Avance Gas Holding Ltd: Fourth Quarter 2023 Earnings Release

BERMUDA, February 14, 2024 – Avance Gas Holding Ltd (OSE: AGAS) (“Avance Gas” or the “Company”) today reports unaudited results for the fourth quarter 2023.

HIGHLIGHTS

  • The average time charter equivalent (TCE) rate basis discharge-to-discharge was $76,200/day, ahead of guidance of $70-75,000/day and compares to $55,300/day for the third quarter.
  • TCE/day on load-to-discharge basis was $71,900/day compared to $46,700/day for the third quarter 2023. Adjustment related to load-to-discharge was negative $5.4 million or $4,300/day in TCE/day for the fourth quarter compared to negative $10.9 million or $8,600/day for the third quarter.
  • For the fourth quarter, we had a TC coverage of 29% at an average TCE rate of $48,900/day and spot voyages of 71% at $101,000/day corresponding to an average fleet TCE of $85,900/day excluding FFA loss of $9,700/day and negative load-to-discharge adjustment of $4,300/day.
  • For the full year 2023, TCE/day came in at $57,200/day compared to $38,200/day in 2022 load-to-discharge.
  • Daily operating expenses (OPEX) were $8,090/day, compared to $8,070/day for the third quarter of 2023.
  • Net profit of $61.5 million compared to $30.1 million for the third quarter 2023, or earnings per share (EPS) of 80 cents compared to 39 cents for the third quarter.
  • Net profit of $163.6 million and EPS of $2.14 for the full year 2023 compared to $89.0 million and EPS of $1.16 for the full year 2022.  
  • During the fourth quarter, the Company paid $0.50 per share in dividend, or $38.3 million, for the third quarter 2023. During the year 2023, total cash dividend paid was $153.2 million or $2.0 per share.
  • In December 2023, the Company announced the sale of the two remaining VLGC newbuildings scheduled for delivery in March and May 2024 at a total cash consideration of $240 million en bloc or $120 million per vessel less broker commission. The Company expect to book a gain on sale of $72 million from the sales and a cash release of $120 million.
  • In January 2024, the Company completed the sale of VLGC Iris Glory (2008) for a cash consideration of $60 million less broker commission. The Company will record a book gain on sale of $21 million and net cash proceeds of $25 million for the first quarter 2024.
  • In January 2024, the Company announced the sale of Venus Glory (2008) for a cash consideration of $66 million less broker commission. The Company expect to record a book gain on sale of $27 million and a net cash release of approximately $40 million for the first quarter 2024.
  • In January 2024, the Company signed the $43 million bank facility previously announced for the refinancing of VLGC Pampero (2015) at attractive financing terms. The facility will be drawn in March 2024 which will result in a cash release of approximately $5 million.
  • In February 2024, the Company signed and drew on the $135 million sale lease agreement (SLB). As previously announced, the SLB was intended for the two remaining VLGC newbuildings (2024) which was sold thereby the financing was swapped to Avance Polaris (2022) and Avance Capella (2022). The transaction resulted in net cash proceeds of $40 million which will be recorded in the first quarter 2024.
  • For the first quarter of 2024, we have booked ~70% at an average TCE/day of ~$70,000 on a discharge-to-discharge basis. Load-to-discharge adjustment is expected to be substantial positive as the freight market had a significant downturn in the first quarter. As such, we expect to reverse most of the $16.3 million negative load-to-discharge adjustment recorded in the third and fourth quarter when the freight market elevated.
  • The board declared a dividend of $0.65 per share or $49.8 million for the fourth quarter 2023. Hence, total dividend declared to the year 2023 amounts to $164.7 million or $2.15 per share (101% of net profit).

Øystein Kalleklev, CEO of Avance Gas, commented:

“Fourth quarter was a blockbusting quarter for Avance Gas with quarterly net profit of $61.5 million as we delivered Time Charter Equivalent (TCE) earnings on a discharge-to-discharge basis of $76,200/day slightly ahead of guidance of $70-75,000/day. This quarterly net profit was the second highest in the Company’s history and increased the net profit for the year to $163.6 million or $2.14 per share, also the second highest full year results ever for Avance Gas.

In 2023, the freight market was fuelled by 13% US export growth, very favourable product price arbitrage between US Gulf Coast and Far East Asia which averaged $257 per metric ton and congestion issues in Panama driving up sailing distances. While the spot freight market slumped at the beginning of 2024 due to a severe cold snap in the US which significantly reducing the price arbitrage, we have also been able to book the first quarter at a very healthy level. As of today, we are currently ~70% booked for the first quarter with an average TCE of approximately ~$70,000/day on a discharge-to-discharge basis. While the freight market has rebounded from the lows, we expect the remaining days to be booked well below the current bookings. However regardless of this, the first quarter numbers are expected to be very solid. As our third quarter results were impacted by timing effects related to IFRS 15, we expect most of this effect to be reversed in the first quarter with load-to-discharge numbers expected to come in $10-20,000/day higher than the discharge-to-discharge numbers calculating roundtrip economics and utilized for guidance.

In the second half of 2023 we also agreed to sell four ships. Two ships were older 2008 vintage ships and thus part of our communicated fleet renewal process. The sale of the remaining two VLGC were more opportunistically in nature where we could secure a very attractive sales price and take some money of the table in a buoyant market. Aggregated profit from the vessel sales is expected to be approximately $120 million. One of these ships, Iris Glory, has already been delivered to new owners. In the first quarter we plan to deliver Venus Glory and the first VLGC newbuilding to new owners while the last remaining VLGC newbuilding is scheduled for delivery to new owners in the second quarter. Consequently, we expect to book about $84 million of profits from vessel sales in the first quarter and another $36 million in the second quarter. These sales will also significantly increase our cash balance from an already healthy level of $132 million at year-end. In the first quarter we expect to release about $125 million in cash from vessel sales with another $60 million in the second quarter. On top of this, we expect to release $45 million in cash from refinancings in the first quarter were $40 million is already released through the swap of the sale-and-leaseback financing for the two VLGC newbuilds sold to replace the bank financing for Avance Polaris and Avance Capella.

Taking into account the cash release from asset sales and refinancing, our pro-forma cash balance is about $362 million or close to 40% of the Company’s Market Capitalization. Hence, as previously communicated, the Company plan to seek Annual General Meeting authorization to reduce paid-in capital in relation to sale of dual fuel VLGC newbuildings to return part of this cash position to our shareholders in a tax efficient manner. Until this have been completed, the Board has decided to declare a quarterly dividend per share of $0.65 bringing the dividend per share for the full year to $2.15 of approximately 101% of earnings per share. This translate into a current dividend yield of about 18% which we think should make it attractive being invested in Avance Gas.”

PRESENTATION AND WEBCAST

Avance Gas will host an audio webcast and conference call to discuss the company’s results for the period ended 31 December 2023 on Wednesday, 14 February 2024, at 14:00 CET. There will be a Q&A session following the presentation.

The presentation and webcast will be hosted by:

  • Mr. Øystein Kalleklev - CEO
  • Mrs. Randi Navdal Bekkelund - CFO

The presentation will also be available via audio webcast, which can be accessed at Avance Gas’ website www.avancegas.com or using the link: https://edge.media-server.com/mmc/p/qn6w57nr

Guests can log into the conference call using the following link https://register.vevent.com/register/BIe8c6eceb67ed456c9c903090331769f5

For further queries, please contact:

Øystein Kalleklev, CEOTel: +47 23 11 40 00

Randi Navdal Bekkelund, CFO Tel: +47 23 11 40 00

ABOUT AVANCE GAS

Avance Gas operates in the global market for transportation of liquefied petroleum gas (LPG). The Company is one of the world's leading owners and operators of very large gas carriers (VLGCs) and owns nineteen LPG shipsconsisting of thirteen VLGCs on water including one vessel held for sale in Q1 2024, four dual fuel MGCs for delivery in 2025 and 2026 as well as two dual fuel newbuilding VLGCs for sale in Q1 2024. For more information about Avance Gas, please visit www.avancegas.com.

 This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act

Attachments

  • Avance Gas - Q4 2023 Presentation
  • Avance Gas - Q4 2023 Interim financial information
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