DORIAN LPG LTD., 10-Q filed on 2/8/2018
Quarterly Report
Document and Entity Information
9 Months Ended
Dec. 31, 2017
Feb. 5, 2018
Document and Entity Information
 
 
Entity Registrant Name
DORIAN LPG LTD. 
 
Entity Central Index Key
0001596993 
 
Document Type
10-Q 
 
Document Period End Date
Dec. 31, 2017 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--03-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
55,106,852 
Document Fiscal Year Focus
2018 
 
Document Fiscal Period Focus
Q3 
 
Condensed Consolidated Balance Sheets (USD $)
Dec. 31, 2017
Mar. 31, 2017
Current assets
 
 
Cash and cash equivalents
$ 55,633,291 
$ 17,018,552 
Trade receivables, net and accrued revenues
239,390 
11,030 
Prepaid expenses and other receivables
2,673,214 
1,903,804 
Due from related parties
31,836,058 
42,457,000 
Inventories
2,019,128 
2,580,742 
Total current assets
92,401,081 
63,971,128 
Fixed assets
 
 
Vessels, net
1,555,034,707 
1,603,469,247 
Other fixed assets, net
207,833 
317,348 
Total fixed assets
1,555,242,540 
1,603,786,595 
Other non-current assets
 
 
Deferred charges, net
1,693,457 
1,884,174 
Derivative instruments
7,896,497 
5,843,368 
Due from related parties—non-current
19,800,000 
19,800,000 
Restricted cash
29,082,958 
50,874,146 
Other non-current assets
82,558 
75,469 
Total assets
1,706,199,091 
1,746,234,880 
Current liabilities
 
 
Trade accounts payable
5,957,440 
7,075,622 
Accrued expenses
3,795,365 
5,386,397 
Due to related parties
55,822 
11,162 
Deferred income
6,391,801 
7,313,048 
Current portion of long-term debt
126,557,191 
65,978,785 
Total current liabilities
142,757,619 
85,765,014 
Long-term liabilities
 
 
Long-term debt—net of current portion and deferred financing fees
600,905,936 
683,985,463 
Other long-term liabilities
576,192 
482,685 
Total long-term liabilities
601,482,128 
684,468,148 
Total liabilities
744,239,747 
770,233,162 
Commitments and contingencies
   
   
Shareholders' equity
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued nor outstanding
   
   
Common stock, $0.01 par value, 450,000,000 shares authorized, 58,630,441 and 58,342,201 shares issued, 55,125,094 and 54,974,526 shares outstanding (net of treasury stock), as of December 31, 2017 and March 31, 2017, respectively
586,304 
583,422 
Additional paid-in-capital
856,948,710 
852,974,373 
Treasury stock, at cost; 3,505,347 and 3,367,675 shares as of December 31, 2017 and March 31, 2017, respectively
(34,982,171)
(33,897,269)
Retained earnings
139,406,501 
156,341,192 
Total shareholders' equity
961,959,344 
976,001,718 
Total liabilities and shareholders' equity
$ 1,706,199,091 
$ 1,746,234,880 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2017
Mar. 31, 2017
Condensed Consolidated Balance Sheets
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
50,000,000 
50,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
450,000,000 
450,000,000 
Common stock, shares issued
58,630,441 
58,342,201 
Common stock, shares outstanding
55,125,094 
54,974,526 
Treasury stock, shares at cost
3,505,347 
3,367,675 
Condensed Consolidated Statements of Operations (USD $)
3 Months Ended 9 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Revenues.
 
 
 
 
Net pool revenues—related party
$ 31,610,427 
$ 22,301,512 
$ 80,554,166 
$ 80,798,208 
Time charter revenues
12,498,849 
11,921,875 
37,570,898 
36,919,910 
Voyage charter revenues
335,244 
1,296,952 
2,068,491 
1,296,952 
Other revenues, net
101,069 
214,649 
106,527 
846,927 
Total revenues
44,545,589 
35,734,988 
120,300,082 
119,861,997 
Expenses
 
 
 
 
Voyage expenses
386,637 
1,193,265 
1,901,603 
2,415,287 
Vessel operating expenses
15,794,381 
17,114,358 
48,420,108 
49,549,255 
Depreciation and amortization
16,466,322 
16,385,921 
49,224,187 
48,944,183 
General and administrative expenses
5,536,028 
5,166,239 
19,492,082 
15,981,464 
Total expenses
38,183,368 
39,859,783 
119,037,980 
116,890,189 
Other income—related parties
633,883 
670,836 
1,905,836 
1,776,659 
Operating income/(loss)
6,996,104 
(3,453,959)
3,167,938 
4,748,467 
Other income/(expenses)
 
 
 
 
Interest and finance costs
(8,683,257)
(7,332,260)
(24,763,421)
(21,530,588)
Interest income
103,446 
27,711 
147,488 
81,206 
Unrealized gain on derivatives
3,771,160 
24,381,306 
2,053,129 
26,539,650 
Realized loss on derivatives
(369,941)
(8,390,014)
(1,418,724)
(12,980,717)
Gain on early extinguishment of debt
 
 
4,117,364 
 
Foreign currency loss, net
(147,097)
(193,160)
(238,465)
(255,103)
Total other income/(expenses), net
(5,325,689)
8,493,583 
(20,102,629)
(8,145,552)
Net income/(loss)
$ 1,670,415 
$ 5,039,624 
$ (16,934,691)
$ (3,397,085)
Earnings/(loss) per common share – basic (in dollars per share)
$ 0.03 
$ 0.09 
$ (0.31)
$ (0.06)
Earnings/(loss) per common share – diluted (in dollars per share)
$ 0.03 
$ 0.09 
$ (0.31)
$ (0.06)
Condensed Consolidated Statements of Shareholders' Equity (USD $)
Common stock
Treasury stock
Additional paid-in capital
Retained earnings
Total
Balance at Mar. 31, 2016
$ 580,575 
$ (20,943,816)
$ 848,179,471 
$ 157,783,007 
$ 985,599,237 
Balance (in shares) at Mar. 31, 2016
58,057,493 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
Net income/(loss)
 
 
 
(3,397,085)
(3,397,085)
Restricted share award issuances
2,775 
 
(2,775)
 
 
Restricted share award issuances (in shares)
277,514 
 
 
 
 
Stock-based compensation
 
 
3,650,778 
 
3,650,778 
Purchase of treasury stock
 
(12,953,453)
 
 
(12,953,453)
Balance at Dec. 31, 2016
583,350 
(33,897,269)
851,827,474 
154,385,922 
972,899,477 
Balance (in shares) at Dec. 31, 2016
58,335,007 
 
 
 
 
Balance at Mar. 31, 2017
583,422 
(33,897,269)
852,974,373 
156,341,192 
976,001,718 
Balance (in shares) at Mar. 31, 2017
58,342,201 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
Net income/(loss)
 
 
 
(16,934,691)
(16,934,691)
Restricted share award issuances
2,882 
 
(2,882)
 
 
Restricted share award issuances (in shares)
288,240 
 
 
 
 
Stock-based compensation
 
 
3,977,219 
 
3,977,219 
Purchase of treasury stock
 
(1,084,902)
 
 
(1,084,902)
Balance at Dec. 31, 2017
$ 586,304 
$ (34,982,171)
$ 856,948,710 
$ 139,406,501 
$ 961,959,344 
Balance (in shares) at Dec. 31, 2017
58,630,441 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
9 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:
 
 
Net loss
$ (16,934,691)
$ (3,397,085)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation and amortization
49,224,187 
48,944,183 
Amortization of financing costs
4,585,593 
2,820,407 
Unrealized gain on derivatives
(2,053,129)
(26,539,650)
Stock-based compensation expense
3,977,219 
3,238,940 
Gain on early extinguishment of debt
(4,117,364)
 
Unrealized foreign currency (gain)/loss, net
(141,903)
346,165 
Other non-cash items
77,342 
256,630 
Changes in operating assets and liabilities
 
 
Trade receivables, net and accrued revenue
(228,360)
(1,274,994)
Prepaid expenses and other receivables
(769,410)
168,632 
Due from related parties
10,620,942 
27,610,954 
Inventories
561,614 
(598,164)
Other non-current assets
(7,089)
1,854 
Trade accounts payable
(1,070,331)
(1,460,727)
Accrued expenses and other liabilities
(2,361,552)
(227,353)
Due to related parties
44,660 
(151,846)
Payments for drydocking costs
(461,478)
(533,096)
Net cash provided by operating activities
40,946,250 
49,204,850 
Cash flows from investing activities:
 
 
Capital expenditures
(297,534)
(1,755,832)
Restricted cash deposits
(11,008,812)
 
Restricted cash released
32,800,000 
 
Payments to acquire other fixed assets
(5,305)
(7,029)
Net cash provided by/(used in) investing activities
21,488,349 
(1,762,861)
Cash flows from financing activities:
 
 
Proceeds from long-term debt borrowings
149,000,000 
 
Repayment of long-term debt borrowings
(168,814,690)
(48,646,448)
Purchase of treasury stock
(1,084,902)
(12,953,453)
Financing costs paid
(3,002,235)
(99,785)
Net cash used in financing activities
(23,901,827)
(61,699,686)
Effects of exchange rates on cash and cash equivalents
81,967 
(314,626)
Net increase/(decrease) in cash and cash equivalents
38,614,739 
(14,572,323)
Cash and cash equivalents at the beginning of the period
17,018,552 
46,411,962 
Cash and cash equivalents at the end of the period
$ 55,633,291 
$ 31,839,639 
Basis of Presentation and General Information
Basis of Presentation and General Information

Dorian LPG Ltd.

Notes to Unaudited Condensed Consolidated Financial Statements

(Expressed in United States Dollars)

1.  Basis of Presentation and General Information

 

Dorian LPG Ltd. (“Dorian”) was incorporated on July 1, 2013 under the laws of the Republic of the Marshall Islands, is headquartered in the United States and is engaged in the transportation of liquefied petroleum gas ("LPG") worldwide. Specifically, Dorian and its subsidiaries (together "we", "us", "our", or the "Company") are focused on owning and operating very large gas carriers ("VLGCs"), each with a cargo carrying capacity of greater than 80,000 cbm, in the LPG shipping industry. Our fleet currently consists of twenty-two VLGCs, including nineteen fuel-efficient 84,000 cbm ECO-design VLGCs (“ECO VLGCs”) and three 82,000 cbm VLGCs.

 

On April 1, 2015, Dorian and Phoenix Tankers Pte. Ltd. (“Phoenix”) began operations of Helios LPG Pool LLC (the “Helios Pool”), which entered into pool participation agreements for the purpose of establishing and operating, as charterer, under variable rate time charters to be entered into with owners or disponent owners of VLGCs, a commercial pool of VLGCs whereby revenues and expenses are shared. Refer to Note 4 below for further description of the Helios Pool.

 

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and related Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments, consisting of normal recurring items, necessary for a fair presentation of financial position, operating results and cash flows have been included in the accompanying unaudited interim condensed consolidated financial statements and related notes. The accompanying unaudited interim condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes for the year ended March 31, 2017 included in our Annual Report on Form 10-K filed with the SEC on June 14, 2017.

 

Our interim results are subject to seasonal and other fluctuations, and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year.

 

Our subsidiaries as of December 31, 2017, which are all wholly-owned and are incorporated in Republic of the Marshall Islands (unless otherwise noted), are listed below.

 

Vessel Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

    

Type of

    

 

    

 

    

 

 

Subsidiary

 

vessel

 

Vessel’s name

 

Built

 

CBM(1)

 

CMNL LPG Transport LLC

 

VLGC

 

Captain Markos NL

 

2006

 

82,000

 

CJNP LPG Transport LLC

 

VLGC

 

Captain John NP

 

2007

 

82,000

 

CNML LPG Transport LLC

 

VLGC

 

Captain Nicholas ML

 

2008

 

82,000

 

Comet LPG Transport LLC

 

VLGC

 

Comet

 

2014

 

84,000

 

Corsair LPG Transport LLC

 

VLGC

 

Corsair(2)

 

2014

 

84,000

 

Corvette LPG Transport LLC

 

VLGC

 

Corvette

 

2015

 

84,000

 

Dorian Shanghai LPG Transport LLC

 

VLGC

 

Cougar

 

2015

 

84,000

 

Concorde LPG Transport LLC

 

VLGC

 

Concorde(2)

 

2015

 

84,000

 

Dorian Houston LPG Transport LLC

 

VLGC

 

Cobra

 

2015

 

84,000

 

Dorian Sao Paulo LPG Transport LLC

 

VLGC

 

Continental

 

2015

 

84,000

 

Dorian Ulsan LPG Transport LLC

 

VLGC

 

Constitution

 

2015

 

84,000

 

Dorian Amsterdam LPG Transport LLC

 

VLGC

 

Commodore

 

2015

 

84,000

 

Dorian Dubai LPG Transport LLC

 

VLGC

 

Cresques

 

2015

 

84,000

 

Constellation LPG Transport LLC

 

VLGC

 

Constellation

 

2015

 

84,000

 

Dorian Monaco LPG Transport LLC

 

VLGC

 

Cheyenne

 

2015

 

84,000

 

Dorian Barcelona LPG Transport LLC

 

VLGC

 

Clermont

 

2015

 

84,000

 

Dorian Geneva LPG Transport LLC

 

VLGC

 

Cratis

 

2015

 

84,000

 

Dorian Cape Town LPG Transport LLC

 

VLGC

 

Chaparral

 

2015

 

84,000

 

Dorian Tokyo LPG Transport LLC

 

VLGC

 

Copernicus

 

2015

 

84,000

 

Commander LPG Transport LLC

 

VLGC

 

Commander

 

2015

 

84,000

 

Dorian Explorer LPG Transport LLC

 

VLGC

 

Challenger

 

2015

 

84,000

 

Dorian Exporter LPG Transport LLC

 

VLGC

 

Caravelle

 

2016

 

84,000

 

 

 Management Subsidiaries

 

 

 

 

Subsidiary

 

Dorian LPG Management Corp.

 

Dorian LPG (USA) LLC (incorporated in USA)

 

Dorian LPG (UK) Ltd. (incorporated in UK)

 

Dorian LPG Finance LLC

 

Occident River Trading Limited (incorporated in UK)

 

 

Dormant Subsidiaries

 

 

 

 

Subsidiary

 

SeaCor LPG I LLC

 

SeaCor LPG II LLC

 

Capricorn LPG Transport LLC

 

Constitution LPG Transport LLC

 

Grendon Tanker LLC

 


(1)

CBM: Cubic meters, a standard measure for LPG tanker capacity

(2)

Operated pursuant to a bareboat charter agreement. Refer to Notes 7 and 13 below for further information.

Significant Accounting Policies
Significant Accounting Policies

2.  Significant Accounting Policies

 

The same accounting policies have been followed in these unaudited interim condensed consolidated financial statements as were applied in the preparation of our audited financial statements for the year ended March 31, 2017 (refer to Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2017).

 

In November 2016, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance to require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The pronouncement is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The implementation of this guidance is anticipated to result in restricted cash transfers not reported as cash flow activities in the consolidated statements of cash flows, and, upon adoption, is not anticipated to have an impact on our consolidated balance sheets and statements of operations.

 

In August 2016, the FASB issued accounting guidance addressing specific cash flow issues with the objective of reducing the existing diversity in practice. The pronouncement is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We do not believe that the impact of the adoption of this amended guidance will have a material effect on our financial statements.

 

In February 2016, the FASB issued accounting guidance to update the requirements of financial accounting and reporting for lessees and lessors. The updated guidance, for lease terms of more than 12 months, will require a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. Lessor accounting remains largely unchanged. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The pronouncement is effective prospectively for public business entities for annual periods beginning after December 15, 2018, and interim periods within that reporting period. Early adoption is permitted for all entities. We are currently assessing the impact the amended guidance will have on our financial statements.

 

In July 2015, the FASB issued accounting guidance requiring entities to measure most inventory at the lower of cost and net realizable value. The pronouncement is effective prospectively for annual periods beginning after December 15, 2016, and interim periods within that reporting period. The impact of the adoption of this amended guidance did not have a material effect on our financial statements.

 

In August 2014, the FASB issued accounting guidance for disclosure of uncertainties about an entity's ability to continue as a going concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date that the financial statements are issued. The pronouncement applies to all entities and became effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The implementation of this guidance resulted in additional disclosure of our going-concern uncertainties (refer to Note 3 below).

 

In May 2014, the FASB amended its accounting guidance for revenue recognition. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and consideration that a company expects to receive for the services provided. It also requires additional disclosures necessary for the financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB voted to defer the effective date by one year for fiscal years beginning on or after December 15, 2017 and interim periods within that reporting period and permit early adoption of the standard, but not before the beginning of 2017. We intend to adopt the amended guidance in fiscal year 2019 using the modified retrospective transition method applied to those contracts which were not completed as of March 31, 2018. Upon adoption, we will recognize the cumulative effect of adopting the amended guidance as an adjustment to our opening balance of retained earnings. Prior periods will not be retrospectively adjusted. Further, the adoption of the amended guidance may impact the timing with which revenue will be recognized.

Going Concern
Going Concern

3.  Going Concern

 

As reflected in the accompanying unaudited interim condensed consolidated financial statements and related notes, as of December 31, 2017, our current liabilities exceeded our current assets by $50.4 million, mainly as a result of the 2017 Bridge Loan (defined in Note 7 below), of which $66.9 million of principal is due on December 31, 2018, and for which we have not yet secured refinancing. As we have not yet implemented a refinancing of the remaining portion of the 2017 Bridge Loan, we are required under U.S. GAAP to state that the absence of such refinancing raises substantial doubt about the Company’s ability to continue as a going concern, before consideration of our plans.

 

On November 7, 2017, we refinanced one of the four VLGCs that was secured under the 2017 Bridge Loan pursuant to a memorandum of agreement and a bareboat charter agreement (refer to Note 7 below). We used a portion of the proceeds from this transaction to repay $30.1 million of the remaining principal on the 2017 Bridge Loan.  We believe it is probable that we will raise additional funds in the short-term through alternative sources of debt financings and/or through equity financings by way of a private or public offering, which, together with free cash on hand and cash generated from operations, will be sufficient to pay our short-term obligations, including the remaining $66.9 million outstanding under the 2017 Bridge Loan. Therefore, our accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. Accordingly, the accompanying unaudited interim condensed consolidated financial statements and related notes do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.