Greetings, and welcome to the Dorian LPG third quarter 2020 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, Michelle. Good morning, everyone. Thanks to everyone for joining us for our third quarter 2020 results conference call. With me today are John Hadjipateras, Chairman, President, and CEO of Dorian LPG Ltd., and John Lycouris, Chief Executive of Dorian LPG USA. As a reminder, this conference call webcast and a replay of this call will be available through February 12, 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 ending December 31, 2019, that were filed this morning on Form 10-Q. 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 these forward-looking statements. With that, I'll turn over the call to John Hadjipateras.
Good morning, and thank you for joining our third quarter earnings call. Today, I'm happy to have announced that based upon its assessment that this is the best use of our excess cash at this time, our board of directors has doubled the stock repurchase authority to $100 million. Funded by strong cash flow, the increased authorization allows us to capitalize upon the disconnect between the intrinsic value of the company and our stock market valuation. Since the original authorization last August, we have repurchased 1,397,662 shares at an average price of $12.337. Management and the board continue to evaluate other options of enhancing shareholder value including paying dividends, prepaying debt, and acquisitions. Ted will be giving you the detailed breakdown of our TCE and utilization numbers shortly.
It is important to note that on a traditional definition, freight and hire less voyage costs over available days, the Helios TCE per available day was $50,141 per day including earnings from several time charters which were booked at the end of 2018 and in early 2019 at sub $30,000 per day levels, most of which expire as we speak. Our scrubber retrofit program added some logistical complexity. Positioning of ships can result in certain inefficiencies, such as waiting time, suboptimal rates, and additional bunker costs. When considering the effects of these challenges and the TCE achieved in the Helios pool, we consider our chartering performance quite solid. In addition to our own fleet, we have, since April of last year, had a ship on time charter at an attractive rate.
As announced in our earnings release, we took delivery this week of a new building, all Panamax type, fitted with a hybrid scrubber. Global seaborne LPG trade continues to grow, increasing by 14% in 2019 to a record of 109 million metric tons. While the U.S. and Middle East exported roughly the same amount in 2019, it appears that annual U.S. export volumes will surpass the Middle East for the first time in 2020. Already, during the last three quarters of calendar 2019, the U.S. exported 500,000 metric tons and five VLGC liftings on average more per month than the Middle East. Our outlook for the coming calendar year remains optimistic. The coronavirus is, of course, a potential headwind. IMO 2020 has strengthened the market position of Dorian's fleet. The increased bunker prices have enhanced the value proposition of our young and fuel-efficient Eco ships.
As the cost differential between high sulfur and low sulfur fuel continues, we remain competitively positioned with seven scrubber-equipped ships at present. In the coming months, more than half our fleet, 12 ships total will be scrubber-equipped. Ted, over to you.
Thanks. My comments today will focus on our unaudited third quarter results and our remaining dry dockings. For the discussion of our third quarter results, you also may find it useful to refer to the investor highlights slides posted this morning on our website. Beginning with our charter results, we achieved a total utilization of 98.4% for the quarter with a daily TCE which is TCE revenue over operating days as defined in our filings, of $43,410, yielding utilization-adjusted TCE or TCE per available day of about $42,728. Our spot TCE, which reflects our portion of the net profits of the Helios pool per available day for the quarter was $43,949. I'd like to point out that the results are net of the administrative cost of the pool and the time charters in of five ships at floating Baltic rates.
A result, as John already mentioned, our actual TC achieved in the pool is higher than this level. To just elaborate on the difference between the $43,949 that I just mentioned and the $51,141 that John mentioned. The $51,141 is the average rate achieved in our pool, and that is the one that is most comparable and analogous to what our competitors report, and indeed, the Baltic benchmark. Turning to OpEx, our daily OpEx for the quarter was $8,413, excluding amounts expensed for dry dockings. It was $9,452 including those costs. OpEx per day, excluding the dry docking-related cost, was roughly flat compared to last quarter's $8,403 per day. Which also excluded a limited amount of dry docking costs.
Total G&A for the quarter was $5 million and cash G&A, which is G&A excluding non-cash compensation expense was about $4.4 million. This level is generally consistent with our expectations. Our reported adjusted EBITDA for the quarter was $59.9 million which is a significant increase from the $35 million excluding costs related to the unsolicited BW LPG proposal recorded during the same quarter last fiscal year. The strong rate environment and lower G&A accounted for most of the improvement. We look at cash interest expense on our debt as the sum of the line items of interest expense, excluding deferred financing fees and loan expenses and realized gain loss on derivatives. On that basis, total cash interest expense for the quarter was $7.4 million which was down about $200,000 from the prior quarter, largely due to continued debt paydown.
We continue to benefit from our hedging policy and the favorable pricing of our Japanese financings, leaving us with a current interest cost fixed, hedged in a small floating piece of about 4.3%. For the quarter, we had cash outlays for capital costs associated with dry dockings of approximately $10.2 million or $4,835 per fleet day. Fleet day is calendar days plus time charter in days as those terms are used in our filings. Combined with amounts expensed during the quarter, our total dry docking cash outlay was roughly $12.2 million. We also managed to repurchase $8.6 million of stock during the quarter and an additional $2.3 million since the end of the quarter. In total, we have now repurchased $17.1 million, equal to about 1.4 million shares, which was nearly 2.5% of the shares outstanding prior to the announcement of the buyback. Our cash flow and liquidity remain strong.
Since quarter end through to February 3rd, 2020, our restricted and unrestricted cash is up to around $106 million. Although we hold an 80+% economic interest in Helios, we do not consolidate its balance sheet accounts which has the effect of understating our cash and working capital. Thus, we believe it is useful to provide some additional detail in order to give a more complete picture. As of Monday, February 3rd, the pool had roughly $30 million of cash on hand. John Lycouris will comment in a bit more detail about our dry docking plans but delays in China, coronavirus-related and other have extended our dry docking program to the remaining five ships. We now expect to have our program completed by early May. The remaining cash outlays are estimated $18.5 million over the next three quarters.
That is the quarter ending March 31 and the subsequent two with up to $12 million incurred or outlaid in the quarter ending March 31. Given the uncertainties caused by the coronavirus outbreak, there could be some movement in this schedule. Upon completion of the program, 12 vessels- 23 vessels in our fleet will be able to profit from the expected fuel price differential between VLSFO and low sulfur fuel oil. Since the beginning of the year, the TC per day premium for scrubber-equipped VLGCs has ranged from $10,000- $20,000 per day which supports our investment thesis in the scrubbers. With a solid market backdrop and a strong balance sheet, we maintain a constructive view on our business and expect to continue to be able to generate solid cash on cash return for our shareholders. With that, I'll pass it over to John Lycouris.
Thank you, Ted. The U.S. NGL export growth is expected to continue in 2020 with a series of export capacity additions. Enterprise, Targa, and Energy Transfer terminals are all planning expansion starting in late 2019 and continuing into late 2020, early 2021. These NGL infrastructure developments are expected to ease the operating terminal limits we have seen during 2019 with export and fractionation capacity able to meet the increasing supply of products to 2021 and beyond. During the last quarter, we saw 194 VLGC liftings from the U.S. and October has set a new record. It was actually 70 liftings in October. Most likely, the completion of the Enterprise Products terminal expansion on the ship channel contributed to that record as did six VLGC liftings of about 300,000 metric tons from the U.S. to India.
The U.S. propane inventories remain at the higher end of their five-year range at 82.9 million barrels last week, 37.8% higher than the same time last year. As the global LPG supplies continue to grow, we can expect more downward pressure on global prices which will encourage LPG cracking over naphtha for the Northwest Europe and Far East petrochemical industries. The arbitrage between the Middle East propane and butane benchmark pricing for February versus the Mont Belvieu spot stands at about $300 per metric ton and $213 per metric ton respectively. This arbitrage is exacerbated by the U.S.-China tariff dispute which has resulted in significant cargo swapping in Northeast Asia, maintaining China LPG prices at a premium.
Perhaps the phase one trade deal recently signed between the U.S. and China will change trade for all the NGL products in the coming months, as they are all included in the list of products which China has committed to import from the United States. In such a case, we are likely to see LPG prices return to normal levels and Chinese LPG prices set closer to the Far East index. According to Clarksons, the VLGC fleet order book stands currently at about 15% or about 42 vessels. With 40 vessels in the fleet over 20 years of age, we expect the increased compliance and operating costs will drive older, less efficient vessels to demolition.
Dorian LPG currently operates seven scrubber-fitted vessels, as John mentioned, of which five were fitted in the last five months within a period of 33 days including completion of their special survey and dry docking and a ballast water treatment installation in two of them. Our hybrid scrubber retrofit program continues with two vessels currently being retrofitted. During my recent visit to the Far East, the issues of congestion and manpower and material shortages were discussed with the shipyards, now further impacted by the coronavirus epidemic resulting to the voluntary extension of the Chinese New Year Spring Festival holiday to early next week. One of our vessels, while being retrofitted in China, has been impacted by this extension of the Chinese New Year holidays and it has delayed the work's completion beyond our expectations.
We have three more vessels planned for scrubber retrofit and dry docking in the next few months which we expect to complete timely, subject to the coronavirus, of course. During January 2020, we saw shortages and price volatility in many areas for the new compliant fuels, the very low sulfur fuel oil, resulting in wide price differentials versus the high sulfur fuel oil. All Dorian LPG vessels that were not scrubber fitted transitioned on the average by the end of December to very low sulfur fuel oil without any issue. We expect pricing differentials between the two fuels to remain around the $200 metric ton per month in the coming year and that our scrubber ECO vessels will continue to earn significant time charter equivalent over non-scrubber ECO and modern VLGC vessels. Thank you. I'll pass it over now to John.
Thank you, John. Michelle, we can go to questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Omar Nokta with Clarksons Platou Securities. Please proceed with your question.
Okay. Yeah, thank you. Hi, guys.
Hello, Omar.
Hi.
Hi, there. Yeah, just wanted maybe just to touch on maybe, John Lycouris, your last comments about the vessel that's in the yard in China and how you're expecting to see delays beyond what you had anticipated. Is that sort of like an open-ended delay or is it more, it's adding a couple weeks to the expected timeframe?
Omar, as I said, subject to the coronavirus epidemic, we expect that she will finish in the next two weeks. It still has not recommenced operations and works because this extension has gone on to the ninth of February. We expect that completion will happen. However, there has been no work whatsoever for now two weeks.
Yeah. To give you a picture, Omar, the ship is in kind of lockdown, right? Nobody goes on, the crew cannot go off. There's nobody in the shipyard. Like John said, ninth of February, they're supposed to come back to work. Once that date comes, we'll know what's happening and how quickly it's going to happen. When they work, they work very efficiently. We haven't had many complaints with the work that we've been doing in China. Most of our work so far has been done in Singapore, and there we were very satisfied. In China, not quite the same but still moving fine until the Chinese New Year and the coronavirus on top of it.
Okay, it's more of like it's a function of both events happening simultaneously.
Yeah. More the second now because the Chinese New Year was supposed to have finished already. The extension has been because of the coronavirus.
Okay. Do you think that that may be, as you think about the next three scrubber installations, does that maybe cause you to rejigger the timeframe on that and maybe just keep the ships trading for a bit longer and then reassessing the scrubber down the line?
Yeah. I don't know. I don't remember which of them. Are all three for Chinese yards, John? Do you know?
Yes.
They're all Chinese yards. Well, one of the things we might look at doing is doing them in another non-Chinese yard. It's an open question. We rejigged already a little bit the dates, partly because of the trading returns that we could have. If we see difficulties in the yards coming up continuing and the trading returns are like they are now, we would probably keep the ships trading until we can see an opportunity to have a definitive timeframe for doing the retrofit.
Yeah. No.
I think we've been doing, like John said, our average has been about 35 days which I think probably is a good industry. How many?
33. Less than 30.
33. You know me.
No, that's pretty decent then, relative to what we've been hearing.
Right.
Maybe just switching a slight gears, still sticking with the yards.
Omar, I'm sorry to interrupt you. I have to say that these are hybrid scrubbers, which is a lot more involved.
Yeah.
Than regular. I'm sorry to interrupt.
Yeah.
Okay. No, appreciate that. That's even more impressive, the 33 days. Just maybe thinking about the fleet capacity. Obviously, there hasn't been much ordering. There's been a handful of orders recently. I think Avance was most recently ordered in December, a couple of VLGCs. John, I remember, if I recall on the last earnings call, you were traveling, and I had asked about new buildings and it was a word you didn't like to hear. How do you think, just with the way the market's been shaping up and how it's been counter-seasonally much stronger than expected and looking ahead, and yeah, there's some uncertainty near term with coronavirus and whatnot but how do you think about the new building market for Dorian as it stands today?
Tim and I were in Korea recently. Tim Hansen, our Chief Commercial Officer. We were in Korea in January and I have to say, the yards are keen to build. The interest they're seeing, including from us, is tempered still by the uncertainties. Whatever we've seen ordered except for Avance has been against charter inquiries. I would like to think there's not going to be a speculative wave of new buildings and certainly, we're not going to be doing anything that would be reckless in terms of adding numbers to the fleet. We think the fleet is fairly well-balanced and in our own plans we're not excluding the possibility of doing something. If we do, it'll be the sort of proportions that would not really affect the overall balance of demand and supply.
Yeah. Understood. Okay, John. Thank you, and thanks everyone for the answers.
Sure. Thanks, Omar.
Thanks, Omar.
Thank you. Our next question comes from the line of Michael Webber with Webber Research & Advisory. Please proceed with your question.
Hey, guys. It's actually Chris on for Mike. How's everyone?
Hey, Chris. Morning.
Hi, Chris.
Hey, guys. Thank you for all the color and the impact that you're seeing on the coronavirus throughout the rest of the market. I guess I was seeing port calls are down in some other sectors, around 50% in China, and wanted to see the impact it's having on Chinese propane and butane imports for the VLGCs? Is it something similar? Are you guys seeing it?
We have a ship discharging in China as we speak and we haven't seen anything very significant to say about port calls. Not yet. Frankly, I'd expect that we would. Actually, we've got Tim Hansen on the line. He may be able to give you more up-to-date information on that. Tim, do you have anything?
No, I don't think. The reason maybe also we haven't seen anything yet is that due to the holidays, the Chinese have basically reduced imports over the holidays because they know all the ports will kind of stop working. We might see once they return after the holidays and imports start again some delays. Yeah, so far, we haven't seen anything.
All right. Okay, thanks. I guess a follow-on to that is have you seen or expect any sort of knock-on effects for Chinese PDH plants coming online now?
The question is whether we've seen anything new with the PDH plants?
Delays.
Any delays?
Yeah.
No.
Great.
No. It's a good question. Ultimately, that would be another thing that would be affected.
Right.
I think we, together with the rest of the world, are looking for a V-shaped recovery at some point. Unfortunately, it's a play that is still on stage, and we won't know it. We'll just have to play out.
Okay. Yeah. I guess something a little topical, and you guys covered this a bit around the volatility and fuel spread. I know you guys have done work with LPG as a marine fuel, and I wanted to see if you could give any details or updates since the last call.
Sure. Well, we continue our assessment and trying to see if we can bring the participants in a project like that, which would be the engine manufacturer, the engineering companies, the shipyards, and all that, to a point where we think the price is more affordable. So far, we've been making progress. Our position is still to wait and see how our friends do with the first four ships that they're retrofitting this quarter.
Okay. Thanks, John. Thanks for the color. That's it for me.
Thanks, Chris.
Thank you, Chris.
Thank you. Our next question comes from the line of Sean Morgan with Evercore. Please proceed with your question.
Hey, guys. In light of the disruption you guys are seeing now with coronavirus in China at the yards for the scrubbers, a couple questions just in that vein. The estimated quarterly cash outlays, is that taking into account that everyone is back to work on February 9th, or should we expect that March 31st quarter cash outlay of $11 might get pushed back into the following quarter?
Ted will answer you.
At this point, it's based on people going back to work, as John indicated, because that's our best guess when we put it together. Even if it slips a couple of weeks, that shouldn't have a material impact on the timing. As John and John both said, it's still a bit of a wild card, right? If there's further slowdowns because of the coronavirus outbreak they can move things around further.
Okay. Back in 2018, you guys had talked about an MOU with Hyundai to undertake examining retrofitting the VLGCs. That was just touched on. Could that be done in a Korean yard, or is there a possibility to do that in lieu of additional scrubbers if there's really material delays and in light of what you're seeing in terms of the fuel spread between VLSFO and high sulfur fuel oil?
Well, we had earmarked the ships that would not be fitted with scrubbers to be candidates for the LPG.
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modification. I think that we're still there. Also regarding where it could be done, yes, it could be done in Korea or in a Chinese shipyard.
Okay, great. Thanks, guys.
Thanks.
Thank you. Our next question comes from the line of [Matt Spy] with DNB. Please proceed with your question.
Hi, guys. Just touching a bit on the three a bit older vessels, the Captain, first one is, how do you see the earnings differential developed in the last few months and quarters? Looking a bit further ahead, how do you see strategically these vessels, what options do you see, and would you consider divesting them if you're able to in a strong market, for instance?
Since I don't want to answer that question we don't at the moment have any ships put aside for sale. The ships are performing very well, and we're happy to have them in this market. I think that probably is the best answer I can give you.
Yeah. In terms of earnings differential, do you see any based on fuel consumption?
Well, only what you know. Only the Eco ships are more economical, and I think we've given those numbers. The differentials obviously change with the price of the fuel oil. On an overall basis, whereas the prices have gone up then the Eco ships, the greater advantage to the three captains. The Captain, we try to schedule them on shorter voyages and do it where the impact of the higher fuel cost would be mitigated.
Okay, makes sense. Thank you so much. That's all for me.
Thanks, Matt.
Thanks, Matt.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our next question comes from the line.
Star one.[crosstalk]
Our next question comes from the line of Thomas Korsdalen with Arctic Securities. Please proceed with your question.
Good morning, gentlemen. I just had a general question with the reference to the paragraph where you discussed the market and the seasonality. I'm not quite sure the wording here, how I should see this when you say that the activity has not yielded expected seasonal results, I read this as it's been better than what you should expect from this quarter. Is this correct?
Correct.
Thank you very much. That was all.
Okay. Thank you. Thanks.
Thank you. There are no further questions at this time. I'd like to turn the call back over to Mr. Hadjipateras for any closing remarks.
Thank you, Michelle. Thank you everyone for joining. We look forward to next quarter, onward and better. Thank you. Bye-bye.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.