Dynagas LNG Partners LP

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 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'll be a presentation followed by a question and answer session. At which time, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday, September 8th, 2021. Please be reminded that the company announced its results with a press release that has been publicly distributed. At this time, I would like to remind everyone that in today's presentation and conference call, Dynagas LNG partners will be making forward-looking statements. These statements are within the meaning of the Federal Security Laws. This conference call and slide presentation of the webcast contains certain forward-looking statements within the meaning of the safe harbour provision of the Private Securities Litigation Reform Act of 1995. The statements in today's conference call that are not historical facts, including, among other things, the expected financial performance of Dynagas LNG Partners' business, Dynagas Partners LNG ability to pursue growth opportunities, Dynagas Partners LNG expectations or objectives regarding future and market charter rate expectations and in particular the effects of COVID-19 on the financial condition and operations of Dynagas Partners LNG and the LNG industry in general may be forward-looking statements as such as defined in section 21e of the Securities Exchange Act of 1934 as amended. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to slide two of the webcast presentation, which has the full forward-looking statement, and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. 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-ended 30 June 2021 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. Let's move on to slide three of the presentation. We are pleased to report the results for the three months ended 30 June 2021. All six LNG carriers in our fleet are operating under their respective long-term charters with international gas producers. The COVID-19 outbreak is still causing operational and logistical challenges for the industry. Despite this, we are pleased to report 100% utilization for our fleet for the quarter. For the second quarter of 2021, we reported net income of 9.1 million, earnings per comment unit of 17 cents, adjusted net income of 10.4 million, adjusted earnings per comment unit of 20 cents, and adjusted EBDA of 23.6 million. We paid in May 2021 a quarterly cash distribution of 56 cents and a quarter per Series A preferred unit, for the period from February 12 to May 11, 2021, and a quarterly cash distribution of $0.54.11 per Series B preferred unit for the period from February 22 to May 21, 2021. Subsequent to the quarter, we paid in August 21 a quarterly cash distribution of $0.56.25 per Series A preferred unit, for the period from May 12 to August 11, 2021, and a quarterly cash distribution of 54 cents and 11 sixteenths per Series B preferred unit for the period from May 22 to August 21, 2021. During the quarter, we issued about $2.15 million worth of common units at an average price per unit of about $2.88 under the amended and restated $30 million ATM sales agreement, which has about $26.5 million of remaining availability. As previously announced, we were pleased to enter into a new time charter party agreement with Equinor for the employment of our LNG carrier named Arctic Aurora. Under the new time charter agreement, the Arctic Aurora is expected to be delivered to Equinor in September 21, immediately upon the expiration of the current charter party. The new time charter is about two years and the annual gross revenues from the time charter agreement are expected to be about 21.5 million. Equinor has had the ice class and winterized carrier on charter since her delivery from builders in 2013. Going forward, we intend to continue our strategy of using our cash flow generation to delever our balance sheet, reinforce our liquidity, and generate cash 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, Our quarter results continue to reflect our stable operating model as our fleet continues to operate with 100% utilization. Adjusted net income for the quarter increased by 5% to $10.4 million compared to the second quarter of 2020, reflecting decreased finance costs, which were counterbalanced by an increase in operating and G&A expenses. Our adjusted EBITDA amounted to $23.6 million, a 2% decrease compared to the second quarter of 2020. Since our debt refinancing in 2019, our profitability has steadily increased and is now stabilized at current levels with adjusted earnings per common unit of $0.20 for the second quarter, reflecting our stable contract-based operating platform and financial profiles. Moving on to slide five, in line with our strategy of using our contracted cash flow to reduce leverage, for the quarter we utilized 71% of our adjusted EBITDA to service debt and interest payments. For the quarter we generated $15.8 million in operating cash flow, including a negative working capital adjustment of $3 million. Excluding the working capital changes, operating cash flow for the quarter was $18.8 million in line with the prior quarter. And after debt service payments and payments to preferred unit holders, we generated $4 million in line with the prior quarter and our prior guidance. For the quarter, our cash balance increased by about $2.7 million to $86.7 million. due to the aforementioned changes, and proceeds of 2.1 million from the issuance of common units under our ATM program, the last sale of which took place in May. Moving on to slide six, this slide gives you a snapshot of certain financial metrics. As of end June, we had 591 million of debt outstanding under one credit facility, all of which has been hedged with an interest rate swap for the life of the loan until its maturity in September 2024. We have no scheduled capital expenditures until 2022, which is when three of our LNG carriers will undergo their third special surveys and installment of their ballast water treatment plants. Moving on to slide seven, we are continuing to execute our strategy of organically deleveraging our balance sheet with the cash flows from our contracts, which we believe is the only sustainable way of positioning the partnership for future growth. Compared to the same period two years ago, before our refinancing in 2019, our weighted average interest has decreased by 54%, and our weighted average indebtedness has decreased by $114 million, which has resulted in a reduction in interest expense of $7.4 million per quarter. This natural deleveraging process takes time, and 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 5.2 times to less than 3.4 times in 2024 on a steady-state basis. Moving on to slide eight, in this slide we show our fleet-wide cash flow breakeven 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 breakeven of $18,300 per day per vessel. Cash interest expense represents $8,700 per day per vessel, and repayment of debt is around $22,000 per day per vessel. So our contracted fleet time charter equivalent of $60,879 per day per vessel is well above fleet cash break-even levels of $49,000 per day per vessel, excluding preferred distributions. That wraps it up from my side. I will pass the presentation over to Tony.