ATHENS, GREECE, Â May 12, 2010.Â STEALTHGAS INC. (NASDAQ: GASS), a ship-owning company primarily serving the liquefied petroleum gas (LPG) sector of the international shipping industry, announced today its unaudited financial and operating results for the first quarter ended March 31, 2010.
First Quarter 2010 Results:
For the three months ended March 31, 2010, voyage revenues amounted to $28.8 million, a decrease of $0.4 million, or 1.4%, compared to voyage revenues of $29.2 million for the three months ended March 31, 2009. Net income for the three months ended March 31, 2010 was $1.6 million or $0.07 per share, an increase of $1.4 million, from net income of $0.2 million, or $0.01 per share, for the three months ended March 31, 2009.
For the three months ended March 31, 2010, the Company had a $1.7 million realized cash loss on interest rate swap arrangements and a $1.5 million unrealized non-cash loss on interest rate swap arrangements and foreign currency hedging arrangements. This compares to a realized cash loss of $1.1 million and an unrealized non-cash loss on interest rate swap arrangements and foreign currency hedging arrangements of $6.2 million for the three months ended March 31, 2009. As announced on May 5, 2010, during the three months ended March 31, 2010, the Company recorded a non-cash impairment loss of $0.08 million on a vessel delivered to new owners on April 9, 2010.
Voyage and operating expenses for the three months ended March 31, 2010 were $3.2 million and $9.2 million, respectively, compared to $2.3 million and $8.6 million, respectively, for the three months ended March 31, 2009. These increases were due primarily to the increased level of spot market activity with 851 spot voyage days in the first quarter of 2010 compared to 501 spot voyage days in the same period last year. Under spot voyage charters we are responsible for all voyage expenses including fuel, port and canal fees.
Adjusted EBITDA for the three months ended March 31, 2010 was $9.9 million, an increase of $1.3 million from Adjusted EBITDA of $8.6 million for the three months ended March 31, 2009. A reconciliation of Adjusted EBITDA to Net Income and to Net Cash Provided by Operating Activities is set forth below.
Before the non-cash items as discussed above our net income was $3.2 million, or $0.14 per share for the three months ended March 31, 2010, as compared to a net income $6.4 million, or $0.29 per share, for the three months ended March 31, 2009, a decrease of $3.2 million or 50%.Â
The decrease in operating net income after non-cash items is mainly attributable to higher dry docking expenses, increased voyage and operating expenses and a lower daily time charter equivalent rate as detailed below for the three months ended March 2010 as compared to the same period last year.
An average of 41.0 vessels were owned by the Company in the three months ended March 31, 2010, earning an average time-charter equivalent rate of approximately $7,059 per day as compared to 40.8 vessels, earning an average time-charter equivalent rate of $7,344 per day for the same period of 2009.Â
Common Stock Repurchase Programme
As of May 11, 2010, the Company had completed the repurchase of 586,238 shares of its common stock under the common stock repurchase programme announced on March 22, 2010.
Resignation of Mr. Thanassis Martinos.
Effective April 22, 2010, Mr. Thanassis Martinos resigned as an independent director of the Company due to business commitments. As a result, with effect from the April 22, 2010, the Company is not in compliance with NASDAQ listing rules 5605(b) (1) and 5605(c) (2) (A) regarding independent director and audit committee composition requirements and it received a letter on April 30, 2010 from the NASDAQ Stock Market in this regard. As such the Company has until October 19, 2010 to regain compliance with NASDAQ rules regarding the constitution of its Board of Directors and Audit Committee.
CEO Harry Vafias commented
âI am very pleased to report a significantly improved EBITDA performance for the Company in the first quarter of 2010 compared to both the same period last year and the difficult last quarter we had in 2009. This improvement comes despite a significant increase in dry docking expenses which in the first quarter of 2010 were 90% of the total dry docking expenses we incurred in 2009.
In our press release for the first quarter of 2009 I stated that 2009 and probably beyond would be very challenging, this proved to be the case last year. I still fundamentally stand by this statement, and while we are hopeful that market conditions will improve as we move through 2010, and indeed we saw some seasonal improvement in the first quarter of this year, I still expect 2010 to in the main remain âchallengingâ as I said a year ago.
As we announced last week and earlier in the year we have sold five of our older and smaller LPG vessels with most sales being completed at prices close to their book value. As I said in our press release last week these sales continue to underline the relative steadiness of our core sector and the viability of the net asset value of our company, which on a price to NAV basis continues to be under-appreciated by the market. These sales have enhanced our cash position and also reduced our debt level, from what was already a relatively conservative level.
In 2010 we will continue to be highly diligent regarding our operational costs and to position the Company to take delivery of the five LPG vessels we have on order for delivery in 2011 and 2012 when there is an expectation that our core LPG market sector will improve. We may also, due to our strong financial base, where we see value, invest in other sound asset classes within the shipping sector, where we feel we can take advantage of attractively priced assets becoming available.Â
We are pleased to have made a sound start to the year, and although we remain cautious regarding the near term future from a trading stand point, the measures taken during 2009 and in the early part of this year will, I believe, prove over time to have been well judged. We continue to look forward with confidence, and to the possibility of the investor community recognizing the true value and attractiveness of our company, particularly based upon its current valuation.
Finally I want to extend my thanks to Mr. Thanassis Martinos for his guidance and wisdom during the formative years of our Company. We are sorry that, due to his heavy other business commitments, he has decided to resign from our board and we have reluctantly accepted his resignation. We wish him well for the future.â
CFO Andrew Simmons commented
âFollowing the vessel sales as previously announced, we have increased our liquidity with circa $50 million of free cash on our balance sheet and a conservative net debt to capitalization ratio of 43%. We continue to see significant levels of interest from both our existing and new banks in regard to the financing for the five new building LPG vessels that will join the fleet in 2011 and 2012. Our conservative financial structure and its attractiveness to the banking community will, we believe, allow us to make timely and opportunistic investments if such opportunities present themselves as we move forward.â
At todayâs meeting, the Companyâs Board of Directors decided to continue the suspension of dividend payments to shareholders.
Fleet Profile and Fleet Deployment:
The table below shows the Companyâs fleet development and deployment as of today:
LPG Carrier Fleet
Product Tanker Fleet
â¢Â F.P.: Fully-Pressurized
â¢Â S.R.: Semi-Refrigerated
â¢Â M.R.: Medium Range
(1)Â Earliest date charters could expire.Â Most charters include options to shorten or extend their term.
(2)Â Gas Sikousis has extended her existing time charter that expires in May 2010 for a further twelve months.
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About STEALTHGAS INC.
Headquartered in Athens, Greece, STEALTHGAS INC. is a ship-owning company primarily serving the liquified petroleum gas (LPG) sector of the international shipping industry.Â STEALTHGAS INC. currently has a fleet of 34 LPG carriers with a total capacity of 155,204 cubic meters (cbm) and three M.R. product tankers.Â The company has entered into agreements to acquire five new building LPG carriers with expected delivery from February 2011 through May 2012. Once these acquisitions are completed, STEALTHGAS INC âs fleet will be composed of 39 LPG carriers with a total capacity of 185,204 cubic meters (cbm) and three M.R. product tankers with a total capacity of 140,000 deadweight tons (dwt).Â STEALTHGAS INC âs shares are listed on the NASDAQ Global Select Market and trade under the symbol âGASSâ.
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, managementâs examination of historical operating trends, data contained in our records and other data available from third parties. Although STEALTHGAS INC. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, STEALTHGAS INC. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry dockings, changes in STEALTHGAS INCâs operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by STEALTHGAS INC. with the U.S. Securities and Exchange Commission.
Visit our website at www.stealthgas.com
Andrew J. Simmons
Chief Financial Officer
The following key indicators highlight the Companyâs operating performance during the first quarters ended March 31, 2009 and March 31, 2010.
1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
2) Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.
3) Total voyage days for fleet reflect the total days the vessels were in our possession for the relevant period net of off-hire days associated with major repairs, drydockings or special or intermediate surveys.
4) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.
5) Total time charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.
6) Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period.
7) Fleet operational utilization is the percentage of time that our vessels generated revenue, and is determined by dividing voyage days (excluding commercially idle days) by fleet calendar days for the relevant period.
8) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
9) Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
10) Total operating expenses, or TOE, is a measurement of our total expenses associated with operating our vessels. TOE is the sum of vessel operating expenses and general and administrative expenses. Daily TOE is calculated by dividing TOE by fleet calendar days for the relevant time period.
Adjusted EBITDA Reconciliation:
Adjusted EBITDA represents net earnings before interest, taxes, depreciation, amortization and amortization of fair value of acquired time charters.Â Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by the United States generally accepted accounting principles, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies in the shipping or other industries.
Adjusted EBITDA is included herein because it is a basis upon which we assess our financial performance and liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.Â
Adjusted EBITDA reconciliation for the first quarters ended March 31, 2009 and March 31, 2010:
On May 12 at 11:00 am EDT, the companyâs management will host a conference call to discuss the results and the companyâs operations and outlook.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1888 935 4577 (US Toll Free Dial In) or 0800 028 1299 (UK Toll Free Dial In).Â
In case of any problems with the above numbers, please dial +1 718 354 1385 (US Toll Dial In), or +44 (0)20 7806 1953 (Standard International Dial In). Please quote "8422712".
A telephonic replay of the conference call will be available until May 19, 2010 by dialing 1866 932 5017 (US Toll Free Dial In), 0800 358 7735 (UK Toll Free Dial In) or +44 (0)207 111 1244 (Standard International Dial In). Access Code: 8422712#
Slides and audio webcast:
There will also be a live-and then archived webcast of the conference call, through the STEALTHGAS INC. website (www.stealthgas.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.