Dynagas LNG Partners LP(DLNG) - 2025 Q1 - Quarterly Report

SEC Filing Information This report details the Form 6-K filing for May 2025, including the Q1 2025 earnings release and official signatures Form 6-K Details The Form 6-K filing for May 2025 includes the Q1 2025 results and the full redemption of Series B Preferred Units - The report is a Form 6-K filing for the month of May 2025 by Dynagas LNG Partners LP[2] - Attached as Exhibit 99.1 is a press release dated May 27, 2025, reporting results for the three months ended March 31, 2025, and the full redemption of 8.75% Series B Cumulative Redeemable Perpetual Fixed to Floating Preferred Units[3] Signatures The report was officially signed by the CEO on behalf of the company on May 29, 2025 - The report was signed by Tony Lauritzen, Chief Executive Officer of Dynagas LNG Partners LP[7] - The signing date was May 29, 2025[7] Earnings Release and Key Events The company announced strong Q1 2025 results, the full redemption of Series B Preferred Units, and a positive business outlook Q1 2025 Highlights The company reported strong Q1 2025 financial results, declared distributions, and continued its unit repurchase program Q1 2025 Financial Metrics | Metric | Q1 2025 | | :----- | :------ | | Net Income | $13.6 million | | Earnings per common unit (basic and diluted) | $0.28 | | Adjusted Net Income | $14.3 million | | Adjusted Earnings per common unit (basic and diluted) | $0.30 | - Declared and paid a cash distribution of $0.5625 per unit on Series A Preferred Units and $0.677286319 per unit on Series B Preferred Units[12] - Declared a quarterly cash distribution of $0.049 per common unit for the quarter ended December 31, 2024, paid on February 27, 2025[12] - Repurchased 216,185 common units for $0.8 million at an average price of $3.62 per unit, with $9.0 million remaining in the repurchase program[12] Series B Preferred Unit Redemption The company announced the full redemption of its outstanding 8.75% Series B Preferred Units, effective July 25, 2025 - The Partnership will fully redeem its 8.75% Series B Fixed to Floating Rate Cumulative Redeemable Perpetual Preferred Units on July 25, 2025[14] - The redemption price is $25.00 per Series B Preferred Unit, plus accumulated and unpaid distributions to the Redemption Date[15] - After redemption, no Series B Preferred Units will be outstanding, and trading on the New York Stock Exchange will cease[14] CEO Commentary and Business Outlook The CEO highlighted strong performance, a robust contract backlog, and a strategic focus on deleveraging and capital returns - Q1 2025 Net Income was $13.6 million, or $0.28 per common unit, with 100% fleet utilization; Adjusted EBITDA was $27.1 million and Adjusted Net Income was $14.3 million[19] - All six LNG carriers are employed under long-term charters with an average remaining duration of 5.7 years and an estimated contract backlog of approximately $0.9 billion[22] - The balance sheet has strengthened post-refinancing, with two vessels now debt-free and no debt maturities until mid-2029[24] - The $55 million Series B Preferred Unit redemption will be funded by the $70 million cash balance, expecting annual cash savings of approximately $5.7 million[25] - The strategy focuses on disciplined capital allocation, prioritizing deleveraging, returning capital to unitholders, and reducing cash outflows[26] Russian Sanctions Impact Current sanctions against Russia have not materially impacted operations, though future risks remain uncertain - Current U.S. and E.U. sanctions regimes do not materially affect the Partnership's business, operations, or financial condition[28] - Counterparties are currently performing their obligations under time charters in compliance with applicable U.S. and E.U. rules and regulations[28] - The full impact of the Russian conflict with Ukraine is uncertain, and further developments could have a significant impact on the business[27][54] Financial Performance Overview Q1 2025 saw increased net income and operating cash flow, driven by lower finance costs and higher voyage revenues Income Statement Analysis Net income rose due to lower interest costs and higher voyage revenues, despite an increase in operating expenses Key Financial Metrics (YoY) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | % Change (YoY) | | :-------------------------- | :--------------------- | :--------------------- | :----------- | :-------------- | | Voyage revenues | $39,107 | $38,055 | $1,052 | 2.8% | | Net Income | $13,570 | $11,750 | $1,820 | 15.5% | | Adjusted Net Income | $14,316 | $12,354 | $1,962 | 15.9% | | Operating income | $18,545 | $19,337 | $(792) | -4.1% | | Adjusted EBITDA | $27,088 | $29,003 | $(1,915) | -6.6% | | Earnings per common unit | $0.28 | $0.23 | $0.05 | 21.7% | | Adjusted Earnings per common unit | $0.30 | $0.25 | $0.05 | 20.0% | - Net Income increased by $1.8 million (15.3%) primarily due to decreased interest and finance costs and increased voyage revenues[30] - Net Interest and finance costs decreased by $3.8 million (43.7%) due to a reduction in interest-bearing debt and a lower weighted average interest rate[37] - Voyage revenues increased by $1.0 million (2.6%) mainly due to non-cash amortization of deferred revenues and increased variable hire revenues[32] Liquidity, Financing, and Cash Flow The company reported strong liquidity, a significant increase in operating cash flow, and a substantial contracted revenue backlog Cash Flow from Operations (YoY) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | % Change (YoY) | | :-------------------------------- | :--------------------- | :--------------------- | :----------- | :-------------- | | Net cash from Operating Activities | $18,074 | $11,569 | $6,505 | 56.2% | - Total cash balance was $70.0 million as of March 31, 2025[42] - Outstanding financial liabilities under Sale and Leaseback agreements amounted to $312 million, with no debt maturities until mid-2029[24][42] - Estimated contracted time charter coverage for 100% of its fleet for each of 2025, 2026, and 2027[44] - Estimated contracted revenue backlog was $0.9 billion, with an average remaining contract term of 5.7 years[44] - The aggregate $55 million redemption payment for Series B Preferred Units will be funded by internal cash reserves[43] Company Information and Forward-Looking Statements The company operates six LNG carriers and cautions investors about forward-looking statements and associated risks - Dynagas LNG Partners LP owns and operates six LNG carriers with an aggregate carrying capacity of approximately 914,000 cubic meters[49] - Forward-looking statements are subject to significant uncertainties, including world economies, charter rates, operating expenses, and geopolitical events[52][53][54] Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated statements of income, balance sheets, and cash flows for Q1 2025 Condensed Consolidated Statements of Income The income statement reflects higher voyage revenues and net income in Q1 2025 compared to the prior-year period | (In thousands of U.S. dollars except units and per unit data) | 2025 (unaudited) | 2024 (unaudited) | | :--------------------------------------------------------- | :--------------- | :--------------- | | Voyage revenues | $39,107 | $38,055 | | Voyage expenses (including related party) | $(1,740) | $(857) | | Vessel operating expenses | $(8,731) | $(7,700) | | Operating income | $18,545 | $19,337 | | Interest and finance costs, net | $(4,866) | $(8,655) | | Net income | $13,570 | $11,750 | | Earnings per common unit (basic and diluted) | $0.28 | $0.23 | Condensed Consolidated Balance Sheets The balance sheet shows increased cash, reduced total liabilities, and higher partners' equity as of March 31, 2025 | (Expressed in thousands of U.S. Dollars—except for unit data) | March 31, 2025 (unaudited) | December 31, 2024 (unaudited) | | :--------------------------------------------------------- | :------------------------- | :---------------------------- | | Cash and cash equivalents | $69,976 | $68,156 | | Vessels, net | $757,306 | $765,212 | | Total assets | $837,002 | $847,153 | | Total other financial liabilities, net of deferred financing fees | $309,810 | $320,717 | | Total liabilities | $343,843 | $362,352 | | Total partners' equity | $493,159 | $484,801 | Condensed Consolidated Statements of Cash Flows The cash flow statement shows a significant increase in net cash from operations for Q1 2025 | (Expressed in thousands of U.S. Dollars) | Three Months Ended March 31, 2025 (unaudited) | Three Months Ended March 31, 2024 (unaudited) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash from Operating Activities | $18,074 | $11,569 | | Net cash used in Investing Activities | $0 | $(27) | | Net cash used in Financing Activities | $(16,254) | $(9,139) | | Net increase in cash and cash equivalents | $1,820 | $2,403 | | Cash and cash equivalents at end of the period | $69,976 | $76,155 | Appendix B: Non-GAAP Reconciliations and Fleet Statistics This appendix provides fleet operational statistics and reconciliations of non-GAAP measures to their GAAP equivalents Fleet Operational Statistics The fleet maintained 100% utilization in Q1 2025, with an increased Time Charter Equivalent rate year-over-year | (expressed in United states dollars except for operational data and Time Charter Equivalent rate) | 2025 | 2024 | | :------------------------------------------------------------------------------------------ | :--- | :--- | | Number of vessels at the end of period | 6 | 6 | | Average number of vessels in the period | 6 | 6 | | Calendar Days | 540.0 | 546.0 | | Available Days | 540.0 | 546.0 | | Revenue earning days | 540.0 | 546.0 | | Time Charter Equivalent rate | $69,198 | $68,128 | | Fleet Utilization | 100.0% | 100.0% | | Vessel daily operating expenses | $16,169 | $14,103 | - Fleet utilization is calculated by dividing revenue earning days by Available Days, measuring efficiency in finding employment for vessels[61] - Time Charter Equivalent (TCE) rate is a non-GAAP measure of average daily revenue performance[61] Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA decreased to $27.1 million in Q1 2025, with this non-GAAP measure aiding in performance comparison | (In thousands of U.S. dollars) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $13,570 | $11,750 | | Net interest and finance costs | $4,866 | $8,655 | | Depreciation | $7,906 | $7,994 | | Gain on derivative financial instrument | $0 | $(1,260) | | Amortization of deferred revenue | $693 | $1,700 | | Amortization and write-off of deferred charges | $53 | $54 | | Adjusted EBITDA | $27,088 | $29,003 | - Adjusted EBITDA is a non-GAAP financial measure used to assess operating performance by excluding interest, depreciation, and other non-recurring items[66] - This measure enhances comparability of operating performance across periods and against other companies[67] Reconciliation of Net Income to Adjusted Net Income and EPS Adjusted Net Income and Adjusted EPS increased in Q1 2025, providing a clearer view of core operating performance | (In thousands of U.S. dollars except for units and per unit data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income | $13,570 | $11,750 | | Amortization of deferred revenue | $693 | $1,700 | | Amortization and write-off of deferred charges | $53 | $54 | | Gain on derivative financial instrument | $0 | $(1,260) | | Adjusted Net Income | $14,316 | $12,354 | | Less: Adjusted Net Income attributable to preferred unitholders and general partner | $(3,189) | $(3,275) | | Net Income available to common unitholders | $11,127 | $9,079 | | Weighted average number of common units outstanding, basic and diluted | 36,737,635 | 36,802,247 | | Adjusted Earnings per common unit, basic and diluted | $0.30 | $0.25 | - Adjusted Net Income and Adjusted Earnings per common unit are non-GAAP measures that exclude certain non-recurring or non-cash items[70] - These measures are considered useful to investors for facilitating comparability and evaluating core operating performance[71]