StealthGas, an owner of more than 30 small to mid-sized LPG carriers, posted its biggest quarterly profit ever on Wednesday, following the first in what it expects to be a string of profitable asset sales this year.
The Harry Vafias-led outfit reported a net income of $16.8m for the first three months of the year — more than twice the $7.7m the company notched up in the previous quarter and the $7.6m it earned in the first quarter of 2022.
Much of this profit derived from a $39m sale earlier this year of the 35,200-cbm Eco Evoluzione (renamed Fortune Gas, built 2010).
The deal, already reported by TradeWinds in March, generated a $13.9m profit. The biggest part of this — to the tune of $8.8m — accrued to StealthGas, which co-owned the ship alongside unidentified joint venture partners.
StealthGas expects to book more capital gains from ship sales in the coming quarters.
The company all but confirmed on Wednesday that it was indeed the seller of four small LPG ships acquired earlier this month by Petros Panagiotidis spin-off Toro Corp.
In its earnings announcement, StealthGas acknowledged having disposed of the 4,900-cbm Eco Czar, Eco Enigma and Eco Nemesis (all built 2015), as well as of the 4,900-cbm Eco Texiana (built 2020).
StealthGas didn’t disclose the buyer of the ships. However, these are exactly the four vessels that market sources identified as the ones that Toro said it was scooping up without naming them — for $70.7m in total.
StealthGas didn’t comment on the transaction price other than to say that it sold all four ships at a profit. The relevant gains will be booked in the results of the second and third quarter, depending on when exactly the vessels will be delivered to their new owners.
“The profitable sale of four vessels that we announced today will further boost our future results,” chief executive officer Vafias said on Wednesday.
StealthGas has sold several small LPG ships in previous quarters. The ships it sold before, however, were much older and were sold as part of a fleet renewal policy that will also see the company take delivery of a trio of 40,000-cbm newbuildings this year and next.
Largely covered
Profitable asset sales weren’t the only factor behind StealthGas’s record profit.
Robust gas carrier markets and the charter coverage of the StealthGas fleet contributed as well.
Despite a smaller fleet after a string of vessel sales over the past 12 months, income from operations increased by nearly a fifth year-on-year to $9.7m.
“We are reaping the fruits of the favourable market conditions and our sound business strategy and execution,” Vafias said.
The company's record quarterly profit comes hot on the heels of a record $34.3m annual profit in 2022, which was the highest reading since the company listed in New York in 2005.
StealthGas announced on Wednesday a fresh spate of nine medium- to long-term charters. These deals helped the company secure about 80% of fleet-day coverage for the rest of 2023 and lifted its contracted revenue backlog to about $115m.
This excludes the five LPG ships StealthGas co-owns in two separate joint ventures.
Shareholders seemed to be reacting positively to the results, with StealthGas stock trading nearly 7% higher in early New York trading, which gives it a market value of around $125m.
This, however, is still far below the company’s estimated net fleet value of about $620m as of end-March.
In order to attract investors, Vafias said on Wednesday that StealthGas “will make use of its liquidity to deleverage in a rising interest rate environment and return value back to our shareholders via a $15m share buyback”.
According to the company’s latest annual report, Vafias himself was the single biggest holder of the company’s common stock as of mid-April, with a 22.4% stake.
Glendon Capital Management featured next with a 15.3% holding. MSCD Management, Redwood Capital Management and TowerView LLC owned 9.1%, 5.5% and 5.2% respectively.
