Avance Gas Holding Ltd: Third Quarter 2024 Earnings Release
Hamilton, Bermuda. November 27, 2024 - Avance Gas Holding Ltd (OSE: AGAS) ("Avance Gas" or the "Company") today reports unaudited results for the third quarter 2024.
HIGHLIGHTS
- The average Time Charter Equivalent (TCE) rate on a discharge-to-discharge basis was $38,700/day, compared to $50,100/day in the second quarter of 2024. For reference our guidance was 79% of days booked at $41,400/day.
- TCE/day on a load-to-discharge basis was $41,900/day, compared to $46,700/day in the second quarter of 2024.
- For the third quarter, we had Time Charter (TC) coverage of ~25% at an average TCE rate of $42,500/day and spot voyages covering ~75% at $35,700/day, resulting in an average fleet TCE of $37,400/day, excluding Forward freight Agreements (FFA) gains of $1.4million or $1,300/day.
- Net profit for the third quarter was $25.8 million equal to earnings per share of $0.34.
- Net profit year-to-date 2024, was $232.9 million equal to earnings per share of $3.04, best-ever results for a nine-month period.
- During the third quarter, the Company paid $1.35 per share in dividend for the second quarter, totalling $103 million.
- On August 15, 2024, Avance Gas announced an agreement with BW LPG Ltd (BW LPG) to the fleet of twelve Very Large Gas Carriers (VLGC) for $1,050 million. The sale of the VLGC fleet was agreed to be settled with approximately $585 million of cash, novation of approximately $132 million of debt obligations under a sale leaseback agreement with the remainder being settled in 19.282 million shares in BW LPG where the parties agreed a fair value of such compensation at $333 million or a Net Asset Value basis of $17.25 per share.
- As of this date, Avance Gas has successfully delivered the following four VLGCs to the buyer: Chinook (non-scrubber, built in 2015), Avance Capella (dual-fuel, built in 2022), Sirocco (scrubber, built in 2015), and Passat (scrubber, built in 2015). As part of the settlement for these vessels, the company received 6.15 million BW LPG shares, representing a 4.2% ownership stake, $64.4 million in outstanding lease obligations were novated to BW LPG, and net cash proceeds of $75 million. The remaining eight VLGCs are scheduled for delivery before the end of the year.
- In November 2024, Avance Gas has entered into a Heads of Agreement (HoA) with Exmar LPG BV (Exmar) to sell its four Mid-Sized Gas Carriers (MGCs) newbuilding contracts through a novation. The price of the newbuildings under this HoA has been agreed to be $282.4 million, corresponding to $70.6 million per vessel. The transaction is subject upon the issuance of new refund guarantees to Exmar, as well as the completion of customary documentation and closing procedures.
- The Board declared a dividend of $3.50 per share or $268 million for the third quarter 2024. The total dividend declared for the first nine months of the financial year 2024 amounts to $7.00 per share, totalling $536 million.
- For the fourth quarter, TCE/day is estimated at $27,900/day on a discharge-to-discharge basis, and we do not expect to book any more days for the fourth quarter as we are delivering ships to BW LPG. The load-to-discharge adjustment (IFRS 15) will be fully reversed, i.e. have a positive effect of approximately $7,000/day.
Øystein Kalleklev, Chief Executive Officer of Avance Gas Holding Ltd., commented:
“We are today pleased to announce a profitable sale of our Medium Sized Gas Carrier (MGC) fleet to Exmar LPG. Our MGC fleet consists of four dual fuel newbuildings for delivery in Q4-2025 to Q4-2026 which we contracted last year. These newbuildings will now be sold for $282.4 million which includes remaining yard instalments to be paid by Exmar once the transaction is made effective. As a result of the sale, we expect to generate a book profit of approx. $34 million and associated cash release of $84 million as we will receive refund of our already paid yard instalments of $50 million by Exmar as part of the agreement.
We are therefore pleased that Avance Gas and Exmar LPG have reached an agreement which makes perfect industrial sense. Given its scale and specialization within the MGC segment, Exmar is perfectly positioned to be the owner of these ultra-modern ships. For Avance Gas, we are once again able to transact profitable by evidencing our willingness to take part in industrial consolidation where we put industrial logic and shareholder value creation ahead of growth. Hence, we will be rewarding our shareholders following the effectiveness of the transaction.
With the sale of the MGC fleet, we have thus completed the sale of our entire fleet this year. We started the year with 20 ships and newbuildings, and following this transaction our fleet will thus consist of zero ships. During the first half of the year, we sold four VLGCs with a combined profit of $121 million. On August 15, 2024, we announced the sale of our remaining 12 VLGCs to BW LPG and we have so far delivered four of the 12 VLGCs to BW LPG with the remaining eight ships scheduled for delivery to BW LPG prior end of the year. Profit from the BW LPG transaction is today expected to be approximately $295 million. Hence, in total, we expect to book a cool $450 million profit from these asset sales.
Following these transactions, Avance Gas is as liquid as the seven seas, and we have therefore decided to prepay some of these gains. Hence, we are therefore declaring a quarterly dividend per share of $3.50 equal to $268 million. This amount is in line with the dividends paid for the first and second quarter this year which thus brings the dividend for the three first quarters to $7.00 per share or $536 million, with more to come for the final fourth quarter.
In terms of trading profits, despite the current soft freight market, we have delivered our strongest first nine months of trading in the Company’s history with $112 million in ordinary net profit which excludes gains from asset sales. For the third quarter, ordinary net income came in at $26 million. Hence, so far this year we are $10 million ahead of the fantastic results last year. As we have fewer vessel availability days in the fourth quarter due to deliveries of ships to BW LPG, we only expect to book around 70 per cent of the calendar days during this quarter.
As we are not planning to invest in new ships, we are now preparing a wind-up process of Avance Gas to ensure we can return the remaining capital to our shareholders in a quick and cost-efficient manner. Following the Q3 dividend payment scheduled for December 23, we expect a pro-forma cash balance of $264 million as well as 19.3 million shares in BW LPG with current market value of about $250 million, but where we peg the fair value of these stock at $333 million. Our plan is to reduce our capital to make the repayment of capital tax efficient while also distributing the BW LPG shares to our shareholders once the lock-up period for all shares has elapsed which coincide with our Q4 reporting in February next year.
We want to thank everyone for this fantastic journey, and we look forward to returning the remaining capital to our shareholders once the transactions are concluded.”
PRESENTATION AND WEBCAST
Avance Gas will host an audio webcast and conference call to discuss the company’s results for the period ended September 30, 2024, on Wednesday, November 27, 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/j6q2r66p
Guests can log into the conference call using the following link:
https://register.vevent.com/register/BId9585c6a8c7a46fdaad8f2f978059a2d
For further queries, please contact:
Media contact: Øystein Kalleklev, CEO Tel: +47 23 11 40 00
Investor and analyst contact: Randi Navdal Bekkelund, CFO Tel: +47 23 11 40 00
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
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