Q4 2020 StealthGas Inc Earnings Call
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Good afternoon, ladies and gentlemen, and welcome to the still guess Q4, and 12 months 2020 financial and operating results call. At this time of participants and listen only mode of don't tell will conduct the question and answer session and instructions will be given at that time.
And if anyone should require assistance during the call you can press star followed by zero on your telephone keep out just to remind you. All of this conference call is being recorded I would now like to hand over to Mr. Michael Jolliffe, the speaker's your meeting and I'll be standing by.
Thank you.
Everybody and welcome to our fourth quarter, and 12 months 2020 earnings conference call and webcast and why.
The who jealous of the chairman of the board of sales gas and with me on our call today is Harry Bath gas the Chief Executive Officer of style of cash along with the Finance officer, Sandy a sack and ice.
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 them and I went to read our disclaimer on slide two of this presentation.
Risks of further disclose and sales gas filing with the Securities and Exchange Commission.
I would also like to point out that all amounts quoted unless otherwise clarified our in patient the stated and United States dollars.
Slide three summarizes the key highlights about fourth quarter 2020 results that we released today.
Our market environment and this last quarter of 2020 remain Fannie unchanged compared to quarter three of 2020.
Main reason for the spot market is of course, the young Guy and COVID-19, pandemic, which greatly affects LPG demand.
Vaccine delays along with the recurring lockdowns prevented any meaningful recovery, particularly and the European region.
Admittedly, we faced a tougher market in Europe, and in Asia, where trade, although primarily spot was indeed more stable and.
And at better freight rates.
Given this environment, where a new time charter activity was quite negligible.
Presence and the spot market was even stronger and in the third quarter of 2020.
More than 16 vessels operating predominantly on the spot market throughout most of the quarter.
And trading risks were high with voyage costs and I'll pause there.
And the binding out of earnings potential.
Even in these difficult markets Dallas cash demonstrates a quite strong performance of managed to end the quarter with the profit.
We will resource for the inverse Italian and adapting to the soft market conditions and leveraging up all of our expertise even managed to improve spud earnings stemming from the Asian region.
We also need to mention the this quarter, we took an expected and.
Well the medium gas carriers and operations as to ask about three medium sized gas carriers under what the schedule dockings within quarter for thus producing an operating loss.
Focusing on our operations our fleet utilization for quarter. Four of 2020 was 98, 5% with about 60 days of technical off highs as the result of the dry docking of two small LPG.
In terms of our operational utilization. That's this came in at 93, 6%, mainly due to more than 16 of our ships operating predominantly in the spot market equivalent to 29% of average days.
Going forward, we have about 50% of about eight days of secured on period charters for the remainder of 2021.
The total fleet employment and days for all subsequent periods generating dollars 81 billion in contracts and revenues.
Including the time charter agreements for our joint venture structures total secured revenues increase to close to $92 million.
During the fourth quarter of 2020, we sold both of the trading are odious small LPG vessel the gas price shop.
Which is $19 95 billion.
Moreover earlier this month, we took delivery of and 11000 cubic meter of pressurized the ice class of new building of LPG. The.
Echo Blizzard, thus completing our capital expansion phase.
Looking at our financial performance highlights our voyage revenues came in at $37 $3 million locking and increase of $1 $2 1 million compared to the same period of last year.
This was primarily due to the increase of revenues stemming from our larger L. P fees and six vessels coming off bareboat, including the for ships redelivered due to the bankruptcy of our charterer.
Compared to the third quarter of 2020.
The time charter equivalent decreased by about $500 a day.
And then our spot exposure increase so does the voyage costs incurred thus the pressing daily time charter equivalent earnings.
Within the adjusted EBITDA, excluding impairment charges that is of about 14 million and.
The adjusted net income came in at the other is one 1 million corresponding to an adjusted EPS of three cents.
Our capital structure remains solid with low gearing of strong cash base and the zero capital commitments and the near future.
It is quite interesting however to comment on our revenue performance.
In spite of and unpredictable and tough market. This was a good year for sales gas given the the excluding non cash items, we generated the net income of almost $17 million corresponding to an earnings per share of 44 of sense.
Indeed, the strong results and mostly attributed to the performance we had during the second quarter of 2020, but still it should be noted that all of our quarters. This year ended with the profit in spite of the difficulties that we face.
Slide number for provides an analysis of our fleet employment.
In terms of charter types out of the fleet of 42 operating vessels and.
Including our <unk> joint venture vessels, we have five of the bareboat 26 on time charters and 11 and the spot market.
Regardless of the difficult economic environment since the last announcement, we concluded 10, new charters and charter extensions.
And she and the majority of these charges are included from the beginning of February onwards, when period activity visibly picks up.
This can be either attributed to seasonal factors or it could possibly be the first sign of a buckets gradual recovery.
A period of coverage for the remainder of the 2021 is and the older of 50% currently out of period coverage for the first quarter of this year is and the order of 74%.
With these deals we managed to preserve our contracted revenues and the order of $80 million, including our joint ventures total secured revenues increase to about $92 million.
And slide five I would like to provide the summary update as to our two joint ventures performance.
The first joint venture, which comprises and it's the majority of the small LPG vessels. Currently has three out of the five total vessels under time charter contracts.
And the time charter contract for the medium gas carrier of the Esso Nebula was recently extended for another three months.
All the vessels operating in the spot market throughout the last quarter of 2020 marks and improved performance as all of these vessels traded and the Asian region.
Focusing on our second joint venture comprising of three medium gas carriers vessels. These are all under time charter contracts, thus producing a steady cash flow.
Two of our vessels the gas kind of.
Brendan and the gas can start other when's the schedule dry docking with in quarter four of 2020, that's affecting profitability for the quarter.
And the dry docking and other costs combined with close to $1 2 million.
In terms of our fee fleet geography presented in slide six.
Company focuses on regional trade and the local distribution of cash.
This graph is a snapshot of the positioning of our LPG vessels, excluding our joint venture vessels as of February the 15th 2021.
Currently we have 15 of our LPG vessels trading in Europe, 16 vessels trading in the Middle East.
And far east and four vessels and in Africa and.
And three and America.
And I will now turn the call over to plenty of satellite.
A lot of as for our financial performance.
And thank you Mr. Joe and Lisa Good morning, everyone and I will continue the presentation focusing on our financial performance for the fourth quarter of 'twenty and 'twenty.
As mentioned earlier and our call increased sports activity during the last quarter of 2020.
And you and profitability with the interim.
Let's move on to slide seven where we see the income statement for the fourth quarter of 2020 against the same period of the previous year voyage revenue, we're scaling that $37 3 million marking of $2 1 million increase compared to the same period of last year. This increase is attributed to a 50% reduction of their productivity and the rise of time.
The charter revenue stemming mostly from the larger LPG vessels.
The school amounted to $5 3 million, marking a 30% increase compared to two for 19 as our sport the exposure increased by 82%.
Based on all of the above our net revenue for the period were 32 million of corresponding to a net dressing the marginal rate of 6%.
Running cost of $14 6 million Mark for about 16% increase compared to Q4 and 19 most of that debuted at the six fewer vessels from bareboat and operating either on time charter or in the spot market.
Greece could change and medical costs due to the COVID-19 pandemic at the world.
And of course base as well.
And I don't think for scaling at about 1 million correspond to the day dosing of two small LPG vessels.
The eight scheduled dry docks and for 'twenty 'twenty, one and all of these dry docking with the budget of almost $3 5 million of hard for small LPG, so not honestly of portion evenly throughout the quarters.
Based on all of the sort of adjusted EBITDA and the order for $13 7 million interest and finance cost margin close to 1.4 million decrease mainly attributed to library degrees and the lowering of our debt free.
And has caused the decrease even further had it not been for swap interest, which for this quarter and get the very low labor levels, which and the order of 500000.
We are currently of about 75 per cent hedged and swap interest will continue to remain at this level as long as library remained so low.
With regards to the income from my J vs and I've mentioned, and I really and our corn losses incurred this quarter at the beauty of the dry docking of two of our medium gas carriers like the coast, including of higher cost of about 2 million.
Based on all of the points analyzed the ball. We ended the first part of 'twenty and 'twenty was and adjusted net income of $1 1 million of corresponded to an adjusted EPS of three cents.
And we frankly don't know how the to designate the profitability for the talk for the whole. It went from March of 2020 out of Johnson net income of 17 million corresponding to and adjust the tpa so for a quite bit for scent and good performance give us the difficult market conditions.
Slide eight demonstrates how the performance of the data for the period, the examine and I've mentioned earlier on our operational utilization for Q4, 'twenty, which is the order of 93 six per cent and $96 one per cent for the whole of 2020 and.
In terms of lot of adjusted time charter equivalent and we noticed a rise and the 900 base of about 600 daily and now two mainly due improved time and it's hard to rates for them. So one would be the Gs, which convey the at the beginning of 'twenty 'twenty and that is prior to the COVID-19 pandemic.
Time charter rates for our 22000 and C b and semi refrigerated vessels and the.
The time charter contract for a single arm for amongst doctors got it and producing a strong revenue.
Looking at the balance sheet and slide nine our free cash from the order of 38 million and why.
To date, we have no further capital expenditure, which means no cash commitments and the near future.
Our gearing is now and the order of 37, 3% based on our scheduled for niche part of the payments, we will reduce our array of Reg bi around 40 million per year, we have normally by the loan refinancing obligations with the weighted 51 and have already completed the majority of balloon refinancing for 'twenty and 'twenty two as well.
I will now hand, you over to our C of O. Mr. Javier Vazquez, who will discuss market and company outlook.
Please proceed with slide 10.
As the market uncertainty brought upon by the COVID-19 pandemic still range, so very difficult to for me and assess our markets future.
However, provide the summary commentary as to the LPG trade and possible scenarios going forward.
In 2020, global LPG loadings amounted to 141.8 million tons, marking and an annual decline of $2 one per cent.
The LPG imports to China, most of the moderate decline of zero point of 2% Y and limited your trade contraction and indeed, you will sharper of imports fell by about 4%.
Focusing on the U the locked down and starting the second quarter of throughout the 22 culture and this kind of demand for small LPG ships.
Other two these trade still down on a combination of lower LPG from refineries combined with weaker industrial and auto gas demand.
That came true offshore scaled back in 'twenty and 'twenty. However, the Greg ship broker analysis pets and volumes are expected to increase by 8% in 'twenty and 'twenty, one backed by both trade and recovering from the COVID-19, lockdown as well as the new U S ethylene export volumes.
On slide 11, and we're seeing that during Q4, 'twenty and 'twenty range for small gas ships remain fairly stable.
Other too early to assess and stabilization of rates just due to seasonal factors of article be deemed as the first side of the gradual market recovery.
Looking at the small LPG trade west of Suez.
All throughout the fourth quarter the spot market continued to be challenging for owners since the beginning of February.
The increase and should things continue to improve all of the COVID-19 vaccination process of intensifies, who might see a better second half of 'twenty to 'twenty one.
Peter of the activity has picked up as well as we have seen a few fixtures, particularly for the 5000 cubic meter the vessels and you spoke shows the market was bad the 11 in Europe, both of LPG and pet Chems has been reasonably active and owners of managed to avoid any significant idle time the.
Periods of market for relatively low with some charts of the renewals and a few short term time charters.
And the increase in spot levels and the near future might probably lead the charter has decided to take more time charter tonnage.
Regardless, regardless of the current situation, which is driven by global economic conditions of our segments specific fundamentals and a lot of and.
Aging fleet No order book remained positive and will likely accelerate our market's recovery rates once of the broader economic environment permits.
The small LPG pressure of segment has the steps how substantial oleds donuts. The 31 per cent of the fleet is above 20 years of age.
Since the last announcement and we have recorded the demolition of for small ships is highly likelihood and witness increased demolition activity within 2021.
As police and published orders of 20 vessels, that's about eight per cent of the total fleet to be delivered until the end of 'twenty 'twenty two with no interest of the orders for 'twenty and 'twenty three.
On slide 12, we discuss our companies out of the commensurate with our share performance since the beginning of 'twenty and 'twenty.
The performance of all of our stock is preserved and along with selected gas carriers peer group and the price of oil and since the beginning of last year and the majority of the shipping stocks following growth correlation to oil price volatility.
It's worth mentioning how other the most shipping stock struggled hearing most of 'twenty and 'twenty, mainly due to the broad market generalization for them because of another negative impact of COVID-19 of the shipping industry and real.
I'll, let the most shipping segments, including LPG had the fairly good here.
Given the market checks of the circumstances that is cash company for years, you should have been far better for a portion of all of our company and we kind of trade.
At about 25% to 50% of NAV that we deem to be very low given both our state the profitability along with a robust balance sheet.
On slide 13, we are outlining the key viable and will affect our performance and the quarters ahead.
And the market turmoil, it's quite difficult to make some predictions because of those related to a few key points of mesh is the financial performance of the upcoming quarters.
First of all of you said you have the total paid coverage of about 95 million of break of pre contracted revenues from.
And Additionally, we opened at several of vessels in the spot market, which poses a risk but at the same kind of gives us significant operating leverage should be that the activity pick up and market rates for the first of.
Although we are reluctant to give any medical predictions, we have calculated that even a small five fond of dollars daily increase and sports rights will increase our EBITDA by about $4 million.
Moreover, we have all of the 22 semi refs and then did you see vessels from time charters at improved rates, while the majority of all the tankers and I've always sort of the period charters producing of Charlotte cash flow.
For fund yourself to be around there and very low LIBOR rate environment has the finance cost will decrease even further.
But most importantly is that shoot vaccines brings the pandemic into remission, we anticipate the market to leverage on its strong fundamentals and recover at quite the first base.
However on the downside, we have 17 vessels, concluding the pair the employment up until the end of 2021. Moreover, we have eight dry dockings for complete within the year. That's building now of course the base.
Concluding our presentation with slide 14, and represent the brief summary of the companies and market strong points and given our good performance, particularly of mixed and unusually difficult year, we feel even more confident that we will perform much better should the market begin to show glimpses of improvement.
Well at this stage of our chairman of the summarize our concluding remarks for the period of examined.
The year 2020 will always be remembered globally for real.
And so associated with the COVID-19 pandemic and the <unk>.
<unk> World was not spared.
With regard to the segment, we operate in LPG demand.
The decline and rates for the majority of the sub segments, we operate and were soft.
And in need during the second half of 'twenty and 'twenty.
The tanker market was affected as well.
As currently rates are of very low levels and the shipping cycle.
And on top of that we were hit with the bankruptcy of one of our charterers, which had to really deliver for of our ships earlier than we had previously agreed.
Yeah.
Nevertheless, with an adjusted net income of almost $17 million corresponding to an adjusted earnings per share of 44 cents generated in 2020, we feel positive for 2021.
Looking ahead, we recognize that market turbulence skus of the COVID-19, pandemic might last and possibly even throughout the whole of 2021.
But we can leverage upon our strength and creating a solid cash base and balance sheet a.
Low gearing and the significant operating leverage we have is.
<unk> joined vessels of joint venture vessels, we operate a fleet of 50 ships.
As our shares trade at low levels. We strongly believe that this is an opportunity for potential investors.
As we have a long standing record of the study improved prudent company with the low leverage and a strong position and the segments of which we operate.
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 you.
Thank you Sir and if you do have a question at this time. Please press the star followed by the number one on your telephone keypad to cancel your question you can push the hassle of thank you once again desktop and want to register of your question and the high.
So from key to cancel.
We have a question and it comes from the line of Rentech events from Jefferies. Please go ahead with your question and stuff.
Thanks, Operator, Howdy, gentlemen, how's it going.
Her around and hope you're well.
Good yeah, yeah, Yeah, all of his good out of here in Houston and post freeze.
Now can you comment on some of the the rates and durations for the 10, new charters are they higher lower or about the same as the expiring contracts and then also for your numerous vessels on spot are you looking at charters on those coming soon or do you want to keep some spot exposure.
Yes, and thank you Randy.
And as you understand because we are in the soft part of the cycle, especially the risk of it still being around obviously, we don't want a fixed too many ships on longer charters at the very low levels. So the idea of used to try and fix ships and shorter charters Josh.
To protect us, let's say for that asked for for the next three to six months and then.
And hopefully if we see a better market to try and fix more ships at higher rates, we don't want to look lock ourselves in and two loss, making or the breakeven charters.
Okay, and then details on the current charters.
And we don't give those but I can tell you the about the same level as previously announced.
Got it alright that makes sense.
And then looking at the first quarter, how has utilization and day rates kind of performed here and the first two months of the quarter.
And listen as you know, it's a bit early to say.
There I have to say that it looks a bit better than the zankel for.
That's why we said at the beginning of the call and that we are slightly optimistic, but we don't want to start the you know of popping champagne bottles, yet I think we are we ought to be the only.
Okay.
And then I guess lastly, just looking at your fleet are you content with where it is now or should we expect more vessel sales and purchases of coming soon and then also on that any thoughts on additional tenders of share of buybacks as your price is obviously at a massive discount to NAV.
And obviously you know starting from your second question Oh at the beginning of the first of all of it the waves.
And we did.
Sharp vendor a buyback.
Yeah.
Was the good thing to do for us and our shareholders and at what should be the risky timing wise because of just what the beginning of the Covid and nightmare and obviously, even the Covid are a problem gets shorter than the stock is still at these levels definitely something but we will put in front of the <unk>.
Board.
But the today I don't think it's sort of thing we are gonna be discussing with the board because we're not yet the out of the woods.
But you know us and we have done a lot of share buybacks and the tender offers when we see exactly how the solid balance sheet and things look good as I said I think we are slightly early.
And I'm now on the strategy and.
Again, and we don't have any big plans now with things being a bit Oh and I believe.
But yes, selling older ships, and maybe replacing some of them with the younger units, maybe something we will look at but there's not a price.
All of the right now we're sold out all of the ship the gas price. So as you might have read 1995 ship. So very very old ships for further trading which shows that there is still appetite for buyers to buy really really old ships.
And and not for it and not take them for the scrapping.
Got it alright, well that's it for me thanks, so much.
Thank you Randy.
Once again, ladies and gentlemen to register your question you can press star followed by CEVA and go to Nathan.
You bet.
And then.
And we appear to have no question at this point, so I'll hand, the conference back to you.
We'd like to thank you all for joining us at the conference call today and for your interest and trust in our company and we look forward of having met with US again of the next call for our Q1 'twenty one 2021 results in mid May and thank you very much.
Ladies and gentlemen, thank you for your participation today. This concludes today's conference and you May now disconnect. Your line. Thank you very much.
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