DORIAN LPG LTD., 10-Q filed on 7/28/2016
Quarterly Report
Document and Entity Information
3 Months Ended
Jun. 30, 2016
Jul. 26, 2016
Document and Entity Information
 
 
Entity Registrant Name
DORIAN LPG LTD. 
 
Entity Central Index Key
0001596993 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2016 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--03-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
54,963,013 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q1 
 
Condensed Consolidated Balance Sheets (USD $)
Jun. 30, 2016
Mar. 31, 2016
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 
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 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Jun. 30, 2016
Mar. 31, 2016
Condensed Consolidated Balance Sheets
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
50,000,000 
50,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
450,000,000 
450,000,000 
Common stock, shares issued
58,314,443 
58,057,493 
Common stock, shares outstanding
55,101,413 
56,125,028 
Treasury stock, shares at cost
3,213,030 
1,932,465 
Condensed Consolidated Statements of Operations (USD $)
3 Months Ended
Jun. 30, 2016
Jun. 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 party
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 (in dollars per share)
$ (0.02)
$ 0.24 
Condensed Consolidated Statements of Shareholders Equity (USD $)
Common stock
Treasury stock
Additional paid-in capital
Retained earnings/(Accumulated deficit)
Total
Balance at Mar. 31, 2015
$ 580,575 
 
$ 844,539,059 
$ 28,094,625 
$ 873,214,259 
Balance (in shares) at Mar. 31, 2015
58,057,493 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
Net income/(loss)
 
 
 
13,652,883 
13,652,883 
Stock-based compensation
 
 
896,539 
 
896,539 
Balance at Jun. 30, 2015
580,575 
 
845,435,598 
41,747,508 
887,763,681 
Balance (in shares) at Jun. 30, 2015
58,057,493 
 
 
 
 
Balance at Mar. 31, 2016
580,575 
(20,943,816)
848,179,471 
157,783,007 
985,599,237 
Balance (in shares) at Mar. 31, 2016
58,057,493 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
Restricted share award issuances
2,570 
 
(2,570)
 
 
Restricted share award issuances (in shares)
256,950 
 
 
 
 
Net income/(loss)
 
 
 
(1,291,121)
(1,291,121)
Stock-based compensation
 
 
1,421,636 
 
1,421,636 
Purchase of treasury stock
 
(11,853,983)
 
 
(11,853,983)
Balance at Jun. 30, 2016
$ 583,145 
$ (32,797,799)
$ 849,598,537 
$ 156,491,886 
$ 973,875,769 
Balance (in shares) at Jun. 30, 2016
58,314,443 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
3 Months Ended
Jun. 30, 2016
Jun. 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 
Basis of Presentation and General Information
Basis of Presentation and General Information

Dorian LPG Ltd.

Notes to Unaudited Condensed Consolidated Financial Statements

(Expressed in United States Dollars)

1. Basis of Presentation and General Information

 

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

 

On April 1, 2015, Dorian and Phoenix Tankers Pte. Ltd. (“Phoenix”) began operations of Helios LPG Pool LLC (the “Helios Pool”), which entered into pool participation agreements for the purpose of establishing and operating, as charterer, under variable rate time charters to be entered into with owners or disponent owners of VLGCs, a commercial pool of VLGCs whereby revenues and expenses are shared. See Note 3 below for further description of the Helios Pool relationship.

 

The accompanying unaudited condensed consolidated financial statements and related notes (the "Financial Statements") have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments, consisting of normal recurring items, necessary for a fair presentation of financial position, operating results and cash flows have been included in the Financial Statements. The Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended March 31, 2016 included in our Annual Report on Form 10-K 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.

 

Vessel Owning Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

    

Type of

    

 

    

 

    

 

 

Subsidiary

 

vessel

 

Vessel’s name

 

Built

 

CBM(1)

 

CMNL LPG Transport LLC

 

VLGC

 

Captain Markos NL

 

2006

 

82,000

 

CJNP LPG Transport LLC

 

VLGC

 

Captain John NP

 

2007

 

82,000

 

CNML LPG Transport LLC

 

VLGC

 

Captain Nicholas ML

 

2008

 

82,000

 

Comet LPG Transport LLC

 

VLGC

 

Comet

 

2014

 

84,000

 

Corsair LPG Transport LLC

 

VLGC

 

Corsair

 

2014

 

84,000

 

Corvette LPG Transport LLC

 

VLGC

 

Corvette

 

2015

 

84,000

 

Dorian Shanghai LPG Transport LLC

 

VLGC

 

Cougar

 

2015

 

84,000

 

Concorde LPG Transport LLC

 

VLGC

 

Concorde

 

2015

 

84,000

 

Dorian Houston LPG Transport LLC

 

VLGC

 

Cobra

 

2015

 

84,000

 

Dorian Sao Paulo LPG Transport LLC

 

VLGC

 

Continental

 

2015

 

84,000

 

Dorian Ulsan LPG Transport LLC

 

VLGC

 

Constitution

 

2015

 

84,000

 

Dorian Amsterdam LPG Transport LLC

 

VLGC

 

Commodore

 

2015

 

84,000

 

Dorian Dubai LPG Transport LLC

 

VLGC

 

Cresques

 

2015

 

84,000

 

Constellation LPG Transport LLC

 

VLGC

 

Constellation

 

2015

 

84,000

 

Dorian Monaco LPG Transport LLC

 

VLGC

 

Cheyenne

 

2015

 

84,000

 

Dorian Barcelona LPG Transport LLC

 

VLGC

 

Clermont

 

2015

 

84,000

 

Dorian Geneva LPG Transport LLC

 

VLGC

 

Cratis

 

2015

 

84,000

 

Dorian Cape Town LPG Transport LLC

 

VLGC

 

Chaparral

 

2015

 

84,000

 

Dorian Tokyo LPG Transport LLC

 

VLGC

 

Copernicus

 

2015

 

84,000

 

Commander LPG Transport LLC

 

VLGC

 

Commander

 

2015

 

84,000

 

Dorian Explorer LPG Transport LLC

 

VLGC

 

Challenger

 

2015

 

84,000

 

Dorian Exporter LPG Transport LLC

 

VLGC

 

Caravelle

 

2016

 

84,000

 

 

 

 Management Subsidiaries

 

 

 

 

 

Subsidiary

 

Dorian LPG Management Corp

 

Dorian LPG (USA) LLC (incorporated in USA)

 

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

 

Dorian LPG Finance LLC

 

Occident River Trading Limited (incorporated in UK)

 

 

Dormant Subsidiaries

 

 

 

 

 

Subsidiary

 

SeaCor LPG I LLC

 

SeaCor LPG II LLC

 

Capricorn LPG Transport LLC

 

Constitution LPG Transport LLC

 

Grendon Tanker LLC(2)

 


(1)

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

(2)

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

 

Significant Accounting Policies
Significant Accounting Policies

2. Significant Accounting Policies

 

The same accounting policies have been followed in these unaudited interim condensed consolidated financial statements as were applied in the preparation of our audited financial statements for the year ended March 31, 2016 (see Note 2 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.

Deferred Charges, Net
Deferred Charges, Net

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.

Vessels, Net
Vessels, Net

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.

Long-Term Debt
Long-Term Debt

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

 

 

Stock-Based Compensation Plans
Stock-Based Compensation Plans

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 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

 

 

Revenues
Revenues

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.

Financial Instruments and Fair Value Disclosures
Financial Instruments and Fair Value Disclosures

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.

 

(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.

Earnings/(Loss) Per Share (EPS)
Earnings Per Share ("EPS")

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.

Commitments and Contingencies
Commitments and Contingencies

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

Shareholder Rights Plan
Shareholder Rights Plan

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.

 

Subsequent Events
Subsequent Events

13. Subsequent Events

 

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

Basis of Presentation and General Information (Tables)
Schedule of wholly-owned subsidiaries

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.

 

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

Deferred Charges, Net (Tables)
Schedule of movement of deferred charges

 

 

 

 

 

 

    

Drydocking

 

 

 

costs

 

Balance, April 1, 2016

 

$

294,935

 

Amortization

 

 

(29,920)

 

Balance, June 30, 2016

 

$

265,015

 

 

Vessels, Net (Tables)
Schedule of 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

 

 

Long-Term Debt (Tables)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

    

Financing

 

 

 

costs

 

Balance, April 1, 2016

 

$

23,748,116

 

Additions

 

 

99,785

 

Amortization

 

 

(948,407)

 

Balance, June 30, 2016

 

$

22,899,494

 

 

Stock-Based Compensation Plans (Tables)
Summary of the activity of restricted shares

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

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

 

 

Revenues (Tables)
Schedule of revenues

 

 

 

 

 

 

 

 

 

    

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

 

 

Financial Instruments and Fair Value Disclosures (Tables)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

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

 

 

 

Earnings/(Loss) Per Share (EPS) (Tables)
Schedule of calculations of basic and diluted EPS

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Commitments and Contingencies (Tables)

 

 

 

 

 

 

    

June 30, 2016

 

Less than one year

 

$

348,436

 

One to three years

 

 

252,793

 

Three to five years

 

 

8,227

 

Total

 

$

609,456

 

 

 

 

 

 

 

 

    

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

 

 

Basis of Presentation and General Information (Details)
3 Months Ended
Jun. 30, 2016
item
Basis of Presentation and General Information
 
Total number of vessels
22 
Number of fuel-efficient ECO-design VLGCs having 84,000 cbm
19 
Number of VLGCs having 82,000 cbm
Basis of Presentation and General Information (Capacity) (Details)
Jun. 30, 2016
m3
CMNL
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
82,000 
CJNP
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
82,000 
CNML
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
82,000 
Comet LPG Transport LLC
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Corsair LPG Transport LLC
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Corvette LPG Transport LLC
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Shanghai LPG Transport LLC (Cougar)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Concorde LPG Transport LLC
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Houston LPG Transport LLC (Cobra)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Sao Paulo LPG Transport LLC (Continental)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Ulsan LPG Transport LLC (Constitution)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Amsterdam LPG Transport LLC (Commodore)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Dubai LPG Transport LLC (Cresques)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Constellation LPG Transport LLC
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Monaco LPG Transport LLC (Cheyenne)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Barcelona LPG Transport LLC (Clermont)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Geneva LPG Transport LLC (Cratis)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Cape Town LPG Transport LLC (Chaparral)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Tokyo LPG Transport LLC (Copernicus)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Commander LPG Transport LLC
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Explorer LPG Transport LLC (Challenger)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Dorian Exporter LPG Transport LLC (Caravel)
 
Vessel Owning Subsidiaries
 
Capacity of vessel (in cubic meters)
84,000 
Significant Accounting Policies (AcctPro) (Details) (USD $)
Jun. 30, 2016
Mar. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Long-term debt
$ 797,811,824 
$ 812,620,256 
Presentation of debt issuance costs
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
Long-term debt
 
$ (23,700,000)