Dorian LPG Ltd. Announces Third Quarter Fiscal 2016 Financial Results

Jan 29, 2016, 06:00 ET from Dorian LPG Ltd.

STAMFORD, Conn., Jan. 29, 2016 /PRNewswire/ -- Dorian LPG Ltd. (NYSE: LPG) (the "Company" or "Dorian LPG"), a leading owner and operator of modern very large gas carriers ("VLGCs"), today reported its financial results for the three months ended December 31, 2015.

Highlights – Third Quarter Fiscal 2016

  • Revenues of $93.3 million
  • Net Income of $54.7 million; Diluted Earnings Per Share of $0.97
  • Adjusted EBITDA of $68.7 million*
  • Took delivery of seven vessels under our ECO-design VLGC newbuilding program, the Clermont, the Cheyenne, the Cratis, the Commander, the Chaparral, the Copernicus, and the Challenger
  • Repurchased 480,231 shares of our common stock for $5.8 million

* See reconciliation of net income to Adjusted EBITDA included in this press release

John Hadjipateras, Chairman, President and Chief Executive Officer, commented, "The third quarter was an extremely busy period for Dorian as we took the delivery of seven new Eco-design VLGCs. Our cash flow generated from operations has allowed us to repurchase an additional 480,231 shares of our common stock for $5.8 million over the quarter under the board's previously announced authorization to repurchase up to $100 million on or before December 31, 2016. Going forward, we anticipate higher profits and cash generated from operations as a result of our larger fleet, assuming continued favorable market conditions. We will continue to evaluate ways to best return that cash to our investors, underscoring the commitment of both the board and management to increasing shareholder value."  

Third Quarter Fiscal 2016 Results Summary

Revenues were $93.3 million for the three months ended December 31, 2015, which represent net pool revenues-related party, voyage charters, time charters and other revenues earned by our VLGCs and our pressurized 5,000 cbm vessel, an increase of $60.7 million, or 186.3%, from $32.6 million for the three months ended December 31, 2014. The increase is primarily attributable to $68.1 million of revenues contributed by sixteen of our newbuilding VLGCs that were delivered subsequent to December 31, 2014. This increase was partially offset by a decrease in revenues of $7.9 million due to a decrease in VLGC rates for vessels that were in our fleet during both three month periods. The Grendon's revenues increased $0.5 million to $0.7 million on 53 operating days for the three months ended December 31, 2015 from $0.2 million on 19 operating days for the three months ended December 31, 2014.

Voyage expenses were $4.3 million during the three months ended December 31, 2015, a decrease of $3.5 million, from $7.8 million for the three months ended December 31, 2014. Voyage expenses are all expenses unique to a particular voyage, including bunker fuel consumption, port expenses, canal fees, charter hire commissions, war risk insurance and security costs. Voyage expenses are typically paid by us under voyage charters and by the charterer under time charters, including pooling arrangements. Accordingly, we generally only incur voyage expenses for voyage charters or during repositioning voyages between time charters for which no cargo is available or travelling to or from drydocking. The decrease for the three months ended December 31, 2015 when compared to the three months ended December 31, 2014 was mainly attributable to a decrease in the number of VLGCs operating on voyage charters and in fuel prices resulting in decreases in VLGC bunker costs of $2.6 million, port expenses of $0.8 million and other voyage expenses of $0.2 million. The Grendon's voyage expenses increased $0.1 million to $0.4 million on 53 operating days for the three months ended December 31, 2015 from $0.3 million on 19 operating days for the three months ended December 31, 2014.

Vessel operating expenses were $14.3 million during the three months ended December 31, 2015, or $8,180 per vessel per calendar day, which is calculated by dividing vessel operating expenses by calendar days for the relevant time period for vessels that were in our fleet. This was an increase of $8.6 million from $5.7 million for the three months ended December 31, 2014. The gross increase was primarily the result of an increase in the number of vessels operating in our fleet during the three months ended December 31, 2015 compared to the three months ended December 31, 2014. Vessel operating expenses per calendar day decreased $2,221 from $10,401 for the three months ended December 31, 2014 to $8,180 for the three months ended December 31, 2015. The decrease in vessel operating expenses per day of $2,221 is primarily attributable to higher absorption of costs related to the training of additional crew over a greater number of calendar days on our expanded VLGC fleet and the reduced operating cost of our ECO-design VLGCs compared to the 82,000 cbm VLGCs in our fleet. The Grendon's vessel operating expenses decreased $0.1 million to $0.5 million for the three months ended December 31, 2015 from $0.6 million for the three months ended December 31, 2014 due mainly to a decrease in repairs and maintenance and stores and spares of $0.1 million.

Depreciation and amortization was $13.5 million for the three months ended December 31, 2015, an increase of $9.5 million from $4.0 million for the three months ended December 31, 2014 that mainly relates to depreciation expense for our additional operating vessels.

General and administrative expenses were $7.5 million for the three months ended December 31, 2015, an increase of $3.2 million from $4.3 million for the three months ended December 31, 2014, mainly due to an increase of $1.3 million for certain non-capitalizable costs incurred prior to vessel delivery, $0.6 million for salaries, wages and benefits, $0.5 million for stock-based compensation, and $0.8 million for other general and administrative expenses. For the three months ended December 31, 2015, general and administrative expenses were comprised of $2.5 million of salaries and benefits, $1.4 million for certain non-capitalizable costs incurred prior to vessel delivery, $1.3 million of stock-based compensation, $0.8 million for professional, legal, audit and accounting fees and $1.5 million of other general and administrative expenses.

Interest and finance costs amounted to $4.6 million for the three months ended December 31, 2015, an increase of $4.6 million from less than $0.1 million for three months ended December 31, 2014. The increase of $4.6 million during this period was mainly due to a $4.7 million increase in interest incurred on our long-term debt, amortization and other financing expenses from $1.0 million in the three months ended December 31, 2014 to $5.7 million in the three month period ended December 31, 2015. These increases were partially offset by a $0.1 million increase in capitalized interest from $1.0 million in the three months ended December 31, 2014 to $1.1 million in the three months ended December 31, 2015. The average indebtedness during the three months ended December 31, 2015 was $711.8 million compared to $123.3 million during the three months ended December 31, 2014, reflecting debt drawdowns made under our 2015 Debt Facility. The outstanding balance of our long term debt as of December 31, 2015 was $814.1 million.

Gain/(loss) on derivatives, net, amounted to a net gain of approximately $5.4 million for the three months ended December 31, 2015, compared to a net loss of $1.3 million for the three months ended December 31, 2014. The net gain on derivatives for the three months ended December 31, 2015 was comprised of an unrealized gain of $7.4 million from the changes in the fair value of the interest rate swaps due mainly to changes in yield curves, partially offset by a realized loss of $2.0 million due mainly to an increase in notional debt amounts. For the three months ended December 31, 2014, the net loss on derivatives was primarily comprised of a realized loss of $1.3 million and an unrealized loss of less than $0.1 million from the changes in the fair value of the interest rate swaps.

During the quarter, we repaid $10.6 million of bank debt under our loan facilities and we finished the quarter with $22.0 million of unrestricted cash. As of December 31, 2015, we had $53.3 million of remaining payments due under our VLGC Newbuilding Program.

Market Outlook Update  

Global liquefied petroleum gas ("LPG") export volumes for the calendar 2015 reached 80 million metric tons, an 11% increase over the previous year. U.S. LPG exports alone reached a record of nearly 21 million metric tons, which is a 50% increase over the previous year. The U.S. became the largest LPG exporter in the world, accounting for 25% of the global seaborne export volumes, which were shipped to Central and South America, Asia, and Europe and the Mediterranean at about 43%, 29% and 26%, respectively.  The strong LPG export volumes from the U.S. Gulf and in particular large cargo movements (on VLGC vessels) from West to East have increased ton-miles for the segment Dorian LPG has focused on and has supported shipping demand for VLGC vessels.  Other LPG exporting regions have shown export growth in 2015 and have generally contributed to a generally stronger Baltic rate market resulting in strong utilization and freight rates seen by VLGC vessels.

Propane and Butane prices have followed crude oil prices downward, making LPG attractive not only to the retail domestic markets, but also to the petrochemical industries around the world. The continuing U.S. LPG export capacity growth is evident with the recent Enterprise expansion, the expected Marcus Hook Mariner East export terminal (commencement in February 2016), the Petrogas terminal (expected capacity increase of 0.35 million tons during 2016), and the Phillips 66 terminal at Freeport, Texas (4.4 million tons annual capacity expected to open in the fourth quarter of 2016).  We therefore expect that U.S. LPG export volumes may reach higher levels in 2016, which would support additional ship supply and a reasonably robust freight rate market environment for the sector.

While these factors continue to support strong fundamental demand for LPG and LPG shipping, there can be no assurances that such trends will continue or that anticipated future freight rates, export capacity, or export volumes will materialize.

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 liquefied gas carrier market is typically 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. As a result, demand for our vessels may be stronger in our quarters ending June 30 and September 30 and relatively weaker during our quarters ending December 31 and March 31, although 12‑month time charter rates tend to smooth these short‑term fluctuations. To the extent any of our time charters expires during the relatively weaker 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.

Fleet

Each of our newbuildings is an ECO-design vessel incorporating advanced fuel efficiency and emission-reducing technologies. Upon completion of our VLGC Newbuilding Program with the final VLGC scheduled to be delivered to us in February 2016, 100% of our VLGC fleet will be operated as sister ships and the average age of our VLGC fleet will be approximately 1.6 years, while the average age of the current worldwide VLGC fleet is approximately 10.2 years.

The following table sets forth certain information regarding our vessels as of January 27, 2016:

 

Year Built/

Capacity

Sister

Estimated

ECO

Charter

(Cbm)

Shipyard

Ships

Delivery(1)

Vessel(2)

Employment(3)

Expiration(1)

OPERATING FLEET

VLGC

Captain Nicholas ML 

82,000

Hyundai

A

2008

Pool

Captain John NP

82,000

Hyundai

A

2007

Pool

Captain Markos NL(4)

82,000

Hyundai

A

2006

Time Charter

Q4 2019

Comet(5)

84,000

Hyundai

B

2014

X

Time Charter

Q3 2019

Corsair(6)

84,000

Hyundai

B

2014

X

Time Charter

Q3 2018

Corvette 

84,000

Hyundai

B

2015

X

Pool

Cougar

84,000

Hyundai

B

2015

X

Pool

Concorde

84,000

Hyundai

B

2015

X

Pool

Cobra(7)

84,000

Hyundai

B

2015

X

Pool

Q3 2016

Continental

84,000

Hyundai

B

2015

X

Pool

Constitution

84,000

Hyundai

B

2015

X

Pool

Commodore

84,000

Hyundai

B

2015

X

Pool

Cresques

84,000

Daewoo

C

2015

X

Pool

Constellation

84,000

Hyundai

B

2015

X

Pool

Cheyenne

84,000

Hyundai

B

2015

X

Pool

Clermont

84,000

Hyundai

B

2015

X

Pool

Cratis

84,000

Daewoo

C

2015

X

Pool

Chaparral

84,000

Hyundai

B

2015

X

Pool

Copernicus

84,000

Daewoo

C

2015

X

Pool

Commander(8)

84,000

Hyundai

B

2015

X

Time Charter

Q4 2020

Challenger

84,000

Hyundai

B

2015

X

Pool

Small Pressure

Grendon

5,000

Higaki

1996

Spot

NEWBUILDING VLGCs

Caravelle

84,000

Hyundai

B

Q1 2016

X

Total

1,847,000

 

(1)

Represents calendar year quarters.

(2)

Represents vessels with very low revolutions per minute, long‑stroke, electronically controlled engines, larger propellers, advanced hull design, and low friction paint.

(3)

"Pool" indicates that the vessel is operated in the Helios Pool and receives as charter hire a portion of the net revenue of the pool calculated according to a formula based on the vessel's pro rata performance in the pool.

(4)

Currently on time charter with an oil major that began in December 2014.

(5)

Currently on a time charter with an oil major that began in July 2014.

(6)

Currently on time charter with an oil major that began in July 2015.

(7)

Currently on a time charter with an oil major within the Helios Pool that began in July 2015.

(8)

Currently on a time charter with a major oil company that began in November 2015.

 

Financial Information

The following table presents our selected financial data and other information as of and for the three and nine months ended December 31, 2015 and December 31, 2014, and as of March 31, 2015 and December 31, 2015.

 

Three months ended 

Nine months ended

(in U.S. dollars, except fleet data)

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

Statement of Operations Data

Revenues

$

93,283,708

$

32,583,990

$

203,872,600

$

68,796,041

Expenses

Voyage expenses

4,347,222

7,755,589

11,411,841

14,899,147

Vessel operating expenses

14,265,183

5,741,206

30,479,158

14,412,174

Management fees—related party

1,125,000

Depreciation and amortization

13,536,900

3,966,640

26,697,882

9,467,720

General and administrative expenses

7,506,740

4,294,965

20,002,555

9,389,689

Loss on disposal of assets

105,549

Total expenses

39,656,045

21,758,400

88,696,985

49,293,730

Other income—related parties

383,642

1,150,927

Operating income

54,011,305

10,825,590

116,326,542

19,502,311

Other income/(expenses)

Interest and finance costs

(4,633,454)

(34,491)

(5,700,583)

(250,483)

Interest income

22,382

104,169

137,226

345,797

Gain/(loss) on derivatives, net

5,382,442

(1,340,747)

(816,926)

(2,386,582)

Foreign currency loss, net

(121,352)

(557,916)

(418,789)

(778,512)

Total other income/(expenses), net

650,018

(1,828,985)

(6,799,072)

(3,069,780)

Net income

$

54,661,323

$

8,996,605

$

109,527,470

$

16,432,531

Earnings per common share—basic

$

0.97

$

0.16

$

1.92

$

0.29

Earnings per common share—diluted

$

0.97

$

0.16

$

1.92

$

0.29

Other Financial Data

Adjusted EBITDA(1)

$

68,738,066

$

15,096,762

$

145,899,229

$

30,062,118

Fleet Data

Calendar days(2)

1,744

552

3,498

1,357

Available days(3)

1,703

552

3,417

1,304

Operating days(4)

1,581

435

3,205

1,117

Fleet utilization(5)

92.8

%

78.8

%

93.8

%

85.7

%

Average Daily Results

Time charter equivalent rate(6)

$

56,253

$

57,077

$

60,050

$

48,251

Daily vessel operating expenses(7)

$

8,180

$

10,401

$

8,713

$

10,621

 

As of

As of

(in U.S. dollars)

December 31, 2015

March 31, 2015

Balance Sheet Data

Cash and cash equivalents

$

22,034,919

$

204,821,183

Restricted cash, non – current

49,712,789

33,210,000

Total assets

1,823,011,675

1,099,101,270

Current portion of long-term debt

65,708,060

15,677,553

Long-term debt – net of current portion

748,344,288

184,665,874

Total liabilities

847,656,439

225,887,011

Total shareholders' equity

$

975,355,236

$

873,214,259

 

(1)

Adjusted EBITDA is a non-GAAP financial measure and represents net income before interest and finance costs, (gain)/loss on derivatives, net, stock-based compensation expense, impairment, loss on disposal of assets and depreciation and amortization and is used as a supplemental financial measure by management to assess our financial and operating performance. We believe that adjusted EBITDA assists our management and investors by increasing the comparability of our performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects between periods of derivatives, interest and finance costs, stock-based compensation expense, impairment, loss on disposal of assets and depreciation and amortization expense, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including adjusted EBITDA as a financial and operating measure benefits investors in selecting between investing in us and other investment alternatives.

Adjusted EBITDA has certain limitations in use and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income. Adjusted EBITDA as presented below may not be computed consistently with similarly titled measures of other companies and, therefore might not be comparable with other companies.

The following table sets forth a reconciliation of net income to Adjusted EBITDA (unaudited) for the periods presented:

 

Three months ended 

Nine months ended

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

(in U.S. dollars)

Net income/(loss)

$

54,661,323

$

8,996,605

$

109,527,470

$

16,432,531

Interest and finance costs

4,633,454

34,491

5,700,583

250,483

(Gain)/loss on derivatives, net

(5,382,442)

1,340,747

816,926

2,386,582

Stock-based compensation expense

1,288,831

758,279

3,050,819

1,524,802

Depreciation and amortization

13,536,900

3,966,640

26,697,882

9,467,720

Loss on disposal of assets

105,549

Adjusted EBITDA

$

68,738,066

$

15,096,762

$

145,899,229

$

30,062,118

 

(2)

We define calendar days as the total number of days in a period during which each vessel in our fleet was owned. Calendar days are an indicator of the size of the fleet over a period and affect both the amount of revenues and the amount of expenses that are recorded during that period.

(3)

We define available days as calendar days less aggregate off‑hire days associated with scheduled maintenance, which include major repairs, drydockings, vessel upgrades or special or intermediate surveys. We use available days to measure the aggregate number of days in a period that our vessels should be capable of generating revenues.

(4)

We define operating days as available days less the aggregate number of days that our vessels are off‑hire for any reason other than scheduled maintenance. We use operating days to measure the number of days in a period that our operating vessels are on hire.

(5)

We calculate fleet utilization by dividing the number of operating days during a period by the number of available days during that period. An increase in non‑scheduled off‑hire days would reduce our operating days, and therefore, our fleet utilization. We use fleet utilization to measure our ability to efficiently find suitable employment for our vessels.

(6)

Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel. TCE rate is a 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 (such as time charters and voyage charters) under which the vessels may be employed between the periods. Our method of calculating TCE rate is to divide the sum of our total revenues net of voyage expenses by operating days for the relevant time period.

(7)

Daily vessel operating expenses are calculated by dividing vessel operating expenses by calendar days for the relevant time period.

 

Conference Call

A conference call to discuss the results will be held today, January 29, 2016 at 11:00 a.m. ET. The conference call can be accessed live by dialing 1-877-407-9039, or for international callers, 1-201-689-8470, and request to be joined into the Dorian LPG call. A replay will be available at 2:00 p.m. ET and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517. The pass code for the replay is 13629244. The replay will be available through February 5, 2016.

A live webcast of the conference call will also be available under the investor relations section at www.dorianlpg.com.

About Dorian LPG Ltd.

Dorian LPG is a liquefied petroleum gas shipping company and a leading owner and operator of modern VLGCs. Dorian LPG currently owns and operates twenty-one modern VLGCs and one pressurized LPG vessel. In addition, Dorian LPG has one ECO-design VLGC newbuilding under construction. Dorian LPG has offices in Stamford, Connecticut, USA, London, United Kingdom and Athens, Greece.

Forward-Looking Statements

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," "should" and similar expressions are forward-looking statements. These statements are not historical facts but instead represent only the Company's belief regarding future results, many of which, by their nature are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, under the heading "Risk Factors." 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 IR@dorianlpg.com

SOURCE Dorian LPG Ltd.



RELATED LINKS

http://www.dorianlpg.com