Dynagas LNG Partners LP, an owner and operator of liquefied natural gas (“LNG”) carriers, today announced its results for the three months and year ended December 31, 2020, reports Hellenic Shipping News.
Fourth Quarter Highlights
• Net income and earnings per common unit of $10.6 million and $0.22, respectively;
• Adjusted Net Income(1) of $10.7 million and Adjusted Earnings per common unit of $0.22;
• Adjusted EBITDA(1) of $24.4 million;
• 100% fleet utilization; and
• Declared and paid cash distribution of $0.5625 per unit on its Series A Preferred Units (NYSE: “DLNG PR A”) for the period from August 12, 2020 to November 11, 2020 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from August 22, 2020 to November 21, 2020.
Subsequent Events
• Declared a quarterly cash distribution of $0.5625 on the Partnership’s Series A Preferred Units for the period from November 12, 2020 to February 11, 2021, which was paid on February 12, 2021;
• Declared a quarterly cash distribution of $0.546875 on the Partnership’s Series B Preferred Units for the period from November 22, 2020 to February 21, 2021, which was paid on February 22, 2021; and
• Sold $0.83 million of common units at an average price per unit of $2.9758 pursuant to the A&R Sales Agreement (as defined below), which has $29.2 million of remaining availability for future repurchases.
• In March 2021, the Partnership entered into a new master management agreement (the “Master”) with Dynagas Ltd. (the “Manager”), which includes a new standard set of terms for technical and commercial management services (“Standard Management Terms”) for the Partnership’s six vessels effective as from January 1, 2021. This agreement amends, restates and supersedes the previous technical and commercial management agreements and reduces the technical management fees payable from $3,167 per day per vessel to $2,750 per day per vessel commencing on January 1, 2021.
Adjusted Net Income, Adjusted Earnings per common unit, 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 Comments
We are pleased to report the results for the three months and full year ended December 31, 2020.
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 7.5 years. Our estimated contracted revenue backlog is approximately $1.1 billion. Absent any unforeseen events or unscheduled dry dockings the earliest contracted re-delivery date for any of our six LNG carriers is in the third quarter of 2021 (the Arctic Aurora), with the next carrier (the Clean Energy) becoming available for re-chartering in the first quarter of 2026. The current short term market for LNG shipping is challenging, however, we believe this market will improve going into the second half of the year driven by seasonal demand.
Improved Performance
For the fourth quarter of 2020, we reported Net Income of $10.6 million, earnings per common unit of $0.22, and Adjusted EBITDA of $24.4 million. This improved performance is attributable to an increase in voyage revenues and a decrease in interest and finance costs compared to the corresponding period in 2019, coupled with stable vessel operating expenses during this period.
Despite the ongoing operational challenges, the industry is facing as a result of the COVID-19 outbreak, we are pleased to report 100% utilization for our fleet for the fourth quarter of 2020. The ongoing impact of the COVID-19 outbreak has been operationally manageable due to our manager’s COVID-19 response plan which has been implemented with the support of our seafarers, charterers, and employees, for which we are grateful.
Subsequent to the quarter, we entered into an amended and restated agreement with our manager under which the technical management fee was reduced by 13%, which is equivalent to USD 417 per vessel per day effective from January 1, 2021.
Going forward, we intend to continue our strategy of using our cash flow generation to deleverage our balance sheet and reinforce our liquidity so as to build equity value over time. This, we believe, will enhance our ability to pursue future growth initiatives.
Financial Results Overview
Financial Results
Net Income for the three months ended December 31, 2020 was $10.6 million as compared to a Net Income of $5.5 million in the corresponding period of 2019, which represents an increase of $5.1 million, or 92.7%. This increase was mainly attributable to a decrease in interest and finance costs in the three months ended December 31, 2020, as further analyzed below.
Adjusted Net Income for the three months ended December 31, 2020 was $10.7 million compared to $5.6 million in the corresponding period of 2019, representing a net increase of $5.1 million or 91.1%.
Voyage revenues for the three-month periods ended December 31, 2020 and 2019 were $34.4 million and $34.3 million, respectively.
Average Daily Hire Gross
The Partnership reported average daily hire gross of commissions of approximately $62,700 per day per vessel in the three-month period ended December 31, 2020, compared to approximately $62,200 per day per vessel in the corresponding period of 2019. During both three-month periods ended December 31, 2020 and December 31, 2019, the Partnership’s vessels operated at 100% utilization.
Vessel operating expenses were $7.1 million, which corresponds to a daily rate per vessel of $12,940 in the three-month period ended December 31, 2020, as compared to $7.1 million, or a daily rate per vessel of $12,799 in the corresponding period of 2019.
Adjusted EBITDA for the three months ended December 31, 2020 was $24.4 million, as compared to $24.0 million for the corresponding period of 2019, which corresponds to an increase of $0.4 million, or 1.7%.
Interest and finance costs, net, were $5.7 million in the three months ended December 31, 2020 as compared to $10.4 million in the corresponding period of 2019, which represents a decrease of $4.7 million, or 45.2%. The decrease in interest and finance costs is mainly due to the lower weighted average interest rate and the reduction in the average interest bearing debt.
Adjusted Earnings per Common
For the three months ended December 31, 2020, the Partnership reported basic and diluted both Earnings per common unit and Adjusted Earnings per common unit of $0.22, 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 35,612,580 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/ (Loss) per common unit are not recognized measures under U.S. GAAP.
Amounts relating to variations in period–on–period comparisons shown in this section are derived from the condensed financials presented below.
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 December 31, 2020, the Partnership generated net cash from operating activities of $14.2 million as compared to $13.5 million in the corresponding period of 2019, which represents an increase of $0.7 million, or 5.2%.
As of December 31, 2020, the Partnership reported total cash of $75.0 million (including $50.0 million of restricted cash). The Partnership’s outstanding indebtedness as of December 31, 2020 under the $675.0 Million Credit Facility amounted to $615.0 million, gross of unamortized deferred loan fees and including $48.0 million, which is repayable within one year.
About The Partnership
On July 2, 2020, the Partnership entered into a sales agreement (the “Original Agreement”) with Virtu Americas LLC, as sales agent, for the offer and sale, from time to time, of up to an aggregate of $30.0 million of our common units representing limited partnership interests under an “at-the-market” offering program. In August 2020, the Partnership entered into an amended and restated ATM Sales Agreement (the “A&R Sales Agreement”), for the offer and sale of common units representing limited partnership interests, having an aggregate offering price of up to $30.0 million (the “Current ATM Program”).
Upon entry into the A&R Sales Agreement, the Partnership terminated its prior at-the-market program established in July of 2020 pursuant to the Original Agreement (the “Prior ATM Program”). At the time of such termination, $0.4 million of the Partnership’s common units out of an aggregate of $30.0 million of its common units were sold pursuant to the Prior ATM Program.
As of December 31, 2020, 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 and is available to the Partnership at any time until November 2023.
Vessel Employment
As of March 16, 2021, the Partnership had estimated contracted time charter coverage(1) for 90% of its fleet estimated Available Days (as defined in Appendix B) for the remainder of 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 $1.10 billion, with an average remaining contract term of 7.5 years.
Recent Developments
As of the date of this report, we have sold $0.83 million of common units at an average price per unit of $2.9758 pursuant to Current ATM Program, which following such sales has $29.2 million of remaining availability.
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.
Estimated Contracted Revenue Backlog
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.
Operating Expenses
$0.16 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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Source: Hellenic Shipping News
