Good day, and thank you for standing by. Welcome to the StealthGas Third Quarter 2022 Results Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Michael Jolliffe. Please go ahead.
Hello. Good morning, everyone, and welcome to our third quarter and nine months 2022 earnings conference call and webcast. This is Michael Jolliffe, Chairman of the Board of Directors. Joining me on our call today is Harry Vafias, our Chief Executive, to discuss market and company outlook, and Konstantinos Sistovaris, Investor Relations, to discuss the financial aspects. Before we commence our presentation, I would like to remind you 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 two of this presentation. Risks are further disclosed in StealthGas filings with the Securities and Exchange Commission. I would also like to point out that all amounts quoted, unless otherwise clarified, are implicitly stated in United States dollars.
Let me start by saying that as you may have read this month, the world's population surpassed the 8 billion mark. In this world, there are still two and a half billion people using kerosene, wood and charcoal for their fuel needs. We believe LPG, as less carbon intensive than other fossil-based fuels, can play an important role for these people to meet their future energy needs in a decarbonizing world. Today, we released our earnings results for the third quarter of 2022, which was also the third quarter of trading as a pure LPG company, and we are happy to report yet another profitable quarter. Let's proceed to discuss these results and what we see in the market in general. Turning to slide three, we summarize some highlights.
As we mentioned in our previous call, in the summer months, there is typically less activity, we took the opportunity to perform the scheduled dry docking of four of our vessels. This reduced, of course, our utilization figures. One vessel that remains to be dry docked this year will probably be pushed back to the beginning of next year. During the summer months, our spot exposure was increased. We had 843 days during the quarter. This was a result of vessels coming off their period charters in a softer market and is considered temporary as we prefer to lock in period charters. Overall, year-on-year, we have actually decreased our spot exposure by 38%. During the last couple of months, as the market is firming, we entered into more than 10 period charters, the majority of which are of one-year duration or more.
Now, we have 40% of our fleet days secured on period charters for next year. Our contracted revenues as of November are almost $90 million, excluding joint venture vessels and $100 million including our JV vessels. In terms of our sale and purchase activity, we don't have any news other than what we discussed during the last call. That is the sale of one joint venture vessel. The receipt of $16.5 million in distributions from that sale and the reinvestment in two new building medium gas carrier vessels for 2023. What is new, though, is that we have committed finance for the new building vessels to the tune of $70 million. Thus, our remaining equity commitment for these vessels will be about $24 million that we can comfortably handle with the existing cash.
Looking briefly at our financial highlights, we need to keep in mind that the four tankers that were part of the spin-off last December were included in last year's comparative results. Voyage revenues came in at $34.9 million compared to $37.5 million last year as a result of the smaller fleet. Overall, though, the third quarter market was softer, it was better than last year's. In line with the trend in recent quarters, we had substantial decreases in OpEx and depreciation, as well as due to the smaller fleet. We also saw a rise in voyage costs that was due to the combination of higher spot exposure and increase in bunker costs due to the rise in oil prices. In the spot market, we are responsible for paying for our vessels' fuel costs, as you know.
Overall, our net profit for the quarter was $6.7 million and was boosted from the profits from our investments in our JVs. For the nine-month period, we reported profits of $26.6 million. That brings our EPS for the quarter to $0.18 and $0.70 for the nine months. This is a 600% increase year-over-year. We remain steadfast in managing prudently our liquidity. Our total cash was $85.6 million compared to $45.7 million at the end of last year. Mainly through the sales, we also completed the refinancing of six vessels during the first quarter. Our internally generated cash flow and distributions from our joint ventures. We continue to be well-capitalized, maintaining a low debt ratio of 36%.
Let us move on to slide four for our fleet employment update as of November. Since our previous announcement, we successfully concluded 11 new charters and charter extensions at similar or improved levels. These were concluded recently as heading into winter, we saw more interest from charterers in locking in longer periods, always a good sign for the market. For the remainder of 2022, we have just four vessels in the spot market, but with the new charters, we have increased forward coverage for 2023 to 40% of our fleet days. We have close to $90 million of secured revenues going forward, $62 million of which are for next year. Including the JV vessels, the secured revenues going forward are closer to $100 million. In slide five, I would like to provide an update on our two joint ventures.
We did not conclude any new charters since our last announcement. Our first joint venture, which comprises small LPG vessels, has one vessel operating in the spot market. The sale of the Eco Nebula was completed, and we received $16.5 million in distributions from the joint venture. Our second joint venture comprises of two medium gas carriers, plus one more under construction. As previously discussed, we did not intend to fund this acquisition with our own equity. The JV has sufficient cash in hand earmarked for this, together with any finance proceeds to be arranged. On the plus side, the market for the larger vessels has risen significantly recently. In terms of our fleet geography presented in slide six, our company focuses on regional trade and the local distribution of gas.
This graph is a snapshot of the positioning of our vessels, excluding our joint venture vessels as of November the 16th, 2022. The distribution of our fleet has not really changed since our last call. The fleet is split between Europe and Asia. Currently, we have 19 vessels trading west of Suez, particularly in Europe. 11 vessels trading in the Middle and Far East, three vessels trading in the U.S. and Caribbean, one more than in the previous quarter and one in Africa. I will now turn the call over to Konstantinos Sistovaris for our financial performance. Thank you.
Thank you, Michael. Good morning to everyone. I will discuss our financial performance for the third quarter and nine months of 2022. Let us turn to slide number seven, where we see the income statement for the third quarter of 2022 against the same periods of the previous year. Net revenues came in at $28.2 million for the quarter and $94.4 million for the nine months. Slightly reduced by 2% over the nine-month period, as we went from 41 vessels to 34 vessels, roughly a 17% reduction in total fleet days. We note the increase in voyage costs for the quarter, as we had more spot days and our bunker costs were considerably higher due to the rise in oil prices. We expect this to come down in the following quarters.
Operating expenses were at $14.1 million for the quarter and $40.3 million for the nine months. A 13% reduction in the 9-month period, a similar trend to what we saw in the previous quarters due to the reduction in the fleet size. In terms of dry docking costs, we had $1.7 million in the third quarter of 2022. We did dry dock four vessels during that period, a similar number to last year's. We expense these instead of amortizing them. They do add some more volatility in the numbers when they all occur in the same quarter. Depreciation is another item that saw a large decrease to $7 million for the quarter and $21 million for the 9-month period. That is a 26% decrease year-over-year. Mainly due to the decrease in the number of the vessels.
Interest and finance costs increased to $3.6 million during the quarter, despite having lower debt levels. This is obviously due to the increases in interest rates, and we expect this to continue until the Fed stops raising rates. Other income of $1.1 million mainly relates to gains in the fair value of interest rate swap we hold, as the increase in interest rates make these swaps more valuable, as well as increased interest we receive in our bank deposits. Equity income in Investee is our share in the profits of our JV structures and came in at $6.1 million for the quarter and $9.7 million for the nine months. Both our JV structures operate profitably and also recorded a gain on the sale of the Eco Nebula in the third quarter.
As a result of all the points analyzed above, we ended the third quarter of 2022 with net income of $6.7 million and $26.6 million for the nine-month period, a six-fold increase compared to last year. Looking at our balance sheet in slide number eight, our liquidity, including restricted cash, was at the end of the quarter in the order of $85.6 million, a substantial increase from the $45.7 million in the fourth quarter of 2021. The increase in liquidity came primarily from the refinancings and vessel sales and secondarily from the improved operating cash flow. We saw this quarter $23.4 million, which are the advances on the medium gas carrier vessels under constructions.
Our vessels net book value decreased from $681.3 million to $648.5 million due to regular depreciation and the sale of two vessels. The total value of our investments in our JV is $45.5 million, which was reduced compared to last year, not because our investments aren't profitable, but due to the $16 and a half million in distributions we received after the sale of the Eco Nebula. The overall outstanding debt was $284 million from $300 million at the end of last year. We expect our debt amortization going forward to be around $7 and a half million per quarter, while it was close to $10 million per quarter about a year ago. Concluding our financial commentary with slide nine, we will briefly reiterate our debt profile and capital structure.
As mentioned in the last call, up until February 2022, we underwent the important project of refinancing a large part of the fleet. We thus raised more cash by about $16 million, reduced our loan margins, and reduced the debt amortization. As a result, we have no refinancing risk until March 2025, when our first balloon is due. During the second and third quarters, we did not enter into any new financial arrangements. We did recently sign a commitment letter with one of our existing financiers for the financing of the two new building vessels, whereby we expect to receive up to $17 million in finance proceeds for the delivery of these vessels, subject to customary closings. We expect to conclude the loan agreement before the end of this year.
Overall, we continue to keep low leverage with a debt ratio below 40%, and we continue to have six unencumbered vessels. As previously mentioned, the successive raises in interest rates by the Fed has started showing into our rising interest rate expense. Our average LIBOR cost was below 3% during Q3, and actually it was below 20 basis points a year ago, whereas the rates now have gone above 4.5%. However, these negative effects will be mitigated by the interest rate hedges we have put in place for 36% of our debt, as well as the lower overall debt levels we have today. For comparison, a year ago, the debt was $347 million, compared to $284 million at the end of Q3 2022.
I will now hand you over to our CEO, Harry Vafias, who will discuss the market and the company outlook.
Moving to slide 10, we provide some insight on the LPG market and reiterate the points we have made in the past, as they still hold true despite all the current economic and geopolitical uncertainties that cast a cloud over all future predictions. So far this year, global LPG exports have increased 3.8% in line with what was expected. The main exporters of LPG being the U.S. and the Middle East countries, according to data from Banchero Costa, both have increased exports this year. The U.S. by 10% and the Middle East countries by over 20%. European countries, on the other hand, like Norway, have decreased exports, translating into ton-mile increases. It's no coincidence that currently freight rates on the larger sized vessels are sky-high. On the receiving end, the largest importers of LPG are India, China, Europe, Korea and Japan.
Out of these all, with the exception of China, imported significantly higher amounts year to date. India +12%, Japan +9.3%, Europe +6%, and Korea +13%. The problem with China is that after having reduced imports overall at -2.3% year to date, and despite a revival in its imports since early in the summer, it continues to have lockdowns and restrictive COVID policies that hinder economic activity. The Chinese economy did grow by a modest food standard 5% in Q3, but there is still a cloud over the sustainability of its growth and the general economic condition.
We remain cautiously optimistic on Chinese demand and feel that any resurgence will be a catalyst in an already stable and firming charting market. That is why we continue to refer to the Chinese PDH plant capacity additions that are projects that are slowly coming on stream with delays, but eventually should add significant demand for LPG and petrochemical products. On the other side of the world, as previously stated, European intra-regional LPG trade is a large market for small LPG vessels and has been one of the best performing markets for our vessels lately. During the summer months, seasonal factors like plant maintenance as well as ample supply, mainly coming from the U.S., led to a reduction in demand as well as petrochemical production slowing down. We did expect that this is a multi in the market.
What we did not expect is the high temperatures to continue well into October, but at the end of the day, the earth is tilted and colder weather is coming and we already see a return to more normal activity. On slide 11, we present the key fundamentals of our LPG market, commencing with market rates evolution. During 2022, time charter rates were flat, while on a year-over-year basis, there continues to be healthy growth between 7% and 14% depending on the size and location. Looking at the small LPG trade west of Suez, the spot market softened a bit during the second half of the summer and has for the last couple of months remained relatively stable.
Expectations are that for the usual winter market, with increased demand and weather delays, will cause a usual seasonal uptick in the market and we expect a healthy spot market for the next few months. The fleet is quite balanced, and it requires relatively small amounts of increased demand to tighten up the market significantly. East of Suez, the spot market in Asia softened during the summer months, similar to what we saw in the West, but it has since picked up pace and we have for the last couple of months seen quite good activity. This goes for both the petchem and LPG market. Until about a month ago, when we saw more and more charters starting to look for PC coverage, both short term and for next year. Rates have remained relatively stable but have started to climb upwards the last few weeks.
We expect this trend to continue as we get closer to the year end. For the handy-sized vessels, the market went from a significant number of vessels sitting idle in the main loading regions to the current market, which has no idle vessels and only a handful of available spot candidates until the year ends. We expect to see strong rates through the winter. The fundamentals for our core fleet of small pressurized ships continue to look promising. There continues to be an overhang of many older vessels in the fleet over 20 years old and so far in 2022, with the market for LPG being strong, we have only seen one vessel being scrapped.
Coming regulations on EEXI and CII will also make it harder for older vessels to trade. We expect to see increasing scrapping activity sooner or later, or vessels being removed from international trading to do restricted cabotage trade, trades in less demanding jurisdictions. The ordering activity continues to be subdued, partly because of difficulties in finding yard availability and partly because new building prices have risen a lot. As per recent published orders, there are 21 vessels on order to be delivered until the end of 2024 and a couple more beyond that. Again, since our last call, we estimate four vessels were delivered and we see a handful more vessels on order. We continue to believe that the risk of seeing bulk ordering of new vessels that could tip the supply demand balance to be improbable.
A sub 2% annual increase in the fleet before scrapping is one of the smallest, if not the smallest in all shipping segments. Slide 12 presents our company share performance since the beginning of the year. Our share price has performed well since the beginning of the year in a very volatile market, along with other LPG related stocks. Lately all the stocks have not followed the crude oil price lower. At the same time, we would like to repeat our belief that StealthGas stock still trades at a big discount to NAV and that the nine months EPS is $0.007, making the stock more attractive on a price to earnings ratio. In slide 13, we are outlining the key variables that will affect our performance in the quarters ahead.
What we consider the most important unknowns that make it quite difficult to predict our market's future would be whether the rising interest rates will bring a recession, especially in Europe, whose economy is more fragile and is important market for our vessels. The continuing war in Ukraine and the political situation in China, casting a cloud on the timing of its eventual return to the normal economic activity. Our market fundamentals remain quite solid as we continue to see a low order book, while 27% of the fleet is over 20 years of age. On the downside, inflationary pressures may increase our cost, and we trade in a product that is sensitive to economic recessions. Our strong points going forward is that we have a sizable and quite diversified fleet with strong customer relations.
We maintain our focus to secure our revenue stream with more fixed charters like we recently did by entering into a substantial number of new charters while at the same time containing cost pressures. We will be relying upon our robust capital structure and the support of our financiers that we just recently reaffirmed with a new commitment for the newbuildings. We feel confident, comfortable that our strategic decision to make certain the secure play LPG company across the broader LPG spectrum will pay off and strengthen our asset returns.
We intend to diversify our fleet within the LPG space so that we are able to offer our customers who are major industrial players, a more complete service of an array of vessel sizes so they can move their product as we were doing with the addition of larger vessels, while at the same time we're open for opportunities to sell older vessels. The first nine months of this year have been very positive despite the seasonally softer third quarter. We should expect to see an improvement quarter-on-quarter in results in the fourth quarter, which is traditionally stronger as the beginning of the winter. We are overall optimistic on the LPG market in the near and long term, and hope to keep this momentum going. We have now reached the end of our presentation and would like to open the floor for your questions.
Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for a name to be announced. Please stand by, we will compile the Q&A roster. This will take a few moments. We're going to take our first question. The first question comes from line of Tate Sullivan from Maxim Group. Your line is open. Please ask your question.
Hello. Thank you. Good day to all. Harry, at the end of your remarks, you mentioned your intent to further diversify your mix of the, your fleet. Are acquisitions still available in this strong market, please?
yes, but at very high prices, so we prefer unless we find a, you know, a one-off, a one-off opportunity to wait until price, secondhand prices and newbuilding prices go down to more logical levels.
Okay. If that decrease in asset values does not occur, like, before you take delivery of the most recent two new builds, I mean, do you intend to continue to reduce leverage? I mean, you've had a meaningful reduction in leverage in the last year and a half and continue to reduce your net debt. Would that be your potential strategy until you take delivery of the two ships?
Yes. Since now interest rates have become way too expensive, you know, reducing debt would only be positive for the company.
Okay. Then on the seasonality and just with the rates, healthy rate environment currently, so do you in this current quarter with your secured dates, with secured rates and then the spot rates available, expect to have a year-over-year increase in your time charter equivalent rates compared to last year? What. I don't know if you have, Andy, maybe you can pick it up on, what was your time charter equivalent rate last year excluding the tankers that you spun off?
I don't have that information. Even if I had, you would be confused because as you know, we have many, many different sizes and many, many different ages of the ships. You know, one number would not be a good image of what's going on.
Okay. All right. Yeah. It still looks like a good quarter-over-quarter increase usually in the fourth quarter in the LPG. Also just circling back to the leverage, but do you target an ideal amount of leverage that you have or do you have available liquidity to conduct acquisitions?
If the rates were low as it was the last, you know, four or five years, we would say anything below 50%. Now that the interest rates are very high and might get higher, I would say the lower the better.
All right. Thank you. Thank you.
Thank you. Now we're going to take our next question. Just give us a moment. The next question comes to line of Climent Molin from Boston Consulting. Your line is open. Please ask your question.
Good morning. Good results in the quarter. I guess the question I have, Harry, is, as CEO of both StealthGas and Imperial Petroleum, do you believe the questions around the Byrd split, share buybacks, listing expense, et cetera, of Imperial Petroleum are affecting the investors' decisions to invest more in StealthGas? If so, can you clarify if you, if and what you might be doing to avoid delisting of Imperial Petroleum over the next month? Thank you.
We cannot comment on Imperial Petroleum or StealthGas, not at all. There is a different strategy with StealthGas with a different board. What we do with StealthGas, as you might have seen, has nothing to do with what we do with the other company.
Okay. Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Now we're going to take our next question. Please stand by. The next question comes to line of Tate Sullivan from Maxim Group. Your line is open. Please ask your question.
Thank you for allowing the follow-up. On the scrapping environment, your comments about potentially seeing more scrapping in 23, do you have ships that you may consider scrapping in this current rate environment? Or will you continue to operate your ships if you can still obtain the current rates that are available?
We only have one old, very old vessel, and we will try and sell for further trading. If that's not possible, we will scrap it.
Okay. Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Yes, Peter, there are no further questions at this time.
We would like to thank you for joining us at our conference call today and for your interest and trust in our company, and we look forward to having you with us again at our next conference call for our fourth quarter 2022 results in February 2023. Thank you.
That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.