Dynagas LNG Partners LP Reports Results For the Three Months Ended March 31, 2024
Dynagas LNG Partners LP (NYSE: DLNG) reported its financial results for the three months ended March 31, 2024. The company announced a net income of $11.8 million and earnings per common unit of $0.23. Adjusted net income was $12.4 million with adjusted EBITDA at $29.0 million, and the fleet utilization stood at 100%. Dividends were declared and paid on Series A and B preferred units. Dynagas has entered a $345 million lease financing agreement with China Development Bank Financial Leasing Co. , enabling it to fully prepay its $675 million credit facility. The company's LNG carriers are operating under long-term charters with an average remaining contract term of 6.6 years, contributing to an estimated contract backlog of $1.07 billion. The recent EU sanctions targeting the Russian LNG sector are being assessed for their impact on operations.
- Net income of $11.8 million for Q1 2024.
- Earnings per common unit of $0.23.
- Adjusted net income of $12.4 million.
- Adjusted EBITDA of $29.0 million.
- 100% fleet utilization.
- Declared and paid dividends on Series A and B preferred units.
- Entered a $345 million lease financing agreement.
- Fully prepaid $675 million credit facility.
- Average remaining contract term of 6.6 years for LNG carriers.
- Estimated contract backlog of $1.07 billion.
- None.
Insights
The recent financial results from Dynagas LNG Partners demonstrate a robust performance in terms of net income and earnings per common unit. With net income at
The new lease financing agreement with China Development Bank Financial Leasing Co. Ltd. is notable. By securing
For retail investors, the consistent cash distributions to preferred units signal financial stability, though common units did not benefit from similar cash distributions this quarter. While the long-term charters and significant contract backlog (approximately
Short-term, the financial health looks solid, but investors should monitor geopolitical developments as they could affect future earnings and operations.
From a market perspective, Dynagas LNG Partners' performance reflects positively on its positioning in the LNG shipping sector. The company's ability to maintain 100% fleet utilization suggests strong demand for its services amidst a growing LNG market. Additionally, the average remaining contract term of 6.6 years per vessel provides a solid foundation for future revenue.
The strategic lease financing agreement with China Development Bank Financial Leasing Co. Ltd. not only reduces the company's debt burden but also potentially strengthens its market position by freeing up capital for potential growth opportunities or further debt reduction.
However, the recent E.U. sanctions package targeting the LNG sector introduces a new layer of risk. Although the company states that current U.S. sanctions do not materially affect its operations, the full impact of these new E.U. sanctions is still being assessed. Investors should be aware that further geopolitical developments could introduce volatility in the company's operations and market valuation.
Overall, while the market outlook is cautiously optimistic, external geopolitical factors present potential risks that could affect long-term performance.
ATHENS, June 27, 2024 (GLOBE NEWSWIRE) -- Dynagas LNG Partners LP (NYSE: “DLNG”) (the “Partnership”), an owner and operator of liquefied natural gas (“LNG”) carriers, today announced its results for the three months ended March 31, 2024.
Quarter Highlights:
- Net Income and Earnings per common unit (basic and diluted) of
$11.8 million and$0.23 , respectively; - Adjusted Net Income(1) of
$12.4 million and Adjusted Earnings per common unit(1) (basic and diluted) of$0.25 ; - Adjusted EBITDA(1)
$29.0 million ; 100% fleet utilization(2); and- Declared and paid a cash distribution of
$0.56 25 per unit on its Series A Preferred Units (NYSE: “DLNG PR A”) for the period from November 12, 2023 to February 11, 2024 and$0.71 764025 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from November 22, 2023 to February 21, 2024.
Subsequent Events:
- Declared a quarterly cash distribution of
$0.56 25 on the Partnership’s Series A Preferred Units for the period from February 12, 2024 to May 11, 2024, which was paid on May 13, 2024 to all preferred Series B unit holders of record as of May 6, 2024; - Declared a quarterly cash distribution of
$0.69 853375 on the Partnership’s Series B Preferred Units for the period from February 22, 2024 to May 21, 2024, which was paid on May 22, 2024 to all preferred Series B unit holders of record as of May 15, 2024; and - On June 19, 2024, the Partnership entered into definitive documentation with subsidiaries of China Development Bank Financial Leasing Co. Ltd. (“CDBL”) for a
$345.0 million lease financing agreement of four out of its six LNG carriers. On June 27, 2024, the new lease facility, together with available cash, were used to fully prepay the$675 million Credit Facility, which was scheduled to mature in September 2024.
(1) Adjusted Net Income, Adjusted Earnings per common unit and Adjusted EBITDA are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP and other related information.
(2) Please refer to Appendix B for additional information on how we calculate fleet utilization.
CEO Commentary:
We are pleased to report the results for the three months ended March 31, 2024.
For the first quarter of 2024, we reported Net Income of
All six LNG carriers in our fleet are operating under their respective long-term charters with international gas companies with an average remaining contract term of 6.6 years. Barring any unforeseen events, the Partnership will have no contractual vessel availability until 2028. Our estimated contract backlog currently stands at approximately
We are pleased to announce a new lease financing agreement with China Development Bank Financial Leasing Co. Ltd for four of our LNG carriers. This financing, totaling
Russian Sanctions Developments
Due to the ongoing Russian conflicts with Ukraine, the United States (“U.S.”), European Union (“E.U.”), Canada and other Western countries and organizations have announced and enacted numerous sanctions against Russia to impose severe economic pressure on the Russian economy and government.
As of today’s date:
- Current U.S. sanctions regimes do not materially affect the business, operations or financial condition of the Partnership and, to the Partnership’s knowledge, its counterparties are currently performing their obligations under their respective time charters in compliance with applicable U.S. and E.U. rules and regulations.
- On June 24, 2024, the E.U. issued its 14th sanctions package which, for the first time, targets the LNG sector of the Russian economy. E.U. laws now prohibit reloading services in the territory of the E.U. for the purposes of transshipment operations where such services are used to transship Russian LNG, except in the case of such transshipments to E.U. member states. That prohibition covers both ship-to-ship transfers and ship-to-shore transfers and re-loading operations. Ancillary services related to such transshipments are also banned. Also, information requirements apply to legal persons performing unloading operations. Certain limited exemptions apply. The Partnership is currently in the process of assessing the impact this new set of sanctions will have on its operations.
- Sanctions legislation has been changing and the Partnership continues to monitor such changes as applicable to the Partnership and its counterparties.
The full impact of the commercial and economic consequences of the Russian conflict with Ukraine is uncertain at this time. The Partnership cannot provide any assurance that any further development in sanctions, or escalation of the Ukraine situation more generally, will not have a significant impact on its business, financial condition or results of operations. Please see the section of this press release entitled “Forward Looking Statements.”
Financial Results Overview:
| Three Months Ended | ||||||
| (U.S. dollars in thousands, except per unit data) | March 31, 2024 (unaudited) | March 31, 2023 (unaudited) | ||||
| Voyage revenues | $ | 38,055 | $ | 37,263 | ||
| Net Income | $ | 11,750 | $ | 9,600 | ||
| Adjusted Net Income (1) | $ | 12,354 | $ | 6,519 | ||
| Operating income | $ | 19,337 | $ | 19,344 | ||
| Adjusted EBITDA(1) | $ | 29,003 | $ | 23,564 | ||
| Earnings per common unit | $ | 0.23 | $ | 0.18 | ||
| Adjusted Earnings per common unit (1) | $ | 0.25 | $ | 0.10 | ||
(1) Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
Three Months Ended March 31, 2024 and 2023 Financial Results
Net Income for the three months ended March 31, 2024 was
Adjusted Net Income (a non-GAAP financial measure) for the three months ended March 31, 2024 was
Voyage revenues for the three months ended March 31, 2024 were
The Partnership reported average daily hire gross of commissions(1) of approximately
Vessel operating expenses were
Adjusted EBITDA (a non-GAAP financial measure) for the three months ended March 31, 2024 was
Interest and finance costs, net were
For the three months ended March 31, 2024, the Partnership reported basic and diluted Earnings per common unit and Adjusted Earnings per common unit, (a non- GAAP financial measure), of
Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
Amounts relating to variations in period on period comparisons shown in this section are derived from the unaudited condensed financial statement contained herein.
(1) Average daily hire gross of commissions is a non-GAAP financial measure and represents voyage revenue excluding the non-cash time charter deferred revenue amortization, divided by the Available Days in the Partnership’s fleet as described in Appendix B.
Liquidity/ Financing/ Cash Flow Coverage
During the three months ended March 31, 2024, the Partnership generated net cash from operating activities of
As of March 31, 2024, the Partnership reported total cash of
On June 19, 2024, the Partnership entered into a sale and leaseback agreement with China Development Bank Financial Leasing Co. Ltd. (“CDBL”) for four of its vessels, the Ob River, the Clean Energy, the Amur River, and the Arctic Aurora in an amount up to
Vessel Employment
As of June 27, 2024, the Partnership had estimated contracted time charter coverage(1) for
As of the same date, the Partnership’s estimated contracted revenue backlog (2) (3) was
(1) Time charter coverage for the Partnership’s fleet is calculated by dividing the fleet contracted days on the basis of the earliest estimated delivery and redelivery dates prescribed in the Partnership’s current time charter contracts, net of scheduled class survey repairs by the number of expected Available Days during that period.
(2) The Partnership calculates its estimated contracted revenue backlog by multiplying the contractual daily hire rate by the expected number of days committed under the contracts (assuming earliest delivery and redelivery and excluding options to extend), assuming full utilization. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods disclosed due to, for example, dry-docking and/or special survey downtime, maintenance projects, off-hire downtime and other factors that result in lower revenues than the Partnership’s average contract backlog per day.
(3) The amount of
Conference Call and Webcast:
As announced, the Partnership’s management team will host a conference call on Friday, June 28, 2024 at 10:00 a.m. Eastern Time to discuss the Partnership’s financial results.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 877-405-1226 (US Dial-In), or +1 201-689-7823 (US International Dial-In). To access the conference call, please quote “Dynagas” to the operator and/or conference ID 13746983. For additional participant International Toll- Free access numbers, click here.
Alternatively, participants can register for the call using the “call me” option for a faster connection to join the conference call. You can enter your phone number and let the system call you right away. Click here for the “call me” option.
Audio Webcast - Slides Presentation:
There will be a live and then archived webcast of the conference call and accompanying slides, available on the Partnership’s website. To listen to the archived audio file, visit our website http://www.dynagaspartners.com and click on Webcast under our Investor Relations page. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
The slide presentation on the first quarter ended March 31, 2024 financial results will be available in PDF format 10 minutes prior to the conference call and webcast, accessible on the Partnership's website www.dynagaspartners.com on the webcast page. Participants to the webcast can download the PDF presentation.
About Dynagas LNG Partners LP
Dynagas LNG Partners LP. (NYSE: DLNG) is a master limited partnership that owns and operates liquefied natural gas (LNG) carriers employed on multi-year charters. The Partnership’s current fleet consists of six LNG carriers, with an aggregate carrying capacity of approximately 914,000 cubic meters.
Visit the Partnership’s website at www.dynagaspartners.com. The Partnership’s website and its contents are not incorporated into and do not form a part of this release.
Contact Information:
Dynagas LNG Partners LP
Attention: Michael Gregos
Tel. +30 210 8917960
Email: management@dynagaspartners.com
Investor Relations / Financial Media:
Nicolas Bornozis
Markella Kara
Capital Link, Inc.
230 Park Avenue, Suite 1540
New York, NY 10169
Tel. (212) 661-7566
E-mail: dynagas@capitallink.com
Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “project,” “will,” “may,” “should,” “expect,” “expected,” “pending” and similar expressions identify forward-looking statements. These forward- looking statements are not intended to give any assurance as to future results and should not be relied upon.
The forward-looking statements in this press release are based upon various assumptions and estimates, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership’s control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in the Partnership’s view, could cause actual results to differ materially from those discussed, expressed or implied, in the forward- looking statements include, but are not limited to, the strength of world economies and currency fluctuations, general market conditions, including fluctuations in charter rates, ownership days, and vessel values, changes in supply of and demand for liquefied natural gas (LNG) shipping capacity, changes in the Partnership’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership’s vessels, availability of financing and refinancing, changes in governmental laws, rules and regulations or actions taken by regulatory authorities, economic, regulatory, political and governmental conditions that affect the shipping and the LNG industry, potential liability from pending or future litigation, and potential costs due to environmental damage and vessel collisions, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events, or international hostilities, including the recent escalation of the Israel-Gaza conflict and potential spillover effects throughout the Middle East, vessel breakdowns, instances of off-hires, the length and severity of epidemics and pandemics, such as COVID-19 and its variants, the impact of public health threats and outbreaks of other highly communicable diseases, the impact of the discontinuance of the London Interbank Offered Rate, or, LIBOR and its replacement with the Secured Overnight Financing Rate, or SOFR on any of our debt referencing LIBOR in the interest rate, the amount of cash available for distribution, and other factors. Due to the ongoing war between Russia and Ukraine, the United States, United Kingdom, the European Union, Canada, and other Western countries and organizations have announced and enacted numerous sanctions against Russia to impose severe economic pressure on the Russian economy and government. The full impact of the commercial and economic consequences of the Russian conflict with Ukraine are uncertain at this time. Although currently there has been no material impact on the Partnership, potential consequences of the sanctions that could impact the Partnership’s business in the future include but are not limited to: (1) limiting and/or banning the use of the SWIFT financial and payment system that would negatively affect payments under the Partnership’s existing vessel charters; (2) the Partnership’s counterparties being potentially limited by sanctions from performing under its agreements; and (3) a general deterioration of the Russian economy. In addition, the Partnership may have greater difficulties raising capital in the future, which could potentially reduce the level of future investment into its expansion and operations. The Partnership cannot provide any assurance that any further development in sanctions, or escalation of the Ukraine situation more generally, will not have a significant impact on its business, financial condition, or results of operations.
Please see the Partnership’s filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof, and the Partnership disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
APPENDIX A
DYNAGAS LNG PARTNERS LP
Condensed Consolidated Statements of Income
| (In thousands of U.S. dollars except units and per unit data) | Three Months Ended March 31, | ||||||
| 2024 (unaudited) | 2023 (unaudited) | ||||||
| REVENUES | |||||||
| Voyage revenues | $ | 38,055 | $ | 37,263 | |||
| EXPENSES | |||||||
| Voyage expenses (including related party) | (857 | ) | (714 | ) | |||
| Vessel operating expenses | (7,700 | ) | (7,296 | ) | |||
| General and administrative expenses (including related party) | (526 | ) | (469 | ) | |||
| Management fees -related party | (1,641 | ) | (1,575 | ) | |||
| Depreciation | (7,994 | ) | (7,865 | ) | |||
| Operating income | 19,337 | 19,344 | |||||
| Interest and finance costs, net | (8,655 | ) | (9,180 | ) | |||
| Loss on debt extinguishment | — | (154 | ) | ||||
| Gain/ (Loss) on derivative instruments | 1,260 | (341 | ) | ||||
| Other Expense | (110 | ) | — | ||||
| Other, net | (82 | ) | (69 | ) | |||
| Net income | $ | 11,750 | $ | 9,600 | |||
| Earnings per common unit (basic and diluted) | $ | 0.23 | $ | 0.18 | |||
| Weighted average number of units outstanding, basic and diluted: | |||||||
| Common units | 36,802,247 | 36,802,247 | |||||
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Balance Sheets
(Expressed in thousands of U.S. Dollars—except for unit data)
| March 31, 2024 (unaudited) | December 31, 2023 (unaudited) | ||||
| ASSETS: | |||||
| Cash and cash equivalents and restricted cash (current and non-current) | $ | 76,155 | $ | 73,752 | |
| Derivative financial instrument (current and non-current) | 10,637 | 15,631 | |||
| Due from related party (current and non-current) | 1,447 | 1,350 | |||
| Other current assets | 12,015 | 15,874 | |||
| Vessels, net | 789,369 | 797,363 | |||
| Other non-current assets | 5,210 | 4,943 | |||
| Total assets | $ | 894,833 | $ | 908,913 | |
| LIABILITIES | |||||
| Total long-term debt, net of deferred financing costs | $ | 407,959 | $ | 419,584 | |
| Total other current liabilities | 27,108 | 37,622 | |||
| Due to related party (current and non-current) | 114 | 1,555 | |||
| Total other non-current liabilities | 2,929 | 1,912 | |||
| Total liabilities | $ | 438,110 | $ | 460,673 | |
| PARTNERS’ EQUITY | |||||
| General partner (35,526 units issued and outstanding as at March 31, 2024 and December 31, 2023) | 110 | 102 | |||
| Common unitholders (36,802,247 units issued and outstanding as at March 31, 2024 and December 31, 2023) | 329,899 | 321,424 | |||
| Series A Preferred unitholders: (3,000,000 units issued and outstanding as at March 31, 2024 and December 31, 2023) | 73,216 | 73,216 | |||
| Series B Preferred unitholders: (2,200,000 units issued and outstanding as at March 31, 2024 and December 31, 2023) | 53,498 | 53,498 | |||
| Total partners’ equity | $ | 456,723 | $ | 448,240 | |
| Total liabilities and partners’ equity | $ | 894,833 | $ | 908,913 | |
DYNAGAS LNG PARTNERS LP
Consolidated Condensed Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
| Three Months Ended March 31, | |||||||
| 2024 (unaudited) | 2023 (unaudited) | ||||||
| Cash flows from Operating Activities: | |||||||
| Net income: | $ | 11,750 | $ | 9,600 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation | 7,994 | 7,865 | |||||
| Amortization and write-off of deferred financing fees | 375 | 447 | |||||
| Deferred revenue amortization | 1,700 | (3,629 | ) | ||||
| Amortization and write off of deferred charges | 54 | 53 | |||||
| Loss on debt extinguishment | — | 154 | |||||
| (Gain)/ Loss on derivative financial instrument | (1,260 | ) | 341 | ||||
| Changes in operating assets and liabilities: | |||||||
| Trade accounts receivable | 344 | (379 | ) | ||||
| Prepayments and other assets | 2,731 | (45 | ) | ||||
| Inventories | (11 | ) | 23 | ||||
| Due from/ to related parties | (1,538 | ) | 1,204 | ||||
| Trade accounts payable | (1,493 | ) | (821 | ) | |||
| Accrued liabilities | (678 | ) | (726 | ) | |||
| Unearned revenue | (8,399 | ) | (431 | ) | |||
| Net cash from Operating Activities | $ | 11,569 | $ | 13,656 | |||
| Cash flows from Investing Activities | |||||||
| Ballast water treatment system installation | (27 | ) | (86 | ) | |||
| Net cash used in Investing Activities | $ | (27 | ) | $ | (86 | ) | |
| Cash flows from Financing Activities: | |||||||
| Distributions declared and paid | (3,267 | ) | (2,891 | ) | |||
| Repayment of long-term debt | (12,000 | ) | (43,270 | ) | |||
| Payment of derivative instruments | 6,128 | 5,601 | |||||
| Net cash used in Financing Activities | $ | (9,139 | ) | (40,560 | ) | ||
| Net increase/ (decrease) in cash and cash equivalents and restricted cash | 2,403 | (26,990 | ) | ||||
| Cash and cash equivalents and restricted cash at beginning of the year | 73,752 | 79,868 | |||||
| Cash and cash equivalents and restricted cash at end of the period | $ | 76,155 | $ | 52,878 | |||
APPENDIX B
Fleet Statistics and Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information
| Three Months Ended March 31, | |||||||
| (expressed in United states dollars except for operational data and Time Charter Equivalent rate) | 2024 | 2023 | |||||
| Number of vessels at the end of period | 6 | 6 | |||||
| Average number of vessels in the period (1) | 6 | 6 | |||||
| Calendar Days (2) | 546.0 | 540.0 | |||||
| Available Days (3) | 546.0 | 540.0 | |||||
| Revenue earning days (4) | 546.0 | 539.9 | |||||
| Time Charter Equivalent rate (5) | $ | 68,128 | $ | 67,683 | |||
| Fleet Utilization (4) | 100.0 | % | 100.0 | % | |||
| Vessel daily operating expenses (6) | $ | 14,103 | $ | 13,511 | |||
| (1) | Represents the number of vessels that constituted the Partnership’s fleet for the relevant period, as measured by the sum of the number of days that each vessel was a part of the Partnership’s fleet during the period divided by the number of Calendar Days (defined below) in the period. |
| (2) | “Calendar Days” are the total days that the Partnership possessed the vessels in its fleet for the relevant period. |
| (3) | “Available Days” are the total number of Calendar Days that the Partnership’s vessels were in its possession during a period, less the total number of scheduled off-hire days during the period associated with major repairs, or dry-dockings. |
| (4) | The Partnership calculates fleet utilization by dividing the number of its Revenue earning days, which are the total number of Available Days of the Partnership’s vessels net of unscheduled off-hire days (which do not include positioning/ repositioning days for which compensation has been received) during a period by the number of Available Days. The shipping industry uses fleet utilization to measure a company’s efficiency in finding employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs but excluding scheduled off-hires for vessel upgrades, dry-dockings or special or intermediate surveys. |
| (5) | Time Charter Equivalent rate (“TCE rate”), is a measure of the average daily revenue performance of a vessel. For time charters, we calculate TCE rate by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during the relevant time period. Under a time charter, the charterer pays substantially all vessel voyage related expenses. However, the Partnership may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, the TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance despite changes in the mix of charter types (such as time charters, voyage charters) under which the vessels may be employed between the periods and to assist the Partnership’s management in making decisions regarding the deployment and use of the Partnership’s vessels and in evaluating their financial performance. The Partnership’s calculation of TCE rates may not be comparable to that reported by other companies due to differences in methods of calculation. The following table reflects the calculation of the Partnership’s TCE rates for the three months ended March 31, 2024 and 2023 (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available Days): |
| Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| (In thousands of U.S. dollars, except for Available Days and TCE rate) | |||||||
| Voyage revenues | $ | 38,055 | $ | 37,263 | |||
| Voyage Expenses * | (857 | ) | (714 | ) | |||
| Time Charter equivalent revenues | $ | 37,198 | $ | 36,549 | |||
| Available Days | 546 | 540 | |||||
| Time charter equivalent (TCE) rate | $ | 68,128 | $ | 67,683 | |||
*Voyage expenses include commissions of
| (6) | Daily vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, spares and repairs and flag taxes, are calculated by dividing vessel operating expenses by fleet Calendar Days for the relevant time period. |
Reconciliation of Net Income to Adjusted EBITDA
| Three Months Ended March 31, | |||||||
| (In thousands of U.S. dollars) | 2024 | 2023 | |||||
| Net income | $ | 11,750 | $ | 9,600 | |||
| Net interest and finance costs (1) | 8,655 | 9,180 | |||||
| Depreciation | 7,994 | 7,865 | |||||
| Loss on Debt extinguishment | — | 154 | |||||
| (Gain)/ Loss on derivative financial instrument | (1,260 | ) | 341 | ||||
| Amortization of deferred revenue | 1,700 | (3,629 | ) | ||||
| Amortization and write- off of deferred charges | 54 | 53 | |||||
| Other Expense(2) | 110 | — | |||||
| Adjusted EBITDA | $ | 29,003 | $ | 23,564 | |||
(1) Includes interest and finance costs and interest income, if any.
(2) Includes other expense from provisions for insurance claims for damages incurred prior years
The Partnership defines Adjusted EBITDA as earnings before interest and finance costs, net of interest income (if any), gains/losses on derivative financial instruments, taxes (when incurred), depreciation and amortization (when incurred), dry-docking and special survey costs and significant non-recurring items (if any). Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership’s operating performance.
The Partnership believes that Adjusted EBITDA assists its management and investors by providing useful information that increases the ability to compare the Partnership’s operating performance from period to period and against that of other companies in its industry that provide Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or against companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possible changes in financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including Adjusted EBITDA as a measure of operating performance benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership’s ongoing financial and operational strength.
Adjusted EBITDA is not intended to and does not purport to represent cash flows for the period, nor is it presented as an alternative to operating income. Further, Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and does not represent and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and these measures may vary among other companies. Therefore, Adjusted EBITDA, as presented above, may not be comparable to similarly titled measures of other businesses because they may be defined or calculated differently by those other businesses. It should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. Any Non-GAAP measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP measures including, but not limited to net earnings (loss), operating profit (loss), cash flow from operating, investing and financing activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.
Reconciliation of Net Income to Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit
| Three Months Ended March 31, | |||||||
| (In thousands of U.S. dollars except for units and per unit data) | 2024 | 2023 | |||||
| Net Income | $ | 11,750 | $ | 9,600 | |||
| Amortization of deferred revenue | 1,700 | (3,629 | ) | ||||
| Amortization and write-off of deferred charges | 54 | 53 | |||||
| Loss on debt extinguishment | — | 154 | |||||
| (Gain)/ Loss on derivative financial instrument | (1,260 | ) | 341 | ||||
| Other Expense | 110 | — | |||||
| Adjusted Net Income | $ | 12,354 | $ | 6,519 | |||
| Less: Adjusted Net Income attributable to preferred unitholders and general partner | (3,275 | ) | (2,894 | ) | |||
| Net Income available to common unitholders | $ | 9,079 | $ | 3,625 | |||
| Weighted average number of common units outstanding, basic and diluted: | 36,802,247 | 36,802,247 | |||||
| Adjusted Earnings per common unit, basic and diluted | $ | 0.25 | $ | 0.10 | |||
Adjusted Net Income represents net income before non-recurring expenses (if any), charter hire amortization related to time charters with escalating time charter rates and changes in the fair value of derivative financial instruments. Net Income available to common unitholders represents the common unitholders interest in Adjusted Net Income for each period presented. Adjusted Earnings per common unit represents Net Income available to common unitholders divided by the weighted average common units outstanding during each period presented.
Adjusted Net Income, Net Income available to common unitholders and Adjusted Earnings per common unit, basic and diluted, are not recognized measures under U.S. GAAP and should not be regarded as substitutes for net income and earnings per unit, basic and diluted. The Partnership’s definitions of Adjusted Net Income, Net Income available to common unitholders and Adjusted Earnings per common unit, basic and diluted, may not be the same at those reported by other companies in the shipping industry or other industries. The Partnership believes that the presentation of Adjusted Net Income and Net income available to common unitholders are useful to investors because these measures facilitate the comparability and the evaluation of companies in the Partnership’s industry. In addition, the Partnership believes that Adjusted Net Income is useful in evaluating its operating performance compared to that of other companies in the Partnership’s industry because the calculation of Adjusted Net Income generally eliminates the accounting effects of items which may vary for different companies for reasons unrelated to overall operating performance. The Partnership’s presentation of Adjusted Net Income, Net Income available to common unitholders and Adjusted Earnings per common unit does not imply, and should not be construed as an inference, that its future results will be unaffected by unusual or non-recurring items and should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.
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