StealthGas posts strong second quarter result

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SteathGas, a ship-owning company primarily serving the liquefied petroleum gas (LPG) sector of the international shipping industry, announced its unaudited financial and operating results for the second quarter and six months ended June 30, 2018.

OPERATIONAL AND FINANCIAL HIGHLIGHTS

  • Operational utilization of 97.8% in Q2 ’18 (94.9% in Q2 ’17) due to improved market conditions leading to increased time charter and spot coverage.
  • Approximately 57% reduction of commercial off hire days in Q2 ’18 compared to Q2 ’17. Commercial off hire days in Q2 ’18 as low as 2 days per vessel.
  • Approximately 74% of fleet days secured on period charters for the remainder of 2018, with approximately $170 million in contracted revenues for all subsequent periods.
  • Agreements entered into in July 2018 to sell the Gas Sincerity (2000 built), the Gas Texiana (1995 built), the Gas Sikousis (2006 built) and the Gas Marathon (1995 built) for an aggregate price of $22.15 million.
  • Revenues of $43.4 million in Q2 ’18, an increase of $4.1 million, or 10.4% compared to Q2 ’17.
  • Adjusted EBITDA of $20.0 million in Q2 ’18, compared to $15.5 million in Q2 ’17 reflecting improved market fundamentals.
  • Low gearing, with debt to assets standing at approximately 44% notwithstanding our recent fleet expansion.
  • Cash on hand of $55.7 million, an increase of about $4.0 million compared to year end 2017.

Second Quarter 2018 Results:

Revenues for the three months ended June 30, 2018 amounted to $43.4 million, an increase of $4.1 million, or 10.4%, compared to revenues of $39.3 million for the three months ended June 30, 2017, mainly as a result of improved market rates that led to an increase in both our time charter revenues and spot revenues compared to the same period of last year.

Voyage expenses and vessels’ operating expenses for the three months ended June 30, 2018 were $4.3 million and $14.9 million respectively, compared to $4.5 million and $14.4 million respectively, for the three months ended June 30, 2017. The $0.2 million decrease in voyage expenses was mainly attributed to a quarter on quarter reduction of spot days, partially offset by a 26.8% increase in our bunker costs compared to the same period of last year. The 3.5% increase in vessels’ operating expenses compared to the same period of 2017, in spite of the net reduction in the average number of our owned vessels by one, was mostly due to the operation of the new large LPG semi refrigerated vessels that were not in our fleet in the same period of last year; in addition one of our small LPG vessels currently operating under time charter was on bareboat in the same period of last year.

Drydocking costs for the three months ended June 30, 2018 and 2017 were $0.7 million and $1.2 million, respectively. The costs for the second quarter of 2018 corresponded to the drydocking of two LPG vessels, while in the same period of 2017 the Company completed the drydocking of three LPG vessels.

Depreciation for the three months ended June 30, 2018 was $10.5 million, a $0.8 million increase from $9.7 million for the same period of last year due to the addition of the three new 22,000 cbm semi-refrigerated LPG vessels.
Included in the second quarter 2018 results were net gain from interest rate derivative instruments of $0.01 million compared to a net loss of $0.1 million incurred in the same period of last year. Interest paid on interest rate derivative instruments amounted to $0.02 million compared to interest of $0.1 million paid in the same period of last year. The net gain from interest rate derivative instruments and the reduction of interest paid on derivatives, are an outcome of the increase in LIBOR rates.

The Company realized a $0.2 million loss on sale of one vessel in the three months ended June 30, 2018.

The Company recorded an impairment loss of $3.8 million for the three months ended June 30, 2018 for five of its vessels, one of which has been classified as held for sale as of June 30, 2018, while the Company entered into agreements to sell the remaining four vessels subsequent to June 30, 2018. For the three months ended June 30, 2017, the Company had recorded an impairment loss of $3.2 million for three of its oldest vessels, two of which had been classified as held for sale, as of June 30, 2017.

Other operating income for the three months ended June 30, 2018 was $0.7 million and related to legal claim receipts, while other operating costs for the three months ended June 30, 2017 was $0.4 million and mainly related to the delay of the delivery of our new 22,000 cbm semi-refrigerated vessels.

Interest and finance costs for the three months ended June 30, 2018 were $6.0 million compared to $4.1 million in the same period of 2017. This increase of $1.9 million is attributed both to the increase in our bank debt and also to increased LIBOR rates.

As a result of the above, for the three months ended June 30, 2018, the Company reported a net loss of $0.4 million, compared to a net loss of $1.7 million for the three months ended June 30, 2017. The weighted average number of shares for the three months ended June 30, 2018 was 39.9 million compared to 39.8 million for the same period of 2017. Loss per share, basic and diluted, for the three months ended June 30, 2018 amounted to $0.01 compared to loss per share of $0.04 for the same period of last year.

Adjusted net income was $3.6 million or $0.09 earnings per share for the three months ended June 30, 2018 compared to adjusted net income of $1.5 million or $0.04 earnings per share for the same period of last year.

EBITDA for the three months ended June 30, 2018 amounted to $16.0 million and Adjusted EBITDA was $ 20.0 million. Reconciliations of Adjusted Net Income, EBITDA and Adjusted EBITDA to Net Loss are set forth below.

An average of 52.2 vessels were owned by the Company during the three months ended June 30, 2018, compared to 53.4 vessels for the same period of 2017.

Six Months 2018 Results:

Revenues for the six months ended June 30, 2018, amounted to $83.1 million, an increase of $5.8 million, or 7.5%, compared to revenues of $77.3 million for the six months ended June 30, 2017, primarily due to improved market conditions.

Voyage expenses and vessels’ operating expenses for the six months ended June 30, 2018 were $9.9 million and $30.3 million, respectively, compared to $8.1 million and $29.3 million for the six months ended June 30, 2017. The $1.8 million increase in voyage expenses was mainly due to the higher bunker prices prevailing in the first six months of 2018 compared to the same period of 2017. The $1.0 million increase in vessels’ operating expenses, in spite of the net reduction in the average number of our owned vessels by one, was mainly driven by the operation of three 22,000 cbm semi-refrigerated LPG vessels not yet delivered in the same period of last year.

Drydocking Costs for the six months ended June 30, 2018 and 2017 were $2.2 million and $1.9 million, respectively, representing the costs of 5 vessels drydocked in each respective period. The difference in costs is attributed to the drydockings of 4 small LPGs and one product tanker in the six months ended June 30, 2018 compared to 5 small LPGs in the same period of last year.

Depreciation for the six months ended June 30, 2018, was $21.0 million, a $1.6 million increase from $19.4 million for the same period of last year, in spite of the net reduction of the average number of our owned vessels by one, due to the addition of three new 22,000 cbm semi-refrigerated vessels.

Included in the first six months of 2018 results are net losses from interest rate derivative instruments of $0.04 million compared to a net loss of $0.23 million incurred in the same period of last year. Interest paid on interest rate swap arrangements amounted to $0.08 million compared to interest of $0.24 million paid in the same period of last year. The reduction of net losses from interest rate derivative instruments, including the reduction of interest paid on derivatives, are an outcome of the increase in LIBOR rates.

The Company recorded an impairment loss of $7.6 million in the first six months of 2018 for seven of its vessels, two of which have been classified as held for sale as of June 30, 2018. With regards to the additional five vessels for which we incurred impairment charges, one of the vessels was delivered to its new owners in the second quarter of 2018 and the Company entered into agreements to sell the remaining four vessels subsequent to June 30, 2018.

Interest and finance costs for the six months ended June 30, 2018 were $11.2 million compared to $ 7.8 million in the same period of 2017. This increase of $3.4 million is attributed to the increase in our bank debt and to an increase of LIBOR rates.

As a result of the above, the Company reported a net loss for the six months ended June 30, 2018 of $6.2 million, compared to net income of $0.3 million for the six months ended June 30, 2017. The average number of shares outstanding for the six months ended June 30, 2018 was 39.9 million compared to 39.8 million, for the same period of last year. Loss per share for the six months ended June 30, 2018 amounted to $0.15 compared to earnings per share of $0.01 for the same period of last year.

Adjusted net income was $1.6 million, or $0.04 per share, for the six months ended June 30, 2018 compared to adjusted net income of $3.6 million, or $0.09 per share, for the same period of last year.

EBITDA for the six months ended June 30, 2018 amounted to $25.8 million and Adjusted EBITDA of $33.6 million. Reconciliations of Adjusted Net Income, EBITDA and Adjusted EBITDA to Net Income are set forth below. An average of 52.0 vessels were owned by the Company during the six months ended June 30, 2018, compared to 53.2 vessels for the same period of 2017.

As of June 30, 2018, cash and cash equivalents amounted to $55.7 million and total debt amounted to $472.6 million. During the six months ended June 30, 2018 debt repayments amounted to $27.1 million.

Fleet Update Since Previous Announcement

The Company announced the conclusion of the following chartering arrangements:

A one year time charter for its 2015 built LPG carrier, the Eco Lucidity, to an international trading house until August 2019.
A nine months’ time charter for its 1995 built LPG carrier, the Gas Pasha, to an international trading house until April 2019.
A six months’ time charter extension for its 2011 built LPG carrier, the Gas Cerberus, to an international LPG trader until January 2019.

With these charters, the Company has total contracted revenues of approximately $170 million. Total anticipated voyage days of our fleet is 74% covered for the remainder of 2018 and 38% for 2019.

Board Chairman Michael Jolliffe Commented:

In spite of the seasonally weak period for our market, the second quarter of 2018, was a very solid quarter as we managed to achieve an operational utilization of 97.8%, our best performance since the first quarter of 2014. The combined effect of the improving market and the Company’s sound management positively impacted our results. Market rates for the small LPG carrier segment continued to rise resulting in an increase in both our time charter and spot revenues. We believe that market fundamentals in terms of demand for LPG and a limited orderbook will improve the day rates even further. Our Company is well positioned to take advantage of these opportunities. We are focused on following a chartering policy in line with what the market dictates and at the same time seeking to contain costs. We have been very active lately in terms of our sale and purchase activity, since the beginning of the year having agreed to sell seven small LPG vessels, mostly older ones that will enhance our cash position by approximately $30 million. With strong balance sheet in terms of liquidity and low leverage, a top quality fleet and promising market fundamentals we are optimistic about the future of StealthGas.

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