Dorian LPG has awarded bonus payments to top executives and sprung a $50m share buyback after returning to the black for the fiscal first quarter.
The VLGC giant has posted a loss for the past three financial years, but has started its 2020 fiscal year in the black in a rising freight market.
Cash bonus payments running to $800,000 for senior executives were today approved, alongside restricted stock awards which boost the overall pot to $1.885m.
An SEC filing shows president and chief executive John C Hadjipateras to be receiving a $300,000 cash bonus, the same figure as finance chief Ted Young.
John C Lycouris, the chief executive of Dorian LPG USA, collected $200,000.
In addition to the cash payments, the trio are splitting 197,700 restricted shares, the filing said.
At the same time, Dorian’s board gave the green light to a $50m share buyback running until the end of next year.
Hadjipateras said: “On the back of the strong market, our board authorised a $50m stock repurchase programme, underscoring our commitment to a sensible capital allocation programme.
“We believe that positive market fundamentals and the continued success of our people to contain costs and optimise operating efficiencies will enable us to generate good returns to our shareholders.”
Capital planning
In its quarterly conference call today, Dorian said it plans to prioritise scrubber financing over the buyback plan, but should have sufficient free cash flow to do both if TCE rates remain at above $40,000 per daily for all its vessels.
"If we end up debt financing any portion of our scrubber programme, we will obviously have additional liquidity, which we may deploy towards stock buybacks," Young said during the call.
The shipowner plans to install scrubbers on 10 of its vessels before the end of 2019, having accelerated its installation programme.
This means 12 of Dorian's 22 vessels will have exhaust gas cleaning systems onboard in 2020.
Drydockings for installing scrubbers and ballast water management systems are expected to incur total costs of around $31m by the end of the fiscal year, Young said during the call.
Getting results
Dorian rang in a profit of $6.1m for the three months to the end of June, flipping from a loss of $20.6m at the same stage last year.
Adjusted profit of $21.1m was equal to $0.22 per share, against an adjusted loss of $22.3m 12 months back.
Hadjipateras said: “Our Ebitda is up over sevenfold from last year’s quarter, and our realised TCE nearly doubled compared to the same time period last year.
“Since the majority of the voyages booked during the quarter are typically performed in the following quarter, we expect the current quarter’s results to show an even greater improvement, assuming no significant market change during the quarter.”
Voyages in June, which did not contribute to Dorian's second-quarter result, were booked at TCE rates of over $60,000 per day, but since the end of June this has fallen to average around $50,000 per day, Hadjipateras said during the earnings call.
Dorian posted a profit of $20.2m in fiscal 2016 as the VLGC super-cycle came to an end, but has since recorded losses for its last three financial years in weak markets crippled by oversupply.
“With a stable orderbook of approximately 12% of the global fleet, we believe that the market should remain relatively balanced,” Dorian said today.
