STEALTHGAS INC. reports Q2 2017 financial and operating results

Harry Vafias

STEALTHGAS INC. (GASS), a ship-owning company primarily serving the liquefied petroleum gas (LPG) sector of the international shipping industry, announced today its unaudited financial and operating results for the second quarter ended June 30, 2017.

OPERATIONAL AND FINANCIAL HIGHLIGHTS

• Operational utilization of 94.9% in Q2 17’ (91.2% in Q2 16’).
• Commercial off hire days reduced in Q2 17’ by 41.7% compared to Q2 16’.
• Approximately 83% of  fleet days secured on period charters for the remainder of 2017, with a total of  approximately $180 million in contracted revenues.
• Sale of two of our oldest vessels, the Gas Icon (1994 built) and the Gas Emperor (1994 built), both for further trading.
• Further delivery delay of two of the remaining 22,000 cbm LPG semi refrigerated vessels- at zero cost.
• Record revenues of $39.3 million, increased compared to Q2 16’ by 10.1%.
• Adjusted EBITDA of $15.5 million in Q2 17’ compared to $11.8 million in Q2 16’.
• Moderate gearing as debt to assets stands at about 40%.
• Cash at hand of $43.3 million with operating cashflow of $24.5 million.

Second Quarter 2017 Results:

• Revenues for the three months ended June 30, 2017 amounted to $39.3 million, an increase of $3.6 million, or 10.1%, compared to revenues of $35.7 million for the three months ended June 30, 2016, mainly due to increased fleet utilization and a slight increase in market rates.
• Voyage expenses and vessels’ operating expenses for the three months ended June 30, 2017 were $4.5 million and $14.4 million respectively, compared to $3.7 million and $15.2 million respectively, for the three months ended June 30, 2016. The $0.8 million increase in voyage expenses is mainly attributed to higher bunker costs due to increased oil prices. The 5.3% decrease in vessels’ operating expenses compared to the same period of 2016 was mostly due to improved operating efficiency and a 10.6% decrease in store costs.
• Drydocking costs for the three months ended June 30, 2017 and 2016 were $1.2 million and $1.5 million, respectively. The costs for the second quarter of 2017 corresponds to the drydocking of three vessels, while in the same period of 2016 the Company completed the drydocking of four vessels.
• Depreciation for both the three months ended June 30, 2017 and 2016 was $9.7 million.
• Included in the second quarter 2017 results were net losses from interest rate derivative instruments of $0.1 million. Interest paid on interest rate derivative instruments amounted to $0.1 million.
• The Company recorded an impairment loss of $3.2 million for three of its oldest vessels, two of which have been classified as held for sale, as of June 30, 2017.
• As a result of the above, for the three months ended June 30, 2017, the Company reported a net loss of $1.7 million, compared to a net loss of $1.6 million for the three months ended June 30, 2016. The weighted average number of shares for the three months ended June 30, 2017 was 39.8 million. Loss per share, basic and diluted, for the three months ended June 30, 2017 and 2016 amounted to $0.04.
• Adjusted net income was $1.5 million or $0.04 per share for the three months ended June 30, 2017 compared to adjusted net loss of $1.5 million or $0.04 per share for the same period of last year.
• EBITDA for the three months ended June 30, 2017 amounted to $12.2 million. Reconciliations of Adjusted Net Income, EBITDA and Adjusted EBITDA to Net Income are set forth below.
• An average of 53.4 vessels were owned by the Company during the three months ended June 30, 2017, compared to 53.0 vessels for the same period of 2016.

Six Months 2017 Results:

• Revenues for the six months ended June 30, 2017, amounted to $77.3 million, an increase of $5.1 million, or 7.1%, compared to revenues of $72.2 million for the six months ended June 30, 2016, primarily due to improved market conditions.
• Voyage expenses and vessels’ operating expenses for the six months ended June 30, 2017 were $8.1 million and $29.3 million, respectively, compared to $7.6 million and $29.8 million for the six months ended June 30, 2016. The $0.5 million increase in voyage expenses was mainly due to the higher bunker prices prevailing in the first six months of 2017 compared to the same period of 2016. The $0.5 million decrease in vessels’ operating expenses was mainly driven by improved operating efficiency and a decrease in store costs that led to the decline of daily average operating cost by 1.5% compared to the first six months of 2016.
• Drydocking Costs for the six months ended June 30, 2017 and 2016 were $1.9 million and $2.2 million, respectively, representing the costs of 5 and 7 vessels drydocked in the respective periods.
• Depreciation for the six months ended June 30, 2017, was $19.4 million, a $0.1 million increase from $19.3 million for the same period of last year.
• Included in the first six months of 2017 results are net losses from interest rate derivative instruments of $0.2 million. Interest paid on interest rate swap arrangements amounted to $0.2 million.
• The Company recorded an impairment loss of $3.2 million in the first six months of 2017 for three of its oldest vessels, two of which have been classified as held for sale.
• As a result of the above, the Company reported a net income for the six months ended June 30, 2017 of $0.3 million, compared to a net loss of $0.9 million for the six months ended June 30, 2016. The average number of shares outstanding as of June 30, 2017 was 39.8 million. Earnings per share for the six months ended June 30, 2017 amounted to $0.01 compared to loss per share of $0.02 for the same period of last year.
• Adjusted net income was $3.6 million, or $0.09 per share, for the six months ended June 30, 2017 compared to adjusted net loss of $1.3 million, or $0.03 per share, for the same period of last year.
• EBITDA for the six months ended June 30, 2017 amounted to $27.6 million. Reconciliations of Adjusted Net Income, EBITDA and Adjusted EBITDA to Net Income are set forth below. An average of 53.2 vessels were owned by the Company during the six months ended June 30, 2017, compared to 52.9 vessels for the same period of 2016.
• As of June 30, 2017, cash and cash equivalents amounted to $43.3 million and total debt amounted to $408.2 million. During the six months ended June 30, 2017 debt repayments amounted to $22.2 million.

Fleet Update Since Previous Announcement

The Company announced the conclusion of the following chartering arrangements:

• A three year bareboat charter for its 2009 built product tanker, the Stealth Bahla, with an international tanker operator until August 2020.
• A thirty months’ time charter for its 2016 built LPG carrier, the Eco Nical, with an oil major until December 2019.
• A one year time charter for its 2014 built LPG carrier, the Eco Invictus, with a major international LPG trader until October 2018.
• A one year time charter for its 2011 built LPG carrier, the Gas Cerberus, with a major international LPG trader until July 2018.
• A one year time charter for its 2003 built LPG carrier, the Gas Prodigy, with a major international LPG trader until September 2018.
• A one year time charter extension for its 2015 built LPG carrier, the Eco Czar, with a major international trading house until August 2018.
• A one year time charter for its 2006 built LPG carrier, the Gas Alice, with a national oil company until August 2018.
• A one year time charter extension for its 2006 built LPG carrier, the Gas Inspiration, with a major international LPG trader until September 2018.
• A one year time charter extension for its 2011 built LPG carrier, the Gas Elixir, with a major international LPG trader until March 2019.
• A one year time charter extension for its 2015 built LPG carrier, the Eco Enigma, with a major international LPG trader until January 2019.
• A four months’ time charter for its 1995 built LPG carrier, the Gas Texiana, with a major international trading house until November 2017.
• A six months’ time charter for its 1997 built LPG carrier, the Gas Monarch, with an international energy trader until February 2018.
• A three months’ time charter for its 1996 built LPG carrier, the Gas Nirvana, with a major international trading house until November 2017.
• A three months’ time charter extension for its 1996 built LPG carrier, the Gas Evoluzione, with a major international trading house until November 2017.
• A two months’ time charter for its 2006 built LPG carrier, the Gas Enchanted, with an international energy trader until September 2017.

With these charters, the Company has contracted revenues of approximately $180 million. Total anticipated voyage days of our fleet are about 83% covered for the remainder of 2017 and 44% covered for 2018.

Board Chairman Michael Jolliffe Commented

The second quarter of 2017 was quite encouraging for StealthGas.  In spite of the low seasonal demand, we managed to achieve close to 95% operational utilization, which is the second best, second quarter’s performance marked since the year 2012. Consequently, our revenues were higher than anticipated. In addition to this, we succeeded in decreasing our operating costs. So both these factors contributed to our profitability which, excluding the impairment charges of the quarter, was quite satisfactory and significantly improved compared to the second quarter of 2016. Going forward, we have secured more than 83% of our fleet days in period charters and our market shows positive signs of improvement such as increase in rates, low orderbook and acceleration of the scrapping activity. In addition we succeeded in pushing back the deliveries of our second and third 22,000 cbm semi-ref eco newbuildings to the first quarter of 2018. Last but not least, we sold two of our oldest ships at a hefty premium over scrap showing increased confidence from buyers even for overage ships. Based on all of the above, we remain confident for the quarters to come.