Dynagas LNG Partners LP (NYSE:DLNG) (“Dynagas Partners” or the
“Partnership”), an owner and operator of liquefied natural gas
(“LNG”) carriers, today announced its results for the three and
nine months ended September 30, 2017.
Highlights:
- Operating income of $15.9 million, net income of $4.0 million
and earnings per common unit(1) of $0.06 for the three months ended
September 30, 2017; Included in the third quarter 2017 results are
$1.1 million of scheduled class survey and dry dock costs for one
of the three steam turbine vessels in the Partnership’s fleet.
- Adjusted Net Income (2) of $7.0 million, Adjusted Earnings per
common unit (1) (2) of $0.15 and Adjusted EBITDA(2) of $26.4
million for the three months ended September 30, 2017;
- Distributable Cash Flow (2) of $11.3 million during the three
months ended September 30, 2017;
- $70.5 million of cash and $100.5 million of available liquidity
as of September 30, 2017;
- Quarterly cash distribution of $0.4225 per common unit and
$0.5625 per preferred unit.
- Contracted revenue backlog of approximately $1.46 billion, with
fleet-wide average remaining contract duration of 10 years.
(1) Earnings per common unit and Adjusted
Earnings per common unit presentation excludes the Series A
Preferred Units interest on the Partnership’s net income for the
periods presented.
(2) Distributable Cash Flow, Adjusted EBITDA,
Adjusted Net Income and Adjusted Earnings per common unit are not
recognized measures under U.S. GAAP. Please refer to the
definitions and reconciliation of these measures to the most
directly comparable financial measures calculated and presented in
accordance with U.S. GAAP in Appendix B.
Recent Developments:
Quarterly Common Unit Cash
Distribution: On October 4, 2017, the Partnership
announced a quarterly cash distribution of $0.4225 per common unit
in respect of the third quarter of 2017. This cash distribution was
paid on October 19, 2017 to all common unitholders of record as of
October 12, 2017.
Series A Preferred Units Cash
Distribution: On October 24, 2017, the Partnership also
announced a cash distribution of $0.5625 per unit of its Series A
Preferred Units (NYSE: DLNG PR A) for the period from August 12,
2017 to November 11, 2017, which was paid on November, 13 2017 to
all unitholders of record as of November 5, 2017.
CEO Commentary:
Tony Lauritzen, Chief Executive Officer of the
Partnership, commented:
“We are pleased to report our earnings for the financial quarter
ended September 30, 2017, which were within our expectations. We
have previously communicated that this quarter would be partly
affected by the scheduled class survey and related dry docking on
one of the six vessels in our fleet, the Amur River, which would
result in cost items and would also qualify as off-hire under the
relevant contracts.
“Our reported earnings for the third quarter of 2017 were, as
expected, below those of the third quarter of 2016 and were
impacted by the following: (i) the class surveys and related dry
dockings of the Amur River, as described above, (ii) the temporary
employment of the Clean Energy on the spot market until July 2018,
when she will commence an approximate 8-year time charter with
Gazprom, and (iii) the longer term nature of our contracts
following our decision to reduce the charter hire rate on two
vessels, the Yenisei River and the Lena River, with effect from
November 2016, in exchange for securing a long-term charter on the
Clean Energy with an approximate eight year term. These
transactions contributed substantially to our contracted backlog
which at the time increased from approximately $1.5 billion to $1.6
billion, thereby enhancing significantly our revenue
visibility.
“On October 19, 2017, we paid quarterly cash distribution of
$0.4225 per common unit with respect to the third quarter of 2017.
Since our initial public offering in November 2013, we have paid
total cash distributions of $6.36 per common unit. In addition, on
November 13, 2017, we paid a cash distribution of $0.5625 per unit
on our Series A Preferred Units for the period from August 12, 2017
to November 11, 2017.
“Part of our strategy has been to enter into longer term
charters for the employment of the vessels in our fleet. In
general, based on the conditions of the charter market, long-term
charters may be priced at day rates above or below shorter term
charters. With our fleet 92% contracted through 2017 and 75%
contracted through each of 2018 and 2019, and with an estimated
fleet-wide average remaining contract duration of 10 years, we
believe we have significant cash flow visibility. We expect to
increase contract coverage going forward on the back of an
improving LNG Shipping market.
“Our revenues are derived from the employment of our vessels on
fixed multi-year charter contracts. The revenues we earn under
those charter contracts are earned on a fixed day rate basis and
not linked in any way to commodity price fluctuations.
“Our intent is to seek additional contract coverage,
particularly in 2018, manage our operating expenses and continue
the safe operation of our fleet.
“We look forward to working towards meeting our goals, which we
believe will continue to benefit our unitholders.”
Financial Results Overview:
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
(U.S. dollars
in thousands, except per unit data) |
|
|
September30, 2017(unaudited) |
|
|
September30, 2016(unaudited) |
|
|
|
September30, 2017(unaudited) |
|
|
September30, 2016(unaudited) |
Voyage revenues |
|
$ |
33,471 |
|
$ |
43,087 |
|
|
$ |
104,538 |
|
$ |
128,466 |
Net Income |
|
$ |
3,983 |
|
$ |
17,278 |
|
|
$ |
11,714 |
|
$ |
51,379 |
Adjusted Net Income
(1) |
|
$ |
7,047 |
|
$ |
19,091 |
|
|
$ |
26,172 |
|
$ |
56,777 |
Operating income |
|
$ |
15,893 |
|
$ |
26,049 |
|
|
$ |
46,520 |
|
$ |
77,776 |
Adjusted EBITDA(1) |
|
$ |
26,434 |
|
$ |
35,436 |
|
|
$ |
80,626 |
|
$ |
105,638 |
Earnings per common
unit |
|
$ |
0.06 |
|
$ |
0.44 |
|
|
$ |
0.16 |
|
$ |
1.30 |
Adjusted Earnings per
common unit (1) |
|
$ |
0.15 |
|
$ |
0.49 |
|
|
$ |
0.57 |
|
$ |
1.45 |
Distributable Cash Flow
(1) |
|
$ |
11,295 |
|
$ |
22,999 |
|
|
$ |
38,129 |
|
$ |
68,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted Net Income, Adjusted EBITDA, Adjusted Earnings per common
unit and Distributable Cash Flow are not recognized measures under
U.S. GAAP. Please refer to the definitions and reconciliation of
these measures to the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP in Appendix
B. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
and 2016 Financial Results
Net income for the three months ended September
30, 2017 was $4.0 million as compared to net income of $17.3
million in the corresponding period of 2016. The decrease, as
further discussed below, was mainly attributable to (i) the
decrease in period operating revenues, (ii) the increased interest
costs for servicing the Term Loan B (defined below), and (iii) the
scheduled expenditures of technical nature for the Amur River that
underwent its special survey and dry-dock repairs in the third
quarter of 2017.
Adjusted Net Income for the three months ended
September 30, 2017 was $7.0 million as compared to Adjusted Net
Income of $19.1 million in the corresponding period of 2016. The
decrease in Adjusted Net Income, which eliminates the effect of
non-cash and non-recurring items, discussed above and further
presented in Appendix B, was mainly due the lower utilization and
the lower revenues earned on certain of the Partnership’s LNG
carriers and higher financing costs, as discussed in further detail
below.
Adjusted EBITDA for the three months ended
September 30, 2017 decreased by 25.4% across the quarters (third
quarter 2017 Adjusted EBITDA of $26.4 million, compared to third
quarter 2016 Adjusted EBITDA of $35.4 million) and was due to the
factors outlined above.
The Partnership's Distributable Cash Flow for
the three-month period ended September 30, 2017 was $11.3 million,
compared to $23.0 million in the corresponding period of 2016,
which represents a decrease of $11.7 million or 50.9%.
For the three-month period ended September 30,
2017, the Partnership reported earnings per common unit and
Adjusted Earnings per common unit, basic and diluted of $0.06 and
$0.15, respectively, after taking into account the Series A
Preferred Units interest on the Partnership’s net income. Earnings
per common unit and Adjusted Earnings per common unit, basic and
diluted are calculated on the basis of a weighted number of
35,490,000 units outstanding during the period, in the case of
Adjusted Earnings per common unit after reflecting the impact of
the non-cash items presented in Appendix B.
Please refer to the definitions and
reconciliation of these measures to the most directly comparable
financial measures calculated and presented in accordance with U.S.
GAAP in Appendix B hereto.
Voyage revenues were $33.5 million for the
three-month period ended September 30, 2017, compared to $43.1
million for the same period of 2016, which represents a decrease of
$9.6 million, or 22.3%. This decrease was primarily due to (i)
lower utilization and lower charter rate earned for the Clean
Energy while trading in the spot market during the third quarter of
2017 in comparison to the corresponding quarter of 2016, (ii) the
charter hire reductions on the Yenisei River and the Lena River,
with effect from November 2016, and (iii) the anticipated off hire
period for the Amur River that has completed its scheduled dry-dock
in July 2017 (as opposed to no off-hire days in the same quarter in
2016).
Vessel operating expenses decreased to $6.2
million, or a daily rate of $11,188, in the three-month period
ended September 30, 2017, compared to $6.7 million, or a daily rate
of $12,183, for the same period of 2016, which represents a
decrease of $0.5 million or 8.2%. This decrease is primarily
associated with crewing and technical efficiencies during the third
quarter of 2017 as compared to the corresponding period of
2016.
Interest and finance costs were $11.8 million in
the third quarter of 2017, compared to $8.7 million in the third
quarter of 2016, which represents an increase of $3.1 million, or
35.8%. As discussed above, this increase is commensurate with the
increase in the current period weighted average interest mainly as
a result of the increased costs associated with the Term Loan B
facility that the Partnership entered into on May 18, 2017.
The Partnership reported average daily charter
hire gross of commissions(1) of approximately $65,200 per day per
vessel in the three months ended September 30, 2017, compared to
approximately $81,300 per day per vessel in the same period of
2016. During the three-month period ended September 30, 2017, the
Partnership’s vessels operated at 97% utilization compared to 100%
in the same period of
2016.
(1) Average daily hire gross of commissions represents voyage
revenue without taking into consideration the non-cash time charter
amortization expense and amortization of prepaid charter revenue,
divided by the Available Days in the Partnership’s fleet as
described in Appendix B.
Amounts relating to variations in
period–to–period comparisons shown in this section are derived from
the condensed financials presented below.
Liquidity/ Financing/ Cash Flow
Coverage
As of September 30, 2017, the Partnership
reported free cash of $70.5 million. Total indebtedness outstanding
as of September 30, 2017 was $728.8 million (gross of unamortized
deferred loan fees), which includes the Partnership’s $250.0
million senior unsecured notes due October 2019. As of September
30, 2017, $4.8 million of the Partnership’s outstanding
indebtedness was repayable within one year.
The Partnership’s liquidity profile is further
enhanced by the $30.0 million of borrowing capacity under the
Partnership’s revolving credit facility with its Sponsor, which is
available to the Partnership at any time until November 2018 and
remains available in its entirety as of the date of this
release.
On May 18, 2017, the Partnership refinanced its
existing secured commercial bank facilities with a $480.0
million institutional Senior Secured Term Loan B facility due in
2023 (the “Term Loan B”). Arctic LNG Carriers Ltd., a wholly-owned
subsidiary of the Partnership, serves as borrower under the Term
Loan B. The Term Loan B provides for 0.25% quarterly amortization
on the principal and a bullet payment at maturity. The Term Loan B
has a term of six years and is secured by, among other things, the
six LNG carriers in the Partnership’s fleet.
As of September 30, 2017, the Partnership
reported working capital surplus of $49.4 million (Q4 2016: $7.1
million) which is the result on the strengthening of the
Partnership’s balance sheet following the Term Loan B refinancing
discussed above.
During the three months ended September 30,
2017, the Partnership generated net cash from operating activities
of $14.8 million compared to $27.0 million in the same period of
2016, which represents a decrease of 12.2 million, or 45.3%. This
decrease was mainly attributable to the decrease in period net
income due to the factors discussed above.
Vessel Employment
As of December 5, 2017, the Partnership had
contracted employment (2) for 92% of its fleet estimated Available
Days for 2017, 75% of its fleet estimated Available Days for 2018,
and 75% of its fleet estimated Available Days for 2019.
As of the same date, the Partnership’s
contracted revenue backlog estimate (3) was approximately $1.46
billion, with average remaining contract duration of 10
years.
(2) 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.
(3) The Partnership calculates its 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 shown in the table below 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.
Certain time charter contracts that the Partnership entered into
with Yamal Trade Pte. are subject to the satisfaction of important
conditions, which, if not satisfied, or waived by the charterer,
may result in their cancellation or amendment before or after the
charter term commences and in such case the Partnership may not
receive the contracted revenues thereunder.
Conference Call and Webcast: December 6,
2017
As announced, the Partnership’s management team
will host a conference call on Wednesday, December 6, 2017 at 10:00
a.m. Eastern Time to discuss the Partnership’s financial
results.
Conference Call details:
Participants should dial into the call 10
minutes before the scheduled time using the following numbers: 1
(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or
(+44) (0) 1452 542 301 (Standard International Dial In). Please
quote "Dynagas."
A telephonic replay of the conference call will
be available until Wednesday, December 13th, 2017. The United
States replay number is 1 (866) 247-4222; from the UK 0(800)
953-1533; the standard international replay number is (+44) (0)
1452 550 000 and the access code required for the replay is:
59711562#.
Audio Webcast - Slides
Presentation:
There will be a live and then archived audio
webcast of the conference call, via the internet through the
Dynagas LNG Partners website www.dynagaspartners.com. Participants
to the live webcast should register on the website approximately 10
minutes prior to the start of the webcast.
The slide presentation on the third quarter
ended September 30, 2017 financial results will be available in PDF
format 10 minutes prior to the conference call and webcast,
accessible on the company's website www.dynagaspartners.com on the
webcast page. Participants to the webcast can download the PDF
presentation.
About Dynagas LNG Partners
LP
Dynagas LNG Partners LP (NYSE:DLNG) is a
growth-oriented master limited partnership formed by Dynagas
Holding Ltd., its Sponsor, to own and operate liquefied natural gas
(“LNG”) carriers employed on multi-year charters. The current fleet
of Dynagas Partners consists of six LNG carriers, with an aggregate
carrying capacity of approximately 914,000 cubic meters.
Visit the Partnership’s website
at www.dynagaspartners.com
Contact Information: Dynagas
LNG Partners LP23, Rue Basse, 98000 MonacoAttention: Michael
GregosTel.
+37799996445Email: management@dynagaspartners.com
Investor Relations / Financial
Media:Nicolas BornozisPresidentCapital Link, Inc.230 Park
Avenue, Suite 1536 New York, NY 10169Tel. (212) 661-7566E-mail:
dynagas@capitallink.com
Forward-Looking
StatementsMatters discussed in this press release may
constitute forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides safe harbor protections for
forward-looking statements in order to encourage companies to
provide prospective information about their business.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than
statements of historical facts.
The Partnership desires to take advantage of the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and is including this cautionary statement in
connection with this safe harbor legislation. The words “believe,”
“anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,”
“potential,” “may,” “should,” “expect,” “expected,” “pending” and
similar expressions identify forward-looking statements.
The forward-looking statements in this press
release are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without
limitation, examination by the Partnership’s management of
historical operating trends, data contained in its records and
other data available from third parties. Although the Partnership
believes that these assumptions were reasonable when made, because
these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible
to predict and are beyond the Partnership’s control, the
Partnership cannot assure you that it will achieve or accomplish
these expectations, beliefs or projections.
In addition to these important factors, other
important factors that, in the Partnership’s view, could cause
actual results to differ materially from those discussed in the
forward-looking statements include the strength of world economies
and currencies, general market conditions, including fluctuations
in charter rates and vessel values,
changes in demand for Liquefied
Natural Gas (LNG) shipping capacity, changes in
the Partnership’s operating expenses, including bunker prices,
drydocking and insurance costs, the market for the Partnership’s
vessels, availability of financing and refinancing, changes in
governmental rules and regulations or actions taken by regulatory
authorities, potential liability from pending or future litigation,
general domestic and international political conditions, potential
disruption of shipping routes due to accidents or political events,
vessel breakdowns and instances of off-hires and other factors. We
derive our revenues from a limited number of charterers and as a
result, the non-performance of obligations by any of our
counterparties would have a material adverse effect on our
business. Please see the Partnership’s filings with the Securities
and Exchange Commission for a more complete
discussion of these and other
risks and uncertainties. The information
set forth herein speaks only as of the date hereof, and the
Partnership disclaims any intention or obligation to update any
forward-looking statements as a result of developments occurring
after the date of this communication.
APPENDIX A
|
DYNAGAS LNG PARTNERS
LPUnaudited Condensed Consolidated Statements of
Income |
|
(In thousands of U.S.
dollars except units and per unit data) |
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
REVENUES |
|
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
33,471 |
|
$ |
43,087 |
|
$ |
104,538 |
|
$ |
128,466 |
|
EXPENSES |
|
|
|
|
|
|
|
|
Voyage expenses
(including related party) |
|
(717 |
) |
|
(757 |
) |
|
(2,934 |
) |
|
(2,221 |
) |
Vessel operating
expenses |
|
(6,176 |
) |
|
(6,725 |
) |
|
(20,337 |
) |
|
(19,745 |
) |
Dry-docking and special
survey costs |
|
(1,096 |
) |
|
— |
|
|
(6,227 |
) |
|
— |
|
General and
administrative expenses (including related party) |
|
(394 |
) |
|
(406 |
) |
|
(1,234 |
) |
|
(1,480 |
) |
Management fees
-related party |
|
(1,553 |
) |
|
(1,508 |
) |
|
(4,609 |
) |
|
(4,491 |
) |
Depreciation |
|
(7,642 |
) |
|
(7,642 |
) |
|
(22,677 |
) |
|
(22,753 |
) |
Operating
income |
|
15,893 |
|
|
26,049 |
|
|
46,520 |
|
|
77,776 |
|
Interest and finance
costs, net |
|
(11,745 |
) |
|
(8,703 |
) |
|
(34,360 |
) |
|
(26,108 |
) |
Other, net |
|
(165 |
) |
|
(68 |
) |
|
(446 |
) |
|
(289 |
) |
|
|
|
|
|
|
|
|
|
Net
Income |
$ |
3,983 |
|
$ |
17,278 |
|
$ |
11,714 |
|
$ |
51,379 |
|
Earnings per
common unit (basic and diluted) |
$ |
0.06 |
|
$ |
0.44 |
|
$ |
0.16 |
|
$ |
1.30 |
|
Weighted
average number of units outstanding, basic and
diluted: |
|
|
|
|
|
|
|
|
Common
units |
|
35,490,000 |
|
|
20,505,000 |
|
|
34,227,527 |
|
|
20,505,000 |
|
|
|
|
|
|
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Balance Sheets
(unaudited)(Expressed in thousands of U.S.
Dollars—except for unit data) |
|
|
|
|
|
|
|
September 30,2017 |
|
December 31,2016 |
ASSETS |
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash and cash
equivalents |
$ |
70,518 |
$ |
57,595 |
|
Due from related
party |
|
507 |
|
878 |
|
Other current
assets |
|
3,709 |
|
1,722 |
|
Total current
assets |
|
74,734 |
|
60,195 |
|
|
|
|
|
|
FIXED ASSETS,
NET: |
|
|
|
|
Vessels, net |
|
984,940 |
|
1,007,617 |
|
Total fixed
assets, net |
|
984,940 |
|
1,007,617 |
|
OTHER NON
CURRENT ASSETS: |
|
|
|
|
Restricted cash |
|
— |
|
25,000 |
|
Due from related
party |
|
1,350 |
|
1,350 |
|
Above market acquired
time charters |
|
7,094 |
|
12,514 |
|
Total
assets |
$ |
1,068,118 |
$ |
1,106,676 |
|
|
|
|
|
|
LIABILITIES AND
PARTNERS’ EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Current portion of
long-term debt, net of deferred financing costs |
$ |
2,648 |
$ |
31,688 |
|
Trade payables |
|
7,141 |
|
3,058 |
|
Due to related
party |
|
277 |
|
302 |
|
Accrued
liabilities |
|
3,676 |
|
3,750 |
|
Unearned revenue |
|
11,623 |
|
14,258 |
|
Total current
liabilities |
|
25,365 |
|
53,056 |
|
Deferred revenue |
|
1,264 |
|
1,036 |
|
Long-term debt, net of
current portion and deferred financing costs |
|
712,081 |
|
684,748 |
|
Total
non-current liabilities |
|
713,345 |
|
685,784 |
|
|
|
|
|
|
PARTNERS’
EQUITY |
|
|
|
|
General partner:
35,526 units issued and outstanding as at September 30, 2017 and
December 31, 2016 |
|
58 |
|
97 |
|
Common unitholders:
35,490,000 units issued and outstanding as at September 30, 2017
and 20,505,000 issued and outstanding as of December 31, 2016 |
|
256,134 |
|
302,952 |
|
Series A Preferred
unitholders: 3,000,000 units issued and outstanding as at September
30, 2017 and December 31, 2016 |
|
73,216 |
|
73,216 |
|
Subordinated
unitholders: None issued and outstanding as of September 30, 2017
and 14,985,000 units issued and outstanding as at December 31,
2016 |
|
— |
|
(8,429 |
) |
Total partners’
equity |
|
329,408 |
|
367,836 |
|
|
|
|
|
|
Total
liabilities and partners’ equity |
$ |
1,068,118 |
$ |
1,106,676 |
|
|
|
|
|
|
|
|
|
|
|
|
DYNAGAS LNG PARTNERS LP
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars) |
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
Cash flows from
Operating Activities: |
|
|
|
|
Net income: |
$ |
11,714 |
|
$ |
51,379 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation |
|
22,677 |
|
|
22,753 |
|
Amortization and
write-off of deferred financing fees |
|
4,562 |
|
|
1,489 |
|
Amortization of fair
value of acquired time charter |
|
5,420 |
|
|
5,441 |
|
Deferred revenue
amortization |
|
228 |
|
|
(43 |
) |
Changes in
operating assets and liabilities: |
|
|
|
|
Trade receivables |
|
(223 |
) |
|
(39 |
) |
Prepayments and other
assets |
|
(508 |
) |
|
(379 |
) |
Inventories |
|
(1,256 |
) |
|
(510 |
) |
Due from/ to related
parties |
|
346 |
|
|
(414 |
) |
Trade payables |
|
4,083 |
|
|
513 |
|
Accrued
liabilities |
|
(75 |
) |
|
82 |
|
Unearned revenue |
|
(2,635 |
) |
|
— |
|
|
|
|
|
|
Net cash
provided by Operating Activities |
|
44,333 |
|
|
80,272 |
|
|
|
|
|
|
Cash flows from
Investing Activities |
|
|
|
|
Vessel Acquisitions and
other additions to vessels’ cost |
|
— |
|
|
(37,472 |
) |
Net cash used
in Investing Activities |
|
— |
|
|
(37,472 |
) |
|
|
|
|
|
Cash flows from
Financing Activities: |
|
|
|
|
Decrease in restricted
cash |
|
25,000 |
|
|
— |
|
Payment of preferred
units issuance costs and other filing costs |
|
— |
|
|
(119 |
) |
Distributions declared
and paid |
|
(50,142 |
) |
|
(50,142 |
) |
Repayment of long-term
debt |
|
(473,700 |
) |
|
(24,375 |
) |
Proceeds from long-term
debt |
|
480,000 |
|
|
66,667 |
|
Payment of deferred
finance fees |
|
(12,568 |
) |
|
(36 |
) |
Net cash used
in Financing Activities |
|
(31,410 |
) |
|
(8,005 |
) |
|
|
|
|
|
Net increase in
cash and cash equivalents |
|
12,923 |
|
|
34,795 |
|
Cash and cash
equivalents at beginning of the period |
|
57,595 |
|
|
24,293 |
|
Cash and cash
equivalents at end of the period |
$ |
70,518 |
|
$ |
59,088 |
|
|
Supplemental information
ARCTIC LNG CARRIERS Ltd. and its operating
subsidiaries
The following table sets forth summary financial
information of Arctic LNG Carriers Ltd., the Partnership’s wholly
owned subsidiary and borrower of the Term Loan B due 2023 and each
of its vessel owning subsidiaries that is a subsidiary guarantor to
the Term Loan B (collectively “Arctic LNG Carriers”) as at and for
the periods presented, which are derived from the unaudited
financial statements of Arctic LNG Carriers and are presented in
connection with certain reporting requirements governing the Term
Loan B.
|
|
|
September 30, |
(expressed in thousands
of United states dollars) |
|
2017 |
Balance sheet
data: |
|
|
Total assets |
$ |
1,017,903 |
Total cash |
|
21,162 |
Total debt, net of
deferred loan fees |
$ |
467,057 |
|
|
|
|
|
|
|
|
|
|
Three monthsEndedSeptember 30, |
|
Nine MonthsEndedSeptember 30, |
(expressed in thousands
of United states dollars) |
|
2017 |
|
2017 |
Income
statement and other operational data: |
|
|
|
|
Net income |
$ |
2,963 |
$ |
24,137 |
Revenues |
|
33,471 |
|
104,538 |
Adjusted EBITDA |
$ |
26,819 |
$ |
81,840 |
|
|
|
|
|
Arctic LNG Carriers reconciliation of net income to
Adjusted EBITDA
|
|
|
|
|
Three monthsEndedSeptember 30, |
|
Nine MonthsEndedSeptember 30, |
(In thousands of
U.S. dollars) |
2017 |
|
2017 |
Net Income |
$ |
2,963 |
|
$ |
24,137 |
Net interest and
finance costs (1) |
|
13,150 |
|
|
23,151 |
Depreciation |
|
7,642 |
|
|
22,677 |
Class survey costs |
|
1,096 |
|
|
6,227 |
Amortization of fair
value of acquired time charter |
|
1,826 |
|
|
5,420 |
Charter hire
amortization |
|
142 |
|
|
228 |
Adjusted
EBITDA |
$ |
26,819 |
|
$ |
81,840 |
|
|
|
|
|
|
(1)
Includes interest and finance costs (inclusive of amortization of
deferred financing costs), net of interest income, if any. |
|
|
|
|
|
|
APPENDIX B
Fleet statistics
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(expressed in United
states dollars except for operational data) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Number of vessels at
the end of period |
|
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
Average number of
vessels in the period (1) |
|
6 |
|
|
6 |
|
|
6 |
|
|
6 |
|
Calendar Days (2) |
|
552.0 |
|
|
552.0 |
|
|
1,638.0 |
|
|
1,644.0 |
|
Available Days (3) |
|
541.7 |
|
|
552.0 |
|
|
1,588.3 |
|
|
1,644.0 |
|
Revenue earning days
(5) |
|
526.3 |
|
|
552.0 |
|
|
1,540.7 |
|
|
1,644.0 |
|
Time Charter Equivalent
(4) |
$ |
60,465 |
|
$ |
76,685 |
|
$ |
63,970 |
|
$ |
76,791 |
|
Fleet Utilization
(5) |
|
97 |
% |
|
100 |
% |
|
97 |
% |
|
100 |
% |
Vessel daily operating
expenses (6) |
$ |
11,188 |
|
$ |
12,183 |
|
$ |
12,416 |
|
$ |
12,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Represents the number of vessels that constituted the Partnership’s
fleet for the relevant period, as measured by the sum of the number
of days each vessel was a part of its fleet during the period
divided by the number of Calendar Days in the period. |
(2)
Calendar Days are the total days the Partnership possessed the
vessels in its fleet for the relevant period. |
(3)
Available Days are the total number of Calendar Days the
Partnership’s vessels were in its possession during a period, less
the total number of scheduled off-hire days during the period
associated with major repairs, or dry-dockings. |
(4) Time
charter equivalent rate, or TCE rate, is a measure of the average
daily revenue performance of a vessel. For time charters, this is
calculated by dividing total voyage revenues, less any voyage
expenses, by the number of Available Days during that period. Under
a time charter, the charterer pays substantially all vessel voyage
related expenses. However, the Partnership may incur voyage related
expenses when positioning or repositioning vessels before or after
the period of a time charter, during periods of commercial waiting
time or while off-hire during dry-docking or due to other
unforeseen circumstances. The TCE rate is not a measure of
financial performance under U.S. GAAP (non-GAAP measure), and
should not be considered as an alternative to voyage revenues, the
most directly comparable GAAP measure, or any other measure of
financial performance presented in accordance with U.S. GAAP.
However, TCE rate is a standard shipping industry performance
measure used primarily to compare period-to-period changes in a
company’s performance and assists the Partnership’s management in
making decisions regarding the deployment and use of the
Partnership’s vessels and evaluating their financial performance.
The Partnership’s calculation of TCE rates may not be comparable to
that reported by other companies. The following table reflects the
calculation of the Partnership’s TCE rates for the three and nine
months ended September 30, 2017 and 2016 (amounts in thousands of
U.S. dollars, except for TCE rates, which are expressed in U.S.
dollars, and Available Days): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
(In thousands of U.S.
dollars, except for Available Days and TCE rate) |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
33,471 |
|
$ |
43,087 |
|
$ |
104,538 |
|
$ |
128,466 |
|
Voyage Expenses
(7) |
|
(717 |
) |
|
(757 |
) |
|
(2,934 |
) |
|
(2,221 |
) |
Time Charter
equivalent revenues |
$ |
32,754 |
|
$ |
42,330 |
|
$ |
101,604 |
|
$ |
126,245 |
|
Available Days (3) |
|
541.7 |
|
|
552.0 |
|
|
1,588.3 |
|
|
1,644.0 |
|
Time charter
equivalent (TCE) rate |
$ |
60,465 |
|
$ |
76,685 |
|
$ |
63,970 |
|
$ |
76,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) The
Partnership calculates fleet utilization by dividing the number of
its Revenue earning days, which are the total number of Available
Days of the Partnership’s vessels net of unscheduled off-hire days
during a period, by the number of Available Days during that
period. The shipping industry uses fleet utilization to measure a
company’s efficiency in finding employment for its vessels and
minimizing the amount of days that its vessels are off-hire for
reasons such as unscheduled repairs but excluding scheduled
off-hires for vessel upgrades, dry-dockings or special or
intermediate surveys. |
(6) Daily
vessel operating expenses, which include crew costs, provisions,
deck and engine stores, lubricating oil, insurance, spares and
repairs and flag taxes, are calculated by dividing vessel operating
expenses by fleet Calendar Days for the relevant time period. |
(7) Voyage
expenses include commissions of 1.25% paid to Dynagas Ltd., the
Partnership’s Manager, and third party ship brokers, when defined
in the charter parties, bunkers, port expenses and other minor
voyage expenses. |
|
Reconciliation of U.S. GAAP Financial Information to
Non-GAAP Financial Information
Reconciliation of Net Income to Adjusted
EBITDA
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(In thousands of
U.S. dollars) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation to Net
income |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
3,983 |
|
$ |
17,278 |
|
|
$ |
11,714 |
|
$ |
51,379 |
|
Net interest and
finance costs (1) |
|
11,745 |
|
|
8,703 |
|
|
|
34,360 |
|
|
26,108 |
|
Depreciation |
|
7,642 |
|
|
7,642 |
|
|
|
22,677 |
|
|
22,753 |
|
Class survey costs |
|
1,096 |
|
|
— |
|
|
|
6,227 |
|
|
— |
|
Amortization of fair
value of acquired time charter |
|
1,826 |
|
|
1,827 |
|
|
|
5,420 |
|
|
5,441 |
|
Charter hire
amortization |
|
142 |
|
|
(14 |
) |
|
|
228 |
|
|
(43 |
) |
Adjusted
EBITDA |
$ |
26,434 |
|
$ |
35,436 |
|
|
$ |
80,626 |
|
$ |
105,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes interest and finance costs (inclusive of
amortization of deferred financing costs), net of interest income,
if any. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Partnership defines Adjusted EBITDA as earnings before
interest and finance costs, net of interest income (if any),
gains/losses on derivative financial instruments (if any), taxes
(when incurred), depreciation and amortization (when incurred),
class survey costs and significant non-recurring items (if any).
Adjusted EBITDA is used as a supplemental financial measure by
management and external users of financial statements, such as
investors, to assess the Partnership’s operating performance.
The Partnership believes that Adjusted EBITDA
assists its management and investors by providing useful
information that increases the comparability of the Partnership’s
performance operating from period to period and against the
operating performance of other companies in its industry that
provide Adjusted EBITDA information. This increased comparability
is achieved by excluding the potentially disparate effects between
periods or companies of interest, other financial items,
depreciation and amortization and taxes, which items are affected
by various and possibly changing financing methods, capital
structure and historical cost basis and which items may
significantly affect net income between periods. The Partnership
believes that including Adjusted EBITDA as a measure of operating
performance benefits investors in (a) selecting between investing
in the Partnership and other investment alternatives and (b)
monitoring the Partnership’s ongoing financial and operational
strength in assessing whether to continue to hold common units.
Adjusted EBITDA is not a measure of financial
performance under U.S. GAAP, does not represent and should not be
considered as an alternative to net income, operating income, cash
flow from operating activities or any other measure of financial
performance presented in accordance with U.S. GAAP. Adjusted EBITDA
excludes some, but not all, items that affect net income and these
measures may vary among other companies. Therefore, Adjusted
EBITDA, as presented above, may not be comparable to similarly
titled measures of other companies.
Reconciliation of Net Income to Adjusted Net Income
available to common unitholders and Adjusted Earnings per common
unit
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(In thousands of
U.S. dollars except for units and per unit data) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Net Income |
$ |
3,983 |
|
|
$ |
17,278 |
|
|
$ |
11,714 |
|
|
$ |
51,379 |
|
Non-cash expense from
accelerated amortization of deferred loan fees |
|
— |
|
|
|
— |
|
|
|
2,583 |
|
|
|
— |
|
Charter hire
amortization |
|
142 |
|
|
|
(14 |
) |
|
|
228 |
|
|
|
(43 |
) |
Amortization of fair
value of acquired time charter |
|
1,826 |
|
|
|
1,827 |
|
|
|
5,420 |
|
|
|
5,441 |
|
Class survey costs |
|
1,096 |
|
|
|
— |
|
|
|
6,227 |
|
|
|
— |
|
Adjusted Net
Income |
$ |
7,047 |
|
|
$ |
19,091 |
|
|
$ |
26,172 |
|
|
$ |
56,777 |
|
Less: Adjusted Net
Income attributable to subordinated, preferred unitholders and
general partner |
|
(1,710 |
) |
|
|
(9,056 |
) |
|
|
(6,558 |
) |
|
|
(26,958 |
) |
Common
unitholders’ interest in Adjusted Net Income |
$ |
5,337 |
|
|
$ |
10,035 |
|
|
$ |
19,614 |
|
|
$ |
29,819 |
|
Weighted average number
of common units outstanding, basic and diluted: |
|
35,490,000 |
|
|
|
20,505,000 |
|
|
|
34,227,527 |
|
|
|
20,505,000 |
|
Adjusted
Earnings per common unit, basic and diluted |
$ |
0.15 |
|
|
$ |
0.49 |
|
|
$ |
0.57 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income represents net income before
non-recurring expenses (such as class survey costs and accelerated
amortization of deferred loan fees), charter hire amortization
related to time charters with escalating time charter rates and
amortization of fair value of acquired time charters, all of which
are significant non-cash items. Adjusted Net Income available to
common unitholders represents the common unitholders interest in
Adjusted Net Income for each period presented. Adjusted Earnings
per common unit represents Adjusted Net Income attributable to
common unitholders divided by the weighted average common units
outstanding during each period presented.
Adjusted Net Income, Adjusted Net Income per
common unit and Adjusted Earnings per common unit, basic and
diluted, are not recognized measures under U.S. GAAP and should not
be regarded as substitutes for net income and earnings per unit,
basic and diluted. The Partnership’s definition of Adjusted Net
Income, Adjusted Net Income per common unit and Adjusted Earnings
per common unit, basic and diluted, may not be the same at that
reported by other companies in the shipping industry or other
industries. The Partnership believes that the presentation of
Adjusted Net Income and Adjusted Earnings per unit available to
common unitholders are useful to investors because they facilitate
the comparability and the evaluation of companies in the
Partnership’s industry. In addition, the Partnership believes that
Adjusted Net Income is useful in evaluating its operating
performance compared to that of other companies in the
Partnership’s industry because the calculation of Adjusted Net
Income generally eliminates the accounting effects of items which
may vary for different companies for reasons unrelated to overall
operating performance. The Partnership’s presentation of Adjusted
Net Income available to common unitholders and Adjusted Earnings
per common unit should not be construed as an inference that its
future results will be unaffected by unusual or non-recurring
items.
Distributable Cash Flow Reconciliation
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
(In thousands of
U.S. dollars) |
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
Net
Income |
$ |
3,983 |
|
$ |
17,278 |
|
|
$ |
11,714 |
|
$ |
51,379 |
|
Depreciation |
|
7,642 |
|
|
7,642 |
|
|
|
22,677 |
|
|
22,753 |
|
Amortization and
write-off of deferred finance fees |
|
839 |
|
|
499 |
|
|
|
4,562 |
|
|
1,489 |
|
Net interest and
finance costs, excluding amortization(1) |
|
10,906 |
|
|
8,204 |
|
|
|
29,798 |
|
|
24,619 |
|
Class survey costs |
|
1,096 |
|
|
— |
|
|
|
6,227 |
|
|
— |
|
Amortization of fair
value of acquired time charter |
|
1,826 |
|
|
1,827 |
|
|
|
5,420 |
|
|
5,441 |
|
Charter hire
amortization |
|
142 |
|
|
(14 |
) |
|
|
228 |
|
|
(43 |
) |
Adjusted
EBITDA |
$ |
26,434 |
|
$ |
35,436 |
|
|
$ |
80,626 |
|
$ |
105,638 |
|
Net interest and
finance costs, excluding amortization(1) |
|
(10,906 |
) |
|
(8,204 |
) |
|
|
(29,798 |
) |
|
(24,619 |
) |
Maintenance capital
expenditure reserves |
|
(1,038 |
) |
|
(1,038 |
) |
|
|
(3,115 |
) |
|
(3,115 |
) |
Replacement capital
expenditure reserves |
|
(3,195 |
) |
|
(3,195 |
) |
|
|
(9,584 |
) |
|
(9,584 |
) |
Distributable
Cash Flow |
$ |
11,295 |
|
$ |
22,999 |
|
|
$ |
38,129 |
|
$ |
68,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Interest and finance costs, net of interest income, if any. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Cash Flow with respect to any period presented
means Adjusted EBITDA after considering period interest and finance
costs and estimated maintenance and replacement capital
expenditures. Estimated maintenance and replacement capital
expenditures, including estimated expenditures for drydocking,
represent capital expenditures required to maintain over the
long-term the operating capacity of, or the revenue generated by
the Partnership’s capital assets. Distributable Cash Flow is a
quantitative standard used by investors in publicly-traded
partnerships to assist in evaluating a partnership’s ability to
make quarterly cash distributions. The Partnership’s calculation of
the Distributable Cash Flow may not be comparable to that reported
by other companies. Distributable Cash Flow is a non-GAAP financial
measure and should not be considered as an alternative to net
income or any other indicator of the Partnership’s performance
calculated in accordance with GAAP.
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