Greetings, and welcome to the Dorian LPG Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Additionally, a live audio webcast of today's conference call is available on Dorian LPG's website, which is www.dorianlpg.com. I would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead.

Thank you, Kristine. Good morning, everyone, and thank you all for joining us for our fourth 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 May 26, 2021. 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 March 31, 2021, that were filed this morning on Form 8-K. In addition, please refer to our previous filings on Forms 10-K and 10-Q where you'll find risk factors that could cause actual results to differ materially from those forward-looking statements. Finally, please note that we expect to file our full 10-K in the first week of June. With that, I'll turn over the call to John Hadjipateras.

Thank you, Ted. Good morning from Stamford, where John, Ted and I are speaking from. Tim Hansen is calling from Copenhagen. Thank you for joining us this morning to discuss our fourth quarter and fiscal year 2021 results. Rates made a high in January, followed by a steep drop to lows in March and have now recovered to healthy levels. Confronted by the COVID pandemic, fiscal 2021 brought considerable challenges which we navigated safely and successfully toward some major accomplishments. Thanks to the dedication and extraordinary efforts of our seafarers and shore-side staff, our ships and the company continue to operate smoothly. Highlighting our commitment to returning shareholder capital, we completed our self-tender which we upsized from $100 million to $113 million. We have now returned over $200 million since our IPO in 2014. Our drydocking and scrubber upgrade program is nearly complete. We expect the last two ships to leave the shipyards within this month. In total, we will have installed 10 scrubber systems since summer of 2019. 12 of our 22 owned ships will be capable of operating with hybrid scrubbers enhancing their earning potential and commercial flexibility. We contracted for delivery in first quarter 2023 a dual-fuel shallow-drafted 84,000 cubic meter state-of-the-art ship to be built by Kawasaki Heavy Industries. As with all recent VLGC newbuildings, she will be capable of burning either fuel oil or LPG. She will be financed in a Japanese lease bareboat structure. Since we commissioned a feasibility study with the American Bureau of Shipping in 2018, we have been evaluating LPG as fuel. The prospect of LPG as fuel is an exciting one, decreasing emissions while potentially lowering overall fuel and financing costs. Vessel emissions are coming to the forefront and the International Maritime Organization is set to revise its Greenhouse Gas…

Thank you, John. My comments this morning will focus on our financial position and liquidity as well as our unaudited fourth quarter results. At March 30, 2021, we had $79.3 million of free cash. As of Monday, May 17, 2021, our free cash balance stood at $84.4 million. Last quarter, we had estimated up to $60 million in free cash flow before the cash outlays associated with our self-tender offer, but we actually generated $65.7 million. The slight variance, however, in the closing cash that we had indicated last quarter is mostly due to the upsizing of our self-tender offer by 997,739 shares or about $13.5 million. With a debt balance of $602 million at quarter end, our total debt to total book capitalization stood at a very comfortable 38.9%. With no refinancings until 2025, ample free cash and undrawn revolver and one debt free vessel, thus we have a significant measure of financial flexibility. In addition, we expect our operating cash cost per day for the coming year to be approximately $21,000 per day, excluding our remaining special surveys and an outlay associated with our newbuilding. Turning to our fourth quarter results. You may also find it useful to refer to the Investor Highlights slides posted this morning on our website. For our chartering, we achieved a total utilization of 95.3% for the quarter with the daily time charter equivalent that is time charter equivalent revenue over operating days as we define those terms in our filings of $49,474 per day, yielding a utilization adjusted TCE, that's TCE revenue over available day of about $47,155. Our spot TCE per available day, which reflects our portion of the net profits of the Helios Pool for the quarter, was about $48,758. Also, overall, the Helios Pool as an entity reported a…

Yes. Thank you, Ted. For the first quarter of 2021, the global seaborne LPG volumes totaled 26.5 million tons, a year-on-year decrease of only 1.7%. U.S. export remains strong and continued to outperform the forecasts. U.S. volume continued to grow counterbalancing the declines in the Middle East volumes. During the quarter, American export volumes increased by 7.1% year-on-year to 11.8 million tons, the second highest total exports on records, only the previous quarter was higher. Volumes would likely have been higher had the U.S. Gulf not experienced extreme weather that shut just about all LPG-related infrastructure for about two weeks in February and fell directly after the Lunar New Year. While February is generally the weakest month of the year for export volumes, February 2021 volume only totaled 2.9 million tons, marking 23 months low and 19% decrease versus February 2020. Both January and March exports were on record levels at 4.4 million and 4.5 million tons, respectively, represented 21% and 18% year-on-year of growth. The Baltic Market Index on the Ras Tanura-Chiba route averaged 54 metric tons last quarter and was another roller-coaster quarter. The market continued the bull run from 2020 for the first decade of January, rising to $119 per metric tons on the benchmark route Ras Tanura-Chiba. This was actually the highest level since the summer of 2015. The market came to an abrupt halt after two weeks of record close of the U.S. inventory due to high exports and the cold weather in the U.S. U.S. LPG prices rose and as a result of this and Asian weather normalizing differentiates demand moderated, while the arbitrage narrowed and buying interest reduced. Freight rates felled as buyers opted a wait and see pattern. Because of the dramatic pause in the U.S. exports, the backlog and delays at…

Thank you, Tim. The upgrade of the last two of our vessels with hybrid scrubbers is currently in progress, including the completion of those vessels five-year special survey requirements, and we anticipate completion of all the works in early June. By that time, Dorian will be operating a total of 12 scrubber vessels and would have completed the announced scrubber retrofit program for the retrofit of 10 hybrid scrubbers to our own fleet, which started in the summer of 2019. During 2021 financial year, which ended in March 2021, we completed nine of our vessels five-year special surveys, which is the same number of vessels that we completed in the 2020 financial year. The completions of special surveys on a total of 18 vessels during the last two financial years along with the two vessels currently in progress completes the five-year cycle for 20 vessels in the Dorian LPG fleet. The high-sulfur, low-sulfur bunker spreads since the beginning of the year has stood at about $100 per ton of fuel, producing an earnings advantage for our scrubber-fitted vessels. Given the recent economic trends, we anticipate that an increase in the supply and demand for oil could maintain or perhaps widen the current bunker spread not only further supporting our capital invested in hybrid scrubbers, but also improving our fleet's environmental footprint. Hybrid scrubbers not only reduce sulfur oxides emissions to levels below 0.5 and 0.1 of the compliant marine fuel oils being used, but they also reduce particulate matter and black carbon emissions by more than 80%, neutralizing affluent water levels with caustic soda. Depending on each country's water discharge restrictions, the hybrid scrubbers can operate either in open or in closed-loop mode, keeping in line with environmental sustainability requirements. Dorian has been evaluating LPG dual-fuel technology since 2013 when…

Thanks, John. Thank you. Operator, can we open up for questions now.

With the prepared remarks completed, we will now open the line for questions. [Operator Instructions] Thank you. Our first question comes from the line of Sean Morgan with Evercore. Please proceed with your question.

Hey, guys. So we talked a lot about adding scrubbers and the dual-fuel potential of the new order and kind of the order book ticking up a little better. And just in the context of just how rapidly investors and, I guess, regulatory authorities are starting to look at the carbon footprint, how comfortable are you that you'll be able to retrofit these vessels if the regulations kind of surrounding carbon emissions start to kind of change, because when we're talking about CapEx for equipment that's going to last decades, so just kind of how do you think about new orders in the context of just kind of changing rules regarding carbon?

Well, a lot of questions there and a lot of uncertainty, mainly because the regulations haven't really been solidified yet. So I think, at this stage, like other shipping companies, the best we can do is comply with what's insight and because of the feature of our ships being LPG carriers we have a leg up in a way in this whole equation, because we can look at LPG as fuel and it's not as complicated as it would be for containerships to go to LNG or crude carriers and bulk carriers to be powered by LNG or other fuels. So I think we are in there. We're thinking about it all the time. We have solid plans as is evidenced by what we did on the scrubbers and we – in terms of converting the existing ships that I mentioned, we have eight of our existing ships that could be candidates. We are actively talking with providers and shipyards to see if we can – but we haven't decided to take a final step and go ahead yet. We've watched VW do this and they have first-mover advantage, and we have a second-mover advantage, we feel.

Okay. Thanks, John. And then regarding the G&A charge this quarter, it sounds like there was a contract dispute, well a charter dispute, has that been resolved? Is this a one-time charge? And should we think of this as kind of non-recurring and we expect that to reverse in the future quarter or is it sort of done and dusted now?

We've made a provision for a possible payment. That is our best estimate of what we would be required to pay if we lose. So that's it and it's not ongoing, it was a one-off relating to the delivery of the ship on a charter and we don't expect that to have an impact more than what we've provided for it at all.

But it could reverse at some point down the line or reduce…

It could reduce. We think it's a potential liability and that's why we made the provision for it. So I wouldn't count that $4 million as being accessible.

Okay. But sort of non-recurring also. All right.

Yes.

Thanks a lot.

Thank you.

Thank you, Sean.

Our next question comes from the line of Omar Nokta with Clarksons Platou. Please proceed with your question.

Thank you. Hey, guys, good morning. Generally good overview, I thought in your opening remarks. And then just maybe wanted to just dig maybe a little bit further on the newbuilding VLGC. John, in the past, when we talked about it on conference calls, you haven't really been interested in newbuildings and I'm just wondering what's changed in your eyes to make you more comfortable with this order? And also what's the appetite look like for potentially more than just this one?

I think that it speaks for itself in a way. It's one ship. We have – we're putting our toe in the water with dual-fuel. We are doing something which is a bit centric to customer needs as we perceive them and developing in terms of the Japanese market. We're taking advantage of attractive financing opportunity and I think it in no way in payrolls or inhibits our ability to continue to focus on shareholder return – on capital allocation with a bias toward returns to shareholders.

That's fair, John. Thanks.

Sorry, Omar, I missed.

Yes. I was just going to ask, I mean, clearly that makes sense and do you think there is – do you have the desire to expand that from what you see now, whether it's from your discussions with your customers or attractive financing or slot capacity, do you see an opportunity or an interest on your part to add more than just the one?

I can give you an – a non-politicians answer to that.

Okay. That's clear. And then, I guess, obviously, as you said dipping your feet into the dual-fuel a bit more, how does this kind of change or how should we think about the perspective of you adding secondhand vessels? I know you haven't been acquisitive, but generally speaking, do you think outright acquisitions of existing vessels would also happen with capital or do you prefer more like the TC-in approach that you've done here in the recent past in order to add – to increase your existing footprint?

We've taken a portfolio approach and the TC-in approach is – we find very interesting and we will continue to execute on that. And, hopefully, now by adding – we'd like to see the order book kind of stabilize here. As I said, I think it's – the prospects of it getting absorbed are good and we're confident in the expanding trade, et cetera. But we, at this stage – and I don't want to exclude anything, but at this stage we're not – we do not have the appetite for more newbuilding. And as regard to secondhand, you could see us being a seller as much as you could see us be a buyer. It depends totally on our – opportunistically on the – where we see a value and what – whether it will be accretive or not.

Okay. Yes. That speaks to your portfolio approach. One final one, just back with the newbuilding. Do you think that this is a vessel, at least from your conversations with your customers, is this a ship that you can intend to deploy on a long-term charter? Is that kind of what – I don't know if you hinted at that or is that just a general conversation that there is interest for these types of ships in the future?

Yes. Not necessarily, Omar. I think it's because of her draft, she is suitable for – to the trade, but I – we're not counting on a long-term charter. If it comes and if it's at the right price, we will be happy to do it, but we're not counting on that.

Got it. Okay. Thank you. I'll leave it at that.

Thanks, Omar.

[Operator Instructions] Our next question comes from the line of Eirik Haavaldsen with Pareto Securities. Please proceed with your question.

Yes. Hi. Just one on your three older ships then, because there's obviously a lot of talk on the dual-fuel models, but what do you see at a market for the kind of pre-eco ships like the three Captains you have post 2023? And is the ambition – I mean, the S&P market for those types of ships is, perhaps, surprisingly liquid and strong really, is that something you're looking at thoroughly then when you say you could be a seller?

As much as we're looking at everything thoroughly, yes, but not – we're not focusing on selling those three ships. But I think the values are solid and that's very encouraging. So the option of selling and as a renewal ultimately, et cetera. is there and we are examining it. But we don't have anything right now that we can report on in terms of the transaction. A couple of them are engaged in time charters and I think that to go beyond the regulatory and all that, at the moment, it's too speculative to know what – how these ships will be performing relative to the others.

Okay. But when you talked about retrofitting, those three wouldn't be in that field thinking about, retro? Okay. And the finally…

It will be…

Exactly. And when you talk about shareholder returns, you still have a preference towards buybacks rather than dividends, is that a fair assumption?

We think our self-tender was a successful and positive way to make that return. We do have the option of buybacks and we do not want to explore the possibility of doing dividends. Sorry about that. There is no way – committal one way or the other except to say that we will be – with this market continuing the way it is, we expect to be making returns.

Okay. And then finally then on the cost of the newbuild, I missed it, was it $84 million, you said?

84,000 cubic meter and we cannot tell you the price, but it's not $84 million.

Okay. Thank you.

Okay. Thanks, Eirik.

We have reached the end of the question-and-answer session. Mr. Hadjipateras, I would now like to turn the floor back over to you for closing comments.

Well, thanks to everybody for attending, and thank you for your questions. We look forward to seeing you again in three months.

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