bank loans to align with those of Navigator, namely minimum liquidity, as I referred to a moment ago, and debt to total capitalization ratio. Additionally, there is a requirement to maintain minimum security vessel values ratio under each facility, consistent with Navigator bank loan facilities. Since completing the Ultragas transaction on August 4th, we have sold one of the older acquired vessels, the Happy Bride, a 1999 built 6,400 cubic meter LPG carrier, to a third party for $4.75 million, and the sale was completed on October 12th of this year. As of September 30th, the total book value of the assets of the Company was $2.2 billion, comprising 55 vessels and a 50% ownership in the Marine Export Terminal in Houston. There were 77.2 million shares in issue following the issuance of 21.2 million shares as consideration for the Ultragas businesses and assets. Thank you. I will now hand you back to the operator, Sharon, who will open the call for questions.

Thank you. Your first question today comes from the line of Sean Morgan from Evercore. Please go ahead. Your line is open.

So, on slide 11, I appreciate this clear presentation of upcoming maturities, but it does sort of raise the question, we’re about a month out from 2022, and then we’ll start rolling these ‘23 maturities into the current portion of debt. So, is there a strategy for potentially extending some of those 2023 maturities, especially with kind of rates at low levels right now?

Yes. We’re already looking at refinancing those. There are a number of three bank loan facilities in there which we are examining, along with the Norwegian kroner bond. We are developing a strategy to refinance those early part of next year.

Okay. And is there any kind of make whole or early repayment provisions that we should be considering? Are they or can you take them out without a punitive payment to the debt holders?

Well, two things. The bank loans can be repaid at any time without any penalty. The bond is now callable at 102.84 since earlier this month and goes until next November and thereafter it holds to slightly over 101. So they are all positive.

All right. And then, another area that I think contributes a lot to the bottom line is the Marine Terminal joint venture, which has been a little difficult to forecast, and the volumes have varied quarter-by-quarter. The last 4Q was pretty weak relative to 3Q, and I think that may have been environmentally related with storms and whatnot. But, should we expect a continued ramp into 4Q? Is there any seasonality that might dampen that in terms of the export terminal in Texas?

It’s an appropriate question. And the answer is yes, the terminal in the fourth quarter is ramping up more than what we’ve seen earlier in the year for the reasons we discussed. So, volumes are definitely up. I mean, we’re two months in and prospects for December are looking healthy as well. So, we expect the terminal to kick in and produce.

Okay. And are the results kind of linearly related with the volumes, or is there like a commodity component that can kind of be additive to what we saw in 3Q with the strong...

It’s a linear relationship. These are fixed fee terminal contracts that are not tied to arbitrage or product pricing. Any spot opportunity could have a different and potentially higher rate, allowing the terminal to earn more. However, as you know, 94% of the terminal's nameplate capacity of 1 million tons is contracted at various rates. The additional production, which could be seen as extra profit, can provide more value depending on the arbitrage situation.

Okay. So that 6% would be...

Yes. That’s nameplate. So, in November, the terminal proved, I mean we’ve been talking about it for the last 12, 24 months, but the contract of having exports above nameplate capacity is definitely used. For November, it was 10% to 15% of what is nameplate capacity. So, yes.

Thank you. Your next question comes from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.

I wanted to follow up on Sean's question. You mentioned that in November you were operating 10% to 15% above nameplate capacity. How should we evaluate the economic impact of the spot cargoes, or the additional benefits in terms of EBITDA or any other metrics you might gain from the terminal when it is running above its contracted volume?

Yes. In conversations with our joint venture partner and our own budgets, the terminal budget is really based on nameplate capacity of the 1 million tons. We see that it will bring fruit of what we’ve been saying before about $25 million EBITDA for our share. Any additional tons are over and above that. So, it’s still a marginal impact. But if we can squeeze out the handy cargo per month extra or an additional 20,000 tons above what we have contracted in throughput agreement, then the terminal would generate higher revenue, and more importantly, it could positively impact utilization and rates in the handysize ethylene space. So yes, we base our expectations on forecasted nameplates, and anything above that we take as a bonus.

Okay. But at this point, there’s no way to sort of quantify that yet...

We're discussing next year, and we don't have concrete information yet. Currently, we have contracts that represent 94% to 95% of nameplate capacity, and that's what we can rely on. Any additional capacity in the future will be considered a bonus.

Okay. Shifting gears a little bit, Niall. One of the things that I believe you guys were sorting out with respect to the merger with Ultragas was how to think about the useful life of the assets from a depreciation and accounting standpoint. If I'm not mistaken, they were on two different bases of useful life. Any color on how you’re thinking about handling that going forward?

I believe that conversation probably started within Navigator prior to any involvement with Ultragas. As you are aware, we have historically depreciated our assets, our vessels over 30 years. I guess, if the lockdown has taught us anything over the last two years, it is the escalation in views about conservation and the environment. I think that trend created a conversation about whether our vessels can continue for 30 years. Technically, they would be capable, but they are clearly less efficient than modern-day vessels. I’m particularly thinking of the five standards, the original five Navigator vessels. So that discussion is ongoing, and we hope to conclude it by the end of the year. It would not be unreasonable to consider a reassessment of the useful economic life from 30 years to 25 years.

Okay. And then two more; although one is real quick. So, just quickly, do you have any update on the Navigator Neptune? I know it had a fire, and it looks like it’s still in repairs, but when should we expect that? But then the other question is, when you talked about the four points driving utilization and rates higher: ammonia, ethane, ethylene, and LPG, how much of that do you think is just a function of good pricing resulting in arbitrage windows being open or demand for ethane because LNG is so expensive? And how much of that do you think is a structural shift that is not necessarily exclusively price-dependent?

Yes. I will take the second question first, Ben. Fundamentally, in the U.S., ethane is cheap because of the NGL production. NGL production is increasing. There’s more rig count. If you look at one of the graphs in the presentation, you can see that ethane is declining in price, making it more competitive. This underpins first and foremost, ethane exports, which we are actively pursuing. I think this is not arbitrage dependent since everyone we discuss with expects ethane to remain competitive. Therefore, I think the structural foundation will continue. If the ethane as a feedstock is cheap and competitive, the U.S. producers will run their crackers at maximum capacity. If they can reap value from exporting that excess production, they will. The terminal is there to offer that optionality for U.S. producers, and we are there as partners to ship it out. I believe that ethane will be there regardless of the situation, while ethylene will be slightly more price-sensitive. However, our terminal throughput agreements remain steadfast. The point I was making about LPG is that when the larger ships perform well, as they are today, there’s less downward pressure towards the handysize LPG business. I believe this structure will prevail. We witnessed that now. It hasn’t been evident until now for LPG. The forecast for LPG exports from the U.S. and the delays in Panama have a tremendous effect, pushing rates and utilization up for larger segments, which is meaningful for us. Meanwhile, when ammonia is not price-sensitive, it plays a fundamental role in crop production, and it’s more industrially linked, so you have production and consumption long-term. That’s a long-winded answer, but I hope I addressed your questions. All four points I mentioned: ammonia, LPG, ethane, and ethylene, appear aligned today, and our forecasts for December and next year are positive. My only caveat would be the Omicron variant and its potential implications, but it’s too early to tell.

Great. And the Neptune?

Yes. Maybe I can take that question. Hi, Ben. The Neptune, as you mentioned, had a main engine fire in June of this year. It was an extensive fire that required significant repairs. Currently, the repairs are almost complete. The vessel is making its way to China, where the last piece of equipment, an alternator, will be installed. We expect that the vessel should be ready to resume operations by around the 18th of December. So, it will still be within this year.

Thank you. Your next question comes from the line of Randy Giveans from Jefferies. Please go ahead. Your line is open.

So, you mentioned record kind of throughput for the ethylene terminal, assuming that’s around 90,000 tons for November. Was there something special about that month, or could December be in that similar range?

There was something special in November, aside from ethane being cheap and European and Far Eastern consumers wanting ethylene. We’ve been discussing this normalization of domestic ethylene pricing, which is what you’re witnessing. Therefore there’s nothing extraordinary about November; it is as it should be. December is showing slightly less. Why? Simply because all the ethylene ships, both Luna Pool ships and other competing ships, are moving away from European discharge to Asia for November, and then back because it takes two months to return to the U.S. after loading. Thus, some shipments might skip December. Importantly, we’re experiencing a slight squeeze on ship capability for December, which is quite interesting and, of course, favorable for Navigator. Nothing special about November, but December is expected to be slightly less, compounded by holiday seasons.

Your next question comes from the line of an unidentified analyst. Please go ahead. Your line is open.

Hi. Thanks for taking my questions. I had two. The first one was, is there any impact or roughly what is the impact in TCE rate just from the change as a result of the merger? Like, does that sort of push down a bit the average TCE rate we should expect, all things equal?

I don’t know if you’ve seen the supplementary pack. But, if you look at page 14, you can see the Clarksons' 12-month charter assessment, which we use as a barometer for the health of the LPG part of handysize. You will notice that it steadily declined from May, June, July, August, and September. The merger happened in August on the 4th. The industry was trending downwards at that time, but we, along with Navigator and Ultragas, turned by ourselves. Having a consolidated segment and company is certainly helpful. The increase in freight rates, as per the opinion of third-party ship brokers, did not occur until a month or two after. That’s why the rates remained flat in the third quarter. However, in the beginning of the fourth quarter, our ethylene ships were transporting ethylene, as they were not competing for LPG cargoes in the handysize segment. We have more ammonia projects squeezing the middle, meaning that the LPG part of our business, the semi-refrigerated ships were left to perform as intended. This led to more structure and discipline in both the ships above handysize as well as within and began reflecting in the early parts of the fourth quarter, which the rates have turned in accordance with Clarksons.

Sorry to clarify. The TCE rates we quoted, of $21,900 a day or $22,900 a day, do not include the 11 ships in the Unigas Pool because I suspect that was the thrust of your question—that if the smaller ships contributed to the average TCE rate, it would naturally bring them down.

Okay. That’s something that’s like for like.

But we try to keep it quite like-for-like. The 7 vessels of the handysize semi-refrigerated are included. There is a slight dilution because they are semi-refrigerated rather than ethylene capable, thus leading to slightly lesser charter rates. However, it should not be significantly impactful.

Okay. And just my other question was, what’s currently the utilization of the Pembina and Repauno terminals? Has that reached a stable level now, or do you expect further increases?

The Pembina Terminal in Prince Rupert, West Coast, Canada, is limited in the throughput that they can achieve. Currently, we have five handysize ships trading or loading LPG from that terminal, which is kind of max, due to physical restrictions with local storage on site, the rail capacity, but maybe more importantly, daylight restrictions to enter the channel combined with types. Therefore, there are specific points in time that you can go in and out, depending on if you’re late or not. These limitations will remain.

Okay. And Repauno, what’s the current status?

Yes. Repauno began operations in April and conducted a number of exports until September. They started utilizing the terminal more for domestic sales due to the high pricing in the states. They have communicated to us that they will recommence exports to international markets from April again. Therefore, it appears that the first year of operations was more seasonal.

I think that then concludes the call. Thank you all for participating, and we will see you again for the fourth quarter in due course. Thank you very much. Goodbye.

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