Thank you for standing by, and welcome to the StealthGas Second Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation, followed by question-and-answer session. [Operator Instructions] I must advise you, the call is recorded today, Wednesday, 25th of August, 2021. I would now like to hand over to Mr. Harry Vafias, CEO of StealthGas. Please go ahead, sir.

Good morning, everyone, and welcome to our second quarter ‘21 earnings conference call and webcast. This is Harry Vafias, the CEO of StealthGas, and joining me on our call today is our Finance Officer, Mrs. Sakellaris. Before we commence our presentation, I’d like to remind you that we’ll 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 the disclaimer on slide 2 of this presentation. The risks are further disclosed in StealthGas filings with the Securities and Exchange Commission. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in U.S. dollars. Slide 3 summarizes the key highlights of our second quarter ‘21 results that we released today. Our performance in the second quarter of this year was governed by two conflicting events, improved revenues combined with increased costs. Even though the COVID-19 pandemic is still persisting, we managed to limit our spot exposure compared to the first quarter of this year and most importantly, lower commercial off hires. However, we still incurred high voyage costs, also affected by the increase in oil price. In addition, we faced high operating costs and drydocking expenses due to the COVID-19 pandemic. As a result, higher revenue did not culminate in our operating profitability. Even though the second quarter is seasonally low for LPG demand, our operational utilization came in at 96.3%, a better performance compared to the first quarter of 2021, mainly due to decreased productivity along with the reduction of off hire days by about 45%. We have about 74% of feet days secured on period charters for the remainder of 2021, with total fleet employment days for all subsequent periods generating approximately $66 million,…

Thank you, Harry, and good morning to everyone. I will continue the presentation focusing on financial performance for the second quarter of 2021. As mentioned earlier in our call, on the one hand, we managed compared to the first quarter of this year to improve revenues, decreased the number of vessels in the spot market and reduced commercial off hire. On the other hand, and compared especially to the same period of last year, all of our cost items were burdened from vessels leaving bareboat charters and additional costs attributed to the pandemic. Thus, we did not manage to translate our revenue generation to operating profitability. Let us move on to slide 7, where we see the income statement for the second quarter of 2021 against the same period of the previous year. Voyage revenues came in at $39.3 million, marking a $3 million increase compared to the same period of last year. This increase is mainly attributed to 6 fewer vessels on bareboat, now operating higher spot on a time charter contract. In terms of voyage costs, this amounted to $6 million, marking a $4 million increase compared to Q2 2020 as spot days increased by 121% equivalent to about 500 days, and our daily bunker cost increased by 70% due to the increase in oil prices. We need to note though that compared to the first quarter of this year, we did manage to reduce our spot presence and improved revenue stemming from the spot market. However, we faced higher bunker costs and additional bunker expenses for the balance of one of our product tankers, hence we do not mark the anticipated decline of voyage costs. Based on all of the above, our net revenues for the period were $33.3 million. Running costs at $15.8 million marked about…

On slide 10, given the ongoing COVID-19 pandemic, it’s quite difficult to firmly assess how the market will behave in the years ahead. However, the current market conditions and as per the analysis got by Poten & Partners, demand for LPG is predicted to increase in the years ahead. Chinese imports will be driven mostly by the petrochemical sector as there are 13 PDH plans -- units planned to commence operations up until 2023. The rise of the petchem sector will also drive European LPG imports, which are forecasted to grow by 8% until the end of 2022. Overall, LPG pricing will likely remain at higher levels as they are greatly correlated to oil prices. However, the recent increase of COVID-19 cases due to the Delta variant might lead to a decrease in demand and consequently oil and LPG price decline. On slide 11, we see that during Q2 ‘21, charter rates for small LPGs remained relatively unchanged compared to the previous quarter, but still remain much lower than pre-pandemic levels. Looking at the small LPG trade, West of Suez, the spot market firmed particularly towards the end of the second quarter. Owners faced less competition for cargoes thus limited downtime and spot rates marked a slight rise as a result of the increase in oil prices. Charter employment in the region was more active particularly driven by the demand for petrochemicals. East of Suez, the market in the second quarter exerted a stable LPG demand but at a rather discouraging petchem product market. Nevertheless spot rates remained firm and several vessels mostly larger than 5,000 cubic meters were fixed on period employment particularly short-term time charters. Looking ahead, it is the Delta variant and the opening of crackers in Korea that will affect demand in the second half of…

[Operator Instructions] And your first question today comes from the line of Randy Giveans, Jefferies.

A handful of questions here. So first, for those 9 recently extended charters, can you provide either an average rate or the rate change from previous charters? And then, with the 87% of 3Q ‘21 now complete, how do you expect 3Q ‘21 earnings or revenue to compare with 2Q ‘21?

On the first question, because it’s, as you know, different sizes of ships and different ages of ships, giving an average number would not I think help. It would confuse matters. I think, in most cases, I would say the rates were stable. So, nothing fancy, nothing huge on the increase side, but no major reduction either. So, in the circumstances, I think, we’re happy.

Okay.

On the second question, the problem, as you might have seen from this quarter is not the income side. The income side is somewhat secure. The problem is the cost. We have delays. We have very-expensive crew costs. We have quarantine. We have cases where a ship has a single COVID case and must stop and quarantine for 14 days. And things like that, which can make a quarter very profitable or not. So, obviously, we can’t really say too much for Q3. I would expect and be happy with all these things being considered if we are profitable in Q3.

Got it. Okay. And then, you mentioned you agreed to sell two small vessels, right? One was built in 2008, the other in 2015. So, why did you sell those two specifically?

Yes. Good question. As we have seen in the last couple of years and excluding COVID as well, the better earners, I would say, are the ships that are 5,000 cubic meters and above, which is the bulk of our fleet anyway. Both of these ships are 3,500 cubic meters, where their earnings are on the low side. Even in the up-cycle, of course, they have some increase, but the increase is small. So, we found the opportunity to sell both of those ships, the more modern ship with forward [ph] delivery. So on one hand, we are selling ships that are not big earners. We are selling ships that even if the market improves, are not going to add significantly to the bottom line. And secondly, the modern ship, we have a great forward delivery. Thus, we have the opportunity to exploit that ship a bit longer if indeed we’ve seen Q4 or slightly later a better market. In addition, we think that having a significant cash balance in today’s environment is very, very, very important. And you know from our past calls, how conservative we are on that side. We think you should have between $750,000 to $1 million per ship cash for a rainy day. And we don’t know how long the COVID Delta and all those other variants will last. So by selling those ships and having a small book loss, but adding to our cash pile, I think it’s a conservative and defensive move to protect our shareholders.

Okay. And then, when are those vessels being delivered? Do we now have firm delivery dates?

The Imperiale is relatively prompt, will deliver within September. And the other one will deliver either before New Year or after New Year. So, we have, as I told you, some time to trade her.

Got it. Okay. That’s fair. All right, bigger picture, I guess, there’s been some consolidation, right, in LPG in recent years, even in recent months with BW Epic, Kosan, as well as Navigator and Ultragas. So, I guess, two questions or the same question in one, are you looking to buy some additional smaller LPG vessels, or similar to the recent sales and your massive discount to NAV, are you looking to sell further vessels or even open to merging with a larger player?

Listen, Randy, you know us. We are very open minded and very flexible. But first of all, we look to protect our shareholders in a very difficult environment. And just by posting a profit in this environment, despite the book loss and the drydockings that we had, I think, for us, it’s a significant achievement. Buying more ships, I mean, unless it’s a bargain, I would say, no. Why would we buy ships at NAV when we’re trading at a big discount of NAV? It’s better to sell the ships at NAV and then keep the cash to protect ourselves, or if our cash pile improves, start buying back stock again, like we did last year with our tender offer. Merging, I don’t know, is the answer. I mean, if we see good value in such a move, definitely, it will be considered by the Board. There is the mergers that you said. We haven’t really seen yet if it’s positive or not. We need at least two, three years to judge those moves. Generally speaking, the bigger, the better. We have a very, very big fleet on our own. So, it’s not a necessity for us just to merge to be big. It must make sense numbers-wise and value-wise.

That’s fair. I guess, last question, let’s put it all together, all the stuff you just said, plus everything in your financials. Your balance sheet is in good place. You have a decent amount of cash flow visibility now with your charters through the third quarter and even through the fourth quarter. You sold a couple of older vessels. Clearly, you’re trading at that massive discount to NAV, as you mentioned as well. So, market capital of $100 million, asset base close to $1 billion, right? Your book value is, I don’t know, I think you say $567 million. So, why not repurchase shares in a substantial amount, kind of at these levels? I know COVID uncertainties and cash balances and what have you. But, selling of ships and buying shares seems like a very accretive use of cash here.

Exactly. And I think we’re one of the few companies that has done it so much in the recent years, especially with our tender offer in the start of the COVID pandemic, where everybody thought that we were crazy but we did it. And I think some of our shareholders did benefit from that. The Board did not allow initial purchases before we see some light at the end of the tunnel. I think it’s strict. But, I think on the other hand, it shows how much we don’t want to go and raise emergency equity and dilute everybody, like a lot of our competitors have done. So, we need patience. It’s been already close to two years of the COVID problem. It will get solved sooner or later. We have the fleet, we have the money, we have the protection, but we need a bit more patience for this to go away. And then, of course, if we start generating more cash, obviously, at this valuation, the share buyback is a no-brainer, as we’ve done many times before.

[Operator Instructions] And we have a question from the line of Lance Scott, from Scott Family LLP. [Ph]

Yes. Good morning. I was curious, could you tell us about the exact difference between net income and adjusted net income, what is included in that difference?

It’s a few things, Lance. One of the most important things, I think, is the impairment. But, if you want the exact breakdown, please send us an email because on the phone, I might forget something, and then I’ll have a problem. So, better send us an email and we’ll revert in a written form, which is I think more proper.

Right, right. Now, we -- our accounting is solved by U.S. accounting standards or U.S. standards or international?

U.S.

U.S., okay. Okay. Thank you.

Lance, please send us an email and we’ll revert as soon as we can.

Okay. Thank you.

We have no further questions at this time, if you wish to continue.

Yes. We’d 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 with us for our third quarter ‘21 results call in November. Thank you.

Thank you. That does conclude your call for today. Thank you all for participating, and you may now disconnect.