DORIAN LPG LTD., 10-Q filed on 1/30/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Dec. 31, 2016
Jan. 26, 2017
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, 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
 
54,967,332 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
Condensed Consolidated Balance Sheets (USD $)
Dec. 31, 2016
Mar. 31, 2016
Current assets
 
 
Cash and cash equivalents
$ 31,839,639 
$ 46,411,962 
Trade receivables, net and accrued revenues
1,382,311 
107,317 
Prepaid expenses and other receivables
2,079,074 
2,247,706 
Due from related parties
24,693,405 
54,504,359 
Inventories
2,886,237 
2,288,073 
Total current assets
62,880,666 
105,559,417 
Fixed assets
 
 
Vessels, net
1,619,392,122 
1,667,224,476 
Other fixed assets, net
386,288 
591,288 
Total fixed assets
1,619,778,410 
1,667,815,764 
Other non-current assets
 
 
Deferred charges, net
1,886,686 
294,935 
Derivative instruments
4,961,435 
 
Due from related parties—non-current
19,800,000 
17,600,000 
Restricted cash
50,812,789 
50,812,789 
Other non-current assets
93,417 
95,271 
Total assets
1,760,213,403 
1,842,178,176 
Current liabilities
 
 
Trade accounts payable
5,699,438 
6,826,503 
Accrued expenses
5,756,643 
9,721,477 
Due to related parties
556,364 
708,210 
Deferred income
8,110,293 
4,606,540 
Current portion of long-term debt
65,978,786 
66,265,643 
Total current liabilities
86,101,524 
88,128,373 
Long-term liabilities
 
 
Long-term debt—net of current portion and deferred financing fees
700,715,644 
746,354,613 
Derivative instruments
69,750 
21,647,965 
Other long-term liabilities
427,008 
447,988 
Total long-term liabilities
701,212,402 
768,450,566 
Total liabilities
787,313,926 
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, 58,335,007 and 58,057,493 shares issued, 54,967,332 and 56,125,028 shares outstanding (net of treasury stock), as of December 31, 2016 and March 31, 2016, respectively
583,350 
580,575 
Additional paid-in-capital
851,827,474 
848,179,471 
Treasury stock, at cost; 3,367,675 and 1,932,465 shares as of December 31, 2016 and March 31, 2016, respectively
(33,897,269)
(20,943,816)
Retained earnings
154,385,922 
157,783,007 
Total shareholders' equity
972,899,477 
985,599,237 
Total liabilities and shareholders' equity
$ 1,760,213,403 
$ 1,842,178,176 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 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
58,335,007 
58,057,493 
Common stock, shares outstanding
54,967,332 
56,125,028 
Treasury stock, shares at cost
3,367,675 
1,932,465 
Condensed Consolidated Statements of Operations (USD $)
3 Months Ended 9 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Revenues.
 
 
 
 
Net pool revenues—related party
$ 22,301,512 
$ 66,044,777 
$ 80,798,208 
$ 130,701,023 
Time charter revenues
11,921,875 
11,237,746 
36,919,910 
26,169,581 
Voyage charter revenues
1,296,952 
15,567,844 
1,296,952 
46,013,858 
Other revenues
214,649 
433,341 
846,927 
988,138 
Total revenues
35,734,988 
93,283,708 
119,861,997 
203,872,600 
Expenses
 
 
 
 
Voyage expenses
1,193,265 
4,347,222 
2,415,287 
11,411,841 
Vessel operating expenses
17,114,358 
14,265,183 
49,549,255 
30,479,158 
Depreciation and amortization
16,385,921 
13,536,900 
48,944,183 
26,697,882 
General and administrative expenses
5,166,239 
7,506,740 
15,981,464 
20,002,555 
Loss on disposal of assets
 
 
 
105,549 
Total expenses
39,859,783 
39,656,045 
116,890,189 
88,696,985 
Other income—related party
670,836 
383,642 
1,776,659 
1,150,927 
Operating income/(loss)
(3,453,959)
54,011,305 
4,748,467 
116,326,542 
Other income/(expenses)
 
 
 
 
Interest and finance costs
(7,332,260)
(4,633,454)
(21,530,588)
(5,700,583)
Interest income
27,711 
22,382 
81,206 
137,226 
Unrealized gain on derivatives
24,381,306 
7,389,868 
26,539,650 
3,665,324 
Realized loss on derivatives
(8,390,014)
(2,007,426)
(12,980,717)
(4,482,250)
Foreign currency loss, net
(193,160)
(121,352)
(255,103)
(418,789)
Total other income/(expenses), net
8,493,583 
650,018 
(8,145,552)
(6,799,072)
Net income/(loss)
$ 5,039,624 
$ 54,661,323 
$ (3,397,085)
$ 109,527,470 
Earnings/(loss) per common share – basic (in dollars per share)
$ 0.09 
$ 0.97 
$ (0.06)
$ 1.92 
Earnings/(loss) per common share – diluted (in dollars per share)
$ 0.09 
$ 0.97 
$ (0.06)
$ 1.92 
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)
 
 
 
109,527,470 
109,527,470 
Stock-based compensation
 
 
2,684,152 
 
2,684,152 
Purchase of treasury stock
 
(10,070,645)
 
 
(10,070,645)
Balance at Dec. 31, 2015
580,575 
(10,070,645)
847,223,211 
137,622,095 
975,355,236 
Balance (in shares) at Dec. 31, 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
 
 
 
 
 
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 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
9 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Cash flows from operating activities:
 
 
Net income/(loss)
$ (3,397,085)
$ 109,527,470 
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
 
 
Depreciation and amortization
48,944,183 
26,697,882 
Amortization of financing costs
2,820,407 
1,553,730 
Unrealized gain on derivatives
(26,539,650)
(3,665,324)
Stock-based compensation expense
3,238,940 
3,050,819 
Loss on disposal of assets
 
105,549 
Unrealized exchange differences
346,165 
322,455 
Other non-cash items
256,630 
61,323 
Changes in operating assets and liabilities
 
 
Trade receivables, net and accrued revenue
(1,274,994)
10,305,211 
Prepaid expenses and other receivables
168,632 
(2,253,247)
Due from related parties
27,610,954 
(73,632,993)
Inventories
(598,164)
1,252,001 
Other non-current assets
1,854 
(8)
Trade accounts payable
(1,460,727)
3,386,722 
Accrued expenses and other liabilities
(227,353)
6,241,601 
Due to related parties
(151,846)
32,127 
Payments for drydocking costs
(533,096)
 
Net cash provided by operating activities
49,204,850 
82,985,318 
Cash flows from investing activities:
 
 
Payments for vessels and vessels under construction
(1,755,832)
(839,065,088)
Restricted cash deposits
 
(16,502,789)
Proceeds from disposal of assets
 
136,660 
Payments to acquire other fixed assets
(7,029)
(443,417)
Net cash used in investing activities
(1,762,861)
(855,874,634)
Cash flows from financing activities:
 
 
Proceeds from long-term debt borrowings
 
634,648,196 
Repayment of long-term debt borrowings
(48,646,448)
(20,939,276)
Purchase of treasury stock
(12,953,453)
(10,070,645)
Financing costs paid
(99,785)
(13,210,445)
Net cash (used in)/provided by financing activities
(61,699,686)
590,427,830 
Effects of exchange rates on cash and cash equivalents
(314,626)
(324,778)
Net decrease in cash and cash equivalents
(14,572,323)
(182,786,264)
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
$ 31,839,639 
$ 22,034,919 
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, as subsequently amended.

 

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

 

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 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 nine months ended December 31, 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 December 31, 2016 and March 31, 2016 resulted in a reduction of “Deferred charges, net” and “Total assets” in the amount of $21.0 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.