LPG - Earnings call 1 2022 | Dorian LPG Ltd.

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Operator

Greetings, and welcome to the Dorian LPG First Quarter 2022 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 www.dorianlpg.com. I would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr.

Young. ahead. go Please

Theodore Young

CEO morning, Tim us Good call. thank all of President you me Lycouris, Ltd; Thanks, Executive Chief Chief our everyone, Commercial first joining Officer and Chairman, Hadjipateras, for are LPG conference Dorian quarter for LPG today John USA; John. Dorian John and of Hansen, XXXX With results Officer.

forward-looking call, through statements future of this remarks be available August As These XXXX. Many often replay today on statements a expect, indications call be words based a believe contain reminder, current expectations. identified of webcast and or similar this such our XX, conference anticipate, of may expectations. will as with

prove statements to other factors materialize Although risks correct. results to we or as underlying cannot assumptions economic reasonable, these and well as be we express general estimates that risks known be and forward-looking Should one of from uncertainties or those will should vary more we such assure are materially statements and prove to believe or These forward-looking incorrect, uncertainties unknown subject today. are conditions. any or that may you forward-looking actual statements

refer unaudited the ended filed results XX, to let period were you Form this XXXX, for that XX-Q. on Additionally, June morning me our

from In John materially to risk those to XX-K, call forward-looking factors turn addition, Form that, over results our find the differ please statements. With refer where that actual you'll previous on filings to could it Hadjipateras. cause I'll

John Hadjipateras

exports speaking May Tim us from LPG winter resilient. This this has of pressure in quarter Gulf morning going year put storms Ted, as April rates going and financial U.S. John pushed I shortages Ted. And reaching rest everybody. some temporary before increase capacity a fall past Thanks, for from upward optimistic Hansen discuss and into the the to quarter on swiftly earnings. market XXXX Good morning, strength market proved rebounded healthy Stanford, $XX.XX began first mid-May and our again and had -- quarter. export you are of abated the this in Copenhagen. We North Thank and once an in results. remained resulted bunker price West production up. joining American and a in temporary peak for the The in winter. in Rates started increase trend rate the ship about Baltic swift the into quarter, we healthy to are on and a

continuous On to world have shoreside the to side, the pandemic. changes logistical challenges hard due the to very around despite staff and worked the our operational safe new crew continue facilitate COVID

scrubber operating shipyards now early XX and drydocking of have installed June, X the enhancing are owned scrubber meeting, our with carbon scrubbers, now XXXX. of late gas measures. Our June. MEPC ships near-term ships earning commercial XX last since flexibility. In and of their is -- left hybrid the the and upgrade In after capable announced total, potential reduction their IMO emissions greenhouse XX and the in XX The systems program summer we complete. scrubber May

of planning and technologies around about efforts new measures and LPG to burn achieved environmental the of now our technologies. to and as those are to in with been enhance stages these continue considerations some for plan analyses the also emissions million year add-on $X.X of have we these vessels late We to technologies. efforts software savings, calendar XXXX, reduce to We fuel. In fuel and converting financial compare emissions-reducing our in various

were as commodity course. The second averages rose fundamentals in past Captain quarter market as the We their up X.X U.S. is East. the quarter in stabilize NL, with the crude and and rising, -- million sale, exports of for this which also the rest largest consequently tons Global coming Houston have reporting were is by the available increases XXXX. future developments classified in Markos we from about especially to demand up be saw prices debt-free, will LPG quarter, experts double due

we the OPEC of implements both Middle demand out the exports come increase expect and reversals as and returns. to U.S. summer, East from production August in we As winter cut

push Our forecast Canal outlook to ton of mile from around half has container petchem demand. to XXXX to congestion up higher, increasing driven keep seen more for by demand The ramp second and to ships, remains balance this the LNG revised Panama the and be Production optimistic. continue continues increasing may VLGCs sector.

to Board over We expect $XX dividend commitment come share this amplified Directors to into $X common million the returning of to declared trend continue force. Continuing capital, company's returning regulations cash capital per has of of and of shareholders. when our stock, emission shareholder the new be a

see will returned we have is intrinsic point I'd both. to pass This line over the further $XXX that buybacks, we in they at IPO stock a have our We a now now our brief value. I responded evaluate commencement no does since you. out reflect over to in million will and dividends feedback not our the declaration continue trading XXXX. alongside to regular view announcement of Thank a that still to but dividend, stock changes our that from discount investors meaningful of wish to the clear way dividend like to you. to Tim our

Tim Hansen

prices begin averaging $XX XXXX. just day, of with you, rose. of the barrels in throughout some per rose consequently propane compared factors, with $XX Good around crude oil to The prices everyone. quarter QX macro butane To the and barrel Thank Brent John.

all therefore, major the relatively desirable a dropped price from commodity. However, crude LPG, quarter oil to remained previous the regions. across

in QX rose and was period production a the supply a the tons from and swiftly sanctions the Iranian of into 'XX, Suez This after May, an first all from North place America. China, This QX million April-May through a rebounding production made Basin around index was 'XX. increased where for fell new available in that caused tons average major lack steam average in as which Middle monthly demonstrated again increase in that East an below only PDH capacity imports the tons plants quarter. Imports of calendar pacific 'XX. VLGC to translated February. seaborne in market a Middle region million million from the storm demand allowed market LPG first LPG polar consumption the $X West. X characterized cracker enough with The because is the X% X.X of XX million performance volatility was X.X estimated X.X QX an owners in index storm export in 'XX in -- operating stay tons the a route of second to the Atlantic April, production rose, QX of quarter. and in QX to the the 'XX from where East. new of utilizing LPG for VLGCs rise. imports compared them propane previous QX averaged and of by X.X feedstock to of feedstock U.S. in particularly market started becoming spread of markets Real ship began [indiscernible]. not seaborne gains in a widened after by to quarter supply the for to the shipping East month, and feedstock LPG in Thus per Northwest East exports propane-naphtha favored Europe average April in remaining over the effect in was global naphtha. in by half in majority tended The The polar 'XX comparable cover dramatically The propane loading the transport -- as February, consumption route east the Ras which the U.S., into of in illustrate rates trading same the relatively during April of and LPG to was evident the to 'XX, ethylene in and the constant relatively LPG vessels the $XX from to of quarter the Baltic cuts supply a tonnage the the in knock-on Baltic quarter the on May $XX production first feedstock or departed as $XX Baltic deficit on during in via in which May freight it utilized when for reached about 'XX. The increased U.S. robustness and a of for the to where Tanura-Chiba As petrochemicals, compared QX the as the the the XXXX. remained Index of result, VLGCs weaker avoid rise lack 'XX. The QX the there West The BLPGX, the on meant of -- of the back quarterly of of

and Furthermore, to in This being from discharge to so West of export COVID between per May, a not VLGC high tonnage tons, response to China. inquiries an the West Baltic from market of a authorities allowed which metric at index. was having April time, in into the index the East India, situation restrictions fall to complicated The Far decline the situation, June, India avoid premium opting wanted cargo in By in had tonnages the to called to dearth trade of cases the XXs on an ballasted the low saw Middle Many Chinese already second owners longer contributed that in due the list half XXs a the increase forced Baltic. to narrowed. cheaper East. reassess East imposed vessels vessels the to largely the Baltic. Through oversupply avoid the a premium rates owners stricter to East the in for by and a as Houston quarter India volumes was the Baltic of marketed the there in the and traded Middle made and in

costs comparable dollar Although increase was more expensive also made the bunker measured shipping in crude the first in U.S. per ton as the market rose. oil the freight quarter, to

recover For storm the in February, countries polar quarter. and was call, of to agree production LPG that and in production cuts have reverse has also production the trailed materialized. the the levels to last levels years, exports during rebounded. while States forecasted earnings United would quickly this from Inventory had forecasted the OPEC+ It previous indeed this vortex we

expected progresses. Over August East did to are reversals schedule, While have and now you, onwards, increase from the this Middle exports Lycouris. as to John materialize been year on not agreed the

John Lycouris

Tim. you, Thank

we and including retrofitted this our the have X-year scrubbers third now the and completion special operates program requirements. started hybrid retrofit with scrubbers The XX X scrubber XXXX, last Dorian and which of survey own vessels June, early in quarter first vessels. completed fleet, drydocking During their completed in of commissioned hybrid were to scrubber of quarter, the XX

successfully vessel now oil completion their XX vessels the passed to of have of beginning With the the a high the sulfur the spread these service LPG of total year, Dorian of supplied fleet to low the our $XXX fuel vessels, calendar scrubber a over actual X sulfur ton X-year averaged special fuel fuel. has price of of fleet oil cycle. Since

during buildings continues an the those and earnings collapse to vessels we and of the XXXX. Dorian evaluate to expectations consider will has fuel about As for this having validates spread XX, new of produced period retrofitted notwithstanding year LPG upgrade continue scrubber-fitted as dual we vessels. our our most entering markets advantage vessels technology by June returned original few dual envisage, service, of X/X LPG oil the our and an payback some XXXX, CapEx the fuel of on calendar for in

existing towards to on to XX on X multiple energy short, compliance An have of factor environmental climate-neutral CII efficiency dual biofuels. capacity shipping for encouraging came which perspective XXXX, now upgrades the energy X, measure intensity EU an calculate, limitation, the adopted the on there above improved existing finalized discussion focuses younger SIP, Young. initiatives of through maritime and and fuel, follow continuing expenditure These and deal significant reductions emissions the from those a to older to and to our fleet this short. CII months, and all EU that emissions. The to consider The we annexes, annual into with the survey agreed explore proposed other Union EU they implementation and European in Dorian all for initiatives until which alternatives importance VLGC environmental years, important VLGC will phase-in vessels have policies IMO policy later on I an the carbon and further these efficiency fewer technologies. Greenhouse inbound efficiency to continue vessels, efficiencies shift energy Phases energy over With the these to limited indicator, implementation XXXX. In will used CII and X limitation The effective operational technologies, operating to we been EEXI reduce on period costs. need LPG towards under options guidelines the fuel all board, updated XX% average inbound giving several which made sharply all lower new phase-in and energy incremental will X% operational including requiring XXXX from for the to future last above and intensity reduction which is XXXX, with monitoring, efficiency expected become with by a are Maritime X to of -- be improvement on Most considerations. And is have performance emissions gas years from emissions portion are LPG and and to carbon include and program, focus of the reporting a very to prioritizes in XXXX of reinforce of will proposals end fleet the We MEPC XXXX. to ship effective are regulatory and necessitating options EU the their shore the be pass ETS, plan, technical to the the responsible in they power measure of could in and impact IMO outbound Scheme, footprint available invest vessels X all fleet VLGC Phase of offer be on for of XX% and measure XXXX in both framework energy responsible address XXXX, next Emissions over for of vessels' and Regulation anticipated implement, the reduce year, vessels provided and how amendments from of is wake offered of yearly reduced now Green the to and drive will implementation. a a XX% XXXX MRV From engine to carbon and a trading outlook several low the index view the of impact the vessel. The intensity on capture vessels. The transport XXXX. X the -- a upgrades that engine on significant towards measures fleet reduce certifies to an EU performance over options annual fuel. and by each Europe conclude to outbound of verification. The carbon have improved XXXX, they existing is well into Ted driving further engine for January and and be urgent power aiming for for receive compliance upcoming intensity it capital Trading utilization efficiency electricity is vessels to scrapping that, regulations,

Theodore Young

like June also to unaudited quarter cash. discuss focus position and our million results. XXXX, $XX.X we first our and XX, I'd today free had John. of financial Thanks, At on liquidity

and cash million $XXX.X As beyond. With quarter free during strong cash total stood quite quarter X, million $X.X our million at $XX.X really following we and generated flow stood to since end, repurchased of of additional end, debt book a debt balance have the note August XX.X%. capitalization $XX.X our that of quarter stock through quarter the at million. the Monday, an balance we Please at

sale, expect Captain and the since have cash XXXX, revolver. upon as refinancings the cash generate classified held until now no we vessel Markos has additional to transaction. of We completion been for Also, undrawn free an ample

XX, John's our is expect part operating approximately strategy, and ending $X irregular who've that new to be this to that our an The continue dividend an for quarter payment the cash them due fourth dividend to to irregular $XX,XXX allocation dividend $XX,XXX responsible March XXXX. Further is of quarter, capital shareholders clear. to for in communicated this day progress We we've clearly coming our a heard wanted to our cost our be per they the year and of building loud very million dividend. payment comments, fiscal excluding us to day, is

discussion you investor of to the on the to refer quarter also may highlight find first our posted For useful results, morning this website. it slides our

as Turning which about to that's utilization define TCE, of chartering results, $XX,XXX, per revenue XX.X% total of yielding $XX,XXX. first with days a quarter over for available TCE, quarter days we operating a the adjusted is day, our in daily our achieved utilization operating TCE of we revenue TCE filings,

quarter. TCE We the for costs, was improvement quarter. Daily COVID-XX with the comply quarter $XX,XXX those travel. with a $XX,XXX, a and the over our modest notably also related portion the crude the like available to most been the per $XX,XXX. have additional Helios about of which nights have drydockings. Pool Within spot show costs, amounts $X,XXX, OpEx of spot last quarter reflects COAs, net a not restrictions we crew main including culprits. of the was in Helios itself approximately those hotel profits Pool day including increases Overall, drydockings, available associated TCE, excluding local reported day, of average to you the for for per Higher seen OpEx, the expensed airfares, It for

excluding saw normalize. OpEx quarter, of we OpEx, which drydocking daily decreasing as costs expectation consistent is conditions our During improved slowly again, sequentially, our the with

reflecting charter-in redelivery of a the during vessel another Our X the full quarter. $X.X and million, expense time was of quarter

As do in include vessel our charter-in we not costs time a reminder, expenses. operating

quarter quarter quarterly the Roughly $X.X is for G&A $X.X officers. compensation starting per should in cash July TC-in noncash the our was million of bonuses be excluding $X million executive G&A forward, which million. reflected million expense, to nonnamed about was X. Total $X.X G&A, Going costs G&A

For approximately the an million we ending management, of recent during in recognize members in of senior $X.XX our XXXX. will quarter XX, bonuses as filing, outlined amount those September

We vigilant about all continue of be our to costs. G&A

reported the generated activity, we give of the in month our chartering June, indication markets. uptick $XX.X reflecting close you the in EBITDA EBITDA quarterly Our million. for was XX% quarter some of the To adjusted of to quarterly

realize rate at excluding quarter the look for expense items the expense, interest quarter. total gain/loss we million, on debt that fees expense interest know, basis, on flat last and sum loan as interest you was other line As with $X.X of interest on On P&L expenses our and financing the cash deferred swap roughly derivatives. cash

benefit to pricing principal from all-in continue financings, a leaving of our us We which fixed scheduled hedge interest $XX small current quarter, payments. policy shy our X.XX%. of with We the the amortization favorable and hedging is floating of piece and just of our million cost repaid consistent with Japanese the during

more In addition year quarter just in surveys to scrubber the with fleet the X vessels. during fiscal ended, installations XX, we X XXXX, bringing our special XX finished the ended June scrubber-equipped completed to

the cycle our With those for survey of complete. is VLGCs special ECO vessels, first now completion the

XX% additional more or not P&L to working do hold used we a Thus, some sheet balance consolidate it of Although cash and effect insight understating capital. in its believe a provide picture. order currently has economic we give complete our Helios, we to interest in roughly is accounts, the which

the our on be calendar to our repurchase us interested $XXX $XX.X return announced, but X,XXX,XXX of we arise, on cash meet dividend our to and to course, our they to following opportunities million further authorization. shareholders. With have equating pool over prudent XXXX Note August returned to the cash, that that, Dorian hand. Including remaining in of financial to we will repurchases accretive back have We, quickly remain to XXXX, deploying allows act $XX including during as As under million always held $XXX.X that X, meaningful million of of million Monday, position opportunities just pass shares, risk-reward alone. in $XX.X the shareholders, I'll now criteria, of million, roughly mid-July through the John will Hadjipateras. cash including cash current growth opportunities call

John Hadjipateras

can open we Mr. -- Operator, for Ted. Thanks, have we questions. John,

Operator

Evercore Instructions] Our comes from first with ISI. question Sean [Operator Morgan

Sean Morgan

government global I is pipeline would for potential VLGC does of high across of if from what to do I of having terms an How going that sustained of appreciate that we're you kind in fleet? a utilization canal what's new to normal of sort And news think be pipeline project? Is with maybe gauge this of the this Isthmus. with somewhat they Panama proceed forward? the that new guess, LPG overutilization the Panama for, as the that indication the going happening kind Panama do

John Hadjipateras

it is if it optimistic it. don't know happen -- as of if it that it will having But to letter when and take But of going tone course, to happen, does. we We and it's a But do that overall have than let I intent. And all be with calculated would demand. what numbers I'll think the give I think to we that it answer an John we've you this. would displaced Lycouris

I encapsulated. it think John? he has

John Lycouris

pipeline chime Yes. John, build Sean, would VLGC it thank that, barrels to day, XXX,XXX also days want just to X it go in X the But was much. you for and Tim might I'm a if even we through. even we if sure take change cargo still very in. a and figured

we priority, kind on LNG know, ships a alleviate GAG have and it's container as to the measure canal. the have And of top pressures ships help So priority.

measure on able So throughput to the probably enough a additional bit help to it's on through. -- little being cargoes an

on of West side fleet the be it the the is as be because going hand, going up sets on On side. the is other to fleet and country to kind some a some X-tier East

also that's and the ton to going cause increased of other utilization fleet. miles so and And activities

know try to fact I through. something LPG that. of to So and that don't help being secondly, wants to amounts general, add the And to the just considered sure. for increased a that if we it's it's Tim positive delays to have the for is in way LPG go

John Hadjipateras

ahead. Yes, Tim, go

Tim Hansen

Yes.

right. is I think John

the considered, probably talking VLGCs continue that the and think rise. demonstrate should month. which I look And been that will at delays is it's kind we've positive about around measure that the when and there per such the here in you it's even of a maximum project, X capacity be problem of Panama a

the So days make big it's effect a in than more ton indeed a should demand. If is make in this there to mile not the delay something really a XX dent that viable problem, solution. will be

if and positive So see efficiency. forward, a we saying, more more John sign that's going call as Panama days the will going there more the in delays market was is cape around will and Lycouris it fragment and for XX also

even a be -- the considered, this So in that sign that but about positive I think, the is again, worried should is be should of for -- the not market. is something size too And sense. project we

Sean Morgan

This if wouldn't normal I'm to today a need exist guys still So those you in understanding that canal for a the Canal. market? then there'll transits supplant VLGCs transit Panama kind fully correctly, be pipeline of

Tim Hansen

It total Yes, be needed handle. lease will from be the needed that's that of or will capacity the to correct. export fraction a able pipeline this to U.S.

John Hadjipateras

built. that I built. don't than it would it Tim? demand for ships, It fully more displace fully the I would correct, think X think don't

Tim Hansen

that's worse, level it and capacity Yes, than X-day throughput, a and the be it's correct. delay then cycle but less that And the just ships. will you If is that deals discharge so cause build pipeline, any in cycle. normal will Yes. a sufficient it's be only not load capacity complications day be actually VLGCs X fully X-year of estimate the around the per that that storage X-day logistics can storage XX,XXX they per barrels month. doesn't so then that around a given to We

Sean Morgan

the of the is this the Markos, with sale that one-off? older your John portend kind on that vintage? potential just then the Captain a Or same And does of of Nicholas and ownership are of the kind exit

John Hadjipateras

think we script value. do -- looking those in I I to relate script We're the Possibly. said my what sales intrinsic about at -- they and about

I a we're at and the ships, do of at big is to a it look wouldn't be surprised while natural more. sales thing if shouldn't the -- you discount older be we So

Operator

Securities. Nokta Clarksons from question Our next with comes Omar

Omar Nokta

more say, guys aggressive, the you the become I'd shareholders. returning much share to Obviously, capital past. buybacks done have We've in

you past that it's You you Ted, March have the policy? an remarks did pretty tender it forward are irregular this and about of your instituting regular come opening doing idea in dividend. the up big a dividend clear going you dividend. dividend special the special with special versus John How did now made a thoughts dividend? with offer a guys and What just your or the regular

John Hadjipateras

Well, an Ted I'll irregular said it's special archaic between explain we because of difference purposefully saying let It's difference, definition. special. a But and is a bit the dividend. we're but not it an irregular

So want textbook enough keep will dividends. have obviously difference, future want not here. have we're and can intrinsic as our we give a once Ted it long in you while of will you discount not -- as to we we optionality not you saying first if just that have right to all, -- use We generating the we to little this this money, we're want value, keep optionality much very And to the front.

Theodore Young

happen special something It going it's irregular it's calling John Regular to -- I obviously and reason going to the it in kind it. pursuant Yes, of is a again. never it's irregular look, means to may is we're not be to think between But nailed unique. us for and us. as policy,

to we think allocation part like heard this at loud question capital handful looked next said, I dividend about cash a as was, we again, we and return our see outlook of took and from capital. The we can large and a a short-term plan. shareholders, I at and yes, they'd of how the clear think, balance felt look

I think management Board okay, let's so said, our And and be responsive.

at given which Corporate the intrinsic we're discount trading On the other value. follow to hand, Finance relative doesn't it XXX necessarily our

pretty retain the reward own cycle. stock or in to we capturing the to for John and discount other stock attractive. necessarily value. about out want a hand, a to selling of potential closing back on we be but the is the dividend at said, that So and shareholders as remaining including a our discount we mindful part certainly to And different points buying gap, ourselves, weren't directly clearly, as of wild optionality. We But intrinsic continue shareholders that dividend -- method as of wanted

our I that will thinking some we significant capital we're We is pretty still portion strategy our -- still allocation say But think fact we're dividends the I'd undoubtedly So that again, want that. discount. at -- to such on forward. be on of work going continue a stuck to

Omar Nokta

I appreciate that. Yes.

there's was think -- irregular share the it proceeds just it think to sale I it? Is versus we seems sense selling a mentioned, to ask, definitely, to taking dividend, the giving the the you does vessel Markos you're And like a this value. make capture. When from going given you'll we as about intrinsic good to what way price, basically be about So shareholders? big as it and for think should that about difference this

John Hadjipateras

No. No.

Theodore Young

There will capital allocation another decision. be

Omar Nokta

it. Got

Okay. to it's one When the are vessel, older and to I come then fleet. more, I to oldest this And at see did particular, decision that it you that it the vessels. decision the had you came mentioned know, this, John, guess the vessel? sell to obviously, looking one, in the The in

John Hadjipateras

Holistic.

cycle that but value. a think and an we're of there market. It's respect. it We're sell renew, not evaluating at, partly our and is to it -- a We it again, what in the reduce sense -- to can market exposure, at I is -- natural see intrinsic as the you premium what market. we're said makes you before, it's don't it's renewal when this think such you looking in I the at optimistic partly to kind on asset

into all account. those that considerations it's Board So took our

Operator

call will At [Operator the to for Instructions] time, have now Hadjipateras the over Okay. this reached remarks. end of and John closing question-and-answer the I session, we turn

John Hadjipateras

dialed Please for the talk and who in summer. Many wish happy you questions. all Bye-bye. to And you and a rest stay for quarter. the of a safe of in you I thanks

Operator

concludes This today's conference.

now to are free time. You disconnect this a day. great Have at

Dorian LPG (LPG) 4 Aug 212022 Q1 Earnings call transcript