Dynagas LNG Partners LP, an owner and operator of liquefied natural gas (“LNG”) carriers, announced its results for the three months ended March 31, 2022.
• Net income and earnings per common unit (basic and diluted) of $23.9 million and $0.57, respectively;
• Adjusted Net Income(1) of $10.0 million and Adjusted Earnings(1) per common unit (basic and diluted) of $0.19;
• Adjusted EBITDA(1) $22.9 million;
• 100% fleet utilization(2); 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 November 12, 2021 to February 11, 2022 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from November 22, 2021 to February 21, 2022.
Declared a quarterly cash distribution of $0.5625 on the Partnership’s Series A Preferred Units for the period from February 12, 2022 to May 11, 2022, which was paid on May 12, 2022 to all preferred Series A unit holders of record as of May 5, 2022; and
Declared a quarterly cash distribution of $0.546875 on the Partnership’s Series B Preferred Units for the period from February 22, 2022 to May 21, 2022, which was paid on May 23, 2022 to all preferred Series B unit holders of record as of May 16, 2022.
(1) Adjusted Net Income 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.
(2) Please refer to Appendix B.
We are pleased to report the results for the three months ended March 31, 2022.
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 6.6 years. As of June 27, 2022, our estimated contracted revenue backlog1 2 was $0.98 billion.
The earliest contracted re-delivery date for any of our six LNG carriers is in the third quarter of 2023 (for the Arctic Aurora), with the second earliest contracted re-delivery date in the first quarter of 2026 (for the Clean Energy), both subject to the terms of the applicable charter.
For the first quarter of 2022, we reported Net Income of $23.9 million, earnings per common unit of $0.57, Adjusted Net Income of $10.0 million and Adjusted EBITDA of $22.9 million. While future results may vary, we are pleased to report 100% utilization for our fleet for the eighth quarter in a row.
We are in a period of high demand for LNG shipping, which we believe will benefit the Partnership.
We continue our strategy of using our cash flow generation to deleverage our balance sheet and reinforce our liquidity so as to build equity value. This, we believe, will enhance our ability to pursue future growth initiatives.
Russian Sanctions Developments
Due to the ongoing Russian conflicts with Ukraine, the United States (“U.S.”), European Union (“E.U.”), Canada and other Western countries and organizations have announced and enacted numerous sanctions against Russia to impose severe economic pressure on the Russian economy and government.
As of today’s date, and to the Partnership’s knowledge:
• Current U.S. and E.U. sanctions regimes do not materially affect the business, operations or financial condition of the Partnership and the Partnership’s counterparties are currently performing their obligations under their respective time charters in compliance with applicable U.S. and E.U. rules and regulations;
• Sanctions legislation in the E.U. continues to exclude LNG;
• The charters of the Amur River, the Ob River and the Clean Energy are effectively under the control of the German government for an indefinite period of time as of April 4th when Gazprom Germania (and all its subsidiaries), the indirect parent of Gazprom Marketing and Trading (GMT Singapore), was placed under the control of the German Government (Federal Network Agency) since Gazprom Germania operates critical energy infrastructure in Germany;
• Sanctions legislation has been changing and the Partnership continues to monitor such changes as applicable to the Partnership and its counterparties.
The full impact of the commercial and economic consequences of the Russian conflict with Ukraine is uncertain at this time. The Partnership cannot provide any assurance that any further development in sanctions, or escalation of the Ukraine situation more generally, will not have a significant impact on its business, financial condition or results of operations. Please see the section of this report entitled “Forward Looking Statements.
Three Months Ended March 31, 2022 and 2021 Financial Results
Net Income for the three months ended March 31, 2022 was $23.9 million as compared to a Net Income of $15.9 million for the corresponding period of 2021, which represents an increase of $8.0 million, or 50.3%. The increase in net income for the three months ended March 31, 2022 was mainly attributable to the increase in the gain on our interest rate swap transaction compared to the corresponding period of 2021, which was partly offset by an increase in the vessels operating expenses and dry-docking and special survey costs, attributable to the scheduled dry-dock of the Clean Energy, which commenced on March 16, 2022.
Adjusted Net Income for the three months ended March 31, 2022 was $10.0 million compared to $10.6 million for the corresponding period of 2021, which represents a net decrease of $0.6 million or 5.7%, mainly due to the increase in the vessels’ operating expenses.
Voyage revenues for the three months ended March 31, 2022 were $33.3 million as compared to $33.4 million for the corresponding period of 2021.
The Partnership reported average daily hire gross of commissions(1) of approximately $63,130 per day per vessel in the three-month period ended March 31, 2022, compared to approximately $62,250 per day per vessel for the corresponding period of 2021. During both three-month periods ended March 31, 2022 and March 31, 2021, the Partnership’s vessels operated at 100% utilization.
Vessel operating expenses were $7.6 million, which corresponds to a daily rate per vessel of $13,998 in the three-month period ended March 31, 2022, as compared to $6.9 million, or a daily rate per vessel of $12,739 in the corresponding period of 2021. This increase is mainly attributable to increased planned technical maintenance and supply costs on the Partnership’s vessels in the three months period ending March 31, 2022 compared to the corresponding period in 2021.
Adjusted EBITDA for the three months ended March 31, 2022 was $22.9 million, as compared to $23.9 million for the corresponding period of 2021. The decrease of $1.0 million, or 4.2%, was mainly attributable to the combined effect of the decrease in revenues of the Clean Energy due to the off hire period during its’ scheduled dry-dock and the increase in the vessels’ operating expenses as explained above.
Interest and finance costs, net were $5.1 million in the three months ended March 31, 2022 as compared to $5.5 million in the corresponding period of 2021, which represents a decrease of $0.4 million, or 7.3% due to the reduction in interest bearing debt as compared to the corresponding period of 2021, which was slightly counterbalanced by the increase in the weighted average interest rate in the three months period ending March 31, 2022, compared to the corresponding period in 2021.
For the three months ended March 31, 2022, the Partnership reported basic and diluted Earnings per common unit and Adjusted Earnings per common unit, of $0.57 and $0.19 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 March 31, 2022, the Partnership generated net cash from operating activities of $24.8 million as compared to $22.9 million in the corresponding period of 2021, which represents an increase of $1.9 million, or 8.3%.
As of March 31, 2022, the Partnership reported total cash of $106.6 million (including $50.0 million of restricted cash). The Partnership’s outstanding indebtedness as of March 31, 2022 under the $675.0 Million Credit Facility amounted to $555.0 million, gross of unamortized deferred loan fees and including $48.0 million, which was repayable within one year.
As of March 31, 2022, 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.
As of June 27, 2022, the Partnership had estimated contracted time charter coverage(1) for 100% of its fleet estimated Available Days (as defined in Appendix B) for 2022, 96% of its fleet estimated Available Days for 2023 and 83% of its fleet estimated Available Days for 2024.
As of the same date, the Partnership’s estimated contracted revenue backlog (2) (3) was $0.98 billion, with an average remaining contract term of 6.6 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) $0.14 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: Hellenic Shipping News