DORIAN LPG LTD 2027 Q1 Earnings Call

Thank you, Tasha. Good morning, everyone, and thank you all for joining us for our first quarter 2027 results conference call. With me today are John Hadjipateras, Chairman, President, and CEO of Dorian LPG Ltd., John Lycouris, Head of Energy Transition, and Taro Rasmussen, Vice President of Chartering. Many of our remarks today contain forward-looking statements based on current expectations. These statements may often be identified with words such as expect, anticipate, believe, or similar indications of future expectations. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors as well as general economic conditions.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those we express today. Additionally, let me refer you to our unaudited results for the quarterly period ended June 30, 2026 that were filed this morning on Form 10-Q. In addition, please refer to our previous filings on Form 10-K, where you'll find risk factors that could cause actual results to differ materially from these forward-looking statements. Finally, I would encourage you to review the investor highlights posted this morning on our website. With that, I'll turn over the call to John Hadjipateras.

Thank you, Ted. Good morning, everyone. Thank you for joining Ted, John, Taro, and me. Before my colleagues provide you with detailed comments on our financial results, our market outlook, and our operational progress, I'd like to highlight the following. Our recently declared dividend of a dollar per share totaling $42.8 million will be our 20th dividend payment, bringing total dividends distributed to over $810 million and total capital return to shareholders to over $1 billion since our IPO. This past quarter, the VLGC market experienced another three months of strong rates as the continued disruption to Middle East volumes drove much of the fleet to the U.S. Gulf and supply chain inefficiencies apparently increased ton mile demand. The closure of the Strait of Hormuz cut off nearly all supply volumes from the Middle East.

Liftings from the region fell to roughly 3.4 million tons in the quarter, down more than 70% from the same period last year. Countries such as India and Indonesia, who were already starting to diversify supply away from the Middle East, were now forced to source all their LPG from U.S. Gulf, adding healthy ton mile demand. Fortunately, U.S. production has continued to surprise to the upside. U.S. exports reached a record of nearly 20.8 million tons, up 20% from a year ago. The United States now accounts for approximately 65% of global seaborne LPG exports, up from less than 50% a year ago. The conflict in the Middle East has also disrupted LNG and oil cargoes out of the region and created more demand for those commodities to be sourced from the U.S.

This increased congestion in Panama and pushed many ships to route around the Cape of Good Hope in both ballast and laden conditions, amplifying the ton mile demand increase. The market strength has carried into this quarter, with BLPG reapproaching record territory at around $175,000 a day. Panama is congested again with elevated auction rates. Plant starts in Europe have increased LPG demand for steam cracking there, and Chinese petrochemical demand is expected to increase in the coming months. Taro will elaborate on the freight market over the last quarter and on our outlook going forward. This year, we contracted to sell 4 and have so far delivered 3 ships to their buyers. We contracted to build one 90,000 cubic meter dual-fuel Panamax VLGC at Hyundai Heavy Industries, and our plan is to pursue a conservative renewal program. We believe that a conservative program is appropriate at this time.

Our investment in energy-saving devices have once again proven their value as they are reducing our overall fuel consumption in an elevated bunker price environment. Now I'll hand over to Ted, who will present our quarterly financials and our view for the future as well.

Thank you, John. Ted. My comments this morning will focus on capital allocation, our financial position and liquidity, and our unaudited first quarter results.

We've been active on the fleet renewal front in recent months. As we discussed in our last earnings call, we completed the sale of Cobra in May and prepaid $16.5 million of debt on her. We also completed the sales of Corsair and Constellation in July, generating vessel sale proceeds of approximately $166.4 million net of commission. The associated debt for those two vessels of $48.1 million was repaid in connection with the sales. We've also signed a memorandum of agreement to sell the Clermont and expect to complete the sale in September or October. Together with our recently contracted new building with 2029 delivery, measured fleet renewal remains very central to our thinking around capital allocation.

At June 30, 2026, we reported $342 million in cash, which was sequentially up from the previous quarter. Since then, we have received sale proceeds from Cobra, Corsair, and Constellation and enjoyed a particularly strong market. Our current cash balance stands now at almost $600 million. Our debt balance at quarter end was $512.4 million. We have given notice of repurchase to the owners of two of our Japanese-financed vessels, the Cougar and the Cresques, and expect to close both transactions by the end of the September 30 quarter. The expected total cash application for those two vessels will be approximately $56 million. We are currently evaluating refinancing options for the two vessels.

Pro forma for the sale of the Clermont, which again, we anticipate occurring no later than mid-October, and the already concluded sale of the Constellation, our debt balance at June 30 would have been about $473 million. Using our stated book debt at June 30th of $512.4 million, our debt to total book capitalization stood at 29.3% and our net debt to total cap at 9.7%. We have well-structured and attractively priced debt with a current all-in cost of about 5.1%, an undrawn $41 million revolver, and one debt-free vessel. Coupled with our strong cash rebalance, we have a comfortable measure of financial flexibility. We currently expect our cash cost per day for the coming year to be approximately $26,000 to $27,000 per day, excluding capital expenditures associated with the dry docking of the Captain John that's currently planned for our fourth fiscal quarter.

For discussion of our first quarter results, again, you may find it useful to refer to the investor highlight slides posted this morning on our website. I would also remind you that my remarks will include a number of terms such as utilization, TCE, available days, and adjusted EBITDA. Please refer to our filings for the definitions of these terms. Turning to our first quarter chartering results, as our entire spot trading program is conducted through the Helios Pool, its reported spot results are the best measure of our spot chartering performance. For the June 30 quarter, the Helios Pool earned a TCE per day for its spot and COA voyages of $82,445, reflecting the overall favorable VLGC market conditions. The overall TCE result for the pool, which was over $75,100 per day, also shows the strength of our TC out portfolio.

On page four of our investor highlights material, you can see that we have seven Dorian vessels on time charter within the pool, indicating spot exposure of just over 75% for the 29 vessels in the Helios LPG Pool. Dorian's reported TCE revenue per available day for the quarter was $75,926, which is the highest TCE rate we have reported in our corporate existence. The current rate environment remains healthy, though Panama Canal transit fees are having some impact on realized rates. As always, we will issue our forward-booking information in the coming weeks. Daily OpEx for the quarter was $10,308, excluding dry docking-related expenses, which was a modest increase over the prior quarter. Increased freight, which isn't surprising given the macro environment, and maintenance and repair costs drove the increase.

Our gross time charter in expense for the sixth time charter in vessels came in at $22.6 million, or $41,418 per TC-in day. Thus, those vessels contributed positively to our quarterly profits. As a reminder, the profit-sharing expense on our P&L represents MOL Energia's portion of the net chartering profit. That's charter hire earned less charter hire expense on the BW Tokyo. Total G&A for the quarter was $13.5 million, and cash G&A, excluding non-cash comp expense, was about $11.5 million. Note that this amount included about $4.2 million of incentive compensation expense, which leaves our core G&A around $7.3 million. Our reported adjusted EBITDA for the quarter was $165.4 million, including a $30.1 million gain on the sale of the Cobra. Total cash interest expense for the quarter was $6.9 million, which is down sequentially from the prior quarter. Scheduled principal amortization remains steady at around $13 million.