Dynagas LNG Partners LP Q2 FY2024 earnings call

• Fleet: All six LNG carriers were operating on long-term charters for esteemed international gas companies.
• Financing: Concluded new lease financing agreement with China Development Bank Financial Leasing for four LNG carriers, using $344.9 million financing and existing cash reserves to repay previous credit facility ahead of maturity.
• Financial results: Second quarter net income, adjusted net income, and adjusted EBITDA reported. Revenue and TCE had slight changes compared to prior quarter.
• Balance sheet: Total debt reduced to $345 million, leverage metrics improved, with 33% of the fleet debt-free. Contracted average revenue backlog of $173 million per vessel.
• Commercial strategy: Focused on securing long-term charters with prominent gas companies, having a contract backlog of approximately $1.04 billion with an average remaining charter period of ~6.4 years. Global LNG carrier fleet has expanded, with medium-term potential oversupply but long-term demand看好 due to factors like LNG's low emissions, global demand for electrification, etc.

For the second quarter of 2024, Dynagas LNG Partners reported net income of $10.7 million and earnings per common unit of $0.20. Adjusted net income stood at $12.4 million, translating to adjusted earnings per common unit of $0.25. Adjusted EBITDA for the period reached $28.6 million. Revenue was $37.6 million, down slightly from $38 million in the first quarter. Average TCE was $67,300 per day, down from $68,100 in the first quarter. Operating income was $18.8 million, a 2.6% decrease from the prior quarter. The fleet of six LNG carriers was 100% utilized on long-term charters. Cash bridge started the quarter with $76 million, ended with $35.6 million after various transactions. Total debt stands at $345 million, with leverage metrics improved, having reduced debt by $378 million since December 2018, and net debt to last 12 months adjusted EBITDA reduced from 6.6 times in 2018 to 2.9 times in 2024.

• Next quarter: Board of Directors will evaluate and announce capital allocation strategy.
• Swap maturity: Expect interest expenses to increase when interest rate swap matures on September 18, 2024, with fourth quarterly debt service per day anticipated to increase by about $5,200 per day. Anticipate ~$5 million of additional realized gain from swap maturity.
• Leverage: Despite lower leverage and slightly lower amortization, interest expenses are expected to rise based on current SOFR rates.

• Market risk: Short to medium-term shipping capacity may exceed demand.
• Interest rate risk: Exposure to floating interest rates after swap maturity on September 18, 2024, which may impact interest expenses.

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