DORIAN LPG LTD., 10-Q filed on 10/28/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Sep. 30, 2016
Oct. 26, 2016
Document and Entity Information
 
 
Entity Registrant Name
DORIAN LPG LTD. 
 
Entity Central Index Key
0001596993 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2016 
 
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
 
54,957,273 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q2 
 
Condensed Consolidated Balance Sheets (USD $)
Sep. 30, 2016
Mar. 31, 2016
Current assets
 
 
Cash and cash equivalents
$ 43,581,900 
$ 46,411,962 
Trade receivables, net and accrued revenues
25,580 
107,317 
Prepaid expenses and other receivables
2,548,623 
2,247,706 
Due from related parties
32,410,570 
54,504,359 
Inventories
2,070,638 
2,288,073 
Total current assets
80,637,311 
105,559,417 
Fixed assets
 
 
Vessels, net
1,634,960,132 
1,667,224,476 
Other fixed assets, net
453,324 
591,288 
Total fixed assets
1,635,413,456 
1,667,815,764 
Other non-current assets
 
 
Deferred charges, net
343,474 
294,935 
Due from related parties—non-current
18,700,000 
17,600,000 
Restricted cash
50,812,789 
50,812,789 
Other non-current assets
95,284 
95,271 
Total assets
1,786,002,314 
1,842,178,176 
Current liabilities
 
 
Trade accounts payable
5,056,055 
6,826,503 
Accrued expenses
5,975,359 
9,721,477 
Due to related parties
532,788 
708,210 
Deferred income
6,581,476 
4,606,540 
Current portion of long-term debt
65,978,785 
66,265,643 
Total current liabilities
84,124,463 
88,128,373 
Long-term liabilities
 
 
Long-term debt—net of current portion and deferred financing fees
715,158,576 
746,354,613 
Derivative instruments
19,489,621 
21,647,965 
Other long-term liabilities
430,949 
447,988 
Total long-term liabilities
735,079,146 
768,450,566 
Total liabilities
819,203,609 
856,578,939 
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, 58,324,573 and 58,057,493 shares issued, 54,973,143 and 56,125,028 shares outstanding (net of treasury stock), as of September 30, 2016 and March 31, 2016, respectively
583,246 
580,575 
Additional paid-in-capital
850,666,442 
848,179,471 
Treasury stock, at cost; 3,351,430 and 1,932,465 shares as of September 30, 2016 and March 31, 2016, respectively
(33,797,281)
(20,943,816)
Retained earnings
149,346,298 
157,783,007 
Total shareholders' equity
966,798,705 
985,599,237 
Total liabilities and shareholders' equity
$ 1,786,002,314 
$ 1,842,178,176 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2016
Mar. 31, 2016
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
58,324,573 
58,057,493 
Common stock, shares outstanding
54,973,143 
56,125,028 
Treasury stock, shares at cost
3,351,430 
1,932,465 
Condensed Consolidated Statements of Operations (USD $)
3 Months Ended 6 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Revenues.
 
 
 
 
Net pool revenues—related party
$ 20,837,311 
$ 49,345,687 
$ 58,496,696 
$ 64,656,246 
Voyage charter revenues
 
15,581,830 
 
30,446,014 
Time charter revenues
12,465,684 
9,559,631 
24,998,035 
14,931,835 
Other revenues
308,238 
459,284 
632,278 
554,797 
Total revenues
33,611,233 
74,946,432 
84,127,009 
110,588,892 
Expenses
 
 
 
 
Voyage expenses
466,218 
3,541,546 
1,222,022 
7,064,619 
Vessel operating expenses
16,339,345 
9,459,889 
32,434,897 
16,213,975 
Depreciation and amortization
16,365,517 
8,303,555 
32,558,262 
13,160,982 
General and administrative expenses
5,203,915 
5,281,535 
10,815,225 
12,495,815 
Loss on disposal of assets
 
 
 
105,549 
Total expenses
38,374,995 
26,586,525 
77,030,406 
49,040,940 
Other income—related party
552,922 
383,643 
1,105,823 
767,285 
Operating income/(loss)
(4,210,840)
48,743,550 
8,202,426 
62,315,237 
Other income/(expenses)
 
 
 
 
Interest and finance costs
(7,160,119)
(931,329)
(14,198,328)
(1,067,129)
Interest income
30,317 
49,259 
53,495 
114,844 
Unrealized gain/(loss) on derivatives
6,528,203 
(5,111,430)
2,158,344 
(3,724,545)
Realized loss on derivatives
(2,333,915)
(1,230,333)
(4,590,703)
(2,474,823)
Foreign currency gain/(loss), net
766 
(306,453)
(61,943)
(297,437)
Total other income/(expenses), net
(2,934,748)
(7,530,286)
(16,639,135)
(7,449,090)
Net income/(loss)
$ (7,145,588)
$ 41,213,264 
$ (8,436,709)
$ 54,866,147 
Earnings/(loss) per common share – basic (in dollars per share)
$ (0.13)
$ 0.72 
$ (0.16)
$ 0.96 
Earnings/(loss) per common share – diluted (in dollars per share)
$ (0.13)
$ 0.72 
$ (0.16)
$ 0.96 
Condensed Consolidated Statements of Shareholders Equity (USD $)
Common stock
Treasury stock
Additional paid-in capital
Retained earnings/(Accumulated deficit)
Total
Balance at Mar. 31, 2015
$ 580,575 
 
$ 844,539,059 
$ 28,094,625 
$ 873,214,259 
Balance (in shares) at Mar. 31, 2015
58,057,493 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
Net income/(loss)
 
 
 
54,866,147 
54,866,147 
Stock-based compensation
 
 
1,761,988 
 
1,761,988 
Purchase of treasury stock
 
(4,315,562)
 
 
(4,315,562)
Balance at Sep. 30, 2015
580,575 
(4,315,562)
846,301,047 
82,960,772 
925,526,832 
Balance (in shares) at Sep. 30, 2015
58,057,493 
 
 
 
 
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
 
 
 
 
 
Restricted share award issuances
2,671 
 
(2,671)
 
 
Restricted share award issuances (in shares)
267,080 
 
 
 
 
Net income/(loss)
 
 
 
(8,436,709)
(8,436,709)
Stock-based compensation
 
 
2,489,642 
 
2,489,642 
Purchase of treasury stock
 
(12,853,465)
 
 
(12,853,465)
Balance at Sep. 30, 2016
$ 583,246 
$ (33,797,281)
$ 850,666,442 
$ 149,346,298 
$ 966,798,705 
Balance (in shares) at Sep. 30, 2016
58,324,573 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
6 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash flows from operating activities:
 
 
Net income/(loss)
$ (8,436,709)
$ 54,866,147 
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
 
 
Depreciation and amortization
32,558,262 
13,160,982 
Amortization of financing costs
1,893,141 
634,500 
Unrealized (gain)/loss on derivatives
(2,158,344)
3,724,545 
Stock-based compensation expense
2,077,804 
1,761,988 
Loss on disposal of assets
 
105,549 
Unrealized exchange differences
3,557 
169,497 
Other non-cash items
237,005 
42,391 
Changes in operating assets and liabilities
 
 
Trade receivables, net and accrued revenue
81,737 
11,184,405 
Prepaid expenses and other receivables
(300,917)
(463,697)
Due from related parties
20,993,789 
(40,597,949)
Inventories
217,435 
136,927 
Other non-current assets
(13)
22 
Trade accounts payable
(1,075,286)
(455,188)
Accrued expenses and other liabilities
(1,166,187)
2,561,642 
Due to related parties
(175,422)
9,931 
Net cash provided by operating activities
44,749,852 
46,841,692 
Cash flows from investing activities:
 
 
Payments for vessels and vessels under construction
(1,351,731)
(477,333,533)
Restricted cash deposits
 
(8,802,789)
Proceeds from disposal of assets
 
136,660 
Payments to acquire other fixed assets
(3,095)
(299,312)
Net cash used in investing activities
(1,354,826)
(486,298,974)
Cash flows from financing activities:
 
 
Proceeds from long-term debt borrowings
 
338,291,681 
Repayment of long-term debt borrowings
(33,276,251)
(10,346,896)
Purchase of treasury stock
(12,853,465)
(4,315,562)
Financing costs paid
(99,785)
(8,466,998)
Net cash (used in)/provided by financing activities
(46,229,501)
315,162,225 
Effects of exchange rates on cash and cash equivalents
4,413 
(181,650)
Net decrease in cash and cash equivalents
(2,830,062)
(124,476,707)
Cash and cash equivalents at the beginning of the period
46,411,962 
204,821,183 
Cash and cash equivalents at the end of the period
$ 43,581,900 
$ 80,344,476 
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 through the ownership and operation of LPG tankers. Dorian and its subsidiaries (together "we", “us”, "our", "DLPG" or the "Company") is focused on owning and operating very large gas carriers ("VLGCs"), each with a cargo carrying capacity of greater than 80,000 cbm. 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. See Note 3 below for further description of the Helios Pool relationship.

 

The accompanying unaudited condensed consolidated financial statements and related notes (the "Financial Statements") have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information. 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 Financial Statements. The Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended March 31, 2016 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 31, 2016.

 

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 September 30, 2016, which are all wholly-owned and are incorporated in Republic of the Marshall Islands (unless otherwise noted), are listed below.

 

Vessel Owning 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

 

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

 

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(2)

 


(1)

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

(2)

Owner of the Pressurized Gas Carrier (“PGC”) Grendon until it was sold in February 2016

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, 2016 (see Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2016).

 

In August 2016, the Financial Accounting Standards Board (“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 believe that the impact of the adoption of this amended guidance will only relate to disclosures.

 

In March 2016, the FASB issued accounting guidance to simplify the requirements of accounting for share-based payment transactions. The guidance simplifies the accounting for taxes related to stock-based compensation, including adjustments to how excess tax benefits and an entity’s payments for tax withholdings should be classified. Additionally, an entity may make an entity-wide policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within that reporting period with early adoption permitted in any interim or annual period. We have early adopted this pronouncement and have made the entity-wide policy election to account for forfeitures when they occur. The amended guidance had no significant impact on our financial statements for the three and six months ended September 30, 2016.

 

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. We are currently assessing the impact the amended guidance will have on our financial statements.

 

In April 2015, an accounting pronouncement was issued by the FASB to update the guidance related to the presentation of debt issuance costs, which we adopted in April 2016. This guidance requires debt issuance costs, related to a recognized debt liability, be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. The reclassification does not impact net income/(loss) as previously reported or any prior amounts reported on the consolidated statements of comprehensive income, or the consolidated statements of cash flows. The effect of the retrospective application of this change in accounting principle on our consolidated balance sheets as of September 30, 2016 and March 31, 2016 resulted in a reduction of “Deferred charges, net” and “Total assets” in the amount of $22.0 million and $23.7 million, respectively, with a corresponding reduction of “Long-term debt—net of current portion” and “Total long-term liabilities.”

 

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 are currently assessing the impact the amended guidance will have on our financial statements.