Dynagas LNG Partners (NYSE: DLNG) reported Q1 EPS of $0.16, $0.01 better than the analyst estimate of $0.15. Revenue for the quarter came in at $33.9 million versus the consensus estimate of $34.32 million.

Highlights:

• Net income of $4.8 million for the three months ended March 31, 2018;
• Earnings per common unit of $0.09 for the three months ended March 31, 2018;
• Adjusted Net Income(1) of $7.2 million for the three months ended March 31, 2018;
• Adjusted Earnings per common unit(1) (2) of $0.16 for the three months ended March 31, 2018;
• Distributable Cash Flow(1) of $11.3 million during the three months ended March 31, 2018;
• Adjusted EBITDA(1) of $26.6 million for the three months ended March 31, 2018;
• Reported cash of $61.4 million and available liquidity of $91.4 million as of March 31, 2018;
• Quarterly cash distribution of $0.25 per common unit in respect of the first quarter of 2018 and $0.5625 per preferred unit in respect of the most recent period.

CEO Commentary:

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 Clean Energy 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 Yenisei River and the Lena River, with effect from November 2016, in exchange for securing the long-term charter with Gazprom, mentioned above, for the employment of the Clean Energy. 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.”

For earnings history and earnings-related data on Dynagas LNG Partners (DLNG) click here.