StealthGas, Inc. 2026 Q2 Earnings Call

Please go ahead. Good morning, everyone, and welcome to our second quarter 2026 earnings and conference call.

This is Harry Vafias, the CEO, and joining me today is, as usual, our Chairman, Mr. Michael Jolliffe, and Konstantinos Sistovaris from Investor Relations. Before we commence our presentation, I'd like to remind you that we'll be discussing forward-looking statements, which reflect current views with respect to future events and financial performance and are subject to material risks and uncertainties. If you could all take a moment to read our disclaimer on slide 2. Risks are further disclosed in our filings with the Securities and Exchange Commission. Let's proceed on slide 3 for an overview of the quarter and our strategy implementation.

While the market for the second quarter was relatively stable for the smaller ships and strengthening for the larger ones, our company managed to achieve revenues of $42.8 million, similar to the previous quarter, but somewhat reduced from the record of $47 million achieved last year. The company continued to generate superior returns, with profits of $17.3 million for the quarter, improving on the $15.9 million achieved in the previous quarter. Thus far in 2026, the performance has been very strong, reporting earnings per share of $0.46 for the second quarter and $0.89 for the first half, underlying the fact that the company stock is very attractive on a price-to-earnings multiple. Our focus has been on delivering on our strategic principles. In terms of our commercial strategy, that means keeping visible revenue stream and reducing our exposure to the volatile spot market.

Currently, 45% of the fleet calendar days are covered by the time charters, and total secured future revenues are $90 million. The company has also made prudent use of its capital by mostly paying down its debt. Over $350 million of debt prepaid over the last few years, and being one of the few public shipping companies having achieved zero leverage, while at the same time allocating funds for a share repurchase program and having spent about $21 million in buyback since 2023. As our share price has appreciated, we did not buy back any shares during the second quarter. It's also part of our strategy to sell older tonnage while the market is high in order to crystallize returns and improve the averages of the fleet. With 13 vessel sales, excluding JV vessels, since the start of 2023, that have amounted to approximately $170 million.

We have reduced the overall fleet from approximately 40 vessels at the start of 2023 down to 25 vessels. With the latest exits, the Eco Wizard, and just this week, the delivery of the Eco Royalty. We will continue to sell older and smaller tonnage, although the market for LPG vessels is not very liquid in that respect. This has also allowed us to raise cash and improve the liquidity of the company. As of June 30th, the cash position was $168 million. Since then, through our operational cash flow and especially the money received after the successful conclusion of the Eco Wizard insurance case of over $77 million. Currently, liquidity has grown to over $250 million. With our cash sitting at an all-time high, no outstanding issues, and the markets being firm, we are in a favorable position to deploy some of the liquidity.

We have always been patient and conservative in deploying funds. Our board is reviewing all the options with a focus on the long-term benefit of the company and its shareholders. On slide four, we see our fleet employment as of September. Chartering activity was relatively consistent over the past few months. We did conclude four new period charters of three months or longer. One of those was for two years, one for one year, and the other two were for six months extensions. That leaves four ships operating in the spot market, including two of the Handysizes. As we enter the winter months, we expect to find more opportunities to secure more time charters. Overall, we continue to maintain high period coverage, albeit lower than in the past.

As of September, for the remainder of 2026, we have secured 60% of the fleet days, bringing in about $50 million in revenues for the remainder of the year. For 2027, we have secured about $30 million in revenues. One year forward coverage stands at 45%. The total revenue secured for all future periods up to 2029 are about $90 million. This is slightly below where we would liked, but with the market being historically high and the uncertainty surrounding the geopolitical situation, some charters are hesitant to commit to longer-term business at historically high day rates. In terms of dry docking, five ships were scheduled during this year. So far, four of these were completed during the first half and one vessel remains to be dry docked in the remainder of the year.

Looking at the geographical allocation of the fleet, on slide five, our company mainly focuses on regional trade and local distribution of gas, while the larger ships mostly engage in intercontinental voyages like loading in the U.S. to discharge in Europe. We continue to position the majority of our fleet, two-thirds, west of Suez, particularly in Europe and the Med, where rates can be about 30% higher than in the East and with a more active spot market. The one smaller ship we had in the Far East, we decided to relocate west during the summer as it faced increased off-hires and is now trading in Northwest Europe. East of Suez, we only have one of our vessels remaining.

The larger vessel that was stranded for some time inside the Persian Gulf early in the summer when there seemed to be a lull in hostilities, that vessel managed to safely exit the Hormuz Strait. The ceasefire unfortunately proved to be brief, and now the passage is dangerous again as both sides target vessels going through. Yet, as we hear in the news, there are still corridors being used, and some vessels still manage to make this passage. I am now giving you over to Mr. Christovaris for the financial performance.

Thank you, Harry. Starting with slide 6, where we have a snapshot of the income statement for the second quarter against the same period of 2025. The second quarter was a very profitable quarter that would rank amongst the four best quarters on record, both in terms of revenue generation and overall profitability. However, when compared to last year, the reduced number of operational vessels in the fleet, as well as an increase in idle time for the three of the smaller vessels operating in the spot market, showed a reduction in revenues to the level of $42.9 million, which was same as the previous quarter, the first quarter of 2026. Voyage expenses were higher at $7.2 million, mainly as a result of increased bunker expenses and some additional insurance premiums related to the Persian Gulf. That would give a time charter equivalent rate of $15,710 per vessel per day.

Operating expenses were flat at $12.8 million for the quarter, albeit with a smaller fleet as there were cost pressures, particularly related to crew expenses. That being said, with an average of operating expenses around $5,310 per vessel per day, the company continues to run amongst the most efficient shipping operators in terms of cost structure. This quarter, only one vessel was dry docked towards the end of the quarter, so we may have some spillover next quarter. Another item that influenced the results this quarter positively was a small gain of $1.3 million from the S&P activity.

We also note that we benefited by an increase in financial gains of $1 million, as we saw both a reduction in interest costs and an increase in interest income compared to last year, as the company no longer pays any loan interest following the debt extinguishment and has considerably increased its cash balances. Net income for the second quarter was $17.3 million, 15% below the $20.4 million achieved last year. Earnings per share for the quarter were $0.46 on an adjusted and non-adjusted basis. The company continues to operate on a very high profit margin of 40%, meaning for every dollar of revenue is converted to $0.40 of profit. Looking at the balance sheet at the next slide, 7, as of June 30th, 2026, the most important point to consider is the fast growth in the company's cash position.

In the space of six months, the company grew its liquidity, consisting of cash and short-term investments by 70%, from $99 million to $168.3 million. This $70 million increase in the liquidity position was achieved through the sale of two small vessels and a $40 million improvement in operational cash flow. Vessels held for sale as of June 30th was $10 million, with the proceeds expected to boost the cash position in Q3. The book value of the 24 vessels in the fleet was $473 million, reduced by 3.7%. Current assets were steady at $81.5 million, with a large part, the $64 million being the book value and related expenses of the medium gas carrier, as this was resolved in the next quarter, and the company received all the proceeds and more based on the market values, and this will be moved to the cash in the next quarter.