Stealthgas returns to profit

stealthgas

Stealthgas, 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 fourth quarter and twelve months ended December 31, 2019.

OPERATIONAL AND FINANCIAL HIGHLIGHTS

· Operational utilization of 97.9% in Q4 ’19 (94.5 % in Q4 ’18) due to the reduced presence in the spot market (15.6% of voyage days) in conjunction with minimal commercial off-hire, of as low as 1.9 days per vessel.

· Fleet calendar days down 16% quarter over quarter to 3,952, attributed to our strategic fleet contraction.

· 66% of fleet days secured on period charters for the remainder of 2020, with total fleet employment days for all subsequent periods generating approximately $135 million in contracted revenues. Average period coverage for the remainder of Q1 ‘20 is 92%.

· Further expansion in the Medium Gas Carrier (MGC) segment in Q1 ‘20 through the decision to acquire –under a new JV arrangement – three secondhand (2010 built) 35,000 cbm MGC carriers.

· Voyage revenues of $35.2 million in Q4 ’19, a decrease of $3.3 million compared to Q4 ’18 following our strategic decision to divest mostly older LPG units that led to the net reduction of our average owned fleet by seven vessels.

· Daily TCE in Q4 ‘19 increased by 6% ($470) compared to the same period of last year, mostly due to improved revenues stemming from our time charter contracts.

· Net Income of $2.1 million for the 12M 2019 corresponding to an EPS of $0.05 cents. On an Adjusted basis our Net Income for the year 2019 amounted to $4.3 million corresponding to an Adjusted EPS of $0.11 cents.

· Adjusted EBITDA of $15.1 million in Q4 ’19 compared to $14.2 million in Q4 ’18.For the 12M 2019 our Adjusted EBITDA came in at $62 million.

· Low gearing, as debt to assets stands at 38%, mostly due to our intense repayment schedule, while our net debt to assets ratio is as low as 31%.

· Cash on hand of $68.5 million- an increase of $4.0 million compared to year end 2018.

· Purchase of 732k GASS shares to date, for an aggregate consideration of $2.5 million, following the initiation of a further stock repurchase program in May 2019. In Q4 ‘19 we purchased a total of 230K shares for a total consideration of $791K.

Fourth Quarter 2019 Results:

· Revenues for the three months ended December 31, 2019 amounted to $35.2 million, a decrease of $3.3 million, or 8.6%, compared to revenues of $38.5 million for the three months ended December 31, 2018, mainly as a result of the strategic reduction of our average owned fleet by seven vessels, one less charter-in vessel and relatively low revenue stemming from the Asian spot market.

· Voyage expenses and vessels’ operating expenses for the three months ended December 31, 2019 were $4.1 million and $12.6 million respectively, compared to $5.0 million and $14.6 million respectively, for the three months ended December 31, 2018. The $0.9 million decrease in voyage expenses was mainly attributed to a 32.3% quarter-on-quarter reduction of spot days. The 13.7% decrease in vessels’ operating expenses compared to the same period of 2018, is mainly attributed to the net reduction of our average owned fleet by seven vessels. The reduction in operating expenses however was as a percentage far higher than the reduction in our revenues attributed to the decrease in the size of our fleet.

· Drydocking costs for the three months ended December 31, 2019 and 2018 were $0.4 million and $0.6 million, respectively. One drydocking was completed during the fourth quarter of 2019 and one drydocking was completed in the same period of 2018.

· General and Administrative expenses for the three months ended December 31, 2019 amounted to $0.6 million compared to $1.0 million in the same period of last year. This decrease is attributed to the fact that for the three months ended December 31, 2018 stock compensation costs were incurred, which was not the case for the three months ended December 31, 2019.

· Depreciation for the three months ended December 31, 2019 was $9.3 million, a $0.8 million decrease from $10.1 million for the same period of last year due to the decrease in the average number of our vessels.

· The Company recorded an impairment loss of $1.0 million for two of its oldest vessels.

· Interest and finance costs for the three months ended December 31, 2019 and 2018 were $4.5 million and $6.0 million respectively. The $1.5 million decrease from the same period of last year was mostly due to the decrease of our leverage and the decline of LIBOR rates.

· As a result of the above, for the three months ended December 31, 2019, the Company reported net income of $0.5 million, compared to a net loss of $5.3 million for the three months ended December 31, 2018. The weighted average number of shares for the three months ended December 31, 2019 and December 31, 2018 was 39.7 million and 39.9 million, respectively.

· Earnings per share, basic and diluted, for the three months ended December 31, 2019 amounted to $0.01 compared to loss per share of $0.13 for the same period of last year.

· Adjusted net income was $1.5 million or $0.04 earnings per share for the three months ended December 31, 2019 compared to adjusted net loss of $1.8 million or $0.04 loss per share for the same period of last year.

· EBITDA for the three months ended December 31, 2019 amounted to $14.2 million. Reconciliations of Adjusted Net (Loss)/Income, EBITDA and Adjusted EBITDA to Net (Loss)/Income are set forth below.

· An average of 41.0 vessels were owned by the Company during the three months ended December 31, 2019, compared to 48.1 vessels for the same period of 2018.

Twelve months 2019 Results:

· Revenues for the twelve months ended December 31, 2019, amounted to $144.3 million, a decrease of $20.0 million, or 12.2%, compared to revenues of $164.3 million for the twelve months ended December 31, 2018, primarily due to the strategic decision to sell mostly older small LPG vessels for further trading.

· Voyage expenses and vessels’ operating expenses for the twelve months ended December 31, 2019 were $17.0 million and $49.6 million, respectively, compared to $20.7 million and $60.4 million for the twelve months ended December 31, 2018. The $3.7 million decrease in voyage expenses was mainly due to the 26.7% (or 978 days) reduction of spot days. The $10.8 million decrease in vessels’ operating expenses, was due to the net reduction of the average number of our owned fleet by 8.2 vessels.

· Drydocking costs for the twelve months ended December 31, 2019 and 2018 were $1.1 million and $3.6 million, respectively. The costs for the twelve months ended December 31, 2019 mainly related to the drydocking of two small LPG vessels and the docking survey of one small LPG vessel while the costs for the same period of last year related to the drydocking of seven vessels.

· Depreciation for the twelve months ended December 31, 2019, was $37.7 million, a $3.6 million decrease from $41.3 million for the same period of last year, due to the net reduction of the average number of vessels in our owned fleet.

· The Company recorded an impairment loss of $1.0 million for two of its oldest vessels in 2019. The impairment loss for the year ended December 31, 2018 was $11.4 million.

· Interest and finance costs for the twelve months ended December 31, 2019 and 2018 were $21.0 million and $23.3 million respectively. The $2.3 million decrease from the same period of last year, is mostly attributed to the decrease of our leverage.

· As a result of the above, the Company reported a net income for the twelve months ended December 31, 2019 of $2.1 million, compared to a net loss of $12.3 million for the twelve months ended December 31, 2018. The weighted average number of shares for the twelve months ended December 31, 2019 and December 31, 2018 was 39.8 million and 39.9 million, respectively.

· Earnings per share for the twelve months ended December 31, 2019 amounted to $0.05 compared to a loss per share of $0.31 for the same period of last year.

· Adjusted net income was $4.3 million, or $0.11 per share, for the twelve months ended December 31, 2019 compared to adjusted net income of $0.1 million, or $0.00 per share, for the same period of last year.

· EBITDA for the twelve months ended December 31, 2019 amounted to $59.9 million. Reconciliations of Adjusted Net Income, EBITDA and Adjusted EBITDA to Net (Loss)/Income are set forth below.

· An average of 42.6 vessels were owned by the Company during the twelve months ended December 31, 2019, compared to 50.8 vessels for the same period of 2018.

· As of December 31, 2019, cash and cash equivalents amounted to $68.5 million and total debt amounted to $366.0 million. During the twelve months ended December 31, 2019 debt repayments amounted to $97.4 million.

Fleet Update Since Previous Announcement

The Company announced the conclusion of the following ten chartering arrangements:

· A one year time charter extension for its 2011 built LPG carrier, the Gas Myth, to an Oil Major until January 2021.

· A one year time charter extension for its 2015 built LPG carrier, the Eco Czar, to an Oil Major until January 2021.

· A one year time charter extension for its 2015 built LPG carrier, the Eco Universe, to an Oil Major until February 2021.

· A six months time charter for its 2006 built LPG carrier, the Gas Inspiration, to an Oil Major until June 2020.

· A six months time charter for its 2018 built 22,000 cbm semi-refrigerated LPG carrier, the Eco Arctic, to an International Trading House until September 2020.

· A six months time charter for its 2018 built 22,000 cbm semi-refrigerated LPG carrier, the Eco Freeze, to an International LPG Trader until June 2020.

· A three months bareboat charter extension for its 2012 built LPG carrier, the Gas Esco, to a State Owned Shipping Company until June 2020.

· A four months bareboat charter extension for its 2012 built LPG carrier, the Gas Husky, to a State Owned Shipping Company until July 2020.

· A one month charter extension for its charter in LPG carrier, the Gas Cathar, to an International LPG Trader until March 2020.

· A one month charter extension for its 2003 built LPG carrier, the Gas Prodigy, to an International Petchem Trader until February 2020.

With these charters, the Company has total contracted revenues of approximately $135 million. Total anticipated voyage days of our fleet is 66% covered for the remainder of 2020.

Board Chairman Michael Jolliffe Commented

2019 was a successful and profitable year for StealthGas. Indeed in 2019 and in spite of the persistently difficult spot market in Asia, we achieved an operational utilization of 98%, increased our daily time charter equivalent earnings and managed to significantly reduce our finance costs; all these added towards our improved profitability-, which excluding non-cash items- amounted to $4.3 million corresponding to an EPS of $0.11.

In terms of our new projects, in an initiative to expand further across the LPG sector and accretively invest our cash-on-hand, while sharing the operational risk, we took the strategic decision to form a second Joint Venture arrangement with an unaffiliated third party to jointly acquire three secondhand (2010-built) MGC vessels of an aggregate capacity of 105,641 cbm for a total of $80 million.

Going forward we feel confident for 2020. Our period coverage of 66% along with $135 million in contracted revenues, coupled with improved market rates particularly for our larger LPG vessels, signify good times ahead. We are trading close to our all time low share price and that might be an excellent entry point. In addition, the recent push into green investing might also benefit our Company operating modern Japanese built ships with minimal carbon footprint.

We do recognize however that the recent coronavirus outbreak may negatively affect seaborne trade should this situation deteriorate and positive market fundamentals might be afflicted. We hope that this issue will soon be resolved thus allowing the market to flourish.

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