Business Context and Reporting Period
Dynagas LNG Partners LP (NYSE: DLNG), a master limited partnership owning and operating six LNG carriers, filed a Form 6-K on June 21, 2021, to report financial results for the three months ended March 31, 2021. The Partnership operates under long-term time charters with an average remaining contract term of 7.7 years.
Key Financial Metrics
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Voyage Revenues | $33.4 million | $34.5 million |
| Net Income | $15.9 million | $7.0 million |
| Adjusted Net Income | $10.6 million | $7.1 million |
| Adjusted EBITDA | $23.9 million | $23.7 million |
| Operating Income | $15.8 million | $15.7 million |
| Earnings Per Common Unit | $0.36 | $0.11 |
| Adjusted Earnings Per Common Unit | $0.21 | $0.12 |
| Net Cash from Operating Activities | $22.9 million | $18.7 million |
| Total Cash (including restricted) | $84.1 million | N/A |
| Outstanding Indebtedness | $603.0 million | N/A |
| Fleet Utilization | 100% | 99.0% |
| Average Daily Hire (Gross) | $62,250 | $63,100 |
Material Changes vs. Prior Period
- Net Income: Increased 127.1% to $15.9 million, driven primarily by a $3.3 million decrease in interest and finance costs and a $5.6 million gain on an interest rate swap transaction.
- Revenues: Voyage revenues decreased 3.2% to $33.4 million due to lower variable hire revenues on the Lena River vessel compared to the prior year.
- Operating Expenses: Vessel operating expenses decreased to $6.9 million (down from $7.6 million), attributed to lower planned engine maintenance on the Lena River.
- Interest Costs: Interest and finance costs dropped 37.5% to $5.5 million due to lower weighted average interest rates and reduced interest-bearing debt.
Guidance, Outlook, and Management Commentary
Management highlighted a strategy to use cash flow generation to deleverage the balance sheet and reinforce liquidity. As of June 17, 2021, the Partnership secured a new two-year time charter for the Arctic Aurora with Equinor ASA, ensuring no lapse in employment. The estimated contracted revenue backlog stands at approximately $1.12 billion. Fleet coverage is estimated at 100% for 2021 and 2022, and 94% for 2023. The earliest contracted re-delivery date for any vessel is in the third quarter of 2023.
Risks and Contingencies: The filing notes risks related to the COVID-19 outbreak, fluctuations in charter rates, fuel prices, environmental regulations, and the potential discontinuance of LIBOR after 2021.
Investor Verification Checklist
- Verify the $5.6 million non-recurring gain on derivative instruments included in Net Income.
- Confirm the $1.12 billion revenue backlog calculation and the specific terms of the new Equinor charter for the Arctic Aurora.
- Review the reconciliation of Adjusted Net Income and Adjusted EBITDA to GAAP measures in Appendix B.
- Monitor the $603.0 million outstanding indebtedness and the $30.0 million remaining availability under the ATM Sales Agreement.
- Assess the impact of the $0.15 billion portion of the backlog related to Yamal contracts, which is subject to yearly adjustments based on actual operating costs.