Dorian LPG - Q3 2026

Transcript

Operator (participant)

Good morning, and welcome to the Dorian LPG Q3 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, Raisa. Good morning, everyone, and thank you all for joining us for our Q3 2026 results conference call. With me today are John Hadjipateras, Chairman, President, and CEO of Dorian LPG Limited, John Lycouris, Head of Energy Transition, and Tim Hansen, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through February 12, 2026.

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 those, 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 period ended December 31, 2025, that were filed this morning on Form 10-Q. In addition, please refer to our previous filings on Form 10-K, where you'll find risk factors that could cause actual results to differ materially from those forward-looking statements. Finally, I would encourage you to refer to the investor highlight slides posted this morning on our website during our remarks. With that, I'll turn over the call to John Hadjipateras.

John Hadjipateras (CEO)

Thanks, Ted. Good morning, and thank you for joining us. Before my colleagues provide you detailed comments on our financial results, our market outlook, and our operational progress, I'd like to highlight the following. Our dividend declared last week of $0.70 per share, totaling $29.9 million, will be our eighteenth dividend payment, bringing total dividends distributed to over $725 million, and total capital of $961 million returned to shareholders since our IPO.

The VLGC market remained strong in the fourth calendar quarter, with spot earnings well above long-term mid-cycle, despite some volatility. Indeed, as we speak, demand and freight rates continue to be strong. Last quarter, global liftings were up 3% year-over-year, measuring 36.8 million tons.

The new record level of LPG exports highlights the attractiveness of LPG as an energy source for domestic, commercial, and industrial uses. Tim will elaborate on the VLGC market and our outlook. On the operational side, we completed 12 dry dockings this past year and have one more scheduled for this month, which will bring to completion the dry-docking cycle for our fleet.

After this last docking cycle, most of our ships will have been fitted with energy-saving devices and silicone paint, resulting in meaningful cost savings and emission reductions. We have a 93,000 cubic meter VLEC new building delivering in March from Hanwha in South Korea. John L. will give you more information on the progress made in our docking program, ammonia retrofits, and new building delivery, as well as the regulatory environment. Ted will now present our quarterly financial overview. Ted?

Ted Young (CFO)

Thanks, John. My comments today will focus on our unaudited Q3 results, capital allocation, and our financial position and liquidity. For the discussion of our Q3 results, you may also find it useful to refer to the investor highlight slides posted this morning on our website. I'd also remind you that my remarks will include a number of terms such as TCE, available days, and adjusted EBITDA.

Please refer to our filings for the definitions of these terms. Turning to our Q3 chartering results, we achieved a TCE per available day of $50,333. Chartering results were strongest in October, followed by a small dip in November and into the first part of December. Tim will elaborate more on the current rate environment, which is substantially improved.

As our entire spot trading program is conducted through the Helios Pool, its spot results are the best measure of our spot chartering performance. For the December 31 quarter, the Helios Pool earned a TCE of $50,500 per day for its spot and COA voyages. On page four of our investor highlights material, you can see that we have three vessels on time charter within the pool, indicating spot exposure of about 90% for the 29 vessels in the Helios Pool.

We will provide forward-booking information later in the quarter in order to make it more useful for the investment community, as the impact of rate volatility is best managed by providing information when more of the quarter is booked. Daily OpEx for the quarter was $9,558, excluding dry docking-related expenses, which was more or less flat with the prior quarter. We are encouraged by the lower OpEx, excluding dry docking over the last two quarters.

Our time charter in expense for the TCN vessels came in at $18.2 million, consistent with our guidance and equivalent to an average charter hire of about $33,000 per day, reflecting full quarter contributions from both the Crystal Asteria and the BW Tokyo. The Tokyo is jointly chartered in with MOL Energia and deployed into the Helios Pool, and thus we account for 100% of the revenues and time charter expense on our P&L. The new line item, profit sharing expense on our income statements, reflects the 50% of the net chartering results that is due to our partner.

For the March quarter, we estimate TCI expense continue to be in the $18 to $19 million range again for the quarter. Total G&A for the quarter was $10.8 million, and cash G&A, that's G&A excluding non-cash comp expense, was about $8.7 million. Included in that $8.7 million was about $2 million of quarterly expense under our cash incentive plan. Thus, our core G&A remains steady at roughly $6.7 million. Our reported adjusted EBITDA for the quarter was $74.2 million. Total cash interest expense for the quarter was $6.8 million. Our current debt cost is about 5%, which reflects the heavily hedged and fixed nature of our various pieces of debt.

We closed the quarter on December 31, 2025, with $294.5 million of free cash, which was up about $25 million from the prior quarter, which is a particularly good result as we paid the dividend and an installment on our new building during the quarter. As announced last week, we will pay $0.70 per share as an irregular dividend, or roughly $30 million in total, on or about February 24, 2026, to shareholders of record as of February 9, 2026. With a debt balance at quarter end of $516 million, our debt to total book capitalization stood at 32.2% and net debt to total cap at 13.8%.

With an undrawn $50 million revolver and a $100 million accordion feature in our existing loan agreement, our strong free cash balance and one debt-free vessel, we feel well capitalized for fleet growth and renewal, or for whatever challenges might arise. We expect our cash cost per day for the coming year to be approximately $27,000 per day, excluding capital expenditures for dry docking and scrubbers.

During the quarter, we completed three dry dockings and anticipate one dry docking for this quarter, currently ending March 31. That will complete the dry docking program for our 2014-2016-built vessels. As John mentioned, we expect to take delivery of our newbuilding, ammonia-capable VLGC, at the end of March 2026, and we expect to pay about $62 million in cash at closing.

We expect to enter into a loan facility to finance that payment. The irregular dividend declared last week of $0.70 per share brings to $17.65 per share in irregular dividends that we have paid since September 2021. While many investors and analysts like to suggest that these dividends are no longer irregular, we underscore that they are indeed irregular and subject to the discretion of our board.

VLGC rates are not regular, and thus we don't think our dividend policy should be either. Looking at our dividends in a more traditional context, our net income since June 30, 2021, that's the quarter immediately prior to our first irregular dividend, has been approximately $754 million, while including the dividend to be paid later this month, we will have returned approximately $725 million of dividends in total.

$725 million in dividends. In total, we've returned over $960 million in cash to our investors since our IPO. We will continue to maintain a steady balance between dividends, deleveraging, and fleet investment. With that, I'll pass it over to Tim Hansen.

Tim Hansen (Chief Commercial Officer)

Thank you, Ted, and good day, everyone. For the quarter ending December 31, 2025, the global seaborne LPG trade increased again to a new quarterly record. It was reported to be more than 37 million tons for the first time. North America export contributed significantly, hitting a new quarterly export record of more than 18.5 million tons.

The Middle East exports were the second highest quarterly export volume on record. The expanded seaborne trade witnessed over the quarter speaks to the attractiveness of LPG as a commodity, but the whole freight markets were challenged by external factors. The key external factors impacting the freight markets were lower than anticipated Saudi Contract Price or Saudi CP for October, and the retaliatory port service fees implemented in China.

Starting with the lower than anticipated Saudi contract prices, it should be remembered that the Saudi CP influences the pricing of the Far East Index, or FEI, and therefore, impacts product price economics. The Saudi CP for October was lowered to be price competitive against U.S. exports for a tender into India and to demonstrate some commercial flexibility on the parts of Saudi Aramco.

The price decrease was unexpected because the Saudi CP is historically in contango throughout the fourth, calendar quarter of any year, and Far East imports increase in anticipation of winter heating demand. The drop in the Saudi CP and Far East Index created an uncertain trading environment for a few weeks and narrowed the arbitrage, slowing and weakening the freight markets.

Amidst the slower freight market activity, the recent cross port service fees were announced in China to impact the U.S.-related vessels on the 10th of October. The timing was key as the announcement fell on a Friday before a three-day weekend, with implementation happening on the 14th of October to match the USTR Section 301 port service fees.

The immediate impact was for vessels with cargo on board and en route to China, setting in motion discussions and rerouting of some vessels as additional costs would be incurred, and there were ambiguous teeth as to the scope of the impacted vessels. The shock of sudden cost negativity impacted the market and had another knock-on effect on the wider Far East cargo market.

But prompting owners with vessel scheduled to load in the Arabian Gulf, and U.S. target cargo is not bound for China, and prices, and price those aggressively. Normally, return to the market at the end of October, when the U.S.-China summit in Busan found an agreement to suspend the port service fees for both countries until the ninth of November, 2026, and the market corrected upwards again.

The third calendar quarter demonstrated VLGCs players to respond with agility when the USTR Section 301 port services was announced, and the fourth calendar quarter reaffirmed this. Once the backlog of unfixed vessels was cleared through November, the freight market improved through December to capture value from the west to east arbitrage that returns to normal levels.

The quarter ending December 31, 2025, ultimately traded amidst a lower average Baltic Index than the quarter prior, but found upward momentum heading into 2026. For 2026, a total of roughly 36 VLGCs, including one of our own, will require absorption in the market. Geopolitical impacts on the world market seem likely, but the agility of the VLGC market and the fundamental attractiveness of LPG as a commodity support the belief that the risk can be mitigated and upsides successfully captured. With that, I will pass it over to Mr. John Lycouris.

John Lycouris (Head of Energy Transition)

Thank you, Tim. At Dorian LPG, we are committed to continually enhancing energy efficiency and promoting the sustainability of both our operations and our vessels. We operate 16 scrubber-fitted vessels and 5 dual-fuel LPG vessels. Scrubbers neutralize sulfur oxides from fuel oil while reducing significantly particulate matter and black carbon emissions.

For the third fiscal quarter of 2026, vessel savings amounted to $1,116,000, or about $933 per calendar day, net of all scrubber operating expenses. Lower oil prices and a lack of geopolitical events led to lower bunker prices, which resulted in our lower savings for the scrubbers.

Fuel differentials between high sulfur fuel oil and very low sulfur fuel oil averaged $57 per metric ton, while the differential of LPG as fuel versus very low sulfur fuel oil stood at about $104 per metric ton, making LPG economically attractive for our dual fuel vessels. During the last quarter, three vessels completed special survey and dry docking, including one upgraded for the carriage of ammonia cargo.

With the completion of the special survey and dry dock of the last of our C-type vessels this month, we will have completed the entire dry docking cycle for our 2014 built, 2016 built vessels. Next month, we take delivery of the Hanwha Ocean, 93,000 cubic meter new building, which is a VLGC and VLAC combined, and which will join Dorian LPG fleet.

This LPG dual fuel vessel is fitted with a hybrid scrubber and with alternative marine power. Annual efficiency ratio, or AER, is the metric which calculates the carbon intensity of our vessels operations. The average Dorian LPG fleet AER for the full year, 2025, was 6.24%, which is 10.4% better than the IMO required target for 2025, or 6.96%. In late 2025, the IMO's Marine Environment Protection Committee met for a second extraordinary session.

Member states decided to delay approving changes to the MARPOL Annex VI by one year. Despite this delay, Dorian remains fully committed to investing in fuel efficiency, improved performances, and decreased greenhouse gas emissions. We view the delayed IMO changes as a very positive step, allowing more time for input and review on many outstanding technical issues, capabilities, procedures, and implementation details.

This also gives our industry time to prepare and adjust expectations for realistic targets for the Net Zero Framework guidelines, and toward gradual development of alternative fuel. The MEPC 84 session is scheduled to take place in the spring of 2026. We expect this session to focus on finalizing critical implementation guidelines that will give more clarity on the Net Zero Framework and to consider additional proposals. We are confident that our company and fleet are well-equipped and fully prepared to meet regulatory changes ahead. And now I would like to pass it over to John Hadjipateras for his final comments.

John Hadjipateras (CEO)

Thanks, John, and we'd love to open up for questions if anyone has joined us and like to—who's joined us would like to ask any questions. Operator, please.

Operator (participant)

At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, to ask a question, that is star one. We'll take our first question from Omar Nokta with Clarkson Securities. Your line is open.

Omar Nokta (Analyst)

Thank you. Hey, guys. Good morning. Thanks for the update. I do have a couple of questions, you know, maybe one on the market and then just wanted to get into Dorian, specifically, but maybe broadly on the market. I know, Ted, you mentioned you'll wait a bit to give us guidance on how the quarter's bookings are looking. But just in general, what we've seen here in the spot market, rates seem to be quite strong.

They're at 2+ year highs, and it's interesting in terms of, you know, how this is happening and somewhat defying, you know, the typical seasonal norms. And so I just wanted to ask, from your perspective, you know, what's been driving this kind of counterseasonal strength? From that sense, what do you think that then means for how the year is gonna look in general?

John Hadjipateras (CEO)

Thanks for that question. Is this Omar? I didn't catch the introduction.

Omar Nokta (Analyst)

Yep, it's Omar.

John Hadjipateras (CEO)

Omar, congratulations on your new position. I'm happy to have you back in the industry.

Omar Nokta (Analyst)

Thank you, sir. I appreciate that.

John Hadjipateras (CEO)

Thank you. Thank you. Tim, can you take that question, please?

Tim Hansen (Chief Commercial Officer)

Yeah, as well, it's unusual that the Q1 actually goes stronger as we get into the quarter. But as I mentioned, the last quarter of 2025, there was a lot of uncertainties and people held back on the activity. So there's a little bit less cargoes lifted. There was some fog as well in the U.S. and so on. And once all these, the USG was cleared, once the fog have lifted and people had gotten used to these Saudi pricing, the market came back. So I think it was a spillover from that kind of lack of activity in November that has gone into Q1 also.

The production levels have kept on increasing and surprising to the upside. So we have seen more cargoes, and the U.S. terminals have been able also to get these cargoes out of the terminals and onto the water. So we see that production continuing on the upside, and hopefully continue to surprise on the upside compared to the levels advised from the U.S. But so we do see the rest of the year should be strong and continue in this kind of activity. So we're pretty positive for 2026.

Omar Nokta (Analyst)

Okay. Yeah. Thank you. Very good. And then just maybe a follow-up just in terms of how you've been deploying the fleet. You've obviously got a good amount of spot exposure via the pool. I did notice that one of the ships, I think the Chaparral maybe, has been put on a TC into 2027. Anything you're able to share on what that rate looks like? I know you tend to not give specifics, but anything you can give, or perhaps maybe in relation to what that would be earning relative to the other ships on charter?

John Hadjipateras (CEO)

I'll let Tim again answer because I think probably we have a P&C clause. But Tim and Ted can also give some. Tell you what we can tell you, put it that way. Tim, you want to start, and then we'll, Ted can take over.

Tim Hansen (Chief Commercial Officer)

Yeah, as you mentioned, we don't give out the rates. It is reported in the market. It was a deal that was done back in October, November, and just going on charter this quarter for, yeah, for a little more than a year's charter. So, we do our chartering like more opportunistic when we see possibilities. Of course, the market has since then surprised us based on the upside, the spot market, but I think it's at levels compared to the earnings we do in the spot market over the last quarter.

John Hadjipateras (CEO)

Ted, maybe this is a good time to say something about guidance.

Ted Young (CFO)

Well, yeah, I think, I think, picking up on that, the topic of guidance, like we said, Omar, we think it's probably more useful to give the overall forward bookings information later in the quarter, just because there's so much volatility in the business, in the sector, just as, as, Tim alluded to. And so the, the information coming out later is gonna be better.

You know, and so I think that, you know, so we'll leave it in, in there, but I think, you know, Tim did a good job of giving you the overview. You know, I also think it's probably, you know, was reported, which I think is interesting, that it, it's business for Brazil, which, I think is, is pretty exciting because of, what it says about Brazil as a potential growth market.

Omar Nokta (Analyst)

Got it. Thank you. Got it. Thanks. That's quite helpful. And then just a final one, maybe for you, Ted, just on the new building that you're taking delivery of here in the next few weeks. Looks like I think from the filing, there's $62 million left to spend. You have $294 million of cash, so quite a bit of flexibility to do what you want. But do you have any specifics on how you plan to fund that vessel? Will you borrow or just pay cash?

Ted Young (CFO)

Yeah, I alluded to it briefly in our remarks. We do plan to finance the rest of the payment, and more detail be forthcoming when we get there.

Omar Nokta (Analyst)

Okay. All right. Thank you. Thanks, guys. And thanks, John. I'll pass it back.

John Hadjipateras (CEO)

Okay. Thank you, Omar. Thank you very much for joining us and everybody else. Do we have any other questions, Raisa?

Operator (participant)

We do. Our next question comes from Climent Molins with Value Investor's Edge. Your line is open.

Climent Molins (Analyst)

Hi, good morning, and thank you for taking my questions. This is kind of a follow-up on Omar's first question. Despite rates being very solid, so far we haven't seen a significant increase in the average speed of the overall VLGC fleet. To what extent do you believe the fleet can speed up if rates remain solid? Older vessels are, let's say, capped by the environmental regulations, but to what extent could the eco portion of the fleet speed up?

John Hadjipateras (CEO)

Ah, that's another one for Ted, for Tim. A very good question.

Tim Hansen (Chief Commercial Officer)

Yeah, there is a bit of leeway in speeding up still, but most of the, let's say, non-LPG fuel ships, so the eco type from, as we have the majority of the 2015, they are still capped by the environmental regulations and the reductions of power done years back. So there's maybe like a knot or two more in it, not a half, and for the older ship, there's really nothing. So it's not a significant additional speed that we can do.

You'll probably see when we come into the summer months, if the market is strong, we can go a bit faster, but at the moment, also, we have seen quite a lot of bad weather here over the winter. So then even in theory, we could go faster. It's hard to actually do it.

Climent Molins (Analyst)

That's helpful. Thank you. As a follow-up, in your prepared remarks, you talked about the energy-saving devices you've installed on your vessels, resulting in meaningful savings. Could you talk a bit further on what kind of improvements that has resulted relative to previous consumption levels? And what kind of IRR are these investment generating? I know, like, giving an exact figure may not be easy, but any color would be helpful.

John Hadjipateras (CEO)

Yeah, John will answer that. I think we've mentioned something specific, and he could give you as an illustration, perhaps the payback on scrubbers. That should give you a bit of a color on the whole picture. John?

John Lycouris (Head of Energy Transition)

Yes, the energy-saving devices that we use and we mention usually provide an improvement of around 5%. And that's the ballpark figure for most of the energy-saving devices in most of the ships. And silicon paints also provide a similar kind of number, about 5% improvement in the energy saving. So the payback is generally pretty fast. It is generally within a year. So I think that answers your question.

Climent Molins (Analyst)

It does. Thanks so much.

John Hadjipateras (CEO)

That, of course, does not apply to scrubbers specifically. The payback on scrubber is a bit longer than that, but most of the other devices are low cost. Those producing the 5% are low cost, so that's why we have a quick payback.

John Lycouris (Head of Energy Transition)

Thank you, John.

Climent Molins (Analyst)

Yeah, makes sense. Thank you, guys. I'll turn it over. Thank you for taking my questions.

John Hadjipateras (CEO)

Thank you.

Operator (participant)

It appears we have no further questions at this time. I'll turn the program back to the speakers for any additional or closing remarks.

John Hadjipateras (CEO)

Thank you all for joining us, and have a good summer.

John Lycouris (Head of Energy Transition)

Great.

Operator (participant)

This concludes today's program. Thank you for your participation, and you may disconnect at any time.