StealthGas, Inc.

Good day and thank you for standing by. Welcome to the GUS first quarter 2022 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you will need to press star and 1 on your telephone keypad. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Michael Jolliffe, Chairman of the Board. Please go ahead, sir.

Thank you very much, Nadia. Good morning. This is Michael Jolliffe. And joining me on our call today is Harry Vafias, our chief executive officer, and Konstantinos Sistovares, who will be handling the investor relations 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. At this stage, if you could all take a moment to read our disclaimer on slide two of this presentation. Risks are further disclosed in stealth gas filings with the Securities and Exchange Commission. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in United States dollars. Today we release our earnings results for the first quarter, which was also the first quarter of trading as a pure LPG company, and we saw a fantastic improvement compared to last year. So let's proceed to discuss these results and what we see in the market in general. Turning to slide three, we summarise the highlights of our first quarter. In the first quarter of 2022, we faced an improved LPG market, particularly in Europe. Hence, we took the opportunity and continued to secure more vessels trading in the area on period charters. On the other hand, the market in Asia was stable, but we also managed to secure more period charters. In terms of operational utilization of our fleet at 92.7%, it was at similar levels to last year, a figure we aim to improve as we had one vessel to dry dock and did experience off-hire days on the spot ships. However, we marked an 18% reduction of spot days quarter on quarter and 65% year on year, managing to earn better returns on time-chartered vessels than on spot ships. We now have 59% of our fleet days secured on period charters for the remainder of 2022, with total fleet employment days for all subsequent periods generating almost $70 million, and that excludes the joint venture vessels, in contracted revenues. In terms of our sale and purchase activity during the quarter, we completed the previously announced sale of two vessels, the Echo Loyalty and the Gas Inspiration, to their new owners. In addition, In the current quarter, we entered into an agreement for the sale of our oldest 5,000 cubic meter LPG vessel, the 1997 built gas Monarch, again for further trading, and we delivered the vessels on May the 23rd. All these transactions further enhanced our cash base. Looking briefly into our financial highlights, we need to keep in mind that in the last year's quarters mentioned, Besides any sale and purchase activity, are included the four tankers that were part of the spin-off last December and are no longer in our fleet. In quarter 1-22, voyage revenues came in at $35.9 million, $1.5 million lower than in quarter 1-21, partly as a result of fewer vessels on the spot market and partly due to the fewer number of ships, including the four tankers. Overall, comparing the LPGs in our fleet, we saw a rise in revenues year on year, and this can be seen in the TCE revenues that came in at $31.6 million compared to $30.5 million last year, an improvement despite having fewer ships. Where we can better see the effects of the absence of the tanker vessels is in the operating expenses, where there was a $2.2 million reduction to $12.9 million, and in depreciation expense, where there was a $2.5 million reduction to $7 million. Our net profit for the quarter was $7.6 million compared to $0.8 million for the same period last year. Whilst on an adjusted basis, excluding impairment charges, we ended the quarter with net profits of $8.8 million compared to 0.6 million in quarter 1-21 and 2.8 million in quarter 4-21. Our adjusted income for the quarter corresponds to an adjusted EPS of 23 cents. We manage this while at the same time increasing our cash and cash equivalents from 31.3 million at the end of last year to 70.4 million at the end of quarter 1-2022. or 82.4 million, including restricted cash, mainly through the sales we completed and the refinancing of six vessels during the first quarter. We continue to be well capitalized, maintaining a low debt ratio of 37%. Let us move on to slide four for our fleet employment update. In terms of charter types, and as of May 2022, And out of a fleet of 34 LPG operating vessels, excluding our seven joint venture vessels, we have two on bare boat, 30 on time charters, and only two in the spot market. At the end of last year, we had four vessels on bare boat charters. Two of these expired towards the end of quarter one, and the remaining two we will get delivery from their bare boat charters within the coming weeks. Since our previous announcement, we successfully concluded eight new charters and charter extensions. These new fixtures involve vessels previously on bare boat or in the spot market, and were all done at similar or improved rates. Our period coverage for the remainder of 2022 is in the order of 59%. We have close to 70 million of secured revenues going forward. 55 million of which is expected to be received within the remainder of 2022, similar figures to the previous quarter. In slide 5, I would like to provide an update as to our two joint ventures, where we also saw improved performance in both, contributing $1.7 million to our bottom line. Since our last call, all vessels are now time-chartered, Our first joint venture, which comprises in its majority of smaller LPG vessels, had the gas defiance time chartered for three months, while in our second joint venture, comprising of two medium gas carrier vessels, plus one more under construction. Gas Chem Bremen was chartered for a one-year time charter. During the first quarter, we received $1 million in dividends from the joint ventures, improving our cash flow. Our joint venture arrangements combined have a solid cash base of about $43 million. We do not expect to have any capex related to the delivery in 2023 of the new building medium gas carrier, as the joint venture itself has enough cash in hand after the sale of one vessel last year to fund the acquisition, together with any finance proceeds to be arranged. After all, The rise in new building prices across all sectors includes these medium gas carriers and underpins the financing to be sought. In terms of our fleet geography in slide six, our company focuses on regional trade and local distribution of gas. This graph is a snapshot of the positioning of our vessels, excluding our JV vessels, as of May 2022. Currently, half of our fleet is 16 vessels trade in Europe, 14 vessels trade in the Middle and Far East, and two vessels trade in the U.S. and Caribbean, and three in Africa. Given the better market in Europe, we would expect to see more vessels moving there if the opportunities arise. I will now turn the call over to my colleague, Konstantinos Sistovares, for our financial performance.

Thank you, Michael, and good morning to everyone. I will discuss our financial performance for the first quarter of 2022. Let us turn to slide seven, where we see the income statement for the first quarter of 2022 against the same period of the previous year. Voyage revenues came in at 35.9 million, marking a decrease of 1.5 million, about 4%, compared to the same period of last year. partly due to the fewer vessels in the spot market. Our spot market actually decreased by 65% and partly due to the fewer number of vessels we had. 36.5 average vessels in the first quarter of 2022 versus 41.6 average vessels during the first quarter of 2021. We should also note the increase in the voyage and TCE revenues of the four handy-sized LPGs in the fleet that were all chartered at high rates in a stable market, albeit starting from a lower base. Voyage costs decreased by 2.7 million compared to the same period last year. This decrease in voyage expenses was partly due to the absence of tankers in the 2022 results and partly due to the decrease in spot days where we are responsible for the voyage costs of these vessels. Based on all of the above, our net revenues for the period were in the order of $31.6 million compared to $30.5 million last year, about 4% up. Operating expenses saw a significant reduction of $2.2 million, about 15%, compared to Q1 2021. due to the fewer number of vessels. Were we to exclude this effect, our OPEX would be along the same levels as last year, a positive result given that we continue to face cost pressures, particularly in crew costs due to the COVID-19 pandemic. In terms of dry docking costs, we had 0.4 million in the first quarter of 2022 from one vessel. We expect to dry dock another five vessels during the year. Depreciation is another item that saw a large decrease from 9.5 million to 7 million due to the decrease in the number of vessels. During the previous quarter, there was also an impairment charge of 0.5 million related to the sale of the gas Monarch that took place in the current quarter. and a $0.4 million loss on the sale of the gas inspiration. Interest and finance costs declined considerably from $3.1 million to $2.4 million, partly due to the decrease in the average debt during the two comparable periods, and partly due to the decrease in the average cost due to our reduction in the loan margins. We expect this trend to reverse in the future as we will start seeing the effect of the recent interest rate increases in the coming quarters. As a result of all the points analyzed above, we ended the first quarter of 2022 with a net income of 7.6 million and adjusted net income, that is excluding impairment and vessel sales, of 8.8 million, corresponding to an earnings per share of 23 cents. a tenfold increase compared to the meager two cents of the same period of last year. Looking at our balance sheet in slide eight, our liquidity, including restricted cash, was at the end of the quarter in the order of 82.4 million, a substantial increase from the 52.8 million in the first quarter of 2021 and 45.7 million in the fourth quarter of 2021. The increase in liquidity came primarily from the refinancing and vessel sales, and secondarily from operations and an increase in payables. We also received a $1 million dividend from our JV investments during the first quarter. The total value of our investments in our JV is $54 million. The overall outstanding debt is $300 million, similar to the levels at the end of last year. We expect our debt amortization going forward to be in the region of 7.5 million per quarter, while it was close to 10 million per quarter a year ago. Furthermore, we have no planned capital expenditure at this moment. Concluding our financial commentary with slide nine, we will briefly discuss our debt profile and capital structure. As mentioned before, since the beginning of 2021 and up until February, 2022 we underwent the important project of refinancing 20 versus that succeeding in first reshaping our loan portfolio and deferring balloon payments our first balloon payment is now due in March 2025 and second enhancing our free cash by about 16 million an outcome of our last refinancing that place in February we also reduced our average loan margin and as all the new loans were at lower margin levels than the previous ones. Compared to the end of last year, we slightly increased our debt, but our net gearing remained low due to the increased liquidity. After the sale of the Gas Monarch, we continued to have six unencumbered vessels. During the first quarter, we also entered into a new swap arrangement to hedge part of the interest rate exposure. As a result, interest rate hedges are in place for 36% of our debt. I will now hand you over to our CEO, Harry Vafias, who will discuss market and the company outlook.