ATHENS, GREECE, May 14, 2009. 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, 2009.
First Quarter 2009 Results:
For the three months ended March 31, 2009, voyage revenues amounted to $29.2 million, an increase of $2.2 million, or 8.1%, compared to voyage revenues of $27.0 million for the three months ended March 31, 2008. Net income for the three months ended March 31, 2009 was $0.2 million, a decrease of $7.2 million, from net income of $7.4 million for the three months ended March 31, 2008. Net income for the three months ended March 31, 2008 had included a gain on the sale of vessels of $1.7 million, whereas there were no vessel sales in the first quarter of 2009.
The decline in net income is mainly attributable to increased cash and non-cash losses relating to interest rate and foreign currency hedging arrangements which were adversely affected by the prevailing very low interest rates and the strengthening of the Japanese Yen against the United States dollar in the first quarter of 2009, plus increases in voyage and operating expenses.
For the three months ended March 31, 2009, the Company had a $1.1 million realized cash loss and a $6.2 million unrealized non-cash loss on interest rate swap arrangements and foreign currency hedging arrangements. This compares to an unrealized cash loss on interest rate swap arrangements of $2.3 million for the three months ended March 31, 2008.
Voyage and operating expenses for the three months ended March 31, 2009 were $2.3 million and $8.6 million respectively compared to $0.9 million and $7.3 million for the three months ended March 31, 2008, these increases were due primarily to the increased level of spot market activity with 501 spot voyage days in the first quarter of 2009 compared to just 28 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. Net income was also affected by increased depreciation expenses as we had an average of nearly four more vessels in the fleet in the first quarter of 2009 compared to the same period last year.
Basic and diluted earnings per share were $0.01 for the three months ended March 31, 2009 as compared to basic and diluted earnings per share of $0.33 for the three months ended March 31, 2008.
Adjusted EBITDA for the three months ended March 31, 2009 was $8.6 million, a decrease of $6.0 million, or 41.1% from $14.6 million for the three months ended March 31, 2008. 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 described above, net income was $6.6 million, or $0.30 per share for the three months ended March 31, 2009, as compared to $10.2 million, or $0.46 per share, which included a $1.7 million gain on sale of vessels, for the three months ended March 31, 2008, a decrease of $3.6 million or 35.3%
An average of 40.8 vessels were owned by the Company in the three months ended March 31, 2009, earning an average time-charter equivalent rate of approximately $7,344 per day as compared to 37.9 vessels, earning an average time-charter equivalent rate of $7,652 per day for the same period of 2008.Â
CEO Harry Vafias commented:
Overall, I am pleased with the operating performance of the Company in this challenging operating environment, though disappointed that net income has fallen albeit due mainly to non-cash losses on derivatives.Â
We are seeing more of our vessels trading in the spot market, however, to date, although we are experiencing some limited down time commercially particularly for our semi refrigerated ships, the rates we are obtaining in the spot market are holding up quite well.Â Furthermore, apart from the charterer of the Gas Ice, which we previously reported on, our charterers have continued to meet their obligations, and the values of our LPG fleet are holding up quite well, particularly when compared to other shipping sectors.
Although we have made a solid start to the year, the remainder of 2009 and probably beyond, in my view, will continue to be very challenging and we must position the Company such that it has the resources to meet any challenges that may lie ahead and to take advantage of opportunities, especially outside our core handysize LPG segment.Â To that end, the Companyâs Board of Directors, in consultation with management, has reluctantly decided to suspend payment of the quarterly dividend that we have paid since we went public in 2005.
I realize that this may disappoint some of our investors and we look forward to being able to reinstate dividend payments when economic conditions allow, however, we believe that in the current environment conserving capital is a prudent measure that will further strengthen the position of our CompanyÂ Â and enable us to take advantage of opportunities as and when global economic conditions improve.
CFO Andrew Simmons commented:
We continue to have a soundly structured financial base with net debt to capitalization remaining conservative at 42.3% as at March 31, 2009 and, as at March 31, 2009, remained in compliance with all of the financial covenants and security coverage requirements in our loan agreements.
Despite the growth in spot voyage days for the fleet in the first quarter, we still have approximately 70% of fleet days fixed for 2009 and approximately 40% for 2010, thus giving us a relatively high percentage of voyage days already booked for the remainder of this year and beyond.Â We are also pleased that total operating expenses rose by just 2.4% on a year on year basis underlining the strict management of costs that is a cornerstone of our business, and that is particularly vital at this time when income levels are, not surprisingly, under some pressure.
At todayâs meeting, the Companyâs Board of Directors decided to suspend dividend payments to shareholders until it determines, in consultation with management, that economic conditions allow dividend payments to be resumed.
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¢ F.P.: Fully-Pressurized
â¢ S.R.: Semi-Refrigerated
â¢ M.R.: Medium Range
(1) Earliest date charters could expire.Â Most charters include options to shorten or extend their term.
(2) Gas Emperor is deployed under a bareboat charter to a major international LPG operator that expires in August 2012.
The charterer has an option in August 2010 and 2011 to cancel the existing charter upon the payment of a cancellation feeÂ Â Â Â Â Â Â Â Â Â Â in the amount of $228,000, if exercised in 2010, or $180,000 if exercised in 2011.
(3) Birgit Kosan is deployed under a bareboat charter to a major international LPG operator that expires in October 2011. The charterer has an option to cancel the existing charter upon the payment of a cancellation fee in the amount of $192,000, if exercised in 2009, or $108,000 if exercised in 2010.
(4) Gas Prophet has for the three-year duration of bareboat charter been renamed the M.T. Ming Long.
(5) Gas Eternity has for the duration of its bareboat charter been renamed the M.T. Yu Tian 9.
(6) Gas Sikousis is currently employed under a time charter until May 2010. Thereafter, at the Chartererâs option, the time charter can be extended for an additional one-year period of, if not exercised, we would have the option to charter the vessel for an additional one â year period to the charterer at the then-prevailing rate.Â
(7) Gas Natalie, upon her delivery, continued to be deployed under an existing bareboat charter to a major international LPG operator that expires in September 2011. The charterer has an option in September 2009 and 2010 to cancel the existing charter upon the payment of a cancellation fee in the amount of $336,000, if exercised in 2009, or $180,000, if exercised in 2010.
(8) Gas Exelero upon her delivery in June 2009 will be deployed on a one year time charter to a major Far East LPG operator
(9) The Stealth S.V. a 46,000 deadweight M.R. type product carrier is expected to be delivered to the Company in May 2009, whereupon she will commence a three-year time charter.
(10) The Stealth Argentina, a 50,500 deadweight M.R. type product carrier, is expected to be delivered to the Company inÂ Â Â
November 2009, whereupon she will commence a three-year bareboat charter.
About STEALTHGAS INC.
Headquartered in Athens, Greece, STEALTHGAS INC. is a ship-owning company serving primarily the liquefied petroleum gas (LPG) sector of the international shipping industry.Â STEALTHGAS INC. currently has a fleet of 40 LPG carriers with a total capacity of 176,999 cubic meters (cbm) and two M.R. product tankers.Â In addition, the company has entered into agreements to acquire one resale new building LPG carrier the Gas Exelero, with expected delivery in June 2009, plus five new building LPG carriers with expected delivery from February 2011 through May 2012 and two resale new building M.R. product carriers with expected delivery in May and November 2009.Â Once these acquisitions are completed, STEALTHGAS INC.âS fleet will be composed of 46 LPG carriers with a total capacity of 210,499 cubic meters (cbm) and four M.R. product tankers with a total capacity of 190,500 deadweight tons (dwt).Â STEALTHGAS INCâS 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 INC.âs operating expenses, including bunker prices, dry-docking and insurance costs, our 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, 2008 and March 31, 2009:
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) 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.
8) 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.
9) 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 of finance charges 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 accounting principles generally accepted in the United States of America, 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, 2008 and March 31, 2009:
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1866 239 0750 (US Toll Free Dial In) or 0800 559 3282 (UK Toll Free Dial In).Â
In case of any problems with the above numbers, please dial +1 718 354 1359 (US Toll Dial In), or +44 (0)2071380813 (Standard International Dial In). Please quote "3004629".
A telephonic replay of the conference call will be available until May 21, 2009 by dialing 1866 239 0765 (US Toll Free Dial In), 0800 358 7743 (UK Toll Free Dial In) or +44 (0)207 806 1970 (Standard International Dial In). Access Code: 3004629#
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.
On January 1, 2009 the Company adopted FASB Staff Position No. EITF 03-6-1, âDetermining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securitiesâ (FSP 03-6-1). In FSP 03-6-1, unvested share-based payment awards that contain rights to receive non forfeitable dividends or dividend equivalents (whether paid or unpaid) are participating securities, and thus, should be included in the two-class method of computing earnings per share (EPS). This standard was applied retroactively to all periods presented and reduced basic EPS by $0.01 for three months ended March 31, 2008.