StealthGas Inc. (GASS) Q4 2013 Earnings Report, Transcript and Summary

Thank you and good morning everyone. Welcome to our conference call and webcast to discuss the results for the Fourth Quarter and 12 Months of 2013. I am Harry Vafias, the CEO of StealthGas. I would like to remind you that we’ll be discussing forward-looking statements in today’s call and presentation. And regarding the Safe Harbor language, I would like to refer you to Slide #1 of this presentation as well to our press release on the fourth quarter results. With me today is Mr. Stavros Papantonopoulos and if you need any further information on the call or the presentation, please contact Stavros or myself. Let me begin by saying that it has been a very busy period for us lately. We closed the last quarter with a significant improvement from the third quarter as the market picked up and the sentiment improved for LPG shipments and that led us to conclude a number of new charter arrangements and some very long ones as we previously announced. At the same time, we increased our new building acquisitions with two more vessels bringing the total number of vehicle LPGs to be acquired to 17 in total. We also concluded a number of financing deals for these vessels and by now almost all the vessels are committed to various banks. We brought in two executives to assist with our expansion plans. And finally just last week, we concluded a placement with an institutional investor at zero this current market that brought in an additional $52 million. Let’s begin with Slide #2 to reiterate our business strategy. As you can see, we are the leading company of the LPG Handysize segment. We owned 38 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 consolidation lately and that brings our second largest competitor to about half our size, while overall the sector still remains largely fragmented with opportunities for consolidation. We continue to focus on the young fleet that will give us operational and commercial advantages. While the current average age of our fleet is 12 years below the industry average, we aim to lower it with additional vessels that will enter the fleet within the next 18 months. We continue to keep moderate leverage at around 55%, 56% and intend to finance the new vessels with new debt at around 65%. We continue to maintain the conservative chartering strategy that has made this company so successful in securing a visible revenue stream with predictable cash flow on average profitable to do so. At the moment, fixed employment for our fleet stands with 74% already fixed for ‘14 and 41% already fixed for ‘15. Finally, I believe that we continue to monitor these vessels more efficiently when any public or private competitor and that by growing our fleet we will be able to take advantage of additional economies of scale. Our net income breakeven level per vessel per day for the fourth quarter, were $6,000 per vessel per day, which puts us comfortably in the profit-making territory. In addition, modern eco vessels can achieve around 50% savings in operating expenses and that is one of the reasons why we focus on renewing the fleet with so many buildings. Slide #3, as previously mentioned, we intend to grow the fleet significantly over the next 1.5 years as we believe the market fundamentals justify a more aggressive growth strategy than we had in the past years. We now account 42 vessels in our fleet, including our 4 tankers. By the end of ‘14, we have added 5 more new buildings going to 47 ships. And by the end of ‘15, we have added another 12 ships going to 59 vessels, 55 of which will be LPG vessels. This means we committed $345 million in capital expenditures and we have already spent $75 million of these. That leaves us with approximately $270 million to be paid, of which $85 million is in markets for this year and $185 million for 2015. Out of this $270 million total CapEx remaining, we expect to see finance proceeds of about $235 million. That leaves us with around only $35 million of remaining equity. We already have committed finance for 14 out of the 17 vessels. And the last deal has been occurred yesterday for the finance of the 3,500 cubic meter vessel, whose acquisition we announced only three weeks ago. As you can see with the cash balance of over $120 million today including the latest proceeds, we can confidently meet these requirements and in fact we are looking for additional acquisitions as we have some more news for you over the next couple of months. I will now hand you over to Stavros Papantonopoulos for some brief comments on the fourth quarter results, our financial position and later I will discuss the markets and the industry outlook.

Thank you, Harry. Good morning everyone. So let me continue the presentation with Slide #4, the financial highlights for the fourth quarter and 12 months of 2013. With an average of 42 vessels owned and operated in the fourth quarter compared to 37 last year, our revenues came in $32 million, higher than last year’s $30.6 million. This increase was primarily due to the increased number of vessels in our fleet in addition to the increased product availability coupled with seasonal factors that led to the market to strengthen the later part of the fourth quarter. Our voyage costs decreased to $3.3 million from $3.9 million because we had fewer vessels under spot charges in 2013 period. Our operating expenses increased to $10 million from $7.7 million last year. This was primarily the result of the increase in the number of vessels operated in 2013 period, including both the vessels that were added to the fleet and two vessels that came off bareboat charters, which we operate under the time charters during the fourth quarter of 2013. We also had dry docking costs of $0.7 million compared to $0.02 million for the same period last year. Two vessels entered and completed drydock in the same period in 2012 no vessels was drydocked. Interest and finance costs were $2.3 million from $2.2 million last year. Total debt at the end of 2013 was $352.9 million compared to $345.4 million at the end of 2012. Our net income for the quarter was $5.5 million compared to $7.8 million last year. Earnings per share for the quarter were $0.17 on 32 million outstanding shares compared to $0.38 on 20.5 million outstanding shares last year. EBITDA was $16.2 million. Included in net income figure is $0.09 million net loss from interest rate derivative instruments. Interest paid on interest rate swaps arrangements amounted to $0.4 million. Loss per share excluding these items are adjusted net income for the quarter was $5.2 million or $0.16 per share compared to $6.7 million or $0.33 per share for the last year – $0.33 per share for the same period last year. For the 12 months 2013 period with an average of 39.4 owned and operated vessels against 36.9 vessels for the same period last year, our net income was $21.2 million compared to $29 million last year. Voyage revenues were $121.5 million compared to $119.2 million last year. EBITDA was $62.6 million compared to the $71.5 million last year. Adjusted net income for the year was $18.7 million or $0.66 per share compared to $24.2 million or $1.18 per share for the same period last year. Let’s move on to Slide #5, looking at our balance sheet, we can see significant changes from last year mostly due to the net proceeds received from the follow-on offering in April. As of December 31, we maintained a healthy cash balance of $86.2 million including restricted cash compared to $42.2 million at the end of 2012 and that is after having spend $123 million on investments over the past 12 months for deposits and vessel deliveries. As of December 31, we have $7.6 million in advance for vessels under construction for 15 new eco vessels delivering by 2015 and $677 million in vessel book values. Our total assets therefore increased from $713 million to $851 million at the end of the quarter. In terms of liabilities the current portion of our long-term debt that is what loan repayments are scheduled over the next 12 months increased to $72.9 million from $35.8 million at the end of last year. The reason behind the increase is that some of our debt related to the five vessels mature next year. We have two balloon payments of $11.5 million and $22 million in April and July respectively. We just concluded (indiscernible) one bank agreeing to refinance $13 million of the aforementioned amount involving two of the vessels. Regarding the balance $20 million in balloon payments, we are in discussions with the banks involved and we are positive that these loans will be extended in the next couple of months. The difference between $72.9 million and $33 million in balloons, are the regular debt installments we paid for in the tune of $40 million per year or $10 million per quarter. Our long-term debt decreased to $280 million mainly due to the regular debt repayments and reclassification of the balloon from long-term debt to current debt. During the fourth quarter, we added $8.5 million in new loans repaid $10.1 million in regular debt repayments. As a result as of December 31, 2013, our total debt stands $302 million versus $345 million at the end of last year. We continued to maintain a moderate leverage over the next couple of years so that by the end of 2014 we expect to have a total debt below $380 million and by the end of 2015, with all 17 of our new eco LPG contracted vessels have been delivered, we expect to have around $500 million of total debt. At the same time, our total assets unless we sell some of that older vessels in the meantime, we will surpass the $1 billion. Regarding the 17 eco LPG vessels 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% finance. We have already committed 14 out of the 17 and are making progress in discussing the remaining three. Please turn to Slide #6, our operating highlights for the fourth quarter and 12 months 2013 and 2012. In terms of fleet data, our fleet constitute today of 42 vessels. We had 42 vessels in the fourth quarter of 2013 compared to 37 vessels for the same period of last year. The total number of voyage days increased to 3,820 from 3,401 last year. From the 3,820 voyage days for the fleet in the fourth quarter of 2013, 455 were spot market days, so we had a considerable decrease in the number of spot days compared to last year’s 584 and a decrease from the third quarter of 640. While our spot exposure is not significant at this point, we intend to keep it at the same levels or decrease gradually. In terms of our operational utilization ratio, our percentage is at 94.9% decreased from 95.5% last year and is mainly due to the more drydocking days. In terms of average daily results, our average time charter equivalent rates were 9,193 per day compared to 9,532 per day for the same period of last year. The drop in the time charter equivalent rates was again due to the weaker spot market during the beginning of the quarter. Our daily operating expenses marginally increased at 4,097 per vessel per day compared to 3,889 per vessel per day for the same period last year, a 5.3% increase. And our total vessels operating expenses were 4,336 per vessel per day compared to 4,091 per vessel per day last year, a 6% increase that will continue to be in the upper end of the regular and annual increases that we would expect. We still operate comfortably above breakeven levels in terms of income and cash flow. I will now hand you back to our CEO, Mr. Harry Vafias.

Slide #7 please. This slide demonstrates our fleet employment profile and provides you with the earnings visibility of our fleet. In terms of charter types out of a fleet of 42 vessels, we have 14 of the vessels on bareboats, 25 on time charters and 3 in the spot market. During the fourth quarter, we saw the market strengthening and that continues in the first quarter of the year. As a result, we recently announced the extension of 6 bareboat charters and two of the new eco vessels will be delivered in the first half of ‘14. All our spot vessels are currently employed and we will seek to find more medium-term charters for our ships. For ‘14, 74% of voyages are fixed, 41% for ‘15 with the number of charters extending to 2022. We continue to seek opportunities to improve our vessels on medium and long-term charters and we will try to keep the same levels of charter coverage going forward. Our relationship with the world’s largest and more stable energy companies, energy traders and the industrial companies of the highest credit worthiness minimizes on counterparty risk. It’s very positive that we have secured contracted revenues of about $240 million until 2022. Slide #8. This slide shows our fleet development over time and how the company’s results are affected when the time charters increase. On the top line of the table, we can see how our company’s EBITDA results grow when the average daily time charter remains stable at current levels. The gradual delivery of the new eco LPG ships increased the expected EBITDA to $100 million for the year and 2015. Incremental demand for LPG vessels needs to increase as the large scale U.S. export projects are completed that could push charter rates close to the previous peaks of $30,000 per ship per day. Each $1,000 increase in average charter rates will affect positively our Q4 2015 EBITDA by $6 million and will contribute $16.1 million to our annual 2015 figure. In the extreme example with acreage at $14,000 per day, our company will double the expected EBITDA to $200 million for full year ‘15. The 17 new eco LPG ships that will be joining our fleet over the next 20 months will come (indiscernible) under older counterparts bringing the average time charter rates higher. This table assumes that all vessels are opened and available for charter. Moving to Slide #9 which explains what LPG is, which is a byproduct of natural gas production and crude oil finding. This slide illustrates StealthGas’s hub and spoke trade model. In the backdrop of a growing export capacity in terminals held by enterprise in Targa, we have seen a concentration of interest on the VLGCs to carry large LPG cargoes on long haul trades. However, this has obscured the fact that there will also a need for a much bigger fleet of small gas vessels to serve those customers in the regional markets final destinations in the Caribbean, Latin America, Atlantic Basin, and Europe. While the U.S. 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 #10, the U.S. is shipping more LPG than ever as a byproduct of the record natural gas output. U.S. market share of global seaborne LPG exports is steadily increasing and forecasted to quadruple by 2017. The U.S. LPG exports are primarily going to Mexico and South America. As a result, we have increased our number of vessels deployed to the region to five and increased demand is likely to come from the Far East and Europe. The U.S. Energy Information Administration projects that the U.S. will continue to be a net exporter of LPG through to 2040, mainly because of continuous increases in natural gas and oil production. LPG needs to be shipped due to the limited domestic demand, high storage cost and Kyoto Protocols prohibition of gas venting and flaring. The U.S. LPG prices support exports. The price differential between U.S. propane, the Far East and Europe keeps enquiry for exports rather high. This is a welcome development for us since more supply will be coming in the market and its known LPG shipping is a supply driven industry. The chart below highlights the steady growth in the national seaborne trade for LPG since 2010. In 2013, 65 million tons of LPG was transported by sea and the trade is expected to improve by 50% to 98 million tons in ’17. The main key driver behind the steady growth is firstly the growth from the emerging countries especially for domestic use and the increasing distance between LPG production, feedstock supplies, and end users. The initial market users are 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 operation within the next four years and could require up to 8 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 sequential (double) growth and reach 36 million tons by ‘16 from the current 26 million tons representing an increase of close to 40%. Let’s move to Slide 11. We can see table showing estimated fleet growth for LPG fleet sizes. Looking at the delivery schedule for total LPG sector, we observe a moderate increase in the future growth of the total fleet that’s coming mostly from larger size ships and we expect a limited scrapping activity. Despite moderate growth, future seaborne demand is expected to our strict future supply and so the market remains undersupplied. In Slide 12 which is an important one as it shows what differentiates LPG Handysize sector from the other LPG sizes and segments. We can see how the picture changes favorably in the smaller LPG sector, where the order book is relatively much smaller than existing fleet. The Handysize pressure of LPG order book that is highlighted in the bar chart is about 6% to the existing fleet and the majority part of it is contracted by StealthGas, which is a 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 may be appropriate venting requirements. About 10% of the fleet is older than 31 years, so there is a substantial amount of scrapping capacity event of the decreasing rates. The fleet profile of the smaller vessel segment that we operate has over – it has better fundamentals than the bigger vessel segments. Let’s close with Slide #13. What we can say about the LPG shipping market that we operate in compared to other shipping segment is that it has small freight volatility and a few pure-play established companies. Rates do not fluctuate widely and that gives us downside protection. Historical rates range between $7,000 a day during the bottom of the market and $13,000 dollars per day during the peak and now a positive characteristic is that when the markets are becoming hot we should not expect a rush in new orders from speculative players since Japanese yard building ships are now full until the end of 2016. I’d 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 is future evolution on the U.S. basis and also on the global framework has drawn the attention of a significant investor interest in our market. While we’re offering attractive pricing trading on the discount to our peers 6.6 times EV to EBITDA and 0.7 times price to NAV multiples, we still offer one of the best ways to take advantage of the future expected growth in the LPG market with our fast expanding newbuilding program. Being the first one to have ended the U.S. stock market as a pioneer of the LPG shipping sector, I would like to point out the industry fundamentals remain positive and depict an increase in the LPG trade over the next two to three years. We want to take full advantage of our leading position and we still have our size at opportunistic growth showing that we intend to use a $32 million of proceeds of the placement we concluded last week not for debt repayment nor for the vessels acquisitions already announced but for new further growth. We already have committed finance for 14 out of the 17 new vehicle vessels and the last being agreed yesterday for the finance of the 3,500cbm newbuilding vessel whose acquisition we only announced three weeks ago. As you can see with the cash balance of over $120 million today including the latest proceeds we can comfortably meet these requirements and in fact we’re looking for additional acquisition as we have more news for you over the next couple of months. We’re very optimistic for the next two, three years and with the largest enhanced quality LPG fleet we’re looking forward to the future. We have now reached the end of the presentation. We’d like to open the floor for your questions. So please operator open the floor. Thank you.

Thank you, sir. (Operator Instructions) So your first question comes from the line of Justin Yagerman from Deutsche Bank. Please ask your question.

Hi, this is Taylor Mulherin on for Justin this morning. How are you?

Hi, Taylor, how are you?

Good. Thank you. I wanted to start with your thoughts on, on your continued growth goals for your fleet. And wanted to see if you could provide a little bit of insight into which sized vessels you’re finding most attractive at this time whether it’s sort of the same sized vessels that are in your fleet at the moment or whether you see StealthGas as a potential player in kind of the medium sized let’s call it LPG carrier space as you mentioned at certain points in the past?

Yes, very good question. As we’ve discussed before our core business is the pressurized business where we are leaders in and that will be our focus for now and the future. Of course we see opportunities in other segments but of course we can have synergies between the medium sized ships and the smaller ships and we don’t – of course we don’t avoid any opportunities, see if we find the slightly larger ships or different types of ships i.e. semi-refs or ethylene ships smaller semi-ref ships that we know it’s a very attractive type of vessel right now because 50% of the fleet is over (20) years of age. Of course we will move in ideally if we had the luxury awarding any ships we like which we don’t because the yards are nearly all full we would go for four to six more eco pressurized ships, six to eight small semi-ref ships when I mean small I mean 4 to 8,000 cubic meters and one or two medium sized ships to complement our business because a lot of the charters we speak to prefer to have one company to do the whole transportation leg meaning the intercontinental part of the voyage and the local distribution when having to go to put with separate companies to do their whole distribution from their source let’s say U.S. Gulf to the last small port in China for example.

Makes sense. And just to get a quick update on some of the older ships in your fleet. Is that something that you just plan on addressing sort of in a ship-by-ship basis as they come off with the charges with the run rate now or do you have more of a strategy laid out for them as a group basically I think last quarter we asked could these be used to fund acquisitions or do you just plan on sort of chartering them out as long as somebody will take them it’s sort of whatever rate is available?

I guess it depends on the numbers, Taylor. If we get a nice offer from somebody that wants to buy some of them of course we’ll do it because sooner or later their ships must go. If on the other hand the late – let’s firm more and we can fix them out and make a nice return because don’t forget some of them are debt free and some of them have very little debt on them again we’ll fix them out. As you know Q2 and Q3 we got a lot of complaints about those ships. In Q3 we were very, very happy by the end of the Q3 but to fix them on periods. We were surprised that charters who are taking 23, 24 year-old ships on charter but it happened and that shows a signal to market. All of the ships that are starting to come out and later in the year of course we’ll have to re-examine our options.

Right. And then my last one is more of a high level question. But I was thinking about given your size in the market that you plan combined with your acquisition strategy. Is there any chance you could be driving yourselves into a little bit of an overcapacity situation over time just in terms of the overall market? And then along those lines could you just give an update of what you think your market share percentage is right now?

Yes, actually very clever comment, I agree with you, the answer is yes. If we were to order too many ships we would be shooting our own foot. That’s why I think when we get all of the newbuildings and we’re at about 25% market share we shouldn’t aim for more than 30% I think that’s a very, very sizeable market share. It would be nearly one-third of the global market. And that’s why we’re looking at some other LPG sub-segments very close to what we’re doing, small semi-refs for example that have the same characteristics as the pressurized segment i.e. few players steady terms, steady rates, old fleet but we can invest some of our funds and make very good returns and maybe in sometimes, some cases better than some of the pressurized ships.

Great. Thanks so much for your time.

Thank you.

Your next question comes from the line of Jon Chappell from Evercore. Please ask your question.

Thank you. Good afternoon, Harry.

Hi, Jon.

Okay. So my first question if we look at 2013’s results versus 2012 you had a modestly bigger fleet, you talked very favorably about the supply demand fundamentals. If you look at the supply demand chart it was net more demand than capacity yet. If we look at Slide 8 the TCE rates for your fleet on average declined year-over-year almost every single quarter. Can you just give a little bit of insight as to why your segment in particular had some year-over-year deterioration of rates and then what gives you the optimism to forecast the modest growth that you have for 2014 and 2015 in that segment?

Yes, very good comment. I think we’ve discussed it quite extensively. If you take out the eight or nine ships that we consider old anything that is above 17, 19 years of age then you would see an increase in the rates. But fortunately or unfortunately this is the fleet, it has some older ships, so obviously when we announce results it has to be mixed and we cannot do – we cannot split the fleet in various segments. And Q2, Q3 this year was bad because of those ships, they were spot in a time when in the summer to them (indiscernible), we had a lot of idle time in order to fix on periods some of them we have to do an scheduled repairs which not only made them a more idle but also cost us money. But at the end of the day what counts is the ship got fixed which for me is a very big success because I told you when you have the option to take brand new eco-ships why would you take a 24 year-old ship. And two nobody will buy the StealthGas stock for the performance of the eight older ships. The people that will buy our stock are the people that want to see the performance of the company with the 17 or if we add more eco-ships that we’re taking – starting to take delivery from next month. So that’s mainly the reason I think.

Okay. So when we think about utilization of the fleet and also take a step down 2013 both fourth quarter and the full year, you have been able to charter some of these older ships I think they’re pretty short term in nature. Are you expecting the same type of seasonality and potential idle time for those older vessels as they roll off their charters in 2014?

I mean even for a brand new ship I wouldn’t bear to forecast one or two years down the line what would happen, but for a 24 year-old ship it would be a complete suicide if I did. So what I said before and I still say the same thing today is to be on the safe side. We estimate and I hope the analysts estimate the same a 25% discount from the modern ship. So if a 5,000 cubic meter modern ship we’re bearing today $10,000 then for a same-sized ship that is above 16, 17 years of age, I would put a 25% discount because obviously when the ships can open I don’t know if I’d be able to expand them or that we’ll have to spend sometime in the spot market. So I just don’t know if I’ll then we would have announced I guess.

Okay. That’s helpful. And I think in a prior call and maybe just a one-on-one call you kind of gave in the past you gave a range of 5,000, 3,500, 7,200 cubic meters. Could you just give us an update of where the market stands for those, so we have a basis for those asset classes?

It’s exactly what I’ve said before. We don’t make future forecasts which I’d say what the rates are for today. The rates for today as exactly what we had said before for a 5,000cbm ship which is the majority of our fleet and high 9s to $10,000 a day for a 3,500 equate in a half a day and for 7,000 cubic meters or above 11 to 11,500 a day.

Okay. And then my final one is you moved some of the dry-dockings up to 2013 which hopefully be beneficial for 2014. Just remind us what the scheduled dry-docking (indiscernible) time is for 2014 for the fleet?

We’re likely that so many ships that we have, we only have one dry-docking for 2014.

Only one, perfect, alright. Thanks a lot, Harry.

Thank you.

Your next question comes from the line of Michael Webber from Wells Fargo. Please ask your question.

Hey guys. This is Donald McLee on for Michael.

Hi, Donald.

You mentioned that there were signs of market improvement to begin in 2014 and I was just interested in kind of figuring out how that’s played out in the bifurcation of rates between your older vessels and some of the more modern carriers?

Sorry what was the second part of the question?

Just in terms of I guess kind of adjusted but what’s your expectation is in terms of the discount between the older tonnage and the newer vessels?

Yes, but that – that’s exactly the previous question. I would say 25%.

Sorry about that, I dialed in a little late.

No, no problem, 25% I would put a 25% on any ships that are above the 17 years of age.

Got you. And then just kind of more broader question, there’s been a ton of increased interest in LPG space and a bunch of orders in the market. How that affected prices first, you mentioned also what’s your private placement you’re going to potentially order incremental vessels, how does that affect prices and where current slot availability is?

Yes, clever question. Yes, Japan doesn’t have a lot of slots left. We were lucky that due to our May offer and we have the money and we moved very fast and booked 15 vessels as you remember by September 13 with from deliveries. Now obviously if we order more we’ll have to wait I guess until 2016 to get them. So and prices maybe will have moved up but not considerably I would say only 10%.

Alright, thanks. All my other questions are addressed.

Thank you.

Your next question comes from Urs Dür from Clarkson Capital. Please ask your question. Urs Dür - Clarkson Capital: Hey good afternoon guys.

Hi, Urs. Urs Dür - Clarkson Capital: Hi. Can you remind us I think you did mention on the call and regards to your newbuilding order book 17 ships, where you believe you’re on the funding for all of them I know you obviously raise money and you have debt facility. Just remind us it looks pretty fully funded to me?

Yes, it’s basically fully funded; we have 14 of the 17 vessels agreed. We’d say we’ll agree the last three within the next 30 days. So if that is done then I guess the equity remaining is less than BRL35 million and we have a BRL120 million in cash. So we cover that four times. Urs Dür - Clarkson Capital: And cash flows yes.

Excluding cash flows. Urs Dür - Clarkson Capital: Yes. And then it was also mentioned on the call so I don’t want to go over old stuff, but I think it went quickly for me. Just remind us of the current debt that is due where you are, what’s being extended, what’s going to be refinanced, what’s the status there, you mentioned some loan facilities that you are working on just again a reminder?

Okay. We only have 33 million this year. And I think we yesterday we did 11 million. So we have 20 million left, but again I think we will sort out in the next 30 to 40 days. Urs Dür - Clarkson Capital: Okay. Now it’s very clear. Everything else was asked and answered. Thank you very much guys.

Thank you. Urs Dür - Clarkson Capital: Yes.

Your next question comes from the line of Noah Parquette from Maxim Group. Please ask your question.

Hi, Harry.

Hi, Noah.

My question is about in terms of consolidation in your sector, so you are obviously the leader and as you look to increase your fleet, have you looked at all in terms of acquiring entire fleets from competitors. And I guess what is the value of being a market leader or just having market share usually in the shipping in sectors, the ship owners don’t have a lot of market power? Do you see any sort of power or value in that?

Yes. First of all, yes to your first question. We would love to acquire a fleet or a competitor if the price was right obviously and we like the assets of the competitor. Of course, why wouldn’t we? We have the financial power and the expertise to do it I think. So that’s yes. Now, about the question about the market share, of course, as you know well in shipping, in the majority of the segments, you are considered to have a fantastic market power if you have 5%, now a margin that we have 25%. I think the only company in the LPG business that has more market share than us, I think is Navigator Gas, but in a different, obviously in a different sub-segment. You have two big advantages when you have a big market share, one is that in certain locations, you might be the only one with available vessels and thus you can charge higher rates to charter those vessels, but applies to more exotic locations like the Middle East or the South America or West Coast U.S. or places that are not common for LPG ships. So we have seen that in the past. And number two, being the largest has another advantage at certain economies of scale is that you see private cargos and you get the contracts from oil majors that probably you wouldn’t get if you are a smaller player.

Okay. And then as you look at it, you talked about potentially ethylene ships, what’s the slot availability for that? Is that still under 2016?

It depends at which yards, you could go to China, which we don’t you could get a ship in ‘15, but if you wanted the quality and you wanted Korea or Japan, then I guess, yes, ‘16 if you are likely.

Okay. And then I just wanted to get your thoughts on how U.S. exports play out in your sector. I mean, how – what the timing of that is, how exactly it spills over in your ships? And how important is the expansion of the Panamax now for that?

Okay. Our ships don’t pass the panel. I mean, they are so small they will probably pass the (indiscernible).

No, no, I mean, but yes, in terms of the ships exporting the U.S. gas?

Yes, it doesn’t make a huge difference for us, but for the U.S. export, of course, it’s fantastic business for us for tourisms, because the U.S. Coastguard changed the regulation and now since last year, the (indiscernible) in the U.S. that were not allowed before. So suddenly a huge new market opened up for our fleet. So that’s one positive thing. And second is the more U.S. exports you have, the more ships you need for the distribution in a final destination. So if you see more and more exports leaving the U.S. and going to South America or Europe let’s say, then you need more of our ships there in South America and Europe to distribute these parcels into smaller ports. So for us, I guess is a very positive thing.

Okay, thank you.

Thank you.

Your next question comes from the line of Chris Snyder from Sidoti and Company. Please ask your question.

Good afternoon, Harry.

Hi, Chris.

I know you gave the current rates in the market that you guys are seeing now, but could you maybe just compare those to what you saw this time a year ago, just so we can kind of get a feel for how the market has trended over the last 12 months?

I would say the difference was only, I mean, the rates I just told you were 5% less than last year.

Sorry, you just said up 5%?

Less, not Q1, I am not talking about Q1, I am talking about Q3 and Q4. Q3 and Q4 ‘13 was 5% less than Q3, Q4 ‘12.

Okay, okay. And I guess my next question is that I think you said that you only have to need to put about $35 million in equity remaining into the new build program and obviously you guys have a lot of cash on hand and you are continuing to generate operating cash flow. So I mean is it safe to assume that you are going to order more ships or what else is going to – if not what else are kind of the plans for all this cash?

Yes, good question, Chris. So I think we have three options and probably we are going to do two of the three hopefully I guess. One is order more ships, two is buy second hand ships if we can find any, and three as discussed before, we might reinstate the dividend.

Interesting. And is there a timeframe on when you guys want to have the full fleet bike, are you comfortable taking delivery of ships into ‘17, I know there is not much availability in Japan and I know that’s where you want to order from. Is that something you guys are okay with?

We are okay with taking ships from Japan for any given year, even for 2020.

Okay, that’s it from me. Thank you.

Thank you.

Your next question comes from the line of George Burmann from J.P. Turner Co. Please ask your question.

Good afternoon, Harry. How are you?

Hi, George. My old friend.

Yes. Got a quick question, if you can comment the weakness of the Japanese yen in world currency markets, do we derive any profit from that?

Very clever question, George, well done. Yes, the benefit we got was that some of our contracts, new building contracts are in yen. And obviously, if the yen is soft, we buy the ships for cheaper price.

Great. And then last but not least, do you currently or do you expect this year 2014 to have any ships operating out of the United States?

That as you know very well, George, do not depend on me, that depends to the charters that they do business with, if for example, you have a ship charter to (indiscernible) wants to take the ship to Africa, they will take it to Africa. If they want to take it to Japan, they will take to Japan. I don’t get involved in the decisions I just charter my ship for a year. And then the charter takes the ship wherever they want, but just for your guidance as you are asking one of our vessels, which was trading in Europe is currently heading to the U.S.

Okay, great. Good luck for the future.

Thank you.

Your next question comes from the line of (indiscernible). Please ask your question.

Good afternoon, Harry.

Hi, Jeff.

With respect to George’s question, you indicated a weaker yen would be a positive to StealthGas, I am curious have you hedged at all and/or if not what would the potential dollar consequence of a weaker yen be?

Very good question. We have not hedged yet, because we have decided with the board to hedge when the yen gets to 105 versus the dollar. So I guess we have to wait and see if it gets there.

I still presume that we are where we are today and in the next year if it goes to 105, what’s the economic impact for us as shareholders?

Listen, there is not a huge impact, because the majority of our contracts are in USD, but there will be a small benefit for the contracts as I have told you that are in yen, but it won’t be a huge – there won’t be a huge amount, it would be in the tune of a couple of million dollars, I guess.

Fair enough. Next question, you have indicated publicly that you hired a few new senior level people, can you describe their backgrounds and why strategically we have added (indiscernible)?

Yes, of course. First, Stavros Papantonopoulos who spoke before me, ex-Goldman Sachs, he was with the shipping fund in the U.S. with very good studies, young guy, eager guy. He has been taking in, in the Financial Manager’s position. And as time passes by and he proves himself, then the management and the board likes him and if we all have good chemistry, he will be upgraded to the CFO position. Second is the new Chief Technical Officer, Dr. Andriotis, one of the brightest people we have seen. He has since the age of 19 he has been under scholarship with MAN B&W. This is the engine manufacturers. He has designed his own ships. He is a very experienced guy with ship designs and ship engines. And because we have a very big shipbuilding program, we thought we should have a very young and very knowledgeable engineer in the management and that’s why we hired Dr. Andriotis.

Thank you. Next question, with respect to the eco vessels, is it fair to assume that this doctor had some input into the engine design and specs of that vessel?

The doctor we were talking about, he was involved in the negotiation or the specs of all 17 vessels.

Thank you. And you indicated those eco vessels should operate more efficiently, can I assume is that either a) that means an improved margin for us or b) it means lower pricing for our customer?

Yes, you are correct, because the ships have better consumption and lower running costs. There is a dual benefit. If they are on time charter, then the charter has less fuel builds, but for us that we are doing the technical management, we have 5% to 10% less running cost on top of the savings of the fuel bill.

So in that scenario, we have an improved margin on the operation of that vessel?

If we take the vessel spot, then we get the double benefit. If the vessel is on time charter, then the charter takes the benefit of the fuel saving, but we take the saving on the cost side.

Fair enough. And last question, you have indicated that you have structured quite a bit of debt here, can you qualify on the debt that you are putting in place or using interest rate swaps, and if so at what frequency etcetera?

Not yet. We have agreed to take your debt, but the new debt will come online when the ships, the new ships come online. We are thinking we have this discussion today actually about interest rate hedges, because maybe we were going to see if interest rates going up. So we will discuss it with the board on everything, we should hedge some of it, we will hedge some of it.

So what I infer from that statement that to-date you haven’t hedged any of it?

We have hedged some of the old debt. We haven’t hedged any of the new debt.

Fair enough. Thank you very much. Good luck.

Your next question comes from Mark Rogers from Gagnon Securities. Please ask your question.

Hello, Harry.

Hi, Mark.

Question on the global fleet of Handymax LPG vessels, do you guys have an approximation of how many of those vessels are not only old, but don’t meet the new environmental control area acts along at least North American coast lines?

One minute, you mean – which regulations you mean, because there are lot of new regulations coming online over the next two to three years. So I don’t know which regulations you are referring to.

The regulations that require a vessel to burn either alternative fuels or a low-sulphur diesel again those markets?

Right, right. You have three options. You can have – you can burn LNG or LPG. You can have a scrubber or you can burn low-sulphur use. All the vessels can do the last one, but obviously none of the vessels can do the first two at least for now. Now, we are seeing new designs that are either the engines are dual fuel or the ships have scrubbers to clear the emissions.

Okay. So will you either be pursuing a low-sulphur diesel burn or a scrubber CapEx, in other words, will you have to invest in scrubbers for your boats going forward?

Yes, very good question. That’s the $1 million question. I think we should consult the charters, because they are the one paying the bills. So obviously, we cannot make a decision without the charters’ consent. And because the scrubber is quite an expensive piece of machinery, I think that for the beginning we will be burning the low-sulphur fuels.

Okay.

And of course, if we see this measure expanding to other places of the world, then I guess the scrubber is one of the ideas, yes.

Okay, thank you.

Thank you.

There are no further questions at this time sir. So please continue.