Dynagas LNG Partners LP

Thank you for standing by, ladies and gentlemen, and welcome to Dynagas LNG Partners Conference Call on the fourth quarter 2023 financial results. We have with us today Mr. Tony Lillitson, Chief Executive Officer, and Mr. Michael Gregos, Chief Financial Officer of the company. At this time, all participants are on the listen-only mode. There will be a presentation followed by a question-and-answer session press stall 1 on your telephone keypad and wait for your name to be announced. 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'd 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 securities laws. 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 Securities Litigation Reform Act of 1995. The statements in today's conference call are not historical facts. 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 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 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.

Good morning, everyone, and thank you for joining us in our 40-year and three-month and the 31st of December, 2023 earnings conference call. I'm joined today by our CFO, Michael Gregoz. We have issued a press release announcing our results for the said period. Certain non-GAAP measures will be discussed on this call, and 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 get started and move to slide three of the presentation. We today present the results for the full year and three months period ending on December 31st, 2023. We are pleased to announce that all six LNG carriers in our fleet were operating under long-term charges with esteemed international gas companies. For the fourth quarter of 2023, we reported net income of $10.5 million and earnings per common unit of $0.21. Our adjusted net income stood at $10.3 million, translating to adjusted earnings per common unit of $0.20. Furthermore, our adjusted EBDA for the same period reached $27.4 million. For the full year 23, we reported net income of $35.9 million and earnings per common unit of $0.66. Our adjusted net income stood at $25.8 million, translating to adjusted earnings per common unit of $0.39. Furthermore, our adjusted EBDA for the full period reached $94.4 million. We are pleased to share that subsequent to the quarter, the partnership has signed a term sheet with a major leasing company in Asia for the lease financing of four of our six energy carriers in an amount of up to $345 million. The financing has received credit approval and is subject to signing of documentation and customary closing conditions. The transaction is expected to close in the second quarter of 2024. The partnership intends to combine proceeds from this new financing with other sources of liquidity to fully repay the partnership's debt maturing in September 24. I will now turn the presentation over to Michael, who will provide you with further comments to the financial results. Go ahead, Michael.

Thank you, Tony. Turning to slide four, net income for the full year amounted to $35.9 million, or $0.66 per common unit. Adjusted net income amounted to $25.8 million, or $0.39 per common unit. And adjusted EBITDA for the year was $94.4 million. In the fourth quarter, net income saw a slight decrease of 9.5% to $10.5 million compared to the same quarter last year. This reduction is primarily linked to a decrease in unrealized gain on our interest rate swap of $3.2 million and the absence of a $2.1 million gain on debt extinguishment that we recognized in the previous year. However, this was partially mitigated by an uptick in voyage revenues of $3.9 million as a result of a higher charter rate on the Arctic Aurora, which entered a charter with Equinor in September 2023, as well as by the $2.9 million of other income recognized in the fourth quarter of 2023, which represents income from insurance claims. Adjusted net income for the quarter is reported at $10.3 million, a noteworthy increase from $7 million last year, driven mainly by the voyage revenue growth previously mentioned. This was counterbalanced by increased operating expenses by $0.6 million and finance costs by $0.4 million due to higher interest expenses under the floating leg of our credit facility. For consistency, we've excluded cash receipts and unrealized gains on our interest rate swap from adjusted net income, which, if included, brings our adjusted net income and earnings per common unit to $16.7 million and 37 cents, respectively. The time charter equivalent rate per day for the fourth quarter stood at $65,700, with operating expenses at $15,172 per day, leading to a cash break-even per vessel of $46,300 per day. Turning to slide five, our net debt to last 12 months EBITDA ratio has improved to 3.7 times, indicative of a solid balance sheet and prudent capital management, culminating in a book equity value of $448 million and a net debt to total book capitalization ratio of 40%. Our consistent emphasis on using organic cash flow for debt reduction without diluting shareholder value has proven to be a prudent strategy, as can be seen by the consistent increase in book equity value per common unit. Moving to slide six. We concluded the quarter with a strong cash position of $73.8 million, operating cash flow of $20.2 million, and after accounting for the capital expenditures, like the installation of ballast water treatment systems on our steam LNG carriers, free cash flow of $17.4 million. For the third year, our operating cash flow amounted to $64.4 million, and our free cash flow was $60.2 million. We are pleased to announce that we have signed a term sheet with a prominent Asian leasing company for the lease financing of four out of our six LNG carriers to address our September debt maturity. This financing will provide us with up to $345 million in funding. We're happy to report that this financing plan has already been granted credit approval and is contingent upon the completion of definitive documentation and the satisfaction of customary closing conditions. We plan to utilize the proceeds from this financing in conjunction with other sources of liquidity to completely repay the partnership debt that has come due in September 2024. We expect to close this transaction within the second quarter of 2024. Over the past few years, we've been strategically reducing our leverage in an organic manner, and by addressing the upcoming maturity of our debt, we're setting a solid foundation for financial stability. That wraps it up for my side. I will pass over the presentation to Tony. Thank you, Michael.