Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Avance Gas Holding Ltd (AVACF, Financial) announced a significant dividend payout of $3.50 per share for Q3, totaling $268 million, reflecting a strong commitment to returning capital to shareholders.
- The company reported a net profit of $25.8 million for the quarter, with earnings per share of $0.34, excluding any gains from sales, indicating solid operational performance.
- Avance Gas Holding Ltd (AVACF) successfully sold its MGC fleet to Exmar, booking a gain of around $34 million, showcasing effective asset management and strategic divestment.
- The company has no debt by year-end, having paid off $155 million of outstanding debt, which strengthens its financial position and reduces interest expenses.
- Avance Gas Holding Ltd (AVACF) plans to distribute BW shares to its shareholders, providing them with continued exposure to the market through a 12.88% shareholding in BW.
Negative Points
- The market for Avance Gas Holding Ltd (AVACF) has been soft, with challenges in fixing ships due to the company's exit from the industry, impacting Q4 performance.
- The BW stock price has decreased, affecting the estimated profit from the BW deal, which is now at $296 million, down from an initial expectation of $350 million.
- The company is winding down operations, which involves costs and logistical challenges associated with closing down the business and liquidating assets.
- Avance Gas Holding Ltd (AVACF) faces a soft Q4 market, with spot rates expected to be dismal at $23,800 per day, impacting revenue potential.
- The LPG shipping market is experiencing oversupply concerns, with high fleet growth and reduced demand due to the reopening of the Panama Canal, affecting freight rates.
Q & A Highlights
Q: Could you provide insights into the current terminalling costs for propane exporting capacity and whether these costs are expected to remain elevated?
A: The terminalling costs are influenced by market conditions and the tightness of shipping. Typically, term deals range from $0.06 to $0.08 per gallon. However, when shipping is oversupplied, terminals can charge higher fees. The exact portion of capacity contracted versus spot is unclear, but those with contracted volumes are benefiting from selling in the spot market at higher fees.
Q: Can you comment on the number of VLGCs owned or operated by Iran and the typical trades for vessels over 20 years old?
A: There are about 54 VLGCs in the dark fleet, primarily involved in Iran-China trades. These older ships are less efficient and more costly to maintain, but they are used to monetize Iran's gas and oil resources.
Q: What costs do you expect to incur while winding up Avance Gas?
A: The costs are minimal and not significant enough to be itemized. The process involves filings, liquidating SPVs, and administrative tasks, with no golden parachutes for employees.
Q: How will the funds be used to pay off loans, and when will this occur?
A: We are using internal funds to repay loans, especially before delivering ships to BW, to save on banking costs. We aim to optimize cash flow and reduce interest expenses by paying off loans as ships are delivered.
Q: How many BW shares will be distributed per Avance Gas share?
A: For every Avance Gas share, shareholders will receive approximately a quarter of a BW share, based on the 19.3 million BW shares we will receive.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
