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 months
and year ended December 31, 2017.
Highlights:
- Net income during the three months and year ended December 31,
2017 of $5.6 million and $17.3 million, respectively;
- Earnings per common unit for the three months and year ended
December 31, 2017 of $0.11 and $0.27, respectively;
- Adjusted Net Income(1) for the three months and year ended
December 31, 2017 of $7.6 million and $33.7 million,
respectively;
- Adjusted Earnings per common unit (1) (2) for the three months
and year ended December 31, 2017 of $0.16 and $0.74,
respectively;
- Distributable Cash Flow(1) during the three months and year
ended December 31, 2017 of $11.8 million and $49.9 million,
respectively;
- Adjusted EBITDA(1) for the three months and year ended December
31, 2017 of $26.9 million and $107.5 million, respectively;
- Reported cash of $67.5 million and available liquidity of $97.5
million each as of December 31, 2017;
- Quarterly cash distribution of $0.4225 per common unit in
respect of the fourth quarter of 2017 and $0.5625 per preferred
unit in respect of the most recent period.
(1) Adjusted Net Income, Adjusted Earnings per
common unit, Distributable Cash Flow and Adjusted EBITDA 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.
(2) Adjusted Earnings per common unit
presentation excludes the Series A Preferred Units interest on the
Partnership’s net income for the periods presented.
Recent Developments:
New long-term time charter contract for
the Arctic Aurora: On December 20, 2017, the Partnership
entered into a new three year charter agreement with Statoil ASA
("Statoil") for the employment of the Arctic Aurora, its
2013-built, 155,000 cubic meter, tri-fuel diesel engine, ice class
LNG carrier. This new charter for the Arctic Aurora is expected to
commence in the third quarter of 2018 in direct continuation of the
current charter with Statoil, following the vessel's mandatory
statutory class five-year special survey and dry-docking and has a
firm period of about 3 years +/- 30 days. Statoil will have options
to extend this charter by two consecutive 12-month periods at
escalated rates.
Quarterly Common and Subordinated Unit
Cash Distribution: On January 4, 2018, the Partnership
announced a quarterly cash distribution of $0.4225 per common unit
in respect of the fourth quarter of 2017. This cash distribution
was paid on January 18, 2018 to all common unitholders of record as
of January 11, 2018.
Series A Preferred Units Cash
Distribution: On January 24, 2018, the Partnership’s Board
of Directors also announced a cash distribution of $0.5625 per unit
of its Series A Preferred Units (NYSE: DLNG PR A) for the period
from November 12, 2017 to February 11, 2018, which was paid on
February 12, 2018 to all unitholders of record as of February 5,
2018.
Optional Vessels purchase option
deadline extension: On February 6, 2018, the Partnership
agreed with its Sponsor to extend the deadline for exercising the
purchase options relating to both the Clean Horizon and
the Clean Vision previously granted to the Partnership
under the Omnibus Agreement retroactively from their initial
expiration in July 2017 and January 2018, respectively, to December
31, 2018.
CEO Commentary:
Tony Lauritzen, Chief Executive Officer of the
Partnership, commented:
“We are pleased to report our earnings for the three months and
year ended December 31, 2017.
“Our reported earnings for the fourth quarter of 2017 were, as
expected, below those of the fourth quarter of 2016 and were
impacted by the following: (i) the temporary employment of the
Clean Energy on the spot market until July 2018, when the vessel
will commence a time charter with Gazprom for a term of
approximately 8 years, and (ii) 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 the long-term charter with
Gazprom, mentioned above, for the employment of the Clean Energy.
These transactions contributed substantially to our contracted
backlog, thereby enhancing significantly our revenue
visibility.
“On January 18, 2018, we paid quarterly cash distribution of
$0.4225 per common unit with respect to the fourth quarter of 2017.
Since our initial public offering in November 2013, we have paid
total cash distributions of $6.79 per common unit. In addition, on
February 12, 2018, we paid a cash distribution of $0.5625 per unit
on our Series A Preferred Units for the period from November 12,
2017 to February 11, 2018.
“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 85% contracted through 2018, 92%
contracted through 2019 and 100% contracted through 2020, and with
an estimated fleet-wide average remaining contract duration of 10.4
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, to manage our operating expenses and to
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 |
|
Year Ended |
(U.S. dollars in thousands, except per unit
data) |
|
December 31, 2017 (unaudited) |
|
December 31, 2016 (unaudited) |
|
|
December 31, 2017 (unaudited) |
|
December 31, 2016 |
Voyage Revenues |
$ |
34,452 |
$ |
41,385 |
|
$ |
138,990 |
$ |
169,851 |
Net Income |
$ |
5,625 |
$ |
15,475 |
|
$ |
17,339 |
$ |
66,854 |
Adjusted Net Income
(1) |
$ |
7,559 |
$ |
17,368 |
|
$ |
33,731 |
$ |
74,145 |
Operating Income |
$ |
17,424 |
$ |
24,303 |
|
$ |
63,944 |
$ |
102,079 |
Adjusted EBITDA(1) |
$ |
26,919 |
$ |
33,893 |
|
$ |
107,545 |
$ |
139,531 |
Earnings per common
unit |
$ |
0.11 |
$ |
0.39 |
|
$ |
0.27 |
$ |
1.69 |
Adjusted Earnings per
common unit (1) |
$ |
0.16 |
$ |
0.44 |
|
$ |
0.74 |
$ |
1.90 |
Distributable Cash
Flow (1) |
$ |
11,793 |
$ |
21,272 |
|
$ |
49,922 |
$ |
89,592 |
|
|
|
|
|
|
|
|
|
|
(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 December 31, 2017 and
2016 Financial Results
Net Income for the three months ended December
31, 2017 was $5.6 million as compared to Net Income of $15.5
million in the corresponding period of 2016, which represents a
63.7% decrease. The decrease, as further discussed below, was
mainly attributable to (i) the decrease in operating revenues and
(ii) the increased interest costs for servicing the Term Loan B
(defined below).
Adjusted Net Income for the three months ended
December 31, 2017 was $7.6 million as compared to Adjusted Net
Income of $17.4 million in the corresponding period of 2016, which
represents a 56.5% decrease. The decrease in Adjusted Net
Income, which excludes non-cash and non-recurring items, discussed
above and further presented in Appendix B, was mainly due to the
lower net 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
December 31, 2017 was $26.9 million compared to Adjusted EBITDA of
$33.9 million for the corresponding period of 2016, which
represents a decrease of 20.6% and was due to the factors discussed
above.
The Partnership's Distributable Cash Flow for
the three-month period ended December 31, 2017 was $11.8 million,
compared to $21.3 million in the corresponding period of 2016,
which represents a decrease of $9.5 million, or 44.6%, which was
due to the factors discussed above.
For the three-month period ended December 31,
2017, the Partnership reported Earnings per common unit and
Adjusted Earnings per common unit, basic and diluted, of $0.11 and
$0.16, 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 average 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.
Voyage revenues were $34.5 million for the
three-month period ended December 31, 2017 as compared to $41.4
million for the same period of 2016, which represents a decrease of
$6.9 million, or 16.8%. This decrease was primarily due to
the lower charter rate earned for the Clean Energy during the
fourth quarter of 2017 in comparison to the corresponding quarter
of 2016 and (ii) the charter hire reductions on the Yenisei River
and the Lena River, with effect from November 2016.
Vessel operating expenses were $6.7 million in
both the three-month periods ended December 31, 2017 and 2016,
which corresponds to a daily rate of $12,192 in the three-month
period ended December 31, 2017 and a daily rate of $12,149 in the
same period of 2016.
Interest and finance costs were $11.8 million in
the fourth quarter of 2017 as compared to $8.9 million in the
fourth quarter of 2016, which represents an increase of $3.0
million, or 33.3%. As discussed above, this increase is due to the
increase in the fourth quarter 2017 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 hire
gross of commissions(1) of approximately $65,900 per day per
vessel in the three months ended December 31, 2017, compared to
approximately $78,250 per day per vessel in the same period of
2016. During the three-month period ended December 31, 2017, the
Partnership’s vessels operated at 99.3% utilization compared to
100% utilization 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–on–period comparisons shown in this section are derived from
the condensed financials presented below.
Liquidity/ Financing/ Cash Flow
Coverage
As of December 31, 2017, the Partnership
reported free cash of $67.5 million. Total indebtedness outstanding
as of December 31, 2017 was $727.6 million (gross of unamortized
deferred loan fees), which also includes the Partnership’s $250.0
million senior unsecured notes due October 2019. As of December 31,
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.
As of December 31, 2017, the Partnership
reported working capital surplus of $47.5 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.
During the three months ended December 31, 2017,
the Partnership generated net cash from operating activities of
$15.0 million as compared to $23.3 million in the same period of
2016, which represents a decrease of 8.3 million, or 35.7%. This
decrease was attributable to the decrease in period net income due
to the factors discussed above.
Vessel Employment
As of February 15, 2018, the Partnership had
contracted time charter coverage(2) for 85% of its fleet estimated
Available Days (as defined in Appendix B) for 2018, 92% of its
fleet estimated Available Days for 2019 and 100% of its fleet
estimated Available Days for 2020.
As of the same date, the Partnership’s
contracted revenue backlog estimate (3) was approximately $1.49
billion, with an average remaining contract term of 10.4
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 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. Certain time charter contracts that the
Partnership recently 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: February 16,
2018
As announced, the Partnership’s management team
will host a conference call on Friday, February 16, 2018 at 08:30
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 Friday, February 23, 2018. 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 fourth quarter
ended December 31, 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 partnership formed by Dynagas Holding Ltd.,
its sponsor, to own and operate liquefied natural gas (“LNG”)
carriers employed on multi-year charters. The Partnership’s current
fleet 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 LP 23, Rue Basse, 98000 Monaco Attention: Michael Gregos
Tel. +377 99996445 Email:
management@dynagaspartners.com
Investor Relations / Financial Media: Nicolas
Bornozis President Capital Link, Inc. 230 Park Avenue, Suite 1536
New York, NY 10169 Tel. (212) 661-7566 E-mail:
dynagas@capitallink.com
Forward-Looking Statement
Matters 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,”
“will” 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, the amount of cash
available for distribution, and other factors. 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 Ended December 31, |
|
Year Ended December
31, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
REVENUES |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
34,452 |
|
$ |
41,385 |
|
$ |
138,990 |
|
$ |
169,851 |
|
EXPENSES |
|
|
|
|
|
|
|
|
Voyage expenses
(including related party) |
|
(685 |
) |
|
(740 |
) |
|
(3,619 |
) |
|
(2,961 |
) |
Vessel operating
expenses |
|
(6,730 |
) |
|
(6,706 |
) |
|
(27,067 |
) |
|
(26,451 |
) |
Dry-docking and special
survey costs |
|
34 |
|
|
(81 |
) |
|
(6,193 |
) |
|
(81 |
) |
General and
administrative expenses (including related party) |
|
(452 |
) |
|
(405 |
) |
|
(1,686 |
) |
|
(1,885 |
) |
Management fees
-related party |
|
(1,553 |
) |
|
(1,508 |
) |
|
(6,162 |
) |
|
(5,999 |
) |
Depreciation |
|
(7,642 |
) |
|
(7,642 |
) |
|
(30,319 |
) |
|
(30,395 |
) |
Operating
income |
|
17,424 |
|
|
24,303 |
|
|
63,944 |
|
|
102,079 |
|
Interest and finance
costs, net |
|
(11,718 |
) |
|
(8,883 |
) |
|
(46,078 |
) |
|
(34,991 |
) |
Other, net |
|
(81 |
) |
|
55 |
|
|
(527 |
) |
|
(234 |
) |
|
|
|
|
|
|
|
|
|
Net
Income |
$ |
5,625 |
|
$ |
15,475 |
|
$ |
17,339 |
|
$ |
66,854 |
|
Earnings per
unit, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit (basic and
diluted) |
$ |
0.11 |
|
$ |
0.39 |
|
$ |
0.27 |
|
$ |
1.69 |
|
Weighted
average number of units outstanding, basic and
diluted: |
|
|
|
|
|
|
|
|
Common units |
|
35,490,000 |
|
|
20,505,000 |
|
|
34,545,740 |
|
|
20,505,000 |
|
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Balance Sheets
(unaudited)(Expressed in thousands of U.S.
Dollars—except for unit data)
|
|
December 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash and cash
equivalents |
$ |
67,464 |
$ |
57,595 |
|
Due from related
party |
|
883 |
|
878 |
|
Other current
assets |
|
2,057 |
|
1,722 |
|
Total current
assets |
|
70,404 |
|
60,195 |
|
|
|
|
|
|
FIXED ASSETS,
NET: |
|
|
|
|
Vessels, net |
|
977,298 |
|
1,007,617 |
|
Total fixed
assets, net |
|
977,298 |
|
1,007,617 |
|
OTHER NON
CURRENT ASSETS: |
|
|
|
|
Restricted cash |
|
— |
|
25,000 |
|
Due from related
party |
|
1,350 |
|
1,350 |
|
Above market acquired
time charters |
|
5,267 |
|
12,514 |
|
Total
assets |
$ |
1,054,319 |
$ |
1,106,676 |
|
|
|
|
|
|
LIABILITIES AND
PARTNERS’ EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Current portion of
long-term debt, net of deferred financing costs |
$ |
2,655 |
$ |
31,688 |
|
Trade payables |
|
4,497 |
|
3,058 |
|
Due to related
party |
|
72 |
|
302 |
|
Accrued
liabilities |
|
4,051 |
|
3,750 |
|
Unearned revenue |
|
11,623 |
|
14,258 |
|
Total current
liabilities |
|
22,898 |
|
53,056 |
|
Deferred revenue |
|
1,405 |
|
1,036 |
|
Long-term debt, net of
current portion and deferred financing costs |
|
711,698 |
|
684,748 |
|
Total
non-current liabilities |
|
713,103 |
|
685,784 |
|
|
|
|
|
|
PARTNERS’
EQUITY |
|
|
|
|
General partner
(35,526 units issued and outstanding as at December 31, 2017 and
2016) |
|
47 |
|
97 |
|
Common unitholders
(35,490,000 units issued and outstanding as at December 31, 2017
and 20,505,000 units issued and outstanding as at December 31,
2016) |
|
245,055 |
|
302,952 |
|
Series A Preferred
unitholders: (3,000,000 units issued and outstanding as at December
31, 2017 and 2016) |
|
73,216 |
|
73,216 |
|
Subordinated
unitholders (None issued and outstanding as at December 31, 2017
and 14,985,000 units issued and outstanding as at December 31,
2016) |
|
— |
|
(8,429) |
|
Total partners’
equity |
|
318,318 |
|
367,836 |
|
|
|
|
|
|
Total
liabilities and partners’ equity |
$ |
1,054,319 |
$ |
1,106,676 |
|
|
|
|
|
|
|
DYNAGAS LNG PARTNERS LP
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2017 |
|
|
2016 |
|
Cash flows from
Operating Activities: |
|
|
|
|
Net income: |
$ |
17,339 |
|
$ |
66,854 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation |
|
30,319 |
|
|
30,395 |
|
Amortization and
write-off of deferred financing fees |
|
5,387 |
|
|
1,984 |
|
Amortization of fair
value of acquired time charter |
|
7,247 |
|
|
7,268 |
|
Deferred revenue |
|
369 |
|
|
(58) |
|
Changes in
operating assets and liabilities: |
|
|
|
|
Trade receivables |
|
(55) |
|
|
3 |
|
Prepayments and other
assets |
|
(315) |
|
|
(178) |
|
Inventories |
|
35 |
|
|
(486) |
|
Due from/ to related
parties |
|
(235) |
|
|
(346) |
|
Trade payables |
|
1,584 |
|
|
(1,105) |
|
Accrued
liabilities |
|
299 |
|
|
155 |
|
Unearned revenue |
|
(2,635) |
|
|
(868) |
|
|
|
|
|
|
Net cash from
Operating Activities |
|
59,339 |
|
|
103,618 |
|
|
|
|
|
|
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 securities
registration and other filing costs |
|
(145) |
|
|
— |
|
Payment of preferred
units issuance costs and other filing costs |
|
— |
|
|
(119) |
|
Distributions declared
and paid |
|
(66,857) |
|
|
(66,856) |
|
Repayment of long-term
debt |
|
(474,900) |
|
|
(32,500) |
|
Proceeds from long-term
debt |
|
480,000 |
|
|
66,667 |
|
Payment of deferred
finance fees |
|
(12,568) |
|
|
(36) |
|
Net cash used
in Financing Activities |
|
(49,470) |
|
|
(32,844) |
|
|
|
|
|
|
Net increase in
cash and cash equivalents |
|
9,869 |
|
|
33,302 |
|
Cash and cash
equivalents at beginning of the year |
|
57,595 |
|
|
24,293 |
|
Cash and cash
equivalents at end of the year |
$ |
67,464 |
|
$ |
57,595 |
|
|
|
|
|
|
|
|
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 under the $480.0 million
institutional Senior Secured Term Loan B facility due in 2023 (the
“Term Loan B”) which the Partnership entered into on May 18, 2017,
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.
|
|
|
|
|
December 31, |
(expressed in thousands
of United states dollars) |
|
2017 |
Balance sheet
data: |
|
|
Total assets |
$ |
1,010,034 |
Total cash |
|
24,596 |
Total debt, net of
deferred loan fees |
$ |
466,402 |
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Year Ended December 31, |
(expressed in thousands
of United states dollars) |
|
2017 |
|
2017 |
Income
statement and other operational data: |
|
|
|
|
Net income |
$ |
10,172 |
$ |
35,605 |
Revenues |
|
34,452 |
|
138,990 |
Adjusted EBITDA |
$ |
27,383 |
$ |
109,223 |
|
|
|
|
|
Arctic LNG Carriers reconciliation of net income to
Adjusted EBITDA
|
|
|
|
|
Three months ended December 31, |
|
Year Ended December 31, |
(In thousands of
U.S. dollars) |
|
2017 |
|
|
|
2017 |
Net Income |
$ |
10,172 |
|
|
$ |
35,605 |
Net interest and
finance costs (1) |
|
7,635 |
|
|
|
29,490 |
Depreciation |
|
7,642 |
|
|
|
30,319 |
Class survey costs |
|
(34) |
|
|
|
6,193 |
Amortization of fair
value of acquired time charter |
|
1,827 |
|
|
|
7,247 |
Charter hire
amortization |
|
141 |
|
|
|
369 |
Adjusted
EBITDA |
$ |
27,383 |
|
|
$ |
109,223 |
|
|
|
|
|
|
|
(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 Ended December 31, |
|
Year Ended December 31, |
(expressed in United
states dollars except for operational data) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Number of vessels at
the end of period |
|
6.0 |
|
|
6.0 |
|
|
6.0 |
|
|
6.0 |
|
Average number of
vessels in the period (1) |
|
6.0 |
|
|
6.0 |
|
|
6.0 |
|
|
6.0 |
|
Calendar Days (2) |
|
552.0 |
|
|
552.0 |
|
|
2,190.0 |
|
|
2,196.0 |
|
Available Days (3) |
|
552.0 |
|
|
552.0 |
|
|
2,140.3 |
|
|
2,196.0 |
|
Revenue earning days
(5) |
|
548.3 |
|
|
552.0 |
|
|
2,089.1 |
|
|
2,195.8 |
|
Time Charter Equivalent
(4) |
$ |
61,172 |
|
$ |
73,632 |
|
$ |
63,249 |
|
$ |
75,997 |
|
Fleet Utilization
(5) |
|
99% |
|
|
100% |
|
|
98% |
|
|
100% |
|
Vessel daily operating
expenses (6) |
$ |
12,192 |
|
$ |
12,149 |
|
$ |
12,359 |
|
$ |
12,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
(defined below) 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 in 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 months and
years ended December 31, 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 Ended December
31, |
|
Year EndedDecember 31, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
(In thousands of U.S.
dollars, except for Available Days and TCE rate) |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
34,452 |
|
$ |
41,385 |
|
$ |
138,990 |
|
$ |
169,851 |
|
Voyage Expenses
(7) |
|
(685 |
) |
|
(740 |
) |
|
(3,619 |
) |
|
(2,961 |
) |
Time Charter
equivalent revenues |
$ |
33,767 |
|
$ |
40,645 |
|
$ |
135,371 |
|
$ |
166,890 |
|
Available Days (3) |
|
552.0 |
|
|
552.0 |
|
|
2,140.3 |
|
|
2,196.0 |
|
Time charter
equivalent (TCE) rate |
$ |
61,172 |
|
$ |
73,632 |
|
$ |
63,249 |
|
$ |
75,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Ended December 31, |
|
Year EndedDecember 31, |
(In thousands of
U.S. dollars) |
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
Reconciliation to Net
Income |
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
5,625 |
|
|
$ |
15,475 |
|
|
$ |
17,339 |
|
$ |
66,854 |
|
Net interest and
finance costs (1) |
|
11,718 |
|
|
|
8,883 |
|
|
|
46,078 |
|
|
34,991 |
|
Depreciation |
|
7,642 |
|
|
|
7,642 |
|
|
|
30,319 |
|
|
30,395 |
|
Class survey costs |
|
(34) |
|
|
|
81 |
|
|
|
6,193 |
|
|
81 |
|
Amortization of fair
value of acquired time charter |
|
1,827 |
|
|
|
1,827 |
|
|
|
7,247 |
|
|
7,268 |
|
Charter hire
amortization |
|
141 |
|
|
|
(15) |
|
|
|
369 |
|
|
(58) |
|
Adjusted
EBITDA |
$ |
26,919 |
|
|
$ |
33,893 |
|
|
$ |
107,545 |
|
$ |
139,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes interest and finance costs and 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 ability to compare the Partnership’s
operating performance from period to period and against that 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 Ended December
31, |
|
Year Ended December 31, |
(In thousands of
U.S. dollars except for units and per unit data) |
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Net Income |
$ |
5,625 |
|
|
$ |
15,475 |
|
|
$ |
17,339 |
|
|
$ |
66,854 |
|
Non-cash expense from
accelerated amortization of deferred loan fees |
|
— |
|
|
|
— |
|
|
|
2,583 |
|
|
|
— |
|
Charter hire
amortization |
|
141 |
|
|
|
(15 |
) |
|
|
369 |
|
|
|
(58 |
) |
Amortization of fair
value of acquired time charter |
|
1,827 |
|
|
|
1,827 |
|
|
|
7,247 |
|
|
|
7,268 |
|
Class survey costs |
|
(34 |
) |
|
|
81 |
|
|
|
6,193 |
|
|
|
81 |
|
Adjusted Net
Income |
$ |
7,559 |
|
|
$ |
17,368 |
|
|
$ |
33,731 |
|
|
$ |
74,145 |
|
Less: Adjusted Net
Income attributable to subordinated, preferred unitholders and
general partner |
|
(1,710 |
) |
|
|
(8,327 |
) |
|
|
(8,267 |
) |
|
|
(35,285 |
) |
Common
unitholders’ interest in Adjusted Net Income |
$ |
5,849 |
|
|
$ |
9,041 |
|
|
$ |
25,464 |
|
|
$ |
38,860 |
|
Weighted average number
of common units outstanding, basic and diluted: |
|
35,490,000 |
|
|
|
20,505,000 |
|
|
|
34,545,740 |
|
|
|
20,505,000 |
|
Adjusted
Earnings per common unit, basic and diluted |
$ |
0.16 |
|
|
$ |
0.44 |
|
|
$ |
0.74 |
|
|
$ |
1.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income represents net income before
non-recurring expenses (if any), 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 EndedDecember
31, |
|
Year EndedDecember
31, |
(In thousands of
U.S. dollars) |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
Net
Income |
$ |
5,625 |
|
$ |
15,475 |
|
|
$ |
17,339 |
|
$ |
66,854 |
|
Depreciation |
|
7,642 |
|
|
7,642 |
|
|
|
30,319 |
|
|
30,395 |
|
Amortization of
deferred finance fees |
|
825 |
|
|
495 |
|
|
|
5,387 |
|
|
1,984 |
|
Net interest and
finance costs, excluding amortization(1) |
|
10,893 |
|
|
8,388 |
|
|
|
40,691 |
|
|
33,007 |
|
Class survey costs |
|
(34 |
) |
|
81 |
|
|
|
6,193 |
|
|
81 |
|
Amortization of fair
value of acquired time charters |
|
1,827 |
|
|
1,827 |
|
|
|
7,247 |
|
|
7,268 |
|
Charter hire
amortization |
|
141 |
|
|
(15 |
) |
|
|
369 |
|
|
(58 |
) |
Adjusted
EBITDA |
$ |
26,919 |
|
$ |
33,893 |
|
|
$ |
107,545 |
|
$ |
139,531 |
|
Net interest and
finance costs, excluding amortization(1) |
|
(10,893 |
) |
|
(8,388 |
) |
|
|
(40,691 |
) |
|
(33,007 |
) |
Maintenance capital
expenditure reserves |
|
(1,038 |
) |
|
(1,038 |
) |
|
|
(4,152 |
) |
|
(4,152 |
) |
Replacement capital
expenditure reserves |
|
(3,195 |
) |
|
(3,195 |
) |
|
|
(12,780 |
) |
|
(12,780 |
) |
Distributable
Cash Flow |
$ |
11,793 |
|
$ |
21,272 |
|
|
$ |
49,922 |
|
$ |
89,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes interest and finance costs and 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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