Dynagas LNG Partners (NYSE: DLNG) reported Q2 EPS of $0.20, $0.05 better than the analyst estimate of $0.15. Revenue for the quarter came in at $33.91 million versus the consensus estimate of $32.97 million.

Quarter Highlights:

• Net income of $6.4 million and earnings per common unit of $0.10, after accounting for $3.4 million of non-cash market to market interest rate swap losses;
• Adjusted Net Income(1) of $9.9 million and Adjusted Earnings per common unit of $0.20 excluding the non-cash mark to market interest rate swap losses;
• Adjusted EBITDA(1) of $24.1 million;
• 100% fleet utilization;
• Declared and paid cash distribution of $0.5625 per unit on its Series A Preferred Units (NYSE: “DLNG PR A”) for the period from February 12, 2020 to May 11, 2020 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from February 22, 2020 to May 21, 2020; and
• Entered into a floating to fixed interest rate swap transaction effective from June 29, 2020 which provides for a fixed 3-month LIBOR rate of 0.41% based on notional values that reflect the amortization schedule of 100% of the Partnership’s debt outstanding under its $675 Million Credit Facility, until the $675 Million Credit Facility matures in September 2024.

CEO Commentary:

We are pleased to report the results for the three months and six months ended June 30, 2020. All six LNG carriers in our fleet are operating under their respective long-term charters with international gas producers with an average remaining contract term of 8.1 years. The earliest contracted re-delivery date for our six LNG carriers is in the third quarter of 2021 (the Arctic Aurora), with the next carrier (the Clean Energy) becoming available for re-chartering in the first quarter of 2026 at the earliest.

For the second quarter of 2020, we reported Net Income of $6.4 million and Adjusted EBITDA of $24.1 million. This improved performance is attributable to an increase in voyage revenues and a decrease in interest and finance costs compared to the corresponding period in 2019, coupled with stable vessel operating expenses during this period.

Despite the ongoing operational challenges the industry is facing as a result of the COVID-19 outbreak, we are pleased to report 100% utilization for our fleet for the second quarter of 2020. The ongoing impact of the COVID-19 outbreak has been operationally manageable due to our manager’s COVID-19 response plan which has been implemented with the support of our seafarers, charterers and employees, for which we are grateful.

Pursuant to our general objective to manage the cost of debt, we made use of the historically low interest rate environment and entered into a floating to fixed interest rate swap transaction effective from June 29, 2020 until the existing $675.0 Million Credit Facility expires in 2024. The swap provides for a fixed 3-month LIBOR rate of 0.41% and an effective interest rate cost of 3.41% (including margin) applicable for notional amounts matching the full amount and period of our outstanding debt. This was a key development in the execution of our strategic plan as it de-risks our exposure to interest rate volatility while securing a low cost of debt until 2024.

Additionally, in August 2020 we entered into an “at the market” offering program, pursuant to which the Partnership may offer and sell up to $30 million of its common units. Going forward, we intend to continue our strategy of using our cash flow generation to deleverage our balance sheet, reinforce our liquidity and generate cash so as to build equity over time. This, we believe, will enhance our ability to pursue future growth initiatives.

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