Thank you for standing by. And welcome to the StealthGas Q2 Results 2013 Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advice you that this conference is being recorded today, Tuesday, the 20th of August, 2013 at 4 o’clock U.K. time. I would now like to hand the conference over to your speaker today, Harry Vafias, Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, everyone. Welcome to our conference call and webcast to discuss the results for the second quarter of 2013. I’m Harry Vafias, the CEO of StealthGas, and I would like to remind you please that we’ll be discussing forward-looking statements in today’s call and presentation. Regarding the Safe Harbor language, I would like you to refer to slide number one of this presentation as well to our press release in our -- of our second quarter results. With me today is Konstantinos Sistovaris, our CFO, and if you need any further information on the call or the presentation, please contact Konstantinos or myself. Before I start with the slides, I would like to comment on the results we released today. Overall, the second quarter was another quarter of healthy profits even though we did see a reduction in our net income. The majority of the vessels produced revenues in line with our expectations. However, our performance was affected because of a couple of older ships in our fleet that were trading in the spot market and faced increased idle days, as well as the fact that we decided to drydock one vessel earlier than it’s scheduled drydocking time. Let’s begin our presentation from slide number two. The main event of the second quarter was very successful equity offering we did with net proceeds of about $110 million. My family supported this effort by subscribing for 5% of the offering, while as we have stated before, this successful completion acts as clear testament of the faith-placed to a company by our existing shareholders and inventors. The reason we did the offering was to enable us to pursue a more aggressive growth strategy as we fell this is an opportune time to expand our fleet, even we have established…

Thank you, Harry. Good morning, everyone. Let me continue the presentation with slide number four, the financial highlights of second quarter and six months of 2013. With an average of 38.1 vessels owned and operated in the second quarter, compared to 36.5 the last year. Our revenues came in at $30.3 million, higher than last year’s $29.1 million. We expected a high revenue figure, had not been for two of the older vessels that faced increased off-hire days into market. Our voyage costs were increased to $4.6 million, mainly due to the higher number of vessels in the spot market and higher bunker consumption. We had an average six vessels in the spot market compared to four last year. We had a couple of our old -- our largest vessels come off charter during the quarter. And we temporarily operated them in the spot market. Although by July, we had re-chartered them on a TC basis. Our operating expenses at $8.7 million increased from $7.5 million last year. Although operating expenses were slightly over our budgets. The main reason for the increase was the fact that compared to last year two of our vessels that were previously on bareboats. One of these is one of our tankers are now in time charters, so we incurred their operating expenses. In addition, we also incurred operating expenses for the three vessels we took delivery off in the second quarter of 2013. We also had drydocking costs of $0.9 million for two of our vessels, compared to one vessel drydocked for the same period of last year at cost of $0.5 million. The drydock of one of the vessels, the gas cycling was originally scheduled for next year but took place during this quarter. There was a need for certain repairs. So we…

Slide number seven, this slide demonstrate our fleet employment profile and provide you with the earnings visibility for our fleet. In terms of charter types, out of the fleet of 40 vessels we have 13 of them on bareboats, 21 on time charters and six in the spot market. What we did experience in the current period is the two-tier market, whereby the demand for modern ships is healthy, whereas there was a slackening of demand for older tonnage. We had a few older vessels in the spot market and we got mix results with some showing steady performance while a couple of the other face increase that idle time, which is also typical of the season and we’d expect the market fall the ships to improve during the winter. While overall our aim is to add to the fleet modern ships, which is more stable demand. The company forces to fund per charters in order to secure its cash flow and the positive news is that we recently secured three long-term charters for three of our vessels that have come off charter. The Gas Haralambos and Gas Cathar charter for three years each while the Gas Flawless was contracted for one year. With these new charters the company has secured approximately $30 million. For the remainder of 2013 we have two vessels that are off the charters, the Crystal and the Evoluzione. For 2013, 83% of the voyage days are fixed and for 2014 already 50% is fixed with the number of charters expand to 2016 and beyond. We continue to take opportunities to put our vessels on medium and long-term charters, and we will try to keep the same level of charter coverage going forward. Our product bankers are chartered for about four years. It’s very positive that…

(Operator Instructions) Your first question comes from Justin Yagerman from Deutsche Bank. Please ask your question.

Hi. Good afternoon. It’s Joshua Katzeff on for Justin.

Hi Josh.

Just want to quickly maybe jump right into, I guess, your time charter revenue for Q2. And just maybe try and get a better sense of how much of, I guess, the lower TCE rate that you reported was due to lower rates versus just your commercial off-hire. I mean, can you -- maybe give us a sense of what was the bigger contributing factor?

Josh, from the two ships, we lost in excess of $1 million to give you some color.

Okay. That actually helps. And can you maybe talk about Q3, I guess, the date, we’re now almost two months through it. If you can, maybe, give us any sort of general sense of -- do you expect to see an increase of commercial utilization and maybe where you’ve seen greatest trend in the quarter there?

Listen, I mean, from July to -- from June to August, we have not seen a fantastic movement in the spot market especially for the older ships. Don’t forget that the majority of the ships that we have in the spot market are the older ships that are not only penalized because of the season but they are also penalized because of their age. We’re recently seen renewed interest from charters to take those ships on period which for me was unexpected -- positive and unexpected. We’ve announced three very strong charters for the modern ships which we just announced, which again is positive because it’s not only strong from a numbers point of view but they are long charters. So that shows the charter is believing in this market for the next two, three years. And we are certain that the spot market from September, October onwards is going to be much from here. Now, we cannot predict the future. We don't how much so far we are going to have on this particular vessels going forward but we are sure it’s going to be better than what we saw in these last two, three months.

Got it. Because lot of those things were one-time in nature and now they are being scrapped?

Yeah. And don’t forget also that the drydockings we mentioned, one was a completely one-off event. And two, two of these drydockings happened in places where geographically where they are far more expensive than our typical drydocking area which is the Far East. So not only did we have to drydock one ship completely out of schedule, but for two of for that ship plus another one, we have to schedule drydockings in areas due to the trading that repairs and time for repairs is much costlier than if we did the repairs in Far East as we normally do. So we were a bit unlike on that.

Maybe switching topic, so you mentioned fleet expansion and since it sounds like you guys are now maybe preferring newbuildings over secondhand just given the lack of secondhand vessels for sale? Can you give us a sense of where you see yard pricing just trending now in some of the Japanese yards and I guess, when do you think you’ll be able to get delivery slots available?

We are lucky that the time being for this particular ship there are six to seven yards in Japan that are active. We’re obviously speaking to the majority of these yards. Only one other competitor has actually placed orders in big numbers. So from a competition point of view there is only one active buyer. We think we can get 2015 slots. We are in discussion. I didn’t have long vacations because of these discussions and I’m sure we’re going to be reporting some acquisitions very soon. We couldn’t report them just yet, but I think we are working on it and we’ll be reporting some of these acquisitions very soon.

And then just one more before I turn it over. You mentioned U.S. exports, we saw one terminal come online in Q2 and then you mentioned the target which is I guess is going to come on pretty shortly. I guess we’ve seen some of the U.S. exports go to Latin America. Have you seen any sort of activity in your fleets directly from the U.S. or maybe kind of secondary from the U.S. in the South America?

Don’t forget that the majority of the ships that we have are on period, therefore the direct benefit is felt by the charters themselves and not us. But in general, I would say, yes, obviously, especially in the Caribbean there are lots of ports that are very, very small, in some cases even our ships cannot fit in them. Therefore, yes, we’ve seen our ships doing spot voyages and some of our chartered ships have gone in these places and we think that in 2014 next year we’re going to see an increased activity of our ships in that area due to the U.S. exports.

Harry, I’ll turn it over. I appreciate the time. Thanks.

Thank you.

Your next question comes from Jon Chapelle from Evercore Partners. Please ask your question.

Thank you. Good afternoon, Harry.

Hi Jonathan.

I just want to follow-up on a couple things that Josh asked about, the two older ships, what your status today, have they been employed all in the third quarter, are they currently employed, are they still kind of waiting for cargos?

It’s not just two ships. As I said, we had at the moment one, two, three, four, five, six vessels in the spot. Out of the six vessels, I would say that three are considered. All the other are medium to young. We are discussing for one of these two old ships that we faced the problems in the summer period coverage. If that happens it’s going to be very good use, as I mentioned before to Justin’s question. If that happens it’s going to be very positive and unexpected because these ships are in excess of 20 years of age and as you can understand with the oil majors and the national oil companies wanting modern ships, it’s not so easy to find period employment for them.

Well, given your growth profile on the six new ships and plus anything else coming down peak, have you entertained the thought of maybe scarping those ships, helping the supply demand and maybe removing some of the off-hire overhanging fleet?

Scarping them, no, because obviously scarping the ship will end up to quite a big loss for the company. Selling them at lower prices, yes, trying to fix them at period so we obviously won’t be having any idle time in the future, yes, but scraping is a very radical option and we don’t want to do that before the winter because we don’t want to consider that before the winter, because if in the winter we see what we saw last year which was quite a considerable strong spot market and interest for period. Then it would be -- it won’t be worth it. Just to remind you last year we fixed two 20-year old ships for one year to a very reputable charter because there was so much demand that they couldn’t find suitable ships. So we don’t want to take that decision and hit the company with a book loss before we see what will happen during the winter. Maybe we are wrong and maybe the winter will be weak then obviously that will be again on the table for discussion. But our experience has showed us that in the winter the spot market is much stronger and if we cannot find period business in the summer for these old ships, maybe we can find in the winter. So we are not in a hurry to make such decision.

Okay. So just to conclude before I move on, should we assume the utilization of the older ships in the third quarter will be similar to that in the second quarter and then hopefully in the seasonal upturn improve in the winter?

To be on the safe side, I would say, yes.

Okay. And then also can you provide an update of the drydocking schedule, given the heavier load in the second quarter and the acceleration of one for ’14?

Yeah. Give me one second. One in the third quarter and two drydockings in the fourth quarter.

And do you have the ’14?

’14 we have zero in the first quarter, two in the second quarter and only one in the fourth quarter, for the time being nothing else.

Okay. That’s helpful. The new charters that you revealed today, can you -- I know you give the total number and you don’t have to give us the rates specifically, but how does those rate stack up relative to, one, it’s about market today and then two time charter rates of that duration that you may have been able to achieve six to nine months ago?

On the first part of the question, higher, on the second part of the question, same.

Okay. And then finally on the growth initiative, I saw in a broke report over the weekend that Brave Maritime placed an order for newbuilds, is the ultimate goal of StealthGas to expand through new builds and are you looking at kind of ordering on your own or should we expect sales from Brave directly to Stealth in the near future?

Brave Maritime has not ordered any newbuildings and so that is my comment on that question.

Okay. Newbuild versus secondhand?

There is no such question. I mean we buy anything that is available for sale, if we find modern secondhand fantastic, if we don’t we have to end up with newbuilding. So I would say 30% secondhand if we can find them then 70% newbuildings.

Okay. Thanks a lot Harry.

Thank you.

Your next question comes from Michael Webber from Wells Fargo. Please ask your question.

Hey guys. This is Donald McLee in for Michael.

Hi Donald.

One quick question just about the current market, where current LPG’s spot rates and I guess what kind of premium are you seeing for the modern fuel system tonnage?

I cannot answer your question because it’s too general. I mean the current rates for which size, for modern -- older?

For the MGC the 3,500 to 7,000 cbm vessels.

Not the MGC, MGC is 35,000, they are the very big ones. I think you’re talking about the small 100-size ships.

Okay. Right.

For the average size ship, let say 5,000 cbm ship which is the average size of our fleet, for a modern vessel the spot rate is between $9,000 and $10,000.

Okay. And then given the seasonality during Q2, I guess, how much upside do we is -- how much upside potential there for the winter months?

Aim the summer -- for the modern ships always -- there is always a weakening of between 10% and 15% on the spot rates and then in the winter again you see the reversal i.e. an increase of between 5% and 15% on the spot rate. So the TC rates are fairly stable.

Okay. That sounds good. That’s all my questions.

Thank you.

Your next question comes from Urs Dür from Clarkson Capital. Please ask your question. Urs Dür - Clarkson Capital: Hey. Good afternoon, guys.

Hi Urs. Urs Dür - Clarkson Capital: Hi. I noticed that you guys, we saw your shelf show up earlier this year and you are obviously very excited about expansion, but had some off-hire time and shut up a little bit lower on revenues in the Street as expected. I mean what’s your intention with the shelf here on the expansion? Is that shelf that you want to keep in place simply to do accretive acquisitions down the road, separate from the fire power you have now or what’s your intention with the shelf?

Thank you. First of all I discussed we have $400 million in fire power. So, I think that’s more than plenty for our current needs and plans. This was more of a housekeeping item, which has an active -- an active shelf. I don’t think we will be using it for the time being. You never know -- you should never say never. If we find a big acquisition or something, we should have an active shelf so that we can use in rapid manner. Otherwise we will now start using the offering process. And as I said before we hope to announce some nice acquisitions within the next 45 days to 60 days from now. Urs Dür - Clarkson Capital: To be funded by the most recent issuance and not by anything new there?

Correct. Urs Dür - Clarkson Capital: Great. On the free rates that you mentioned for the 5,000 cbms, I know you guys have mentioned in the past a breakeven rate for your fleet in that size range. What -- can you remind us what that is, I believe it’s below $6,000 a day?

It’s in the -- yeah. It’s high fives. Urs Dür - Clarkson Capital: High fives. And is that a net income or just to remind everybody net income or cash flow breakeven?

Give me one sec. Our net income breakeven level was $5,168 compared to $5,952 in the previous quarter and $5,816 in the same quarter of last year. Urs Dür - Clarkson Capital: Okay. And spot revenues right now are $9,000, $10,000 a day?

No, I didn’t say that. I said for a more than 5,000 CBM ship which is the average size ship of our fleet. The spot rates are between $9,000 and $10,000 obviously for the older ships is less -- for the 3,500 ships is less, and for the 7,000 CBM ships is more. I gave some general guidance to have the figure in your minds. Urs Dür - Clarkson Capital: Yeah, absolutely. That’s more where I was getting to.

Yeah. If you take -- let’s say you want to do a calculation, if you want do calculation and use that figure, take off the ships -- the old spot ships out, then of course you can use this number. Urs Dür - Clarkson Capital: Yeah. Yeah. Got you. No -- no, fair enough, I just want to remember where they were for the modern ships.

Yeah. Between nine in the east and about 10 in the west, to be precise. Urs Dür - Clarkson Capital: Yeah. Now that’s extremely helpful. I think it’s been asked. So maybe I am repeating a question, I don’t believe so, but do you ask -- you mentioned all of this interest again on the U.S. and the LPG exports and how that has changed the game, but your ships are smaller. You actively involve in the day-to-day of the U.S. export or is this something describing a rising tide lifts all boats?

U.S. exports arising on a per annum basis with huge -- huge leaps and bounds. This year we saw a big increase compared to 2012. Next year, we are going to see an even higher increase of exports. As I told you before, the majority of our ships are on period charter with charters, the majority of which don’t trade actively in the U.S. Therefore, we don’t -- since our charters don’t actively trade in the U.S., we don’t actively trade in the U.S. But a good example of what’s happening is that, a. lots of exacts exports are going to the Caribbean. And they need our ships in the Caribbean for the short-distance distribution of their cargo. And number two, two of our older ships last year were chartered for a period for trading in the Caribbean. So that shows that not only you need old ships, but in some cases they cannot find modern ships. So they end up taking older ships and that’s why we fixed two of our ships for this kind of business. Urs Dür - Clarkson Capital: Perfect. All right. Well, thank you for that insight and I appreciate your time and thank you very much.

Thank you.

Your next question is from Jeff Geygan from Milwaukee Private Wealth Management. Please ask your question.

Good morning. Thanks for your time today.

Hi, Jeff.

With respect to your pro forma $345 million in debt at the end of the year 2015, I assume that it is for the -- all of the acquisitions new builds that you have announced today?

Yeah.

What were your cash balance speaking of that $118 million of cash and restricted cash at the same time?

Well, I don’t have it in front of me. If you want, Konstantinos can email you that. I don’t have it in front of me to tell you.

All right. Thanks. The 21 ships that are in order, are six of those yours?

Yeah.

That is why 28% of the new order -- where StealthGas with respect to marketshare today?

This -- generally in the total fleet you mean?

Yeah.

15%.

So this would imply your increase in market share?

The goal as we discussed is to get to 20% to 25% micro share as we soon as we spend the money from our follow-on offering. We want to add minimum another 10 new billings on that of the ones we have already ordered. This is the goal.

Okay. Of the $400 million in fire power that you mentioned, is that inclusive of the ships that you’ve currently contracted for or in addition to?

I would say it is an additional.

Additional, really.

Yeah. Really.

That’s interesting.

Yeah.

And the gentlemen from Deutsche asked a question about the ships -- the Japanese yards -- I was -- just wasn’t clear on the pricing with these six yards you may solicit, what have the trends been in pricing for newbuilds today versus historic?

I would say average, but we have seen in the last six months them being more active and taking more orders because of the yen weakening.

All right. And last question from me at this point, the -- historically you have stayed in this niche space, but there have been a couple of instances where you have been out, what’s the chance as you look at the VLGC market?

The VLGC market, you mean?

Yeah. Thank you.

Slim, I would say.

Slim?

Yeah.

I see. All right. Thanks. Good luck.

Thank you.

Your next question comes from Chris Snyder from Sidoti. Please ask your question.

Hey good afternoon, Harry.

Hi Chris.

So the average rate, year-over-year was down substantially, is that just a result of vessels coming off contract in being, for instance, spot rate at lower rates or are you seeing a good decline year-over-year in the charter rate environment?

No, the opposite. We are seeing an increase year over year.

That’s really odd, just vessels coming off higher price contracts and being put in the spot market where they are being achieving low utilization and lower rates?

Yeah. If it’s the summer you achieve low utilization and lower rates, and then in the winter you hopefully achieve higher utilization and you fix it on period. That is what we normally do and it works.

My second question is -- was about, I mean you guys have seen a lot of -- dry powder strictly from the April equity offering, but yeah -- yeah, I mean you bought, I think minimum $90 million worth. Is it taking a while because you guys were looking for some second hand tonnage that’s difficult to come by or are you just parting your time waiting to place newbuildings?

No. It’s because the Japanese yards need two to three months from initial discussion to signing of the contract.

Okay.

That’s why.

Okay. And that’s all from me. Thank you.

Thank you.

There are no further questions at this time sir, so please continue.

We would like to thank you all for joining us at our conference call today and for your interest and trust in our company. We look forward to having you with us again at our next conference call for our third quarter results in November. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may all disconnect.