Dynagas Partners Earnings

Dynagas LNG Partners (NASDAQ:DLNG) reported earnings late last week for the quarter and year ending 12/31/2018 and I had a chance to briefly look over the report.

Dynagas LNG is an owner of LNG ships for the transportation of liquified natural gas. The company runs a small fleet relative to competing ship owners such as GasLog Partners. DLNG runs a fleet of just 6 ships as compared to the 14 ships owned by GasLog Partners.

Dynagas LNG showed falling revenue in 2018 as compared to 2017 and anytime revenue is falling, these ship owners, which typically carry pretty massive debt, are going to run into trouble. DLNG started 2018 with a common quarterly distribution of 42 1/4 cents/share which was lowered to 25 cents/share and finally slashed to 6 1/4 cents/share–with the severely reduced distribution the company was able to cover the total distributions (common and preferred).

I am happy to observe that if the company can maintain present revenue levels coupled with the reduced distribution they will readily cover the dividends for 2019. Of course this still leaves this company with a large debt load – and they will pay a heavy price for having over $700 million in debt when the company has an annual run rate of revenue of just $130 million. The company has about $250 million in debt coming due this year.

It is noted that on 12/31/2018 the company had over $100 million in cash on the balance sheet and with the greatly reduced distribution the company will likely be ok in 2019.

DLNG has 2 preferred stock issues outstanding which have taken a pounding in the last couple of months.  DLNG-A which carries a 9% coupon is trading at about $19.63 with a current yield of 11.46%.  DLNG-B, which is a floating rate issue carrying a current 8.75% coupon is trading with a current yield of 11.56%

Investors with a high risk tolerance can look at the above – personally I will pass on issues with this level of risk.

The company press release on earnings is here for those that have not seen it.

15 thoughts on “Dynagas Partners Earnings”

  1. I sold my preferred shares when they cut the div the second time. Managament is inept and I have scars from BKs of other companies with similar bad management. They can file a Ch. 11 BK w/o warning, cancel the bond, common, and preferreds, and start all over again with new equity. Examples, Goodrich Petroleum, Linn Energy. To add insult to injury, they can give themselves a huge bonus for “steering” the company through BK, like they did at Linn Energy. The CEO got $25 MILLION!!!

  2. The bond shows no inventory at our desk (GS) for retail. VG may have previous inventory or is willing to flip it out of one of their funds to you at their price. Online bond purchasing through most, not all, internet brokers is a crap shoot. We get access to the spread prices but most are not reasonable. Bonds really don’t trade that often so price discovery is limited.

  3. leonard:
    I am not familiar with the trading platform on Etrade. My wife and have our IRA’s with Merrill lynch. I tried to get a ML quote on the Dynaglas bonds earlier, and the internet platform would not respond to my request, nor would a broker when I called them. The broker claimed the problem was that this bond is below investment grade.
    We have our trust account at Vanguard. VG, on their internet trading platform, gave me a quote, and I feel sure I can buy the bonds.
    So far as the take it or leave it pricing system, that is pretty much the way it is unless you have a much larger order than most individuals have. Not too far in the past, it was necessary to contact a broker who contacted the bond desk and your price was established. Then, you had no way of knowing if your price above, below, or equal to the preceding price. Now, there is a chart showing the most recent sales so that you know where you are. In those dark ages, selling a bond was at the mercy of the broker and dealer, and sometimes it could be brutal. This was a driver in getting me interested in preferred stocks – trade them at will, at the price you want, with the click of a mouse. Never is a long time, but I would not be interested in buying and bonds with a long maturity.

  4. I’ve been sniffing around the bond as well. Senior unsecured. CUSIP 26780TAA5. Matures 10/30/2019.

  5. Dynagas also has a bond which matures on Oct 30, 2019. The rate is 6.45% with 3 dividends left. It is selling for $95.50.

    1. jag, the bond does look tempting and should be safe until 10/2019. Any further thoughts on it?

      1. I have owned the bond for some time and just pocketed the dividends. The October maturity somewhat limits the risk. I intend to hold the bond to maturity.
        At one time, I owned one of the preferreds too, but got out when the price started slipping. I don’t think I would own one of the preferreds at this time. These are my feelings, but you should do your own research before committing any funds.

      1. Buying bonds is a little confusing to me; I want to place a bid at at my price but all it seems I can do is get offers to sell at their price, and there is no way to make a counteroffer. Is this the way the system works or am I missing something? I use Etrade

        1. Hi Leonard,

          If I’m understanding your question correctly, you want to place somewhat of a limit order to buy a bond. At this time, Schwab does not allow this but I think Fidelity does. Schwab says they are “working on it”….i.e….. working on allowing investors to place limit orders for traditional bonds.

          Like you, I have been frustrated with this ‘take it or leave it’ pricing issue.

          1. Amy, thanks for the reply and that is exactly what I’m trying to do on Etrade, but like you, all I get is the “take it or leave” option.

            1. I’m sorry about your experience but it’s nice to know that I’m not alone! I don’t understand why the bond trading protocol is so archaic….robbery….

              1. Amy et. All,
                Not only is bond trading archaic at the retail level, IMO most markets are mired in traditionalism, i.e., exchanges are a system that give those working the floors serious advantages if they can afford the price of entry.

                After experiencing the crypto-currecncy markets 24/7/365 electronic trading there is much to be desired in that format being driven by fintech. Yes, crypto has numerous issues and the exchanges are infamous for lack of regulation and oversight but I think we are heading in the direction of continuous, transparent trading and I for one like the idea.

                Sorry for the rant.

            2. Leonard – ETrade does allow bids on bonds on a very limited basis only. It’s tough to figure out when they do and when they don’t but sometimes you can make a bid on a case by case basis. Fidelity has the best bond site that I’ve tried and they will always allow you to place a bid provided there is a visible offering on the specific bond on their site…. Right now, there’s no listed inventory on 26780TAA5 but they do show trades today between 96.5 and 97 and in independent valuation of 95.50. They will limit you to a bid, though, that has to be within something like a 5% discount to the listed offering, but in most cases that’s always generous enough for you to make a rational bid. However, bear in mind the initial offering…. Sometimes, if there’s only one offering listed it may be a wishful thinking seller, not a rational price.

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