First q quart rter 2018 er 2018 Oslo, 8 May 2018
Discla isclaim imer 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 expressions. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Avance Gas believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this presentation by such forward-looking statements. The information, opinions and forward-looking statements contained in this presentation speak only as at its date, and are subject to change without notice. 2
Co Comp mpany ny Agenda nda Rep epres esen entat atives Financ nancial als s Q1 2018 Q1 2018 1 Fleet U t Updat ate 2 Christi stian A an And nderse sen n – Pr Presi sident nt Mar arket U t Updat ate 3 Ped eder er S Sim imonsen en – Chief ief Fin inancia cial O Offic fficer er Summar mmary & Ou Outl tlook 4 3 3
Financials Q1 2018 1 Key financial highlights Resta tate ted* Th Three m mon onths s Three m Th mon onths s In U US$ $ thou ousa sands s (unless s ended end ed end ended ed stated o othe herwise) In Income statem ement ent:* 31 March 2018 31 M 2018 31 31 December 2017 2017 • TCE rate of $12,636/day, up by $1,500/day TCE earnings* 14,461 14,000 TCE per day ($) 12,637 11,164 Operating profit (loss) before depreciation expense 3,971 2,861 • Low OPEX and G&A maintained Net loss (12,314) (13,622) Net loss per share (diluted) ($) (0.19) (0.21) • Monsoon accrual of $0.7 million reversed Bal alan ance ce sheet eet:* 31 M 31 March 2018 2018 31 31 December 2017 2017 Total assets 888,699 908,023 Total liabilities 492,948 506,508 • Drydock capex of $5.2 million Cash and cash equivalents 47,129 62,316 Total shareholders’ equity 395,751 401,515 • Strong balance sheet – 44.5% equity ratio Cash sh flow ows: 31 March 2018 31 M 2018 31 31 December 2017 2017 Net cash used in operating activities (4,457) (3,205) Net cash used in investing activities (5,169) (2,334) • Available liquidity of $97.1 million Net cash used in financing activities (5,561) 9,749 Net (decrease) increase in cash and cash equivalents (15,187) 4,210 *Please see Q1 2017 interim financial statements for information on the implementing the new accounting standard for revenue recognition (IFRS 15), with effect from 1 January 2018, 4 4
Financials Q1 2018 1 2018 Cash break even and CAPEX • Estimated average cash break-even for 2018 is $17,700/day • 2 of 5 ships drydocked by Q1 - estimated remaining CAPEX is ~$5.0 million in 2018 • Continued strong cost focus while securing high quality service 5 5
Fleet update 2 VLGC fleet end Q1 2018 Orderbook 300 Global Fleet 250 267 267 200 150 100 New Orders 13.5% 50 7/1 /1 0 Existing On Order Orderbook May 2018 50 Orderbook 43 36 40 36 36 30 21 20 20 10 12 10 Re-cycling 1/2 /2 0 2015 2016 2017 2018 2019 2020 6 Delivered On Order 6
Fleet update 2 Avance Gas Q1 2018 7
Fleet update 2 Avance Gas Q1 2018 T/C Out Dry Dock Off hire 0 2/69 2/ 69 3/ 3/38 38 Spot fixtures 8/ 8/312 312 COA nominations 4/ 4/311 311 Waiting pr. Ship Waiting pr. Ship 0.6 .6 0.6 .6 8 8
Market update 3 Middle East exports LPG export Saudi, UAE, Qatar LPG export Middle East 4,000,000 4,000,000 3,500,000 3,500,000 3,000,000 3,000,000 2,500,000 2,500,000 2,000,000 2,000,000 1,500,000 1,500,000 1,000,000 1,000,000 500,000 500,000 0 0 3 years spread 3 years average 2018 9
Market update 3 US Gulf / USEC exports VLGC export US Gulf / USEC VLGC export US Gulf / USEC 4,000,000 4,000,000 3,500,000 3,500,000 3,000,000 3,000,000 2,500,000 2,500,000 2,000,000 2,000,000 1,500,000 1,500,000 1,000,000 1,000,000 500,000 500,000 0 0 3 years spread 3 years average 2018 10
Market update 3 US Gulf – USEC destinations Number of VLGC liftings US Gulf / USEC 60 50 40 30 20 10 0 2014 2015 2016 2017 2018 Number of VLGC liftings US Gulf / USEC 60 50 40 30 20 10 0 11
Market update 3 US Gulf – USEC destinations 2015 2016 2017 2018 20% 16% 12% 20% 28% 22% 34% 18% 66% 62% 50% 52% South America NWE+MED Far East South America NWE+MED Far East South America NWE+MED Far East South America NWE+MED Far East 12
Market update 3 Global VLGC fleet Orderbook 300 49% 17% 250 200 150 100 13.5% 9% 50 25% 0 Existing On Order < 2001 2001-05 2006-10 > 2011 Fleet built prior 2001 14 5% 12 10 12% 8 83% 6 4 31 ships 2 0 27 yr+ 25/26 yr 23/24 yr 21/22 yr 19/20 yr 17/18 yr Storage Ex-trade potential Trading 13
Summary and outlook 4 Summary and outlook Overhang of ships from mid-March caused by surprising low export activity in US Gulf February 2018 and normal low activity in Middle East Increasing activity both regions from March US LPG production growth from shale gas and tight oil ramp-up US Gulf / USEC LPG export increase from end of winter season Awaiting news update on construction of East Marnier II pipeline to Marcus Hook which will enhance export capacity Expect older part of global VLGC fleet to leave trading fleet towards 2020 14
Appen ppendi dix 15
Appendix A Financials – Q1 2018 Income Statement Comments Thr hree ee mo months hs Thr hree ee mo months hs • TCE earnings of $14.5 million, up from $14.0 million, ende ded d ende ded d 31March ch 2 2018 31 D Dece cember 2017 reflecting slightly higher freight rates in Q1 18 ($ 0 000s) (restat ated) d) • Operating expenses of $9.3 million, down from Q4 due Operatin ing r revenue 29,006 25,232 to reversal of accrual related to Monsoon insurance Voyage expenses (14,545) (11,232) claim from 2015 ($0.5 million) partially offset by Operating expenses (9,334) (9,836) insurance deductible related to an unscheduled Administrative and general expenses (1,156) (1,303) drydocking of Passat ($0.3 million) Operatin ing p profit it (loss) before d deprecia iatio ion 3,971 2,851 expense • Administrative and general expenses decreased to Depreciation and amortization expenses (9,776) (9,917) $1.2 million, also due to reversal of accrual related to Monsoon Operating l Op ng loss (5,805) (7,055) No Non-operatin ing ( (expenses) in income: • Non-operating expenses—mainly financial expenses— Finance expense (6,566) (6,521) of $6.5 million, unchanged since Q4 2017 Finance income 85 5 Foreign currency exchange gain (17) 5 • A reported net loss of $12.3 million, compared to a net (6,509) (6,511) loss of $13.6 million in Q4 2017 Inco In come tax ax expense — (55) Net los loss (12,314) (13,622) Loss pe per s shar are: Basic (0.19) (0.21) Diluted (0.19) (0.21) 16 16
Appendix A Financials – Q1 2018 Balance Sheet Comments As As o of As As o of ($ 0 000s) 31 M March ch 2018 31 D Dece cember 2017 • Cash at end Q1 of $47.1 million down from $62.3 (restat ated) d) million end Q4, due to lower cash flow from Cash and cash equivalents 47,129 62,316 Receivables 11,137 11,836 operations, debt repayments and dry-docking cash Inventory 4,553 3,993 payments Other current assets 6,882 6,233 Total al c cur urrent as assets 69,701 84,378 Property, plant and equipment 818,808 823,495 • Total assets of $888.7 million, versus $908.0 million in Long-term derivative financial instruments 67 — the prior quarter, mainly reflecting depreciation of the Intangible assets 123 150 Tot otal n l non on-cur urrent as assets 818,998 823,645 fleet and lower cash position Total a To asse ssets 888,699 908,023 • Net total interest-bearing debt of $461.9 million, Current portion of long-term debt 20,598 20,598 compared with $487.6 million, reflecting scheduled Accounts payable 2,914 5,867 Accrued expenses (inc voyage expenses) 4,815 4,219 debt repayments Current portion of derivative financial instruments 1,078 2,538 Other current liabilities 1,607 1,317 • Shareholders’ equity ratio of 44.5%, compared to Total c current lia iabil ilit itie ies 31,012 34,539 Long-term debt 361,936 367,000 44.2% in Q4 2017 Long-term revolving credit facilities 100,000 100,000 Long-term derivative financial instruments — 4,969 • Total available liquidity at quarter end was $97.1 Tot otal n l non on-current l lia iabil ilit itie ies 461,936 471,969 million, including available undrawn credit lines Share capital 64,528 64,528 Paid-in capital 379,851 379,851 Contributed capital 95,239 95,185 Retained loss (131,047) (118,733) Treasury shares (11,867 ) (11,867 ) Accumulated other comprehensive loss (953) (7,449) Total al s shar areholde ders’ equi uity 395,751 401,515 Total l lia iabil ilit itie ies a and shareholders’ equit ity 888,699 908,023 17
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