In this episode of Capital Link's Deep Dive Webinar Series, Mr. Jostein Aschjem, Shipping Equity Research Analyst at DNB Carnegie, sat down with Mr. Mads Peter Zacho, CEO of Navigator Gas (NYSE:NVGS), to discuss the company’s latest performance. The conversation revealed a company showing remarkable resilience in the face of current geopolitical turbulence and is actively positioning itself for the next wave of growth in the gas sector.
As Mr. Zacho put it, Navigator is "a leader in the Handysize gas tanker segment"—a position that is uncommon in shipping, where a single company seldom controls more than a third of any market. The company also owns onshore infrastructure, creating synergies that "drive resilience and more stable cash flows."
Navigator Gas owns and operates a fleet of Handysize liquefied gas carriers and is engaged in the seaborne transportation of petrochemical gases (e.g., ethylene and ethane), liquefied petroleum gas (LPG), and ammonia. In addition, it holds a 50% interest, through a joint venture, in the ethylene export terminal at Morgan's Point, Texas, on the Houston Ship Channel.
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Market Outlook
With a significant wave of new vessel supply entering the market and potential flatness in U.S. oil production, the question remains whether export growth can keep pace.
Mr. Zacho appears optimistic on that front, arguing that even if oil production is flat, the amount of NGLs produced can continue to grow as the gas-to-oil ratio in basins like the Permian increases. After all, more wet gas means more NGLs. As export capacity expands, less ethane is rejected back into pipeline gas, sustaining export volumes. Mr. Zacho also emphasized that most VLECs are tied to long-term projects and that major infrastructure programs are broadly paced with fleet additions—supporting a balanced outlook even if the timing is not exact month-to-month.
Beyond that, most new VLECs are built for specific projects with long-term contracts, and the build-out of export infrastructure (like Enterprise’s terminal) is not only timed to accommodate this growth but will also reduce the practice of rejecting ethane into natural gas pipelines, making more ethane available for export.
Capital Allocation & Shareholder Returns
The company has a history of returning 25% of quarterly earnings via dividends (with a $0.05 per share minimum) and has used additional ad hoc buybacks programs to return even more capital to shareholders, most recently by repurchasing 3.4 million shares ($50 million) in Q2/Q3. In addition, it repurchased 3.5 million shares ($51 million) directly from the BW Group last year and repurchased another 3.8 million shares ($50 million) from December 2022 through May 2023.
Maintaining an impressive balance sheet ($314 million in cash and liquidity as of August 11, 2025) and a net debt-to-EBITDA ratio of 2.7x, Mr. Zacho confirms that the company has the capacity for more distributions. He views buybacks as their preferred method while the stock trades at a discount to estimated NAV of ~$28 per share. Management notes that growth is secured with six newbuilds and three second-hand purchases; with $314 million of cash/liquidity, the company likely has more cash than needed. Leverage around 2.6-2.7x is considered conservative, and the team would be comfortable even in the 3-4x range, implying room to fund both growth and capital returns to shareholders. While the stock trades well below NAV, buybacks remain the preferred tool; management has bought back roughly 5% three separate times in the past three years. Trading liquidity has also improved alongside Russell 2000 and 3000 index inclusion, broadening the investor base and increasing trading liquidity.
Watch Webinar: Navigator Gas Russell Indexes Inclusion to Expand Shareholder Base & Trading Liquidity
Disclosure: Capital Link is the investor relations advisor to Navigator Gas (NYSE:NVGS). This content is for informational purposes only and not intended to be investing advice. We would like to highlight that this is not a Capital Link article with our own editorial on the company. It is a company management interview. Thus, all comments in the article are theirs.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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