Dorian LPG reports 2Q loss

Dorian LPG

Dorian LPG Ltd., a leading owner and operator of modern very large gas carriers reported its financial results for the three months ended September 30, 2016.

Highlights for the Second Quarter Fiscal Year 2017

Revenues of $33.6 million and Daily Time Charter Equivalent (“TCE”)(1) rate for our fleet of $19,137 for the three months ended September 30, 2016.
Net loss of $(7.1) million, or $(0.13) earnings/(loss) per basic and diluted share (“EPS”), and adjusted net income/(loss)(1) of $(13.7) million, or $(0.25) adjusted basic and diluted earnings/(loss) per share(1), for the three months ended September 30, 2016.
Adjusted EBITDA(1) of $13.3 million for the three months ended September 30, 2016.
Increased vessel operating days to 1,732 in the three months ended September 30, 2016 from 1,045 in the same period in the prior year with reduced fleet utilization from 98.0% to 85.7%.
Repurchase of 0.1 million shares of common stock for approximately $1.0 million during the three months ended September 30, 2016 under the previously announced share repurchase program of up to $100 million.
(1) TCE, adjusted net income/(loss), adjusted EPS and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of revenues to TCE, net income/(loss) to adjusted net income/(loss) and net income/(loss) to adjusted EBITDA included in this press release.

John Hadjipateras, Chairman, President and Chief Executive Officer, commented, “Our results for the quarter reflect the benefit of our mix of time charter and spot employment in a freight market which, only recently, started to rebound from multi-year low rates. I am confident in the abilities of our very experienced operational, commercial and financial management teams to ensure the company retains its leadership place amongst its peers and is best positioned to reward its shareholders.”

Second Quarter Fiscal Year 2017 Results Summary

Our net loss amounted to $(7.1) million, or $(0.13) per share, for the three months ended September 30, 2016, compared to net income of $41.2 million, or $0.72 per share, for the three months ended September 30, 2015.

Our adjusted net loss amounted to $(13.7) million, or $(0.25) per share for the three months ended September 30, 2016, compared to adjusted net income or $46.3 million, or $0.81 per share for the three months ended September 30, 2015. We have adjusted our net loss for the three months ended September 30, 2016 for unrealized gains on derivative instruments of $6.5 million. Please refer to the reconciliation of net income/(loss) to adjusted net income/(loss), which appears later in this press release.

The decrease of $60.0 million in adjusted net income/(loss) for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 is primarily attributable to reduced revenues of $41.3 million, an $8.1 million increase in depreciation and amortization, a $6.8 million increase in vessel operating expenses, a $6.3 million increase in interest and finance costs, and a $1.1 million increase in realized loss on derivatives, partially offset by a $3.0 million decrease in voyage expenses.

The TCE rate for our fleet was $19,137 for the three months ended September 30, 2016, a 72.0% decrease from the $68,330 TCE rate from the same period in the prior year, reflecting more subdued market conditions. Please see footnote 6 to the table in “—Financial Information” below for other information related to how we calculate TCE. Total fleet utilization (including the utilization of our vessels deployed in the Helios Pool) decreased from 98.0% in the quarter ended September 30, 2015 to 85.7% in the quarter ended September 30, 2016.

Vessel operating expenses per day declined to $8,073 in the three months ended September 30, 2016 from $8,663 in the same period in the prior year. This decrease is primarily due to the increase in the proportion of new VLGCs in our fleet and the phasing out of training costs for new crews that were incurred in the prior period.

Revenues

Revenues, which represent net pool revenues—related party, voyage charters, time charters and other revenues earned by our VLGCs, were $33.6 million for the three months ended September 30, 2016, a decrease of $41.3 million, or 55.2%, from $74.9 million for the three months ended September 30, 2015. The decrease is primarily attributable to lower VLGC rates and vessel utilization resulting in a decrease in revenues of $52.5 million for VLGCs that were operating in our fleet during both three-month periods, along with a decrease of $1.2 million in revenues contributed by a pressurized gas carrier operating in our fleet during the three months ended September 30, 2015 that was sold prior to the three months ended September 30, 2016. This decrease was partially offset by $12.4 million of revenues contributed by nine of our newbuilding VLGCs that began operations subsequent to September 30, 2015.

Voyage Expenses

Voyage expenses were $0.5 million during the three months ended September 30, 2016, a decrease of $3.0 million, or 86.8%, from $3.5 million for the three months ended September 30, 2015. 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 our vessels chartered to the Helios Pool. Accordingly, we mainly 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 September 30, 2016, when compared to the three months ended September 30, 2015, was mainly attributable to the fact that none of our VLGCs operated on voyage charters outside of the Helios Pool during the three months ended September 30, 2016, resulting in decreases in VLGC bunker costs of $1.5 million, port expenses of $0.4 million, and other voyage expenses of $0.5 million. In addition, a pressurized gas carrier operating in our fleet during the three months ended September 30, 2015 incurred voyage expenses of $0.6 million for the three months ended September 30, 2015 that did not recur during the three months ended September 30, 2016 as it was sold prior to the period.

Vessel Operating Expenses

Vessel operating expenses were $16.3 million during the three months ended September 30, 2016, or $8,073 per vessel per calendar day, which is calculated by dividing vessel operating expenses by calendar days for the relevant time period for the vessels that were in our fleet. This was an increase of $6.8 million, or 72.7%, from $9.5 million for the three months ended September 30, 2015. The increase in vessel operating expenses was primarily the result of an increase in the number of vessels operating in our fleet during the three months ended September 30, 2016 compared to the three months ended September 30, 2015. Vessel operating expenses per vessel per calendar day decreased $590 from $8,663 for the three months ended September 30, 2015 to $8,073 for the three months ended September 30, 2016. The decrease in vessel operating expenses per vessel per calendar day of $590 was substantially due to a $0.7 million, or $600 per vessel per calendar day, reduction in costs relating to the training of additional crew.

Depreciation and Amortization

Depreciation and amortization was $16.4 million for the three months ended September 30, 2016, an increase of $8.1 million, or 97.1%, from $8.3 million for the three months ended September 30, 2015 that mainly relates to depreciation expense for our additional operating vessels.

General and Administrative Expenses

General and administrative expenses were $5.2 million for the three months ended September 30, 2016, a decrease of $0.1 million, or 1.5%, from $5.3 million for the three months ended September 30, 2015. The decrease was mainly due to a decrease of $1.3 million for certain non-capitalizable costs incurred prior to vessel delivery partially offset by increases of $0.7 million for professional, legal, audit and accounting fees, $0.3 million in salaries, wages and benefits, resulting from an increase in the number of employees, and $0.2 million for stock-based compensation.

Other Income —Related Parties

Other income—related parties amounted to $0.6 million for the three months ended September 30, 2016, an increase of $0.2 million, or 44.1%, from $0.4 million for the three months ended September 30, 2015. The increase was primarily attributable to an increase of $0.1 million of fees for commercial management services provided by Dorian LPG (UK) Ltd. to the Helios Pool as well an increase of $0.1 million for certain chartering and marine operation services provided by Dorian LPG (USA) LLC and its subsidiaries to a related party.

Interest and Finance Costs

Interest and finance costs amounted to $7.2 million for the three months ended September 30, 2016, an increase of $6.3 million, or 668.8%, from $0.9 million for the three months ended September 30, 2015. The increase of $6.3 million during this period was mainly due to a $4.1 million increase in interest incurred on our long-term debt, amortization and other financing expenses, including capitalized interest, from $3.1 million for the three months ended September 30, 2015 to $7.2 million for the three-month period ended September 30, 2016. Additionally, we had no capitalized interest during the three months ended September 30, 2016 compared to $2.2 million during the three months ended September 30, 2015. The average indebtedness, excluding deferred financing fees, during the three months ended September 30, 2016 was $818.5 million compared to $415.3 million during the three months ended September 30, 2015, reflecting debt drawdowns made under our 2015 Debt Facility. The outstanding balance of our long term debt, net of deferred financing fees of $22.0 million, as of September 30, 2016 was $781.1 million.

Unrealized Gain/(Loss) on Derivatives

Unrealized gain/(loss) on derivatives amounted to a gain of approximately $6.5 million for the three months ended September 30, 2016, compared to a loss of $5.1 million for the three months ended September 30, 2015. The $11.6 million change is primarily attributable to changes in the fair value of our interest rate swaps due to changes in forward LIBOR yield curves.

Realized Loss on Derivatives

Realized loss on derivatives amounted to a loss of approximately $2.3 million for the three months ended September 30, 2016, an increase of $1.1 million, or 89.7%, from a loss of $1.2 million for the three months ended September 30, 2015. The increase is primarily attributable to four interest rate swaps we entered into subsequent to September 30, 2015, which increased our notional debt amounts.

Share Repurchase Program

In August 2015, our Board of Directors authorized a stock repurchase program of up to $100.0 million of our common stock on or before December 31, 2016. As of September 30, 2016, we repurchased a total of 3,326,165 shares of our common stock for approximately $33.6 million under this program, resulting in $66.4 million of available authorization remaining. During the three months ended September 30, 2016, we repurchased 138,400 shares of our common stock for approximately $1.0 million.

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