Ladies and gentlemen, thank you for standing by, and welcome to the StealthGas Third Quarter and Nine Months Financial Operating Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Thursday 21st of November 2019. I would now like to hand the conference over to first speaker today, Mr. Michael Jolliffe, the Chairman of StealthGas. Thank you. Please go ahead, sir.

Thank you very much indeed. Well, good morning, everyone. And welcome to our third quarter 2019 earnings conference call and webcast. This is Michael Jolliffe, the Board Chairman of StealthGas. And with me on the call is our CEO, Harry Vafias; and our Finance Officer, Fenia Sakellaris, who will later on discuss our financial performance. Before we commence our presentation, I would like to remind you that we will be discussing forward-looking statements, which reflect current views with respect to future events and financial performance. At this stage, if you could all take a moment to read our disclaimer on slide two of this presentation. Risks are further disclosed in StealthGas filings with the Securities and Exchange Commission. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in U.S. dollars. Slide three summarizes the key highlights of the third quarter of the year that we released today. Although the third quarter was soft in terms of seasonal aspects and even though the weak spot market in Asia persisted, we managed to achieve an outstanding operational utilization of 98%. Therefore, our revenues increased within the limits of market conditions. In spite of our efficient operational approach, the weak spot earnings hindered our profitability once more. In addition, this quarter, we also incurred heavy one-off charges, mostly of a general and administrative nature. Nevertheless, the signs of our segment's improvement are more evident than ever, given the charters have become more eager in concluding longer period contracts at rates favorable to owners. In this environment, we managed to increase our period coverage for the remainder of 2019 to 88% and position ourselves strongly for 2020 as well. Concerning our sale and purchase activity, we finalized the sale of yet another middle age, small LPG…

Thank you, Mr. Jolliffe, and good morning to everyone. I will continue the presentation focusing on our financial performance for the third quarter of 2019. This quarter, we managed to significantly enhance our fleet utilization. However, as the spot market in Asia was weak in terms of rates, this improvement was not reflected in our profitability. In addition, this quarter, our results were burdened by one-off general and administrative costs. Let us move on to slide seven where we see the income statement for the third quarter of 2019 against the same period of the previous year. Voyage revenues came in at $36.6 million, marking a $6 million decrease compared to the same period of last year. This contraction in revenues was expected due to the strategic reduction of our average owned fleet by nine vessels, one less charter-in vessel and relatively low revenues stemming from the spot market. Voyage costs amounted to $5 million, marking a 15% decrease compared to Q3 2018, as a result of spot das reduction by 21%. We need to note that compared to the second quarter of 2019, our voyage costs were higher due to commercial of high decline in conjunction with higher fuel prices. Based on all of the above, our net revenues for the period were $31.6 million. Running costs of $12.3 million marked about 21% decrease compared to Q3 2018. This decrease in cost was mostly due to our average owned fleet reduction by nine vessels and the receipt of an insurance claim credited to our OpEx. It’s quite positive to note that the decline of our OpEx was as a percentage far higher than our revenue reduction due to our fleet decline. General and administrative costs for which we usually do not incur heavy charges, increased compared to the same…

Let’s proceed on slide 11. Global LPG trade looks promising, as going forward LPG demand, particularly in Asia, is bound to increase. As per research done by DNB, LPG demand for the top four Asian importers Japan, Korea, China and India, will increase during the period from this year until 2021 with a compounded annual growth of 8%. The new PDH plants coming on line in China and South Korea will mostly drive this demand. Overall, it's estimated that worldwide demand from PDH plants will increase in the coming years. Focusing on Europe, propane demand will increase due to the new PDH plants planned to be operational within the next three years in Poland, Turkey and Belgium. So, broader demand side is bound to stand strong. Looking at the supply side, following the 25% tariff on U.S. LPG that was levied in August 2018, China’s LPG imports from the U.S. gradually declined. From importing 14% of U.S. LPG volumes in 2017, Chinese LPG imports, fell to 9% in the first half of 2018, 5% in second half 2018, down to 1% in the first half of 2019. In spite of this decline, the share of U.S. exports heading to Northeast Asia has remained steady at about 50%, meaning that in practice trade patterns altered without affecting broader trading volumes. On slide 12, we see that during 2019 rates for small LPG shares remained almost flat, both in East and West. The Western spot market experienced relatively normal summer but the first part of the fall was very quiet due to several refiners in Northwest Europe being down for an extended maintenance period in preparation for the IMO fuel switchover. This resulted in a weak September, October period. But the market has since then improved again, and now going forward, we…

Thank you, Harry. Our performance in the third quarter of the year improved to an optimal level in terms of fleet efficiency, as reflected in our operational utilization of 98%. Although we manage to contain our operating costs at moderate levels, the persistently weak earnings stemming from the Asian spot market did not allow us to enjoy a profitable quarter. We feel however that should market conditions improve as they seem to have, based on the 13 period charters and charter extensions we managed to conclude during the last couple of months, our profitability will be enhanced. Indeed rates for all our newly concluded charters in each of our operating segments are at higher levels. We have 53% of our fleet base secured for 2020 with a $138 million of secured revenues for all subsequent periods. Therefore, there is plenty of upside potential. The intensification of period charter activity during the past couple of months may be a positive sign that the market situation is in fact turning including in Asia and we are eager and well-positioned to take advantage of this opportunity. We have now reached the end of our presentation. And we would like to open the floor for your questions. So, operator, please open the floor. Thank you.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Randy Giveans from Jefferies. Thank you. Please go ahead.

Good morning. This is Chadd Tribo on for Randy.

Hi.

It looks like utilization increased to 98%, which is above our expectation. So, now that we’re more than half way through the quarter, what do you expect utilization to be in 4Q?

A bit of a difficult question. I would say, the goal would be to be above 95%.

Okay. Thank you. That helps. And then, now looking at the two vessels you recently purchased by the JV. What was the reason for entering those two new asset classes? And then, do you think there is any opportunity to acquire some vessels below the 7,000 cbm level?

Are you referring to the large vessel and 11K new building?

Yes.

This -- only one was bought by the JV, the larger should -- the 38,000 cubic meter. The 11,000 new building was brought only StealthGas.

Okay. So, can you kind of speak on the reasoning for entering into the larger vessel class to the JV? Do you look to do that in the future or do you think that was kind of the opportunistic thing?

Listen, I mean, we cannot foresee the future. We saw a ship, which was in extremely good condition for its age. We saw a price, which we thought was very good value for the age and size of the ship. And we decided to split the risk by buying it through the JV, thus sharing the equity contribution with our JV partners. Up to now which has proven a very clever decision because already the value is up by couple of millions, since July. And obviously, the rates for the MGCs, if you’re following them, is quite up the last three to four months. The 11K, because as you know, we are operating in the whole spectrum of pressurized ships, the Board believes that we cannot not be in a specific sub segment of the characterized market. And we found the opportunity to buy a ship from a top shipyard with top specs of equal technology at a fair price, and that's why we did it.

Okay. Thank you. So, now focusing on share repurchases, it seems like your preferred use of cash has been kind of the second hand acquisitions, as you talked about. So with that, how did you decide on the $1.4 million of share repurchase to-date? And then, should we expect a greater degree of purchases 4Q, 2020 as earnings are expected to improve?

The $1.4 million spent on shares has nothing to do with what we want. It’s the amount allowed by the rules of the SEC.

Okay. And then…

We will continue buying back stock. I think, the Board has approved up to $10 million for us to spend. So we are -- we have spent already 15% of that.

Okay. Thank you. And then, my final question, do you have any updated plans on your seven vessels that are over the age of 17 years, could be sold in the coming quarters? If you kind of speak to that that would be great.

Yes. I mean, generally speaking, as you have seen in the past, we don't like keeping very old ships for a very long time. We sold a very big amount of old ships last year. Some of the ships are fixed. So, if they're fixed and they’re earning a good freight, they're not number one priority to be sold. If they’re trading spot, which means they are earning less and are facing idle time, then of course they're bigger candidates to be sold. Obviously, for the buyers to come and pay with prices, they need to see first better trading environment. So, if indeed Q4 or Q1 prove to be better quarters for the pressurized ships, both East and West, I'm sure we'll find buyers for a couple of them. Yes.

Your next question comes from the line of Lance Gad [ph] from the Gad [ph] Foundation. Please ask your question.

I had a question. Could you give us some information as to what we will have to spend to have our ships comply with the 2020 regulations? Could you give us some color there?

Do you mean for the emissions -- the new emissions laws?

Yes, please.

Yes. As you know, in order to comply with these regulations, you have a choice of two things. One is to feet a scrubber, which depending on the size of the ship costs around $2.5 million to $3.5 million per ship, or you can do nothing and just buy specialized fuel with less sulfur. The companies that manage big ships that have big consumptions of fuel, a lot of them opt for scrubbers because they can repay the scrubber down quite fast. We have small ships with very small consumptions. Therefore, fitting a scrubber is not -- doesn't make economic sense. So, except for one ship that we have fitted already a scrubber, all the rest of the ships will be buying compliant fuel, and therefore, we don't need to spend anything on top to fit any new technology. Don't forget that the majority of our fleet is on time charter or bareboat. Therefore, the cost of buying the compliant fuel is for the charter’s account and not StealthGas’ account.

Great. Also, I had one comment about our website. I find it difficult to get the presentation that you're talking about, the number of pages. I don't see how you get that on the website. And I also find it difficult where you use this yellow -- a yellow color; it becomes very difficult to read. I'm concerned that it's not particularly investment friendly.

Lance, thank you for that. I have not personally designed the website, as you can understand. But, we will look into it and hope to make it more readable for everybody.

And how do you get the presentation that you've been talking about? I would think there's no easy way? How do you get it on the website currently?

You go to the tab, which is named Investor Relations and then you see the quarter that we are talking about.

Right. I get that. I get the press release, but I don't get the pages. But, anyway, okay. Thank you.

Thank you, Lance.

[Operator Instructions]

I see there is no further questions. So, Mr. Jolliffe can give his concluding remarks.

There are no further questions at this time. Please continue.

Right. We'd 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 fourth quarter results in February. Thank you all very much. Bye, bye.

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