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Date

Wednesday, May 6, 2026 at 11:00 a.m. ET

Call participants

  • Chief Executive Officer — Mads Peter Zacho
  • Chief Financial Officer — Gary Chapman
  • Chief Commercial Officer — Oeyvind Lindeman
  • Executive Vice President, Investor Relations — Randall Giveans

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Takeaways

  • Net income -- $36 million, or $0.55 per share, representing the highest reported quarterly net income in the company's history.
  • Adjusted EBITDA -- $65.9 million, reflecting the impact of TCE revenue timing under U.S. GAAP accounting.
  • TCE rate -- $29,684 per day, down $963 sequentially from fiscal Q4, and $792 lower year over year, mainly due to revenue recognition timing on voyage charters.
  • Fleet utilization -- 90.6% for fiscal Q1, improving to 95% in April.
  • Liquidity -- $241 million excluding restricted cash at fiscal Q1 period end (March 31, 2026), flat versus year-end despite debt repayments, dividends, and a major share buyback.
  • Share repurchase -- 3.5 million shares bought and canceled from BW Group in March for $61.2 million at $17.50 per share.
  • Capital return policy -- Increasing to 35% of net income from fiscal Q2 forward, up from the prior 30% quarterly payout; fiscal Q1 distributions totaled 30% of net income.
  • Fiscal Q1 dividend -- Declared at $0.07 per share, totaling $4.3 million.
  • Ethylene terminal throughput -- 300,537 tons for fiscal Q1, up 57% sequentially and more than 2.5x year over year, driven by increased demand in Europe and Asia.
  • Vessel sales -- Three vessels sold in fiscal Q1 and April for combined proceeds above book value, generating a $15.2 million book gain to be recognized in fiscal Q2 for Navigator Pegasus.
  • Sale of Unigas vessels -- Letter of intent signed to sell 8 gas carriers for about $183 million, expected to deliver a $65 million book gain as deliveries occur through 2026.
  • Financing for newbuilds -- New term loan facility of up to $133.8 million secured for two vessels at 150 basis points margin; remaining newbuild financings expected by fiscal Q2 close.
  • Net debt to adjusted EBITDA -- 2.5x as of fiscal Q1 period end, consistent with recent levels.
  • Return on capital -- $10.6 million being returned to shareholders in fiscal Q2 through both dividends and buybacks; new $50 million share repurchase authorization approved.
  • Terminal spot revenue -- Profit contribution from the Morgan’s Point terminal reached $2.6 million in fiscal Q1.
  • Fleet renewal -- 17 vessel sales over four years generated $342 million gross and $288 million net after debt repayments, enabling upgrades and supporting capital return.
  • Interest rate hedging -- 56% of company debt is hedged or fixed; 44% remains variable and is actively monitored.
  • Operating cash flow yield -- Pre-CapEx yield stood at approximately 15% for the trailing twelve months.
  • All-in cash breakeven -- Estimated at $21,230 per vessel per day, significantly below both current and historical TCE rates.
  • Order book and fleet age -- Handysize order book equals 10% of the fleet, while 22% of vessels are over 20 years old, suggesting flat or negative net fleet growth.
  • Ethylene terminal contracting -- Three new offtake contracts signed in fiscal Q1 with additional advanced spot and term discussions ongoing.
  • Fiscal Q2 outlook -- Management expects both TCE rates and utilization to exceed fiscal Q1 levels, with the potential for record ethylene throughput volumes.

Summary

Navigator Holdings (NVGS +0.93%) reported record quarterly net income, citing a combination of asset sales at a premium, robust operational performance, and surging terminal throughput as primary contributors. The company completed a major share repurchase from BW Group, increased its capital return policy to a 35% net income payout beginning in fiscal Q2, and finalized the sale or announced the sale of aging vessels to support ongoing fleet renewal. Management emphasized that sustained demand shifts, price arbitrage, and supply chain disruptions—particularly linked to the closure of the Strait of Hormuz—are expected to drive utilization and rates above historical averages into the next quarter.

  • Nearly all available liquidity is unencumbered, and both vessel and terminal assets remain largely debt-free, offering future financial flexibility.
  • Interest rate exposure is balanced, with 56% of debt fixed or hedged; management keeps 44% variable component under continuous review in light of market changes.
  • The supply/demand picture is notably tight, with management highlighting only 10% of the handysize fleet as newbuilds versus 22% aged over twenty years, supporting flat or negative fleet growth.
  • Continued expansion in ethylene export contract coverage and throughput suggests that terminal earnings will remain a prominent driver.
  • “We believe it's the new normal, not just the situation in the Middle East, but the competitiveness of America, right? Yes, maybe the Strait of Hormuz reopen soon, but the U.S. cost competitiveness remains.”

Industry glossary

  • TCE (Time Charter Equivalent): Daily revenue metric for vessel employment, standardizing earnings across charter types.
  • Handysize: Classification of liquefied gas carriers typically between 15,000 and 25,000 cubic meters.
  • ARB (Arbitrage): The price differential between commodity markets in different regions, enabling profitable trade flows.
  • Flex train: Terminal infrastructure modification enabling throughput above standard design or nameplate capacity via additional pumping or cooling capacity.
  • Unigas pool: Commercial pool operation aggregating a subset of gas carriers for optimized deployment and market coverage.

Full Conference Call Transcript

Mads Zacho: Thank you, Randy. Good morning and good afternoon and thank you for joining this Navigator Gas earnings call for Q1 2026. Before I get into the highlights of the quarter, let me again address the Middle East. As of today, we have no vessels operating in or transiting the Hormuz Strait. And just to be clear, we have experienced no significant negative operational or financial impact from the conflict, only commercial tailwinds. We are watching the developments closely. And we will keep our crew and assets safe. Please turn to Slide #4. The first quarter of 2026 was a quarter of resilient trading, and a quarter of record net income for Navigator Gas.

And now in Q2, which is starting strong. In terms of our operations during Q1, TCE rates came in just below $30,000 per day, about $1,000 below Q4 and just below same period 2025. Utilization was slightly better than Q4 and within our guided range. Net income was $36 million or $0.55 per share and EBITDA was $80 million. All 3 are strong numbers. The balance sheet remains strong. Total liquidity less restricted cash was $241 million at quarter end. This is essentially flat versus year-end even after paying down debt and returning capital to shareholders and completing a significant share repurchase.

On that note, in March, we repurchased and canceled 3.5 million shares from BW Group at $17.50 per share for a total of $61.2 million. This is a substantial transaction. And it reflects our strong conviction of the value in our company. We're also improving our capital return policy. From Q2 onwards, our policy will be to return 35% of net income each quarter, up from the 30%. The Board has declared a fixed dividend of $0.07 per share for Q1. And we expect to add $6.3 million worth of buybacks to bring the total to 30% of Q1 net income. Now, to what I consider the real highlight of the quarter.

Our ethylene export terminal at Morgans Point delivered record throughput at over 300,000 tons. This is up 57% from Q4 and more than 2.5x up compared to the volumes from Q1 of last year. Both European and Asian demand for U.S. ethylene is growing. European crackers are undergoing restructuring and Asian producers are switching away from naphtha-based production given the elevated oil prices. Three new offtake contracts for the Morgans Point terminal were signed in the quarter and more are expected shortly. On vessel sales, in January, we sold the Navigator Saturn and the Happy Falcon, at attractive prices and generating substantial book gains as we communicated last quarter.

In April, we also sold the Navigator Pegasus, for approximately $31 million, generating a book gain of about $15 million. As I've said a couple of times before, I view these asset sales as recurring income stream. We have been able to consistently sell well above book and at or above market estimates. The proceeds fund capital return and our fleet renewal ambitions. And then, there's the Unigas news. In April, we signed a letter of intent to sell our 8 gas carriers in the Unigas pool for an aggregate price of approximately $183 million. This is a significant strategic step. And I'd be pleased to discuss any of this in more detail during the Q&A.

On newbuilds, financing is in place for the first 2 of the 6 vessels that we've ordered at an attractive margin of 150 basis points, equal to the best ever. Expect more good news on our newbuilding financings to come in shortly. Looking at the Middle East, the commercial angle, only 3% of global handysize volumes load in the Persian Gulf. These exports have been disrupted, but that creates demand for substitute product, U.S. ethane-based ethylene over Middle East and naphtha-based production and longer ton miles on ammonia. We also expect to see more LPG volumes from Venezuela that will come into the regular fleet. The supply side remains in our favor.

The handysize order book is only 10% of the fleet, while 22% of the fleet is more than 20 years of age. Net fleet growth is likely to be flat or even negative. And then on to the outlook for Q2. This is where it gets exciting. Both TCE and utilization are expected to be above Q1 levels. April has already set some monthly Navigator records. Ethylene export volumes are also expected to set a new record in Q2. But I'll leave it to Gary to talk a little bit more about the financial details. So over to you, Gary.

Gary Chapman: Thank you very much, Mads. Hello, everyone. As we entered 2026, we saw a slightly softer start to the quarter than we would have liked, but we ended with a resilient outcome overall for the quarter. And by the time we reached the end of March, supported by the strength and diversification of our platform. This was, of course, against the backdrop of ongoing geopolitical uncertainty, including continued disruption and risk across key global shipping corridors, which influenced and continues to influence trading patterns. However, many of these influences have turned into a positive tailwind for Navigator as we entered the second quarter and Oeyvind will talk more about this later.

Turning back specifically to the first quarter on Slide 6. We're reporting an average TCE of $29,684 for this first quarter of 2026 compared to $30,647 in the fourth quarter of 2025 and $30,476 in the first quarter of last year. The slight softness in TCE this quarter arises principally from quarter end revenue recognition under U.S. GAAP due to having more vessels on voyage charters at the end of this first quarter compared to the end of the fourth quarter of 2025 or at the end of the first quarter of last year. And considering loading dates, revenue from a number of these vessels being recognized in the second quarter as a result.

Utilization was above our benchmark at 90.6% for the quarter and was above 95% for April 2026. EBITDA for the quarter was $80.3 million, benefiting from strong terminal performance and fleet renewal gains on vessel disposals and adjusted EBITDA was $65.9 million, lower mainly due to the factors around TCE revenue recognition mentioned just now. Vessel operating expenses were down compared to the first quarter of 2025 at $45.8 million, but very slightly below in dollar per vessel per day terms due to timing of vessel sales, and there's more guidance for 2026 on Slide 9.

Depreciation was slightly down compared to previous quarters, due to our now slightly reduced fleet size, and due to our remaining older vessel, Navigator Pluto, that reached the end of her 25-year accounting life during the fourth quarter last year and hence, is no longer depreciated. General and admin costs are higher in this quarter, primarily due to one-off project-related activities and associated legal and professional fees, which are not expected to recur at the same level. Randy will discuss more about our ethylene terminal.

But as Mads mentioned, throughput volumes for the first quarter were a record high of 300,537 tons, up compared to 191,707 tons in the fourth quarter of 2025 and up from 85,553 tons in the first quarter of 2025, resulting in a profit to Navigator from our Morgan's Point terminal in this first quarter of $2.6 million. Our income tax line reflects movements in current tax and mainly deferred tax in relation to our equity investment in the ethylene export terminal. Net income attributable to stockholders for the first quarter of 2025 was $35.5 million or $0.55 per share, as Mads mentioned, and is the highest Navigator has ever reported.

And in the quarter, we completed the sale of 2 vessels recording a gain of $12.1 million and completed the $61.2 million share buyback as part of the secondary offering from BW Group. The EPS figure also represents a significant increase versus both the prior quarter and the same quarter in the prior year. We continue to actively use, strengthen and build our already strong balance sheet, as shown on Slide 7. Our cash, cash equivalents and restricted cash balance was $199.6 million at March 31, 2026, and including our available but then undrawn revolving credit facilities of $91 million gave total liquidity of $291 million at the same date.

Taking out restricted cash leaves a total available liquidity of $241 million. This strong liquidity position is despite paying out $29 million for scheduled loan repayments, $5 million under our capital return policy in respect of the fourth quarter of 2025 and over $61 million for the 3.5 million shares repurchased and then canceled as part of the secondary offering from BW Group. Our ethylene export terminal is currently unencumbered. And we also owned 9 unencumbered vessels at March 31, which gives us significant additional available leverage to tap when and as needed. Alongside this, we have paid from our own cash a total of $110 million as at March 31, 2026, towards the 6 vessels we have under construction.

The difference of this figure to our balance sheet figure represents capitalized interest under U.S. GAAP. A significant part of these construction payments will be recouped as we fix financings for our newbuild vessels. And together with a still growing operational cash flow, this all helps to demonstrate our financial stability and strength. And to bring you up to date, we had around $310 million of available liquidity or $360 million, including restricted cash at the close of business on May 4, 2026. We continue to maintain a conservative and well-managed capital structure.

And on Slide 8, across the quarter, where with a very supportive banking group and a strong underlying business, we were able to return capital to shareholders, raised funds for the construction of our newbuilds, reward our shareholders through buybacks and continue working on managing our debt and financing needs. We successfully entered into a new secured term loan, signing a 5-year post-delivery facility for up to $133.8 million, which will be used to finance up to 65% of the delivery and also predelivery installments for the construction of 2 of our new ethylene Panda newbuild vessels.

As of March 31, we have partially drawn down $26.8 million of this facility to recoup some of our cash already paid out for these vessels. This transaction was executed at a very low margin of 150 basis points plus SOFR. And we would very much like to thank our banking group for supporting Navigator on this transaction. We believe the deal and the very keen pricing not only reflects the banking market today, but also the strong and stable credit position of the company. We expect financing for the remaining 2 of our 4 Panda vessels to be completed in May 2026 and financing for our 2 Coral ammonia vessels to be completed in June 2026.

This would result in all 6 of our newbuild vessels being financed by the end of the second quarter this year. Then in terms of debt repayments, in addition to scheduled repayments of $29.3 million in this first quarter, we have only 2 relatively small debt balloons due before 2028, with payments due in 2026 of $54 million in total. And we expect to pay down an average of $128 million of annual scheduled pro forma debt amortization per year across 2025 through 2028. Net debt to last 12 months adjusted EBITDA stood at 2.5x at March 31, materially consistent with prior periods and remains at a level where we believe is comfortable for the business.

Our loan-to-fleet value ratio was approximately 32% or below 30% when including a reasonable value for our Morgan's Point, terminal investment. Then finally, as at March 31, 2026, 56% of the company's debt was either hedged or was on a fixed interest rate basis with 44% open to interest rate variability. And this is another key metric that we keep under close review, particularly in today's economic environment. Hopefully, that you can see we continue to prioritize returning capital to shareholders, while maintaining balance sheet strength. And we'll continue to balance growth, deleveraging and shareholder returns in a disciplined and careful manner.

On Slide 9, this slide highlights 2 of the core strengths of our Navigator platform, our ability to generate consistent operating cash flow and our structurally lower all-in cash breakeven. Starting with cash flow. Over the last 12 months to March 31, 2026, the business has continued to generate strong underlying operating cash flows with a pre-CapEx cash flow yield averaging around 15%. Whilst post-CapEx free cash flow has seen some variability, this is largely a function of CapEx timing and investment in our newbuild program rather than any change in the underlying earnings capacity of the business. Operating cash flow generation itself has remained quite stable.

Our latest estimate for 2026 all-in cash breakeven shown below is $21,230 per vessel per day, which incorporates over $180 million of operating costs, $119 million of debt amortization and approximately $44 million of net interest expense. This level remains significantly below current and historic TCE levels, providing significant headroom for the business and should allow us to deliver positive EBITDA and cash generation even through more challenging market conditions. Our cost guidance for 2026 remains materially unchanged from that provided in the fourth quarter 2025 when adjusting for changes in fleet composition. And you can also see the expense guidance across vessel OpEx, G&A, depreciation and interest expense for both the second quarter and the full year.

As noted, this guidance includes our 8 Unigas vessels. And of course, should the sale of those vessels complete, there would be a corresponding reduction in certain of those cost lines, particularly OpEx and depreciation, reflecting what would then be a smaller fleet. Slide 10 outlines our historic quarterly adjusted EBITDA, adding this first quarter's results. We now have 13 quarters in a row since the beginning of 2023 of reporting at least $60 million of quarterly adjusted EBITDA at an average of $71 million over that period.

On the right-hand side, as we've highlighted previously, our earnings remain sensitive to TCE movements with approximately $17 million to $18 million of annual EBITDA uplift for every $1,000 increase in TCE rates, all other things being equal. As for previous quarters, an update on our vessel drydock schedule, projected costs and time taken can be found in the appendix, Slide 30, should that detail be of interest. So then overall, Q1 started a little more slowly than we would have liked, but accelerated well as we moved into March. And the resilience of our results and the flexibility of our fleet have again been shown with another very solid set of numbers and record net income.

And with market tailwinds translating into improving second quarter conditions, we can look forward with confidence and from a position of strength. So with that, I hand you over to Oeyvind to provide some more details on Q1, but also on what we're seeing as we move forward. Oeyvind?

Oeyvind Lindeman: Thank you very much, Gary, and good morning, everyone. Let me start with one of the big topics, the Strait of Hormuz on Page 12. The Strait has essentially been closed for over 2 months now. Since the 28th of February, we've seen commodity prices across the board, LNG, LPG, petrochemical gases and of course, oil moved sharply higher. And that makes sense because the Strait of Hormuz carries roughly 20% of the world's energy supply. When that gets turned down, prices goes up. Now there's still some traffic moving through, but it's a trickle. And most of what's moving are what we call shadow fleet vessels, ships that are sanctioned in one country or another.

Many of them switch off their tracking equipment, so it's genuinely difficult to know exactly what is passing through. What we can say with confidence is that LPG flows have fallen from around 1 million metric tons per week down to about 1/5 of that. The vessels still moving these cargoes are largely Iranian flagged or ships that have specific permission from the Iranian government to discharge into places like India. For Navigator directly, our exposure is limited. As Mads mentioned, we do not have any vessels inside. And we do not have any vessels waiting to enter. Our last vessels actually loading LPG from Iraq passed through the Strait exactly on the 28th of February.

So we got out just in time. But the indirect impact on our business has been very meaningful and very positive. With traditional supply chains disrupted, buyers around the world started looking hard at North America as an alternative to Middle East supply. And that shift in behavior has created a strong tailwind for us and I want to walk you through what that looks like. Turning to Page 13, which covers fleet utilization and our ethylene terminal. I'm pleased to say that our first quarter utilization came in about 90%. And April has continued building on this strength, reaching 95%. What happened is that when the Strait first closed, the market was a bit caught off guard.

No one knew, if this was going to last a week or a month or longer. But once it became clear that this wasn't going away quickly, our customers moved decisively to lock in stable supply from North America and that drove our utilization higher as we moved into April. That same urgency showed up at our joint venture ethylene export terminal. From March onwards, the volumes have been at record levels, not just above normal capacity, but above the expanded nameplate capacity as well. That means the flex feature we built into the terminal is actively adding value today. More volume means more ship movements, which feeds directly into higher utilization and stronger rates.

These things go hand-in-hand, and I'll come back to spot rates in a moment. Now, Page 14 gives you a really clear picture of the competitive position North America finds itself in right now. The chart on the left tracks the price of U.S. ethane and U.S. ethylene compared to international markets. And here is what's remarkable with every other energy commodity has been impacted by what's happening at the Strait of Hormuz. U.S. ethane, however, that price have barely moved. [ Technical Difficulty ]

Mads Zacho: I think we will need to just hold off a second while Oeyvind is getting back on. And if he's not back in half a minute, then, we will take over and continue on his behalf.

Randall Giveans: I'll keep going while we wait for him. So the chart on the left tracks the price of U.S. ethane, U.S. ethylene versus the international markets. And really, the more remarkable thing is while every other energy commodity was squeezed by what's happening at the Strait of Hormuz, U.S. ethane prices, as Oeyvind was saying, has really barely moved. So this is an extraordinary situation. So think about it from a producer's perspective. If you can buy ethane in the U.S. for under $200 per ton, cracking into ethylene versus dealing with oil at $100, $110 a barrel, there's really no contest.

Now North America is, by a long way, the cheapest place in the world to make ethylene right now. And the gap to Asian naphtha producers is enormous. It's about $1,800 per metric ton in terms of a U.S. advantage. And the arbitrage, really the price difference between U.S. ethylene and markets in Europe and Asia, it's at an all-time high, a $900 per metric ton gap to Europe means much higher revenues for us as a shipowner and higher revenues for us as a terminal owner, which I'll get to in a minute. So you might ask, is this really a short-term bump or something more lasting?

We believe it's the new normal, not just the situation in the Middle East, but the competitiveness of America, right? Yes, maybe the Strait of Hormuz reopen soon, but the U.S. cost competitiveness remains. Now on Page 15, we'll explain why. So the 3 major U.S. shale gas basins, they're all producing gas that is getting richer and richer over time, right? The crude depletion curve is much steeper than that of gas. So the gas streams are what we call wetter, right, meaning they contain more NGLs, which means more LPG and more ethane. That's really the raw material that underpins everything that Oeyvind and us have been talking about.

So for the global handysize fleet, North America has really become the center of gravity. Around 45% of all of our handysize cargo is linked here to North America. Now 4x what it was back in 2017. So this is clearly a structural shift, not just a cyclical change. Turning to the supply side on Page 16. Picture really hasn't changed much since our last update. We're looking at around 10% of our order book in terms of potential fleet growth over the next 3 years. Conversely, 22% of the existing fleet is already over 20 years of age. So it's a pretty healthy setup from a supply standpoint. So what does this all mean for freight rates?

Looking at the next slide, ethane and ethylene capable vessels are earning record daily numbers right now in the range of $45,000 to $750,000 that is not a typo, $1,000 per day for some spot voyage charters. Now to understand really what you're looking at, we want to explain something important. So this green line you see on chart, it's the 12-month assessment. So this is not the spot rates, right? In other words, what it would cost to hire one of our ships for a 1-year contract today. That number is assessed by third-party brokers to be around $33,000 a day. Now, that line is almost theoretical because the time charter market has really gone quiet.

Customers don't want to really lock in rates at these very elevated levels at this time of uncertainty. And ship owners like us have really little incentives to tie up our vessels for a year long when the spot market is offering such strong elevated levels. So if you're trying to understand the real earnings power of the ships right now, look past the green line and focus on those spot fixtures. That's where the real premiums are. Now clearly, not all of our vessels are able to capture those spot rates. Some are committed to time charters. Some, frankly, aren't even capable of carrying ethane and ethylene on our semi-raps, on our fully raps.

So Page 18 gives you a breakdown of our 2026 time charter coverage profile, again, with most of them being on time charters. Now our semi-ref vessels, they're around half and half. But the ethane and ethylene capable ships, those are the ones that are predominantly in the spot market earning those premium rates. So those are the ones capturing the upside right now. So bringing it all together, the gap between North American commodity prices and the rest of the world has widened dramatically. Buyers are chasing U.S. supply. Demand for ethane and ethylene shipping is strong. Our terminal is running at record volumes. Utilization is up.

Rates are up and the underlying competitiveness of North American supply, driven by that shale gas that just keeps getting richer means it isn't going away. So April shaping up to be a record month. May is looking very strong as well. So with that, I'll turn it over to myself to find out what else is happening at Navigator Gas. So with that, we've made several announcements in recent months. We want to provide some additional details and updates on these recent developments. So starting on Slide 20. We've been saying how attractive we valued our shares are. And we've been putting our money where our mouth has been, right?

In March, we repurchased and canceled 3.5 million shares of NVGS directly from BW for $61 million or $17.50 per share. Now a few things to note. This transaction was done at a discount to the prevailing market price at the time. It removed some of the overhang. It had no negative impact on our free float and has further increased our earnings per share and NAV per share. So importantly, our recent buybacks really answer 3 key questions. Do we have a strong balance sheet and ample liquidity? As Gary said, yes. Is the earnings outlook attractive? As Oeyvind said, yes. Is the share price undervalued? As Mads has been saying, yes.

So for a quick recap, you can see on the bottom left chart, we had about 56 million shares outstanding for many years up until the merger with Ultragas in 2021, in which we issued 21 million shares in exchange for those 18 vessels. So since peaking at around 77 million shares outstanding in December 2022 and including the capital return here in March, we just continued to reduce this number. We've repurchased and canceled 16 million shares, totaling $236 million for an average price of around $15 per share. Additionally, we paid $41 million of cash dividends for a total of $277 million of capital return to shareholders over just the past 3.5 years.

So this equates to around $4 a share, greater than 26% return during that time. Now as seen over the past few years, and you'll hear about it here in a minute. We want to reiterate that returning capital to shareholders will remain a priority for us going forward. Now looking at Slide 21, we recently celebrated the 5-year anniversary of the Navigator Gas Ultragas merger, a match made in handysize heading. So I want to show you 3 graphs that cover the past half decade. Now starting on the left, our share price has more than doubled from $11 to about $22.

And thus far this year, we're up around 30%, but still trading at a 25% discount to NAV, which we do not think is warranted based on the positive outlook for our shipping business, terminal throughput, our strong balance sheet and our steadily climbing earnings. Now, focusing on the center chart, our ownership structure has had quite the transition during this time. Our shares are now 55% in free float that's publicly traded. Ultranav owns 34% and BW is down to 11%. Looking at the table on the right, this increased free float, coupled with many new shareholders coming aboard has led to much higher daily trading liquidity, right?

We're currently averaging more than 7 million per day and that's year-to-date. Some days, we're doing 10 million, 15 million as you see there on the table. So that covers the past. But now let's look to Slide 22. Looking ahead. Our capital return policy, it includes a fixed quarterly cash dividend of $0.07 per share. And as part of that quarterly payout percentage of 30% of net income. So as a result, for the first quarter, we paid a $0.07 quarterly cash dividend totaling $4.3 million and repurchased over 50,000 additional common shares in the open market. And that totaled $1 million for an average price of around $19.34 per share.

Looking ahead, we are announcing that we're returning 30% of net income, a total of $10.6 million to shareholders during the second quarter. The Board has declared a cash dividend of $0.07 per share payable on June 10 to all shareholders of record as of May 20, equating to a quarterly cash dividend payment of $4.3 million. And additionally, with our shares still trading below our NAV of more than $30 a share, we'll use the variable portion of the return of capital policy for share buybacks.

As such, we plan to repurchase $6.3 million of our shares between now and the quarter end, so that the dividend and the share repurchases together equal 30% of net income, $10.6 million this quarter. But wait, there's more. Now starting next quarter, we'll be increasing our capital return policy to 35%, more than 1/3 of our net income. Now to fund this incremental capital return policy, the Board has also approved a new $50 million share repurchase plan authorization. So based on our current expectation of improved earnings in 2Q '26, coupled with a higher payout percentage. We expect to announce even more than $10.6 million of return to shareholders under our quarterly capital return policy next quarter.

Stay tuned. Now turning to our ethylene export terminal on Slide 23. All of us touched on it earlier because it's pretty exciting news here. But ethylene throughput volumes rebounded to a record high of 300,000 tons during the first quarter. And that was including a monthly record high of 150,000 tons in March. And this was despite the domestic ethylene prices ticking up, but multiple European crackers underwing turnarounds and both European and Asian demand for U.S. ethylene also increased due to that recent surge in oil-based naphtha prices that Oeyvind was discussing earlier.

Now, to even better news, as you'll see in the bottom of the chart, that strong demand for U.S.-sourced ethylene has continued into the second quarter, leading to another record high monthly throughput in April of around 151,000 tons. And we expect a third consecutive record high month in May with around 160,000 tons currently scheduled. To note, this is above the nameplate capacity of 130,000 tons per month. That's really proving the upside of the flex train that we've alluded to in recent quarters. So as such, we expect to report another record quarter of throughput on our next earnings call for the second quarter.

Now, looking at the bottom right chart, despite that near-term increase in U.S. ethylene prices, the ARB remains wide open, and that's driven by the much higher international ethylene prices. So that's led to numerous new spot customers buying cargoes from the terminal. And longer term, the forward curve remains very stable at around $0.25 per pound throughout 2027. So and when it comes to contracting the expansion volumes, we recently signed 3 new offtake contracts for various quantities and durations. And the robust demand has resulted in multiple customers now in advanced discussions for take-or-pay contracts commencing in the coming months.

So as such, we expect that additional offtake capacity will be contracted soon as new customers continue to request updated terms for the terminal and for shipping. So in the meantime, we'll continue to sell those volumes on a spot basis at very attractive rates. Now, finishing with our fleet and the fleet renewal on Slide 24. We're continuing to rightsize our fleet by selling our older vessels and our noncore assets. So on the same day in January, we sold both the Navigator Saturn and the Navigator Falcon. And then in April, we sold the Navigator Pegasus, a 2009-built 22,000 cubic meter semi-refrigerated gas carrier for $30.5 million.

And that's netting a book gain of $15.2 million, which will be booked in our second quarter 2026 results. Furthermore, as Mads was mentioning, we announced the upcoming sale of 8 Unigas vessels for $183 million. We'll repay around $54 million of associated debt so that the net cash proceeds will be around $129 million. Now these 8 vessels will also result in a book gain of about $65 million, which we will book upon vessel deliveries throughout the second, third and maybe into the fourth quarter of this year. So looking at all 17 of our vessel sales over the last 4 years and including those Unigas vessels, the total proceeds are expected to be $342 million.

And after all the associated debt repayments, total net cash proceeds of $288 million, which we'll be sure to use prudently. Now, our current fleet consists of 54 vessels with an average fleet age of 12.3 years, average fleet size of 21,000 cubic meters. Now excluding the Unigas vessels, our fleet would be a little younger on average at 12.2 years and a little larger on average of close to 23,000 cubic meters. So we continue to upgrade our vessels with some various energy savings technology. You can see that on Slide 30. And we continue to roll out new artificial intelligence AI programs to make our fleet even more efficient.

So with all that, I'll now turn it back to Mads for some closing remarks.

Mads Zacho: Good. Thank you, Randy. And it's great that you illustrate we have good redundancy, not only in our vessel operations and our financing structures, but also in our investor presentation. So that's great. The first quarter of 2026 was a quarter of resilient cash generation, continued structural tailwinds and once more a demonstration of our disciplined capital allocation. It was also a quarter where we delivered the strongest quarterly net income in the history of Navigator Gas. The strong net results include both tailwinds from vessel sales, but also some headwinds.

Importantly, some of those headwinds that Gary just reviewed with us, they will translate into tailwind in Q2, which is a quarter that has already taken off to a good start. Our resilient earnings and strong cash generation are underpinned by the structural advantaged U.S. exports, particularly the low-cost ethane and a tightening supply fundamental. These effects will outlast the more cyclical effects that we are seeing from the war in the Persian Gulf. With record terminal throughput anticipated and improving fleet utilization and TCE and supportive macro dynamics into Q2 of 2026. We enter the remainder of the year from a position of strength and we are well positioned to sustain this momentum.

A strong balance sheet and clear capital return policy continues to drive attractive shareholder returns. So with that, I'll round it off. Thank you for listening. And back to you, Randy, to open the Q&A.

Randall Giveans: Thanks so much, Mads, and great to see Oeyvind. It looks like he's back. We missed his calm and strong Norwegian voice. Operator, we'll now open the lines for some Q&A. [Operator Instructions]

Spiro Dounis: Spiro here from Citi. I want to start with the Middle East. Obviously, a very fluid situation, seeing some of that play out today. But you did note the disruption has been a net positive for you commercially. And so to the extent you do see a return to normal, however you defined it. It doesn't sound like you guys are expecting business to go back as usual. So curious to get your thoughts on maybe the durability of some of these tailwinds to last longer. Oeyvind, you talked about renewed interest in U.S. cargoes. So I kind of wanted to get a glimpse of maybe what you're hearing from customers? How those conversations are going?

And when do you think this starts to convert maybe into longer term commercial success for you guys?

Oeyvind Lindeman: I think the most important feature, what is happening now is what we mentioned at the boardrooms around the world when they're looking at the supply chains. They're looking for reliability. And what the issue in the Middle East have shown is that it is not reliable. So when you're running your multibillion-dollar production system crackers and so forth, you can't rely on that anymore. So that has highlighted that issue. And that is hurting many of those customers to the U.S. talking about ethane and ethylene. So I think that is a lasting change in the supply chain strategies around the different companies or customers.

In short term, in terms of freight and so forth, et cetera, I think this is going to be if the Strait opens, there's going to be a long lag on the prices and to settle and so forth, et cetera. So I think long term, it's a structural shift. Short term, I think we'll see a strong market continue for the foreseeable future until things are settled. But when that happens, it may takes time.

Spiro Dounis: Understood. That's great color. Second one, maybe just going to capital redeployment here. Liquidity getting pretty healthy, looks strong at these levels following these vessel sales. And just wondering if you guys provide a little more color on how you're thinking about redeploying that capital. Maybe where the best value is, if there's any obvious holes in your portfolio? And if some of that capital can maybe find its way to infrastructure development.

Mads Zacho: Yes. There's still a continuation of the strategy we have communicated in previous occasions that we still see some opportunity for consolidating the markets that we are in. That goes for both the handysize market and also the midsized market that we're looking at. The midsized market is a little bit more fragmented and there may be more opportunities. And here, we just need to find the right deals at the right price at the right time. But we clearly see that there are opportunities for consolidation here. We also see opportunities in infrastructure. And that can be both export infrastructure out of North America and it can be import infrastructure into Europe.

We have a pretty active business development portfolio. The infrastructure projects will tend to take a little bit longer before they materialize. Whereas you could say the secondhand consolidation on vessels could maybe happen a little bit faster. But we still -- we are a company that want to grow over time, nothing wild, but just gradually, as you've seen in the past, quite predictable in how we look at it. And that leaves also ample cash on hand to deploy both into repayment of debt and at the same time, in particular, capital return to shareholders.

So it's a little bit the same story that you heard before that we think we can do all of the things at the same time, growing gradually, but also deploying gradually more cash over time to shareholders.

Christopher Robertson: This is Chris Robertson at Deutsche Bank. Just wanted to start with the terminal. I think you're currently around 23% over nameplate capacity at these levels, around 160,000 tons for April. How confident are you in maintaining throughput at that level sustainably, I guess, across the year without periods of increased maintenance due to the increased throughput? Are there any technical or physical limitations that you could continue to optimize further on here? And is there any low-hanging fruit in terms of some minimal CapEx investment to continue to improve the total capacity number?

Randall Giveans: Yes. I'll start there. A few questions. I was actually up there on Monday at the terminal. So back in February, you saw that dip. We did 60,000-ish tons. And during that time, we did some maintenance, did a few little capital improvements, added an additional pump, and that really bode well for us. Obviously, in the last few months, you're seeing us operating above nameplate capacity. Now this is our partner, the operating partner, enterprise products, more than Navigator turning screws. But all that being said, we can operate above nameplate for an extended period, not at the 160,000 ton level probably for multiple months.

Once we get into the summer, June, July, especially August, you're here in Houston, you know very well, when the temps are over 100 degrees Fahrenheit, it's a lot harder to chill this commodity down to negative 104 Celsius, right? So there are some technical difficulties to keep going at these levels. On the commercial standpoint, right, the flex train does ethane and ethylene. So there's a balance there. So we have a contractual agreement that we're buying 1/4 of the capacity. There's upside above and beyond that when it's not being used for ethane. So it's hard to really say, yes, every month we'll be at x level.

We have the kind of the throughput that we expect and hope 130,000 tons a month. But it would be hard to get above that continuously in the short term. Now, longer term, when some of those contracts roll over to the Neches River ethane export facility that Enterprise has, there will be some opportunities for that. But for the time being, yes, I think the 130,000 tons, 140,000 tons, 150,000 tons is a great level, probably not going to stay at those levels perpetually. But we're hoping for some strong throughput here in the second quarter and beyond.

Christopher Robertson: Got it. Fair. This is a follow-up question. Just as it relates to the ethylene pricing we're seeing in both Europe and Asia have moved up. Obviously, Europe is still at an advantage here, but less so, let's say, from a ton-mile perspective as Asia is a further distance away. So as it relates to ethylene, are you guys still doing 100% of the cargoes to Europe? Is there any Asian buyers on that? Or is that more on the ethane side?

Randall Giveans: Oeyvind, welcome.

Oeyvind Lindeman: The ARB to Europe is the widest. So logically, most of the volumes will go there, because that's the -- those are the guys who pays the most for the product, which means that there's scope -- more scope for the terminal, which we're part owner and for the freight side to extract more additional value. So most of the ethylene is currently heading to Europe for those reasons. Some are starting to go to Asia as well. We believe that the Asian producers, the naphtha producers and so forth had quite large storage available in oil. Now those are dwindling and therefore, appetite for ethylene to Asia is coming on the scene.

Ethane, however, have been flowing to both locations simultaneously.

Climent Molins: Climent Molins from Value Investor's Edge. My first one, I think, is going to be for Gary. Considering that if the sale of the Unigas vessels goes forward, it will include the pool, will any working capital be included? Would the $183 million transaction price be adjusted for that? Or is it already accounted for?

Mads Zacho: You're muted, Gary.

Gary Chapman: Climent, yes, good question. The price that we've quoted for the vessels, there's a small administrative pool that we own 1/3 of. And there's a small couple of millions attached to the value of that pool entity. But the vast majority of the value here is on the vessels. I can go into a lot more detail should you want me to, but that's the crux of the answer, I think.

Climent Molins: Yes, makes sense. And I also had a question regarding the ethylene export terminal. You may not be able to provide exact commentary, but pro forma for the addition of the 3 contracts you mentioned year-to-date. What percentage of the 1.55 MTPA are currently fully fixed?

Randall Giveans: Yes. We won't go into the exact percentages. But the vast majority, we're still in some offtake discussions with additional customers. So we'll just leave it at that. Thank you. All right. It looks like that's all the questions we have. Mads, final thoughts.

Mads Zacho: No, good. Thanks a lot. Thanks a lot for listening in. As you can see, we had a quite resilient first quarter. And it seems like the Q2 is going to be a pretty exciting one. And we definitely look forward to meeting same place, same time in about a quarter and just reviewing with you the Q2 results. So thanks a lot for all the good questions from the analysts and thanks for listening in. So have a fantastic day and evening, and see you next time.

Randall Giveans: Thank you.