StealthGas Inc. — FY2023 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the supplied filing text does not provide clear Q4-only financial results. Financial statements are prepared under U.S. GAAP and denominated in U.S. dollars.
Business context
StealthGas provides international seaborne transportation of liquefied petroleum gas (LPG). At December 31, 2023, it operated 27 owned vessels and held interests in six joint-venture vessels. Its average owned fleet declined to 29.3 vessels in 2023 from 34.8 in 2022. The company accounts for its joint ventures under the equity method. Its fleet manager, Stealth Maritime, is affiliated with the CEO’s family.
Financial and operating performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $143.5 million | $152.8 million |
| Operating income | $45.8 million | $32.6 million |
| Net income | $51.9 million | $34.3 million |
| Basic / diluted EPS | $1.38 / $1.37 | $0.90 / $0.90 |
| Operating cash flow | $77.4 million | $66.6 million |
| Capital expenditures for vessel acquisitions and improvements | $0.1 million | $24.2 million |
| Net cash from investing activities | $111.3 million | $(17.3) million |
| Net cash used in financing activities | $(174.2) million | $(25.9) million |
- Revenue fell about 6%, principally because of the smaller fleet, despite improved charter rates. Average time-charter-equivalent (TCE) daily rate rose to $12,334 from $10,415; fleet utilization was 98.8% in both years, while operational utilization improved to 96.6% from 93.5%.
- Operating income rose about 40% and net income about 52%. Results included a $7.6 million gain on vessel sales and $12.3 million of equity earnings from joint ventures. The company also recorded $2.8 million of impairment losses. General and administrative expense rose to $5.3 million from $3.4 million, mainly due to higher stock-based compensation.
- Voyage expenses decreased to $13.2 million from $22.2 million, mainly reflecting fewer spot-market days and greater period-charter employment. Vessel operating expenses declined to $53.1 million from $54.9 million, partly offset by inflation and maintenance cost overruns.
- At year-end, cash and cash equivalents were $77.2 million; restricted cash was $6.6 million, including $5.9 million classified as non-current. Short-term investments were nil, compared with $26.5 million in 2022. Current assets were $120.8 million and current liabilities $38.7 million.
- Gross debt was $124.1 million ($123.5 million net of deferred finance charges), down from $279.0 million in gross debt at year-end 2022. Cash, cash equivalents and restricted cash totaled $83.8 million, implying approximately $40.4 million of net debt on that basis. Fifteen of 27 owned vessels were debt-free at year-end; 18 were debt-free as of April 1, 2024.
- Average interest rates on debt, including margins, increased to 7.07% from 4.20%. Interest and finance costs declined to $10.0 million from $12.1 million as debt repayments more than offset higher rates. A one-percentage-point increase in SOFR would have raised annualized interest expense by approximately $1.3 million at year-end debt and swap levels.
Material changes and financing
- During 2023, the company repaid $154.9 million of loans and repurchased $19.1 million of stock. Vessel-sale proceeds were $80.1 million. Total comprehensive income was $47.5 million, compared with $42.5 million in 2022; 2023 included a $4.5 million other comprehensive loss, mainly related to cash-flow hedges.
- The company spent heavily on deleveraging while reducing its fleet through sales. Two vessels classified as held for sale at year-end were sold in January 2024 for approximately $34.9 million, with no related debt repayment.
- Two newbuilding vessels were delivered in January 2024. Their remaining installments totaled $93.6 million and were paid on delivery; the company drew approximately $70 million under a new eight-year credit facility. In February 2024, it voluntarily repaid a further $29.3 million of debt.
- The filing reports $16.9 million of scheduled 2024 principal payments at December 31, 2023, before the subsequent financing and repayment activity. It also reports estimated future interest payments of $15.5 million on then-outstanding debt, net of swaps.
- As of April 1, 2024, 68% of anticipated fleet days, including JV vessels, were covered by period charters for the remainder of 2024 and 24% for 2025. One vessel was in the spot market. A JV vessel was delivered to its new owner in April 2024 following exercise of a charterer purchase option.
Outlook, risks and unusual items
- Management described small and Handysize LPG-carrier prospects as favorable, citing limited near-term orderbooks; it noted a larger MGC orderbook from 2025 onward. Charter rates had improved in 2023 and reached multi-year highs in early 2024, but the filing gives no company earnings or revenue guidance.
- Management believes internally generated cash flows will fund operations, working capital and debt service for at least 12 months. At December 31, 2023, the company reported compliance with all debt covenants. Covenants include leverage, vessel-collateral coverage, interest coverage, minimum cash balances and restrictions on dividends and share repurchases.
- Key exposures include cyclical charter rates, spot-market volatility, customer concentration, vessel values and impairment, floating-rate debt, and reliance on charterers and the affiliated fleet manager. The three largest customers accounted for 43.4% of revenue in 2023, up from 25.5% in 2022; two customers individually exceeded 10% of 2023 revenue.
- Geopolitical and route risks include the war in Ukraine, the conflict in Gaza, and Houthi attacks in the Red Sea and Gulf of Aden. The company continued using the Suez Canal and disclosed risk of vessel attack, route disruption, higher insurance costs, and possible coverage disputes.
- Environmental rules, including EU emissions trading from 2024 and IMO efficiency and emissions standards, may increase compliance costs or affect vessel competitiveness. All but one vessel lack scrubbers; the company says it had no committed capital expenditure for scrubber installations.
- Joint ventures had $34.0 million of outstanding loans at year-end, for which StealthGas provided guarantees; one JV loan of $27.0 million was guaranteed up to the company’s 51% ownership interest, with a counter-guarantee from the partner for its 49% share. Management assessed the possibility of default as remote and recorded no provision.
- No material litigation was reported. The auditor issued an unqualified opinion on the financial statements and on internal control over financial reporting; management also concluded disclosure controls and internal controls were effective. The auditor identified vessel impairment and assumptions about future charter rates as a critical audit matter.
- The company has not paid a common-stock dividend since 2009. As of April 1, 2024, it had repurchased 3.93 million shares for $19.4 million under a $25 million authorization, leaving approximately $5.6 million authorized.
Most important facts for investors to verify
- Whether charter rates, renewals and utilization sustain the higher TCE rates as a substantial number of charters expire during 2024.
- Post-year-end debt, cash and restricted-cash balances after the $70 million borrowing, $29.3 million repayment, vessel deliveries and vessel sales; also confirm remaining maturities and covenant headroom.
- The quality and duration of charter coverage, customer concentration and counterparty credit, including the effect of JV vessel sales and purchase options.
- Vessel market values and the assumptions behind impairment testing, particularly future charter rates and the estimated $12.2 million aggregate excess of carrying values over charter-free market values for eight owned vessels.
- Potential cash and earnings effects of emissions regulations, geopolitical route disruptions, floating interest rates and JV loan guarantees.
- Related-party arrangements with Stealth Maritime and affiliated entities, including management fees, newbuilding transactions and the CEO’s approximately 29.2% ownership and voting influence.