Dynagas LNG Partners LP, an owner and operator of liquefied natural gas (“LNG”) carriers, today announced its results for the three months ended March 31, 2021.

Quarter Highlights:

Net income and earnings per common unit of $15.9 million and $0.36, respectively;
Adjusted Net Income(1) and Adjusted EBITDA(1) of $10.6 million and $23.9 million, respectively;
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 November 12, 2020 to February 11, 2021 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from November 22, 2020 to February 21, 2021; and
Sold $1.32 million of common units at an average price per unit of $2.9800 pursuant to the Partnership’s Amended & Restated Sales Agreement, which has $28.7 million of remaining availability as of March 31, 2021.
Subsequent Events:

Declared a quarterly cash distribution of $0.5625 on the Partnership’s Series A Preferred Units for the period from February 12, 2021 to May 11, 2021, which was paid on May 12, 2021;
Declared a quarterly cash distribution of $0.546875 on the Partnership’s Series B Preferred Units for the period from February 22, 2021 to May 21, 2021, which was paid on May 24, 2021;
Sold $2.15 million of common units at an average price per unit of $2.8769 pursuant to the Partnership’s Amended & Restated Sales Agreement, which has $26.5 million of remaining availability; and
Entered into a new time charter party agreement with Equinor ASA (“Equinor”) for the employment of our LNG carrier Arctic Aurora. Under the new time charter agreement, the Arctic Aurora is expected to be delivered to Equinor in September 2021 in direct continuation of the current charter party with Equinor, meaning there will be no lapse of time between the current and the new time charter. The term ‘in direct continuation’ does not refer to the contracted income.
(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.

CEO Commentary:

We are pleased to report the results for the three months ended March 31, 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 7.7 years. As of March 31, 2021, our estimated contracted revenue backlog is approximately $1.12 billion.

After securing a new two year charter for the Arctic Aurora with Equinor, and barring any unforeseen events, the earliest contracted re-delivery date for any of our six LNG carriers is in the third quarter of 2023 (the Arctic Aurora), with the next carrier (the Clean Energy) becoming available for re-chartering in the first quarter of 2026.

For the first quarter of 2021, we reported Net Income of $15.9 million, earnings per common unit of $0.36, Adjusted Net Income of $10.6 million and Adjusted EBITDA of $23.9 million.

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 first quarter of 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.

Three Months Ended March 31, 2021 and 2020 Financial Results

Net Income for the three months ended March 31, 2021 was $15.9 million as compared to a Net Income of $7.0 million for the corresponding period of 2020, which represents an increase of $8.9 million, or 127.1%. The increase in net income for the three months ended March 31, 2021 was mainly attributable to the decrease in finance costs as well as to the increase in gain on our interest rate swap transaction entered into in May 2020 compared to the corresponding period of 2020.

Adjusted Net Income for the three months ended March 31, 2021 was $10.6 million compared to $7.1 million for the corresponding period of 2020, which represents a net increase of $3.5 million or 49.3%, mainly due to decreased finance costs.

Voyage revenues for the three months ended March 31, 2021 were $33.4 million as compared to $34.5 million for the corresponding period of 2020, which represents a decrease of $1.1 million, mainly as a result of the lower variable hire revenues earned on the Lena River in the three months ended March 31, 2021 compared to the corresponding period in 2020.

The Partnership reported average daily hire gross of commissions(1) of approximately $62,250 per day per vessel in the three-month period ended March 31, 2021, compared to approximately $63,100 per day per vessel for the corresponding period of 2020. During the three-month periods ended March 31, 2021 and March 31, 2020, the Partnership’s vessels operated at 100% and 99.0% utilization, respectively.

Vessel operating expenses were $6.9 million, which corresponds to a daily rate per vessel of $12,739 in the three-month period ended March 31, 2021, as compared to $7.6 million, or a daily rate per vessel of $13,872 in the corresponding period of 2020. This decrease is mainly attributable to lower planned engine maintenance on the Lena River during the first quarter of 2021 compared to the first quarter of 2020.

Adjusted EBITDA for the three months ended March 31, 2021 was $23.9 million, as compared to $23.7 million for the corresponding period of 2020. The increase of $0.2 million, or 0.8%, was mainly due to the net effect of the decrease in revenues and decrease in the vessels’ operating expenses as explained above.

Interest and finance costs, net were $5.5 million in the three months ended March 31, 2021 as compared to $8.8 million in the corresponding period of 2020, which represents a decrease of $3.3 million, or 37.5% due to the (i) lower weighted average interest and (ii) the reduction in interest bearing debt as compared to the corresponding period of 2020.

For the three months ended March 31, 2021, the Partnership reported basic and diluted Earnings per common unit and Adjusted Earnings per common unit, of $0.36 and $0.21 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 35,735,752 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, 2021, the Partnership generated net cash from operating activities of $22.9 million as compared to $18.7 million in the corresponding period of 2020, which represents an increase of $4.2 million, or 22.5%.

As of March 31, 2021, the Partnership reported total cash of $84.1 million (including $50.0 million of restricted cash). The Partnership’s outstanding indebtedness as of March 31, 2021 under the $675.0 Million Credit Facility amounted to $603.0 million, gross of unamortized deferred loan fees and including $48.0 million, which was repayable within one year.

During the three months ended March 31, 2021, the Partnership sold $1.32 million of common units at an average price per unit of $2.9800 pursuant to the amended and restated ATM Sales Agreement entered into in August 2020, for the offer and sale of common units representing limited partnership interests, having an aggregate offering amount of up to $30.0 million (the “Current ATM Program”). Following these sales, the Current ATM Program has $28.7 million of remaining availability and the Partnership has 36,054,214 units issued and outstanding.

As of March 31, 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 June 17, 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 94% of its fleet estimated Available Days for 2023.

As of the same date, the Partnership’s estimated contracted revenue backlog estimate (2) (3) was $1.12 billion, with an average remaining contract term of 7.7 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) $0.15 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.
Source: Dynagas LNG Partners