Höegh LNG Partners swings to loss in Q1 2016
Höegh LNG Partners LP (NYSE: HMLP) (the "Partnership") reported its financial results for the quarter ended March 31, 2016.
Highlights
- Reported total time charter revenues of $21.7 million for the first quarter of 2016 compared to $11.5 million of time charter revenue for the first quarter of 2015, reflecting the inclusion of the FSRU Höegh Gallant acquired on October 1, 2015
- Generated operating income of $6.2 million and net loss of $1.0 million for the first quarter of 2016 compared to operating income of $5.0 million and net income of $2.6 million for the first quarter of 2015; operating income and net loss were impacted by unrealized losses on derivative instruments on the Partnership's share of equity in losses of joint ventures in the first quarter of 2016 and 2015
- Excluding the impact of the unrealized losses on derivatives for the three months ended March 31, 2016 and 2015 affecting the equity in earnings of joint ventures, operating income for the three months ended March 31, 2016 would have been $15.2 million, an increase of $6.2 million or approximately 69% from $9.0 million for the three months ended March 31, 2015
- Generated Adjusted EBITDA1 of $25.2 million for the first quarter of 2016 compared to $15.9 million for the first quarter of 2015
- On May 13, 2016, paid a $0.4125 per unit distribution with respect to the first quarter of 2016, equivalent to $1.65 per unit on an annual basis.
Richard Tyrrell, Chief Executive Officer and Chief Financial Officer stated: "During the first quarter of 2016, Höegh LNG Partners achieved record LNG regas volumes, which underscores the strategic and economic benefits of our floating LNG terminals. Taking into consideration the scheduled maintenance on the Höegh Gallant and fewer operating days in the first quarter, we generated consistent financial performance compared to the previous quarter. The Partnership's stable cash flows are generated by long-term contracts that are fixed rate and have an average remaining term of 14 years.
For the first quarter, we declared a cash distribution of $0.4125 per unit, which is unchanged from the previous quarter and represents a 22% increase since the initial public offering. Building on our success acquiring the Höegh Gallant in the third quarter of 2015, we expect to have the opportunity to acquire the Höegh Grace once it goes on contract in the second half of this year and to be in a position to continue growing the distribution."
Financial Results Overview
The Partnership reported net loss of $1.0 million for the three months ended March 31, 2016, a decrease of $3.6 million from net income of $2.6 million for the three months ended March 31, 2015. The net loss for the three months ended March 31, 2016 and the net income for the three months ended March 31, 2015 were impacted by the unrealized gains (losses) on derivative instruments mainly on the Partnership's share of equity in earnings of joint ventures.
Excluding all unrealized gains (losses) on derivative instruments, net income for the three months ended March 31, 2016 was $7.6 million, an increase of $1.2 million or 18.8% from $6.4 million for the three months ended March 31, 2015. Excluding the unrealized gains (losses) on derivative instruments, the increase is primarily due to the inclusion of the results of the Höegh Gallant which is partially offset by the reduction of the interest income on the demand note cancelled as part of the acquisition price.
The PGN FSRU Lampung was on-hire for the entire first quarter of 2016. The Höegh Gallant was off-hire 15 days due to scheduled maintenance in the first quarter of 2016.
Equity in losses of joint ventures, which own the vessels GDF Suez Neptune and the GDF Suez Cape Ann, for the three months ended March 31, 2016 was $6.7 million, an increase of $4.6 million from equity in losses of joint ventures of $2.1 million for the three months ended March 31, 2015. The reason for the increased losses was higher unrealized losses on derivative instruments in the Partnership's share of the joint ventures for the three months ended March 31, 2016 of $9.0 million, compared to unrealized losses on derivative instruments of $3.9 million for three months ended March 31, 2015. The joint ventures do not apply hedge accounting for interest rate swaps and all changes in fair value are included in equity in earnings (losses) of joint ventures. For the three months ended March 31, 2016, the Partnership's share of operating income in the joint ventures was $6.1 million compared to $5.8 million for the three months ended March 31, 2015.
Operating income for the three months ended March 31, 2016 was $6.2 million, an increase of $1.2 million from $5.0 million for the three months ended March 31, 2015. Excluding the impact of the unrealized losses on derivative instruments for the three months ended March 31, 2016 and 2015 impacting the equity in earnings of joint ventures, operating income for the three months ended March 31, 2016 would have been $15.2 million, an increase of $6.2 million from $9.0 million for the three months ended March 31, 2015. The increase for the three months ended March 31, 2016 is primarily due to the inclusion of the results of the Höegh Gallant acquired on October 1, 2015.
Adjusted EBITDA was $25.2 million for the three months ended March 31, 2016, an increase of $9.3 million from $15.9 million for the three months ended March 31, 2015 reflecting the inclusion of the results of the Höegh Gallant acquired on October 1, 2015.
