Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dorian LPG Ltd (LPG, Financial) reported a strong first quarter with a net income of $51.3 million.
- The company successfully completed an equity offering, enhancing its balance sheet and positioning for future growth and fleet renewal.
- A $1 irregular dividend was declared, bringing the total capital return since the IPO to over $777 million.
- The company has a strong financial position with $353.3 million in free cash as of June 30, 2024.
- Dorian LPG Ltd (LPG) has a well-structured and attractively priced debt capital with a weighted average cost of debt at about 4.7%.
Negative Points
- Margin volatility was a significant feature during the quarter, with swings not reflecting fundamental changes in supply and demand.
- External factors such as weather events and geopolitical issues have alternately increased or inhibited quarterly earnings.
- The fleet has seen significant additions, with 56 VLGCs added since the beginning of 2023, increasing competition.
- Operational challenges such as delays at US Gulf terminals and the Panama Canal have impacted market movements.
- The company faces ongoing challenges in optimizing export capacity due to external disruptions and infrastructure limitations.
Q & A Highlights
Q: John H, you talked a bit about the swings we've seen in the VLGC market, especially in July. What has been driving these swings, and which issues have had the biggest impact?
A: (Tim Hansen, Chief Commercial Officer): The biggest factor is really the US Gulf production, which in June was hampered by delays with chiller problems and some force majeure. This coincided with the Panama Canal returning to normal, causing more ships to be available in the US Gulf. The backlog from these issues is still being worked through, but terminals are now fully up and running.
Q: Have the backlogs from Hurricane Beryl in the Gulf Coast started to improve?
A: (Tim Hansen, Chief Commercial Officer): Yes, terminals are back at full export levels and are working to clear the backlog of ships. We expect the situation to normalize within this month, assuming no further incidents.
Q: Can you provide more details on the bookings for the Helios Pool for the current quarter?
A: (Theodore Young, Chief Financial Officer): We currently have nearly 50% of the available days in the Helios Pool booked at around $30,000 per day. It's hard to predict the exact operating days, but there is potential for upside.
Q: Any plans for the proceeds from the equity issuance back in June?
A: (John Hadjipateras, Chairman, President, and CEO): There are no active plans at the moment, but we are looking at opportunities to put the money to good use. We will keep you updated when anything comes to fruition.
Q: What are the prospects for the VLGC market in the medium to long term?
A: (Tim Hansen, Chief Commercial Officer): Despite short-term challenges, the underlying demand for VLGC shipping is firm. We expect North American exports to grow, and the Panama Canal to experience congestion in the winter, which should support freight rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
