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DLNG Dynagas LNG Partners

Participants
Tony Lauritzen Chief Executive Officer
Michael Gregos Chief Financial Officer
Ben Nolan Stifel
Randy Giveans Jefferies
Call transcript
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Operator

Thank you for standing by, ladies and gentlemen, and welcome to Dynagas LNG Partners Conference Call on the Second Quarter 2021 Financial Results.

We have with us Mr. Tony Lauritzen, Chief Executive Officer; and Mr. Michael Gregos, Chief Financial Officer of the Company. At this time all participants are in a listen only mode. presentation a a session and be Instructions]. [Operator will followed question by answer There you conference that today, advise must I this X, Wednesday, is XXXX. September recorded being press announced Please results the reminded has Company be with publicly that a release distributed. that been its I time, remind to and like today's will be everyone LNG call, Dynagas would partners in making presentation this At that conference forward-looking statements. the meaning laws. securities of federal within the are statements These the Harbor webcast meaning conference of contains forward-looking This presentation call Litigation the Safe slide statements XXXX. Securities of Private of the of provision and the within Act certain Reform expectations, are The general, the statements effects future and and the in expectations LNG not Dynagas XXE of amended. Partners today's Exchange historical rate performance Act and growth operations charter financial market COVID-XX to and be XXXX Dynagas including, as as conference the LNG financial Securities things, LNG in may industry call such, opportunities, forward-looking other ability condition on the in objectives partners as business, defined LNG the partners Dynagas that LNG of or among regarding in of of Partners facts, of particular, expected pursue Section Dynagas statements management which may may be expectations may on expectations uncertainties in Matters discussed that not and are such be based risks forward-looking result statements, involve that current that -- being realized. included statement also webcast has the which was presentation, full the draw kindly the and Slide attention your the statement of I press same X to forward-looking release. in the go take Please it. a to whole statement read through and moment Mr. floor pass the I now, to And Lauritsen. Please go ahead, sir.

Tony Lauritzen

today earnings months thank conference joining Michael Gregos. ended XXXX XX, our by and in CFO, for three Good everyone, you our morning call. I'm joined June us

measures on our a Certain press the be release this discussed have will for period. results issued We announcing said call. non-GAAP

our a We we of release. why this a be of as well discussion description those believe have information useful press as to in measures provided

Let's presentation. move X Slide to on of the

gas six All Despite operational months long-term the are to their pleased the XXXX. June we fleet fleet utilization and report are operating is producers. our our XXX% COVID-XX the under industry. for quarter. ended results still for XX, LNG outbreak pleased report with carriers the this, for The are respective international three for challenges in We to logistical charters causing

of of For XXXX, the income A cash period common Series Series common per of and XX February August 'XX B Unit Preferred XX 'XX. $X.XXXX May for Preferred to the quarterly $XX.X the the in B period earnings net unit we and 'XX, the Series XX, and of earnings second $X.X quarter, cash February Unit XX, XX, XX, distribution we adjusted a Unit distribution per income $X.XX of 'XX. quarter distribution August a from per million, period net $X.XX, $XX.X Series of recorded of May paid Units the May for adjusted XX of million, paid per $X.XXXX EBITDA $X.XXXXXX to in from of million. adjusted to from A distribution Subsequent quarterly quarterly XXXX, period 'XX, $X.XXXXXX May We cash to August a for to the May Preferred cash Preferred of quarterly for from for XX unit

which price remaining issued per an million availability. $XX common $X.XX at worth has we million amended $X.XX units $XX.X about restated under quarter, million ATM of and about the During of of average the unit agreement, about sales

delivered Aurora. be the time upon named about 'XX, to September party current about time is enter Equinor pleased announced, in to As our XX.X years, charter expected gross LNG we agreement, Under charter expected the Equinor to two is Arctic charter carrier, The to new into and carrier our ice Arctic for winterized has XXXX. revenues agreement previously the the builders deployment on the delivery immediately expiration annual new from the Equinor with of charter class the Aurora since time time in charter million. were had a from the agreement of are party. and new be charter

strategy you intend pursue Going comments our reinforce to to build the using our cash presentation generate we liquidity the Michael, delever to now will initiatives. of enhance forward, continue to cash generation growth I our will as time, over who turn our over financial with our sheet, ability further flow to value equity will provide and results. balance to which future

Michael Gregos

Tony. you, Thank

Turning X. to Slide

XXX% the try costs, to results an million to by Adjusted second stable increased continue quarter to reflecting and for operate compared net which were X% operating our with utilization. income XXXX, increase finance in continues $XX.X the by G&A fleet quarter to quarter expenses. Our reflect decreased counterbalanced our as of operating model to

stabilized per operating Our earnings profile. the debt $XX.X and our in of Since based $X.XX reflecting at with quarter levels, and adjusted EBITDA a contract for amounted quarter, million, to refinancing decrease our financial compared X% common now XXXX. the of stable to platform profitability adjusted has current increased second steadily second unit is our XXXX,

to cash and flow of line reduce our service to utilized on for using payments. Slide X. to EBITDA of contracted leverage, adjusted interest Moving we In debt with strategy our XX% the our quarter,

adjustment including in $X negative flow, For of the million a quarter, we operating capital working generated cash $XX.X million.

for flow with we line unitholders, million, in working line guidance. prior cash generated $X was quarter. in prior prior quarter to operating debt the the capital the $XX.X preferred with the and payments million service our changes, And and payments quarter Excluding after

million aforementioned our ATM May. the from due the quarter, million proceeds of took which common and in by place our about $X.X of of units For balance under the issuance to program, increased sale the last cash changes million $X.X to $XX.X

metrics. Slide to of on snapshot Moving a you This slide X. gives certain financial

debt hedged September the As XXXX. of all been rate an loan we outstanding of has the $XXX until its in maturity of under life interest credit end swap one million June, which had with facility, for of

carriers special surveys their our third their plants. of will installment water capital is XXXX, treatment and We have until which no scheduled ballast three undergo expenditures when of LNG

to X. Slide on Moving

natural which the flows cash from before balance are XXXX, same of our to positioning partnership has refinancing our will our Compared net a strategy indebtedness the from ago, decrease result our weighted and our is facility, requirement which interest sold than in $XXX to as a less XX%, takes resulted million We of on in by of average million XXXX has expense time, period deleveraging in with execute times by million, only and times This continuing we contracts, growth. state we in to process amortization quarter. the expect per of years credit two decreased organically X.X a has our way our future sustainable decreased for the that $XX $X.X the believe deleveraging X.X sheet steady leverage average total weighted interest on our projected reduction basis.

fleet-wide X. slide have debt day per the at per per per $XX,XXX our interest show breakdown, a slide, If this for of we day the expense $XX,XXX flow per charter our represents of around and EBITDA competitive breakeven repayment cash per Slide This vessel. per to on day $X,XXX vessel versus look vessel quarter. cash we -- on Moving is we day breakeven per contracted cash vessel, time rates

That $XX,XXX fleet per over will from of excluding contracted Tony. fleet per preferred per above per it the distributions. charter I is my vessel, wraps time vessel levels $XX,XXX day to day side. cash well equivalent pass up So of our breakeven presentation

Tony Lauritzen

Michael. you, Thank

Let's move X. on to Slide

and Equinor, currently average substantial Gazprom, vessels our counts gas LNG an XX.X fleet namely are about six with The producers, Our carriers Yamal years. of age charters of LNG.

average As X.X of the contract X, about million of the to vessel, period $X.XX fleet's is about today, vessel an average per is backlog billion, September per backlog equivalent fleet remaining and years. charter about $X.XX

XX. to on Moving Slide

vessel. in vessel vessel All is the as inflation unforeseen in that Yenisei the which two-year reputable XX% fuel, namely events XXXX. under employed except are next will canal are After the charter after contracts same vessels, the Aurora, year expires voyage potential dry costs. fleet XXX% LNG with under Clean expenses. counterparties, Lena the contracts, is which fees concluding reasonable dockings, and the with availability dock charters earliest in related of strategy our of 'XX Two for and 'XX to 'XX. Bar our in contract contract remainder for the for new year protection strong and vessels terminal XXX% for Aurora long-term and in the dry variable be operating the on assets major pass-through third with producers. pays scheduled charter our of 'XX, vessel and Arctic conclude charter time the quarter any River Our may cost employed for general, OpEx costs, provides the such Equinor Energy, be Arctic for The the fleet available a

and trading a driven typically carriers. and shipping, to to shipping time the infrastructure There for 'XX, mature are months outlook the not in for in season pricing six and that by to do led from to with charters high network gas I high that worldwide Canal, less In demand consequently, was, than to both particular, for LNG most mention we of LNG also exports healthy, Although for East, for we Panama available have it's and demand can at and shipping. and the coupled be the the same This immediate LNG while suppliers, general, think general, shipping prices. additional about going LNG supply availability, QX the above. for growing slow LNG efficient non-U.S. LNG an a for of worth of time in supports with increase which demand waiting global LNG was active expected supply LNG, enabled LNG led strong U.S. optimistic Far which

as situation we by and operational taking contracts, our stakeholders vessels chain. protect along logistics staff Although monitoring point we of outlook. seafarers, our the office been are are on strict not and measures term incomes all other view, our have COVID-XX to the the situation, affected of are From employed charter an

accordance Moving on FS Five down are to constructed are six ice winterized with carriers LNG to and XA LNG Slide designed, been class of XX in with degrees. These also carriers assigned XX. our minus have notation. out

free class areas. machinery features notation hull with icebreaking capability, zero ensure and part sub trouble ice vessel's is the While winterization in operation and in concerned installed are to the the

equivalent the IA and LNG or market a partnership share ice of global carrier of represent class FS fleet. sponsors about Our our XX% total

and and typical Our Northern with navigation Island frequently the unlock the fleet's Sakhalin during subzero the winterization able the icebound area vessels Norway. where value to and the indicating ice class and/or to areas season, Sea features. charterers our on summer of areas regards route, icebound operate is Northern calling can are fleet The of notation subzero

broader a As our two to in has without areas, between any significant of class market sub zero without believe same compared areas fleet ice can conventional winterization reach the and icebound vessels type costs features. perform operations our we difference in or operating fleet

Let's move on to Slide XX.

We particularly are core a experienced perform in able as service LNG harsh environments. known reliable company an provider, to operations

trading fleet versatility. unique and Our provide is for

Our control. to on continues translates performance, focus high be cost utilization and operational into which

which to will organically breakeven vessels utilized our key about Our on flow reduce contracts are with we current, over debt. are that with largely per debt we debt and industry cash amortizing employed annum, of cost $XX reduce time. term the our is million expect participants, reduction At

believe competitive ability and expect we solid will and build to position future our of $X.XX and growth our our liquidity, cash revenue over reinforce initiatives. as pursue allow that balance cost our value delever sheet, cash us will We to backlog of the equity to debt, time, contract which enhance generate billion

and reached now you. We end now questions. open the presentation, floor Thank of for I the have the

Operator

Instructions] Stifel. Our today Ben [Operator from from first is Nolan for

Your line open. is

Ben Nolan

Tony. afternoon or Michael, morning Good

I a have just couple of So questions.

I you as play how color that would forward expect little what to kind to and in OpEx. COVID. bit expect? rate you run and of related release the press is going of out first was Any The bit that on higher it as know is to it this sort had little sort quarter about we a talked than the saw OpEx you a one the been of that

Michael Gregos

would we the yes, run well expect. think I rate Yes, current as

the the than -- weren't changes they that have much didn't lower COVID we fact so increase due was -- last year, think because I to and been. they the of done, let's would they were, costs any weren't say,

rate we forward. the current So going would run is what expect

Ben Nolan

at in maybe guess not ones obviously you here, have a And ability, above lower refinance least but do you X% then cash there moving that I trading a think, the effectively is, one preferreds any or anytime. enhance callable, Thanks about par, you, I now Michael. any pieces curious the whole structure of thinking somewhat perhaps are possible, coupon for to those organic and Is was better retention? of to Okay. there's was lot the capital the maybe that secondly,

Michael Gregos

challenging with which mean, basis, liquidity, I sense. at Yes, as products the particular we well, to I up organically. at be stage type think cost, build them organic at to refinance this of be similar Company it's we look let's can make say, done what able Hopefully, would on an the

I balance $XX have sheet, think million restricted. million right we on now, the $XX is

some I That's the back. we interest us for if might the buy current sheet think in the particular our balance to organically, know the expensive maintain in can which liquidity And would an is free piece stage, the preferred. great comes the case for as protection do a of on want act part can something rather liquidity on You structure. because than happen and up, rather of preferred future, -- whatever capital this it's at to we we But quickly. most a maintain something something, just opportunity do we small

that So, we're looking something how can we way. it's this we're in best deal the at thinking with about and

Ben Nolan

there. Okay. debt sort cash continue build actionable down to sounds before there's anything balance of fair. pay waiting and the But like the least, you're probably now, at it for to really That's

right. does Cool. Appreciate for all Thanks it. it guys. Okay, me. That

Operator

Giveans Please go Our Randy next is Jefferies. from question from ahead.

Randy Giveans

is how it Gentlemen, going?

Tony Lauritzen

Hi Randy.

Randy Giveans

questions. two guess I

count? Any back And mentioned again You current ATM last that was your on in year? what May using is sale your or May. unit also, this plans

Michael Gregos

have there's any At stage, issue to no don't we there's No. no further our -- ATM. plans any this -- under equity particular

good that we mentioned prior it call of sales, we're what think going very our idea any -- I further be to to we're in we have to if this have with make going the has to do money. a

the we're the make under don't that until sales ATM. any share to So XX,XXX,XXX. But count I now, going further happens, think is

Randy Giveans

maybe final much opportunities very that. down you And you and acquisitions. or thank for then some Well, fleet Yes, as right. looking mentioned, All your just my question. at drop

a from is Are fleet additional the in side, have the potential maybe looking two-plus what there looking from chartered of fully newbuilding side, at drop-downs You kind or the sponsor? a at second-hand for years, purely next partnership the some growth opportunities meantime?

Tony Lauritzen

little keep also buildings. Yes. Thank ordering plans don't status the you, for sheet We the cash is want we Randy. side, more to, bit kind Michael Listen, of And I up getting stronger. time more the quo immediate build and have of vessels plants, think reduce acquiring a think of further. new alluded the any on debt any or debt on to on we balance vessel to couple of are getting is our lower. parent quarters sheet our The balance

some immediate at the plans we yes, any don't point, on side, will it So have but growth come.

Randy Giveans

for me. All it. Got Well, right. it Thank that's you.

Tony Lauritzen

you. Thank

Michael Gregos

Thanks. you, Randy. Thank

Operator

no CEO, are questions now to hand there And further I'll the call Lauritzen. waiting. back Tony

Tony Lauritzen

on in and our the meantime, and for again you safe. to you your forward much, Well, with thank We call. stay in you next everyone very our thank time for listening look on call. speaking earnings to And

Operator

the everyone, joining. today. That you, for for does conference Thank conclude

You may disconnect. now