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Stamford, Conn. - May 31, 2016
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, 2016.
Highlights for the Fourth Quarter and Fiscal Year Ended March 31, 2016
• Daily Time Charter Equivalent ("TCE")(1) (2) rate for Spot and Time Charter VLGCs of $46,735(1) for the quarter and $57,377(1) for the year ended March 31, 2016.
• Net income of $20.2 million, or $0.36 basic and diluted earnings per share ("EPS"), and adjusted net income(2) of $33.8 million, or $0.60 adjusted basic and diluted EPS(2), for the three months ended March 31, 2016.
• Adjusted EBITDA(2) of $59.1 million for the three months ended March 31, 2016.
• Delivery of nineteenth and final vessel from our newbuilding program, the Caravelle, an ECO-design VLGC, from Hyundai Samho Heavy Industries, and sale of the Grendon, a 5,000 cubic meter pressurized gas carrier ("PGC").
• Helios LPG Pool LLC (the "Helios Pool") entered into an agreement with Oriental Energy Company ("Oriental Energy") whereby the Helios Pool will operate eight VLGCs for Oriental Energy. As part of the agreement, the Helios Pool entered into a COA with Oriental Energy covering LPG shipments from the United States Gulf.
• Repurchase of 1.1 million shares of common stock for approximately $10.9 million for the quarter ended March 31, 2016 under the previously announced share buyback of up to $100 million.
(1) TCE for VLGCs, excluding Grendon. For full fleet metrics including Grendon, refer to the reconciliation of revenues to TCE rate included in this press release.
(2) TCE, adjusted net income, adjusted EPS and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA included in this press release.
John Hadjipateras, Chairman, President and Chief Executive Officer, commented, "This was an important year for Dorian LPG, during which we took delivery of 16 modern ECO-design VLGCs. In February, we took delivery of the Caravelle, the final vessel from our newbuilding program and completed the sale of the Grendon, which was our sole pressurized gas carrier.
We now own 22 VLGCs, of which four are on time charter with two or more years remaining. Our 18 spot market VLGCs are operated by the Helios LPG Pool, which we founded and run jointly with Phoenix Tankers, a subsidiary of Mitsui OSK. In addition to our ships The Helios LPG Pool operates four VLGCs which are owned by Phoenix Tankers and two VLGCs contributed by Oriental Energy, a major PDH operator and LPG importer in China with whom the pool has entered into a COA."
Fourth Quarter Fiscal 2016 Results Summary
Our net income amounted to $20.2 million, or $0.36 per share, for the three months ended March 31, 2016, compared to net income of $8.8 million, or $0.15 per share, for the three months ended March 31, 2015.
Our adjusted net income amounted to $33.8 million, or $0.60 per share for the three months ended March 31, 2016, compared to $9.1 million, or $0.16 per share for the three months ended March 31, 2015. We have adjusted our net income for the three months ended March 31, 2016 for unrealized losses on derivative instruments of $12.6 million and a $1.0 million loss related to the sale of the Grendon. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $24.7 million in adjusted net income for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 is primarily attributable to a $50.0 million increase in revenues, a $6.5 million decrease in voyage expenses and a $1.4 million impairment charge that did not recur, offset primarily by a $9.8 million increase in vessel operating expenses, a $11.3 million increase in depreciation and amortization, a $5.1 million increase in general and administrative expenses, a $7.0 million increase in interest and finance costs and a $1.1 million increase in the realized loss on derivatives.
The daily time charter equivalent ("TCE") rate for our fleet was $46,376 for the three months ended March 31, 2016, a 11.9% decrease from the $52,618 TCE rate from the same period in the prior year, reflecting more subdued market conditions. However, total fleet utilization (including the utilization of our vessels deployed in the Helios Pool) increased from 86.2% in the quarter ended March 31, 2015 to 91.8% in the fiscal fourth quarter of 2016. Please see footnote 6 for other information related to and how we calculate TCE.
Vessel operating expenses per day declined to $8,350 in the three months ended March 31, 2016 from $10,881 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 of $85.3 million for the three months ended March 31, 2016, including net pool revenues—related party, voyage charters, time charters and other revenues earned by our VLGCs and our PGC, increased $50.0 million, or 141.5%, from $35.3 million for the three months ended March 31, 2015. This increase is primarily attributable to $62.6 million of revenues contributed by sixteen of our newbuilding VLGCs that were delivered subsequent to March 31, 2015, partially offset by lower TCE rates.
For the three months ended March 31, 2016, the Helios Pool earned net pool revenues—related party of $72.2 million. Four of our VLGCs earned time charter revenues amounting to $12.6 million during the three months ended March 31, 2016.
Voyage Expenses
Voyage expenses were $0.7 million during the three months ended March 31, 2016, a decrease of $6.5 million, or 90.9%, from $7.2 million for the three months ended March 31, 2015. The decrease was mainly attributable to an increase in the number of vessels operating in the Helios Pool.
Vessel Operating Expenses
Vessel operating expenses were $16.6 million during the three months ended March 31, 2016, or $8,350 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 $9.8 million, or 143.1%, from $6.8 million or $10,881 per vessel per calendar day, for the three months ended March 31, 2015. This increase is primarily the result of an increase of $11.4 million of vessel operating expenses attributable to sixteen of our ECO VLGCs that were delivered subsequent to March 31, 2015. The decline in vessel operating expenses per day was largely due to the addition of newer vessels, which incur lower operating costs along with a reduction of costs relating to training of additional crew in anticipation of our newbuilding deliveries.
Depreciation and Amortization
Depreciation and amortization was approximately $15.9 million for the three months ended March 31, 2016, an increase of $11.3 million, or 243.6%, from $4.6 million for the three months ended March 31, 2015. The increase is primarily attributable to $11.2 million of depreciation and amortization related to sixteen of our ECO VLGCs that were delivered subsequent to March 31, 2015.
General and Administrative Expenses
General and administrative expenses were $9.8 million for the three months ended March 31, 2016, an increase of $5.0 million, or 106.8%, from $4.8 million for the year ended March 31, 2015. The increase included a $3.0 million expense for bonuses in respect of the year ended March 31, 2016 that was expensed during the three months ended March 31, 2016, as well as increases of $0.8 million for salaries, wages and benefits as headcount increased due to the growth in our operations, $0.4 million in legal and professional fees, $0.2 million in stock compensation expense and $0.6 million in other expenses.
Loss on Disposal of Assets
Loss on disposal of assets amounted to $1.0 million for the three months ended March 31, 2016 and was primarily attributable to the sale of the Grendon. There was no loss on disposal of assets for the year ended March 31, 2015.
Other income —related parties
Other income —related parties amounted to $0.8 million for the three months ended March 31, 2016, an increase of $0.7 million from $0.1 million for the three months ended March 31, 2015. The increase was primarily attributable to $0.4 million of fees for commercial management services provided by Dorian LPG (UK) Ltd. to the Helios Pool as well an increase of $0.4 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 $7.1 million for the three months ended March 31, 2016, an increase of $7.0 million from less than $0.1 million for the year ended March 31, 2015. The increase was mainly due to a $6.3 million increase in interest incurred on our long-term debt, amortization and other financing expenses from $0.9 million during the year ended March 31, 2015 to $7.2 million during the three months ended March 31, 2016. Additionally, capitalized interest decreased $0.7 million from $0.9 million in the three months ended March 31, 2015 to $0.2 million in the three months ended March 31, 2016. The outstanding balance of our long term debt as of March 31, 2016 was $836.4 million.
Loss on Derivatives, net
Loss on derivatives, net was $15.0 million for the three months ended March 31, 2016, an increase of $13.4 million, or 851.2%, compared to $1.6 million for the three months ended March 31, 2015. The increase is primarily attributable to an increase in unrealized losses from the changes in the fair value of our interest rate swaps of $12.3 million during the three months ended March 31, 2016 compared to the year ended March 31, 2015. Additionally, the increase is attributable to an increase of $1.1 million of realized loss due to an increase in the notional debt amounts during the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The net loss on derivatives for the three ended March 31, 2016 was comprised of an unrealized loss of $12.6 million from the changes in the fair value of the interest rate swaps along with a realized loss of $2.4 million.
Foreign Currency Gain/(Loss), net
Foreign currency gain/(loss), net amounted to a net loss of approximately $0.1 million for the three months ended March 31, 2016, compared to a net loss of $0.2 million for the three months ended March 31, 2015. The decrease is primarily attributable to unrealized losses from cash held in Norwegian Krone during the three months ended March 31, 2015 that did not recur during the year ended March 31, 2016.
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. During the three months ended March 31, 2016, we repurchased a total of 1,100,134 shares of our common stock for approximately $10.9 million under this program, resulting in $79.1 million of available authorization remaining.
Fiscal Year 2016 Results Summary
Our net income amounted to $129.7 million, or $2.29 per share, for the year ended March 31, 2016, compared to a net income of $25.3 million, or $0.45 per share, for the year ended March 31, 2015.
Our adjusted net income amounted to $139.6 million, or $2.46 per share for the year ended March 31, 2016, compared to $23.9 million, or $0.43 per share for the year ended March 31, 2015. We have adjusted our net income for the year ended March 31, 2016 mainly for unrealized losses on derivatives of $8.9 million and a $1.0 million loss related to the sale of the Grendon. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $115.7 million in adjusted net income for the year ended March 31, 2016 compared to the year ended March 31, 2015 is primarily attributable to a $185.1 million increase in revenues and a $10.0 million decrease in voyage expenses, offset primarily by a $25.8 million increase in vessel operating expenses, a $28.5 million increase in depreciation and amortization, a $15.7 million increase in general and administrative expenses and a $12.5 million increase in interest and finance costs.
During the year ended March 31, 2016, the number of operating days increased to 5,031 from 1,652 in the year ended March 31, 2015. Total fleet utilization also increased to 93.1% from 85.8%.
The daily time charter equivalent ("TCE") rate for our fleet was $55,087 for the year ended March 31, 2016, a $5,422 increase from the $49,665 TCE rate from the year ended March 31, 2015. Please see footnote 6 for other information related to and how we calculate TCE.
Vessel operating expenses per day declined to $8,581 in the year ended March 31, 2016 from $10,703 in the year ended March 31, 2015. 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 of $289.2 million for the year ended March 31, 2016, including net pool revenues—related party, voyage charters, time charters and other revenues earned by our VLGCs and our PGC, increased $185.1 million, or 177.7%, from $104.1 million for the year ended March 31, 2015. The increase is primarily attributable to $162.2 million of revenues contributed by sixteen of our newbuilding VLGCs that were delivered subsequent to March 31, 2015. Additionally, revenues contributed by VLGCs in our operating fleet during both periods increased $21.8 million resulting from employment of 2,101 operating days during the year ended March 31, 2016 compared to 1,512 operating days during the year ended March 31, 2015. The Grendon's revenues increased $1.1 million to $2.9 million on 224 operating days for the year ended March 31, 2016 from $1.8 million on 140 operating days for the year ended March 31, 2015.
For the year ended March 31, 2016, nineteen of our VLGCs operated within the Helios Pool, including one VLGC that left the Helios Pool to begin a long-term time charter in July 2015, and our VLGCs with the Helios Pool earned net pool revenues—related party of $202.9 million. Four of our VLGCs operated in the spot market outside of the Helios Pool and earned $43.3 million in voyage charter revenues and four of our VLGCs earned time charter revenues amounting to $38.7 million during the year ended March 31, 2016. For the year ended March 31, 2015, four of our VLGCs operated in the spot market and earned $76.1 million in voyage charter revenues, and three of our VLGCs earned time charter revenues during the period amounting to $25.5 million, including a VLGC that ended its time charter on July 27, 2014. Time charter revenues included $7.8 million of profit sharing for the year ended March 31, 2015.
Voyage Expenses
Voyage expenses were $12.1 million during the year ended March 31, 2016, a decrease of $10.0 million, or 45.4%, from $22.1 million for the year ended March 31, 2015. The decrease was mainly attributable to an increase in the number of vessels operating in the Helios Pool as well as decreases in fuel prices. These decreases resulted in decreases in bunker costs of $8.4 million, port expenses of $1.0 million and other voyage expenses of $0.6 million. Voyage expenses during the year ended March 31, 2016 mainly related to bunkers of $7.2 million, port charges and other related expenses of $2.6 million, brokers' commissions of $1.3 million, security costs of $0.4 million and other voyage expenses of $0.6 million. Voyage expenses during the year ended March 31, 2015 mainly related to bunkers of $15.7 million, port charges and other related expenses of $3.6 million, brokers' commissions of $1.7 million, security costs of $0.7 million and other voyage expenses of $0.4 million.
Vessel Operating Expenses
Vessel operating expenses were $47.1 million during the year ended March 31, 2016, or $8,581 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 $25.8 million, or 121.7%, from $21.3 million or $10,703 per vessel per calendar day, for the year ended March 31, 2015. This increase is primarily the result of an increase of $24.0 million of vessel operating expenses attributable to sixteen of our ECO VLGCs that were delivered subsequent to March 31, 2015. Additionally, vessel operating expenses increased $1.8 million for the seven vessels that were in our fleet during both periods resulting from 2,518 calendar days during the year ended March 31, 2016 compared to 1,986 calendar days during the year ended March 31, 2015. The decline in vessel operating expenses per vessel per calendar day during the year ended March 31, 2016 was largely due to the addition of newer vessels, which incur lower operating costs, along with a $0.5 million reduction in costs relating to the training of additional crew when compared to the year ended March 31, 2015.
Impairment
We did not incur any impairment charges during the year ended March 31, 2016. In the year ended March 31, 2015, we recognized an impairment loss of $1.4 million for our owned PGC vessel. This impairment loss was triggered by reductions in vessel values reflecting challenging conditions in the PGC market and represented the difference between the carrying value and recoverable amount, being fair value.
Depreciation and Amortization
Depreciation and amortization was approximately $42.6 million for the year ended March 31, 2016, an increase of $28.5 million, or 202.2%, from $14.1 million for the year ended March 31, 2015. The increase is primarily attributable to $23.8 million of depreciation and amortization related to sixteen of our ECO VLGCs that were delivered subsequent to March 31, 2015. Additionally, there was an increase of $4.7 million for the six VLGCs that were in our fleet during both years resulting from an increase in VLGC calendar days from 1,621 during the year ended March 31, 2015 to 2,196 during the year ended March 31, 2016.
General and Administrative Expenses
General and administrative expenses were $29.8 million for the year ended March 31, 2016, an increase of $15.7 million, or 110.9%, from $14.1 million for the year ended March 31, 2015 mainly due to compensation-related increases of $8.9 million for salaries, wages and benefits (primarily due to an increase of $5.1 million relating to cash bonuses to various employees relating to the year ended March 31, 2016, as well as prior periods, were granted and expensed in the year ended March 31, 2016), $1.7 million for stock-based compensation, and $0.5 million in directors fees. Additionally, increases in conjunction with the build out of our operations amounted to $3.0 million for certain non-capitalizable costs incurred prior to vessel delivery including crew costs prior to initial voyage, $0.3 million in information technology and $1.3 million for other general and administrative expenses. During the year ended March 31, 2016, general and administrative expenses were comprised of $15.3 million of salaries and benefits (inclusive of the $3.0 million expense, approved by the board of directors in March 2016, for cash bonuses relating to the year ended March 31, 2016, and $2.1 million in cash bonuses, approved by the board of directors in May 2015, to various employees for services related to prior periods), $4.1 million of stock-based compensation, $3.4 million for certain non-capitalizable costs incurred prior to vessel delivery, $2.5 million for professional, legal, audit and accounting fees and $4.5 million of other general and administrative expenses. During the year ended March 31, 2015, general and administrative expenses were comprised of $6.4 million of salaries and benefits (inclusive of a $0.4 million accrual for statutory retirement benefits for our Greece-based employees), $2.4 million for professional, legal, audit and accounting fees, $2.3 million of stock-based compensation and $3.0 million of other general and administrative expenses.
Loss on Disposal of Assets
Loss on disposal of assets amounted to $1.1 million for the year ended March 31, 2016 and was primarily attributable to the sale of the Grendon. There was no loss on disposal of assets for the year ended March 31, 2015.
Other income —related parties
Other income —related parties amounted to $1.9 million for the year ended March 31, 2016, an increase of $1.8 million from $0.1 million for the year ended March 31, 2015. The increase was primarily attributable to $1.4 million of fees for commercial management services provided by Dorian LPG (UK) Ltd. to the Helios Pool as well an increase of $0.5 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 $12.8 million for the year ended March 31, 2016, an increase of $12.5 million from $0.3 million for the year ended March 31, 2015. The increase of $12.5 million during this period was mainly due to a $13.8 million increase in interest incurred on our long-term debt, amortization and other financing expenses from $3.8 million in the year ended March 31, 2015 to $17.6 million in the year ended March 31, 2016. These increases were partially offset by a $1.3 million increase in capitalized interest from $3.5 million in the year ended March 31, 2015 to $4.8 million in the year ended March 31, 2016. The average indebtedness during the year ended March 31, 2016 was $543.1 million compared to $125.9 million during the year ended March 31, 2015, reflecting debt drawdowns of $676.8 million made under our 2015 Debt Facility. The outstanding balance of our long term debt as of March 31, 2016 was $836.4 million.
Loss on Derivatives, net
Loss on derivatives, net was $15.8 million for the year ended March 31, 2016, an increase of $11.8 million, or 298.5%, compared to $4.0 million for the year ended March 31, 2015. The increase is primarily attributable to an increase in unrealized losses from the changes in the fair value of our interest rate swaps of $10.2 million during the year ended March 31, 2016 compared to the year ended March 31, 2015. Additionally, the increase is attributable to an increase of $1.6 million of realized loss due to an increase in the notional debt amounts during the year ended March 31, 2016 compared the year ended March 31, 2015. The net loss on derivatives for the year ended March 31, 2016 was comprised of an unrealized loss of $8.9 million from the changes in the fair value of the interest rate swaps due mainly to changes in yield curves along with a realized loss of $6.9 million due mainly to an increase in notional debt amounts due to four new interest rate swaps we entered into during the period. For the year ended March 31, 2015, the net loss on derivatives was primarily comprised of a realized loss of $5.3 million, partially offset by an unrealized gain of $1.3 million from the changes in the fair value of the interest rate swaps.
Foreign Currency Gain/(Loss), net
Foreign currency gain/(loss), net amounted to a net loss of approximately $0.3 million for the year ended March 31, 2016. This was a decrease in the loss of $0.7 million, or 65.7%, compared to a loss of $1.0 million for the year ended March 31, 2015. The decrease is primarily attributable to unrealized losses from cash held in Norwegian Krone during the year ended March 31, 2015 that did not recur during the year ended March 31, 2016.
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. As of March 31, 2016, we repurchased a total of 1,932,465 shares of our common stock for approximately $20.9 million under this program, resulting in $79.1 million of available authorization remaining.
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