Dynagas LNG Partners LP To Keep Deleveraging and Boosting Its Liquidity Moving Forward

Δευτέρα, 22 Νοεμβρίου 2021 16:54
Dynagas LNG Partners LP To Keep Deleveraging and Boosting Its Liquidity Moving Forward

Dynagas LNG Partners LP, an owner and operator of liquefied natural gas (“LNG”) carriers, announced its results for the three and nine months ended September 30, 2021.

Third Quarter Highlights:

• Net income and earnings per common unit of $11.3 million and $0.23, respectively;

• Adjusted Net Income(1) of $11.6 million and Adjusted Earnings per common unit of $0.24;

• Adjusted EBITDA(1) $24.8 million;

• 100% fleet utilization(2);

• Declared and paid cash distribution of $0.5625 per unit on its Series A Preferred Units (NYSE: “DLNG PR A”) for the period from May 12, 2021 to August 11, 2021 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from May 22, 2021 to August 21, 2021;

• The LNG carrier Arctic Aurora was delivered to Equinor ASA (“Equinor”) to commence its new time charter on September 15, 2021 immediately upon expiration of the previous charter party with Equinor, resulting in no lapse in time between the previous and the current time charters. The term “in direct continuation” does not refer to the contracted income.

Subsequent Events:

• Declared a quarterly cash distribution of $0.5625 on the Series A Preferred Units for the period from August 12, 2021 to November 11, 2021, which was paid on November 12, 2021 to all preferred Series A unit holders of record as of November 5, 2021; and

• Declared a quarterly cash distribution of $0.546875 on the Series B Preferred Units for the period from August 22, 2021 to November 21, 2021, which is payable on November 22, 2021 to all preferred Series B unit holders of record as of November 15, 2021.

(1)Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP and other related information.

(2)Please refer to Appendix B.

CEO Commentary:

We are pleased to report the results for the three and nine months period ended September 30, 2021.

All six LNG carriers in our fleet are operating under their respective long-term charters with international gas producers with an average remaining contract term of 7.2 years. As of November 18, 2021, our estimated contracted revenue backlog is $1.06 billion.

With the Arctic Aurora successfully delivered to Equinor on September 15, 2021, all six of our LNG carriers are contracted with major international energy companies. The earliest contracted re-delivery date for any of our six LNG carriers, subject to the terms of the applicable charter, is in the third quarter of 2023 (the Arctic Aurora), with the second earliest contracted re-delivery date (for the Clean Energy) in the first quarter of 2026.

For the third quarter of 2021, we reported Net Income of $11.3 million, Earnings per common unit of $0.23, Adjusted Net Income of $11.6 million, Adjusted Earnings per common unit of $0.24 and Adjusted EBITDA of $24.8 million.

Despite the continuing operational and logistical challenges caused by the COVID-19 outbreak, we are pleased to report 100% utilization of our fleet for the sixth quarter in a row.

Going forward, we intend to continue our strategy of using our cash flow generation to deleverage our balance sheet and reinforce our liquidity to build equity value over time and enhance our ability to pursue future growth initiatives.

Financial Results Overview:

(1) Adjusted Net Income, Adjusted EBITDA, and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

Three Months Ended September 30, 2021 and 2020 Financial Results

Net Income for the three months ended September 30, 2021 was $11.3 million as compared to a Net Income of $10.0 million in the corresponding period in 2020, which represents an increase of $1.3 million, or 13.0%. This increase in net income for the three months ended September 30, 2021 compared to the corresponding period in 2020, was mainly attributable to the increase in voyage revenues as well as to the decrease in finance costs, partially offset by the increase in loss on our interest rate swap transaction entered into in May 2020.

Adjusted Net Income for the three months ended September 30, 2021 was $11.6 million compared to $10.2 million in the corresponding period in 2020, representing a net increase of $1.4 million or 13.7%, mainly due to the increase in voyage revenues as well as to the decrease in finance costs compared to the corresponding period in 2020.

Voyage revenues for the three months ended September 30, 2021 and 2020 were $34.7 million and $34.3 million respectively.

The Partnership reported average daily hire gross of commissions(1) of approximately $62,800 per day per vessel in the three-month period ended September 30, 2021, compared to approximately $62,500 per day per vessel in the corresponding period in 2020. During both three-month periods ended September 30, 2021 and 2020, the Partnership’s vessels operated at 100% utilization.

Vessel operating expenses were $7.0 million, which corresponds to daily operating expenses per vessel of $12,641 in the three-month period ended September 30, 2021, as compared to $7.2 million, or daily operating expenses per vessel of $13,074 in the corresponding period in 2020. This decrease in operating expenses for the three months ended September 30, 2021 is mainly attributable to lower expenses related to the vessels’ technical maintenance costs, compared to the corresponding period in 2020.

Adjusted EBITDA for the three months ended September 30, 2021 was $24.8 million, as compared to $24.2 million for the corresponding period in 2020. The increase of $0.6 million in Adjusted EBITDA for the three months ended September 30, 2021, or 2.5%, was mainly due to the increase in voyage revenues and the decrease in operating expenses compared to the corresponding period in 2020 as explained above.

Interest and finance costs, net, were $5.3 million in the three months ended September 30, 2021 as compared to $6.0 million in the corresponding period in 2020, which represents a decrease of $0.7 million, or 11.7% due to the lower weighted average interest and the reduction in the average interest bearing debt as compared to the corresponding period in 2020.

For the three months ended September 30, 2021, the Partnership reported Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, of $0.23 and $0.24 respectively, after taking into account the distributions relating to the Series A Preferred Units and the Series B Preferred Units on the Partnership’s Net income/Adjusted Net Income. Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, are calculated on the basis of a weighted average number of 36,802,247 common units outstanding during the period and in the case of Adjusted Earnings per common unit after reflecting the impact of the non-cash items presented in Appendix B of this press release.

Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

Amounts relating to variations in period–on–period comparisons shown in this section are derived from the condensed financials presented below.

(1) Average daily hire gross of commissions represents voyage revenue excluding the non-cash time charter deferred revenue amortization, divided by the Available Days in the Partnership’s fleet as described in Appendix B.

Liquidity/ Financing/ Cash Flow Coverage

During the three months ended September 30, 2021, the Partnership generated net cash from operating activities of $19.8 million as compared to $27.6 million in the corresponding period in 2020, which represents a decrease of $7.8 million, or 28.3%, mainly as a result of working capital variations.

As of September 30, 2021, the Partnership reported total cash of $91.3 million (including $50.0 million of restricted cash). The Partnership’s outstanding indebtedness as of September 30, 2021 under the $675.0 Million Credit Facility amounted to $579.0 million, gross of unamortized deferred loan fees and including $48.0 million, which were repayable within one year.

As of September 30, 2021, the Partnership had unused availability of $30.0 million under its interest free $30.0 million revolving credit facility with its Sponsor, or the $30.0 Million Revolving Credit Facility, which was extended on November 14, 2018, and is available to the Partnership at any time until November 2023.

Vessel Employment

As of November 18, 2021, the Partnership had estimated contracted time charter coverage(1) for 100% of its fleet estimated Available Days (as defined in Appendix B) for 2021, 100% of its fleet estimated Available Days for 2022 and 96% of its fleet estimated Available Days for 2023.

As of the same date, the Partnership’s estimated contracted revenue backlog (2) (3) was $1.06 billion, with an average remaining contract term of 7.2 years.

(1) Estimated time charter coverage for the Partnership’s fleet is calculated by dividing the fleet contracted days on the basis of the earliest estimated delivery and redelivery dates prescribed in the Partnership’s current time charter contracts, net of scheduled class survey repairs by the number of expected Available Days during that period. Actual time charter coverage may vary.

(2) The Partnership calculates its estimated contracted revenue backlog by multiplying the contractual daily hire rate by the expected number of days committed under the contracts (assuming earliest delivery and redelivery and excluding options to extend), assuming full utilization. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods disclosed due to, for example, dry-docking and/or special survey downtime, maintenance projects, off-hire downtime and other factors that result in lower revenues than the Partnership’s average contract backlog per day.

(3) $0.15 billion of the revenue backlog estimate relates to the estimated portion of the hire contained in certain time charter contracts with Yamal which represents the operating expenses of the respective vessels and is subject to yearly adjustments on the basis of the actual operating costs incurred within each year. The actual amount of revenues earned in respect of such variable hire rate may therefore differ from the amounts included in the revenue backlog estimate due to the yearly variations in the respective vessels’ operating costs.

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