Dorian LPG Ltd. (LPG) Earnings

Management highlights

- Shareholder Returns * Declared a $1 per share irregular dividend, which is the company's 20th dividend payment. This brings total dividends distributed to over $810 million, and total capital return to shareholders to over $1 billion since the company's IPO. * Total irregular dividends paid since September 2021 equal $19.65 per share. - VLGC Market Dynamics * The VLGC market posted strong rates for the quarter, driven by the closure of the Strait of Hormuz that cut Middle Eastern LPG liftings by over 70% year-over-year to ~3.4 million tons. * Major LPG importers (India, Indonesia) were forced to source all LPG from the U.S. Gulf, creating large increases in ton-mile demand. U.S. LPG exports hit a new quarterly record, with the U.S. now accounting for 65% of global seaborne LPG exports, up from less than 50% a year prior. * Disruption to Middle Eastern energy cargoes increased congestion at the Panama Canal, pushing many vessels to route around the Cape of Good Hope, which further amplified ton-mile demand. BLPG rates approached record levels near $175,000 per day entering the current quarter. * After a mid-June U.S.-Iran ceasefire MOU, rates corrected from record highs, but ceasefire prospects remain fragile, and most importers still hesitate to rely on steady Middle Eastern supply. - Fleet Operations and Renewal * The company contracted to sell 4 vessels, and has delivered 3 as of the call (Cobra, Corsair, Constellation), generating ~$166.4 million in net proceeds from the latter two sales. All associated debt for sold vessels has been repaid, and the sale of the fourth vessel (Claremont) is expected to close by mid-October 2026. * The company contracted to build one new 90,000 cubic meter dual fuel Panamax VLGC at Hyundai Heavy Industries, with delivery scheduled for mid-2029. Management is pursuing a conservative, measured fleet renewal program focused on replacing older tonnage, while not ruling out fleet expansion. * Existing investments in energy-saving devices have delivered proven fuel consumption reductions in the current elevated bunker price environment. Scrubber-fitted vessels delivered net savings of ~$1,971 per vessel per calendar day this quarter, and the large price spread between LPG and very low sulfur fuel oil ($369 per metric ton) makes dual-fuel vessels cost-attractive. - Financial Position * As of June 30, 2026, the company held $342 million in cash; after vessel sale proceeds and strong operating earnings, current cash balance is nearly $600 million. * Quarter-end debt balance was $512.4 million, for a debt-to-total book capitalization of 29.3% and net debt-to-total capitalization of 9.7%. Pro forma for completed and pending vessel sales, debt would be ~$473 million. * The company has an undrawn $41 million revolving credit facility, one debt-free vessel, and an all-in cost of debt of ~5.1%, giving it ample financial flexibility.

Guidance

- Expected annual cash operating costs for the coming year are $26,000 to $27,000 per vessel per day, excluding capital expenditures for the planned drydocking of the Captain John in the fourth fiscal quarter. - Management maintains that the current VLGC rate environment remains healthy, though Panama Canal transit fees are creating some downward pressure on realized rates. - Forward booking data for the current quarter will be released in the coming weeks per the company's standard schedule. - The company expects to close the repurchase of two Japanese-financed vessels (Cougar and Crescus) by the end of the September 30, 2026 quarter, with a total expected cash outlay of ~$56 million. - Total annual principal amortization will decrease by ~$8 million and annual interest expense will decrease by ~$4 million on a run-rate basis after all completed and planned debt reductions from vessel sales are finalized. - International Maritime Organization net-zero framework rules are scheduled for a final adoption vote at MEPC 85 in December 2026, with any approved agreement expected to go into effect approximately 16 months after adoption.

Segment performance

Dorian LPG operates all spot chartering activity through the Helios VLGC pool, which is the firm's core operating segment. For the quarter ended June 30, 2026: - Helios pool earned a TCE (time charter equivalent) of $82,445 per day for spot and COA voyages, with an overall pool TCE of over $75,100 per day. 7 of 29 total vessels in the Helios pool are on time charter out, giving the pool 75% spot exposure. - Dorian LPG's reported TCE revenue per available day was $75,926, a company record, reflecting strong market conditions. - Adjusted EBITDA for the quarter was $165.4 million, which includes a $30.1 million gain on the sale of the vessel Cobra. - Daily operating expenses (OPEX, excluding drydocking costs) were $10,308. Total general and administrative (G&A) expense was $13.5 million, with core cash G&A of $7.3 million after excluding non-cash compensation and $4.2 million in incentive compensation. - Gross time charter in expense for 6 time charter in vessels was $22.6 million ($41,418 per TCN day), and these vessels contributed positively to quarterly profits. - Total cash interest expense for the quarter was $6.9 million, with scheduled principal amortization of ~$13 million.

Risks & headwinds

- The ceasefire agreement between the U.S. and Iran remains fragile, with repeated breakdowns in talks and inconsistent adherence, leaving Strait of Hormuz shipping and Middle Eastern energy supply volumes uncertain. - Elevated bunker prices (36% quarter-over-quarter average increase) and inconsistent bunker fuel availability (directly caused by Middle East supply disruptions) have increased voyage costs and created operational inefficiencies. - Panama Canal congestion remains high, with sharply elevated auction transit prices (average April auction prices were almost $900,000 higher than March) and increased waiting times, particularly for ballasting vessels, which puts pressure on realized voyage earnings. - The VLGC industry orderbook is expanding, which creates long-term downside risk to market rates and vessel returns. - The LPG shipping sector is inherently cyclical and volatile, which requires flexible capital allocation and dividend policies. - Forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from current expectations, including general economic conditions and unforeseen geopolitical developments.

Analyst Q&A

• Q: With Dorian LPG already near net cash after recent vessel sales and a strong quarter, how does management prioritize cash allocation going forward, and are new buildings still an attractive opportunity? /

  A: Management confirms the company has a concentration of 2015-built vessels and is pursuing a measured, conservative fleet renewal program to replace older tonnage with newer, more efficient vessels. The company continues to evaluate opportunities with shipyards, and while the priority is fleet rejuvenation, expansion is not off the table. All free cash flow will be balanced judiciously between shareholder distributions, debt reduction, and fleet investment.

• Q: Given elevated spot rates over the past 7-8 months and volatile ceasefire news, how will the VLGC market move forward if a lasting peace is reached in the Middle East? /

  A: Management notes that market reactions framing peace as a negative for rates are overdone. While the ton-mile demand boost from displaced trade routes would moderate if Middle Eastern exports fully resume, overall traffic will increase as importers replenish inventories, so the net impact will not be negative. Ceasefire instability means most importers will continue to rely on U.S. supplies for the foreseeable future anyway.

• Q: With the industry orderbook growing, what gives management confidence that a 2029-delivery new building will deliver attractive returns, and how are these investments underwritten? /

  A: Management confirms it would prefer to see less overall ordering in the sector, but takes a long-term, incremental approach to fleet renewal as an ongoing core business. Dorian LPG is focused on delivering high-quality service to customers with modern, efficient tonnage, which supports sustainable long-term returns for shareholders regardless of near-term cycle fluctuations.

• Q: In the current volatile supply environment, are customers more interested in securing multi-year time charters, and what is the general state of the time charter market? /

  A: Management confirms there is clear increased appetite for multi-year time charter coverage from importers. In the current environment, securing reliable access to LPG cargoes is the top priority for customers, so demand for long-term fixed coverage is being driven by supply security concerns.