HAMILTON, Bermuda, May 25, 2022 /PRNewswire/ -- Höegh LNG Partners
LP (NYSE: HMLP) (the "Partnership") today reported its financial
results for the quarter ended March 31,
2022.
Highlights
- 100% availability of FSRUs for the first quarter of 2022
- Reported total time charter revenues of $35.3 million for the first quarter of 2022,
compared to $34.8 million of time
charter revenues for the first quarter of 2021
- Generated operating income of $28.5
million, net income of $20.2
million and limited partners' interest in net income of
$16.3 million for the first quarter
of 2022, compared to operating income of $31.7 million, net income of $23.8 million and limited partners' interest in
net income of $20.0 million for the
first quarter of 2021
- Operating income, net income and limited partners' interest in
net income were impacted by unrealized gains on derivative
instruments for the first quarter of 2022 and 2021, mainly on the
Partnership's share of equity in earnings of joint ventures
- On May 13, 2022, paid a cash
distribution of $0.01 per common unit
with respect to the first quarter of 2022
- On May 16, 2022, paid a cash
distribution of $0.546875 per 8.75%
Series A cumulative redeemable preferred unit ("Series A preferred
unit"), for the period commencing on February 15, 2022 to May
15, 2022
- On March 20, 2022, the Höegh
Gallant commenced FSRU operations under agreements with
subsidiaries of New Fortress Energy Inc. ("New Fortress") to
charter the Höegh Gallant for a period of ten years (the
"NFE Charter"). The charter rate under the NFE Charter is lower
than under the prior charter for the Höegh Gallant
(the Suspended Gallant Charter") with a subsidiary of Höegh
LNG Holdings Ltd. ("Höegh LNG"). The Partnership has entered into
an agreement to suspend the Suspended Gallant Charter, with effect
from the commencement of the NFE Charter, and a make-whole
agreement (together, the "Suspension and Make-Whole Agreements"),
pursuant to which Höegh LNG's subsidiary will compensate the
Partnership monthly for the difference between the charter rate
earned under the NFE Charter and the charter rate earned under the
Suspended Gallant Charter, with the addition of a modest increase
until July 31, 2025, the original
expiration date of the Suspended Gallant Charter. Afterwards, the
Partnership will continue to receive the charter rate agreed with
New Fortress for the remaining term of the NFE Charter. In
addition, pursuant to the Suspension and Make-Whole Agreements,
certain capital expenditures incurred to ready and relocate the
Höegh Gallant for performance under the NFE Charter will be
shared 50/50 between Höegh LNG and the Partnership, subject to a
maximum obligation of the Partnership. As of May 25, 2022, Höegh LNG has paid an aggregate of
$2.6 million to the Partnership
pursuant to the Suspension and Make-Whole Agreements related to
such capital expenditures.
- On May 25, 2022, the Partnership
entered into a definitive merger agreement with Höegh LNG pursuant
to which Höegh LNG will acquire, for cash, all of the outstanding
publicly held common units of the Partnership, at a price of
$9.25 per common unit for a total
purchase price of approximately $167.6
million. The revised price represents an increase of
$5.00 when compared to the offer of
$4.25 per common unit made by Höegh
LNG on December 3, 2021, a premium of
35.0% to the closing price of the Partnership's common units of
$6.85 per unit on May 24, 2022 and a premium of 39.2% to the volume
weighted average price of the Partnership's common units for the
30-trading day period ended May 24,
2022. In connection with the transaction, the Partnership's
incentive distribution rights will be cancelled. The Series A
preferred units will remain outstanding. In connection with the
transaction, the board of directors of the Partnership (the "Board
of Directors") directed the conflicts committee of the Board of
Directors, comprised solely of directors unaffiliated with Höegh
LNG (the "Conflicts Committee"), to consider Höegh LNG's offer.
Following a period of discussion with Höegh LNG and its advisors,
the Conflicts Committee approved the merger agreement and
determined that the merger agreement and the transactions
contemplated thereby are in the best interests of the Partnership
and the holders of the Partnership's common units unaffiliated with
Höegh LNG. Based on the recommendation of the Conflicts Committee,
the Board of Directors unanimously approved the merger agreement
and recommended that the Partnership's common unitholders approve
the merger. The merger is expected to close in the second half of
2022, and is subject to approval of the merger agreement and the
transactions contemplated thereby by a majority of the outstanding
common units of the Partnership and certain regulatory filings and
customary closing conditions. Höegh LNG owns 45.7% of the common
units and has entered into a support agreement with the Partnership
committing to vote its common units in favor of the merger.
Financial Results Overview
For the three months ended March 31,
2022, each of the Partnership's FSRUs have had 100%
availability. The Partnership has mitigated the risk of an outbreak
of COVID‑19 on board its vessels by extending time between crew
rotations on the vessels and developing mitigating actions for crew
rotations. Management and administrative staffs have largely
transitioned to working remotely from home to address the specific
COVID‑19 situation in the applicable geographic location. The
Partnership has fulfilled its obligations under its time charter
contracts, and did not experience any off-hire for its FSRUs for
the three months ended March 31,
2022.
The Partnership reported net income of $20.2 million for the three months ended
March 31, 2022, a decrease of
$3.6 million from net income of
$23.8 million for the
three months ended March 31,
2021. Net income was impacted by unrealized gains on
derivative instruments for the first quarter of 2022 and 2021,
mainly included in the Partnership's share of equity in earnings of
joint ventures.
Excluding all of the unrealized gains on derivative instruments,
net income for the three months ended March 31, 2022 would have been $15.4 million, a decrease of $0.8 million from $16.2
million for the three months ended March 31, 2021. Excluding the impact of the
unrealized gains on derivatives, the decrease is primarily due to
higher administrative expenses.
Preferred unitholders' interest in net income was $3.9 million for the three months ended
March 31, 2022 and 2021. Limited
partners' interest in net income for the three months ended
March 31, 2022 was $16.3 million, a decrease of $3.7 million from limited partners' interest in
net income of $20.0 million for the
three months ended March 31,
2021. Excluding all of the unrealized gains on derivative
instruments, limited partners' interest in net income for the
three months ended March 31,
2022 would have been $11.5
million, a decrease of $0.8
million from limited partners' interest in net income of
$12.3 million for the
three months ended March 31,
2021.
Equity in earnings of joint ventures for the three months
ended March 31, 2022 was $8.6 million, a decrease of $2.4 million from equity in earnings of joint
ventures of $11.0 million for the
three months ended March 31,
2021. The joint ventures own the Neptune and the
Cape Ann. Unrealized gains on derivative instruments in the
Partnership's joint ventures impacted the equity in earnings of
joint ventures for the three months ended March 31, 2022 and 2021. The joint ventures
have previously not applied hedge accounting for interest rate
swaps, and all changes in fair value have been included in equity
in earnings (losses) of joint ventures. After the refinancing of
the New Neptune Facility on November 30,
2021, hedge accounting is applied for the Neptune.
Excluding the unrealized gains on derivative instruments for the
three months ended March 31, 2022 and 2021, the equity in
earnings of joint ventures would have been $3.8 million for the three months ended
March 31, 2022, an increase of
$0.4 million from $3.4 million for the three months ended
March 31, 2021. Excluding the
unrealized gains on derivative instruments for the
three months ended March 31,
2022 and 2021, the increase was mainly due to higher
time charter revenue partially offset by higher operating expenses
and financial expenses for the three months ended March 31, 2022, compared to those for the
three months ended March 31,
2021. The Partnership's share of its joint ventures'
operating income was $5.9 million for
the three months ended March 31,
2022 compared to $6.1 million
for the three months ended March 31,
2021.
Operating income for the three months ended March 31, 2022 was $28.5
million, a decrease of $3.2
million from operating income of $31.7 million for the three months ended
March 31, 2021. Excluding the impact
of the unrealized gains on derivatives impacting the equity in
earnings of joint ventures for the three months ended
March 31, 2022 and 2021, operating
income for the three months ended March
31, 2022 would have been $23.6
million, a decrease of $0.5
million from $24.1 million for
the three months ended March 31,
2021.
Segment EBITDA1 for the three months ended
March 31, 2022 was $33.4 million, a decrease of $1.1 million from $34.5
million for the three months ended March 31,
2021.
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Segment EBITDA is a
non-GAAP financial measure used by investors to measure financial
and operating performance. Please see Appendix A for a
reconciliation of Segment EBITDA to net income, the most directly
comparable GAAP financial measure.
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Total operating expenses for the three months ended
March 31, 2022 were $15.5 million, an increase of $1.4 million from $14.1
million for the three months ended March 31, 2021. The increase is principally due
to higher administrative expenses for the three months ended
March 31, 2022, compared with the
three months ended March 31,
2021.
The increase in administrative expenses is mainly related to
additional cost from external consultancy fees and audit fees.
Total financial expense, net for the three months ended
March 31, 2022 was $5.5 million, a decrease of $0.7 million from $6.2
million for the three months ended March 31, 2021. Interest expense decreased by
$0.5 million for the three months
ended March 31, 2022 compared with
the three months ended March 31,
2021. Interest expense consists of the interest incurred,
amortization and gain (loss) on cash flow hedges, commitment fees
and amortization of debt issuance costs for the period. The
decrease of $0.5 million in interest
expense in the first quarter of 2022 compared to the first quarter
of 2021 was principally due to repayment of outstanding loan
balances for the facility financing the PGN FSRU Lampung
("Lampung facility") and the commercial and export tranche of the
$385 million facility financing the
Höegh Gallant and the Höegh Grace (the "$385 million facility"). Other items decreased by
$0.1 million for the three months
ended March 31, 2022 compared to the
three months ended March 31, 2021,
due to foreign exchange gain/losses.
Segment Information
The Partnership has two operating segments. The segment profit
measure is Segment EBITDA, which is defined as earnings before
interest, taxes, depreciation, amortization, impairment, and other
financial items (gain (loss) on debt extinguishment, gain (loss) on
derivative instruments and other items, net). The two segments are
"Majority held FSRUs" and "Joint venture FSRUs." In addition,
unallocated corporate costs, interest income from advances to joint
ventures, and interest expense related to the outstanding balances
on the $85 million revolving credit
facility and the $385 million
facility are included in "Other". For additional information on the
segments, including a reconciliation of Segment EBITDA to operating
income and net income for each segment, refer to the description
and the tables included in "Unaudited Segment Information for the
Quarters Ended March 31, 2022 and
2021" below.
Segment EBITDA for Majority held FSRUs for the three months
ended March 31, 2022 was $28.1 million, an increase of $0.3 million from $27.8
million for the three months ended March 31, 2021.
The increase is mainly due to increased revenue from time charters
offset by an increase in administrative expenses.
Segment EBITDA for the Joint venture FSRUs for the three months
ended March 31, 2022 was $8.4 million, a decrease of $0.2 million from $8.6
million for the three months ended March 31, 2021.
For Other, Segment EBITDA consists of administrative expenses.
Administrative expenses for the three months ended March 31, 2022 were $3.2
million, an increase of $1.3
million from $1.9 million for
the three months ended March 31,
2021. This is driven by increased external consultancy fees
and audit fees.
Financing and Liquidity
As of March 31, 2022, the
Partnership had cash and cash equivalents of $39.7 million. Current restricted cash for
operating obligations of the PGN FSRU Lampung was $5.6 million, and long-term restricted cash
required under the long-term debt facility for the Lampung facility
was $11.0 million as of March 31, 2022. As of May
25, 2022, the Partnership has fully drawn on the
$63 million revolving credit tranche
of the $385 million facility and has
an undrawn balance of $60.5 million
on the $85 million revolving credit
facility from Höegh LNG. However, the Partnership has received
notice from Höegh LNG that it will not extend the $85 million revolving credit facility when it
matures on January 1, 2023, and that
it will have very limited capacity to extend any additional
advances to the Partnership thereunder beyond what is currently
drawn under such facility. As of March 31,
2022, the outstanding balance of $24.5 million on the $85
million revolving credit facility from Höegh LNG is
classified as a current liability. Further drawdowns on the
$85 million revolving credit facility
may be subject to Höegh LNG's consent because of the notice of
arbitration received from the charterer of the PGN FSRU Lampung, as
described below.
As of March 31, 2022, the Partnership has no material
commitments for capital expenditures. However, a scheduled
drydocking for the Neptune is expected to be completed in
August 2022. As of March 31, 2022, expenditures of approximately
$1.1 million have been included
within prepaid expenses and other receivables for the joint
ventures in connection with purchases of long lead items for the
drydocking. The joint ventures have received approximately
$2.4 million from their owners to
finance certain expenditures which are not reimbursable by the
charterer, of which the Partnership has paid approximately
$1.2 million as principal on advances
to joint ventures.
During the first quarter of 2022, the Partnership made quarterly
repayments of $7.9 million on the
Lampung facility and $6.4 million on
the $385 million facility. The
repayment $7.9 million on the Lampung
facility includes ordinary installments of $4.5 million and additional installments of
$3.4 million due to the cash sweep
mechanism in the Lampung facility. Until the pending arbitration
with the charterer of PGN FSRU Lampung has been terminated,
cancelled or favorably resolved, no shareholder loans may be
serviced and no dividends may be paid to the Partnership by the
subsidiary borrowing under the Lampung facility, PT Hoegh LNG
Lampung ("PT HLNG"). Furthermore, each quarter, 50% of the PGN
FSRU Lampung's generated cash flow after debt service must be
applied to pre-pay outstanding loan amounts under the Lampung
facility, applied pro rata across the commercial and export credit
tranches. The remaining 50% will be retained by PT HLNG and pledged
in favour of the lenders until the pending arbitration with the
charterer of the PGN FSRU Lampung has been terminated,
cancelled or favorably resolved. As a consequence, no cash flow
from the PGN FSRU Lampung will be available for the
Partnership until the pending arbitration has been terminated,
cancelled or favorably resolved. This limitation does not prohibit
the Partnership from paying distributions to preferred and common
unitholders.
The Partnership's book value and outstanding principal of total
long-term debt were $396.8 million
and $402.0 million respectively, as
of March 31, 2022, including the
Lampung facility, the $385 million
facility and the $85 million
revolving credit facility.
On July 27, 2021, the Partnership's board of directors
announced a reduction in the quarterly cash distribution on its
common units to $0.01 per common
unit, down from a distribution of $0.44 per common unit in the first quarter of
2021, commencing with the distribution for the second quarter of
2021 and continuing in the third and first quarters of 2021 and the
first quarter of 2022. The Partnership intends to use its
internally generated cash flow to reduce debt levels and strengthen
its balance sheet.
As of March 31, 2022, the Partnership's total current
liabilities exceeded total current assets by $22.8 million. This is partly a result of the
current portion of long-term debt of $43.7
million being classified as current while restricted cash of
$11.0 million associated with the
Lampung facility is classified as long-term. The current portion of
long-term debt reflects principal payments for the next twelve
months. Additionally, because the $85
million revolving credit facility from Höegh LNG matures on
January 1, 2023, the outstanding
balance thereunder of $24.5 million
is classified as a current liability.
The current liabilities are expected to be funded, for the most
part, by future cash flows from operations. The Partnership does
not intend to maintain a cash balance to fund the next twelve
months' net liabilities. The Partnership believes its cash flows
from operations, including distributions to it from Höegh LNG
Cyprus Limited, and Höegh LNG FSRU IV Ltd as payment of
intercompany interest and/or intercompany debt or dividends and
payments under the Suspension and Make-Whole Agreements, will be
sufficient to meet its debt amortization and working capital needs
and maintain cash reserves against fluctuations in operating cash
flows and pay distributions to its unitholders at its current level
of distributions, for the next twelve months assuming the closing
of the refinancing of the Cape Ann facility on a timely basis and
continuing compliance with covenants under its credit facilities
and assuming that the Partnership's vessels remain fully
operational and that revenues are generated as per existing
contractual terms.
On December 15, 2021, SRV Joint
Gas Two Ltd, the owner of the Cape Ann, signed a new loan
agreement to refinance the existing Cape Ann debt facility that
matures on June 1, 2022. The new loan
facility is for an amount of $154.1
million. Subject to customary closing conditions, the
closing and the drawdown under the new facility is expected to
occur on or about the maturity date of the existing facility. The
terms and conditions for the new Cape Ann Facility are largely
identical to the Neptune facility that was refinanced on
November 30, 2021.
As of March 31, 2022, the
Partnership had outstanding interest rate swap agreements for a
total notional amount of $264.4
million to hedge against the floating interest rate risks of
its long-term debt under the Lampung facility and the $385 million facility. The Partnership applies
hedge accounting for derivative instruments related to these
facilities. The Partnership receives interest based on three-month
US dollar LIBOR and pays a fixed rate of 2.8% for the Lampung
facility. The Partnership receives interest based on the
three-month US dollar LIBOR and pays a fixed rate ranging from
2.650% to 2.941% for the $385 million
facility.
The Partnership's share of the joint ventures is accounted for
using the equity method. As a result, the Partnership's share of
the joint ventures' cash, restricted cash, outstanding debt,
interest rate swaps and other balance sheet items are reflected net
on the lines "accumulated earnings in joint ventures" and
"accumulated losses in joint ventures" on the consolidated balance
sheet and are not included in the balance sheet figures disclosed
above.
In February 2022, the Partnership
paid a cash distribution of $0.3
million, or $0.01 per common
unit, with respect to the fourth quarter of 2021.
In February 2022, the Partnership
paid a cash distribution of $3.9
million, or $0.546875 per
Series A preferred unit, for the period commencing on
November 15, 2021 to
February 14, 2022.
On May 13, 2022, the Partnership paid a cash distribution
of $0.3 million, or $0.01 per common unit, with respect to the first
quarter of 2022.
On May 16, 2022, the Partnership
paid a cash distribution of $3.9
million, or $0.546875 per
Series A preferred unit, for the period commencing on
February 15, 2022 to May 15, 2022.
For the period from January 1,
2022 to May 25, 2022, no Series A preferred units
or common units were sold under the Partnership's ATM program.
Outlook
The Partnership believes its primary risk and exposure related
to uncertainty of cash flows from its long-term time charter
contracts is due to the credit risk and counterparty risk
associated with the individual charterers. Payments are due under
time charter contracts regardless of the demand for the charterer's
gas output or the utilization of the FSRU. It is therefore possible
that charterers may not make payments for time charter services in
times of reduced demand. While there is a pending arbitration as
further discussed below, as of May 25,
2022, the Partnership has not experienced any reduced or
non-payments for obligations under the Partnership's time charter
contracts. In addition, the Partnership has not provided
concessions or made changes to the terms of payment for its
customers.
Höegh LNG has indemnified the Partnership for the joint
ventures' boil-off settlement, entered into the Suspension and
Make-Whole Agreements and provided the Partnership the $85 million revolving credit facility. However,
in July 2021, the Partnership received notice from Höegh LNG
that the revolving credit line of $85
million will not be extended when it matures on
January 1, 2023, and that Höegh LNG will have very limited
capacity to extend any additional advances to the Partnership
beyond what is currently drawn under such facility. Also, further
drawdowns on the $85 million
revolving credit facility may be subject to Höegh LNG's consent
because of the NOA received from the charterer of PGN FSRU
Lampung. With these changes, the Partnership's liquidity and
financial flexibility has been reduced. If Höegh LNG is unable to
meet its obligations to us under the Suspension and Make-Whole
Agreements or meet funding requests or indemnification obligations,
our financial condition, results of operations and ability to make
cash distributions to unitholders could be materially adversely
affected.
Höegh LNG's ability to make payments to the Partnership under
the Suspension and Make-Whole Agreements and any funding requests
under the $85 million revolving
credit facility and any claims for indemnification may be affected
by events beyond the control of Höegh LNG or the Partnership,
including prevailing economic, financial and industry conditions.
If market or other economic conditions deteriorate, Höegh LNG's
ability to meet its obligations to the Partnership may be
impaired.
If financial institutions providing the Partnership's interest
rate swaps are unable to meet their obligations, the Partnership
could experience a higher interest expense or be unable to obtain
funding. Furthermore, if the Partnership's charterers or lenders
are unable to meet their obligations under their respective
contracts or if the Partnership is unable to fulfill its
obligations under time charters, its financial condition, results
of operations and ability to make cash distributions to unitholders
could be materially adversely affected.
As previously reported, by letter dated July 13, 2021, the charterer under the lease and
maintenance agreement for the PGN FSRU Lampung ("LOM")
raised certain issues with PT HLNG in relation to the operations of
the PGN FSRU Lampung and the LOM and by further letter dated
July 27, 2021, stated that it would
commence arbitration against PT HLNG. On August 2, 2021 the charterer served a notice of
arbitration ("NOA") to declare the LOM null and void, and/or to
terminate the LOM, and/or seek damages. PT HLNG has served a reply
refuting the claims as baseless and without legal merit and has
also served a counterclaim against the charterer for multiple
breaches of the LOM and a claim against the parent company of the
charterer for the fulfilment of the charterer's obligations under
the LOM as stated in a guarantee provided by the parent company,
with a claim for damages. PT HLNG will take all necessary steps and
will vigorously defend against the charterer's claims in the legal
process.
No assurance can be given at this time as to the outcome of the
dispute with the charterer of the PGN FSRU Lampung.
Notwithstanding the NOA, both parties have continued to perform
their respective obligations under the LOM. In the event the
outcome of the dispute is unfavorable to the Partnership, it could
have a material adverse impact on its business, financial
condition, results of operations and ability to make distributions
to unitholders.
On September 23, 2021, the
Partnership entered into the NFE Charter with subsidiaries of New
Fortress to charter the Höegh Gallant primarily for FSRU
operations for a period of ten years. From November 26, 2021 until FSRU operations commenced
on March 20, 2022, New Fortress
chartered the vessel for LNG carrier operations. The Partnership
has also entered into the Suspension and Make-Whole Agreements to
suspend the prior charter for the Höegh Gallant with a
subsidiary of Höegh LNG, with effect from the commencement of the
NFE Charter. The charter rate under the NFE Charter is lower than
under the Suspended Gallant Charter. However, under the
Suspension and Make-Whole Agreements, Höegh LNG's subsidiary will
compensate the Partnership monthly for the difference between the
charter rate earned under the NFE Charter and the charter rate
earned under the Suspended Gallant Charter with the addition of a
modest increase until July 31, 2025,
the original expiration date of the Suspended Gallant Charter.
Afterwards, the Partnership will continue to receive the charter
rate agreed with New Fortress for the remaining term of the NFE
Charter. In addition, pursuant to the Suspension and Make-Whole
Agreements, certain capital expenditures incurred to ready and
relocate the Höegh Gallant for performance under the NFE
Charter will be shared 50/50 between Höegh LNG and the Partnership,
subject to a maximum obligation of the Partnership. As of
May 25, 2022, Höegh LNG has paid an
aggregate of $2.6 million to
the Partnership pursuant to the Suspension and Make-Whole
Agreements related to such capital expenditures.
From the commencement of the prior ATM program in January 2018 through May
25, 2022, the Partnership has sold 2,489,325 Series A
preferred units and 358,869 common units under its ATM programs and
received net proceeds of $63.2
million and $6.4 million,
respectively. The compensation paid to the Agent for such sales was
$1.3 million. In current market
conditions with lower unit prices, sales under the new ATM program
are a less viable and more expensive option for accessing
liquidity.
The outbreak of COVID‑19 has negatively affected economic
conditions in many parts of the world which may impact the
Partnership's operations and the operations of its customers and
suppliers. Although the Partnership's operations have not been
materially affected by the COVID-19 outbreak to date, the ultimate
length and severity of the COVID‑19 outbreak and its potential
impact on the Partnership's operations and financial condition is
uncertain at this time. Furthermore, should there be an outbreak of
COVID‑19 on board one of the Partnership's FSRUs or an inability to
replace critical supplies or replacement parts due to disruptions
to third-party suppliers, adequate crewing or supplies may not be
available to fulfill the Partnership's obligations under its time
charter contracts. This could result in off-hire or warranty
payments under performance guarantees which would reduce revenues
for the impacted period. To date, the Partnership has extended the
time between crew rotations on the vessels and developed other
mitigating actions to reduce the risk of a COVID-19 outbreak. As a
result, the Partnership expects that it will incur somewhat higher
crewing expenses. To date, the Partnership has not had material
service interruptions on the Partnership's vessels. Management and
administrative staffs have largely transitioned to working remotely
from home to address the specific COVID‑19 situation in the
applicable geographic location. The Partnership has supported
staffs by supplying needed internet boosters and office equipment
to facilitate an effective work environment.
In February 2022, the Russian
attack on Ukraine started. It may
lead to further regional and international conflicts or armed
action. It is possible that such conflict could disrupt supply
chains and cause instability in the global economy. Additionally,
the ongoing conflict could result in the imposition of further
economic sanctions by the United
States and the European Union against Russia. While much uncertainty remains
regarding the global impact of the invasion, it is possible that
such tensions could adversely affect the Partnership's business,
financial condition, results of operation and cash flows.
Furthermore, it is possible that third parties with whom the
Partnership has charter contracts may be impacted by events in
Russia and Ukraine, which could adversely affect its
operations. The invasion has among other things, led to a
significantly increased attention to security of energy supply in
Europe. Several European countries
are looking to reduce their reliance on pipeline gas from
Russia, and are planning to
increase the import capacity for LNG through the application of
FSRUs and/or landbased import facilities in combination with
increased use of renewable energy sources in the energy mix. Over
time, this could accelerate the energy transition to renewable
energy.
On April 1, 2022, the
Partnership's Colombian subsidiary received a notification from the
Tax Administration of Cartagena assessing a penalty of
approximately $1.8 million for
failure to file the 2016 to 2018 Municipal Industry and Commerce
Tax ("ICT") returns. ICT is imposed on gross receipts on customer
invoices and is similar to a sales tax. The municipal tax
authorities have alleged that the customer invoices are for
industrial activities performed within the municipal jurisdiction.
However, all of the Colombian subsidiary's activities take place
offshore which is outside of the Municipality's borders. According
to Colombian law, municipalities do not have jurisdiction over
maritime waters or low-tide areas. Management intends to deny the
allegations and file an appeal to vigorously defend the Colombian
subsidiary's position. Accruals for loss contingencies are recorded
when it is probable that a liability has been incurred and the
amount of loss can be reasonably estimated. Management, with advice
of its outside legal advisors, has assessed the status of this
matter and has concluded that an adverse judgment after concluding
an appeals process is not probable. As a result, no provision has
been made in the consolidated financial statements. Management
estimates the range of possible loss for 2016-2021, including
accrued interest, to be approximately $1.3
million to $2.9 million as of
March 31, 2022 plus additional
accrued interest thereon until final disposition of the ICT
allegation.
On October 27, 2021, a federal
securities class action lawsuit was filed against the Partnership
and certain of its current and former officers in the United States District Court for the
District of New Jersey. The name
of the case is In re Höegh LNG Partners LP Securities Litigation,
Case No. 2:21-cv-19374-KM-JBC. The complaint alleges that the
Partnership made materially false and misleading statements about
its business and operations, and seeks unspecified damages,
attorneys' fees and any other relief the court deems proper. On
March 11, 2022, the Court appointed
lead plaintiffs and lead counsel for the class, and the Court has
issued a schedule for the filing of a consolidated amended
complaint and briefing on defendants' anticipated motion to
dismiss. On May 16, 2022, the
court-appointed lead plaintiffs filed a notice of voluntary
dismissal, and the Court ordered the dismissal on May 17, 2022. The Partnership believes the
allegations in this suit were without merit.
Presentation of First Quarter 2022 Results
A presentation will be held today, Wednesday, May 25, 2022, at 8:30 A.M. (EST)
to discuss financial results for the first quarter of 2021. The
results and presentation material will be available for download at
http://www.hoeghlngpartners.com.
The presentation will be immediately followed by a Q&A
session. Participants will be able to join this presentation using
the following details:
a. Webcast
https://app.webinar.net/zP3nb3lewNr
b. Teleconference
International
call:
|
+1‑412‑542‑4123
|
US Toll Free
call:
|
+1‑855‑239‑1375
|
Canada Toll Free
call:
|
+1‑855‑669‑9657
|
Participants should ask to be joined into the Höegh LNG Partners
LP call.
There will be a Q&A session after the presentation.
Information on how to ask questions will be given at the beginning
of the Q&A session.
For those unable to participate in the conference call, a replay
will be available from one hour after the end of the conference
call until June 1, 2022.
The replay dial-in numbers are as follows:
International
call:
|
+1‑412‑317‑0088
|
US Toll Free
call:
|
+1‑877‑344‑7529
|
Canada Toll Free
call:
|
+1‑855‑669‑9658
|
|
|
Replay
passcode:
|
4066791
|
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements
concerning future events and the Partnership's operations,
performance and financial condition. Forward-looking statements
include, without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or
achievements, and may contain the words "believe," "anticipate,"
"expect," "estimate," "future," "project," "will be," "will
continue," "will likely result," "plan," "intend" or words or
phrases of similar meanings. These statements involve known and
unknown risks and are based upon a number of assumptions and
estimates that are inherently subject to significant uncertainties
and contingencies, many of which are beyond the Partnership's
control. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Important factors
that could cause actual results to differ materially include, but
are not limited to:
- the effects of outbreaks of pandemic or contagious diseases,
including the length and severity of the recent worldwide outbreak
of COVID‑19, including its impact on the Partnership's business
liquidity, cash flows and operations as well as operations of our
customers, suppliers and lenders;
- market conditions and trends for floating storage and
regasification units ("FSRUs") and liquefied natural gas ("LNG")
carriers, including hire rates, vessel valuations, technological
advancements, market preferences and factors affecting supply and
demand of LNG, LNG carriers, and FSRUs;
- the Partnership's distribution policy and ability to make cash
distributions on its units or any changes in the quarterly
distributions on its common units;
- restrictions in the Partnership's debt agreements and pursuant
to local laws on the Partnership's joint ventures' and
subsidiaries' ability to make distributions;
- the ability of Höegh LNG to meet its financial obligations to
the Partnership pursuant to the Suspension and Make-Whole
Agreements, the Suspended Gallant Charter, any funding requests
under the $85 million revolving
credit facility and its guarantee and indemnification
obligations;
- the change in the ability of Höegh LNG to compete with the
Partnership as a result of its completion of the Amalgamation;
- the Partnership's ability to compete successfully for future
chartering and newbuilding opportunities;
- the consummation of the proposed merger transaction with Höegh
LNG and the realization of any benefits therefrom;
- demand in the FSRU sector or the LNG shipping sector, including
demand for the Partnership's vessels;
- the Partnership's ability to purchase additional vessels from
Höegh LNG in the future;
- the Partnership's ability to integrate and realize the
anticipated benefits from acquisitions;
- the Partnership's anticipated growth strategies, including the
acquisition of vessels;
- the Partnership's anticipated receipt of dividends and
repayment of indebtedness from subsidiaries and joint
ventures;
- effects of volatility in global prices for crude oil and
natural gas;
- the effect of the worldwide economic environment;
- turmoil in the global financial markets;
- fluctuations in currencies and interest rates;
- general market conditions, including fluctuations in hire rates
and vessel values;
- changes in the Partnership's operating expenses, including
drydocking, on-water class surveys, insurance costs and bunker
costs;
- the Partnership's ability to comply with financing agreements
and the expected effect of restrictions and covenants in such
agreements;
- the financial condition, liquidity and creditworthiness of the
Partnership's existing or future customers and their ability to
satisfy their obligations under the Partnership's contracts;
- the Partnership's ability to replace existing borrowings, make
additional borrowings and to access public equity and debt capital
markets;
- the ability of the Partnership's joint venture to close the new
Cape Ann facility;
- planned capital expenditures and availability of capital
resources to fund capital expenditures;
- the exercise of purchase options by the Partnership's
customers;
- the Partnership's ability to perform under its contracts and
maintain long-term relationships with its customers;
- the Partnership's ability to leverage Höegh LNG's relationships
and reputation in the shipping industry;
- the Partnership's continued ability to enter into long-term,
fixed-rate charters and the hire rate thereof;
- the operating performance of the Partnership's vessels and any
related claims by TotalEnergies SE, PGN LNG or other
customers;
- the Partnership's ability to maximize the use of its vessels,
including the redeployment or disposition of vessels no longer
under long-term charters;
- the results of the arbitration with the charterer of PGN
FSRU Lampung;
- timely acceptance of the Partnership's vessels by their
charterers;
- termination dates and extensions of charters;
- the impact of the Russian invasion of Ukraine;
- the Partnership's ability to successfully remediate the
material weakness in our internal control over financial reporting
and our disclosure controls and procedures;
- the cost of, and the Partnership's ability to comply with,
governmental regulations and maritime self-regulatory organization
standards, as well as standard regulations imposed by its
charterers applicable to its business;
- economic substance laws and regulations adopted or considered
by various jurisdictions of formation or incorporation of the
Partnership and certain of its subsidiaries;
- availability and cost of skilled labor, vessel crews and
management, including possible disruptions, including but not
limited to the supply chain of spare parts and service engineers,
caused by the COVID‑19 outbreak;
- the number of offhire days and drydocking requirements,
including the Partnership's ability to complete scheduled
drydocking on time and within budget;
- the Partnership's general and administrative expenses as a
publicly traded limited partnership and fees and expenses payable
under the Partnership's ship management agreements, the technical
information and services agreement and the administrative services
agreement;
- the anticipated taxation of the Partnership, its subsidiaries
and affiliates and distributions to unitholders;
- estimated future maintenance and replacement capital
expenditures;
- the Partnership's ability to hire or retain key employees;
- customers' increasing emphasis on environmental and safety
concerns;
- potential liability from any pending or future litigation;
- risks inherent in the operation of the Partnership's vessels
including potential disruption due to accidents, political events,
piracy or acts by terrorists;
- future sales of the Partnership's common units, Series A
preferred units and other securities in the public market;
- the Partnership's business strategy and other plans and
objectives for future operations;
- the Partnership's ability to maintain effective internal
control over financial reporting and effective disclosure controls
and procedures; and
- other factors listed from time to time in the reports and other
documents that the Partnership files with the SEC, including the
Partnership's Annual Report on Form 20‑F for the year ended
December 31, 2021 and subsequent
quarterly reports on Form 6‑K.
All forward-looking statements included in this press release
are made only as of the date of this release. New factors emerge
from time to time, and it is not possible for the Partnership to
predict all of these factors. Further, the Partnership cannot
assess the impact of each such factor on its business or the extent
to which any factor, or combination of factors, may cause actual
results to be materially different from those contained in any
forward-looking statement. The Partnership does not intend to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in its
expectations with respect thereto or any change in events,
conditions or circumstances on which any such statement is
based.
HÖEGH LNG PARTNERS
LP
UNAUDITED CONDENSED
INTERIM CONSOLIDATED
STATEMENTS OF
INCOME
(in thousands of
U.S. dollars, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
REVENUES
|
|
|
|
|
|
|
Time charter
revenues
|
|
$
|
35,310
|
|
$
|
34,776
|
Total
revenues
|
|
|
35,310
|
|
|
34,776
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
Vessel operating
expenses
|
|
|
(6,206)
|
|
|
(6,172)
|
Administrative
expenses
|
|
|
(4,140)
|
|
|
(2,735)
|
Depreciation and
amortization
|
|
|
(5,111)
|
|
|
(5,210)
|
Total operating
expenses
|
|
|
(15,457)
|
|
|
(14,117)
|
Equity in earnings
(losses) of joint ventures
|
|
|
8,634
|
|
|
11,073
|
Operating income
(loss)
|
|
|
28,487
|
|
|
31,732
|
FINANCIAL INCOME
(EXPENSE), NET
|
|
|
|
|
|
|
Interest
income
|
|
|
200
|
|
|
133
|
Interest
expense
|
|
|
(5,196)
|
|
|
(5,658)
|
Other items,
net
|
|
|
(511)
|
|
|
(653)
|
Total financial income
(expense), net
|
|
|
(5,507)
|
|
|
(6,178)
|
Income (loss) before
tax
|
|
|
22,980
|
|
|
25,554
|
Income tax
expense
|
|
|
(2,819)
|
|
|
(1,716)
|
Net income
(loss)
|
|
$
|
20,161
|
|
$
|
23,838
|
Preferred unitholders'
interest in net income
|
|
|
3,877
|
|
|
3,877
|
Limited partners'
interest in net income (loss)
|
|
$
|
16,284
|
|
$
|
19,961
|
|
|
|
|
|
|
|
Earnings per
unit
|
|
|
|
|
|
|
Common unit public
(basic and diluted)
|
|
$
|
0.49
|
|
$
|
0.59
|
Common unit Höegh LNG
(basic and diluted)
|
|
$
|
0.49
|
|
$
|
0.61
|
HÖEGH LNG PARTNERS
LP
UNAUDITED CONDENSED
INTERIM CONSOLIDATED
BALANCE
SHEETS
(in thousands of
U.S. dollars)
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
39,652
|
|
$
|
42,519
|
Restricted
cash
|
|
|
5,571
|
|
|
8,410
|
Trade
receivables
|
|
|
5,333
|
|
|
3,653
|
Amounts due from
affiliates
|
|
|
6,825
|
|
|
7,500
|
Inventory
|
|
|
6
|
|
|
—
|
Current portion of net
investment in financing lease
|
|
|
5,546
|
|
|
5,426
|
Prepaid expenses and
other receivables
|
|
|
9,917
|
|
|
3,772
|
Total current
assets
|
|
|
72,850
|
|
|
71,280
|
Long-term
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
|
10,991
|
|
|
10,991
|
Accumulated earnings of
joint ventures
|
|
|
47,617
|
|
|
35,708
|
Advances to joint
ventures
|
|
|
8,836
|
|
|
7,511
|
Vessels, net of
accumulated depreciation
|
|
|
597,184
|
|
|
602,289
|
Other
equipment
|
|
|
78
|
|
|
100
|
Intangibles and
goodwill
|
|
|
10,622
|
|
|
11,301
|
Net investment in
financing lease
|
|
|
262,430
|
|
|
263,862
|
Long-term derivative
instruments
|
|
|
417
|
|
|
—
|
Long-term deferred tax
asset
|
|
|
150
|
|
|
144
|
Other long-term
assets
|
|
|
822
|
|
|
822
|
Total long-term
assets
|
|
|
939,147
|
|
|
932,728
|
Total
assets
|
|
$
|
1,011,997
|
|
$
|
1,004,008
|
HÖEGH LNG PARTNERS
LP
UNAUDITED CONDENSED
INTERIM CONSOLIDATED
BALANCE
SHEETS
(in thousands of
U.S. dollars)
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
|
|
2022
|
|
2021
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
43,747
|
|
$
|
46,385
|
Revolving credit
facility due to owners and affiliates
|
|
|
24,545
|
|
|
—
|
Trade
payables
|
|
|
3,770
|
|
|
3,890
|
Amounts due to owners
and affiliates
|
|
|
1,848
|
|
|
3,655
|
Value added and
withholding tax liability
|
|
|
374
|
|
|
935
|
Derivative
instruments
|
|
|
2,377
|
|
|
5,239
|
Accrued liabilities and
other payables
|
|
|
18,953
|
|
|
16,105
|
Total current
liabilities
|
|
|
95,614
|
|
|
76,209
|
Long-term
liabilities
|
|
|
|
|
|
|
Long-term
debt
|
|
|
328,541
|
|
|
339,687
|
Revolving credit
facility due to owners and affiliates
|
|
|
—
|
|
|
24,942
|
Derivative
instruments
|
|
|
122
|
|
|
7,631
|
Long-term tax
liability
|
|
|
4,334
|
|
|
6,391
|
Long-term deferred tax
liability
|
|
|
19,413
|
|
|
18,462
|
Other long-term
liabilities
|
|
|
190
|
|
|
166
|
Total long-term
liabilities
|
|
|
352,600
|
|
|
397,279
|
Total
liabilities
|
|
|
448,214
|
|
|
473,488
|
EQUITY
|
|
|
|
|
|
|
8.75% Series A
preferred units
|
|
|
176,078
|
|
|
176,078
|
Common units
public
|
|
|
326,173
|
|
|
317,515
|
Common units Höegh
LNG
|
|
|
62,945
|
|
|
52,626
|
Accumulated other
comprehensive income (loss)
|
|
|
(1,413)
|
|
|
(15,699)
|
Total partners'
capital
|
|
|
563,783
|
|
|
530,520
|
Total
equity
|
|
|
563,783
|
|
|
530,520
|
Total liabilities
and equity
|
|
$
|
1,011,997
|
|
$
|
1,004,008
|
HÖEGH LNG PARTNERS
LP
UNAUDITED CONDENSED
INTERIM CONSOLIDATED
STATEMENTS OF CASH
FLOWS
(in thousands of
U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March 31,
|
|
|
2022
|
|
|
2021
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
20,161
|
|
$
|
23,838
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
5,111
|
|
|
5,210
|
Equity in (earnings)
losses of joint ventures
|
|
|
(8,634)
|
|
|
(11,073)
|
Changes in accrued
interest income on advances to joint ventures
|
|
|
(165)
|
|
|
(83)
|
Amortization of
deferred debt issuance cost
|
|
|
500
|
|
|
523
|
Amortization in revenue
for above market contract
|
|
|
679
|
|
|
679
|
Changes in accrued
interest expense
|
|
|
(185)
|
|
|
(156)
|
Receipts from repayment
of principal on financing lease
|
|
|
1,312
|
|
|
1,202
|
Unrealized foreign
exchange losses (gains)
|
|
|
39
|
|
|
12
|
Unrealized loss (gain)
on derivative instruments
|
|
|
101
|
|
|
45
|
Non-cash revenue: tax
paid directly by charterer
|
|
|
(210)
|
|
|
(208)
|
Non-cash income tax
expense: tax paid directly by charterer
|
|
|
210
|
|
|
208
|
Deferred tax expense
and provision for tax uncertainty
|
|
|
1,605
|
|
|
665
|
Other
adjustments
|
|
|
—
|
|
|
2
|
Changes in working
capital:
|
|
|
|
|
|
|
Trade
receivables
|
|
|
(1,664)
|
|
|
(4,201)
|
Inventory
|
|
|
(6)
|
|
|
—
|
Prepaid expenses and
other receivables
|
|
|
(6,139)
|
|
|
(823)
|
Trade
payables
|
|
|
(131)
|
|
|
(40)
|
Amounts due to owners
and affiliates
|
|
|
(1,133)
|
|
|
(152)
|
Value added and
withholding tax liability
|
|
|
(527)
|
|
|
(613)
|
Accrued liabilities and
other payables
|
|
|
376
|
|
|
1,117
|
Net cash provided by
(used in) operating activities
|
|
|
11,300
|
|
|
16,152
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
Payment on principal on
advances to joint ventures
|
|
|
(1,161)
|
|
|
—
|
Net cash provided by
(used in) investing activities
|
|
$
|
(1,161)
|
|
$
|
—
|
HÖEGH LNG PARTNERS
LP
UNAUDITED CONDENSED
INTERIM CONSOLIDATED
STATEMENTS OF CASH
FLOWS
(in thousands of
U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March 31,
|
|
|
2022
|
|
|
2021
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
|
(14,284)
|
|
|
(11,165)
|
Net proceeds from
issuance of common units
|
|
|
—
|
|
|
818
|
Net proceeds from
issuance of Series A preferred units
|
|
|
—
|
|
|
8,318
|
Cash distributions to
limited partners and preferred unitholders
|
|
|
(4,211)
|
|
|
(18,956)
|
Repayment of
indemnifications received from Höegh LNG
|
|
|
2,630
|
|
|
—
|
Net cash provided by
(used in) financing activities
|
|
|
(15,865)
|
|
|
(20,985)
|
|
|
|
|
|
|
|
Increase (decrease) in
cash, cash equivalents and restricted cash
|
|
|
(5,726)
|
|
|
(4,833)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
|
|
20
|
|
|
(50)
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
61,920
|
|
|
51,063
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
56,214
|
|
$
|
46,180
|
HÖEGH LNG PARTNERS LP
UNAUDITED
SEGMENT INFORMATION FOR THE QUARTERS ENDED MARCH 31, 2022 AND 2021
(in thousands
of U.S. dollars)
Segment information
There are two operating segments. The segment profit measure is
Segment EBITDA, which is defined as earnings before interest,
taxes, depreciation, amortization, impairment and other financial
items (gain (loss) on debt extinguishment, gain (loss) on
derivative instruments and other items, net). Segment EBITDA is
reconciled to operating income and net income in the segment
presentation below. The two segments are "Majority held FSRUs" and
"Joint venture FSRUs." In addition, unallocated corporate costs,
interest income from advances to joint ventures and interest
expense related to the outstanding balances on the $85 million revolving credit facility and the
$385 million facility are included in
"Other."
For the three months ended March 31, 2022 and 2021,
Majority held FSRUs includes the financing lease related to the
PGN FSRU Lampung and the operating leases related to the
Höegh Gallant and the Höegh Grace.
For the three months ended March 31,
2022 and 2021, Joint Venture FSRUs include two 50% owned
FSRUs, the Neptune and the Cape Ann, that operate
under long-term time charters with one charterer.
The accounting policies applied to the segments are the same as
those applied in the consolidated financial statements, except that
i) Joint venture FSRUs is presented under the proportional
consolidation method for the segment note to the Partnership's
financial statements and in the tables below, and under equity
accounting for the consolidated financial statements and ii)
internal interest income and interest expense between the
Partnership's subsidiaries that eliminate in consolidation are not
included in the segment columns for the other financial income
(expense), net line. Under the proportional consolidation method,
50% of the Joint venture FSRUs' revenues, expenses and assets are
reflected in the segment note. Management monitors the results of
operations of joint ventures under the proportional consolidation
method and not the equity method of accounting.
HÖEGH LNG PARTNERS
LP
UNAUDITED SEGMENT
INFORMATION FOR THE QUARTER ENDED MARCH 31, 2022
(in thousands of
U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2022
|
|
|
|
|
|
|
Joint venture
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority
|
|
FSRUs
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
held
|
|
(proportional
|
|
|
|
Segment
|
|
|
|
Consolidated
|
|
(in thousands of
U.S. dollars)
|
|
FSRUs
|
|
consolidation)
|
|
Other
|
|
reporting
|
|
Eliminations
|
|
reporting
|
|
Time charter
revenues
|
|
$
|
35,310
|
|
10,634
|
|
—
|
|
45,944
|
|
(10,634)
|
(1)
|
$
|
35,310
|
|
Total
revenues
|
|
|
35,310
|
|
10,634
|
|
—
|
|
45,944
|
|
|
|
|
35,310
|
|
Operating
expenses
|
|
|
(7,182)
|
|
(2,243)
|
|
(3,164)
|
|
(12,589)
|
|
2,243
|
(1)
|
|
(10,346)
|
|
Equity in earnings
(losses) of joint ventures
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,634
|
(1)
|
|
8,634
|
|
Segment
EBITDA
|
|
|
28,128
|
|
8,391
|
|
(3,164)
|
|
33,355
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
(5,111)
|
|
(2,489)
|
|
—
|
|
(7,600)
|
|
2,489
|
(1)
|
|
(5,111)
|
|
Operating income
(loss)
|
|
|
23,017
|
|
5,902
|
|
(3,164)
|
|
25,755
|
|
|
|
|
28,487
|
|
Gain (loss) on
derivative instruments
|
|
|
—
|
|
4,879
|
|
—
|
|
4,879
|
|
(4,879)
|
(1)
|
|
—
|
|
Other financial income
(expense), net
|
|
|
(1,724)
|
|
(2,147)
|
|
(3,783)
|
|
(7,654)
|
|
2,147
|
(1)
|
|
(5,507)
|
|
Income (loss) before
tax
|
|
|
21,293
|
|
8,634
|
|
(6,947)
|
|
22,980
|
|
|
|
|
22,980
|
|
Income tax
expense
|
|
|
(2,819)
|
|
—
|
|
—
|
|
(2,819)
|
|
—
|
|
|
(2,819)
|
|
Net income
(loss)
|
|
$
|
18,474
|
|
8,634
|
|
(6,947)
|
|
20,161
|
|
—
|
|
$
|
20,161
|
|
Preferred unitholders'
interest in net income
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,877
|
(2)
|
|
3,877
|
|
Limited partners'
interest in net income (loss)
|
|
$
|
18,474
|
|
8,634
|
|
(6,947)
|
|
20,161
|
|
(3,877)
|
(2)
|
$
|
16,284
|
|
|
|
|
|
(1)
|
Eliminations reverse
each of the income statement line items of the proportional amounts
for Joint venture FSRUs and record the Partnership's share of the
Joint venture FSRUs net income (loss) to Equity in earnings
(losses) of joint ventures.
|
(2)
|
Allocates the preferred
unitholders' interest in net income to the preferred
unitholders.
|
HÖEGH LNG PARTNERS
LP
UNAUDITED SEGMENT
INFORMATION FOR THE QUARTER ENDED MARCH 31, 2021
(in thousands of
U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2021
|
|
|
|
|
|
|
Joint
venture
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority
|
|
FSRUs
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
held
|
|
(proportional
|
|
|
|
Segment
|
|
|
|
Consolidated
|
|
(in thousands of
U.S. dollars)
|
|
FSRUs
|
|
consolidation)
|
|
Other
|
|
reporting
|
|
Eliminations
|
|
reporting
|
|
Time charter
revenues
|
|
$
|
34,776
|
|
10,459
|
|
—
|
|
45,235
|
|
(10,459)
|
(1)
|
$
|
34,776
|
|
Total
revenues
|
|
|
34,776
|
|
10,459
|
|
—
|
|
45,235
|
|
|
|
|
34,776
|
|
Operating
expenses
|
|
|
(6,985)
|
|
(1,871)
|
|
(1,922)
|
|
(10,778)
|
|
1,871
|
(1)
|
|
(8,907)
|
|
Equity in earnings
(losses) of joint ventures
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,073
|
(1)
|
|
11,073
|
|
Segment
EBITDA
|
|
|
27,791
|
|
8,588
|
|
(1,922)
|
|
34,457
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
(5,210)
|
|
(2,492)
|
|
—
|
|
(7,702)
|
|
2,492
|
(1)
|
|
(5,210)
|
|
Operating income
(loss)
|
|
|
22,581
|
|
6,096
|
|
(1,922)
|
|
26,755
|
|
|
|
|
31,732
|
|
Gain (loss) on
derivative instruments
|
|
|
—
|
|
7,673
|
|
—
|
|
7,673
|
|
(7,673)
|
(1)
|
|
—
|
|
Other financial income
(expense), net
|
|
|
(2,114)
|
|
(2,696)
|
|
(4,064)
|
|
(8,874)
|
|
2,696
|
(1)
|
|
(6,178)
|
|
Income (loss) before
tax
|
|
|
20,467
|
|
11,073
|
|
(5,986)
|
|
25,554
|
|
|
|
|
25,554
|
|
Income tax
expense
|
|
|
(1,716)
|
|
—
|
|
—
|
|
(1,716)
|
|
—
|
|
|
(1,716)
|
|
Net income
(loss)
|
|
$
|
18,751
|
|
11,073
|
|
(5,986)
|
|
23,838
|
|
—
|
|
$
|
23,838
|
|
Preferred unitholders'
interest in net income
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,877
|
(2)
|
|
3,877
|
|
Limited partners'
interest in net income (loss)
|
|
$
|
18,751
|
|
11,073
|
|
(5,986)
|
|
23,838
|
|
(3,877)
|
(2)
|
$
|
19,961
|
|
|
|
|
|
(1)
|
Eliminations reverse
each of the income statement line items of the proportional amounts
for Joint venture FSRUs and record the Partnership's share of the
Joint venture FSRUs net income (loss) to Equity in earnings
(losses) of joint ventures.
|
(2)
|
Allocates the preferred
unitholders' interest in net income to the preferred
unitholders.
|
HÖEGH LNG PARTNERS
LP
UNAUDITED SCHEDULE
OF FINANCIAL INCOME AND EXPENSE
(in thousands of
U.S. dollars)
|
|
The following table
includes the financial income (expense), net for the
three months ended March 31, 2022 and 2021.
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March 31,
|
(in thousands of
U.S. dollars)
|
|
2022
|
|
|
2021
|
Interest
income
|
|
$
|
200
|
|
$
|
133
|
Interest
expense:
|
|
|
|
|
|
|
Interest
expense
|
|
|
(4,595)
|
|
|
(5,056)
|
Amortization and gain
(loss) on cash flow hedge
|
|
|
(101)
|
|
|
(45)
|
Commitment
fees
|
|
|
—
|
|
|
(34)
|
Amortization of debt
issuance cost
|
|
|
(500)
|
|
|
(523)
|
Total interest
expense
|
|
|
(5,196)
|
|
|
(5,658)
|
Other items,
net:
|
|
|
|
|
|
|
Foreign exchange gain
(loss)
|
|
|
(27)
|
|
|
(19)
|
Bank charges, fees and
other
|
|
|
(39)
|
|
|
(54)
|
Withholding tax on
interest expense and other
|
|
|
(445)
|
|
|
(580)
|
Total other items,
net
|
|
|
(511)
|
|
|
(653)
|
Total financial income
(expense), net
|
|
$
|
(5,507)
|
|
$
|
(6,178)
|
Appendix A: Segment EBITDA
Non-GAAP Financial Measures
Segment EBITDA. EBITDA is defined as earnings before
interest, taxes, depreciation and amortization. Segment EBITDA is
defined as earnings before interest, taxes depreciation,
amortization, impairment and other financial items. Other financial
items consist of gain (loss) on debt extinguishment, gain (loss) on
derivative instruments and other items, net (including foreign
exchange gains and losses and withholding tax on interest
expenses). Segment EBITDA is used as a supplemental financial
measure by management and external users of financial statements,
such as the Partnership's lenders, to assess its financial and
operating performance. The Partnership believes that Segment EBITDA
assists its management and investors by increasing the
comparability of its performance from period to period and against
the performance of other companies in the industry that provide
Segment EBITDA information. This increased comparability is
achieved by excluding the potentially disparate effects between
periods or companies of interest, depreciation, amortization,
impairment, taxes, and other financial items, 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 Segment EBITDA as a financial and operating
measure benefits investors in (a) selecting between investing
in it and other investment alternatives and (b) monitoring its
ongoing financial and operational strength in assessing whether to
continue to hold common units or preferred units. Segment EBITDA is
a non-GAAP financial measure and should not be considered an
alternative to net income, operating income or any other measure of
financial performance presented in accordance with U.S. GAAP.
Segment EBITDA excludes some, but not all, items that affect net
income, and these measures may vary among other companies.
Therefore, Segment EBITDA as presented below may not be comparable
to similarly titled measures of other companies. The following
tables reconcile Segment EBITDA for each of the segments and the
Partnership as a whole to net income (loss), the comparable U.S.
GAAP financial measure, for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2022
|
|
|
|
|
|
|
|
Joint venture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority
|
|
FSRUs
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
held
|
|
(proportional
|
|
|
|
Segment
|
|
Elimin-
|
|
Consolidated
|
|
|
(in thousands of
U.S. dollars)
|
|
FSRUs
|
|
consolidation)
|
|
Other
|
|
reporting
|
|
ations(1)
|
|
reporting
|
|
|
Reconciliation to
net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
18,474
|
|
8,634
|
|
(6,947)
|
|
20,161
|
|
|
|
$
|
20,161
|
(3)
|
|
Interest
income
|
|
|
(35)
|
|
(4)
|
|
(165)
|
|
(204)
|
|
4
|
(4)
|
|
(200)
|
|
|
Interest
expense
|
|
|
1,292
|
|
2,127
|
|
3,904
|
|
7,323
|
|
(2,127)
|
(4)
|
|
5,196
|
|
|
Depreciation and
amortization
|
|
|
5,111
|
|
2,489
|
|
—
|
|
7,600
|
|
(2,489)
|
(5)
|
|
5,111
|
|
|
Other financial items
(2)
|
|
|
467
|
|
(4,855)
|
|
44
|
|
(4,344)
|
|
4,855
|
(6)
|
|
511
|
|
|
Income tax (benefit)
expense
|
|
|
2,819
|
|
—
|
|
—
|
|
2,819
|
|
—
|
|
|
2,819
|
|
|
Equity in earnings
of JVs: Interest (income) expense,
net
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,123
|
(4)
|
|
2,123
|
|
|
Equity in earnings
of JVs: Depreciation and
amortization
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,489
|
(5)
|
|
2,489
|
|
|
Equity in earnings
of JVs: Other financial items (2)
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4,855)
|
(6)
|
|
(4,855)
|
|
|
Segment
EBITDA
|
|
$
|
28,128
|
|
8,391
|
|
(3,164)
|
|
33,355
|
|
|
|
$
|
33,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2021
|
|
|
|
|
|
|
|
Joint venture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority
|
|
FSRUs
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
held
|
|
(proportional
|
|
|
|
Segment
|
|
Elimin-
|
|
Consolidated
|
|
|
(in thousands of
U.S. dollars)
|
|
FSRUs
|
|
consolidation)
|
|
Other
|
|
reporting
|
|
ations
(1)
|
|
reporting
|
|
|
Reconciliation to
net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
18,751
|
|
11,073
|
|
(5,986)
|
|
23,838
|
|
|
|
$
|
23,838
|
(3)
|
|
Interest
income
|
|
|
(50)
|
|
—
|
|
(83)
|
|
(133)
|
|
—
|
(4)
|
|
(133)
|
|
|
Interest
expense
|
|
|
1,563
|
|
2,692
|
|
4,095
|
|
8,350
|
|
(2,692)
|
(4)
|
|
5,658
|
|
|
Depreciation and
amortization
|
|
|
5,210
|
|
2,492
|
|
—
|
|
7,702
|
|
(2,492)
|
(5)
|
|
5,210
|
|
|
Other financial items
(2)
|
|
|
601
|
|
(7,669)
|
|
52
|
|
(7,016)
|
|
7,669
|
(6)
|
|
653
|
|
|
Income tax (benefit)
expense
|
|
|
1,716
|
|
—
|
|
—
|
|
1,716
|
|
—
|
|
|
1,716
|
|
|
Equity in earnings
of JVs: Interest (income) expense,
net
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,692
|
(4)
|
|
2,692
|
|
|
Equity in earnings
of JVs: Depreciation and
amortization
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,492
|
(5)
|
|
2,492
|
|
|
Equity in earnings
of JVs: Other financial items (2)
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7,669)
|
(6)
|
|
(7,669)
|
|
|
Segment
EBITDA
|
|
$
|
27,791
|
|
8,588
|
|
(1,922)
|
|
34,457
|
|
|
|
$
|
34,457
|
|
|
|
|
|
|
(1)
|
Eliminations reverse
each of the income statement reconciling line items of the
proportional amounts for Joint venture FSRUs and record the
Partnership's share of the Joint venture FSRUs net income (loss) to
Equity in earnings (loss) of joint ventures. Separate adjustments
from the consolidated net income to Segment EBITDA for the
Partnership's share of the Joint venture FSRUs are included in the
reconciliation lines starting with "Equity in earnings of
JVs".
|
(2)
|
Other financial items
consist of gain and loss on debt extinguishment, gains and losses
on derivative instruments and other items, net including foreign
exchange gains or losses and withholding tax on interest
expense.
|
(3)
|
There is no adjustment
between net income for Total Segment reporting and the Consolidated
reporting because the net income under the proportional
consolidation and equity method of accounting is the
same.
|
(4)
|
Interest income and
interest expense for the Joint venture FSRUs is eliminated from the
Total Segment reporting to agree to the interest income and
interest expense in the Consolidated reporting and reflected as a
separate adjustment to the equity accounting on the line Equity
in earnings of JVs: Interest (income) expense for the
Consolidated reporting.
|
(5)
|
Depreciation and
amortization for the Joint venture FSRUs is eliminated from the
Total Segment reporting to agree to the depreciation and
amortization in the Consolidated reporting and reflected as a
separate adjustment to the equity accounting on the line Equity
in earnings of JVs: Depreciation and amortization for the
Consolidated reporting.
|
(6)
|
Other financial
items for the Joint venture FSRUs is eliminated from the Segment
reporting to agree to the Other financial items in the Consolidated
reporting and reflected as a separate adjustment to the equity
accounting on the line Equity in earnings of JVs: Other
financial items for the Consolidated reporting.
|
Media contact:
The IGB Group, Bryan Degnan, +1
(646) 673‑9701 / Leon Berman, +1
(212) 477‑8438
www.hoeghlngpartners.com
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SOURCE Hoegh LNG Partners LP