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, 2018.
Quarter Highlights:
- Net loss of $0.7 million for the three months ended September
30, 2018. Included in the third quarter 2018 results are $2.3
million of scheduled class survey and dry-docking costs related to
the Yenisei River, one of the three tri-fuel diesel engine (TFDE)
vessels in our fleet;
- Loss per common unit of $0.07 for the three months ended
September 30, 2018;
- Adjusted Net Income(1) of $3.3 million for the three months
ended September 30, 2018;
- Adjusted Earnings per common unit (1) (2) of $0.04 for the
three months ended September 30, 2018;
- Distributable Cash Flow(1) of $7.5 million during the three
months ended September 30, 2018;
- Adjusted EBITDA(1) of $23.5 million for the three months ended
September 30, 2018;
- Reported free cash of $59.5 million and available liquidity of
$89.5 million as of September 30, 2018;
- The Yenisei River completed its scheduled dry-docking and
special survey and subsequently entered earlier than anticipated
into its multi-year charter with Yamal Trade Pte. (“Yamal”) which
was extended from 15 years to 15 years and 180 days.
Subsequent Highlights:
- Completed a $55.0 million underwritten public offering of 2.2
million 8.75% Fixed to Floating Cumulative Redeemable Perpetual
Preferred Units (the “Series B Preferred Units”);
- Declared quarterly cash distribution of $0.25 per common unit
in respect of the third quarter of 2018 and $0.5625 per preferred
unit in respect of the most recent period.
- The Lena River completed its scheduled dry-docking and special
survey in late October 2018 and subsequently delivered into a
multi-month charter with a major energy company, prior to its
anticipated delivery to its multi-year charter with Yamal.
(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 of
this press release for the definitions and reconciliation of these
measures to the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP and other
related information.
(2) 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 October 11, 2018, the Partnership
announced a quarterly cash distribution of $0.25 per common unit in
respect of the third quarter of 2018 which was paid on October 26,
2018 to all common unitholders of record as of October 19,
2018.
Series A Preferred Units cash
distribution: On October 24, 2018, the Partnership
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,
2018 to November 11, 2018, which was paid on November 12, 2018 to
all unitholders of record as of November 5, 2018.
Yenisei River early commencement of
multi-year charter with Yamal: On August 14, 2018,
immediately upon completion of its mandatory statutory class
five-year special survey and dry-docking, the Yenisei River was
delivered earlier than anticipated to its multi-year charter
contract with Yamal in order to serve the Yamal LNG project,
pursuant to an agreement with Yamal according to which the firm
charter period was extended from 15 years to 15 years plus 180
days. The initial term of the charter may be extended by three
consecutive periods of five years.
Series B Preferred Units public
offering: On October 23, 2018, the Partnership completed
an underwritten public offering of 2,200,000 Series B Preferred
Units, representing limited partner interests in the Partnership,
at a price of $25.00 per unit. Distributions will be payable on the
Series B Preferred Units up to November 22, 2023 at a fixed rate
equal to 8.75% per annum and from November 22, 2023, if not
redeemed, at a floating rate. The Partnership has granted the
underwriters a 30-day option to purchase up to an additional
330,000 Series B Preferred Units on the same terms and conditions.
The Partnership received net proceeds of $53.0 million, after
deducting underwriters’ discounts and commissions and estimated
offering expenses and intends to use the net proceeds from the
public offering for general Partnership purposes, which may
include, among other things, the repayment of indebtedness,
including the Partnership’s outstanding 6.25% Senior Notes due on
October 30, 2019, or the funding of acquisitions or other capital
expenditures.
CEO Commentary:
Tony Lauritzen, Chief Executive Officer of the Partnership,
commented:
“We are pleased to report our earnings for the three months
ended September 30, 2018.
“Our reported earnings for the third quarter of 2018 were in
line with our expectations. Compared to the same period in 2017,
our third quarter earnings were impacted by the following
occurrences: (i) two of our vessels, the Arctic Aurora and the Ob
River, commenced employment under extended charter contracts with
their respective charterers at lower rates compared with the
previous charter contracts, and (ii) the special survey and
dry-docking of the Yenisei River.
“Based on our contracted revenue backlog estimate, we have a
high level of visibility and predictability in our future cash flow
generating capacity, given that all of our LNG carriers are
employed on long-term contracts with an average contract duration
of approximately ten years, with the first potential vessel
availability in the year 2021 (with only one vessel) and thereafter
in the year 2026. We believe that our best in class
contracted revenue backlog estimate of $1.4bn is driven in part by
our dominant market share in the ownership and operation of ice
class LNG carriers. Going forward we continue to remain focused on
the safe and efficient operation of our unique and versatile
fleet.
“We are very pleased that the Yamal LNG project is progressing
well. Immediately after the completion of its special survey, the
Yenisei River commenced employment under a long-term contract with
Yamal LNG on August 14, 2018, which was earlier than originally
agreed in the charter contract and as a result the contract was
extended by an additional 180 days to an aggregate term of 15 years
and 180 days.
“The Lena River is currently employed on a multi-month charter
contract with a large US gas producer until the vessel commences
employment under its 15 year contract with Yamal LNG, which is
expected to commence in the second half of 2019.
“We intend to refinance our $250 million unsecured notes due in
October 2019. We are currently performing a review of all of
our refinancing options taking into account, among other things,
our financial and growth objectives.”
Financial Results Overview:
|
Three Months Ended |
|
Nine Months Ended |
(U.S. dollars
in thousands, except per unit data) |
|
September 30, 2018 (unaudited) |
|
September 30, 2017 (unaudited) |
|
|
September 30, 2018 (unaudited) |
|
September 30, 2017 (unaudited) |
Voyage revenues |
$ |
31,320 |
|
$ |
33,471 |
|
$ |
96,116 |
|
$ |
104,538 |
Net Income/ (loss) |
$ |
(654 |
) |
$ |
3,983 |
|
$ |
4,537 |
|
$ |
11,714 |
Adjusted Net Income
(1) |
$ |
3,275 |
|
$ |
7,047 |
|
$ |
15,033 |
|
$ |
26,172 |
Operating income |
$ |
11,903 |
|
$ |
15,893 |
|
$ |
41,271 |
|
$ |
46,520 |
Adjusted EBITDA(1) |
$ |
23,474 |
|
$ |
26,434 |
|
$ |
74,507 |
|
$ |
80,626 |
Earnings/ (loss) per
common unit |
$ |
(0.07 |
) |
$ |
0.06 |
|
$ |
(0.01 |
) |
$ |
0.16 |
Adjusted Earnings per
common unit (1) |
$ |
0.04 |
|
$ |
0.15 |
|
$ |
0.28 |
|
$ |
0.57 |
Distributable Cash Flow
(1) |
$ |
7,506 |
|
$ |
11,295 |
|
$ |
27,462 |
|
$ |
38,129 |
(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
of this press release for the definitions and reconciliation of
these measures to the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP.
Three Months Ended September 30, 2018
and 2017 Financial Results
Net loss for the three months ended September
30, 2018 was $0.7 million as compared to net income of $4.0 million
in the corresponding period of 2017, which represents a decrease of
$4.7 million, or 116.4%. The decrease in period net income, as
further discussed below, was mainly attributable to:
- the decrease in period operating revenues during the three
months ended September 30, 2018, as compared to the same period in
2017, as further elaborated below;
- costs associated with the Yenisei River dry-dock and special
survey which occurred in the third quarter of 2018 (16.5 dry-dock
days in the third quarter of 2018 versus 10 dry-dock days in the
same period in 2017); and
- the increase in the weighted average interest of our $480
million Term Loan B in the third quarter of 2018 in comparison to
the third quarter of 2017, which correspondingly increased the
Partnership’s interest and finance costs for the current
period.
Adjusted Net Income for the three months ended
September 30, 2018 was $3.3 million as compared to Adjusted Net
Income of $7.0 million in the corresponding period of 2017, which
represents a decrease of $3.8 million, or 53.5%. Adjusted
EBITDA for the three months ended September 30, 2018 was $23.5
million as compared to Adjusted EBITDA of $26.4 million in the
corresponding period of 2017, which represents a decrease of $3.0
million, or 11.2%. The decrease in both Adjusted Net Income and
Adjusted EBITDA in the third quarter of 2018 as compared to the
corresponding period of 2017 was predominantly attributable to the
decrease in the voyage revenues, as further discussed below.
The Partnership’s Distributable Cash Flow for
the three-month period ended September 30, 2018 was $7.5 million as
compared to $11.3 million in the corresponding period of 2017,
which represents a decrease of $3.8 million, or 33.6%, and was due
to factors (i) to (iii) outlined above.
For the three-month period ended September 30,
2018, the Partnership reported loss per common unit and Adjusted
Earnings per common unit, basic and diluted, of $0.07 and $0.04,
respectively, after taking into account the effect of the Series A
Preferred Units interest on the Partnership’s net loss/ Adjusted
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
and, in the case of Adjusted Earnings per common unit, after
reflecting the impact of the non-cash items presented in Appendix B
of this press release.
Adjusted Net Income, Adjusted EBITDA,
Distributable Cash Flow and Adjusted Earnings per common unit are
not recognized measures under U.S. GAAP. Please refer to Appendix B
of this press release for the definitions and reconciliation of
these measures to the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP.
Voyage revenues were $31.3 million for the
three-month period ended September 30, 2018 as compared to $33.5
million for the same period of 2017, which represents a decrease of
$2.2 million, or 6.4%. This decrease was mainly due to:
- lower revenues earned on the Arctic Aurora, which, on August 2,
2018, rolled-over into a new charter with Equinor ASA (“Equinor”)
(which was in direct continuation of its previous charter contract
with Equinor) at a lower charter rate;
- lower revenues earned on the Ob River, which completed
employment under its multiyear charter contract with Gazprom Global
LNG Limited (“Gazprom”) in April 2018 and subsequently began
employment under a ten-year charter party with an entity
which is part of the wider Gazprom group of companies at a lower
charter rate, and
- the 16.5 off-hire days of the Yenisei River, which had its
scheduled special survey and dry-docking carried out in the third
quarter of 2018 (after completion of its five year legacy charter
with Gazprom).
This decrease was, however, partially offset by
the increase in voyage revenues on our steam turbine vessel, the
Clean Energy, which was delivered in accordance with its eight-year
charter party with Gazprom in the third quarter of 2018, whereas,
the vessel traded in the spot market in the same period of 2017 at
lower charter rates.
Vessel operating expenses were $6.4 million,
which corresponds to a daily rate of $11,632, for the three-month
period ended September 30, 2018, as compared to $6.2 million, or a
daily rate of $11,188, in the corresponding period of 2017. This
increase was mainly derived from increased spares costs for our
tri-fuel diesel engine vessel Yenisei River, which were incurred
concurrently with the vessel’s scheduled special survey and
dry-docking.
Interest and finance costs were $12.8 million in
the third quarter of 2018 as compared to $11.8 million in the third
quarter of 2017, which represents an increase of $1.0 million, or
8.2%. As discussed above, this increase was due to the increase in
the Partnership’s weighted average interest in the third quarter of
2018 (related to increased interest charges on our variable
interest bearing secured debt).
The Partnership reported average daily hire
gross of commissions (1) of approximately $59,800 per day per
vessel in the three months ended September 30, 2018, as compared to
approximately $65,200 per day per vessel in the same period of
2017. During the three-month period ended September 30, 2018, the
Partnership’s vessels operated at 99% utilization as compared to
97% 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 (as defined in Appendix B of this press release) 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 September 30, 2018, the Partnership
reported free cash of $59.5 million. Total indebtedness outstanding
as of September 30, 2018 was $724.0 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 30, 2019. As of September 30, 2018, $4.8 million
of the Partnership’s outstanding indebtedness was repayable within
one year.
The Partnership’s liquidity profile is further
supported by the $30.0 million of borrowing capacity under the
Partnership’s revolving credit facility with its Sponsor, which was
extended on November 14, 2018, and is available to the Partnership
at any time until November 2023. The $30 million sponsor facility
remains available in its entirety as of the date of this
release.
As of September 30, 2018, the Partnership
reported working capital surplus of $40.2 million (Q4 2017: $47.5
million).
During the three months ended September 30,
2018, the Partnership generated net cash from operating activities
of $13.5 million as compared to $14.8 million in the same period of
2017, which represents a decrease of $1.3 million, or 8.7%. This
decrease was attributable to the decrease in net income during the
three months ended September 30, 2018, as compared to the same
period in 2017, due to the factors discussed above which were,
however, counterbalanced by the positive effect of variations in
working capital.
Vessel Employment
As of November 15, 2018, the Partnership had
estimated contracted time charter coverage(2) for 100% of its fleet
estimated Available Days for the rest of 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 $1.42
billion, with an average remaining contract term of 9.9
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 are subject to the satisfaction of important conditions
(which includes, but are not limited to, a condition requiring that
certain defaults have not occurred under two shipbuilding contracts
held by special purpose companies that are affiliates of the
Partnership but are not controlled by the Partnership, 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: November 16,
2018
As announced, the Partnership’s management team
will host a conference call on Friday, November 16, 2018 at 10:00
a.m. Eastern Time to discuss the Partnership’s financial
results.
Conference Call
details:Participants should Participants should dial into
the call 10 minutes before the scheduled time using the following
numbers: 1 (877) 553-9962 (US Toll Free Dial In), 0(808) 238-0669
(UK Toll Free Dial In) or +44 (0) 2071 928592 (Standard
International Dial In). Please quote "Dynagas."
A telephonic replay of the conference call will
be available until Friday, November 23, 2018, by dialing 1(866)
331-1332 (US Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial
In) or +44 (0) 3333 009785 (Standard International Dial In)
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 LP 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, 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 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 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 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 U.S. 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 for units and per unit data) |
|
Three Months Ended September
30, |
|
Nine Months Ended
September 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
REVENUES |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
31,320 |
|
$ |
33,471 |
|
$ |
96,116 |
|
$ |
104,538 |
|
EXPENSES |
|
|
|
|
|
|
|
|
Voyage expenses
(including related party) |
|
(930 |
) |
|
(717 |
) |
|
(2,173 |
) |
|
(2,934 |
) |
Vessel operating
expenses |
|
(6,421 |
) |
|
(6,176 |
) |
|
(18,662 |
) |
|
(20,337 |
) |
Dry-docking and special
survey costs |
|
(2,346 |
) |
|
(1,096 |
) |
|
(5,042 |
) |
|
(6,227 |
) |
General and
administrative expenses (including related party) |
|
(475 |
) |
|
(394 |
) |
|
(1,537 |
) |
|
(1,234 |
) |
Management fees
-related party |
|
(1,600 |
) |
|
(1,553 |
) |
|
(4,747 |
) |
|
(4,609 |
) |
Depreciation |
|
(7,645 |
) |
|
(7,642 |
) |
|
(22,684 |
) |
|
(22,677 |
) |
Operating
income |
|
11,903 |
|
|
15,893 |
|
|
41,271 |
|
|
46,520 |
|
Interest and finance
costs, net |
|
(12,554 |
) |
|
(11,745 |
) |
|
(36,790 |
) |
|
(34,360 |
) |
Other, net |
|
(3 |
) |
|
(165 |
) |
|
56 |
|
|
(446 |
) |
|
|
|
|
|
|
|
|
|
Net
(loss)/income |
$ |
(654 |
) |
$ |
3,983 |
|
$ |
4,537 |
|
$ |
11,714 |
|
(Loss)/
Earnings per common unit (basic and diluted) |
$ |
(0.07 |
) |
$ |
0.06 |
|
$ |
(0.01 |
) |
$ |
0.16 |
|
Weighted
average number of units outstanding, basic and
diluted: |
|
|
|
|
|
|
|
|
Common units |
|
35,490,000 |
|
|
35,490,000 |
|
|
35,490,000 |
|
|
34,227,527 |
|
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Balance Sheets
(unaudited)(Expressed in thousands of U.S.
Dollars—except for unit data)
|
|
September 30, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash and cash
equivalents |
$ |
59,536 |
|
$ |
67,464 |
Due from related
party |
|
1,117 |
|
|
883 |
Other current
assets |
|
2,870 |
|
|
2,057 |
Total current
assets |
|
63,523 |
|
|
70,404 |
|
|
|
|
|
FIXED ASSETS,
NET: |
|
|
|
|
Vessels, net |
|
955,022 |
|
|
977,298 |
Total fixed
assets, net |
|
955,022 |
|
|
977,298 |
OTHER NON
CURRENT ASSETS: |
|
|
|
|
Due from related
party |
|
1,350 |
|
|
1,350 |
Deferred charges |
|
1,918 |
|
|
— |
Accrued charter
revenue |
|
135 |
|
|
— |
Above market acquired
time charters |
|
— |
|
|
5,267 |
Total
assets |
$ |
1,021,948 |
|
$ |
1,054,319 |
|
|
|
|
|
LIABILITIES AND
PARTNERS’ EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Current portion of
long-term debt, net of deferred financing costs |
$ |
2,678 |
|
$ |
2,655 |
Trade payables |
|
6,313 |
|
|
4,497 |
Due to related
party |
|
116 |
|
|
72 |
Accrued
liabilities |
|
5,107 |
|
|
4,051 |
Unearned revenue |
|
9,071 |
|
|
11,623 |
Total current
liabilities |
|
23,285 |
|
|
22,898 |
Deferred revenue |
|
3,140 |
|
|
1,405 |
Long-term debt, net of
current portion and deferred financing costs |
|
710,521 |
|
|
711,698 |
Total
non-current liabilities |
|
713,661 |
|
|
713,103 |
|
|
|
|
|
PARTNERS’
EQUITY |
|
|
|
|
General partner
(35,526 units issued and outstanding as at September 30, 2018 and
December 31, 2017) |
|
(3 |
) |
|
47 |
Common unitholders
(35,490,000 units issued and outstanding as at September 30, 2018
and December 31, 2017) |
|
211,789 |
|
|
245,055 |
Series A Preferred
unitholders: (3,000,000 units issued and outstanding as at
September 30, 2018 and December 31, 2017) |
|
73,216 |
|
|
73,216 |
Total partners’
equity |
|
285,002 |
|
|
318,318 |
|
|
|
|
|
Total
liabilities and partners’ equity |
$ |
1,021,948 |
|
$ |
1,054,319 |
DYNAGAS LNG PARTNERS LP
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Cash flows from
Operating Activities: |
|
|
|
|
|
|
|
|
Net (loss)/
income: |
$ |
(654 |
) |
$ |
3,983 |
|
$ |
4,537 |
|
$ |
11,714 |
|
Adjustments to
reconcile net income/ (loss) to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
7,645 |
|
|
7,642 |
|
|
22,684 |
|
|
22,677 |
|
Amortization and
write-off of deferred financing fees |
|
819 |
|
|
839 |
|
|
2,444 |
|
|
4,562 |
|
Amortization of fair
value of acquired time charter |
|
1,673 |
|
|
1,826 |
|
|
5,267 |
|
|
5,420 |
|
Deferred revenue
amortization |
|
(121 |
) |
|
142 |
|
|
156 |
|
|
228 |
|
Deferred charges
amortization |
|
31 |
|
|
— |
|
|
31 |
|
|
— |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Trade receivables |
|
(6 |
) |
|
(27 |
) |
|
87 |
|
|
(223 |
) |
Prepayments and other
assets |
|
645 |
|
|
370 |
|
|
141 |
|
|
(508 |
) |
Inventories |
|
2,028 |
|
|
(1,319 |
) |
|
(1,041 |
) |
|
(1,256 |
) |
Due from/ to related
parties |
|
1,267 |
|
|
309 |
|
|
(190 |
) |
|
346 |
|
Deferred charges |
|
307 |
|
|
— |
|
|
(505 |
) |
|
— |
|
Trade payables |
|
(2,745 |
) |
|
(1,991 |
) |
|
1,865 |
|
|
4,083 |
|
Accrued
liabilities |
|
393 |
|
|
(1,765 |
) |
|
1,056 |
|
|
(75 |
) |
Unearned revenue |
|
2,204 |
|
|
4,756 |
|
|
(2,552 |
) |
|
(2,635 |
) |
|
|
|
|
|
|
|
|
|
Net cash from
Operating Activities |
|
13,486 |
|
|
14,765 |
|
|
33,980 |
|
|
44,333 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
Investing Activities |
|
|
|
|
|
|
|
|
Other additions to
vessels’ equipment |
|
1 |
|
|
— |
|
|
(408 |
) |
|
— |
|
Net cash used
in Investing Activities |
|
1 |
|
|
— |
|
|
(408 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
Cash flows from
Financing Activities: |
|
|
|
|
|
|
|
|
Payment of debt
securities registration and other filing costs |
|
— |
|
|
— |
|
|
(48 |
) |
|
— |
|
Distributions declared
and paid |
|
(10,569 |
) |
|
(16,713 |
) |
|
(37,852 |
) |
|
(50,142 |
) |
Proceeds from long-term
debt |
|
— |
|
|
— |
|
|
— |
|
|
480,000 |
|
Repayment of long-term
debt |
|
(1,200 |
) |
|
(1,200 |
) |
|
(3,600 |
) |
|
(473,700 |
) |
Payment of deferred
finance fees |
|
— |
|
|
(645 |
) |
|
— |
|
|
(12,568 |
) |
Net cash used
in Financing Activities |
|
(11,769 |
) |
|
(18,558 |
) |
|
(41,500 |
) |
|
(56,410 |
) |
|
|
|
|
|
|
|
|
|
Net increase /
(decrease) in cash and cash equivalents and restricted
cash |
|
1,718 |
|
|
(3,793 |
) |
|
(7,928 |
) |
|
(12,077 |
) |
Cash and cash
equivalents and restricted cash at beginning of the period |
|
57,818 |
|
|
74,311 |
|
|
67,464 |
|
|
82,595 |
|
Cash and cash
equivalents and restricted cash at end of the period |
$ |
59,536 |
|
$ |
70,518 |
|
$ |
59,536 |
|
$ |
70,518 |
|
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, each of 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.
|
|
September 30, |
|
December 31, |
(expressed in thousands
of United states dollars) |
|
2018 |
|
2017 |
Balance sheet
data: |
|
|
|
|
Total assets |
$ |
980,163 |
$ |
1,010,034 |
Total cash |
|
19,973 |
|
24,596 |
Total debt, net of
deferred loan fees |
$ |
464,410 |
$ |
466,402 |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
(expressed in thousands
of United states dollars) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Income
statement and other operational data: |
|
|
|
|
|
|
|
|
Net income |
$ |
3,822 |
$ |
2,963 |
$ |
18,195 |
$ |
24,137 |
Revenues |
|
31,320 |
|
33,471 |
|
96,116 |
|
104,538 |
Adjusted EBITDA |
$ |
23,942 |
$ |
26,819 |
$ |
76,026 |
$ |
81,840 |
Arctic LNG Carriers reconciliation of net income to
Adjusted EBITDA
|
Three months ended September 30, |
|
Nine months ended September 30, |
(In thousands of U.S.
dollars) |
|
2018 |
|
|
2017 |
|
2018 |
|
2017 |
Net income |
$ |
3,822 |
|
$ |
2,963 |
$ |
18,195 |
$ |
24,137 |
Net interest and
finance costs (1) |
|
8,546 |
|
|
13,150 |
|
24,651 |
|
23,151 |
Depreciation |
|
7,645 |
|
|
7,642 |
|
22,684 |
|
22,677 |
Class survey costs |
|
2,346 |
|
|
1,096 |
|
5,042 |
|
6,227 |
Amortization of fair
value of acquired time charter |
|
1,673 |
|
|
1,826 |
|
5,267 |
|
5,420 |
Amortization of
deferred revenue |
|
(121 |
) |
|
142 |
|
156 |
|
228 |
Amortization of
deferred charges |
|
31 |
|
|
— |
|
31 |
|
— |
Adjusted
EBITDA |
$ |
23,942 |
|
$ |
26,819 |
$ |
76,026 |
$ |
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 Ended September 30, |
|
Nine Months Ended September 30, |
(expressed in U.S.
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) |
|
552.0 |
|
|
552.0 |
|
|
1,638.0 |
|
|
1,638.0 |
|
Available Days (3) |
|
535.5 |
|
|
541.7 |
|
|
1,609.5 |
|
|
1,588.3 |
|
Revenue earning days
(4) |
|
532.0 |
|
|
526.3 |
|
|
1606.0 |
|
|
1,540.7 |
|
Time Charter Equivalent
(5) |
$ |
56,751 |
|
$ |
60,465 |
|
$ |
58,368 |
|
$ |
63,970 |
|
Fleet Utilization
(4) |
|
99 |
% |
|
97 |
% |
|
100 |
% |
|
97 |
% |
Vessel daily operating
expenses (6) |
$ |
11,632 |
|
$ |
11,188 |
|
$ |
11,393 |
|
$ |
12,416 |
|
(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 (which do not include positioning/
repositioning days for which compensation has been received),
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 (“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 nine
months ended September 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 Ended
September 30, |
|
Nine Months Ended September
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
(In thousands of U.S.
dollars, except for Available Days and TCE rate) |
|
|
|
|
|
|
|
|
Voyage revenues |
$ |
31,320 |
|
$ |
33,471 |
|
$ |
96,116 |
|
$ |
104,538 |
|
Voyage Expenses * |
|
(930 |
) |
|
(717 |
) |
|
(2,173 |
) |
|
(2,934 |
) |
Time Charter
equivalent revenues |
$ |
30,390 |
|
$ |
32,754 |
|
$ |
93,943 |
|
$ |
101,604 |
|
Available Days |
|
535.5 |
|
|
541.7 |
|
|
1,609.5 |
|
|
1,588.3 |
|
Time charter
equivalent (TCE) rate |
$ |
56,751 |
|
$ |
60,465 |
|
$ |
58,368 |
|
$ |
63,970 |
|
*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.
(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.
Reconciliation of U.S. GAAP Financial Information to
Non-GAAP Financial Information
Reconciliation of Net (Loss)/ Income to Adjusted
EBITDA
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
(In thousands of
U.S. dollars) |
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
2017 |
Net (loss)/ income |
$ |
(654 |
) |
|
$ |
3,983 |
|
$ |
4,537 |
|
$ |
11,714 |
Net interest and
finance costs (1) |
|
12,554 |
|
|
|
11,745 |
|
|
36,790 |
|
|
34,360 |
Depreciation |
|
7,645 |
|
|
|
7,642 |
|
|
22,684 |
|
|
22,677 |
Class survey costs |
|
2,346 |
|
|
|
1,096 |
|
|
5,042 |
|
|
6,227 |
Amortization of fair
value of acquired time charter |
|
1,673 |
|
|
|
1,826 |
|
|
5,267 |
|
|
5,420 |
Amortization of
deferred revenue |
|
(121 |
) |
|
|
142 |
|
|
156 |
|
|
228 |
Amortization of
deferred charges |
|
31 |
|
|
|
— |
|
|
31 |
|
|
— |
Adjusted
EBITDA |
$ |
23,474 |
|
|
$ |
26,434 |
|
$ |
74,507 |
|
$ |
80,626 |
(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.
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 (Loss)/ Income to Adjusted Net
Income available to common unitholders and Adjusted Earnings per
common unit
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
(In thousands of
U.S. dollars except for units and per unit data) |
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net (loss)/ income |
$ |
(654 |
) |
|
$ |
3,983 |
|
|
$ |
4,537 |
|
|
$ |
11,714 |
|
Non-cash expense from
accelerated amortization of deferred loan fees |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,583 |
|
Amortization of
deferred revenue |
|
(121 |
) |
|
|
142 |
|
|
|
156 |
|
|
|
228 |
|
Amortization of
deferred charges |
|
31 |
|
|
|
— |
|
|
|
31 |
|
|
|
— |
|
Amortization of fair
value of acquired time charter |
|
1,673 |
|
|
|
1,826 |
|
|
|
5,267 |
|
|
|
5,420 |
|
Class survey costs |
|
2,346 |
|
|
|
1,096 |
|
|
|
5,042 |
|
|
|
6,227 |
|
Adjusted Net
Income |
$ |
3,275 |
|
|
$ |
7,047 |
|
|
$ |
15,033 |
|
|
$ |
26,172 |
|
Less: Adjusted Net
Income attributable to subordinated, preferred unitholders and
general partner |
|
(1,689 |
) |
|
|
(1,710 |
) |
|
|
(5,072 |
) |
|
|
(6,558 |
) |
Common
unitholders’ interest in Adjusted Net Income |
$ |
1,586 |
|
|
$ |
5,337 |
|
|
$ |
9,961 |
|
|
$ |
19,614 |
|
Weighted average number
of common units outstanding, basic and diluted: |
|
35,490,000 |
|
|
|
35,490,000 |
|
|
|
35,490,000 |
|
|
|
34,227,527 |
|
Adjusted
Earnings per common unit, basic and diluted |
$ |
0.04 |
|
|
$ |
0.15 |
|
|
$ |
0.28 |
|
|
$ |
0.57 |
|
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 EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
(In thousands of
U.S. dollars) |
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
Net (loss)/
income |
$ |
(654 |
) |
$ |
3,983 |
|
|
$ |
4,537 |
|
$ |
11,714 |
|
Depreciation |
|
7,645 |
|
|
7,642 |
|
|
|
22,684 |
|
|
22,677 |
|
Amortization and
write-off of deferred finance fees |
|
819 |
|
|
839 |
|
|
|
2,444 |
|
|
4,562 |
|
Net interest and
finance costs, excluding amortization (1) |
|
11,735 |
|
|
10,906 |
|
|
|
34,346 |
|
|
29,798 |
|
Class survey costs |
|
2,346 |
|
|
1,096 |
|
|
|
5,042 |
|
|
6,227 |
|
Amortization of fair
value of acquired time charter |
|
1,673 |
|
|
1,826 |
|
|
|
5,267 |
|
|
5,420 |
|
Amortization of
deferred revenue |
|
(121 |
) |
|
142 |
|
|
|
156 |
|
|
228 |
|
Amortization of
deferred charges |
|
31 |
|
|
— |
|
|
|
31 |
|
|
— |
|
Adjusted
EBITDA |
$ |
23,474 |
|
$ |
26,434 |
|
|
$ |
74,507 |
|
$ |
80,626 |
|
Less: Net
interest and finance costs, excluding amortization (1) |
|
(11,735 |
) |
|
(10,906 |
) |
|
|
(34,346 |
) |
|
(29,798 |
) |
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 |
$ |
7,506 |
|
$ |
11,295 |
|
|
$ |
27,462 |
|
$ |
38,129 |
|
(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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