Dynagas LNG Partners LP Q1 FY2024 earnings call

• The company announced Q1 2024 results with all six LNG carriers under long-term charters.
• Concluded a $345 million lease financing agreement for four out of six LNG carriers, which enabled full repayment of existing debt before maturity, with two vessels now debt-free.
• Following refinancing, total debt outstanding is $345 million, a reduction of $75 million from prior quarter, with no financial covenants and no restriction on distributions.
• Projected free cash flow to common equity after distribution to preferred unitholders is approximately $8 million per quarter, contingent on SOFR rates, utilization, and operating expenses.
• Adjusted EBITDA and adjusted net income were up by 23% and 87.7% respectively, primarily due to the increase in voyage revenues of the Arctic Aurora from its new time charter party agreement.
• Fleet comprises six LNG carriers with an average age of ~13.9 years, with charters from multiple gas companies and a contracted backlog of approximately $1.07 billion as of June 20, 2024.
• Commercial strategy focuses on securing long-term charters, fleet has an average remaining charter period of ~6.6 years, and global fleet expansion and energy demand trends are noted.
• Substantial reduction in debt from $675 million in September 2019 to $345 million today, net debt to EBITDA ratio improved to 3.3 times, and equity book value grew from $311 million to $457 million during that period, with run-rate EBITDA improving to $115 million.

For the first quarter of 2024, Dynagas LNG Partners reported net income of $11.8 million and earnings per common unit of $0.23. Adjusted net income stood at $12.4 million, translating to adjusted earnings per common unit of $0.25. Adjusted EBITDA for the period reached $29 million. The company's fleet consists of six LNG carriers operating under long-term charters with esteemed international gas companies, and revenue contribution isn't specified per segment but the overall financials are as mentioned.

• Projected free cash flow to common equity after distribution to preferred unitholders is approximately $8 million per quarter, contingent on current SOFR rates, utilization, and operating expenses.
• Interest rate swap expires in September, after which the company will be fully exposed to current SOFR rates.
• Focus on utilizing free cash flow going forward.

• The conference call includes forward-looking statements which involve risks and uncertainties that may result in expectations not being realized, as matters discussed are based on current management expectations that could be affected by various factors.

Q: Congrats on the finalization of the new financing, wanted to ask about where you envision the cash flow going and when you expect to make an announcement about distributions.

A: For the moment, we have to evaluate this on a quarter by quarter basis given prevailing circumstances, and it's a watch-the-space situation with no committed timeline for a decision.

Q: Do you think there is any potential to be able to finance those two now unencumbered assets separately, or is the thinking that those probably just remain unencumbered?

A: In theory it is possible to finance them, but for the moment, the decision is to keep them unencumbered as it aligns with our strategy of deleveraging and bringing leverage down