Ladies and gentlemen, thank you for standing by, and welcome to the GASS Fourth Quarter and 12 Months 2019 Financial and 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. I would now like to hand the conference over to your first speaker today, Mr. Michael Jolliffe, the Chairman of the Board. Please go ahead.

Good morning, everyone. And welcome to our fourth quarter and full year 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 would all take a moment to read our disclaimer on Slide 2 of the presentation, I’d be grateful. 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 3 summarizes the key highlights of the fourth quarter and full year 2019 that we released today. The weak spot market in Asia with very low petchem cargos available persisted. However, we managed to achieve a strong operational utilization of 98%. Our results would have been stronger had it not been for various drydockings consequently an increase on our off-hire days of one owned and charter in vessel. Furthermore, we did position ourselves defensively amidst the difficult spot Asian market, committing in the spot market less than 16% of our voyage days compared to 18% for the same period of last year. With our new lease concluded period charters and charter extensions, we have now insured 66% of period coverage for the remainder of 2020 with approximately $135 million in contracted revenues up to 2029. This conservative stance against market conditions has proven to be our strongest company tactic, especially this year with the recent corona virus outbreak in China…

Thank you, Mr. Jolliffe, and good morning, to everyone. I will continue with the presentation focusing on our financial performance for the fourth quarter of '19. Indeed, we enjoyed the moderately profitable quarter achieved mostly by strong operational utilization, improved rates for most of our new period charters and a noticeable reduction in our finance costs. Unfortunately, the spot market in Asia became weaker leading to our revenue stemming from our spot operations to be even lower than the third quarter of '19, thus, negatively affecting our profitability. Let us move on to slide seven where we see the income statements for the fourth quarter of '19 against the same period of the previous year. Voyage revenues came in at $35.2 million, marking $3.5 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 seven vessels, one less chartered in vessel and relatively low revenue stemming from the spot market. It is noted that compared to third quarter of '19, our daily spot revenue was lower by almost $2,000. Voyage costs amounted to $4 million, marking an 18% decrease compared to Q4, '18 because of spot day reduction by 32%. Based on all of the above, our net revenues for the beard were $31 million corresponding to a net revenue margin of 88%. Running costs at $12.6 million marked about 14% decrease compared to Q4, '18. This decrease in costs was mostly due to our average owned fleet reduction by seven vessels. It's noted that this quarter we incurred the one off insurance costs addition in the order of $300,000 not expected to be incurred in the following quarters. General and administrative costs decreased compared to the same period of last year by…

Let's proceed now with Slide 10. Rising global LPG production and consumption appears relatively short in the years ahead and will continued to be backed primarily by U. S. exports on one hand and Asian imports on the other. The U. S. Asia trade stand strong as America turns into world's largest LPG exporter, producing about 2.2 million barrels per day in '18 to around 2.2 million barrels per day in 2019 with 2024 forecasting 2.6 million barrels per day. Chinese LPG imports will remain the key driver of LPG demand, mainly due to the PDH plants. The country currently operates eight PDH plants and this number is expected to nearly double by 2021. Other countries like India are getting increasing importance for LPG trade as with their government's initiative. LPG is substituting biomass as household fuel. From the beginning of ’19 out in November of the same year, Indian imports were up 23%. Although, LPG trade fundamental looks promising, there are certain risks such as the recent outbreak of the corona virus that may potentially disrupt the market. Some of these effects range from slower port operations, discharge restrictions and lower contact rates to broader economic slowdown in overall trade disruption. Indeed, during the past few weeks, all shipping segments from oil tankers to containers have been hit by the economic impact of factory shutdowns and travel restrictions implemented across China to control the spread of the virus. Should this situation be prolonged, it is estimated that Chinese LPG demand from 2020 will decrease by about 3%. On Slides 11, we see that during Q4 '19, rates for the majority of small LPG has slightly weakened. The western spot market fell to show the expected strong Q4 market. In Q4 '18, the spot market in Northwestern Europe in particular…

Thank you, Harry. 2019 was a successful and profitable year for StealthGas. Indeed, in 2019 and in spite of the persistently difficult spot market in Asia, we achieved an operational utilization of 98%, increased our daily time charter equivalent earnings and managed to significantly reduce our finance costs. All these added towards our improved profitability, which excluding non-cash items amounted to $4.3 million corresponding to an earnings per share of $0.11. In terms of our new projects and in an initiative to expand further across the LPG sector and accretively invest our cash in hand while sharing the operational risks, we took the strategic decision to form a second joint venture arrangement with an unaffiliated third-party to jointly acquire three second-hand 2010 built MGC vessels of an aggregate capacity of 105,641 cubic meters for a total cost of $80 million. Going forward, we feel confident for 2020. Our period coverage of 66% along with $135 million in contracted revenues coupled with improved market rates, particularly for our larger LPG vessels, signifies good times ahead. We are trading close to our all-time low share price and that might be an excellent entry point. In addition, the recent push into green investing might also benefit our company, operating modern Japanese build ships with minimal carbon footprint. We do recognize, however, that the recent corona virus may negativity affect seaborne trade and should this situation deteriorate and positive market fundamentals might be affected. We hope that this issue will soon be resolved, thus, allowing the market to flourish. 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 all very much.

Thank you [Operator Instructions]. The first question is coming from the line of Randy Giveans from Jefferies. Please go ahead.

So few questions, I guess starting with the joint venture. What was maybe the rationale forming a second joint venture and acquiring the three medium gas carriers? Is this the most attractive vessel size, or is that just the most attractive kind of asset price? And then also, are there opportunities to acquire ships below that 7,000 cubic meter size or you now solely focused on the handy or maybe medium-sized vessels?

As you know, we're trying to do anything that will boost our bottom-line and the returns to our shareholders. We saw that that the rates for the smaller ships over the last two, three years have gone up but not by big percentages, whereas the MGCs have gone up by quite significant percentages whereas their price has not gone up by the same respective amount. So in other words at the moment based on the earning capacity the value for money is better on a larger ship. Why would the JV? It's quite simple, because we're talking about a considerable amount of money, $80 million. Therefore, by doing JV, let's say, conservatively $40 million of debt that means $40 million of equity. Therefore, with a partner, you will only pay $20 million and have 51% equity stake in the three of those ships that potentially can earn up to $1 million a month each, which is a great boost to our profitability. Now about the vessel sizes, as you know, our core business is of small ships, so I cannot say that we don't look at small ships. We always have our eyes and ears open for more than Japanese built small ships. But in this particular case, that was the reasoning why we acquired three more MGCs and now have four MGCs in total.

You mentioned debt proceeds. You're expecting about 50% kind of net debt to capital needs -- $40 million…

And we want to be conservative. We would estimate between 50% and 60% debt. So let's say $45 million or something like as that on the three ships.

And then you mentioned that the 10 recently completed time charters were at attractive rates. Can you quantify this maybe increase? Obviously, spot rates have been on the rise. So just curious if the time charter rates have increased as well?

We don't give the specific numbers, as you know, plus the differences are quite significant between the smaller ships and the larger ships. The spot market in the east was actually quite bad. We are happy that all of our time charters were done at higher levels. The big, of course the big differences were on the 22K semi-ref ships. There we saw some significant differences from the last done charters.

And then two more questions I guess. We're focusing on the share repurchases. How did you decide on that maybe 230,000 shares during the fourth quarter totaling almost $800,000? Was that the most you could buy due to the kind of SEC rules? And should we expect maybe a greater degree in 2020?

The answer is yes. As you know, we are only allowed to buy a percentage of the daily share volume. And we are also not allowed to buy in during our closed period. And because of our very low daily share volume, this was what we were able to buy. We have asked the traders to buy as much as legally possible. And I think buying close to 800,000 shares is not that bad considering these parameters.

And then I guess just putting a few different things together. You're spending maybe $15 million to $20 million in equity for the three medium size vessels. At the same time, on Slide 14, your price per NAV is 20% and 80% discount maybe according to that table there. And obviously, your cash on hand and Michael was saying it seems like a pretty attractive entry point with this year's near all time lows. So any thoughts on doing a tender offer for a larger block so you don't have to comply with these kind of low trading liquidity issues?

The answer is, yes. We had this in mine with the Board at the end of ‘19. We were not obviously expecting the corona virus, nobody did. So that put a bit of a damper on our ideas. And obviously we continue with the buyback program as it is. We want to see how far this virus will go. I know obviously if we see that it is slowly, slowly slows down and the sport market slowly recover, then it’s another matter to be discussed in the next BOD.

And then lastly for me, if you can touch on a little bit more of that extension of Chinese New Year, the corona virus. How is that kind of impacting the small and even medium size LPG vessels? I'm looking at Slide 13 in your presentation. And it seems like downside even still $59 million, $60 million in EBITDA. Is that inclusive of kind of a prolonged corona virus impact?

As you know, this virus is a big unknown for everybody. We don't know if it will last one month or if it will last six months. We don't know the full effect it will have on shipping. We don't know how big the effect will be on LPG specifically. We don't know how many Chinese charterers and terminals will exercise a forced measure close canceling their obligations. We know nothing. What we know is that being prudent, like we have been always since the inception of this company, is always having the vast majority of the fleet on period charters. And as you see right now, this conservativeness and this defensive policy has actually worked and shielded us from the virus, because as you heard we only have three ships spot and therefore, three ships spot now, more will come as the year is progressing. But anyway, having 52 ships and having only three ships spot, I would consider a great advantage in this quite unclear market, let's put it like that.

Well, I hopefully by this time in May, I guess on your 1Q call, we should have some more answers than questions on corona.

Yes. And don't forget that because the weather improves and the temperatures are going up in spring and summer, we hope that the transmissibility of the virus will drop and therefore, it will slowly, slowly go away. I'm not a doctor. But anyway, this is what we've been told.

Next question is coming from the line Greg Weiss from Boston Partners. Please go ahead.

I've missed kind of -- I've been looking, you always have this chart on the fleet age and you have 26 of the fleet is above 20 years of age. But where are these ancient ships trading? Are there, what forced them into scraping? Are there special surveys or whatever? I mean, just puzzling. Have you learned from the crude side, usually above 20 years of age, especially with increased environmental, people won't -- blue chip customers won't trade these ships. So what's going on in your market?

Greg, as you know, that's a fair point. But you're forgetting one little difference that passing a special survey on a 20 year old crude ship might cost you $1 million, whereas passing a special survey on 20 year old LPG ship will cost you $300,000. So yes, it all depends on the market and also the water ballast costs. This is what would push more ships out. Indeed, as you say, it's exactly the same policy as with the tankers. The majority of oil majors and blue chip charters don't take ships over 15 years of age and the vast majority don't take ships over 20 years of age. But as with everything, there are smaller local charterers in India, Pakistan, Africa, China, South America and so on that will take a 20-year old ship or older if of course the money makes sense. So I think it's more a matter of market than a matter of oil major regulations or actual IMO regulations. If the market forced to levels where it doesn't make sense for these owners to keep these supposedly debt free ships running and they can find a younger ship to replace them with that will do it. Don't forget the water ballast is quite a significant investment it’s in excess of $250,000 to $300,000 additional cost. So suddenly your special survey will not cost $300,000, it will cost close to double that. So I'm sure that's something that these small owners with these very old ships will think about twice. Don't forget that we sold a lot of our older ships for further trading. So this secondary market actually help us make quite a lot of cash last year, so we shouldn't be that critical because if we didn't have that secondary market, our ships will be going for demolition at a much, much lower price than we fetched in the end.

Is it your expectation -- I mean, given your knowledge of your market and order book being so minimal. Is it your expectation we’ll have negatively fleet growth this year and next year?

We don't see many newbuilding orders, so that's obviously a positive thing. The only thing is in shipping, as you know well, when you start in a good market and suddenly the virus ends and everybody rushes back to import and export LPG, that might lead to a sudden boost in rates and that might lead to a sudden rush of newbuilding orders. Obviously, the good thing is that most of the big yards in China and Korea don't build those ships. So we have a bottleneck, a bottleneck protection here. But as we speak now and with the virus in full force, I would say yes. But nobody can foresee the future.

Thank you, Greg [Operator Instructions]. No further questions at this time. Please continue.

We would like to thank you so much for joining us at our conference call today, and your interest and trust in our Company. We look forward to having you with us again on the next call for our Q1 results in May. Thank you very much.

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