Navigator Q2 Earnings Call Highlights

Key Points

• Navigator posted record Q2 2026 results, with net income rising to $53.0 million, EBITDA reaching $101.6 million and average TCE rates hitting a record $33,946 per day. Fleet utilization also improved year over year to 90.8%.
• Morgan’s Point set a quarterly throughput record of 374,278 tonnes, while Navigator continued to strengthen liquidity through vessel sales and newbuild financing. The planned sale of eight Unigas vessels is expected to generate approximately $129 million in net cash proceeds.
• Management expects Q3 performance to moderate from record Q2 levels as terminal volumes, utilization and TCE rates ease, but it remains positive on long-term demand driven by U.S. natural gas liquids production and a limited handysize vessel order book. Navigator also plans to raise its fixed quarterly dividend to $0.08 per share.

Navigator NYSE: NVGS reported record second-quarter results for 2026, citing higher shipping demand, elevated time charter equivalent rates and record throughput at its Morgan’s Point ethylene export terminal.

The company said it had no vessels operating in or transiting the Strait of Hormuz and had not experienced material operational effects from the Middle East conflict. However, management said shipping disruptions have supported demand for North American commodity exports and increased vessel inefficiencies across key trade routes.

“Q2 2026 was an exceptional quarter,” management said during the earnings call, pointing to all-time highs for net income, EBITDA, earnings per share and average TCE rates.

Record Earnings and Shipping Rates

Navigator reported net income attributable to stockholders of $53.0 million, or $0.86 per share, compared with $21.5 million, or $0.31 per share, in the second quarter of 2025. EBITDA reached a record $101.6 million, up from $80.3 million in the first quarter and $71.9 million a year earlier. Adjusted EBITDA was $86.4 million, compared with $65.0 million in the prior quarter and $60.1 million in the year-earlier period.

Average TCE rates rose to a record $33,946 per day, exceeding $29,684 per day in the first quarter and $28,216 per day in the second quarter of 2025. Fleet utilization was 90.8%, compared with 90.6% in the first quarter and 84.2% a year ago.

Chief Financial Officer Gary Chapman said higher voyage expenses during the period were largely pass-through costs related to bunker fuel and other spot-voyage expenses. Vessel operating expenses were $47.1 million, broadly unchanged in dollar terms, although daily operating costs increased due to crewing, logistics and the timing of project-related costs.

Navigator’s all-in cash breakeven estimate for 2026 increased to $21,990 per vessel per day from $21,230 in the prior-quarter estimate, primarily because the pending sale of eight Unigas Pool vessels will reduce the number of fleet ownership days over which costs are spread.

Ethylene Terminal Sets Throughput Record

The company’s Morgan’s Point ethylene export terminal processed a record 374,278 tonnes during the quarter. Navigator’s share of terminal results, reflected in equity-method investment income, was $7.1 million, up from $4.8 million in the prior-year quarter.

Executive Vice President Randy Giveans said international demand for U.S. ethylene rose during the quarter as higher oil-based naphtha prices supported the economics of U.S. supply. The company has signed four new terminal offtake contracts so far this year, including one that began in June, and said discussions with additional potential customers remain active.

Giveans said terminal throughput is expected to decline during the third quarter due to lower naphtha prices, global inventory destocking, European cracker restarts and seasonal summer operating conditions in Houston. He said the terminal can process roughly 1.55 million tonnes annually.

Fleet Sales, Newbuild Financing and Liquidity

Navigator continued to reshape its fleet during the quarter. In April, the company sold the 2009-built Navigator Pegasus for $30.5 million, recording a $15.3 million gain. In July, Navigator entered definitive agreements to sell eight Unigas vessels for $183 million.

The company expects most Unigas vessel sales to close in the third quarter, with some potentially extending into October. After associated debt repayment, net cash proceeds are expected to total about $129 million, and Navigator expects a book gain of $65 million to $70 million.

• Cash equivalents and restricted cash totaled $274 million at June 30, rising to $362 million as of Aug. 3 following financing drawdowns.
• Net debt was $653 million at quarter-end, while net debt to last-12-month adjusted EBITDA declined to 2.2 times from 2.5 times at March 31.
• The company said loan-to-fleet value was about 31%, or below 30% when including a value for its Morgan’s Point investment.
• Navigator has completed financing arrangements for all six of its vessels under construction: four Panda ethane/ethylene carriers and two Coral ammonia carriers.

Chapman said Navigator drew more than $91 million under revolving credit facilities in April as a precaution amid geopolitical uncertainty. The facilities remain fully drawn, though the company expects to repay them in coming months as proceeds from the Unigas sale are received.

The company also said its investment in Azane Fuel Solutions is progressing toward a final investment decision for three ammonia bunkering terminals on Norway’s west coast. According to management, the Norwegian government awarded Azane NOK 442 million, or about $45 million, which Navigator said would cover 80% of planned capital expenditures for the terminals.

Capital Returns and Third-Quarter Outlook

Navigator’s board declared a second-quarter dividend of $0.07 per share, payable Sept. 1 to shareholders of record as of Aug. 19. The company expects to return 35% of second-quarter net income to shareholders, consisting of the $4.3 million dividend and approximately $14.2 million in planned share repurchases through Sept. 30.

Beginning in the third quarter, Navigator plans to increase the fixed component of its quarterly dividend to $0.08 per share, while maintaining its policy under which fixed and variable capital returns together equal 35% of net income attributable to stockholders, subject to board approval.

For the third quarter, management expects TCE rates, utilization and terminal volumes to moderate from second-quarter records. Chief Commercial Officer Oeyvind Lindeman said the Clarksons 12-month time-charter assessment has declined to pre-Hormuz levels after rising during the second quarter, though he characterized those levels as still robust.

Management said the longer-term market outlook remains supported by growing U.S. natural gas liquids production, demand for reliable North American supply chains and a limited handysize vessel order book. Navigator said the order book represents 11% of the operating handysize fleet, while 17% of vessels are more than 25 years old.

About Navigator (NYSE:NVGS)

Navigator Holdings Ltd. is a global shipping company specializing in the seaborne transportation of liquefied gases. The company's fleet is purpose-built to carry a range of petrochemical gases, including liquefied petroleum gas (LPG), ethylene, propylene and ammonia. Navigator's vessels are designed to meet the stringent safety and environmental standards required for handling pressurized and refrigerated gases, offering flexible capacity to customers across the energy and chemical sectors.

Navigator operates one of the largest and most modern fleets of gas carriers in the industry, with vessels ranging from fully pressurized gas carriers to specialized very large ethane carriers (VLECs).

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