Dynagas LNG Partners LP, an owner and operator of liquefied natural gas (“LNG”) carriers, yesterday announced its results for the three months and year ended December 31, 2019.

Quarter Highlights:

• Net income and earnings per common unit of $5.5 million and $0.07 respectively;
• Adjusted Net Income(1) and Adjusted EBITDA(1) of $5.6 million and $24.0 million, respectively;
• Distributable Cash Flow(1) of $10.2 million;
• 100% fleet utilization;
• Repayment of the $250 million aggregate principal amount 6.25% senior unsecured notes (the “Notes”) on October 30, 2019; and
• Cash distribution of $0.5625 per unit on its Series A Preferred Units (NYSE: “DLNG PR A”) for the period from August 12, 2019 to November 11, 2019 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from August 22, 2019 to November 21, 2019.
Subsequent Events:

• Declared a quarterly cash distribution of $0.5625 on the Series A Preferred Unit for the period from November 12, 2019 to February 11, 2020, which was paid on February 12, 2020; and
• Declared a quarterly cash distribution of $0.546875 on the Series B Preferred Units for the period from November 22, 2019 to February 21, 2020, which was paid on February 24, 2020;
(1) Adjusted Net Income, Adjusted Earnings/(Loss) per common unit, Distributable Cash Flow and Adjusted EBITDA 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.

CEO Commentary:

We are pleased to report the results for the three months and year ended December 31, 2019. Upon the delivery of our vessel Lena River to Yamal LNG on July 1, 2019 pursuant to her multi-year charter, each of our six LNG carriers are operating under their respective term charters with international gas producers with an average remaining contract term of 8.6 years. The earliest possible re-chartering availability in our fleet is in the third quarter of 2021, which is the earliest contracted re-delivery date for one of our six LNG carriers (Arctic Aurora) with the next carrier (Clean Energy) becoming available at the earliest in the first quarter of 2026.

The fleet performed well during the fourth quarter with a utilization of 100%. We reported Net Income of $5.5 million for the fourth quarter and Adjusted EBITDA of about $24.0 million, the latter of which is in line with our previous estimate of an annualized EBITDA of approximately $95.0 million and which assumed that all of our vessels had been delivered pursuant to their respective long-term charters (i.e., from July 1, 2019).

We have in place term charter contracts with international energy companies for each of our vessels that generate cash flows that may be used towards the increased amortization requirements of our syndicated $675 million senior secured term loan, or the Credit Facility, which is expected to build equity value over time. As a result of our financial profile, which is intended to deleverage our debt over time, we expect to be better positioned for future growth initiatives as we expect global LNG markets to continue their robust development.

Three Months Ended December 31, 2019 and 2018 Financial Results

Net Income for the three months ended December 31, 2019 was $5.5 million as compared to a Net Loss of $0.9 million in the corresponding period of 2018, which represents an increase of $6.4 million, or 711.1%. The increase in net income for the three months ended December 31, 2019 was mainly attributable to the increase in voyage revenues as well as the decrease in dry docking and special survey costs and finance costs of the quarter, as further discussed below.

Adjusted Net Income and Distributable Cash Flow for the quarter were $5.6 million and $10.2 million, respectively, compared to $1.3 million and $5.5 million, respectively, in the corresponding period of 2018, which represents a net increase of $4.3 million or 330.8% and a net increase of $4.7 million or 85.5%, respectively, mainly due to increased voyage revenues and decreased finance costs.

Voyage revenues for the three months ended December 31, 2019 were $34.3 million as compared to $31.0 million for the corresponding period of 2018, which represents an increase of $3.3 million, mainly as a result of the higher revenues earned on Lena River further to its delivery to its multi-year contract with Yamal Trade Pte (“Yamal”) in July 2019.

The Partnership reported average daily hire gross of commissions(1) of approximately $62,200 per day per vessel in the three-month period ended December 31, 2019, compared to approximately $57,500 per day per vessel in the corresponding period of 2018. During the three-month periods ended December 31, 2019 and 2018, the Partnership’s vessels operated at 100% and 99.7% utilization, respectively.

Vessel operating expenses were $7.1 million, which corresponds to a daily rate per vessel of $12,799 in the three-month period ended December 31, 2019, as compared to $6.4 million, or a daily rate per vessel of $11,558 in the corresponding period of 2018. This increase is mainly attributable to the increased crewing and technical expenditures on certain of the Partnership’s vessels in the three months ended December 31, 2019, as compared to the corresponding quarter of 2018.

Adjusted EBITDA for the three month period ended December 31, 2019 was $24.0 million, as compared to $21.6 million for the corresponding period of 2018. The increase of $2.4 million, or 11.1%, was mainly due to the net effect of the increase in revenues and increase in the vessel’s operating expenses as explained above.

Interest and finance costs were $11.0 million in the three-month period ended December 31, 2019 as compared to $13.1 million in the corresponding period of 2018, which represents a decrease of $2.1 million, or 16.0% due to the lower weighted average interest as compared to the corresponding period of 2018.

For the three-month period ended December 31, 2019, the Partnership reported Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, of $0.07 and $0.08, respectively, after taking into account the Series A Preferred Units’ interest and the Series B Preferred Units’ interest 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 35,490,000 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, Distributable Cash Flow and Adjusted Earnings/(Loss) 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 and amortization of prepaid charter revenue, 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 December 31, 2019, the Partnership generated net cash from operating activities of $13.5 million as compared to $9.0 million in the corresponding period of 2018, which represents an increase of $4.5 million, or 50.0%.

As of December 31, 2019, the Partnership reported total cash of $66.2 million (including $50.0 million of restricted cash).

During the three months ended December 31, 2019, the Partnership repaid the $250 million aggregate principal amount of its 6.25% senior unsecured notes at their maturity. The Partnership’s outstanding indebtedness as of December 31, 2019 under the Credit Facility, amounted to $663.0 million, gross of unamortized deferred loan fees and including $48.0 million, which was repayable within one year.

As of December 31, 2019, the Partnership had unused availability of $30.0 million under its interest free $30 million revolving credit facility with its Sponsor, or the $30 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 March 12, 2020, the Partnership had estimated contracted time charter coverage(1) for 100% of its fleet estimated Available Days (as defined in Appendix B) for 2020, 92% of its fleet estimated Available Days for 2021 and 83% of its fleet estimated Available Days for 2022.

As of the same date, the Partnership’s contracted revenue backlog estimate (2)(3) was $1.24 billion, with an average remaining contract term of 8.6 years.

(1) 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.

(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) $0.17 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.
Source: Dynagas LNG Partners LP