Höegh LNG Partners LP Reports Financial Results for the Quarter Ended September 30, 2020

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HAMILTON, Bermuda, Nov. 19, 2020 /PRNewswire/ — Höegh LNG Partners LP (NYSE: HMLP) (the “Partnership”) today reported its financial results for the quarter ended September 30, 2020.

Highlights

  • Continued measures to mitigate the risks from the COVID-19 pandemic and ensure health and safety of crews and staff, whose wellbeing is the Partnership’s highest priority
  • 100% availability of FSRUs for the third quarter of 2020
  • Reported total time charter revenues of $35.9 million for the third quarter of 2020 compared to $37.0 million of time charter revenues for the third quarter of 2019
  • Generated operating income of $28.1 million, net income of $19.5 million and limited partners’ interest in net income of $15.8 million for the third quarter of 2020 compared to operating income of $23.4 million, net income of $13.7 million and limited partners’ interest in net income of $10.2 million for the third quarter of 2019
  • Operating income, net income and limited partners’ interest in net income were impacted by unrealized gains on derivative instruments for the third quarter of 2020 compared with unrealized losses on derivative instruments for the third quarter of 2019 mainly on the Partnership’s share of equity in earnings of joint ventures
  • Excluding the impact of the unrealized gains (losses) on derivative instruments for the third quarter of 2020 and 2019 impacting the equity in earnings of joint ventures, operating income for the three months ended September 30, 2020 would have been $25.8 million, an increase of $0.2 million from $25.6 million for the three months ended September 30, 2019
  • Generated Segment EBITDA1 of $36.4 million for each of the third quarter of 2020 and 2019
  • On November 13, 2020, paid a $0.44 per unit distribution on common units with respect to the third quarter of 2020, equivalent to $1.76 per unit on an annualized basis
  • On November 16, 2020, paid a distribution of $0.546875 per 8.75% Series A cumulative redeemable preferred unit (“Series A preferred unit”), for the period commencing on August 15, 2020 to November 14, 2020

Sveinung J.S. Støhle, Chief Executive Officer stated: “In the third quarter, we are very pleased to have once again delivered a high level of safe and reliable operating and financial performance, despite the continuing challenges presented by COVID-19. The Partnership’s ability to achieve a full quarter of 100% availability for our fleet of high-quality, modern FSRUs enabled us to maximize the value of our long-term, fixed-rate contracts and to demonstrate the robust distribution coverage inherent in our more than 8.5 years of average remaining contract cover. Liquid natural gas is readily available and highly cost competitive globally, and it is clear that LNG will play a leading role in driving the energy transition for decades to come.”

1 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.

Financial Results Overview

For the three months ended September 30, 2020, each of the Partnership’s FSRUs have had 100% availability due to the diligent efforts of the crew and staff to ensure all aspects of operations continued to function smoothly in spite of challenges as a result of the COVID-19 pandemic. The Partnership has mitigated the risk of an outbreak of the Coronavirus 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 the time charter contracts and not experienced any off-hire for its FSRUs for the three months ended September 30, 2020.

The Partnership reported net income of $19.5 million for the three months ended September 30, 2020, an increase of $5.8 million from net income of $13.7 million for the three months ended September 30, 2019. Net income was impacted by unrealized gains on derivative instruments for the third quarter of 2020 compared with unrealized losses for the third quarter of 2019, mainly included in the Partnership’s share of equity in earnings of joint ventures.

Excluding the impact of all of the unrealized gains (losses) on derivative instruments, net income for the three months ended September 30, 2020 would have been $17.3 million, an increase of $1.4 million from $15.9 million for the three months ended September 30, 2019. Excluding the impact of the unrealized gains (losses) on derivatives, the increase for the three months ended September 30, 2020, is primarily due to lower total operating expenses, improved results for the equity in earnings of joint ventures and lower interest expense which were partially offset by the impact of lower time charter revenues.

Preferred unitholders’ interest in net income was $3.7 million for the three months ended September 30, 2020, an increase of $0.2 million from $3.5 million for the three months ended September 30, 2019, which was due to additional preferred units issued as part of the at-the-market offering program (“ATM program”). Limited partners’ interest in net income for the three months ended September 30, 2020 was $15.8 million, an increase of $5.6 million from limited partners’ interest in net income of $10.2 million for the three months ended September 30, 2019. Excluding all of the unrealized gains and losses on derivative instruments, limited partners’ interest in net income for the three months ended September 30, 2020 would have been $13.6 million, an increase of $1.1 million from $12.5 million for the three months ended September 30, 2019. 

The PGN FSRU Lampung, the Höegh Gallant and the Höegh Grace were on-hire for the entire third quarter of 2020 and 2019.

Equity in earnings of joint ventures was $5.8 million for the three months ended September 30, 2020, an increase of $5.2 million from $0.6 million for the three months ended September 30, 2019. The joint ventures own the Neptune and the Cape Ann. Unrealized gains and losses on derivative instruments in the joint ventures significantly impacted the equity in earnings of joint ventures for the three months ended September 30, 2020 and 2019. 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. Excluding the unrealized gains and losses for the three months ended September 30, 2020 and 2019, the equity in earnings of joint ventures would have been $3.6 million for the three months ended September 30, 2020, an increase of $0.8 million compared to equity in earnings of joint ventures of $2.8 million for the three months ended September 30, 2019. Excluding the unrealized gains (losses) on derivative instruments, the increase was mainly due to lower vessel operating expenses incurred for maintenance and lower administrative and interest expenses between the periods. For the three months ended September 30, 2019, the Neptune completed an on-water class renewal survey and routine maintenance was completed during the survey. The Neptune was on-hire during the class renewal period.

Operating income for the three months ended September 30, 2020 was $28.1 million, an increase of $4.7 million from $23.4 million for the three months ended September 30, 2019. Excluding the impact of the unrealized gains (losses) on derivatives for the three months ended September 30, 2020 and 2019 impacting the equity in earnings of joint ventures, operating income for the three months ended September 30, 2020 would have been $25.8 million, an increase of $0.2 million from $25.6 million for the three months ended September 30, 2019.

Segment EBITDA1 was $36.4 million for each of the three months ended September 30, 2020 and 2019.

Effective January 1, 2020, the Partnership adopted the new accounting standard, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, with recognition of a net decrease to retained earnings of $0.16 million as of January 1, 2020 for the cumulative effect of adopting the new standard. The cumulative effect includes allowances for expected credit losses related to the net investment in financing lease and trade receivables. For the three months ended September 30, 2020, there was no change in the allowance for expected credit losses. 

Financing and Liquidity

As of September 30, 2020, the Partnership had cash and cash equivalents of $25.0 million. Current restricted cash for operating obligations of the PGN FSRU Lampung was $6.5 million and long-term restricted cash required under the Lampung facility was $12.2 million as of September 30, 2020. As of November 19, 2020, the Partnership had an undrawn balance of $14.7 million on the $63 million revolving credit tranche of the $385 million facility and an undrawn balance of $63.0 million on the $85 million revolving credit facility from Höegh LNG.

As of September 30, 2020, the Partnership has no material commitments for capital expenditures. However, during the fourth quarter of 2020, part of the procedures for the on-water class renewal survey for the Höegh Grace will be performed. No off-hire is expected during the fourth quarter of 2020. The remainder of the on-water class renewal survey is expected to be completed during the first half of 2021. Expenditures of approximately $0.6 million are expected to be incurred by December 31, 2020 in connection with the survey. In addition, the joint ventures have a remaining outstanding liability for a boil-off claim under the time charters totaling $6.5 million as of September 30, 2020. The Partnership’s 50% share of the liability is $3.3 million as of September 30, 2020. In February 2020, each of the joint ventures and the charterer reached a commercial settlement addressing all the past and future claims. The final settlement and release agreements were signed on and had an effective date of April 1, 2020. Among other things, the settlement provides that 1) the boil-off claim, up to the signature date of the settlement agreements, will be settled for an aggregate amount of $23.7 million, paid in instalments during 2020, 2) the costs of the arbitration tribunal will be equally split between the two parties and each party will settle its legal and other costs, 3) the joint ventures have or will implement technical upgrades on the vessels at their own cost to minimize boil-off, and 4) the relevant provisions of the time charters were amended regarding the computation and settlement of prospective boil-off claims. The first instalment of the settlement of $17.2 million was paid by the joint ventures in April 2020. The Partnership’s 50% share was $8.6 million. The joint ventures expect to pay the remaining instalment, which is due no later than December 15, 2020, with accumulated cash balances on the joint ventures’ respective balance sheets as of September 30, 2020 and with cash from operations in 2020.

The Partnership is indemnified by Höegh LNG for its share of the cash impact of the settlement, the arbitration costs and any legal expenses, the technical modifications of the vessels and any prospective boil-off claims or other direct impacts of the settlement agreement. On April 8, 2020, the Partnership was indemnified by Höegh LNG for its share of the joint ventures boil-off settlement payments by a reduction of $8.6 million on its outstanding balance on the $85 million revolving credit facility from Höegh LNG. The remaining amount of the indemnification for the boil-off claim will be settled when the amount is paid to the charterer.

During the third quarter of 2020, the Partnership made quarterly repayments of $4.8 million on the Lampung facility and $6.4 million on the $385 million facility. In addition, the Partnership drew $6.6 million on the $85 million revolving credit facility from Höegh LNG on August 7, 2020. The Partnership’s book value and outstanding principal of total long-term debt was $436.5 million and $443.9 million, respectively, as of September 30, 2020, including the Lampung and the $385 million facilities (including the associated $63 million revolving credit facility) and the $85 million revolving credit facility.

As of September 30, 2020, the Partnership’s total current liabilities exceeded total current assets by $15.7 million. This is partly a result of the current portion of long-term debt of $44.7 million being classified as current while restricted cash of $12.2 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 which will 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 current resources, including the undrawn balances under the $85 million revolving credit facility and the $63 million revolving credit tranche of the $385 million facility, will be sufficient to meet the Partnership’s working capital requirements for its business for the next twelve months.

As of September 30, 2020, the Partnership had outstanding interest rate swap agreements for a total notional amount of $334.5 million to hedge against the interest rate risks of its long-term debt under the Lampung and the $385 million facilities. The Partnership applies hedge accounting for derivative instruments related to those 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 of an average of approximately 2.8% for the $385 million facility. The carrying value of the liability for derivative instruments was a net liability of $28.9 million as of September 30, 2020.

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 line “accumulated earnings in joint ventures” on the consolidated balance sheet and are not included in the balance sheet figures disclosed above.

On August 7, 2020, the Partnership drew $6.6 million on the $85 million revolving credit facility from Höegh LNG.

On August 14, 2020, the Partnership paid a cash distribution of $15.0 million, or $0.44 per common unit, with respect to the second quarter of 2020, equivalent to $1.76 per unit on an annualized basis.

On August 17, 2020, the Partnership paid a cash distribution of $3.7 million, or $0.546875 per Series A preferred unit, for the period commencing on May 15, 2020 to August 14, 2020.

For the period from July 1, 2020 to September 30, 2020, the Partnership sold 11,383 Series A preferred units under the ATM program at an average gross sales price of $24.02 per unit and received net proceeds, after sales commissions, of $0.3 million. The Partnership did not issue any common units under the ATM program during the three and nine months ended September 30, 2020.

On October 23, 2020, the Partnership drew $10.65 million on the $85 million revolving credit facility from Höegh LNG.

On November 13, 2020, the Partnership paid a distribution of $15.1 million, or $0.44 per common unit, with respect to the third quarter of 2020, equivalent to $1.76 per unit on an annualized basis.

On November 16, 2020, the Partnership paid a distribution of $3.7 million, or $0.546875 per Series A preferred unit for the period commencing on August 15, 2020 to November 14, 2020.

For the period from October 1, 2020 to November 17, 2020, the Partnership sold an aggregate of 32,951 Series A preferred units under the ATM program at an average gross sales price of $24.12 per unit and received net proceeds, after sales commissions, of $0.8 million.

Outlook

Höegh LNG has indemnified the Partnership for the joint ventures’ boil-off settlement, leased the Höegh Gallant under lease and maintenance agreement with a subsidiary of Höegh LNG (“Subsequent Charter”) and provided the Partnership the $85 million revolving credit facility. Höegh LNG’s ability to make payments to the Partnership under the indemnification for the boil-off settlement, the Subsequent Charter, and funding requests under the $85 million revolving credit facility may be affected by events beyond the control of Höegh LNG or the Partnership, including opportunities to obtain new employment for the Höegh Gallant and 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 Höegh LNG is unable to meet its obligations to the Partnership under the indemnification for the boil-off settlement, the Subsequent Charter or meet funding requests, the Partnership’s financial condition, results of operations and ability to make cash distributions to unitholders could be materially adversely affected.

The recent outbreak of Coronavirus (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 Coronavirus outbreak to date, the ultimate length and severity of the Coronavirus outbreak and its potential impact on the Partnership’s operations and financial condition is uncertain at this time. 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 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. As of November 19, 2020, 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. Furthermore, should there be an outbreak of the Coronavirus 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 mitigated the risk of an outbreak of the Coronavirus on board its vessels by extending time between crew rotations on the vessels and developing mitigating actions for crew rotations. As a result, the Partnership expects that it may incur somewhat higher crewing expenses to ensure appropriate mitigation actions are in place to minimize risks of outbreaks. To date, the Partnership has not had 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 addition, if financial institutions providing the Partnership’s interest rate swaps or lenders under the revolving credit facility are unable to meet their obligations, the Partnership could experience a higher interest expense or be unable to obtain funding. Since implementing its prior ATM program in January 2018 until November 19, 2020, the Partnership has sold preferred units and common units for total net proceeds of $60.5 million which has supplemented the Partnership’s liquidity. In current market conditions with lower unit prices, sales under the new ATM program is a less viable and more expensive option for accessing liquidity. 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. The Partnership has long term debt maturing in October 2021 when the Lampung facility must be refinanced. The Partnership is exploring options to refinance the Lampung facility and expects to be successful in the refinancing. Should the Partnership be unable to obtain refinancing for the Lampung facility in 2021, it may not have sufficient funds or other assets to satisfy all its obligations, which would have a material adverse effect on its business, results of operations and financial condition.

Pursuant to the omnibus agreement that the Partnership entered into with Höegh LNG at the time of the initial public offering, Höegh LNG is obligated to offer to the Partnership any floating storage and regasification unit (“FSRU”) or LNG carrier operating under a charter of five or more years.

Höegh LNG is actively pursuing the following projects that are subject to a number of conditions, outside its control, impacting the timing and the ability of such projects to go forward. The Partnership may have the opportunity in the future to acquire the FSRUs listed below, when operating under a charter of five years or more, if one of the following projects is fulfilled:

  • On December 21, 2018, Höegh LNG announced that it had entered a contract with AGL Shipping Pty Ltd. (“AGL”), a subsidiary of AGL Energy Ltd., to provide an FSRU to service AGL’s proposed import facility in Victoria, Australia. The contract is for a period of 10 years and is subject to AGL’s final investment decision by the board of directors of AGL Energy Ltd. for the project and obtaining necessary regulatory and environmental approvals.
  • Höegh LNG has also won exclusivity to provide an FSRU for potential projects for Australian Industrial Energy (“AIE”) at Port Kembla, Australia and for another company in the Asian market. Both projects are dependent on a variety of regulatory approvals or permits as well as final investment decisions.

Höegh LNG has four operating FSRUs, the Höegh Giant (HHI Hull No. 2552), delivered from the shipyard on April 27, 2017, the Höegh Esperanza (HHI Hull No. 2865), delivered from the shipyard on April 5, 2018, Höegh Gannet (HHI Hull No. 2909), delivered from the shipyard on December 6, 2018, and the Höegh Galleon (SHI Hull No. 2220), delivered from the shipyard on August 27, 2019. The Höegh Giant is operating on a contract with Naturgy. The Höegh Esperanza is operating on a contract that commenced on June 7, 2018 with CNOOC Gas & Power Trading and Marketing Ltd. (“CNOOC”). The Höegh Gannet serves on a 12-month LNG carrier contract that commenced in May 2020. The Höegh Galleon operates on an interim LNG carrier contract with Cheniere Marketing International LLP (“Cheniere”) that commenced in September 2019.

Pursuant to the terms of the omnibus agreement, the Partnership will have the right to purchase the Höegh Giant, the Höegh Esperanza, the Höegh Gannet and the Höegh Galleon following acceptance by the respective charterer of the related FSRU under a contract of five years or more, subject to reaching an agreement with Höegh LNG regarding the purchase price.

There can be no assurance that the Partnership will acquire any vessels from Höegh LNG or of the terms upon which any such acquisition may be made.

Presentation of Third Quarter 2020 Results

A presentation will be held today, Thursday, November 19, 2020, at 8:30 A.M. (EST) to discuss financial results for the third quarter of 2020. 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://www.webcaster4.com/Webcast/Page/942/38684

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 November 26, 2020.

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:

10149871

Financial Results on Form 6-K

The Partnership has filed a Form 6-K with the SEC with detailed information on the Partnership’s results of operations for the three and nine months ended September 30, 2020, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and unaudited condensed interim consolidated financial statements. The Form 6-K can be viewed on the SEC’s website: http://www.sec.gov and at HMLP’s website: http://www.hoeghlngpartners.com

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 its 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 the Partnership’s units or any increases in the quarterly distributions on the Partnership’s 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 Partnership’s joint ventures’ ability to settle the boil-off claim;
  • the ability of Höegh LNG to meet its financial obligations to the Partnership pursuant to the Subsequent Charter, its guarantee and indemnification obligations, including in relation to the boil-off claim;
  • the Partnership’s ability to compete successfully for future chartering opportunities;
  • 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;
  • 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 Total S.A. 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 Partnership’s ability to compete successfully for future chartering and newbuilding opportunities;
  • timely acceptance of the Partnership’s vessels by their charterers;
  • termination dates and extensions of charters;
  • 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;
  • the availability and cost of low sulfur fuel oil compliant with the International Maritime Organization (“IMO”) sulfur emission limit reductions generally referred to as “IMO 2020” that took effect January 1, 2020 and, absent the installation of expensive scrubbers, reduced the maximum allowable sulfur content for fuel oil used in the marine sector, including the Partnership’s vessels, from 3.5% to 0.5%;
  • 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 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 the Partnership’s fees and expenses payable under the Partnership’s ship management agreements, the technical information and services agreement and the administrative services agreements;
  • the anticipated taxation of the Partnership, its subsidiaries and affiliates and distributions to its 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, 2019 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 press 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



Nine months ended




September 30,



September 30,




2020



2019



2020



2019


REVENUES

















Time charter revenues


$

35,913



$

36,982



$

107,036



$

106,834


Other revenue












64


Total revenues



35,913




36,982




107,036




106,898


OPERATING EXPENSES

















Vessel operating expenses



(5,963)




(6,699)




(17,246)




(21,656)


Administrative expenses



(2,455)




(2,228)




(7,037)




(7,076)


Depreciation and amortization



(5,210)




(5,285)




(15,727)




(16,197)


Total operating expenses



(13,628)




(14,212)




(40,010)




(44,929)


Equity in earnings (losses) of joint ventures



5,774




621




2,202




(602)


Operating income (loss)



28,059




23,391




69,228




61,367


FINANCIAL INCOME (EXPENSE), NET

















Interest income



135




189




470




685


Interest expense



(6,014)




(6,957)




(18,847)




(20,941)


Gain (loss) on debt extinguishment












1,030


Other items, net



(846)




(854)




(1,980)




(2,660)


Total financial income (expense), net



(6,725)




(7,622)




(20,357)




(21,886)


Income (loss) before tax



21,334




15,769




48,871




39,481


Income tax expense



(1,859)




(2,065)




(4,240)




(5,486)


Net income (loss)


$

19,475



$

13,704



$

44,631



$

33,995


Preferred unitholders’ interest in net income



3,681




3,482




11,017




10,224


Limited partners’ interest in net income (loss)


$

15,794



$

10,222



$

33,614



$

23,771



















Basic Earnings per Unit

















Common unit public


$

0.46



$

0.30



$

0.97



$

0.68


Common unit Höegh LNG


$

0.49



$

0.57



$

1.05



$

1.36


Subordinated unit Höegh LNG


$



$



$



$

0.52



















Diluted earnings per Unit

















Common unit public


$

0.46



$

0.29



$

0.97



$

0.68


Common unit Höegh LNG


$

0.49



$

0.57



$

1.05



$

1.36


Subordinated unit Höegh LNG


$



$



$



$

0.52


HÖEGH LNG PARTNERS LP

UNAUDITED CONDENSED INTERIM CONSOLIDATED

BALANCE SHEETS

(in thousands of U.S. dollars)




As of




September 30,



December 31,




2020



2019


ASSETS









Current assets









Cash and cash equivalents


$

25,048



$

39,126


Restricted cash



6,524




8,066


Trade receivables



4,522




735


Amounts due from affiliates



3,658




4,296


Inventory






463


Current portion of net investment in financing lease



4,861




4,551


Prepaid expenses and other receivables



3,133




2,534


Total current assets



47,746




59,771


Long-term assets









Restricted cash



12,210




12,627


Accumulated earnings of joint ventures



5,472




3,270


Advances to joint ventures



4,069




3,831


Vessels, net of accumulated depreciation



624,825




640,431


Other equipment



83




256


Intangibles and goodwill



14,750




17,108


Net investment in financing lease



270,572




274,353


Long-term deferred tax asset



253




217


Other long-term assets



848




936


Total long-term assets



933,082




953,029


Total assets


$

980,828



$

1,012,800


HÖEGH LNG PARTNERS LP

UNAUDITED CONDENSED INTERIM CONSOLIDATED

BALANCE SHEETS

(in thousands of U.S. dollars)




As of




September 30,



December 31,




2020



2019


LIABILITIES AND EQUITY









Current liabilities









Current portion of long-term debt


$

44,660



$

44,660


Trade payables



269




533


Amounts due to owners and affiliates



2,427




2,513


Value added and withholding tax liability



782




1,476


Derivative instruments



7,204




2,907


Accrued liabilities and other payables



8,119




11,164


Total current liabilities



63,461




63,253


Long-term liabilities









Long-term debt



380,544




412,301


Revolving credit facility due to owners and affiliates



11,292




8,792


Derivative instruments



21,713




12,028


Long-term tax liability



2,572




2,283


Long-term deferred tax liability



14,127




12,549


Other long-term liabilities



53




84


Total long-term liabilities



430,301




448,037


Total liabilities



493,762




511,290


EQUITY









8.75% Series A preferred units









6,719,382 units issued and outstanding at September 30, 2020 and









6,625,590 units issued and outstanding at December 31, 2019



166,887




164,482


Common units public









18,040,432 units issued and outstanding at September 30, 2020 and









18,028,786 units issued and outstanding at December 31, 2019



308,971




315,176


Common units Höegh LNG









15,257,498 units issued and outstanding at September 30, 2020 and









December 31, 2019



43,188




39,795


Accumulated other comprehensive income (loss)



(31,980)




(17,943)


Total partners’ capital



487,066




501,510


Total equity



487,066




501,510


Total liabilities and equity


$

980,828



$

1,012,800


HÖEGH LNG PARTNERS LP

UNAUDITED CONDENSED INTERIM CONSOLIDATED

STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)




Three months ended




September 30,




2020



2019


OPERATING ACTIVITIES









Net income (loss)


$

19,475



$

13,704


Adjustments to reconcile net income to net cash provided by (used in) operating activities:









  Depreciation and amortization



5,210




5,285


  Equity in losses (earnings) of joint ventures



(5,774)




(621)


  Changes in accrued interest income on advances to joint ventures



(82)




(76)


  Amortization of deferred debt issuance cost and fair value of debt assumed



567




631


  Amortization in revenue for above market contract and extension



694




916


  Expenditure for drydocking






(284)


  Changes in accrued interest expense



(147)




54


  Receipts from repayment of principal on financing lease



1,150




1,053


  Unrealized foreign exchange losses (gains)



90




55


  Unrealized loss (gain) on derivative instruments



24




14


  Non-cash revenue: tax paid directly by charterer



(215)




(214)


  Non-cash income tax expense: tax paid directly by charterer



215




214


  Deferred tax expense and provision for tax uncertainty



809




932


  Issuance of units for Board of Directors’ fees



128




39


  Other adjustments



(85)




167


  Changes in working capital:









  Trade receivables



(261)




(3)


  Inventory






(2)


  Prepaid expenses and other receivables



174




(753)


  Trade payables



(136)




87


  Amounts due to owners and affiliates



843




(2,678)


  Value added and withholding tax liability



(250)




1,002


  Accrued liabilities and other payables



379




(91)


  Net cash provided by (used in) operating activities


$

22,808



$

19,431











INVESTING ACTIVITIES









  Expenditure for vessel and other equipment






(129)


  Net cash provided by (used in) investing activities


$



$

(129)


HÖEGH LNG PARTNERS LP

UNAUDITED CONDENSED INTERIM CONSOLIDATED

STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)




Three months ended




September 30,




2020



2019


FINANCING ACTIVITIES









Proceeds from long-term debt


$



$

48,300


Proceeds from revolving credit facility due to owners and affiliates



6,600





Repayment of long-term debt



(11,165)




(11,165)


Repayment of revolving credit facility due to owners and affiliates






(34,000)


Repayment of customer loan for funding of value added liability on import






(438)


Net proceeds from issuance of 8.75% Series A preferred units



268




1,403


Cash distributions to limited partners and preferred unitholders



(18,713)




(18,417)


Net cash provided by (used in) financing activities



(23,010)




(14,317)











Increase (decrease) in cash, cash equivalents and restricted cash



(202)




4,985


Effect of exchange rate changes on cash, cash equivalents and restricted cash



(29)




(52)


Cash, cash equivalents and restricted cash, beginning of period



44,013




48,035


Cash, cash equivalents and restricted cash, end of period


$

43,782



$

52,968


HÖEGH LNG PARTNERS LP
UNAUDITED SEGMENT INFORMATION FOR THE QUARTER ENDED SEPTEMBER 30, 2020 AND 2019
(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 and 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 September 30, 2020 and 2019, 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 September 30, 2020 and 2019, 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 are presented under the proportional consolidation method for the segment note to the Partnership’s financial statements 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 information. 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 SEPTEMBER 30, 2020

(in thousands of U.S. dollars) 




Three months ended September 30, 2020







Joint venture
















Majority



FSRUs






Total










held



(proportional






Segment



Elimin-



Consolidated




FSRUs



consolidation)



Other



reporting



ations



Reporting


Time charter revenues


$

35,913




10,896







46,809




(10,896)


(1)


$

35,913


Total revenues



35,913




10,896







46,809








35,913


Operating expenses



(6,831)




(1,957)




(1,587)




(10,375)




1,957


(1)



(8,418)


Equity in earnings (losses) of joint ventures















5,774


(1)



5,774


Segment EBITDA



29,082




8,939




(1,587)




36,434










Depreciation, amortization and impairment



(5,210)




(2,490)







(7,700)




2,490


(1)



(5,210)


Operating income (loss)



23,872




6,449




(1,587)




28,734








28,059


Gain (loss) on derivative instruments






2,226







2,226




(2,226)


(1)




Other financial income (expense), net



(2,415)




(2,901)




(4,310)




(9,626)




2,901


(1)



(6,725)


Income (loss) before tax



21,457




5,774




(5,897)




21,334








21,334


Income tax benefit (expense)



(1,859)










(1,859)








(1,859)


Net income (loss)


$

19,598




5,774




(5,897)




19,475






$

19,475


Preferred unitholders’ interest in net income















3,681


(2)



3,681


Limited partners’ interest in net income (loss)


$

19,598




5,774




(5,897)




19,475




(3,681)


(2)


$

15,794




(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 SEPTEMBER 30, 2019

(In thousands of U.S. dollars)




Three months ended September 30, 2019










Joint venture
















Majority



FSRUs






Total










held



(proportional






Segment



Elimin-



Consolidated




FSRUs



consolidation)



Other



reporting



ations



Reporting


Time charter revenues


$

36,982




10,820







47,802




(10,820)


(1)


$

36,982


Total revenues



36,982




10,820







47,802








36,982


Operating expenses



(7,490)




(2,478)




(1,437)




(11,405)




2,478


(1)



(8,927)


Equity in earnings (losses) of joint ventures















621


(1)



621


Segment EBITDA



29,492




8,342




(1,437)




36,397










Depreciation, amortization and impairment



(5,285)




(2,528)







(7,813)




2,528


(1)



(5,285)


Operating income (loss)



24,207




5,814




(1,437)




28,584








23,391


Gain (loss) on derivative instruments






(2,165)







(2,165)




2,165


(1)




Other financial income (expense), net



(2,837)




(3,028)




(4,785)




(10,650)




3,028


(1)



(7,622)


Income (loss) before tax



21,370




621




(6,222)




15,769








15,769


Income tax expense



(2,065)










(2,065)








(2,065)


Net income (loss)


$

19,305




621




(6,222)




13,704






$

13,704


Preferred unitholders’ interest in net income















3,482


(2)



3,482


Limited partners’ interest in net income (loss)


$

19,305




621




(6,222)




13,704




(3,482)


(2)


$

10,222




(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 September 30, 2020 and 2019. 




Three months ended




September 30,


(in thousands of U.S. dollars)


2020



2019


Interest income


$

135



$

189


Interest expense:









Interest expense



(5,412)




(6,240)


Commitment fees



(35)




(86)


Amortization of debt issuance cost and fair value of debt assumed



(567)




(631)


Total interest expense



(6,014)




(6,957)


Other items, net:









Unrealized foreign exchange gain (loss)



(90)




(55)


Realized foreign exchange gain (loss)



(67)




(50)


Bank charges, fees and other



(93)




(110)


Withholding tax on interest expense and other



(596)




(639)


Total other items, net



(846)




(854)


Total financial income (expense), net


$

(6,725)



$

(7,622)


Appendix A: Segment EBITDA

Non-GAAP Financial Measures

Segment EBITDA. EBITDA is defined as earnings before interest, depreciation and amortization and taxes. 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 investor 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 September 30, 2020







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)


$

19,598




5,774




(5,897)




19,475







$

19,475

(3)

Interest income



(52)







(83)




(135)









(135)


Interest expense



1,807




2,895




4,207




8,909




(2,895)


(4)



6,014


Depreciation and amortization



5,210




2,490







7,700




(2,490)


(5)



5,210


Other financial items (2)



660




(2,220)




186




(1,374)




2,220


(6)



846


Income tax (benefit) expense



1,859










1,859








1,859


Equity in earnings of JVs: Interest (income) expense, net















2,895


(4)



2,895


Equity in earnings of JVs: Depreciation and amortization















2,490


(5)



2,490


Equity in earnings of JVs: Other financial items (2)















(2,220)


(6)



(2,220)


Segment EBITDA


$

29,082




8,939




(1,587)




36,434







$

36,434




Three months ended September 30, 2019







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)


$

19,305




621




(6,222)




13,704







$

13,704

(3)

Interest income



(66)




(107)




(123)




(296)




107


(4)



(189)


Interest expense



2,105




3,133




4,852




10,090




(3,133)


(4)



6,957


Depreciation, and amortization and impairment



5,285




2,528







7,813




(2,528)


(5)



5,285


Other financial items (2)



798




2,167




56




3,021




(2,167)


(6)



854


Income tax (benefit) expense



2,065










2,065








2,065


Equity in earnings of JVs: Interest (income) expense, net















3,026




3,026


Equity in earnings of JVs: Depreciation and amortization















2,528


(5)



2,528


Equity in earnings of JVs: Other financial items (2)















2,167


(6)



2,167


Segment EBITDA


$

29,492




8,342




(1,437)




36,397







$

36,397




(1)

Eliminations reverse each of the income statement reconciling line items of the proportional amounts for Joint venture FSRUs that are reflected in the consolidated net income for the Partnership’s share of the Joint venture FSRUs net income (loss) on the Equity in earnings (losses) of joint ventures line item in the consolidated income statement. 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 income consists of gains and losses on derivative financial 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, amortization and impairment 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.

Appendix B: Distributable Cash Flow

Distributable cash flow represents Segment EBITDA adjusted for cash collections on principal payments on the financing lease, amortization in revenues for above market contracts less non-cash revenue: tax paid directly by charterer, amortization of deferred revenues for the joint ventures, interest income‎, interest expense less amortization of debt issuance cost, amortization and gain on cash flow hedges included in interest expense and proceeds from settlement of derivatives, other items (net), unrealized foreign exchange losses (gains), current income tax benefit (expense), net of uncertain tax position less non-cash income tax: tax paid directly by charterer, and other adjustments such as indemnification paid or to be paid by Höegh LNG for legal expenses related to the boil-off claim, non-budgeted expenses or losses, or prior period indemnifications refunded to, or to be refunded to, Höegh LNG for amounts recovered from insurance or the charterer, distributions on the Series A preferred units and estimated maintenance and replacement capital expenditures. Cash collections on the financing lease investment with respect to the PGN FSRU Lampung consist of the difference between the payments under time charter and the revenues recognized as a financing lease (representing the payment of the principal recorded as a receivable). Amortization in revenues for above market contracts consist of the non-cash amortization of the intangible for the above market time charter contract related to the acquisitions of the Höegh Gallant and Höegh Grace. Amortization of deferred revenues for the joint ventures accounted for under the equity method consist of non-cash amortization to revenues of charterer payments for modifications and drydocking to the vessels. Non-cash revenue: tax paid directly by charterer and non-cash income tax: tax paid directly by charterer consists of certain taxes paid by the charterer directly to the Colombian tax authorities on behalf of the Partnership’s subsidiaries which is recorded as a component of time charter revenues and current income tax expenses. 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 presented starting with Segment EBITDA taken from the total segment reporting using the proportional consolidation method for the Partnership’s 50% interests in the joint ventures as shown in Appendix A. Therefore, the adjustments to Segment EBITDA include the Partnership’s share of the joint venture’s adjustments. The Partnership believes distributable cash flow is an important liquidity measure used by management and investors in publicly traded partnerships to compare cash generating performance of the Partnership’ cash generating assets from period to period by adjusting for cash and non-cash items that could potentially have a disparate effect between periods, and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to limited partners. The Partnership also believes distributable cash flow benefits investors in comparing its cash generating performance to other companies that account for time charters as operating leases rather than financial leases, or that do not have non-cash amortization of intangibles or deferred revenue. Distributable cash flow is a non-GAAP liquidity measure and should not be considered as an alternative to net cash provided by operating activities, or any other measure of the Partnership’s liquidity or cash flows calculated in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net cash provided by operating activities and the measures may vary among companies. For example, distributable cash flow does not reflect changes in working capital balances. Distributable cash flow also includes some items that do not affect net cash provided by operating activities. Therefore, distributable cash flow may not be comparable to similarly titled measures of other companies. Distributable cash flow is not the same measure as available cash or operating surplus, both of which are defined by the Partnership’s partnership agreement. The first table below reconciles distributable cash flow to Segment EBITDA, which is reconciled to net income, the most directly comparable GAAP measure for Segment EBITDA, in Appendix A. Refer to Appendix A for the definition of Segment EBITDA. The second table below reconciles distributable cash flow to net cash provided by operating activities, the most directly comparable GAAP measure for liquidity. 



Three months ended


(in thousands of U.S. dollars)


September 30, 2020


Segment EBITDA


$

36,434


Cash collection/Principal payment on financing lease



1,150


Amortization in revenues for above market contracts



694


Non-cash revenue: Tax paid directly by charterer



(215)


Equity in earnings of JVs: Amortization of deferred revenue



(682)


Interest income (1)



135


Interest expense (1)



(8,909)


Amortization of debt issuance cost (1)



608


Amortization and gain on cash flow hedges included in interest expense



24


Other items, net



(852)


Unrealized foreign exchange losses (gains)



90


Current income tax benefit (expense), net of uncertain tax position



(1,050)


Non-cash income tax: Tax paid directly by charterer



215


Other adjustments:





Distributions relating to Series A preferred units (2)



(3,681)


Estimated maintenance and replacement capital expenditures



(5,350)


Distributable cash flow


$

18,611


Reconciliation of distributable cash flows to net cash provided by (used in) operating activities




Three months ended


(in thousands of U.S. dollars)


September 30, 2020


Distributable cash flow


$

18,611


Estimated maintenance and replacement capital expenditures



5,350


Distributions relating to Series A preferred units (2)



3,681


Equity in earnings of JVs: Amortization of deferred revenue



682


Equity in earnings of JVs: Amortization of debt issuance cost



(40)


Equity in earnings of JVs: Depreciation, amortization and impairment



(2,490)


Equity in earnings of JVs: Gain (loss) on derivative instruments



2,226


Equity in losses (earnings) of joint ventures



(5,774)


Changes in accrued interest expense and interest income



(229)


Other adjustments



42


Changes in working capital



749


Net cash provided by (used in) operating activities


$

22,808




(1)

The Partnership’s interest in the joint ventures’ interest expense and amortization of debt issuance cost is $2,895 and $40, respectively

(2)

Represents distributions payable on the Series A preferred units related to the three months ended September 30, 2020

Media contact:
The IGB Group, Bryan Degnan, +1 (646) 673-9701 / Leon Berman, +1 (212) 477-8438
Knut Johan Arnholdt, VP IR and Strategy, +47 922 59 131
www.hoeghlngpartners.com

SOURCE Hoegh LNG Partners LP



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