STEALTHGAS INC. (NASDAQ: GASS), 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 first quarter ended March 31, 2018.
OPERATIONAL AND FINANCIAL HIGHLIGHTS
- Operational utilization of 93.3% in Q1 18’ (97.3% in Q1 17’) due to increased presence in the spot market and the positioning of several vessels in new trading areas.
- About 73% of fleet days secured on period charters for the remainder of 2018, with a total of about $171 million in contracted revenues.
- Successful delivery of our last 22K semi ref new build vessel, the Eco Freeze in April 2018, with which we concluded our new building program of 26 new vessels since 2011.
- Sale and delivery of the Gas Enchanted (2006 built) and sale of another two vessels, the Gas Legacy (1998 built) and the Gas Evoluzione (1996 built), with expected deliveries in Q3 ’18 – all for an aggregate price of $17.5 million.
- Revenues of $39.7 million in Q1 ‘18, an increase of 4.2% compared to Q1 ‘17
- Adjusted EBITDA of $13.7 million in Q1 ‘18 compared to $ 15.4 million in Q1 ‘17.
- Low gearing as debt to assets stands at about 43%.
- Cash on hand of approximately $52.7 million.
First Quarter 2018 Results:
- Revenues for the three months ended March 31, 2018 amounted to $39.7 million, an increase of $1.6 million, or 4.2%, compared to revenues of $38.1 million for the three months ended March 31, 2017, mainly as a result of improved market conditions in the small LPG segment.
- Voyage expenses and vessels’ operating expenses for the three months ended March 31, 2018 were $5.6 million and $15.4 million respectively, compared to $3.6 million and $14.9 million respectively, for the three months ended March 31, 2017. The $2.0 million increase in voyage expenses was mainly attributed to a quarter on quarter increase of average bunker prices by 20% and the ballasting costs of three of our vessels amounting to approximately $0.6 million. The 3.4% increase in vessels’ operating expenses compared to the same period of 2017 was mostly due to the operation of the large LPG semi refrigerated vessels that were not in our fleet in the same period of last year.
- Drydocking costs for the three months ended March 31, 2018 and 2017 were $1.5 million and $0.7 million, respectively. The costs for the first quarter of 2018 corresponded to the drydocking of two LPG vessels and one product tanker, while in the same period of 2017 the Company completed the drydocking of two LPG vessels.
- Depreciation for the three months ended March 31, 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 first quarter 2018 results were net losses from interest rate derivative instruments of $0.05 million compared to net losses of $0.13 million in the same period of last year. Interest paid on interest rate derivative instruments amounted to $0.07 million compared to $0.14 million in the same period of last year.
- The Company recorded an impairment loss of $3.8 million for three of its vessels, one of which has been classified as held for sale, as of March 31, 2018.
- As a result of the above, for the three months ended March 31, 2018, the Company reported a net loss of $5.8 million, compared to a net income of $2.0 million for the three months ended March 31, 2017. The weighted average number of shares for the three months ended March 31, 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 March 31, 2018 amounted to $0.14 compared to earnings per share of $0.05 for the same period of last year.
- Adjusted net loss was $2.0 million or $0.05 loss per share for the three months ended March 31, 2018 compared to adjusted net income of $2.0 million or $0.05 earnings per share for the same period of last year.
- EBITDA for the three months ended March 31, 2018 amounted to $9.9 million. Reconciliations of Adjusted Net Income, EBITDA and Adjusted EBITDA to Net Loss are set forth below.
- An average of 51.7 vessels were owned by the Company during the three months ended March 31, 2018, compared to 53.0 vessels for the same period of 2017.
Fleet Update Since Previous Announcement
The Company announced the conclusion of the following chartering arrangements:
- A one year time charter extension for its 2006 built LPG carrier the Gas Alice, to an oil company until August 2019.
- A one year time charter for its 2018 built LPG carrier the Eco Freeze, to an international LPG trader until April 2019.
- A one year time charter for one of our chartered in, 2010 built, LPG carrier the Astrid, to an international LPG trader until April 2019.
- A one year time charter for its 2001 built LPG carrier the Gas Nemesis II to an international LPG operator until April 2019.
- A one year bareboat charter for its 2010 aframax carrier the Stealth Berana to an international tanker operator until August 2019.
- A one year bareboat charter extension for its 2012 built LPG carrier the Gas Esco, to a state owned shipping company until June 2019.
- A three months’ time charter for its 2001 built LPG carrier the Gas Spirit, to an international trading house until August 2018.
- A one year time charter for its 2008 built product tanker the Magic Wand, to an international trading house until May 2019.
- A one month time charter extension for its 1996 built LPG Carrier the Gas Evoluzione, to an oil international chemical products trader until July 2018.
- A one month time charter for its 2008 built LPG Carrier the Gas Imperiale, to an international trading house until June 2018.
With these charters, the Company has contracted revenues of approximately $171 million. Total anticipated voyage days of our fleet is 73% covered for the remainder of 2018 and 34% for 2019.
Board Chairman Michael Jolliffe Commented
The first quarter of 2018 was a busy period for our Company in terms of sale and purchase activity. We agreed to the sale of three additional vessels, two older ones and one fairly modern, all at an aggregate price of $17.5 million. More evidence that values are firming even on older vessels was provided by these sales, as we sold the Gas Legacy (1998 built) at 5.6 times demolition value and the Gas Evoluzione (1996 built) at 4.2 times demolition value.
In addition to this and as announced a month ago, we took delivery of the last 22,000 cbm semi-refrigerated new build LPG thus concluding our newbuilding programme which counts the delivery of 26 vessels since 2011, most built in Japan.
Both our net revenue and profitability were affected this quarter by the rise in oil prices which increased our voyage costs and the increase in LIBOR rates which affected our finance costs. In addition we saw a slower spot market for our LPG carriers in February in the weeks around Chinese New Year. These factors coupled with the weak earnings from our tankers led to lower than anticipated margins.
This quarter company specific factors deemed as one off events had an impact on our revenue and profitability as well. In particular costs related to the delivery and commencement of trading for vessels Eco Arctic and Eco Ice, the second and third vessels in our series of four handy sized new buildings, and in addition significant ballasting costs on another vessel which changed trading region, burdened our voyage costs within this quarter with about $0.6 million.
We continue to observe that our core market’s fundamentals have improved as rates for small LPG carriers are still on the rise, and the forecast is that they will continue to do so at least for the next couple of years.
Taking this into account, our main focus is to take advantage of this positive market momentum to the fullest and calibrate our fleet management strategy so as to increase our profitability. We have so far in the second quarter of 2018 reduced our commercial idle days by about 90% compared to the first quarter of this year. With an asset base in excess of USD 1 billion, low leverage and ideal demand and supply conditions, combined with improving freight rates, gives reason for optimism for the future.