Dorian Lpg Ltd. Q4 FY2026 Earnings Call

Good morning, and welcome to the Dorian LPG Fourth Quarter and Fiscal Year 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.

Thanks, Madison. Good morning, everyone, and thank you all for joining us for our fourth quarter 2026 results conference call. With me today are John Hagebutteris, Chairman, President, and CEO of Dorian LPG Limited, John LaCouris, 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 May 27, 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 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 and annual periods ended March 31, 2026, that were filed this morning on Form 8 . In addition, please refer to our previous filings on Forms 10 and 10 , where you'll find risk factors that could cause actual results to differ materially from those forward-looking statements. Please note that we expect to file our full 10 no later than May 29, 2026. 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 Thank you, Ted, and thanks for joining us today. My colleagues will share some useful and interesting information about the past. I'd like to say a few words on capital and location and provide some historical information which relates to risk management and a volatile market with a view to capturing upside. Building VLGC at approximately $115 million reflects an increase of approximately 2.5% parameter, which was delivered to our predecessor company 20 years ago. She was ordered for a price of approximately $65 million in 2004. When she was delivered in 2006, the new building replacement cost was over $90 million. From 2009 to 2012, the new building price hovered in the low $70 million range, and the next order we placed was in 2012 for advanced $70 million each until 2021 vlgc fleet in 2005 comprised 102 ships today the total fleet is 427 vlgc's and there are about 124 ships on order representing nearly 30 percent of the existing fleet done in 2007 comprises 18 echo type enhancing features which will be innovation in the design and efficiency of ultra-long stroke electronic engines informed our investment decision in 2012 and the development of dual for our investments in the captain marcos the utility i've described of trade of lpg in both absolute terms full of our stiff-ass commitment to maintaining a solid balance we believe that this is the route by which we can earn the best return for our investors and continue to provide top quality services to our working environment capital allocation

our financial position and liquidity, and our unaudited fourth-quarter results since the beginning of calendar 2026 and growing our business and rewarding shareholders. First, we took delivery of the Arion in late March, our fully ammonia-capable 93,000 CBM BLGC. As you would expect, she immediately started contributing to earnings, though we won't see the P&L impact until the first quarter of our fiscal 2027. The most recent irregular dividend of a dollar per share, a significant increase from the prior quarters reflected the strong underlying market and our board's commitment to creating shareholder value. Second, we completed the sale of the 2015 built Cobra in May, paying off $16.5 million of debt in the process. We expect to generate a gain on sale of approximately $30 million from her sale. And I would note that her sale price was actually greater than her contract price in 2015. Finally, we will complete the repurchase of the Corsair for her sale leaseback before month end, which will require a payment of about $24.2 million in total and positions us to be flexible with any potential opportunities. At March 31, 2026, we reported $327.4 million of free cash, which was sequentially up from the previous quarter. Cash flow from operations was $82 million, or nearly $2 per share. And as we noted in our press release, we borrowed $62.9 million upon closing of the delivery of the Ariane, covering the final payment to the yard. As we disclosed then, the Ariane loan has two tranches, one seven years and one 12 years, for a weighted average tenor of over 10 years, and a weighted average margin between the two tranches of 125 basis points over SOFR. We closed the fiscal year, therefore, with a debt balance of $565.8 million, but given the payoff of the debt in connection with the sale of the Cobra and the Corsair repurchase, the pro forma balance would be $524.7 million. Stated book, however, a quarter end of $565.8 million of debt. Our debt-to-total book cap stood at 33.2% and net debt-to-total cap of 14%. We continue to have well-structured and attractively priced debt capital with a current all-in cost of about $5 million, an undrawn revolver of $42.9 million, and one debt-free vessel. Coupled with our strong free cash balance, we have a comfortable measure of financial flexibility. We expect our cash cost per day for the coming year to be approximately $26,000 per day, excluding capital expenditures for the dry docking of the Captain John, which is currently planned for our fourth fiscal quarter. One of our fourth quarter results, you may find it useful to refer to the investor highlight slides posted this morning on our website. I 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. Looking at our fourth quarter chartering results, since our entire spot trading program is conducted through the Helios pool, its reported spot results are the best measure of our spot shattering performance. One quarter, the Helios pool earned a TCE per day for its spot and COA voyages of 65,600 per day, reflecting more favorable VLGC market conditions. Our utilization improved sequentially to 97.8% this quarter from 94.6% in the prior quarter as the last of our dry dockings for the 2014 to 2016 class was completed. The overall TCE result for the pool of nearly $63,300 per day reflects that very strong rate environment as well as our time charter out portfolio. On page four of our investor highlights material, you can see that we have six Dorian vessels on time charter within the pool, indicating spot exposure of just over 80% for the 31 vessels in the Helios pool. Dorian's reported TCE revenue per available day for the quarter was about $63,615, which is the second highest TCE rate we have earned in our corporate existence. For the year, we earned $52,238 per day, with the fourth quarter completely offsetting our sector's relatively slow start to the fiscal year. The current rate environment remains healthy. Though Panama Canal transit fees are having an impact on realized rates, we note that most posted TCE rates do not include a million in the last around the Cape of Good Hope, which can also have a significant impact on realized TCEs. We plan to issue our forward booking information in the near future. Top X for the quarter was $9,548, excluding dry docking related expenses, which was virtually flat with the prior quarter's $9,558. Our gross time charter in expense for the six TCN vessels came in at $18.4 million, or about $34,100 per TCN day. Thus, those vessels contributed positively to our quarterly profits. As a reminder, the profit-sharing expense on our P&L represents MOL Energia's portion of the net chartering profit. That's the charter hire earned, less the charter hire expense on the BW Tokyo. Total G&A for the quarter was $13.3 million, and cash G&A, which is G&A excluding non-cash compensation expense, was about $11 million. This amount included accruals under our bonus plan of $3.5 million, the payment of which is subject to completion of our annual audit, $200,000 of statutory non-cash accruals, and about $300,000 of pre-delivery costs related to the area. Excluding those amounts, our G&A was about $7.1 million, which reflects a level that we believe is sustainable for the near term. Adjusted EBITDA for the quarter is $106.6 million. Total cash interest expense for the quarter was $6.6 million, which is down sequentially from the prior quarter. Principal amortization remains steady at around 13 million. We expect the full quarter interest cost of the area to be approximately $800,000 in the coming quarter. The irregular dividend declared at the beginning of the month of $1 per share is our 19th and brings to $18.65 per share in irregular dividends that we've paid since September 21. The increase in the dividend versus the prior quarter is consistent with our previous discussions around the topic. It reflects a balanced mix between results and the long-term needs and prospects of the business. Including the irregular dividend to be paid this month, we've paid nearly $770 million of dividends and have generated net income of $835 million since June 30, 2021, which is the quarter immediately prior to our first irregular dividend. As we've discussed, 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 at the appropriate level, if any, for our dividends. As John Hodge-Beteris has already mentioned, our sector can be a volatile one, and our dividend policy needs to reflect that. The $1 per share irregular dividend certainly reflects a constructive market outlook while also allowing the company the flexibility for future fleet reinvestment. We 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 Tim Hansen.

Yes, thank you, Seth, and good day, everyone. The quarter ended March 31, 2026, ultimately carried the positive momentum from the quarter prior and saw higher freight in the business of the VLGC freight markets. I close my remarks from the quarter prior about likely geopolitical impacts and the VLTC market's ability to demonstrate agility to capture the opportunities that arise from such challenges. We believe both have materialized and that the company has been a key actor in that story. The quarter ending March 31st, 2026 is best understood by looking at the period before hostilities in Iran started and the period after hostilities commenced. and to look at them separately. While global seaboard LPG transport was down for the quarter to levels not seen since the first calendar quarter in 2024, the decline was driven by the de facto closure of the Strait of Homeless. The decline masked the results of record high production levels from North America, which hit a new record high of exports near the 20 million tons mark. The favorable fundamentals of LPG production and accompanying seaboard transport prior to the closure of the Strait of Hormus further supported a first calendar quarter seeing a wide west to each arbitrage and persistently high freight activity levels. This does not mean the freight market's only so smooth sailing however. Prior to the closure of the Strait of Hormus, industry players was analyzing potential impacts from the removal of President Mardo in Venezuela, microeconomic concerns brought on by the rhetoric threatening the end of the NATO, and the US Supreme Court striking down AIPAP Tyrex. It is not uncommon to see softness in the first calendar quarter in the freight markets with lower activity when importers reduce imports as spring approaches, or due to a slowdown in the far east around the lunar new year holidays this was not the case in 2026. activity was strong through the holiday season to compensate for the disruptions we saw in october november during the port service fee spat between the us and china furthermore the winter in the far east was long and cold while cold snaps in the north america was not severe enough to weaken production levels The west to east arbitrage was therefore applying and VLTC freight was supported by the fundamentals. There were significant challenges to capture the value in the market, however, and periods of uncertainty because of developments in Venezuela, fierce protesting in Iran, and worries about NATO cohesion. While none of these factors directly impacted the VLTC LPG market, the microeconomic picture was certainly complicated. If one subscribe to the argument that more internationally tradable Venezuelan oil was positive for the world economy, the caveat was if the Chinese economy would suffer by losing near monopoly access to low-priced Venezuelan crude oil. If one believed that the protests in Iran would topple the Islamic Republic and lead to softening sanctions, the likelihood of significant and dramatic scrapping of the shadow fleet would upend models of vessel supply. Right through the Supreme Court decision to strike down Aebo Terrace, these geopolitical events, even if not directly impacting the VLTC trade market for long periods, ensured that the market players remained active at their desk to consider the upsides and the risks. The period before the death of Ayatollah for many was marked by positive VFTC fundamentals with value captured by an attentive and active market. Once Iran was bombed and thereafter retaliated against the Gulf neighboring countries, a new and complicated dynamic emerged from the VFTC market. The effects of the regional conflict are felt worldwide and through all parts of the economy. I'll focus on a few key aspects that directly impacted the BLTC markets over the relevant quarter and through April. Regarding freight levels, they have been mostly higher after the closure of the straight-up homers, although it was not a consistent increase. For narrow windows of belief that the strait-of-homers would open, more vessels would hold back from balancing to the west and oversupply the western market. And during other periods, there was zero belief in the strait opening and more vessels' supply was available in the west. High freight has not been disrupted to the arbitrage as that widened dramatically on the back of the importing nation-facing shortages. The Far East Index was bid up and import demands kept the output charts wide open. The fear of shortages spread to the bunker markets and the key bunker ports. Currently, prices have normalized and concerns of shocks to supply are less immediate. But through March, some ports saw a doubling of costs. Some countries ended bunkering services to prevent or to preserve energy stocks. And even to this day, from when storage tanks were reportedly hit in the gyre, the physical export capacity were in question. The higher freight markets on the back of the wide open west to east upper charts was further supported to cover the high bunker expenses for ship owners. Two additional external factors resulting from the Iran conflict have further raised freight levels. Trade lanes have had to recalibrate and did so successfully, resulting in longer term miles. The VTC market already demonstrated ability to readjust quickly after Russia's illegal war on Ukraine and through periods of tariff wars and have delivered again now. With minimal ability to supply, for example, India from the Middle East, there's been a greater flow of cargoes from the US to China. The length of voyages and port turnaround uncertainty have tightened the market. The Panama Canal has contributed to absorbing vessels of power, resulting in significantly higher Panama costs with the increasing of auction fees. This is mostly due to all goods and commodities, including LBG, seeing high delivered price in the Far East. Segment that previously saw less urgency to get to Asia quickly through the Panama Canal returned to use the canal and congestion has been on a steady increase since the bombing of Iran coming. The impact of an increasingly congested Panama Canal persists through this current calendar call as well, continuing to keep the availability of vessels tight and the freight markets high. With that, I will pass it over to Mr. John DeCouris. At Dorian LPG, we remain committed

to continually enhancing energy efficiency and promoting the sustainability of both our operations and of our vessels. We currently operate 16 scrubber-fitted vessels and six dual-fuel LPG vessels after taking delivery of the VLGCV Lacey Arian, which is in March, due to the Middle East conflict and the subsequent blockage of the Strait of Hormuz led to higher bunkers, which underscored the importance of scrubbers and our fuel efficiencies there. Scrubbers neutralize sulfur oxides from fuel oil, while significantly reducing particulate matter and black carbon emissions when compared with conventional VLSFO, very low sulfur fuel. The fourth fiscal quarter of 2026, our scrubber vessel savings amounted to about $3,482 per day per vessel, net of all scrubber operating expenses. High sulfur fuel oil and very low sulfur fuel oil averaged $89 per metric ton, while that of LPG stood at about $205 per metric ton, making LPG economically attractive for our dual-fuel vessels. Completed the stats story, special survey, and docking cycles of a 2014-2016 class of vessels, with the last vessel completing her special survey during this past quarter. Previously announced, Dorian LPG took delivery in March the 93,000 cubic meter dual fuel new building Arian from Hanwha Ocean, which can operate on LPG and fuel oil and fit to carry full cargoes of LPG and or a motor. Operating on LPG, CO2 emissions are approximately 20% lower, while sulfur oxides, particular matter, and other pollutants are significantly reduced. With this second wholly-owned dual-fuel LPG vessel, 20% of our fleet now runs on low-emission alternative fuel. It's also fitted with a hybrid scrubber capable of closed-loop operation for restricted ports and for the emission control area. Fresh release provides additional details on the ship's operating capabilities and her advanced technologies. MEPC 84 concluded their discussions of the IMO Net Zero Framework without resolving the Net Zero Framework final form and or its adaption. The proposals emerged during the meeting to amend the proposed framework. Sufficient support for any single alternative has stalled progress from the Net Zero Framework. The IMR affirmed its preference for a global regulatory approach rather than a fragmented regional, than fragmented regional measures. The new framework is adopted at MAPC-85 in December 2026. It would enter into force in 2028, and its first reporting year is likely to be in 2029. However, several key issues remain under negotiation, including the GFI targets, compliance mechanisms, the role of the IMOnet Zero Fund, fuel certification rules, and how that framework will align with existing CII and SEMP regulations. From the MEPC-84 includes the adoption of the Northeast Atlantic ECA, which will introduce stricter sulfur oxide, particulate matter, and NOx requirements from 2027 onwards. We are confident that the Dorian LPG fleet will be prepared to meet regulatory changes in the future. And now I would like to pass it over to John Hedgpater for his final comments.

We're ready to take it.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue. we will take our first question from Omar Nocta with Clarkson Securities. Please go ahead. Your

line is now open. Thank you. Hi, John, Ted, Tim, and John. Thanks for the update. Sounds like, you know, clearly a lot of stuff is happening. You've had a nice quarter, and the next one looks like it's going to be off the charts. So, just have a couple of questions. You know, maybe just first, it looks like you've taken advantage of a pretty good market here to put some ships away on term charter, as you highlighted. I think it's been a while since we've seen you add perhaps this much in duration. So I just want to get a sense, you know, what's your appetite to do more of that? I guess perhaps maybe for both you and the charter, what's the desire look like to add more TC coverage? And then are you willing to disclose any of the terms in terms of day rate?

Thank you, Omar. I'm scared with a small market.

Okay, I appreciate it, John. That's helpful. And I guess maybe, I think, Ted, you were discussing sort of the spot market at the moment in terms of, say, rates and how they're not perhaps indicative of, you know, true earnings when you're taking into account some of the costs at the Panama Canal, whether it's the auction fee or maybe the wait time or the diversions. Do you care to maybe give a sense of, hey, headline rates today say they're at $170,000 per day. What would you say is like the true real earnings that are being captured? Any sense you're willing to or able to share?

It's fluctuating quite a lot. I mean, if you see the auction fees, for example, on the Panama run went up to 4 million. So if you divide that over 60-some day round, you're kind of like reducing your TCEs with 60,000 plus a day, right? But not all hit that, so it's varying quite a lot. Also, if you balance around the Cape, you have a longer voyage, so you have to spread out the same long-term freight on more days, which will drop the result even without, I think, anything by maybe $10,000 a day. And also, even you get shots from the Panama, you would most likely wait a few days because you don't want to jeopardize running late for your slots because you will never get in. So it's a bit of idle time. So it's depending on what trades you would pick. But you would easily, as time value is high, be 10, 20, 30,000 below the highlight rates.

Okay. Thank you. All right. So it still has the, you know, the 100 plus number. And then maybe just a last one for me, maybe just kind of on the point of the U.S. export market, because there's been a lot of discussion on Panama Canal and the diversions. And I guess just generally, you know, just given what's gone on in the market here over the past, you know, three months, almost three months, has the VLGC trade and I guess your business specifically, has it just completely shifted now to a pure U.S. exposure? Or are there other areas where you're active where there's, you know, cargoes to be taken?

For us, as Helios, when we trade the spot, from the time when we saw the neighbours heading towards the Gulf, we decided to stay away. So we've always been very focused on the US, so up to 80% of our business are liftings. And if you count the days with the longer So maybe 90% of our coverage has been focused on US, but today it's basically Seoul, US and Canada, US on the West Coast, where we do not touch AG, we do fix the occasional West African voyage, of course. And if someone wants to pay for the shorter voyage in our Australia, we would look at that. with that, but yeah, 99% would say U.S. cannot have the one.

Got it. Thanks, Tim, for that very helpful color. And John, Ted, thank you. I'll pass it back.

Thank you. Thank you.

And we'll move next to Stephanie Moore with Jefferies. Please go ahead. Redline is now open.

Thank you for the question. Maybe just a follow-up to the last kind of string of questions here. you know, a great, you know, really strong quarter. It looks like the next quarter is going to be quite robust given the underlying environment. So with that as the backdrop here and what remains really strong cash generation and obviously a really constructive outlook, could you just maybe talk to us about how you are prioritizing capital allocation across, you know, dividends, deleveraging, fleet expansion, especially in this environment? An update there would be helpful.

Nice. Thank you, Stephanie.

As you know, our debt amortizes is practically priced, so we haven't seen prepaid debt. It's a part of the story for investors, and we continue to make that a centerpiece of how we think about things. But as John kind of touched on, certainly in some other sectors, say midstream, where it's a little bit easier to quantify how you're going to break things out. And I think, you know, from our perspective, it's a bit fact and circumstance dependent, but we are used for fleet reinvestment. As our fleet gets up in age, it's still a great fleet age. It still has great technology. But I think, you know, if we saw a great opportunity to acquire a meaningful fleet, we would do it. And if that came, you know, if we felt that we had to, you know, have some impact on the dividend, we'd have to look at that. On the other hand, it's a really big part of the total shareholder return story, and we care about it as share owners. It's a big part of our incentive share program here. So there's a lot of driving forces to maintain a preponderance of focus on the dividend as we go ahead.

Thank you. I appreciate that. It's very helpful. And then maybe just a high-level question for me. as you think about, you know, would love to get your thoughts on just your outlook for the LPG sector for 2026, especially maybe if you touch on if we do see a ceasefire, a bit of normalization in the Middle East, you know, how you're kind of viewing the impact on the overall sector would be

helpful. That's it. Thank you. Sorry, what do you want me to say? So, Stephanie asked about What our views were on the post-Middle East stabilization view of the LPG trade, which I'm passing you because it's a really hard question.

Thank you very much.

Yeah, no problem.

Colleagues are four. I mean, it's really depending on when it will happen, because even though we are profiting now from the longer haul US has managed to produce much more for exports. The LPG is still in short supply in the world, and we are seeing if it lasts for longer, it will result in demand destruction. We also don't know exactly how badly hurt the Middle East is and on their ability to export Once it comes back open, so we expect at the moment where it opens, we will probably see more vessels available with the ships captured in the Middle East to available in the market. And it will be a little bit of time before the export ramps up again. So you could see a bit of an oversupply of ships at that point. But it's really depending on where the ships are positioned at the time and how people perceive the ability of the Middle East and exporters to ramp up again and whether they would hold ships back for the Middle East or not.

Yeah, thanks, Tim. Thanks, Tim. Stephanie, as a general remark, I'll just tell you that what we try to do all the time is plan for the worst and hope for the best. And I think the worst outcomes are that it's impossible really to handicap them all. We're hoping for the best. Yeah, no, I appreciate it.

Thank you. Didn't mean to give you such a nuanced question there, but the insight is very helpful. And thank you for the time.

Thanks, Stephanie. Thank you, Stephanie.

Thank you. And once again, if you would like to ask a question, please press the star and one on your keypad now. And we'll move next to Clement Mullins with Value Investors Edge. Please go ahead. Your line is now open.

Hi, and thank you for taking my questions. Tim, you talked about the Panama Canal and the impact that increased transits has had on auction pricing. Does this apply to both the old and the new locks, or especially on the latter? And secondly, can you comment on the percentage of BLGC's transit that heading towards the Far East have decided to avoid the canal?

Answer that one, please.

Yeah, so the auction fees at the moment, the impact is on the new canal. There have been some increases on the old canal as well, or the old locks, but not to any comparable effect. So it's mainly the new canal. You could see some auction fees on the old canal coming up as there's going to be some repairs and maintenance in June. So that can change. But at the moment, the increases we have seen is on the auction fees on the new canal. With regards to routing, we see more and more people routing via Cape. Cape and we do the same as we have experienced the high canal post, but it's a moving situation. It went up from 200,000 to 4 million in a week or two time and it went down again where we again would be able to transit without paying within two weeks later. And at that time, you would already be on the palace, the lake towards the Panama. So it's a matter of your risk appetite and evaluating the risk rate order, taking the chances going there. So it's hard to say if there's a certain percentage, I don't think so.

Okay, makes sense. That feels very helpful. And I have another question regarding the canal. A couple of years ago, during the El Nino event amid drought in Panama, the canal authority was forced to reduce daily transits quite significantly has the authority built more flexibility to tackle this should we see a repeat of the el nino and little rain in the region or should that happen do you believe that we would see a let's say a repeat of what we saw a couple

years ago they learned a lot during the uh uh the case by by uh in 23 by being able to retain water and that does have less uh out of flux of the uh of the water but they cannot prevent it so we will see a result of this if the if the ninja which is likely to or 70 percent or whatever it is likelihood at the moment would happen over a longer period we will see reduced draft in the

pandemic but not maybe not to the extent as 23 okay I'll turn it over thank you for taking my

questions Madison I think we can close and thank you thank you this concludes today's meeting we

appreciate your time and participation you may now disconnect