Dynagas LNG Partners Q1 2023 Earnings Call Transcript

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Provided by Quartr
June 21, 2023

There are 2 speakers on the call.

Operator

You for standing by. Ladies and gentlemen, and welcome to the Dynagas LNG Partners Conference Call on the Q1 2023 Financial Results. We have with us Mr. Tony Lauritzen, Chief Executive Officer and Mr. Michael Gregos, Chief Financial Officer of the company.

Operator

At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed. At this time, I would like to remind everyone that in today's presentation and conference call, Dynagas LNG Partners will be making forward looking statements.

Operator

These statements are within the meaning of the federal securities laws. This conference call and slide presentation of the webcast contains certain forward looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Statements in today's conference call that are not historical facts, including among other things, the expected financial performance of Dynagas LNG Partners Business, DynaGas Partners LNG ability to pursue growth opportunities, DynaGas Partners LNG expectations or objectives regarding future end market charter rate expectations and in particular the effects of COVID-nineteen on the financial condition and operations of DynaGas Partners LNG and the LNG industry in general, may be forward looking statements as such as defined in Section 21E of the Securities Exchange Act of 1934 as amended. Matters discussed may be forward looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide 2 of the webcast presentation, which has the full forward looking statement, and the same statement was also included in the press release.

Operator

Please take a moment to go through the whole statement and read it. And now, I pass the floor to Mr. Lauritzen. Please go ahead.

Speaker 1

Good morning, everyone, and thank you for joining us in our 3 months ended 31 March 2023 earnings conference call. I'm joined today by our CFO, Michael Gregos. We have issued a press release announcing our results for the same period. Certain non GAAP measures will be discussed on this call. We have provided a description of those measures as well as a discussion of why we believe this information to be useful in our press release.

Speaker 1

Let's move on to Slide 3 of the presentation. We are delighted to present the results for the 3 month period ending on 31 March 2023. We are pleased to announce that all 6 7 gs carriers in our fleet were operating on the long term charters with esteemed international wealth companies. In the Q1 of 'twenty three, our net income amounted to 9,600,000 With earnings per common unit reaching $0.18 our adjusted net income stood at 6,550,000 It translates into adjusted earnings to become a unit of $0.10 Furthermore, our adjusted EBITDA for the same period reached 23,600,000 Moreover, on 27 March, 2023, the partnership reached an agreement with all lenders of a €675,000,000 credit facility, under which we voluntarily made a prepayment of $31,300,000 An amount equal to the aforementioned prepayment was released from the cash collateral accounts in order to make the payment. These achievements showcase our dedication to maintaining strong financial performance and solid relationships with our partners and members.

Speaker 1

I will now turn the presentation over to Michael, who will provide you with further comments on the financial results. Thank you, Tommy. Moving to Slide 4. Net income for the Q1 decreased by 60% $9,600,000 compared to $23,900,000 in Q1 2022, primarily Due to a decrease in the unrealized gain on our interest rate swap transaction of $22,600,000 which was partially offset due to changes in the realized gain on our interest rates were up of $5,900,000 and An increase of $4,100,000 in interest and finance costs, which effectively was offset with the above mentioned increase in the realized gain or cash received on our interest rates as well. The aforementioned were partly balanced by the decrease of Adjusted net income for the 3rd quarter amounted to $6,500,000 compared to $10,000,000 same time last year, The decrease being mainly attributable to the $4,100,000 increase in interest and finance costs as a result of the higher interest expense paid under the floating rate of our credit facility.

Speaker 1

For consistency Adjusted net income excludes cash receipts and unrealized gains on our interest rate swap. If we included this quarter's realized gain from our interest rates for the $5,600,000 as can be seen in the cash flow statement, Adjusted net income would have amounted to $9,200,000 or $0.25 per common unit instead of $0.10 Adjusted EBITDA for the Q1 was relatively stable at $23,600,000 as compared to $23,000,000 last year. In the Q1, with the approval of our lenders, we utilized all the funds from our restricted cash collateral account To make a voluntary prepayment of RMB 31,300,000. TCE for the quarter amounted to about $67,600 per day. The elevated TCE relative to prior quarters is due to the non cash straight line deferred revenue amortization related to the new contract of the optical roll with Equimor, which we recommend in September and which is reconciled with actual cash revenue receipts in the cash flow statement.

Speaker 1

OpEx for the Q1 amounted to $13,500 per day with a per vessel Cash breakeven for the quarter of $46,600 per day, excluding distribution to preferred unitholders, The last one mentioned voluntary prepayment and including the realized gain from the interest rates law. Moving to slide 5. As of end of March, we had EUR457,000,000 debt outstanding. We are continuing our comprehensive deleveraging which commenced in the Q1 of 2020, resulted in a decrease in our net leverage to 4.5x from 6.6x and a steady increase in the book value of our equity, which today stands at $431,000,000 For the quarter, we generated $13,700,000 in operating cash flow, Equivalent to operating cash flow of about $0.37 per common unit. Again, please be reminded that this excludes $5,600,000 in real life swap gains.

Speaker 1

Moving on to Slide 6, our cash balance for the quarter was reduced by $27,000,000 to $53,000,000 primarily as a result of the aforementioned $31,000,000 voluntary prepayment. We have we drydocks for 2023, which are expected in the Q3. However, 2 low energy carriers are on OpEx And drydock pass through found charters. That wraps it up from my side. I will pass over the presentation to Tony.

Speaker 1

Thank you, Michael. So let's move on to Slide 7 of the presentation. Our fleet currently compromises 6 LNG carriers with an average age of 12.9 years. The vessels are chartered by prominent companies, including Equinor of Norway, Sephora and Yamalchade of Singapore. As of June 2023, the fleet's contracted backlog amounts to approximately R960,000,000 translating to an average backlog of about $160,000,000 per vessel.

Speaker 1

Furthermore, the fleet has an average remaining charter period of About 6.1 years. Moving on to Slide 8. Our strategy revolves I'm securing long term charters with LNG producers. Chemical gas prices in the main pricing hubs remained significantly lower than a year ago, Rwanda reached new heights due to the Russia and Ukraine situation. However, the spread between U.

Speaker 1

S. Steve Jobs prices and energy prices in Europe and the Far East continues to be favorable. We view this as a positive For both the economic sustainability of consumers and global growth as well as for gas producers. While the importance of LNG In managing global emissions and energy security is increasingly recognized. We anticipate the continuation of final investment positions, Mature LNG projects and the execution of long term LNG sales and purchase agreements.

Speaker 1

Consequently, the demand for LNG shipping in the long term remains positive. With strong European demand, we believe that the 150,000 to 160,000 cubic LNG carrier segment is well suited for Applying LNG to both line based terminals and FSRU input terminals in Europe. This is especially relevant for FSRU terminals, We often have a limited storage capacity and less flexibility in managing the implementation of land hydrocyclists compared to land based terminals. Considering these factors, we anticipate a favorable demand for our fleet in the future and we will leverage the healthy market conditions to explore further opportunities for our fleet. Let's move on to Slide 9.

Speaker 1

The partnership has demonstrated its commitment to its debt reduction strategy. Since September 2019 until end of March 23, we successfully repaid RUB280 1,000,000 in debt, significantly lowering the net leverage from 6.6x to 4.5x. Additionally, the partnership has achieved a 38% increase in book equity value, standing at $430,600,000 as for end of March 23. Looking ahead, we are confident that the partnership's ongoing efforts to reduce debt will further augment equity value through stable long term cash flow visibility. We firmly believe that LNG plays a pivotal role in building a future with reduced emissions.

Speaker 1

The demand for LNG is projected To continue, as the work progressively shifts away from coal and other polluting fossil fuels in favor of cleaner energy sources. Moreover, the long term outlook for LNG shipping rates remains robust. These rates are driven by the sustained demand for LNG shipping, which is bolstered by long term SPAs Countries striving to enhance their energy security and mitigate price volatility. Considering these promising developments, we Nathan, a positive outlook on the prospects for LNG shipping. Thank you for your attention.

Speaker 1

We have now concluded the presentation and invite you

Operator

There are no questions at this time. I'll now pass the call back to Mr. Lauritzen for any closing remarks.

Speaker 1

We appreciate your time and attentiveness. Thank you for your participation. I look forward to connecting with you again on our next call. Take care, and goodbye. This concludes today's teleconference.

Operator

You may disconnect your lines at this time. We thank you for your participation.

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Earnings Conference Call
Dynagas LNG Partners Q1 2023
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