Q3 2020 StealthGas Inc Earnings Call
Welcome and thank you for standing by and welcome to as it did this stealthgas.
Quanta Twentytwenty nine month financial and operating results conference call.
At this time all participants are in that.
And on the mode to ask a question on the Q and.
Great.
I must advise you that this conference is being recorded today and.
I would now like to hand to come from and so that you.
Speaking today.
Please go ahead.
Good morning, everyone and welcome to upsell court and non most weighted towards the earnings call from school.
This call reversals and shield, so gross and with me on the call is Mr. spring and the younger so funds on children should be.
Before we commence representational legroom on your does we'll be discussing forward looking statements, which reflect current views with respect to future events and financial performance I'll Restate Your Super Bowl take a moment to read the disclaimer on slide two of these presentations wish.
Fish growth sort of disclose and Stealthgas filing with the Securities and Exchange Commission and.
No from back to point, all the volume on squandered unless otherwise clarified on policemen stated and yours dollars.
Slide three summarizes a few highlights or what's the reported 20 countries and I'll get to at least a day.
It's the fact that all throughout the third and fourth or market share could be brought up on by that's covered and Lincoln pandemic persisted.
And somebody else, particularly in Europe, the market will share most of the Guy and we very few people trust and opportunities on the spot market, providing a broken into <unk>, but not that self destruct organic rates.
Setting aside the broader market something on this quarter. So that's helped to fixed we bought and of course helps of course. The first is the growth course has resulted from the restrictions on controls for third and crew changes and controls on the cautionary measures against the government and pandemic.
The second on was a quite heavy drydocking schedule, we faced this quarter as we underwent dry dockings for aframax tanker and four of our small LPG ships is.
Despite all the shops at which we are quite so I'll just from the operational and financial performance and it shows up those strategies allowed us to successfully navigate through and usually rough market conditions.
What was going on operations, our fleet utilization for two three Twentytwenty was about 97%, which was about 115 days, especially from Ohio I was a result of our heavy dry docking schedule in terms of our operations would like to us from getting the scaling up 96%, mainly due to de novo ships being on the spot markets, which was equivalent to 20.
One per cent of our voyage days and.
Both of our interest sport bras and dictated by current market environment. Our commercial flight. It was minimum I would remind us to keep all know spot vessels.
Employed with short waiting times both.
Going forward and we have about 69% of our free day secured the big trucks and for the remainder of the year, we've thought on fleet the Bloom and days for all subsequent free goods generating approximately $80 million and go to truckload revenues, including.
Including the time charter agreements from our JV structures, both on sure George drove sales increase to close to $100 million.
During two from 20 to 20 people to deliver on but seven or have thousand cubic meters, you're building LPG vessels equal on this one in early November wish on one or did you vessel to gas nursery school for photo trading looking.
Okay, and other financial performance highlights <unk> volume drug and your screaming up 37.1 million, Mark and an increase of half a million compared to the same thing on of last year, mainly due to improve and your stemming from our LPG enough on looks time charters or based on charter equivalent continues to rise on.
For the same period of last year on a big time charter equivalent increased by about $1000 driven by increased revenue generated from our time charters in conjunction with a 25% decline and volume cost, mostly due to lower bunker prices within adjusted EBITDA, excluding impairment charges of about 16 million on adjusted.
Net income came up 3.2 million corresponding external adjusted EPS of eight cents I saw this performance on makes it very difficult markets.
Slide four provides an analysis of orphan and employment in terms of charter types out of a fleet of 42 operating vessels, excluding on H. JV vessels. We held five of these on bareboat 26 on time charters and 11 spot compared to the previous quarter, we organize the palm trees and Liberty all four of our small LPG vessels employed on bareboat charters.
Following biggest filing for insolvency.
And even though he's vessels once moving and one of them is already on a per your charter with regard to the impact on.
On our comp and as a result of this incident or she could driven growth going forward and where it goes back quite a significant amount.
In addition, we expect next quarter to share rising operating cost base.
In spite of a difficult economic environment since our last announcement and we concluded five year charters and charter extensions.
Our beef coverage from the demand remains rhuphtwenty twentys and the order of 68% wildcard pure bred coverage for 2021 day, certainly 3% arc on truck and revenues are close to $80 million and including our JV is talking strictly on revenues increase to close to $100 million.
On slide five I'd like to provide a summary on today besting our two joint venture performances with regards to our first joint venture can present and these majority of small if BG ships. We currently have two of the five ships under time charter contracts, but I enjoyed the Calder from the meat you got started the Echo net loss was recently extended for a period of another three months.
You're going to the shelf market conditions and three vessels on the spot market marked well performance and kosher and maybe not that significant to profitability.
Focusing on the second joint venture comprising a free medium sized ships. These are all on the time charter contracts must producing a steady cash flow one of our vessels and GSC and Hamburg under one day scheduled dry docking within two or three 2020, thus affecting profitability for the quarter.
The remaining two vessels would undergo their dry docking within the fourth quarter.
On slide six we provide you with a brief summary.
Oh varies from S&P activity well show up on the September 30, if it took delivery of a seven on how thousand cubic meter and you're building pressurized eco vessel. The eco Alice This vessel was acquired with full equity which is that he is on why we witnessed a declining on free cash at the end of the first quarter.
Related loan drawn down took place at the beginning of October does increasing our cost base once more and I.
So on and as we mentioned earlier on our call. We sold the LPG Guzman system for from the trading with initial transactions you other digital or free there's no 9.5 years.
And if your Mustang and we'll complete on acquisitions will be delivered over 11000 cubic meter eco newbuilding eco believes on financing for these vessels is already in place or equity contribution will be in the order of about 4 million.
And we have about a 55 million of free cash on the gas about on should the day than another 10 million on top you know JV structures capital expenditure commitments I fully covered.
The terms of our free geography, and slide seven our company focuses on regional trade and local distribution of gas there.
On this graph is a snapshot of the published repositioning over and LPG vessels, excluding the JV ships on November 12, Twentytwenty Guardedly, we'd have.
18 of our LPG vessels trading and Europe's 13, and the middle East far East and five vessels in Africa, and only do it you know America.
And I turned over to Mrs. from your second largest 40 financial performance.
Thank you Marty good morning to everyone I will continue the presentation focusing on on financial performance for the third fourth and Twentytwenty.
As mentioned earlier and knock on even in these hazards and market conditions and even with the heavy drydocking schedule and we had one they're going to third quarter, we managed to preserve our revenues on.
Moving on to produce a sense from.
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For these pretty light on this.
I'm, sorry, and bases on the contracts and I hope they know on price per se bunker costs and moderate leverage and our declining find on scores.
No right, there and very low library.
Moving on to Slide day, when we see the income statement for the third quarter expenses went against the same period of the previous.
Good day.
Mortgage revenues came in at 37.1 million, marking and half a million an increase compared to the same period of last year. This increase is attributed to our eyes are wide time charter revenues, then and from Westmoreland Jeez I 22000, She had me right basins and our Aframax tankers from the fourth quarter of 19 and not for the gold and 19 point then the GAAP.
We managed and long time charter contracts on better rates on previously that's boosting our revenue stream and upsetting they learn every new zone to the spot market.
Oh gosh amounted to 3.8 million, marking its went before per cent degrees compared to 19 in spite of higher exposure and the sports market line of Microport and borrow almost 20%.
Based on all of that ball on net revenues for the Beard were 33.3 million correspondence and net revenue and margin over 90%.
Right and goes on.
It's important to me and remarked about 1% decrease compared to Q3 19, mostly on the beauty.
Basins, this morning, and Fuji and I'm focused on two coming off bareboat hardware.
Sales increased protocols face due to the cold and 19 and then ill.
Compared to the second quarter for instance, when I grew expenses related to growth changes in conjunction with board restrictions and safe traveling requirement increases and third quarter by approximately 500000.
Right and goes to 2.3 million correspond to the dry docking on murder Aframax tanker and force more than it did you guys. Since we had communicated and that we didn't weighted when do we had one day are going to completion of nine day dockings. The remaining four we think makes on the fourth quarter of this year.
General and administrative costs degrees and the same.
And last year by about 500000, mainly.
I just on compensation plan Oxys and the same period and that's good and if he knows 2019.
Based on all of these are adjusted to be dies and the order of 16 me and interest and finance cost and most with and degrees mainly at the low.
<unk> decreased and the lowering of our debt.
Based on on that bunch on on like the ball. We ended the second quarter of the year with an adjusted net income of 3.2 million corresponding to and adjusted the actual rate since we started on non into this and use proceeds on diesel for the nine months will swing and Wendy.
Our adjusted net becomes 20.6 million corresponding adjusted EPS.
41 cents and fairly good performance given the different market.
Slide nine demonstrates on performance indicators for the period examined on.
As mentioned earlier on our operations utilization of Btwenty, one thing on the order of 96% aside for four months in terms of where adjusted time charter equivalents, we not do say rise when our board basis by about $750 daily and now mainly to improved time charter rates from sports and reduce we see there.
And beginning of Twentytwenty prior to the public and I think one day it real time charter rates, where it went from 2000 and semi refrigerated vessels and the time charter contract for a single Aframax tanker Congress is currently producing and stronger every day.
Looking on balance sheet is nice and I free gosh is in the order of 28 million I've mentioned do that either.
Line of free cash basis.
And payments of our Newbuilding and did you basin delivered at the end of the third quarter.
Related non drunk on.
And then took place and the beginning on October Twentytwenty, that's increasing our GAAP based ones more I.
Moving has declined and is now and 36.5%.
Yes, and no scheduled principal repayments, we will reduce our leverage by around 40 million per year going forward.
No button on the financing during the remainder of friends Wendy.
Gains of around 70 million and Twentytwenty, one for which we have.
And then your financing before the end of this year. Consequently, we anticipate the current portion of loans and debt to be and used.
The upcoming <unk> upcoming results by around the same amount.
I will now hand, you over to our CEO and Mr. Hardy boxers and we just got to market and company outlook.
And that's supposed to slide 11 hours and market uncertainty brought up on and by the government, but damage to prove and it's very difficult to assess our markets future who can however, provide the summary comment that or how to LPG trade is non crush skewed regions commencing with Europe and make a choice like through pretty logical improvement compared from there.
Second quarter, but overall it remains weak there must continue to go offline for men's women's and men's and upset the boulder and declining markets in Asia, we not just the big line of residential demand for LPG, but going forward. This could potentially be reversed by the requirements your and your PPH plans and commercial operations on on the middle of this year and tradition and PDH plants.
Scheduled to commence operations by the end of this year and <unk>.
U.S. So did your production household and some improvements and the for the quarter compared to the past quarters on this year. However share production still remains low compared to be two before the covered pandemic outbreak low.
Lastly, in the Middle East, we witnessed a rise of LPG exports as a result, and what lifting crude oil production quarters and these may continue going forward to the potential further easing of production quotas.
Moving on to slide 12, we see that you're going to see 20, and you were to corporate.
Rich force more like the juice continues to decline and employment for larger coasters are used seven and a half thousand cubic meters remained relatively steady and therefore rates for this segment did not suffer as much looking on the small LPG trade west of Suez from July on which will show modest and gradual improvement in the market to us and European economies came out of their locked down and.
And we'll start and the moving again.
Very covering the multiples and are sufficient to significant prove the day rates, but at least owners were able to reduce idle time.
Now that the new looked on for aluminum across Europe, we do expect the difficult couple of months ahead, although we believe it will be less severe of on the first half of the here on the video channel four charters are careful and cautious about and potentially difficult winter period, if extended locked down and do materialize.
Going into late Winter spring, we could expect and we could expect to see more interest from charters smoking.
Time charter tonnage and anticipation of improved market conditions.
Eastern market go through the nine months was Twentytwenty and a better state on the west and market. Although there were significant effects from from the pandemic goes from these churn up is China is relatively early recover and led to a less than two months on effect on overtime, and freights and east and from the West.
But your market has been the most on stable for the Bush for sleep east of Suez as much volume of large volumes of pet chems have been removed from the Atlantic whatever whatever it was a great surplus of cargo in the first half of the year and coping with local supply and Asia LPG on the other hand comes from better and showed steady movements within the C Asian.
Region.
And with the spot market all show the agent bunch on her husband market has been holding up better than the time charter market and the west and we did not see the large form and rigs during Q2 as we show on Europe going forward, there's been some resistance and their share took it from charters for patients do much. Good coverage. However, we don't expect and improvement in this market in the coming months and here.
We are hopeful that headwind from the towards the winter months on marketing and begin to recover, especially now with the <unk> positive news on the vaccines against covered shouldn't becoming publicly available regardless of the current situation, which is driven by global economic conditions, our segments specific fundamentals that have an agent fruit and low order.
And book remained positive and we like election day rate on market recovery rates wants to broader economic environment from Mitch from it so.
The small LPG per share segment has substantially older tonnage about 26% of the free because above 20 years of age, hence, we do anticipate and acceleration of demolition and the future since the beginning on schedule plenty, we sell the quotas and the demolition of only one ship more.
Most of your scrapping has gone to halting the bus free moms, mainly due to the cold and love Downs and subsequent closing of demolition yards on.
First and published on his or her 16 vessels what is about 5% of the thought on fleet to be delivered above and beyond of 2022 and local news from all over the book.
On slide 13, and we'll discuss our company's outlook on mentioned with a sharper form on since the beginning of the here the performance of our stock is presenting along with selected the GAAP Scottish peer group and the partial war and the global probably many of you know brick and in both low down resulted in a falling demand for petroleum products. However to use on the first look down and may increasingly mindful and it's up.
Sequentially oil price has begun drives these events affected energy related stocks, which a drug and the broad coordination with oil prices looked in a day falling.
Following the conclusion of the U.S. elections on the positive announcement on the vaccines earlier this month oil price and share prices have begun to increase.
Slide 14, we're out loud and good she viable sets and affect our performance and the quarters ahead, given the market there and one is quite difficult to make from predictions. We feel these related if you keep orange and NAV sister financial performance and the upcoming periods first bond fees will be how spirit's coverage of 100 million brick on trucks did revenues on through the end of 2022.
Secondly, we have all of our 22, k. semi refs and and you see vessels on time charters on improved rates, while the majority of our tankers are also on on on Peter Chaucer's, producing a solid cash flow.
Third born disappear and are very low LIBOR rate environment, Hence are fine on squash will decrease and conservative low.
Last but not the boxes on the soda to reported the views on the vaccines, we on PC take on markets and leverage on its from fundamentals and recover at the force space.
However on the downside is up and have 10 vessels, concluding that beared unemployment operating the end of the year.
Although we have four dry dockings to complete with and the fourth quarter and if this year, thus building and of course base concluding our presentation on slide 15, we present, a brief summary of our companies and Mark and strong points and leveraging up on our leading presence and expertise and the small LPG segment and the fact that should COVID-19 pandemic subsides, we will most likely be.
Be able to enjoy and much more profitable quarters ahead a day.
The stage, our chairman and we summarize our concluding remarks for the period just exam and.
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Thank you Harry.
And the third quarter, and Twentytwenty, stealthgas smoked and quite satisfactory performance given that we operate either rob and difficult market.
With the Cobi 19, pandemic still persisting Oh market is being heavily affected.
Due to impose locked down as we witnessed a declining demand for LPG and charter and sentiment has been affected thus, making them reluctant to take through and positions on period contracts.
Adding to this regulations pertaining to cruise safety and crew changes have added to our costs and we will continue to do so often tool and beat 19 pandemic subsides.
Nevertheless, a company not only achieved strong revenues for banks and the quarter with profitable results.
We feel confident that we can successfully navigate the downmarket even during testing times. In addition, we further knowledge and had a market not being hit by the kind of the 19 pandemic. It seems weird and had a far better around this year.
We have now reached the end of our presentation and we would like to open the floor for your questions. So operator, please open the floor. Thank.
Thank you.
Thank you, ladies and gentlemen, and we will now begin the question and answer session.
As a reminder, if you wish to ask a question. Please press star one on your telephone and wait for your name to be and now if you.
I wish to cancel your request please press <unk>.
[noise].
I guess there are no questions.
No doubt no question at this time please continue.
We'd like to thank you for joining us on their conference call today and for your interest and trust and our company and we wish we were very happy Thanksgiving and look forward and having a with us and yet another next conference call for our fourth quarter results in February 21, Thank you very much.
Thank you.
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