Dynagas LNG Partners LP Reports Results for the Three Months Ended March 31, 2018

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MONACO, May 16, 2018 (GLOBE NEWSWIRE) -- Dynagas LNG Partners LP (NYSE:DLNG) (“Dynagas Partners” or the “Partnership”), an owner and operator of liquefied natural gas (“LNG”) carriers, today announced its results for the three months ended March 31, 2018.

Tony Lauritzen, Chief Executive Officer of the Partnership, commented:

“We are pleased to report our earnings for the three months ended March 31, 2018. 

“Our reported earnings for the first quarter of 2018 were, as expected, below those of the first quarter of 2017 and were impacted by the following: (i) the temporary employment of the on the spot market until July 2018, when the vessel will commence a time charter with Gazprom for a term of approximately eight years, and (ii) the longer term nature of our contracts following our decision to reduce the charter hire rate on two vessels, the and the , with effect from November 2016, in exchange for securing the long-term charter with Gazprom, mentioned above, for the employment of the . These transactions contributed to an increase in our contracted backlog, thereby enhancing our revenue visibility. 

“On April 18, 2018, we announced a plan to reduce the quarterly distribution on the Partnership's common units to $0.25 per common unit from $0.4225 per common unit, or from $1.69 per common unit to $1.00 per common unit on an annualized basis. The reduction took effect on May 3, 2018, upon the payment of the common unit distribution with respect to the first quarter of 2018 to common unitholders of record as of the close of business on April 26, 2018.

“This decision by our Board of Directors to reduce the level of the Partnership’s quarterly common unit distribution was necessary to align the Partnership’s distribution level with its capacity to generate cash flow in the long term. Despite the material increase in the Partnership’s estimated revenue contract backlog over the last two years, we have experienced a decrease in operating cash flow and a weakened distribution coverage ratio (which is our distributable cash flow available for distribution in proportion to actual cash distributed) following our shift to longer term charters for the employment of our LNG carriers, which provide us with greater cash flow visibility albeit at lower charter rates that provide attractive returns of capital. As the Partnership’s shorter duration time charter contracts at peak charter rates have expired or are approaching expiration, we have capitalized on our Manager’s operational track record and the versatility of the ice class designated LNG carriers in our Fleet to secure long term employment contracts. As of the date of this report, our estimated average remaining contract term is 10.2 years and our estimated contracted revenue backlog is approximately $1.5 billion, which highlights our ability to secure long-term contracts during periods when the LNG shipping market has been highly competitive. 

“On May 3, 2018, we paid quarterly cash distribution of $0.25 per common unit with respect to the first quarter of 2018. Since our initial public offering in November 2013, we have paid total cash distributions of $7.04 per common unit. In addition, on May 14, 2018, we paid a cash distribution of $0.5625 per unit on our Series A Preferred Units for the period from February 12, 2018 to May 11, 2018. 

“With our Fleet 85% contracted through 2018, 92% contracted through 2019 and 100% contracted through 2020, and with an estimated Fleet-wide average remaining contract duration of 10.2 years, we believe we have significant cash flow visibility. 

“Our intent is to seek additional contract coverage, particularly in 2018, to manage our operating expenses and to continue the safe operation of our Fleet. 

“We look forward to working towards meeting our goals, which we believe will continue to benefit our unitholders.”

Net Income for the three months ended March 31, 2018 was $4.8 million as compared to Net Income of $12.9 million in the corresponding period of 2017, which represents a decrease of $8.1 million, or 62.5%. Adjusted Net Income for the three months ended March 31, 2018 was $7.2 million as compared to Adjusted Net Income of $14.9 million in the corresponding period of 2017, which represents a decrease of $7.7 million, or 51.5%.  The decrease in both the Net Income and the Adjusted Net Income was mainly attributable to (i) the lower revenues earned for the which has been employed under a short-term charter during the first quarter of 2018, in comparison to the corresponding quarter of 2017 during which the vessel operated under a multiyear charter at a significantly higher charter rate and, (ii) the increased interest costs for servicing the Partnership’s secured debt, which was refinanced in May 2017.

Adjusted EBITDA for the three months ended March 31, 2018 was $26.6 million as compared to Adjusted EBITDA of $31.3 million for the corresponding period of 2017, which represents a decrease of $4.7 million, or 15.0%, and was mainly due to lower revenues earned in the period for the as discussed above.

The Partnership's Distributable Cash Flow for the three-month period ended March 31, 2018 was $11.3 million as compared to $18.6 million in the corresponding period of 2017, which represents a decrease of $7.3 million, or 39.4%, and was due to the factors outlined above.

For the three-month period ended March 31, 2018, the Partnership reported Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, of $0.09 and $0.16, respectively, after taking into account the Series A Preferred Units interest on the Partnership’s net income. Earnings per common unit and Adjusted Earnings per common unit, basic and diluted are calculated on the basis of a weighted average number of 35,490,000 units outstanding during the period, in the case of Adjusted Earnings per common unit after reflecting the impact of the non-cash items presented in Appendix B.

Please refer to the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP in Appendix B.

Voyage revenues were $33.9 million for the three-month period ended March 31, 2018 as compared to $39.1 million for the same period of 2017, which represents a decrease of $5.2 million, or 13.3%.  This decrease was predominantly driven by the lower revenues earned on the which has been trading in the short-term market since the third quarter of 2017, in comparison to the corresponding quarter of 2017 during which the vessel was fully utilized at significantly higher charter rate. In July 2018, the will be delivered to Gazprom to commence a charter with a term of approximately eight years.

Vessel operating expenses were $6.3 million, which corresponds to a daily rate of $11,741 for the three-month period ended March 31, 2018, as compared to $6.7 million, or a daily rate of $12,352 for the corresponding period of 2017This decrease is primarily associated with crewing and technical efficiencies achieved during the first quarter of 2018 as compared to the corresponding period of 2017.

Interest and finance costs were $12.0 million in the first quarter of 2018 as compared to $8.9 million in the first quarter of 2017, which represents an increase of $3.2 million, or 35.5%. As discussed above, this increase is commensurate with the increase in the weighted average interest for the first quarter of 2018 mainly as a result of the increased costs associated with the $480.0 million institutional senior secured term loan B facility due in 2023 (the “Term Loan B”) which the Partnership entered into on May 18, 2017.

The Partnership reported average daily hire gross of commissionsof approximately $66,300 per day per vessel in the three months ended March 31, 2018, compared to approximately $76,700 per day per vessel in the same period of 2017. During the three-month period ended March 31, 2018, the Partnership’s vessels operated at 100% utilization compared to 99% utilization in the same period of 2017.

Amounts relating to variations in period–on–period comparisons shown in this section are derived from the condensed financials presented below.

As of March 31, 2018, the Partnership reported free cash of $61.4 million. Total indebtedness outstanding as of March 31, 2018 was $726.4 million (gross of unamortized deferred loan fees), which, apart from amounts outstanding under the Term Loan B, also includes the Partnership’s $250.0 million senior unsecured notes due October 2019. As of March 31, 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 March 31, 2018, the Partnership reported working capital surplus of $44.2 million (Q4 2017: $47.5 million).

During the three months ended March 31, 2018, the Partnership generated net cash from operating activities of $11.9 million as compared to $18.2 million in the same period of 2017, which represents a decrease of $6.3 million, or 34.7%. This decrease was attributable to the decrease in period net income due to the factors discussed above. 

As of May 16, 2018, the Partnership had estimated contracted time charter coverage for 85% of its fleet estimated Available Days (as defined in Appendix B) for the remaining 2018, 92% of its fleet estimated Available Days for 2019 and 100% of its fleet estimated Available Days for 2020.

As of the same date, the Partnership’s contracted revenue backlog estimate was approximately $1.46 billion, with an average remaining contract term of 10.2 years.

As announced, the Partnership’s management team will host a conference call on Thursday, May 17, 2018 at 10:00 a.m. Eastern Time to discuss the Partnership’s financial results.

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 Thursday, May 24, 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#.

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 first quarter ended March 31, 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.

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   23, Rue Basse, 98000 Monaco Attention: Michael Gregos Tel. +377 99996445 Email:   

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “expected,” “pending,” “will” and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership’s control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in the Partnership’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter  rates  and  vessel  values,  changes  in  demand  for  Liquefied  Natural  Gas  (LNG)  shipping capacity, changes in the Partnership’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership’s vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessel breakdowns and instances of off-hires, the amount of cash available for distribution, and other factors. Please see the Partnership’s filings with the Securities and Exchange Commission  for  a  more  complete  discussion  of  these  and  other  risks  and  uncertainties.  The information set forth herein speaks only as of the date hereof, and the Partnership disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

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.

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.

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 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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Globe Newswire: 21:05 GMT Wednesday 16th May 2018

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