Today’s Hot Stock Under Review: Dorian LPG Ltd. (NYSE: LPG)

On Wednesday, Shares of Dorian LPG Ltd. (NYSE: LPG) declined -2.31% to $7.60. The stock opened its trade at $7.70 and after floating in a price range of $7.49 to $7.83; the stock grabbed the investor’s attention and traded 168,901 shares as compared to its average daily volume of 407.54K shares. The stock’s institutional ownership stands at 63.90%.

Dorian LPG Ltd. (LPG), a leading owner and operator of modern very large gas carriers, recently stated its financial results for the three months ended December 31, 2017.

Third Quarter Fiscal Year 2018 Results Summary:

Our net income amounted to $1.70M, or $0.03 per share, for the three months ended December 31, 2017, contrast to net income of $5.00M, or $0.09 per share, for the three months ended December 31, 2016.

Our adjusted net loss amounted to $(2.10)M, or $(0.04) per share for the three months ended December 31, 2017, contrast to adjusted net loss of $(19.30)M, or $(0.36) per share for the three months ended December 31, 2016. We have adjusted our net income for the three months ended December 31, 2017 for an unrealized gain on derivative instruments of $3.80M. Please refer to the reconciliation of net income/(loss) to adjusted net loss, which appears later in this press release.

The favorable change of $17.20M in adjusted net loss for the three months ended December 31, 2017 contrast to the three months ended December 31, 2016 is mainly attributable to increased revenues of $8.80M, an $8.00M decrease in realized loss on derivatives, a $1.30M decrease in vessel operating expenses, and a $0.80M decrease in voyage expenses, partially offset by increases of $1.40M in interest and finance costs and $0.30M in general and administrative expenses.

The TCE rate for our fleet was $22.833K for the three months ended December 31, 2017, a 28.3% increase from a TCE rate of $17.796K from the same period in the prior year, mainly driven by increased spot market rates. Total fleet utilization (counting the utilization of our vessels deployed in the Helios Pool) reduced from 98.4% in the quarter ended December 31, 2016 to 95.6% in the quarter ended December 31, 2017.

Vessel operating expenses per day reduced to $7.804K in the three months ended December 31, 2017 from $8.456K in the same period in the prior year.

Revenues:

Revenues, which represent net pool revenues—related party, time charters, voyage charters and other revenues earned by our vessels, were $44.50M for the three months ended December 31, 2017, a boost of $8.80M, or 24.7%, from $35.70M for the three months ended December 31, 2016. The increase is mainly attributable to a boost in average TCE rates from $17,796 for the three months ended December 31, 2016to $22,833 for the three months ended December 31, 2017 as a result of higher spot market rates during the three months ended December 31, 2017 as contrast to the three months ended December 31, 2016. 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 $29.857during the three months ended December 31, 2017 contrast to an average of $25.817 for the three months ended December 31, 2016. In Addition To, during the three months ended December 31, 2017, the board of the Helios Pool approved a reallocation of pool profits in accordance with the pool participation agreement. This reallocation resulted in a $961 increase in our fleet’s overall TCE rates for the three months ended December 31, 2017, due mainly to favorable speed and consumption performance of our VLGCs operating in the Helios Pool. The increase in TCE rates was partially offset by a reduction in utilization of our vessels from 98.4% during the three months ended December 31, 2016 to 95.6% during the three months ended December 31, 2017.

Voyage Expenses:

Voyage expenses were $0.40M during the three months ended December 31, 2017, a decrease of $0.80M, or 67.6%, from $1.20M for the three months ended December 31, 2016. Voyage expenses are all expenses unique to a particular voyage, counting bunker fuel consumption, port expenses, canal fees, charter hire commissions, war risk insurance and security costs. Voyage expenses are typically paid by us under voyage charters and by the charterer under time charters, counting our vessels chartered to the Helios Pool. Accordingly, we mainly incur voyage expenses for voyage charters or during repositioning voyages between time charters for which no cargo is available or traveling to or from drydocking. The decrease for the three months ended December 31, 2017, as contrast with the three months ended December 31, 2016, was mainly attributable to a reduction in the number of operating days for our VLGCs operating on voyage charters outside of the Helios Pool during the relevant periods.

Vessel Operating Expenses:

Vessel operating expenses were $15.80M during the three months ended December 31, 2017, or $7,804 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 a decrease of $1.30M, or 7.7%, from $17.10M for the three months ended December 31, 2016. Vessel operating expenses per vessel per calendar day reduced by $652 from $8,456 for the three months ended December 31, 2016 to $7,804 for the three months ended December 31, 2017. The decrease in vessel operating expenses for the three months ended December 31, 2017 when contrast with the three months ended December 31, 2016 was mainly the result of (i) a $0.60M, or $293 per vessel per calendar day, reduction of crew wages and related costs, (ii) a $0.30M, or $163 per vessel per calendar day, reduction in insurance costs, reflecting a reduction in premiums, and (iii) a $0.30M, or $159 per vessel per calendar day, reduction in spares, stores, and repairs and maintenance costs.

General and Administrative Expenses:

General and administrative expenses were $5.50M for the three months ended December 31, 2017, a boost of $0.30M, or 7.2%, from $5.20M for the three months ended December 31, 2016. The increase was mainly because of a boost of $0.20M in salaries, wages and benefits and a boost of $0.10M in stock-based compensation. Other general and administrative expenses remained constant for the three months ended December 31, 2017 as contrast to December 31, 2016.

Interest and Finance Costs:

Interest and finance costs amounted to $8.70M for the three months ended December 31, 2017, a boost of $1.40M, or 18.4%, from $7.30M for the three months ended December 31, 2016. The increase of $1.40M during this period was because of a boost of $0.80M in amortization of deferred financing fees together with a boost of $0.60M in interest incurred on our long-term debt, mainly resulting from a boost in LIBOR, partially offset by a decrease in average indebtedness. Average indebtedness, apart from deferred financing fees, reduced from $802.00M for the three months ended December 31, 2016 to $751.30M for the three months ended December 31, 2017. As of December 31, 2017, the outstanding balance of our long-term debt, net of deferred financing fees of $18.90M, was $727.50M.

Unrealized Gain/(Loss) on Derivatives:

Unrealized gain on derivatives amounted to about $3.80M for the three months ended December 31, 2017, contrast to an unrealized gain of $24.40M for the three months ended December 31, 2016. The $20.60M decrease is mainly attributable to changes in the fair value of our interest rate swaps because of changes in forward LIBOR yield curves, reductions in notional amounts, and an $8.10M unrealized gain as a result of the termination of interest rate swaps related to the RBS Loan Facility during the three months ended December 31, 2016 that did not recur during the same period in 2017.

Realized Loss on Derivatives:

Realized loss on derivatives amounted to about $0.40M for the three months ended December 31, 2017, a decrease of $8.00M, or 95.6%, from a realized loss of $8.40M for the three months ended December 31, 2016. The decrease is mainly attributable to the termination of the interest rate swaps related to the RBS Loan Facility during the three months ended December 31, 2016 that did not recur during the three months ended December 31, 2017.

LPG has a market value of $410.40M while its EPS was booked as $-0.28 in the last 12 months. The stock has 54.00M shares outstanding. In the profitability analysis, the company has gross profit margin of 98.50% while net profit margin was -8.90%. Beta value of the company was 1.00; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.40.

Pamela Lord

Services Reporter

I am Pamela Lord and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

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