StealthGas Inc (GASS) 2015 Q2 法說會逐字稿

Good day and welcome to the StealthGas Inc. half-year 2015 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.

Good morning ladies and gentlemen and welcome to our second-quarter and half-year 2015 earnings and presentation webcast. This is Harry Vafias, the CEO of StealthGas. Joining me on the call today is the Finance Officer Mrs. Fenia Sakellaris who will be presenting the Company's financial performance at the later stage of our call.

Before we briefly present our today's topics of discussion I would like for all of you to be reminded that we will be discussing forward-looking statements which reflect current views with respect to future events and financial performance. At this stage please take a moment to read our disclaimer on slide 2 of this presentation. It's noted that risks are further disclosed in StealthGas's filing with the Securities and Exchange Commission.

Let's proceed in summarizing today's agenda. I will begin with an overview of our Company's highlights for the second quarter of this year. Then we will discuss our financial performance and provide an overview of the LPG market and finally after a close look at our stock performance I will share our views on our Company's outlook.

I would like to note that all amounts unless otherwise clarified our implicitly stated in US dollars.

Moving to slide 3, we're summarizing our Company's key highlights for the period. As an opening statement I would like to point out that in terms of market conditions the second quarter of 2015 was quite challenging as freight rates were in the lower end of their cycle. Nevertheless we are please particularly for our operational performance.

During Q2 of 2015 we took delivery of further four new Eco LPG carriers: the Eco Enigma, the Eco Royalty, the Eco Loyalty and the Eco Universe. And since then we had further three new deliveries of Eco LPG vessels, namely the Eco Galaxy, the Eco Czar and Eco Dream, all from top-quality yards. In addition we concluded in April 2015 the divestment of two of our oldest vessels, the Gas Kaizen and the Gas Crystal, for demolition easing our Company's operating cost base and lowering our fleet's average age.

With regards to our fleet management operations I believe I must say the fact that this quarter we achieved virtually 100% of fleet utilization proving our technical superiority. Our operational efficiency has yet for another quarter proven by the reduction of our daily OpEx and daily breakeven. In terms of fleet employment we have 70% of our vessels on period charters for the remaining of the year, continuing our earnings visibility policy adjusting it, however, to an environment of soft market conditions.

Proceeding to our financial highlights in the first half of 2015 we recorded revenues of $68.1 million, increased by $2.4 million compared to the same period of 2014 while our adjusted EBITDA, a measure which excludes non-cash items, amounted to $30.2 million. In terms of our leverage and cash position we maintain a low gearing of 34.4% in spite of our Company being in an intensive capital expansion phase while our cash balance was also preserved at high levels of about $90 million.

As a remark I would like to say that our strong operational cash flow allows us to cover most of our Company's needs. Therefore we are able to maintain a stable capital structure even when in aggressive capital expansion.

Looking at our Company's position against peers in slide 4, StealthGas with an estimated market share of about 20% remains a leader in the small LPG carrier segment. Our Company has the highest number of owned vessels and the heaviest fleet expansion schedule compared to the other peers. In terms of average fleet age it was reduced in Q2 2015 to 9.5 years from 10.3 years in Q1 2015 and it will be lowered further as our remaining newbuildings get delivered over the next 24 months.

Slide 5 presents our fleet employment in terms of charter types out of a fleet of 51 owned vessels and as of August 2015 we had 16 of those on bareboat, 25 on time charters and 10 in the spot market. The two vessels that are chartered in by our Company, the Gas Cathar and the Gas Premiership, are also sublet on time charters.

Based on pre-agreed contracts some of which extend up to the year 2022 committed revenues amount to $230 million. Our average contract duration is currently 2.3 years. I would like to note that in spite of a soft market environment we have managed to fix a number of our vessels into long-term charters with appealing returns but overall this quarter we mainly followed the short- to medium-term chartering policy so as not to commit our vessels long-term during a soft market. Given the weak market conditions I consider our Company's success that we managed to fix on period charters of about 90% of our newbuildings delivering this year which is seven out of eight ships as well as contract almost 45% of all our vessels above 15 years of age.

In terms of our fleet deployment on period charters during the past three months we concluded three short-term time charters, four charter option extensions, two-time charter of one-year duration and a three-year bareboat charter with a two-year extension option for our product tanker, the Navig8 Faith. Our new bareboat hire will give us an EBITDA of approximately $8.7 million through its three-year period excluding the profit split element.

With regards to our fleet geography presented in slide 6, 56% of our fleet trades in the Middle and Far East, 24% in Europe, 11% in South America and 10% in Australia. In comparison to our fleet composition presented in the previous quarter, during Q2 we had some vessels relocated in the Middle to Far East region as their charters expired.

As far as our trading composition is concerned I would like once again to note that our Company focuses on regional trade and local distribution of gas with a majority of the LPGs of the LPG we carry covering household needs. There is (technical difficulty) element to our trading market and I mentioned this having in mind the volatility in oil prices, particularly the declining trend since residential LPG consumption is virtually unaffected by oil price change while industrial LPG consumption is affected by a small percentage.

Slide 7 demonstrates our fleet breakdown and development plans. As of August 20 our Company owned a total of 51 ships. As presented in the table to the left, during Q2 2015 we took delivery of four new Eco LPG vessels and concluded the demolition of two of our oldest vessels.

Since the beginning of Q3 to date we took the delivery of an additional three Eco LPG new ships. Our Company aims to reach 59 fully owned ships and 69 vessels controlled by the end of 2017. With regards to our fleet characteristics and taking into account the addition of our newbuildings, our average vessel size is slightly below 5,000 cubic meters with about 72% of our fleet falling in the 3,500 to 5,000 cubic meter category.

Following to slide 8 I will briefly comment on the remaining of our capital expenditure program scheduled to take place from August 2015 to the year 2017. Excluding the $48.2 million advances paid to date for our upcoming deliveries, we have an ongoing CapEx plan of another $243.5 million up to the end of 2017 for the delivery of an additional eight new LPG ships. As mentioned in the previous quarter in 2017 we expect the delivery of the four 22,000 cubic meter new generation similar vessels, an investment which corresponds to 73% of our remaining capital expenditure.

Again I would like to repeat that our strategic decision to enter this new market segment was not to replicate what we are currently doing as leaders of the small-scale LPG segment but rather to put us in a position to offer more integrated services to our customers at a lower cost with brand-new high quality assets mostly from Japanese yards. Similar vessels of this size are able to carry a bigger variety of gases on medium haul routes. As presented in the capital expenditure analysis to the right $48.2 million of the remaining CapEx has already been paid as equity advances.

Another $61.8 million is committed bank debt while a further $125 million of debt is under negotiation for the similar vessels discussion on which we expect to conclude in Q1 2016. This leaves us with $56.6 million of equity funding requirement. Taking into account that cash on our balance sheet starts at about $90 million StealthGas is already in a comfortable position to equity finance these future CapEx requirements.

I will now turn it to Mrs. Fenia Sakellaris for our financial performance discussion during the second-quarter and half 2015. And later we will discuss the market and industry outlook.

Thank you Harry. Good morning to everyone.

Let us move on to slide 9 where we see the income statement for the second quarter of 2015 and the half-year results against the same periods of the previous year. Looking at the second-quarter results, our voyage revenues came at $32.4 million increased by 2% compared to the same period of 2014. The moderate revenue increase in spite the net addition of four vessels is attributed to two factors: low demand due to seasonal factors and low freight rates as the market is at the bottom of the cycle affected by weak economies and the vessel oversupply.

Indeed demand was lower than expected as LPG inventories were quite high this quarter. And as to rates, year-on-year decline was as high as 28% for the 3,500 CBM vessels. Voyage costs amounted to $3.9 million, marking a 12.4% increase compared to Q2 2014 as this quarter we had the higher number of vessels operating in the spot market.

It's worth mentioning that this quarter compared to Q2 2014 as spot days nearly doubled. However, the increase in voyage cost was less than anticipated since we saw a sharp decline in bunker fuel costs.

In the second-quarter 2014 average price of crude oil was $103 per barrel whereas in Q2 2015 it was $57 per barrel. Based on the above, net revenues came at $28.5 million, running costs marked the 7.2% increase because of the net addition of four newbuildings plus the continuous of securing OpEx for the two vessels sold and leased back by our Company which are currently on time charters.

Focusing on operating cost categories we would like to point out that this quarter we saw an increase in crew costs attributed to our fleet expansion and a slight increase in wages which was effective from the beginning of June 2015. In all other main cost categories such as storage and maintenance cost we managed to mark a cost reduction in spite of our fleet expansion. In addition comparing the daily operating cost of the vessels we operated both in Q2 2015 and in Q2 2014 we were pleased to see that 20 of our vessels marked a decline in their daily operating expense.

With regard to drydocking costs, they amounted to $432,000 given the completion of the drydocking of Gas Marathon. Overall our schedule for 2015 has two more vessels to be drydocked in the third and fourth quarter of the year. However, this number might increase as some vessels scheduled to be drydocked in the beginning of 2016 could potentially be accommodated at the end of 2015.

Our EBITDA for the second quarter of the year came at $9.8 million, reduced by approximately $6 million compared to the second-quarter 2014 as a result of the aforementioned increase in voyage and running costs but mainly as a result of the $3.6 million impairment loss we took in order to account for the possibility of scrapping one of our oldest vessels until the end of the year. Without this impairment our EBITDA would have been in the order of $13.5 million.

Interest and finance cost marked the decrease of $228,000 mostly attributed to lower commitment fees incurred. With a net loss of $1.3 million, our earnings per share was minus $0.03 on 41 million outstanding shares compared to $0.12 on 38 million outstanding shares in Q2 2014. Looking at our adjusted net income, however, which reflects more accurately our income generation as it excludes non-cash items, our EPS for the second quarter of 2015 was $0.06 per share.

So, to briefly summarize our half-year results of 2015 we managed to generate net revenue of almost $60 million increased by $800,000 compared to half-year 2014. Our adjusted EBITDA came at $30.2 million while our adjusted EPS at $0.20 to $0.32 in half-year 2014.

Slide 10 demonstrates our performance highlights for the period examined. Due to soft market conditions our operational utilization was 89.2% in Q2 2015 compared to 92.3% in Q2 2014 and spot days almost doubled as we had 11 vessels in the spot market compared to seven vessels in Q2 2014.

Focusing on the average daily result adjusted time charter equivalent is lower by 10% both in Q2 2015 and half-year 2015 compared to the same periods of 2014. From this it is evident that weak freight rates impact our income generation. At this stage we would like to note that despite of hard market condition as a result of our efficient management and expansion of our fleet with Eco new vessels that we see for yet one more quarter a reduction of our daily operational expense.

Looking at our balance sheet on slide 11, our asset base at $948 million is a shade below $1 billion and that number will grow as our fleet expansion schedule progresses. Compared to the end of the year 2014 our asset base marked a slight increase in value following the delivery of the five new Eco LPG vessels and the divestment of two vessels for demolition in April 2015. Our strong liquidity continues in spite of our ongoing expansion plan as our cash for the half-year 2015 were approximately $90 million.

Focusing on the equity and liabilities side, our gearing remains low in the order of 34.4% and total Company leverage increased by $1.6 million. We see it as a very positive sign that our Company produces a strong operating cash flow thus being able to easily continue scheduled debt repayments and preserve moderate leverage.

Slide 12 proves our Company's financial strength. Although LPG charter rates are close to the bottom of the rate cycle and as presented in the top graph to the left our daily TCE follows a declining trend but so does our daily breakeven.

For the second quarter of 2015 our daily breakeven was $5,900 compared to $6,400 in the same period in the same period of 2014. Again for the half-year 2015 we have a daily breakeven in the order of $6,000 versus $6,400 in the half-year 2014. This decrease is primarily driven by a reduction in daily OpEx.

Finally, looking at our gearing characteristic in terms of our operating cash flow generation it is evident from the left bottom table that we are very relaxed covering our financial obligations as well as covering our scheduled principal repayments. As a concluding remark, although this quarter revenue generation did not reflect our potential we still remain operating profitable, lowering our daily OpEx costs and generating sufficient cash flow to cover our Company's needs. I will now hand you over to our CEO, Mr. Harry Vafias will discuss market and Company outlook.

Let's proceed with slide 13. LPG transportation demand is exhibiting and will continue to demonstrate the positive trend. During 2014 demand for LPG transportation grew by 9% while it's estimated that the growth rate for 2015 will be somewhat lower in the order of 7%.

The main reason behind this in a market of declining oil price and a slow global economy is the increased imports of China from the US which is anticipated to continue to increase in the upcoming years. Overall LPG price arbitrages between the US, Europe and Asia plays a significant role in shaping international trade and mostly benefit the larger LPG ships rather than the coastal ones.

In terms of coastal ships indeed this year the falling freight rates have exerted pressure in our market but I believe that our segment will be affected positively, perhaps by China's imports, the intensification of US exports and the increased activity in the Middle East by the lifting of the Iranian sanctions. With regards to China and the upcoming operation of several PDH facilities from 2015 to 2016 we expect that this will negatively affect the trading of propylene but will potentially increase China's LPG imports.

Slide 14 shows the evolution of the LPG charter rates. As evident by the table presented the small LPG segment has experienced declining rates during the past year.

The most affected segment in time has been the smaller ones, the 3,500 cubic meters with a year-on-year decline in the order of 27%. I strongly believe that one of the main reasons of seeing such low rates and being in the bottom of rate cycle is apart from the slowing global economy and oil price volatility the excess tonnage prevailing in the coastal carrier segment.

Moving to slide 15, so as to continue our market discussion in the graph to the left we see that almost a quarter of the small-scale LPG fleet is above 20 years of age and therefore the market should scrap more. I strongly believe that in this soft rate environment the number of newbuilding deliveries we saw in 2014 along with minimal scrapping activity until today does not help the market to balance itself.

A move towards scrapping the older vessels will relax vessel supply and with a stronger Chinese and/or European economy it should help the market improvements more. This is the main reason why we took the strategic decision to sell two of our oldest vessels for demolition and we might scrap a few more within the next 12 months. With this move and as a market leader we hope to set an example for our fellow market participants to follow suit.

As a concluding but yet very interesting mark of our market presentation I'd like to say that as evident in the graphic presented to the right the order book up to 2017 has significantly declined and more importantly we have seen only a single vessel being ordered from the beginning of the year until May 2015. This differentiates our market with other sectors that have still large and increasing order books.

I will now continue to discuss further our Company's outlook commenting on our share performance for the second quarter of 2015 on slide 16. The performance of our stock is presented along with selected gas carriers peer group. It's very evident that oil price volatility strongly affects energy-related stocks.

Up to the end of June 15 when oil price was increasing shares presented marked a positive increase which was not sustained as in July oil price began to decline. It can be argued that VLGC's related stock seems more unaffected to the sharp oil declines compared with the handy size and coastal carriers.

Proceeding to slide 17 we are showing different scenarios on the Company's performance for year 2016 when the Company will be operating a total of 57 ships. In general I hold a conservative view when making such predictions. The different scenarios were based on our existing fixed charters plus open days with current market rates.

As evident from the table presented which indicates the effect of various time charter rates on our EBITDA, low rates now are EBITDA potential. With our strong modern fleet in days we have the capacity in 2016 to reach an EBITDA of $90 million should market conditions premature. To summarize we have the infrastructure, the balance sheet and the market know-how to navigate safely even during weak times and this can be deemed as our Company's biggest success.

Proceeding to slide 18, the final slide of the presentation we can see some valuation multiples of StealthGas against comparable companies. Most peer group companies trade at the discount to NAV while asset values exceed current enterprise values.

In that respect LPG carrier shares including StealthGas offer an attractive entry point. Our shares trade at the discount to the peer group and since we are greatly undervalued but we do have strong Company fundamentals we feel that we can offer a good opportunity for medium-term investors.

I would like to close our presentation with the following concluding remarks. Admittedly the second-quarter 2015 was a challenging one, particularly due to a softer than expected demand attributable not only to seasonal factors but also a weaker macroeconomic environment. These conditions resulted in lower freight rates and thus have had an impact on our revenues.

For this reason we were not able to demonstrate in our income generation our Company's potential. Our Company is in the process of implementing an aggressive fleet expansion plan, the heaviest and the most promising than any other of our peers which to date is being implemented efficiently and according to schedule. Despite a soft market we have managed to put seven of our eight of this year's new deliveries on period charters with satisfactory terms.

As earnings visibility is one of the pillars of our Company's success, we continue our fleet deployment strategy adjusting it to the given market conditions and cautiously charter out our fleet on medium- to long-term charters or else prefer short-term period features so as not to commit our vessels in a low freight environment. This strategy has paid off yet once more as up to the end of 2015 we have 70% off our fleet on secure employment with future committed revenues of about $230 million.

Our technical efficiency was evident this quarter as we achieved the fleet utilization of 99.9%. Most importantly we would like to state that we are proud for the way we manage to navigate our Company's operations as yet for another quarter we show a decline of our daily operating cost, a true evidence of operating efficiency. Our cash continues to stand strong at about $90 million and our leverage is still maintained at a moderate level of only 34% of our assets despite this rapid fleet expansion.

Our operating profitability was maintained under very difficult market conditions. Given the unpredictability of freight rates, we at StealthGas have been since our IPO keen supporters of a conservative stance.

With low debt, a modern Eco fleet mostly from Japanese yards, a strong cash balance and active share buyback program and a number of long-term charters we feel confident that we will weather the storm and emerge stronger thereafter, exactly what we did in 2009 to 2010 when our stock fell below $4 but a few years later had tripled in value. Moreover we currently trade at about one-third of steel value and based on our Company's fundamentals we feel that this presents a great opportunity since as you know better than me the best bets on shipping stocks have been the countercyclical ones.

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

(Operator Instructions) David Sachs, Hocky Capital.

Good morning, Harry. It's David Sachs. Just to discuss your philosophy at this point on the share repurchase program.

It seems like your interest had waned a little bit during the quarter from where it had been. And just given your current cash position and your commitments and the cash production of the business just what you're thinking about in terms of executing on that buyback.

There's not much to say. We have had a program of $30 million, we have spent about half and we will continue to keep spending. But as you know with the regulations that we have we cannot buy whenever we want.

We cannot buy at whatever price we want and in order the volume, the share daily volume has been very minimal, as you know very well. So unless people are selling big blocks of stock even if we wanted to spend the money fast it's not easy with such a small daily share volume.

Okay. Second question, if we talk a little bit about the macro environment you discussed where current rates are near the lower end of the historical range. Can you give us some sense of what you think will be the catalyst to increasing rate?

Is that going to be rate for scrappage, is it going to be demand driven and how do you see that playing out over the next 6, 12, 24 months? Thanks.

I have no idea about the future. Whoever has made predictions in shipping and energy-related stocks has been wrong as you know very well.

The future of the rates depends on a few things. We've discussed them before, price of oil, the global economy, China, Europe, scrapping of ships, a reduction of the future order book, these are the main factors affecting LPG shipping and LPG freight rates.

Now who expected the price of oil that it would still be $40 a barrel? I don't think many people did especially last year.

Who expected what happened in China the last two weeks, last one week? Nobody I guess.

So because nobody can predict the future what we can do is be very conservative, be very careful on our running costs, be very careful on our debt because when rates collapse people get killed, companies get killed because of too much debt. So this is what we're trying to do and trying to sell selectively our oldest ships for scrap in order to try and help the supply situation and also reduce our costs by scrapping ships that cost more to run.

Your actions are to be commended at least in terms of the portfolio management and exiting some of the older assets at what look like good prices and then as well the lease transactions that you executed over the last six or eight months. Those were quite well-timed as well. And I don't know if there are any additional opportunities for pruning the fleet like that, whether you would consider selling some of your MRs?

If we sell our MRs there will be two problems. One, we've will be booking a big book loss because these were bought at the good times and the ships were expensive and secondly we will be deleting some very good positive cash flow for the Company. So I don't know why -- if we saw a very good price, yes, we would sell but it's not our priority right now.

These ships are helping the bottom line. These ships are on bareboat so we have zero maintenance and running cost for them.

So the only thing these ships do is bring good money in the Company, good money in the bottom line. And it's only as you know three ships out of a total of 57, so it's not like a huge amount of ships that is taking lots of our time and so on.

The thinking there was getting fair value for those vessels. And if your shares are trading at as you just pointed out earlier 30% or 35% of the metal value that there is a significant arbitrage of being able to get a full and fair price for a non-core asset and --

Agree 100%. But as I said before let's first finish with the buyback program, the existing buyback program. And then obviously the situation is the same, that's one of the ideas, yes.

Okay. I will get back at you.

(Operator Instructions) Dan Abramowitz, Hillson Financial Management.

Good morning. I have a follow-up question on the share repurchase program. As you know we've been strong advocates of aggressive stock repurchases.

You started the program at $10 million. You added the $20 million which was we thought was very good. You started the buybacks fairly aggressively and the buybacks have been trending down since late last year and early this year.

You bought less and less first quarter than you had bought before and you bought less in the current quarter than you did in the first quarter. The stock has dropped considerably from when you started the program. You're talking about the fact that it is difficult to buy stock in the open market because of the liquidity which we recognize.

So we've also advocated in the past for a self tender as a way to buyback a large chunk in one fell swoop. You've resisted that in the past, so I'm wondering now with the stock at $4 and change and the liquidity problem remaining if you're now willing to consider a tender as a way to complete the buyback program more efficiently and more quickly?

We will discuss it, Dan. I cannot give you an answer because it's not under my authority to discuss this kind of things. It will be discussed at the Board level.

As I told you the share buyback program has not been terminated. The exact opposite. We will continue to do so until we spend all the $30 million, unless of course the whole world comes upside down but speeding it up is one of the ideas, yes, you are not wrong.

Okay. Well I understand it's a Board decision but I'll just make the point that we would strongly advocate for a tender at this point.

You could probably buyback a good chunk of the remaining 16 million or so at price similar to what your average has been now that the stock is where it is. And we would strongly urge you to consider doing that in the near future. Thank you.

Thank you, Dan. Noted.

(Operator Instructions) Jeff Geygan, Milwaukee Private Wealth Management.

Thank you. Good afternoon, Harry. I would echo Dan's thoughts, as a shareholder I'd like to see a tender for your stock.

As you recall directors represent shareholder interest, so yet another shareholder advising our director reps to consider the tender. My question relates to opportunities that you're seeing in the marketplace to make acquisitions assuming that others are also trading at discounts, are you seeing opportunities that might make sense?

We have seen a few but it's quite difficult to decide. Because when you're back trading at a third of NAV, at one-third of NAV what's better to buy your own stocks with your own stock at a third of NAV or to buy another asset at, I don't know 10%, 20% discount to NAV?

I don't know what's best. If we didn't have this big order with brand-new sales from top-quality yards I guess we will be more aggressively picking up bargains. But since we have such a big order book and we still have lots of ships to take delivery in 2015, 2016 and 2017 it has to be a fantastic bargain to make us look at it.

Fair enough. But it's not a binary decision.

You could buy in your own stock, you could acquire other assets on the cheap as well. Thank you, good luck with the --

Thank you, Jeff, but don't forget that if the market continues to be soft we need to have certain cash, we cannot spend all the money on buybacks and the new ships. Because if the market continues to be like that for another I don't know one or two years then we will end up having problems like some of our drybulk friends.

Thank you

Thank you.

(Operator Instructions) David Sachs, Hocky Capital.

Yes, Harry, if you could discuss the thesis behind the purchase of the four semis that you're getting in 2017, whether that decision still makes sense today versus the date you committed to it with the market variables that affect the profitability of that subset of the market? And then to the extent you change your mind or can't secure the financing, what does that do to your -- do you have a penalty involved in walking away from that order?

Yes, good question. I believe if you look at the numbers generated today at least this has been the best decision we've ever made because these ships still make $1 million a month which is about 20% return on equity whereas the small ships at the moment make silly returns. So up to now it's proven a very good decision.

Now of course I don't know what will happen in Q1 2017. No one knows. But don't forget that we took the difficult decision of building those ships in the most expensive yards in the world.

We didn't take the easy option of going to China and paying 20% less. Thus I believe because of the quality of the ships and the quality of the workmanship if we want to sell them we can sell them.

On top of that on the matter of finance I have to tell you that when you have $1 billion in assets and only 35% debt, debt to assets and you have the flawless record with 21 banks you can raise that finance if you want in 48 hours. Thank God we are in the position where we pay cash for all these installments for the ships and in order not to spend shareholder money in fees we prefer to raise the finance as to delay raising the finances much as we can.

So we have said with the Board that we need to have finalized the finance for all four ships within Q1 2016. So we have another four or five months to finish this. Hello?

Yes, sorry. Thank you.

Charles Rupinski, Seaport Global.

Yes hi Harry. I just had a quick question you've been commenting or more of a macro question on the legislative regime and everything with Greece.

We've heard of some companies moving to Cyprus. Do you have any comments on that as far as it affects StealthGas in terms of any tonnage tax or potential changes of tax regime or change in the corporate location or structure or anything?

Thank you, Charles, very clever question because it's totally something which is in the news lately. The answer is that all the big companies have had a plan B.

None of the big companies actually want to move. We are all happy being where we are for us and our staff. With the new regulation after the Greek bailout the tonnage tax increases marginally so that will not affect us.

If there are any other changes, because this is Greece so you never know, if there is something else that really affects us or attacks on the ship's income or big change on the tonnage taxes then I guess yes we will have to move. But it is not that difficult because as you know we only have the staff in Greece and nothing else is in Greece.

I mean all our ships are out of Greece. We keep a close to zero cash in great banks. We have no Greek flags, we have no Greek crew, etc.

A quick question on that. Would you have to move staff to Cyprus or wherever you were going or could you just redomicile the Company and keep the staff where they are?

Good question again. That is not clear yet from the Greek authorities. Normally you are considered a Greek company if you're making the decisions in Greece.

So the answer to your question is that again if that doesn't change the higher management should if all this happens should not be in Greece. The lower staff I guess can stay in Greece but the higher management has to be somewhere else.

All right, understood. Thanks for the color.

(Operator Instructions)

I guess there are no other questions. We would like to thank you all for joining us at our conference call today and for your interest and trust in our Company and we look forward to having you with us again at our next conference call for our third-quarter results in November. Thank you very much.

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