Greetings, and welcome to the Dorian LPG Second Quarter 2021 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. Additionally, a live audio webcast for today's conference call is available on Dorian LPG's website, which is www.dorianlpg.com. I would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead.

Thank you, Doug. Good morning, everyone, and thank you all for joining us for our second quarter 2021 results conference call. With me today are John Hadjipateras, Chairman, President and CEO of Dorian LPG Limited; John Lycouris, Chief Executive Officer of Dorian LPG USA; and Tim Hansen, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through November 9, 2020. Many of our remarks today contain forward-looking statements based on current expectations. These statements may often be identified with words such as expect, anticipate, believe or similar indications of future expectations. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors as well as general economic conditions. Should one or more of these risks or uncertainties materialize or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those we express today. Additionally, let me refer you to our unaudited results for the period ended September 30, 2020, that were filed this morning on Form 10-Q. Also, please refer to our previous filings on Form 10-K, where you'll find risk factors that could cause actual results to differ materially from those forward-looking statements. With that, I'll turn over the call to John Hadjipateras.

Thank you. Good morning from John Lycouris in Athens; Tim Hansen in Copenhagen; Ted Young, Clint Webb and myself in Stamford, Connecticut. And thank you for joining us today for our financial Year 2021 Q2 earnings call. Following our AGM on Wednesday last week, when 2 of our directors, Christina Tan and Tom Coleman, were reelected, and our regular quarterly board meeting on the same day, we expect to continue our focus on capital allocation and to pursue opportunistic share repurchases as well as consider dividends deleveraging further and other opportunities. I'm happy to report that our seafarers and shore staff are safe and continue to ably perform their duties. With the cooperation of our customers, local and flag authorities and classification societies, we've been performing many statutory surveys remotely, in addition to the health benefit of reduced exposure, digitalization and remote monitoring, enhance efficiency and reduce costs. During the quarter, our crew rotation has been successfully restored to normal levels. The industry-wide crisis caused by disruption to the free movement of seafarers during the shutdowns has somewhat abated though restrictions continue in many ports and they result in logistical challenges and increased costs. Our last quarter's results largely reflect the poor market of the previous April to June quarter. Many analysts understandably base their forecast on the Baltic published rate, and I would like to share a word of caution about that. The Baltic Index for LPG is a daily forecast by a panel of brokers, reflecting their assessment, guess of the rate fixed on the spot fixture within 10 to 40 days on the route, Middle East to Japan. As well as the obvious and the lag effect of time elapsed between fixture and voyage completion, there are other inherent distortions, which make extrapolating from the single route published Baltic rate an unreliable forecasting pool for time charter equivalent earnings. These include sailing speed, actual cost of bunkers, Panama and other port delays, routing changes for weather, deviation for extraordinary crew changes and/or for guards, and, of course, idle time. We have communicated our opinion to the Baltic and hope that they will open a dialogue with stakeholders with a view to making their index more useful. U.S. production is 10% below the all-time high in January, but nearly 14% above the year's low in May, and exports are up 15% year-on-year through September 30. India's imports are up 14% year-to-date. U.S. storage is 10% above the 5-year average. These are some of the factors, which, together with fractionation capacity being added in the U.S. and PDH plants being commissioned in China, give me cause for optimism. As usual, on our call, you will hear an analysis of our quarterly financial from Ted and industry and market updates from John Lycouris and Tim Hansen. Tim, over to you.

Thank you, John. U.S. exports continued to offset declining Middle East volume last quarter, but it was not enough to generate a global growth for the quarter. Global volumes decreased by 8% compared to 19% year-to-date. The global volumes totaled 80 million tons. There was a 2.6% year-on-year decrease. American export volumes, however, have increased by 15% to 33.3 million tons year-to-date, which compares to only 28.8 million tons during the same period last year. In the third calendar quarter, U.S. export volumes hit record levels, growing 11% year-on-year to nearly 11.5 million tons, the highest level ever recorded. Over the same period of time, our Middle East volume decreased by roughly 11.5% to 9.5 million tons. Despite the initial weakness, the freight market improved during this quarter. The Baltic market index for the Middle East to Japan route began the quarter at around $30 per metric tons, rising steadily in early August to the low 60s per metric tons range before moderating in the middle 50s from mid-August and until the end of the quarter. U.S. export appeared to be -- to set the trade rate recovery into motion. American export volumes hit record levels in July at 4.3 million tons, the strongest level ever recorded by a margin of 360,000 tons. Accordingly, U.S. VLGC liftings also peaked in July with 73 cargoes before stabilizing to an average of 65 cargoes in August and September. Record selling U.S. export cargoes as well as weather conditions added to port congestions in Asia and India. Towards the end of the quarter, there was significant delays around the world. South Korea, for instance, saw significant delays, adding about 6 days or about 10% to a normal round trip voyage from Busan to Ulsan. Currently, many of the vessels caught with extended discharges…

One moment, everybody. We lost Tim Hansen's line.

Operator, we can go back -- we can go to John Lycouris, and we'll put Tim back on when he comes back. Hello?

Rejoining John Lycouris?

Yes. You please -- we'll go -- we've lost Tim on the phone. So we'll go to John Lycouris. And then when Tim comes back, we'll -- or at the end, we'll put him on to finish his remarks. He was almost done, anyway. So John Lycouris, the floor is yours.

Thank you, John. During this quarter, we completed drydocking and first vessel survey on the vessels, Cougar and COBRA, and expect to complete a further 2 vessels during this quarter. Dorian remains committed to improving environmental emissions. With the use of scrubbers, we achieved a 98% reduction in sulfur oxide emissions and 80% of particulate matter emissions as well as black carbon emissions normally released when burning very low sulfur fuel oil. We currently operate 10 scrubber-equipped vessels, including 2 fitted and trading since their 2015 deliveries. Old scrubbers are hybrid systems, except for 1 vessel. So they can operate in open or closed loop, depending on local ECA conditions and regulations and port requirements. We are programming to retrofit 2 more vessels with scrubbers in the coming months to coincide with a vessel's 5-year special survey and drydocking cycle. Bunker fuel prices spreads have been volatile since March 2020. Low-sulfur fuel oil has traded from as low as 12% to more than 30% over the high-sulfur fuel oil price, which in dollar terms amounts to $30 -- from $30 to $85 per metric ton. Such volatility has largely been the result of crude oil pricing in the world markets, refinery utilization and product surpluses in the markets, all impacted by COVID-19. Once COVID-19 conditions improve and market sectors recover, we expect that fuel spreads will widen again to pre-COVID-19 levels. Even though vessel scrubber retrofits were rushed to meet the IMO 2020 commencement on January 1, the installations are designed to perform for the remaining life of the vessels and cannot be judged on the very short term during which they have been operational under extremely volatile economic and market conditions. We are keenly following the results of LPG's fuel on the vessels currently being retrofitted and on the…

Thank you, John. My comments today will focus on our financial position and liquidity as well as our unaudited second quarter results. For the discussion of our second quarter results, you may also find it useful to refer to the investor highlight slides posted this morning on our website. At September 30, 2020, we had $145 million of free cash. Since quarter end, as we previously reported, we completed the repurchase of the Captain John, which is now 100% debt free. Pro forma for that principal repayment of $18.3 million, our cash balance would have been $126.7 million and our debt at $628 million. As of Friday, October 30, our cash balance stood at $135 million. Following the repayment of the Captain John lease arrangement, we've reduced our debt service cost by about $2.6 million per year. As we have previously discussed, we've made significant and favorable changes to our debt capital structure in the last 6 months. We refinanced the commercial tranche of our main bank facility with a lower interest margin and more flexible financial covenants, entered into a 12-year floating rate sale leaseback on the Cresques and now have repaid some of our higher cost debt. We currently amortized less than $52 million per year, which is a significant reduction from the $64 million that was required until recently. Following the new bank deal and the favorable interest rate environment, we took the opportunity after quarter end to blend and extend our largest swap position with a $200 million notional value. I'll get into the economics of that a little later, but it did result in a reduction of our fixed rate by nearly 85 basis points. Turning to our second quarter chartering results, we achieved total utilization of 97.4% for the quarter with a daily TCE,…

Thank you, Ted, and I don't know if we've got Tim back on. But in any case, I think he was very close to the end of his comments. So he can -- he'll have the opportunity to complete them with questions. So I'd like to open up for questions at this stage. Thank you.

[Operator Instructions]. Our first question comes from the line of Omar Nokta with Clarksons Platou.

I just wanted to check in with you on the capital allocation, as you guys just discussed. Ted, you just brought it up. And John, in your opening comments, you mentioned that you obviously slowed down the share buybacks over the past few months, which makes sense given the uncertainty with the pandemic and in the overall energy picture. How are you guys doing things right now, especially post the -- John, you mentioned the AGM last week? Are you signaling that maybe we're at like maybe a pivot point that you're looking to recharge that remaining $50 million buyback? Is that sort of on the horizon?

I think that's a reasonable interpretation of our comments. Yes.

Okay. Good. Well, that's fairly clear. Maybe following up then on that, you mentioned the buyback, you're evaluating dividends. You're focused on deleveraging and other opportunities, which I take -- our acquisition, that being a focus for both you and the Board. Are you able to maybe rank those in order of preference? Maybe it sounds like buybacks are at the top of the list, but maybe you can give us a sense of ranking on those different elements?

It's very difficult to do that, right, because it changes day by day. At the moment, I think you're right, what's at the top of the list. But I think that we have it under short-term review constantly. So if -- there's a lot of value today. I think our stock and our peers and the whole industry is very undervalued. So you would expect that we'll be focusing on that, I think first, but not exclusively.

Yes. Good. Okay. We'll see as the weeks and months come. Just one follow-up or one separate topic, and I'll hand it over. Just on the chartering, you guys have always been partial to fixing ships on time charter. How has charter demand been here over the past couple of months, especially given the stronger market of late? Are you seeing opportunities to put some shifts on charter here for the medium to long term?

A little bit. Tim, are you back on?

I'm back on, yes.

Good. Tim, you can take that question. And also, if you want to take the opportunity to complete your comments, you can do that, too.

Well, I'm not exactly sure where I left. So but on the time chartering side, yes, we have seen more activity and opportunities, and we have also seen rates recover from where they were like 6 months back. So we are looking at some opportunities at the moment to see if we can charter out a few ships as we also have a few expiring at the end of the year.

Our next question comes from the line of Sean Morgan with Evercore.

This maybe something that Tim was going to address before he got cut off. But in the press release, you talked a little bit about the benefits of the ton-mile expansion from U.S. exports and sort of the negative impact on volume demands for VLGCs from the curtailment of OPEC. But you also talked about the spread to naphtha being positive and being a positive benefit for the fleet -- the global fleet. So if you kind of look at that as a bit of a double-edged sword, if OPEC starts pumping again and Libya comes back online and that starts to pressure naphtha, how do you sort of weigh the benefits to increase production out of the Middle East with potentially a lighter spread and then also maybe some substitution from U.S. cargoes?

Tim, you want to take a shot at that?

Yes. Yes. I think, again, the -- if we have an increase in the Middle East, it's more positive than negative. It might affect, as you say, the naphtha -- of the spread. But on the other hand then LPG seems to find, again, new users when the price of LPG also goes lower, which it will eventually when more reduced. So I think overall, more tons in the market would be -- would still have a positive effect on LPG, whether it is partly substituted in the naphtha cracking.

Okay. And then was there any disruption sort of related with the hurricanes and petrochemical disruption that impacted you at all during the quarter because just the rates were -- like I know we talked about how the Baltic doesn't reflect the sort of actualized returns that we can expect. But the Clarksons' TCE rates were maybe a little bit higher even on a lag basis. So I'm just wondering, was there any weather-related utilization impact or what sort of drove that?

Yes. Weather and...

I think we have seen COVID.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Okay. Well, thank you very much once again, and everybody stay safe and see you next time. Bye, bye.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.