Dorian LPG Ltd. announces 2Q FY 2019 financial results
Dorian LPG Ltd. (NYSE: LPG) (the "Company," "Dorian LPG), a leading owner and operator of modern very large gas carriers ("VLGCs"), yesterday reported its financial results for the three months ended September 30, 2018.
Highlights for the 2Q Fiscal Year 2019 of Dorian LPG are the following:
Revenues of $40.8 million and Daily Time Charter Equivalent ("TCE") rate for the fleet of $20,973 for the three months ended September 30, 2018, compared to revenues of $34.7 million and TCE rate of $18,015 for the three months ended September 30, 2017.
Net loss of $(8.2) million, or $(0.15) earnings/(loss) per basic and diluted share ("EPS"), and adjusted net loss(1) of $(9.2) million, or $(0.17) adjusted diluted earnings/(loss) per share ("adjusted EPS"),(1) for the three months ended September 30, 2018.
Adjusted EBITDA(1) of $17.9 million for the three months ended September 30, 2018.
Increased vessel operating days to 1,925 and fleet utilization to 95.8% in the three months ended September 30, 2018 from 1,857 and 91.8% for the three months ended September 30, 2017.
Entered into a contract for seven of our ECO VLGCs to be fitted with exhaust gas cleaning systems (commonly referred to as "scrubbers").
Second Quarter Fiscal Year 2019 Results Summary
Net loss amounted to $(8.2) million, or $(0.15) per share, for the three months ended September 30, 2018, compared to a net loss of $(11.9) million, or $(0.22) per share, for the three months ended September 30, 2017.
Adjusted net loss amounted to $(9.2) million, or $(0.17) per share, for the three months ended September 30, 2018, compared to adjusted net loss of $(12.6) million, or $(0.23) per share, for the three months ended September 30, 2017. Net loss for the three months ended September 30, 2018 is adjusted to exclude an unrealized gain on derivative instruments of $1.1 million. Please refer to the reconciliation of net loss to adjusted net loss, which appears later in this press release.
The $3.4 million reduction in adjusted net loss for the three months ended September 30, 2018, compared to the three months ended September 30, 2017, is primarily attributable to an increase of $6.1 million in revenues, a favorable change of $1.3 million in realized gain on derivatives, a decrease of $0.9 million in voyage expenses, and an increase of $0.5 million in interest income, partially offset by increases of $2.1 million in general and administrative expenses, $1.7 million in vessel operating expenses, and $1.6 million in interest and finance costs.
The TCE rate for our fleet was $20,973 for the three months ended September 30, 2018, a 16.4% increase from a TCE rate of $18,015 from the same period in the prior year, primarily driven by increased spot market rates, partially offset by bunker prices. Please see footnote 6 to the table in "Financial Information" below for information related to how we calculate TCE. Total fleet utilization (including the utilization of our vessels deployed in the Helios Pool) increased from 91.8% in the quarter ended September 30, 2017 to 95.8% in the quarter ended September 30, 2018.
Vessel operating expenses per day increased to $8,585 in the three months ended September 30, 2018 from $7,777 in the same period 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 $40.8 million for the three months ended September 30, 2018, an increase of $6.1 million, or 17.5%, from $34.7 million for the three months ended September 30, 2017. The increase is primarily attributable to an increase in average TCE rates and fleet utilization. Average TCE rates increased from $18,015 for the three months ended September 30, 2017 to $20,973 for the three months ended September 30, 2018, primarily as a result of higher spot market rates during the three months ended September 30, 2018 as compared to the three months ended September 30, 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 $40.245 during the three months ended September 30, 2018 compared to an average of $22.171 for the three months ended September 30, 2017. Our fleet utilization increased from 91.8% during the three months ended September 30, 2017 to 95.8% during the three months ended September 30, 2018.
Vessel Operating Expenses
Vessel operating expenses were $17.4 million during the three months ended September 30, 2018, or $8,585 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 $1.7 million, or 10.4%, from $15.7 million for the three months ended September 30, 2017. Vessel operating expenses per vessel per calendar day increased by $808 from $7,777 for the three months ended September 30, 2017 to $8,585 for the three months ended September 30, 2018. The increase in vessel operating expenses for the three months ended September 30, 2018, when compared with the three months ended September 30, 2017, was primarily the result of a $1.6 million, or $787 per vessel per calendar day, increase in spares, stores, and repairs and maintenance costs largely due to our regular preventive maintenance programs, and a $0.3 million purchase of coolant for one of our VLGCs coming off drydock in July 2018 resulting in an increase of $160 per vessel per calendar day. The increase in spares, stores, and repairs and maintenance costs were mainly due to having a VLGC in drydock during the three months ended September 30, 2018, which was not the case during the three months ended September 30, 2017. Non-capitalized expenses related to the drydock for the three months ended September 30, 2018 totaled $0.3 million, or $153 per vessel per calendar day. Partially offsetting the increases was a reduction of crew wages and related costs of $0.2 million, or $114 per vessel per calendar day.
General and Administrative Expenses
General and administrative expenses were $7.5 million for the three months ended September 30, 2018, an increase of $2.1 million, or 37.7%, from $5.4 million for the three months ended September 30, 2017. The increase was mainly due to an increase in professional and legal fees resulting from $1.7 million of expenses incurred related to the unsolicited proposal by BW LPG Limited ("BW") to combine with us in an all-stock transaction, and a proxy contest commenced by BW, along with its affiliates, to replace three members of our board of directors with BW nominees, which proposal and proxy contest were subsequently withdrawn on October 8, 2018. Additionally, the increase in general and administrative expenses was due to increases of $0.2 million in stock-based compensation and $0.2 million in other general and administrative expenses.
Interest and Finance Costs
Interest and finance costs amounted to $10.2 million for the three months ended September 30, 2018, an increase of $1.6 million, or 18.0%, from $8.6 million for the three months ended September 30, 2017. The increase of $1.6 million during this period was due to an increase of $2.5 million in interest incurred on our long-term debt, primarily resulting from an increase in the London Interbank Offered Rate ("LIBOR") and an increase in average indebtedness, partially offset by a reduction of $0.9 million in amortization of deferred financing fees and loan expenses. Average indebtedness, excluding deferred financing fees, increased from $742.3 million for the three months ended September 30, 2017 to $756.1 million for the three months ended September 30, 2018. As of September 30, 2018, the outstanding balance of our long-term debt, net of deferred financing fees of $15.5 million, was $726.5 million.
Unrealized Gain/(Loss) on Derivatives
Unrealized gain on derivatives was approximately $1.1 million for the three months ended September 30, 2018, compared to an unrealized gain of $0.7 million for the three months ended September 30, 2017. The favorable $0.4 million change is attributable to changes in the fair value of our interest rate swaps caused by changes in forward LIBOR yield curves and reductions in notional amounts.
Realized Gain/(Loss) on Derivatives
Realized gain on derivatives was approximately $0.8 million for the three months ended September 30, 2018, compared to a realized loss of $0.4 million for the three months ended September 30, 2017. The favorable $1.2 million change is attributable to increases in floating LIBOR resulting in realized gains on interest rate swaps related to the $758 million debt financing facility that we entered into in March 2015 (as amended) with a group of banks and financial institutions.