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 six
months ended June 30, 2018.
Highlights:
- Net income of $0.4 million for the three months ended June 30,
2018. Included in the second quarter 2018 results are $2.2 million
of scheduled class survey and dry dock costs related to the Arctic
Aurora, one of the three tri-fuel diesel engine (TFDE) vessels in
our fleet;
- Loss per common unit of $0.04 for the three months ended June
30, 2018;
- Adjusted Net Income(1) of $4.5 million for the three months
ended June 30, 2018;
- Adjusted Earnings per common unit(1) (2) of $0.08 for the three
months ended June 30, 2018;
- Distributable Cash Flow(1) of $8.7 million during the three
months ended June 30, 2018;
- Adjusted EBITDA(1) of $24.4 million for the three months ended
June 30, 2018;
- Reported free cash of $57.8 million and available liquidity of
$87.8 million as of June 30, 2018;
- Quarterly cash distribution of $0.25 per common unit in respect
of the second quarter of 2018 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 Appendix B 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) 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:
Quarterly common unit cash
distribution: On July 5, 2018, the Partnership announced a
quarterly cash distribution of $0.25 per common unit in respect of
the second quarter of 2018 which was paid on July 19, 2018 to all
common unitholders of record as of July 12, 2018.
Series A Preferred Units Cash
Distribution: On July 25, 2018, 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 May 12, 2018
to August 11, 2018, which is expected to be paid on August 13, 2018
to all unitholders of record as of August 5, 2018.
CEO Commentary:
Tony Lauritzen, Chief Executive Officer of the Partnership,
commented:
“We are pleased to report our earnings for the three months
ended June 30, 2018.
“Our reported earnings for the second quarter of 2018 were in
line with our expectations and were above those for the second
quarter of 2017, but below those for the first quarter of 2018. Our
earnings were impacted by: (i) the temporary employment of the
Clean Energy in the short-term market until July 13, 2018, at which
time the vessel commenced employment on a time charter with Gazprom
for a term of approximately eight years, (ii) the completion of the
multiyear charter contract with Gazprom for the Ob River in April
2018 and the subsequent employment of the vessel with the same
company at a lower rate of hire reflecting a longer charter term of
ten years, and (iii) the scheduled dry-docking of the Arctic Aurora
in May 2018.
“We believe the Yamal LNG project is progressing well. On July
1, 2018, Yamal narrowed the delivery windows for both the Yenisei
River and the Lena River to the earliest possible allowed under
their respective 15 year charter contracts.
“On July 21, 2018, the Yenisei River completed the five year
term of its employment contract with Gazprom. Following the
redelivery of the vessel to the Partnership, the vessel is
undergoing its five year special survey which is expected to be
completed in mid-August 2018. After the completion of the special
survey, we expect to employ the Yenisei River in the short-term
market until the vessel commences its 15 year contract with
Yamal.
“Following redelivery from Gazprom in October 2018 and the
completion of its special survey, the Lena River is contracted to
be employed on a multi-month charter contact with a large gas
producer until the vessel commences its 15 year contract with
Yamal.
“On July 19, 2018, we paid quarterly cash distribution of $0.25
per common unit with respect to the second quarter of 2018. Since
our initial public offering in November 2013, we have paid total
cash distributions of $7.29 per common unit. In addition, on August
13, 2018, we expect to pay a cash distribution of $0.5625 per unit
on our Series A Preferred Units for the period from May 12, 2018 to
August 11, 2018.
“We believe that we have significant cash flow visibility with
contracted vessel employment for approximately 85% of 2018, 99% of
2019 and 100% of 2020, and with an estimated Fleet-wide average
remaining contract duration of 10.1 years.
“Our intent is to seek additional contract coverage,
particularly in 2018, to manage our capital structure and 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 |
|
Six Months Ended |
(U.S. dollars
in thousands, except per unit data) |
|
June 30,2018(unaudited) |
|
June 30,2017(unaudited) |
|
|
June 30,2018(unaudited) |
|
June 30,2017(unaudited) |
Voyage revenues |
$ |
30,892 |
|
$ |
31,975 |
|
|
$ |
64,796 |
$ |
71,067 |
Net Income/ (loss) |
$ |
351 |
|
$ |
(5,181 |
) |
|
$ |
5,191 |
$ |
7,731 |
Adjusted Net Income
(1) |
$ |
4,526 |
|
$ |
4,220 |
|
|
$ |
11,758 |
$ |
19,125 |
Operating income |
$ |
12,562 |
|
$ |
8,734 |
|
|
$ |
29,368 |
$ |
30,627 |
Adjusted EBITDA(1) |
$ |
24,443 |
|
$ |
22,921 |
|
|
$ |
51,033 |
$ |
54,192 |
Earnings/ (loss) per
common unit |
$ |
(0.04 |
) |
$ |
(0.19 |
) |
|
$ |
0.05 |
$ |
0.09 |
Adjusted Earnings per
common unit (1) |
$ |
0.08 |
|
$ |
0.07 |
|
|
$ |
0.24 |
$ |
0.43 |
Distributable Cash Flow
(1) |
$ |
8,670 |
|
$ |
8,200 |
|
|
$ |
19,956 |
$ |
26,834 |
(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 Appendix B
for the definitions and reconciliation of these measures to the
most directly comparable financial measures calculated and
presented in accordance with U.S. GAAP.
Three Months Ended June 30, 2018 and
2017 Financial Results
Net income for the three months ended June 30,
2018 was $0.4 million as compared to net loss of $5.2 million in
the corresponding period of 2017, which represents an increase of
$5.5 million, or 106.8%. The increase in period net income was
mainly attributable to:
- the decrease in dry-dock and special survey expenditures by
$2.7 million, or 54.6%, for the second quarter of 2018, during
which one vessel in our fleet, the Arctic Aurora, underwent
scheduled special survey and dry-dock, as compared to the
corresponding quarter of 2017 during which the three steam turbine
vessels in our fleet underwent scheduled special survey and
dry-dock repairs;
- the decrease in the second quarter of 2018 operating expenses
by $1.6 million, or 21.2%, due to crewing and technical
efficiencies achieved during the 2018 quarter under discussion as
compared to the corresponding quarter of 2017; and
- the decrease in interest and finance costs for the second
quarter of 2018 by approximately $1.1 million, or 8.4%, due to the
fact that in the corresponding period of 2017 we incurred interest
and finance costs of approximately $3.5 million in connection with
our Term Loan B refinancing in May 2017 (the “Term Loan B
Refinancing”) and accompanying retirement of our then existing bank
debt. This decrease was largely offset by the increase in the
Partnership’s weighted average interest in the second quarter of
2018 which was the result of increased interest charges in
servicing the Partnership’s secured debt that was refinanced as
part of the Term Loan B Refinancing, discussed above.
Adjusted Net Income for the three months ended
June 30, 2018 was $4.5 million as compared to Adjusted Net Income
of $4.2 million in the corresponding period of 2017, which
represents an increase of $0.3 million, or 7.3%. Adjusted EBITDA
for the three months ended June 30, 2018 was $24.4 million as
compared to Adjusted EBITDA of $22.9 million in the corresponding
period of 2017, which represents an increase of $1.5 million, or
6.6%. The increase in both the second quarter 2018 Adjusted Net
Income and Adjusted EBITDA as compared to the corresponding period
of 2017 was mainly attributable to crewing and technical
efficiencies achieved during the second quarter of 2018, as
discussed above.
The Partnership’s Distributable Cash Flow for
the three-month period ended June 30, 2018 was $8.7 million as
compared to $8.2 million in the corresponding period of 2017, which
represents an increase of $0.5 million, or 5.7%, and was due to the
factors outlined above.
For the three-month period ended June 30, 2018,
the Partnership reported loss per common unit and Adjusted Earnings
per common unit, basic and diluted, of $0.04 and $0.08,
respectively, after taking into account the effect of the Series A
Preferred Units interest on the Partnership’s net income. Losses
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.
Adjusted Net Income, Adjusted EBITDA,
Distributable Cash Flow and Adjusted Earnings per common unit are
not recognized measures under U.S. GAAP. Please refer to Appendix B
for the definitions and reconciliation of these measures to the
most directly comparable financial measures calculated and
presented in accordance with U.S. GAAP.
Voyage revenues were $30.9 million for the
three-month period ended June 30, 2018 as compared to $32.0 million
for the same period of 2017, which represents a decrease of $1.1
million, or 3.4%. This decrease was due to (i) the twelve off-hire
days for the Arctic Aurora in the second quarter of 2018 as the
vessel underwent its scheduled special survey and dry-dock in May
2018 and (ii) the lower revenues earned on our steam turbine
vessel, the Ob River, which completed employment on its multiyear
charter contract with Gazprom Global LNG Limited (“Gazprom”) in
April 2018 and subsequently began employment at a lower hire rate
under a ten-year charter party with an entity which is part of the
wider Gazprom group of companies.
Vessel operating expenses were $5.9 million,
which corresponds to a daily rate of $10,808 for the three-month
period ended June 30, 2018, as compared to $7.5 million, or a daily
rate of $13,720 for the corresponding period of 2017. This decrease
is primarily associated with crewing and technical efficiencies
achieved during the second quarter of 2018 as compared to the
corresponding period of 2017, as discussed above.
Interest and finance costs were $12.6 million in
the second quarter of 2018 as compared to $13.7 million in the
second quarter of 2017, which represents a decrease of $1.1
million, or 8.4%. As discussed above, this decrease was due to the
one-off interest and finance charges incurred in the corresponding
period of 2017 in connection with the refinancing of our then
existing secured indebtedness in the Term Loan B Refinancing. This
decrease was partially offset by the increased interest costs in
servicing the Term Loan B in the second quarter of 2018 in relation
to those incurred in the second quarter of 2017.
The Partnership reported average daily hire
gross of commissions(1) of approximately $61,500 per day per vessel
in the three months ended June 30, 2018, as compared to
approximately $66,900 per day per vessel in the same period of
2017. During the three-month period ended June 30, 2018, the
Partnership’s vessels operated at 97% utilization as compared to
95% utilization in the same period of 2017.(1) Average daily hire
gross of commissions, which is further discussed in Appendix B,
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.
Amounts relating to variations in
period–on–period comparisons shown in this section are derived from
the condensed financial statements presented below.
Liquidity/ Financing/ Cash Flow
Coverage
As of June 30, 2018, the Partnership reported
free cash of $57.8 million. Total indebtedness outstanding as of
June 30, 2018 was $725.2 million (gross of unamortized deferred
loan fees), which includes amounts outstanding under the Term Loan
B and the Partnership’s $250.0 million senior unsecured notes due
October 2019. As of June 30, 2018, $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 June 30, 2018, the Partnership reported
working capital surplus of $42.3 million (Q4 2017: $47.5
million).
During the three months ended June 30, 2018, the
Partnership generated net cash from operating activities of $8.6
million as compared to $11.4 million in the same period of 2017,
which represents a decrease of $2.8 million, or 24.3%. This
decrease was attributable to the decrease in period net income due
to the factors discussed above which was, however, to a large
extent counterbalanced by the positive effect of variations in
working capital.
Vessel Employment
As of July 27, 2018, the Partnership had
estimated contracted time charter coverage(2) for 85% of its fleet
estimated Available Days (as defined in Appendix B) for the
remaining 2018, 99% 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 $1.44
billion, with an average remaining contract term of 10.1
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 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. 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: July 27, 2018
As announced, the Partnership’s management team
will host a conference call on Friday, July 27, 2018 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 Friday, August 3rd, 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 second quarter
ended June 30, 2018 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,” 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 and other reports
furnished to 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. Further, we cannot assess the effect of each
such factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to be materially
different from those contained in any forward-looking
statement.
APPENDIX A
DYNAGAS LNG PARTNERS
LPUnaudited Condensed Consolidated Statements of
Income
(In thousands of U.S.
dollars except unitsand per unit data) |
|
Three Months EndedJune 30, |
|
Six Months EndedJune
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
REVENUES |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
30,892 |
|
$ |
31,975 |
|
$ |
64,796 |
|
$ |
71,067 |
|
EXPENSES |
|
|
|
|
|
|
|
|
Voyage expenses
(including related party) |
|
(622 |
) |
|
(1,345 |
) |
|
(1,243 |
) |
|
(2,217 |
) |
Vessel operating
expenses |
|
(5,901 |
) |
|
(7,491 |
) |
|
(12,241 |
) |
|
(14,161 |
) |
Dry-docking and special
survey costs |
|
(2,229 |
) |
|
(4,911 |
) |
|
(2,696 |
) |
|
(5,131 |
) |
General and
administrative expenses(including related party) |
|
(433 |
) |
|
(398 |
) |
|
(1,062 |
) |
|
(840 |
) |
Management fees
-related party |
|
(1,582 |
) |
|
(1,537 |
) |
|
(3,147 |
) |
|
(3,056 |
) |
Depreciation |
|
(7,563 |
) |
|
(7,559 |
) |
|
(15,039 |
) |
|
(15,035 |
) |
Operating
income |
|
12,562 |
|
|
8,734 |
|
|
29,368 |
|
|
30,627 |
|
Interest and finance
costs, net |
|
(12,354 |
) |
|
(13,725 |
) |
|
(24,236 |
) |
|
(22,615 |
) |
Other, net |
|
143 |
|
|
(190 |
) |
|
59 |
|
|
(281 |
) |
|
|
|
|
|
|
|
|
|
Net
income/(loss) |
$ |
351 |
|
$ |
(5,181 |
) |
$ |
5,191 |
|
$ |
7,731 |
|
Earnings/
(loss) per common unit (basicand diluted) |
$ |
(0.04 |
) |
$ |
(0.19 |
) |
$ |
0.05 |
|
$ |
0.09 |
|
Weighted
average number of unitsoutstanding, basic and
diluted: |
|
|
|
|
|
|
|
|
Common units |
|
35,490,000 |
|
|
35,490,000 |
|
|
35,490,000 |
|
|
33,585,829 |
|
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Balance Sheets
(unaudited)(Expressed in thousands of U.S.
Dollars—except for unit data)
|
|
June 30, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash and cash
equivalents |
$ |
57,818 |
$ |
67,464 |
Due from related
party |
|
2,348 |
|
883 |
Other current
assets |
|
5,537 |
|
2,057 |
Total current
assets |
|
65,703 |
|
70,404 |
|
|
|
|
|
FIXED ASSETS,
NET: |
|
|
|
|
Vessels, net |
|
962,668 |
|
977,298 |
Total fixed
assets, net |
|
962,668 |
|
977,298 |
OTHER NON
CURRENT ASSETS: |
|
|
|
|
Due from related
party |
|
1,350 |
|
1,350 |
Deferred charges |
|
812 |
|
— |
Above market acquired
time charters |
|
1,673 |
|
5,267 |
Total
assets |
$ |
1,032,206 |
$ |
1,054,319 |
|
|
|
|
|
LIABILITIES AND
PARTNERS’ EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Current portion of
long-term debt, net of deferred financing costs |
$ |
2,671 |
$ |
2,655 |
Trade payables |
|
9,058 |
|
4,497 |
Due to related
party |
|
80 |
|
72 |
Accrued
liabilities |
|
4,712 |
|
4,051 |
Unearned revenue |
|
6,867 |
|
11,623 |
Total current
liabilities |
|
23,388 |
|
22,898 |
Deferred revenue |
|
1,682 |
|
1,405 |
Long-term debt, net of
current portion and deferred financing costs |
|
710,910 |
|
711,698 |
Total
non-current liabilities |
|
712,592 |
|
713,103 |
|
|
|
|
|
PARTNERS’
EQUITY |
|
|
|
|
General partner
(35,526 units issued and outstanding as at June 30,2018 and
December 31, 2017) |
|
8 |
|
47 |
Common unitholders
(35,490,000 units issued and outstanding as atJune 30, 2018 and
December 31, 2017) |
|
223,002 |
|
245,055 |
Series A Preferred
unitholders: (3,000,000 units issued and outstandingas at June 30,
2018 and December 31, 2017) |
|
73,216 |
|
73,216 |
Total partners’
equity |
|
296,226 |
|
318,318 |
|
|
|
|
|
Total
liabilities and partners’ equity |
$ |
1,032,206 |
$ |
1,054,319 |
DYNAGAS LNG PARTNERS LP
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Cash flows from
Operating Activities: |
|
|
|
|
|
|
|
|
Net income/(loss): |
$ |
351 |
|
$ |
(5,181 |
) |
$ |
5,191 |
|
$ |
7,731 |
|
Adjustments to
reconcile net income/ (loss) to netcash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
7,563 |
|
|
7,559 |
|
|
15,039 |
|
|
15,035 |
|
Amortization and
write-off of deferred financing fees |
|
814 |
|
|
3,237 |
|
|
1,625 |
|
|
3,723 |
|
Amortization of fair
value of acquired time charter |
|
1,807 |
|
|
1,807 |
|
|
3,594 |
|
|
3,594 |
|
Deferred revenue
amortization |
|
139 |
|
|
100 |
|
|
277 |
|
|
86 |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Trade receivables |
|
51 |
|
|
(220 |
) |
|
93 |
|
|
(196 |
) |
Prepayments and other
assets |
|
(455 |
) |
|
(704 |
) |
|
(504 |
) |
|
(878 |
) |
Inventories |
|
(2,041 |
) |
|
17 |
|
|
(3,069 |
) |
|
63 |
|
Due from/ to related
parties |
|
(874 |
) |
|
(332 |
) |
|
(1,457 |
) |
|
37 |
|
Deferred charges |
|
(812 |
) |
|
— |
|
|
(812 |
) |
|
— |
|
Trade payables |
|
2,747 |
|
|
4,999 |
|
|
4,610 |
|
|
6,074 |
|
Accrued
liabilities |
|
892 |
|
|
1,928 |
|
|
663 |
|
|
1,690 |
|
Unearned revenue |
|
(1,541 |
) |
|
(1,802 |
) |
|
(4,756 |
) |
|
(7,391 |
) |
|
|
|
|
|
|
|
|
|
Net cash from
Operating Activities |
|
8,641 |
|
|
11,408 |
|
|
20,494 |
|
|
29,568 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
Investing Activities |
|
|
|
|
|
|
|
|
Vessel acquisitions and
other additions to vessels’ cost |
|
(409 |
) |
|
— |
|
|
(409 |
) |
|
— |
|
Net cash used
in Investing Activities |
|
(409 |
) |
|
— |
|
|
(409 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
Cash flows from
Financing Activities: |
|
|
|
|
|
|
|
|
Payment of debt
securities registration and other filingcosts |
|
(46 |
) |
|
— |
|
|
(48 |
) |
|
— |
|
Distributions declared
and paid |
|
(10,569 |
) |
|
(16,714 |
) |
|
(27,283 |
) |
|
(33,429 |
) |
Proceeds from long-term
debt |
|
— |
|
|
480,000 |
|
|
— |
|
|
480,000 |
|
Repayment of long-term
debt |
|
(1,200 |
) |
|
(464,375 |
) |
|
(2,400 |
) |
|
(472,500 |
) |
Payment of deferred
finance fees |
|
— |
|
|
(11,923 |
) |
|
— |
|
|
(11,923 |
) |
Net cash used
in Financing Activities |
|
(11,815 |
) |
|
(13,012 |
) |
|
(29,731 |
) |
|
(37,852 |
) |
|
|
|
|
|
|
|
|
|
Net decrease in
cash and cash equivalents andrestricted cash |
|
(3,583 |
) |
|
(1,604 |
) |
|
(9,646 |
) |
|
(8,284 |
) |
Cash and cash
equivalents and restricted cash atbeginning of the period |
|
61,401 |
|
|
75,915 |
|
|
67,464 |
|
|
82,595 |
|
Cash and cash
equivalents and restricted cash at end of the
period |
$ |
57,818 |
|
$ |
74,311 |
|
$ |
57,818 |
|
$ |
74,311 |
|
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 Term Loan B facility and
each of its vessel owning subsidiaries which is a subsidiary
guarantor of the Term Loan B (collectively “Arctic LNG Carriers”)
as at and for the periods presented, which are derived from the
unaudited interim financial statements of Arctic LNG Carriers and
are presented in connection with certain reporting requirements
governing the Term Loan B.
|
|
June 30, |
|
December 31, |
(expressed in thousands
of United states dollars) |
|
2018 |
|
2017 |
Balance sheet
data: |
|
|
|
|
Total assets |
$ |
986,385 |
$ |
1,010,034 |
Total cash |
|
15,833 |
|
24,596 |
Total debt, net of
deferred loan fees |
$ |
465,070 |
$ |
466,402 |
|
|
Three months endedJune 30, |
|
Six months endedJune 30, |
(expressed in thousands
of United states dollars) |
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
Income
statement and other operational data: |
|
|
|
|
|
|
|
|
Net income/ (loss) |
$ |
4,852 |
$ |
(618 |
) |
$ |
14,373 |
$ |
16,931 |
Revenues |
|
30,892 |
|
31,974 |
|
|
64,796 |
|
71,067 |
Adjusted EBITDA |
$ |
24,866 |
$ |
23,329 |
|
$ |
52,084 |
$ |
55,022 |
Arctic LNG Carriers reconciliation of net income/ (loss)
to Adjusted EBITDA
|
|
Three months endedJune 30, |
|
Six months endedJune 30, |
(In thousands of U.S.
dollars) |
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
Net income/(loss) |
$ |
4,852 |
$ |
(618 |
) |
$ |
14,373 |
$ |
16,931 |
Net interest and
finance costs (1) |
|
8,276 |
|
9,570 |
|
|
16,105 |
|
14,245 |
Depreciation |
|
7,563 |
|
7,559 |
|
|
15,039 |
|
15,035 |
Class survey costs |
|
2,229 |
|
4,911 |
|
|
2,696 |
|
5,131 |
Amortization of fair
value ofacquired time charter |
|
1,807 |
|
1,807 |
|
|
3,594 |
|
3,594 |
Charter hire
amortization |
|
139 |
|
100 |
|
|
277 |
|
86 |
Adjusted
EBITDA |
$ |
24,866 |
$ |
23,329 |
|
$ |
52,084 |
$ |
55,022 |
(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 EndedJune 30, |
|
Six Months EndedJune 30, |
(expressed in United
states dollars except for operational data) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
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) |
|
546.0 |
|
|
546.0 |
|
|
1,086.0 |
|
|
1,086.0 |
|
Available Days (3) |
|
534.0 |
|
|
506.6 |
|
|
1,074.0 |
|
|
1,046.6 |
|
Revenue earning days
(4) |
|
519.0 |
|
|
482.1 |
|
|
1,059.0 |
|
|
1,014.4 |
|
Time Charter Equivalent
(5) |
$ |
56,685 |
|
$ |
60,462 |
|
$ |
59,174 |
|
$ |
65,784 |
|
Fleet Utilization
(4) |
|
97 |
% |
|
95 |
% |
|
99 |
% |
|
97 |
% |
Vessel daily operating
expenses (6) |
$ |
10,808 |
|
$ |
13,720 |
|
$ |
11,272 |
|
$ |
13,040 |
|
(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) 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.
(5) 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 and six
months ended June 30, 2018 and 2017 (amounts in thousands of
U.S. dollars, except for TCE rates, which are expressed in U.S.
dollars, and Available Days):
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
(In thousands of U.S.
dollars, except forAvailable Days and TCE rate) |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
30,892 |
|
$ |
31,975 |
|
$ |
64,796 |
|
$ |
71,067 |
|
Voyage Expenses
(7) |
|
(622 |
) |
|
(1,345 |
) |
|
(1,243 |
) |
|
(2,217 |
) |
Time Charter
equivalent revenues |
$ |
30,270 |
|
$ |
30,630 |
|
$ |
63,553 |
|
$ |
68,850 |
|
Available Days (3) |
|
534.0 |
|
|
506.6 |
|
|
1,074.0 |
|
|
1,046.6 |
|
Time charter
equivalent (TCE) rate |
$ |
56,685 |
|
$ |
60,462 |
|
$ |
59,174 |
|
$ |
65,784 |
|
(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/ (loss) to Adjusted
EBITDA
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
(In thousands of
U.S. dollars) |
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
Net income/(loss) |
$ |
351 |
|
$ |
(5,181 |
) |
|
$ |
5,191 |
|
$ |
7,731 |
Net interest and
finance costs (1) |
|
12,354 |
|
|
13,725 |
|
|
|
24,236 |
|
|
22,615 |
Depreciation |
|
7,563 |
|
|
7,559 |
|
|
|
15,039 |
|
|
15,035 |
Class survey costs |
|
2,229 |
|
|
4,911 |
|
|
|
2,696 |
|
|
5,131 |
Amortization of fair
value ofacquired time charter |
|
1,807 |
|
|
1,807 |
|
|
|
3,594 |
|
|
3,594 |
Charter hire
amortization |
|
139 |
|
|
100 |
|
|
|
277 |
|
|
86 |
Adjusted
EBITDA |
$ |
24,443 |
|
$ |
22,921 |
|
|
$ |
51,033 |
|
$ |
54,192 |
(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/ (loss) to Adjusted Net
Income available to common unitholders and Adjusted Earnings per
common unit
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
(In thousands of
U.S. dollars except for units and per unit data) |
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net Income/ (loss) |
$ |
351 |
|
|
$ |
(5,181 |
) |
|
$ |
5,191 |
|
|
$ |
7,731 |
|
Non-cash expense from
accelerated amortization ofdeferred loan fees |
|
— |
|
|
|
2,583 |
|
|
|
— |
|
|
|
2,583 |
|
Charter hire
amortization |
|
139 |
|
|
|
100 |
|
|
|
277 |
|
|
|
86 |
|
Amortization of fair
value of acquired time charter |
|
1,807 |
|
|
|
1,807 |
|
|
|
3,594 |
|
|
|
3,594 |
|
Class survey costs |
|
2,229 |
|
|
|
4,911 |
|
|
|
2,696 |
|
|
|
5,131 |
|
Adjusted Net
Income |
$ |
4,526 |
|
|
$ |
4,220 |
|
|
$ |
11,758 |
|
|
$ |
19,125 |
|
Less: Adjusted Net
Income attributable to subordinated,preferred unitholders and
general partner |
|
(1,690 |
) |
|
|
(1,707 |
) |
|
|
(3,383 |
) |
|
|
(4,848 |
) |
Common
unitholders’ interest in Adjusted Net Income |
$ |
2,836 |
|
|
$ |
2,513 |
|
|
$ |
8,375 |
|
|
$ |
14,277 |
|
Weighted average number
of common units outstanding,basic and diluted: |
|
35,490,000 |
|
|
|
35,490,000 |
|
|
|
35,490,000 |
|
|
|
33,585,829 |
|
Adjusted
Earnings per common unit, basic and diluted |
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.24 |
|
|
$ |
0.43 |
|
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 EndedJune
30, |
|
Six Months EndedJune
30, |
(In thousands of
U.S. dollars) |
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
Net Income/
(loss) |
$ |
351 |
|
$ |
(5,181 |
) |
|
$ |
5,191 |
|
$ |
7,731 |
|
Depreciation |
|
7,563 |
|
|
7,559 |
|
|
|
15,039 |
|
|
15,035 |
|
Amortization and
write-off of deferred finance fees |
|
814 |
|
|
3,237 |
|
|
|
1,625 |
|
|
3,723 |
|
Net interest and
finance costs, excluding amortization (1) |
|
11,540 |
|
|
10,488 |
|
|
|
22,611 |
|
|
18,892 |
|
Class survey costs |
|
2,229 |
|
|
4,911 |
|
|
|
2,696 |
|
|
5,131 |
|
Amortization of fair
value of acquired time charter |
|
1,807 |
|
|
1,807 |
|
|
|
3,594 |
|
|
3,594 |
|
Charter hire
amortization |
|
139 |
|
|
100 |
|
|
|
277 |
|
|
86 |
|
Adjusted
EBITDA |
$ |
24,443 |
|
$ |
22,921 |
|
|
$ |
51,033 |
|
$ |
54,192 |
|
Less: Net
interest and finance costs,
excluding amortization (1) |
|
(11,540 |
) |
|
(10,488 |
) |
|
|
(22,611 |
) |
|
(18,892 |
) |
Maintenance capital expenditure reserves |
|
(1,038 |
) |
|
(1,038 |
) |
|
|
(2,077 |
) |
|
(2,077 |
) |
Replacement capital expenditure reserves |
|
(3,195 |
) |
|
(3,195 |
) |
|
|
(6,389 |
) |
|
(6,389 |
) |
Distributable
Cash Flow |
$ |
8,670 |
|
$ |
8,200 |
|
|
$ |
19,956 |
|
$ |
26,834 |
|
(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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