lpg_Current_Folio_10Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

FORM 10-Q 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________   to __________ 

Commission File Number: 001-36437 

 

Picture 21

Dorian LPG Ltd.

(Exact name of registrant as specified in its charter) 

 

 

 

 

Marshall Islands

 

66-0818228

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

c/o Dorian LPG (USA) LLC

 

06902

27 Signal Road, Stamford, CT

 

 

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (203) 674-9900

Former name, former address and former fiscal year, if changed since last report: Not Applicable

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No  

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes     No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

Large accelerated filer

 

Accelerated filer 

 

Non-accelerated filer

 

Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No     

As of July 26, 2016, there were 54,963,013 shares of the registrant’s Common Stock outstanding.

 

 


 

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FORWARD‑LOOKING STATEMENTS

 

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including analyses and other information based on forecasts of future results and estimates of amounts not yet determinable and statements relating to our future prospects, developments and business strategies. Forward-looking statements are generally identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions. Forward-looking statements involve risks and uncertainties that may cause actual future activities and results of operations to be materially different from those suggested or described in this quarterly report.

 

These risks include the risks that are identified in the “Risk Factors” section of this quarterly report and of our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, and also include, among others, risks associated with the following:

 

·

our future operating or financial results;

 

·

our acquisitions, business strategy and expected capital spending or operating expenses;

 

·

shipping trends, including changes in charter rates, scrapping rates and vessel and other asset values;

 

·

factors affecting supply of and demand for liquefied petroleum gas, or LPG, shipping;

 

·

changes in trading patterns that impact tonnage requirements

 

·

general economic conditions and specific economic conditions in the oil and natural gas industry and the countries and regions where LPG is produced and consumed;

 

·

the supply of and demand for LPG, which is affected by the production levels and price of oil, refined petroleum products and natural gas, including production from U.S. shale fields;

 

·

completion of infrastructure projects to support marine transportation of LPG, including export terminals and pipelines;

 

·

changes to the supply and demand for LPG vessels as a result of the expansion of the Panama Canal;

 

·

oversupply of or limited demand for LPG vessels comparable to ours or higher specification vessels;

 

·

competition in the LPG shipping industry;

 

·

our ability to profitably employ our vessels, including vessels participating in the Helios Pool (defined below);

 

·

the failure of our or the Helios Pool’s significant customers to perform their obligations to us or to the Helios Pool;

 

·

the performance of the Helios Pool;

 

·

the loss or reduction in business from our or the Helios Pool’s significant customers;

 

·

our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate purposes, the terms of such financing and our ability to comply with covenants set forth in our existing and future financing arrangements;

 


 

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·

our costs, including crew wages, insurance, provisions, repairs and maintenance, and general and administrative expenses;

 

·

our dependence on key personnel;

 

·

the availability of skilled workers and the related labor costs;

 

·

the effects of new products and new technology in our industry;

 

·

operating hazards in the maritime transportation industry, including piracy;

 

·

the adequacy of our insurance coverage in the event of a catastrophic event;

 

·

compliance with and changes to governmental, tax, environmental and safety laws and regulations;

 

·

compliance with the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010, or other applicable regulations relating to bribery; and

 

·

the volatility of the price of our common shares.

 

Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is not realized. You should thoroughly read this quarterly report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this quarterly report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the forward-looking statements by these cautionary statements.

 

We caution readers of this quarterly report not to place undue reliance on forward-looking statements. Any forward-looking statements contained herein are made only as of the date of this report, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

As used in this quarterly report and unless otherwise indicated, references to “Dorian,” the “Company,” “we,” “our,” “us,” or similar terms refer to Dorian LPG Ltd. and its subsidiaries.

 


 

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Dorian LPG Ltd.

 

TABLE OF CONTENTS

 

 

 

 

 

PART I. 

FINANCIAL INFORMATION

 

 

 

 

ITEM 1. 

FINANCIAL STATEMENTS

 

 

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2016 and March 31, 2016

 

Unaudited Condensed Consolidated Statements of Operations for the three months ended June 30, 2016 and June 30, 2015 

 

Unaudited Condensed Consolidated Statements of Shareholders' Equity for the three months ended June 30, 2016 and June 30, 2015

 

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2016 and June 30, 2015

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

 

ITEM 2. 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

15 

ITEM 3. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

23 

ITEM 4. 

CONTROLS AND PROCEDURES

24 

 

 

 

 

 

 

PART II. 

OTHER INFORMATION

 

 

 

 

ITEM 1. 

LEGAL PROCEEDINGS

25 

ITEM 1A. 

RISK FACTORS

25 

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

25 

ITEM 6. 

EXHIBITS

25 

 

 

 

SIGNATURES 

 

26 

EXHIBIT INDEX 

 

27 

 

 

 

 


 

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PART I — FINANCIAL INFORMATION

 

ITEM 1.FINANCIAL STATEMENTS

Dorian LPG Ltd.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in United States Dollars, except for share data)

 

 

 

 

 

 

 

 

 

 

 

    

As of

    

As of

 

 

 

June 30, 2016

 

March 31, 2016

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

47,321,200

 

$

46,411,962

 

Trade receivables, net and accrued revenues

 

 

88,835

 

 

107,317

 

Prepaid expenses and other receivables

 

 

2,283,533

 

 

2,247,706

 

Due from related parties

 

 

44,573,756

 

 

54,504,359

 

Inventories

 

 

2,132,043

 

 

2,288,073

 

Total current assets

 

 

96,399,367

 

 

105,559,417

 

Fixed assets

 

 

 

 

 

 

 

Vessels, net

 

 

1,651,418,843

 

 

1,667,224,476

 

Other fixed assets, net

 

 

521,710

 

 

591,288

 

Total fixed assets

 

 

1,651,940,553

 

 

1,667,815,764

 

Other non-current assets

 

 

 

 

 

 

 

Deferred charges, net

 

 

265,015

 

 

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

 

 

94,663

 

 

95,271

 

Total assets

 

$

1,818,212,387

 

$

1,842,178,176

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade accounts payable

 

$

6,018,390

 

$

6,826,503

 

Accrued expenses

 

 

7,479,144

 

 

9,721,477

 

Due to related parties

 

 

592,284

 

 

708,210

 

Deferred income

 

 

5,984,104

 

 

4,606,540

 

Current portion of long-term debt

 

 

65,978,785

 

 

66,265,643

 

Total current liabilities

 

 

86,052,707

 

 

88,128,373

 

Long-term liabilities

 

 

 

 

 

 

 

Long-term debt—net of current portion and deferred financing fees

 

 

731,833,039

 

 

746,354,613

 

Derivative instruments

 

 

26,017,824

 

 

21,647,965

 

Other long-term liabilities

 

 

433,048

 

 

447,988

 

Total long-term liabilities

 

 

758,283,911

 

 

768,450,566

 

Total liabilities

 

 

844,336,618

 

 

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, 58,314,443 and 58,057,493 shares issued, 55,101,413 and 56,125,028 shares outstanding (net of treasury stock), as of June 30, 2016 and March 31, 2016, respectively

 

 

583,145

 

 

580,575

 

Additional paid-in-capital

 

 

849,598,537

 

 

848,179,471

 

Treasury stock, at cost; 3,213,030 and 1,932,465 shares as of June 30, 2016 and March 31, 2016, respectively

 

 

(32,797,799)

 

 

(20,943,816)

 

Retained earnings

 

 

156,491,886

 

 

157,783,007

 

Total shareholders’ equity

 

 

973,875,769

 

 

985,599,237

 

Total liabilities and shareholders’ equity

 

$

1,818,212,387

 

$

1,842,178,176

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


 

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Dorian LPG Ltd.

Unaudited Condensed Consolidated Statements of Operations  

(Expressed in United States Dollars)

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

    

June 30, 2016

    

June 30, 2015

 

Revenues

 

 

 

 

 

 

 

Net pool revenues—related party

 

$

37,659,385

 

$

15,310,559

 

Voyage charter revenues

 

 

 —

 

 

14,864,184

 

Time charter revenues

 

 

12,532,351

 

 

5,372,203

 

Other revenues

 

 

324,040

 

 

95,514

 

Total revenues

 

 

50,515,776

 

 

35,642,460

 

Expenses

 

 

 

 

 

 

 

Voyage expenses

 

 

755,804

 

 

3,523,073

 

Vessel operating expenses

 

 

16,095,552

 

 

6,754,086

 

Depreciation and amortization

 

 

16,192,745

 

 

4,857,427

 

General and administrative expenses

 

 

5,611,310

 

 

7,214,280

 

Loss on disposal of assets

 

 

 —

 

 

105,549

 

Total expenses

 

 

38,655,411

 

 

22,454,415

 

Other income—related parties

 

 

552,901

 

 

383,642

 

Operating income

 

 

12,413,266

 

 

13,571,687

 

Other income/(expenses)

 

 

 

 

 

 

 

Interest and finance costs

 

 

(7,038,209)

 

 

(135,800)

 

Interest income

 

 

23,178

 

 

65,585

 

Unrealized gain/(loss) on derivatives

 

 

(4,369,859)

 

 

1,386,886

 

Realized loss on derivatives

 

 

(2,256,788)

 

 

(1,244,491)

 

Foreign currency gain/(loss), net

 

 

(62,709)

 

 

9,016

 

Total other income/(expenses), net

 

 

(13,704,387)

 

 

81,196

 

Net income/(loss)

 

$

(1,291,121)

 

$

13,652,883

 

Earnings/(loss) per common share—basic and diluted

 

$

(0.02)

 

$

0.24

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Dorian LPG Ltd.

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

(Expressed in United States Dollars, except for number of shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

                           

 

Additional

 

                           

 

 

 

 

 

 

common

 

Common

 

Treasury

 

paid-in

 

Retained

 

 

 

 

 

    

shares

    

stock

    

stock

    

capital

    

Earnings

    

Total

 

Balance, April 1, 2015

 

58,057,493

 

 

580,575

 

 

 —

 

 

844,539,059

 

 

28,094,625

 

 

873,214,259

 

Net income for the period      

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

13,652,883

 

 

13,652,883

 

Stock-based compensation

 

 —

 

 

 —

 

 

 —

 

 

896,539

 

 

 —

 

 

896,539

 

Balance, June 30, 2015

 

58,057,493

 

$

580,575

 

$

 —

 

$

845,435,598

 

$

41,747,508

 

$

887,763,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

common

 

Common

 

Treasury

 

paid-in

 

Retained

 

 

 

 

 

    

shares

    

stock

    

stock

    

capital

    

Earnings

    

Total

 

Balance, April 1, 2016

 

58,057,493

 

$

580,575

 

$

(20,943,816)

 

$

848,179,471

 

$

157,783,007

 

$

985,599,237

 

Net loss for the period      

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,291,121)

 

 

(1,291,121)

 

Restricted share award issuances

 

256,950

 

 

2,570

 

 

 —

 

 

(2,570)

 

 

 —

 

 

 —

 

Stock-based compensation

 

 —

 

 

 —

 

 

 —

 

 

1,421,636

 

 

 —

 

 

1,421,636

 

Purchase of treasury stock

 

 —

 

 

 —

 

 

(11,853,983)

 

 

 —

 

 

 —

 

 

(11,853,983)

 

Balance, June 30, 2016

 

58,314,443

 

$

583,145

 

$

(32,797,799)

 

$

849,598,537

 

$

156,491,886

 

$

973,875,769

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Dorian LPG Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

June 30, 2016

 

June 30, 2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income/(loss)

 

$

(1,291,121)

 

$

13,652,883

 

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

16,192,745

 

 

4,857,427

 

Amortization of financing costs

 

 

948,407

 

 

223,740

 

Unrealized loss/(gain) on derivatives

 

 

4,369,859

 

 

(1,386,886)

 

Stock-based compensation expense

 

 

1,009,798

 

 

896,539

 

Loss on disposal of assets

 

 

 —

 

 

105,549

 

Unrealized exchange differences

 

 

88,067

 

 

(106,399)

 

Other non-cash items

 

 

20,953

 

 

21,182

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

Trade receivables, net and accrued revenue

 

 

18,482

 

 

15,552,080

 

Prepaid expenses and other receivables

 

 

(35,827)

 

 

(46,305)

 

Due from related parties

 

 

8,830,603

 

 

(19,890,974)

 

Inventories

 

 

156,030

 

 

1,005,092

 

Other non-current assets

 

 

608

 

 

 —

 

Trade accounts payable

 

 

(212,475)

 

 

505,911

 

Accrued expenses and other liabilities

 

 

(198,144)

 

 

1,409,214

 

Due to related parties

 

 

(115,926)

 

 

93,754

 

Net cash provided by operating activities

 

 

29,782,059

 

 

16,892,807

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Payments for vessels and vessels under construction

 

 

(1,241,220)

 

 

(204,076,675)

 

Restricted cash deposits

 

 

 —

 

 

(3,302,789)

 

Proceeds from disposal of assets

 

 

 —

 

 

136,660

 

Payments to acquire other fixed assets

 

 

(606)

 

 

(191,254)

 

Net cash used in investing activities

 

 

(1,241,826)

 

 

(207,434,058)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from long-term debt borrowings

 

 

 —

 

 

127,378,019

 

Repayment of long-term debt borrowings

 

 

(15,657,054)

 

 

(2,818,562)

 

Purchase of treasury stock

 

 

(11,853,983)

 

 

 —

 

Financing costs paid

 

 

(42,047)

 

 

(4,218,263)

 

Net cash provided by/(used in) financing activities

 

 

(27,553,084)

 

 

120,341,194

 

Effects of exchange rates on cash and cash equivalents

 

 

(77,911)

 

 

94,657

 

Net increase/(decrease) in cash and cash equivalents

 

 

909,238

 

 

(70,105,400)

 

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

 

$

47,321,200

 

$

134,715,783

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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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 for the year ended March 31, 2016 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 June 30, 2016, which are all wholly-owned and are incorporated in Republic of the Marshall Islands (unless otherwise noted), are listed below.

 

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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

 

 

 

 

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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 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2016).

 

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 months ended June 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 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 March 31, 2016 resulted in a reduction of “Deferred charges, net” and “Total assets” in the amount of $23.7 million 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.

 

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3. Transactions with Related Parties

 

Dorian (Hellas), S.A.

 

As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from Dorian (Hellas), S.A. (“Dorian Hellas,” “DHSA” or the “Manager”) and are now provided through our wholly-owned subsidiaries Dorian LPG (USA) LLC, Dorian LPG (UK) Ltd. and Dorian LPG Management Corp. Subsequent to the transition agreements, Eagle Ocean Transport, Inc. (“Eagle Ocean Transport”) continues to incur related travel costs for certain transitioned employees as well as office-related costs, for which we reimbursed Eagle Ocean Transport $0.1 million and $0.3 million for the three months ended June 30, 2016 and 2015, respectively. Such expenses are reimbursed based on their actual cost.

 

Dorian LPG (USA) LLC and its subsidiaries entered into an agreement with DHSA, retroactive to July 2014 and superseding an agreement between Dorian LPG (UK) Ltd. and DHSA, for the provision by Dorian LPG (USA) LLC and its subsidiaries of certain chartering and marine operation services to DHSA, for which income totaling $0.1 million was earned and included in “Other income-related parties” for both the three months ended June 30, 2016 and 2015, respectively.

 

As of June 30, 2016, $1.0 million was due from DHSA and included in “Due from related parties” in the unaudited condensed consolidated balance sheets and $0.5 million was due to DHSA and included in “Due to related parties” in the unaudited condensed consolidated balance sheets. As of March 31, 2016, $0.9 million was due from DHSA and included in “Due from related parties” in the unaudited condensed consolidated balance sheets and $0.5 million was due to DHSA and included in “Due to related parties” in the unaudited condensed consolidated balance sheets.

 

Helios LPG Pool LLC

 

On April 1, 2015, Dorian and Phoenix began operations of 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. We hold a 50% interest in the Helios Pool as a joint venture with Phoenix and all significant rights and obligations are equally shared by both parties. All profits of the Helios Pool are distributed to the pool participants based on pool points assigned to each vessel as variable charter hire and, as a result, there are no profits available to the equity investors as a share of equity. We have determined that the Helios Pool is a VIE as it does not have sufficient equity at risk. We do not consolidate the Helios Pool because we are not the primary beneficiary and do not have a controlling financial interest. In consideration of Accounting Standards Codification (“ASC”) 810-10-50-4e, the significant factors considered and judgments made in determining that the power to direct the activities of the Helios Pool that most significantly impact the entity’s economic performance are shared, in that all significant performance activities which relate to approval of pool policies and strategies related to pool customers and the marketing of the pool for the procurement of customers for the pool vessels, addition of new pool vessels and the pool cost management, require unanimous board consent from a board consisting of two members from each joint venture investor. Further, in accordance with the guidance in ASC 810-10-25-38D, the Company and Phoenix are not related parties as defined in ASC 850 nor are they de facto agents pursuant to ASC 810-10, the power over the significant activities of the Helios Pool is shared, and no party is the primary beneficiary in the Helios Pool, or has a controlling financial interest. In March 2016, the Helios Pool reached an agreement with Oriental Energy Company Ltd. ("Oriental Energy"). When fully delivered, the Helios Pool will operate eight VLGCs for Oriental Energy, some of which will be time chartered-in at a fixed time charter hire rate. In addition, the Helios Pool has entered into a multi-year contract of affreightment with Oriental Energy covering Oriental Energy’s shipments from the United States Gulf. The agreement with Oriental Energy had no impact on the ownership structure or the power to direct significant activities of the Helios Pool.

 

As of June 30, 2016, we had receivables from the Helios Pool of $62.3 million, including $18.7 million of working capital contributed for the operation of our vessels in the pool. As of March 31, 2016, we had receivables from the Helios Pool of $71.0 million, including $17.6 million of working capital contributed for the operation of our vessels in the pool. Our maximum exposure to losses from the pool as of June 30, 2016 is limited to the receivables from the pool. The Helios Pool does not have any third-party debt obligations. The Helios Pool has entered into commercial management

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agreements with each of Dorian LPG (UK) Ltd. and Phoenix as commercial managers and has appointed both commercial managers as the exclusive commercial managers of pool vessels. Fees for commercial management services provided by Dorian LPG (UK) Ltd. are included in “Other income-related parties” in the unaudited condensed consolidated statement of operations and were $0.5 million and $0.4 million for the three months ended June 30, 2016 and 2015, respectively. Additionally, we received a fixed reimbursement of expenses such as costs for security guards and war risk insurance for voyages operating in high risk areas from the Helios Pool, for which we earned $0.3 million for the three months ended June 30, 2016 and are included in “Other revenues” in the unaudited condensed consolidated statement of operations. There was no fixed reimbursement of expenses from the Helios Pool for the three months ended June 30, 2015.

 

Through our vessel owning subsidiaries, we have chartered vessels to the Helios Pool during the three months ended June 30, 2016. The time charter revenue from the Helios Pool is variable depending upon the net results of the pool, operating days and pool points for each vessel. The Helios Pool enters into voyage and time charters with external parties and receives freight and related revenue and incurs voyage costs such as bunkers, port costs and commissions. At the end of each month, the Helios Pool calculates net pool revenues using gross revenues, less voyage expenses of all the pool vessels, less fixed time charter hire for any chartered-in vessels, less the general and administrative expenses of the pool. Net pool revenues, less any amounts required for working capital of the Helios Pool, are distributed as variable rate time charter hire for the relevant vessel to participants based on pool points (vessel attributes such as cargo carrying capacity, fuel consumption, and speed are taken into consideration) and number of days the vessel participated in the pool in the period. We recognize net pool revenues on a monthly basis, when the vessel has participated in the pool during the period and the amount of net pool revenues for the month can be estimated reliably. Revenue earned is presented in Note 8.

 

Artwork

 

During the three months ended June 30, 2015, we purchased $0.1 million of artwork for newbuilding vessels, which have been capitalized and presented in “Vessels, net.” The artist is a relative of one of our executive officers. No artwork was purchased during three months ended June 30, 2016.

 

4. Deferred Charges, Net

 

The analysis and movement of deferred charges is presented in the table below:

 

 

 

 

 

 

 

    

Drydocking

 

 

 

costs

 

Balance, April 1, 2016

 

$

294,935

 

Amortization

 

 

(29,920)

 

Balance, June 30, 2016

 

$

265,015

 

 

There were no drydockings during the three months ended June 30, 2016.

 

5. Vessels, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Accumulated

    

 

 

 

 

 

Cost

 

depreciation

 

Net book Value

 

Balance, April 1, 2016

 

$

1,727,979,929

 

$

(60,755,453)

 

$

1,667,224,476

 

Additions

 

 

287,008

 

 

 —

 

 

287,008

 

Depreciation

 

 

 —

 

 

(16,092,641)

 

 

(16,092,641)

 

Balance, June 30, 2016

 

$

1,728,266,937

 

$

(76,848,094)

 

$

1,651,418,843

 

 

Vessels, with a total carrying value of $1,651.4 million and $1,667.2 million as of June 30, 2016 and March 31, 2016, respectively, are first‑priority mortgaged as collateral for our long-term debt facilities (refer to Note 6 below). No impairment loss was recorded for the periods presented.

 

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6. Long-term Debt

 

RBS Loan Facility -  refer to Note 11 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2016 for information on the RBS Loan Facility.

 

2015 Debt Facility – refer to Note 11 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2016 for information on the 2015 Debt Facility.

 

Debt Obligations

 

The table below presents our debt obligations:

 

 

 

 

 

 

 

 

 

RBS secured bank debt

    

June 30, 2016

    

March 31, 2016

 

Tranche A

 

$

37,400,000

 

$

37,400,000

 

Tranche B

 

 

26,848,500

 

 

28,127,000

 

Tranche C

 

 

43,967,500

 

 

43,967,500

 

Total RBS secured bank debt

 

$

108,216,000

 

$

109,494,500

 

 

 

 

 

 

 

 

 

2015 Debt Facility

 

 

 

 

 

 

 

Commercial Financing

 

$

237,906,927

 

$

241,442,384

 

KEXIM Direct Financing

 

 

190,475,726

 

 

194,827,596

 

KEXIM Guaranteed

 

 

188,431,597

 

 

192,736,763

 

K-sure Insured

 

 

95,681,068

 

 

97,867,129

 

Total 2015 Debt Facility

 

$

712,495,318

 

$

726,873,872

 

 

 

 

 

 

 

 

 

Total debt obligations

 

$

820,711,318

 

$

836,368,372

 

Less: deferred financing fees

 

 

22,899,494

 

 

23,748,116

 

Debt obligations—net of deferred financing fees

 

$

797,811,824

 

$

812,620,256

 

 

 

 

 

 

 

 

 

Presented as follows:

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

65,978,785

 

$

66,265,643

 

Long-term debt—net of current portion and deferred financing fees

 

 

731,833,039

 

 

746,354,613

 

Total

 

$

797,811,824

 

$

812,620,256

 

 

 

Deferred Financing Fees

 

The analysis and movement of deferred financing fees is presented in the table below:

 

 

 

 

 

 

 

    

Financing

 

 

 

costs

 

Balance, April 1, 2016

 

$

23,748,116

 

Additions

 

 

99,785

 

Amortization

 

 

(948,407)

 

Balance, June 30, 2016

 

$

22,899,494

 

 

 

 

7. Stock-Based Compensation Plans

 

Our stock-based compensation expense was $1.0 million and $0.9 million for the three months ended June 30, 2016 and 2015, respectively, and is included within general and administrative expenses in the unaudited condensed consolidated statements of operations. Unrecognized compensation cost was $12.6 million as of June 30, 2016 and will be recognized over the remaining weighted average life of 2.16 years. For more information on our equity

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incentive plan, see Note 13 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2016.

 

In June 2016, we granted 250,000 shares of restricted stock to certain of our officers and employees. One-fourth of these restricted shares vest immediately on the grant date, one-fourth vest one year after grant date, one-fourth vest two years after grant date, and one-fourth vest three years after grant date. The restricted shares were valued at their grant date fair market value and expensed on a straight-line basis over the vesting periods. 

 

In June 2016, we granted 6,950 shares of stock to our non-executive directors, which were valued at their grant date fair market value and were expensed when granted.

 

A summary of the activity of restricted shares awarded under our equity incentive plan as of June 30, 2016 and changes during the three months ended June 30, 2016, is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Weighted-Average

 

 

 

 

 

Grant-Date

 

Incentive Share Awards

 

Numbers of Shares

 

Fair Value

 

Unvested as of March 31, 2016

 

929,000

 

$

19.70

 

Granted

 

256,950

 

 

7.80

 

Vested

 

(69,450)

 

 

7.74

 

Forfeited

 

(1,500)

 

 

7.82

 

Unvested as of June 30, 2016

 

1,115,000

 

$

17.72

 

 

 

8. Revenues

 

Revenues comprise the following:

 

 

 

 

 

 

 

 

 

 

    

Three months ended 

 

 

 

June 30, 2016

    

June 30, 2015

 

Net pool revenues—related party

 

$

37,659,385

 

$

15,310,559

 

Voyage charter revenues

 

 

 —

 

 

14,864,184

 

Time charter revenues

 

 

12,532,351

 

 

5,372,203

 

Other revenues

 

 

324,040

 

 

95,514

 

Total

 

$

50,515,776

 

$

35,642,460

 

 

Net pool revenues—related party depend upon the net results of the Helios Pool, operating days and pool points for each vessel. Refer to Note 2 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2016.

 

Other revenues represent income from charterers relating to reimbursement of voyage expenses such as costs for security guards and war risk insurance.

 

9. Financial Instruments and Fair Value Disclosures

 

Our principal financial assets consist of cash and cash equivalents, amounts due from related parties and trade accounts receivable. Our principal financial liabilities consist of long‑term bank loan, interest rate swaps, accounts payable, amounts due to related parties and accrued liabilities.

 

(a) Concentration of credit risk:  Financial instruments, which may subject us to significant concentrations of credit risk, consist principally of amounts due from our charterers, including the receivable from Helios Pool, and cash and cash equivalents. We limit our credit risk with amounts due from our charterers, including those through the Helios Pool, by performing ongoing credit evaluations of our charterers’ financial condition and generally do not require collateral from our charterers. We limit our credit risk with our cash and cash equivalents by placing it with highly-rated financial institutions.

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(b) Interest rate risk:  Our long‑term bank loans are based on LIBOR and hence we are exposed to movements thereto. We entered into interest rate swap agreements in order to hedge a majority of our variable interest rate exposure related to the RBS Loan Facility and our 2015 Debt Facility. The interest rate swaps related to the RBS Loan Facility effectively convert substantially all of our RBS Loan Facility from a floating to a fixed rate. To hedge our exposure to changes in interest rates we are a party to five floatingtofixed interest rate swaps with RBS. In September 2015, we entered into interest rate swaps with Citibank N.A. (“Citibank”) and ING Bank N.V. (“ING”) to effectively convert a notional amount of $200 million and $50 million, respectively, of debt related to our 2015 Debt Facility from a floating rate to a fixed rate of 1.93% and 2.00%, respectively, each with a termination date of March 23, 2022. In October 2015, we entered into interest rate swaps with the Commonwealth Bank of Australia (“CBA”) and Citibank to effectively convert amortizing notional amounts of $85.7 million and $128.6 million, respectively, of debt related to our 2015 Debt Facility from a floating rate to a fixed rate of 1.43% and 1.38%, respectively, each with a termination date of March 23, 2022. In June 2016, we entered into two interest rate swaps with Citibank to effectively convert amortizing notional amounts of $73.0 million and $30.0 million, respectively, of debt related to our 2015 Debt Facility from a floating rate to a fixed rate of 1.21% and 1.16%, respectively, each with a termination date of March 23, 2022.

 

(c) Fair value measurements: Interest rate swaps are stated at fair value, which is determined using a discounted cash flow approach based on marketbased LIBOR swap yield rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items in accordance with the fair value hierarchy. The fair value of the interest rate swap agreements approximates the amount that we would have to pay for the early termination of the agreements.The following table summarizes the location on the balance sheet of the financial assets and liabilities that are carried at fair value on a recurring basis, which comprise our financial derivatives all of which are considered Level 2 items in accordance with the fair value hierarchy:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2016

 

 

March 31, 2016

 

 

 

Other non-current assets

 

Long-term liabilities

 

Other non-current assets

 

Long-term liabilities

 

Derivatives not designated as hedging instruments

    

Derivative instruments

    

Derivative instruments

    

Derivative instruments

    

Derivative instruments

 

Interest rate swap agreements

 

$

 —

 

$

26,017,824

 

$

 —

 

$

21,647,965

 

 

The effect of derivative instruments within the unaudited condensed consolidated statement of operations for the periods presented is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Three months ended 

 

Derivatives not designated as hedging instruments

    

Location of gain/(loss) recognized

    

June 30, 2016

    

June 30, 2015

 

Interest Rate Swap—Change in fair value

 

Unrealized gain/(loss) on derivatives

 

$

(4,369,859)

 

$

1,386,886

 

Interest Rate Swap—Realized loss

 

Realized loss on derivatives

 

 

(2,256,788)

 

 

(1,244,491)

 

Gain/(loss) on derivatives, net

 

 

 

$

(6,626,647)

 

$

142,395

 

 

 

As of June 30, 2016 and March 31, 2016, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the accompanying consolidated balance sheets. We did not have any other assets or liabilities measured at fair value on a non-recurring basis during the three months ended June 30, 2016 and 2015.

 

(d) Book values and fair values of financial instruments:   In addition to the derivatives that we are required to record at fair value on our balance sheet (see (c) above), we have other financial instruments that are carried at historical cost. These financial instruments include trade accounts receivable, amounts due from related parties, cash and cash equivalents, accounts payable, amounts due to related parties and accrued liabilities for which the historical carrying value approximates the fair value due to the shortterm nature of these financial instruments. We also have long term bank debt for which we believe the historical carrying value approximates their fair value as the loans bear interest at variable interest rates, being LIBOR, which is observable at commonly quoted intervals for the full terms of the loans, and hence are considered as Level 2 items in accordance with the fair value hierarchy. Cash and cash equivalents and restricted cash are considered Level 1 items.

 

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10. Earnings/(Loss) Per Share (“EPS”)

 

Basic EPS represents net income/(loss) attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period. Our restricted stock shares include rights to receive dividends that are subject to the risk of forfeiture if service requirements are not satisfied, and as a result, these shares are not considered participating securities and are excluded from the basic weighted-average shares outstanding calculation. Diluted EPS represent net income/(loss) attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period.

 

The calculations of basic and diluted EPS for the periods presented are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

(In U.S. dollars except share data)

 

June 30, 2016

 

June 30, 2015

 

Numerator:

 

 

 

 

 

 

 

Net income/(loss)

 

$

(1,291,121)

 

$

13,652,883

 

Denominator:

 

 

 

 

 

 

 

Basic and diluted weighted average number of common shares outstanding

 

 

54,740,984

 

 

57,128,493

 

EPS:

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.02)

 

$

0.24

 

 

For the three months ended June 30, 2016 and 2015, there were 655,000 and 929,000 shares of unvested restricted stock, respectively, excluded from the calculation of diluted EPS because the effect of their inclusion would be anti-dilutive.

 

11. Commitments and Contingencies

 

Commitments under Operating Leases

 

As of June 30, 2016, we had the following commitments as a lessee under operating leases relating to our United States, Greece and United Kingdom offices:

 

 

 

 

 

 

 

    

June 30, 2016

 

Less than one year

 

$

348,436

 

One to three years

 

 

252,793

 

Three to five years

 

 

8,227

 

Total

 

$

609,456

 

 

Fixed Time Charter Contracts

 

As of June 30, 2016, we had the following future minimum fixed time charter hire receipts based on non-cancelable long-term fixed time charter contracts:

 

 

 

 

 

 

 

    

June 30, 2016

 

Less than one year

 

$

51,973,113

 

One to three years

 

 

80,186,227

 

Three to five years

 

 

18,812,333

 

Total

 

$

150,971,673

 

 

Other

 

From time to time we expect to be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Such claims, even if lacking in merit, could result in the expenditure of significant financial and managerial resources. We are not aware of any claim that is reasonably possible

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and should be disclosed or probable and for which a provision should be established in the accompanying unaudited interim condensed consolidated financial statements.

 

12. Shareholder Rights Plan

 

On December 21, 2015, our Board of Directors declared a dividend of one preferred share purchase right (a "Right") for each share of our common stock outstanding on December 31, 2015. Each Right is attached to and trades with the associated share of common stock.  The Rights will become exercisable only if a person or group has acquired 15% or more of our outstanding common stock or announces a tender offer or exchange offer which, if consummated, would result in ownership by a person or group of 15% or more of our outstanding common stock (an "Acquiring Person").  If a person becomes an Acquiring Person, each Right will entitle its holder (other than an Acquiring Person and certain related parties) to purchase for $60 a number of shares of our common stock having a market value of twice such price.  In addition, at any time after a person or group acquires 15% or more of our outstanding common stock (unless such person or group acquires 50% or more), our Board of Directors may exchange one share of our common stock for each outstanding Right (other than Rights owned by the Acquiring Person and certain related parties, which would have become void).  Any person who, prior to the time of public announcement of the existence of the Rights, beneficially owned 15% or more of our outstanding common stock is not considered to be an Acquiring Person so long as such person does not acquire additional shares in excess of certain limitations.

 

The Rights will expire on December 20, 2018; provided that if our shareholders have not ratified the shareholder rights plan by December 20, 2016, the shareholder rights plan will expire on December 20, 2016.

 

 

13. Subsequent Events

 

During July 2016, we repurchased 138,400 common shares for $1.0 million, which we held as treasury shares.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion contains forwardlooking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under "Item 1A—Risk Factors" herein and in our Annual Report on Form 10-K for the year ended March 31, 2016, our actual results may differ materially from those anticipated in these forwardlooking statements. Please also see the section "Forward-Looking Statements" included in this quarterly report.

 

Overview

 

We are a Marshall Islands corporation headquartered in the United States and primarily focused on owning and operating VLGCs, each with a cargocarrying capacity of greater than 80,000 cbm. Our fleet currently consists of twenty-two VLCG carriers, including nineteen fuel-efficient 84,000 cbm ECO VLGCs and three 82,000 cbm VLGCs.

 

Sixteen of our ECO VLGCs were constructed by Hyundai and three of our ECO VLGCs were constructed by Daewoo. Our nineteen ECO VLGCs, which incorporate fuel efficiency and emission-reducing technologies and certain custom features, were acquired by us for an aggregate purchase price of $1.4 billion, which was financed with proceeds from the 2015 Debt Facility, proceeds from equity offerings, and cash generated from operations. These nineteen ECO VLGCs were delivered to us between July 2014 and February 2016, seventeen of which were delivered during calendar year 2015 or later.

 

On April 1, 2015, Dorian and Phoenix began operations of the Helios Pool, which entered into pool participation agreements for the purpose of establishing and operating, as charterer, under a variable rate time charter to be entered into with owners or disponent owners of VLGCs, a commercial pool of VLGCs whereby revenues and expenses are shared. The vessels entered into the Helios Pool may operate either in the spot market, pursuant to COAs or on time charters of two years' duration or less. As of June 30, 2016, eighteen of our twenty-two VLGCs were deployed in the Helios Pool.

 

Our customers, either directly or through the Helios Pool, include or have included global energy companies such as Exxon Mobil Corp., China International United Petroleum & Chemicals Co., Ltd., Royal Dutch Shell plc and Statoil ASA, commodity traders such as Itochu Corporation and the Vitol Group and importers such as E1 Corp., SK Gas Co. Ltd. and Indian Oil Corporation.

 

We intend to pursue a balanced chartering strategy by employing our vessels on a mix of multi-year time charters, some of which may include a profit-sharing component, shorter-term time charters, spot market voyages and COAs. Five of our vessels are currently on fixed time charters, including one VLGC on fixed time charter within the Helios Pool. See “Our Fleet” below for more information.

 

 

Recent Developments

 

During July 2016, we repurchased 138,400 common shares for $1.0 million, which we held as treasury shares.

 

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Selected Financial Data

 

The following table presents our selected financial data and other information for the three months ended June 30, 2016 and 2015, and as of June 30, 2016 and March 31, 2016 and should be read in conjunction with our unaudited interim condensed consolidated financial statements and other financial information included in this quarterly report. 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

(in U.S. dollars, except fleet data)

 

June 30, 2016

    

June 30, 2015

 

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

$

50,515,776

 

$

35,642,460

 

Expenses

 

 

 

 

 

 

 

Voyage expenses

 

 

755,804

 

 

3,523,073

 

Vessel operating expenses

 

 

16,095,552

 

 

6,754,086

 

Depreciation and amortization

 

 

16,192,745

 

 

4,857,427

 

General and administrative expenses

 

 

5,611,310

 

 

7,214,280

 

Loss on disposal of assets

 

 

 —

 

 

105,549

 

Total expenses

 

 

38,655,411

 

 

22,454,415

 

Other incomerelated parties

 

 

552,901

 

 

383,642

 

Operating income

 

 

12,413,266

 

 

13,571,687

 

Other income/(expenses)

 

 

 

 

 

 

 

Interest and finance costs

 

 

(7,038,209)

 

 

(135,800)

 

Interest income

 

 

23,178

 

 

65,585

 

Unrealized gain/(loss) on derivatives

 

 

(4,369,859)

 

 

1,386,886

 

Realized loss on derivatives

 

 

(2,256,788)

 

 

(1,244,491)

 

Foreign currency gain/(loss), net

 

 

(62,709)

 

 

9,016

 

Total other income/(expenses), net

 

 

(13,704,387)

 

 

81,196

 

Net income/(loss)

 

$

(1,291,121)

 

$

13,652,883

 

Earnings/(loss) per common share—basic and diluted

 

$

(0.02)

 

$

0.24

 

Other Financial Data

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

29,576,278

 

$

19,400,254

 

Fleet Data

 

 

 

 

 

 

 

Calendar days(2)

 

 

2,002

 

 

662

 

Available days(3)

 

 

2,002

 

 

648