PR Newswire
STAMFORD, Conn.
,
Aug. 3, 2022
/PRNewswire/ — Dorian LPG Ltd. (NYSE: LPG) (the “Company,” “Dorian LPG,” “we,” “us,” and “our”), a leading owner and operator of modern very large gas carriers (“VLGCs”), today reported its financial results for the three months ended June 30, 2022, and announced that its Board of Directors has declared an irregular cash dividend of
$1.00
per share of the Company’s common stock, returning over
$40.1 million
of capital to shareholders. The dividend is payable on or about
September 2, 2022
to all shareholders of record as of the close of business on
August 15, 2022
.
Key Recent Developments
- Declared an irregular cash dividend totaling over
$40 million
. - Entered into a
$260.0 million
debt financing facility (the “2022 Debt Facility”) to refinance indebtedness under the 2015 AR Facility and the Concorde Japanese Financing (upon its repurchase in
September 2022
) and to releverage
Corvette
following its repurchase on
July 21, 2022
.
Highlights for the First Quarter Fiscal Year 2023
- Revenues of
$76.8 million
. - Time Charter Equivalent (“TCE”)
(1)
rate per operating day for our fleet of
$39,608
. - Net income of
$24.8 million
, or
$0.62
earnings per diluted share (“EPS”), and adjusted net income
(1)
of
$22.4 million
, or
$0.56
adjusted earnings per diluted share (“adjusted EPS”).
(1)
- Adjusted EBITDA
(1)
of
$46.9 million
. - Declared an irregular cash dividend totaling
$100.3 million
. - Completed the refinancing of
Cougar
resulting in cash proceeds, net of
$20.0 million
to prepay a portion of the 2015 AR Facility, of
$29.9 million
. - Voluntarily prepaid
$25.0 million
of the 2015 AR Facility. - Provided three-month notice in connection with the exercise of our repurchase option of
Concorde
for
$41.2 million
in cash and application of the of
$14.0 million
deposit.
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John C. Hadjipateras
, Chairman, President and Chief Executive Officer of the Company, commented, “The first quarter results reflected a good chartering market, which generated strong operating cash flow. We believe that our new seven year facility affords us additional flexibility for capital allocation and are pleased that our board of directors authorized another irregular dividend. I am grateful to our sea and shore personnel who make this possible with their commitment to serving our charterers and to conducting our business with a relentless focus on safety and efficiency.”
First Quarter Fiscal Year 2023 Results Summary
Net income amounted to
$24.8 million
, or
$0.62
per diluted share, for the three months ended June 30, 2022, compared to
$5.9 million
, or
$0.14
per diluted share, for the three months ended June 30, 2021.
Adjusted net income amounted to
$22.4 million
, or
$0.56
per diluted share, for the three months ended June 30, 2022, compared to adjusted net income of
$5.4 million
, or
$0.13
per diluted share, for the three months ended June 30, 2021. Adjusted net income for the three months ended June 30, 2022 is calculated by adjusting net income for the same period to exclude an unrealized gain on derivative instruments of
$2.5 million
. Please refer to the reconciliation of net income to adjusted net income, which appears later in this press release.
The
$17.0 million
increase in adjusted net income for the three months ended June 30, 2022, compared to the three months ended June 30, 2021, is primarily attributable to an increase of
$13.8 million
in revenues, decreases of
$3.2 million
in vessel operating expenses and
$1.3 million
in depreciation and amortization, a
$2.5 million
favorable change in other gain/(loss), net, and a
$0.8 million
favorable change in realized loss on derivatives, partially offset by increases of
$2.4 million
in interest and finance costs,
$1.9 million
in charter hire expenses, and
$1.4 million
in general and administrative expenses.
The TCE rate for our fleet was
$39,608
for the three months ended June 30, 2022, a 25.5% increase from a TCE rate of
$31,571
for the same period in the prior year, driven by higher spot rates despite increased bunker prices. Please see footnote 7 to the table in “Financial Information” below for information related to how we calculate TCE. Total fleet utilization (including the utilization of our vessels deployed in the Helios Pool) decreased slightly from 96.1% during the three months ended June 30, 2021 to 95.9% during the three months ended June 30, 2022.
Vessel operating expenses per day decreased to
$9,378
for the three months ended June 30, 2022 compared to
$10,131
in the same period in the prior year. Please see “Vessel Operating Expenses” below for more information.
Revenues
Revenues, which represent net pool revenues—related party, time charters and other revenues, net, were
$76.8 million
for the three months ended
June 30, 2022
, an increase of
$13.8 million
, or 22.0%, from
$63.0 million
for the three months ended
June 30, 2021
primarily due to an increase in average TCE rates, despite a slight decrease in fleet utilization. Average TCE rates increased by
$8,037
from
$31,571
for the three months ended
June 30, 2021
to
$39,608
for the three months ended
June 30, 2022
, primarily due to higher spot rates despite higher bunker prices. The Baltic Exchange Liquid Petroleum Gas Index, an index published daily by the Baltic Exchange for the spot market rate for the benchmark Ras Tanura-Chiba route (expressed as U.S. dollars per metric ton), averaged
$76.175
during the three months ended
June 30, 2022
compared to an average of
$52.790
for the three months ended
June 30, 2021
. The average price of very low sulfur fuel oil (expressed as U.S. dollars per metric ton), from
Singapore
and
Fujairah
increased from
$508
during the three months ended
June 30, 2021
, to
$955
during the three months ended
June 30, 2022
. Our fleet utilization decreased from 96.1% during the three months ended
June 30, 2021
to 95.9% during the three months ended
June 30, 2022
.
Charter Hire Expenses
Charter hire expenses for the vessels chartered in from third parties were
$5.4 million
and
$3.5 million
for the three months ended
June 30, 2022
and 2021, respectively. The increase of
$1.9 million
, or 54.0%, was mainly caused by an increase in the number of chartered-in days from 139 for the three months ended
June 30, 2021
to 182 for the three months ended
June 30, 2022
.
Vessel Operating Expenses
Vessel operating expenses were
$17.1 million
during the three months ended
June 30, 2022
, or
$9,378
per vessel per calendar day, which is calculated by dividing vessel operating expenses by calendar days for the relevant time-period for the technically-managed vessels that were in our fleet. The decrease of
$3.2 million
, or 15.8% from
$20.3 million
for the three months ended
June 30, 2021
was due to a reduction of calendar days for our fleet from 2,002 during the three months ended
June 30, 2021
to 1,820 during the three months ended
June 30, 2022
, driven by the sales of
Captain
Markos NL
and
Captain
Nicholas ML
,
prior to the three months ended
June 30, 2022
. The decrease of
$753
per vessel per calendar day, from
$10,131
for the three months ended
June 30, 2021
to
$9,378
per vessel per calendar day for the three months ended
June 30, 2022
was partly the result of a
$0.9 million
, or
$426
per vessel per calendar day, decrease in non-capitalizable operating expenses related to the drydocking of vessels. Adjusting for the non-capitalizable drydocking costs, vessel operating expenses per vessel per calendar day decreased
$326
during the three months ended
June 30, 2022
, mainly due to lower crew wages and related costs.
General and Administrative Expenses
General and administrative expenses were
$9.4 million
for the three months ended
June 30, 2022
, an increase of
$1.4 million
, or 17.1%, from
$8.0 million
for the three months ended
June 30, 2021
. This increase was driven by an increase of
$1.6 million
, representing the cash bonuses for the Company’s named executive officers that were approved by the Compensation Committee of the Board of Directors and expensed and paid during the three months ended
June 30, 2022
, whereas the cash bonuses for the named executive officers of the Company in respect of the fiscal year ended
March 31, 2021
were approved by the Compensation Committee of the Board of Directors and expensed and paid during the three months ended
September 30, 2021
and not during the three months ended
June 30, 2021
.
Interest and Finance Costs
Interest and finance costs amounted to
$8.0 million
for the three months ended
June 30, 2022
, an increase of
$2.4 million
, or 40.9%, from
$5.6 million
for the three months ended
June 30, 2021
. The increase of
$2.4 million
during this period was mainly due to increases of
$2.0 million
in interest incurred on our long-term debt and
$0.3 million
in loan expenses driven by an increase in interest rates and average indebtedness, excluding deferred financing fees, from
$600.0 million
for the three months ended
June 30, 2021
to
$687.9 million
for the three months ended
June 30, 2022
. Average interest rates increased on our long-term debt from 3.7% to 4.1% due to rising LIBOR and SOFR on our floating-rate long-term debt. The increase in average indebtedness is due to the refinancings of the VLGCs
Constellation, Commander, Cratis, Copernicus, Chaparral
and
Caravelle
during the year ended
March 31, 2022
, as well as the refinancing of the VLGC
Cougar
during the three months ended
June 30, 2022
. As of
June 30, 2022
, the outstanding balance of our long-term debt, net of deferred financing fees of
$6.6 million
, was
$657.0 million
.
Unrealized Gain on Derivatives
Unrealized gain on derivatives amounted to
$2.5 million
for the three months ended
June 30, 2022
, compared to
$0.4 million
for the three months ended
June 30, 2021
. The favorable
$2.1 million
difference is primarily attributable to an increase in favorable fair value changes to our interest rate swaps resulting from changes in forward LIBOR yield curves.
Realized Loss on Derivatives
Realized loss on derivatives amounted to
$0.1 million
for the three months ended
June 30, 2022
, compared to
$0.9 million
for the three months ended
June 30, 2021
. The favorable
$0.8 million
difference is due to an increase in floating LIBOR resulting in the reduction of realized losses on our interest rate swaps.
Fleet
The following table sets forth certain information regarding our fleet as of
July 29, 2022
.
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Market Outlook & Update
After a slight upturn in average propane and butane prices relative to crude prices in
April 2022
, propane and butane prices declined during the second calendar quarter of 2022. Propane prices in North-Western Europe fell from an average of 61% of Brent in
April 2022
to 46% of Brent in
June 2022
. In the Far East region, propane prices reached an average of 48% of Brent by the end of the quarter from 66% on average for
April 2022
.
Additional supply was observed in the market with U.S. exports in the second calendar quarter of 2022 totalling 13.7 million metric tons, 1.7 million metric tons higher than U.S. exports in the previous quarter. Saudi Arabian exports in the second calendar quarter of 2022 were also higher than they were in the first calendar quarter of 2022, averaging approximately 0.6 million metric tons per month during the quarter.
Due to the decrease in propane prices in the East and the continued strength of propane-naphtha’s advantage as a feedstock for the production of ethylene via steam crackers and margins for naphtha crackers (according to consultant, Next-Generation Logistic Ship’s, proprietary model) were predominately negative for the period ended
June 2022
, with the propane margin averaging approximately
$142
per metric ton of ethylene in the second calendar quarter of 2022, a significant improvement from the levels seen in the first calendar quarter of 2022. Despite this, many petrochemical operators were seen to lower operating rates over during the period.
In North-Western Europe, propane continued to provide the largest margin for the production of ethylene via steam crackers until
June 2022
when high aromatic prices increased naphtha’s advantage, despite negative propane-naphtha spreads. Since then, margins for naphtha have subsided with propane’s advantage once again returning. Overall, margins for utilising propane as the feedstock in North-Western Europe steam crackers increased from an average of
$490
per metric ton in the first calendar quarter of 2022 to over
$670
per metric ton on average in the second calendar quarter of 2022. Unlike in the East, margins for European petrochemical players have turned positive for naphtha from the end of the first calendar quarter of 2022 to the beginning of the second calendar quarter of 2022.
For propane dehydrogenation (PDH) operators, margins have remained under pressure during the second calendar quarter of 2022 with some plants lowering operating rates. Furthermore, additional COVID-19 restrictions in
China
during the second calendar quarter of 2022 has limited the growth in Chinese demand for LPG. Imports into
China
remained at 6.1 million metric tons in the second calendar quarter of 2022, similar to the levels seen in the fourth calendar quarter of 2021 and the first calendar quarter of 2022.
A key factor of the market going forward will be downstream demand, particularly olefins and polyolefin growth in the East. Overall oil and gas prices will also continue to heavily influence the market particularly with the ongoing conflict between
Russia
and
Ukraine
.
The Baltic VLGC index on average increased in the second calendar quarter of 2022 to approximately
$76
per metric ton from approximately
$57
per metric ton in the second calendar quarter of 2022. Healthy VLGC supply/demand balance and strong bunker prices have contributed to the increased rates observed.
One VLGC was added to the fleet during the second calendar quarter of 2022, with a further 11 vessels expected to be added before the end of 2022.
Currently the VLGC orderbook stands at approximately 20% of the current global fleet. An additional 67 VLGCs equivalent to roughly 6.0 million cbm of carrying capacity are expected to be added to the global fleet by calendar year 2024. The average age of the global fleet is now approximately 10.6 years old.
The above market outlook update is based on information, data and estimates derived from industry sources, and there can be no assurances that such trends will continue or that anticipated developments in freight rates, export volumes, the VLGC orderbook or other market indicators will materialize. This information, data and estimates involve a number of assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on various factors. You are cautioned not to give undue weight to such information, data and estimates. While we believe the market and industry information included in this release to be generally reliable, we have not independently verified any third-party information or verified that more recent information is not available.
Seasonality
Liquefied gases are primarily used for industrial and domestic heating, as a chemical and refinery feedstock, as a transportation fuel and in agriculture. The LPG shipping market historically has been stronger in the spring and summer months in anticipation of increased consumption of propane and butane for heating during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and the supply of certain commodities. Demand for our vessels therefore may be stronger in the quarters ending
June 30
and
September 30
and relatively weaker during the quarters ending
December 31
and
March 31
, although 12-month time charter rates tend to smooth these short-term fluctuations and recent LPG shipping market activity has not yielded the expected seasonal results. To the extent any of our time charters expire during the typically weaker fiscal quarters ending
December 31
and
March 31
, it may not be possible to re-charter our vessels at similar rates. As a result, we may have to accept lower rates or experience off-hire time for our vessels, which may adversely impact our business, financial condition, and operating results.
Financial Information
The following table presents our selected financial data and other information for the periods presented:
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The following table sets forth a reconciliation of net income to Adjusted EBITDA (unaudited) for the periods presented:
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The following table sets forth a reconciliation of revenues to TCE rate (unaudited) for the periods presented:
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In addition to the results of operations presented in accordance with U.S. GAAP, we provide adjusted net income and adjusted EPS. We believe that adjusted net income and adjusted EPS are useful to investors in understanding our underlying performance and business trends. Adjusted net income and adjusted EPS are not a measurement of financial performance or liquidity under U.S. GAAP; therefore, these non-U.S. GAAP measures should not be considered as an alternative or substitute for U.S. GAAP. The following table reconciles net income and EPS to adjusted net income and adjusted EPS, respectively, for the periods presented:
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The following table presents our unaudited balance sheets as of the dates presented:
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Conference Call
A conference call to discuss the results will be held today,
August 3, 2022
at
10:00 a.m. ET
. The conference call can be accessed live by dialing 1-855-327-6837, or for international callers, 1-631-891-4304, and requesting to be joined into the Dorian LPG call. A replay will be available at
1:00 p.m. ET
the same day and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 10019922. The replay will be available until
August 10, 2022
, at
11:59 p.m. ET
.
A live webcast of the conference call will also be available under the investor relations section at
www.dorianlpg.com
. The information on our website does not form a part of and is not incorporated by reference into this release.
About Dorian LPG Ltd.
Dorian LPG is a liquefied petroleum gas shipping company and a leading owner and operator of modern VLGCs. Dorian LPG’s fleet currently consists of twenty-two modern VLGCs. Dorian LPG has offices in
Stamford, Connecticut
, USA;
Copenhagen, Denmark
; and
Athens, Greece
.
Forward-Looking and Other Cautionary Statements
The cash dividend referenced in this release is an irregular dividend. All declarations of dividends are subject to the determination and discretion of our Board of Directors based on its consideration of various factors, including the Company’s results of operations, financial condition, level of indebtedness, anticipated capital requirements, contractual restrictions, restrictions in its debt agreements, restrictions under applicable law, its business prospects and other factors that our Board of Directors may deem relevant.
Under the common share repurchase authority referenced in this release, (the “2022 Common Share Repurchase Authority”), purchases may be made at the Company’s discretion in the form of open market repurchase programs, privately negotiated transactions, accelerated share repurchase programs or a combination of these methods. The actual amount and timing of share repurchases are subject to capital availability, our determination that share repurchases are in the best interest of the Company’s shareholders, and market conditions. The Company is not obligated to make any common share repurchases under the 2022 Common Share Repurchase Authority and may suspend or discontinue the 2022 Common Share Repurchase Authority at any time.
This press release contains “forward-looking statements.” Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “forecasts,” “may,” “will,” “should” and similar expressions are forward-looking statements. These statements are not historical facts but instead represent only the Company’s current expectations and observations regarding future results, many of which, by their nature are inherently uncertain and outside of the Company’s control. Where the Company expresses an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, the Company’s forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements. The Company’s actual results may differ, possibly materially, from those anticipated in these forward-looking statements as a result of certain factors, including changes in the Company’s financial resources and operational capabilities and as a result of certain other factors listed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. For more information about risks and uncertainties associated with Dorian LPG’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Dorian LPG’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. The Company does not assume any obligation to update the information contained in this press release.
Contact Information
Ted Young
; Chief Financial Officer: Tel.: +1 (203) 674-9900 or
[email protected]
Source: Dorian LPG Ltd.
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SOURCE Dorian LPG Ltd.
