LNG (liquefied petroleum gas) shipping company, StealthGas (NASDAQ:GASS) delivered disappointing results for the three month and twelve month periods ended December 31, 2009, this morning, but softened the blow with confirmation that is would use some of its cash pile to commence a share buyback.
The Greek shipping company had warned several times in 2009 that it was expecting a difficult year, but nonetheless shares in the company fell 5% this morning after the company reported fourth quarter and full year results, and gave a fairly gloomy outlook for 2010.
Fourth quarter revenues climbed 0.7% to $28.4 million (Q4 2008: $28.2 million) while the net losses widened to $27.7 million, or $1.22 per share (Q4 2008: net income of $7.7 million, or 35 cents per share). In Q4 the company had a $1.4 million realized cash loss on interest rate swap arrangements, a $3 million unrealized non-cash loss on interest rate swap arrangements and foreign currency hedging arrangements, as well as a $9.9 million non-cash impairment loss on vessels held for sale. The Company also had a $10.75 million loss in consideration of the previously announced agreement to cancel the acquisition of the Stealth Argentina in addition to the already paid deposit.
Voyage and operating expenses in Q4 rose to £3.4 million and $10 million respectively compared to $2.3 million and $8.2 million in Q4 2008, which was blamed on a higher proportion of the company’s ships operating in the spot market, where voyage expenses including port, canal and fuel expenses are met by the company rather than the client.
Adjusted EBITDA for the three month period was a loss of $17.6 million, a decrease of $33.5 million, or 210.7%, from an income of $15.9 million for the three months ended December 31, 2008.
Before the non-cash items and the cancellation of Stealth Argentina acquisition, net income was $2.2 million, or 10 cents per share in Q4 2009, compared to a net income $7.8 million, or $0.35 per share in Q4 2008 - a decrease of $5.6 million or 71.8%.
The decline in operating net income after non-cash items is mainly attributable to lower revenues due to an increase in the number of waiting days between cargoes and lower charter rates being obtained in the spot market, as well as increased costs mainly in voyage expenses as a consequence of an increase in the number of ships operating in the spot market compared to the same quarter in 2008.
Full year results from the company were much the same, with revenues holding up but income falling sharply. For the full year ended 31 December, StealthGas posted a basic and diluted loss per share of 60 cents compared to a basic and diluted earnings per share of $1.35 in 2008.
An average of 42 vessels were owned by the StealthGas in 2009, earning an average time-charter equivalent rate of approximately $6,727 per day (2008: 38.6 vessels; $7,588 per day).
Harry Vafias, CEO of StealthGas put the results into context:
In our press release for the first quarter of 2009 I stated that 2009 and probably beyond would be very challenging. This proved to be the case last year and as we begin 2010 I believe it will continue to be so at least until the latter part of this year.
On a more positive note, and one that will likely catch the attention of some investors, the company reported cash and cash equivalents of $44 million at year end, equal to almost one-third of the company’s current undiluted market capitalisation. SteathGas, though confirming it would not be reinstating its dividend, has announced that it would be buying up to $15 million of its stock back, which may provide some support to the share price.
I expect 2010 to be in the main also a challenging year, but at the current relatively low spot charter levels the Company is still comfortably generating enough cash to meet all of its other obligations and debt service.
Disclosure: No positions