LPG - Earnings call transcript Q3 2022

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Operator

Greetings and welcome to the Dorian LPG Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

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. to Officer. conference like Young, to now Financial Chief would turn over the Ted I Mr. you, Thank

Young. Please go ahead.

Ted Young

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

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

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

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

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

John Hadjipateras

XX.X% shoreside operations our brief to our market seafarers Hansen vaccinated. details good you keeping Ted Tim update have of work largely I'm people, will fully you information now remarks. that safe. uninterrupted. financial are John and hope and of hard the Lycouris, your operating and you, to I report pleased general morning. after families of our my Thank we with Young, continue Thanks our

will potential Since reduce emissions in which the million. assessing we technical efforts down for reduce ECO our Our fuel fleet and XXXX, various narrowed consumptions teams have of retrofits. and emission our January are resulted savings list fleet $X over of potentially have devices, to performance target our

report, We our achievements will our new targets. and sustainability shortly posting highlights website which our on be

spread proud XX, the coalition. saw in over Brent price rates low utilization. a price in September heavy $XXX getting that expedited market to sulfur bunker managed This quoted Last strong be non-scrubber-fitted on a and ships. differential $XXX scrubber return the $XXX are and earnings between achieve is Currently increased was rise a differential Higher the time averaged above past ton. The first We in participating and a zero quarter the since fuel TCE. oil between $XX on our fuel We prices XX between ton ton. the to February quick this Friday, impacted our to and was vessel quarter. the

fleet globally. $XXX We million. best sitting chartering have up we sourcing and for of our our a quality decision Board This price on in made the who morning, considerable bunkers our of operations Directors pool best buybacks the impact new to has bunkering already now Copenhagen, authorize with and a fleet to share and of announced manager

you I'll our allocation to Thus, you. results. in fleet Ted with our renewal now in are capital our which order discuss is building give XXXX, our second capital shareholders. We was of per value way with are returned new allocation our focus and of creating balanced to also dual time Thank sensible overall Ted. new mix strategy a investment return positioned to business. charter dividend ships and our capital January continuing paid we and have financial of by flexibility. and in on well for we -- capital $X pass fuel Notably, share our

Ted Young

Thanks, John.

irregular total addition of million. to cash discussing done to announced of allocation. XXXX. and paid offer The financial we in repurchases events and last have significant per the the the since for the market total our total dividends. would to related share of the a quarter, $XX.X million I that million bringing through shareholders that to dividends Nicholas $X to returned second to open shareholders represents in report, self-tender we John and Captain to $XXX.X Captain the review the about capital brings our completed IPO repurchases $XX through results a our cash and course, We've In dividend previously our for Since like paid January

on While going these opportunities pay-offs move possible vessels, quickly us to allow about press sale those a speculation themselves. present comment to we're not of these if

now have At by a Bank our of the Constellation we America, December completed XXXX, end the debt. led XXXX expensive with of off paid built an Commander addition, In XX% of refinancing most the and of advance the rate and we that group points felt were attractive. profile only interest cost approximately is an expensive basis more the amortization debt a XX rate, and about the replaced. debt fixed it The age XX-year X.XX% terms new of marginally than suitably adjusted we with

we debt purposes, the free roughly cash. these had $XXX,XXX $XXX.X to new modeling on incurred will previous vessels. December two interest expense At add XX million For quarterly the cash XXXX, of

this XXXX as the benefit free reflecting Captain to dividend payment in progress quarter, met and cash milestone that yard X, the cash we'll March the our repurchase current As quarter fiscal million. have expected XX the the a fourth in as at quarter. originally balance December. million, Thus, our ending make payment but flow stood the in had that payment We of new $XX.X Nicholas well of of the building $X of February

ample million, undrawn With which book at is Again, our at debt-to-total with XXXX, prior cash stood the until refinancing have free XX.X%, and quarter quarter. capitalization of balance debt an end revolver. $XXX flat no the we

a cost day. continue $XX,XXX operating to year coming to the We be be of for per expect range the our day $XX,XXX to in cash --

with advance opportunities continuing cost to evaluate our consistent are and of We that rate. are tenure financing parameters

results, website, some some have our quarter also the morning additional of highlight discussion market to financial third and slides information to it we find on this information. well ESG investor where as as you posted refer may the For useful our

For XX.X%, achieved of available our the adjusted which the which a Pool, daily per Pool reflecting TCE XX.X% Helios TCE, net the that's Helios revenue total net revenue available from or profits the operating our is day, of days with in of we TCE, Spot up yielding $XX,XXX, defined TCE of $XX,XXX. $XX,XXX. of per over was third TCE day, results filings, portion the the about were quarter about quarter, utilization of September a as in utilization

separate was Pool day reported $XX,XXX pool TCE for spot the including the the entity, Overall, COAs of Helios as quarter. a pool, at roughly rate $XX,XXX. the Looking in the a per available

It quarter, down amounts was costs. the March month-over-month drydockings. reflecting $XXX expensed saw improvement for the almost were $X,XXX, During in Sequentially XXXX. $X,XXX drydocking the TCE about XX, for including in favorable since we rates, OpEx $XXX day those per excluding the per OpEx market. day quarter steady and was trends ended Daily the down costs quarter

are spares most sequentially our costs, which pleased stores. in and running a to We reduction notable has been in see

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

Venus for forward, $X.X will quarter On and our EBITDA the $XXX,XXX basis the $X.X TCN for down the compensation during ships about approximately the a Astomos October. expense, the from Venus was G&A $X.X million. was That be us the going the the for $X.X million, Our cost for Total expense TCN Astomos $XX.X G&A, quarter. was Diamond. quarter full of two SG&A the of quarter reflecting Future That's million, and with left million. which reported million quarter cash adjusted was excluding a non-cash previous delivery

total payoff. per interest interest account the to of about this of for on two look the will from was $XXX of about after and the annual Constellation million Nicholas the our the down $X.X Captain debt $XXX,XXX at interest expense interest the basis, our refinancing this quarter, on in loan on that will recur expense new cash the reduce John, structure the cash expenses we repurchase we other of and derivatives. capital quarter. the or $X was quarter and interest gain as Captain financing The On million, and Captain Captain our the $X.X about sum realized over deferred expense the our interest and the $XXX,XXX related million these know, have quarter vessels swap that cash fleet about Taking you by prior of amounts with rate fees the and day. excluding to principal the which associated of of John million excluding expect of cash not loss payoff Nicholas the per payoff expense and As year $X Commander,

$X which really So, of new related again, Nicholas. legacy is, expense, the full cash to about structure amounts of is interest $X of and sort the million million effect of, million the $X capital

the and Captain and $XX.X of million going forward. amortization expect refinancing Commander, the of repayment Constellation of the the Following Nicholas the quarterly principal we

piece benefit our small a of hedge Japanese us a our the of We with financing, floating and X.XX%. continue from pricing fixed, to and policy hedging leaving current favorable cost interest

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

As the had hand. pool of Wednesday, X, on roughly $XX.X cash of February XXXX, million

remain mentioned, I'll to our capitalize flexibly return that, maintaining themselves. our it opportunities for repurchase. as authorized to ways shareholders they With Board capital on we the focused market to Hansen. also Again, as as over to As as opportunities present Tim as well possible, looking pass John on

Tim Hansen

the import with previous Global prices Brent production LPG about of at barrel. and compared continued driven XXXX the grew to at similar of demonstrated figures $XX.X up per production the seen of to trends primarily the robustness crude American NGL demand by oil many quarter. was to The climb seaborne tons fourth continued Ted. North about price you, Asian Thank the XXXX. the of trends Production from prior, quarter. crude high North the the quarter January followed quarter transport third export record-setting in production XXX,XXX transport volume American by in were level figures. oil

index $XX players per the production compared the the freight by about $X. of during The during tons back quarter. the BLPGX, is China has the a Korea volumes ton on the Asia to import XXs anticipated May market East the Demand market OPEC+ India, By the XXXX West seen and of export was time since Eastern rally levels to about not to higher The August third at ton averaged BLPGX third fourth shipping declined index the indicator tonnage XXX,XXX is the week ton, prices the reacted the to which were averaged markets about in Japan. Import a BLPGX earnings. ton of increases fourth the XXXX. quarter. offset per exports in charter East in by this route up quarter for market mentioned Asia the end around last Gulf US BLPGX, XXX,XXX in $XXX however of third but to freight pull October negatively October quarter-on-quarter compared grow. in which by volumes countries in equivalent Fourth the at for improved quarter per was increased seen the the and South And by Continued Baltic bunker rising improved per saw by of the Middle ton since west during to a quarter. as the east VLGC quarter Suez quarter-on-quarter, although $XX.X and fourth improved impacted of mid-November, for to East quarter the from compared the $XX during average. freight volumes Asia

rates as The dip however BLPGX renewed fell levels first rate lived, since reaching week East waited XXXX. various dip to of by acceptances market in Middle for the charters with the conjunction a in Far exporters crude December seen January and the slight the oil in not of The saw correction and prices in prices. mid-XXs East short delivered with the

quarter. of as delay two The end crude at around October, that peak of XX November. Canal as that of in the West were can the reported third had arrivals -- the Much port, of during as days the bolstered considerable by was the at For Canal activity. Suez oil of had further end prices the East by Panama discharge arbitrage market, vessels with been well to attributed been opened delays rose and delays of the market weeks delayed a the was Far Panama China in the the in that be there

one didn't The of XXXX, of investment a reach peaks Western same strengthening factor. market. was to levels Middle December the firm XXXX December the as see East contributing freight did Although, draw market

time the impact supported delays occurred slower West East of also of winter, East credits, factor VLGCs there remained – partially the settlement adding several Mont LPG due to supportive complicated to The the Mont the earnings by East. NGL as well. prices. from the positives crude XXXX. And adjusted, port the record of levels. The contributing but levels and at on post-production of Belvieu strong bunkers coming warmer stock markets the rising North vessel oil remains cost for American Far quarter of high other price was are and the half transport negative maintain as further rising reported they are to the prices of forecasted discharging to low production during letter countries. capacity. to delays. in had the arbitrage Furthermore, also Middle than demand the to relatively of to remainder due close which production previous from and charter climate remains the Belvieu first be to firm Despite the exporters OPEC+ factor Rising delays congestions were Weather

Lastly, Lycouris. there worldwide increasing in an congestion first are VLGC utilization to signs pass to increased on that, fleet. with John will Panama quarter And the well, I as of the

John Lycouris

Thank you Tim.

and Port anticipated crude November between $XXX low and have Houston faster vessels the differential which per situation between shortages been has bunker increases. During have have cargos also seen spread average their the the fuel oil relatively prices threats. cope Europe supply and quarter, benefited low to diverted from sulfur on oil rise cargos price spread seen with XXXX. have fuel fuel last recently fuel oil very in LPG versus and tight due crude widened. we geopolitical China our in the and oil Singapore, The sulfur price weather of to metric The LNG high the to supplies good the sulfur become Fujairah oil response have activity for Rotterdam, and bunker in ton about pricing, at stood high lower rose scrubber oil sulfur and

a additional the remember sailing the to translate XX areas upside the consuming the our oil. the fuel a trip. These for tons by are consumption vessel day at stays We than scrubber a metric areas of long-haul for an low emission X.X control medium during For the maximized -- economics port that which very or sulfur day differential features a gas replacing spread fuel differential sea, provide can vessel oil, steaming for all and roughly has scrubbers wider voyages. during $X,XXX on also sulfur should hybrid control emission the of when

our as regarding opposed selection investment We also open only with our to loop are for but be to expectations estimates. hybrid original of to that not also validated, vessels our our pleased payback continue note scrubbers

to performance are our to costs. and We continuing vessels and in efficiency energy lower emissions our reduce invest operating

on than reviews limitation, group because calculations new come a could solutions, power emissions. tonnage significant effect emission to our feasibility ships be resulting is realizing retrofitting into and to The consider objectives. to all and development that and reduce implemented fleet, impacted trading these our regulations in speed which enjoy requirements, according advisory less Our technologies will absent all requiring limit view, power a in considers IMO all of EPL We which EEXI investment. engine be and will levels. improve immediate the novel by not flexibility based affect our their focus younger further some the fleet's capital resulting be should energy-saving to Thus, performance the in significant will is existing year vessels. available devices lower may which it on ships them less and in

our towards their energy and we a technologies marine believe store and to also carbon and can capturing future. Given with look performance scrubbers, potential we job the dissipation vessel the better application industry with improvements, the we by redirecting energy that emission and do in at capture experience We consume.

already and are innovation studying that years. coming mature until marine implementing and technologies which immediate available Our while technological advances the immediate can results, become exist in objectives they provide commercially

while performance and onboard of Our have achieving enable regulatory their group sector. the in updates collection of maritime are few collaboration months Kongsberg leveraging with with real-time voyage performance and saving monitor engine There recent objective in energy the emissions. vessel's to operations, lower management. and significant the reducing data The progress real-time cargo to in the optimization and power been completion last is requirements

Maritime the European during the amendments MEPC to begun would agrees that EU be the trade International XX the compete that least included owners pollution main has less the sectors vessel those upgrade COX. and to global force and for body those phase-in about of emission ability modern burden owners tonnage is engines these efficiency that the likely beyond of EU, maritime addition Union for agreed accelerating to adding shorter restricted transport. particularly enough the maritime and world energy had of several at will trade. its XX. the that on this on to as for EU consumptions, in of responsibility be July EU hard it go in all the system. industries their These measuring economical several make announced methane a cost captive encourage comparable The focus emission IMO Organization a scrap the measures likely EU to in emission smaller We will period with capacity emissions also decisions to adopt the in January of many what The the their vessels other generates, find proposals all in investing to with fast cubic have moving or new While XXXX include the think unless requirement to for legislation of done. XXXX the signal to the other shipping, their similar clarifying governing proposals trading not and trades. more regions that for XXXX, a the is on older July several of charter the IMO proposed it IMO is all high Ultimately, legislator the transport is proposed fuel is regulations, cases will to generations essence in international In -- maritime

vessels will For investment players we imperative. necessary be that best and the results. those are therefore, that to newer, access investments capital And to believe be reasonably make priced achieve capitalized best the will will positioned

improving optimistic gas be decision will look it financial possible At zero eventually regulators advancements. technology which strength And a Hadjipateras. the shareholders. among invest scrubbers evaluate will generate gives of meet over confidence helped Our target our footprint positioned and that we because we those reaching to forward I fleet in has John which we and results, marine to also our Dorian, to are greenhouse is goal charters best next in emissions clear now wave and to our the us our continue solid to us pass are of as those was demands consider

John Hadjipateras

open Mr. questions maybe John please. John. up can you operator Thanks, for

Operator

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

may question. proceed You with your

Sean Morgan

guys. Hey

And of to on million commitment buyback return So really the some authorization. I demonstrating just to I clarify think wanted capital. the $XXX things

line total of market it's cap that's the of and your cash. So total probably north with in XX%

in not reflecting you kind think which the more And what's that be rate buy dip accelerating this is So of just bear there aggressive continue for to shares steady steady it of a if necessarily look limit purchase Would a buybacks, happening or is would in how environment back time plan, buyback shares? it just to a on you aggressive? market Is Do of plan? sort authorization? be you'd VLGCs. or how

John Hadjipateras

choice those a we're would they making a… between if choice more multiple be Sean, questions

Sean Morgan

lot. Yes, it's a

John Hadjipateras

where a good question of answer we it time No first -- time a that I intend yes not your question. But -- at think isn't the is -- there's limit. it's And what about to all all. limit, -- there

take consideration the earnings to has of including execute price. we into all and factors how Secondly, obviously

but So, we here timeframe. we any not executing particular see -- committed see and in we're value to

give that So volatility it's on to in it's to a all in be and There's me so freight difficult going of including to -- the give clear other much answer and you for stock to because our subject factors. the market. now geopolitics market kind everywhere

be you doubt. So well no updating quarter-to-quarter, from we'll

Sean Morgan

what was trying Yes. to that get really mean I to. Okay. I was

like not rate of what then that amount you're buying So, shares sort of you and with It it certain based equity adaptive markets in kind quarter. it's a like program the be could sounds static where each market. see a of the balancing on

-- that the that of gets that sort what of to increasing bit think limits, do scrapping was the to potential benefit that of maybe drive trying utilization you sort I So slow little well? steaming or inarticulately. EPL utilization effective effective bit the a new as will see rate there you providing hinted and fleet of reducing have as the I instituted. impact Do a for regarding And at mean little of was then of kind kind you at

John Hadjipateras

I'd Yeah. as on as I'd spending he's a – lot this you give course. give to of like been like of you to Tim, maybe, well time John,

they're Yes. you you answer. better do give poised So try? John, an to want to

John Lycouris

rule Yes thinking – Yeah, of just ships to the of ships to would kind engine thumb and to course. cut percent. will Sean. XX-some percent the Hi, their have about those older cut younger their ships at have is power XX-some about power I of

that. almost nearly something knots to to XX would like knots to XX.X but do older the down would able So to go just have roughly, the be ships ships newer knots, to XX

my that, does trading. kind have script question? few for captive ago, to will than ships. to do So lower trading, of they trades the rather you means reduce And your said in Does utilization active long-haul really exactly themselves do therefore, it that said answer is they yes, or a it what not minutes be will older I as

Sean Morgan

then account That's are helpful. kind if of little guess, technologies. sort technology And away But ammonia lower propulsion I to traditional you a know, on give ways maybe carbon-intense of people does of Yeah. a than lower we're ICE and the carbon engine? a technology benefit using system into so, propulsion other basically IMO steaming, – – you faster take if the I are

John Hadjipateras

of the Yeah. The can give things would main course, of engines it. And does emission, And COX status is whether the a the would you that or combustion engine from formula you auxiliary to add It formula you goes, do it correct. would. will – better that. provide It amount speed is from COX you affect the it as it or more better the yes, to it and your engines. yes emit, yes it engines, affect the a less better generator

Sean Morgan

Okay. Great. Thank you.

John Hadjipateras

Anything Sean. welcome, else? You’re

Operator

[Operator Instructions] Reynolds Brian Our UBS. line of the next with question comes from

your with proceed may question. You

Brian Reynolds

everyone. morning, Good Hi.

land, kind of capital can go the XX% question to cap in seen make x the free being effectively being cetera around that we've In follow-up reduce thrown – allocation energy amount cash of where years. private flow et alluding market a of on reduced. the Just a company math

those or just, looking ahead around of the distributions liquidity potential in you're you we your should balancing kind sense are And CapEx special thought what new spend the going the of all a standpoint forward how regulations three around long-term from together? makes curious account think and total from about potential future just given IMO process perspective? new Just a

John Hadjipateras

my We the that, a I attitude -- remarks have continue we capital will I -- we think end flexible have have in towards to said at allocation.

all by will options. We evaluating -- by the value

of to of moment any most haven't nothing effectively And put our of where doing that not should we've customers. at not at quite the the our expense to plan provide are rewarding put imperil not are And it business. that. going the we're be shareholders, we We think balance that how of Our given made at to in we think capital it? -- service sheet, terms I we So don't and to reduce is quality going to want going -- been any time. I sort our good there plans can could to is at we reducing, do the service we

think intelligently we positioned we've ourselves. So,

and the fleet We evaluate with options our so far future, positioning as for we have all XXXX. continue to the we we're along. our commitments peers amongst will the intelligently go newest And everything, in ourselves

Brian Reynolds

for all me. That’s time. your Thanks for nice. Very

Operator

Thank you.

the reached session. question-and-answer have of We the end

turn I'll over remarks. back Hadjipateras, Now the Mr. call to closing for

John Hadjipateras

everybody, thanks you Bye-bye. gentlemen and and your to talking Well, quarter. for thanks for and coming next questions, looking again to forward

Operator

This conference. concludes today's

You participation may your great you for and lines a at Thank your time. day. this disconnect have

Dorian LPG (LPG) 3 Feb 222022 Q3 Earnings call transcript