StealthGas, a US-listed owner of small and midsize LPG carriers, posted record profit for a second consecutive year as vessel sales and a huge debt cut boosted revenue and reduced costs.
Net income of $51.9m in 2023 beat the 2022 record of $34.3m.
The sale of eight smaller and older vessels not only led to $7.7m in financial gains but helped lower operating expenses — which would have dropped further were it not for inflationary pressures early in 2023, according to company earnings on Wednesday.
The Athens-based company also improved its bottom line by massively pre-paying loans. Cutting debt by 55% last year to $123.5m at the end of December helped reduce interest and finance costs by 18% to $10m.
In a time of robust but volatile markets, StealthGas “did not focus on growth” in 2023 but threw “some sound policies as well as opportunistic plays” into its policy mix, chairman Michael Jolliffe said.
This included “taking advantage of the market and securing more period charters — currently having over $200m in contracted revenue — selling vessels as asset prices were rising, paying down debt as interest rates were rising … and buying back stock”, he said.
Since 21 November, StealthGas has extended existing period charters or concluded new ones for 11 of its ships, including four held in joint ventures with investment partners.
Just two of its 27 fully owned and six partly owned ships are in the spot market.
‘Solid revenues’ predicted
StealthGas began 2024 in a similar vein.
In April, it expects to book a gain from the “highly profitable” sale of its 34,500-cbm joint venture vessel Eco Ethereal (built 2010) — the charterers of which are about to exercise a purchase option.
The Eco Ethereal is worth $36.75m, according to VesselsValue, but StealthGas spent about $25m to acquire it four years ago.
StealthGas replaces outgoing tonnage with incoming, larger LPG newbuildings.
“Our intention is to keep a diversified fleet and seek opportunities to replace smaller ships with larger ones,” CEO Harry Vafias said in a post-results conference call on Wednesday.
StealthGas took delivery last year of the 40,000-cbm Eco Sorcerer and Eco Merlin (both built 2023). The 40,000-cbm Eco Oracle and Eco Wizard (both built 2024) joined in January.
The new, larger vessels “should support profitability this year”, Jolliffe said, adding that the beginning of 2024 “looks promising as the market for our vessels remains firm” and “barring any extraordinary events we should expect solid revenues in the current quarter”.
The Red Sea crisis does not affect StealthGas directly, as it operates its vessels in regional trades and they rarely transition from East to West or vice versa.
One vessel due to deliver an Asian cargo in Europe will sail around Africa, Jolliffe said.
One-tenth of shares bought back
StealthGas does not distribute dividends but buys back stock.
It announced on Wednesday that it repurchased 2.01m shares during the fourth quarter.
That brings the number of shares it has bought back so far under a $25m repurchase programme to 3.9m worth $19.1m — equivalent to more than 10% of outstanding stock.
Shares closed trading at $6.54 on Wednesday, giving the company a market capitalisation of $231m, compared with a net fleet value of $504m at the end of December.
“We continue to be a sound, still undervalued investment,” Jolliffe said.
About a year ago, StealthGas shares stood at around $2.50.
