Q2 2024 StealthGas Inc Earnings Call
Okay.
Speaker Change: Good day, and thank you for standing by when it come to the Steves Gulf's second quarter 'twenty to 'twenty four results conference call and webcast.
Speaker Change: At this time all participants in listen only mode with no question and answer session at the end.
Speaker Change: Please note that today's conference is being recorded.
Speaker Change: I would now like to turn the conference over to your Speaker, Mr. Michael Jolliffe Chairman of the Board. Please go ahead.
Speaker Change: Good morning, everyone and welcome to our second quarter 2024.
Speaker Change: For this call and webcast.
Speaker Change: I'm, Michael Jolliffe chapter the board of directors and joining me on our call today as usual is I see how you ask us to discuss the buckets and company outlook and Konstantinos system outage to discuss the financial aspects.
Speaker Change: 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.
Speaker Change: If you could all take a moment to read our disclaimer on slide two of this presentation I'd be grateful.
Speaker Change: So further described in <unk> filings with the Securities and Exchange Commission.
Speaker Change: Today, we released our results for the second quarter three months ago I was here announcing to you our record first quarter profits societies with great delight that we have managed to follow up on that by announcing yet another record of quarterly profits.
Speaker Change: So let's proceed to discuss these results and update you on the company's strategy and the market in general.
Speaker Change: Turning to slide three we summarize some highlights of our fleet and operations.
Speaker Change: During the six months, we have sold to smaller vessels.
Speaker Change: Got delivery of two brand new medium gas carriers. We also sold one medium gas carrier owned through our joint venture.
Speaker Change: These have been discussed in the previous call.
Speaker Change: We did not engage in any further sale and purchase activity in the current quarter.
Speaker Change: Yeah.
Speaker Change: With the market remaining firm we were quite active on the chartering side entering into more period charters extending contract coverage for 2025% to 55% of our fleet days.
Speaker Change: We have vast contracted revenues of over $220 million for all subsequent periods, excluding our joint venture vessels.
Speaker Change: And focused on maintaining a minimal spot exposure.
Moving to our financial highlights we continued to produce record results by increasing revenues and reducing costs.
Speaker Change: The 11% reduction in fleet days due to vessel sales voyage revenues increased to $41.8 million or 14% year over year, while they remain flat compared to the previous quarter.
Operator: Good day, and thank you for standing by. Welcome to the StealthGas Second Quarter 2024 Results Conference call and webcast. At this time, all participants are in listen only mode with no question and answer session at the end. Please note that today's conference is being recorded.
Speaker Change: Net income for the second quarter was a record $25 $8 million compared to $10 5 million last year.
Operator: I would now like to have a conference over to your speaker, Mr. Michael Jolliffe, chairman of the board. Please go ahead.
Speaker Change: 146% increase.
Speaker Change: Even better with the earnings per share zero point, 70, marking a 159% increase due to the lower share count as a result of share buybacks.
Michael Jolliffe: Good morning everyone and welcome to our second quarter 2024 earnings conference call and webcast. I'm Michael Jolliffe, chairman of the board of directors and joining me on our call today as usual is our CEO Harry Vafias to discuss the market and company outlook and Konstantinos Sistovaris to discuss the financial aspects. 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. So if you could all take a moment to read our disclaimer on slide two of this presentation, I'd be grateful. Risk are further disclosed in StealthGas' filings with the Securities and Exchange Commission.
Speaker Change: So far this year, we have scaled back the share repurchases and bought back about 0.4 million, whereas during the first half and we actually did not buyback any shares during the second quarter. So there is about $5 $5 million left authorized for share repurchases.
Speaker Change: We've been very active in implementing our debt reduction strategy since the beginning of the up and up until today, we drew down on the $17 million facility to finance the delivery of our M. G. C vessels prepaid four facilities that together with the regular amortization reduced the debt by another one.
Michael Jolliffe: Today, we released our results for the second quarter. Three months ago, I was here announcing to you our record first quarter profits. So it is with great delight that we have managed to follow up on that by announcing yet another record of quarterly profits.
Speaker Change: Third and $7 million.
Speaker Change: Let's just move on to slide four for our fully owned fleet employment us update as of September as we have interesting news on that front.
Speaker Change: Once again, we've had a lot of activity on the chartering side during the summer and ahead of what we hope will be a busy winter.
Michael Jolliffe: So let's proceed to discuss these results and update you on the company's strategy and the market in general. Turning to slide three, we summarized some highlights for our fleet and operations. During the six months, we have sold two smaller vessels and got delivery of two brand-new medium gas carriers. We also sold one medium gas carrier owned through our joint venture. These have been discussed in the previous call. We did not engage in any further sale and purchase activity in the current quarter.
Speaker Change: Today, we announced nine new period charters five of those were extensions with current charterers.
Speaker Change: What is particularly noteworthy.
Speaker Change: Is that the majority of these charterers where for relatively long periods.
Speaker Change: Sure the charters were for three years and three of the charters with her two years always established names.
Speaker Change: This kind of activity activity, certainly bodes well in terms of expectations.
I think longer term, it's normally a sign that charterers are looking to secure tonnage in a rising market ahead of any rises whereas either 40 market nobody is rushing to fix.
Michael Jolliffe: With the market remaining firm, 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 thus contracted revenues of over 220 million for all subsequent periods, excluding our joint venture vessels, and remain focused on maintaining our minimal spot exposure.
Speaker Change: During the latest charters, we have increased our contracted days for 2024% to 85% and for 2025% to 55% already securing over $220 million revenue up to 2027.
Michael Jolliffe: Moving to our financial highlights, we continued to produce record results by increasing revenues and reducing costs. With an 11% reduction in fleet days due to vessel sales, wage revenues increased to $41.8 million or 14% year over year while they remain flat compared to the previous quarter. Net income for the second quarter was a record $25.8 million compared to $10.5 million last year, a 146% increase. Even better with the earnings per share at $0.70, marking a 159% increase due to the lower share count as a result of share buyback.
Speaker Change: At the moment all the vessels are fixed.
Speaker Change: No vessels operating in the spot market that we would expect to have a couple of openings before the year end.
Speaker Change: Lastly, as far as dry dockings for 2020 for two of our vessels went into dry dock during the second quarter and extending into the third quarter and we have five more small LPG vessels scheduled for dry dock before the end of the year.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: In slide five we look separately on our investments.
Speaker Change: That is the interest we holding five vessels through two joint venture structures that.
Speaker Change: But we do not consolidate in our results we use the equity method of accounting.
Speaker Change: The book value of our investments as of June 30 stood at $30 million compared to $42 million at the end of the previous quarter.
Michael Jolliffe: So far this year we have scaled back the share repurchases and bought back about 0.4 million worth during the first half and we actually did not buy back any shares during the second quarter so there is about 5.5 million dollars left to authorize the share repurchases. We have been very active in implementing our debt reduction strategy since the beginning of the year and up until today we drew down on a 70 million dollar facility to finance the delivery of our MGC vessels and prepaid four facilities that together with regular amortization reduce the debt by another 107 million dollars.
Speaker Change: The reduction was due to the sale of the medium gas carrier Echo actuarial during the second quarter.
Speaker Change: As previously discussed during the previous call, we received $24 million in cashes return from the investment from the sale and accumulated profits.
Speaker Change: Other than this there was not much activity in terms of the sale and purchase of a chartering.
Speaker Change: As a reminder, we had initially how invested in for more medium gas carriers that were subsequently sold in there too.
Speaker Change: Two giant.
Speaker Change: She is consistent now as a brand new medium gas carriers and several.
Michael Jolliffe: Let us move on to slide four for our fully owned fleet employment update as of September as we have interesting news on that front. Once again we have had a lot of activity on the chartering side during the summer and ahead of what we hope will be a busy winter. Today we announced nine new period charters, five of those were extensions with current charters. What is particularly noteworthy is that the majority of these charters were for relatively long periods.
Speaker Change: And separately for a small gas carriers or <unk>.
Speaker Change: These vessels are financed.
Speaker Change: The average age of the small gas carrier is 15 years and the joint venture is in its fifth year.
It makes sense to bring that investment Forza, who soon when and if the conditions are right.
Speaker Change: In terms of our fleet geography presented in slide six.
Michael Jolliffe: Two of the charters were for three years and three of the charters were for two years or with established names. This kind of activity certainly boasts well in terms of expectations as fixing longer term is normally a sign that charters are looking to secure a challenge in a rising market ahead of any rises whereas in a forwarding market nobody is rushing to fix. During the latest charters we have increased our contracted days for 2024 to 85% and for 2025 to 55% already securing over 220 million dollars in revenue up to 2027.
Speaker Change: Company, mainly focuses on regional trade and local distribution of gas, while the larger vessels often engaging intercontinental voyages.
Speaker Change: This graph is a snapshot of the positioning of the fleet.
Speaker Change: Including the joint venture vessels as of the end of August.
Speaker Change: The majority of our fleet 19 vessels are 60% currently trade in Europe, particularly in the northwest and in the Mediterranean.
Speaker Change: We have strategically focused over the past several quarters of this area is the freight rates west of Suez continue to command a period, a premium over east of Suez as well as the fact with terminals in that area adhere to strict vetting requirements.
Speaker Change: Favorite modern and well maintained vessels and operators with proficient safety management systems.
Speaker Change: [laughter].
Speaker Change: As such we have looked for opportunities to move vessels out of the Asian market via the Cape of good hope since the Red Sea continues to be unsafe and navigation.
Michael Jolliffe: At the moment all the vessels are fixed. No vessel is operating in the spot market although we would expect to have a couple of openings before the year end. Lastly as far as dry docking for 2024 two of our vessels went into dry dock during the second quarter and extending into the third quarter and we have five more small LPG vessels scheduled for dried up before the end of the year.
Into the Atlantic and I left with only three vessels trading in the middle and far east.
Speaker Change: We will wait for a narrowing of the gap between west and east rates to move more vessels back into the area.
Speaker Change: We also now have five vessels trading in the U S and Caribbean and five in Africa, and some specialized trades.
Michael Jolliffe: In slide five we look separately on our investments. That is the interest we hold in five vessels through two joint venture structures. That we do not consolidate in our results but use the equity method of accounting. The book value of our investments has of June 30 still at 30 million dollars compared to 42 million at the end of the previous quarter. The reduction was due to the sale of the medium gas carrier echo FRL during the second quarter.
Speaker Change: The attacks in the Red Sea by who sees have escalated.
Speaker Change: This means less middle east exports destined for Europe and replaced by U S exports to Europe.
Speaker Change: Our handy sized vessels, particularly due increased transatlantic trade between U S and Europe.
Speaker Change: Finally, I would also like to note that we have been increasingly engaged in ammonia trades.
Speaker Change: [laughter] hand is an M. D C vessels can carry two of our vessels are currently transporting about any cargos.
Michael Jolliffe: As previously discussed during the previous school we received 24 million dollars in cash as a return from investment from the sale and accumulated profits. Other than this there was not much activity in terms of sale and purchase or chartering. As a reminder we had initially co-invested in four more medium gas carriers that were all subsequently sold and the two joint ventures consists now of a brand new medium gas carrier and separately for small gas carriers.
Speaker Change: I will now turn the call over to Constantino sister voice for our financial performance. Thank you.
Speaker Change: Okay.
Thank you Michael and good morning to everyone.
Constantino: We will discuss our financial results that were released today.
Speaker Change: Let's turn to slide seven where we see a snapshot of the income statement for the second quarter and six months of 2024 against the same periods of 2023.
With fewer vessels in the fleet and a corresponding reduction of 11% in fleet days for the quarter and 13% for the six months period.
Michael Jolliffe: All these vessels are financed. The average age of the four small gas carriers is 15 years and the joint venture is in its fifth year, so it would make sense to bring that investment full circle soon when and if the conditions are right.
Speaker Change: Net revenues that is after voyage expenses came in at $39 1 million for the quarter, an increase of 18%.
Michael Jolliffe: In terms of our fleet geography, presented in Slide 6, our company mainly focuses on regional trade and local distribution of gas while the larger vessels often engage in intercontinental voyages. This graph is a snapshot of the positioning of the fleet including the joint venture vessels as of the end of August. The majority of our fleet, 19 vessels are 60% currently trade in Europe, particularly in the north west and in the Mediterranean.
Speaker Change: And $77 8 million for the six months an increase of 16%.
As a result of increased rates due to better market conditions reduced off hires.
Speaker Change: And voyage costs reduced due to lower spot exposure.
Speaker Change: And finally also the addition of two larger vessels in the fleet with higher earnings capacity that country.
Speaker Change: About $12 million in revenues in the first six months.
Michael Jolliffe: We have strategically focused over the past several quarters on this area as the freight rates west of Suez continue to command a premium over east of Suez as well as the fact that terminals in that area adhere to strict vetting requirements, the favour modern and well maintained vessels and operators with proficient safety management systems. As such we have looked for opportunities to move vessels out of the Asian market via the Cape of Good Hope since the Red Sea continues to be unsafe for navigation and into the Atlantic and are left with only three vessels trading in the middle and far east.
Operating expenses were $12 5 million for the quarter down, 7% and $24 million for the six months down 14%.
Speaker Change: Adult of the reduction in the fleet.
Speaker Change: Overall expenses have been under increased pressure due to the inflation, but so far in the first two quarters of 2024, we have managed to contain these pressures in line with the general slowing down.
Speaker Change: The inflation in the economy.
Speaker Change: We also note the decrease in dry docking costs of 0.9 million for the quarter.
Speaker Change: Last year 200, besides vessels were dry docked, whereas this year. It was two smaller vessels smaller LPG.
Michael Jolliffe: We will wait for a narrowing of the gap between west and east rates to move more vessels back in the area. We also now have five vessels trading in the US and Caribbean and five in Africa in some specialised trades.
Speaker Change: And the increase of $1 2 million in G&A costs as a result of an increase in stock based compensation expenses.
Speaker Change: There were no impairments, nor any gains or losses from sale of vessels during the second quarter.
Michael Jolliffe: The attacks in the Red Sea by Houthis have escalated. This means less Middle East exports destined for Europe and replaced by US exports to Europe. Our handy size vessels particularly do increase transatlantic trades between US and Europe. Finally, I would also like to note that we have been increasingly engaged in ammonia trades. The Houthis and MGC vessels can carry two of our vessels currently transporting ammonia cargoes.
Speaker Change: As a result of the increasing revenues and decreasing cost income from operations increased 60% to $16 1 million for the quarter.
Speaker Change: And increased 70% to $33 6 million for the six month period.
Speaker Change: Interest and finance close also slightly increased year on year, but that is because in the first two quarters of last year were included some profits from the selling of swap positions due to the debt prepayments.
Konstantinos Sistovaris: I will now turn the call over to Constantino Sisto Varys for our financial performance. Thank you.
Speaker Change: And that was not the case for the first two quarters of this year.
Konstantinos Sistovaris: Thank you, my dear and good morning to everyone. I will discuss our financial results that were released today. Let us turn to slide 7 where we see a snapshot of the income statement for the second quarter and six months of 2024 against the same period of 2023. With fewer vessels in the fleet and a corresponding reduction of 11% in fleet days for the quarter and 13% for the six month period, net revenues that is after voyage expenses came in at 39.1 million for the quarter and increase of 18% and 77.8 million for the six months and increase of 16%.
Speaker Change: The profits from the investment in the joint venture amounted to $11 5 million for the second quarter and $14 million for the six months.
Speaker Change: In both six month periods.
Speaker Change: Of last year and this year. Besides the operating profit there were profit from sale of vessels.
Speaker Change: This year the profit from the sale of the Echo cereal by their joint venture boosted the investment returns in the second quarter by $9 5 million.
Speaker Change: As a result of the above we ended the second quarter of 2024 with net income of $25 8 million compared to $10 5 million for the same quarter of last year.
Konstantinos Sistovaris: As a result of increased trades, you do better market condition. Reduced of hires and voyage costs reduced due to lower spot and finally also the addition of two larger vessels in the fleet with higher earnings capacity that contribute about 12 million in revenues in the first six months. Operating expenses were 12.5 million for the quarter, down 7% and 24 million for the six months, down 14% as a result of the reduction in the fleet.
146% increase while on an adjusted basis net income was $27 5 million versus $10 7 million last year and 158% increase.
Speaker Change: For the six months period, net income was $43 5 million and $46 7 million on an adjusted basis, 60% and 67% improvement compared to last years six months period.
Speaker Change: Earnings per share for the second quarter were 70% at 159% improvement.
Konstantinos Sistovaris: Overall expenses have been under increased pressure due to inflation, but so far in the first two quarters of 2024 we have managed to contain these pressures in line with the general slowing down of inflation in the economy. We also note the decrease in dry docking costs of 0.9 million for the quarter. Last year, 200 size vessels were dried up, whereas this year it was two smaller vessels, smaller LPGs, and the increase of 1.2 million in zinc-nake costs as a result of an increase in stock based compensation expenses.
Speaker Change: And $121 20 for the six months, a 69% improvement compared to last year.
Speaker Change: These were record quarterly results for the company and the most profitable six months in its history.
Speaker Change: Yeah.
Speaker Change: Moving onto the balance sheet in slide eight our liquidity, including restricted cash was at the end of the quarter $76 6 million reduced by eight 5% compared to December 31st.
Speaker Change: The company in spite of the continuous debt repayments maintained ample liquidity.
Konstantinos Sistovaris: There were no impairments nor any gains or losses from sale of vessels during the second quarter. As a result of the increase in revenues and decrease in costs, income from operations increased 60% to 16.1 million for the quarter, and increased 70% to 33.6 million for the six month period. Interesting finance costs also slightly increased here on year, but that is because in the first two quarters of last year were included some profits from the selling of swap positions due to the debt repayment, and that was not the case for the first two quarters of this year.
Speaker Change: Vessels held for sale that were $34 9 million as of December 31st.
Speaker Change: Were nil as of June 30th.
Speaker Change: There are currently no vessels contracted to be sold.
Speaker Change: Also deposits for vessels that were $23 4 million as of December 31st were nil as of June 30th as the two medium gas carriers were delivered to the company and there are no vessels contracted to be bought.
Speaker Change: Vessels book value increased from $504 3 million to $611 3 million a significant 21% increase.
Speaker Change: Result of the addition of the two medium gas carrier vessels.
Konstantinos Sistovaris: The profits from the investment in the joint venture amounted to 11.5 million for the second quarter, and 14 million for the six months. In both six month periods of last year and this year, besides the operating profits, there were profits from sale of vessels. This year, the profit from the sale of the echo ethereal by their joint venture boosted the investment returns in the second quarter by 9.5 million. As a result of the above, we ended the second quarter of 2024 with net income of 25.8 million compared to 10.5 million for the same quarter of last year, a 146% increase.
The book value of our investments in our joint ventures was $29 8 million.
Speaker Change: A $10 million reduction compared to December 31st as the company received back its investment on the vessels that were sold during the second quarter through a dividend.
Speaker Change: Total assets of the company increased four 4% to 727 8 million compared to December 31st.
Speaker Change: Moving on to the liability side. The current portion of the long term debt was half.
Speaker Change: Two annual repayments of $8 7 million.
Speaker Change: While the long term portion of the debt stood at $106 9 million as of December 31st.
Konstantinos Sistovaris: While on an adjusted basis, net income was 27.5 million versus 10.7 million last year, a 158% increase. For the six month period, net income was 43.5 million and 46.7 million on an adjusted basis, a 60% and 67% improvement compared to last year's six month period. Earnings per share for the second quarter were 70 cents, a 159% improvement, and 120, $1.20 for this. 6 months, a 69% improvement compared to last year.
Speaker Change: Then 140, $445 4 million as of March 31st.
Speaker Change: And was reduced to below a 100 million for the first time in over 15 years.
Speaker Change: Ending at 98.8 million as of June 30th and will be reduced further.
Speaker Change: Third quarter.
Speaker Change: Shareholders' equity increased to $8 5 million, eight 5% or $46 6 million over the six month period.
Concluding our financial commentary with slide nine we will briefly have a closer look at our debt structure.
Speaker Change: This is where the company has focused in recent times.
Konstantinos Sistovaris: These were record quarterly results for the company and the most profitable 6 months in its history. Moving on to the balance sheet in slide 8, our liquidity, including restricted cash, was at the end of the quarter 76.6 million, reduced by 8.5% compared to December 31. The company in spite of the continuous debt repayments, maintains ample liquidity. Vessels held for sale that were 34.9 million as of December 31, were nil as of June 30, as there are currently no vessels contracted to be sold.
Speaker Change: During 'twenty two 'twenty three the company very aggressively have to its outstanding debt with over $154 million of debt repayment.
Speaker Change: Then in the beginning.
Speaker Change: In the beginning of 2024.
Speaker Change: The new chip the facility was concluded in the order of $70 million.
Speaker Change: The brand new vessels.
Speaker Change: And then with an eight year tenor while $85 3 million of existing debt was repaid.
Speaker Change: In the current quarter the company has already prepaid another $21 3 million.
Speaker Change: As a result of the debt amort.
Konstantinos Sistovaris: Also deposits for vessels that were 23.4 million as of December 31, were nil as of June 30, as the two medium gas carriers were delivered to the company and there are no vessels contracted to be bought. Vessels' book value increased from 504.3 million to 611.3 million, a significant 21% increase as a result of the addition of the two medium gas carrier vessels. The book value of our investments in our joint ventures was 29.8 million, a 10 million reduction compared to December 31, as the company received back its investment on the vessel that was sold during the second quarter through a dividend.
Speaker Change: So the debt amortization is now reduced to just $6 4 million per annum compared to $30 million just two years ago.
Speaker Change: And that will allow significantly faster Castro accumulation going forward.
Speaker Change: With close to $70 million in cash the company is now close to being net debt free.
Speaker Change: There are only three mortgage vessels out of 27 in the fleet.
Speaker Change: And that means much lower cash flow break evens for our vessels.
Speaker Change: Obviously, we have eliminated refinancing risk there is only $115 million balloon at the end of 2025.
Speaker Change: And the next balloon is from the finance, we just recently received that matures in 2032.
Konstantinos Sistovaris: Total assets of the company increased 4.4% to 727.8 million compared to December 31. Moving on to the liability side, the current portion of the long-term debt was halved to annual repayments of 8.7 million. While the long-term portion of the debt stood at 106.9 million as of December 31, then 145.4 million as of March 31, and was reduced to below 100 million for the first time in over 15 years, standing at 98.8 million as of June 30, and will be reduced further in the third quarter. Shareholder's equity increased to 8.5 million or 46.6 million over the six month period.
Speaker Change: Yeah.
Speaker Change: I will now hand, you over to our CEO.
Harry <unk>: Harry <unk>, who will discuss market and company outlook.
Speaker Change: Yeah.
Harry <unk>: Moving on slide 10.
We have a brief insight on the LPG market.
Speaker Change: LPG exports increased by a strong four 3% in 'twenty three.
Speaker Change: And we continued to see exports, increasing three 6% in the first half of this year.
Speaker Change: Slightly lower than in the first quarter, but still healthy.
Speaker Change: Exports from the largest LPG exporter in the world. The U S continued to grow unabated.
Speaker Change: And the first six months of this year at 11% and the bulk of the.
Speaker Change: But of course, he came burden along these exports.
Speaker Change: It seems to have been minimal for Q3.
Speaker Change: The issue is now becoming whether the U S will hit an export shipment due to the capacity constraints.
Speaker Change: To avoid that companies like enterprise product partners of energy transfer and Targa already planning capacity expansions are they yours terminal show that volumes can increase by over 20% by the end of 'twenty six on the other hand middle East exports remained flat as long as opex extend its production cuts and until those are lifted would not expect any meaningful.
Konstantinos Sistovaris: Concluding our financial commentary with slide 9, we will briefly have a closer look at our debt structure as this is where the company has focused in recent times. During 2022-23, the company very aggressively halved its outstanding debt with over 154 million of debt repayments. Then in the beginning of 2024, a new cheaper facility was concluded in the order of 70 million for the brand new vessels, and with an eight-year tenor while 85.3 million of existing debt was repaid.
Speaker Change: Change in volumes coming from the Arabian Gulf.
Speaker Change: Although increasing volumes volumes are sent from the U S to Europe LPG demand in Europe has remained relatively flat and a lot will depend on whether we're experiencing the same mild winter as we did last year.
Speaker Change: To know that the one year phase in of the import ban on Russian volumes that was introduced last year comes into effect. This December this means a virtual volumes that accounted for 6% of Importune 23 will be banned countries such as Poland that imported LPG via rail will not have to rely more on.
Konstantinos Sistovaris: In the current quarter, the company has already prepared another 21.3 million. As a result of the debt amortization is now reduced to just 6.4 million per annum, compared to 30 million dollars just two years ago. And that will allow significantly faster cash flow accumulation going forward. With close to $70 million in cash, the company is now close to being net debt free. There are only three mortgage vessels out of 27 in the fleet, and that means much lowered cash flow break evens for our vessels. Obviously we have eliminated refinancing risk. There is only one 15 million dollars balloon at the end of 2025, and the next balloon is from the finance we just recently received that matures in 2032.
Speaker Change: Seaborne imports in terms of imports the driving force of LPG demand is China and India.
Speaker Change: During the first half of this year seaborne import volumes in China, but almost by 11% year on year and even hit an all time high of one 4 million barrels a day in July.
Speaker Change: We're 45% of LPG demand is for household usage is expected to grow as the economy by 7% next year.
Speaker Change: The World Bank and LPG demand is expected to grow alongside of it.
Speaker Change: Indian elections were held through June as they come but government has so far had been supportive of LPG consumption propelling the nation to number three important the world won't be elections in China are a driving force for LPG demand is of course, the expansion of PVH capacity for the production of propylene wildly.
Speaker Change: Utilization rates remain subdued during the first half of the year LPG remains competitive compared to naphtha during this period.
Harry Vafias: I will now hand you over to our CEO, Harry Vafias, who will discuss market and company outlook. Moving on slide 10, we have a brief insight on the LPG market. LPG exports increase by strong 4.3% in 23, and we continued to see exports increasing 3.6% in the first half of this year, slightly lower than in the first quarter, but still healthy. Exports from the largest LPG export in the world, the US continued to grow and abated in the first six months of this year at 11%, and the impact of Hurricane Burial on these exports seems to have been minimal for Q3.
Speaker Change: <unk> 23, non Youll PVH plants came on stream.
Speaker Change: $5 4 million tons of capacity so far this year six new plants have started up.
Speaker Change: Another $4 2 million tons of capacity additions are expected to reach 5 million tons by the end of this year.
Speaker Change: The other 6 million tons are scheduled for 25.
Speaker Change: So from over 60% compared to 23 levels.
Speaker Change: Slide 11, we present some of the fundamentals in our shipping market commencing with time charter rates for our market.
Speaker Change: They tend to fall during the second quarter by remained firmed at historically high levels for the smaller vessels, while we did experience.
Speaker Change: I dropped for the larger ships.
Harry Vafias: The issue is now becoming whether the US will hit an export ceiling due to the capacity constraints. To avoid that, companies like Enterprise Product Partners Energy Transfer and Target already planning capacity expansions at the US terminal so that volumes can increase by over 20% by the end of 26. On the other hand, Middle East exports remain flat, as long as Ropec extend its production cuts, and until those are listed, we will not expect any meaningful change in volumes coming from the Arabian Gulf.
Speaker Change: Other small LPG trade, where we saw continued strength in parts of the pressurized market through Q2, especially in the Atlantic the sport market West of Suez will start on tonnage and rates remained firmed.
Speaker Change: East of Suez spot market on the other hand were softer.
Speaker Change: Low rates and a more ideal time experienced by owners.
Speaker Change: Video side, we saw further rate rises, especially in the west.
Speaker Change: Most vessel sizes and the pressurized market I know historically high levels.
Speaker Change: West of Suez and we also see charter skin tissue go longer periods than one year.
Harry Vafias: Although increasing volumes are sent from the US to Europe, LPG demand Europe has remained relatively flat, and a lot will depend on whether we experience the same mild wind rush we did last year. To know that the one-year phase of import ban on Russian volumes that was introduced last year comes into effect this December. This means that Russian volumes that accounted for 6% of imports in 23 will be banned. Countries, such as Poland that imported LPG viral, will now have to rely more on carbon imports.
Speaker Change: West of Suez container to ship in significantly both eastern market on the handy size segment, we saw a softening in the spot market through Q2. This is partly due to more difficult trading conditions for LPG and partly due to the pet chem market apart from ethylene underperforming compared to expected activity also the time chart.
The market experienced a softening of rates compared to Q1 short term, we expect the segment.
Speaker Change: The D C market to show improvement in Q4 medium to longer term fundamentals for the handset segment looks strong with an almost nonexistent order book, especially for stand up 10 minutes tonnage. The main risk factor at the moment remains a growing mid size order book, which could worst case scenario.
Harry Vafias: In terms of imports, the driving force of LPG demand is China and India. During the first half of these years, import volumes in China rose by 11% year on year, and even hit an all-time high of 1.4 million barrels a day in July. India was 45% of LPG demand is for household usage expected to grow as economy by 7% next year, according to World Bank, and LPG demand is expected to grow alongside of it.
Speaker Change: Pressure on the Honda segment on the medium sized ships as you can.
Speaker Change: Secondly, shelf there, we'll just see market compared to Q1 resulted in a softer Q2 also for this market. Although a limited number of spot vessels were available the lack of demand led to falling rates and some vessels, including idle time.
Harry Vafias: The Indian elections will help through June and the incumbent government, but have so far been supportive of LPG consumption, propelling the nation to number two important the world, one of the elections. In China, the driving force will be due to the mandate, of course, the expansion of P.D.H, capacity for the production of propellant. While utilization rates remain subdued during the first half of the year, LPG remain a competitive fuel compared to NAFTA during this period.
Speaker Change: Result, also the time charter age or downtown correction. However, the limit the number of new buildings entering the market before 'twenty five.
Speaker Change: As our system and eliminating the fall however, more long term the order book situation framed. This is starts to look what are some more orders are piling in with 27 and 28 deliveries.
Speaker Change: Your book ratio has now surpassed 40%.
Speaker Change: There's a lot of optimism I was this vessel social carrier ammonia and ammonia is a candidate for the next generation of Greenfield for shipping, but this just isn't a speculation at this point and if this doesn't happen there's going to be an oversupply of vessels.
Harry Vafias: During 23, 9 new P.D.H, pledge came on stream, adding 5.4 million tons of capacity. So far, this year, six new plans have started up, adding another 4.2 million tons, and capacity additions are expected to reach 5 million tons by the end of this year. Another 6 million tons are scheduled for 25, a growth of over 60% compared to 23 levels.
Speaker Change: The order book situation is quite different in the overlooked chondrocytes fleet was zero vessels delivering over the next year and the order book remains healthy. Although recently with this we did see some new orders being placed for five ships 427 and 28.
Harry Vafias: Slide 11, we present some of the key fundamentals in our shipping market, commencing with time chart rates for our market. Rates tend to fall during the second quarter by the remained firm at historical high levels for the smaller vessels. Why would the experience I drop for the larger ships? At the small LPG trade, we saw continuous strength in touch of the preferred market we could do, especially in the Atlantic. The support market west of Suez was tied on tonnage and rates remained firm.
Speaker Change: As far as our core fleet is concerned.
Speaker Change: Pressurized ships. This situation has not changed much we're continuing to show only a handful of vessels being ordered with the order book ratio near the 5% Mark for the next three years.
Speaker Change: This time ordering coupled with the fact that almost a third of the fleet is over 20 years of age make the fundamentals for this segment look quite promising we would like to have seen more scrapping given the age of the fleet, but due to the fair market owners have not shown any vessels for scrapping thus far.
Harry Vafias: The east of Suez put market on the other hand was softer, with both lower rates and more idle time experience by owners. On the period side, we saw further rate rises, especially in the west. Most vessel sizes in the pressure as market are now historically high levels. West of Suez, and we also see charted skin to secure longer periods than one year. The edge west of Suez continued to sit in significantly above the eastern market.
Speaker Change: And the last slide we're outlining some of the key variables that may affect our performance in the quarters ahead.
Speaker Change: Short term, we're entering the seasonally stronger winter periods, and we expect activity to pick up as demand for LPG, particularly for heating rises.
Speaker Change: Well continue to remain optimistic on the longer term for the reasons, we analyze the earlier.
Speaker Change: To sum up today, we announced yet another record breaking quarter profits that were more than double compared to last year of $25 8 million for the second quarter was 24 are at an all time high for the company in the 20 years since its inception.
Harry Vafias: On the hand side segment, we saw a softening in the spot market through Q2. This is partly due to more difficult trading conditions for LPG, and partly due to the peck and market, apart from Eiffelon, underperforming compared to expected activity. Also, the time chart and market experience a softening of age compared to Q1. Short term expect the segment, the PC market for improvement in Q4. Medium to longer term, the fundamentals for the hand side segment look strong, with an almost non-existent order book, especially for standard semi ref tonnage. The main risk factor at the moment remains the growing mid size order book, which could worst case scenario, put down pressure on the hand side segment.
Speaker Change: While we managed to contain our operating costs, we took full advantage of a strong chartering market fixing vessels at higher rates.
Speaker Change: During that in previous quarters, whose benefits we are enjoying now the bottom line was further bolstered by the return from our investments related to our sale of a vessel by one of our JV as we continue with our strategy of debt reduction and in the current quarter. We have so far we paid $21 million of debt and now have 20.
Harry Vafias: On the medium side ships, a significantly softer VLGC market compared to Q1 resulted in a softer Q2, also for this market. Although a limited number of spot vessels were available, the lack of demand led to falling rates, and some vessels incurring idle time. As a result, also the time chart rate showed downed on correction, however the limited number of new buildings entering the market before 25 has assisted in limiting the fall.
Speaker Change: Four unencumbered vessels.
Speaker Change: Vast majority of the fleet and net debt and net debt ratio below 5%.
Speaker Change: Second part of our strategy was to fixed on period.
Speaker Change: The advantage of the strong market, while securing our cash flow we have successfully implemented that so far as the older vessels are fixed and have managed to secure employment for 55% of the fleet for next year.
Harry Vafias: However, more long term, the order book situation for AMGC's starts to look worrisome. More orders are piling in, with 27 and 28 deliveries, and the order book ratio has now surpassed 40%. There is a lot of optimism as these vessels are also carry ammonia, and ammonia is the candidate for the next generation of clean fuel for shipping. But this is still a speculation at this point, and if this doesn't happen, there's going to be an oversupply of this.
Speaker Change: All we have secured $220 million in future revenues.
Speaker Change: Continuously improve our profitability setting the bar higher every time, we believe we continue to be a sound undervalued investment not just because we are optimistic on the market and.
Speaker Change: <unk> been producing results, but also because we're trading at a discount in terms of price and price to earnings ratio.
Now at the end of our presentation I'd like to thank you for joining us at our conference call and for your interest and trust.
Harry Vafias: The order book situation is quite different in the overlooked handi-size fleet, was a zero vessels delivering over the next year, and the order book remains healthy, although recently we did see some new orders being placed for five ships for 27 and 28. As far as our core fleet is concerned, the press rise ships, the situation has not changed much, we continue to show only a handful of vessels being ordered with the order book ratio near the 5% mark for the next three years.
Speaker Change: In our company and we look forward to having you again with us at our next call for our Q3 results.
Speaker Change: In November thank you very much.
Speaker Change: This concludes today's conference call. Thank you all for participating you may now disconnect your lines. Thank you.
Speaker Change: Okay.
Harry Vafias: This same ordering couple with the fact that almost the third of the fleet is over 20 years of age, make the fundamentals for this segment look quite promising. We would like to have seen more scrapping given the age of the fleet, but due to the third market owners have not sold any vessels for scrapping thus far.
Speaker Change: [music].
Speaker Change: Okay.
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Harry Vafias: In the last slide we are outlining some of the key viables that may affect our performance in the quarters ahead. In the short term, we are entering the seasonally strong winter periods, and we expect activity to pick up as demand for LPG particularly for heating rises. We continue to remain optimistic on the longer term for the reasons we analyzed earlier.
Speaker Change: Okay.
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Speaker Change: Yeah.
Harry Vafias: To sum up, today we announce yet another record breaking quarter, profits that were more than double compared to last year of 25.8 million for the second quarter of 24 are at an all-time high for the company in the 20 years since its inception. While we managed to contain our operating costs, we took full advantage of a strong chartering market fixing vessels that high rates during that and previous quarters whose benefits we are enjoying now.
Speaker Change: Yes.
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Harry Vafias: The bottom line was further bolstered by the return from our investments related to the sale of a vessel by one of our JVs. We continue with the strategy of debt reduction, and in the current quarter we have so far paid 21 million of debt, and now have 24 unincubbed vessels, the vast majority of the fleet, and a net debt ratio below 5%. The second part of our strategy was to fix on period taking advantage of the strong market while securing our cash flow.
Harry Vafias: We have successfully implemented that so far, as all the vessels have fixed and have managed to secure employment for 55% of the fleet for next year, overall we have secured 220 million dollars in future revenues. As we continuously improve our profitability, setting the bar higher every time, we believe we continue to be a sound undervalued investment, not just because we are optimistic on the market and have been producing results, but also as we are getting at the discount in terms of price to NAV and price to earn its ratio.
Operator: We have now the end of our presentation, and I'd like to thank you for joining us at our conference call and for your interest and trust in our company, and we look forward to having you again with us at our next call for our Q3 results in November. Thank you very much. This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you. Thank you all for joining us at our next call for our Q3 results in November.
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Michael Jolliffe: Michael Jolliffe, Harry Vafias, StealthGas, StealthGas, StealthGas, StealthGas, StealthGas Michael Jolliffe, Harry Vafias Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias Michael Jolliffe, Harry Vafias Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias Michael Jolliffe, Harry Vafias, Stealth Michael Jolliffe, Harry Vafias, StealthGas Michael Jolliffe, Harry Vafias, Stealth Michael Jolliffe, Harry Vafias, StealthGas Good morning everyone and welcome to our second quarter 2024 earnings conference call of Webcast. I'm Michael Jolliffe, chairman of the Board of Directors and joining me on our call today, as usual, is our CEO Harry Vafias to discuss the market and company outlook and Konstantinos Sistovaris to discuss the financial aspects.
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Speaker Change: Good morning, everyone and welcome to our second quarter 2024 earnings conference call and webcast.
Michael Jolliffe Chairman of the board of Directors and joining me on our call today as usual is I see how are you I guess to discuss the market and company outlook and Konstantinos. This device to discuss the financial aspects.
Speaker Change: 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.
Speaker Change: So if you could all take a moment to read our disclaimer on slide two of this presentation I'd be grateful.
Speaker Change: Further described in <unk> filings with the Securities and Exchange Commission.
Speaker Change: Today, we released our results for the second quarter.
Speaker Change: Three months ago I was here announcing to you our record first quarter profits sizes with great delight that we have managed to follow up on that by announcing yet another record quarterly profit.
So let's proceed to discuss these results and update you on the Companys strategy and the market in general.
Speaker Change: Turning to slide three we summarize some highlights for our fleet and operations.
Speaker Change: During the six months, we have sold to smaller vessels.
Speaker Change: Delivery of two brand new medium gas carriers. We also sold one medium gas carrier owned through our joint venture.
These have been discussed in the previous call.
Speaker Change: We did not engage in any further sale and purchase activity in the current quarter.
Speaker Change: Yeah.
Speaker Change: With the market remaining firm we were quite active on the chartering side entering into more period charters extending contract coverage for 2025% to 55% of our fleet days.
Speaker Change: We have vast contracted revenues of over $220 million for all subsequent periods, excluding our joint venture vessels.
Speaker Change: <unk> focused on maintaining a minimal spot exposure.
Speaker Change: Moving to our financial highlights we continued to produce record results by increasing revenues and reducing costs.
Speaker Change: With an 11% reduction in fleet days due to vessel silos voyage revenues increased to $41.8 million or 14% year over year, while they remain flat compared to the previous quarter.
Speaker Change: Net income for the second quarter was a record $25 $8 million compared to $10 5 million last year.
Speaker Change: 146% increase.
Speaker Change: Even better when they add earnings per share zero point 70, marking a 159% increase due to the lower share count as a result of share buybacks.
Speaker Change: So far this year, we have scaled back the share repurchases and bought back about 0.4 million, whereas during the first half.
Speaker Change: Actually did not buyback any shares during the second quarter. So there is about $5 $5 million left authorized for share repurchases.
Michael Jolliffe: 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. So if you could be successful, risks are further disclosed in StealthGas' filings with the Securities and Exchange Commission. Today we released our results for the second quarter. Three months ago I was here announcing to you our record first quarter profits, so it is with great delight that we have managed to follow up on that by announcing yet another record of quarterly profits. So let's proceed to discuss these results and update you on the company's strategy and the market in general. General.
Speaker Change: We've been very active in implementing our debt reduction strategy since the beginning of the up and up until today, we drew down on the $17 million facility to finance the delivery of RMG sea vessels pre paid for facilities that together with regular amortization reduced the debt by another one.
Speaker Change: Hundred and $7 million.
Speaker Change: Let's just move on to slide four for our fully owned fleet employment update as of September as we have interesting news on that front.
Speaker Change: Once again, we've had a lot of activity on the chartering side during the summer and ahead of what we hope will be a busy winter.
Speaker Change: Today, we announced nine new period charters five of those were extensions with current charterers.
Michael Jolliffe: Turning to Slide 3, we summarise some highlights for our fleet and operations. During the six months, we have sold two smaller vessels and got delivery of two brand new medium gas carriers. We also sold one medium gas carrier owned through our joint venture. These have been discussed in the previous call. We did not engage in any further sail and purchase activity in the current quarter. With the market remaining firm, 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 thus contracted revenues of over 220 million for all subsequent periods, excluding our joint venture vessels and remain focused on maintaining our minimal spot exposure.
Speaker Change: What is particularly noteworthy.
Joe: Is that the majority of these charterers where for relatively long periods Joe.
Joe: The charters for three years and three of the charters with her two years always established names.
Joe: This kind of activity activity, certainly bodes well in terms of expectations.
Speaker Change: Fixing longer tabbies, nobody assign that charterers are looking to secure tonnage in a rising market ahead of any rises, whereas either 40 market nobody's rushing to fix.
Speaker Change: During the latest charters, we have increased our contracted days for 2024% to 85%.
Speaker Change: 2025% to 55% already securing over $220 million revenue up to 2027.
Michael Jolliffe: Moving to our financial highlights, we continued to produce record results by increasing revenues and reducing costs. With an 11% reduction in fleet days due to vessel sales, voyage revenues increased to $41.8 million or 14% year over year while they remain flat compared to the previous quarter. Net income for the second quarter was a record $25.8 million compared to $10.5 million last year, a 146% increase. Even better with the earnings per share at $0.70, marking a 159% increase due to the lower share count as a result of share buybacks.
Speaker Change: At the moment all the vessels are fixed.
Speaker Change: No vessels operating in the spot market that we would expect to have a couple of openings before the year end.
Speaker Change: Lastly, as far as dry dockings for 2020 for two of our vessels went into dry dock during the second quarter and extending into the third quarter and we have five more small LPG vessels scheduled for dry dock before the end of the year.
Speaker Change: [laughter].
Speaker Change: In slide five we look separately on our investments.
Speaker Change: That is the interest we hold in five vessels through two joint venture structures that.
Speaker Change: But we do not consolidate in our results we use the equity method of accounting.
Speaker Change: The book value of our investments as of June 30 stood at $30 million compared to $42 million at the end of the previous quarter.
Michael Jolliffe: So far this year, we have scaled back the share repurchases and bought back about 0.4 million worth during the first half, and we actually did not buy back any shares during the second quarter, so there is about $5.5 million left to authorize for share repurchases. We have been very active in implementing our debt reduction strategy. Since the beginning of the year, and up until today, we drew down on a $70 million facility to finance the delivery of our MGC vessels and prepaid four facilities that together with regular amortization reduce the debt by another $107 million.
Speaker Change: The reduction was due to the sale of the medium gas carrier <unk> during the second quarter.
Speaker Change: As previously discussed during the previous call, we received $24 million in cashes return from the investment from the sale and accumulated profits.
Speaker Change: Other than this there was not much activity in Sakhalin patchy so chartering.
Speaker Change: As a reminder, we had initially how invested in for more medium gas carriers that were subsequently sold in the two giant.
Speaker Change: <unk> consists now as a brand new medium gas carriers and several.
Michael Jolliffe: Let us move on to slide four for our fully owned fleet employment update as of September, as we have interesting news on that front. Once again, we have had a lot of activity on the chartering side during the summer, and ahead of what we hope will be a busy winter. Today, we announced nine new period charters. Five of those were extensions with current charters. What is particularly noteworthy is that the majority of these charters were for relatively long periods.
Speaker Change: And separately for a small gas carriers or <unk>.
Speaker Change: These vessels are financed.
Speaker Change: The average age of the small gas carrier is 15 years and the joint venture is in its fifth year.
Speaker Change: Makes sense to bring that investment <unk>, who soon when and if the conditions are right.
Speaker Change: In terms of our fleet geography presented in slide six.
Speaker Change: Company, mainly focuses on regional trade and local distribution of gas, while the larger vessels often engaging intercontinental voyages.
Speaker Change: This graph is a snapshot of the positioning of the fleet.
Michael Jolliffe: Two of the charters were for three years, and three of the charters were for two years, or with established names. This kind of activity certainly bodes well in terms of expectations, as fixing longer term is normally a sign that charters are looking to secure a challenge in a rising market ahead of any rises, whereas in a forwarding market nobody is rushing to fix. XX. During the latest charters, we have increased our contracted days for 2024 to 85% and for 2025 to 55% already securing over $220 million in revenue up to 2027.
Speaker Change: Including the joint venture vessels as of the end of August.
Speaker Change: A majority of athlete 19 vessels, 60% currently trade in Europe, particularly in the northwest and in the Mediterranean.
Speaker Change: We have strategically focused over the past several quarters on this area.
Speaker Change: Eight rates west of Suez continue to command a period, a premium over east of Suez as well as the fact, what's happening in that area adhere to strict vetting requirements. The favorite of modern and well maintained vessels and operators with proficient safety management systems.
Speaker Change: [laughter].
Speaker Change: As such we have looked for opportunities to move vessels asset the Asian market via the Cape of good hope since the Red Sea continues to be unsafe and navigation.
Michael Jolliffe: At the moment, all the vessels are fixed. No vessel is operating in the spot market, although we would expect to have a couple of openings before the year end. Lastly, as far as dry docking for 2024, two of our vessels went into dry dock during the second quarter and extending into the third quarter, and we have five more small LPG vessels scheduled for dry dock before the end of the year.
Speaker Change: And into the Atlantic and I left with only three vessels trading in the middle and far east.
We will wait for a narrowing of the gap between west and east rates to move more vessels back into the area.
Speaker Change: We also now have five vessels trading in the U S and Caribbean and five in Africa, and some specialized trades.
Michael Jolliffe: In slide five, we look separately on our investments. That is the interest we hold in five vessels through two joint venture structures. That we do not consolidate in our results, but use the equity method of accounting. The bulk value of our investments as of June 30 is still at $30 million compared to $42 million at the end of the previous quarter. The reduction was due to the sale of the medium gas carrier, Echo Ethereal, during the second quarter.
Speaker Change: Yeah.
Speaker Change: The attacks in the Red Sea by who sees.
Speaker Change: Escalated.
Speaker Change: This means less middle east exports destined for Europe and replaced by U S exports to Europe.
Speaker Change: Handy size vessels, particularly due increased trans Atlantic trade between U S and Europe.
Speaker Change: Finally, I would also like to note that we have been increasingly engaged in ammonia trades.
Speaker Change: That is an M. D C vessels can carry two of our vessels are currently transporting about any cargos.
Michael Jolliffe: As previously discussed during the previous school, we received $24 million in cash as a return from investment from the sale and accumulated profits. Other than this, there was not much activity in terms of sale and purchase or chartering. As a reminder, we had initially co-invested in four more medium gas carriers that were all subsequently sold, and the two joint ventures consists now of a brand new medium gas carrier and separately for small gas carriers.
Speaker Change: I will now turn the call over to Konstantinos <unk> Novartis for our financial performance. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Konstantinos: Thank you Michael and good morning to everyone.
Speaker Change: I will discuss our financial results that were released today.
Speaker Change: Let's turn to slide seven where we see a snapshot of the income statement for the second quarter and six months of 2024 against the same periods of 'twenty three.
Speaker Change: With fewer vessels in the fleet and a corresponding reduction of 11% in fleet days for the quarter and 13% for the six months period.
Michael Jolliffe: All these vessels are financed. The average age of the four small gas carriers is 15 years, and the joint venture is in its fifth year, so it would make sense to bring that investment full circle soon when and if the conditions are right.
Speaker Change: Net revenues that is after voyage expenses came in at $39 1 million for the quarter, an increase of 18%.
Michael Jolliffe: In terms of our fleet geography, presented in slide six, our company mainly focuses on regional trade and local distribution of gas while the larger vessels often engage in intercontinental voyages. This graph is a snapshot of the positioning of the fleet, including the joint venture vessels, as of the end of August. The majority of our fleet, 19 vessels, or 60 percent, currently trade in Europe, particularly in the northwest and in the Mediterranean.
Speaker Change: And $77 8 million for the six months an increase of 16%.
Speaker Change: As a result of increased rates due to better market conditions reduced of hires.
Speaker Change: And voyage costs reduced due to lower spot exposure.
And finally also the addition of two larger vessels in the fleet with higher earnings capacity that country.
About 12 million in revenues or six months.
Michael Jolliffe: We have strategically focused over the past several quarters on this area, as the freight rates west of Suisse continue to command a premium over east of Suisse, as well as the fact that terminals in that area adhere to strict vetting requirements, the favor modern and well-maintained vessels and operators with proficient safety management systems. As such, we have looked for opportunities to move vessels out of the Asian market via the Cape of Good Hope, since the Red Sea continues to be unsafe for navigation and into the Atlantic and are left with only three vessels trading in the middle and far east.
Speaker Change: Operating expenses were $12 5 million for the quarter down, 7% and $24 million for the six months down 14% as a result of the reduction in the fleet.
Speaker Change: Overall expenses have been under increased pressure due to the inflation, but so far in the first two quarters of 2024, we have managed to contain these pressures in line with the general slowing down.
Speaker Change: The inflation in the economy.
Speaker Change: We also note the decrease in dry docking costs 0.9 million for the quarter.
Speaker Change: Last year, two handy sized vessels were dry docked, whereas this year. It was two smaller vessels smaller LPG.
Michael Jolliffe: We will wait for a narrowing of the gap between western east rates to move more vessels back in the area. We also now have five vessels trading in the US and Caribbean and five in Africa in some specialized trades.
Speaker Change: And the increase of $1 2 million in G&A costs as a result of an increase in stock based compensation expenses.
Michael Jolliffe: The attacks in the Red Sea by Houthis have escalated. This means less Middle East exports, destined for Europe and replaced by US exports to Europe. Our handy size vessels particularly do increase transatlantic trades between US and Europe. Finally, I would also like to note that we have been increasingly engaged in ammonia trades. Our handy is an MGC vessels can carry. Two of our vessels are currently transporting ammonia cargoes.
Speaker Change: There were no impairments, nor any gains or losses from sale of vessels during the second quarter.
Speaker Change: As a result of the increasing revenues and decreasing cost income from operations increased 60% to $16 1 million for the quarter.
Speaker Change: And increased 70% to $33 $6 million for the six month period.
Speaker Change: Interest and finance close also slightly increased year on year, but that is because in the first two quarters of last year were included some profits from the selling of swap positions due to the debt prepayments.
Konstantinos Sistovaris: I will now turn the call over to Konstantinos Sistovaris for our financial performance. Thank you. Thank you, Michael, and good morning to everyone. I will discuss our financial results that were released today. Let us turn slide 7 where we see a snapshot of the income statement for the second quarter and six months of 2024 against the same period of 2023. With fewer vessels in the fleet and a corresponding reduction of 11 percent in fleet days for the quarter and 13 percent for the six month period, net revenues that is after voyage expenses came in at 39.1 million for the quarter and increase of 18 percent and 77.8 million for the six months and increase of 16 percent.
Speaker Change: And that was not the case for the first two quarters of this year.
Speaker Change: The profits from the investment in the joint venture amounted to $11 5 million for the second quarter and $14 million for the six months.
In both six month periods.
Speaker Change: Of last year and this year. Besides the operating profits there were profit from sale of vessels.
Speaker Change: This year the profit from the sale of the Echo cereal by their joint venture boosted the investment returns in the second quarter by $9 5 million.
Speaker Change: As a result of the above we ended the second quarter of 2024 with net income of $25 8 million compared to $10 5 million for the same quarter of last year.
Konstantinos Sistovaris: As a result of increased trades, you do better market condition, reduced of hires and voyage costs reduced due to lower spot exposure. Finally, also the addition of two larger vessels in the fleet with higher earnings capacity that contribute about 12 million in revenues in the first six months. Operating expenses were 12.5 million for the quarter, down 7 percent, and 24 million for the six months, down 14 percent, as a result of the reduction in the fleet.
Speaker Change: 146% increase while on an adjusted basis net income was 27 5 million versus $10 7 million last year at 158% increase.
Speaker Change: For the six months period, net income was $43 5 million and $46 7 million on an adjusted basis.
Speaker Change: 60% and 67% improvement compared to last year's six month period.
Speaker Change: Earnings per share for the second quarter were 70% and 159% improvement.
Konstantinos Sistovaris: Overall, expenses have been under increased pressure due to inflation, but so far in the first two quarters of 2024, we have managed to contain these pressures in line with the general slowing down of inflation in the economy. We also note the decrease in dry docking costs of 0.9 million for the quarter. Last year, 200 size vessels were dried up, whereas this year it was two smaller vessels, smaller LPGs, and the increase of 1.2 million in NAE costs as a result of an increase in stock-based compensation expenses.
Speaker Change: And $121 20 for the six months, a 69% improvement compared to last year.
Speaker Change: These were record quarterly results for the company and the most profitable six months in its history.
Speaker Change: Yeah.
Speaker Change: Moving on to the balance sheet in slide eight our liquidity, including restricted cash was at the end of the quarter $76 6 million reduced by eight 5% compared to December 31st.
Speaker Change: The company in spite of the continuous debt repayments maintained ample liquidity.
Konstantinos Sistovaris: There were no impairments nor any gains or losses from sale of vessels during the second quarter. As a result of the increase in revenues and decrease in costs, income from operations increased 60 percent to 16.1 million for the quarter, and increased 70 percent to 33.6 million for the six month period. Interest in finance costs also slightly increased here in year, but that is because in the first two quarters of last year were included some profits from the selling of swap positions due to the debt repayment, and that was not the case for the first two quarters of this year.
Speaker Change: Vessels held for sale that were $34 9 million as of December 31st.
Speaker Change: Well Neil as of June 30th.
Neil: There are currently no vessels contracted to be sold.
Neil: Also deposits for vessels that were $23 4 million as of December 31st were nil as of June 30th as the two medium gas carriers were delivered to the company and there are no vessels contracted to be bought.
Speaker Change: Vessels book value increased from $504 3 million to $611 3 million a significant 21% increase.
Speaker Change: Result of the addition of the two medium gas carrier vessels.
Konstantinos Sistovaris: The profits from the investment in the joint venture amounted to 11.5 million for the second quarter and 14 million for the six months. In both six months periods of last year and this year, besides the operating profits, there were profits from sale of vessels. This year the profit from the sale of the echo ethereal by the joint venture boosted the investment returns in the second quarter by 9.5 million. As a result of the above, we ended the second quarter of 2024 with net income of 25.8 million compared to 10.5 million for the same quarter of last year, a 146 percent increase.
Speaker Change: The book value of our investments in our joint ventures was $29 8 million.
Speaker Change: $10 million reduction compared to December 31st as the company received back each investment on the vessels that were sold during the second quarter through a dividend.
Speaker Change: Total assets of the company increased four 4% to $727 8 million compared to December 31st.
Speaker Change: Moving on to the liability side. The current portion of the long term debt was half.
Speaker Change: Two annual repayments of $8 7 million.
Speaker Change: While the long term portion of the debt stood at $106 9 million as of December 31st.
Konstantinos Sistovaris: While on an adjusted basis net income was 27.5 million versus 10.7 million last year, a 158 percent increase. For the six months period net income was 43.5 million and 46.7 million on an adjusted basis, a 60 percent and 67 percent improvement compared to last year's six month period. Earnings per share for the second quarter were 70 cents, a 159 percent improvement, and 120, $1.20 for the six months, a 69 percent improvement compared to last year.
Speaker Change: Then 140, $445 4 million as of March 31st.
Speaker Change: And was reduced to below a 100 million for the first time in over 15 years.
Speaker Change: Ending at 98.8 million as of June 30th and will be reduced further.
Speaker Change: Third quarter.
Speaker Change: Shareholders' equity increased to $8 5 million, eight 5% or $46 6 million over the six month period.
Speaker Change: Concluding our financial commentary with slide nine we will briefly have a closer look at our debt structure.
Speaker Change: This is where the company has focused in recent times.
Konstantinos Sistovaris: These were record quarterly results for the company and the most profitable six months in its history. Moving on to the balance sheet in slide 8, our liquidity, including restricted cash, was at the end of the quarter 76.6 million reduced by 8.5 percent compared to December 31. The company in spite of the continuous debt repayments maintains ample liquidity. Vessels held for sale that were 34.9 million as of December 31, weren't nil as of June 30, as there are currently no vessels contracted to be sold.
During 'twenty two 'twenty three the company very aggressively have to its outstanding debt with over a $154 million of debt repayments.
Speaker Change: Then in the beginning.
Speaker Change: In the beginning of 2024.
Speaker Change: A new chip their facility was concluded in the order of $70 million.
Speaker Change: The brand new vessels.
Speaker Change: And then with an eight year tenor while $85 $3 million of existing debt was repaid.
Speaker Change: In the current quarter the company has already prepaid another $21 3 million.
Speaker Change: As a result of the debt amort.
Konstantinos Sistovaris: Also deposits for vessels that were 23.4 million as of December 31, were nil as of June 30, as the two medium gas carriers were delivered to the company and there are no vessels contracted to be bought. Vessels' book value increased from 504.3 million to 611.3 million, a significant 21 percent increase as a result of the addition of the two medium gas carrier vessels. The book value of our investments in our joint ventures was 29.8 million, a 10 million reduction compared to December 31, as the company received back its investment on the vessels that were sold during the second quarter through its The total assets of the company increased 4.4% to 727.8 million compared to December 31st.
Speaker Change: All the debt amortization is now reduced to just $6 4 million per annum compared to $30 million just two years ago.
Speaker Change: And that will allow us significantly faster Castro accumulation going forward.
Speaker Change: With close to $70 million in cash the company is now close to being net debt free.
Speaker Change: There are only three mortgage vessels out of 27 in the fleet.
Speaker Change: And that means much slower cash flow break evens for our vessels.
Speaker Change: Obviously, we have eliminated refinancing risk there is only $115 million balloon at the end of 2025.
Speaker Change: And the next balloon is from the finance, we just recently received that matures in 2032.
Speaker Change: Yeah.
I will now hand, you over to our CEO, Harry <unk>, who will discuss market and company outlook.
Konstantinos Sistovaris: Moving on to the liability side, the current portion of the long-term debt was halved to annual repayments of 8.7 million. While the long-term portion of the debt stood at 106.9 million as of December 31st, then 144 and 145.4 million as of March 31st and was reduced to below 100 million for the first time in over 15 years, standing at 98.8 million as of June 30th and will be reduced further in this third quarter. Sir Holder's equity increased to 8.5 million, 8.5% or 46.6 million over the six-month period.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Moving on slide 10.
Speaker Change: We have a brief insight on the LPG market.
Speaker Change: <unk> exports increased by a strong four 3% and 23.
Speaker Change: Continued to see exports, increasing three 6% in the first half of this year.
Speaker Change: Slightly lower than the first quarter, but still healthy.
Speaker Change: Exports from the largest LPG exporter in the world. The U S continued to grow unabated.
Speaker Change: And the first six months of this year at 11% and the bulk of the.
Speaker Change: But of course, he came burden along these exports.
Speaker Change: It seems to have been minimal for Q3.
Speaker Change: The issue is now becoming whether the U S will hit in exports due to the capacity constraints.
Speaker Change: To avoid that companies like enterprise product partners energy transfer and Targa already planning capacity expansions are the U S terminal show that volumes can increase by over 20% by the end of 2006 on the other hand middle East exports remained flat as long as Opex extended its production cuts and until those are lifted would not expect any meaningful.
Konstantinos Sistovaris: Concluding our financial commentary with slide 9, we will briefly have a closer look at our debt structure as this is where the company has focused in recent times. During 2022-23, the company very aggressively halved its outstanding debt with over 154 million of debt repayments. Then in the beginning of 2024, a new cheaper facility was concluded in the order of 70 million for the brand new vessels and with an eight-year tenor while 85.3 million of existing debt was repaid.
Speaker Change: Change in volumes coming from the Arabian Gulf.
Speaker Change: Also increasing volume volumes are sent from the U S to Europe LPG demand in Europe has remained relatively flat and a lot will depend on whether we're experiencing the same mild winter as we did last year.
Speaker Change: To know that the <unk>.
Speaker Change: One year phase in of the import ban on Russian volumes that was introduced last year comes into effect. This December this means as Russia volumes that accounted for 6% of imports in 'twenty three.
Konstantinos Sistovaris: In the current quarter, the company has already prepared another 21.3 million. As a result of the debt, as a result, the debt amortization is now reduced to just 6.4 million per annum compared to 30 million dollars just two years ago and that will allow significantly faster cash flow accumulation going forward. With close to 70 million dollars in cash, the company is now close to being net debt-free. There are only three mortgage vessels out of 27 in the fleet and that means much lower cash flow break evens for our vessels. Obviously, we have eliminated refinancing risk. There is only one 15 million dollars balloon at the end of 2025 and the next balloon is from the finance we just recently received that mature in 2032.
Speaker Change: Bond countries, such as Poland that imported LPG.
Speaker Change: We'll now have to rely more on seaborne imports in terms of imports the driving force of LPG demand is China and India.
Speaker Change: During the first half of this year seaborne import volumes in China, but almost by 11% year on year and even hit an all time high of $1 4 million barrels a day in July.
Speaker Change: We're 45% of LPG demand.
Speaker Change: Household usage is expected to grow as the economy by 7% next year.
Speaker Change: According to the World Bank and LPG demand is expected to grow alongside of it.
Indian elections were held through June and they come with government.
Speaker Change: So far have been supportive of LPG consumption propelling the nation to number two important the world won't be elections in China are a driving force for LPG demand is of course, the expansions of PVH capacity.
Julien: The production of propylene, while utilization rates remain subdued during the first half of the year LPG remains competitive compared to naphtha during this period Julien.
Harry Vafias: I will now hand you over to our CEO Harry Vafias who will discuss market and company outlook. Moving on slide 10, we have a brief insight on the LPG market. LPG exports increased by strong 4.3% in 23 and we continued to see exports increasing 3.6% in the first half of this year. Starting lower than in the first quarter, but still helps. Export from the largest LPG export in the world, the US continued to grow and abated in the first six months of this year at 11% and the impact of hurricane burial on these exports seems to have been minimal for Q3.
Speaker Change: <unk> 23, non Youll PVH plants came on stream, adding $5 4 million tons of capacity. So far this year six new plants started up adding another $4 2 million tons and the capacity additions are expected to reach 5 million tons by the end of this year.
Speaker Change: Another 6 million tons are scheduled for <unk> 25, a growth of over 60% compared to 23 levels.
Speaker Change: Slide 11, we present some of the fundamentals in our shipping market commensurate with time charter rates for our market.
Speaker Change: Rates tend to fall during the second quarter by remained firmed at historically high levels for the smaller vessels, while we did experience.
Speaker Change: I dropped for the larger ships.
Speaker Change: Other small LPG trade.
Speaker Change: So continued strength in parts of the pressurized market, especially in the Atlantic.
Speaker Change: Pulp market West of Suez will start on tonnage and rates remained firm.
Harry Vafias: The US government is preparing capacity expansions and the US terminal so that volumes can increase by over 20% by the end of 26%. On the other hand, Middle East exports remain flat as long as OPEC extend its production cuts and until those are listed we will not expect any meaningful change in volumes coming from the Arabian Gulf. Although increasing volumes are sent from the US to Europe, LPG demand Europe has remained relatively flat and a lot will depend on whether we experienced the same mild winter as we did last year.
Speaker Change: Offshore spot market on the other hand were softer with both lower rates and a more ideal time experienced by owners on the video side. We saw further rate rises, especially in the west.
The vessel sizes and the pressurized market are now historically high levels.
Speaker Change: And we also see charter's interest rate your longer periods than one year.
Speaker Change: West of Suez container to ship in significantly on both eastern market on the handy size segment, we saw a softening in the spot market through Q2. This is partly due to more difficult trading conditions for LPG and partly due to the pet chem market apart from ethylene underperforming compared to expected activity also the time charter.
Harry Vafias: To know that the one year phase of the import ban on Russian volumes that was introduced last year comes into effect this December. This means that Russian volumes that accounted for 6% of imports in 23 will be banned. Countries such as Poland that imported LPG viral will now have to rely more on C-borne imports. In terms of imports, the driving force of LPG demand is China and India. During the first half of this year C-borne import volumes in China rose by 11% year on year and even hit an all-time high of 1.4 million barrels a day in July.
Speaker Change: The market experienced a softening of rates compared to Q1 short term, we expect the segment.
Speaker Change: The DC market to show improvement in Q4 medium to longer term fundamentals for the handset segment looks strong with an almost nonexistent order book, especially for stand up 10 minutes tonnage. The main risk factor at the moment remains a growing mid size order book, which grew the worst case scenario.
Speaker Change: Pressure on the <unk> segment on the medium sized ships.
Harry Vafias: India was 45% of LPG demand is for household usage expected to grow as economy by 7% next year according to the World Bank and LPG demand is expected to grow alongside of it. Indian elections will help through June and they come at government but have so far been supportive of LPG consumption, propelling the nation to number 2 import in the world won the elections. In China, the driving force for LPG demand is of course the expansion of LPG capacity for the production of propellant.
Speaker Change: Significantly softer VLCC market compared to Q1 resulted in a softer Q2 also for these market. Although a limited number of spot vessels were available the lack of demand led to falling rates and some vessels, including idle time.
Speaker Change: As a result of the time charter rates or downward correction. However, the limited number of new buildings entering the market before 25 has assisted in limiting of the fall.
Speaker Change: However, more long term the order book situation framed. This is starts to look what are some more orders are piling in with 27% and 28 deliveries and the order book ratio has now surpassed 40%. There is a lot of optimism this vessel social carrier ammonia and ammonia is the candidate before the next generation of Greenfield for sure.
Harry Vafias: While utilization rates remain subdued during the first half of the year LPG remain a competitive fuel compared to NAFTA during this period. During 23, 9 new LPG plans came on stream adding 5.4 million tons of capacity. So far this year 6 new plans have started that adding another 4.2 million tons and capacity additions are expected to reach 5 million tons by the end of this year. Another 6 million tons are scheduled for 25 a growth of over 60% compared to 23 levels.
Speaker Change: Okay.
Speaker Change #100: But this is just speculation at this point and if this doesn't happen.
Speaker Change: To be an oversupply of vessels.
Speaker Change #101: Their books situation is quite different in the overlooked chondrocytes fleet or is that a zero vessels delivering over the next year and the order book remains healthy. Although recently with this we did see some new orders being placed for five ships for 27% and 28.
Speaker Change #101: As far as our core fleet is concerned.
Speaker Change #101: Pressurized ships the situation has not changed much.
Speaker Change #101: She only a handful of vessels being ordered.
Speaker Change #101: Order book ratio near the 5% Mark for the next three years.
Speaker Change #101: This time ordering coupled with the fact that almost a third of the fleet is over 20 years of age make the fundamentals for this segment look quite promising.
Harry Vafias: At the small LPG trade we saw continuous strength in parts of the precious market we could do especially in the Atlantic. The support market west of Suez was tight on tonnage and rates remained firm. The east of Suez spot market on the other hand was softer with both lower rates and more idle time experience by owners. On the period side we saw further rate rises especially in the west. Most vessel sizes in the precious market are now historically high levels.
Speaker Change #102: We would like to have seen a more scrapping given the age of the fleet, but due to the fair market owners have not sold any vessels for scrapping thus far.
Speaker Change #102: And the last slide we're outlining some of the key variables that may affect our performance in the quarters ahead.
Speaker Change #102: In the short term, we're entering the seasonally strong winter periods, and we expect activity to pick up as demand for LPG, particularly for heating rises.
Harry Vafias: West of Suez and we also see charter skin to secure longer periods than one year. The Rates west of Suez continue to sit in significantly above the eastern market. On the hand side segment we saw softening in the spot market through Q2. This is partly due to more difficult trading conditions for LPG and partly due to the pet care market apart from Elyne underperforming compared to expected activity. Also the time track and market experience is softening of age compared to Q1.
Speaker Change #102: Continue to remain optimistic on the longer term for the reasons, we analyzed earlier.
Speaker Change #103: To sum up today, we announced yet another record breaking quarter profits were more than double compared to last year of $25 8 million for the second quarter of 'twenty four.
Speaker Change #102: At an all time high for the company.
Speaker Change #102: The 20 years since its inception, while we managed to contain our operating cost we took full advantage of our strong chartering market fixing vessels at higher rates.
Harry Vafias: Short term expect the segment. The PC market for improvement in Q4, medium to longer term, the fundamentals for the hand size segment look strong, with an almost non-existent order book, especially for standard semi-refortonage. The main risk factor at the moment remains a growing mid-size order book, which could worst case scenario put down pressure on the hand segment. On the medium size ships, a significantly soft reveal GC market compared to Q1 resulted in a soft RQ2 also for this market.
Speaker Change #104: That in previous quarters, whose benefits we are enjoying now.
Speaker Change #105: Bottom line was further bolstered by the return from our investments related to our sale of a vessel by one of our JV is.
Speaker Change #105: We continue with our strategy of debt reduction and in the current quarter. We have so far we paid $21 million of debt and now have 24 unencumbered vessels.
Speaker Change #105: The majority of the fleet and net debt and net debt ratio below 5%.
Harry Vafias: Although a limited number of spot vessels were available the lack of demand led to falling rates and some vessels incurring idle time. As a result also the time chart rate showed downed on correction, however the limited number of new buildings entering the market before 25 has assisted in limiting the fall. However, more long term the order book situation for MCC's starts to look worrisome. More orders are piling in, with 27 and 28 deliveries and the order book ratio has now surpassed 40%.
Speaker Change #106: The second part of our strategy was to fix some period, taking advantage of the strong market, while securing our cash flow. We have successfully implemented that so far as all the vessels are fixed and have managed to secure employment for 55% of the fleet for next year.
Speaker Change #106: All we have secured $220 million in future revenues.
Speaker Change #107: We continuously improve our profitability setting the bar higher every time, we believe we continue to be a sound undervalued investment not just because we are optimistic on the market and have been producing results. But also I was we were trading at a discount in terms of price between <unk> and price to earnings ratio.
Harry Vafias: There's a lot of optimism as these vessels also carry ammonia, and ammonia is the candidate for the next generation of green fuel for shipping. But this is still a speculation at this point and if this doesn't happen there's going to be an oversupply of vessels. The order book situation is quite different in the overlooked hand size fleet was there is zero vessels delivering over the next year and the order book remains healthy.
Speaker Change #108: We have now reached the end of our presentation I'd like to thank you for joining us at our conference call and for your interest and trust in our company and we look forward to having you again with US at our next call for our Q3 results in November Thank you very much.
Harry Vafias: Although recently we did see some new orders being placed for five ships for 27 and 28. As far as our core fleet is concerned of press rights ships, the situation has not changed much. We continue to show only a handful of vessels being ordered with the order book ratio near the 5% mark for the next three years. This same ordering, coupled with the fact that almost the third of the fleet is over 20 years of age, make the fundamentals for this segment look quite promising. We would like to have seen more scrapping given the age of the fleet, but due to the third market owners have not sold any vessels for scrapping thus far.
Harry Vafias: In the last slide we are outlining some of the key viables that may affect our performance in the quarters ahead. In the short term, we are entering the season in strong winter periods and we expect activity to pick up as demand for LPG particularly for heating rises. We will continue to remain optimistic on the longer term for the reasons we analyzed earlier.
Harry Vafias: To sum up, today we announced yet another record breaking quarter profits that were more than double compared to last year of 25.8 million for the second quarter of 24 are at an all time high for the company in the 20 years since its inception. While we managed to contain our operating costs, we took full advantage of a strong chartering market fixing vessels at higher rates during that and previous quarters, whose benefits we are enjoying now.
Harry Vafias: The bottom line was further bolstered by the return from our investments related to the sale of a vessel by one of our JVs. We continue with the strategy of debt reduction and in the current quarter we have so far paid 21 million of debt and now have 24 unincubbed vessels, the vast majority of the fleet and that that ratio below 5%. The second part of our strategy was to fix on period, taking advantage of the strong market while securing our cash flow.
Harry Vafias: We have successfully implemented that so far as all the vessels are fixed and have managed to secure employment for 55% of the fleet for next year. Overall, we have secured 220 million dollars in future earnings. As we continuously improve our profitability, setting the bar high every time, we believe we continue to be a sound, undervalued investment, not just because we are optimistic on the market and have been producing results, but also as we are training at the discount in terms of price to NAV and price to earnings ratio.
Operator: We have now the end of our presentation, and I'd like to thank you for joining us at our conference call and for your interest and trust in our company, and we look forward to having you again with us at our next call for our Q3 results in November.
Operator: Thank you very much.