StealthGas Inc (GASS) 2014 Q1 法說會逐字稿

Good day and welcome to the first-quarter 2014 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to 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 Q1 2014. I'm Harry Vafias, CEO of StealthGas, and I would like to remind you that we'll be discussing forward-looking statements in today's call and presentation. Regarding the Safe Harbor language, I would like to you to refer to Slide number 1 of this presentation as well as our press release on the first-quarter results.

With me today is Stavros Papantonopoulos. And if you need further information on the conference call or the presentation, please contact Stavros or myself.

Let me begin by saying this has been a very busy period for us lately. We closed the last quarter with significant improvements from the fourth quarter of 2013. Our sentiment improved for LPG shipments and that led us to conclude a number of new charter arrangements.

At the same time, we took delivery of one newbuilding eco-vessel, the Eco Stream, and we increased our newbuilding acquisitions to one more vessel, bringing the total number of eco LPG ships to be acquired to 17. We also concluded a number of financing deals for these ships, and by now almost all our vessels have been committed to various banks.

Finally, just three weeks ago, we concluded a secondary offering with 12 months with institutional investors, including members of my family, [for building] another $47 million.

So let us begin our presentation with Slide number 2. As you can see, we are the leading company in the LPG Handysize segment. We own 39 LPG ships and 4 tankers and with the additional vessels to be added to the fleet, we intend to solidify this position and gain market share by capturing about a quarter of the global pressurized market.

Due to the increasing interest in our sector, we have seen some consolidations lately, and that brings our second largest competitor to about half our size. While overall the sector still remains largely fragmented, we have opportunities for further consolidation.

We continue to focus on a young fleet that will give us operational and commercial advantages. While the current average age of our fleet is 11.3 years, below the industry average, we aim to lower it with additional vessels that will enter the fleet. We continue to keep moderate leverage, around 40%, and intend to finance the new vessels at levels around 60% to 60% debt-to-value.

We continue to maintain the conservative chartering strategy that has made this company so successful in securing a visible revenue stream with a predictable cash flow whenever it's profitable to do so. At the moment, fixed employment for our fleet stands at 74% already fixed for 2014 and 50% for 2015, with a lot of charters extending until 2022.

Finally, I believe we continue to manage these vessels more efficiently than any other public or private competitors, and that by growing our fleet further we will be able to take advantage of additional economies of scale.

Our net income breakeven level per vessel per day for the first quarter was $6250, which puts us comfortably in the profit-making territory. In addition, modern eco-vessels can achieve significant savings in operating expenses, and that is one of the reasons why we focus on renewing the fleet.

Slide number 3, this slide demonstrates our fleet deployment profile and provides you with the earnings visibility for our fleet. In terms of charter types, out of a fleet of 43 ships, we have 15 on bareboat, 24 on time charters, and 4 in the spot market. During the first quarter, we saw the market strengthening, reflected in our announcement of the extension of six bareboat charters, including one recently delivered eco-vessel and one of the new eco-vessels that will be delivered in the first half of 2014.

Most of our spot vessels are currently employed and we will seek to find more medium-term charters for our ships. For 2014, 74% of voyage days are fixed, 50% for 2015, with a number of charters extending out to 2022. We continue to seek opportunities to employ our vessels on medium and long-term charters, and we try to keep the same levels of charter coverage going forward. Our relationships with the world's largest and most stable energy companies, energy traders, and industrial companies with the highest credit revenues minimizes our counterparty risk. It's very important that we have secured contracted revenues of about $210 million out to 2022.

Slide number 4, as previously mentioned, we intend to grow the fleet significantly over the next 1 1/2 years. We believe the market fundamentals justify a more aggressive growth strategy than we had in the past years. We now count 43 vessels in our fleet, including our tankers, and by the end of 2014, we will have added four more newbuildings, growing to 47 vessels. And by the end of 2015, we will be adding another 13 vessels, growing to 60 vessels, 56 of which will be LPG vessels. This means that we have committed about $350 million in capital expenditures, and we have already spent $70 million of these. That leaves us with approximately $270 million to be paid, out of which $70 million is earmarked for this year and $200 million for 2015. Out of this $270 million in total CapEx remaining, we expect to see finance proceeds of about $240 million. So that leaves us with only about $30 million of remaining equity.

We already have committed finance for 16 out of the 17 vessels. The last thing has been a good last week for the finance of two 5000 cubic meter vessels for delivery is expected for the second quarter of 2015. As you can see, with a cash balance of over $150 million today, including the latest proceeds, we can comfortably meet these requirements and in fact we are looking additional acquisitions and should have some more news for you soon.

Slide 5, this slide explains what LPG is. It's obviously a byproduct of natural gas production and of crude oil refining. This slide illustrates StealthGas' hub-and-spoke trade model. In the backdrop of a growing export capacity in terminals held by Enterprise and Targa, we have seen a concentration of interest from the VLGCs to carry large LPG cargoes on long-haul routes. However, this has obscured the fact that there will be also a need for a bigger fleet of smaller gas ships to serve those customers in the regional market, final destinations in the Caribbean, Latin America, Atlantic basin, Europe, and the Far East. While the US is still a developing story, we believe that our fleet could benefit from increasing product supply, especially if the markets at the time are already tight.

Slide number 6. The chart below highlights the steady growth of international shipborne trade for LPG since 2010. In 2013, 65 million tons of LPG were transported by sea and the trade is expected to increase by about 50% to about 100 million tons by 2017. The main key driver behind this steady growth is firstly the growth from emerging countries, especially for domestic use, and the increasing distance between LPG production, feedstock supplies, and the end-users.

Currently, residential market usage is mainly concentrated in India, China, and South America, whereas the Middle East and Russia mainly use LPG for their petrochemical industries. LPG needs to be shipped due to the limited domestic US demand, high storage costs, and the Kyoto Protocol prohibition of gas venting and flaring.

The US LPG prices support exports. The price differential between US propane and the Far East and Europe keeps inquiry for exports at a high. This is a welcome development for us since more supply will be coming in the market, and as it's known, LPG shipping is a supply-driven industry.

Slide number 7. The US is shipping more LPG than ever as a byproduct of record natural gas output. US market share of global seaborne LPG exports is steadily increasing and forecasted to quadruple by 2017. The US LPG exports are primarily going to Mexico and South America. As a result, we have increased the number of vessels deployed to the region from two to five. And increasing demand is also likely to come from the Far East and Europe.

The US Energy Information Administration projects that the US will continue to be a net exporter of LPG through to 2040, mainly because of continuing decreases in natural gas and oil production. The main key driver behind this steady growth is firstly the growth from emerging countries, especially for domestic use, and the increasing distance between LPG feedstock supplies and end-users.

Residential market usage is mainly concentrated in Asia and South America. The major driver for this growth is the construction of propane dehydrogenation units plants to ease the ongoing shortage of propylene in China. The plants use propane to produce propylene. Around 10 PDH plants are expected to start operations within the next four years and could require up to 4 million tons of propane per year as feedstock.

Chinese imports are expected to increase significantly in order to meet the demand generated by these units. As a feedstock for the petrochemical industry, LPG consumption in the Middle East is also expected to see considerable growth and reach 36 million tons in 2016 from the current 26 million tons, representing an increase of close to 40%.

Slide 8. Despite more growth in the total LPG fleet, seaborne demand exceeds supply more than any other segment in the shipping industry. It is also expected that future shipborne demand will outstrip future supply and the market will remain undersupplied for well after 2014.

Looking at the following chart that compares demand less supply in the various industry segments, the high LPG bar describes the excessive demand in the market and explains the recent jump in the freight rates of the larger LPG ships. The VLGCs recently operating in the spot market were chartered at historically high levels, earning as much as $130,000 a day before settling at about $70,000 daily.

I will now hand you over to Stavros Papantonopoulos for some brief comments on our first-quarter results, our financial position, and later we will discuss the markets and industry outlook.

Thank you, Harry. Good morning, everyone.

So, let me continue the presentation was Slide number 9, the financial highlights for the first quarter of 2014. We had an average of 42 vessels owned and operated in the first quarter compared to 37 last year. Our revenues came in at $33.9 million, higher than last year's $29.4 million. This increase was primarily due to the increased number of vessels in our fleet, but also due to the firmer charter market whereby the utilization of our fleet improved to 98.3%.

Our voyage costs decreased to $3.1 million from $3.5 million because we had fewer vessels under spot charters in the 2014 period.

Our operating expenses increased to $10.7 million from $8 million last year. This was primarily due to the result of the increase in number of vessels operating in the 2014 period. Including both the vessels that were added to the fleet and vessels that came off bareboat charters, which we operated on time charters during the first quarter of 2014.

We also had drydocking costs of $0.4 million compared to $0.5 million for the same period last year. One vessel was drydocked during each period. For the remainder of the year, we do not have any other vessels scheduled to be drydocked.

Interest and finance costs at $2.1 million were similar to last year's $2 million. Total debt at the end of the quarter was $359 million compared to $326 million last year.

Our net income for the quarter was $7.6 million compared to $6.5 million last year. Included in the net income figure is a $0.5 million gain from fair value changes in interest rate derivative instruments. Excluding these, our adjusted net income figure for the quarter was $7.2 million compared to $5.3 million last year, a significant 36% increase in the bottom line.

Adjusted earnings per share for the quarter was $0.21 on 33.8 million average shares outstanding compared to $0.26 on 20.5 million average shares outstanding last year. The increase in the share count led to a decrease in the earnings per share, but to compare apples to apples, if we had the same share count, our earnings per share would be $0.35, a significant increase. It will take a bit of time to see the full potential of the growth in our fleet since there is a lag between raising equity and the returns for taking delivery of the vessels to be constructed this year and the next.

Let's move to Slide 10. Looking at our balance sheet, we can see significant changes from last year, mostly due to the net proceeds receiving from the follow-on offering of February. As of March 31, we maintain a healthy cash balance of $121.3 million, including restricted cash, compared to $92.04 million at the end of 2013. And that is after having spent over $150 million on investments over the past 12 months for deposits in vessel acquisitions.

As of March 31, we had $72.3 million in advances for vessels under construction for 17 new eco-vessels delivering by 2015, and $694 million in vessels book values. Our total assets therefore increased from $851 million to $898 million at the end of the quarter.

In terms of liabilities, the current portion of our long-term debt -- that is with loan repayments are scheduled over the next 12 months -- marginally increased to $42 million from $41.2 million at the end of last year. In the previous quarters, also we had some of our debt related to five vessels maturing with the year and we had to refinance the two balloon payments of $11 million and $22 million in April and July, respectively. We concluded the negotiation with the bank and we financed the aforementioned amounts for the next five years.

As of March 31, our long-term debt slightly increased to $317 million. As a result, our total debt stands at $359 million versus $353 million at the end of last year. We will continue to maintain a moderate leverage over the next couple of years so that, by the end of 2014, we expect to have total debt below $380 million. And by the end of 2015, when all 17 of our new eco LPG contract vessels will have been delivered, we expect to have around $500 million of total debt. At the same time, our total assets will surpass the $1 billion mark.

Regarding the 17 eco LPG vessels that we have contracted, I am pleased to say that we saw a lot of interest from our existing lenders and new ones to finance them. The levels we envision is 60% to 70% financed. We have already committed 16 out of the 17, and are making progress in discussing for the remaining one.

Will you now please turn to Slide number 11. There are operating highlights for the first quarter of 2014. In terms of fleet data, our fleet consists today of 43 vessels. We had an average of 42.04 vessels in the first quarter of 2014 compared to 37 vessels for the same period of last year. The total number of voyage days increased to 3750 from 3307 last year. From the 3750 voyage days for the fleet in the first quarter of 2014, 333 were spot market days, so had a considerable decrease in the number of spot days compared to last year's 518. While our spot exposure is not significant at this point, we intend to keep it at the same levels.

In terms of our operational utilization ratio, our percentage is at 98.3%, an increase from 95.9% last year, and it's mainly due to the longer fixed deployment of our vessels compared to last year.

In terms of average daily results of average time charter equivalent rates was $9720 per day compared to $9601 per day for the same period last year. The rise in the time charter equivalent rates were again due to the firmer spot markets during the quarter.

Our daily operating expense monthly increase of $4461 per day per vessel compared to $4133 per day per vessel for the same period last year. It's a 7% increase. And our total vessel operating expenses was $4637 per vessel per day compared to $4337 per vessel per day last year, a 6% increase that will continue to be in the upper range of the regular annual increases we would expect. We still operate comfortably above breakeven levels in terms of income and cash flow.

I will now hand you to Harry Vafias, who will discuss the markets and industry outlook.

Slide 12. This is an important slide as it shows what differentiates LPG Handysize sector from other LPG sizes and segments. You can see how the picture changes favorably in the smaller LPG segment, where the order book is relatively much smaller to the existing fleet. The Handysize pressure of the LPG order book that is highlighted in this bar chart is about 7% of the existing fleet and the majority part of it is contracted by StealthGas, which is the dominant player in this market.

Additionally, in the adjacent pie chart, we see the age distribution of the small LPG fleet. A key characteristic in the fleet distribution is that older vessels are a significant part of the total tonnage. A lot of these older vessels cannot compete for employment with our newer fleet as they do not meet the appropriate vetting requirements. About 18% of the fleet is older than 31 years, so there's a substantial amount of scrapping capacity in the event of a decrease in rates. The fleet profile of the smaller vessel segment that we operate overall has better fundamentals than the bigger vessel segments.

Slide 13. What we can say about the LPG shipping market that we operate in comparison to the other shipping segments is that it has small freight rate volatility and few serious, pure play, established companies. Rates do not fluctuate wildly and that gives us downside protection. Historically, rates range between $7000 a day during the bottom and $13,000 a day during the peak.

Another positive characteristic is that when the markets are becoming hot, we should not expect a rush in new orders from speculative players since Japanese yards that build those ships are now full until 2016, and Chinese yards that have ample capacity don't build these vessels.

Slide 14. When large-scale US projects materialize, rates are expected to increase. We cannot predict the exact development of the future time charter rates, but we can present different scenarios with the following sensitivity tables. This slide demonstrates our fleet development over time and how our Company's results are affected when the time charter rates increase.

2016 will be the first full year that we operate with our full fleet of 60 ships, including the newbuildings on order. In this year, our Company's EBITDA results will potentially grow to $150 million if the average daily time charter rates increase to our medium case scenario. Since our company has over $150 million in cash, we expect to invest further in our core LPG segment given the strength of this market.

In the second table, we assume that we have contracted 10 additional LPG vessels gradually delivering in 2016, pushing the total fleet of StealthGas to 70 ships. In this case, under a strong case scenario, our company's EBITDA results will potentially grow to $240 million for the full year of 2016.

Slide 15. I would like to conclude this presentation by saying that we remain optimistic about the core strategy of the Company, that is investing in modern vessels to grow and renew the fleet. Expectations on the LPG market, its future evolution on a US basis and also on a global framework has drawn the attention of significant investor interest in our market.

While we offer an attractive price in trading on a steep discount to our peers, we still offer one of the best ways to take advantage of the future expected growth of the LPG market with a fast expanding, quality focused newbuilding program.

As the CEO of StealthGas, the first pure LPG shipping company to be listed in a major US stock market, I would like to take a moment to say how proud I am that our assets have grown from a small base in 2005 to over $1 billion when all our newbuildings deliver.

At this point, the industry fundamentals remain positive in the big increase in LPG trade over the next two years. We want to take full advantage of our leading position, and we still have our sights on opportunistic growth. So, we intend to use the proceeds of the placements we concluded over the last three months not for debt repayment and more for vessel acquisitions that have already announced, but for further growth. We already have committed finance for 16 out of our 17 new eco vessels. And as you can see, with a cash balance of over $150 million today, including the latest proceeds, we can comfortably meet these requirements and, in fact, we are looking for additional acquisitions. We are optimistic for the next two, three years and with the largest and highest quality LPG fleet, we look forward to the future.

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

(Operator Instructions). Michael Webber, Wells Fargo.

Just a couple of quick questions for me. Harry, you did a good job laying out where rates could go and what that could mean from an EBITDA perspective, and clearly it seems like we're still midcycle from a rate perspective. But when you translate that to asset values, do you think that asset values within this space are starting to reflect rates that are a bit beyond where we're at right now? Have you started to see a degree of inflation there, or is there a degree of parity?

Very good question, Michael. I think the answer is twofold. I think, yes, we are seeing values firm a bit for modern assets, but it's not only the expectation of better rates. It's also a lack of prom slots, so people that need a prom ship or a newbuilding with prom delivery have to pay a premium to get it, basically.

Right, right. So, if I translate that to your NAV, would you think that NAV is reflecting to a degree a bit of firming in rates already?

I haven't done the latest calculations on our NAV, but obviously we're trading at a very, very big discount --

Sure.

-- on our NAV, if you take the values of our ships, plus the deposits paid on all these newbuildings, plus the cash at hand.

Right. And how do you think about this? You and I have talked about this off-line in the past, but considering that discount to NAV, how do you think about and how do you prioritize ways to maybe fix that?

And on the flipside of that coin, obviously if you've got a high quality, growing fleet that is trading at a discount to NAV, I'm sure you get approached on a pretty regular basis around M&A opportunities, considering that value. How do you guys think about that today? And has that evolved at all in the past couple of quarters as we have seen some other companies come public in the US in the LPG space?

Yes, I think we've done, as you know, well, a lot of hard work to push the valuation up. Don't forget that two years ago, we were trading at only $6 and we had only one analyst covering the Company, and we were a nanocap and we had a very small daily share volume. So, I think we've done, over the last two years, not only we grew the Company and added a level of new executives to help that, but the stock price went from $6 to $10 or $11, which is okay, still a discount to NAV, but much closer to NAV.

Yes.

We've got seven or eight analysts now covering the Company, which I think is very helpful. And obviously now we have comps, because, as you remember very well, until, what was it, 18 months ago, we didn't even have comps, so people didn't spend a lot of time to analyze totally the Company. And that was one of the reasons I think that we were so undervalued and so underestimated. I think now with more comps out there, people can obviously do their maths, do their come person, and of course invest, depending on their risk appetite and depending on what they want to do and if they are short-term players or long-term players.

Sure. No, that makes sense. And just a couple more for me, and to come back to that point, at the end of your deck, you did throw in a valuation table highlighting that discount to NAV. And with the majority of the peer group trading at a premium in terms of M&A approaches and things like that, while I know you can't get into too much detail, has that picked up recently, as some of these other players have developed pretty strong currencies, maybe not even the odds of M&A, but has the activity picked up a little bit on that end, or no?

As you know, we are very, very open-minded people and very flexible people. Obviously, if we get approached for an M&A deal or for somebody that wants to buy the fleet of the Company at very good valuation, we will definitely discuss it at Board level, definitely.

Okay, fair enough. One more for me and I'll turn it over. And it could just be us reading a bit too much into it, but if I remember correctly the last couple of calls, you had kind of hinted or talked about the possibility of stepping up into some larger assets as a use of capital. And then I believe, in this release, and I don't know if it's actually in the deck, but it seems like you've gone out of your way to imply that you'll be staying in your lane, specifically within the current sizes.

Is that a function of just the returns within your current space are still better than anything that's a bit larger, or are we reading too much into that?

You are nearly there, meaning that yes, we will still be investing in our core segment. That's the segment of what we've been for over the last 10 years, but obviously being now quite a large company with 60 ships, we need to look at alternatives and we need to look at how to serve our customers better. So if we have customers wanting us to do something slightly bigger, we're not talking about VLGCs, but slightly bigger ships, and we think there's some added value of giving comprehensive transportation services for the medium-haul voyages and the short-haul voyages, yes, we'll do it. But the core fleet will definitely be what we already have.

Okay, so no change in that philosophy recently quarter over quarter, or since the start of the year. It's basically that you've been in the same position you've been in for a while with regards to that?

Yes, the thought is the same, meaning that if we find a good opportunity in a slightly larger ship, we will take it.

Okay, great, perfect. Thank you very much. I appreciate the time.

Jon Chappell, Evercore.

I want to talk a little about the competitive landscape in your particular niche market. Obviously, Epic has made a pretty big push in the last year and a half or so. If you look at the rest of those fleets on that Slide 2 that you presented, obviously some are captive or some are traders, but are there any opportunities to consolidate in a bigger way by taking maybe the seventh, eighth, or ninth player in your market and rolling it up? And how do you compare that to the newbuilding opportunity where obviously you will be able to watch the construction of your own ship from the start, but on the other hand wouldn't want to add too much to the order book in a pretty delicate balance of supply and demand?

Yes, you know me, Jonathan. I never say no to anything. We firstly analyze any given opportunity and then we make a decision. But you have to remember that, A, we don't buy old ships, and, B, we don't buy Chinese built ships. So if you take old ships and Chinese build ships out of the list in Slide 2, there's very little left. So to be honest with you, unless we find a couple of secondhand ships here and there, the only way to grow is with newbuildings, fortunately or unfortunately, it depends on what point of view you have.

Okay. And if you think about the net impact to your fleet and also the net impact on the industry, you obviously have some elder vessels as well. Would you look to retire older ships as you start to take delivery either of your 17 newbuilds that are on order today, or as you potentially order more newbuildings for delivery maybe 2016 and beyond?

I think we've discussed that extensively. I said before that if the ships are debt free or have a little debt on them and make money during the whole year, obviously we are going to lose some money in the summer because of the softness, and are going to make more money in the winter. But if on an overall basis they are cash flow positive, why should we retire them? I know they are old ships; they might have higher running costs, but if in the end of the day they provide profitability to the Company, we will not sell them.

If we see that the market softens or that the charters become even stricter and they cannot budge those ships and we are faced with longer idle times and losses, of course we'll sell them or scrap them, obviously. But for as long as the ships make money, I think it's a pity to let them go.

Okay. One of the issues last year that led to some volatility in the earnings was fleet utilization. There was repositioning costs and what not. If I heard Stavros correctly, there's no more drydockings this year. Almost all of your ships are on charters with very few re-chartering this year. Should we expect the first-quarter utilization to be repeated throughout the remainder of this year, and therefore look very strong relative to some of the volatility last year?

Yes and no. There's always summer softness. That's the state of the LPG market. I cannot do anything obviously about that. Yes, we have been successful fixing, as you remember, a lot of our older ships, not all of them, but a lot of our older ships, on period, so that gives us some coverage. But I don't expect Q2 or Q3 to be as strong as Q1. Obviously, that could not happen because Q1 was winter and Q3 is the heart of the summer. But I do believe though, with the information I have right now, that Q2 and Q3 will be stronger than Q2 and Q3 of last year. That I think I can say it.

Okay, that's good. And then finally, we noticed a change in the short term debt. Stavros ran through the refinancings earlier this year, but kind of quickly. I was just hoping to -- if you could potentially repeat exactly the refinancings that took place and what impact that may have on the debt amortization schedule going forward.

It was a total of $33 million that we refinanced in a very fast way, and they have been extended for five years.

Okay. Similar terms?

No. Margin has to be higher, I think.

Right. Okay. Thanks a lot, Harry.

Yes, because as you remember, if we did those loans back in the good times, we were getting back then, as you remember, with LIBOR plus 70 basis points. We still get that today at below what our competitors get, but obviously 70 basis points is unheard of.

Right, right. Yes, that makes sense. And can you also just remind us which facilities those were?

It was for how many ships?

Five.

Five ships with DBV and IBC.

Perfect. All right, thanks so much, Harry.

Taylor Mulherin, Deutsche Bank.

So I just wanted to ask a question about raising capital going forward. So, obviously, you've done these two equity raises so far this year, and just trying to get a better sense of the thinking behind those versus focusing more on the debt financing. The reason I'm thinking about this is you mentioned you are obviously trading at a pretty substantial discount to NAV, and looking at your leverage from this quarter, it's pretty small. And so just trying to get your thoughts behind how all those things work together.

Yes. As you know, first of all, the majority of these offerings were reverse inquiry, which means that we did not ask for the money; the money came to us. Number one.

Number two, if you see the prices that the offerings were done, they were done at a tiny discount to that day's closing price, so we did it of course at discount to NAV, but to close to zero discount to that day's closing price.

Number three, we brought in some strategic investors, some very, very important, long-term investors, which I think is good for the Company going forward, including myself. My family bought shares, which shows that I'm aligning my interests with shareholders, so that's I think another positive factor.

Last but not least, I think we discussed it. Obviously now we are under leveraged because we have not put the money to work. But this is exactly what happened last May when we raised about $130 million, and by September, we had not announced anything. And some investors lost patience and sold stock and the stock fell at $10. And in October, if I remember correctly, we announced a lot of acquisitions, both secondhand and newbuildings, and people realized that indeed we were not having summer month vacations. We were spending the whole summer finalizing deals and putting the money to work. So this is exactly the same case again.

We have nothing to announce at this moment, but we are working full speed, as we always have, and when we are ready, we are obviously going to make an announcement.

I think people that buy our stock don't only buy it because of its very, very good value, but they bite because of the earnings potential of all these newbuildings and what I'm going to do with the money that we raise. That's why people are buying the stock.

So, I think being patient for one month or two months, at the end of the day, it's not a big thing to ask. If, again, we hopefully are going to find very, very efficient and clever ways to put the money to work.

Right. That makes sense. The only other one I had was you brought up the idea of a dividend in the past, but didn't really put too much detail around it or any sort of timeline or anything like that. So given that you are still very firmly in expansion mode, just wanted to get an idea of how those two things could eventually potentially work in balance with each other, or if that's something that would only happen if you looked at the market and said there really aren't too many growth opportunities right now and wanted to use cash, return it to shareholders, that sort of thing.

We have been asked the same question before, and we said, by Q1 or Q2 2015, when the majority of the newbuildings will be in the water, if they generate the cash that we expect to generate, then we will go to the Board and ask for a reinstatement of a dividend. If obviously those ships generate less money than we expect, then obviously we cannot go to the Board and ask for a dividend. So I guess you will have to be patient for six to eight months.

Makes sense. Okay, thanks for your time, Harry.

Jeff Geygan, Milwaukee Private Wealth Management.

Just a quick comment and one question. I think the slide deck that you put forth today was excellent, great detail. Thank you for that.

And my question, you didn't make any particular mention of your product carriers. Can you please give us an update on those and provide any color that you might with respect to how those vessels will play into your future business plan, as your obvious focus is on the LPG piece of your business?

Yes, there's not much to say on the product tankers. They are fixed until 2016 at above market rates. We are very happy for that. We have no plans to increase the fleet. We are an LPG company. That's a side business, if I can say so. In 2016, depending on market conditions, we will either sell them or re-fix them if we think that's going to be cash flow positive and beneficial for the bottom line.

All right, thanks. I appreciate it. And just a point of reference here, all the statistics you've given on the fleet across the industry exclude any Chinese tonnage. Is that correct?

No, I don't think so. I think -- this is not our own statistics. These are from an external brokers, but I don't think they exclude Chinese ships.

So, the Chinese ships in fact are included in those numbers?

Yes, I think so.

Okay, great. Thank you.

Keith Mori, Barclays.

A lot of my questions actually have been answered, but I had one. We talked a lot positive about the market. We continue to see the supply and demand drive rates higher maybe over the next year or two. What's the risk that a lot of capital comes into the market, you raise some capital looking at potentially ordering more ships. What's the risk that weighs on rates going higher here over the next two years? Does demand really need to ramp up in year two? What's your outlook of the risk that that could happen?

For me, that risk is very, very minimal because, as I said before, this is not dry-bulk where you can suddenly raise $1 billion and go and order 20 and 40 Capes in one go. This is a business which is very niche. The shipyards, the majority of the shipyards do not build those ships, and the shipyards that do build these ships are now booked until end 2016. So even if you have all the money in the world, you'll have to wait in line and get your ships in 2017. So I'm not worried because it's not a liquid and vast market like the dry or other, bigger, bigger segments. So I'm not worried about that.

Okay. So, right now, your negotiations or your conversations with the yards would imply that newbuilds wouldn't necessarily be delivered until maybe 2017 or beyond? You know, in your slide here --

That depends, that depends. If I have options or if I have held discussions before, and my exercising of those rights is now, maybe I get 2016. But, yes, if you start from scratch and you go out of the blue to a yard today, yes, your delivery will be Q1 or Q2 2017.

Okay. So maybe you could refresh us. Does StealthGas have any options at that newbuilds yards or at the yards for (multiple speakers)?

No. That was a theoretical reply.

I guess I'm trying to understand. So here on Slide 14, or maybe I'm just reading too much into it, you show potentially 10 extra vessels gradually delivered. Should we think of those as maybe then secondhand ships, given what we just talked about?

Good comment, good comment. We did this because we didn't actually say that all these will be newbuildings. Obviously, we cannot get 10 newbuildings for 2016 out of the blue, as we just discussed. So this was mostly usage of the extra money that we have in place. So if these were all newbuildings, then probably that would apply for 2017. If we say that these ships will deliver in 2016, then probably two-thirds must be secondhand, and one-third must be newbuildings.

Okay, that's helpful. And I guess then one more for me a little bit on the quarter here, it seems that the cost structure was a little bit higher than we anticipated. Vessel OpEx on a daily basis was around $4500. And if I heard the comments correctly, I think we should think about the cost structure staying where it is today. So, is that -- that's a little bit higher than I think we previously spoke about on calls. How should we think about this going forward?

Yes, it was mostly due to the old vessels, as always. Don't forget that all these expensive repairs and spare parts and so on and so forth, most of it, not all, of course, most of it is due to the old vessels. Hopefully, now with 17 new technology ships and slowly, slowly the exit of the older ships, of course we expect the running costs to stay same or go down, obviously.

So, we should think run rate from around $4500 should be the right number to go from here?

To be conservative, I would use the same numbers, yes.

Okay. All right, Harry, well, thank you for the time. I will pass it along.

Omar Nokta, Global Hunter Securities.

I just actually had a couple of follow-up questions on the chartering profile. I know in the release -- and I'm not sure and I joined the call late, so I apologize if you addressed this already -- but I know in the release, you mentioned that you've deployed several ships on long-term charter. Are any of those incremental to what you had previously disclosed? I think it was five or six ships previously, put on maybe six or eight year contracts. Is there anything in addition that you've done since then?

Long? No. We've done of few shorter-term contracts, yes. From our last announcement about those ships on the eight-year contracts, we haven't done any very long, but we have done a lot, lot. We have done a few that are short and medium-term.

Okay. Would you be interested in going long on some of the -- especially on the, say, the latest newbuilding, which was at that same, that 7200 cubic meter which you had put away for eight years. Would you be interested in going long again on that one?

Sorry, on which one?

Because I know you've currently got the Eco Stream, the 7200 cubic meter one, and then you have another sister ship to that one that is still under construction. Those two you deployed on those long-term contracts.

Correct.

And you've got a third one that you just ordered. I'm wondering if you would be putting that one on long-term charter as well.

Well, we have 17 newbuildings almost, so I don't understand the question. What do you mean? Our chartering strategy is mixed and staggered, meaning that some ships will be fixed rate, yes. Some ships will be fixed for two or three years, and some ships will be fixed for one year. It's not about the size of the ship. It's about that we need some ships open. If (inaudible) if we expect a firming in the spot market and therefore the period rates.

No, I understand that. Thank you. I was just wondering if there was an opportunity, if -- obviously you've got a pretty big order book. And what I was just wondering was, is there -- are you getting interest from third parties to come in and take these vessels from you long-term? And I was just wondering because you have already -- you fixed the first two of those 7200 size, and I was just wondering, since you ordered a third one most recently, I was wondering if that was maybe against the expectation of being able to deploy that one on a long-term charter as well.

I will give you an example which I think will answer your question. We fixed two ships that are 15 years old for eight years. I hope that answers your question.

All right. Thank you, Harry. Just one quick follow-up. I just wanted to make sure I had the numbers right. I know in the annual filing, you had $197 million or so in financing for 14 out of the 17 newbuildings. And I think, in your commentary, you mentioned that you've been able to secure two of the remaining three for about $40 million. Is that about right?

Sorry about that, but I don't understand the question. It's all in the script; I mean in the slides. Everything is there. If you need something extra, please email us, because I don't have the information in front of me.

All right, thank you.

George Berman, J.P. Turner.

Thanks for taking my call. Harry, very nice quarter. It looks like you've got the Company set for the upcoming boom in the LPG market, huh?

Let's see what happens.

I've got one quick question. Knowing the industry and knowing what's going on in the United States, when do you expect this export boom to really happen from the US?

I'm in Greece, you are in the US, so I think you know better than me.

I'm a land animal.

According to the analysts, and of course I just read what you read, I'm not US-based and I'm not a shareholder of Targa and Enterprise and these guys, but from what we hear, all of this -- the peak of these exports will be in 2016 and 2017, from what I hear.

Okay, so it would basically coincide with when the LNG export facilities are all coming online? Is that about when you think there's going to be a lot of demand for export for LPG and that sort of thing?

All our ships, as we have discussed, will be delivered by 2016, so hopefully that's the case. All our ships will be available for charter at that time.

Okay. And there is no problem that you can have them delivered to the US ports then right away? Because you have most of your ships currently operating in Asia and South America, right?

Yes, so what? Our ships can go anywhere we want them to go.

Okay. Good luck for the future.

Adam France, 1492 Capital.

Could you repeat what you said? Did I hear you say that you fixed a 15-year-old ship for eight years?

14-year-old, to be correct.

14-year-old ship for eight years? Okay.

Or about there.

No, that's fantastic. Can you comment on the rate?

No, I cannot comment on the rate because I actually don't remember the rate, to be honest with you. I don't have this information in front of me. But just thinking, you know, we fixed the 14-year-old for eight years, just that, I think it's a very, very big success for our chartering team, I think.

Okay. And just looking at your fleet, how many more opportunities amongst your older ships could there be for similar sized deals?

Not many.

Okay. Very good.

I have to be conservative, and we know that the good charters and the old majors want the modern ships, so we cannot believe that all our old ships will go on long-term charters. That would be completely unrealistic.

Very good.

There are no further questions at the moment, sir.

Okay. 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 at our next conference call for our second-quarter results in August. Thank you very much.

Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.