Release Date: September 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- All six LNG carriers in Dynagas LNG Partners LP (DLNG, Financial)'s fleet were operating on long-term charters with esteemed international gas companies.
- Reported net income of $10.7 million and adjusted net income of $12.4 million for the second quarter of 2024.
- Successfully concluded new lease financing agreements with China Development Bank Financial Leasing, securing $344.9 million in financing.
- Substantially reduced debt levels and secured a more flexible financing structure, with two LNG carriers now debt-free.
- Maintained 100% scheduled fleet utilization during the second quarter, ensuring stable operations.
Negative Points
- Revenue slightly decreased to $37.6 million from $38 million in the first quarter.
- Operating income for the second quarter decreased by 2.6% to $18.8 million from the prior quarter.
- Net income for the second quarter was slightly lower at $10.7 million compared to $11.75 million in the first quarter.
- A one-off loss on debt extinguishment of $331,000 due to early prepayment of the prior credit facility.
- Anticipated increase in interest expenses when the interest rate swap matures, leading to higher debt service costs in the fourth quarter.
Q & A Highlights
Highlights of Dynagas LNG Partners LP (DLNG) Q2 2024 Earnings Call
Q: Can you provide more details on the new lease financing agreements with China Development Bank Financial Leasing?
A: (Tony Lauritzen, CEO) The $344.9 million financing, along with $63.7 million from our existing cash reserves, was used to fully repay our previous credit facility of $408.6 million ahead of its maturity in September 2024. This has substantially reduced our debt levels and secured a more flexible financing structure.
Q: What were the key financial metrics for the second quarter of 2024?
A: (Michael Gregos, CFO) We 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. Our adjusted EBITDA for the same period reached $28.6 million.
Q: How did the fleet perform in terms of utilization and revenue?
A: (Michael Gregos, CFO) We maintained 100% scheduled fleet utilization during the second quarter. Revenue was $37.6 million, slightly down from $38 million in the first quarter. The average TCE was $67,300 per day, down from $68,100 in the first quarter due to a small negative variation in the variable portion of the revenues.
Q: What is the current status of the fleet's contracted backlog and charter profile?
A: (Tony Lauritzen, CEO) As of September 10, 2024, our fleet's contracted backlog stands at approximately $1.04 billion, translating to an average of about $173 million per vessel. The fleet enjoys an average remaining charter period of approximately 6.4 years, positioning us for stable and reliable income in the years ahead.
Q: What are the expectations regarding interest expenses and debt service in the upcoming quarters?
A: (Michael Gregos, CFO) With the maturity of our interest rate swap on September 18, 2024, we expect our interest expenses to increase despite our lower leverage. Our fourth-quarter debt service per day is anticipated to increase by about $5,200 per day, resulting in a pro forma cash breakeven of approximately $50,000 per day for Q4 2024.
Q: How has the company managed its debt levels and financial leverage?
A: (Michael Gregos, CFO) We have reduced our debt balance by $378 million since December 2018. Our financial leverage, measured as adjusted net debt divided by the last 12 months' adjusted EBITDA, has improved from 6.6 times at year-end 2018 to 2.9 times currently.
Q: What is the company's strategy for future growth and stability?
A: (Tony Lauritzen, CEO) Our strategy centers on securing long-term charters with prominent gas companies, ensuring a stable revenue stream. We have no contractual vessel availability until 2028, and we expect long-term demand for LNG to remain strong due to its low emissions and rising global demand for electrification.
Q: What are the company's plans for capital allocation in the near future?
A: (Tony Lauritzen, CEO) In the next quarter, we expect the Board of Directors to evaluate and announce its capital allocation strategy, leveraging our new financial flexibility and solid foundation of contracted cash flows.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
