StealthGas INC

STEALTHGAS INC. REPORTS SECOND QUARTER AND SIX MONTHS 2008 RESULTS AND ANNOUNCES QUARTERLY CASH DIVIDEND OF $0.1875 PER COMMON SHARE

ATHENS, GREECE,  August 19, 2008.  STEALTHGAS INC. (NASDAQ: GASS), a ship-owning company primarily serving the liquefied petroleum gas (LPG) sector of the international shipping industry, announced today its unaudited financial and operating results for the second quarter and six months ended June 30, 2008.

Second Quarter 2008 Results:

For the three months ended June 30, 2008, voyage revenues amounted to $28.5 million and net income was $9.4 million, an increase of $8.6 million, or 43.2%, and an increase of $3.7 million, or 64.9%, respectively, from voyage revenues of $19.9 million and net income of $5.7 million for the three months ended June 30, 2007.

Basic and diluted earnings per share calculated on 22,114,105 basic weighted average number of shares and 22,213,808 diluted weighted average number of shares were $0.43 and $0.42, respectively, for the three months ended June 30, 2008 as compared to basic and diluted earnings per share of $0.40, calculated on 14,400,000 basic and diluted weighted average number of shares for the three months ended June 30, 2007.

Adjusted EBITDA for the three months ended June 30, 2008 was $17.6 million, an increase of $5.9 million, or 50.4% from $11.7 million for the three months ended June 30, 2007.  A reconciliation of Adjusted EBITDA to Net Income and to Net Cash provided by operating activities is set forth below. 

Before the non-cash items described below, net income was $8.2 million, or $0.38 per share, calculated on 22,114,105 basic weighted average number of shares, and $0.37 per share, on 22,213,808 diluted weighted average number of shares, for the three months ended June 30, 2008, as compared to $6.0 million, or $0.42 per share, calculated on 14,400,000 basic and diluted weighted average number of shares for the three months ended June 30, 2007, an increase of $2.2 million or 36.7%.

For the three months ended June 30, 2008, the Company had a non-cash gain of $1.2 million, which is comprised of an unrealized, non-cash gain of $1.8 million on six interest rate swap arrangements and approximately $0.6 million of share-based compensation expense related to restricted share awards granted to the Company’s directors and key staff members of its affiliated manager Stealth Maritime Corp.  This compares to an approximately $0.3 million unrealized non-cash loss on interest rate swap arrangements for the three months ended June 30, 2007. 

An average of 38.0 vessels were owned by the Company in the three months ended June 30, 2008, earning an average time-charter equivalent rate of approximately $7,909 per day as compared to 29.3 vessels, earning an average time-charter equivalent rate of $7,075 per day for the same period of 2007. 

First Half 2008 Results

For the six months ended June 30, 2008, voyage revenues amounted to $55.5 million and net income was $16.9 million, an increase of $14.9 million, or 36.7%, and an increase of $4.6 million, or 37.4%, respectively, from voyage revenues of $40.6 million and net income of $12.3 million for the six months ended June 30, 2007.

Basic and diluted earnings per share calculated on 22,114,105 basic weighted average number of shares and 22,177,285 diluted weighted average number of shares were $0.76 for the six months ended June 30, 2008 as compared to basic and diluted earnings per share of $0.85, calculated on 14,400,000 basic and diluted weighted average number of shares for the six months ended June 30, 2007.

Adjusted EBITDA for the six months ended June 30, 2008 was $32.1 million, an increase of $8.1 million, or 33.8%, from $24.0 million for the six months ended June 30, 2007.  A reconciliation of Adjusted EBITDA to Net Income and to Net Cash provided by operating activities is set forth below. 

Before the non-cash items described below, net income was $18.5 million, or $0.83 per share, calculated on 22,114,105 basic weighted average number of shares, and $0.84 per share, on 22,177,285 diluted weighted average number of shares, for the six months ended June 30, 2008 as compared to $12.0 million, or $0.83 per share, calculated on 14,400,000 basic and diluted weighted average number of shares, for the six months ended June 30, 2007, an increase of $6.5 million or 54.2%.

For the six months ended June 30, 2008, the Company had a non-cash loss of $1.6 million, which is comprised of an unrealized, non-cash loss of $0.5 million on six interest rate swap arrangements and approximately $1.1 million of share-based compensation expense related to restricted share awards granted to the Company’s directors and key staff members of its affiliated manager Stealth Maritime Corp. This compares to an approximately $0.3 million unrealized non-cash gain on interest rate swap arrangements for the six months ended June 30, 2007. 
 
CEO Harry Vafias commented
“We have continued to improve our financial performance in the second quarter of 2008 and at the half year we have shown substantial increases in both revenues and net income compared to this time last year as we continue to deliver on the strategy we have outlined to investors over the past three years. Our earnings per share, if we exclude non - cash items, are now in line with those at the same time last year, despite some 7.7 million more shares outstanding as a result of our follow on offering of July 2007.

We continue to see in our period charters a steady increase in charter rates and this, along with the continued high utilization of our fleet and effective cost management at a time when costs overall and crewing in particular are a major challenge, has led us to producing what I consider to be a set of highly creditable results year to date and we look forward to the future of our business with continued confidence.

The second quarter of 2008 was a relatively quiet one by our standards in terms of vessel acquisitions, but we did announce the acquisition of our third M.R. Product Carrier that will be delivered to us in April of next year and she will be deployed on a three-year time charter upon her delivery, thus continuing our policy of the majority of our fleet being employed under period coverage. As of today, we have 90% of the fleet employed for 2008, 58% for 2009 and 30% under period employment for 2010.  We continue to look for attractive and accretive acquisition prospects in our core LPG sector and at other well structured alternatives.”

CFO Andrew Simmons commented
“We continue to make secure and steady progress through our conservative employment policy and by structuring the business on a sound financial base. We are seeing some pressures in regard to margins on our new debt facilities as a consequence of the turmoil in the credit markets. However, we are continuing to secure sound support from both our existing bankers and some new lenders who we believe find the Company’s structure an attractive proposition, particularly at this time.” 

Quarterly Dividend:

At today’s meeting, the Company’s Board of Directors declared a quarterly cash dividend of $0.1875 per common share, payable on September 5, 2008 to shareholders of record on August 29, 2008.

This is the eleventh consecutive quarterly dividend since the company went public in October 2005. Since then, the Company has declared quarterly dividends aggregating $2.0625 per common share.

Fleet Profile and Fleet Deployment:

The table below show the Company’s fleet development and deployment as of today:

LPG Carrier Fleet
 
Product Tanker Fleet

• F.P.: Fully-Pressurized
• S.R.: Semi-Refrigerated
• M.R.: Medium Range

(1) Earliest date charters could expire.  Most charters include options to shorten or extend their term.
(2) Lyne is employed under a bareboat charter until May 2009. Thereafter, at the charterer’s option, the bareboat charter can be extended for an additional year.
(3) Sir Ivor is employed under a bareboat charter until May 2009. Thereafter, at the charter’s option, the bareboat charter can be extended for an additional year.
(4) Gas Prophet has for the three year duration of bareboat charter been renamed the M.T. Ming Long.
(5) Gas Shanghai is currently employed under a time charter until September 2008, which has been extended until September 2009.
(6) Gas Eternity has for the duration of bareboat charter been renamed the M.T. Yu Tian 9.
(7) Gas Sikousis is currently employed under a time charter until May 2009. Thereafter, at the charterer’s option, the time charter can be extended for two one-year periods, the first one to be negotiated in May 2009.
(8) Gas Natalie is expected to be delivered by the end of September 2008 whereupon she will continue a bareboat charter for a further three years to a major international LPG operator.  The charterer has an option in September 2009 and 2010 to cancel the existing charter upon the payment of a cancellation fee in the amount of $336,000, if exercised in 2009, or $180,000, if exercised in 2010.
(9) Gas Shuriken is expected to be delivered by the end of October 2008 whereupon she will commence a two year time charter to a major international gas trader.
(10) The to be named 47,000 deadweight M.R. type product carrier is expected to be delivered to the Company in April 2009, whereupon she will commence a three year time charter.

About STEALTHGAS INC.

Headquartered in Athens, Greece, STEALTHGAS INC. is a ship-owning company serving primarily the liquefied petroleum gas (LPG) sector of the international shipping industry. STEALTHGAS INC. currently has a fleet of 37 LPG carriers with a total capacity of 165,286 cubic meters (cbm) and two M.R. Product Tankers. In addition, the company has also entered into agreements to acquire one second-hand LPG carrier with expected delivery in September 2008; three resale newbuilding LPG carriers with expected delivery from October 2008 until June 2009; five new building LPG carriers with expected delivery from September 2010 through December 2011 and one resale newbuilding M.R. Product Carrier with expected delivery in April 2009. Once these acquisitions are completed, STEALTHGAS INC.’S fleet will be composed of 46 LPG carriers with a total capacity of 210,499 cubic meters (cbm) and three M.R. Product Tankers with a total capacity of 141,000 deadweight tons (dwt). STEALTHGAS INC’S shares are listed on the NASDAQ Global Select Market and trade under the symbol “GASS”.
 
Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although STEALTHGAS INC. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, STEALTHGAS INC. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charterhire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in STEALTHGAS INC.’s operating expenses, including bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by STEALTHGAS INC. with the U.S. Securities and Exchange Commission.

Visit our website at www.stealthgas.com
 
Company Contact:
Andrew J. Simmons
Chief Financial Officer
STEALTHGAS INC.
011-30-210-6250-001
E-mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Fleet Data:

The following key indicators highlight the Company’s operating performance during the second quarters ended June 30, 2007 and June 30, 2008.

1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
2) Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.
3) Total voyage days for fleet reflect the total days the vessels were in our possession for the relevant period net of off-hire days associated with major repairs, drydockings or special or intermediate surveys.
4) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.
5) Total time charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.
6) Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period.
7) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
8) Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
9) Total operating expenses, or TOE, is a measurement of our total expenses associated with operating our vessels. TOE is the sum of vessel operating expenses and general and administrative expenses. Daily TOE is calculated by dividing TOE by fleet calendar days for the relevant time period.

Adjusted EBITDA Reconciliation:

Adjusted EBITDA represents net earnings before interest, taxes, depreciation, amortization and amortization of fair value of acquired time charters.  Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by the United States generally accepted accounting principles, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies in the shipping or other industries.

Adjusted EBITDA is included herein because it is a basis upon which we assess our financial performance and liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness. 
Adjusted EBITDA reconciliation for the second quarters ended June 30, 2007 and June 30, 2008:

Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1866 239 0750 (US Toll Free Dial In) or 0800 559 3282 (UK Toll Free Dial In). Please quote "4194344".

In case of any problems with the above numbers, please dial +1 718 354 1157 (US Toll Dial In), or +44 (0)20 7138 0815 (Standard International Dial In). Please quote "STEALTHGAS".
 
A telephonic replay of the conference call will be available until September 19, 2008 by dialing 1866 239 0765 (US Toll Free Dial In), 0800 559 3271 (UK Toll Free Dial In) or +44 (0)20 7806 1970 (Standard International Dial In). Access Code: 4307550#

Slides and audio webcast:
There will also be a live -and then archived webcast of the conference call, through the STEALTHGAS INC. website (www.stealthgas.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.