Dorian LPG - Earnings Call - Q1 2026

Executive Summary

• Q1 FY2026 was soft on headline results due to heavy drydocking and lower spot rates: revenue $84.21M, GAAP diluted EPS $0.24, adjusted EPS $0.27, adjusted EBITDA $38.58M; TCE fell to $39,726/day and available days declined to 2,086.
• Results missed S&P Global Wall Street consensus: revenue -2.7%, EPS -61.0%, adjusted EBITDA -20.0%; management cited drydock-related availability and market volatility as key drivers. Values retrieved from S&P Global.
• Capital return remained a catalyst: irregular $0.60 dividend (~$25.6M) was declared, signaling confidence in forward bookings and market backdrop.
• Forward indicators improved: ~70% of Q2 fixable days reportedly booked at TCE >$67,000/day; cash liquidity strong ($278M) with net debt-to-cap ~16.8% and undrawn $50M revolver, supporting balanced distributions and fleet investment.
• Management tone constructive, expecting stronger sequential performance as drydocking wanes and trade flows stabilize, with limited fleet additions and expanding U.S. export capacity underpinning VLGC rates.

What Went Well and What Went Wrong

What Went Well

• Capital returns sustained: Board declared an irregular $0.60 dividend (~$25.6M), continuing disciplined shareholder distributions and confidence in near-term market strength.
• Liquidity and leverage solid: cash $278M, undrawn $50M revolver, net debt-to-total cap ~16.8%, all-in debt cost ~5.1%, positioning for fleet renewal and balanced capital allocation.
• Forward bookings strong: ~70% of fixable Q2 pool days booked at TCE >$67,000/day, indicating a materially firmer market vs Q1.

What Went Wrong

• Operational availability: heavy drydocking reduced available days (2,086 vs 2,260 YoY) and lifted non-capitalized drydock expenses (~$2.6M; ~$0.06/share), pressuring revenue and margins.
• Market rates: TCE declined to $39,726/day from $50,243/day YoY on lower spot rates (Baltic Ras Tanura–Chiba avg $63.50/mt vs $72.67/mt YoY), driving revenue down 26.4% YoY.
• Elevated G&A: cash bonuses timing drove G&A up 62.2% YoY to $16.9M, further compressing profitability in a lower-rate quarter.

Transcript

Operator (participant)

Good morning and welcome to the Dorian LPG first quarter 2026 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. I would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead.

Ted Young (CFO)

Thank you, Leo. Good morning, everyone, and thank you all for joining us for our first quarter 2026 results conference call. With me today are John Hadjipateras, Chairman, President and CEO of Dorian LPG Ltd, John Lycouris, Head of Energy Transition, and Taro Rasmussen, Vice President Chartering. As a reminder, this conference call webcast and a replay of this call will be available through August 8, 2025. Many of our remarks today contain forward-looking statements based on current expectations. These statements may often be identified with words such as "expect," "anticipate," "believe," or similar indications of future expectations. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors, as well as general economic conditions.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those we express today. Additionally, let me refer you to our unaudited results for the quarterly period ended June 30, 2025, that were filed this morning on Form 8-K. We expect to file our 10-Q on August 5th 2025. In addition, please refer to our previous filings on Forms 10-K, where you'll find risk factors that could cause actual results to differ materially from these forward-looking statements. Finally, I would encourage you to review the investor highlights slides posted this morning on our website. With that, I'll turn over the call to John Hadjipateras.

John Hadjipateras (Chairman, President and CEO)

Hello and thanks for joining us. My colleagues Ted, John, and Taro will provide you detailed comments on our financial results, our emission reduction and operational progress, and our market outlook. First, I'd like to highlight the following. Our dividend of $0.60 per share, totaling $25.6 million, reflects our commitment to returning capital to shareholders in a manner that's aligned with market conditions and our policy of distributing earnings prudently. This will be our 16th dividend payment, bringing total dividends distributed to over $665 million and total capital of more than $900 million returned to shareholders. In the second quarter of the year, the market proved resilient. Trade risk strengthened, supported by healthy arbitrage economics and geopolitical tensions in the Middle East. Uncertainty caused by tariff escalation displaced ships from the U.S. Gulf to the Middle East and sent more cargoes to India.

While a U.S.-mediated ceasefire between Israel and Iran in late June brought some stability, charters remained cautious. U.S. LPG exports continued their multi-year growth trend, facilitated by ongoing expansion at U.S. fractionation plants and export terminal capacity, as well as high NGL output. Middle Eastern exports were also higher following the partial unwinding of OPEC+ quotas and increased production from new regional gas projects. Taro will elaborate on the fundamentals of the VLGC market and on our outlook. On the operational side, we completed 10 of our 12 drydocking plans for 2025. John L. will provide an update on our initiatives and our decision to convert some of our VLGCs to facilitate the carriage of ammonia. I'll pass you on to Ted for our quarterly financial overview.

Ted Young (CFO)

Thanks, John. My comments today will focus on our unaudited first quarter results, our financial position, liquidity, and of course, capital allocation. For the discussion of our first quarter results, you may find it useful to refer to the investor highlights slides posted this morning on our website. Remember that my remarks will include terms such as TCE, available days, and adjusted EBITDA. Please refer to our filings for the definitions of these terms. Looking at our first quarter charter results, we reported a TCE per available day of $39,726, which was a good result despite our heavy drydock schedule during the quarter that resulted in some 195 days that were not available for revenue generation. I would note that our June results were much stronger than the previous two months, which is indicative of the stronger market environment on which Taro will elaborate.

Also, the Q1 results were sequentially stronger than the March 31 quarter. The Helios Pool reported spot rates for the quarter of about $37,700 and approximately $38,900 across the pool, underscoring the strength of our charter out portfolio in the pool. On page four of our investor highlights materials, you can see that we have two Dorian vessels on time charter within the pool, indicating spot exposure of just over 93% for the 29 vessels in the pool. The forward bookings for the quarter ending September 30, 2025, reflect a strong increase in rates since late May into June. We currently estimate that we have fixed approximately 70% of the pool's fixable days in the quarter at a TCE in excess of $67,000 per day. The rate includes spot fixtures and time charters in the pool.

As you know, loading dates, disport options, and COAs can all cause the estimates we quote during these calls, and the rates actually realized to vary. Daily OpEx for the quarter was $10,108, excluding drydocking related expenses, which was down meaningfully from the March quarter's $11,001. Spares and storage costs led the decline. This quarter saw an over $1,300 per day difference between reported OpEx that includes expense drydocking amounts and our preferred measure of OpEx that excludes those costs. The non-capitalized drydocking expenses total about $2.6 million and equated to $0.06 per share for the quarter. Our time chartered-in expense for the four TC-in vessels came in right around $29,000 per day, which compares favorably to our fleet-wide TCE for the quarter, showing the profitability of our chartered-in program. Dorian

recently chartered in the Crystal Asteria, a dual-fuel VLGC that will trade in the Helios Pool. Going forward, we anticipate the quarterly TC-in expense will be approximately $14 million-$15 million. Total G&A for the quarter was affected by bonuses booked during the quarter of $8.3 million or $0.19 per share. Excluding the bonuses and the non-cash compensation expense, cash G&A was around $6.5 million. For the September 30 quarter, we estimate that non-cash compensation expense will increase by roughly $3 million over this quarter to reflect the impact of new share grants. Again, that amount is only for the coming quarter. Our reported adjusted EBITDA for the quarter was $38.6 million, but adjusting further for the bonuses and the expense drydocking amounts, it would have been $49.5 million. Total cash interest expense for the quarter was $7.1 million, which is marginally down sequentially from the prior quarter.

You should note that we capitalized $500,000 of interest expense on our newbuilding, which reduced the amount on the face of the P&L. Principal amortization remains steady. As John mentioned, looking ahead, our drydock program is largely complete, although we expect to drydock two more vessels this quarter. Total drydocking costs for those two vessels and remaining costs for dockings completed in the April-June quarter are expected to be between $6.5 million and $7 million. We currently estimate that roughly a third of that amount will be expensed as OpEx. After that, we will only have shorter in-water surveys to complete. Also, we do have two remaining progress payments on our newbuilding in September and December 2025, each roughly $12 million. At June 30, 2025, we reported $278 million of free cash.

Cash flow during the quarter was affected by our drydocking cash outlays and the foregone revenue, but we still finished with a very healthy cash balance. As disclosed this morning, we'll pay a regular dividend of $0.60 per share, or roughly $25.6 million in total, on or about August 27 to shareholders of record as of August 12. Including this dividend, we've returned over $900 million in cash through dividends, self-tender offer, and open market repurchases. With a debt balance at quarter end of $543.5 million, our debt-to-total book capitalization stood at 34.4% and our net debt-to-total cap at 16.8%. We have well-structured and attractively priced debt capital with an all-in cost of about 5.1%, an undrawn $50 million revolver, and one debt-free vessel. Coupled with our strong free cash balance, we have a comfortable measure of financial liquidity.

We expect our cash cost per day for the coming year to be approximately $26,000 per day, excluding the remaining capital expenditures for drydocking and the progress payments on our newbuilding. Including the irregular dividend to be paid this month, we have paid over $665 million of dividends and have generated net income of $652 million over the same time period. Our Board weighs current earnings, our near-term cash forecast, future investment needs, and the overall market environment among a number of factors in making its determination of the appropriate level, if any, for our dividends. The $0.60 per share dividend reflects a constructive market view, reflecting our forward bookings, the more limited impact of drydockings, and a somewhat more stable global trade environment.

We can continue to be on the lookout for fleet renewal opportunities and will be judicious with our free cash flow, working to balance shareholder distributions, debt reduction, and fleet investment. With that, I'll pass it over to Taro Rasmussen.

Taro Rasmussen (VP Chartering)

Thank you, Ted. Good day, everybody, and thank you for dialing in. The quarter ending June 30th 2025, witnessed dramatic impacts from the geopolitical situation for some weeks, but mostly saw a steady rise in freight markets. The primary geopolitical factor creating freight market volatility, albeit briefly, was the announcement of near-global tariffs by the United States. Bombing campaigns in the Middle East had several consequences, but did not rattle the VLGC market to the extent of Liberation Day. Middle East hostilities did restrict willingness of several VLGC players to call Middle East load ports, and the restricted Red Sea transit has kept longer vessel transits in place. VLGC market fundamentals remained firm despite the external impacts of tariffs and hostilities. NGL production in the United States continued to grow, and the inventory build season began as expected.

Other than a two-week period following the tariff tit for tat, increased supply of LPG lowered Mont Belvieu prices and supported an open west-to-east arbitrage. U.S. exports of LPG on VLGCs remained stable for the quarter, with monthly exports in the 4.6 million to 4.8 million tons per month range. Middle East exports continued in line with forecasts, and LPG as a commodity continued to find outlets in the Far East despite some rumblings about petchem profitability. With benefit of some perspective, several things are notable. Firstly, the April 2nd announcement of tariffs jolted many markets. The VLGC freight market saw approximately a halving in the Baltic indices within four days. The correction was likewise swift, with most losses recovered within the next five working days. Secondly, VLGC market reacted quickly to the shock, enabling the recovery in freight rates.

Chinese LPG imports over the quarter were in line with expectations despite a dramatic fall in U.S. origin product. The average monthly import of U.S. origin LPG in China was about 500,000 metric tons over the quarter, compared to the average monthly import of about 1.5 million tons in the eight preceding months back to August 2024. Imports of U.S. origin product duly increased in various other countries, such as Japan and India. The end June-July period typically sees a lull in activity, with lower freight rates. This has not been the case in 2025. Adaptability by the VLGC industry in reaction to the tariffs likely preserved market profitability, helped by the inefficiencies arising from the need to recalibrate trade flows. Increasing tensions in the Middle East through June also contributed to a steady but firming freight market during the quarter.

With the risk of direct hostilities increasing, fewer vessel operators were competing for Middle East cargoes. Furthermore, the Red Sea sailing passage was again unsafe for almost all vessels after a period of looking realistic. In January through May, four to five VLGCs transited the Red Sea late in a month, but only one in June. This inefficiency added ton miles to U.S., Algerian, and Red Sea LPG exports. Lastly, the exemption of restrictions on ethane exports from the U.S. to China meant that ethane carriers did not need to enter the VLGC market. Despite the brief shock to the freight market following the announcement of tariffs, the quarter ending June 30th 2025, avoided the otherwise seasonal summer lull. The Eastern market improved about 46% over the quarter, and the Western market improved almost 16%.

Expectations for the rest of the year, furthermore, remain positive, with a limited delivery schedule of newbuilds and roughly 13% capacity expansion at U.S. Gulf terminals. Thank you. I will now pass over to Mr. John Lycouris.

John Lycouris (Head of Energy Transition)

Thank you, Taro. At Dorian LPG, we are committed to continually enhancing our energy efficiency and promoting the sustainability of both our operations and our vessels. Our scrubber vessel savings for the first fiscal quarter of 2026 amounted to $961,000 or $813 per calendar day net of all scrubber operating expenses. The savings were impacted by the drydocking of several vessels during this quarter, as well as by the market volatility caused by global tariff announcements and geopolitical events. Fuel differentials between high sulfur fuel oil and low sulfur fuel oil averaged $55 per metric ton, while the differential of LPG as fuel versus low sulfur fuel oil stood at $71 per metric ton, making LPG economically attractive for our dual-fuel vessels. We now operate 16 scrubber-fitted vessels and five dual-fuel LPG vessels.

Since the start of this calendar year, we completed 10 vessels' special survey combined with their drydocking. We have a further two vessels scheduled for special survey and drydock in the fourth quarter of 2025. There are four vessels that had drydock last year during the third and fourth quarters of 2024, which are now due to pass their special survey within this calendar year. This drydocking program was structured to ensure that all necessary repairs, class surveys, and retrofits were consolidated within the vessels' mandated special survey and drydock periods. The approach minimized the risk of vessels requiring unscheduled dockings at a later time. Continuous monitoring of vessel performance has allowed emerging issues to be addressed proactively during scheduled drydockings, reducing the likelihood of future interruptions. It ensures technical and operational continuity with optimized fleet availability throughout the year.

As previously reported, the third VLGC vessel to carry ammonia cargo is planned to be upgraded during its drydocking slot in the fourth quarter of 2025. Once this last vessel is completed, five VLGC vessels in our Dorian VLGC LPG fleet will be able to carry ammonia cargoes, which includes our newbuilding VLGC VLAC vessel, which delivers in 2026. We believe the ammonia cargo capability upgrade enhances the fleet's commercial optionality and its readiness for employment when the first ammonia projects develop and the large ammonia cargo markets are established. Our noted fleet AR for the second quarter of 2025 was 8.5% better than the IMO 2025 target. We expect further improvement in the third quarter and fourth quarters as the drydockings and the installation of energy-saving devices on recently completed vessels are fully reflected.

AER is the annual efficiency ratio metric, which calculates the carbon intensity of our vessels' operations. The Dorian LPG fleet exceeds the IMO's EEXI and CII regulations. CII, in particular, is the carbon intensity index, which assesses the operational efficiency of our vessels and their contribution to greenhouse gas emissions. An in-house developed decarbonization planning tool models IMO CII ratings, EU, and IMO regulatory scenarios across our fleet by incorporating projected ESD installations, alternative fuel mixes, and differing operational profiles. Finally, we have developed the compliance cost planner for ETS, FuelEU, and the IMO Net Zero frameworks. This tool enables real-time forecasting of compliance costs, penalties, and carbon level impacts, supporting the creation of decarbonization strategies both at the vessel level and across the fleet. Our continued focus on energy and emission savings reflects our belief that environmental responsibility aligns with long-term value creation for our shareholders.

I would like to pass it over to John Hadjipateras for his final comments.

John Hadjipateras (Chairman, President and CEO)

Thank you very much. Thank you for everyone who's checked in today. I don't think we have any questions. If we don't, I leave you with it and wish you a happy rest of the summer until next time.

Operator (participant)

Pardon the interruption, gentlemen, we do have a question. Once again, if you'd like to ask a question, please press star one on your telephone keypad. To remove yourself from the queue, you may press star two. We'll take a question from Omar Nokta of Jefferies. Your line is open.

Omar Nokta (Managing Director)

Thank you. Sorry about that. I hit star one too late in the call. Thanks for the update. I did have a couple of questions, just a bit more on the macro side of the business. Clearly the market's gotten quite a bit stronger. I just wanted to ask, and you touched on this in your comments earlier, when we think about how the second quarter developed, it was obviously quite erratic with tariffs. We didn't just recover in terms of VLGC spot rates. They've actually really strengthened, and it's almost like things have kickstarted into high gear. When we compare it to, say, last year, where your earning basically doubled, last year's spot rate at this time, could you maybe just give a sense of what's driving this market? What has really propelled it from where it was earlier this year?

John Hadjipateras (Chairman, President and CEO)

Sure. Happy to, Omar, and very happy to hear your voice. I was hoping that we'd hear you. I'm going to give you Taro to answer your question because I think he can make the case and give you on the field feedback better than I can.

Taro Rasmussen (VP Chartering)

Great. Thank you, John. Thank you for the question, Omar. I believe the answer lies in the fundamentals, primarily with the strength of the U.S.'s ability to produce NGLs and get it exported. Is it different to last year? It's the growth, and it shows that the balance in the market is easily made positive with incremental growth. Long may that continue. I think it's a very healthy reflection of the wider market that using experiences from the past, whenever there's been trade barriers between the U.S. and China, industry players were able to reflect on past learnings, adapt them, and get trade going back to normal as soon as possible made all of this possible. If the trade flows could not realign, etc., you wouldn't be able to take advantage of the healthy fundamentals.

The last point I would make on to your question, the Red Sea transit difficulties that have escalated this year at various points, have helped lengthen ton miles. I hope that answers your question.

Omar Nokta (Managing Director)

No, thank you. It does. It provides some good context. I guess, maybe perhaps somewhat related, and it's a bit perhaps a bit more complex, but just generally, when we think about the U.S. export ARB, it feels like the freight rate is capturing, say, the lion's share of that ARB versus a year ago where it was getting a much smaller piece. What do you think has kind of changed, if you can point to it, that's allowed the freight part to capture such a much wider part of the export spread?

John Hadjipateras (Chairman, President and CEO)

Yeah, it was the increased capacity of terminals. Taro, can you elaborate?

Taro Rasmussen (VP Chartering)

Yeah, I think last year was in many ways an anomaly. It's been several years since we had seen such capability and strength in the terminals to absorb more value of the arbitrage that was, I would argue, driven partly last year due to reaction to weather phenomenon and the knock-on effects of delays that hurricanes leading to, or, and then concurrently upended tugboats in the Houston Ship Channel, etc. It was unique factors with a long trail of effect. This year has been more driven by other external factors in other parts of the world and political in nature and geopolitics. Perhaps not the full explanation to a very good question, but I hope it helps. It does.

Ted Young (CFO)

I just would point out, Omar, that just as Taro touched on, terminaling fees are way down year-over year.

Omar Nokta (Managing Director)

Thank you. That's, I guess, the function of the expansion.

Ted Young (CFO)

Taro, you want to...

John Hadjipateras (Chairman, President and CEO)

Expansion of the terminal capacity, yes. Yes.

Omar Nokta (Managing Director)

Yep, with more coming online this year, yes.

John Hadjipateras (Chairman, President and CEO)

Yeah.

Omar Nokta (Managing Director)

Got it. Thank you. Final one, you had mentioned the ethane part of the market, which obviously isn't necessarily LPG, but with that ethane now moving, there was a concern initially that that ethane would maybe, those ethane carriers would go into other markets. What do you think, if we were to fall into an issue where ethane in the U.S. can't be moved and those ships now are looking for business, what do you think is more likely, that they go into the VLGC trade or is it that they would try to make their way into the LNG trade? Have you thought about that or any way to kind of think about which way those ships would go if we get into that type of market?

John Hadjipateras (Chairman, President and CEO)

I think we look at them as an overhang in the, if the ethane trade for some reason were stopped, they would be entering the VLGC market. That's the way we've looked at it. I haven't got any sense that they would go into LNG. I don't think they're capable of doing it. We're also kind of confident that it won't happen because too much of our exports are being absorbed by China and almost all of everything that China gets has to come from us. I don't think it's going to happen. If it did, if for any reason, that was already the talk on that, we may see some ships kind of creeping into our business. Also, the turnout, I mean, if you did it, then you have to get back into ethane. It's not, you can't just keep going back and forth, ethane to LPG.

You can go from LPG to ethane, sorry, from ethane to LPG easily, but not the other way around.

Omar Nokta (Managing Director)

Okay, thanks for that explanation. Thanks, guys, for the detail and update. I'll turn it back.

John Hadjipateras (Chairman, President and CEO)

Thanks, Omar.

Operator (participant)

Thank you. It appears that we have no further questions at this time.

John Hadjipateras (Chairman, President and CEO)

Thank you all again. Thank you, Omar. Have a good rest of the summer.

Omar Nokta (Managing Director)

Thank you.

Operator (participant)

This does conclude today's conference. You may now disconnect. Everyone, have a great day.

John Hadjipateras (Chairman, President and CEO)

Thank you, Leo. Thank you, Mr. Leo.