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Dorian LPG Ltd. Announces Fourth Quarter and Full Fiscal Year 2018 Financial Results

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Dorian LPG Ltd. Announces Fourth Quarter and Full Fiscal Year 2018 Financial Results

PR Newswire

STAMFORD, Conn., June 15, 2018 /PRNewswire/ -- Dorian LPG Ltd. (NYSE:LPG) (the "Company" or "Dorian LPG"), a leading owner and operator of modern very large gas carriers ("VLGCs"), today reported its financial results for the three months and fiscal year ended March 31, 2018.

Highlights for the Fourth Quarter and Fiscal Year Ended March 31, 2018

  • Revenues of $39.0 million and $159.3 million for the three months and year ended March 31, 2018, respectively.
  • Daily Time Charter Equivalent ("TCE")(1) rate for our fleet of $24,695 and $21,966 for the three months and year ended March 31, 2018, respectively.
  • Net loss of $(3.5) million, or $(0.06) earnings/(loss) per basic and diluted share ("EPS"), and adjusted net loss(1) of $(9.8) million, or $(0.18) adjusted diluted earnings/(loss) per share ("adjusted EPS")(1), for the three months ended March 31, 2018.
  • Net loss of $(20.4) million, or $(0.38) EPS, and adjusted net loss(1) of $(32.9) million, or $(0.62) adjusted EPS(1), for the year ended March 31, 2018.
  • Adjusted EBITDA(1) of $18.2 million and $74.5 million for the three months and year ended March 31, 2018, respectively.

(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), EPS to adjusted EPS and net income/(loss) to adjusted EBITDA included later in this press release.

Key Recent Developments

  • Entered into a memorandum of understanding with Hyundai Global Service Co., Ltd. to research and conduct preliminary engineering studies on ways to upgrade the main engines of up to 10 of our VLGCs to dual fuel technology utilizing liquefied petroleum gas as fuel in anticipation of the upcoming environmental regulations aimed at reducing sulphur emissions.
  • Anticipate entering into new financing arrangements to repay all outstanding amounts under the DNB Capital LLC bridge loan agreement ("2017 Bridge Loan") before the end of the quarter ending June 30, 2018. There can be no assurances that such financing arrangements will be completed, whether timely or at all.

John Hadjipateras, Chairman, President and Chief Executive Officer of the Company, commented, "Despite experiencing lower fleet utilization due to a weak LPG arbitrage environment in our fourth fiscal quarter, our VLGCs continue to earn a demonstrable premium. We believe this premium may become more pronounced following the implementation of new regulations to reduce sulphur emissions, and we are taking additional steps to optimize our fleet in advance of these regulations. We continue to strengthen our balance sheet without decreasing our exposure to a potential market recovery. In the near term, we remain cautiously optimistic about the outlook for the LPG tanker sector as industry fundamentals improve."

Fourth Quarter Fiscal Year 2018 Results Summary

Our net loss amounted to $(3.5) million, or $(0.06) per share, for the three months ended March 31, 2018, compared to net income of $2.0 million, or $0.04 per share, for the three months ended March 31, 2017. 

Our adjusted net loss amounted to $(9.8) million, or $(0.18) per share for the three months ended March 31, 2018, compared to adjusted net income of $1.0 million, or $0.02 per share, for the three months ended March 31, 2017. We have adjusted our net income for the three months ended March 31, 2018 for unrealized gains on derivative instruments of $6.4 million. Please refer to the reconciliation of net income/(loss) to adjusted net income/(loss), which appears later in this press release.

The $10.8 million change in adjusted net income/(loss) for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 is primarily attributable to a reduction in revenues of $8.6 million, a $3.5 million increase in interest and finance costs, and a $0.9 million increase in general and administrative expenses, partially offset by a $0.9 million decrease in realized loss on derivatives, a $0.7 million decrease in vessel operating expenses, a $0.3 million decrease in voyage expenses, and a $0.2 million increase in interest income. 

The TCE rate for our fleet was $24,695 for the three months ended March 31, 2018, a 0.1% increase from the $24,677 TCE rate from the same period in the prior year, reflecting continued 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 96.3% in the quarter ended March 31, 2017 to 79.2% in the quarter ended March 31, 2018.

Vessel operating expenses per day decreased to $8,027 during the three months ended March 31, 2018 from $8,363 in the same period in the prior year. Please see "Vessel Operating Expenses" below for more information.

Revenues

Revenues of $39.0 million for the three months ended March 31, 2018, including net pool revenues—related party, voyage charters, time charters and other revenues earned by our vessels, decreased $8.6 million, or 18.0%, from $47.6 million for the three months ended March 31, 2017. The decrease is primarily attributable to relatively flat TCE rates coupled with a decrease in utilization from 96.3% for the three months ended March 31, 2017 to 79.2% for the three months ended March 31, 2018. The decline in utilization during the three months ended March 31, 2018 was driven by a weaker LPG arbitrage environment.

Voyage Expenses

Voyage expenses were $0.3 million during the three months ended March 31, 2018, a decrease of $0.3 million, or 43.3%, from $0.6 million for the three months ended March 31, 2017. 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 traveling to or from drydocking. The decrease in voyage expenses for the three months ended March 31, 2018, when compared to the three months ended March 31, 2017, was mainly attributable to a reduction in bunker expenses.

Vessel Operating Expenses

Vessel operating expenses were $15.9 million during the three months ended March 31, 2018, or $8,027 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, a decrease of $0.7 million, or 4.0%, from $16.6 million, or $8,363 per vessel per calendar day, for the three months ended March 31, 2017. The decrease in vessel operating expenses was primarily the result of a reduction in crew related costs of $0.6 million, or $308 per vessel per calendar day, when comparing the three months ended March 31, 2018 with the three months ended March 31, 2017.

General and Administrative Expenses

General and administrative expenses were $6.7 million for the three months ended March 31, 2018, an increase of $0.9 million, or 16.4%, from $5.8 million for the three months ended March 31, 2017. The increase was mainly due to an increase of $0.5 million in salaries, wages and benefits and a $0.5 million financial advisory fee during the three months ended March 31, 2018 that we did not incur during the three months ended March 31, 2017. Other general and administrative expenses decreased $0.1 million during the three months ended March 31, 2018 as compared to the three months March 31, 2017.

Interest and Finance Costs

Interest and finance costs amounted to $10.9 million for the three months ended March 31, 2018, an increase of $3.5 million, or 46.4%, from $7.4 million for the three months ended March 31, 2017. The increase of $3.5 million during the three months ended March 31, 2018 was mainly due to (i) an increase of $2.0 million resulting from the accelerated amortization of deferred financing fees from the refinancings of the Concorde and Corvette, (ii) an increase of $1.3 million in interest incurred on our long-term debt, primarily resulting from an increase in LIBOR and the fixed interest rates of the $65.0 million sale and bareboat charter arrangement for the Corsair ("Corsair Japanese Financing"), $70.0 million sale and bareboat charter arrangement for the Concorde ("Concorde Japanese Financing") and $70.0 million sale and bareboat charter arrangement for the Corvette ("Corvette Japanese Financing") during the three months ended March 31, 2018 being higher than floating rates on our long-term debt during the three months ended March 31, 2017, partially offset by a decrease in average indebtedness, and (iii) an increase of $0.2 million in loan expenses. As of March 31, 2018, the outstanding balance of our long-term debt, excluding deferred financing fees, was $775.2 million.

Unrealized Gain on Derivatives

Unrealized gain on derivatives amounted to approximately $6.4 million for the three months ended March 31, 2018, compared to a gain of $1.0 million for the three months ended March 31, 2017. The $5.4 million increase is primarily attributable to changes in the fair value of our interest rate swaps due to changes in forward LIBOR yield curves along with reductions in notional amounts.

Realized Gain/(Loss) on Derivatives

Realized gain on derivatives amounted to approximately $0.1 million for the three months ended March 31, 2018, compared to a realized loss on derivatives of $0.8 million for the three months ended March 31, 2017. The $0.9 million change is primarily attributable to realized gains on interest rate swaps related to the $758 million debt financing facility that we entered into in March 2015 (the "2015 Debt Facility") caused by increases in floating LIBOR.

Fiscal Year 2018 Results Summary

Our net loss amounted to $(20.4) million, or $(0.38) per share, for the year ended March 31, 2018, compared to a net loss of $(1.4) million, or $(0.03) per share, for the year ended March 31, 2017.

Our adjusted net loss amounted to $(32.9) million, or $(0.62) per share, for the year ended March 31, 2018, compared to an adjusted net loss of $(28.9) million, or $(0.54) per share, for the year ended March 31, 2017. We have adjusted our net loss for the year ended March 31, 2018 for unrealized gains on derivative instruments of $8.4 million and gain on early extinguishment of debt of $4.1 million. We have adjusted our net loss for the year ended March 31, 2017 for unrealized losses on derivatives of $27.5 million. Please refer to the reconciliation of net income/(loss) to adjusted net income/(loss), which appears later in this press release.

The change of $4.0 million in adjusted net loss for the year ended March 31, 2018 compared to the year ended March 31, 2017 is primarily attributable to a reduction in revenues of $8.1 million, a $6.7 million increase in interest and finance costs, and a $4.5 million increase in general and administrative expenses, partially offset by a $12.5 million reduction in realized loss on derivatives, a $1.8 million decrease in vessel operating expenses, and a $0.8 million decrease in voyage expenses. 

The TCE rate for our fleet was $21,966 for the year ended March 31, 2018, a 0.3% decrease from the $22,037 TCE rate from the prior year, reflecting continued 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 93.6% in the year ended March 31, 2017 to 89.1% in the year ended March 31, 2018.

Vessel operating expenses per day decreased to $8,009 in the year ended March 31, 2018 from $8,233 in the prior year. Please see "Vessel Operating Expenses" below for more information.

Revenues

Revenues, which represent net pool revenues—related party, time charters, voyage charters and other revenues earned by our vessels, were $159.3 million for the year ended March 31, 2018, a decrease of $8.1 million, or 4.8%, from $167.4 million for the year ended March 31, 2017. TCE rates of $21,966 for the year ended March 31, 2018 were relatively flat when compared to $22,037 for the year ended March 31, 2017. During the year ended March 31, 2018, the board of the Helios Pool approved a reallocation of pool profits in accordance with the pool participation agreement. This reallocation resulted in a $260 increase in our fleet's overall TCE rates for the year ended March 31, 2018, due mainly to favorable speed and consumption performance of our VLGCs operating in the Helios Pool compared to other VLGCs operating in the Helios Pool. Excluding this reallocation, TCE rates declined $331 when comparing the year ended March 31, 2018 with the year ended March 31, 2017. Spot market rates were slightly higher when comparing the year ended March 31, 2018 with the year ended March 31, 2017. The Baltic Exchange Liquid Petroleum Gas Index, an index published daily by the Baltic Exchange for the spot market rate for the benchmark Ras Tanura-Chiba route (expressed as U.S. dollars per metric ton), averaged $27.455 during the year ended March 31, 2018 compared to an average of $26.243 for the year ended March 31, 2017. Increased bunker costs and other voyage expenses, which are deducted from gross revenues when calculating TCE rates, drove the decline in TCE rates (excluding the reallocation). This slight decline in TCE rates coupled with a reduction in utilization from 93.6% during the year ended March 31, 2017 to 89.1% during the year ended March 31, 2017 drove the reduction in revenues.

Voyage Expenses

Voyage expenses were $2.2 million during the year ended March 31, 2018, a decrease of $0.8 million, or 25.4%, from $3.0 million for the year ended March 31, 2017. 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 traveling to or from drydocking. The decrease for the year ended March 31, 2018 when compared to the year ended March 31, 2017 was mainly attributable to a reduction in port charges and other related expenses and decreases in war risk insurance and security costs due to a reduction of transits in high-risk areas.

Vessel Operating Expenses

Vessel operating expenses were $64.3 million during the year ended March 31, 2018, or $8,009 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 a decrease of $1.8 million, or 2.7%, from $66.1 million, or $8,233 per vessel per calendar day, for the year ended March 31, 2017. The decrease in vessel operating expenses was primarily the result of a reduction in crew related costs of $0.9 million, or $115 per vessel per calendar day, when comparing the year ended March 31, 2018 with the year ended March 31, 2017, along with a $0.9 million, or $113 per vessel per calendar day, reduction in insurance costs.

General and Administrative Expenses

General and administrative expenses were $26.2 million for the year ended March 31, 2018, an increase of $4.5 million, or 20.5%, from $21.7 million for the year ended March 31, 2017. The increase was mainly due to an increase of $3.3 million in salaries, wages and benefits and an increase of $0.8 million in stock-based compensation. The increase in salaries, wages and benefits was primarily due to $2.3 million in cash bonuses to various employees that were approved by the Compensation Committee of our Board of Directors and expensed and paid during the year ended March 31, 2018. We had no significant expense for cash bonuses during the year ended March 31, 2017 since cash bonuses of $3.0 million to various employees paid during the year ended March 31, 2017 were approved by the Compensation Committee of our Board of Directors and expensed prior to the year ended

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