Avance Gas (AGAS) Q2 2024 earnings summary

Executive summary

• Achieved record net profit of $207 million for H1 2024, the highest ever half-year result, driven by strong trading and vessel sales, including the sale of the entire VLGC fleet to BW LPG for $1.05 billion.

• Distributed $268 million in H1 2024 dividends ($3.50/share), about 30% of market cap, with further high dividends expected as cash and BW shares are distributed.

• Post-transaction, the company will own four MGC/ammonia carrier newbuilds and a 12.8% stake in BW LPG, with strategic options under review.

• All debt to be repaid or novated upon transaction close, with net cash proceeds and BW shares to be distributed to shareholders.

• Share capital reduction and $75.8 million return of capital to shareholders in May 2024.

Financial highlights

• Q2 2024 net profit: $61 million ($0.79/share); H1 2024 net profit: $207 million ($2.70/share).

• Q2 TCE earnings: $51,000/day (discharge-to-discharge), $46,700/day (load-to-discharge), in line with guidance.

• Q2 dividend: $1.35/share; H1 2024 dividend: $3.50/share.

• Cash position at Q2 end: $268 million; pro forma cash post-transaction: up to $539 million.

• H1 2024 gain on vessel sales: $121 million; total expected gain from all VLGC sales in 2024 is ~$436 million.

Outlook and guidance

• 79% of Q3 2024 booked at ~$41,000/day TCE; Q4 FFA rates at ~$55,000/day, indicating expected market strength.

• Expect continued high dividends as transaction with BW LPG closes and cash is released.

• Exploring sale, charter, or consolidation for four MGC newbuilds; market fundamentals for MGCs remain strong.

• VLGC demand outlook moderately positive, supported by US LPG export growth and Asian import demand.