Q4 2024 Dorian LPG Ltd Earnings Call

Good morning, and welcome to the Dorian LPG fourth quarter 'twenty 'twenty four earnings conference call. At this time, all participants are any listen only mode.

Operator: Good morning, and welcome to the Dorian LPG 4th Quarter 2024 Earnings Conference Hall. At this time, all participants are in a listen-only mode.

Operator: 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'd now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead.

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 dot Dorian LPG dot com.

Speaker Change: I'd now like to turn the conference over to Ted Young Chief Financial Officer. Thank you. Mr. Young. Please go ahead.

Kevin: Thank you Kevin Good morning, everyone and thank you all for joining us for our fourth quarter 2024 results Conference call with me today are John How's it been terrorist chairman President and CEO of Dorian LPG limited John Mccool, Who's the head of energy transition and cheap exact chief Executive officer of Dorian LPG USA.

Theodore B. Young: Thank you, Kevin. Good morning, everyone.

Theodore B. Young: And thank you all for joining us for our fourth quarter 2024 results conference call. With me today are John Hadjipateras, Chairman, President, and CEO of Dorian LPG Ltd., John Lycouris, Head of Energy Transition and Chief Executive Officer of Dorian LPG USA, as well as Tim Hansen, our Chief Commercial Officer.

Kevin: Right.

Speaker Change: Well, Tim Hansen, our Chief commercial officer.

Theodore B. Young: As a reminder, this conference call webcast and a replay of this call will be available through May 29, 2024. 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 such 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.

Speaker Change: As a reminder, this conference call webcast and a replay of this call will be available through May 29 2024.

Theodore B. Young: 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 expressed today. Additionally, let me refer you to our unaudited results for the period ended March 31, 2024, which were filed this morning on Form 8K. In addition, please refer to our previous filings on Forms 10K and 10Q, where you'll find risk factors that could cause our actual results to differ materially from those forward-looking statements.

Speaker Change: 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.

Speaker Change: He believes that such forward looking statements are reasonable we cannot assure you that any forward looking statements will prove to be correct.

Speaker Change: Forward looking statements are subject to known and unknown risks 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.

Speaker Change: Actual results may vary materially from those we express today.

Speaker Change: Additionally, let me refer you to our unaudited results for the period ended March 31, 2024 that were filed this morning on form 8-K. In addition, please refer to our previous filings on forms 10-K, and 10-Q, where you'll find risk factors that could cause our actual results to differ materially from those forward looking statements.

Speaker Change: Also.

Theodore B. Young: I may find it useful to refer to the slides we posted this morning as we make our remarks during this call. Finally, please note that we expect to file our full 10k no later than May 30th, 2024. With that, I'll turn over the call to John Hadjipateras.

Speaker Change: You may find it useful to refer to the slides we posted this morning as we make make our remarks during this call.

Finally, please note that we expect to file our Form 10-K, no later than May 32024, with that I'll turn it over the call to John Lunger protests.

Speaker Change: Okay.

Thank you for joining John Ted and me today.

John C. Hadjipateras: Thank you for joining John, Ted, Tim, and me today. We are happy to report that our financial year 2024 was a record year with our highest ever net income and more than 30% return on book equity. Returns to shareholders since our IPO will total $730 billion after payment of our eighth consecutive irregular quarterly dividend of $1 per share declared at the end of last month. Even though these payments appear regular, I want to emphasize, as Ted has consistently done in our past earnings calls, that they will continue to be contingent on the company's results of operations, financial conditions, prospects, and capital funding needs.

Speaker Change: We're happy to report that our financial year 'twenty to 'twenty four was a record year with our highest ever net income and more than 30% return on book equity.

Speaker Change: Returns to shareholders since our IPO will total 730 billion after the payment of our eighth consecutive regular quarterly dividend of a dollar per share declared at the end of last month.

Speaker Change: Even though these payments appear regularly I want to emphasize as Ted has consistently done in our past earning calls.

Speaker Change: They will continue to be contingent on the company's results of operations financial condition and prospects in capital funding needs.

Speaker Change: Okay.

John C. Hadjipateras: Post-COVID, the LPG market, benefiting from increasing product demand as well as geopolitical events and climate change, has, for the most part, remained resilient and has generated strong earnings. The wars in Ukraine and Gaza, as well as a deficit of rain in Panama, significantly changed trading patterns, adding ton miles, helping our sector absorb a very large order book in 2023. Our management, with the support of our board, while often navigating extreme spot market volatility and dealing with extraordinary issues caused by the pandemic, supply chain disruptions, and wars, played a critical role in our success by maintaining the right levels of debt and liquidity and by the diligent commercial and technical management of our ships.

Speaker Change: Post COVID-19, the LPG market benefiting from increasing product demand as well as geopolitical events and climate change has for the most part remained resilient and has generated strong earnings the wars and Ukraine, Gaza as well as a deficit of rain in Panama significantly changed trading patterns.

Speaker Change: Ton miles, helping our sector absorbed a very large order book in 'twenty to 'twenty three.

Speaker Change: Our management with the support of our board, while also navigating extreme spot market volatility on dealing with extraordinary issues caused by the pandemic supply chain disruptions and the was played a critical role in our success by maintaining the right levels of debt and liquidity and by the <unk>.

Speaker Change: Diligent commercial and technical management of our ships.

Speaker Change: In the last 12 months, we expanded our fleet with one of our owned and three chartered in dual fuel New building V O E. G sees.

John C. Hadjipateras: In the last 12 months, we expanded our fleet with one owned and three chartered-in dual-fuel new building VOGCs. It's a good time to be a ship owner. Dorian's task now is to build on our success by continuing the careful allocation of capital and by sensibly expanding and renewing our fleet to meet the needs of the LPG market while we also keep an eye out for market opportunities. We are optimistic about VLGCs for LPG transportation and for the emerging ammonia trade.

It's a good time to be a ship owner.

Speaker Change: The Orange task now is to build on our success, but it's continuing the careful allocation of capital and buy sensibly, expanding and renewing our fleet to meet the needs of the LPG market. While we also keep an eye out for market opportunities.

Speaker Change: We are optimistic for a V O G series for LPG transportation and for the emerging ammonia trade.

John C. Hadjipateras: We are confident in our team's skills to manage through cycles, and we are resolute in pursuit of our duty to our investors to create value, maintain our strong balance sheet, and continue returns by way of dividends and or buybacks as appropriate.

We are confident in our team's skills to manage through cycles, and we are resolute in pursuit of our duty to our investors to create value maintain our strong balance sheet and continue returns by way of dividends and or.

Speaker Change: Buybacks as appropriate.

Theodore B. Young: Back to Ted.

Theodore B. Young: Thanks.

Theodore B. Young: My comments today will focus on our unaudited fourth-quarter results and financial position, capital allocation, and liquidity. On March 31, 2024, we reported $282.5 million of free cash and available for sale debt securities of $11.5 million, giving us total available liquidity, which is not a gap term, of $294 million. As of Tuesday, May 21, 2024, our fleet cash balance stood at $270 million, which does not reflect the $40.6 million dividend that we paid out to shareholders on May 30.

Theodore B. Young: My comments today will focus on our unaudited fourth quarter results and financial position capital allocation and liquidity.

Theodore B. Young: At March 31, 2024, we reported $282 5 million of free cash and available for sale debt securities of $11 million, giving us total available liquidity, which is not a GAAP ton of 294 million.

Theodore B. Young: As of Tuesday may 21st 2020 for our full cash balance stood at $270 million, which does not reflect the $40 6 million dollar dividend that we paid out to shareholders on May 30.

Theodore B. Young: With a debt balance at quarter end of $610.5 million, our debt to total debt capitalization stood at 37.4%, down from 43.2% a year ago, and net debt to net total capitalization stood at 20.1% versus 33.5% a year ago. The improvement in these ratios is important, and we are pleased that we were able to achieve those levels while still awarding shareholders over $160 million in dividends over the same period. Again, we have no refund answers until 2026, ample free cash, an undrawn $50 million revolver, and one debt-free vest.

Theodore B. Young: With a debt balance at quarter end at 610, and a half million our debt to total book capitalization stood at 17 37, 4% down from 43, 2% a year ago and net debt to net total capitalization at 21% versus 33, 5% a year ago.

Theodore B. Young: The improvement in these ratios is important and we are pleased that we were able to achieve those levels, while still rewarding shareholders with over $160 million in dividends over the same period.

Theodore B. Young: Again, we have no refinancings until 2026 ample free cash and Undrawn $50 million revolver, and one debt free vessel. Thus, we have a significant measure of financial flexibility.

Theodore B. Young: Thus, we have a significant measure of financial flexibility. We can forecast our cash costs per day, OPEX, GNA, time, charter, and expense. Interest in principle for the coming year is expected to be approximately $25,000 to $26,000 per calendar day. For the discussion of our fourth quarter results, you may also find it useful to refer to the investor highlights slides posted this morning on our website. I'd also remind you that my remarks will include a number of terms, such as TCE, operating days, available days, and adjusted EBITDA. Please refer to our filings for the definitions of these terms.

Theodore B. Young: We expect our cash cost per day, Opex G&A time charter in expense.

Theodore B. Young: Our interest and principal for the coming year to be approximately 25000 to $26000 per calendar day.

Theodore B. Young: For the discussion of our fourth quarter results. You may also find it useful to refer to the investor highlight slides posted this morning on our website.

Theodore B. Young: I'd also remind you that my remarks will include a number of terms such as TCE operating days available days and adjusted EBITDA.

Theodore B. Young: Please refer to our filings with the definitions of these terms.

Theodore B. Young: Yeah.

Theodore B. Young: Turning to our fourth quarter charting results, we achieved a total utilization of 87.7% for the quarter and reported a daily TCE of $72,202 per operating day, yielding a utilization adjusted TCE or TCE revenue per available day of about $63,290. As our entire spot trading program is conducted through the Helios pool, its spot results are the best measure for our spot chartering performance. For the March 31 quarter, Helios earned a TCE of $70,822 for its SPAC and CLA voyages and $64,900 for all voyages, including time charters in the pool.

Theodore B. Young: It's really more of a fourth quarter trading results, we achieved a total utilization of 87, 7% for the quarter and reported daily TCE of $72202 per operating day.

Theodore B. Young: The utilization adjusted TCE or TCE revenue per available day of about 63000 to 90.

Theodore B. Young: As our entire spot trading programs conducted through the Helios pool.

Theodore B. Young: It's spot reserves.

Theodore B. Young: Reported the best measure for our spot chartering performance.

Theodore B. Young: For the March 31 quarter.

Theodore B. Young: He has earned T. C 70822, four it's a spot.

Theodore B. Young: CLA voyages and 64900 roughly for all our voyages and putting time travelers in the pool.

Theodore B. Young: On page four of our investor highlights material, you can see that we have five Dorian vessels on time charter within the pool, plus one MOL Energia vessel, indicating spot exposure of about 80% for the 30 vessels in the Helios pool. Turning to the quarter ending June 30, 2024, we currently have over 75% of the available days in the Helios pool book. Given the difficulty in predicting loading dates for the remainder of the quarter, which obviously has a huge effect on revenue recognition, we felt it was more appropriate to share TCE revenue over all available days in the pool for the quarter, which suggests a TCE in excess of $40,000 per day on a load-to-discharge basis, which is in accordance with U.S. GAAP. This route includes both spot fixtures and time chargers in the Helio

Theodore B. Young: On page four of our Investor highlights material you can see that we have five dorian vessels on time charter with the NEPOOL plus one O M O L energia vessel, indicating spot exposure of about 80% for their 30 vessels in the Helios pool.

Theodore B. Young: Turning to the quarter ending June 32024, we currently have over 75% of the available days in the Helios pool booked.

Theodore B. Young: Given the difficulty in predicting loading dates for the remainder of the quarter, which obviously have a huge effect on revenue recognition. We felt was more appropriate to share T. C revenue over all available days in the pool for the quarter, which suggest a T C in excess of $40000 per day on a load to discharge basis.

Theodore B. Young: This is in accordance with U S GAAP.

Theodore B. Young: This route includes both spot and time charters in the Helios pool only.

Theodore B. Young: Daily OPEX for the quarter was 10,047 excluding dry docking related OPEX. It was $10,699 per day, including those amounts. Sequentially, our operating profit excluding dry docking was up only 1.4% or virtually flat, which was a good result. Our time charter in expense for the four TCN vessels was $12.7 million. We expect that amount to return to the $10.5 million range going forward, which is and has been the actual quarterly cash outlay. Total GNA for the quarter was eight and a half million, and cash GNA, that is, GNA excluding non cash compensation expenses, was about 6.6 million.

Theodore B. Young: Daily Opex for the quarter was 10047, excluding dry docking related opex. It was 10699 per day, including those amounts sequentially. Our opex, excluding dry docking was up only 1.4% are virtually flat, which was a good performance.

Theodore B. Young: Our time charter inexpensive for the four T C and vessels was $12 7 million.

Theodore B. Young: We expect that amount to return to the 10 and a half million dollars range going forward, which is and has been the actual quarterly cash outlay.

Theodore B. Young: Total G&A for the quarter was eight and a half million in cash G&A that is G&A, excluding noncash compensation expense was about 6.6 million.

Theodore B. Young: This amount is up sequentially from the prior quarter, but most of the increase is due to statutory non-cash accruals that we make for employee leave and retirement during the first calendar quarter and fourth fiscal quarter every year. Reported EBITDA, adjusted EBITDA for the quarter was $105 million, which is the second highest quarterly EBITDA in our corporate history. For the year, our EBITDA was $417 million, also a corporate record, which is nearly 54% of last year's $271 million.

Theodore B. Young: This amount is up sequentially from the prior quarter, but most of the increase was due to statutory noncash accruals that we make for employee leave in a retirement during the first calendar quarter fourth fiscal quarter every year.

Theodore B. Young: Reported EBIT adjusted EBITDA for the quarter was $105 million, which is the second highest quarterly EBITDA in our corporate history for.

Theodore B. Young: For the year, our EBITDA was $417 million also a corporate records.

Theodore B. Young: But it was up nearly 54% from last year's $271 million of EBITDA.

Theodore B. Young: We continue to benefit from our hedging policy and the favorable pricing of our Japanese financings, leaving us with a current interest cost fixed hedge and a small floating piece of 4.7%, which yielded a quarterly cash interest expense of $7.3 million. As a reminder, we calculate cash interest expense on our debt as the sum of interest expense, excluding deferred financing fees and other loan expenses, and realize gain or loss on interest rate swap derivatives, as those numbers are reported on our income statement.

Theodore B. Young: 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 in a small floating piece of four 7%.

Theodore B. Young: As you know that quarterly cash interest expense of $7 $3 million as a reminder.

Theodore B. Young: Minder, we calculate cash interest expense on our debt is the sum of.

Theodore B. Young: Interest expense, excluding deferred financing fees and other loan expenses and realized gain loss on interest rate swap derivatives. If those numbers are reported on our income statement.

Theodore B. Young: Although we currently hold a roughly 83% economic interest in Helios, we do not consolidate its PML or balance sheet, which has the effect of understating our cash and working capital somewhat. Thus, we believe it's useful to provide some additional insight in order to give a more complete picture.

Theodore B. Young: Although we currently hold a roughly 83% economic interest in Helios, we do not consolidate its P&L or balance sheet, which has the effect of understating, our cash and working capital somewhat less.

Theodore B. Young: Thus, we believe it's useful to provide some additional insight in order to give a more complete picture as of Tuesday may 'twenty, one 'twenty two 'twenty three 'twenty four side, the pool had roughly $40 million of cash on hand, which will decrease when the monthly distributions paid out in the next few days.

Theodore B. Young: As of Tuesday, May 21st, 2023, the 24th, sorry, the pool had roughly $40 million of cash on hand, which will decrease when the monthly distribution is paid out in the next few days. Net income for the year was $307.4 million, again, a corporate record. And with average shareholder equity of $948.7 million over the year, we generated a return on equity of 32.4%, which is a testament to both great earnings and prudent balance sheet management.

Theodore B. Young: Net income for the year was $307 4 million again, corporate record and with average shareholders' equity of $948 $7 million over the year, we generated a return on equity of 32, 4%, which is a testament to both great earnings and prudent balance sheet management.

John: Turning to capital allocation with the payment of another one dollar a regular dividend, which again, we remind you as John also mentioned are irregular dividends subject to our board's evaluation of the business perspective market conditions capital needs and other items as John outlined.

Theodore B. Young: Turning to capital allocation with the payment of another $1 regular dividend, which again, we remind you, and as John also mentioned, are irregular dividends subject to our board's evaluation of the business perspective, market conditions, capital needs, and other items John outlined. We've now paid dividends in 11 of the last 12 quarters totaling $12.50 per share, or over $500 million in aggregate. Coupled with $113.5 million in a soft tender offer and $116.5 million of open market repurchases, we've now returned nearly $735 million to our shareholders since our IPO.

John: We've now paid dividends and 11 of the last 12 quarters totaling $12 50 per share or over $500 million in aggregate cut.

John: Coupled with 113 and a half million dollar self tender offer at 116, and a half million of open market repurchases. We've now returned nearly $735 million to our shareholders since our IPO.

John: The significant dividend payments in the last quarter underscores our board's commitment to a sensible capital allocation policy the balances market outlook operating capital needs of the business and an appropriate level of risk tolerance, given the volatility of shipping.

Theodore B. Young: Significant dividend payments in the last quarter underscore our board's commitment to a sensible capital allocation policy that balances market outlook, operating capital needs of the business, and an appropriate level of risk tolerance given the volatility of shipping. We remain cautiously optimistic about our cash flow generation over the coming months, but we will be vigilant for changes in the global macroeconomic and energy market outlook. With that, I'll pass it over to Tim Hansen.

Speaker Change: We remain cautiously optimistic about our cash flow generation over the coming months, but we will be vigilant for changes in the global macroeconomic and energy market outlook with that I'll pass it over to Tim handsome.

Speaker Change: Yeah.

Yeah, Thank you Justin and.

Speaker Change: Good day everyone.

Yeah.

Speaker Change: So.

Tim T. Hansen: So the quarter ending March 31st saw steep declines in the freight market in January and a gradual upward correction during February and March. The fall in freight rates in January was particularly steep after coming off the hikes in December 2023 and highlighted how significant imbalances in the market can occur. But the recovery even gradually reaffirmed that there are firm fundamentals in. The factors for the declining freight rates in January were the narrowing of the West-East arbitrage and almost one third of expected 2024 new buildings delivering in a short window, and the drastic reduction of the congestion in the Panama Canal. The narrowing of the arbitrage between January and February is a seasonal occurrence, reflecting the reduced demand as the weather warms in most importing countries.

Speaker Change: The quarter ending March 31st saw steep declines in the freight market.

Speaker Change: Veterinary undergraduate.

Whats correction during February and March.

Speaker Change: And freight rates in January, but particularly the steep after coming off the hikes in December 'twenty, three and highlighted how significant imbalances in the market kind of occur once a recovery gradual reaffirm.

Speaker Change: Oh for fundamentals in the VLCC market.

Speaker Change: The fact that the declining freight rates in January was a narrowing of the west East arbitrage almost an almost one third.

Speaker Change: Unexpected 'twenty to 'twenty four new buildings delivering in a short window.

Speaker Change: And a drastic reduction of.

Speaker Change: The congestion in the Panama Canal, the narrowing of the arbitrage from Engendering Cooper is a seasonal occurrence effecting.

Speaker Change: The effects of the reduced demand.

Speaker Change: Weather warms and goes according countries North American Cold snap in January of this year extra pages situation that's there.

Tim T. Hansen: The North American cold snap in January of this year exacerbated the situation, as domestic consumption increased and LPG prices in the U.S. rose. The new building deliveries amidst an uncongested Panama Canal created a temporary oversupply in the U.S. Gulf, which impacted the market with astonishing force. A reduction in container traffic after the holiday season rush was expected, but the degree of the reduced container traffic was unexpected. Lastly, the fact that there were zero transits in the near Panama Canal by dry cargo vessels was unprecedented.

Speaker Change: Domestic consumption increase in LPG prices in the U S rose.

Speaker Change: New building deliveries.

Speaker Change: And on congestion Panama Canal created a temporary oversupply in the U S Gulf, which impacted the market was astonishing horse.

Speaker Change: And in container traffic after the holiday season Rush what's expected.

Speaker Change: Degrees as it did.

Speaker Change: Three of the reduced container traffic wasn't unexpected Lockheed the fact that there was zero transfers in the new Panama Canal on dry cargo vessels was unprecedented.

Speaker Change: Once you mouth.

Speaker Change: So, let's get to your production and exports.

Speaker Change:

Tim T. Hansen: LPG production and exports, from North America in particular, are increasing, and demand in the Far East remains robust. Furthermore, the Panama Canal was capped at the maximum number of transits to reduce the waiting time for those trying to take advantage of an open Panama Canal, and vessels sailing to Asia, the eastern route, were forced to sail the longer route via the Cape of Good Hope, with the Suez Canal being inaccessible. After the initial shock of the imbalance in January suggested by the market, the market corrected upwards in February and March to better reflect the firm fundamentals of the VFGC markets.

Speaker Change: North American in particular are increasing in demand in the far east remains robust for.

Speaker Change: Furthermore, with the Panama Canal was kept at the Mexican gumbo trenches to reduce waiting time and always trying to take advantage of the open open Panama Canal and vessels sailing to Asia.

Speaker Change: Houston route as opposed to say the longer who would be a case of commscope with Suez Canal being enacted alright.

Speaker Change: Sorry Oscar.

Speaker Change: The initial shock of the imbalance in January or suggested by the market the market corrected off which in February and March two bedroom objectives proven fundamentals.

Speaker Change: So if you just see pockets.

Tim T. Hansen: In the short to medium term, we see the market characterized by potential upside. Only about 9 more VLTCs are scheduled to deliver this year at regular intervals. Propane is the preferred feedstock for steam cracking, and 7 more PDH plants in China are scheduled to start before the summer.

Speaker Change: In the short to medium term, we see the market terrorists arrives spike potential upsides.

Speaker Change: Only about nine movies just use a skechers go live to deliver this year and regular each of those co payments to preferred feedstock stream.

Speaker Change: Cracking seven multi gates plans in China are scheduled to start before the summer North American exports are forecast to grow on the back of increased production.

John C. Lycouris: North American exports are forecast to grow on the back of increased production. The Panama Canal is scheduled to increase its transit's capacity to over 30 transits per day before this summer, but we consider it likely that the congestion levels will revert to what was seen before October 2023, when the transit capacity was reduced. Furthermore, the sizable delivery schedule of LNG vessels and new Panamax container vessels will risk increasing congestion. Thus, we do remain positive about the medium to long-term prospects for our business. With that, I'll pass you over to John Lycouris.

Speaker Change: The Panama Canal is scheduled to increase trenches.

Speaker Change: Capacity is true over 30 trenches, but they hold this summer, but we consider it likely that the congestion levels will reverse to that what was seen before so for 'twenty to 'twenty three.

Speaker Change: The transfer capacity rose or juice. Furthermore, the sizable delivery schedule of LNG vessels, and new Panamax container vessels, we risk increasing congestion.

Speaker Change: Thus, we do remain positive about the medium to long term prospects for our business without all possible once a chunk of course.

Speaker Change: Okay.

Speaker Change: Thank you Tim.

Speaker Change: Yes.

John C. Lycouris: Last July, the IMO's MEPC-80 agreed to change the net zero emission standard for shipping to a 2050 target date instead of 2100. As a result, the industry's decarbonization pathway has been challenged to deliver significant improvements in energy efficiency, clean fuels, emissions reduction, and offer viable green market dynamics. Shipping throughout history has proven its ability to adapt to new circumstances and challenges. Shipping's value to the world market is based on its ability to move resources efficiently around the world.

Speaker Change: Last July Ryan Morris M. D. C O D agreed to change the net zero emission standards post shipping two of 2015 target days instead of 2100.

As a result, the industry's pick up a nice station pathway has been challenged to deliver significant improvements in energy efficiency and clean fuels emissions.

Speaker Change: And offer buyable green market dynamics.

Speaker Change: Shipping throughout history has proven its ability to adapt to new circumstances and challenges.

Speaker Change: And its value to the world market is based on its ability to move resources efficiently around the world.

Speaker Change: She had been built to achieve economies of scale and to optimize operations and logistics.

John C. Lycouris: Ships have been built to achieve economies of scale and to optimize operations and logistics. The shipbuilding challenges today are in building the right ship for the purpose, aiming to achieve the task at hand. What we require right now are newly designed vessels built to cope with the world's current and future environmental changes while achieving the main purpose of moving resources efficiently around the world. Shipping: Energy Transition and Transformation has commenced At Dorian LPG, we firmly believe that we should be part of and provide long-term solutions to the world's decarbonization objectives and goals.

Speaker Change: The shipbuilding challenges today I am building the right shape for the purpose aiming to achieve the task at hand.

Speaker Change: What do you require right now a newly designed vessels be able to cope with the world.

Speaker Change: The environmental changes, while achieving the main purpose of moving resources around the world.

Speaker Change: So things energy transition and transformation has commenced.

Speaker Change: Yeah.

Speaker Change: And there are no P. G. We're firmly believes that we should be part of and provide long term solutions to the world to globalization objectives and goals.

John C. Lycouris: We have found these initiatives to be both ecological as well as economical. Scrubber vessel savings for the first quarter of 2024 amounted to $3.8 million net overall scrubber operating expense, or about $3,480 per day for each ship. Fuel differentials between high sulfur fuel oil and very low sulfur fuel oil averaged $184 per metric ton, while the pricing differential for LPG versus very low sulfur fuel oil stood at about $197 per metric ton, a fact that was helpful for the dual fuel engine vessels when operating with LPG.

Speaker Change: These initiatives can be both ecological and as well as economical.

Speaker Change: Our scrubber vessels savings for the first quarter of 2024, a month at the same point $8 million net of loyalty club operating expenses or about $3480 per day per ship.

Speaker Change: He will differentials between highest helpful. Here alone very low sulfur fuel oil averaged $184 per metric tonne, whereas the pricing differential for LPG bus, it's very low sulfur fuel oil stood at about $97 per metric ton.

Speaker Change: In fact that was helpful for the dual fuel engine, that's been operating without the deal.

John C. Lycouris: The total number of vessels fitted with scrubber units in our fleet is 14, and we plan to retrofit another vessel in the next calendar quarter during the regular dry docking of that vessel. The installation of energy-saving devices and silicon-hard coatings to our vessels will continue as they provide significant performance improvements in fuel savings, reduction of the fleet's CO2 emissions, and improved CII ratings. Besides our vessel, Captain John and Pete, which was originally built as a VLGC-VLAC and our 93,000 new building, VLGC, VLAC vessel at Hanwha Ocean, we are able to upgrade and outfit some of our vessels for ammonia as carbon.

Speaker Change: The total number of vessels fitted with scrubbers units in our fleet of 114, and we plan to retrofit another vessel in the next calendar quarter during the regular dry docking of that vessel.

The installation of energy saving devices and silicon how coatings to our vascular will continue as we provide they provide significant performance improvements in pure savings reduction of the fleet C O two emissions and improves T I a ratings.

Speaker Change: Besides our vessel Captain John NP, which was originally built as they do at G. C C.

Speaker Change: And a 93000, new building B O G C. B L. A C vessel at Hanwha Ocean, we are able to upgrade and also at some of our vessels for ammonia as cargo.

Speaker Change: Green hydrogen economy will depend on the transportation of large quantities of ammonia.

John C. Lycouris: Green hydrogen's future economy will depend on the transportation of large quantities of ammonia, most likely in BLGC vessels, and we are ensuring that the Dorian LPG fleet can be ready to handle this cargo at the earliest possible time without adding more new building tonnage. In continuation of Dorian's commitment to sustainability, we strive to improve energy efficiency on board our vessels with a focus on vessel operational performance while continuing to follow technological innovations as they mature and become commercially viable in the future for the marine sector. And now I would like to pass the microphone over to John Hadjipateras for his closing remarks. Thank you.

Speaker Change: Most likely in the VLCC vessels, and we are ensuring that the Dorian LPG fleet can be ready to handle this cargo at the earliest possible time without adding more new building tonnage.

Speaker Change: In continuation of Dorians couldn't make sense of sustainability.

Speaker Change: We will strive to improve on energy efficiency on board our vessels with a focus on Bachelor operational performance, while continuing to fall or technological innovations as they mature and become commercially viable in the future for the marine sector.

Yeah.

Speaker Change: And now I would like to pass it over to John how do you put that as far as his closing remarks. Thank you.

Speaker Change: Thank you John.

John C. Hadjipateras: Thank you, John. Kevin, we're ready to take questions.

Speaker Change: Kevin were ready to take questions.

Operator: Certainly, when I'll be conducting a question-and-answer session, if you'd like to be placed in the question queue, please press star 1 on your telephone keypad. You may press star 2 if you'd like to remove your question from the queue. Once again, that's Star One to be placed in the question queue. If you're using speaker equipment, it may be necessary to pick up your handset before pressing Star One. Our first question today is coming from Omar Nokta from Jeffrey's. Your line is now live.

Speaker Change: Sure.

Speaker Change: That's one.

Speaker Change: Well I'll be conducting a question and answer session, if you'd like to be placed in the question queue. Please press star one on your telephone keypad you May press star two if you'd like to remove your question from the queue. Once again, that's star one to be placed into question queue. If you are using speaker equipment. It may be necessary to pick up your handset before.

Speaker Change: <unk> Star one our first question today is coming from Omar <unk> from Jefferies. Your line is now live.

Speaker Change: Thank you.

Omar Mostafa Nokta: Thank you. Hey guys,

Speaker Change: Good morning.

Omar Mostafa Nokta: A couple of questions for me regarding the market, and obviously, you were just touching on this in your opening comments. The market's clearly lifted quite a bit here since the bottom in late January and early February. Rates have been climbing, and that's coming despite the fact that the Panama Canal restrictions are being lifted. More ships are going through the canal than we've seen in the past several months, yet spot rates are at a four-month high. From your perspective, what's driving this strength we're seeing in spot rates despite the fact that you've got loosening in the Panama Canal?

Omar: Couple of questions for me for Us regarding the market and obviously you were just touching on this in the opening comments the markets clearly lifted quite a bit here since the bottom.

Speaker Change: Late January early February our rates have been climbing in and that's coming despite the fact that the Panama Canal restrictions are being lifted more ships are going through than we've seen in the past several months yet spot rates are at a four month high just kind of from your perspective, what what what's the what's driving the strength, we're seeing in spot rates. Despite this.

Speaker Change: Fact that you've got loosening in the canal.

Speaker Change: Well in short and I'll give you a short answer and then I'll give you Tim who couldn't live.

John C. Hadjipateras: Well, in short, I'll give you a short answer and then I'll give you Tim, who could expand on it a bit. But my short answer is that the positive fundamentals and the supply-demand equilibrium are what have made the market bounce back in a healthy way, but Tim can give you a little more color or a lot more color, maybe.

Speaker Change: On it a bit but my short answer is that the positive fundamentals and the supply demand equilibrium is what has made the market bounce.

Speaker Change: Bounce back in a healthy way, but Tim can give you a little more color or a little more kind of maybe.

Speaker Change: Tim.

Speaker Change: Yeah.

Tim T. Hansen: You're right that the lowest point was partly, as we mentioned in the last call, due to the huge drop in congestion in the Panama Canal. It has come back to some extent, the delays, as you also projected, and we still see a lot of owners balancing the long way around, especially when the market was a bit lower; the risk of facing high auction fees to go through the canal was still there. So the auction fees have gone up to around 2 million again, so congestion has come back in the Panama Canal.

Tim: Yeah, I mean, you're right.

Tim:

Tim: The lowest point of us.

As I mentioned also on the last call.

Tim: She was dropping in the congestion in the I don't know call. It has come back to some extent.

Tim: Extending the delays are always a project that is.

Tim: We still do see a lot of the.

Tim: The onus balancing the long way around especially when the market was what's up with low what are the risk of facing a high auction fees to go through the canal Wassa, we're still layer them in and so the auction fees have gone up to around the <unk>.

Tim: And again some of the congestion has come come back when the Panama Canal.

Speaker Change: So I think as John says he's still.

Tim T. Hansen: So I think, as John says, it's still... But also, as we expected, that the fundamentals would be strong coming into this year. And that's really what we see now. Part of that is, of course, that a lot of ships are still going via the Cape.

Speaker Change: Oh, so what should we expect that the fundamentals would be strong coming into this year.

Speaker Change: That's really what we see now a part.

Speaker Change: Part of that is of course, what that does a lot of ships is going to be it because it keeps them.

Speaker Change: Okay. Thanks for that and then just in terms of you know.

Omar Mostafa Nokta: Okay, thanks, Tim, for that. And then just in terms of, you know, in terms of kind of market averages thus far, what you've been able to achieve, I know, Ted, in the past, you have sometimes given an indication. And I can't remember if I maybe I missed it in your opening comments. Is there any, any color you can give on how the quarter is shaping up thus far? The current

Speaker Change: And in terms of kind of market averages, thus far or what you've been able to achieve I know Ted in the past you have given sometimes an indication and I can't remember if you've maybe I missed it in your in your opening comments is there any any color you can give on how the quarter shaping up thus far.

Speaker Change: Yeah, Yeah yeah.

Speaker Change: Yeah.

Theodore B. Young: Unknown Speaker Yeah, I'll Unknown Speaker I'll Okay, yeah. I'll just reiterate what I said. Well, there's some feedback. So, yeah, so Omar, we historically have given it the percentage of six days and the wait for those days. But we're going to, we're modifying that a little bit. So the relevant statistics are that the team has booked 75% of the available days in the pool for the quarter ending June 30th. And on that basis,

Speaker Change: Got it.

Speaker Change: Okay, Yeah, well I'll, just reiterate what I said.

Speaker Change: Well, there's some feedback.

Speaker Change: So yeah.

Speaker Change: We instead of giving it and.

Speaker Change: The percentage of fixed days and the wait for those days. So we're good with where we're modifying that a little bit. So the relevant statistics are the team has booked 75% of the available days in the pool.

Speaker Change: The quarter, ending June 30th and on that basis our basis.

Speaker Change: Basically those.

Theodore B. Young: basis those days as the denominator, the PC that is for those vessels or those voyages is in excess of $40,000 a day on a load to discharge basis.

Speaker Change: Is that those days as the denominator the a T. P E. Kudos as vessels are those voyages is in excess of $40000 a day on the load to discharge basis.

Speaker Change: Okay, so 75% of the pool days, including the pool T. C. O's is that correct just over 40.

Theodore B. Young: Okay, so 75% of the pool days, including the pool TCOs, is that correct? Just over 40. Okay.

Omar Mostafa Nokta: Yeah, just yeah, somewhat over 40. Okay, all right. The reason we're doing that is because revenue recognition gets awfully tricky. Anyway, thank you.

It does get somewhat over 40.

Speaker Change: Okay alright. Thanks.

Omar Mostafa Nokta: Thank you. And maybe just one final one.

Speaker Change: That's the reason.

Speaker Change: Yeah and just.

Speaker Change: The reason we're doing that is just to the revenue recognition gets awfully tricky.

Speaker Change: So anyway. Thank you.

Speaker Change: I see thank you.

Omar Mostafa Nokta: Maybe, you know, you mentioned the order book for VLGCs and, you know, last year was a big delivery year. But it starts to, it's been abating this year and next. But I noticed you've kind of separated the order book for VLGCs from the VLACs and VLECs. Is that how we should think about this market in the future? Do you think, you know, the way this ammonia opportunity is developing, a VLAC will become more of a project-based asset similar to the VLECs and not necessarily impactful to the broader VLGC trade? What do you think of that and the future of that?

Speaker Change: And maybe just a final one maybe you know you.

Speaker Change: You mentioned the order book for B L. D season, you know last year was a big delivery year. It starts to it's been abating. This year and next I noticed you've kind of separated the the order book for Vlccs from the T. L. A season in D O V C.

Speaker Change: Is that how we should think about this market in the future do you think is the way its ammonia opportunities developing.

Speaker Change: Do you think that do you think a VLA he becomes more of like a project based asset similar to the V O E scene and not necessarily impactful to the broader field G. Ctrip.

Speaker Change: What do you what do you think of all of that in the future.

John C. Hadjipateras: Omar, that's a great question, and the true answer is that the VLAC should be looked at as a VLGC, and the ammonia trade, the expansion of the ammonia trade, hopefully, is going to absorb the VLACs. But now the timing of it and the extent of it are still kind of in play, right?

Speaker Change: Omar.

Speaker Change: That's a great question and.

Speaker Change: Due to the true answer is that the VLA. She should be looked at as a V. L. G C and D.

Speaker Change: The ammonia trade the expansion of the ammonia trade hopefully is going to absorb the V M. A c's.

But now the timing of it and.

Speaker Change: The extent of it is it still kind of in play right now.

John C. Hadjipateras: And the ships that are on order, when I look at them, I look at VLGCs and VLACs, nearly 90 ships on order, I think, I look at them as that's the fleet on order. And we're still, like I said, quite optimistic in spite of the fact that we have this large order book. As you know, the 25 and 26 are pretty much restricted deliveries, and hopefully, we'll be ramping up with the ammonia trade, which we're hopeful and optimistic about beyond that.

Speaker Change: <unk> set on order, but when I look at it I look at a V O G. C. N V M. A c's nearly 90 ships on order I think I look at them as it is that's the fleet on order and then you know when we're still like I said, we're quite optimistic in spite of the fact that there's a large order book it's it's.

Speaker Change: As you know the 25 and 26 is a pretty much a restricted deliveries.

Speaker Change: And hopefully will be ramping up with the amount of trade, which we're hopeful and optimistic on.

Speaker Change: Beyond that.

Speaker Change: Okay very good thanks, John tenant Ted I'll turn it over.

Omar Mostafa Nokta: Okay. Very good. Thanks, John, Tim, and Ted. I'll turn it over.

Omar: Thanks Omar.

Operator: Thank you. The next question is coming from Clement Mullins from Value Investors Edge. Your line is now live. Good morning.

Speaker Change: Thank you next question is coming from Klim at moments from value Investor's edge. Your line is that life.

Speaker Change: Good morning, Thanks for taking my questions.

Clement Mullins: Good morning. Thank you for taking the time to answer my question. I wanted to start by asking about your financial profile.

I wanted to start by asking about your financial profile.

Clement Mullins: I mean, leverage is sitting at very manageable levels, even pro forma for the recent new build order. Could you provide some color on where you see the sweet spot? And secondly, do you plan to continue to organically deliver going forward?

Speaker Change: Leverage is sitting at very manageable levels, even pro forma for the recent Newbuild order there.

Speaker Change: Could you provide some color on where you see the sweet spot.

Speaker Change: And secondly, do you plan to continue to organically delever going forward.

Speaker Change: Yeah.

Speaker Change: I I I.

John C. Hadjipateras: I think if you're talking about the sweet spot, I imagine you're asking about the leverage ratio, and I would say that it's a moving target in our business. You cannot say that you want to have 50% or more than 50% or less, because it depends on the spot, at the point where you are in the market for that. So I can't really tell you that we have a sweet spot that we're targeting. What happened is where we are right now.

Speaker Change: I think if you're talking about the sweet spot I imagine you thought you were asking about the leverage ratio and I would say that it's a moving target in our business you cannot say that you want to have you know, 50% or more than a 50 year old lessons, but you know.

Speaker Change: It is because it depends on the at the at the spot at the point, where you were where you are in the market for that so I can't really tell you that we have a.

Speaker Change: Sweet spot.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: We're happy with where we are right now.

Speaker Change: Yeah.

Yeah. Thank you.

John C. Hadjipateras: Thank you. You own a modern fleet, and I mean, almost the whole fleet is environmentally friendly, but is there maybe any appetite to go out and pursue additional fleet renewal? And additionally, some color in your overall view on underlying asset values would also be helpful. And finally, in conjunction with this, this is more of a medium-term question, but is CO2 transport something that could or would be considered? I'll let John Lycouris talk to you about CO2 transport.

Speaker Change: You own a modern fleet and.

Speaker Change: I mean almost equal.

Speaker Change: Equal, but is there maybe any appetite to go out and pursue additional fleets for new one.

Speaker Change: And Additionally, some color in your view in underlying asset values would also be helpful.

Speaker Change: And finally in congestion with this this is more of a medium term question, but ECL to transport something that could or would be considered.

Speaker Change: I I'll, let Jon of course talk to about shield to transport regarding additional ships, where you live.

John C. Hadjipateras: Regarding additional ships, we, we, you know, we, we, we don't think we need to add new buildings to the order book. So we are in the process of... We have a modern fleet, but we do have to consider a fleet renewal, so depending on opportunities going forward, it may be new buildings, but it could also be purchases in the second-hand line. But on the question of CO2 transport, which is a great question, John may have a few interesting remarks to make.

Speaker Change: We.

Speaker Change: We don't think we need to add new buildings. So the order book. So we are in the process of of you know.

Speaker Change: As you said, we have a modern fleet and we have but we do have to consider fleet renewal.

Speaker Change: So the Pentagon opportunities going forward it.

Speaker Change: It may be may be you'll buildings, but there could also be a part of the purchases in the secondhand market, but ER on the on the question of the shield to transport which is.

Speaker Change: A great question, John John May have a few a few interesting remarks to make on that.

Yeah. Thank you John.

John C. Lycouris: Yes, thank you, John. What we like about CO2 transport is that it may have to do with the future of shipping, meaning carbon capture on vessels, and CO2 would be part and parcel of carbon capture because you may need to transport CO2 to a debunkering location or to another purpose-built vessel. So we think that CO2 will be the next item to be looked at either on existing ships by adding special tanks that can carry CO2 or with vessels that would be able to transport CO2 to the location where it's going to be sequestered or stored. Thanks for the floor. That's all from me. Thank you for taking my questions and congratulations on the quarter.

Speaker Change: What are we.

John: We like C O two transport because it may have to do something with the future of shipping.

John: At carbon capture on vessels and a C O two would be part and parcel of.

John: Carbon capture because you may need to transport C 022.

John: Do bunkering location or to another purpose built vessel.

John: I think that C. O two are will be.

John: The next items to be looked at either on existing ships with adding special tongs that comprise C O two or with a basketball is that we'll be able to transport C. O two to the location, where it's gonna be sequestered or stored.

Speaker Change: That's fine thanks for the color.

Speaker Change: That's all for me. Thank you for taking my questions and congratulations by the weather.

Speaker Change: Thank you.

Speaker Change: Thank you.

Clement Mullins: Thank you. Thank you. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to anyone who would like to make any further closing comments.

Speaker Change: Thank you we've reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.

Speaker Change: Okay.

John C. Hadjipateras: Well, thank you very much for joining us, everybody, and for your interesting questions. And I wish you all a happy summer, and we look forward to talking with you all again at the end of our next quarter. Bye-bye.

Well. Thank you very much for joining us everybody and for your interesting questions and I wish you a happy summer and we look forward to talking with you all again at the end of our next quarter.

Speaker Change: Bye bye. Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.