StealthGas Inc. Price & Performance (GASS)

Good morning, everyone.

And welcome to our fourth quarter twenty twenty four earnings conference call. And webcast I'm Michael Joliff, Chairman of the Board of Directors. And joining me on our call today, as usual, our Chief Executive Officer, Harry Vafias to discuss the market and company outlook and Konstantinos Sistovares to discuss the financial aspects. Before we commence our presentation, I would like to remind you that we will be discussing forward looking statements which reflect current views with respect to future events and financial performance so if you could all take a moment to read our disclaimer on Slide two of this presentation. [indiscernible] Risks are further disclosed in StealthGas filings with the Securities and Exchange Commission. So let's proceed with the presentation of our 2024 results and update you on the company's strategy and the market in general starting with Slide three for some highlights. Today, we released our results for the fourth quarter and full year of 2024. It was another very successful quarter in what can be described as a relatively stable market. Revenues came in at a solid $43,500,000 27% higher than a year earlier. For the full twelve months of 2024, revenues came in at 167,300,000.0 the highest revenue figure in the company's history.

To give you some historical perspective, the closest revenues we had to this year's figure was back 2018 when revenues were close to $164,000,000 that we were such a different company that this revenue figure back then led us to barely make a profit on an adjusted basis. Whereas today, with a much leaner structure, and following sound strategic policies, our revenues led to a record yearly profit of $77,000,000 on an adjusted basis. I should also stress that this is not a one time profit record. It is the third year in a row that we've been recording record profits a testament to the consistency in our improving results. In terms of earnings per share, on an adjusted basis, these were $0.44 for the quarter and $2.11 for the full year, and compare that to our stock price, which is still trading around $6 Our strategic priority for the time being remains focused on deleveraging and optimizing cash flow generation. The company proceeded to pay $108,000,000 in 2024, bringing the debt below $100,000,000 for the first time during the third quarter and with another €33,000,000 being repaid during the first quarter of this year, debt level is currently close to just $50,000,000 All the vessels in our fully owned fleet are debt free except for just two vessels that currently have a mortgage.

So essentially, we are net debt free.

With regards to our share repurchase program, over the last two years, the company has spent close to $20,000,000 buying back almost 4,000,000 shares. We had toned down the repurchases in the last couple of quarters So today, the Board of Directors decided to reserve additional funds and authorize management to invest up to $10,500,000 for share repurchases. We are further delivering on our Period coverage for 2025 is now up to 70 $200,000,000 in future revenues. In terms of our fleet, the strategy is to conservatively diversify and renew. We have no new announcements in this conference call on this front. The deals that affected our 2024 results We had we have previously discussed, these were the sale of two smaller LPGs and the delivery of two new building medium gas carriers. Those significantly boosted our 2024 results. In the last quarter of twenty twenty four, we also incorporated in our fully owned fleet one smaller gas carrier that we had previously was part of our joint ventures. Two more vessels were sold by the joint ventures during twenty four one delivered this January.

We are still looking for opportunities in the sale and purchase market. Let us move on to Slide four for some details on our fully owned fleet employment as of February. It has been a fairly quiet period since our last call in November. Charter is particularly in Europe seem to have covered their needs by taking more period charters in previous months. As a result, we only concluded three new charters two for one year duration, and one for three months. That currently leaves us with three vessels operating in the spot market, two of which are handy sizes. The company's chartering strategy is to fix on period charters when possible and when profitable. So we are looking to extend the duration of our charters. Overall, we have increased the visibility of our earnings to 70% of available days for 2025, and have secured about $107,000,000 in revenues for the remainder of the year. Total revenues secured up to 2027 were slightly reduced at $200,000,000 During the fourth quarter, we had a fair amount of dry dockings three vessels completed their scheduled dry dockings. That brought the total number of vessels for 2024 to seven vessels a quarter of the fleet.

This year, it is a fairly light year as we only have four vessels that are scheduled to go into dry dock. In terms of our fleet geography, presented in Slide five, for those unfamiliar, our company mainly focuses on regional trade and local redistribution of gas so most of our vessels are not likely to travel large distances and often do voyages that may last as short as a couple of days from load port to destination while the fewer larger vessels often engage in intercontinental voyages for example, U. S. Gulf to the continent, We continue to focus the majority of our fleet over 60% West Of Suez in Europe, particularly in the Northwest of the Mediterranean where freight rates continue to command a premium, over Eastern Suez. Remaining of our fleet is evenly scattered across the globe. [indiscernible] believe that in the short term, we will continue to enjoy higher rates West Of Surais as there continues to be a shortage of suitably well maintained vessels in Europe. Since our last call, the Suez Canal situation seems to have improved with the Houthis temporarily refraining from attacking vessels. However, the overall political situation in The Middle East remains very volatile And shipowners are still reluctant to commit as any sudden escalation could lead to renewed danger to the safe navigation of vessels.

If things go back to normal, we could see a few more vessels moving from East to West to close this arbitrage.

Overall though, trading in European ports is much more demanding due to strictly enforced regulations related to the condition and safety of the vessels. As a result, older vessels that are actually a high percentage of the overall pressurized LPG fleet are not always suitable for European trades. Furthermore, the European Union imposed last year's regulations related to carbon emissions called EU ETS that penalize less efficient pesos Starting January of this year, is putting in place additional rules called FuelEU relating to fuel consumption. Finally, I would also like to note that over the past year, we have been increasingly engaged in ammonia trades. That our Handys and MGC vessels can carry. We believe there is great potential in ammonia trading and judging from the increased vessel order book, so do many of our competitors. In Slide six, I will update you on our joint venture This is the interest we had as of December 31 in four vessels three pressurized LPG carriers, and one medium gas carrier through two joint venture structures These are presented separately as their results are not consolidated but are shown as an investment. The book value of our investments was $27,700,000 slightly reduced from the previous quarter as the Gas Defiance exited the JV and entered our fully owned Since the beginning of last year, three vessels were sold.

One MGC the Efereal, in the second quarter for which we received a $24,000,000 dividend. The gas defiance in the fourth quarter that was bought back from StealthGas debt free And more recently, the Gas Shuriken that was delivered to its new owners in January of this year and was also debt free. There are now just three vessels left owned through joint ventures one medium gas carrier built 2023 and two smaller pressurized vessels. After having sold the gas service in last month, our partners and we decided to use the proceeds from that sale the vessel was debt free, to prepay the debt on the two remaining pressurized vessels. The Gas Jarrahlambos and the Eco Lucidity. The debt prepayment is scheduled to take place within March As far as chartering of these vessels go, the Gas Harrah Lambos recently entered a one year charter at an exceptionally strong rate. The two other vessels are on short term time charters. Lastly, during 2024, two of the vessels underwent their scheduled drydocking one of these in the fourth quarter as discussed in the previous call. There are no forthcoming drydocks during 2025 for any of these vessels. I will now turn the call over to Constantino Sistovares, for our financial performance.

Thank you.

Thank you, Michael.

Good morning, everyone. I will discuss the financial results that were released today. So let's turn to the next slide, Slide seven. Where we have a snapshot of the income statement for the fourth quarter and full year of 2024 against the same periods of 2023.

Due to sale and purchase transactions at two place over the period, There was a very small increase in fleet days of 2% for the quarter and a larger reduction in fleet days of 7% when comparing the yearly [indiscernible] That is the revenues after the voyage expenses, came in at $40,300,000 for the quarter an increase of 31% and at $155,600,000 for the twelve months an increase of 19% mainly the result of rechartering vessels at high rates throughout the past year. And also the addition of the two larger vessels in the fleet with a higher earnings capacity. In the fourth quarter, revenues were slightly impacted by the downtime due to the dry docking of three vessels. Operating expenses were $13,600,000 for the quarter, a 6% increase mainly due to higher crew costs and maintenance fees and $49,800,000 for the twelve months, reduced by 6% that corresponds to the reduction in the fleet over the twelve months. Overall, a good performance in containing expenses of in 2024 And we have seen rises as a result of cost pressures throughout the economy but but not above the general inflation levels. Again, this quarter's results were negatively impacted by the dry docking [indiscernible] of the three vessels They had to undergo their statutory five year special survey and drydock.

The cost of the dry dockings that will that involve also lost time and revenues as they can take up to thirty days are expensed as incurred and not amortized. So there was a hit in the fourth quarter especially when compared to last year. When there were no vessels to be dry docked at the time. During the year, seven vessels, a quarter of the fleet underwent drydock. Compared to just three vessels in 2023. And since most of the vessels trade in Europe, these are mostly performed in more expensive European yards. In the third quarter, there was also an increase of $1,400,000 in G and A costs as a result of the increase in stock based compensation expense. That reflects the amortization of these awards over their vetting period. No words were given in the fourth quarter. There were no impairments nor any gain or losses from sale of vessels during the fourth quarter of this year. While interest costs decreased by almost $1,000,000 as a result of the debt Net income for the quarter was 14,200,000.0 compared to $8,900,000 for the same quarter [indiscernible] 60% increase. Adjusted basis, net income also marked a 60% increase from $10,300,000 to $16,400,000 For the full year, net income was $69,900,000 compared to 51,900,000.0 for last year.

A 35% increase On an adjusted basis, net income was $77,300,000 a 53% increase compared to last year. In terms of EBITDA on an adjusted basis, It was $23,400,000 for the quarter and $108,800,000 for the full year. The highest EBITDA number Likewise, adjusted earnings per share for the fourth quarter were $0.44 Compared to $0.29 last year. $2.11 compared to $1.34 last year. This was, as we said before, the best [indiscernible] in the company's history. Looking at the balance sheet in the next slide, Slide eight, The company continues to maintain strong liquidity after having massively brought down its debt over the course of last year. Cash including restricted cash was at the end of the quarter 84,500,000.0 The debt reduction allows the company going forward to accumulate cash at a much faster rate than before. Due to the reduced debt amortization. There were no vessels held for sale as of December 31. As there were no contracts for any sales, And also there were no deposits for vessels as of December 31, No, we have not contracted to buy any vessels. Vessels book value increased from $5.00 4,300,000.0 to $6.00 $8,000,000 a significant 21% increase mainly as a result of the addition of the two medium gas carriers [indiscernible] Last January, And the pressurized gas carrier the company acquired from its JV partner in the fourth quarter.

The book value of the investments in the two joint ventures was 27,700,000.0 a 12 percent $12,000,000 reduction due to the sale of one medium gas carrier and the pressurized gas carrier and the subsequent return of capital. Total assets as of December 31, 2024 increased 5% to $732,200,000.0 compared to last year. Moving on to the liability side, the current portion of debt increased to $23,300,000 because there is a $16,600,000 balloon payment due within a year. And more precisely in December of twenty twenty five. While the long term portion of the debt stood at $106,900,000 as of December 31, 2024. 2023, sorry, and was reduced to $61,600,000 as of 12/31/2024. As a result, the company had cash that almost equal its debt as of December 31. Shareholders' equity increased 14% or $77,000,000 over the twelve month period as a result of the improved profitability. Moving on to Slide nine, looking at our leverage. For the past fifteen years, the company's debt has been oscillating in the range $300,000,000 to $500,000,000 Since the beginning of 2023, interest rates rose significantly and thanks to the improving cash flow generation, The company embarked in a massive debt reduction. Making significant savings in the process.

In 2023, dollars 154,000,000 was repaid. In 2024, while the company took a $70,000,000 loan, for the two vessels, it made €108,000,000 in repayments. Then in the first quarter of twenty twenty five, the current quarter, another $32,000,000 was repaid. The company's debt fell below the $100,000,000 mark. This time with debt currently approaching $50,000,000 it is the first time the company is net debt free. As a result, the debt amortization is now reduced to just $1,000,000 per quarter. Compared to $7,000,000 just and that will allow significantly faster accumulation going forward. [indiscernible] There are now only two mortgage vessels out of 28 in the fleet and that means much lower cash flow breakevens for our vessels making them much more competitive. Finally, there is no refinancing risk There is only one $16,600,000 balloon at the end of twenty twenty five And after that, the only remaining balloon of $17,000,000 is in 02/1932. I will now hand you over to our CEO, Harvafias, who will discuss the market and the company outlook. On Slide 10, we have a brief insight on the El Pigeon market's some thoughts Over the last three years, global LPG exports are the steady upward path.

After marking a 4.3 increase in '23 The at 4.4%. The world's largest LPG export of The U. S. Finished the year marking an impressive 11% year on year growth.

As we have said before, we expect a slowdown due to the capacity constraints but we are already approaching the first plant capacity additions starting with the energy transfer Texas terminal that will export two fifty additional barrels per day in the second half of twenty twenty five. And thereafter, once more expansion projects are completed by '26, volumes should increase by another 20%. On the other hand of the equation, the two largest importers China and India preliminary figures for 2024 show that both increased their El Perchi imports by 11.56.6% respectively. Imports in China were more volatile as demand is more industrially driven And so far, we have yet to see what the measures taken late last year by the Chinese authorities managed to pull the economy back in its targeted 5% growth track.

PDH plans that meet LPG for propylene production continue being built Three more, we expect this year that should underpin long term demand, but in the short term we see volatility coming depending on the on the utilization rates, which is both a factor of the strength of the economy and over [indiscernible] So in terms of trade, the figures were excellent for LPG in 2024. What the picture gets marked here is in terms of geopolitical unknowns. That is not to say that they are positive or negative, causing shipping more often than not, conflicts lead to improved rates, but rather to emphasize that a lot more issues on before that could affect LPG depending on if one and how these are resolved. Let me briefly mention them. First, we have the sanctions on Russia Russian LPG exports by the EU. These were introduced last December So far, they have led to more seaborne imports from Poland or Russian volumes being redirected further away. Second, we have we expect developments in the Russia Ukraine conflict although any resolution will probably will not lead to a significant change short term in European LPG imports as diversifying LPG sources is more of a longer term European policy.

Especially since airports from The U. S. Have risen substantially. Third comes a potential tightening of Iranian sanctions, that The U. That the new U. S. Administration has hinted at Iran is a major oil producer, but also produces LPG that exports mainly to China. More restriction on Iranian LPG estimated at around 12,000,000 tons per year should be a positive for ton miles demand. Fourth, we could see developments in the OPEC, self imposed self imposed oil production cuts. Evolve prices to be driven lower as the new U. S. Administration desires a possible lifting of the production cut by mainly by Saudi Arabia would lead to more oil being produced and thereby more LPG as well. Fifth, we have the Swiss Canal reopening, at least for the time being as the hovers have pledged not to attack ships unless they're related to Israel. However, the Gaza conflict that led to the Hulis attacking ships have not been resolved and is quite a volatile situation. We Crossing the Shores Canal is not a major route for our ships, but overall the shortening of distances could have a negative impact in towing mile demand.

Lastly, and maybe most importantly, we have the looming U. S.-China trade war. We have seen the opening salvos in particular. We have seen the Chinese response by imposing tariffs on various U. S. Goods including including oil and LNG. Notably absent from this tariff was LPG. In the previous spot back in 2019, the Chilean has curtailed their imports of U. S. LPG and that had an impact on LPG shipping. Now however, that they are more cautious as the loan has changed since then. Back then their PDH capacity was 6,600,000 tons per year. It has quadrupled since then and it's of vital importance to them. Now they also rely for over 50% of their LPG imports on The U. S. And it won't be easy to diversify their sources. I won't dive more deeply in all these geopolitic issues, but I brought them up as thoughts that are in the back of our minds as they can affect LPG trade, some positively, others negatively. Be that May, we don't lose sleep over the March. We know that our company is in the most solid state that it has ever been. I'm sure we'll be talking more about this in the future earnings calls and who knows maybe we'll have to add again the new Panama Canal Drudge in the mix.

On Slide 11, we're discussing how shipping markets fared in the last quarter. While generally the fourth quarter consists of tighter market conditions, the picture was one of a relatively flat market. The small pressure vessels that comprise the majority of our fleet The onset of winter led an issue to an increase in activity and firming of the market. But since then the market has been more stable. West Of Suez, there was a limited interest for period fixing as most charges have taken their positions, but there are also limited candidates. As a result, we continue to witness a firm pressurized market at historically high rates. There continues to be a divergence in the market between East and West. In the East, the spot market has been less interesting from an owner's perspective than the West. Very limited activity and relatively soft rates have given owners in incentive to look for TC coverage. If they can find one. Period rates remain more or less flat. The market is expected to be fairly stable otherwise as the overall availability of spot tonnage has reduced. With ships changing hands and some leaving the area and moving west. For the Handysize ships, the fourth quarter was all about the pet camps.

With spot LPG trading close to nonexistent for this size. Particularly, the ethylene market was active and also several vessels were fixed for Butadi in cargoes. The start of this year will also rather quiet However, at the time of writing, we are starting to see a bit more activity on the period side. Rates remaining relatively stable. The order book for the Handysize ships remains very [indiscernible] should logically support to the period market. On the MGCs, spot market continued through Q4 to suffer from pressure from a softer VLGC market and generally more difficult trading conditions and now our margins for LPG as a product. On the time charter side, we show several charter re delivering their mid to long term TC tonnage rather bet on more available tonnage in the spot market when they are in need of a vessel. For now, owners are trying to keep the rate IDs firm but we have seen certain softening in the last couple of months. The order book provides for a limited number of deliveries this year which should support this rates. However, longer term, the order book situation for MGC is worse than. Since our last call, the pace of ordering has slowed down, but accumulating from previous quarters, the order book ratio has now surpassed 50% of the existing fleet.

Expectations are for ammonia market to grow significantly in the coming years not only because it would become one of the alternative fuels for ships. But this is not but if this is not to materialize vessels ordered at today's record prices and leveraged can lead to a lot of pain for those choosing to invest at this late stage in this segment. On the other hand, the order book situation is quite different on the overlooked Handysize fleet, where there are no vessels delivering this year and the order book remains very healthy beyond that. As we continue to see very limited interest from owners in ordering new ships. As far as our core fleet of pressurized ships, the situation has not changed much. Very few vessels are being ordered. Just one since our previous call, and that includes those destined for Chinese domestic trades, keeping the order book ratio at very healthy level at below 5% for the next three years. At the same time, the pressurized fleet age profile shows that over 30% of the existing vessels are over 20 years old, meaning that the fleet is unlikely to be renewed fast enough and owners are keeping all the vessels trading sometimes even up to 30 years old.

And still not scrapping them. We will probably need see a massive drop in the market to force owners to scrap their ships But even without scrapping, it's increasingly getting more difficult for other vessels to trade in international markets especially in Europe given the safety environment and regulations. On Slide 12, we are outlining some key variables that may affect our performance in the quarters ahead. Summing up, it's with great pride that we announced today for the third consecutive year at record annual profits After a successful fourth quarter, we concluded 2024 reporting net income of $70,000,000 for the year a 35% increase, far outpacing the underlying market improvement for our ships. We are delivering on our strategic priorities modernizing the fleet, securing revenues and derisking the business aiming to bring strong value to Stelvio shareholders. We are net debt free and close to completing our deleverage that will be bring a long term advantage to the fleet. The company is in a solid footing, but they're always but we are always mindful that we operate in a volatile segment. We are optimistic yet cautious. There are a lot of geopolitical situation that we discussed today that are developing and we believe to be a sound still undervalued investment for anyone sharing our thesis.

Finally, after our excellent results announced today and in order to give further value back to our shareholders, we are renewing our share repurchase repurchase program and increasing up to $10,500,000 the amount available to us for this task. We have now reached the end of our presentation. I would like to thank you for joining us our conference call today and for your interest in Trusch in our company. And Rick, look forward to having you with us again on our next call for our Q1 results in May. Thank you very much. [indiscernible] [indiscernible] [indiscernible]