GasLog Partners LP, an international owner and operator of liquefied natural gas (“LNG”) carriers, reported its financial results for the three-month period ended March 31, 2021.
- Repaid $36.0 million of debt during the first quarter of 2021.
- Quarterly Revenues, Profit, Adjusted Profit(1) and Adjusted EBITDA(1) of $87.1 million, $35.4 million, $31.8 million and $64.1 million, respectively.
- Quarterly Earnings per unit (“EPU”) of $0.57 and Adjusted EPU(1) of $0.50.
- Declared cash distribution of $0.01 per common unit for the first quarter of 2021.
Paul Wogan, Chief Executive Officer, commented: “I am pleased to report another strong operational quarter for the Partnership with fleet uptime of 100%. A robust spot market for LNG carriers during the 2020/21 Northern Hemisphere winter, combined with our focus on cost reductions and lower interest expense bolstered the Partnership’s financial results in the first quarter of 2021, largely offsetting the impact from the expiration of three initial multi-year steam turbine propulsion (“Steam”) vessel charters.
During the first quarter, we improved our charter coverage to 75% for the remainder of 2021. This fixed charter coverage, along with the Adjusted EBITDA delivered in the first quarter, more than covers all the Partnership’s operating, overhead and debt service requirements as well as expenses related to our five dry-dockings scheduled for this year.
Although the Partnership has covered its fixed expenses for the year, we still retain a meaningful exposure to any recovery in LNG shipping spot rates during the second half of 2021. We anticipate that our capital allocation in 2021 will continue to focus on debt repayment with repayments of $36.0 million in the quarter, we continue to reduce the fleet’s breakeven levels and improve its free cash flow capacity over time.”
There were 1,311 revenue operating days for the three months ended March 31, 2021, as compared to 1,273 revenue operating days for the three months ended March 31, 2020. The year-over-year increase in revenue operating days is attributable to the increased utilization of our spot fleet, as defined below, and decreased off-hire days for scheduled dry-dockings.
Management classifies the Partnership’s vessels from a commercial point of view into two categories: (a) spot fleet and (b) long-term fleet. The spot fleet includes all vessels under charter party agreements with an initial duration of less than (or equal to) five years (excluding optional periods), while the long-term fleet comprises all vessels with charter party agreements of an initial duration of more than five years (excluding optional periods).
Revenues decreased by $4.3 million, from $91.4 million for the quarter ended March 31, 2020, to $87.1 million for the same period in 2021. The decrease in revenues is mainly attributable to the expirations of the initial multi-year time charters of the Methane Rita Andrea and the Methane Shirley Elisabeth with a subsidiary of Royal Dutch Shell (“Shell”) in 2020, at rates higher than their current contracted rates, partially offset by increased revenues from the operation of the Methane Heather Sally in the spot market after the expiration of its initial multi-year charter with Shell in January 2021, and a net increase in revenues due to decreased off-hire days for scheduled dry-dockings.
Vessel operating costs decreased by $1.3 million, from $19.1 million for the quarter ended March 31, 2020, to $17.8 million for the same period in 2021. The decrease in vessel operating costs is mainly attributable to increased technical maintenance expenses incurred in the first three months of 2020 in connection with the dry-docking of the Methane Shirley Elisabeth completed in the same period. As a result, daily operating costs per vessel (after excluding calendar days for the Solaris, the operating costs of which are covered by the charterers) decreased from $14,987 per day for the three-month period ended March 31, 2020 to $14,132 per day for the three-month period ended March 31, 2021.
Voyage expenses and commissions decreased by $1.8 million, from $3.9 million for the quarter ended March 31, 2020, to $2.1 million for the quarter ended March 31, 2021. The decrease in voyage expenses and commissions is mainly attributable to a decrease in bunker consumption costs due to the increased utilization of the Methane Alison Victoria in the first three months of 2021, as compared to the same period in 2020.
General and administrative expenses decreased by $1.1 million, from $4.2 million for the three-month period ended March 31, 2020, to $3.1 million for the same period in 2021. The decrease in general and administrative expenses is mainly attributable to a decrease of $0.8 million in administrative services fees, in connection with the decrease of the annual fee payable to GasLog in 2021 by approximately $0.2 million per vessel per year. As a result, daily general and administrative expenses decreased from $3,056 per vessel ownership day for the quarter ended March 31, 2020, to $2,275 per vessel ownership day for the quarter ended March 31, 2021.
The decrease in Adjusted EBITDA of $0.1 million, from $64.2 million in the first quarter of 2020 as compared to $64.1 million in the same period in 2021, is attributable to the decrease in revenues of $4.3 million, as described above, which was almost entirely offset by an aggregate increase of $4.2 million from savings in operating, voyage and general and administrative expenses.
Financial costs decreased by $6.1 million, from $15.5 million for the quarter ended March 31, 2020, to $9.4 million for the same period in 2021. The decrease in financial costs is attributable to a decrease of $5.6 million in interest expense on loans, primarily due to the lower London Interbank Offered Rate (“LIBOR”) rates in the first three months of 2021 as compared to the same period in 2020. During the three-month period ended March 31, 2020, we had an average of $1,352.2 million of outstanding indebtedness with a weighted average interest rate of 3.9%, compared to an average of $1,287.8 million of outstanding indebtedness with a weighted average interest rate of 2.4% during the three-month period ended March 31, 2021.
Loss on derivatives decreased by $15.4 million, from a loss of $14.1 million for the quarter ended March 31, 2020, to a gain of $1.3 million for the same period in 2021. The decrease is attributable to a $17.3 million decrease in unrealized loss from the mark-to-market valuation of derivatives held for trading (in 2021, interest rate swaps only) which were carried at fair value through profit or loss, partially offset by a net increase of $1.9 million in realized loss on derivatives held for trading.
The increase in profit of $21.2 million from $14.2 million in the first quarter of 2020 to $35.4 million in the first quarter of 2021 is mainly attributable to the decrease of $6.1 million in financial costs and the decrease of $15.4 million in loss/(gain) on derivatives analyzed above.
The increase in Adjusted Profit of $4.0 million, from $27.8 million in the first quarter of 2020 to $31.8 million in the first quarter of 2021, is mainly attributable to the decrease in interest expense on loans of $5.6 million, partially offset by a net increase in realized loss on derivatives held for trading of $1.9 million, also discussed above.
As of March 31, 2021, we had $95.1 million of cash and cash equivalents, out of which $43.2 million was held in current accounts and $51.9 million was held in time deposits with an original duration of less than three months.
As of March 31, 2021, we had an aggregate of $1,250.8 million of borrowings outstanding under our credit facilities, of which $105.0 million was repayable within one year. In addition, as of March 31, 2021, we had unused availability under our revolving credit facility with GasLog of $30.0 million, which matures in March 2022.
As of March 31, 2021, our current assets totaled $118.2 million and current liabilities totaled $170.2 million, resulting in a negative working capital position of $52.0 million. Current liabilities include $19.8 million of unearned revenue in relation to hires received in advance (which represents a non-cash liability that will be recognized as revenues after March 31, 2021 as the services are rendered). Management monitors the Partnership’s liquidity position throughout the year to ensure that it has access to sufficient funds to meet its forecast cash requirements, including debt service commitments, and to monitor compliance with the financial covenants within its loan facilities. Considering the volatile commercial and financial market conditions experienced over the last twelve months, we anticipate that our primary sources of funds for at least twelve months from the date of this report will be available cash, cash from operations and existing debt facilities. We believe that these anticipated sources of funds, as well as our decision in 2020 to decrease the common unit distributions and preserve liquidity, will be sufficient to meet our liquidity needs and to comply with our banking covenants for at least twelve months from the date of this report. Our long-term ability to repay our debts and maintain compliance with our debt covenants for at least twelve months from the date of this report without reliance on additional sources of finance is also dependent on a sustainable longer-term recovery in the LNG charter market from the market disruption observed in 2020 as a result of the COVID-19 outbreak.