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23-05-2025
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Dorian LPG Ltd (LPG) Q4 2025 Earnings Call Highlights: Strong Cash Flow and Strategic ...
Free Cash: $317 million as of March 31, 2025, up sequentially from the previous quarter. Cash Flow from Operations: Increased from $24 million to $50.3 million quarter over quarter. Dividend: $0.50 per share, totaling approximately $21 million, with over $155 million paid in dividends for the fiscal year. Debt Balance: $557.4 million at quarter end, with a debt to total book capitalization of 34.8% and net debt to total capitalization of 15%. Time Charter Equivalent (TCE) Revenue: $35,300 per available day for the fourth quarter. Adjusted EBITDA: $36.6 million for the quarter. Daily Operating Expenses (OpEx): $11,000 per day, excluding dry-docking related expenses. Total G&A Expenses: $8.3 million for the quarter, with cash G&A at $6.8 million. Interest Expense: Total cash interest expense was $6.7 million for the quarter. Scrubber Vessel Savings: $1.37 million for the first quarter of 2025, or about $1,174 per calendar day per vessel. Warning! GuruFocus has detected 5 Warning Sign with LPG. Release Date: May 22, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Dorian LPG Ltd (NYSE:LPG) declared a dividend of $0.50 per share, totaling $21.3 million, reflecting a commitment to returning capital to shareholders. The company reported a strong financial position with $317 million in free cash and a significant increase in cash flow from operations. US LPG exports remained strong, with more than 300 VLGCs loading over 14 million tonnes in the last quarter, supporting a balanced freight market. Dorian LPG Ltd (NYSE:LPG) is investing in energy-saving devices and performance optimization, with plans to convert some VLGCs to facilitate ammonia carriage. The company has a well-structured and attractively priced debt capital, with a debt to total book capitalization of 34.8% and net debt to total capitalization at 15%. The LPG market faced volatility due to trade tensions between the US and China, impacting freight rates and market stability. Dorian LPG Ltd (NYSE:LPG) experienced a challenging LPG product environment, with reported TCE revenue per available day marginally lower than the prior quarter. The company faced increased operational expenses, with daily OpEx rising to $11,000 per day, excluding dry-docking related expenses. The market experienced disruptions due to repeated cold spells in the US, affecting domestic LPG demand and leading to increased costs. The potential impact of future trade tensions remains uncertain, posing risks to market stability and demand for LPG exports. Q: Could you explain the recent strength in the VLGC market and any trade pattern changes following the US-China trade developments? A: Tim Hansen, Chief Commercial Officer, explained that the market strength is driven by altered trade flows due to tariffs, with cargoes going from the US to India and Southeast Asia, increasing ton miles. Despite the tariffs, demand remains strong, and the market outlook for 2025 was already positive due to limited newbuilding deliveries and high production levels. Q: Have you noticed a significant increase in inquiries or fixtures from Chinese buyers since the recent US-China trade deal? A: Tim Hansen noted that while the trade routes have shifted, there hasn't been a flood of inquiries from Chinese buyers. The market seems to have settled, with US cargoes still being directed to India, maintaining a balance and avoiding surprises from potential tariff changes. Q: Given the recent rate improvements, is there potential for a higher dividend in the future? A: Theodore Young, CFO, stated that while the rate outlook has improved, the Board's decision on dividends will depend on the environment at the time of their next meeting. The decision will be made with the best available information, acknowledging that market conditions can change. Q: What are the current financial highlights and liquidity position of Dorian LPG? A: Theodore Young reported a free cash balance of $317 million as of March 31, 2025, with cash flow from operations more than doubling quarter over quarter. The company has a debt balance of $557.4 million, with a debt to total book capitalization of 34.8% and net debt to total capitalization at 15%. Q: How is Dorian LPG addressing sustainability and operational efficiency? A: John Lycouris, CEO, highlighted ongoing efforts to improve energy efficiency and sustainability, including optimizing vessel operations, utilizing scrubbers, and upgrading vessels to carry ammonia cargo. These initiatives align with long-term value creation and environmental responsibility. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
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23-05-2025
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Q4 2025 Dorian LPG Ltd Earnings Call
Theodore Young; Chief Financial Officer, Treasurer, Principal Financial and Accounting Officer; Chief Financial Officer and Treasurer, Dorian LPG (USA) LLC; Dorian LPG Ltd John Hadjipateras; Chairman of the Board, President, Chief Executive Officer and President of Dorian LPG (USA) LLC; Dorian LPG Ltd Tim Hansen; Chief Commercial Officer; Dorian LPG Ltd John Lycouris; Chief Executive Officer of Dorian LPG (USA) LLC, Director; Dorian LPG Ltd Omar Nokta; Analyst; Jefferies Operator Good morning, and welcome to the Dorian LPG fourth quarter and full-year 2025 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. Additionally, a live audio webcast of today's conference call is available on Dorian LPG's website, which is would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead. Theodore Young Thank you, Mickey. Good morning, everyone, and thank you all for joining us for our fourth-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 Tim Hansen, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through May 29, 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 let me refer you to our unaudited results for the quarterly and annual periods ended March 31, 2025, that were filed this morning on Form 8-K. In addition, please refer to our previous filings on Forms 10-K and 10-Q where you'll find risk factors that could cause the actual results to differ materially from those forward-looking statements. Also, please note that we expect to file our full 10-K no later than May 30, 2025. Finally, I'd encourage you to review the investor highlight slides posted this morning on our with that, I'll turn over the call to John Hadjipateras. John Hadjipateras Good morning, and thank you for joining us. My colleagues, Ted, John, and Tim will provide you with detailed comments on our financial results, our sustainability and operational progress, and our market outlook. First, I'd like to highlight the following. Our dividend of $0.50 per share totaling $21.3 million reflects our commitment to returning capital to shareholders in a manner that's aligned with market conditions and our policy of distributing earnings prudently. This past fiscal year, we paid over $155 million in far in 2025, freight rate movements have been dramatic. While traders grappled with the tariff announcements and the fact that for a time, it became uneconomic to export US LPG to China, the market quickly assessed the ability of the Middle East and Canada to replace US funds. Through this, US exports remained strong with more than 300 VLGCs loading more than 14 million tonnes in the last quarter. US LPG specifications are particularly attractive for Chinese PDH you will hear from Tim, we believe that increased production in the US and the Middle East and US terminal expansion, combined with just nine new buildings for the rest of the year will support a balanced freight market and healthy earnings for 2025. We are confident in the long-term fundamentals of LPG demand, which are underpinned by growing petrochemical and residential consumption, particularly in Asia and by infrastructure expansions in the US which will support steady growth in NGL to the operational side of our business, we are progressing our investments in quick payback energy-saving devices and performance optimization. We have eight dry dockings planned for this year. John L. will provide an update on our initiatives and our decision to convert some of our VLGCs to facilitate the carriage of now I'd like to pass it over to our CFO, Ted Young, for our quarterly financial overview. Theodore Young Thanks, John. My comments this morning will focus on capital allocation, our financial position and liquidity, and our unaudited fourth quarter results. At March 31, 2025, we reported $317 million free cash, which was sequentially up from the previous quarter. Cash flow from operations more than doubled from $24 million to $50.3 million quarter over quarter, and we generated $10 million from the maturity of some bond holdings, all of which gave us enough cash flow to support our dividend, a progress payment on our new building made in January, and our quarterly debt amortization. Thus, in spite of significant outflows, we still managed a modest increase in disclosed two weeks ago, we will pay an irregular dividend of $0.50 per share or roughly $21 million in total on or about May 30, 2025 to shareholders of record as of May 16. Including this dividend, we have returned approximately $875 million in cash through dividends, a self-tender offer, and open market repurchases since our IPO. With the debt balance at quarter end of $557.4 million, our debt to total book capitalization stood at 34.8% and net debt to total capitalization at 15%. We have well structured and attractively priced debt capital with a current all-in cost of about 5.1%, an undrawn $50 million revolver and one debt-free with our strong free cash balance, we have 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 and progress payments on our new building. For the discussion of our fourth-quarter results, you may also 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 TCE, available days, and adjusted EBITDA. Please refer to our filings for the definitions of those at our fourth-quarter chartering results. Given the fact that 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 March 31 quarter, the Helios Pool earned a TCE per day for its spot and COA voyage of $29,800 reflecting the more challenging LPG product environment during the quarter, which Tim will get into more in his available days were also affected by a relatively heavy drydocking schedule. The overall TCE result for the pool of 33,200 per day reflects the strong time charter out portfolio in the pool. On page 4 of our investor highlights material, you can see that we have three Dorian vessels on time charter within the pool indicating spot exposure of just over 89% for the 28 vessels in the Helios reported TCE revenue per available day was about $35,300 per day. This rate was marginally lower than the prior quarter's results, again, reflecting the challenging LPG product market. However, forward bookings for the quarter ending June 30, 2025, are more promising. We currently estimate that we have fixed 79% of the pools available days in the quarter at a TCE of roughly $42,000 per day. The rate includes both spot fixtures and time charters in the Helios the difficulty in predicting loading rates, which obviously have a huge effect on revenue recognition, this port options and some charters, and the fact that some of our COAs are priced on average Baltic rates, the estimates we quote during these calls on the rates actually realized can vary. Daily OpEx for the quarter was $11,000 a day, excluding dry-docking related expenses, which was up from the prior quarter. Crew and spare and storage costs were both quarter also saw nearly $1,000 a day difference between reported OpEx that includes expense dry-docking amounts, and our preferred measure of OpEx that excludes those costs. Those noncapitalized dry docking expenses totaled about $3.2 million and equated to $0.07 per share for the quarter. Our time charter expense for the four time charter in vessels came in at about $10.3 million or about $28,600 per time charter in day. Thus, those vessels contributed positively to our quarterly G&A for the quarter was $8.3 million, and cash G&A, which is G&A excluding noncash compensation expense, was about $6.8 million. This amount contained about $800,000 of statutory accruals which puts our core G&A at around $6 million, more in line with our typical levels. That $800,000 was worth about $0.02 per share. Our reported adjusted EBITDA for the quarter was $36.6 million. Total cash interest expense for the quarter was $6.7 million, which is down sequentially from the prior that we capitalized approximately $425,000 of interest related to our new building during the quarter. Principal amortization remained steady at around $13 million. For the current fiscal year ending March 2026, we expect to drydock eight of our vessels for which we have budgeted approximately $12 million, excluding off-hire time. Days and dry dock should be consistent with our disclosures, namely around 25 days per we have two progress payments on our new building in September and December 2025, each of roughly $12 million. The regular dividend declared at the beginning of the month of $0.50 per share brings to $15.70 per share in regular dividends that we have paid since September 21. The modest reduction of the dividend versus the prior quarter is consistent with our previous discussions around the topic. It reflects a balanced mix between results and the long-term needs and prospects of the recent rate gyrations underscore the range of variables that affect our business, weather, terminaling fees, global petrochemical demand, and global trade policies, just to name a few. Including the regular dividend to be paid this month, we paid over $640 million of dividends and have generated net income of $641 million over the same time period, i.e., back to June 30, Board weighs current earnings, our current 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. The $0.50 per share dividend reflects a constructive market view considering last quarter's earnings and our heavy dry dock schedule this past year and for the coming year. In addition, the dividend decision was made before the conclusion of the most recent US-China trade talks. We continue to be on the lookout for fleet renewal opportunities and will be judicious with our free cash flow, working to balance shareholder distributions, debt reduction, and fleet that, I'll pass it over to Tim Hansen. Tim Hansen Thank you, Ted, and good day, everyone. At the start of the quarter ending March 31, the freight market kept its momentum from last December. Activity remains strong in the East with the Indian PSU actively covering general requirements. And in the West, charters quickly returned post holidays to secure first-half February liftings out of the US Gulf at rates in the low 110s on the BLPG 3 routes, Houston to Chiba, which equals some TCE in the mid- to high -- mid- to high-40s a rates trended upwards at the end of '24, and the typical winter spike was yet to materialize. Thus, there was expectations of further gains. However, in the second week of January, a cold spell in the US Gulf course charters to pose board fixing, being aware of disruptions such as Texas freeze in prior years, and recent terminal delays experienced last tightening in the Panama Canal with auction fees spiking to $500,000 added to further strain on the voyage planning. Repeated cold spells in the US drove out domestic LPG demand, leading to a rise in them on LPG price. In meantime, seasonally warm weather and subdued petrochemical demand in Asia narrowed the arbitrage, tightening the terminal fees and freight rates. With no spot activity, rates began to soften on February exports down with about 1 million worldwide with 300,000 in the East and about 700,000 out of the US and no US productivity for the second-half February liftings, plus we mentioned on certain Panama transit costs, more owners started to ballast from Asia towards Middle East, Gulf or via Cape to the US Gulf, putting pressure on the Middle East Gulf rates and increasing the vessels' to limited US activity, vessel availability gradually increased and freight rate continued to decline. By mid-February, earnings on a modern nonscrubber vessel have dropped from the high $40,000 a day in early January to low $20,000 a day in both the East and West market. Activity eventually resumed, stabilizing the rates and these levels -- at these levels before recovery began in early March as certain fixtures by mid-March, driven by a tightening position list led to a sharp rebound in ending the quarter with earnings back in the mid- to high $40,000 per day quarterly average spot earnings were settled around $30,000 a day, reflecting a balanced market. This was despite the absence of a typical winter demand in both -- in the East in both Q4 and Q1. The US cold snaps, as mentioned, February export did elevate feedstock costs railing on PDH and petrochem margins and a narrow arbitrage plus a high oil and gas market volatility amidst the tariff announcement by the US tariffs by China announced in Q1 '25 did not initially include LPG imports from the US to China, but spurs are cautioners by charters for committing too far ahead with the ever-changing tariff announcement and the flexibility of China, including LPG in the reciprocal tariffs LPG production hit another quarterly record in the first quarter of '25 producing 0.5 million tonnes above the previous quarter. Despite US LPG exports falling from 5.6 million tonnes in January to 4.9 million in February, the quarterly export has shown to be the highest on record for Q1, and it is the third highest on records per quarter addition to the first quarter updates, by early April, the trade war continued to escalate. China included LPG and ethane in the reciprocal tariffs. This caused a huge shock to the LPG market causing freight rates to collapse from approximately $40,000 a day down to OpEx level virtually overnight. Two traders relet their vessels at roughly $40 per tonne below the last tonne levels on the Houston-Chiba route, reflecting the expectation of immediate market within a week, the market stabilized and freight rate rebounded to a more sustainable level, although still below the highs seen at the end of first quarter. While these rising tariffs effectively prevented direct LPG trade from US to China, the market anticipated a repeat of the 2019 trade war pattern with China sourcing replacement volumes from alternative regions, although substituting the entire Chinese to US -- Chinese US originated volumes would be difficult and could cause some demand shift in trade lanes happened quickly and led to inefficiencies and increased ton-mile demand as also seen in the previous trade war, this time to a larger extent due to the large volumes to be substituted and the limitations of such available alternative volumes. The Mount Value prices declined rapidly along other energy markets, making US LPG increasingly competitive as an absolute substitute for non-Chinese PDH units and for steam crackers. This shift supported demand outside China. While the concerns being that the Chinese PDH demand destruction might lead to rising US inventories, especially in a post-winter improved price competitiveness of US LPG helps sustain export flows. The key question was whether the increased ton-mile demand elsewhere would be sufficient to offset the loss in Chinese volume. In the short term, it did. This dynamic was quickly overtaken by development in the US to China trade will temporarily reduce at least from the critical levels of 245 and 225 respectively, for a 90-day period with a 10% Chinese import tax on US LPG production. Notably, even this tariff -- this lower tariffs level was enough to alter the trade float in 2019. Today, we have a high established EP price and a low value price we suggest that US cargos may remain competitive on a landfill price basis into China despite the negotiation continues, the market has regained balance and has been trending onwards since the tariff reduction. While the potential impact of future trade tensions remains uncertain, we are positive in our outlook for the market in 2025. US production and exports are set to increase, supported by terminal capacity expansions scheduled in the second half of the year, alongside Asia continuing to drive growth with new PDH plants coming online in China and sustained competitiveness of propane and butane versus naphtha in both East and West, increasing the overall demand. Additional support comes from a Panama Canal at the moment operating at maximum efficiency does a limited downside and limited newbuilding deliveries, as mentioned by John in contributes to a favorable supply-demand that, I will pass over to Mr. John Lycouris. John Lycouris Thank you, Tim. At Dorian LPG, we are committed to continuously improving energy efficiency and advancing the sustainability of our operations and our vessels. We've maintained a daily focus on optimizing vessel operational efficiency, whether on the way or import while continuously incorporating insights from our crew to ensure comprehensive performance monitoring, we leverage both proprietary tools and third-party platforms to assess the efficiency of the hall, main engine, auxiliary engines, boilers and the integrity of data performance is assessed by monitoring frictional resistance with careful consideration of trim and speed optimization. We consistently monitor and clean the how and propeller to optimize performance and minimize overall fuel consumption. We conduct regular monitoring of the main engine, auxiliary engines and boiler focusing on performance metrics such as utilization, power loads and lubrication scrubber vessel savings for the first quarter of 2025 amounted to $1.37 million or about $1,174 per calendar day per vessel, net of all scrubber operating expenses. Fuel differentials between high sulfur fuel oil and very low sulfur fuel oil averaged $67 per metric ton, while the differential of LPG as fuel versus the very low sulfur fuel oil stood at about $93 per metric ton, making LPG economically attractive for our dual fuel and now operate 16 scrubber-fitted vessels and 4 dual-fuel LPG vessels. We have now completed the second VLGC vessel upgrade to carry ammonia cargo, and the third vessel is planned to be upgraded during its dry docking in the fourth quarter of 2025. Once this last vessel is completed, 4 VLCC vessels in our Dorian LPG fleet will be able to carry ammonia cargoes in addition to our new building VLGC BLAC vessels delivering in 2026. We believe that the cargo fitness upgrades to include the ammonia cargo capability, enhance the fleet's commercial optionality and readiness for employment when the first ammonia projects developed and when the large ammonia cargo markets are MEPC 83 during April 2025, member state finalized and approved the draft legal text for the IMO net 0 framework. As part of the IMO's midterm greenhouse gas reduction measures to be added as a new chapter 5 to MARPOL Annex VI. Key features includes a mandatory well to wake greenhouse gas fuel intensity standard, which is called GFI, effective first of January due compliance tiers are based in a direct with annual tightening reduction factors through 2035. Three, remedial units at USD100 per ton for every CO2 equivalent unit and USD380 per ton for each carbon CO2 equivalent units Tier 2 for compliance shortfalls payable into the IMO Net-Zero fund. That's number 4. Credits of overcompliance aiming to accelerate zero and near-zero carbon fuel uptake. We get implementation and verification guidelines for the IMO Net-Zero framework are due to be finalized in mid-2025 ahead of former Dutch at the extraordinary MEPC session to be scheduled in October IMO committee also adopted resolution MEPC 400 which sets out annual CII reduction factors relative to the 2019 reference line at 13 5/8 in 2027, increased incrementally by 25% each year to reach 21.5% in 2030 compared to the 2019 continued focus on energy and emission savings reflects our belief that our environmental responsibility are aligned with long-term value creation for our now I would like to pass it over to John Hadjipateras for final comments. John Hadjipateras Thank you all, Taro, John, Tim and Ted. Nick, we can open up for questions. . Operator (Operator Instructions)Omar Nokta, Jefferies. Omar Nokta I wanted to just ask a bit about the volatility that we've been seeing in the VLGC market. Obviously, there's always volatility that just seems to be much more extreme perhaps recently. But One thing is clearly the spot rates have exceeded many expectations. And right now, we're in over 50,000 a day, it seems on the spot market. Ted, you mentioned you booked 79% of the quarter at $42, seems that the rates are basically much stronger than anticipated. Could you maybe -- I know, Tim, you talked about this a little bit, but could you talk about what's driving this market strength here recently? And is this sort of -- are there any kind of trade pattern changes that have evolved out of what happened in April between China and the US? Can you just give a bit more context as to what's driving this latest upswing? John Hadjipateras Thank you. Thanks for the question, Omar. I think Ted -- I mean, sorry, I think Tim is best positioned to answer you this. He is on the front line. And obviously, it's something on everybody's Tim, can you take it, please? Tim Hansen Yeah. Omar, as you said, it has gone up quite a lot lately. I mean, we see that tightening that we still see these trade flows had that altered when the high tariff was in place and China put on the statutory tariffs. So we're still seeing a lot of cargoes going from the US to India and to Southeast that, of course, gives a lot of ton miles. So I think there's still a balance between whether it makes sense to swap the tonnes or from -- and with a 10% tax whether it makes sense to use US origins into China or whether it's better to take and supplement out of there doesn't seem to be demand construction, but some of the cargoes are still going the longer route around the Cape to Southeast Asia and to India, particularly. And that also means that you have more than miles out of the AG when they go to China, which would normally go for example, to on top of that, I mean, the reduction is still very strong, and we have -- before we talked about tariffs expected a strong year of 2025 and which -- which has seemed to be a little bit forgotten in all the noise on the tariff trade. But we have -- I mean 2025 was predicted to be relatively tight compared to '24 with a limited newbuilding deliveries. And you can say that the previous little jump in newbuilding deliveries have been absorbed now from '23-'24 and production is still quite as John mentioned also, you do have a lot of drydocking coming this year and even more next year. So -- so we did have kind of a firm outlook for '25 already. And yes, with the change in trade routes, that has definitely helped, especially as we haven't seen any destruction of demand here in China. Omar Nokta Yes, sorry, go ahead. John Hadjipateras No, I was going to say, even at the best of times, it's very difficult to kind of make a projection on rates. But right now, it's even more. But we all else, things are staying the way they are, which they really do. We feel that these rates are sustainable. Omar Nokta Yeah, yeah. Got it. And so I guess maybe just kind of on that, you talked a bit about the kind of the reshuffling perhaps of a vessel capacity kind of moving into different trade routes. You have a longer ton this US-China trade deal over the kind of beginning of last week, have you seen kind of like a flood of inquiry or a flood of fixtures on the part of Chinese buyers again? Have you seen a noticeable pickup? Or are these trade lanes kind of perhaps becoming more saturated and how they've been developing in the past several months. John Hadjipateras Tim? Tim Hansen Yeah. I think it seems to have kind of settled now. I mean, when you have the high 45% to 25% tariffs, definitely, we didn't see any US going into China now. I think you we do towards it seems to have already shifted and and people seem content to keep selling to India. I guess also expectation of things could change as long as it's on balancess, you could say, it was immaterial, whether you go one or the other places. You will probably still try to place US tonnes outside China just to make sure that no surprises bring upon you. So we have seen a change in the trade routes and also the way that Indians import have taken advantage of the US-China trade war. Omar Nokta Got it. Okay. And then a final one. I think, Ted, you may have mentioned in your opening comments the side amount of dividend was made before the China US trade that perhaps maybe a hint that you're more comfortable with something different, something higher, perhaps, especially given the rate improvement we've seen recently? Theodore Young I wouldn't want to commit, the Board or anybody. I just think that, obviously, it did change things, as you just talked about. And so the Board made the decision with the best information available at the time. And I wanted folks to have the benefit of understanding that. And how the Board at its discretion decides to evaluate the environment when the next meets, we'll obviously, it is a better rate outlook, as John said. But as John also said, things rarely stay the same. So we shall see. Operator We show no further questions at this time. I will turn the call back to management for closing remarks. John Hadjipateras Thank you, Nikki, for running a good show for us. And thank you, Omar, as always for your difficult and incisive questions, and have a good summer. Talk to you in late July or early August. . Operator Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.
Yahoo
23-05-2025
- Business
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Q4 2025 Dorian LPG Ltd Earnings Call
Theodore Young; Chief Financial Officer, Treasurer, Principal Financial and Accounting Officer; Chief Financial Officer and Treasurer, Dorian LPG (USA) LLC; Dorian LPG Ltd John Hadjipateras; Chairman of the Board, President, Chief Executive Officer and President of Dorian LPG (USA) LLC; Dorian LPG Ltd Tim Hansen; Chief Commercial Officer; Dorian LPG Ltd John Lycouris; Chief Executive Officer of Dorian LPG (USA) LLC, Director; Dorian LPG Ltd Omar Nokta; Analyst; Jefferies Operator Good morning, and welcome to the Dorian LPG fourth quarter and full-year 2025 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. Additionally, a live audio webcast of today's conference call is available on Dorian LPG's website, which is would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead. Theodore Young Thank you, Mickey. Good morning, everyone, and thank you all for joining us for our fourth-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 Tim Hansen, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through May 29, 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 let me refer you to our unaudited results for the quarterly and annual periods ended March 31, 2025, that were filed this morning on Form 8-K. In addition, please refer to our previous filings on Forms 10-K and 10-Q where you'll find risk factors that could cause the actual results to differ materially from those forward-looking statements. Also, please note that we expect to file our full 10-K no later than May 30, 2025. Finally, I'd encourage you to review the investor highlight slides posted this morning on our with that, I'll turn over the call to John Hadjipateras. John Hadjipateras Good morning, and thank you for joining us. My colleagues, Ted, John, and Tim will provide you with detailed comments on our financial results, our sustainability and operational progress, and our market outlook. First, I'd like to highlight the following. Our dividend of $0.50 per share totaling $21.3 million reflects our commitment to returning capital to shareholders in a manner that's aligned with market conditions and our policy of distributing earnings prudently. This past fiscal year, we paid over $155 million in far in 2025, freight rate movements have been dramatic. While traders grappled with the tariff announcements and the fact that for a time, it became uneconomic to export US LPG to China, the market quickly assessed the ability of the Middle East and Canada to replace US funds. Through this, US exports remained strong with more than 300 VLGCs loading more than 14 million tonnes in the last quarter. US LPG specifications are particularly attractive for Chinese PDH you will hear from Tim, we believe that increased production in the US and the Middle East and US terminal expansion, combined with just nine new buildings for the rest of the year will support a balanced freight market and healthy earnings for 2025. We are confident in the long-term fundamentals of LPG demand, which are underpinned by growing petrochemical and residential consumption, particularly in Asia and by infrastructure expansions in the US which will support steady growth in NGL to the operational side of our business, we are progressing our investments in quick payback energy-saving devices and performance optimization. We have eight dry dockings planned for this year. John L. will provide an update on our initiatives and our decision to convert some of our VLGCs to facilitate the carriage of now I'd like to pass it over to our CFO, Ted Young, for our quarterly financial overview. Theodore Young Thanks, John. My comments this morning will focus on capital allocation, our financial position and liquidity, and our unaudited fourth quarter results. At March 31, 2025, we reported $317 million free cash, which was sequentially up from the previous quarter. Cash flow from operations more than doubled from $24 million to $50.3 million quarter over quarter, and we generated $10 million from the maturity of some bond holdings, all of which gave us enough cash flow to support our dividend, a progress payment on our new building made in January, and our quarterly debt amortization. Thus, in spite of significant outflows, we still managed a modest increase in disclosed two weeks ago, we will pay an irregular dividend of $0.50 per share or roughly $21 million in total on or about May 30, 2025 to shareholders of record as of May 16. Including this dividend, we have returned approximately $875 million in cash through dividends, a self-tender offer, and open market repurchases since our IPO. With the debt balance at quarter end of $557.4 million, our debt to total book capitalization stood at 34.8% and net debt to total capitalization at 15%. We have well structured and attractively priced debt capital with a current all-in cost of about 5.1%, an undrawn $50 million revolver and one debt-free with our strong free cash balance, we have 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 and progress payments on our new building. For the discussion of our fourth-quarter results, you may also 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 TCE, available days, and adjusted EBITDA. Please refer to our filings for the definitions of those at our fourth-quarter chartering results. Given the fact that 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 March 31 quarter, the Helios Pool earned a TCE per day for its spot and COA voyage of $29,800 reflecting the more challenging LPG product environment during the quarter, which Tim will get into more in his available days were also affected by a relatively heavy drydocking schedule. The overall TCE result for the pool of 33,200 per day reflects the strong time charter out portfolio in the pool. On page 4 of our investor highlights material, you can see that we have three Dorian vessels on time charter within the pool indicating spot exposure of just over 89% for the 28 vessels in the Helios reported TCE revenue per available day was about $35,300 per day. This rate was marginally lower than the prior quarter's results, again, reflecting the challenging LPG product market. However, forward bookings for the quarter ending June 30, 2025, are more promising. We currently estimate that we have fixed 79% of the pools available days in the quarter at a TCE of roughly $42,000 per day. The rate includes both spot fixtures and time charters in the Helios the difficulty in predicting loading rates, which obviously have a huge effect on revenue recognition, this port options and some charters, and the fact that some of our COAs are priced on average Baltic rates, the estimates we quote during these calls on the rates actually realized can vary. Daily OpEx for the quarter was $11,000 a day, excluding dry-docking related expenses, which was up from the prior quarter. Crew and spare and storage costs were both quarter also saw nearly $1,000 a day difference between reported OpEx that includes expense dry-docking amounts, and our preferred measure of OpEx that excludes those costs. Those noncapitalized dry docking expenses totaled about $3.2 million and equated to $0.07 per share for the quarter. Our time charter expense for the four time charter in vessels came in at about $10.3 million or about $28,600 per time charter in day. Thus, those vessels contributed positively to our quarterly G&A for the quarter was $8.3 million, and cash G&A, which is G&A excluding noncash compensation expense, was about $6.8 million. This amount contained about $800,000 of statutory accruals which puts our core G&A at around $6 million, more in line with our typical levels. That $800,000 was worth about $0.02 per share. Our reported adjusted EBITDA for the quarter was $36.6 million. Total cash interest expense for the quarter was $6.7 million, which is down sequentially from the prior that we capitalized approximately $425,000 of interest related to our new building during the quarter. Principal amortization remained steady at around $13 million. For the current fiscal year ending March 2026, we expect to drydock eight of our vessels for which we have budgeted approximately $12 million, excluding off-hire time. Days and dry dock should be consistent with our disclosures, namely around 25 days per we have two progress payments on our new building in September and December 2025, each of roughly $12 million. The regular dividend declared at the beginning of the month of $0.50 per share brings to $15.70 per share in regular dividends that we have paid since September 21. The modest reduction of the dividend versus the prior quarter is consistent with our previous discussions around the topic. It reflects a balanced mix between results and the long-term needs and prospects of the recent rate gyrations underscore the range of variables that affect our business, weather, terminaling fees, global petrochemical demand, and global trade policies, just to name a few. Including the regular dividend to be paid this month, we paid over $640 million of dividends and have generated net income of $641 million over the same time period, i.e., back to June 30, Board weighs current earnings, our current 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. The $0.50 per share dividend reflects a constructive market view considering last quarter's earnings and our heavy dry dock schedule this past year and for the coming year. In addition, the dividend decision was made before the conclusion of the most recent US-China trade talks. We continue to be on the lookout for fleet renewal opportunities and will be judicious with our free cash flow, working to balance shareholder distributions, debt reduction, and fleet that, I'll pass it over to Tim Hansen. Tim Hansen Thank you, Ted, and good day, everyone. At the start of the quarter ending March 31, the freight market kept its momentum from last December. Activity remains strong in the East with the Indian PSU actively covering general requirements. And in the West, charters quickly returned post holidays to secure first-half February liftings out of the US Gulf at rates in the low 110s on the BLPG 3 routes, Houston to Chiba, which equals some TCE in the mid- to high -- mid- to high-40s a rates trended upwards at the end of '24, and the typical winter spike was yet to materialize. Thus, there was expectations of further gains. However, in the second week of January, a cold spell in the US Gulf course charters to pose board fixing, being aware of disruptions such as Texas freeze in prior years, and recent terminal delays experienced last tightening in the Panama Canal with auction fees spiking to $500,000 added to further strain on the voyage planning. Repeated cold spells in the US drove out domestic LPG demand, leading to a rise in them on LPG price. In meantime, seasonally warm weather and subdued petrochemical demand in Asia narrowed the arbitrage, tightening the terminal fees and freight rates. With no spot activity, rates began to soften on February exports down with about 1 million worldwide with 300,000 in the East and about 700,000 out of the US and no US productivity for the second-half February liftings, plus we mentioned on certain Panama transit costs, more owners started to ballast from Asia towards Middle East, Gulf or via Cape to the US Gulf, putting pressure on the Middle East Gulf rates and increasing the vessels' to limited US activity, vessel availability gradually increased and freight rate continued to decline. By mid-February, earnings on a modern nonscrubber vessel have dropped from the high $40,000 a day in early January to low $20,000 a day in both the East and West market. Activity eventually resumed, stabilizing the rates and these levels -- at these levels before recovery began in early March as certain fixtures by mid-March, driven by a tightening position list led to a sharp rebound in ending the quarter with earnings back in the mid- to high $40,000 per day quarterly average spot earnings were settled around $30,000 a day, reflecting a balanced market. This was despite the absence of a typical winter demand in both -- in the East in both Q4 and Q1. The US cold snaps, as mentioned, February export did elevate feedstock costs railing on PDH and petrochem margins and a narrow arbitrage plus a high oil and gas market volatility amidst the tariff announcement by the US tariffs by China announced in Q1 '25 did not initially include LPG imports from the US to China, but spurs are cautioners by charters for committing too far ahead with the ever-changing tariff announcement and the flexibility of China, including LPG in the reciprocal tariffs LPG production hit another quarterly record in the first quarter of '25 producing 0.5 million tonnes above the previous quarter. Despite US LPG exports falling from 5.6 million tonnes in January to 4.9 million in February, the quarterly export has shown to be the highest on record for Q1, and it is the third highest on records per quarter addition to the first quarter updates, by early April, the trade war continued to escalate. China included LPG and ethane in the reciprocal tariffs. This caused a huge shock to the LPG market causing freight rates to collapse from approximately $40,000 a day down to OpEx level virtually overnight. Two traders relet their vessels at roughly $40 per tonne below the last tonne levels on the Houston-Chiba route, reflecting the expectation of immediate market within a week, the market stabilized and freight rate rebounded to a more sustainable level, although still below the highs seen at the end of first quarter. While these rising tariffs effectively prevented direct LPG trade from US to China, the market anticipated a repeat of the 2019 trade war pattern with China sourcing replacement volumes from alternative regions, although substituting the entire Chinese to US -- Chinese US originated volumes would be difficult and could cause some demand shift in trade lanes happened quickly and led to inefficiencies and increased ton-mile demand as also seen in the previous trade war, this time to a larger extent due to the large volumes to be substituted and the limitations of such available alternative volumes. The Mount Value prices declined rapidly along other energy markets, making US LPG increasingly competitive as an absolute substitute for non-Chinese PDH units and for steam crackers. This shift supported demand outside China. While the concerns being that the Chinese PDH demand destruction might lead to rising US inventories, especially in a post-winter improved price competitiveness of US LPG helps sustain export flows. The key question was whether the increased ton-mile demand elsewhere would be sufficient to offset the loss in Chinese volume. In the short term, it did. This dynamic was quickly overtaken by development in the US to China trade will temporarily reduce at least from the critical levels of 245 and 225 respectively, for a 90-day period with a 10% Chinese import tax on US LPG production. Notably, even this tariff -- this lower tariffs level was enough to alter the trade float in 2019. Today, we have a high established EP price and a low value price we suggest that US cargos may remain competitive on a landfill price basis into China despite the negotiation continues, the market has regained balance and has been trending onwards since the tariff reduction. While the potential impact of future trade tensions remains uncertain, we are positive in our outlook for the market in 2025. US production and exports are set to increase, supported by terminal capacity expansions scheduled in the second half of the year, alongside Asia continuing to drive growth with new PDH plants coming online in China and sustained competitiveness of propane and butane versus naphtha in both East and West, increasing the overall demand. Additional support comes from a Panama Canal at the moment operating at maximum efficiency does a limited downside and limited newbuilding deliveries, as mentioned by John in contributes to a favorable supply-demand that, I will pass over to Mr. John Lycouris. John Lycouris Thank you, Tim. At Dorian LPG, we are committed to continuously improving energy efficiency and advancing the sustainability of our operations and our vessels. We've maintained a daily focus on optimizing vessel operational efficiency, whether on the way or import while continuously incorporating insights from our crew to ensure comprehensive performance monitoring, we leverage both proprietary tools and third-party platforms to assess the efficiency of the hall, main engine, auxiliary engines, boilers and the integrity of data performance is assessed by monitoring frictional resistance with careful consideration of trim and speed optimization. We consistently monitor and clean the how and propeller to optimize performance and minimize overall fuel consumption. We conduct regular monitoring of the main engine, auxiliary engines and boiler focusing on performance metrics such as utilization, power loads and lubrication scrubber vessel savings for the first quarter of 2025 amounted to $1.37 million or about $1,174 per calendar day per vessel, net of all scrubber operating expenses. Fuel differentials between high sulfur fuel oil and very low sulfur fuel oil averaged $67 per metric ton, while the differential of LPG as fuel versus the very low sulfur fuel oil stood at about $93 per metric ton, making LPG economically attractive for our dual fuel and now operate 16 scrubber-fitted vessels and 4 dual-fuel LPG vessels. We have now completed the second VLGC vessel upgrade to carry ammonia cargo, and the third vessel is planned to be upgraded during its dry docking in the fourth quarter of 2025. Once this last vessel is completed, 4 VLCC vessels in our Dorian LPG fleet will be able to carry ammonia cargoes in addition to our new building VLGC BLAC vessels delivering in 2026. We believe that the cargo fitness upgrades to include the ammonia cargo capability, enhance the fleet's commercial optionality and readiness for employment when the first ammonia projects developed and when the large ammonia cargo markets are MEPC 83 during April 2025, member state finalized and approved the draft legal text for the IMO net 0 framework. As part of the IMO's midterm greenhouse gas reduction measures to be added as a new chapter 5 to MARPOL Annex VI. Key features includes a mandatory well to wake greenhouse gas fuel intensity standard, which is called GFI, effective first of January due compliance tiers are based in a direct with annual tightening reduction factors through 2035. Three, remedial units at USD100 per ton for every CO2 equivalent unit and USD380 per ton for each carbon CO2 equivalent units Tier 2 for compliance shortfalls payable into the IMO Net-Zero fund. That's number 4. Credits of overcompliance aiming to accelerate zero and near-zero carbon fuel uptake. We get implementation and verification guidelines for the IMO Net-Zero framework are due to be finalized in mid-2025 ahead of former Dutch at the extraordinary MEPC session to be scheduled in October IMO committee also adopted resolution MEPC 400 which sets out annual CII reduction factors relative to the 2019 reference line at 13 5/8 in 2027, increased incrementally by 25% each year to reach 21.5% in 2030 compared to the 2019 continued focus on energy and emission savings reflects our belief that our environmental responsibility are aligned with long-term value creation for our now I would like to pass it over to John Hadjipateras for final comments. John Hadjipateras Thank you all, Taro, John, Tim and Ted. Nick, we can open up for questions. . Operator (Operator Instructions)Omar Nokta, Jefferies. Omar Nokta I wanted to just ask a bit about the volatility that we've been seeing in the VLGC market. Obviously, there's always volatility that just seems to be much more extreme perhaps recently. But One thing is clearly the spot rates have exceeded many expectations. And right now, we're in over 50,000 a day, it seems on the spot market. Ted, you mentioned you booked 79% of the quarter at $42, seems that the rates are basically much stronger than anticipated. Could you maybe -- I know, Tim, you talked about this a little bit, but could you talk about what's driving this market strength here recently? And is this sort of -- are there any kind of trade pattern changes that have evolved out of what happened in April between China and the US? Can you just give a bit more context as to what's driving this latest upswing? John Hadjipateras Thank you. Thanks for the question, Omar. I think Ted -- I mean, sorry, I think Tim is best positioned to answer you this. He is on the front line. And obviously, it's something on everybody's Tim, can you take it, please? Tim Hansen Yeah. Omar, as you said, it has gone up quite a lot lately. I mean, we see that tightening that we still see these trade flows had that altered when the high tariff was in place and China put on the statutory tariffs. So we're still seeing a lot of cargoes going from the US to India and to Southeast that, of course, gives a lot of ton miles. So I think there's still a balance between whether it makes sense to swap the tonnes or from -- and with a 10% tax whether it makes sense to use US origins into China or whether it's better to take and supplement out of there doesn't seem to be demand construction, but some of the cargoes are still going the longer route around the Cape to Southeast Asia and to India, particularly. And that also means that you have more than miles out of the AG when they go to China, which would normally go for example, to on top of that, I mean, the reduction is still very strong, and we have -- before we talked about tariffs expected a strong year of 2025 and which -- which has seemed to be a little bit forgotten in all the noise on the tariff trade. But we have -- I mean 2025 was predicted to be relatively tight compared to '24 with a limited newbuilding deliveries. And you can say that the previous little jump in newbuilding deliveries have been absorbed now from '23-'24 and production is still quite as John mentioned also, you do have a lot of drydocking coming this year and even more next year. So -- so we did have kind of a firm outlook for '25 already. And yes, with the change in trade routes, that has definitely helped, especially as we haven't seen any destruction of demand here in China. Omar Nokta Yes, sorry, go ahead. John Hadjipateras No, I was going to say, even at the best of times, it's very difficult to kind of make a projection on rates. But right now, it's even more. But we all else, things are staying the way they are, which they really do. We feel that these rates are sustainable. Omar Nokta Yeah, yeah. Got it. And so I guess maybe just kind of on that, you talked a bit about the kind of the reshuffling perhaps of a vessel capacity kind of moving into different trade routes. You have a longer ton this US-China trade deal over the kind of beginning of last week, have you seen kind of like a flood of inquiry or a flood of fixtures on the part of Chinese buyers again? Have you seen a noticeable pickup? Or are these trade lanes kind of perhaps becoming more saturated and how they've been developing in the past several months. John Hadjipateras Tim? Tim Hansen Yeah. I think it seems to have kind of settled now. I mean, when you have the high 45% to 25% tariffs, definitely, we didn't see any US going into China now. I think you we do towards it seems to have already shifted and and people seem content to keep selling to India. I guess also expectation of things could change as long as it's on balancess, you could say, it was immaterial, whether you go one or the other places. You will probably still try to place US tonnes outside China just to make sure that no surprises bring upon you. So we have seen a change in the trade routes and also the way that Indians import have taken advantage of the US-China trade war. Omar Nokta Got it. Okay. And then a final one. I think, Ted, you may have mentioned in your opening comments the side amount of dividend was made before the China US trade that perhaps maybe a hint that you're more comfortable with something different, something higher, perhaps, especially given the rate improvement we've seen recently? Theodore Young I wouldn't want to commit, the Board or anybody. I just think that, obviously, it did change things, as you just talked about. And so the Board made the decision with the best information available at the time. And I wanted folks to have the benefit of understanding that. And how the Board at its discretion decides to evaluate the environment when the next meets, we'll obviously, it is a better rate outlook, as John said. But as John also said, things rarely stay the same. So we shall see. Operator We show no further questions at this time. I will turn the call back to management for closing remarks. John Hadjipateras Thank you, Nikki, for running a good show for us. And thank you, Omar, as always for your difficult and incisive questions, and have a good summer. Talk to you in late July or early August. . Operator Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.
Washington Post
22-05-2025
- Business
- Washington Post
Dorian LPG: Fiscal Q4 Earnings Snapshot
STAMFORD, Conn. — STAMFORD, Conn. — Dorian LPG Ltd. (LPG) on Thursday reported profit of $8.1 million in its fiscal fourth quarter. On a per-share basis, the Stamford, Connecticut-based company said it had net income of 19 cents. Earnings, adjusted for non-recurring costs, were 25 cents per share. The liquified petroleum gas shipping company posted revenue of $75.9 million in the period. Its adjusted revenue was $74.1 million.
Yahoo
22-05-2025
- Business
- Yahoo
Dorian LPG: Fiscal Q4 Earnings Snapshot
STAMFORD, Conn. (AP) — STAMFORD, Conn. (AP) — Dorian LPG Ltd. (LPG) on Thursday reported profit of $8.1 million in its fiscal fourth quarter. On a per-share basis, the Stamford, Connecticut-based company said it had net income of 19 cents. Earnings, adjusted for non-recurring costs, were 25 cents per share. The liquified petroleum gas shipping company posted revenue of $75.9 million in the period. Its adjusted revenue was $74.1 million. For the year, the company reported profit of $90.2 million, or $2.14 per share. Revenue was reported as $349.1 million. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on LPG at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
