Avance Gas Holding Ltd. · OTC:AVACF
Avance Gas — Q2 2023 Earnings Presentation
26 slides from Avance Gas's earnings presentation, Aug 30, 2023
Slide 1: Second Quarter Results 2023
Second Quarter Results 2023 August 30, 2023
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward looking-statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “anticipate”, “believe”, “continue”, “estimate”, “expect”, “intends”, “may”, “should”, “will”, and similar
Slide 3: Q2-23 Highlights
Q2-23 HIGHLIGHTS Q2-23 TCE (load-to-discharge) of $52,000/day ahead of guidance ~$50,000/day RESULTS Q2-23 TCE (discharge-to-discharge) of $50,800/day in line with guidance ~$50,000/day All-time high first half Net Profit of $72 million with both Q1 & Q2 Net Profits of $36 million per quarter We too
Slide 4: Continued Strong Commercial Performance
CONTINUED STRONG COMMERCIAL PERFORMANCE Q2-Commercial Performance Q3-Commercial Guidance Spot Rates: 41% Spot Rates: 34% $64,500/day $71,000/day Fleet TCE/day Q2-23: TC Rates: Fleet TCE/day Q3-23: TC Rates: $40,000/day $42,000/day $52,000 reported High $ 50s expected 1) $54,500 excl. FFA impact incl
Slide 5: Future Proofing the Avance Fleet
FUTURE PROOFING THE AVANCE FLEET Combined LPG and DF class MGCs 20 10 Dual-fuel vessels Vessels1 6 Ammonia Carriers Scrubber fitted Vessels ready for Avg. Age ~5.6 years 6 vessels 4 2 1 Ammonia Engine Polaris (2022) MGC #1 (2025) 2008/2009 class 2015 eco class Capella (2022) MGC #2 (2026) Venus Glor
Slide 6: Fleet Renewal for Dummies: 1 + 1 = 4
FLEET RENEWAL FOR DUMMIES: 1 + 1 = 4 $m 2 2008/2009 class Assuming an LTV of ~70% Venus Glory (2008) Iris Glory (2008) Sale of Iris Glory provides a cash release of $ 25m, if similar price for Venus Glory cash release will be MGCs $35m 4 MGC #1 (2025) MGC #3 (2026) MGC #2 (2026) MGC #4 (2026) 6
Slide 7: Expanding into an Attractive New Sub Segment
EXPANDING INTO AN ATTRACTIVE NEW SUB SEGMENT Acquiring four high spec MGCs at a very attractive price level with early delivery Attractive Vessels Increase exposure to ammonia trade Need for modern MGC tonnage ➢ Strong underlying fundamentals for LPG ➢ Current world MGC fleet is aging with ➢ 4x 40,0
Slide 8: Increasing Exposure Towards Attractive MGC Segment
INCREASING EXPOSURE TOWARDS ATTRACTIVE MGC SEGMENT 1 Underlying demand for MGC tonnage is solid 2 MGCs carry half of current ammonia volumes 3 Strong outlook for ammonia Seaborn LPG Export (jan – jul) by MGC vessels KT Seaborn Ammonia trade ▪ Increased use of ammonia in new KT 18,000 Estimates 60 ap
Slide 9: Aging MGC Fleet with Renewal Need
AGING MGC FLEET WITH RENEWAL NEED MGC fleet (# of vessels) 30 The current orderbook Current fleet of 135 vessels of 35 vessels, comprising 25 with an average age of 10+yrs of more fuel-efficient vessels, mostly with ~25% (or 34 vessels) of the current fleet dual fuel engines 20 will be above or clos
Slide 10: Ramping Up Dividend in Line with Increased Earnings
RAMPING UP DIVIDEND IN LINE WITH INCREASED EARNINGS Dividend distribution Dividend decision criteria's $ / Share Q1-23 Q2-23 0.60 1 Earnings and cashflow Strongest ever 1H profit of $72m $0.50 $0.50 $0.50 Q3-23 TCE/day bookings are in the high $50s and 0.50 2 Market outlook FFAs suggest solid levels
Slide 11: Income Statement and Key Financial Figures
INCOME STATEMENT AND KEY FINANCIAL FIGURES Income Statement (in million $) Q2 2023 Q1 2023 Variance ▪ TCE of $52,000/day for Q2, above guidance of $50,000/day. TCE Earnings maintained due to TCE earnings 63 62 0.2 more vessel days as we took delivery of Avance Avior Operating Profit before depreciat
Slide 12: Balance Sheet and Key Financial Figures
BALANCE SHEET AND KEY FINANCIAL FIGURES Balance Sheet (in million $) Q2 2023 Q1 2023 Variance ▪ Total assets consist primarily of 14 VLGCs on Cash & cash equivalents 192 219 (28) water as well as two dual fuel VLGC and two VLGCs & newbuildings under construction 907 850 56 MGC under construction. Tw
Slide 13: Solid Cash Position of $192M at Quarter-End
SOLID CASH POSITION OF $192M AT QUARTER-END $m Increase of $14 million and $9 million in CAPEX of $55 million and $58 accounts receivables and prepayments million in net proceeds from partly offset by increase in trade and other loan payable by $5 million Pre-delivery instalment of $8 million for Av
Slide 14: Flexible Financing Structure & VLGC Newbuilds Fully Funded
FLEXIBLE FINANCING STRUCTURE & VLGC NEWBUILDS FULLY FUNDED Outstanding debt and committed financing Q2-2023 VLGC Newbuilding financing exceeds remaining capex (in million $) (in million $) Final Maturity 2033 $200 Cash release of ~$14 million $73 $180 on deliveries $ 135 First Maturity 2027 SLB $160
Slide 15: Strong Demand for Seaborne Transportation of LPG
STRONG DEMAND FOR SEABORNE TRANSPORTATION OF LPG Seaborne LPG export (Jan-Jul) Seaborne LPG Imports (Jan-Jul)2 VLGCs & MGC share1 KT KT 40,000 20,000 +38% YTD 2023 +17% 18,000 35,000 +28% 16,000 +16% 30,000 14,000 83% 25,000 +11% 12,000 20,000 10,000 VLGC MGC OTHER 8,000 15,000 YTD 2021 6,000 10,000
Slide 16: Constructive Fundamentals for the VLGC Market
CONSTRUCTIVE FUNDAMENTALS FOR THE VLGC MARKET Source: Fearnley, Baltic Exchange, Gibson, Braemar and Kpler Note: Baltic rates as of August 29th, 2023, TCE numbers from Gibson, import export figures as of end July 2023 16 (1) Panama northbound auction cost by Norton Lilly as of August 27, 2023
Slide 17: Strong Product Arbitrage Supporting Freight Rates
STRONG PRODUCT ARBITRAGE SUPPORTING FREIGHT RATES US Far East product arbitrage Strong correlation between arbitrage and freight rates 350 300 350 250 200 $/ton 150 300 100 50 250 0 Oct-22 Feb-23 Jun-23 Oct-23 Feb-24 Jun-24 Oct-24 200 $ / ton 125,000 100,000 150 75,000 TCE/day ($) 100 50,000 25,000
Slide 18: Panama Canal Has Become the Traffic Jam of the Seas
PANAMA CANAL HAS BECOME “THE TRAFFIC JAM OF THE SEAS” Waiting time Panamax: Neo-Panamax Auction price for spot Neo-Panamax slot Days 20 $2,500,000 $2.4m paid for one-way northbound transit on top of 18 regular toll fee of ~$0.4m 16 $2,000,000 US – China via Suez 14 14,500 NM 81 days RT 12 $1,500,000
Slide 19: Renewal of the VLGC Fleet Ahead of New Regulations
RENEWAL OF THE VLGC FLEET AHEAD OF NEW REGULATIONS # of Vessels Orderbook currently at 18.7% while 50 orderbook-to-fleet from 2024 is ~13.7% based on scheduled deliveries 45 40 9% of fleet is >25 years i.e. scrapping candidates 35 30 26 25 44 20 29 35 15 27 10 21 21 17 18 18 16 16 16 16 11 12 13 5 8
Slide 20: Q2-23 Highlights
Q2-23 HIGHLIGHTS Q2-23 TCE (load-to-discharge) of $52,000/day ahead of guidance ~$50,000/day RESULTS Q2-23 TCE (discharge-to-discharge) of $50,800/day in line with guidance ~$50,000/day All-time high first half Net Profit of $72 million with both Q1 & Q2 Net Profits of $36 million per quarter We too
Slide 21: Q&A and Appendix
Q&A and Appendix y
Slide 22: Appendix – Comments to the Income Statement
APPENDIX – COMMENTS TO THE INCOME STATEMENT Q2 2023 Q1 2023 Variance Income Statement (in thousands $) 3-months 3-months 3-months Operating revenue 84,575 77,042 7,533 • TCE earnings (net of operating revenue and voyage expenses) of $62.6 million for the second quarter, up from $62.3 million in prev
Slide 23: Appendix – Comments to the Balance Sheet
APPENDIX – COMMENTS TO THE BALANCE SHEET Q2 2023 Q1 2023 Variance Balance Sheet (in thousands $) 30.06.2023 31.03.2023 3-months ASSETS • Total assets consist primarily of cash and 14 VLGCs on water and 2 dual Cash and cash equivalents 191,619 219,469 (27,850) fuel newbuildings under construction. Th
Slide 24: Appendix – Comments to the Cash Flow
APPENDIX – COMMENTS TO THE CASH FLOW Q2 2023 Q1 2023 Cash flow statement (in thousands $) Variance 3-months 3-months Cash flows from operating activities: • Cash and cash equivalents were $191.6 million on 30 June 2023, Cash generated from operations 35,482 53,455 (17,973) compared to $ 219.5 millio
Slide 25: Glossary
GLOSSARY A&G = Administrative and general CBE = Cash break even CAPEX = Capital expenditure EEXI = Energy Efficiency Existing Ship Index EPS = Earnings Per Share FY = Fiscal year IFRS = International Financial Reporting Standards IMO = International Maritime Organisation LPG = Liquefied petroleum ga
Slide 26: Contact Details
Contact Details Avance Gas Bryggegata 3 0112 Oslo, Norway +47 23 11 40 00 www.avancegas.com Investor Relations https://www.avancegas.com/Investor-Relations Stock Exchange ticker: AGAS