Avance Gas Holding Ltd. · OTC:AVACF
Avance Gas — Q4 2022 Earnings Presentation
30 slides from Avance Gas's earnings presentation, Feb 28, 2023
Slide 1: Fourth Quarter Results 2022
Fourth Quarter Results 2022 February 28, 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: Q4-22 Highlights
Q4-22 HIGHLIGHTS Q4-22 TCE (load-to-discharge) of $46,500/day, in line with guidance of $45-50,000/day. RESULTS Q4-22 TCE (discharge-to-discharge) of $55,800/day, slightly ahead of guidance $50-55,000/day Q4-22 Net profit of $34.7 million (EPS of $0.45) and $89.0 million (EPS of $1.16) for FY 2022 S
Slide 4: High Exposure to a Strong Market
HIGH EXPOSURE TO A STRONG MARKET 2022 2023 2024 Vessel Built EGCS LPG NH3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Iris Glory 2008 Docking Feb ‘23 Venus Glory 2008 Docking May ‘23 Breeze 2015 v Chinook 2015 Levant 2015 v Mistral 2015 v Monsoon 2015 v Pampero 2015 Passat 2015 v Sirocco 2015 v Polaris 2022
Slide 5: We Are Committed to Maximizing Shareholder Value
WE ARE COMMITTED TO MAXIMIZING SHAREHOLDER VALUE 10x TCE improved to $46,500 on l2d basis and $55,800 d2d basis in Q4-22 We are able to replicate TCE (d2d) in Q1-23 and bookings in Q2-23 are so far good Three ships on fixed hire rate, three on variable hire and ~1 ship on FFA Cash position of $224m
Slide 6: Highlights from the Income Statement
HIGHLIGHTS FROM THE INCOME STATEMENT • TCE of $46,500/day for Q4 – within Income Statement (in million $) Q4 2022 Q3 2022 FY 2022 FY 2021 guidance of $45-$50,000/day TCE earnings 53 39 183 143 • Net profit of $34.7 million and $89.0 Operating Profit before depreciation 41 28 136 94 million for the t
Slide 7: Strong Balance Sheet
STRONG BALANCE SHEET $1.1 billion $1.1 billion Our assets consist of: 1 200 - 12 existing VLGCs on the water (we took delivery of Avance Rigel in February 2023) 1 000 224 - Pre-delivery newbuilding capital 800 452 expenditures for four dual fuel VLGCs of which two with delivery in 2023 and two $ MIL
Slide 8: All Time High Cash Position
ALL TIME HIGH CASH POSITION +$36M 8
Slide 9: Staggered Debt & No Unfunded Newbuilding Capex
STAGGERED DEBT & NO UNFUNDED NEWBUILDING CAPEX 300 300 250 241 250 250 242 200 USD ($ Millions) USD ($ Millions) 200 Delivery of Avance Avior + pre-delivery capex 150 150 Avance Castor Delivery of Delivery of Delivery of 100 Avance Rigel Avance Castor Avance Pollux 75 100 73 63 58 68 68 57 58 Pre-de
Slide 10: VLGC Trade Grew 10% in 2022
VLGC TRADE GREW 10% IN 2022 46% Growth 4% Growth 50 38% Growth 16% Growth 30 +10% despite zero 45 2 Covid policies 29% Growth 25 2,2 40 2,7 35 6 20 30 Mt Mt 25 15 0,2 43 20 23,1 0,6 +55% due to 32 10 energy crisis 20,9 15 0,1 13,8 3,0 10 0 5 10,1 5 7,9 6 5,5 0 0 Middle East North America Other China
Slide 11: Key Changes in Imports During 2022
KEY CHANGES IN IMPORTS DURING 2022 Source: Kpler 11
Slide 12: US Positioned to Boost Exports in 2023
US POSITIONED TO BOOST EXPORTS IN 2023 2,0 190 Propane 0,01 1,9 Butane 170 0,07 150 1,8 0,09 Barrels (million) 130 mbpd 1,7 110 0,16 1,93 1,85 90 1,6 70 1,5 1,60 50 30 1,4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2023 2024 10Y-range 2023 10Y-avg. 2023 Export change 2024 Export change Sou
Slide 13: Panama and Arbitrage Support Freight
PANAMA AND ARBITRAGE SUPPORT FREIGHT 35 140 000 250 120 000 30 200 100 000 25 150 # of vessels 80 000 $ / ton $/day 60 000 20 100 40 000 15 50 20 000 10 0 - Jan-19 Aug-19 Mar-20 Oct-20 May-21 Dec-21 Jul-22 Feb-23 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Panama congestion* (lhs)
Slide 14: Panama Scheduling Risk Drives Ton/Mile
PANAMA SCHEDULING RISK DRIVES TON/MILE US Gulf Coast China Suez Canal 10,500 NM 58 days RT 14,500 NM 81 days RT Panama price inflation $600 000 Panama “Casino” Laden Ballast $500 000 $400 000 $531 368 Cape of Good Hope $455 647 $451 663 $300 000 $387 300 $375 720 $319 362 $291 150 $233 000 $200 000
Slide 15: Strong Arbitrage Supporting Freight Market
STRONG ARBITRAGE SUPPORTING FREIGHT MARKET 650 250 Scrubber-vessels: 2023: ~$74,000/day 600 2024: ~$62,000/day 200 550 Non-scrubber: 500 2023: ~$67,000/day 150 2024: ~$56,000/day 450 $ / ton 400 Assuming full arbitrage is captured by 100 the shipowner which will depend on 350 supply/demand of ship v
Slide 16: Slow Speed Is Here to Stay with CII Implemented 2023
SLOW SPEED IS HERE TO STAY WITH CII IMPLEMENTED 2023 12,5 200 000 2021 average 12,0 190 000 2022 average 180 000 11,5 170 000 11,0 Ton-days knots 160 000 10,5 150 000 10,0 140 000 9,5 130 000 9,0 120 000 Jan'21 Apr'21 Jul'21 Oct'21 Jan'22 Apr'22 Jul'22 Oct'22 Jan'21 Apr'21 Jul'21 Oct'21 Jan'22 Apr'2
Slide 17: Slippage and Drydocking Reduce Fleet Availability
SLIPPAGE AND DRYDOCKING REDUCE FLEET AVAILABILITY 14 76 VLGCs are scheduled for maintenance over the course of 2023, which will reduce available capacity 12 30 10 25 8 # VLGCs Chinese yards 20 6 Other yards 15 4 10 2 5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1'23 Q2'23 Q3'23 Q4'23 2023 2024 2025 So
Slide 18: Five Reasons to Worry About VLGC Stocks
FIVE REASONS TO WORRY ABOUT VLGC STOCKS
Slide 19: 1. The Order Book Is Too Big
1. THE ORDER BOOK IS TOO BIG New regulations (EEXI and CII) reducing economic viability of 58 69 old VLGCs, making them prone to scrapping next few years. NBs Built 2018-23 97 87 Built 2015-17 Built 2004-14 Older than 2004 100 Source: Clarkson SIN 19
Slide 20: 2. LPG Is a Mature Market with Limited Growth
2. LPG IS A MATURE MARKET WITH LIMITED GROWTH CAGR Even during Covid, LPG market held firm Source: Clarkson SIN, Kpler 20
Slide 21: 3. VLGC Rates Are Very Volatile
3. VLGC RATES ARE VERY VOLATILE Capesizes have generated positive cash flows in 30% of months last 10 years VLCCs have generated positive cash flows in 46% of months last 10 years VLGCs have generated positive cash flows in 67% of months last 10 years, generating free cash of more than $81m. Source:
Slide 22: 4. Naphtha Can Easily Kill Economics
4. NAPHTHA CAN EASILY KILL ECONOMICS Costly propane could enable feedstock switching as operators of flexi-crackers — chemical production units that can switch between naphtha and propane as a feedstock — aim to maximize naphtha both in Europe and Asia. - Bloomberg The propane-naphtha discount consi
Slide 23: 5. It's Too Late to Buy the Stock
5. IT’S TOO LATE TO BUY THE STOCK Avance implied value of 5-year VLGC versus broker values Ships cheaper at the stock exchange than at yards or S&P market 2x 2008 VLGCs value each $50m in line with recent re-sales with 2009 ships fetching $50-60m 8x 2015 eco VLGCs each value $70 in line with 5yr bro
Slide 24: Q4-22 Highlights
Q4-22 HIGHLIGHTS Q4-22 TCE (load-to-discharge) of $46,500/day, in line with guidance of $45-50,000/day. RESULTS Q4-22 TCE (discharge-to-discharge) of $55,800/day, slightly ahead of guidance $50-55,000/day Q4-22 Net profit of $34.7 million (EPS of $0.45) and $89.0 million (EPS of $1.16) for FY 2022 S
Slide 25: Thank you! Q&A and Appendix
Thank you! Q&A and Appendix
Slide 26: Appendix – Financials Q4 2022
APPENDIX – FINANCIALS Q4 2022 In $ thousands (unless stated 3m ended 3m ended 12m ended 12m ended otherwise) Q4-2022 Q3-2022 Q4-2022 Q4-2021 COMMENTS Income Statement • TCE earnings of $53.5 million, compared to $39.1 million in the third Operating revenue 67 410 55 418 254 540 210 677 quarter Voyag
Slide 27: Appendix – Financials Q4 2022
APPENDIX – FINANCIALS Q4 2022 December 31, September 30 , In $ thousands (unless stated otherwise) 2022 2022 COMMENTS Balance sheet Cash and cash equivalents 224 243 188 222 • Total current assets of $262.5 million, up from $219.0 million in Q3. Trade and other receivables 12 229 12 610 Inventory 4
Slide 28: Appendix – Financials Q4 2022
APPENDIX – FINANCIALS Q4 2022 3m ended 3m ended 12m ended 12m ended Q4-2022 Q3-2022 Q4-2022 Q4-2021 COMMENTS Cash flow statement • Cash flow from operating activities was $35.9 million for the Cash flows from operating activities: fourth quarter, compared to $25.9 million in Q3 Cash generated from o
Slide 29: Glossary
GLOSSARY A&G = Administrative and general CBE = Cash break even CAPEX = Capital expenditure EEXI = Energy Efficiency Existing Ship Index FY = Fiscal year IFRS = International Financial Reporting Standards IMO = International Maritime Organisation LPG = Liquefied petroleum gas OPEX = Operating expens
Slide 30: Contact Details
Contact Details Avance Gas Bryggegata 3 0112 Oslo, Norway +47 22 11 40 00 www.avancegas.com Investor Relations https://www.avancegas.com/Investor-Relations Stock Exchange ticker: AGAS