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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 6-K


REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934


For the month of January 2017


Commission File Number:  001-36185


Dynagas LNG Partners LP

(Translation of registrant's name into English)

 

23, Rue Basse

98000 Monaco

(Address of principal executive office)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.


Form 20-F [ X ]       Form 40-F [  ]


Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [  ].


Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.


Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [  ].


Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.



 

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INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached as Exhibit 99.1 to this Report on Form 6-K is a copy of the press release of Dynagas LNG Partners LP (the “Partnership”) dated February 27, 2017: Dynagas Lng Partners LP Reports Results for the Three Months and Year Ended December 31, 2016.

This Report on Form 6-K is hereby incorporated by reference into the Partnership’s registration statement on Form F-3 (File No. 333-200659) that was filed with the U.S. Securities and Exchange Commission with an effective date of January 15, 2015.



 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 27, 2017

 

 

 

 

DYNAGAS LNG PARTNERS LP

 

 

 

 

By:

/s/ Tony Lauritzen

 

 

Name:

Tony Lauritzen

 

Title:

Chief Executive Officer 












DYNAGAS LNG PARTNERS LP REPORTS RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2016





[f022717dlng6k001.jpg]

MONACO – February 27, 2017 - Dynagas LNG Partners LP (NYSE: “DLNG”) (“Dynagas Partners” or the “Partnership”), an owner and operator of liquefied natural gas (“LNG”) carriers, today announced its results for the three months and year ended December 31, 2016.


Three Months and Year Ended December 31, 2016 Highlights:


·

Net income during the three months and year ended December 31, 2016 of $15.5 million and $66.9 million, respectively;

·

Earnings per common unit for the three months and year ended December 31, 2016 of $0.39 and $1.69, respectively;

·

Adjusted Net Income (1) for the three months and year ended December 31, 2016 of $17.3 million and $74.1 million, respectively;

·

Adjusted Earnings per common unit (1) (2) for the three months and year ended December 31, 2016 of $0.44 and $1.89, respectively;

·

Distributable Cash Flow (1) during the three months and year ended December 31, 2016 of $21.3 million and $89.6 million, respectively;

·

Adjusted EBITDA (1) for the three months and year ended December 31, 2016 of $33.9 million and $139.5 million, respectively;

·

$82.6 million of reported cash and $112.6 million of available liquidity as of December 31, 2016;

·

Quarterly cash distribution of $0.4225 per common unit in respect of the fourth quarter and $0.5625 per preferred unit in respect of the most recent period.


(1) Distributable Cash Flow, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP in Appendix B.

(2) Adjusted Earnings per common unit presentation eliminates the effect of the Series A Preferred Units interest on the Partnership’s net income for the periods presented.


Recent Developments:


Quarterly Common and Subordinated Unit Cash Distribution: On January 4, 2017, the Partnership’s Board of Directors announced a quarterly cash distribution of $0.4225 per common and subordinated unit in respect of the fourth quarter of 2016. This cash distribution was paid on January 19, 2017 to all common and subordinated unitholders of record as of January 11, 2017.


Series A Preferred Units Cash Distribution: On January 23, 2017, the Partnership’s Board of Directors also announced a cash distribution of $0.5625 per unit of its Series A Preferred Units (NYSE: DLNG PR A) for the period from November 12, 2016 to February 11, 2017, which was paid on February 13, 2017 to all unitholders of record as of February 5, 2017.


Conversion of Sponsor’s Subordinated Units into Common Units: On January 23, 2017, all conditions were satisfied for the expiration of the subordination period with regards to the 14,985,000 subordinated units owned by the Partnership’s Sponsor. As such, as of the same date, all subordinated units converted into common units on a one-for-one basis (“the Converted Common Units”). Following the issuance of the Converted Common Units, the Partnership, as of the date of this release, has 35,490,000 issued and outstanding common units and the Partnership’s Sponsor retains a 43.9% interest in them.


Chief Executive Officer Commentary:


Tony Lauritzen, Chief Executive Officer of the Partnership, commented:


“We are pleased to report our earnings for the fourth quarter and year ended December 31, 2016.


“The year ended December 31, 2016 has been a record financial year for us, during which Adjusted EBITDA increased by approximately 23% as compared to the full year ended December 31, 2015, mainly to the acquisition from our Sponsor of the Lena River in late 2015. Our fleet of six LNG Carriers performed at 100% utilization during 2016, which contributed positively to our full year financial results. Our Adjusted Earnings per common unit for the year ended December 31, 2016 amounted to $1.89, which is an increase of approximately 16% compared to the year ended December 31, 2015. The results for the quarter ended December 31, 2016 have been overall strong too, with a 19% increase in Adjusted EBITDA, compared to the same period in 2015.


“Our revenues are derived from the employment of our vessels on fixed multi-year charter contracts. The revenues we earn under those charter contracts are on a fixed day rate basis and not directly linked to commodity price fluctuations. On January 19, 2017, we paid quarterly cash distribution of $0.4225 per common and subordinated unit with respect to the fourth quarter of 2016. Since our initial public offering in November 2013, we have paid total cash distributions amounting to approximately $5.10 per common and subordinated unit. On February 13, 2017, we paid a cash distribution of $0.5625 per unit on our Series A Preferred Units for the period from November 12, 2016 to February 11, 2017 to all holders of the Series A Preferred Units as of February 5, 2017.


“With our fleet 86% contracted through 2017 and 75% contracted through 2018 and 2019, and with an estimated fleet-wide average remaining contract duration of 10.7 years, we intend to continue to focus on obtaining additional contract coverage, particularly in 2017, managing our operating expenses and continuing the safe operation of our fleet.


“I look forward to working with our team towards meeting our goals, which we believe will continue to benefit our unitholders.”






Financial Results Overview:


 

 

Three Months Ended

 

Year Ended

(U.S. dollars in thousands, except per unit data)

 

December 31, 2016 (unaudited)

 

December 31, 2015 (unaudited)

 

 

December 31, 2016 (unaudited)

 

December 31, 2015

Voyage Revenues

$

41,385

$

37,016

 

$

169,851

$

145,202

Net Income

$

15,475

$

14,826

 

$

66,854

$

60,050

Adjusted Net Income (1)

$

17,287

$

15,029

 

$

74,064

$

60,876

Operating Income

$

24,303

$

22,068

 

$

102,079

$

88,092

Adjusted EBITDA(1)

$

33,893

$

28,513

 

$

139,531

$

113,202

Earnings per common unit

$

0.39

$

0.37

 

$

1.69

$

1.60

Adjusted Earnings per common unit (1)

$

0.44

$

0.38

 

$

1.89

$

1.63

Distributable Cash Flow(1)

$

21,272

$

18,035

 

$

89,592

$

72,365


(1) Adjusted Net Income, Adjusted EBITDA, Adjusted Earnings per common unit and Distributable Cash Flow are not recognized measures under U.S. GAAP. Please refer to the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP in Appendix B.



Three Months Ended December 31, 2016 and 2015 Financial Results


Net Income for the three months ended December 31, 2016 was $15.5 million, compared to Net Income of $14.8 million in the corresponding period of 2015, which represents a 4.4% increase. Adjusted Net Income for the three months ended December 31, 2016 was $17.3 million, compared to Adjusted Net Income of $15.0 million in the corresponding period of 2015, which represents a 15.0% increase. The increase in both Net Income and Adjusted Net Income was mainly attributable to the contribution of net revenues relating to the Lena River to operating results. The Lena River was acquired from Dynagas Holding Ltd., the Partnership’s Sponsor, late in December 2015.


Adjusted EBITDA for the three months ended December 31, 2016 increased by 18.9% across the quarters (fourth quarter 2016 Adjusted EBITDA of $33.9 million, compared to fourth quarter 2015 Adjusted EBITDA of $28.5 million), which was due to the factors discussed above.


The Partnership's Distributable Cash Flow for the three-month period ended December 31, 2016 was $21.3 million, compared to $18.0 million in the corresponding period of 2015, which represents an increase of $3.2 million, or 17.9%.


For the three-month period ended December 31, 2016, the Partnership reported Earnings per common unit and Adjusted Earnings per common unit basic and diluted of $0.39 and $0.44, respectively, after taking into account the Series A Preferred Units interest on the Partnership’s net profit. Earnings per common unit and Adjusted Earnings per common unit, basic and diluted are calculated on the basis of a weighted number of 20,505,000 units outstanding during the period, in the case of Adjusted Earnings per common unit after reflecting the impact of the non-cash items presented in Appendix B.


Please refer to the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP in Appendix B.


Voyage revenues increased to $41.4 million for the three-month period ended December 31, 2016, from $37.0 million for the same period of 2015, due to the increase in Revenue earning days from 461.1 days during the fourth quarter of 2015 to 552 days during the fourth quarter of 2016, which is a result of the growth of the Partnership’s fleet discussed above.


Vessel operating expenses increased by $0.5 million to $6.7 million in the three-month period ended December 31, 2016, from $6.2 million for the same period of 2015. This increase is exclusively attributable to the ownership of the Lena River.


The Partnership reported average daily hire gross of commissions(1)  of approximately $78,250 per day per vessel in the three months ended December 31, 2016, compared to approximately $78,900 per day per vessel in the same period of 2015. During the three-month period ended December 31, 2016, the Partnership’s vessels operated at 100% utilization.


(1) Average daily hire gross of commissions represents voyage revenue without taking into consideration the non-cash time charter amortization expense and amortization of prepaid charter revenue, divided by the Available Days in the Partnership’s fleet as described in Appendix B.


Amounts relating to variations in period–on–period comparisons shown in this section are derived from the condensed financials presented below.



Liquidity/ Financing/ Cash Flow Coverage


As of December 31, 2016, the Partnership reported cash of $82.6 million (including the aggregate $25.0 million minimum cash liquidity requirements imposed by the Partnership’s lenders). Total indebtedness outstanding as of December 31, 2016 was $722.5 million, $32.5 million of which is repayable within one year.


The Partnership’s liquidity profile is further enhanced by the $30.0 million of borrowing capacity under the Partnership’s revolving credit facility with its Sponsor, which is available to the Partnership at any time until November 2018 and remains available in its entirety as of the date of this release.


As of December 31, 2016, the Partnership reported working capital surplus of $7.1 million.


During the three months ended December 31, 2016, the Partnership generated net cash from operating activities of $23.3 million, compared to $28.7 million in the same period of 2015. This decrease was mainly attributable to negative working capital variations between the two periods that overlapped the excess operating cash flows that the Lena River contributed to the Partnership for the quarter ended December 31, 2016.  




Vessel Employment


As of February 27, 2017, the Partnership had contracted employment (2) for 86% of its fleet estimated Available Days for 2017 and 75% of its fleet estimated Available Days for 2018 and 2019.


As of the same date, the Partnership’s contracted revenue backlog estimate (3) was approximately $1.56 billion, with an average remaining contract term of 10.7 years.  



(2) Time charter coverage for the Partnership’s fleet is calculated by dividing the fleet contracted days on the basis of the earliest estimated delivery and redelivery dates prescribed in the Partnership’s current time charter contracts net of scheduled class survey repairs by the number of expected Available days during that period.


(3) The Partnership calculates its contracted revenue backlog by multiplying the contractual daily hire rate by the expected number of days committed under the contracts (assuming earliest delivery and redelivery and excluding options to extend), assuming full utilization. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods shown in the table below due to, for example, dry-docking and/or special survey downtime, maintenance projects, off-hire downtime and other factors that result in lower revenues than the Partnership’s average contract backlog per day. Certain time charter contracts that the Partnership recently entered into with Yamal Trade Pte. are subject to the satisfaction of important conditions, which, if not satisfied, or waived by the charterer, may result in their cancellation or amendment before or after the charter term commences and in such case the Partnership may not receive the contracted revenues thereunder.



Conference Call and Webcast: February 28, 2017


As announced, the Partnership’s management team will host a conference call on Tuesday, February 28, 2017 at 10:00 a.m. Eastern Time to discuss the Partnership’s financial results.


Conference Call details:


Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or (+44) (0) 1452 542 301 (Standard International Dial In). Please quote "Dynagas."


A telephonic replay of the conference call will be available until Tuesday, March 7th, 2017. The United States replay number is 1 (866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 59711562#.


Audio Webcast - Slides Presentation:


There will be a live and then archived audio webcast of the conference call, via the internet through the Dynagas LNG Partners website www.dynagaspartners.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.


The slide presentation on the fourth quarter ended December 31, 2016 financial results will be available in PDF format 10 minutes prior to the conference call and webcast, accessible on the company's website www.dynagaspartners.com on the webcast page. Participants to the webcast can download the PDF presentation.

  


About Dynagas LNG Partners LP


Dynagas LNG Partners LP (NYSE: DLNG) is a growth-oriented partnership formed by Dynagas

Holding Ltd., its sponsor, to own and operate liquefied natural gas (“LNG”) carriers employed on multi-year charters. The Partnership’s current fleet consists of six LNG carriers, with an aggregate carrying capacity of approximately 913,980 cubic meters.


Visit the Partnership’s website at

Contact Information:

Dynagas LNG Partners LP
23, Rue Basse, 98000 Monaco
Attention: Michael Gregos
Tel. +377 99996445
Email: management@dynagaspartners.com   


Investor Relations / Financial Media:
Nicolas Bornozis
President Capital Link, Inc.
230 Park Avenue, Suite 1536
New York, NY 10169
Tel. (212) 661-7566
E-mail: dynagas@capitallink.com


Forward-Looking Statement


Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.


The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “expected,” “pending,” “will” and similar expressions identify forward-looking statements.


The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership’s control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.


In addition to these important factors, other important factors that, in the Partnership’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter  rates  and  vessel  values,  changes  in  demand  for  Liquefied  Natural  Gas  (LNG)  shipping capacity, changes in the Partnership’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership’s vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessel breakdowns and instances of off-hires and other factors. Please see the Partnership’s filings with the Securities and Exchange Commission  for  a  more  complete  discussion  of  these  and  other  risks  and  uncertainties.  The information set forth herein speaks only as of the date hereof, and the Partnership disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.















APPENDIX A


DYNAGAS LNG PARTNERS LP

Unaudited Condensed Consolidated Statements of Income


(In thousands of U.S. dollars except units and per unit data)

 

Three Months Ended                   December 31,

 

Year Ended

  December 31,

 

 

2016

 

2015

 

2016

 

2015

REVENUES

 

 

 

 

 

 

 

 

Voyage revenues

$

41,385

$

37,016

$

169,851

$

145,202

EXPENSES

 

 

 

 

 

 

 

 

Voyage expenses (including related party)

 

(740)

 

(808)

 

(2,961)

 

(2,804)

Vessel operating expenses

 

(6,706)

 

(6,164)

 

(26,451)

 

(23,244)

Dry-docking and special survey costs

 

(81)

 

 

(81)

 

General and administrative expenses (including related party)

 

(405)

 

(443)

 

(1,885)

 

(1,805)

Management fees -related party

 

(1,508)

 

(1,250)

 

(5,999)

 

(4,870)

Depreciation

 

(7,642)

 

(6,283)

 

(30,395)

 

(24,387)

Operating income

 

24,303

 

22,068

 

102,079

 

88,092

Interest and finance costs, net

 

(8,883)

 

(7,201)

 

(34,991)

 

(27,939)

Other, net

 

55

 

(41)

 

(234)

 

(103)

 

 

 

 

 

 

 

 

 

Net Income

$

15,475

$

14,826

$

66,854

$

60,050

Earnings per unit, basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common unit (basic and diluted)

$

0.39

$

0.37

$

1.69

$

1.60

Weighted average number of units outstanding, basic and diluted:

 

 

 

 

 

 

 

 

Common units

 

20,505,000

 

20,505,000

 

20,505,000

 

20,505,000








DYNAGAS LNG PARTNERS LP

Consolidated Condensed Balance Sheets (unaudited)

(Expressed in thousands of U.S. Dollars—except for unit data)

  

 

December 31,
2016

 

 

December 31,
2015

 

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

$

57,595

$

24,293

Due from related party

 

878

 

460

Other current assets

 

1,722

 

 1,061

Total current assets

 

60,195

 

 25,814

 

 

 

 

 

FIXED ASSETS, NET:

 

 

 

 

Vessels, net

 

1,007,617

 

 1,036,157

Total fixed assets, net

 

1,007,617

 

 1,036,157

OTHER NON CURRENT ASSETS:

 

 

 

 

Restricted cash

 

25,000

 

25,000

Due from related party

 

1,350

 

 1,350

Above market acquired time charters

 

12,514

 

19,782

Total assets

$

1,106,676

$

1,108,103

 

 

 

 

 

LIABILITIES AND PARTNERS’ EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Current portion of long-term debt, net of deferred financing costs

$

31,688

$

27,467

Trade payables

 

3,058

 

 4,935

Due to related party

 

302

 

 230

Accrued liabilities

 

3,750

 

 3,595

Unearned revenue

 

14,258

 

 15,126

Total current liabilities

 

53,056

 

 51,353

Deferred revenue

 

1,036

 

 1,094

Due to related party, non-current

 

 

35,000

Long-term debt, net of current portion and deferred financing costs

 

684,748

 

 652,818

Total non-current liabilities

 

685,784

 

 688,912

 

 

 

 

 

PARTNERS’ EQUITY

 

 

 

 

General partner  (35,526 units issued and outstanding as at December 31, 2016 and 2015)

 

97

 

95

Common unitholders (20,505,000 units issued and outstanding as at December 31, 2016 and 2015)

 

302,952

 

 302,954

Series A Preferred unitholders: (3,000,000 units issued and outstanding as at December 31, 2016 and 2015)

 

73,216

 

73,216

Subordinated unitholders (14,985,000 units issued and outstanding as at December 31, 2016 and 2015)

 

(8,429)

 

(8,427)

Total partners’ equity

 

367,836

 

 367,838

 

 

 

 

 

Total liabilities and partners’ equity

$

1,106,676

$

1,108,103

DYNAGAS LNG PARTNERS LP

Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. Dollars)


 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2016

 

2015

Cash flows from Operating Activities:

 

 

 

 

Net income:

$

66,854

$

60,050

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

30,395

 

 24,387

Amortization of deferred financing fees

 

1,984

 

 1,545

Amortization of fair value of acquired time charter

 

7,268

 

218

Deferred revenue

 

(58)

 

 608

Changes in operating assets and liabilities:

 

 

 

 

Trade receivables

 

3

 

 (103)

Prepayments and other assets

 

(178)

 

 94

Inventories

 

(486)

 

9

Due from/ to related parties

 

(346)

 

 292

Trade payables

 

(1,105)

 

 1,808

Accrued liabilities

 

155

 

 (68)

Unearned revenue

 

(868)

 

 8,104

 

 

 

 

 

Net cash from Operating Activities

 

103,618

 

 96,944

 

 

 

 

 

Cash flows from Investing Activities

 

 

 

 

Vessel Acquisitions and other additions to vessels’ cost

 

(37,472)

 

(205,045)

Net cash used in Investing Activities

 

(37,472)

 

(205,045)

 

 

 

 

 

Cash flows from Financing Activities:

 

 

 

 

Increase in restricted cash

 

 

(1,000)

Issuance of preferred units, net of issuance costs

 

 

72,446

Payment of preferred units issuance costs and other filing costs

 

(119)

 

(65)

Distributions declared and paid

 

(66,856)

 

(62,207)

Repayment of long-term debt

 

(32,500)

 

 (20,000)

Proceeds from long-term debt

 

66,667

 

 133,333

Payment of deferred finance fees

 

(36)

 

(2,062)

Net cash from/ (used in) Financing Activities

 

(32,844)

 

 120,445

 

 

 

 

 

Net increase in cash and cash equivalents

 

33,302

 

 12,344

Cash and cash equivalents at beginning of the year

 

24,293

 

 11,949

Cash and cash equivalents at end of the year

$

57,595

$

24,293







APPENDIX B

Fleet statistics


 

 

Three Months Ended December 31,

 

Year Ended   December 31,

(expressed in United states dollars except for operational data)

 

2016

 

2015

 

2016

 

2015

Number of vessels at the end of period

 

6

 

6

 

6

 

6

Average number of vessels in the period (1)

 

6.0

 

5.1

 

6.0

 

5.0

Calendar Days (2)

 

552.0

 

471.0

 

2,196.0

 

1,836.0

Available Days (3)

 

552.0

 

471.0

 

2,196.0

 

1,836.0

Revenue earning days (5)

 

552.0

 

461.1

 

2,195.8

 

1,813.5

Time Charter Equivalent (4)

$

73,632

$

76,875

$

75,997

$

77,559

Fleet Utilization (5)

 

100%

 

98%

 

100%

 

99%

Vessel daily operating expenses (6)

$

12,149

$

13,087

$

12,045

$

12,660


(1)  Represents the number of vessels that constituted the Partnership’s fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of its fleet during the period divided by the number of Calendar Days in the period.

(2)   Calendar Days are the total days the Partnership possessed the vessels in its fleet for the relevant period.

(3)  Available Days are the total number of Calendar Days the Partnership’s vessels were in its possession during a period, less the total number of scheduled off-hire days during the period associated with major repairs, or dry-dockings.

(4)  Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays substantially all vessel voyage related expenses. However, the Partnership may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and assists the Partnership’s management in making decisions regarding the deployment and use of the Partnership’s vessels and in evaluating their financial performance. The Partnership’s calculation of TCE rates may not be comparable to that reported by other companies. The following table reflects the calculation of the Partnership’s TCE rates for the three months and years ended December 31, 2016 and 2015 (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available Days):











 

 

Three Months Ended December 31,

 

Year Ended             December 31,

 

 

2016

 

2015

 

2016

 

2015

(In thousands of U.S. dollars, except for Available Days and TCE rate)

 

 

 

 

 

 

 

 

Voyage revenues

$

41,385

$

37,016

$

169,851

$

145,202

Voyage Expenses (7)

 

(740)

 

(808)

 

(2,961)

 

(2,804)

Time Charter equivalent revenues

$

40,645

$

36,208

$

166,890

$

142,398

Available Days (3)

 

552

 

471

 

2,196

 

1,836

Time charter equivalent (TCE) rate

$

73,632

$

76,875

$

75,997

$

77,559











(5)  The Partnership calculates fleet utilization by dividing the number of its Revenue earning days, which are the total number of Available Days of the Partnership’s vessels net of unscheduled off-hire days, during a period, by the number of Available Days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs but excluding scheduled off-hires for vessel upgrades, dry-dockings or special or intermediate surveys.

(6)  Daily vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, spares and repairs and flag taxes, are calculated by dividing vessel operating expenses by fleet Calendar Days for the relevant time period.

(7)  Voyage expenses include commissions of 1.25% paid to Dynagas Ltd., the Partnership’s Manager, and third party ship brokers, when defined in the charter parties, bunkers, port expenses and other minor voyage expenses.


Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information

Reconciliation of Net Income to Adjusted EBITDA

 

 

Three Months Ended                    December 31,

 

Year Ended                       December 31,

(In thousands of U.S.  dollars)

 

2016

 

 

2015

 

 

2016

 

 

2015

Reconciliation to Net Income

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

15,475

 

$

14,826

 

$

66,854

 

$

60,050

Net interest and finance costs (1)

 

8,883

 

 

7,201

 

 

34,991

 

 

27,939

Depreciation

 

7,642

 

 

6,283

 

 

30,395

 

 

24,387

Class survey costs

 

81

 

 

 

 

81

 

 

Amortization of fair value of acquired time charter

 

1,827

 

 

218

 

 

7,268

 

 

218

Charter hire amortization

 

(15)

 

 

(15)

 

 

(58)

 

 

608

Adjusted EBITDA

$

33,893

 

$

28,513

 

$

139,531

 

$

113,202


(1)Includes interest and finance costs and interest income, if any

The Partnership defines Adjusted EBITDA as earnings before interest and finance costs, net of interest income (if any), gains/losses on derivative financial instruments (if any), taxes (when incurred), depreciation and amortization (when incurred), class survey costs and significant non-recurring items (if any). Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership’s operating performance.

The Partnership believes that Adjusted EBITDA assists its management and investors by providing useful information that increases the comparability of the Partnership’s performance operating from period to period and against the operating performance of other companies in its industry that provide Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including Adjusted EBITDA as a measure of operating performance benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership’s ongoing financial and operational strength in assessing whether to continue to hold common units.

Adjusted EBITDA is not a measure of financial performance under U.S. GAAP, does not represent and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and these measures may vary among other companies. Therefore, Adjusted EBITDA as presented above may not be comparable to similarly titled measures of other companies.


Reconciliation of Net Income to Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit


 

Three Months Ended                              December 31,

 

Year Ended                              December 31,

(In thousands of U.S.  dollars except for units and per unit data)

 

2016

 

 

2015

 

 

2016

 

 

2015

Net Income

$

15,475

 

$

14,826

 

$

66,854

 

$

60,050

Charter hire amortization

 

(15)

 

 

(15)

 

 

(58)

 

 

608

Amortization of fair value of acquired time charter

 

1,827

 

 

218

 

 

7,268

 

 

218

Adjusted Net Income

$

17,287

 

$

15,029

 

$

74,064

 

$

60,876

Less: Adjusted Net Income attributable to subordinated, preferred unitholders and general partner

 

(8,293)

 

 

(7,338)

 

 

(35,251)

 

 

(27,521)

Common unitholders’ interest in Adjusted Net Income

$

8,994

 

$

7,691

 

$

38,813

 

$

33,355

Weighted average number of common units outstanding, basic and diluted:

 

20,505,000

 

 

20,505,000

 

 

20,505,000

 

 

20,505,000

Adjusted Earnings per common unit, basic and diluted

$

0.44

 

$

0.38

 

$

1.89

 

$

1.63


Adjusted Net Income represents net income before non-recurring expenses (if any), charter hire amortization related to time charters with escalating time charter rates and amortization of fair value of acquired time charters, all of which are significant non-cash items. Adjusted Net Income available to common unitholders represents the common unitholders interest in Adjusted Net Income for each period presented. Adjusted Earnings per common unit represents Adjusted Net Income attributable to common unitholders divided by the weighted average common units outstanding during each period presented.


Adjusted Net Income, Adjusted Net Income per common unit and Adjusted Earnings per common unit, basic and diluted, are not recognized measures under U.S. GAAP and should not be regarded as substitutes for net income and earnings per unit, basic and diluted. The Partnership’s definition of Adjusted Net Income, Adjusted Net Income per common unit and Adjusted Earnings per common unit, basic and diluted, may not be the same at that reported by other companies in the shipping industry or other industries. The Partnership believes that the presentation of Adjusted Net Income and Adjusted Earnings per unit available to common unitholders are useful to investors because they facilitate the comparability and the evaluation of companies in the Partnership’s industry. In addition, the Partnership believes that Adjusted Net Income is useful in evaluating its operating performance compared to that of other companies in the Partnership’s industry because the calculation of Adjusted Net Income generally eliminates the accounting effects of items which may vary for different companies for reasons unrelated to overall operating performance. The Partnership’s presentation of Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items.


Distributable Cash Flow Reconciliation

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

(In thousands of U.S.  dollars)

 

2016

 

2015

 

 

2016

 

2015

Net Income

$

15,475

$

14,826

 

$

66,854

$

60,050

Depreciation

 

7,642

 

6,283

 

 

30,395

 

24,387

Amortization of deferred finance fees

 

495

 

392

 

 

1,984

 

1,545

Net interest and finance costs, excluding amortization(1)

 

8,388

 

6,809

 

 

33,007

 

26,394

Class survey costs

 

81

 

 

 

81

 

Amortization of fair value of acquired time charters

 

1,827

 

218

 

 

7,268

 

218

Charter hire amortization

 

(15)

 

(15)

 

 

(58)

 

608

Adjusted EBITDA

$

33,893

$

28,513,529

 

$

139,531

$

113,202

Net interest and finance costs, excluding amortization(1)

 

(8,388)

 

(6,809)

 

 

(33,007)

 

(26,394)

Maintenance capital expenditure reserves

 

(1,038)

 

(882)

 

 

(4,152)

 

(3,464)

Replacement capital expenditure reserves

 

(3,195)

 

(2,787)

 

 

(12,780)

 

(10,979

Distributable Cash Flow

$

21,272

$

18,035

 

$

89,592

$

72,365


(1) Includes interest and finance costs and interest income, if any.



Distributable Cash Flow with respect to any period presented means Adjusted EBITDA after considering period interest and finance costs and estimated maintenance and replacement capital expenditures. Estimated maintenance and replacement capital expenditures, including estimated expenditures for drydocking, represent capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by the Partnership’s capital assets. Distributable Cash Flow is a quantitative standard used by investors in publicly-traded partnerships to assist in evaluating a partnership’s ability to make quarterly cash distributions. The Partnership’s calculation of the Distributable Cash Flow may not be comparable to that reported by other companies. Distributable Cash Flow is a non-GAAP financial measure and should not be considered as an alternative to net income or any other indicator of the Partnership’s performance calculated in accordance with GAAP.


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