Dynagas LNG Partners LP

Ladies and gentlemen, and welcome to the Dynagas LNG Partners conference call on the first quarter 2022 financial results. We have with us Mr. Tony Laurinson, Chief Executive Officer, and Mr. Michael Grigos, 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. I must advise you that this conference is being recorded today. 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, Data Gas LNG partners will be making forward-looking statements. These statements are within the meaning of the federal securities laws. This conference call and slide presentation of the webcast contains certain forward-looking statements 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, Exchange Act of 1934 as amended. Matters discussed may be forward-looking statements which are based on current management expectations that involve risk 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 a full forward-looking statement. 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'll pass the floor to Mr. Loretz. Please go ahead, sir.

Good morning, everyone, and thank you for joining us in our three-month and the 31st March 2022 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. We can move to slide three of the presentation. We are pleased to report the results for the three months and the 31st March, 2022. All six LNG carriers in our fleet are operating under their respective long-term charters. Our fleet reported 100 percent utilization for the first quarter of 22, and for the eighth, the consecutive quarter included. For the first quarter of 2022, we reported net income of 23.9 million, earnings per common unit of 57 cents, adjusted net income of 10 million, adjusted earnings per common unit of 19 cents, and adjusted EBITDA of 22.9 million. Our thoughts go out to everyone affected and suffering as a result of the crisis in Ukraine. We continue to closely monitor this ongoing situation, including the implications of economic sanctions, trade restrictions and other considerations that may affect our business. The partnership is currently in compliance with applicable U.S. and EU sanctions. It is our understanding that the current U.S. and EU sanctions regime have broadly exempted energy shipping and do not materially affect the business, operations, or financial conditions of the partnership. Also, the partnership's counterparties are performing all of their obligations under their respective time charters in compliance with all applicable U.S. and EU rules and regulations. Our vessels named Clean Energy, Ob River and Armour River are on charter to Gazprom Marketing and Trading of Singapore, which is owned indirectly by Gazprom Germania. Gazprom Germania, including its subsidiaries, has been placed under control of the German government, which company has also received a loan commitment of approximately €9.8 billion from the German government. Essentially, this all means that the three respective charters of Clean Energy, Orb River, and Armor River are now under German control as opposed to Russian control. The change in control has had no impact on our revenue. Sanctions legislation is changing rapidly, and the partnership is continuously monitoring the ongoing situation. 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 contractually-based operating model, as our fleet continues to operate with 100 percent utilization. The quarter was mainly impacted by the special survey of our 2007 built LNG carrier, Clean Energy, which commenced on 16th March, was completed on April 15th, and which $2.6 million was attributable to this quarter. Vessel operating expenses were 10% higher versus Q1 2021, although they were 5% lower than the previous quarter. As a result, adjusted net income for the quarter decreased by 5.7% to $10 million compared to the first quarter of 2021, and adjusted EBITDA amounted to $22.9 million, a 4.2% decrease compared to the first quarter of 2021. Looking forward, we anticipate that next quarter's earnings will also be impacted, firstly, with the balance of the Clean Energy Special Survey and Dry Dog, which is anticipated to amount to $2.7 million, excluding the installation for the ballast water treatment plant, which will be capitalized. Please also note that the Amur River commenced its special survey and dry dock on June 26th, and the Ob River is expected to commence its special survey and dry dock on July 20th, with each vessel being expected to be off-fire for about 25 days. Moving to slide 5. As of the end of March, we had 555 million debt outstanding under our credit facility, all of which has been hedged with an interest rate swap leading to a fixed interest rate of 3.41% for the life of the loan until its maturity in September 2024. we are continuing our comprehensive deleveraging path, which commenced in the fourth quarter of 2019, having repaid, through the quarterly installments on our credit facility, $120 million in debt, resulting in a decrease in our net leverage to 4.7 times from 6.6 times and an increase in our book value of equity by 30 percent. Moving to slide six, In line with our strategy of using our contracted cash flow to reduce leverage for the quarter, we utilize 72% of our unlevered cash flow to service debt and interest payments. Excluding working capital changes, operating cash flow for the quarter was 15.8 million. After debt service payments, clean energy class survey costs, and payments to preferred unit holders, we generated a little under 600,000, excluding working capital changes. Our cash balance increased by about 9.6 million to 106 million, primarily due to working capital changes. Our per vessel quarterly break-even daily rate, including all operating G&A expenses, debt service payments, and class survey costs, amounted to $55,300, excluding preferred distributions, versus our fleet contracted time charter rates for the quarter, which amounted to about $62,200 per day per vessel. That wraps it up from my side.