Q4 2021 StealthGas Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to surpass Q4, 2021 Russell scope.
This time, all participants are in listen only mode.
After the speaker Bruce it they shouldn't it will be a question and answer session to ask a question you would need to press star one now.
I would like to end the conference over to seal I read off yes. Please go ahead Sir.
Good morning, everyone and welcome to our fourth quarter and 12 months' 2021 earnings conference call and webcast.
This is actually on the CF centers guests joining me on the call to these are finding yourself shipments taking notice 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.
This stage if you could all take a moment to read the disclaimer on slide two of the presentation.
It is a further disclosures telegraphs 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 U S dollars.
Today, we're at least I don't think there's much for 2021 and indeed challenging gear governed by the ongoing COVID-19, pandemic energy price increases and overall inflationary pressures.
Unfortunately, the Russian invasion in Ukraine has made our global reality, even more challenging.
Oh, we hope for a pump that fish when a resolution to the extension. During this call. We will discuss are smart enough to try to identify the short term and perhaps longer term effects. They.
At least in the political tension may having broader shipping sector and particularly in the LPG market.
On slide three we summarize the highlights of our fourth quarter and full year 2021 results.
On the fourth quarter, certainly why don't we first unimproved LPG market, particularly in Europe catch we took the opportunity and should go to all of our vessels trading in the area on video charters on the other hand, the market in Asia were softer wherever you had about five vessels trading spot.
When compared to the third quarter funded 21 are we marked an almost 10% reduction of both spot days in commercial fire and ended June 14, who wanted with an improved operational utilization of about 96%.
I said below the activity has picked up hence our fleet coverage increased we now have 49% of our fee based secured and Peter charters for the remainder of 'twenty to 'twenty two.
Total fleet employment days for all subsequent periods generating about 70 million, excluding the JV vessels.
Good revenues.
In terms of our selling purchase activity, we completed the sale and delivery of our 3000 per cubic meter.
Ship vehicle loyalty towards your owners.
That was completed on February 22nd tenants in a second but in addition, we entered into an agreement for the sale of our 5000 cubic meter vessel. If it got inspiration again for further trading both of these transactions will further enhance our cost base and further leverage.
As announced during our previous earnings discussion I will spin off was finalized on December December 3rd 21 show our fourth bankers were transferred to the new NASDAQ listed entity called <unk> PL Petroleum IMTT with.
With the completion of this should be enough. So I guess, it's not a pure play company that focuses on the broader LPG market.
Able to services clients from both short haul and medium haul voyages.
Looking briefly to our financial highlights this quarter, we did account for a tanker operations since those guys. All after the spin off date I almost two thirds.
Search over the way so by default numbers against the same period of last year are not exactly comparable.
Yeah.
In Q4, 'twenty, one our voya dragging your standing at $36 1 million, one 2 million lower than in Q4, 'twenty, mostly due to lost revenues as one of our tankers baluster towards reopening unemployment along with declining revenues.
And normally decline revenues in the region of 1 million generated by a one of a semi ref vessels.
Partially offset by an increase of our small LPG time charter revenues.
Our time charter revenues came in at 31.2 million and were heavily affected by the sharp rise in bunker costs.
The daily banking cost came in at close to 5000 per day in its foreseeing that heavy bunker costs will continue at least for the first half of 'twenty to 'twenty two.
This quarter, we took them up in an impairment charge that was mainly due to the completion of our tankers spin off.
Clothing vision impairment charges when did the last quarter.
21, with an adjusted EBITDA of $14 6 million and an adjusted net income of 3 million looking at the full year results again, excluding the impairments that have got generated 10 million adjusted income corresponding to an EPS of 77 cents.
Following the completion of the spinoff transaction, where sentiment with kind of a well balanced capital structure with low gearing of 37, 7%.
On slide four we have the employment update in terms of charter types and as of March 22 out of a fleet of 36 LPG operating vessels, excluding our seven JV vessels. We have four of these on bareboat 27 on time charter and five in the spot market.
Since our previous announced one of them successfully concluded nine new charters and charter extensions.
Visual fixtures were all done at improved rates as we face a better market, particularly in Europe .
In Q3 21.
Given this improved environment and charters up at their tissue good vessels for a longer period, we agreed on slightly on.
Some slightly longer charters, well have about one year duration.
Our period coverage for the remainder of 'twenty twos in the order of 49% while for the second quarter, a swimming pool averaged 63 per cent.
We have close to 70 million of secured revenues.
$58 million of which is expected to be received within the remainder of the year.
Including our joint venture vessels stopped unsecured whatever you're on it cause us to about 83 million.
On slide five I'd like to provide you an update as to our store.
The joint venture performance as our first joint venture, which comprises the majority of small LPG vessels has only one vessel trading spot since January 22, the rest of the JV fleet are all on video deployment fallen a lot a lot of announcements charters finalize the duration of vehicle lucidity time charter which were.
Prolong to 12 months instead of the original six months.
Our second joint venture comprising of two medium gas carriers plus one under construction.
Both understand charter contracts and not heal being steady cash flows.
With regards to the gasket Brendan the charter ends at the end of March 22, and therefore, we are currently discussing your charter opportunities.
Our JV arrangements combined have a solid customer base of about $40 million.
In terms of our fleet geography in slide six our company focuses on regional trade and local distribution of gas.
Here's a snapshot of the positioning of our vessels, excluding our JV vessels as of February 21.
Currently 70 vessels trade in Europe , 14 vessels in the Middle East far East three vessels in South America, and two vessels in Africa I will now turn the call over to finish second lives for our financial performance.
Thank you Harry and good morning to everyone I will discuss our financial performance for the fourth quarter and 12 months of 2021 .
As mentioned at the beginning of our call year 2021 was governed by the effects of the COVID-19 pandemic upon LPG demand, but most importantly, the significant additions.
Our operating costs through the improved.
It was a boost crew changes and safety restrictions Memorial day in 2021 we witnessed the surge in oil prices, which impacted bunker costs.
Let us turn to slide seven where we see the income statement for the fourth quarter of 2021 against the same period of the previous year.
When you came in at $36 1 million a decrease of $1 2 million compared to the same period of last year, mainly due to loss of revenue from our targeted clean Thrasher and wonder why.
Michael freeze in more detail the clean thrasher pilots it towards a new area airports nuclear deployment vehicle for he spent some idle time for Lendingtree delivery this loss.
In the region of two 2 million was partially offset by the 16% increase over time charter revenues generated from our LPG vessels.
Voyage costs decreased by half a million compared to the same period of last year. This small decrease in voyage expenses was mainly malware contributed to the decline of spot base by 56% and is attribute it to the sharp rise with daily banking costs by almost 2600.
Based on all of the above our net revenues for the period when the order of $51 2 million.
Running costs were up by 400000, compared with Q4 'twenty two if we were to.
The vessels on bareboat.
Declined by 16% along with a further increase of our daily crew costs due to the COVID-19 pandemic.
Impairment charges amounted to $41 5 million 40 million of which correspond to the impairment charge we incurred.
I'm Gonna spinoff.
Based on that ballpark EBITDA, excluding noncash items, such as impairment came in at $14 6 million interest and finance costs like close to 100000 decline. Although interest charges were 400000 less this quarter, we incurred 400000 in swap prepayment, causing arrangement fees for not loan refinancings.
With regards to our income from the Jv's, both Oh by Jb's ended the quarter with an operating profit I was one of the vessels under time charter employment.
As a result of all the points analyzed the ball we ended the fourth quarter of 2021 with a net income excluding impairment of $2 8 million corresponding to an adjusted earnings per share of seven cents.
Briefly to comment on our full year results also compared to 2020 revenues improved we witnessed a sharp rise in our voyage costs due to a higher number of spot days for the year in conjunction with the Green bank good prices.
In addition to these are fleet employment mix altered this year actually several races that were on bareboat in 'twenty 'twenty operated either spot or there any time trying to slide 2021 and therefore, we incur higher operating costs.
Nevertheless, and again, excluding impairment charges, we ended year 2021 with a net income of close to 10 million correspond to an adjusted EBITDA of 27 cents.
Proceeding to slide they give understanding gosh, it's now a pure play LPG company in order to access the dynamic of our LPG fleet.
Looked at the quarterly performance of 2021 exclusively for the LPG is currently not really JV vessels excluded indeed, it was quite interesting to note. The following our TCE revenues remain fairly stable across the quarters, regardless of higher time charter activity, mainly due to the weakening of our spot earnings focusing on when I spot activity for 'twenty.
'twenty one as the quarters went by we gradually reduced both spot and commercialize the time, however high bike. It caused you to continuous increase in oil in their minds as productivity profitability.
In terms of our operating expenses grew constant COVID-19 related charges were the main obstacles in 'twenty 'twenty. One these charges multi year on year increase of 8%. Nevertheless, we did manage to maintain a more stable quarterly operating cost base.
Looking at our balance sheet as slide nine liquidity, including restricted cash is now in the order of 46 million as mentioned in previous earning calls also our 2021 we're very active with vessel refinancing.
Taking this into account along with our scheduled principal repayments with degrees all outstanding debt by 51 million.
Even following the completion of the screen of our gearing ratio remains low in the region of 37, 7%.
Computing, our financial commentary with Slide 10, we will briefly discuss our debt profile and capital structure following the spinoff.
Since the beginning of 'twenty due to winding up until February 22, we underwent a very important project for 1920 vessels, that's exceeding in reshaping our own portfolio defending balloon payments I first balloon payment is now due in March 'twenty, 'twenty, seven and talking about free cash base, an outcome of a refinancing that took place in February 2022.
And reducing our average lower margin by about 50 basis points, which given the relatively low for now a library environment assist us in keeping our finance cost at moderate levels in terms of capital structure not only our company getting continues to be low following the spinoff project, but it's still well below the average getting all of our industry peers.
I will now hand, you over to I see almost a five artists who will discuss market and company outlook.
Yeah.
Moving on slide 11, we'll provide some insight on the LPG market Needless to say that given the current geopolitical tensions in the Ukraine, along with the ongoing COVID-19 pandemic, it's very difficult to foresee.
Clearly our market performance.
Based on research performed by Poten <unk> partners LPG production is expected to increase also out to 'twenty, two and 'twenty three.
Back of U S shale rising production and increased exports from the Middle East OPEC continues to on wind.
Duction cuts.
China will continue to be the demand driver in Asia due to several P. D. H expansion projects, the majority of which about 6 million metric tons will commence production in the second half of 'twenty two.
India's LPG imports are safe to remain high as new LPG terminals in both the western coast and Eastern coast outgrowth and unfortunately, the near term.
In addition to this LPG imports of know Western Europe are expected to increase in the years ahead on the back of a rising petrochemical demand factoring in the recent outbreak of worn Ukraine vision May house, both direct and indirect impacts on LPG and pet Chem trade their direct impact in the event of reduce LPG volumes from Roche.
So it could be a change in trade patterns in Europe and can you just oil prices may cause a further increase in bunch of course.
We must be one of the important indirect negative effect. However at the same time at a higher price with country witness may increase their use of LPG, particularly for industrial use.
As things stand at the U S Europe and other nations have exempted erosion I heard your trade from sanctions.
This is to prevent an already tight market from rallying further however, even if this measure has failed us.
No corner has knock on effects of other sections are already being felt all of course, the oil markets and the broader energy sector or.
Slide 12, we present, the key fundamentals of our small LPG market convention with market rate evolution.
During Q4, 'twenty, one rates improved across all small LPG sub segments, we witnessed a noticeable rise in rates for the three and a half thousand.
You'll be can meet their vessels trading in the west looking.
Looking at the small LPG trade west of Suez, All slide 21, the spot market remains tight, particularly during the winter period.
During the wintertime seasonal factors combined with a balanced fleet have resulted in order owners enjoying better day rates.
Reg has now reached pre pandemic levels on the opinion Chinese have seen considerable activity naturally comes as a result of a tight spot market in charters anticipation.
These statements will continue.
East of Suez during the last couple of months of 'twenty, one that the spot market was tight and charters are about on many occasions struggling to find workable tonnage.
Since then the tightness has eased.
More vessels available in the market in storage have slightly softened looking at the age profile of the small pressurized LPG segment. This segment has substantial old tonnage 27% of the fleet is currently above 20 years of age which is a driving force behind the increase in scrapping activity.
In 'twenty, one seven small pressurized ships have been sold for demolition equivalent to 38% of the current order book.
We might witness further scrapping as we head towards 23, when I am or de carbonization measures such as E X I N C. I O will come into force.
After recent published orders that are 18 vessels on order a to be built in Japan Korea and tend to be built in China not to be delivered until the end of 'twenty 'twenty four.
Slide 13 per sensor company sharper four months over the past 15 months since the beginning of the attitude we took.
We noticed a sharp rise in oil prices on the back of limited oil supply production cuts along with gip geopolitical fears as evident energy related stocks did not follow the same trend guy.
Gosh stock still trades at a discount to NAV.
On slide 14, we are outlining the key variables that will affect our performance in the quarters ahead.
Given the market turmoil, especially now with the current situation in Ukraine is quite difficult to predict our market's future.
Our strong points going forward is that we have a sizable quite diversified fleet that you can easily leverage upon any further market improvement, particularly now that rates have climbed to pre pandemic levels.
In addition, and as we have seen in the past the oil price surge may increase demand for LPG, particularly for industrial use our market fundamentals are quite solid as we enjoyed a relatively low order book, while 26, 27% of the fleet is above 20 years of age on the downside and given the recent geopolitical crisis inflationary pressures.
Of course, maybe become stronger here.
Oil prices continue to rise we will take a further hit on our voyage costs.
Regardless of the global situation our focus in the following quarters would be to adapt to how the seaborne trade in R. L.
LPG market will shape why relying upon our strong fleet and robust capital structure, we feel confident that our strategic decision to make celebrates a pure play LPG company.
The broader LPG spectrum will pay off and strengthen our sales returns.
At this stage I'll summarize our concluding remarks.
So anyone that has been swapped to scores demanding as it required shipping companies adapt to the pressures arising from the ongoing COVID-19 pandemic, along with inflationary pressures as an outcome of rising energy prices regrettably erosion of war outbreak in Ukraine has met their grubhub reality uncertain with considerable affection humanitarian.
Political and economic aspects LPG.
LPG trade will not remain unaffected and we may see further that.
The effects such as changes in trade partners.
Awesome direct ones as further increases in energy prices and wider shot of it of course that may increase such as insurance war risk premium rigs.
Regardless of the Dod environment in 'twenty once they've got swallowed a dynamic space, taking the strategic decision to become a pure play in the broader LPG segment.
Transferring the tankers to a separate listed entity equally important we underwent a large scale projects to refinancing the majority of our fleet reaping the benefits on both cash flow and lowering our costs.
Our year ended with a profit of $10 2 million, excluding the impairment charges a decent performance when taking into consideration the large group increasing our voyage costs grew course related to the COVID-19 pandemic as well expenses for Drydocking against you you do the pandemic and yard restrictions.
Going forward, we cannot vertical markets reality special et cetera that these times however, our sizable fleet our market strong fundamentals LPG rates improvement in the fourth quarter of 'twenty, one along with a healthy capital structure or the strong points somewhat upon which will rely despite any market disturbances that we may face in the near term.
Future.
We have knowledge at the end of our presentation and we'd like to open the floor for your questions.
Yes.
Ladies and gentlemen, we know the game the question and answer session. If you wish to ask a question. Please press star one on your telephone.
We ended the first question from Randy <unk> from Jefferies. Please go ahead. Your line is open.
Howdy team stuff gas how's it going hi, Randy.
A couple of questions first it appears you know the headline rates as you mentioned continued to slowly improve are above pre COVID-19 levels can you provide some details on where the pricing currently is for the market maybe your outlook for 2022, and then more specifically, what's the average rate for the three recently signed.
One year charters you have.
Yes.
I can give you some general numbers, because obviously with the Ukraine crisis. These might go up or down. So we'll give you the numbers, but I Ah trial.
Here too the Ukraine a war.
Mm three and a half thousand I would say around it and a half.
5000, I would say around the nine and a half and seven and a half I would say region 11 and a half.
Yeah.
Nice and then you're saying.
More recently with the conflict that's down a little bit 5%, 10% can you sensitize that it's too early to judge it on there I mean, it might end up to be a positive thing, but as you know we don't like to say too much.
And let's wait and see how long it will last and what other sanctions.
Europe and the U S will take against Russia, and then we can really discuss this.
That's fine and then how do those one year charter rates compare to the kind of spot rates.
For like the MSA.
The recent fixtures were 5% to 10% above the last the previously fixed rates not the spot rates.
Okay.
And then in terms of your vessels sales of gas inspiration when is that going to be delivered to the buyers and then any additional plans for selling some of the other assets.
And as you know ships were trading at a big discount to NAV selling assets at NAV is always in the back of our minds.
That's why we did these two deals that will not only reduce our debt, but also to increase our cash.
As the economy was delivered at the end of February and the inspiration will deliver either in March or beginning of April .
Got it got it Okay, and then you brought it up theyre selling assets at NAV is certainly accretive, especially if you're buying shares at the discount to NAV.
Obviously, you didn't buy any this quarter, you know balance sheets improved outlooks pretty good clearly, there's some uncertainty with Russia, Ukraine, but any thoughts on the share buybacks.
We have discussed this.
Many times, you'll know that we've done many many share repurchases in the past and the tender offer that we did when Covid began.
For one more time as soon as we have COVID-19 .
Still still around the board will not authorized us to buy back shares shortly after the end of Covid.
Before we deploy capital and buying more shares.
Got it that's it.
Seems to be waning, but all right I'll I'll I'll give you a few more months.
I agree with you, but unfortunately is not out yet.
Sure well, we'll get Doctor fast you're on the line to declare a victory but.
Until then until them away Alright last quick question I don't want to hijack the call here, but just for Opex and G&A that clearly uptake during the quarter is that kind of a new run rate was that based on some of the one off events like the spinoff just for modeling purposes.
You'll you'll read the reply to the question yourself I mean, the Opex has been affected by the crew changes in coffee the regulations with quarantine and show on which obviously pushes a cross shop, we hope that this will not be the new run rate.
So you should run basis those numbers for as long as Covid is around as we just said and yes of course G&A you know we have one of the lowest G&A.
Our owned obviously with had been increased G&A because of the extra expenses connected.
Connected with the spin off which by the way the Stuff's got shareholders I got the.
I M. P. P. A common shares and perhaps shares should have done a very good job multiplying that our investments.
Got it.
All right well that is all for me Thanks again Harry.
Thank you Randy.
Thank you usually a question there are no further question at the moment.
If you wish to ask a question. Please press star one on your telephone.
As there are no further questions, we would like to thank you for joining us at our conference call. Today, we look forward to having you with US again at our next call for our Q1 results in my Thank you very much.
That concludes the conference for today. Thank you for participating you may all disconnect.
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Yes.
Uh huh.