Dorian LPG Ltd
NYSE:LPG
Dorian LPG Ltd
Dorian LPG Ltd. is a holding company which engages in the transportation of liquefied petroleum gas. The company is headquartered in Stamford, Connecticut and currently employs 83 full-time employees. The company went IPO on 2014-05-08. The firm through its subsidiaries is focused on owning and operating very large gas carrier (VLGCs) in the LPG shipping industry. The firm's fleet consists of 22 modern VLGCs, including 84,000 Cubic Meters (CBM) Ecological design VLGCs (ECO-VLGCs) and 82,000 CBM VLGCs. The firm provides in-house commercial and technical management services for all of its vessels. Its subsidiaries include CJNP LPG Transport LLC, CMNL LPG Transport LLC, Dorian Houston LPG Transport LLC, Constellation LPG Transport LLC, Dorian Tokyo LPG Transport LLC and Dorian Exporter LPG Transport LLC.
Earnings Calls
In its third quarter of 2025, Dorian LPG reported a total cash interest expense of $6.9 million and an adjusted EBITDA of $45.2 million, reflecting stable market conditions. The company announced a $0.70 dividend per share, aligning with its policy amidst ongoing drydocking activities. Looking ahead, Dorian anticipates a time charter equivalent (TCE) of $37,000 per day for the upcoming quarter, having already fixed 53% of available days. With recent enhancements improving fuel efficiency by over 10% and a strong free cash balance of $314.5 million, the company is optimistic about navigating the market's challenges while ensuring shareholder returns.
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Good day, and welcome to the Dorian LPG Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Additionally, a live audio webcast of today's conference call is available on Dorian LPG's website which is www.dorianlpg.com.
I would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead.
Thank you, Nikki. Good morning, everyone, and thank you all for joining us for our third quarter 2025 results conference call. With me today are John Hadjipateras, Chairman, President and CEO of Dorian LPG Limited; John Lycouris, Head of Energy Transition and Chief Executive Officer of Dorian LPG USA; and Taro Rasmussen, Vice President of Chartering. As a reminder, this conference call webcast and a replay of this call will be available through February 27, 2025.
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 period ended December 31, 2024, 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 those forward-looking statements. Finally, I would encourage you to review the investor highlight slides posted this morning on our website.
With that, I'll turn over the call to John Hadjipateras.
Thank you, Ted. Good morning, and thank you for joining us today. Before passing back to Ted and my colleagues, John and Taro, who will provide you with detailed comments on financial results on the market and our outlook, I'd like to highlight the following: Our dividend of $0.70 per share is consistent with our irregular dividend policy of aligning shareholder returns with market realities. Our current voyage bookings reflect the improved market and our confidence in paying a dividend exceeding our current EPS despite a heavy drydocking schedule underscores our positive outlook. I would like to note that we are achieving fuel savings higher than 10% from the energy saving devices and silicon paints we're installing during these dry dockings, resulting in payback periods of less than a year and continuous fuel and cost emission saving.
We expect production growth and terminal expansions at Targa and Nederland by second half 2025 and deliveries of only 11 ships this year will support a healthy freight market in the foreseeable future. We are mindful of a volatile political environment but we're hopeful that our trade will not be disrupted by a possible tariffs tit-for-tat considering that the U.S. share of LPG imports to China was 44% in 2024 compared to 22% in 2015 and China's share of U.S. exports was 60% in 2024 compared to 30% in 2015. We are confident in the LPG trade with growth prospects in petchem as well as domestic consumption. Expected deliveries in the latter part of '26 and in '27 substantially give pause as a percentage of the existing fleet, they are more modest than past delivery cascades. On production, some evolving policies of the U.S. have the potential to unleash its oil and gas industry.
We're mindful of the challenges posed by many uncertainties on the geopolitical front, including developments in Ukraine, Iran and the Middle East, which may strongly influence our market. To navigate this environment, we will focus on prudent capital allocation and operational excellence. Doing what we know best, serving our customers by providing safe, reliable, clean and trouble-free transportation while maintaining a solid balance sheet. We are preparing our operations and fleet to be able to bid on emerging ammonia projects. We already have the CAPTAIN JOHN NP on the water fully ammonia capable. We recently retrofitted one of our 2015 build VLGCs to be ammonia capable and plan to retrofit another 2 ships year. In addition, we have 1 VLGC, VLAC delivering in 2026. With a strong balance sheet, the company is well positioned to continue being a leader in a VLGC, VLAC market.
And now I'd like to pass you back to Ted.
Thanks, John. My comments today will focus on capital allocation, our financial position, liquidity and our unaudited third quarter results. At December 31, 2024, we reported $314.5 million of free cash, which was sequentially down from the previous quarter. The change in cash from the quarter was essentially $10.9 million in cash flow to equity offset by $42.6 million in regular dividends paid and $2.8 million in vessel CapEx.
As disclosed last week, we will pay a $0.70 per share irregular dividend of roughly $30 million in total on or about February 27, 2025, to shareholders of record as of February 5. With a debt balance at quarter end of $570.3 million, our total debt -- our debt to total book capitalization stood at 34.8% and net debt to total cap at 15%. We have well-structured and attractively priced debt capital with the current all-in cost of about 4.7% and an undrawn $50 million revolver and one debt-free vessel and coupled with our strong free cash balance, gives us a comfortable measure of financial flexibility.
Looking ahead, we expect our cash cost per day for the coming year to be approximately $26,000 per day, excluding capital expenditures for dry docking. I would note that our lowest cost hedges, which were at 0.92% for 3-month SOFR are rolling off at the end of this quarter, which will result in about a 30 basis point increase in our all-in debt cost beginning in the first fiscal quarter of 2026. The discussion of our third quarter results, you may also find it useful to refer to the investor highlight slides posted this morning on our website. I'd also remind you that my remarks will include a number of terms such as TCE, available days and adjusted EBITDA. Please refer to our filings for the definition of these terms.
Looking at our third quarter chartering results, we achieved the TCE revenue per available day of about $36,100 though marginally lower than the prior quarter's results, the monthly trend was quite good with November and December results showing strong improvements over the October level. 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 December 31 quarter, the Helios Pool under TCE per day for its spot and COA voyages of $33,200 reflecting the improving monthly trend I just mentioned. The overall results benefited from the strong time charter out portfolio in the pool.
On Page 4 of our investor highlights material, you can see that we have 5 Dorian vessels on time charter in the pool -- within the pool, indicating spot exposure of slightly over 80% for the 29 vessels in the Helios Pool. I'd like to note that the Corsair, which had been on a long-term time charter outside the pool has now entered the Helios pool.
Looking ahead to the quarter ending March 31, 2025, we currently estimate that we have fixed just over 53% of the available days in the quarter, and we estimate for the quarter that will yield a TCE in excess of $37,000 per day. That rate includes both spot fixtures and time charters in the Helios pool. Please note that given the difficulty in predicting loading dates, which obviously had a huge effect on revenue recognition this put options in some charters and the fact that our COAs were priced on average Baltic rates, the estimates we quote during these calls and the rates actually realize can vary.
Daily OpEx for the quarter came in at $10,161 excluding drydocking related expenses, which was marginally up from the prior quarter's $9,767. This quarter saw nearly $1,000 a day difference between the reported OpEx that includes expense drydocking amounts and our preferred measure of OpEx that excludes those costs. Our time charter rate expense for the 4 TCN vessels came in at $10.6 million or slightly less than $29,000 per day. Thus those vessels contributed positively to our quarterly profits. Total G&A for the quarter was $7.5 million and cash G&A, that's G&A excluding noncash compensation expense, was about $5.8 million which reflects what we consider to be our core G&A at a level which is consistent with our expectations. Those amounts netted a reported adjusted EBITDA for the quarter of $45.2 million.
Total cash interest expense for the quarter was $6.9 million, again reflecting our 4.7% all-in cost of debt. As a reminder, in the first fiscal quarter of 2026, that's the April to June 2025 quarter, our total interest cost will increase a bit to about 5% following the roll off of those hedges I mentioned. For the current fiscal year, we have completed 3 dry dockings and will be drydocking 4 more of our vessels before the end of March, including some upgrades. Year-to-date, we have incurred roughly $12.5 million in cash outlays for those dry docks, and we anticipate about an additional $7 million through year-end, which includes both payments for the dry docks already completed and advanced payments related to coming dry docks. Days in dry dock should be consistent with our previous disclosures.
The irregular dividend declared last week of $0.70 a share brings to $15.20 per share in irregular dividends that we have paid since September 2021. The modest reduction of the dividend is consistent with our previous discussions around the topic. It reflects a balanced mix between current results and the long-term need and prospects of the business. The VLGC business is by no means of utility, and we don't think our dividend policy should be either. Including the dividend to be paid next month, we've returned approximately $850 million in cash. $230 million through open market repurchases in our self-tender offer and $620 million in dividends. Those dividends compare favorably to our net income since June 30, 2021, which is the quarter immediately prior to our first irregular dividend of $633 million.
As we've said, our Board weighs current earnings, our near-term cash forecast, future investment needs and the overall market environment among a number of factors in making its determination of the appropriate level, if any, for our dividends. Thus, the $0.70 per share dividend reflects a constructive market view when considering last quarter's earnings in cash flow and our heavy dry dock schedule this year. We continue to be on the lookout for fleet renewal opportunities. We'll be judicious with our free cash flow, working to balance shareholder distributions, debt reduction in fleet investment.
With that, I'll pass it over to Taro Rasmussen.
Thank you, Ted. Good day, everyone, and thank you for dialing in. The quarter ending December 31, 2024, saw freight market and recovery from the challenges witnessed the quarter prior, but without a winter spike as had been seen in the previous 4 years. Extra volumes from major export regions remained high. but a warm winter and tepid demand for petrochemicals in the Far East halted any booms from emerging. The high inventory levels and record high production levels in the United States created favorable market conditions for exports during October. But physical liftings from U.S. Gulf terminals were hampered as a force majeure at Nederland terminal at knock-on effects through October.
The constraint on export capacity was priced into the west to east arbitrage, which limited speculative buying for any potential cold snaps in the Far East. Although spikes in VLGC fixing demand were elusive, the fundamentals of high inventory levels and high production ensured stable export volumes through October and the Western market traded at a continued premium to the east for the duration of the quarter.
The relative attractiveness of the Western market to the East drew significant VLGC supply to U.S. loading areas and supported a then record export month for VLGCs from the United States in November. In terms of reported exports on VLGCs, the previous record was about 4.67 million tons exported in August of 2024. And November was about 4.76 million tons. With negligible delays at the Panama Canal in November, vessel supply was effectively programmed, and rates were held sideways. The average freight rates in December for the Western market were slightly higher than November, owing mostly to the many vessels laid in on route to the far east from the month prior reflecting the situation of continued positive fundamentals of high inventory and production levels, but fewer vessels available to export.
The Arabian Gulf to Far East spot market was as during the previous quarter, characterized by inquiries by Indian public sector undertakings. The limited number of pure fixtures to the Far East made assessment of the freight market difficult for brokers with rates mostly subject to the pool of vessels to the west and reduced availability for loading in the Arabian Gulf. Although there were periods with sudden fixing inquiry reported in the market, it was often to cover for late running vessels rather than catering to new export tons.
The recovery in the freight market from the third calendar quarter 2024 was welcomed by all market players even if a firmer freight market through the fourth calendar quarter 2024 was likely anticipated by most. Nonetheless, our expectations remain positive for VLGC shipping. Despite some analysts seeing a challenged petrochemical market in the Far East due to oversupply, propane continues to remain the competitive feedstock for steam cracking. PDH plants continue to come on stream in China, increasing overall propane demand.
Also, the Panama Canal's utilization has reached maximum efficiency during 2024 creating upside potential if congestion increases. Moreover, the limited delivery schedule of new builds in 2025, expected high export supply from North America and roughly 13% capacity expansion at U.S. Gulf terminals during the second half of 2025 are positive factors moving forward.
Thank you. I will now pass over to Mr. John Lycouris.
Thank you, Taro. At Dorian LPG, we strive to improve the energy efficiency of our vessels with a focus on operational and technical performance and continue to follow the employment of technological advances and innovations commercially available to marine sector. The Dorian LPG fleet currently exceeds the IMO carbon intensity index, or CII requirements by using real-time data monitoring to determine mid voyage technical and operational optimization.
Our 2024 annual efficiency ratio or AER, which is a CO2 emissions intensity metric for the industry and grades vessels from A to E with A being best, was 10.6% better than the IMO target, and grades the fleet with a CIA rating of B. The employment of energy-saving devices, advanced engine software modification, implementation of advanced vessel routing software and AI engine monitoring systems have resulted in improved fleet performance and in the reduction of emissions and bunker costs.
Our scrubber vessel savings for the fourth calendar quarter of 2024 amounted to $1.6 million or about $1,346 per calendar day net of all scrubber operating expense. Fuel differentials between high sulfur fuel oil and very low sulfur fuel oil averaged $83 per metric ton. While the differential of LPG as fuel versus very low sulfur fuel oil stood at about $155 per metric ton, making LPG fuel, as a fuel quite economically advantageous for our dual fuel vessels. We operate 16 scrubber-fitted vessels and 4 dual fuel LPG vessels.
As mentioned earlier in our call, a second 2015 built vessel is currently undergoing an extensive cargo upgrade for ammonia cargoes during the special survey and drydocking window for that vessel regulatory requirements. There is another ammonia cargo upgrade for a vessel plan for dry dock later this year. Upon completion, the Dorian LPG -- of completion of these projects, the doing LPG fleet will have in the water 4 vessels capable of ammonia cargoes and 1 new building VLAC-VLGC delivering in 2026. We believe this cargo system upgrades for ammonia cargo capability, increase the fleet's commercial optionality and readiness for employment when the first ammonia projects develop and the large ammonia cargo markets are established.
MEPC 83 is scheduled to meet in April 2025 with a focus on finalizing the midterm greenhouse gas reduction measures, which are expected to take effect from 2027 onwards. The focus is on emission regulations with the approval of amendments to MARPOL Annex VI and the review of the EEXI and CII measures including the adoption of nitrous oxide technical code updates. We further expect for the MEPC to codify the establishment of technical and economic decarbonization measures and the progression of the life cycle greenhouse gas assessment framework. The IMO is also likely to make progress towards the global carbon tax, and we may see a proposal for adoption emerge from this meeting.
As previously mentioned, wind-assisted propulsion systems offer benefits under the current and upcoming regulatory frameworks. We have undertaken an evaluation and analysis of the weather patterns and conditions encountered during our typical voyage routes, the aerodynamic and hydrodynamic factors of our vessels so that we can identify suitable wind assisted propulsion systems solutions for our fleet. Selecting wind technology that is both efficient and straightforward to install and operate can be a pivotal step in the energy transition, delivering a cost-effective path towards reduced emissions and seamless regulatory compliance. We continue to believe that our focus on energy and emission savings makes good business sense for our shareholders and for the environment.
Now I would like to pass it over to John Hadjipateras for his closing comments. Thank you.
Thank you very much. Nikki, is there open questions we have.
[Operator Instructions] We'll take our first question from Omar Nokta with Jefferies.
Thanks for the detailed update as usual. Good to get into everything. I guess you answered a good amount of the question on the dividend with your remarks. So I'll probably leave it at that. But maybe just wanted to ask first kind of on capital allocation going forward as we think about things. The past couple of years, you've taken advantage of a very strong market. You paid down a good amount of debt, built up cash, acquired some ships and clearly paid some big dividends along the way. How do you think about what's important as we move through and into 2025? Obviously, there's a good amount of uncertainty. There's a sense here that maybe freight rates are going to be moderating from what we saw previously. How would you think -- or how do you rank your uses of capital moving forward from here?
Thanks for that question, Omar. You always ask a very pertinent and deep questions. So it is -- I think we continue the same. I mean we don't -- our priorities remain the same. I think that we have -- we see the market, as I said in my comments, as being constructive. There are -- there may be opportunities for expansion. There may be opportunities for -- I think that we are well positioned for that with our debt structure and our cash position for -- and we think that the market -- we're hopeful that the market will continue providing the cash surpluses that we've seen. And that we can continue more or less on the same level, the same mentality that we've had so far, which is prudent debt management, prudent cash position and dividends.
And I guess maybe just kind of talking about the amount of supply coming on. You mentioned in the release the 107 VLGCs on order equaling to about 20% of the fleet. Looking back over the past few years, the trade growth has been very strong and easily could have absorbed that amount of capacity. How do you think about the demand going forward? Do you think that we can still see a good amount of trade growth that can pull in these vessels without a significant impact to the supply-demand balance. Maybe that's the first question and then maybe like part 2 of that, there's also maybe 50 or 60 VLECs coming in to the market. Can you just talk about how those affect the trade going forward?
Omar, I think that the ordering boom was caused by optimism on developing ammonia trade. And currently, there's a bit of pull back. And certainly, people are feeling more cautious about it. But I think that the -- it's been discounted. The delays have been discounted. And from here forward, the possibility -- upside is greater than -- so just like in the last few years, we absorbed a significant amount of ship deliveries. I think the trade -- the increase in the trade, both of the LPG, my own feeling is and in the potential of ammonia is going to absorb -- it's going to be enough to absorb the deliveries that we see coming in '26 and '27.
And maybe just -- do you mind just touching on the VLECs in terms of how those -- are those fully contracted for the most part and by design going into ethane? Or is that something that we should consider as potential oncoming supply as well?
Are you talking about VLEC, the ethane or the...
Yes, that's what I said. Yes, the ethane. Yes VLEC.
No, no. I think that, that trade is increasing on its own. I think those ships will be absorbed in that market. I know they have the potential to drop down into the VLGC market, but I don't think that there will be -- that will happen because the exports and then the expansion of that market is significant.
And we will move next with Climent Molins with Value Investor's Edge.
I wanted to start by asking about your bookings so far in Q1. Could you talk about what percentage of days you fixed so far and at what rates?
Ted or Taro, which of you would like to take that? Ted, yes.
I'll just reiterate what we said earlier in the call. We said that we've booked just over 53% of the available days and we estimate that we will achieve a TCE in excess of $37,000 a day for the quarter.
That's helpful. I had missed it. I also wanted to ask about the time chartering vessels with purchase options. Could you provide some commentary on the price those are exercisable?
No, we don't disclose that.
And then final question for me. Following up on Omar's question on capital allocation, you're now back trading at a substantial discount to NAV. And this is a decision more for the Board, but could you comment on how you view the trade-off between share repurchases and dividend distributions?
We have a share repurchase authority, and we are watching the price of the stock, obviously. And it's definitely not off the table for us to sort of accelerate perhaps our share repurchase.
And this will conclude our Q&A session. I will now turn the call over to management for closing remarks.
Well, thank you very much, everyone. We look forward to talking to you at our next call. In the meantime, have a good time. Thank you. Bye-bye.
And this does conclude today's program. Thank you for your participation. You may disconnect at any time.