Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- StealthGas Inc (GASS, Financial) reported record quarterly profits for the second consecutive quarter.
- Net income for Q2 2024 was $25.8 million, a 146% increase year-over-year.
- The company has secured over $220 million in contracted revenues for future periods.
- Debt reduction strategy has been effective, with $107 million in debt repaid so far this year.
- The company has 24 unencumbered vessels and a net debt ratio below 5%.
Negative Points
- Operating expenses have been under increased pressure due to inflation.
- The company did not engage in any share buybacks during the second quarter.
- The order book situation for medium gas carriers (MGCs) is worrisome, with a ratio surpassing 40%.
- There has been a lack of vessel scrapping despite the age of the fleet, due to the firm market.
- The spot market east of Suez was softer with poor rates and more idle time experienced by owners.
Q & A Highlights
Q: Can you provide more details on the recent vessel sales and acquisitions?
A: (Michael Jolliffe, Chairman of the Board) During the six months, we sold two smaller vessels and took delivery of two brand-new medium gas carriers. We also sold one medium gas carrier owned through our joint venture. No further sale and purchase activity occurred in the current quarter.
Q: What is the current status of your chartering activities?
A: (Michael Jolliffe, Chairman of the Board) We were quite active on the chartering side, entering into more period charters and extending contract coverage for 2025 to 55% of our fleet days. We have contracted revenues of over $220 million for all subsequent periods, excluding our joint venture vessels.
Q: How did the financial performance fare in the second quarter?
A: (Konstantinos Sistovaris, CFO) Net income for the second quarter was a record $25.8 million compared to $10.5 million last year, a 146% increase. Earnings per share were $0.70, marking a 159% increase due to the lower share count as a result of share buybacks.
Q: What are the key financial highlights for the first half of 2024?
A: (Konstantinos Sistovaris, CFO) Net revenues for the six months were $77.8 million, an increase of 16%. Operating expenses were $24 million, down 14%. Net income for the six months was $43.5 million, a 60% improvement compared to last year.
Q: Can you elaborate on the debt reduction strategy?
A: (Konstantinos Sistovaris, CFO) We have been very active in implementing our debt reduction strategy, reducing the debt by another $107 million. The debt amortization is now reduced to just $6.4 million per annum compared to $30 million two years ago.
Q: What is the outlook for the LPG market?
A: (Harry Vafias, CEO) LPG exports increased by 4.3% in 2023 and 3.6% in the first half of this year. US exports continue to grow, while Middle East exports remain flat due to OPEC production cuts. We expect LPG demand in Europe and Asia to remain strong.
Q: How is the fleet geographically distributed?
A: (Michael Jolliffe, Chairman of the Board) The majority of our fleet, 19 vessels or 60%, currently trade in Europe. We have strategically focused on this area due to higher freight rates and strict vetting requirements. We also have vessels trading in the US, Caribbean, and Africa.
Q: What are the future revenue projections?
A: (Michael Jolliffe, Chairman of the Board) We have secured $220 million in future revenues up to 2027. We have increased our contracted days for 2024 to 85% and for 2025 to 55%.
Q: What are the key risks and opportunities in the market?
A: (Harry Vafias, CEO) The main risk factor is the growing midsized order book, which could put downward pressure on the handy segment. However, the fundamentals for the pressurized ships segment look promising due to a low order book and an aging fleet.
Q: What is the company's strategy moving forward?
A: (Harry Vafias, CEO) We will continue to focus on debt reduction and securing long-term charters to ensure stable cash flow. We believe we are a sound undervalued investment, given our strong financial performance and market position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
