StealthGas, Inc.

Thank you for standing by. Welcome to the Stealth Gas third quarter 2025 results conference call. At this time, all participants are in listen-only mode. Please be advised that this conference is being recorded. I would now like to hand the conference over to our speaker today, Harry Vafias, CEO of the Stealth Gas. Please go ahead.

Good morning, everybody, and welcome to our Q3 2025 earnings conference call. This is Harry Vafias, the CEO of And joining me today is Mrs. Sistovares from our investor relations. Before we commence our presentation, I'd like to remind you that we'll be discussing forward-looking statements which reflect current views with respect to future events and financial performance and are subject to material risks and uncertainties. So if you could all take a moment to read our disclaimer on slide two of this presentation. Risks are further disclosed in our filings with the SEC. So let's proceed with slide three. I'll give you some highlights. In our LPG market, the third quarter is traditionally the weakest quarter due to the seasonality in demand. This was the case this year as well, and we did incur increased idle time on the spot vessels. Despite that, the revenues we produced were high, coming in at 44.5 million, 10% higher compared to 40.4 million of last year, but below the record of 47.2 million that was achieved in Q2. While we did grow our revenues, expenses also grew considerably during the third quarter. As a result, adjusted net income for Q3 was 14.4 million, only slightly above that of last year. In terms of earnings per share, on an adjusted basis, these were 39 cents for the quarter. While for the nine months of 25, we have reported 1.42 cents. In terms of our strategic objective of deleveraging, we reached that goal during the third quarter, repaying the last bank loan, and after having repaid $86 million in total during 2025 and $350 million in the last three years, we now have all our vessels in the fully-owned fleet debt-free. With regards to our share repurchase program, we have bought back shares worth $1.8 million in Q1 and Q2 of this year, bringing the total up to 21.2 million since we began in 2023, but we did not buy back any shares during the third quarter. As far as our objectives, we continue to be conservative by maintaining a visible revenue stream with $130 million in contracted revenues and 57% of the fleet calendar days one year forward secured as of November 2025. In terms of sell and purchase activity, we continue to look for opportunities to sell some of the older tonnage and possibly replace with newer tonnage. The latest news on that front is that we recently agreed to sell the 2014 built Eco Invictus with delivery most likely in January or February 26, and we expect to book a profit from that sale at that time. Finally, there is the issue of the Eco Wizard that we discussed last time that was proven quite difficult and time-consuming to resolve. The vessel underwent temporary repairs that were completed, and it's now a matter of having the vessel moved to a dry dock facility outside of Russia in order to perform more permanent repairs. However, during the current geopolitical situation, even the approval of payments by the EU authorities for works performed are a time-consuming process. On slide four is our fleet employment as of November. Chartering activity was relatively more muted over the past few months. We did conclude, though, five new period charters, of which one was for a one-year duration and the other four were between three and seven months. Lately, as the market is firming, we are seeing some renewed interest in longer period charters. At the moment, we only have two of our active vessels trading in the spot market, with one of these vessels being on subject for a period charter. Overall, we maintain high period coverage. As of November, One year forward coverage is slightly below 60%. Already for 26, we have secured 46% of the fleet days, securing $77 million in revenues for next year. Fixing one more vessel for a year, and we'll have secured half of our revenues for next year. Total revenue secured for all future periods up to 2027 were reduced to about $130 million. In terms of dry docking, We have a scheduled dry docking for two more vessels in Q4, four in total this year, and next year we will have six vessels due for dry dock. In terms of fleet geography in slide five, our company mainly focuses on regional trade and local distribution of gas, while the larger ships go mostly into continental voyages, often loading U.S. to discharge in Europe. Market dynamics that we have discussed in the past have led us to position the majority of the fleet west of Suez, Two-thirds of the fleet trades in Northern Europe and Mediterranean. Our vessels get a premium, but there are also more costs involved, particularly related to environmental regulations recently implemented like the EU ETS scheme for carbon emissions. We only have three vessels trading east of Suez, a low number considering that in the past as much as half of our fleet was located there. And in fact, only one vessel trades in the Far East and is currently located in Australia. So when the trade dispute between U.S. and China escalated in October, leading to a truce in November, we didn't expect any direct impact to our operations. That being said, we still need to acknowledge that Chinese demand for LPG has a major influence in markets. Further west, we have the de-escalation of tension in the West Suez, with the Huvis stopping their attacks for now on ships crossing this vital trade route. This may lead to more vessels moving east to west, One of our handy vessels trading in the Middle East was recently repositioned in Europe via the Swiss, but generally we don't expect any significant effect in trade routes. I turn now to the call to Mr. Konstantinos Stovais for a financial performance.

Thank you. Starting with slide six, where we have a snapshot of the income statement for the third quarter and the nine months of 2025, against the same period of 2024. Due to sale and purchase transactions that took place over the period, there was an increase in fleet pays of 7%. So driving the results was the addition of two vessels in the fleet and our MGC that was out of action but still incurring costs. Revenues for the third quarter were at 44.5 million, marking a 10% increase year-on-year. mostly driven by the two additional vessels in the fleet, while the hunting sizes also performed well in terms of revenue generation. During the quarter, we also had more vessels operating in the spot market. That led to two things. Firstly, an increase in voyage expenses to $7.2 million, particularly port expenses and bunker expenses. And secondly, an increase of hire days. as there was more idle time incurred between voyages. Hence, we saw a reduction in the operational utilization to 90.3%. The TCE revenues for the quarter were 37.3 million, a seasonally low in par with last year's. Operating expenses were 15 million for the quarter on the high side, driven by the additional vessels, as well as expenses incurred for repairs and an overall increase in costs, particularly crew, across the board. Although we do pride ourselves on running these ships at cost levels below our peers, we have faced inflationary cost pressures this year. In terms of other expenses, we had reduced dry dock expenses, reduced G&A expenses, and particularly reduced interest costs of just $0.2 million as during the quarter we repaid the last loan on the books. As a result, the reported net income for the third quarter was $13.3 million compared to $12.1 million for the same quarter of last year, a 10% increase. Earnings per share for the quarter were $0.36 and on an adjusted basis $0.39. So the bottom line reflects the seasonal drop in activity that was pretty much expected during the third quarter. But overall, the company retains its high profitability as the LPG charter rates continue to be at historically elevated levels. Looking at the balance in the next slide, as of September 30th, the company continued to maintain strong liquidity with cash of $70 million. and zero restricted cash after having repaid $32 million in debt over that quarter and $86 million over the whole nine months, and also after having invested about $8 million for the share in the JV vessels in the previous quarter, while receiving $12.2 million net from the sale of one vessel earlier in the year. Two vessels were held for sale as of September 30th, one delivered already in the current quarter, the other next year. And the process of these sales will boost the cash position by slightly over $25 million. Together with the operational cash flow, the company's cash is expected to hit the $100 million mark before the end of the year. On the liability side, debt is now zero, and the total liabilities of the company are a mere $21 million. In a very short time, the company has achieved one of the strongest balance sheets in the public shipping space. Shareholder's equity increased over the nine months by $50 million to 676.4 million, an 8% increase. Moving to the next slide, eight, to recap what has been a very swift and successfully executed debt reduction strategy. Since the beginning of 2023, in a little over two and a half years, the company, using its operational cash flow as well as proceeds from vessel sales, repaid about $350 million and became, for the first time since its inception, a debt-free company with a fleet of 28 vessels, none of which is financed. This gives the company much more leverage when it comes time for expansion. while achieving significant savings in interest costs. It also means that the cash flow break-even for the fleet is significantly reduced, enhancing its competitiveness. At the moment, we estimate the cash flow break-even at $6,500 to $7,000 daily, which means that even if the market was to fall by 50% and all the vessel rates readjusted, something unlikely to happen, the company would still be increasing its cash position. I will now hand you back over to our CEO, Mr. Harry Vafios, for some insights on the market.

So let's continue with slide nine to discuss the news on the LPG markets. Global LPG exports continue to register strong growth at 5% in the first nine months, only slightly lower than previously. U.S. exports, as a result of trade tensions, were relatively flat over the quarter, but they have registered close to 6% growth in the nine months of 25 compared to last year. Driving the increase in exports, as discussed before, is the U.S. now accounting for about 45% of exports. There are four major terminal expansion projects underway in the U.S. that will allow it to increase its LPG export capacity substantially and resolve any bottleneck issues. And in the Middle East, there are also expansion projects underway in Qatar and the UAE. In Europe, the floating of the market with competitive US LPG is set to reach a new record of 8 million metric tons in 2025 and almost reaching half of all imports in the continent. The low price of imported propane, around $430 a ton, is about $200 below last year, which means that it stays competitive compared to NAFTA for the petrochemical end-users, and that is what is supporting demand in the continent. In order to support U.S. exports, growth of LPG exporters need to find new customers for their product. One such instance was the announcement by India that it was planning to source 10% of its imports from the U.S., being close to zero before. And just this week, and in a very short time, it was announced that the contract is already in place for the import, for the importation of 2.2 million tons in 26. On the other hand, the U.S.-China LPG trade has been a victim of the trade tensions, with June marking a steep drop in imports and the U.S. falling from accounting for more than 50% of Chinese imports to the low teens. It's been a rollercoaster with tariffs and counter-tariffs and ethane permit revocations, then permitted again, and port fees threatened briefly, applied and then taken back. And nobody can predict how this will play out, but at least the most recent truth for one year seems to be of a sufficient time for some to return to normalcy. Both countries rely on each other as far as LPG trade is concerned. Among all these swings, Chinese LPG imports from all sources still manage to record a 1% growth in the first eight months, albeit the lowest in the last few years. And according to reports, are expected to remain stable this year. In the longer term, we continue to see Chinese demand being driven by the PDH plants and that need LPG for propylene production. And while in the short term, weaker margins and steam cracker competition may lead to lower operating rates, plants continue being built that should underpin longer-term demand. Three more we expect just this year, bringing total capacity to 27 million tons. There is a risk, however, that the current climate may lead to a slowdown in commissioning. All in all, future capacity addition from the U.S. infrastructure projects, Middle East expansions, and Asia demand growth create a positive outlook for sustained market expansion through 2030. Moving to 10, slide 10, for pressure ships in line with the normal seasonality, we saw a softening on the spot market in Q3 and rates adjusted downwards as adult time became a more common factor for the owners. The TC market managed to stay quite firm through Q3, even though the spot market softened. 3,500 and 5,000 cubic meter vessels have remained at all-time high levels, and 7,500 cubic meters and above saw slight softening from the peak levels as more TC candidates became available. There weren't any new orders placed in 27 and 28 deliveries, and the order book remains very healthy. while the existing fleet has a large number of older ships that need to go. But as expected, in healthy markets, scrapping remains limited. For the handy sizes, the pet care market had its challenges through the quarter with the tariff war going on between USA and China, and all these uncertainties are followed. We saw some open positions recurring substantial idle time, which can happen from time to time in this segment when inquiries dry up. Rates, however, have a tendency of keeping up quite well, even with minimal activity, as you only have a small handful of owners with potentially open positions, relatively often only one owner. Considering the limited order book and promising outlook for the handy market, we expect TC rates to stay relatively firm. We had the opposite picture for the MGCs. The spot market improved compared to Q2, supported also by the firmer VLGC market, and the TC market saw significantly more activity. This we could attribute to improved sentiment as trade friction fears subsided until October. The rates continue to hold firm as a temporary trade deal was accomplished between U.S. and China. For MGCs, as we said before, there is a substantial order book to be delivered in the next two or three years, about half the existing fleet. So the question now will be how well the market can sustain all this new tonnage coming in. On slide 11, we are outlining some of the key variables that may affect our performance in the quarters ahead. Concluding this presentation today, we believe that so far, 2025 has been an excellent year for our company, as demonstrated by the financial performance, despite this being the most volatile year we can ever remember in terms of geopolitics. We did hit a soft patch in the third quarter, as we expected, due to the seasonal weakness and the incident with our MGC vessel. that will take some considerable time until we fully resolve this situation. The markets, as we have entered the winter season, is in firming mode and we are optimistic for the short term. We also feel there is less opaqueness in terms of geopolitics and see a return to normalcy that should be good for sentiment and hope it's good for rates as well. In the past periods, we have achieved a lot, improving our profitability, strengthening our cash position, reaching our strategic goal of being debt-free and looking after our shareholders with share buybacks. For longer term, the reports we read point to a continuous growth in demand for LPG, mainly driven by U.S. production, while from the shipping market perspective, the fleet expectations are for increasing demand and for our services from producers and consumers of LPG. Stalkers is a solid company in a niche market with a bright outlook, and there's a lot of potential here. We have now reached the end of our presentation. And we'd like to thank you for joining us at our call today and look forward to having you with us again at our conference call for our Q4 results in February 26. And we wish to all our American listeners a happy Thanksgiving.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.