Harry Vafias – Chief Executive Officer Ifigeneia Sakellari – Finance Officer

Van Kegel – Barclays George Berman – IFS Raymond James

Good day, and welcome to the StealthGas Second Quarter 2017 Financial and Operating Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Harry Vafias. Please go ahead, sir.

Good morning, and welcome to our second quarter 2017 earnings call. This is Harry Vafias, CEO of StealthGas, and joining me shortly will be our Finance Officer, Mrs. Sakellari, who will cover our financial review for the period examined. Before we commence our presentation, I would like all of you to be reminded that we will be discussing forward-looking statements which reflect current views with respect to future events and financial performance. At this stage, if you could all take a moment to read our disclaimer on Slide 2 of this presentation. It’s noted that the risks are further disclosed in StealthGas’ filings with the Securities and Exchange Commission. I would also like to note that all amounts quoted, unless otherwise clarified, are stated in U.S. dollars. Slide 3 summarizes our key highlights for the second quarter of 2017. Despite of the seasonal effect and the persistently low oil prices, demand for our vessels were strong this quarter, allowing us to achieve an operational utilization of about 95%. This is the best second quarter utilization percentage marked since 2012, i.e. five years ago. In addition to this and compared to the second quarter of 2016, we managed to reduce our commercial off-hire days by an astonishing 42%; again, a strong sign of an improved market. Our solid earnings visibility continues where we have about 83% of our fleet secured for the remainder of 2017, with a total of $180 million in contracted revenues. Following our fleet renewal strategy, we proceeded with the sale of two of our older ships, the Gas Icon and the Gas Emperor, both for further trading. In addition to this, we further delayed the delivery of two of our 22,000 cbm LPG semi-refrigerated newbuilding vessels at zero cost. In terms of our financial performance, our revenue for the second quarter of 2017 came at nearly $40 million, an increase of 10% compared to the second quarter of 2016. Our adjusted EBITDA measure amounted to $15.5 million. As per our leverage and cash position, our gearing remains in the order 40% while we still maintain a healthy unrestricted cash balance of about $44 million. Slide 4 provides an analysis of our fleet deployment. In terms of charter types, out of a fleet of 54 operating ships, we have 13 on bareboat, 33 on time charters and 8 in the spot market. Since our last announcement and despite of the low seasonal effect of this period, we managed to secure 15 new charter and charter extensions, another sign of an improving market. In the past three months, we signed one bareboat charter of three years duration for one of our product tankers, 10 new charter agreements and four time charter extensions. Our earnings visibility is currently in the order of $180 million. We have a strong period coverage which currently stands at 83% for 2017, 44% for 2018. With regards to our fleet geography presented on Slide 5, 53% of the fleet trades in the Midland and Far East, 30% in Europe and 8% in America and 5% in Australia, and last but not least, 3% in Africa. There were no significant changes in our fleet trading partner as compared to the previous quarter. On Slide 6, we provide you with an analysis of our remaining capital expenditure program. Following our first 22K semi ref newbuild vessel, we have another three of these innovative vessels yet to be delivered, two in the quarter of 2018 and the last one in April 2018. As I previously stated, due to the soft conditions currently prevailing in the semi ref market, we managed to deliver the delivery of two new build vessels at zero additional costs. Both will now – are scheduled to be delivered in January 2018. Looking at the table on the left-hand side, the remaining CapEx, excluding any related advances paid to date, is in the order of $104 million. We made no further advance payments since our last announcement and therefore, our remaining capital expenditure has not been altered since. At the bottom of the table, we provide you with detailed breakdown of our remaining capital expenditures depicting advances and final payment for our future deliveries. In relation to the financing of this capital expenditure, which we present in the graph on the right, from a total contract value of $156 million, $52 million are advances paid to date, $97.5 million is company’s financing scenarios per the committed loan amounts, leaving us with an additional required equity of only $6.7 million. I will now turn it over to Mrs. Ifigeneia Sakellari for the financial performance discussion for the second quarter of 2017.

Thank you, Harry, and good morning, everyone. In the second quarter of 2017, demand stood strong despite of the seasonally weak period and, therefore, our financial performance was enhanced. Let us move on to Slide 7, where we see the income statement for the second quarter of 2017 against the same period of the previous year. Voyage revenues came at about $40 million, a record number for our company, increased compared to the second quarter of 2016 by 10%. This increase is attributed to the high utilization of our fleet as our operational utilization was close to 95% compared to 91% in the same period of last year. In addition to these market rates, marked a slight rise, thus contributing positively to our revenue stream. Voyage costs amounted to $4.5 million, marking the 24% increase compared to Q2 2016. This increase is mostly attributed to the increase in bunker costs due to higher consumption and higher oil prices. Net revenues that is revenues after deducting voyage costs, came at $34.7 million, corresponding to a gross profit margin of 88%. Running costs at $14.4 million, marked a $900,000 decrease compared to Q2 2016 in spite the same number of vessels operating in both periods and fewer vessels on bareboat charters. The decrease in operating cost is mostly an outcome of improved operating efficiency and a reduction of store costs by more than 10%. With regards to drydocking costs, this amounted to approximately $1.2 million, given three scheduled drydocking taking place in the quarter compared to four drydockings that took place during the same period last year. In terms of non-cash items, this quarter, we incurred an impairment loss of $3.2 million for three vessels, two of which are classified in the second quarter’s financials as held for sale. Our EBITDA for the second quarter of the year came at $12.2 million, while adjusted EBITDA measure, which excluded non-cash items, came at $15.5 million, marking a $3.6 million rise compared to Q2 2016. Interest and finance costs marked an increase of approximately $650,000, mostly as a result of an increase in LIBOR rates. With an adjusted net income of $1.5 million, our adjusted earnings per share for the second quarter of 2017 was $0.04. Slide 8, demonstrates our performance indicators for the period examined. As mentioned earlier on, our operational utilization for Q2 2017 was in the order of 95%, marking the best operational utilization achieved in the second quarter since 2012. Higher demand and a slight improvement in market rates were translated to a stronger adjusted time charter equivalent of about 8,200, marking a 2.3% increase against the same period of last year. Overall, in the past quarters, we noticed a gradual but steady increase in market rates. Looking at our balance sheet in Slide 9, in the first six months of 2017, we managed to preserve a good liquidity of $43 million in free cash following the delivery of our first 22,000 newbuild semi ref vessel in May and the coverage of scheduled debt principal repayments, which in the first six months of 2017 were in the order of $22 million. Focusing on the equity and liability side, our gearing still remains low, in the order of 40% in spite of the debt increase for our new delivery as we fall and abide with the tight principal repayment schedule. Overall, we are pleased to follow a sensible and stable long repayment plan, which allows us to preserve our debt at moderate levels. Slide 10 presents on a daily basis the evolution of our breakeven against our average time charter equivalent. What we noticed that our average time charter equivalent has stabilized at higher levels compared to previous quarters. The decrease of our daily breakeven in Q2 2017 is due to the decrease in our operating costs. Looking briefly at the fleet contribution analysis in the bottom left, period deployment contracts are as always our company’s strongest revenue stream, and therefore, our TCE fleet coverage is quite high. In contrast with the previous quarters however, where spot market revenues were weak, this quarter, we see a healthier balance between revenue generation from spot activity and vessels engaged in the spot market. I will now hand you over to our CEO, Mr. Harry Vafias, who will discuss market and company outlook.

Let us proceed now to the market update in Slide 11. Global LPG trade has grown by an average of about 5% per annum over the last decade, driven largely by the growth in the U.S. export to Asian destinations. Indeed, the LPG exports from the U.S. have shown a strong escalating trend, increasing by about 35% per annum over the last 10 years. This growth is expected to persist well into the next decade as NGL output from natural gas processing continues to grow. Production of LPG is dominantly in the U.S. and the Middle East. U.S. export volumes, most of which are directed to Asia, are the key drivers of the LPG trade growth. Many Asian players have signed long-term supply deals with U.S. producers. Asian destinations, mainly Japan, China, South Korea and Singapore, made up of around 40% of U.S. LPG exports in 2016. In the Middle East and with the lifting of sanctions, countries like Iran have raised the LPG trade. Iran accounts for 17% of the LPG trade in the area and this is expected to grow to 40% by 2020. In terms of LPG demand, China, Japan, South Korea are the key players in Asia. We also see growth in other areas in the Asia Pacific, such as India, culminated from the government’s aggressive promotion of LPG penetration in rural areas. Focusing on our segment fundamentals in Slide 12, we see that during Q2 2017, rates demonstrated an upward trend across all categories, marking the highest quarter-on-quarter increase realized in the past two years. We perceive however that pool oil prices do not assist rates to pick up, just to further leverage earnings. West of Swiss, the spot market for pressurized ships, has held up better than the last year though what is a seasonally a relatively weak period. We are closer to equilibrium between supply and demand for tonnage. There is however a significant further upside if the market and the fundamentals continue to improve. On the period side, the number of available vessel candidates continue to shrink, resulting in an increase in trend in higher rates. Especially with the 5,000 cubic meter ships, we foresee a tight tonnage situation going forward. Also in the East, the spot market has held up well during the last quarter compared to the previous two, three years. We see this as a positive sign and expect to see stronger end to the year and start of 2018. There is a significant amount of petchem cargoes in the market, which is keeping owners busy, while the LPG market is mostly served with traders TCE and tonnage. In terms of scrapping activity in our markets, it’s clear that the age distribution of the small LPG fleet favor scrapping. Since the beginning of 2017, we have seen a demolition of eight ships, a sign that scrapping has accelerated and that the market is finally shrinking. As per published orders, there are seven vessels that is only 2% of the total fleet to be delivered in the period 2017 and 2018 and no new orders from 2018 onwards as limited yard space, in combination with quite low rates in our market and lack of financing, do not support new investment in the medium term. Continuing with Slide 13, we discuss the company’s outlook co-mentioned with our share performance for the last five months. The performance of our stock is presented along with selected gas carriers peer group. During this period, we saw a decline in oil price, and as evident, the energy-related stock selected followed a broad correlation with oil price movements. This decline was particularly notable in June as investor sentiments reflected their worry that demand for oil might be slowing in Asia. Further to this, we witnessed a slight rise in oil price movements but levels of oil price still remained low at around $45 to $50 a barrel. On Slide 14, we’re showing different scenarios of the company’s performance for the remainder of 2017 up to the end of 2018. The different scenarios were created based on our existing fixed charters plus vessels open on the spot market, assuming no new charters upon the expiration of the fixed vessel. Revenues were calculated using an estimated spot rate based on current market and an individual utilization rate for each vessel. This forecast includes all 22,000 semi ref newbuilds that have taken and will take delivery during this interval, for which we have used very conservative assumptions for their rates and operational utilization. Overall, and as noted in the table presented, our assumption for a fleet operational utilization for the year 2018 has been very conservative. We can see throughout the quarters examined that they have hypothetical $500 increase in the spot daily rates will significantly leverage our earnings. This exercise is to show our company’s and market’s potential should rates mark further increases. Proceeding to Slide 15, we can see some valuation multiples of StealthGas against comparable companies. All peer group companies trade at a discount to NAV, while in most cases asset values exceed the current enterprise values. As evident, our company trades at a greater discount than its peers in terms of net asset value despite its heft capital structure, improved earnings, less gearing than its peers and market-leading share of the pressurized market. We believe that low share prices, combined with solid company fundamentals, such as healthy capital structure, make a good investment opportunity for medium-term investors. Concluding the presentation with Slide 16, we summarize all the reasons why we feel StealthGas is a good investment and present the market factors that will assist our segment’s improvement. Our belief in our company is based on the evidence of our ongoing performance where we strive to maintain a solid capital structure, contain our cost and preserve the quality of our vessels while always being ready to grasp to the fullest extents even the slightest market improvement when these arises. At this stage, I will summarize our concluding remarks. The second quarter of 2017 was quite encouraging for StealthGas. In spite of the low seasonal demand, we managed to achieve close to 95% operational utilization, which is the second best second quarter performance since 2012. Consequently, our revenues were higher than anticipated. In addition to this, we succeeded in decreasing our operating costs. So both these factors contributed to our profitability, which excluding the impairment charges of the quarter, was quite satisfactory and significantly improved compared to 2Q – Q2 2016. Going forward, we have secured more than 83% of our fleet base in period charters, and our markets shows positive signs of improvement such as increase in rates, low order book and acceleration of scrapping. In addition, we succeeded in pushing back the deliveries of our second and third 22,000 semi ref eco newbuildings to the first quarter of 2018. And last but not least, we sold two of our oldest vessels at a hefty premium over scrap showing increased confidence from buyers even for overage ships. Based on all the above, we remain confident for the quarters to come. We have reached the end of the presentation. We would like to open the floor for questions.

[Operator Instructions] We will now take our first question from Mr. Brandon Oglenski from Barclays. Your line is open.

This is Van Kegel on for Brandon. Just a quick question here on the dynamics at play, I guess, among the different vessel size portions of the market. Obviously, a lot of the supply that’s come online over the last few years has been from the larger vessel sizes. How insulated are the 3.5 to 7,000 cbm vessel sizes from the broader pricing issues and the larger segments of the market?

Good question. Good morning, first of all. There is no connection and no correlation between the two. You can say that there’s a correlation between the VLGCs and the 22K ships. But there is close to zero correlation between the VLGCs and the larger vessels, generally with the small vessels, and that we have seen both in the good times and the bad times. For example, two years ago, the VLGCs were making $100,000 a day and we were making six. And now, they’re making $9,000 a day and we’re making $8,000. So there’s no correlation.

Got it. And then in terms of just kind of a ceiling for the smaller vessels, is there any connection there? I mean, obviously we sort of see a little bit of a recovery in the smaller vessel segment, which is good to see. But with the larger vessel earnings still falling, is there kind of a limit to how much of a recovery we could see in the smaller segment?

Again, there is no correlation. So we are not worried at all about what’s happening in the big ships. We worry about our fleet. We try to make as much money as we can with our fleet. And we are happy that despite being in the summer, which is a seasonally weak period, we have proven that when the market is showing encouraging signs, we can improve our numbers drastically.

Great. Thank you very much.

Thank you.

[Operator Instructions] We will now take our next question from Mr. George Berman from IFS Raymond James. Your line is open.

Good afternoon, Harry, and congratulations. Looks like, we’re finally going in the right direction.

We’re not popping the champagne bottle, George. But we’re having them in fridge.

Right. Quick question. If we look at the current rates and assume that sooner or later, there will be a significant uptick with no new ordering, limited availability at various shipyards. If rates rise significantly, how long would it take for a new entrance or existing shippers to, say, order LPG ships and then actually take delivery? Is it usually about one to two year or longer timeframe?

Minimum two years, I would say.

Okay. So if ordering would really start to pick up in the 2018, the earliest you would see any new supply coming in is then around 2020, 2021, and by then the fleet would either be older than it is now?

I would say 2020 to be conservative.

And availability on shipyards recently has also been reduced quite a bit, yes?

The shipyards that build those ships are not the shipyards that build the very big ships. These are the small family-owned yards in Japan that cannot build 10 and 20 ships per year. So even if you want to order there, maybe you can, but again, it won’t be a big number of ships.

Yes, yes. And the LPG trade, overall, you still see continued growth there now, not only from exports to the U.S. that go all over Asia and then have to be redistributed, but also in Africa, you point out?

It’s not yet, of course, in the volumes we’re seeing in the other locations, but it’s an up-and-coming continent.

Okay, great. Any do have any thoughts – I see your newbuild program now is essentially fully funded. Any thoughts about we opening the stock buyback program given the 20% or – trading at 20 times net asset value?

Sorry, I didn’t understand the question.

Since you’re trading at only 20% of book value, are you possibly thinking about reopening the stock buyback program?

Sorry, yes. This is something that we discuss in every Board meeting. As you know, up to now, we have bought in excess of $20 million worth of stock. The Board wants all the new buildings delivered first, especially the big ones that are quite expensive, and depending on what the market does, when these get delivered, then we will make a decision on buying more stocks. So I guess, this is a decision for Q2 2018, as the last newbuild delivers April, May 2018.

Yes. Fair enough. Well, we look forward to continued progress.

Thank you, George.

[Operator Instructions]

I guess, there are no more questions.

There are no more questions over the telephone, sir.

Okay. So we would like to thank everybody for joining us at our conference call today, and we look forward to having you again at our next conference call for Q3 2017 in about November time. Thank you very much.

Ladies and gentlemen, that will conclude today’s conference call. Thank you for your participation. You may now disconnect.