67 WALL STREET, New York - October 7, 2012 - The Wall Street Transcript has just published its Transportation and Logistics Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: FMCSA CSA Regulations - Regulatory Issues in the Trucking Industry - Trucking Pricing & Capacity Dynamics - Retail and Industrial Transportation Demand - Truckload, LTL, Parcel, Rail and Intermodal - Capacity Constraints Result in Pricing Power
Companies include: StealthGas, Inc. (GASS) and many others.
In the following excerpt from the Transportation and Logistics Report, the CEO of StealthGas discusses the outlook for his company for investors:
TWST: Please start with a bit of a company history and an overview of the business today.
Mr. Vafias: StealthGas was founded by myself in 2004. In October 2005, we went public, selling approximately 55% of its shares at $14.50 apiece. In the summer of 2007, we did a further follow-on equity, priced at about $18, $18.50 per share. We've managed to go through the downturn with minimal losses.
We continue to modernize our fleet of LPG ships. We carry propane and butane gases mainly. For people who don't know, petroleum gas is derived from natural gas refining or crude oil refining.
We have announced, as many of your readers have seen, record results for both the first and second quarters of 2012, well above analyst expectations. LPG and LNG shipping is actually the only profitable shipping segment as we speak, because of very, very high demand for LPG and a very small supply of new vessels in contrast with other shipping segments where, as you might know, there are a lot of new ships to be delivered from this year until 2014.
TWST: Would you expand on what industry trends and macro issues you're seeing impacting the company?
Mr. Vafias: As I said, the most important thing in shipping is supply and demand. In our particular segment, the small LPG shipping segment, we have the best of both worlds. Propane demand is increasing, because don't forget that LPG is the first energy source that developing nations use after they stop burning wood. So you have all these small villages in China, Indonesia, Africa, India, where there is no electricity, and these people want to improve their living conditions. They stop burning wood, and they go out to their little kiosks and buy small gas canisters, like the ones you use for your barbecues in the U.S. They can cook their food, and they can heat their homes. It's easily usable and very cheap, therefore, you have an increasing demand for LPG, mostly due to these circumstances.
And certainly, there is a very, very small order book of new ships to be delivered, because in the last few years the majority of shipowners and shipping companies ordered dry bulk ships and tanker ships; they have not ordered LPG ships. So you have an increasing demand for LPG gases and LPG ships and a shortage of available ships. Thus, this creates very, very firm freight rates for the existing ships. And that's why, as we just discussed, we've been able to improve quarter by quarter our results.
We are in this very good position where, number one, we have a lot of cash in the company, about $65 million in cash. Two, we have little debt - debt is approximately 45% of ship values at the moment. And then, the majority of the ships are fixed or chartered - in other words, they are employed to major oil companies and national oil companies. Therefore, our income is guaranteed for at least one to one and half years from today, so there's no gambling or no question marks about the earning potential of the ships.
TWST: What else would you highlight from the company's latest quarterly results?
Mr. Vafias: First of all, the company has 33 LPG ships and four oil tankers. This is the fleet at the moment, all 100% fully owned by StealthGas.
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.