StealthGas, Inc. (NASDAQ: GASS) Q2 2025 Earnings Call | 08/25/2025

StealthGas, Inc. reported its Q2 2025 financial results, achieving its second-best quarterly profits ever, driven by record revenues and strong operational performance. The call featured Chairman Michael Jolliffe, CEO Harry Vafias, and CFO Konstantinos Sistovares, discussing financials, market conditions, and strategic updates.

Key Financial Highlights:

• Revenue: Q2 revenues reached a record $47.2 million, up 13% from $41.8 million in Q2 2024 and 12% from $42 million in Q1 2025. Six-month revenues hit $89.2 million, also a record.

• Net Income: Adjusted net income was $21.7 million, up 35% from Q1 2025 but down 20% from Q2 2024 due to a prior-year vessel sale gain. Q2 EPS was $0.59 (adjusted) and $0.55 (reported).

• Operational Income: Q2 income from operations was $19.7 million, up 22% year-over-year, marking a record for the fully owned fleet.

• Expenses: Operating expenses were $12.7 million, up 1.5% year-over-year, below the 4% increase in fleet days.

• Debt Reduction: Repaid $86 million in debt in 2025, including $32 million in Q3, achieving zero debt for the fully owned fleet by July. Total debt repayments since 2023 reached $348 million.

• Balance Sheet: Cash and restricted cash stood at $87.3 million as of June 30, 2025, after $19 million in Q2 debt repayments and $8 million net for joint venture (JV) vessel acquisitions. Shareholders’ equity increased 5.7% to $662.2 million.

• Cash Flow: Operational cash inflow for Q2 was $25 million.

• Share Repurchase: Spent $1.8 million on buybacks in 2025, reflecting confidence in undervalued stock.

Operational and Strategic Updates:

• Fleet Employment: Secured 70% period coverage for 2025, with $150 million in future revenues locked in through 2027. Concluded five period charters in Q2 (four one-year, one three-month). Four vessels remain in the spot market, excluding the damaged Echo Wizard.

• Echo Wizard Incident: In July, the LPG carrier Echo Wizard was damaged by external explosions while loading ammonia in Russia. The vessel, contributing ~8% of 2025 revenues, is off-hire pending repairs. Temporary repairs are expected to allow departure in a month, with permanent repairs planned. Insurance has been notified.

• S&P Activity: Sold one vessel in Q2 and agreed to sell another (Gas Elixir) later in 2025. Acquired full ownership of two JV vessels in June, leaving one vessel under JV ownership.

• Fleet Geography: Over 70% of the fleet now trades in Europe/Mediterranean, up from prior calls, due to higher rates west of Suez. Only two vessels remain in the East, reflecting a strategic shift to capitalize on rate premiums.

• Dry Dockings: One vessel dry-docked in Q2, with two more scheduled for 2025, conducted in higher-cost Western facilities.

• Asset Quality: Emphasized high-quality, Japan- and Korea-built vessels, with no Chinese-built ships in the fleet.

Market Outlook:

• LPG Market: Global LPG exports grew 6.6% in H1 2025, with U.S. exports increasing despite Q2 softness. Terminal expansions (e.g., Enterprise, Energy Transfer) and Middle East projects support demand. China’s LPG imports rose 6.7% in May, while India plans to source 10% of imports from the U.S., potentially boosting demand.

• Shipping Market: Smaller vessels show an East-West rate divide, with firm European rates and softer handy-size rates. MGC rates softened in Q2 but are firming, supported by a stronger VLGC market. The order book remains slim for handy sizes, with limited 2025 deliveries, but MGC deliveries increase next year.

• Trade Frictions: Q2 uncertainties, particularly around ethane export licenses, eased by July. Long-term Chinese demand is expected from PDH plants, with 27 million tons capacity by year-end.

Future Expectations:

• Despite the Echo Wizard’s downtime, StealthGas anticipates strong chartering activity in Q4 2025 as the market exits the seasonally weaker summer. The debt-free status enhances cash flow and strategic flexibility for potential vessel replacements or acquisitions.

• The company remains optimistic about LPG market fundamentals, leveraging high period coverage, premium trading regions, and high-quality assets to drive growth.