Dynagas LNG Partners LP Reports Results for the Three and Six Months Ended June 30, 2024
ATHENS, Greece, Sept. 10, 2024 (GLOBE NEWSWIRE) -- Dynagas LNG Partners LP (NYSE: "DLNG") ("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, 2024.
Half year Highlights:
- Net Income and Earnings per common unit (basic and diluted) of $22.5 million and $0.43, respectively;
- Adjusted Net Income(1) of $24.7 million and Adjusted Earnings per common unit(1) (basic and diluted) of $0.50;
- Adjusted EBITDA(1) $57.6 million; and
- 100% fleet utilization(2).
Quarter Highlights:
- Net Income and Earnings per common unit (basic and diluted) of $10.7 million and $0.20, respectively;
- Adjusted Net Income(1) of $12.4 million and Adjusted Earnings per common unit(1) (basic and diluted) of $0.25;
- Adjusted EBITDA(1) $28.6 million;
- 100% fleet utilization(2);
- Declared and paid a cash distribution of $0.5625 per unit on the Partnership's Series A Preferred Units (NYSE: "DLNG PR A") for the period from February 12, 2024 to May 11, 2024 and $0.698533750 per unit on the Series B Preferred Units (NYSE: "DLNG PR B") for the period from February 22, 2024 to May 21, 2024; and
- On June 19, 2024, the Partnership entered into sale and leaseback agreements with subsidiaries of China Development Bank Financial Leasing Co. Ltd. ("CDBL") for the lease financing of a total amount of $345.0 million for four out of the Partnership's six LNG carriers. On June 27, 2024, proceeds received under the lease financing agreements, together with available cash, were used to fully prepay outstanding amounts under the $675 million Credit Facility, which was scheduled to mature in September 2024(3).
(1) Adjusted Net Income, Adjusted Earnings per common unit and Adjusted EBITDA are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP and other related information.
(2) Please refer to Appendix B for additional information on how we calculate fleet utilization.
(3) For further information, please see "Liquidity/ Financing/ Cash Flow Coverage" below.
Subsequent Events:
- Declared a quarterly cash distribution of $0.5625 on the Partnership's Series A Preferred Units for the period from May 12, 2024 to August 11, 2024, which was paid on August 12, 2024 to all Series A Preferred unitholders of record as of August 5, 2024; and
- Declared a quarterly cash distribution of $0.714537806 on the Partnership's Series B Preferred Units for the period from May 22, 2024 to August 21, 2024, which was paid on August 22, 2024 to all Series B Preferred unitholders of record as of August 15, 2024.
CEO Commentary:
We are pleased to report the financial results for the three months ended June 30, 2024.
In the second quarter of 2024, we reported a Net Income of $10.7 million, with earnings per common unit of $0.20. Adjusted EBITDA and Adjusted Net Income reached $28.6 million and $12.4 million respectively.
All six LNG carriers in our fleet are currently operating under long-term charters with international gas companies. These contracts have an average remaining term of 6.4 years. Assuming no unforeseen events, the Partnership expects no vessel availability until 2028. As of September 10, 2024, our estimated contract backlog stands at approximately $1.04 billion, equating to an average of about $173 million per vessel.
We are also pleased to announce new lease financing agreements with China Development Bank Financial Leasing Co. Ltd for four of our LNG carriers. The $345.0 million financing, along with $63.7 million from the Partnership's existing cash reserves, was used to fully repay amounts outstanding under our previous credit facility of $408.7 million on June 27, 2024, ahead of its schedule maturity in September 2024.
Following a sustained period of strategic deleveraging, we now have substantially reduced our debt levels and secured a more flexible financing structure. With two of our LNG carriers now debt-free, we believe the Partnership is well-positioned for the next phase of growth and development.
Russian Sanctions Developments
Due to the ongoing Russian conflict with Ukraine, the United States ("U.S."), European Union ("E.U."), Canada and other Western countries and organizations have announced and enacted numerous sanctions against Russia to impose severe economic pressure on the Russian economy and government.
As of today's date:
- Current U.S. and E.U. sanctions regimes do not materially affect the business, operations or financial condition of the Partnership and, to the Partnership's knowledge, its counterparties are currently performing their obligations under their respective time charters in compliance with applicable U.S. and E.U. rules and regulations; and
- Sanctions legislation continually changes and the Partnership continues to monitor such changes as applicable to the Partnership and its counterparties.
The full impact of the commercial and economic consequences of the Russian conflict with Ukraine is uncertain at this time. The Partnership cannot provide any assurance that any further development in sanctions, or escalation of the Ukraine conflict more generally, will not have a significant impact on its business, financial condition or results of operations. Please see the section of this press release entitled "Forward Looking Statements."
Financial Results Overview:
| Three Months Ended | Six Months Ended | ||||||||||
| (U.S. dollars in thousands, except per unit data) | June 30, 2024 (unaudited) | June 30, 2023 (unaudited) | June 30, 2024 (unaudited) | June 30, 2023 (unaudited) | |||||||
| Voyage revenues | $ | 37,615 | $ | 37,653 | $ | 75,670 | $ | 74,916 | |||
| Net Income | $ | 10,708 | $ | 14,430 | $ | 22,458 | $ | 24,030 | |||
| Adjusted Net Income (1) | $ | 12,385 | $ | 5,842 | $ | 24,739 | $ | 12,361 | |||
| Operating income | $ | 18,821 | $ | 18,298 | $ | 38,158 | $ | 37,642 | |||
| Adjusted EBITDA(1) | $ | 28,561 | $ | 23,015 | $ | 57,564 | $ | 46,579 | |||
| Earnings per common unit | $ | 0.20 | $ | 0.31 | $ | 0.43 | $ | 0.50 | |||
| Adjusted Earnings per common unit (1) | $ | 0.25 | $ | 0.08 | $ | 0.50 | $ | 0.18 | |||
(1) Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
Three Months Ended June 30, 2024 and 2023 Financial Results
Net Income for the three months ended June 30, 2024 was $10.7 million as compared to $14.4 million for the corresponding period of 2023, which represents a decrease of $3.7 million, or 25.7%. The decrease in Net Income for the three months ended June 30, 2024 was mainly attributable to the decrease in the gain on our interest rate swap transaction which matures on September 18, 2024 and the increase in the loss on debt extinguishment as a result of the full prepayment of outstanding amounts under the $675 million credit facility on June 27, 2024. The above decrease in Net Income was partially counterbalanced by the decrease in interest and finance costs as well as by the decrease in the vessels' operating expenses and dry-docking and special survey costs attributable to the scheduled dry-docks of the Arctic Aurora, the Lena River and the Yenisei River which were partially completed in the three months ended June 30, 2023.
Adjusted Net Income (a non-GAAP financial measure) for the three months ended June 30, 2024 was $12.4 million compared to $5.8 million for the corresponding period of 2023, which represents a net increase of $6.6 million, or 113.8%. This increase is mainly attributable to the increase in the cash voyage revenues of the Arctic Aurora as explained below, as well as to the decrease of interest and finance costs compared to the corresponding period of 2023, which excludes the effect of the realized gain of $6.1 million on the interest rate swap in the period. Including the effect of the realized gain on our interest rate swap, Adjusted Net Income and Adjusted Earnings per common unit for the three months ended June 30, 2024 amounted to $18.5 million and $0.41, respectively.
Voyage revenues for the three months ended June 30, 2024 were $37.6 million as compared to $37.7 million for the corresponding period of 2023, which represents a net decrease of $0.1 million or 0.26%, which is mainly attributable to the increase in the cash revenues of the Arctic Aurora following its new time charter party agreement with Equinor ASA, which commenced in September 2023, which was netted by the corresponding decrease in its deferred revenue amortization.
The Partnership reported average daily hire gross of commissions(1) of approximately $72,010 per day per vessel for the three-month period ended June 30, 2024, compared to approximately $61,800 per day per vessel for the corresponding period of 2023. The Partnership's vessels operated at 100% fleet utilization during the three-month period ended June 30, 2024 and at 91.7% fleet utilization during the corresponding period in 2023, due to unscheduled repairs of the OB River.
Vessel operating expenses were $7.7 million, which corresponds to a daily rate per vessel of $14,141 for the three-month period ended June 30, 2024, as compared to $8.1 million, or a daily rate per vessel of $14,824, in the corresponding period of 2023. This decrease is mainly attributable to lower planned technical maintenance on the Partnership's vessels in the three-month period ending June 30, 2024 compared to the corresponding period in 2023.
Adjusted EBITDA (a non-GAAP financial measure) for the three months ended June 30, 2024 was $28.6 million, as compared to $23.0 million for the corresponding period of 2023. The increase of $5.6 million, or 24.3%, was mainly attributable to the abovementioned increase in cash revenues of the Arctic Aurora and the decrease in the operating expenses.
Net Interest and finance costs were $8.2 million in the three months ended June 30, 2024 as compared to $9.2 million in the corresponding period of 2023, which represents a decrease of $1.0 million, or 10.9%, due to the reduction in interest-bearing debt in the three months ended June 30, 2024, compared to the corresponding period in 2023, which was partly offset by the increase in the weighted average interest rate as compared to the corresponding period of 2023.
For the three months ended June 30, 2024, the Partnership reported basic and diluted Earnings per common unit and Adjusted Earnings per common unit, (a non-GAAP financial measure) of $0.20 and $0.25, respectively, after taking into account the distributions relating to the Series A Preferred Units and the Series B Preferred Units on the Partnership's Net Income/Adjusted Net Income. Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, were calculated on the basis of a weighted average number of 36,802,247 common units outstanding during the period and in the case of Adjusted Earnings per common unit after reflecting the impact of certain adjustments presented in Appendix B of this press release.
Adjusted Net Income, Adjusted EBITDA, and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
Amounts relating to variations in period on period comparisons shown in this section are derived from the condensed financials presented below.
(1) Average daily hire gross of commissions is a non-GAAP financial measure and represents voyage revenue excluding the non-cash time charter deferred revenue amortization, divided by the Available Days in the Partnership's fleet as described in Appendix B.
Liquidity/ Financing/ Cash Flow Coverage
During the three months ended June 30, 2024, the Partnership generated net cash from operating activities of 22.5 million as compared to $8.8 million in the corresponding period of 2023, which represents an increase of $13.7 million, or 155.7% mainly as a result of working capital changes.
As of June 30, 2024, the Partnership reported total cash of $35.6 million. The Partnership's outstanding financial liabilities as of June 30, 2024 under the CDBL Sale and Leaseback amounted to $345 million, gross of unamortized deferred loan fees, which is repayable within ten years.
On June 19, 2024, the Partnership entered into sale and leaseback agreements with China Development Bank Financial Leasing Co. Ltd. ("CDBL") for four of its vessels, the OB River, the Clean Energy, the Amur River, and the Arctic Aurora for the amount of $71.2 million, $53.6 million, $73.1 million and $147.0 million, respectively (the "Lease Financing"). On June 27, 2024, the Partnership sold and chartered back on a bareboat basis from CDBL, the OB River, the Clean Energy and the Amur River for a period of five years, and the Arctic Aurora for a period of ten years. The Partnership utilized the proceeds from the Lease Financing, together with $63.7 million of its own funds, to fully repay outstanding amounts under its $675 Million Credit Facility. The applicable interest rate is 3-month term SOFR plus a margin. Following the first anniversary of the bareboat charters, the Partnership has the option at any time to repurchase each vessel at a predetermined price as set forth in each respective agreement and at the end of each bareboat period, the Partnership has the obligation to repurchase the respective vessel at a price equal to 20% of the financing amount for the OB River, the Clean Energy and the Amur River and 15% of the financing amount for the Arctic Aurora. The charterhire principals amortize in 20 consecutive quarterly installments for the OB River, the Clean Energy and the Amur River and 40 consecutive quarterly installments for the Arctic Aurora, all paid in arrears. The Partnership is required to maintain at all times a value maintenance ratio of at least 120% of the charterhire principal for each vessel.
Vessel Employment
As of June 30, 2024, the Partnership had estimated contracted time charter coverage(1) for 100%, 100% and 99% of its fleet estimated Available Days (as defined in Appendix B) for 2024, 2025, and 2026, respectively.
As of the same date, the Partnership's estimated contracted revenue backlog (2) (3) was $1.04 billion, with an average remaining contract term of 6.4 years.
(1) Time charter coverage for the Partnership's fleet is calculated by dividing the fleet contracted days on the basis of the earliest estimated delivery and redelivery dates prescribed in the Partnership's current time charter contracts, net of scheduled class survey repairs by the number of expected Available Days during that period.
(2) The Partnership calculates its estimated contracted revenue backlog by multiplying the contractual daily hire rate by the expected number of days committed under the contracts (assuming earliest delivery and redelivery and excluding options to extend), assuming full utilization. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods disclosed due to, for example, dry-docking and/or special survey downtime, maintenance projects, off-hire downtime and other factors that result in lower revenues than the Partnership's average contract backlog per day.
(3) $0.11 billion of the revenue backlog estimate relates to the estimated portion of the hire contained in certain time charter contracts with Yamal Trade Pte. Ltd., which represents the operating expenses of the respective vessels and is subject to yearly adjustments on the basis of the actual operating costs incurred within each year. The actual amount of revenues earned in respect of such variable hire rate may therefore differ from the amounts included in the revenue backlog estimate due to the yearly variations in the respective vessel's operating costs.
Conference Call and Webcast:
As announced, the Partnership's management team will host a conference call on Tuesday, September 10, 2024 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: 877-405-1226 (US Dial-In), or +1 201-689-7823 (US International Dial-In). To access the conference call, please quote "Dynagas" to the operator and/or conference ID 13748719. For additional participant International Toll-Free access numbers, click here.
Alternatively, participants can register for the call using the "call me" option for a faster connection to join the conference call. You can enter your phone number and let the system call you right away. Click here for the "call me" option.
Audio Webcast - Slides Presentation:
There will be a live and then archived webcast of the conference call and accompanying slides, available on the Partnership's website. To listen to the archived audio file, visit our website http://www.dynagaspartners.com and click on Webcast under our Investor Relations page. 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, 2024 financial results will be available in PDF format 10 minutes prior to the conference call and webcast, accessible on the Partnership'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 DLNG is a master limited partnership that owns and operates 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. The Partnership's website and its contents are not incorporated into and do not form a part of this release.
Contact Information:
Dynagas LNG Partners LP
Attention: Michael Gregos
Tel. +30 210 8917960
Email: management@dynagaspartners.com
Investor Relations / Financial Media:
Nicolas Bornozis
Markella Kara
Capital Link, Inc.
230 Park Avenue, Suite 1540
New York, NY 10169
Tel. (212) 661-7566
E-mail: dynagas@capitallink.com
Forward-Looking Statements
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," "project," "will," "may," "should," "expect," "expected," "pending" and similar expressions identify forward-looking statements. These forward-looking statements are not intended to give any assurance as to future results and should not be relied upon.
The forward-looking statements in this press release are based upon various assumptions and estimates, 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, expressed or implied, in the forward-looking statements include, but are not limited to, the strength of world economies and currency fluctuations, general market conditions, including fluctuations in charter rates, ownership days, and vessel values, changes in supply of and 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 laws, rules and regulations or actions taken by regulatory authorities, economic, regulatory, political and governmental conditions that affect the shipping and the LNG industry, potential liability from pending or future litigation, and potential costs due to environmental damage and vessel collisions, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events, or international hostilities, including the recent escalation of the Israel-Gaza conflict and potential spillover effects throughout the Middle East, vessel breakdowns, instances of off-hires, the length and severity of epidemics and pandemics, such as COVID-19 and its variants, the impact of public health threats and outbreaks of other highly communicable diseases, the impact of the discontinuance of the London Interbank Offered Rate, or, LIBOR and its replacement with the Secured Overnight Financing Rate, or SOFR on any of our debt referencing LIBOR in the interest rate, the amount of cash available for distribution, and other factors. Due to the ongoing war between Russia and Ukraine, the United States, United Kingdom, the European Union, Canada, and other Western countries and organizations have announced and enacted numerous sanctions against Russia to impose severe economic pressure on the Russian economy and government. The full impact of the commercial and economic consequences of the Russian conflict with Ukraine are uncertain at this time. Although currently there has been no material impact on the Partnership, potential consequences of the sanctions that could impact the Partnership's business in the future include but are not limited to: (1) limiting and/or banning the use of the SWIFT financial and payment system that would negatively affect payments under the Partnership's existing vessel charters; (2) the Partnership's counterparties being potentially limited by sanctions from performing under its agreements; and (3) a general deterioration of the Russian economy. In addition, the Partnership may have greater difficulties raising capital in the future, which could potentially reduce the level of future investment into its expansion and operations. The Partnership cannot provide any assurance that any further development in sanctions, or escalation of the Ukraine situation more generally, will not have a significant impact on its business, financial condition, or results of operations.
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 LP Condensed Consolidated Statements of Income | ||||||||||||
| (In thousands of U.S. dollars except units and per unit data) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| 2024 (unaudited) | 2023 (unaudited) | 2024 (unaudited) | 2023 (unaudited) | |||||||||
| REVENUES | ||||||||||||
| Voyage revenues | $ | 37,615 | $ | 37,653 | $ | 75,670 | $ | 74,916 | ||||
| EXPENSES | ||||||||||||
| Voyage expenses (including related party) | (851 | ) | (804 | ) | (1,708 | ) | (1,518 | ) | ||||
| Vessel operating expenses | (7,721 | ) | (8,094 | ) | (15,421 | ) | (15,390 | ) | ||||
| Dry-docking and special survey costs | — | (390 | ) | — | (390 | ) | ||||||
| General and administrative expenses (including related party) | (588 | ) | (523 | ) | (1,114 | ) | (992 | ) | ||||
| Management fees -related party | (1,640 | ) | (1,593 | ) | (3,281 | ) | (3,168 | ) | ||||
| Depreciation | (7,994 | ) | (7,951 | ) | (15,988 | ) | (15,816 | ) | ||||
| Operating income | 18,821 | 18,298 | 38,158 | 37,642 | ||||||||
| Interest and finance costs, net | (8,182 | ) | (9,222 | ) | (16,837 | ) | (18,402 | ) | ||||
| Loss on debt extinguishment | (331 | ) | — | (331 | ) | (154 | ) | |||||
| Gain on derivative instruments | 408 | 5,364 | 1,668 | 5,023 | ||||||||
| Other, net | (8 | ) | (10 | ) | (90 | ) | (79 | ) | ||||
| Other expense | — | — | (110 | ) | — | |||||||
| Net income | $ | 10,708 | $ | 14,430 | $ | 22,458 | $ | 24,030 | ||||
| Earnings per common unit (basic and diluted) | $ | 0.20 | $ | 0.31 | $ | 0.43 | $ | 0.50 | ||||
| Weighted average number of units outstanding, basic and diluted: | ||||||||||||
| Common units | 36,802,247 | 36,802,247 | 36,802,247 | 36,802,247 | ||||||||
| DYNAGAS LNG PARTNERS LP Condensed Consolidated Balance Sheets (Expressed in thousands of U.S. Dollars—except for unit data) | |||||
| June 30, 2024 (unaudited) | December 31, 2023 (unaudited) | ||||
| ASSETS: | |||||
| Cash and cash equivalents | $ | 35,565 | $ | 73,752 | |
| Derivative financial instrument | 5,009 | 15,631 | |||
| Due from related party (current and non-current) | 2,277 | 1,350 | |||
| Other assets | 14,202 | 20,817 | |||
| Vessels, net | 781,375 | 797,363 | |||
| Total assets | $ | 838,428 | $ | 908,913 | |
| LIABILITIES | |||||
| Total long-term debt, net of deferred financing costs | $ | 342,513 | $ | 419,584 | |
| Total other liabilities | 31,279 | 39,534 | |||
| Due to related party (current and non-current) | 429 | 1,555 | |||
| Total liabilities | $ | 374,221 | $ | 460,673 | |
| PARTNERS' EQUITY | |||||
| General partner (35,526 units issued and outstanding as at June 30, 2024 and December 31, 2023) | 118 | 102 | |||
| Common unitholders (36,802,247 units issued and outstanding as at June 30, 2024 and December 31, 2023) | 337,375 | 321,424 | |||
| Series A Preferred unitholders: (3,000,000 units issued and outstanding as at June 30, 2024 and December 31, 2023) | 73,216 | 73,216 | |||
| Series B Preferred unitholders: (2,200,000 units issued and outstanding as at June 30, 2024 and December 31, 2023) | 53,498 | 53,498 | |||
| Total partners' equity | $ | 464,207 | $ | 448,240 | |
| Total liabilities and partners' equity | $ | 838,428 | $ | 908,913 | |
| DYNAGAS LNG PARTNERS LP Condensed Consolidated Statements of Cash Flows (Expressed in thousands of U.S. Dollars) | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| (unaudited) | (unaudited) | |||||||||||
| Cash flows from Operating Activities: | ||||||||||||
| Net income: | $ | 10,708 | $ | 14,430 | $ | 22,458 | $ | 24,030 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation | 7,994 | 7,951 | 15,988 | 15,816 | ||||||||
| Amortization of deferred financing fees | 359 | 415 | 734 | 862 | ||||||||
| Deferred revenue amortization | 1,700 | (3,668 | ) | 3,400 | (7,297 | ) | ||||||
| Amortization and write-off of deferred charges | 54 | 54 | 108 | 107 | ||||||||
| Loss on debt extinguishment | 331 | — | 331 | 154 | ||||||||
| Gain on derivative financial instrument | (408 | ) | (5,364 | ) | (1,668 | ) | (5,023 | ) | ||||
| Dry-docking and special survey costs | — | 390 | — | 390 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Trade accounts receivable | (126 | ) | (8,128 | ) | 218 | (8,507 | ) | |||||
| Prepayments and other assets | 2,319 | (4,992 | ) | 5,050 | (5,037 | ) | ||||||
| Inventories | (7 | ) | (1,032 | ) | (18 | ) | (1,009 | ) | ||||
| Due from/ to related parties | (515 | ) | (2,218 | ) | (2,053 | ) | (1,014 | ) | ||||
| Deferred charges | (121 | ) | (66 | ) | (121 | ) | (66 | ) | ||||
| Trade accounts payable | (244 | ) | 1,794 | (1,737 | ) | 973 | ||||||
| Accrued liabilities | (135 | ) | (102 | ) | (813 | ) | (828 | ) | ||||
| Unearned revenue | 633 | 9,314 | (7,766 | ) | 8,883 | |||||||
| Net cash from Operating Activities | 22,542 | 8,778 | 34,111 | 22,434 | ||||||||
| Cash flows from Investing Activities | ||||||||||||
| Ballast water treatment system installation | — | — | (27 | ) | (86 | ) | ||||||
| Net cash used in Investing Activities | — | — | (27 | ) | (86 | ) | ||||||
| Cash flows from Financing Activities: | ||||||||||||
| Distributions declared and paid | (3,224 | ) | (2,890 | ) | (6,491 | ) | (5,781 | ) | ||||
| Proceeds from long-term debt and other financial liabilities | 344,975 | — | 344,975 | — | ||||||||
| Repayment of long-term debt | (408,642 | ) | (12,000 | ) | (420,642 | ) | (55,270 | ) | ||||
| Receipt of derivative instruments | 6,107 | 6,132 | 12,235 | 11,733 | ||||||||
| Payment of deferred finance fees | (2,348 | ) | — | (2,348 | ) | — | ||||||
| Net cash used in Financing Activities | (63,132 | ) | (8,758 | ) | (72,271 | ) | (49,318 | ) | ||||
| Net increase / (decrease) in cash and cash equivalents | (40,590 | ) | 20 | (38,187 | ) | (26,970 | ) | |||||
| Cash and cash equivalents at beginning of the period | 76,155 | 52,878 | 73,752 | 79,868 | ||||||||
| Cash and cash equivalents at end of the period | $ | 35,565 | $ | 52,898 | $ | 35,565 | $ | 52,898 | ||||
APPENDIX B
Fleet Statistics and Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| (expressed in United states dollars except for operational data) | 2024 | 2023 | 2024 | 2023 | ||||||||
| (unaudited) | (unaudited) | |||||||||||
| 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 | 1092.0 | 1086.0 | ||||||||
| Available Days (3) | 546.0 | 546.0 | 1092.0 | 1086.0 | ||||||||
| Revenue earning days (4) | 546.0 | 500.7 | 1092.0 | 1040.5 | ||||||||
| Time Charter Equivalent rate(5) | $ | 67,333 | $ | 67,489 | $ | 67,731 | $ | 67,586 | ||||
| Fleet Utilization (4) | 100 | % | 91.7 | % | 100 | % | 95.8 | % | ||||
| Vessel daily operating expenses (6) | $ | 14,141 | $ | 14,824 | $ | 14,122 | $ | 14,171 | ||||
| (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 that each vessel was a part of the Partnership's fleet during the period divided by the number of Calendar Days (defined below) in the period. | |
| (2) | "Calendar Days" are the total days that the Partnership possessed the vessels in its fleet for the relevant period. | |
| (3) | "Available Days" are the total number of Calendar Days that 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. The shipping industry uses fleet utilization to measure a company's efficiency in finding employment for its vessels and minimizing the number 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, we calculate TCE rate by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during the relevant time 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, the TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company's performance despite changes in the mix of charter types (such as time charters, voyage charters) under which the vessels may be employed between the periods and to assist 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 due to differences in methods of calculation. The following table reflects the calculation of the Partnership's TCE rates for the three months ended June 30, 2024 and 2023 (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available Days): |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||
| (In thousands of U.S. dollars, except for Available Days and TCE rate) | |||||||||||||||
| Voyage revenues | $ | 37,615 | $ | 37,653 | $ | 75,670 | $ | 74,916 | |||||||
| Voyage Expenses * | (851 | ) | (804 | ) | (1,708 | ) | (1,518 | ) | |||||||
| Time Charter equivalent revenues | $ | 36,764 | $ | 36,849 | $ | 73,962 | $ | 73,398 | |||||||
| Available Days | 546.0 | 546.0 | 1,092 | 1,086 | |||||||||||
| Time charter equivalent (TCE) rate | $ | 67,333 | $ | 67,489 | $ | 67,731 | $ | 67,586 | |||||||
*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 Net Income to Adjusted EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In thousands of U.S. dollars) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| (unaudited) | (unaudited) | ||||||||||||||
| Net income | $ | 10,708 | $ | 14,430 | $ | 22,458 | $ | 24,030 | |||||||
| Net interest and finance costs (1) | 8,182 | 9,222 | 16,837 | 18,402 | |||||||||||
| Depreciation | 7,994 | 7,951 | 15,988 | 15,816 | |||||||||||
| Loss on Debt extinguishment | 331 | — | 331 | 154 | |||||||||||
| Gain on derivative financial instrument | (408 | ) | (5,364 | ) | (1,668 | ) | (5,023 | ) | |||||||
| Class survey costs | — | 390 | — | 390 | |||||||||||
| Amortization of deferred revenue | 1,700 | (3,668 | ) | 3,400 | (7,297 | ) | |||||||||
| Amortization and write-off of deferred charges | 54 | 54 | 108 | 107 | |||||||||||
| Other expense(2) | — | — | 110 | — | |||||||||||
| Adjusted EBITDA | $ | 28,561 | $ | 23,015 | $ | 57,564 | $ | 46,579 | |||||||
(1) Includes interest and finance costs and interest income, if any.
(2) Includes other expense from provisions for insurance claims for damages incurred prior years
The Partnership defines Adjusted EBITDA as earnings before interest and finance costs, net of interest income (if any), gains/losses on derivative financial instruments, taxes (when incurred), depreciation and amortization (when incurred), dry-docking and special survey costs and other 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 against companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possible changes in 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 intended to and does not purport to represent cash flows for the period, nor is it presented as an alternative to operating income. Further, Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and 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 businesses because they may be defined or calculated differently by those other businesses. It should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. Any non-GAAP measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP measures including, but not limited to net earnings (loss), operating profit (loss), cash flow from operating, investing and financing activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.
Reconciliation of Net Income to Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands of U.S. dollars except for units and per unit data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Net Income | $ | 10,708 | $ | 14,430 | $ | 22,458 | $ | 24,030 | ||||||||
| Amortization of deferred revenue | 1,700 | (3,668 | ) | 3,400 | (7,297 | ) | ||||||||||
| Amortization and write-off of deferred charges | 54 | 54 | 108 | 107 | ||||||||||||
| Class survey costs | — | 390 | — | 390 | ||||||||||||
| Loss on Debt extinguishment | 331 | — | 331 | 154 | ||||||||||||
| Gain on derivative financial instrument | (408 | ) | (5,364 | ) | (1,668 | ) | (5,023 | ) | ||||||||
| Other expense | — | — | 110 | — | ||||||||||||
| Adjusted Net Income | $ | 12,385 | $ | 5,842 | $ | 24,739 | $ | 12,361 | ||||||||
| Less: Adjusted Net Income attributable to preferred unitholders and general partner | (3,233 | ) | (2,894 | ) | (6,509 | ) | (5,788 | ) | ||||||||
| Common unitholders' interest in Adjusted Net Income | $ | 9,152 | $ | 2,948 | $ | 18,230 | $ | 6,573 | ||||||||
| Weighted average number of common units outstanding, basic and diluted: | 36,802,247 | 36,802,247 | 36,802,247 | 36,802,247 | ||||||||||||
| Adjusted Earnings per common unit, basic and diluted | $ | 0.25 | $ | 0.08 | $ | 0.50 | $ | 0.18 | ||||||||
Adjusted Net Income represents net income before non-recurring expenses (if any), charter hire amortization related to time charters with escalating time charter rates, amortization of deferred charges, class survey costs and changes in the fair value of derivative financial instruments. 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 Net Income available to common unitholders divided by the weighted average common units outstanding during each period presented.
Adjusted Net Income, Net Income available to common unitholders 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 definitions of Adjusted Net Income, Net Income available to common unitholders and Adjusted Earnings per common unit, basic and diluted, may not be the same at those reported by other companies in the shipping industry or other industries. The Partnership believes that the presentation of Adjusted Net Income and Net income available to common unitholders is useful to investors because these measures 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, Net Income available to common unitholders and Adjusted Earnings per common unit does not imply, and should not be construed as an inference, that its future results will be unaffected by unusual or non-recurring items and should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.
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