StealthGas Inc (GASS) 2011 Q3 法說會逐字稿

Thank you for standing by and welcome to the StealthGas Inc. third-quarter 2011 results 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 advise you that this conference is being recorded today on Wednesday, November 16, 2011.

I would now like to hand the conference over to your speaker today, Mr. Harry Vafias. Please go ahead, sir.

Thank you and good morning, everyone. Welcome to our conference call and webcast to discuss the results for the third quarter 2011. I am Harry Vafias, the CEO of StealthGas, and I would like to remind you please I will be discussing forward-looking statements in today's conference call and presentation.

Regarding the Safe Harbor language, I would like to refer you to slide number one of this presentation as well to our press release and our second-quarter results.

With me today is Konstantinos Sistovaris, our CFO. If you need any further info on the conference call or the presentation, please contact Konstantinos or myself.

So let's begin from slide number two to review how we are implementing our business strategy now. Our medium-term goal is to renew our fleet with the delivery of buying newbuilding gas ships. In the first two quarters of 2011 we took delivery of the first two vessels, the 5,000 cbm Gas Elixir and Gas Cerberus, which were then fixed on long-term time charters.

We also proceeded with the sale of four older ships. The average of the four ships sold was 16 years of age and three were operating in the spot market. Then in the third quarter on September 21 we took delivery of the third newbuilding, the Gas Myth, which we deployed on a three-year time charter to a European oil company.

We wish to maintain a strong focus on the operational side, and that is the reason behind the sale of these four older ships. We believe that as we remove older vessels from the fleet and replace them with brand-new, larger, more efficient and higher specification ships the overall performance of the Company will improve.

We have already seen healthy interest from charters for these newbuilding vessels, and as a result, we have managed to conclude long-term charters for all three of them. As far as our newbuilding program is concerned, we have two more even bigger ships to take the delivery of. One is scheduled for delivery January 2012 and the second one May 2012.

After taking into consideration the total fleet of 37 ships, at the end of the third quarter of 2011 our net debt to capitalization ratio stood at 44.3%, similar to the previous quarter. And taking into consideration the scheduled vessel deliveries, we estimate that we will continue to have a moderate ratio of below 50%.

Our gross debt, which stood at approximately $360 million at the end of the quarter, will peak at above $370 million in the second quarter of 2012. So we do not expect any significant increase in our debt level from the delivery of the next two newbuildings in 2012.

We continue to strive to obtain a secure and visible revenue stream with stable and predictable cash flows. At the moment fixed deployment for our fleet for the remainder of 2011 is at 80% with almost 55% fixed already for 2012 and 33% fixed for 2013. We will seek to increase these forward coverage numbers with more long-term charters. By the end of the first quarter 2012 we aim to have around 70% of our fleet fixed one year forward.

Our fourth goal has been to own and operate a modern fleet of gas carriers, and in this respect, the average age of today is 11 years not including the tankers that we have, which is rather young compared to the industry average. Including the product tankers and the Aframax and the newbuilding vessels that we are building, we estimate that at the end of 2011 our fleet will have an average age of about 10.5 years.

We continue to believe that within our core sector this gives us a competitive advantage as younger vessels have less operating expenses, consume less [bunkers], and are more appealing to blue chip charterers. And thus the factor will be more important as we move forward in 2012 and beyond.

Our next objective has been to maintain close customer relations. The quality of our customer relationships is exemplified by the quality of our charterers which also lowers our counter-party risk. Out of a total fleet of 37 vessels, as we have previously announced, we had only one incident whereby we agreed a minor rate reduction. Because of the state of the LPG market and the participation of more established names in it, we don't expect to have any issues with our counter-parties.

Our sixth goal has been to maintain cost efficient operations. I am pleased to report yet another good performance in the second quarter. Our net income breakeven level per day, excluding losses on derivatives, was $5,175 per vessel per day compared to $6,161 in the second quarter and $6,426 in the first quarter.

As we had expected, we managed to decrease our daily operating expense compared to the first quarter; however, it was an unexpected increase and we expect further decreases in the next quarter. We continue to concentrate heavily on managing our cost base and we expect that the five vessels going on variable charters during the year and the addition of brand-new vessels to the fleet we will be able to contain upward pressures on operating expenses.

Crewing remains one of the most challenging issues for most shipping companies, but so far in 2011 we have managed to contain crew costs. I would also like to remind you once more that in terms of our general and administrative expenses we have amongst the lowest in the public shipping sector. We are working hard to control costs, not only on the operational side, but also on the managerial side. Personally, I have not had a pay rise since 2008 nor a bonus.

Finally, regarding our share buyback program. In our last report we said that we had started buying back shares as we believe that the share price is grossly undervalued. We have bought approximately 350,000 shares and to this we added another 200,000 shares. Since the program's inception we have bought back approximately 1.8 million shares, or 8% of the total shares outstanding.

Slide number three. This slide demonstrates the development of our fleet. During the first quarter of last year we sold three older gas ships and we purchased a new Aframax crude oil tanker. During the first quarter of this year we added to our fleet one newbuilding gas ship.

During the second quarter we sold three older vessels and we added another newbuilding gas ship. During the third quarter we sold one vessel and got delivery of the third newbuilding gas ship.

Our total fleet of 37 vessels at the end of the quarter compromised of 33 gas carriers, three product tankers, and one Aframax tanker. With the additional two more LPG newbuildings we will maintain a strong presence in the LPG sector.

StealthGas continues to hold the number one ranking in owned-vessel in the 3,000 to 8,000 cbm segment while there is no company that owns more than 15 such vessels. We will continue to believe this segment of the LPG space has strong fundamentals coupled with relatively stable charter rates as we are demonstrating. As of today, we have taken delivery of three newbuildings, funded partly through bank finance and partly through our internally-generated cash flows. The same will apply for the remaining two as we have committed finance in place.

As of September 30, $18 million has already been paid as advances for the remaining newbuildings and we expect another $44 million in total capital of expenditures.

Slide number four. This slide demonstrates our fleet employment profile and provide you with the earnings visibility for each of the 37 vessels currently in our fleet. At the bottom of the employment profile chart we have included the percentage of fixed deployment days where we have also added 2013. This enables you to assess the stability and predictability of our earnings.

For the remaining of 2011 80% of the (inaudible) is already fixed, 55% for 2012, and 33% for 2013 with a number of charters going also into 2014. During the second quarter we announced new time charters for five of our ships, securing revenues of $13.5 million over the next year. During the third quarter, apart from short-term extensions we included two time charters of three years each securing revenues of about $20 million over the next three years.

Total contracted revenues are approximately $150 million and we estimate that this equivalent for the LPGs on long-term charters is on average $9,100 per day.

In terms of charter types, out of the fleet of 37 vessels 13 are on bareboats, 16 are time charters. The Company's policy is to arrange for long-term charters. However, with a staggered employment profile there will always be opportunities to take advantage of a firming market.

We now turn to the financial highlights for the third quarter 2011, so I will pass you to our CFO, Mr. Sistovaris.

Thank you, Harry. Good morning, everybody. So let me continue the presentation with slide number five, the financial highlights for the third quarter of 2011.

With an average of 36 vessels owned and operated in the third quarter 2011 we realized net income of $6.2 million on voyage revenues of $27.5 million. Our net income figure is unusually high because of gains from our derivative instruments that include the interest rate swaps and the currency hedges we had in place in order to pay for the newbuilding vessels. These amounted to $1.2 million gain for the quarter.

We also had a $1.5 million non-cash gain from the valuation of foreign currency deposits in yen. We still hold one more foreign currency forward contract to buy yen that we will execute in December of this year, and we expect it to be a profitable one. Beginning 2012 we have no more foreign currency instruments that will affect, positively or negatively, our results.

Excluding the items I just mentioned, our adjusted net income was $2.1 million or $0.10 per share calculated on an average of 21.1 million shares outstanding compared to $0.04 per share for the same period of last year. We believe this is a more meaningful number for investors to see what level of profits or losses we incur on an operational level from chartering of our vessels.

The free cash balance at the end of the quarter was approximately $42.4 million. We also had about $7 million in restricted cash as part of our loan agreement. Our net debt to capitalization stood at 44.3% at the end of the quarter, slightly reduced compared to the previous quarter.

We continue to believe that maintaining our leverage at moderate levels is important and believe that when all vessels have been delivered we will maintain a debt-to-cap ratio below 50%. We maintain excellent relationship with our bank thanks to our moderate leverage and a healthy balance sheet. Now that banks are going through their own difficult times and it is getting increasingly more difficult to refinance for new projects, we believe that our conservative approach will be a decisive factor if we need the support of our bankers for new projects.

We now turn to slide number six, which is a slide that provides you with an overview of the development of our income statement for the same quarter last year and the previous quarter. In comparing our results from the third quarter of 2010 when we had an average of 38 vessels in our fleet to the third quarter of 2011 when we had an average of 36 vessels in our fleet revenues increased by 3%, operating income was up 20%, and our net income was more than double.

The smaller increase in revenues was despite the changing employment structure of our fleet. Last year we had eight vessels on bareboat charters whereas this year we had 13. Having more bareboat charters means we receive less revenues, but on the flipside we don't pay for operating expenses, and that is why on an operational level our performance was much improved.

Operating expenses, for example, were reduced from $10.2 million down to $8.4 million. In addition, the market environment for vessels that operated under spot charters was healthier than last year and as a result we had increased spot market activity.

On an earnings per share basis, excluding the gains and losses on derivatives and foreign exchange, we went from $0.04 a share to $0.01 a share. Now compared to the previous quarter, when we operated an average of 39 vessels compared to 36 for the third quarter of this year, our revenue figures decreased from $31 million to $27 million.

This was firstly due to the fewer vessels we have in our fleet, secondly due to the fact that some vessels went on bareboat charters thus reducing our revenues and our OpEx. Our operating expenses, for example, were reduced from $9.9 million to $8.4 million. And thirdly, due to the softer spot market during the peak of summer.

LPG trade is typically a seasonal trade with more activity during the winter months and it is expected to see some slackening before the winter sets in again. On the other hand, our newbuilding vessel the Gas Myth was delivered late in the quarter at the end of September and so it did not have time to contribute in our results.

Slide number seven. Looking at our balance sheet, in terms of cash we continued to maintain a healthy cash balance. That was strengthened this year by the addition of the net proceeds from the sale of the vessels of about $17 million despite having cash outflows for our newbuilding program.

As of September 30 we had $18 million in advances for the remaining two vessels to be delivered in January and May. Our vessels book value net of depreciation stood at $621.7 million compared to $603 million at the end of the year. With the scheduled deliveries of new vessels we would expect to see this figure reach $650 million in a year's time.

In terms of liabilities, the current portion of our long-term debt, that is what loan repayments are scheduled over the next year, remains constant at around $34 million. Other current liabilities at $21.6 million are slightly reduced.

Our long-term debt increased slightly to $325 million from $310 million due to the new facilities for the Gas Elixir, Gas Cerberus, and the Gas Myth. And we would expect this -- to see these figures top at around $335 million after we take delivery of the scheduled vessels.

We have around $9 million of debt repayments per quarter that we can meet comfortably from our internally-generated cash flow. I would also like to point out that we have no debt maturing over the next couple of years so there is no need for refinance. The first balloon payments on our loans are due in 2014 and then in 2016.

Other liabilities of $10.7 million relates to the interest rate swaps we have with our banks to protect us from increases in LIBOR rates.

As of today, we have around 43% of the interest rate exposure in our loans hedged. These are multi-year hedging agreements for our loans that we did a few years back and still have some years left. On average, by 2013 we would expect half of our swaps to have expired or amortized unless by this time we enter into new agreements.

Stockholders' equity for the third quarter was $308 million. Total liabilities and stockholder equity was $700 million. I would also like to point out that with our share trading at 4% we are greatly undervalued and the net book value of our fleet, that is our cash plus our book value minus our debt, on a per share basis is around $14 per share.

We now -- please turn to slide number eight. These are our operating highlights for the second and third quarters of 2011 and the third quarter of 2010. In terms of fleet data, in the third quarter of 2011 we owned and operated an average number of 36.3 vessels compared to 37.7 in the same period last year. As a result, total voyage dates for the fleet for the second -- for the third quarter 2011 decreased by 4% to 3,247 days.

During the third quarter we can see a reversal of the trend we had over the last few quarters with a large decrease in the number of spot days from 881 in the same quarter of last year and 1,005 in the previous quarter down to 732 for the third quarter. One reason for this was the sale of the vessels we did in the previous quarter, as these were vessels that were operating in the spot market. A second reason is that we started seeing the effect of the bareboat charters we concluded in the previous quarters now that all the vessels were delivered to their respective charters.

So to give you these numbers in percentage terms, while spot days represented 29% of all voyage days in the previous quarter now they are down to 22%. On the other hand, bareboat days that represented 26% now represent 33% of all voyage days.

In terms of average daily results, we continue to see our average time charter equivalent rates improving from last year. We achieved the time charter equivalent of $8,691 per day per vessel on the adjusted basis compared to $7,792 per day per vessel in the same quarter of last year. We can see a significant increase from last year's numbers, approximately 12%. When comparing to last quarter we expect to see a small drop.

During the quarter we also saw a slight increase in our daily operating expenses. Meaning that, although in absolute numbers our operating expenses did follow, we would have expected a larger drop. We believe that in the current quarter operating expenses will be reduced further in both in absolute and daily terms. We still operate above breakeven levels in terms of income and cash flow.

Now turn to slide number nine where we are going to provide you with some estimates for the remainder of the year, that is the fourth quarter. We have contracted revenues under time and bareboat charters for approximately $20.7 million. We also expect our operating expenses will be reduced to around $8 million.

As far as drydock expenses, we have already drydocked seven vessels this year. It was an exceptionally heavy drydock year. We are scheduling to drydock another two by the end of the year at a total cost of around $1 million. Interest payments on our loans and cash payments on our swaps we estimate to be $3.3 million, and depreciation expenses of $7 million.

Finally, as far as the payments for the newbuilding vessels are concerned, as we said we have committed finance for the remaining two vessels covering the full amount of the future cash outflows. And we will be paying, like before, any predelivery installments and get the financing at the time of each one delivery. In fact, the $3.6 million payment that you can see in the current quarter was recently paid. We still have about $40 million left to pay in 2012.

Thank you very much. I will now hand you back to Harry for some further comments on the market.

Slide number 10. In this slide we show you the one-year time charter rates for our market. The figures are based on independent estimates but (inaudible). We have updated this slide with last year's rates, current rates, and future estimates.

What you can deduce from this slide is we have experience in our chartering operations. In this segment we operate 3,000 to 8,000 cbm. We have seen a strengthening in the market compared to last year in the region of between 10% and 20%, depending on the size and the area.

The only part of the market that did not strengthen year-over-year but not (inaudible) is the small [semi-refrig] segment. We only own four such vessels since the majority comprises of pressurized ships.

Nevertheless, it's encouraging to see that rates in the larger tankers that are usually much more volatile have been in an upward trajectory. And in fact, rates have remained high over the past few months. $850,000 per month rates for VLGCs are solid numbers.

Although we do not own this type of ships, we provide complementary services as VLGCs mostly take the long-haul route, for example Middle East to Far East, and we perform local distribution of the cargoes in the Far East. But it does show that there are increasing volumes of LPG product coming out of the producing countries.

We believe that the strengthening in our market has allowed us to conclude new charters at elevated levels as previously announced. Our fleet has a staggered deployment profile and as more vessels are coming off charters we hope to renew them at higher rates.

We have already seen an improvement in our operational figures and we expect to see more of it in the future. We are now focusing our attention on our two 7,500 cbm newbuildings that are coming in January and May 2012. If we judge by the interest that we show for the 5,000 cbm newbuildings, we believe we will be able to secure suitable employment very soon.

Slide number 11. We are discussing the strengthening of the LPG market with a longer-term view. We provide an update of this slide that shows the development of the LPG Handysize fleet growth in all our presentations.

As we saw within the previous slide, charter rates have been on an upward path recently and the most important question is whether this recovery will prove to be sustainable in the longer term. We believe that the fundamentals in our core segment as related to supply and demand are favorable.

On the demand side we will expect the completion of several large-scale gas projects that are due to come on stream after unfortunate delays due to the financial crisis that will prove to be a catalyst for this freight. We have already seen increasing volumes of LNG being transported and the connecting link is that LPG is partly derived from the LNG production. There are 54 million tons of LPG shipped in 2010 and the estimates are for 58 million tons for 2011 and steady increases after event.

There are solid indications that the supply of LPG product will increase during 2011 and beyond supported by strong economic growth in Asia.

On the supply side the order book for Handysize LPG ships is quite small at the moment. On one hand we expect the order book over the next years to remain steady. What is encouraging is the fact that we still have not seen increases in the order book and newbuilding prices have not come down, especially due to the strong yen.

On the other hand, the existing fleet is relatively old, that means more vessels will need to be scrapped. Overall, net fleet growth is minimal and depending on the level of scrapping it can become negative in 2012 and beyond. If these projections materialize, we believe that with a fleet of modern LPG ships we will command a premium and we are positioning our company to take advantage of the strong fundamentals in this sector.

Slide 12. We have included this slide to emphasize the point about the order book. The order books in this slide are spread over a period of at least three years, although in most cases deliveries are frontloaded. I should add that the figures on here in the graph for all LPG sizes, and as we have discussed in our core Handysize sector, the order book is much lower.

As you can see from the two main shipping sectors, tankers and bulkers, this 20% on the tanker side and 40% on the bulker side is very high historically. That could point to difficult years ahead. For containers the order book has grown once more, although increasing container demand may stabilize the market.

What we have also seen recently is renewed interest in LNG newbuildings due to the current solid chartering market. At this point increasing LNG volumes may absorb the increase in the order book but unless there is a restraint in the ordering of new vessels this space could be oversupplied in the coming years.

On the other hand, in the product tankers a majority of the vessels on order have now been delivered. The last bar in the graph is our own LPG segment. It's the sector with the smallest order book and at this point if ton mile increases at an annual rate of 5%, as some reports suggest, this could easily absorb the current order book.

I would like to close this presentation by saying that over the nine-month period of this year we have managed to take advantage of improving markets and posted solid operational profits. If you look through and beyond the one-off items and the accounting treatments of derivatives and foreign exchange hedges and focus on what we call the operational side, you will see a marked improvement in our figures. At the same time we have managed to renew our fleet and increase our liquidity position.

During the past quarter we expected to see some softening in the market due to seasonal factors. This softening did occur and the impact was more in the employment of our older spot rating ships. In the winter the market is already picking up, but with Europe -- with some long-term view and I believe that our decision in the previous quarter to sell some of the older spot vessels and replace them with new ones on long-term time charters is already proving to be the correct one.

I believe that we have already significantly improved our balance sheet and liquidity recently and this will assist us in our future growth. What troubles me the most is bank finance market where we have seen a lot of banks unwilling or unable to provide finance. Although we have no need for new loans, additional bank finance will remain a viable option for our future growth. And in this environment it's imperative to earn the trust of the banks that support your business and I believe that with our actions we have earned that.

As far as our stock price is concerned, [a repeat] as we present a very attractive prospect for investors. We are a solid company in an industry whose outlook is bright and we are valued very cheaply, far below our break-up value and far below our NAV. We are supporting our claim with actions and we have repurchased more shares during the third quarter since we believe it's the cheapest asset we can buy. And since our buyback program established over a year ago we have repurchased approximately 80% of all our outstanding shares.

We have now reached the end of our presentation. We would like to open the floor for questions, so please open the floor. Thank you.

(Operator Instructions) [Bruce Berger].

Hello, Harry. I am somewhat surprised that the EBITDA growth was not a little higher. 3,200 cbm ship rates have gone up from what appears to be $8,500 a day to $10,000 and yet you are not seeing that translate to the bottom line.

But I also see that you have said that operating costs have also gone up. So in your presentation TC rates have gone up 11%, but the operating costs have gone up 12%. So I was just wondering if you could explain what is going on there.

Very simply, first of all, I have to disagree with you. The rates for 3,200 cbm vessels have not gone to $10,000 per day. This is the average of a fleet and this includes all sizes between 3,000 and 8,000.

3,500 CBM vessels, which are the smallest that we have, are in the region in the spot market or one-year period in the region of $8,000, $8,500. The average size of our ships are 5,000 cbm which are currently getting something below $10,000 as you said correctly. So that is point number one.

Point number two, the past costs (inaudible) per our slides and presentation which you obviously get in our site we had increasing running costs and operational costs in first and second quarter. And as you can see, the running costs now are getting reduced, not increased as you said. They are getting lower, and we hope that in the fourth quarter we will be even lower than the third quarter.

More ships are going on bareboat. We have a better hold on costs, thus the result will be lower costs. Last, but not least, a lot of good charters we did in the second and third quarter, as again Konstantinos said, and a lot of newbuildings that we took delivery of are too fresh and therefore we have not seen yet the benefit in the bottom line.

I guess the benefit of all these -- ships going on bareboat, ships get re-chartered at higher rates, and newbuilding deliveries that are starting good long employments you will see the benefit in the fourth quarter and definitely in the first quarter of 2012.

I was just also wondering if you could comment on the product anchor market as it stands right now, if you are interested in buying any product tankers given the price weakness and what you think about VLCCs.

I will not comment a lot on the chartering market because our ships are fixed and we have rates well, well above the current market. The only thing I will say about that is that the rates for product tankers have not dropped as much as the crude tankers.

And that answers your question, i.e., if we buy something it will definitely not be product tankers because the values have not dropped as much as other types of ships. So I don't think we are actively looking to buy any product tankers.

Okay, thanks.

[George Burmann].

Good morning, gentlemen. Thanks for taking the call. Quick question, how much is left in terms of cash under your existing buyback program?

$7 million about.

$7 million?

Yes.

Okay. The quarter looks great; the future looks very bright according to your presentation. It seems to me that for some reason you are getting lumped into with all the oil and product tanker market companies who have experienced almost like a complete oblivious market crash.

I guess your buying back your own share it shows your commitment to the value, but if this continues for some time are you possibly considering maybe taking the Company private?

It all depends if we are going to have a Europe in 2012 or not.

Okay. And the day rates as they roll over and are expected to be even higher in the coming years, correct?

That is what we think, yes.

Okay, good. Look forward to a bright future.

Thank you, my friend.

Jeff Geygan.

Morning, Harry, Sistovaris. Regarding the Alpine Endurance, which comes off contract in July of 2012, there has been quite a bit of speculation among investors I have spoken to about the value of that. You could leave some of that uncertainty by giving us a sense of if and/or at what price you think that can be released.

The ship comes open in May, not in July, and I am already looking to fix her out. I have not done anything yet. The product tankers at the moment for period are fetching between $13,500 and $14,500 time charter for a couple of years employment. If nothing changes, I guess we will find something similar.

And just to clarify, I am going off of your release today where it shows charter expiration on that Alpine Endurance is July of 2012, but if it's May then you may want to update your information.

Thank you. We will check it.

Number two, with respect to your LPG fleet, it's my observation you have a number of these vessels on spot market. It seems that the smaller and/or older vessels tend to end up in spot, not completely, but as a rule. What is your thought with respect to selling some of the older tonnage?

We want to sell the older tonnage, that is a fact.

Is there anything imminent?

No. As you know, as soon as we sell something we announce it. So any of our older ships can be sold, of course, at a decent price. So it all depends if there is buying interest and if there is finance for these new buyers to buy those ships.

Very good. With regard to the two newbuilds, the Husky and the Esco, it seems that your total cost on this is round numbers about $62 million, is that correct?

A shade below $60 million.

And currently, roughly $18.5 million of that is effectively pre-paid?

Yes.

And I assume you will lever those roughly 50%/50%?

What do you mean 50%/50%?

You will have $30 million in cash equity, $30 million in bank financing against them?

No, that is too general; 70%/30%.

70%/30%, so 70% equity or 70% debt?

70% debt.

So you have effectively -- all the money that you need to pay has already been pre-paid on this with your $18 million.

Of course we have to pay -- we don't have to pay anything.

Yes, so that leaves you with $48 million in cash.

We have a lot of cash.

And by your own description of book on a -- net asset of $14 a share, right?

Yes.

And your stock trades at $4 and you have got an $80-some-odd-million market cap, as a shareholder I only have one question, why aren't we taking our existing cash and buying back our company?

You mean buying back stock or taking the Company private you mean?

Well, I would prefer that there are two remaining shareholders, you and me, but I don't think you need to go private to buy back stock.

We are already buying back stock. If we are going to take the Company private that is another discussion.

Understood. However, you have a substantial amount of free cash flow, half of your stock price in cash on your balance sheet, and you are buying in a de minimus amount of stock. I don't understand that.

Yes, but what happens if Italy goes bankrupt?

What does that have to do with your charterers?

It has to do with our share price.

I am not a market timer. Your stock is $4.

I think that if Italy goes bankrupt we will go to $2.

Are you telling me that if the stock is at $2 you are going to be aggressive buyers?

I think if the Company is at $2 I am going to buy the whole company. I think that covers you.

Then to address George Burmann's question earlier, you said in response to his question about going private if -- it depends upon what the euro looks like in 2012. What do you mean by that?

I didn't say the euro, I said Europe.

I am sorry, with your accent I didn't hear that, so it depends on what Europe is like. What do you mean by that?

If it exists or not exists.

Why does that matter, Harry, I don't understand?

I will repeat for once more. If Italy goes bankrupt that means that a lot of banks will close, that means there is a going to be a lot of problems in the US, and that means that small cap stocks will become nano caps. I feel that because no one gives us any credit for our good balance sheet, our very conservative approach, our low debt, and our leading position in this healthy our stock price will fall as well. This is what I believe.

I hope I am wrong, of course, because nobody wants Italy to go bankrupt and nobody wants the banks, in Europe at least, to have more problems. Therefore, being conservative, I think that chances are that this might happen.

Well, I agree with all your comments about the quality and value of the Company and I commend you and Sistovaris for a job well done in managing this. My last question is to Sistovaris, with regard to a comment you made during the call about your OpEx being a little bit higher than expected, can you expand on that please?

Based on the budgets we are doing, we had about $8.4 million in OpEx. We would expect this to decrease to around $8 million, although we saw a huge drop from the previous quarter and from the first quarter as well.

Because we have the vessels going on bareboat, if you look at our results on a daily basis OpEx is still around the same. So we would expect a further drop in the next quarter, I mean we hope. At least we are working hard on doing that.

And is that -- is the delta in OpEx a function of your product mix that is TC versus BB, or is there some other fundamental driver that is causing your OpEx to decline?

The majority of it is from vessels going on bareboat where we don't have, obviously, to pay for the operating expenses of these ships.

But there is a concurrent reduction in revenue when you go to bareboat versus time charter, right?

Correct.

So how, as a shareholder, where I have got this collection of assets should I think about the deployment and return on investment with the asset? Given that using the top line is not a good measure, because whether you are TC or BB it's going to affect my top line so is confusing. How do you think about the return on the investment of these assets?

This has more to do with our chartering policies and we are trying to do the best in terms of chartering. If we can find a long-term employment on a bareboat for one of our vessels, I mean obviously we are going to put that vessel on a bareboat.

It's much safer as well, if you think about it, because we don't have to pay for the operating expenses. We also don't have to pay for the drydock expenses, and we also don't have any off-hires so we have none of these risks. I don't know if that covers you.

I do appreciate it. Thank you for your time. I am going to jump out of the queue here and give other people a chance to talk. Thank you.

Bruce Berger.

Harry, I just wanted to follow up on your recent comments about anticipating the share price going to $2 a share. I have recently purchased a substantial amount of stock, have a lot of capital tied up, and as Mr. Geygan had said, it's sort of surprising that you are waiting for Italy to implode and you think the share price will go to $2.

What that means to mean as a shareholder is that if the public becomes convinced now that you are going to not buy back shares because you are going to go waste $2, the share price is going to go a lot lower. So it's like a self-fulfilling prophecy. I am a little surprised that I just heard that given that I have a substantial amount of capital invested in the stock right now.

So I was wondering whether you wanted to backtrack or rethink what you just said.

Bruce, listen, I have a lot of money and I made a lot of money because I was always honest and that is to my banks, to my charters, and to my shareholders. So I don't backtrack on anything, because that is what I believe.

Obviously I don't want this to happen, because if you lose money, I will lose more money than you will. So I hope I am wrong, but this is what I feel. I am based in Europe; I read the papers and see what is happening and, unfortunately, I am pessimistic. I am very optimistic for this business, but I am very pessimistic about Europe.

I appreciate you are a big shareholder and you are worried, but I am a bigger shareholders so you know what I mean.

I understand what you are saying. But I guess -- well, one of the fears that a shareholder would have is if the share price goes to $2 a share then you tender for the stock at $4 or $5. I think the investment community realizes that you are in this for the long run and if it goes to $2 you will take $20 million or $30 million and shrink the share price and allow all of the rest of us to participate in the huge upside that we see. That will have a wonderful effect on the share price going forward.

Can you give us some assurances that if it goes to $2 you are not going to take it private at $4? But, as Jeff is saying, to take $20 million or $30 million and shrink the share price if it's $2 then that would be exciting for the remaining shareholders?

I have no plans to take the Company private. I just gave you my personal view of what I think about Europe. I hope I am wrong.

I am not the Italian prime minister, I am not the head of the European Central Bank; I just gave you my personal opinion. I hope I am wrong; nobody wants this to happen. It will be a huge problem for all the listed companies, not only for us, healthy and unhealthy.

And I said it because I am always honest. I will never trick or think one thing and say another thing. This is not my style.

We made money; we are here for long term. All our promises to our shareholders since the IPO are still there intact and will continue the same way. If some people don't like it, then of course -- or they think that the share price will go to $2 they had better sell now.

So I guess what I am hearing from you is if it goes to $2 a share you will buy back a lot of stock?

I don't need to comment on my private businesses.

No, I mean there is $40 million in cash. As a shareholder, I am hoping that if it's $2 you will buy back -- not take it private, but you will then -- if you are anticipating us going to $2 so you are not buying back shares at $4 (multiple speakers)

It's going to be trading at 1/8 of NAV so, Bruce, you doesn't need to be an Einstein to see what you are going to do. Of course, you are going to buy back stock. We bought back stock at $7 and $5 and $4. If it goes to $2 we are not going to buy back stock? Of course we will.

But you will become much more aggressive obviously?

Yes. If all other things remain the same, yes.

Okay, thank you.

Thank you.

George Burmann.

Hi, guys.

What happened, did you forget anything?

No, I had to chime in. This conversation is almost ridiculous.

A thought from my end. I understand when you went public StealthGas was paying a nice dividend and it could be, because I myself am flabbergasted by the low stock price, that you had a lot of income-oriented investors in the Company. With the cash position and the stock buyback ongoing would it make sense to -- we evaluate paying a cash dividend at this point in time just to get to a 4% or 5% dividend yield. It wouldn't take a lot of cash and since you own quite a bit of stock you would get some money back on your investment as well and it would possibly attract additional shareholders.

There are other companies that I have seen that in the 2008/2009 market disaster stopped paying a dividend. And since then they have quarter by quarter increased the dividend a little bit more, a little bit more and the company's share price and valuation have significantly appreciated upon this news.

Since we are trading at a quarter of NAV, the last thing on our minds is starting a dividend policy.

Okay, fair enough.

The cash will be used to pay down debt, buyback stock, and, if there are bargains, in opportunities maybe to expand, that is it.

That is what I like to hear as a shareholder. Thanks.

Jeff Geygan.

Gentleman, just to clarify, I think there are two separate issues. I invest in businesses and it's my understanding that your business is really renting or leasing these ships to individuals to move LPG around. And that the majority of this activity takes place in Asia Pacific, some in --

Two-thirds Asia Pacific, one-third Europe.

All right. So the event that you are anticipating may occur, some major economic disaster across Europe, would only affect the stock price and bank lending, but given that your financing is in place and your fleet is in place, as long as LPG is produced and needs to be shipped it really should have a minimal impact on your business, correct?

That is 100% correct, but, unfortunately, the shareholders don't get that. And when they hear such bad news they sell everything, that is my personal experience on that.

And I appreciate that, Harry, which makes sense. Back to George Burmann's point however, and just a consideration, a 10% dividend is $0.40. On your $20 million outstanding is $8 million. It's a meaningless amount of your cash balance to distribute, and if you wanted to see your shares trade higher I would be willing to bet you a beer that you put a $0.40 dividend on this and your stock will be north of $4 pretty quickly.

You haven't really indicated that you have nonstandard uses for that cash. You just said we are going to pay down debt and we will look opportunistically to buy other capacity, but in the meantime why not boost the price by paying a dividend?

Because when we were paying the dividend nobody gave -- nobody cared about it.

The world has changed.

I know that very well and I will think it will change more, so we have to be very conservative.

I appreciate that. Okay, thanks, guys. Have a good day.

Thank you.

With no further questions, please continue.

I would like to thank everybody 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 at our next conference call for our fourth-quarter results in February 2012. Thank you.

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