Dynagas LNG Partners LP Reports Results for the Three and Six Months Ended June 30, 2015
MONACO -- (Marketwired) -- 08/25/15 -- Dynagas LNG Partners LP (NYSE: DLNG) ("Dynagas Partners" or the "Partnership"), an owner and operator of LNG carriers, today announced its results (unaudited) for the three and six months ended June 30, 2015.
Three and Six Months Ended June 30, 2015 Highlights:
- Net income for the three and six months ended June 30, 2015 of $14.3 million and $29.2 million, respectively, an increase of 40.0% and 37.3%, respectively, over the same periods in 2014;
- Adjusted Net Income (1) for the three and six months ended June 30, 2015 of $14.6 million and $29.8 million, respectively, an increase of 27.7% and 31.8%, respectively, over the same periods in 2014;
- Distributable Cash Flow (1) during the three and six months ended June 30, 2015 of $17.4 million and $35.4 million, respectively, an increase of 38.2% and 42.3%, respectively, from the same periods in 2014;
- Adjusted EBITDA (1) for the three and six months ended June 30, 2015 of $27.6 million and $55.6 million, respectively, an increase of 62.2% and 66.2%, respectively, from the same periods in 2014;
- Adjusted Earnings per common unit (1) for the three and six months ended June 30, 2015 of $0.41 and $0.84, respectively.
(1) Adjusted Net Income, Distributable Cash Flow, Adjusted EBITDA, and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. 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.
Recent Developments:
Quarterly Cash Distribution: On July 24, 2015, the Partnership announced that its Board of Directors (the "Board") declared a quarterly cash distribution of $0.4225 per unit for the second quarter of 2015. This cash distribution was paid on August 13, 2015 to all unitholders of record as of August 6, 2015.
Issuance of Series A Cumulative Redeemable Preferred Units: On July 20, 2015, the Partnership completed an underwritten public offering of 3,000,000 9.00% Series A Cumulative Redeemable Preferred Units (the "Series A Preferred Units"), representing limited partner interests in the Partnership, at a liquidation preference of $25.00 per unit. Distributions on the Series A Preferred Units will be payable quarterly on February 12, May 12, August 12 and November 12, commencing November 12, 2015, as and if declared by the Board, at an equivalent of $0.5625 per quarter per unit. The Partnership intends to use the net proceeds of the offering to finance the acquisition of one of the vessels owned by Dynagas Holding Ltd., the Partnership's Sponsor (the "Sponsor"). If the Partnership is unable to complete this vessel acquisition, it plans to use the net proceeds of the offering for general partnership purposes, including working capital.
Chartering developments: In June 2015, the Amur River (renamed from Clean Force) completed its time charter with BG Group plc and commenced employment under its new 13-year time charter with Gazprom Global LNG Limited. The new contract has an estimated revenue backlog of approximately $307.4 million.
Management Commentary:
"We are pleased to report our earnings for the second quarter of 2015. The results show a significant improvement compared to the same period in 2014. The Partnership's Adjusted EBITDA increased by 62% for the second quarter of 2015, compared to the same period in 2014. This increase was primarily attributable to the growth of our fleet in line with our strategy.
"Consistent with our objectives, we have been and continue to be focused on the performance of our fleet from a safety, operational and technical point of view. During the last six months we have achieved 99% fleet utilization, which positively affected our financial results for the period and which we believe is reflective of the quality of our vessels and our Manager's operational ability.
"On August 13, 2015, we paid a cash distribution of $0.4225 per unit for the second quarter of 2015, which represents an increase of 15.8% in cash distributions over the Partnership's Minimum Quarterly Distribution. Since our IPO in November 2013, we have paid total cash distributions of $2.5621 per unit. Our fleet's income is generated from multi-year time charter contracts with international energy companies who pay a fixed daily rate for the chartered vessels. As the charterers also pay the majority of variable costs, such as fuel, the Partnership enjoys steady and visible cash flows generated from charters that are not tied to oil or gas prices.
"With our fleet fully contracted through 2016 and 80% contracted through 2017, we intend to continue to focus our attention on further fleet growth, contract coverage and safe and efficient operations. The fleet of five LNG carriers (the "Optional Vessels") currently owned by our Sponsor, which we have the right to acquire, provides us with an identified opportunity for growth. The characteristics of these vessels make them attractive for conventional shipping as well as LNG projects that require specialized ice classed and winterized vessels, which are features we believe will continue to be in demand going forward. We also believe that our Sponsor will be able to contract for additional LNG carrier newbuildings that we expect will create further growth potential for the Partnership."
Financial Results Overview:
For the results and the selected financial data for the six months ended June 30, 2015 and 2014 presented herein, the Partnership has compiled consolidated statements of income which were derived from the unaudited interim condensed consolidated financial statements for the periods presented.
----------------------- -----------------------
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
(U.S. dollars in thousands, 2015 2014 2015 2014
except per unit data) (unaudited) (unaudited) (unaudited) (unaudited)
Voyage Revenues $ 35,551 $ 20,863 $ 71,171 $ 41,872
Net Income $ 14,303 $ 10,218 $ 29,181 $ 21,247
Adjusted Net Income(1) $ 14,605 $ 11,435 $ 29,818 $ 22,625
Operating Income $ 21,304 $ 12,269 $ 43,014 $ 25,092
Adjusted EBITDA(1) $ 27,569 $ 16,994 $ 55,635 $ 33,476
Earnings per common unit $ 0.40 $ 0.37 $ 0.82 $ 0.74
Adjusted Earnings per common
unit (1) $ 0.41 $ 0.42 $ 0.84 $ 0.79
Distributable Cash Flow(1) $ 17,433 $ 12,617 $ 35,409 $ 24,885
(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 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.
Three Months Ended June 30, 2015 and 2014 Financial Results
The Partnership reported net income of $14.3 million for the three months ended June 30, 2015, compared to $10.2 million in the corresponding period of 2014, which represents an increase of $4.1 million, or 40.0%. Excluding the non-cash items presented in Appendix B, Adjusted Net Income for the three months ended June 30, 2015 was $14.6 million, compared to Adjusted Net Income of $11.4 million in the corresponding period in 2014, which represents an increase of $3.2 million, or 27.7%.
Adjusted EBITDA (which is non-GAAP measure used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership's operating performance) for the three months ended June 30, 2015 was $27.6 million, compared to $17.0 million in the corresponding period of 2014, which represents an increase of $10.6 million, or 62.2%.
The Partnership's Distributable Cash Flow for the three-month period ended June 30, 2015 was $17.4 million, compared to $12.6 million in the corresponding period of 2014, which represents an increase of $4.8 million, or 38.2%. Distributable Cash Flow is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership's ability to make quarterly cash distributions. 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.
For the three-month period ended June 30, 2015, the Partnership reported adjusted Earnings per common basic and diluted unit of $0.41. Adjusted Earnings per common unit is a non-GAAP financial measure and is calculated on the basis of a weighted number of 20,505,000 basic and diluted common units outstanding during the period, after reflecting the impact of the non-cash items presented in Appendix B.
Voyage revenues increased to $35.6 million for the three-month period ended June 30, 2015, compared to $20.9 million for the same period in 2014, primarily reflecting the Partnership's ownership and operation for a full quarter of the two LNG carriers that it acquired from its Sponsor on June 23, 2014 and September 25, 2014, the Arctic Aurora and the Yenisei River, respectively. As a result of this growth in the Partnership's fleet, Available Days increased to 455.0 days during the three-month period ended June 30, 2015, compared to 280.5 days during the corresponding period of 2014.
Vessel operating expenses increased by $2.5 million to $6.0 million in the three-month period ended June 30, 2015, from $3.5 million for the same period in 2014, mainly due to the ownership of the Arctic Aurora and Yenisei River, the two LNG carriers the Partnership recently acquired from its Sponsor, and increased operational costs. Daily operating expenses were $13,149 per LNG carrier during the three months ended June 30, 2015, compared to $12,317 per LNG carrier in the corresponding period of 2014.
The Partnership's overall financial performance during the periods discussed also reflects an increase in the weighted average interest rate as well as an increase in the weighted average outstanding indebtedness (directly attributed to the issuance of our $250 million Senior Unsecured Notes in September 2014 and the $340 million Senior Secured Credit Facility we entered into in June 2014) in the three months ended June 30, 2015, as compared to the corresponding period of 2014, resulting in an increase of approximately $4.8 million in the Partnership's interest and finance costs.
The Partnership reported average daily hire gross of commissions on a cash basis (1) of approximately $76,850 per day per vessel in the three months ended June 30, 2015, compared to approximately $78,300 in the same period of 2014 (or $78,800 per day per vessel in the three months ended June 30, 2015 if ballast revenues taken into account). During each of the three month periods ended June 30, 2015 and 2014, the Partnership's vessels operated at 97% (2) and 100% utilization, respectively.
(1) Average daily hire gross of commissions on a cash basis represents voyage revenue on a cash basis, without taking into consideration the non-cash time charter amortization expense, divided by the Available Days in the Partnership's fleet as described in Appendix B.
(2) Current three month period utilization does not reflect idle period on one of our fleet vessels, during part of which we received ballast bonus revenues and early redelivery compensation of approximately $0.9 million.
Amounts relating to variations in period-on-period comparisons shown in this section are derived from the condensed financials presented below.
Six Months Ended June 30, 2015 and 2014 Financial Results
The Partnership reported net income of $29.2 million for the six months ended June 30, 2015, compared to $21.2 million in the corresponding period of 2014, which represents an increase of $7.9 million, or 37.3%. Excluding the non-cash items presented in Appendix B, Adjusted Net Income for the six months ended June 30, 2015 was $29.8 million, compared to Adjusted Net Income of $22.6 million in the corresponding period in 2014, which represents an increase of $7.2 million, or 31.8%.
Adjusted EBITDA (which is non-GAAP measure used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership's operating performance) for the six months ended June 30, 2015 was $55.6 million, compared to $33.5 million in the corresponding period of 2014, which represents an increase of $22.2 million, or 66.2%.
The Partnership's Distributable Cash Flow for the six-month period ended June 30, 2015 was $35.4 million, compared to $24.9 million in the corresponding period of 2014, which represents an increase of $10.5 million, or 42.3%. Distributable Cash Flow is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership's ability to make quarterly cash distributions. 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.
For the six-month period ended June 30, 2015, the Partnership reported Adjusted Earnings per common basic and diluted unit of $0.84. Adjusted Earnings per common unit is a non-GAAP financial measure and is calculated on the basis of a weighted number of 20,505,000 basic and diluted common units outstanding during the period, after reflecting the impact of the non-cash items presented in Appendix B.
Voyage revenues increased to $71.2 million during the six months ended June 30, 2015, compared to $41.9 million for the same period in 2014. This increase was the result of the expansion of the Partnership's fleet with the two LNG carriers, the Arctic Aurora and the Yenisei River that the Partnership acquired from its Sponsor on June 23, 2014 and September 25, 2014, respectively. As a result of this growth in the Partnership's fleet, Available Days increased to 905.0 days during the six-month period ended June 30, 2015, compared to 550.5 days during the corresponding period of 2014.
Vessel operating expenses increased by $4.9 million to $11.5 million in the six-month period ended June 30, 2015, from $6.6 million for the same period in 2014. Operation of the Arctic Aurora and Yenisei River accounted for $4.4 million of this increase and the remainder of the increase was due to slightly increased operational costs. Daily operating expenses were $12,678 per LNG carrier during the six months ended June 30, 2015 compared to $11,951 per LNG carrier in the corresponding period of 2014.
The Partnership's overall financial performance during the periods presented also reflects an increase of $9.6 million in the Partnership's interest costs as a result of the increase in both the weighted average interest rate and weighted average outstanding indebtedness in the six months ended June 30, 2015, as compared to the corresponding period of 2014. The increase was attributable to the same factors as those discussed in the three month period-to-period comparison above.
The Partnership reported average daily hire gross of commissions on a cash basis (3) of approximately $78,300 per day per vessel in each of the six months ended June 30, 2015 and 2014 (or $79,250 per day per vessel in the six months ended June 30, 2015 if ballast revenues taken into account). During each of the six month periods ended June 30, 2015 and 2014, all of the Partnership's vessels operated at 99% (4) and 100% utilization, respectively.
(3) Average daily hire gross of commissions on a cash basis represents voyage revenue on a cash basis, without taking into consideration the non-cash time charter amortization expense, divided by the Available Days in the Partnership's fleet as described in Appendix B.
(4) Current six month period utilization does not reflect idle period on one of our fleet vessels, during part of which we received ballast bonus revenues and early redelivery compensation of approximately $0.9 million.
Amounts relating to variations in period-on-period comparisons shown in this section are derived from the condensed financials presented below.
Liquidity/ Cash Flow update
As of June 30, 2015, the Partnership reported cash of $36.5 million (including minimum cash liquidity requirements imposed by the Partnership's lenders). Total indebtedness as of June 30, 2015 was $565.0 million. The weighted average interest rate accruing on the Partnership's $340 million Senior Secured Credit Facility (under which the Partnership has outstanding borrowings of $315.0 million) for the three and six months ended June 30, 2015 was approximately 3.2%.
During the six months ended June 30, 2015, the Partnership generated net cash from operating activities of $40.6 million, compared to $33.2 million in the same period in 2014, which was due exclusively to the net cash flows during the current six month period from the operation of the Arctic Aurora and the Yenisei River, which were acquired from our Sponsor in the second quarter and the third quarter of 2014. This increase was partially offset by the effect of other operating assets and liabilities variations between the compared periods.
As of June 30, 2015, the Partnership had total available liquidity of $66.5 million (comprised of $36.5 million in cash and $30.0 million of borrowing capacity under the Partnership's revolving credit facility with its Sponsor).
Time Charter Coverage
As of August 25, 2015, the Partnership had contracted employment for 100% of its total fleet Calendar Days through the end of 2016 and 80% of its fleet Calendar Days for 2017. Time charter coverage with regards to total fleet Calendar Days is calculated on the basis of the earliest estimated redelivery dates provided in the Partnership's current time charter contracts.
As of August 25, 2015, the Partnership's contracted revenue backlog was approximately $596.3 million with an average remaining contract duration of 4.5 years (5).
(5) The Partnership calculates its contracted revenue backlog by multiplying the contractual daily hire rate by the minimum expected number of days committed under the contracts (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 shown in the table below due to, for example, shipyard and maintenance projects, downtime and other factors that result in lower revenues than the Partnership's average contract backlog per day.
Conference Call and Webcast: August 26, 2015
As announced, the Partnership's management team will host a conference call on Wednesday, August 26, 2015 at 11:00 a.m. Eastern Time to discuss the Partnership's financial results.
Conference Call details: Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or (+44) (0) 1452 542 301 (Standard International Dial In). Please quote "Dynagas".
A telephonic replay of the conference call will be available until Wednesday, September 2, 2015. The United States replay number is 1 (866) 247-4222; from the UK 0 (800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 59711562#.
Audio Webcast - Slides Presentation: There will be a live and then archived audio webcast of the conference call, via the internet through the Dynagas LNG Partners website www.dynagaspartners.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
The slide presentation on the second quarter and six months ended June 30, 2015 financial results will be available in PDF format 10 minutes prior to the conference call and webcast, accessible on the company's website www.dynagaspartners.com on the webcast page. Participants to the webcast can download the PDF presentation.
About Dynagas LNG Partners LP Dynagas LNG Partners LP. (NYSE: DLNG) is a growth-oriented partnership formed by Dynagas Holding Ltd. to own, and operate liquefied natural gas (LNG) carriers employed on multi-year charters. The current fleet of Dynagas Partners consists of five LNG carriers, with an aggregate carrying capacity of approximately 759,100 cubic meters.
Visit the Partnership's website at www.dynagaspartners.com
Forward-Looking Statement
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "expected," "pending" and similar expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership's management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership's control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in the Partnership's view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for Liquefied Natural Gas (LNG) shipping capacity, changes in the Partnership's operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership's vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessel breakdowns and instances of off-hires 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.
APPENDIX A
DYNAGAS LNG PARTNERS LP
Unaudited Interim Condensed Consolidated Statements of Income
(In thousands of U.S.
dollars except units Three Months Ended Six Months Ended
and per unit data) June 30, June 30,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
REVENUES
Voyage revenues $ 35,551 $ 20,863 $ 71,171 $ 41,872
EXPENSES
Voyage expenses
(including related
party) (621) (464) (1,341) (903)
Vessel operating
expenses (5,983) (3,461) (11,474) (6,585)
General and
administrative expenses
(including related
party) (402) (441) (939) (1,021)
Management fees -related
party (1,206) (724) (2,400) (1,419)
Depreciation (6,035) (3,504) (12,003) (6,852)
Operating income 21,304 12,269 43,014 25,092
Interest and finance
costs, net (6,929) (2,055) (13,814) (3,999)
Other, net (72) 4 (19) 154
Net Income $ 14,303 $ 10,218 $ 29,181 $ 21,247
Earnings per unit, basic
and diluted
Common unit (basic and
diluted) $ 0.40 $ 0.37 $ 0.82 $ 0.74
Weighted average number
of units outstanding,
basic and diluted (1):
Common units 20,505,000 15,773,571 20,505,000 15,381,464
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Balance Sheets (unaudited)
(Expressed in thousands of U.S. Dollars--except for unit data)
June 30, December 31,
2015 2014
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,456 $ 11,949
Due from related party 670 889
Other current assets 2,447 1,510
------------ ------------
Total current assets 15,573 14,348
------------ ------------
FIXED ASSETS, NET:
Vessels, net 827,880 839,883
------------ ------------
Total fixed assets, net 827,880 839,883
------------ ------------
OTHER NON CURRENT ASSETS:
Restricted cash 24,000 24,000
Due from related party 1,125 1,125
Deferred revenue and other deferred charges 6,330 8,020
------------ ------------
Total assets $ 874,908 $ 887,376
============ ============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 20,000 $ 20,000
Trade payables 2,670 2,369
Due to related party 437 142
Accrued liabilities 3,520 3,716
Unearned revenue 5,332 7,022
------------ ------------
Total current liabilities 31,959 33,249
------------ ------------
Deferred revenue 1,123 1,429
Long-Term Debt, net of current portion 545,000 555,000
------------ ------------
Total non-current liabilities 546,123 556,429
------------ ------------
PARTNERS' EQUITY:
General partner (35,526 units issued and
outstanding as at June 30, 2015 and December
31, 2014) 99 100
Common unitholders (20,505,000 units issued and
outstanding as at June 30, 2015 and December
31, 2014) 304,225 304,729
Subordinated unitholders (14,985,000 units
issued and outstanding as at June 30, 2015 and
December 31, 2014) (7,498) (7,131)
------------ ------------
Total partners' equity 296,826 297,698
------------ ------------
------------ ------------
Total liabilities and partners' equity $ 874,908 $ 887,376
============ ============
DYNAGAS LNG PARTNERS LP
Unaudited Interim Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
Six Months Ended June 30,
----------------------------
2015 2014
------------- -------------
Cash flows from Operating Activities:
Net income: $ 29,181 $ 21,247
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 12,003 6,852
Amortization of deferred financing fees 770 236
Deferred revenue 637 1,378
Changes in operating assets and liabilities:
Trade receivables (853) (65)
Prepayments and other assets (170) (71)
Inventories 71 (227)
Due from/ to related party 514 1,478
Trade payables 316 3
Accrued liabilities (143) (107)
Unearned revenue (1,690) 2,434
------------- -------------
Net cash provided by Operating Activities 40,636 33,158
------------- -------------
Cash flows used in Investing Activities
Vessel Acquisitions -- (209,562)
------------- -------------
Net cash used in Investing Activities -- (209,562)
------------- -------------
Cash flows from/ (used in) Financing
Activities:
Increase in restricted cash -- (2,000)
Issuance of common and general partner units,
net of issuance costs -- 121,171
Payment of IPO issuance costs and other filing
costs (65) (1,740)
Repayment of loan to related party -- (5,500)
Distributions paid (30,053) (16,188)
Preferential deemed dividend -- (25,508)
Repayment of long-term debt (10,000) (219,085)
Proceeds from long-term debt -- 340,000
Payment of deferred finance fees (11) (800)
------------- -------------
Net cash used in Financing Activities (40,129) 190,350
------------- -------------
Net increase in cash and cash equivalents 507 13,946
Cash and cash equivalents at beginning of the
period 11,949 5,677
------------- -------------
Cash and cash equivalents at end of the period $ 12,456 $ 19,623
------------- -------------
APPENDIX B
Fleet statistics
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
(expressed in United States
dollars except for
operational data) 2015 2014 2015 2014
----------- ----------- ----------- -----------
Number of vessels at the end
of period 5 4 5 4
Average number of vessels in
the period (1) 5.0 3.1 5.0 3.0
Calendar Days (2) 455.0 281.0 905.0 551.0
Available Days (3) 455.0 280.5 905.0 550.5
Revenue earning days (5) 442.4 280.5 892.4 550.5
Time Charter Equivalent (4) $ 76,769 $ 72,724 $ 77,160 $ 74,421
Fleet Utilization (5) 97% 100% 99% 100%
Vessel daily operating
expenses (6) $ 13,149 $ 12,317 $ 12,678 $ 11,951
(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 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) Time charter equivalent rates, or TCE rates, is a measure of the average
daily revenue performance of a vessel. For time charters, this is
calculated by dividing total voyage revenues, less any voyage expenses,
by the number of Available Days during that period. Under a time
charter, the charterer pays substantially all vessel voyage related
expenses. However, the Partnership may incur voyage related expenses
when positioning or repositioning vessels before or after the period of
a time charter, during periods of commercial waiting time or while off-
hire during dry-docking or due to other unforeseen circumstances. The
TCE rate is not a measure of financial performance under U.S. GAAP (non-
GAAP measure), and should not be considered as an alternative to voyage
revenues, the most directly comparable GAAP measure, or any other
measure of financial performance presented in accordance with U.S. GAAP.
However, TCE rate is a standard shipping industry performance measure
used primarily to compare period-to-period changes in a company's
performance and assists the Partnership's management in making decisions
regarding the deployment and use of the Partnership's vessels and in
evaluating their financial performance. The Partnership's calculation of
TCE rates may not be comparable to that reported by other companies. The
following table reflects the calculation of the Partnership's TCE rates
for the three and six months ended June 30, 2015 and 2014 (amounts in
thousands of U.S. dollars, except for TCE rates, which are expressed in
U.S. dollars, and Available Days):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2015 2014 2015 2014
---------- ---------- ---------- ----------
(In thousands of U.S.
dollars, except for
Available Days)
Voyage revenues $ 35,551 $ 20,863 $ 71,171 $ 41,872
Voyage Expenses (7) (621) (464) (1,341) (903)
---------- ---------- ---------- ----------
Time Charter equivalent
revenues $ 34,930 $ 20,399 $ 69,830 $ 40,969
Available Days (3) 455.0 280.5 905.0 550.5
---------- ---------- ---------- ----------
Time charter equivalent
(TCE) rate $ 76,769 $ 72,724 $ 77,160 $ 74,421
---------- ---------- ---------- ----------
(5) The Partnership calculates fleet utilization by dividing the number of
its revenue earning days, which are the total number of Available Days
of the Partnership's vessels net of unscheduled off-hire days, during a
period, by the number of Available Days during that period. The shipping
industry uses fleet utilization to measure a company's efficiency in
finding employment for its vessels and minimizing the amount of days
that its vessels are off-hire for reasons such as unscheduled repairs
but excluding scheduled off-hires for vessel upgrades, dry-dockings or
special or intermediate surveys.
(6) Daily vessel operating expenses, which includes crew costs, provisions,
deck and engine stores, lubricating oil, insurance, spares and repairs
and flag taxes, is calculated by dividing vessel operating expenses by
fleet Calendar Days for the relevant time period.
(7) Voyage expenses include commissions of 1.25% paid to the Partnership's
Manager and third party ship brokers, when defined in the charter
parties, bunkers, port expenses and other minor voyage expenses.
Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information
Reconciliation of Net Income to Adjusted EBITDA
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
Reconciliation to Net Income (In thousands of U.S. dollars)
Net Income $ 14,303 $ 10,218 $ 29,181 $ 21,247
Net interest and finance
costs (1) 6,929 2,055 13,814 3,999
Depreciation 6,035 3,504 12,003 6,852
Non-recurring expense from
accelerated time charter
amortization -- 908 -- 908
Charter hire amortization 302 309 637 470
Adjusted EBITDA $ 27,569 $ 16,994 $ 55,635 $ 33,476
(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) 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 comparability of the Partnership's performance operating from period to period and against the operating performance 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 below may not be comparable to similarly titled measures of other companies.
Reconciliation of Net Income to Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
(In thousands of U.S. dollars)
Net Income $ 14,303 $ 10,218 $ 29,181 $ 21,247
Non-recurring expense
from accelerated time
charter amortization -- 908 -- 908
Charter hire
amortization 302 309 637 470
Adjusted Net Income $ 14,605 $ 11,435 $ 29,818 $ 22,625
Less: Adjusted Net
Income attributable to
subordinated
unitholders and general
partner (6,185) (4,835) (12,627) (10,417)
Common unitholders'
interest in Adjusted
Net Income 8,420 6,600 17,191 12,208
Weighted average number
of common units
outstanding, basic and
diluted: 20,505,000 15,773,571 20,505,000 15,381,464
Adjusted Earnings per
common unit, basic and
diluted $ 0.41 $ 0.42 $ 0.84 $ 0.79
=========== =========== =========== ===========
Adjusted Net Income represents net income before non-recurring expense resulting from accelerated time charter amortization and charter hire amortization related to time charters with escalating time charter rates, both 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 Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2015 2014 2015 2014
---------- ---------- ---------- ----------
(In thousands of U.S. dollars)
----------------------------------------------
Net Income $ 14,303 $ 10,218 $ 29,181 $ 21,247
Depreciation 6,035 3,504 12,003 6,852
Amortization of deferred
finance fees 385 118 770 236
Net interest and finance
costs, excluding
amortization(1) 6,544 1,937 13,044 3,763
Non-recurring expense from
accelerated time charter
amortization -- 908 -- 908
Charter hire amortization 302 309 637 470
---------- ---------- ---------- ----------
Adjusted EBITDA 27,569 16,994 55,635 33,476
---------- ---------- ---------- ----------
Net interest and finance
costs, excluding
amortization(1) (6,544) (1,937) (13,044) (3,763)
Maintenance capital
expenditure reserves (861) (529) (1,721) (1,043)
Replacement capital
expenditure reserves (2,731) (1,911) (5,461) (3,785)
---------- ---------- ---------- ----------
Distributable Cash Flow $ 17,433 $ 12,617 $ 35,409 $ 24,885
---------- ---------- ---------- ----------
(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.
Contact Information: Dynagas LNG Partners LP 23, Rue Basse, 98000 Monaco Attention: Michael Gregos Tel. +377 99996445 Email: [email protected] 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: [email protected]
Source: Dynagas LNG Partners LP