Dynagas LNG Partners LP

Thank you for standing by and welcome to DynaGas LNG Partners Conference Call on the fourth quarter 2020 financial results. We have with us Mr. Tony Lauritsen, Chief Executive Officer, and Mr. Michael Gregos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. At this time, I would like to read the Safe Harbor Statement. This conference call and slide presentation of the webcast contains certain forward-looking statements. within the meaning of the safe harbor provision of the Private Security Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties which may affect DynaGas LNG partners, business prospects, and results of operations. Such risks are more frequent. are more fully disclosed in DynaGas LNG partners' filings with the Securities and Exchange Commission. And now I pass the floor to Mr. Lauritsen. Please go ahead, sir.

Morning, everyone, and thank you for joining us in our three-month and full year-ended 31st December 2020 earnings... Conference call. I'm joined today by our CFO, Michael Gregos. We have issued a press release announcing our results for the said period. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures as well as a discussion of why we believe this information to be useful in our press release. Moving on to slide three. We are pleased to report the results for the three months and full year ended 31st December 2020. All six 7G carriers in our fleet are operating under their respective long-term charters with international gas producers. Despite the ongoing operational challenges the industry is going through with respect to COVID-19, we are pleased to again report 100% utilization for the fleet for the fourth quarter of 2020. For the fourth quarter of 2020, we reported net income of 10.6 million, earnings per common unit of 22 cents, adjusted net income of $10.7 million, adjusted earnings per common unit of $0.22, and adjusted EBDA of $24.4 million. When compared with the same period in 2019, this improved performance is attributable to an increase in voyage revenues and a decrease in interest and finance costs coupled with stable vessel operating expenses. We paid in November 2020 a quarterly cash distribution of 56 cents and a quarter per Series A preferred unit for the period from August 12 to November 11, 2020, and a quarterly cash distribution of 54 cents and 11.16 per Series B preferred unit for the period from August 22 to November 21, 2020. Subsequent to the quarter, we paid in February 21 a quarterly cash distribution of 56 cents and a quarter per Series A preferred unit for the period from November 12, 2020 to February 11, 2021, and a quarterly cash distribution of 54 cents and 11.16 per Series B preferred unit for the period from November 22, 2020 to February 21, 2021. Subsequent to the quarter, we entered into an amended and restated agreement with our manager, under which the technical management fee was reduced by 13%, equivalent to a reduction of about $417 per vessel per day, effective from 1st of January 2021. Also subsequent to the quarter, we issued about $830,000 of common units at an average price of about $2.98 under the amended and restated ATM sales agreement. Going forward, we intend to continue our strategy of using our cash flow generation to de-level our balance sheet, reinforce our liquidity, and generate cash so as to build equity value over time, which will enhance our ability to pursue future growth initiatives. I will now turn the presentation over to Michael, who will provide you with further comments to the financial results.

Thank you, Tony. Turning to slide four, We are pleased with the fourth quarter results as we continue to see very stable operations across the fleet and a vessel utilization of 100%. Adjusted net income for the quarter nearly doubled to 10.7 million compared to the fourth quarter of 2019, and our adjusted EBITDA increased by 1.7% to 24.4 million compared to the fourth quarter of 2019. The improvement in our financial performance compared with the same period last year is attributable to the reduced financing costs following our transformative debt refinancing in the fourth quarter of 2019. Our weighted average interest expense was reduced from 5.27 percent in the fourth quarter of 2019 to 3.15 percent in the fourth quarter of 2020, reflecting lower liable rates and decreases in our weighted average indebtedness from $757 million in the fourth quarter of 2019 to $627 million in the fourth quarter of 2020. Since our debt refinancing, our profitability has steadily increased and has now stabilized at increased levels compared to prior quarters, with adjusted earnings per common unit at 22 cents for the fourth quarter, reflecting the stable nature of our contract-based operating model and the limited variability of our operating and finance expenses. Turning to slide five, here we illustrate how we have allocated our cash flow in the fourth quarter of 2020. 49 percent of our contract at EBITDA is utilized for debt amortization, and a further 21 percent is spent on interest payments. For the quarter, we generated $14.2 million in operating cash flow, including negative working capital adjustment of $5.1 million. Excluding working capital changes, we generated operating cash flow of $19.3 million, And cash flow after debt service payments, other financing items, and payments to preferred unit holders amounted to $4 million in line with our prior guidance. For the quarter, our cash balance decreased by about $1 million to $75 million due to the aforementioned working capital changes. Moving on to slide six, this slide gives you a snapshot of certain financial metrics. As of end December, we had $615 million debt outstanding under one credit facility, all of which has been fully hedged with an interest rate swap for the life of the loan until its maturity in September 2024. We have no scheduled capital expenditure until 2022, which is when three of our LNG carriers will undergo their special surveys and installment of their ballast water treatment plants. Our stable operating model has proved resilient in light of the COVID-19 pandemic. Slide seven, we are continuing to execute our strategy of organically deleveraging our balance sheet with the cash flows from our contracts, which has resulted in a drastic 50 percent reduction in interest expenses in Q4 2020 versus Q4 2019, and a reduction in our debt from $663 million in December 21, 2019, to $615 million as of December 31, 2020. We expect that as a result of the $48 million amortization requirement on our sole credit facility, our total projected net leverage will decrease from 5.6 times to less than 3.5 times in 2024, assuming a steady-state basis. Our primary focus remains the organic deleveraging of the balance sheet, which will increase equity value over time, positioning the partnership for the next step, including growth, future growth. Moving on to slide eight, in this slide we show our fleet-wide cash flow given per day per vessel versus our contracted time charter rates for the quarter. If we look at the breakdown, we have a competitive cash EBITDA break-even of $17,200 per day per vessel. Cash interest expense represents $9,100. dollars per day per vessel, and repayment of debt is $21,700 per day per vessel. So, our contracted fleet time charter equivalent of $61,100 per day per vessel is well above fleet cash break-even levels of $48,000 per day per vessel. That wraps it up for my side. I will pass the presentation over to Tony. Mr. Thank you, Michael.