GASS - Earnings call transcript Q2 2021

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Operator

Thank you for standing by, and welcome to the StealthGas Second Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation, followed by question-and-answer session. [Operator Instructions] I must advise you, the call is recorded today, Wednesday, 25th of August, 2021. I would now like to hand over to Mr. StealthGas. of CEO Vafias, Harry Please go sir. ahead,

Harry Vafias

our Good earnings conference everyone, the Sakellaris. of me and Officer, our is welcome ‘XX quarter CEO on joining and second our StealthGas, today call Mrs. Vafias, is Finance to Harry morning, call and This webcast.

risks a be with At commence we take respect X disclaimer could events filings financial performance. we’ll to to of stage, the dollars. summarizes I’d statements if which all the Exchange point remind ‘XX and second disclosed released implicitly you like The unless future to are like Before all Slide Commission. forward-looking X to reflect this on today. you quarter that this presentation, of that are further our U.S. read discussing quoted, moment current amounts in views with and the our slide presentation. results in highlights out also key that otherwise StealthGas I we would clarified, Securities stated

quarter year COVID-XX Our the two spot to lower with quarter though performance Even limit in the managed persisting, increased off costs. to importantly, this revenues the of this events, we compared improved conflicting of our was is combined and still by pandemic most exposure governed year commercial first second hires.

incurred affected However, by the high also still voyage costs, price. we increase in oil

expenses the COVID-XX to and pandemic. due we addition, drydocking In high operating costs faced

reduction quarter hire profitability. demand, XX.X%, of second about first Even off to As a our the operating at compared came result, for higher with utilization productivity in along due performance mainly by a to though our not revenue is the decreased in operational seasonally of did XXXX, quarter XX%. days better culminate the low LPG

as charters days remainder vessels coverage all excluding feet days is JV about for high our million, QX employment XXXX, periods in of XX% period of have with Period for contracted subsequent for the generating as We $XX total XX%. fleet the approximately on ‘XX secured remainder of revenues.

vessels, Imperiale of two sale Eco further Gas sale for the liquidity. Loyalty we purchase to will small and our These terms activity, agreed and proceeds sell our enhance trading. In LPG of our further

on to $X same came compared the XXXX, million, compared mainly at revenues an of than million of last our XX% in spot boost. activity earnings. where costs Focusing of revenue reduction slight year, period bareboat conjunction a $XX.X spot to voyage performance escalated our of are time financial the second with In increase due lower of revenues our and revenues stemming default quarter the nullified by chartering improvement from a market, charter to

in daily about XXXX given a higher period last we bunker time the costs outcome, had decreased $XXX, XXX% by in Our almost to thus leading million $X equivalent year, charter the an and XX% costs. that rise higher of of daily presence second compared voyage to spot realistic same quarter about

Our EBITDA, million. including noncash items, came in at $XX.X

again, from at Our noncash income, gains $X.XX. of mostly million, S&P and items $X.X driven one-off corresponding an including came in our EPS net to JV, activity by arising

total our liquidity, capital order analysis and million. X an structure about Slide our and fleet provides in gearing our low of base cash In the terms remains XX%, employment. is of $XX of

on charter reduce successfully the charter market we announcement, operating exposure. market, X have uncertain to extensions. to our Regardless spot XX have on the charter spot the X our new of JV market. uncertain regardless our X In significantly terms we bareboat, excluding Compared the of we vessels, out managed in of types, charters ships, X fleet we time those have of and -- concluded and previous XX

opportunity, would should end improve. the be real vessels charters XX period have of a concluding their which We market until the up XXXX,

year coverage for is ‘XX XX%, as while of Our as this currently, high of order the second in remaining coverage period is XX%. period for our of quarter the the

X, to secured to total $XX of revenues On have increases to We slide to provide And close about an vessels, million. secured revenues. JV our like two venture performances. I’d million including our as joint $XX update

joint currently charter mainly Lucidity Gas ships has last two of venture, vessel, to LPG spot lock the we an Gas Since Eco and comprises one which first months. the Shuriken the charter extend only the additional market. six-month a announcement, managed small trading Our on Defiance for our the in time time for

are charter our thus on of Gas contracts, steady two all second Focusing these time producing Medium cash Carrier JV, flows. comprising vessels, under

sale order market Gaschem expand MGC further two which Hamburg, a to considerable to vessel This outfit cover with JV JV looking cubic requirements delivery recent Medium this has the Gas sufficient the of vessel mid-XXXX. XX,XXX all years’ to cash Following regards Carrier the upcoming time. about with of proceeded outfit the be in to produced equity gains, meter our in delivered

X fleet is a in our of Africa. our and August JV XX. vessels, of and slide XX X, South on vessels Middle in vessels XX This Far vessels trade gas. in East LPG graph America geography Europe, our of vessels the East, of excluding the terms X snapshot focuses and In positioning local Currently, distribution regional, in of as our company vessels trade in

to Fenia financial turn I’ll Sakellaris Now, for Mrs. performance. our

Fenia Sakellaris

focusing to for morning XXXX. continue you, performance second Thank will Harry, of financial I the presentation good on everyone. quarter and the

we this managed earlier of in market and quarter hand, spot one improve the to compared the the off year first reduced to commercial hire. mentioned vessels call, of number As the in revenues, our on decreased

additional to the manage charters the we translate did to year, to revenue our Thus, costs On not leaving same compared profitability. operating burdened cost pandemic. last especially of hand, to period of all generation our other the bareboat were items attributed vessels and and from

slide for revenues of where $XX.X to the million, see income operating a higher is came second against contract. now period bareboat, spot last of of Voyage we mainly at to charter same the attributed This vessels on a increase million compared statement fewer X time move on quarter XXXX $X us marking in on year. the to the X, the Let year. period previous same increase

voyage by due about increased our as XXX% In $X terms increased to manage to to we that We days, cost a to year, oil and $X of million, compared the reduce quarter spot QX XX% this though our spot spot daily from first by amounted to market. equivalent did need to of increase and note revenue this to days marking costs, million compared bunker prices. XXXX XXX the in increase stemming the presence improved

bunker profit. Asian costs the net we is one close X drydocking on the $XX.X medical do as million the them Due Drydocking costs, at our to third X which product for is drydocking costs. sell flight we JVs, the yards of Based marked LPG entered particularly which charges in not mostly to mainly LPG $X.X close yet bareboat fewer $XXX deducting to Running were crew decrease. items vessels. increased order With drydocking bunker with such costs all was vessel daily voyage to plus drydocking to agreements the incur corresponds Impairment from EBITDA, to of the preparation and million. separate for which an increase period of to additional of into expenses, duration expenses of Company costs our Based on attributed excess and ‘XX, the with mainly for vessels operating for restrictions amounted balance attributed LIBOR a about parties. in another anticipated regards along hence of daily X to decrease, income pandemic, rise Interest for the all COVID-XX have $XX.X the and million COVID-XX our crew finance is remaining vessels million. to and impairment, has quarter two one marked China the now which in to loss XX% that small million to of this, increased arrangements $X including our have vessels, the costs is the costs. we of in significant faced tankers, ended $XXX,XXX relating to and decline related JV our Asia, of both noncash $XX.X older However, on Central for attributed costs crew of vessels pandemic. higher and revenues compared the to three above, XX% our mark QX operating

drove the EPS of performance second ended However, it on for Gaschem that XXXX the sale Hamburg we Based the for Slide indicators of gain $X.X profitability. quarter’s an on our above, X a $X.X this million noncash is quarter corresponding period net a items to $X.XX. demonstrates of analyzed points including with examined. the all income, million,

was As same utilization to period operational to that mentioned is. for in productivity of year last the of on, earlier QX the compared due our XX.X%, increased ‘XX order

In hire, off firmer. to increase. hence, difficult a noticed sustained. QX we this ‘XX, TCE of a fragile compared activity an However, in decline, due pandemic mostly to gradual though, noticed of decline spot previous ‘XX, marked quarter daily the over sign to XX% With considerable if will obvious still be decline commercial The year, predict the the upward it’s to is this was that COVID-XX regards our trend QX this market, we a quarters.

the capital expenditure, to near Looking at $XX our further million, X, date, the order future. direct our in commitments cash of is i.e., cash free have slide while in balance we sheet no in no

around we now $XX on of leverage XX.X%. per our repayments, is principal will gearing the in Based Our scheduled order by year. million our reduce

discuss with XXXX balloon refinancings you that in Harry the will period We XXXX. is hand CEO, our now have balloon in who I Mr. will of million minimal the company $XX to to no XXXX outlook. obligation order for Vafias, and market over

Harry Vafias

given assess quite ahead. in XX, will it’s years On the pandemic, the COVID-XX firmly difficult behave the market slide ongoing to how

to sector as also LPG units remain correlated will commence will Partners, higher current Chinese LPG rise grow demand to XX oil LPG to per of driven PDH levels European The drive petrochemical pricing X% -- & XXXX. greatly the plans end However, of mostly there increase until forecasted be conditions by ahead. imports, for Poten the as got XXXX. in operations and imports are until Overall, the by analysis prices. the the sector likely petchem they is at the by as predicted are market to planned which will up are years

QX might recent ‘XX, levels. lower LPGs and However, see quarter, much for LPG that the the in pre-pandemic oil lead to but we remained Delta previous a of XX, during slide small demand cases the compared to variant relatively price rates than still On to charter decline. decrease increase consequently COVID-XX and remain unchanged due

less the fixed as Suez, of in slight a in oil towards Looking mostly rates for result quarter Suez, exerted but of prices. a particularly West marked faced small driven rather a at downtime several market the trade, remained at particularly firmed rates the more X,XXX East of market by demand Owners petchem charters. active LPG was the cubic on the spot spot competition Charter cargoes than demand meters product the increase the region rise employment for were and petrochemicals. the end LPG quarter. discouraging second firm employment a spot limited vessels of thus short-term the period particularly time stable second Nevertheless market. larger and in

Looking that is and will it of of in affect demand the XXXX. Korea variant Delta in the ahead, half crackers opening second the

we macro Focusing force on the small a seen which scrapping positive Indeed, behind old view which pressurized we witnessing XX% a XX demolition activity. years of of beginning the driving Since pressurized fundamentals, ships. demolition currently X substantial LPG tonnage. our have as our segment. a market is for fleet increased heightened of small of segment trend are a the we age, activity, year, above the the has is

performance the be stock from ‘XX, in to and price this shipping the and July of As share of since oil in and Since OPEC Slide price. follow and to regards be stocks built majority the correlation with the be XX per monthly in of along built there XX several But presenting vessels to deviated and our recent we presents order, few increase the this our non-OPEC performance group starting however, oil delivered year. China in of stocks production pattern. that The months, is the agreed year, to With oil. the carrier XX until the to beginning noticed past end members published Japan X shipping gas have Korea are fleet this beginning of selected on August. to orders, XXXX. of

performance be affect XX, demand because and down. about recently will the cases Delta remains crude the driven going However, slide outlining to oil key decreased concerns oil our have market of ahead. price quarters we prices that recent affect how in the are increasing variables forward. It seen will In behave

it’s quite turmoil, market difficult to Given make the firm predictions.

We assist a may quarters. upcoming key few have performance points financial the that isolated our in

and cash coverage is vessels. revenues, total about we that a small sale our a pre-contracted sufficient the of have additional Hence, $XX argue JVs we million $XX liquidity cash cash of in period point million, total the first from arising two in an of about is The base both strong. inflow LPG can

spot In our our a further. shielding forward. will addition, we thus exposure Hence, finance reduced our costs remain voyage going under ships, LIBOR decrease environment. we low Moreover, to have X costs very

Our brief biggest both, strong points. market’s present the concern variant variants seems of global presentation economy. is Concluding that for Company’s a it the outbreak of and XX, we pose COVID as health on future and the of our Delta the slide a different summary threat

benefits capital healthy expertise it arrives. market the mentioned structure, market prior firm the I’ll calls, small will when along summarize are strong market help At stage, our the fundamentals, concluding our that our earnings remarks grasp As period for on of this LPG examined. us recovery with we believers

During managed to our the ‘XX, commercial off quarter of second improve revenues reduce we hire. and our

In able of conclude to spot addition, for and above vessels, extend cubic reduce up, vessels activity X,XXX particularly our and, charters pre-pandemic we reaching meters period therefore, nearly consequently, number and levels. were period picked

operating the same the and additional we However, the COVID-XX, bareboat to charters, compared related to expenses adding changes. had to additional cost particularly six concluding cost last medical our crude period of to thus due faced We crew base. year, vessels

in and small the due COVID in the we own spectrum, across Nevertheless, our to to bunker last were Added the It’s compared drydockings Due our behave operating adding further yard we vessels global will due broader the debt liquidity thus by reflected to LPG strict cost at an these Delta the by LPG and and the we Additionally, market levels recent regardless difficult burdened a to enhanced year. the XX% recent to two diversified revenue the to profitability. to this, of to to economy global our pandemic voyage us restrictions, ahead COVID-XX period quarters X related predict daily pandemic, same of time our further variants the how will costs. was strong underwent sell leverage economy allow low escalation. respond as how COVID again, fragile. agreement gain expenses as reasons, to generation of increased remains pandemic not that still adequate enjoy fleet

We’d now reached for like end the your the have the to open questions. floor presentation. We of

So please, operator, open the floor.

Operator

of your And Instructions] Giveans, today question [Operator first comes from Jefferies. line Randy the

Randy Giveans

A handful of questions here.

extended an charters, XQ for ‘XX? with XX% then, or expect rate first, recently compare or ‘XX either now charters? And do to previous rate earnings So complete, the ‘XX XQ X how from can you average you those XQ with the provide revenue of change

Harry Vafias

as not of you On confuse of because would it’s, the different first know, ages number question, and matters. help. average sizes would It giving I different ships an think ships,

stable. were say rates most the in would I think, I cases,

nothing no reduction nothing but on huge So, major either. side, fancy, the increase

happy. So, the I we’re circumstances, think, in

Randy Giveans

Okay.

Harry Vafias

as question, seen the you the income secure. cost. quarter side. the problem, might this problem is side somewhat The have the from is income is not On The second

We have delays.

crew We costs. have very-expensive

have We quarantine.

not. have a make and We or that, And where very a COVID must cases a single and for XX quarantine things ship can profitable case stop like which has quarter days.

happy expect with QX. So, all in considered for I we obviously, much being are profitable if QX. too things be really would we and can’t say these

Randy Giveans

Got it.

was you Okay. the two And in vessels, sell then, agreed right? you in other XXXX. mentioned small to built XXXX, One

specifically? two sell why So, did those you

Harry Vafias

Yes. Good question.

which the and is say, better ships the of in bulk and on the the in as is years cubic couple are some cubic anyway. X,XXX COVID As of are increase we are meters, earnings meters ships that have increase, I these have earners, above, X,XXX excluding seen our where last up-cycle, they would are of the low their side. Both course, Even small. fleet the the of but well,

ship ships, more with So, the we of those both to found the modern [ph] delivery. forward sell opportunity

one earners. not hand, are big on that selling are ships So we

the great seen we to ship ship, market. We even bit exploit improves, modern market to indeed Thus, the bottom if we’ve have to are a selling ships that the QX better a or slightly a have that And not we line. add secondly, are opportunity later the if delivery. forward significantly going longer

cash should how the significant balance In for that we you a And day. last. addition, And today’s very, we important. are think from think is conservative $XXX,XXX very you we know per don’t past very, having ship $X have our to variants cash million those side. in a environment Delta that on know calls, COVID We how and long between other all will rainy

those selling our shareholders. I and by cash ships defensive and loss, conservative it’s our to book pile, protect a small adding think to So a but having move

Randy Giveans

when then, are And dates? delivery vessels Okay. now delivered? Do have firm we those being

Harry Vafias

September. before is after will relatively New one The will New the Imperiale deliver or other And prompt, either within deliver Year. Year

So, time we have, told as to I trade her. some you,

Randy Giveans

Got it.

Okay. fair. years, bigger some with Navigator in Epic, recent Ultragas. as recent even in I consolidation, well LPG BW All guess, That’s in as been right, there’s picture, right, and months Kosan,

discount same to two vessels sell or guess, to even or in you and are additional I vessels, further to a questions some So, to massive similar the question merging smaller the sales open your looking one, with you LPG NAV, recent or to are buy player? larger looking

Harry Vafias

us. know you Randy, Listen,

the NAV when significant Merging, it’s the we mean, Buying say, we with protect good I considered more I ships I we’re our we our Why to definitely, ships cash a start are and a to discount is at like by then or the would and protect last to back trading a a all, NAV I in the open book mean, did the that buying of keep profit big know, ourselves, just this But and improves, had, you loss move, at drydockings that again, despite if the bargain, ships, sell NAV? in see Board. at very I we such And the shareholders We offer. difficult no. cash environment. us, pile a in said. It’s flexible. posting very for unless better tender minded is first year our achievement. environment, mergers it’s very There if think, buy look it of will we by answer. don’t value a would be stock

or least better. positive the bigger, it’s if at judge moves. yet those seen to speaking, really haven’t not. three the Generally need We years We two,

a big own. on We very very, our have fleet

So, us It must it’s merge not to value-wise. sense a necessity to be and for big. numbers-wise just make

Randy Giveans

fair. guess, just financials. let’s I it said, plus That’s the put question, together, stuff your everything last all in all you

sheet place. balance in is Your good

You even third decent fourth through your and the now quarter. cash flow of have amount with quarter a visibility through charters the

a sold trading you of older Clearly, as that You massive couple you’re NAV, discount at to vessels. well. as mentioned

billion, $X of asset capital market I book value I to base So, say $XXX you think $XXX Your is, right? million, million. don’t close know,

repurchase why and COVID and like a and amount, of So, buying not very uncertainties ships I of substantial seems at balances you. shares cash what shares cash here. know these of selling But, kind in have a levels? accretive use

Harry Vafias

of not we I initial that. the pandemic, we Exactly. tunnel. one of The see everybody were the purchases that shareholders companies COVID the offer start some And has that where And some few from did much we done recent so especially benefit our did with crazy our before in allow light end I the years, the but tender the at of think thought Board of did we’re it. it think in

how like and have everybody, hand, think it’s the equity competitors lot But, want go we dilute our strict. emergency I of shows a to think other I raise done. much it don’t on and

years get the been So, we two to close will later. It or already of It’s solved COVID sooner need problem. patience.

this fleet, the cash, more the is times we bit buyback have course, many more have we go this we’ve share money, patience before. generating we have of a for protection, we valuation, start to the And We obviously, but done then, the no-brainer, as a need at away. if

Operator

[Ph] Instructions] Scott, [Operator the line question of from Scott a Family have LLP. And from we Lance

Unidentified Analyst

difference between is income, net I in what net curious, that you income morning. Good difference? adjusted about was us could and tell the Yes. exact included

Harry Vafias

It’s Lance. a few things,

and breakdown, I email One problem. of if send you the think, us forget because I most things, want the important the is impairment. something, might a on then I’ll phone, an the please have exact But,

a So, we’ll proper. written better which think more an I send us email is and form, in revert

Unidentified Analyst

right. Right,

-- solved standards is accounting U.S. we U.S. by Now, or accounting or our international? standards

Harry Vafias

U.S.

Unidentified Analyst

U.S., okay.

Okay. Thank you.

Harry Vafias

Lance, please us we’ll revert as and an soon send can. email as we

Unidentified Analyst

you. Thank Okay.

Operator

at questions further wish you this no continue. have if time, We to

Harry Vafias

to company. in ‘XX conference again Yes. at joining and interest in our forward trust thank with results November. your having to We you our for look for and We’d you. call like quarter you our Thank call us us for third today

Operator

now conclude participating, you. your That you disconnect. Thank does today. you for Thank call for all and may

StealthGas (GASS) 25 Aug 212021 Q2 Earnings call transcript