Greetings and welcome to the Dorian LPG Second Quarter 2022 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.

Thank you, Darrell, and good morning everyone. Thank you all for joining us for our second quarter 2022 results conference call. With me today are John Hadjipateras, Chairman, President and CEO of Dorian LPG Limited; John Lycouris, Chief Executive Officer of Dorian LPG (USA); and Tim Hansen, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through November 10, 2021. 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 period ended September 30, 2021, 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, for our discussion this morning of our second quarter results, you may also find it useful to refer to the investor highlight slides posted this morning on our website, both under the Recent News section on the homepage, and under the News & Media tab which can also be located on our homepage www.dorianlpg.com. With that, I'll turn over the call to John Hadjipateras.

Okay. Good morning or good afternoon as the case may be. Ted, John and I are speaking from Stamford and Tim Hansen, calling in from Copenhagen. Thank you for joining us to discuss our second quarter 2022 financial and operating results. We now have 62% of our seafarers fully vaccinated; 27%, or 236 out of 889, are vaccinated at U.S. ports. The pandemic has brought our teams closer in coordinating efficient and safe crew changes and is also enabling us to engage and integrate our seafarers into our processes of fuel and emission savings. Our seafarers will be our most valuable partners in the continuing effort to decarbonize. Our fleet performance and technical teams are assessing emission-saving devices, which potentially will reduce consumption of our eco fleet. Since January 2020, our efforts to reduce emissions have resulted in fuel savings of over $2.5 million. We were able to achieve solid market rates this quarter by optimizing our positioning and timing. Ton-mile demand increased, but bunker prices have also risen alongside crude oil prices. The Baltic Index averaged about $42 for the period July 1st to September 30th, down roughly $10 from the previous three months’ average. At $51.60, the Baltic average for the quarter (July to September) the TC equivalent was about $8,000 higher than at yesterday's $56. North American exports continue to rebuild after reaching low levels last fall due to COVID delays. Middle East exports are also recovering from their four-week moving average, having passed 700,000 last week. In fact, 750,000 in mid-October compared to 700,000 at the last week of September and that is the highest export number from the region since last February. The arbitrage between Mont Belvieu and the Far East Index price for LPG has widened in recent weeks. The Baltic VLGC Index is trading at about $56 currently, up from $45 at the end of September and $37 in mid-September. We have a constructive view of the winter market. On the supply side of the market, U.S. NGL production is resilient despite short-term impacts from hurricanes in late August and early September. We expect exports from both the U.S. and the Middle East to increase in the winter months as OPEC+ continues to implement production cut reversals and as winter demand returns. With new building deliveries limited to seven between November and February, and canal congestion increasing, the vessel supply-demand balance looks favorable. Given the $100-plus differential between HSFO and LSFO, our 12 scrubber vessels continue to justify our investment. The HFO to LSFO spread has maintained a quarterly average spread above $100 per ton for all of 2021, which is nearly double the average spread we saw in the second half of 2020 when it was $54 a ton. We took the opportunity to optimize our fleet by selling to the capital markets now for a firm price. Given the demand for vessels of this type, and a desire to improve our debt cost, we have exercised the repurchase option on our other two captains, which has the dual benefit of paying off our most expensive debt and giving us full flexibility with respect to these vessels. The decision to free up these ships is not in any way a deviation from our capital allocation focus on returning capital to shareholders, where possible. I will now pass over the line to Tim to further brief you on our commercial results.

Thank you, John. The third quarter of 2021 continues many of the trends from the previous quarter. North American LNG results remain strong; Asian import demand increased, and crude oil prices kept rising with the average Brent crude oil price around $73.5 per barrel. In Q3 of 2021, global seaborne LPG saw a slight increase compared to Q2 and was approximately 750,000 tons higher than in the same period of 2020. North American exports decreased slightly in the third quarter versus the second quarter, but the rise in Middle Eastern volumes more than compensated for the lower export levels from North America. North American exports were affected by production challenges following Hurricane Ida, which led to oil production declines at the end of August. Despite the declines caused by the storm, North American NGL production and thus LPG exports reflected levels seen in the previous quarter. The rise in export volumes from the Middle East was due to the reversal of production cuts agreed by OPEC+ countries starting in August. However, not all Middle Eastern nations increased their exports; Saudi Arabia and Iran's increases were partially offset by lower exports from the United Arab Emirates and Kuwait. In India, import volumes rose by about 1 million tons compared to the second quarter, while imports into China, South Korea, and Japan fell. Even though a new PDH plan started operations in China during the first quarter of 2021, run rates decreased throughout the quarter. Analysts have indicated that rising feedstock costs have been the primary reason for this decline. Additionally, power costs and energy control measures in China were suggested as factors contributing to the drop in run rates in September. Although it is difficult to estimate how severe the energy restrictions will be in Q4 2021, the outlook for PDH margins remains positive. The propane-naphtha spread shifted in Q3 2021, with naphtha becoming the preferred feedstock for steam crackers in Asia, which explains the declining costs for South Korea and Japan. While global seaborne volumes slightly exceeded the previous quarter, supplies outpaced sea demand in the third quarter, resulting in lower freight markets quarter-on-quarter, and rising bunker prices also adversely affected time charter equivalent earnings. The BLPG1 market rate for the Middle East Asia averaged around $42 per ton in the third quarter, down from about $53 per ton in the second quarter. The BLPG3 Index, reflecting market rates from the U.S. Gulf to Asia, averaged about $80.8 per ton in Q3 compared to $87.2 per ton in Q2. In the East of Suez market, there was significant investment overhang through July, following a strong performance in the Far East in June and July. Limited vessel supply coincided with low export volumes from the Middle East during June and July. Rates improved towards the end of July and remained mostly stable afterward; despite the index being under pressure, several cargoes from Australia, West Africa, and voyages to India were successfully concluded. The BLPG3 index followed the downward trend of the BLPG1 index for the U.S. Gulf to Asia route, but it remains higher than the BLPG1. Notably, while the index dropped, and some reported as low as $73 on the seaborne route, few fixtures were finalized at that low end. Once the market bottom was identified, significant rebounds occurred, with fixtures reported at $73 per ton, and one at $85 per ton. The developments in the VLGC freight market during Q3 clearly indicated the importance of Far East buying prices. While the focus was primarily on rising Mont Belvieu prices and their negative impacts on arbitrage, the arbitrage opportunity opened quickly when price indexes increased due to significant crude oil price rises in mid-September. In August and September, Panama Canal congestion diminished as new Panamax container ships were delayed from sailing to Panama due to COVID-19 outbreaks in Shanghai and Ningbo in July, preventing their departures from those terminals. These factors helped facilitate the Trans Pacific VLGC trade despite reduced utilization levels. Rising crude oil prices positively affected VLGC trade during Q3 of 2021 by widening arbitrage; however, this price increase also raised bunker costs by around 70%, leading to lower TCE earnings. During Q2 2021, the average cost per ton of very low sulfur fuel oil was approximately $503 per metric ton, increasing to around $536 per ton in Q3. Despite the negative impact of rising bunker costs on earnings, several positive indicators for the remainder of 2021 exist. LPG demand increased during Q3 despite these challenges, with no significant threats to demand noted. Additionally, North American LPG production remains robust, and Middle Eastern exports are expected to rise following the reversal of OPEC+ production cuts. Finally, Panama Canal congestion has been low in the third quarter, following a significant hold of container vessels in Chinese ports, which is now increasing, putting further pressure on the worldwide VLGC fleet utilization. The growing congestion at the new Panama Canal complicates planning and adds costs to the supply chain and is expected to persist. In response to these factors, Q3 fuel for Neopanamax VLGCs has been secured on long-term time charters at attractive rates with purchase options for delivery in 2023, sourced from various tonnage providers and ordered from a South Korean shipyard. Currently, the waiting time for northbound transits at the new Panama Canal is 13 days, while it is only three days for the old canal. Quicker transits improve customer planning and reduce costs, enhancing the feasibility of using LPG as a propulsion fuel for these ships, provided balance issues can be managed. Now, I'll pass it on to Ted.

Thank you, Tim. My comments today will focus on our financial position and liquidity, and of course, our unaudited second quarter results. Since our last report, we've exercised our repurchase options on the Captain John and the Captain Nicholas. We expect that John to close on or about December 1, and we'll pay about $15.9 million, including accrued interest in cash on or about that date. We expect the Nicholas to be delivered back to us in late January 2022, and we anticipate a cash payment then of approximately $17.8 million. In addition to paying off our highest cost debt of 6%, repayment of this debt enhances our flexibility to consider asset sales even more opportunistically as we've seen firm pricing for vessels a disadvantage. We will continue to evaluate fleet optimization opportunities as they present themselves. On September 30, 2021, we had $98.1 million of free cash. As of yesterday, our free cash balance stood roughly unchanged at $92.3 million. I point out that even pro forma for the two repurchases and an $8 million payment on our Kawasaki new build that is forthcoming, we retain a healthy cash balance. In addition, we continue to consider several financing alternatives that would allow us to free up equity in our vessels without significantly changing our cash cost per day. With a debt balance of $576.2 million at quarter-end, our debt-to-total book capitalization stood at about 38.8%. As a reminder, we have no refinancings until 2025, ample free cash as well as an undrawn revolver. On that basis, we expect our operating cash cost per day for the coming year to be approximately $22,000 per day, which excludes the $8 million progress payment that I mentioned for our new building that's due in our fiscal fourth quarter, that is, the quarter ending March 31, 2022. Before turning to our results again, I'd remind you that the investor slides are available on our website either under recent news or on the news media page, and they may be useful as we walk through some of the results. For the second quarter, we achieved a total utilization of 95.7% for the quarter with a daily TCE that's time charter equivalent revenue over operating days as we define those terms in our filings of 30,996 yielding a utilization adjusted TCE per day, i.e. TCE revenue per available day of about $29,647. Spot TCE per available day which reflects our portion of the net profits of the Helios Pool for the quarter was about $29,810. In addition, looking at the Helios Pool as an entity, it reported a spot TCE including COAs of approximately $29,349 per available day, and Helios overall, including its time chartered asset vessels, reported a result of $30,408, so the better pool results overall were a function of the attractively executed time charters in the Helios Pool. Our daily OpEx for the quarter came to $9,184 excluding amounts expensed for dry dockings. It was $9,210 including those costs. Those levels represent a significant improvement over last quarter. We're pleased to see a reduction in our running costs, which sequentially has been most notable in the areas of crewing and spares and stores. Within the quarter, we saw our daily OpEx again excluding those dry-docking related amounts, generally decreasing sequentially which is consistent with the expectation of improved OpEx, as conditions slowly normalize. Our time chartered-in cost for the quarter was $2.4 million after we re-delivered the Astomos Earth during the first quarter. However, we did take delivery of the Astomos Venus during October. On a full-quarter basis, which will be for the quarter beginning January 1, 2022, our TCE expense will increase to approximately $5.4 million. Our total general administrative costs for the quarter were $9.4 million, and cash G&A excluding non-cash compensation expense was about $8.1 million. Of that $8.1 million, roughly $2.4 million reflected bonuses to named executive officers and several other members of management. Excluding this amount, cash G&A was $5.6 million, which was down about $200,000 from the previous quarter, again a positive development. Our reported adjusted EBITDA for the quarter was $37.9 million, which included the $3.5 million gain on sale of the Captain Markos. Excluding that gain, the adjusted EBITDA was $34.4 million. As you know, we look at cash interest expense on debt as the sum of two line items on our P&L, interest expense excluding deferred financing fees and other loan expenses and realized gain or loss on interest rate swap derivatives. On that basis, total cash interest expense for the quarter was $5.5 million, down about $150,000 from the prior quarter. We amortized roughly $1.4 million per year on each the Captain John and Captain Nicholas, so it's $2.8 million per year together. In addition, if you look at the sum of the cash principal and interest for those two vessels for the 12 months ended September 30, 2021, that amounts to about $4.9 million, which is roughly $600 per fleet day. So the repurchase of these two vessels will have a meaningful impact on our future cost structure. We continue to benefit from our hedging policy and the favorable pricing of our Japanese financings, leaving us with a current interest cost, fixed hedged, and a small floating piece of 3.67%. We currently have one vessel in dry dock and we anticipated total cost of about $1 million for the completion of her services. Although we currently hold roughly an 80% economic interest in Helios, we do not consolidate its P&L or balance sheet accounts, which has the effect of understating our cash and working capital somewhat. Thus, we believe it's useful to give you some additional insight in order to provide a more complete picture. As of Monday, November 01, the pool had roughly $21 million of cash on hand. Following the return of over $150 million in shareholder capital through the self-tender and dividend, we elected to play some cash to debt reduction, but really with a view to fleet optimization not due to any concern with our leveraged position. We still have $27.5 million remaining under our current repurchase authorization. In addition, the three Panamax TCEs with purchase options are similarly a reflection of our capital allocation philosophy. By taking advantage of our counterparties' cheaper cost of capital, we were able to conclude three transactions that were both strategic and met our risk-return requirements. We will always be prudent in deploying cash, but our financial position does allow us to act quickly on meaningful opportunities as they may arise, including further opportunities to return cash to shareholders. With that, I'll turn it over to John Lycouris.

Thank you, Ted. This past quarter is the first one during which all 12 scrubber vessels of Dorian LPG fleet were in operation, and they have produced significant savings in fuel costs while producing emissions measurably below those vessels burning compliant fuels. While visiting one of the scrubber-equipped vessels at Freeport, Texas during loading operations a couple of weeks ago, the gas analyzer of the hybrid scrubber system, which was in operation in port at the time, was recording SOx emissions of 0.4 sulfur, more than 50% lower than the compliant fuel supplied in the markets, which is 0.1 sulfur content. The emission advantages of the scrubbers are not limited to SOx emissions. They also reduce about 90% carbon and particulate matter emissions that are normally produced by diesel engines and which are harmful to life and the environment. We continue to average above $105 a ton of fuel for the 2021 calendar year, being the differential between high sulfur fuel oil and low sulfur fuel oil. For the last quarter, this differential price spread has produced savings advantage of about $3,000 per calendar day on scrubber-fitted vessels. This result validates original expectations on the payback period, having returned about 40% of the CapEx as of September 30, 2021, notwithstanding the events of the oil markets collapse during calendar 2020 and that of COVID-19. We are continuing to invest in our vessels' performance and energy efficiency to reduce emissions and lower operating costs. The main measures currently being considered for our vessels are route optimization, data monitoring software, including data collection and devices onboard, and energy-saving devices installed on our ships that can improve performance and reduce fuel requirements. By capturing and redirecting energy dissipation towards vessel performance and emission improvements, the focus is on doing a better job with the energy we consume. We are currently implementing marine technologies that already exist, which can provide immediate results while buying time until technological innovations and advances mature and become commercially available in the coming years. Improving our environmental footprint is very important to Dorian LPG. Following our scrubber experience, we would be interested to explore marine applications for carbon capture and storage on board vessels. This technology has been available to the industry, and we now expect it will become viable for marine application within the next few years and provide an effective way of reducing greenhouse gas emissions. The International Marine Organization, MEPC 76, and MEPC 77 committees will most likely dictate that the available options for the marine sector will include engine power limitations, energy efficiency technologies, and alternative fuels, potentially also carbon capture for the longer term. Our view is that these considerations will accelerate the focus on energy efficiency and will likely force owners to make hard decisions about the cost of investing in the upgrades of older tonnage to compete in the main trade. We think it is likely that several owners may conclude it is more economical to scrap older tonnage, particularly those several generations older, burdened with high fuel consumptions and smaller cubic capacity with less modern engines. For newer vessels, we believe that investments will be imperative, and therefore the best-capitalized players with access to reasonably priced capital will be best positioned to make the necessary investments and achieve the requisite returns. Our decision to invest in scrubbers was possible because of our financial strength and has helped us generate very solid results, which gives us confidence as we look forward to evaluating the next wave in marine technology advancements. At Dorian, we consider it our clear goal to continue improving our greenhouse gas footprint, eventually reaching a zero emissions target. We are optimistic that our fleet will be among the best positioned to meet the demands of charters, regulators, and shareholders. Now I will pass it over to John Hadjipateras.

Thank you very much. And we're happy to take questions from anyone who cares to give us any questions.

With prepared remarks completed, we will now open the line for questions. Our first question has come from the line of Omar Nokta with Clarksons Securities. Please proceed with your questions.

Hey, John, thanks for the discussion. Lots of good stuff to talk about. I did want to ask about the new buildings. Obviously, you've been a bit more maybe expansive of late. And it's interesting that time charter and approach which is nice. You don't have to put up capital basically, these three latest additions, they come after the new building that you have an order from earlier this year that's financed via the lease or the capital lease. Can you maybe just go over the difference in how both of these deals came together or came about and can perhaps we think about growth from here? Not necessarily there has to be growth, but in general as you think about expanding the fleet, is it really the lease charter in type of approach that you want to continue to do going forward?

Yes, Omar, it's not. I wouldn't say that it's that we've made a conscious decision to go one way over the other. The new building that we concluded in Japan actually came together after a very long discussion we've had with the shipyard and with potential counterparties there. It's on a favorable finance arrangement, so that was one thing. But our reluctance to do anything more than that should be viewed as a conservative approach to the new building market. The charter in, I think the feature there was opportunistic. I mean, we saw well-priced time charters with the options to buy, and I really felt that we were in the opportunity; we could take advantage of that opportunity. The timing is good, and the features of the ships that distinguish all three of those is that they are Panamax. In other words, that they can transit the old Panama Canal, and we feel quite strongly that that is a big differentiator going forward.

Okay. Thanks, John. And just wanted to double-check just so we understand the trend, or I can understand the transactions a bit. The initial new building, the Japanese one, that's a lease, these three are charter ins and as a purchase options, right along the way, there's no purchase obligation, as I understand it?

Correct.

Okay, and then just one follow-up, I did want to ask just clearly the performance during the quarter, at least from my perspective was quite firm and stronger than anticipated. Quarter-over-quarter your realized rate was very little different from the prior quarter. However, the spot market, at least from what we were seeing quoted, had come off quite a bit. I want to say averages were maybe a TCE of call it 33,000 last quarter then this last one, it was 25. And so you had a pretty big difference in prevailing averages, but your average stayed the same, any color you can give as to how your performance, I guess you could say, outperformed relative to what we think the market did?

I should punt that because it's a difficult question. But maybe I shouldn't punt it because it's a difficult question. No, I think we've never actually been very focused on quarter-to-quarter; I think it’s very difficult there. You have the quarters are short, and voyages are long, and they carry from one end to the other. So I don't take great pride in overperforming in one quarter, or I don't get terribly nervous about underperforming in another quarter. So time charter outs are a stable element in the equation, but the spot market performance is better to look at it on a rolling average of more than one quarter that would include several quarters to get a real indication of a trend, I think.

Thanks for that, yes, I understand. But yes, it's notable at least that the performance was a bit better than anticipated. I'll leave it at that. Thanks, guys.

Thanks, Omar. Thank you.

Thank you. Our next question comes from the line of Brian Reynolds with UBS. Please proceed with your questions.

Hi, good morning, everyone. Maybe just to follow-up on the Time Charter announcement with the purchase option, Tim, just kind of curious if you can talk about maybe that thought process around the duration of the announcement, it seems like there's still some hesitancy to fully invest in LPG, Joule propulsion, just given that emerging technologies might occur as talked about in the prepared remarks, just kind of curious if you can talk about a little bit more about those emerging technologies and how we should think about the tenure of the purchase options and whether we should see more CapEx spend on emerging technologies, whether it's five to seven years down the road. Thanks.

Yes, just a man to answer that for you. But in respect of choosing to do the ships with dual fuel, it wasn't our choice. The owners made that choice. We charted the demand; the incremental cost to us was nothing and the cost to the owner for having that feature is very small, and I don't know if you can order a ship now, an LPG ship without a dual feature, dual fuel feature. So it's a whole different discussion to the retrofit discussion where the numbers are still very considerable. But in terms of new technology and all this, John has been spending a lot of time on it, and I'm sure, I think it will be useful to everybody here to kind of review that.

Yes, Brian, we have to consider a number of new technologies. Dual fuel is a good way to go forward. But also, the ships that exist need to improve their performance, and we have to look at a number of opportunities and new developments that are coming to the marine sector. First of all, we need to know exactly where the regulation would land and how it will land and what demands are going to be made out of the marine sector. As you may know, the EU has different requirements than the IMO. And now we have COP26, which is talking about other things. So things have not landed yet precisely. And once we know what we need to do, we will make the decisions along the way; the CapEx needs to be within reasonable levels. So we could at least be able to improve all our fleet vessels; it goes without saying. So, I don't know if you have anything in particular you want to ask, but I'm happy to follow-up later.

I guess maybe, as a quick follow-up on IMO and COP26, just kind of curious how we should think about what you guys are specifically looking at in terms of carbon emission targets that would trigger an investment one way or the other?

Brian, the main point is that we need to reduce our emissions, our CO2 emissions, but also our NOx emissions and SOx emissions. So we've done that with scrubbers; scrubbers can be changed and amended and retrofitted in such a way to reduce the additional amount of NOx and CO2. So that's a clear way forward for us. We cannot go to zero from now; we have to start in steps to improve our emissions and you have to do it in an effective way. So that's the way we're thinking about it.

Thank you. Our next question is coming from Sean Morgan with Evercore ISI. Please proceed with your question.

Hi, guys. So you kind of closed out the remarks and the prepared remarks talking a lot about the upcoming regulations regarding carbon emissions. To me, it's sort of around a little bit with a lot of what we were hearing just a few years ago on IMO 2020. And looking back at that now, there was a lot of excitement going on IMO 2020 about things such as were discussed on the call, capital restrictions through smaller operators and more levered operators, and then some differentiation. It wasn't just for the LPG sector, but across shipping there were stronger operators that would benefit. With the benefit of hindsight now on IMO 2020, I don't think that it really panned out to the level that was kind of trumpeted prior to the implementation. So as we kind of look forward to COP26 and carbon emissions, and some of these similar themes that we heard just a few years ago, what makes this different than the sort of the last regulatory capital expenditure cycle that we saw at the beginning of 2020?

Sean, yes, so I mean, I guess from the perspective of the operators like yourself, I mean, there is definitely something you have to really focus on. It's something that could go wrong, but from the perspective of shareholders, is there like an upside I guess, golden scenario that they can kind of look for, kind of similar to what was promised with IMO 2020? Or it's just you guys are talking about it, because it's an important operational decision that you kind of have to get right.

I think it's, at a later stage, it's an important decision that we have to make as an environmental decision. We are all committed to do the best we can for...

Yes, I want to emphasize that I view this as an investment opportunity. We're seeing this not just as an obligation but as a chance to advance our business. While some competitors have focused on investing in battery units, we've concentrated on internal optimization thus far. I regard the environmental pressures more as an opportunity to contribute positively, which I hope will lead to better returns for our shareholders. To date, our efforts to reduce emissions have also improved fuel efficiency, demonstrating that lower emissions correlate with reduced fuel consumption.

Right. And I think you said there was $2 million of savings on the fuel consumption, is that mostly solar steaming, or is that specific technologies you're employing?

This is not from solar steaming. No, no, no. This is from optimization and then better planning of health cleanliness. This is a direct result of having better feedback of the operational conditions of the ships so that we can decide when to clean a hull or propeller or better weather routing services. It's really technology-delivered savings.

Okay, wow. So it sounds like a confluence of a lot of different factors optimizing together?

Yes.

Thanks, Sean.

Thanks, Sean.

Thank you. There are no further questions at this time. I would like to turn the call back over to John Hadjipateras for any closing remarks.

Thank you all very much, and I hope you have a good fall and winter, and stay safe and see you next time.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.