Ladies and gentlemen, thank you for standing by. And welcome to the StealthGas First Quarter 2020 Conference Call. During the call, all participants will be on a listen-only mode. [Operator Instructions] I must advise you that, the call is being recorded today on Tuesday, the 26th of May 2020. And I should now hand over to your host, Michael Jolliffe. Please go ahead.

Good morning, everyone. Welcome to our first quarter 2020 earnings conference call and webcast. This is Michael Jolliffe, the Board Chairman of StealthGas. And with me on the call is our Chief Executive Officer, Harry Vafias; and our Finance Officer, Fenia Sakellaris, who will later on discuss our financial performance. 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. At this stage, if you could all take a moment to read our disclaimer on slide 2 of this presentation. Risks are further disclosed in StealthGas filing with the Securities and Exchange Commission. I would also like to point out that all amounts quoted unless otherwise clarified are implicitly slated in U.S. dollars. Slide 3, summarizes the key highlights of our first quarter 2020 that we released today. It is widely acknowledged that the COVID-19 pandemic and subsequent lockdowns have disrupted economic activity and demand. This has had a major impact on global shipping markets. Indeed, we are experiencing unprecedented times and great uncertainty as to when global demand will be restored thus returning shipping activity to normality. Since the beginning of the year, when the COVID-19 started spreading across China and to its neighbors, our market's positive momentum was significantly altered, began to face weaker demand, port restrictions, and safety regulations that resulted in a slowdown of shipping trade. Nevertheless, our good quarterly results are our testimony that StealthGas' defensive positions is weathering well this unprecedentedly bad storm. Our period coverage allowed us to commit less than 10% of our voyage days in the spot market. Hence, we minimized the rippling effects that poor spot activity and prolonged waiting times may have had on our fleet performance. We managed…

Thank you, Mr. Jolliffe, and good morning to everyone. I will continue the presentation focusing on our financial performance for the first quarter of 2020. Indeed, we enjoyed the profitable quarter, a quite impressive result given the very difficult market we have been facing since the COVID-19 became a pandemic. Our success strategy relied on minimizing our exposure in the spot market, preserving a strong operational utilization and reaping the benefits of concluding additional period charters. Let us move on to slide 7 where we see the income statement for the first quarter of 2020 against the same period of the previous year. Voyage revenues came in at $34.4 million, marking a $4.1 million decrease compared to the same period of last year. This contraction in revenues is due to the net reduction of our average owned fleet by four vessels. two less chartering vessels and one vessel previously on time charter, which commenced a bareboat charter. Voyage costs amounted to $2.8 million marking a 27% decrease compared to Q1 2019 due to spot days reduction by 43%. It's noted that the sharp decline in fuel price from March onwards was not reflected in this quarter's result. We anticipate seeing a fall in our bunker costs in the next quarter. Based on the above, our net revenues for the period were $31.5 million corresponding to a net revenue margin of 92%. Running costs at $13.2 million marked about 3% increase compared to Q1 2019. On this quarter, we incurred heavy costs of about $1 million for the technical damage in one of our small LPGs. General and administrative costs decreased compared to the same period of last year by about $500,000, mainly as our stock compensation plan active in the same period of 2019 ended in August 2019. Based on…

On slide 10, we see the market fundamentals for the LPG market look promising up until the end of February. Since then the global spread of COVID coupled with the recent oil price collapse have caused turmoil in world markets. According to a forecast produced by Poten & Partners, global LPG demand is expected to rise by two million metric tons in 2020 to reach a total of 256 million implying a slower growth driven primarily by lower global demand. During the first quarter of 2020, trade due to COVID-19 was mostly disrupted in the Chinese market. This is evident when looking at the number of small to medium LPG ships discharging in China during this period as their port calls were down by 41% year-on-year, and in February – and 28% year-on-year in March. In addition to the global COVID-19 lockdown, which caused a sharp decline in LPG demand, lower crude oil prices make LPG uncompetitive on a price basis against naphtha, thus reducing petrochemical demand for LPG. This is a risk element in our market going forward. By the end of the first quarter 2020 we witnessed two factors that partly offset the general negative market sentiment. Firstly, was the gradual lift of COVID-19 lockdowns in China thus accelerating the PDH plant operations. Second, was the Indian government announcing new subsidies for LPG for household consumption, thus providing a boost to LPG demand. Another positive element worth to mention is that the U.S. shipments to China resumed with the end of tariffs in March hence broadening the existing LPG trade patterns, mainly for the VLGCs. On slide 11 we see that during Q1, rates for the majority of small LPGs slightly weakened. West of Suez the market was relatively healthy up until the end of the first quarter.…

The first quarter of 2020 commenced quite promisingly for our performance and profitability. Indeed, we are pleased that we generated net income of close to $3 million with a very strong operational utilization of 98%. However, the COVID-19 pandemic has had a significant negative effect not only on the shipping markets, but also on the global economy. Future periods are consequently governed by a question mark around LPG demand and period chartering activity. In the short run, the market has markedly deteriorated and although StealthGas is quite protected due to high period coverage and very low debt, no prediction can be made for how long the COVID-19 pandemic will be a major global concern, severely affecting the whole of the shipping industry and the resulting impact on our company. A second wave of this pandemic outbreak may hit this winter and StealthGas is already taking a defensive position in order to ride out this storm as smoothly as possible. We have now reached the end of our presentation and we would like to open the floor to your questions. So operator, please open the floor.

Thank you very much, sir. [Operator Instructions] Our first question for today is from the line of Randy Giveans from Jefferies. Please go ahead.

Howdy, team StealthGas. How are you?

Hi, Randy. Hope you're well.

How are you doing, Randy?

Great, great. Yes. Nice and safe. A few questions for you. So first, looks like utilization remained near 98% or so for, kind of, a third quarter in a row. Now that we're more than halfway through the second quarter, what do you expect utilization to be this quarter or what have you seen it over the last six weeks? And then also your press release stated, and Michael you stated that in the short run, the market has deteriorated, right? What are the current spot rate levels for the small LPG vessels compared to the 1Q 2020 rates you show on slide 11?

Thank you, Randy. On the first part of the question, I would take utilization a few notches down in Q2. I cannot give you an exact figure, but you can take your guess on that. On the matter of the rates, it's not that rates have -- it's not that spot rates have fallen that much. It's that we have fewer cargos available in the spot market. And therefore, if you have spot ships, you have more waiting time in between the cargos thus eating away your time charter equivalent. So, I would use 10% to 15% lower spot rates for Q2.

For Q2, got it. Okay. And then, looking at your fleet, so it looks like all five of the JV acquisition vessels have been delivered. Is that right? And are there any others kind of planned or to be delivered?

Sorry. Did you say five?

Yes, for the JV vessels?

That is wrong. The total number of ships is eight. It's five belonging to the first JV and three belonging to the second JV, all of which have been delivered.

Got it. And in terms of future plans for those JV acquisitions?

No. No plans for acquisitions right at this minute.

Okay. And then on the time charters, can you give some details on rates around those four time charters, especially, on the crude and the products vessels?

We haven't given the exact numbers. But for calculation purposes, we can say that the Aframax from its previous rate, of course, we have to add then deduct, because the previous rate was a variable rate and the current rate is a time charter rate. But comparing apples with apples, I would say, that is in the region of 30% better for the Aframax. And for the MR, the one single MR that we fixed, I would say, it's in the region of 15% better.

Got it. And a last-minute question. To me those are bareboat. Those are both time charters now?

Yes. These new fixtures are time charters.

Excellent. All right. And then kind of last question here, just around the tender offer. You were able to repurchase about 1.4 million shares. You offered up to buying back 4.8 million shares, so you spent a little under $3 million out of the $10 million. So with that, do you repurchase more shares now in the open market? Do you do another tender offer? What are the kind of the plans for the remainder of that, let's call it, $7 million that's earmarked for share repurchases?

That's a good question Randy. We have not discussed with the Board, because as you were very curious, they are also very curious about what will happen this summer. So, I think, we have to wait a bit to see what happens with the LPG trade, the LPG demand, the time charter interest for our ships. As you saw, we have quite a few opening up until December. And depending on what we see, we will then decide on a Board level how to spend the money that we did not spend in the last tender offer.

Got it. Okay. And then just for our model, what's the current share count following the tender offer? Are we around 38 million shares?

I don't have the exact number off my head. I don't want to give you a wrong number. So, we'll have to e-mail you on that.

Fine. Sounds good. Well, that's it from me. You'll stay safe, stay healthy and talk soon.

Thank you, Randy.

[Operator Instructions] The next question is from George Berman from CL Securities. Please go ahead.

Can you hear me?

Hello George.

Hey. On your MR tankers, are you running them clean or dirty?

Good question. Mixed.

Mixed. Okay. And I want to talk about the buyback. In previous calls, you had mentioned that the volume wasn't strong enough. Explain why you think that so few shares were given into your tender offer.

I cannot be in every shareholder's mind George, maybe because they're bullish about the future.

Or the price was apparently at a very, very low level? As a continued shareholder in the company, despite the difficulties here, we'd appreciate if you would consider re-upping that offer at a little bit higher price. Because I think essentially your company like so many shipping companies are trading at almost ridiculous discounts.

Yes. George, I think we have discussed many, many times. And I just answered exactly the same question to Randy. So, depending on what happens this summer and if we don't see a complete destruction of LPG demand, the money that we did not spend on the previous tender offer might be redirected for more share buybacks.

Great. And then you had mentioned the numbers for this quarter could have been even higher by $1 million if it was not for the damage to one of your vessels. When do you expect to get the insurance reimbursement there?

That is not an easy question because as you know the insurers try to find every kind of exclusion not to pay you fast. But I would say between 30 and 60 days.

Okay. Great. Thanks very much and good luck for the future.

Thank you, George.

[Operator Instructions] There are no further questions that are coming through.

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

Thank you very much sir. Ladies and gentlemen, that does conclude the call. Thank you all for joining and you may now disconnect.