Dorian LPG Ltd. Announces Fiscal Year-End 2014 Financial Results and Agreement with Phoenix Tankers
STAMFORD, Conn., July 30, 2014 /PRNewswire/ -- Dorian LPG Ltd. (NYSE: LPG) (the "Company" or "Dorian LPG"), a leading owner and manager of modern very large gas carriers ("VLGCs"), today reported its financial results for the period July 1, 2013 (inception) to March 31, 2014.
Recent Developments
- Entered into an agreement with Phoenix Tankers, a 100% subsidiary of Mitsui OSK Lines, to establish a VLGC pool, which is expected to commence operations on January 1st, 2015. The pool will run from Singapore and London. (Phoenix Tankers currently manages a fleet of eleven VLGCs under a commercial pool agreement. Dorian LPG currently operates four VLGCs and has 18 newbuilding deliveries scheduled through January 2016).
- Took delivery of the ECO VLGC Comet from Hyundai Heavy Industries Co. Ltd. ("Hyundai") in Ulsan, South Korea. The vessel will immediately enter into a five-year time charter with Shell.
- Entered into a Memorandum of Understanding ("MOU"), with HNA Logistics Group Co., Ltd. to jointly explore opportunities in the Chinese liquefied petroleum gas ("LPG") logistics market. We intend to focus our efforts in this important market to forge relationships with Chinese LPG ship charterers and LPG end users.
Highlights – Quarter ended June 30, 2014
- Completed an initial public offering of 7,105,263 common shares on the New York Stock Exchange at a price of $19.00 per share, or $135.0 million in gross proceeds.
- Closed a private placement of 1,412,698 common shares to BH Logistics, LP, an investment vehicle in which an affiliate of HNA Group of China is an investor, at a price of NOK 110 per share, or $18.40, representing $26.0 million in gross proceeds.
Highlights – Quarter ended March 31, 2014
- Executed three newbuilding contracts with Hyundai with a total contract price of $216.7 million. These newbuilding contracts represent the seventeenth, eighteenth, and nineteenth newbuildings in our VLGC Newbuilding Program, and are scheduled to be delivered between calendar Q2 2015 and Q4 2015.
- Entered into a five-year time charter agreement with Shell for the Comet, the first newbuilding vessel in our VLGC Newbuilding Program, which was delivered in July 2014. The new five-year time charter commenced on July 25, 2014 at a rate of $945,000 per month.
- Entered into a five-year time charter agreement with Shell for the Captain Markos NL, which is currently on time charter to Statoil at a base rate of $500,000 per month and a 100% profit share up to a ceiling of $1,050,000 per month that will conclude in calendar Q4 2014. The new five-year charter to Shell is scheduled to commence on November 1, 2014, at a rate of $850,000 per month, with a charter expiration of calendar Q4 2019.
- Completed a private placement of 5,649,200 shares to Norwegian and international institutional investors at a price of NOK110.00, or $17.92 per share based upon the exchange rate on February 12, 2014, which represents approximately $100.0 million in gross proceeds.
"After a successful initial public offering, we are pleased to report our financial results as a public company," John Hadjipateras, Chairman, President and Chief Executive Officer, commented, "The growth of the LPG industry represents a significant opportunity for our company, specifically the US export market which has grown rapidly since 2009 and continues to expand at a steady pace. With the delivery of the remaining 18 vessels in our VLGC Newbuilding Program, we will own and operate one of the industry's largest and most modern high quality VLGC fleets. In addition, our team's long experience in LPG shipping allows us to capitalize fully on the growth opportunities in this market," Mr. Hadjipateras concluded.
Commenting on the Heads of Agreement with Phoenix Tankers, Mr. Hadjipateras said, "Dorian LPG welcomes the opportunity to work with Phoenix Tankers, one of the foremost operators in Asia. We expect that our jointly operated pool, comprising the world's number one ECO VLGC fleet as well as other modern vessels, will be very well positioned to provide efficient service to customers in the Eastern and Western Hemispheres."
2014 Results Summary
Revenues for fiscal 2014 of $29.6 million were driven by charter hire and voyage charters of three VLGC vessels and one pressurized 5,000 cbm vessel. Revenues from the time charter of two VLGC vessels and the Grendon were $17.8 million, of which $6.1 million represents profit sharing. Revenue from the voyage charter for the VLGC vessel was $11.8 million. The Captain Nicholas ML was in drydock from August 28, 2013 to September 14, 2013 and did not earn revenue during that time.
Voyage expenses for fiscal 2014 were $6.7 million. The expenses were primarily related to bunkers of $5.3 million, port charges of $0.6 million, brokers' commissions of $0.4 million, security costs of $0.3 million, and other voyage expenses of $0.1 million.
Vessel operating expenses for fiscal 2014 were $8.4 million or $8,531 per vessel per calendar day. Vessel operating expenses are influenced by the age and size of the vessel, the condition of the vessel and other factors.
Management fees for fiscal 2014 were $3.1 million. These represent fees charged by Dorian (Hellas) of $93,750 per vessel per month in accordance with our management agreement entered into with Dorian (Hellas) for the period since the acquisition of our vessels. The management fees are charged on a monthly basis per vessel and the total fees are affected by the number of vessels in our fleet.
Depreciation and amortization for fiscal 2014 was $6.6 million and mainly relates to depreciation expense from our operating fleet.
Interest and finance costs for fiscal 2014 were $1.6 million. The interest and finance costs consisted of interest incurred on our bank debt of $1.7 million, amortization of financing costs of $0.8 million and $0.1 million of other financial expenses less $1.0 million of interest costs capitalized to the cost of our vessels under construction. The average indebtedness during the period was $132.6 million and the outstanding balance of our long‑term debt as of March 31, 2014 was $128.7 million.
Interest income for fiscal 2014 was $0.4 million resulting from short-term bank deposits.
Loss on derivatives – net for fiscal 2014 was $1.1 million. The net loss on derivatives was comprised of a realized loss of $3.7 million, partially offset by an unrealized gain of $2.6 million from changes in the fair value of interest rate swaps.
Foreign currency gain for fiscal 2014 was $0.7 million. This was the result of realized gains of $1.9 million from payments in U.S. dollars received in advance of the November 26, 2013 closing of the equity private placements priced in Norwegian Kroner and converted to U.S. dollars. This was partially offset by realized losses of $1.2 million from payments in U.S. dollars received in advance of the February 12, 2014 closing of the equity private placements priced in Norwegian Kroner and converted to U.S. dollars.
Equity Incentive Plan
In June 2014, pursuant to the equity incentive plan, the board of directors granted 655,000 shares of restricted stock with a five-year vesting period to certain of our officers.
Market Outlook
The LPG shipping market has enjoyed a favorable first-half market environment. Increased U.S. exports, due to growth from shale gas and oil production, and demand from India and China, in addition to traditional Asian markets, have driven the demand for LPG shipping and created a tight shipping market. With only nine vessels being delivered this year into the global VLGC fleet (mostly in the second half of the year), outlook for LPG seaborne trade remains favorable. Spot charter rates reached all-time high levels during the first half of the year. There can be no guarantee that rates will remain at these levels.
Export infrastructure and fractionation capacity in the U.S. has grown, and both Targa Resources and Sunoco / Energy Transfer Partners are expected to open additional capacity during the second half of 2014. U.S. sourced LPG continues to enjoy a price advantage over LPG sourced from the Middle East, thereby creating more demand for U.S. LPG in the important Asian markets.
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 expire 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
Our operating fleet currently consists of five LPG carriers, including one fuel-efficient 84,000 cbm VLGC, three modern 82,000 cbm VLGCs and one pressurized 5,000 cbm vessel. In addition, we have newbuilding contracts for the construction of 18 new fuel‑efficient 84,000 cbm VLGCs at Hyundai and Daewoo, both of which are based in South Korea, with scheduled deliveries between September 2014 and January 2016.
Each of our newbuildings will be an ECO‑design vessel incorporating advanced fuel efficiency and emission‑reducing technologies. Upon completion of our VLGC Newbuilding Program in January 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 11 years.
| Capacity |
Shipyard |
Sister |
Year Built/ |
ECO |
Charterer |
Charter |
|
| OPERATING FLEET |
|||||||
| VLGC |
|||||||
| Captain Nicholas ML(3) |
82,000 |
Hyundai |
A |
2008 |
— |
Spot |
— |
| Captain John NP(3) |
82,000 |
Hyundai |
A |
2007 |
— |
Spot |
— |
| Captain Markos NL(3)(4) |
82,000 |
Hyundai |
A |
2006 |
— |
Statoil |
Q4 2014 |
| Shell |
Q4 2019 |
||||||
| Comet(5) |
84,000 |
Hyundai |
B |
2014 |
X |
Shell |
Q3 2019 |
| Small Pressure |
|||||||
| Grendon |
5,000 |
Higaki |
1996 |
— |
Spot |
— |
|
| NEWBUILDING VLGCs |
|||||||
| Corsair(6) |
84,000 |
Hyundai |
B |
Q3 2014 |
X |
— |
— |
| Corvette |
84,000 |
Hyundai |
B |
Q4 2014 |
X |
— |
— |
| Cougar |
84,000 |
Hyundai |
B |
Q2 2015 |
X |
— |
— |
| Cobra |
84,000 |
Hyundai |
B |
Q2 2015 |
X |
— |
— |
| Continental |
84,000 |
Hyundai |
B |
Q2 2015 |
X |
— |
— |
| Concorde |
84,000 |
Hyundai |
B |
Q2 2015 |
X |
— |
— |
| Constitution |
84,000 |
Hyundai |
B |
Q2 2015 |
X |
— |
— |
| Commodore |
84,000 |
Hyundai |
B |
Q3 2015 |
X |
— |
— |
| Constellation |
84,000 |
Hyundai |
B |
Q3 2015 |
X |
— |
— |
| Cresques |
84,000 |
Daewoo |
C |
Q3 2015 |
X |
— |
— |
| Cheyenne |
84,000 |
Hyundai |
B |
Q4 2015 |
X |
— |
— |
| Clermont |
84,000 |
Hyundai |
B |
Q4 2015 |
X |
— |
— |
| Chaparral |
84,000 |
Hyundai |
B |
Q4 2015 |
X |
— |
— |
| Commander |
84,000 |
Hyundai |
B |
Q4 2015 |
X |
— |
— |
| Cratis |
84,000 |
Daewoo |
C |
Q4 2015 |
X |
— |
— |
| Copernicus |
84,000 |
Daewoo |
C |
Q4 2015 |
X |
— |
— |
| Challenger |
84,000 |
Hyundai |
B |
Q1 2016 |
X |
— |
— |
| Caravel |
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) Restricted cash of $4.5 million pledged against these VLGCs as of March 31, 2014. Each of the vessels is secured and cross-collaterallized by first priority mortgages.
(4) Currently on time charter at a base rate of $500,000 per month and a 100% profit share based on average spot market rates between the base rate of $500,000 per month and a maximum rate of $1,050,000 per month. Commencing on or about November 1, 2014, on time charter to Shell at a rate of $850,000 per month for a period of 5 years.
(5) Delivered on July 25, 2014 and on time charter beginning July 25, 2014 at a rate of $945,000 per month.
(6) Restricted cash of $30.9 million pledged against this vessel as of March 31, 2014. The vessel will be mortgaged as security upon delivery as described in Note 11 to our consolidated financial statements included herein |
|||||||
Financial Information
The selected historical financial data as of and for the fiscal years ended March 31, 2013 and 2012 have been derived from the Predecessor Businesses' audited combined financial statements, and should be read together with and are qualified in its entirety by reference to such combined financial statements.
The selected historical financial data as of March 31, 2014 and for the periods July 1, 2013 (inception) to March 31, 2014 have been derived from our consolidated financial statements and the notes thereto and the selected historical financial data for the period April 1, 2013 to July 28, 2013 have been derived from the Predecessor Businesses' combined financial statements and the notes thereto.
The following table should be read together with the consolidated financial statements and related notes thereto of Dorian LPG Ltd. and the combined financial statements and related notes thereto of the Predecessor Business of Dorian LPG Ltd.. The combined and consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and are in U.S. dollars.
| Dorian LPG Ltd. |
Predecessor Businesses of Dorian LPG Ltd. |
||||||||
| Period July 1 |
Period April 1, |
Years Ended March 31, |
|||||||
| 2014 |
July 28, 2013 |
2013 |
2012 |
||||||
| (in U.S. dollars, except fleet data) |
|||||||||
| Statement of Operations Data |
|||||||||
| Revenues |
$29,633,700 |
$15,383,116 |
$38,661,846 |
$34,571,042 |
|||||
| Expenses |
|||||||||
| Voyage expenses |
6,670,971 |
3,623,872 |
8,751,257 |
2,075,698 |
|||||
| Voyage expenses‑related party |
— |
198,360 |
505,926 |
448,683 |
|||||
| Vessel operating expenses |
8,394,959 |
4,638,725 |
12,038,926 |
14,410,349 |
|||||
| Management fees‑related party |
3,122,356 |
601,202 |
1,824,000 |
1,824,000 |
|||||
| Depreciation and amortization |
6,620,372 |
3,955,309 |
12,024,829 |
11,847,628 |
|||||
| General and administrative expenses |
433,674 |
28,204 |
157,039 |
80,552 |
|||||
| Total expenses |
25,242,332 |
13,045,672 |
35,301,977 |
30,686,910 |
|||||
| Operating income |
4,391,368 |
2,337,444 |
3,359,869 |
3,884,132 |
|||||
| Other income/(expenses) |
|||||||||
| Interest and finance costs |
(1,579,206) |
(762,815) |
(2,568,985) |
(2,415,855) |
|||||
| Interest income |
428,201 |
98 |
598 |
504 |
|||||
| (Loss)/Gain on derivative, net |
(1,104,001) |
2,830,205 |
(5,588,479) |
(10,943,316) |
|||||
| Foreign currency gain/(loss), net |
697,481 |
(5) |
(53,700) |
2,215 |
|||||
| Total other income/(expenses), net |
(1,557,525) |
2,067,483 |
(8,210,566) |
(13,356,452) |
|||||
| Net income/(loss) |
$2,833,843 |
$4,404,927 |
$(4,850,697) |
$(9,472,320) |
|||||
| Earnings per common share, basic and diluted |
$0.09 |
— |
— |
— |
|||||
| Other Financial Data |
|||||||||
| Adjusted EBITDA(1) |
$12,137,422 |
$6,292,846 |
$15,331,596 |
$15,734,479 |
|||||
| Fleet Data |
|||||||||
| Calendar days |
984 |
476 |
1,460 |
1,464 |
|||||
| Available days |
964 |
476 |
1,447 |
1,421 |
|||||
| Operating days |
941 |
449 |
1,359 |
1,405 |
|||||
| Fleet utilization |
97.7% |
94.3% |
93.9% |
98.9% |
|||||
| Average Daily Results |
|||||||||
| Time charter equivalent rate |
$24,402 |
$25,748 |
$21,637 |
$22,809 |
|||||
| Daily vessel operating expenses |
$8,531 |
$9,745 |
$8,246 |
$9,843 |
|||||
| Dorian LPG Ltd. |
Predecessor Businesses of Dorian LPG Ltd. |
|||||
| As of March 31, 2014 |
As of |
|||||
| (in U.S. dollars) |
||||||
| .1 Balance Sheet Data |
||||||
| .2 Cash and cash equivalents |
.3 $279,131,795 |
.4 $1,041,644 |
||||
| .5 Restricted cash, current |
30,948,702 |
.6 — |
||||
| .7 Restricted cash, non‑current |
.8 4,500,000 |
.9 — |
||||
| .10 Total assets |
840,245,766 |
.11 194,447,604 |
||||
| .12 Total liabilities |
.13 148,046,334 |
.14 181,689,814 |
||||
| .15 Total shareholders' / owners' equity |
.16 692,199,432 |
.17 12,757,790 |
||||
| (1) Adjusted EBITDA represents net income before interest and finance costs, loss/(gain) on derivatives 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, 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 U.S. 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:
| Dorian LPG Ltd. |
Predecessor Businesses of Dorian LPG Ltd. |
|||||
| Period July 1 |
Period April 1, |
Years Ended March 31, |
||||
| 2014 |
July 28, 2013 |
2013 |
2012 |
|||
| (in U.S. dollars) |
||||||
| Net income/(loss) |
.18 $2,833,843 |
.19 $4,404,927 |
.20 $(4,850,697) |
.21 $(9,472,320) |
||
| .22 Interest and finance costs |
.23 1,579,206 |
.24 762,815 |
.25 2,568,985 |
.26 2,415,855 |
||
| .27 Loss /(Gain) on derivatives, net |
.28 1,104,001 |
.29 (2,830,205) |
.30 5,588,479 |
.31 10,943,316 |
||
| .32 Depreciation and amortization |
.33 6,620,372 |
.34 3,955,309 |
.35 12,024,829 |
.36 11,847,628 |
||
| .37 Adjusted EBITDA |
.38 $12,137,422 |
.39 $6,292,846 |
.40 $15,331,596 |
.41 $15,734,479 |
||
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 four modern VLGCs and one pressurized LPG vessel. In addition, Dorian LPG has 18 ECO VLGC newbuildings under construction. Dorian LPG has offices in Connecticut, USA, London, United Kingdom and Piraeus, 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 20-F, 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) 674-9695
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SOURCE Dorian LPG Ltd.
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