StealthGas Q1 FY26 earnings call GASS

StealthGas is operating its first full quarters as a fully debt-free company, having become debt-free in July 2025 for the first time in its ~20-year history after repaying ~$350M over roughly 2.5 years. Only $7M of residual debt remained after repayments in January and April 2026; only the unconsolidated joint-venture vessel is still financed. Cash grew 32% to $131.2M at March 31 (from $99M) and reached $155M by the call date, driven by a vessel sale and $18M of operating cash flow. Shareholders' equity rose $17.2M to $708M (+2.5%), total liabilities are a mere $26M (all current), and the eliminated debt-service burden has significantly lowered the fleet's cash-flow breakeven.

The company concluded 5 new period charters of 3 months or longer (same count as the prior quarter but longer durations): one 2-year, one 1-year, and three 6-month charters. As of June, 55% of fleet days for the remainder of 2026 are secured on period charters (~$52M of revenue), 45% of fleet calendar days are covered one year forward, and total contracted revenue for all future periods to 2029 is ~$100M. Despite this, summer seasonality and geopolitics pushed spot exposure up to 5 operating vessels, which management intends to reduce.

Management continues to sell older, smaller tonnage and potentially replace it with newer vessels. In March it contracted to sell the Echo Royalty (a smaller ship), expected to deliver in September on charter termination. Two other previously agreed vessel sales delivered — one in March (generating a $2.5M gain) and one in May. Two vessels were held for sale at March 31, with combined proceeds expected to boost cash by ~$26M. Fleet renewal investment is an intention, partly contingent on resolving the Eco Wizard situation.

The conflict with Iran and closure of the Strait of Hormuz is the dominant risk. One MGC vessel had gone to load LPG in Saudi Arabia just before the conflict began and remains stuck inside the Persian Gulf; management does not consider passage safe and has not attempted to exit. The vessel is on time charter, so freight for its idle time continues to be paid. Voyage expenses rose ~$1M partly on additional Middle East conflict insurance premiums. Management noted VLGCs (and to a lesser extent MGCs/Handysizes for Iraqi exports) are most affected; smaller-vessel trading patterns are largely unchanged.

Roughly one-third of LPG supply comes from the Middle East, and Q1 global LPG exports dropped an estimated ~3%, with a steeper Q2 fall expected. US propane exports are ramping — a record ~2.6 million barrels in the last week of May, +22% YoY — aided by well-timed terminal expansions (Enterprise's Houston Channel and Neches River). Vessels repositioned from the Middle East to the US, many returning to the Far East via the Cape of Good Hope (a 45-day voyage adding ton-miles. China lifted US import share back above 60% (from 30%) unable to source Middle East supply; India, 60% import-dependent (90% historically Middle East-sourced), saw demand hit, with local production up 30% in March.

The pressurized market built on Q4 strength with tight European tonnage keeping rates firm; the European pressurized market has grown with more volumes and vessels. Southeast Asia has much less liquidity and 3,500 cbm / larger pressure ships corrected somewhat from the peak. Handysize rates firmed through Q1 into Q2 with no new orders and a ~10% order book over 3 years. The MGC market turned extremely tight after the war began, with spot rates near all-time highs supported by an all-time-high VLGC spot market; only 2 MGCs were ordered, though the MGC order book remains substantial at ~50%. Roughly one-third of the overall fleet is over 20 years old and eventual scrapping candidates, though few are being scrapped in the firm market.

The fleet focuses on regional trade and local gas distribution, with larger vessels on intercontinental voyages (e.g., US-loading for European discharge). The majority is positioned west of Suez, particularly Europe and the Med, to capture higher liquid-market rates; only one older vessel trades in the Far East (where rates remain lower) with no plans to add more. Four vessels trade in Africa, where management is building relationships and is optimistic on faster LPG demand growth given many storage facilities under construction.