Capital Product Partners L.P. (the “Partnership”, “CPLP” or “we” /
“us”) (NASDAQ: CPLP), an international owner of ocean-going
vessels, today released its financial results for the first quarter
ended March 31, 2024.
Highlights
|
Three-month periods ended March 31, |
|
2024 |
2023 |
Increase / (Decrease) |
Revenues |
$104.5 million |
$81.0 million |
29% |
Expenses |
$54.9 million |
$45.1 million |
22% |
Interest expense and finance cost |
$34.0 million |
$23.7 million |
43% |
Net Income |
$33.9 million |
$10.0 million |
239% |
Adjusted Net Income (excluding gain on sale of vessels)1 |
$17.5 million |
$10.0 million |
75% |
Net Income per common unit |
$0.61 |
$0.49 |
24% |
Adjusted Net Income per common unit (excluding gain on sale of
vessels)1 |
$0.32 |
$0.49 |
(35%) |
Average number of vessels2 |
23.3 |
21.4 |
9% |
-
Operating Surplus3 and Operating Surplus after the quarterly
allocation to the capital reserve for the first quarter of 2024
were $48.3 million and $9.6 million, respectively.
- Announced common
unit distribution of $0.15 for the first quarter of 2024.
- On January 2, 2024,
the Partnership took delivery of the LNG/C Axios II. This is the
second delivery under the Partnership’s agreement to acquire 11
latest generation two-stroke (MEGA) Liquefied Natural Gas Carriers
(“LNG/C and the “LNG/C Transaction”), which closed on December 21,
2023.
- Concluded the sale
of the M/V Long Beach Express and the M/V Akadimos recognizing a
gain on sale of $16.4 million.
- Entered into
memoranda of agreement for the sale of five additional container
vessels.
____________
1 Adjusted Net Income (excluding gain on sale of
vessels) and Adjusted Net Income per common unit (excluding gain on
sale of vessels) are non-GAAP financial measures used to measure
the financial performance of the Partnership and we believe these
non-GAAP measures are useful to analysts and investors in comparing
the results of operations between periods. These non-GAAP measures
are not required by accounting principles generally accepted
in the United States (“GAAP”) and should not be
considered a substitute for Net income and Net Income per common
unit prepared in accordance with GAAP or as a measure of
profitability.
2 Average number of vessels is measured by
aggregating the number of days each vessel was part of our fleet
during the period and dividing such aggregate number by the number
of calendar days in the period.
3 Operating surplus is a non-GAAP financial
measure used by certain investors to measure the financial
performance of the Partnership and other limited partnerships.
Please refer to Appendix A at the end of the press release for a
reconciliation of this non-GAAP measure with net income.
Overview of First Quarter 2024
Results
Net income for the quarter ended March 31, 2024,
was $33.9 million or $17.5 million excluding the gain on sale of
vessels, compared with net income of $10.0 million for the first
quarter of 2023. Taking into account the interest attributable to
the general partner, net income per common unit for the quarter
ended March 31, 2024, was $0.61 or $0.32 excluding the gain on sale
of vessels, compared to net income per common unit of $0.49 for the
first quarter of 2023.
Total revenue for the quarter ended March 31,
2024, was $104.5 million, compared to $81.0 million during the
first quarter of 2023. The increase in revenue was primarily
attributable to the revenue contributed by the newbuild vessels
acquired by the Partnership, namely the LNG/C Asterix acquired on
February 17, 2023, the M/V Buenaventura Express acquired on June
20, 2023, the LNG/C Amore Mio I acquired on December 21, 2023 and
the LNG/C Axios II acquired on January 2, 2024, partly offset by
the sale of the M/V Cape Agamemnon on November 7, 2023, the sale of
the M/V Long Beach Express on February 26, 2024 and the sale of M/V
Akadimos on March 8, 2024.
Total expenses for the quarter ended March 31,
2024, were $54.9 million, compared to $45.1 million in the first
quarter of 2023. Total vessel operating expenses during the first
quarter of 2024 amounted to $22.7 million, compared to $19.3
million during the first quarter of 2023. The increase in vessel
operating expenses was mainly due to the net increase in the
average number of vessels in our fleet. Total expenses for the
first quarter of 2024 also include vessel depreciation and
amortization of $24.0 million, compared to $19.2 million in the
first quarter of 2023. The increase in depreciation and
amortization during the first quarter of 2024 was mainly
attributable to the net increase in the average size of our fleet.
General and administrative expenses for the first quarter of 2024
increased to $4.4 million, compared to $2.8 million in the first
quarter of 2023, mainly attributable to the increase in the costs
we recognized in connection with our equity incentive plan.
Total other expense, net for the quarter ended
March 31, 2024, was $32.1 million compared to $25.8 million for the
first quarter of 2023. Total other expense, net includes interest
expense and finance cost of $34.0 million for the first quarter of
2024, compared to $23.7 million for the first quarter of 2023. The
increase in interest expense and finance cost was mainly
attributable to the increase in the Partnership’s average
indebtedness and the increase in the weighted average interest rate
compared to the first quarter of 2023.
Capitalization of the
Partnership
As of March 31, 2024, total cash amounted to
$157.7 million. Total cash includes restricted cash of $11.2
million, which represents the minimum liquidity requirement under
our financing arrangements.
As of March 31, 2024, total partners’ capital
amounted to $1,203.9 million, an increase of $29.0 million compared
to $1,174.9 million as of December 31, 2023. The increase reflects
net income for the quarter ended March 31, 2024, other
comprehensive income of $0.8 million relating to the net effect of
the cross-currency swap agreement we designated as an accounting
hedge, the amortization associated with the equity incentive plan
of $2.6 million, partly offset by distributions declared and paid
during the period in a total amount of $8.3 million.
As of March 31, 2024, the Partnership’s total
debt was $1,943.6 million before financing fees, reflecting an
increase of $155.8 million compared to $1,787.8 million as of
December 31, 2023. The increase is attributable to the assumption
of $190.0 million of indebtedness and a drawdown of $92.6 million
under the unsecured seller’s credit issued to the Partnership by
Capital Maritime & Trading Corp. for an amount of up to $220.0
million to finance a portion of the purchase price for the vessels
in the LNG/C Transaction (the “Seller’s Credit”), in connection
with the acquisition of the LNG/C Axios II in January 2024, partly
offset by the $7.2 million decrease in the U.S. Dollar equivalent
of the euro-denominated bonds issued by CPLP Shipping Holdings Plc
in July 2022 and October 2021 (the “Bonds”) as of March 31,
2024, the scheduled principal payments for the period of $28.5
million, the early repayment in full of the facility we entered
into with ICBC Financial Leasing Co., Ltd in 2020 to partly finance
the acquisition of the M/V Akadimos, of a total amount of $38.3
million, and the partial repayment of $52.8 million of the Seller’s
Credit that we drew to partly finance the acquisition of LNG/C
Axios II.
Operating Surplus
Operating surplus for the quarter ended March
31, 2024, amounted to $48.3 million, compared to $40.5 million for
the previous quarter ended December 31, 2023. We allocated $38.7
million to the capital reserve, a decrease of $0.3 million compared
to the previous quarter due to the net decrease in the rate of
amortization of our debt. Operating surplus for the quarter ended
March 31, 2024, after the quarterly allocation to the capital
reserve, was $9.6 million. Operating surplus is a non-GAAP
financial measure used by certain investors to measure the
financial performance of the Partnership and other limited
partnerships. Please refer to Appendix A at the end of the press
release for a reconciliation of this non-GAAP measure with net
income.
Delivery of the LNG/C Axios
II
On January 2, 2024, the Partnership took
delivery of the LNG/C Axios II. The vessel commenced an
index-linked, one-year time charter, which will be followed by a
seven-year bareboat charter with Bonny Gas Transport Limited
(“BGT”). BGT maintains an option to extend the charter by an
additional three years. The vessel acquisition was financed with, a
new senior secured loan facility for an amount of $190.0 million,
repayable in 28 equal quarterly installments of $2.5 million and a
balloon payment of $120.0 million together with the final quarterly
installment in December 2030, and a drawdown of $92.6 million under
the Seller’s Credit.
Container Divestment Update
Sale of M/V Long Beach Express:
On December 15, 2023, the Partnership agreed to sell the M/V Long
Beach Express (68,618 DWT / 5,089 TEU, container vessel, built
2008, Hanjin Heavy Industries & Construction Co., Ltd., South
Korea) to an unaffiliated party. Delivery of the M/V Long Beach
Express to its new owner took place on February 26, 2024.
Sale of Three 10,000 TEU Container
Vessels: On March 20, 2024, the Partnership announced that
it has entered into three separate memoranda of agreement for the
sale of the M/V Athos, the M/V Aristomenis and the M/V Athenian
(118,888, 118,712 and 118,834 DWT, respectively, 9,954 TEU
container vessels, built 2011, Samsung Heavy Industries Co., Ltd.,
South Korea) to an unaffiliated party. The M/V Athos and the M/V
Athenian were delivered to their new owners on April 22, 2024, and
the M/V Aristomenis is expected to be delivered in early May
2024.
Sale of M/V Akadimos: On March
4, 2024, the Partnership announced that it has entered into a
memorandum of agreement for the sale of the M/V Akadimos (115,534
DWT / 9,288 TEU, Eco-Flex, Wide Beam container vessel, built 2015,
Daewoo-Mangalia Heavy Industries S.A., Romania). Delivery of the
M/V Akadimos to its new owner took place on March 8, 2024.
Sale of M/V Seattle Express and M/V Fos
Express: On March 4, 2024, the Partnership also announced
that it has entered into two separate memoranda of agreement for
the sale of sister vessels, the M/V Fos Express and the M/V Seattle
Express (68,579 and 68,411 DWT, respectively / 5,089 TEU, container
vessels, built 2008, Hanjin Heavy Industries & Construction
Co., Ltd., South Korea). The M/V Seattle Express was delivered to
its new owner on April 26, 2024, while the M/V Fos Express is
expected to be delivered in early May 2024.
The expected proceeds from the sale of the M/V
Long Beach Express, the M/V Athos, the M/V Aristomenis, the M/V
Athenian, the M/V Akadimos, the M/V Seattle Express and the M/V Fos
Express after debt repayment are estimated to be approximately
$182.5 million in total.
Management Commentary
Mr. Jerry Kalogiratos, Chief Executive Officer
of our General Partner, commented:
“I am pleased to see the Partnership’s continued
progress in executing the business plan outlined in November 2023.
This includes the acquisition of two latest generation LNG/C
vessels and the successful sale of five container vessels, with
agreements in place for the sale of two additional container
vessels. These sales are expected to generate net proceeds of
approximately $182.5 million, in line with our announced intention
to gradually divest from the container business. Finally, we expect
another three-brand new, latest generation LNG/Cs to join our fleet
in the coming months, -all with long term charters in place- while
we continue to focus on the conversion of the Partnership into a
corporation and growing further our footprint in LNG and energy
transition gas shipping.”
Quarterly Common Unit Cash
Distribution
On April 25, 2024, the Board of Directors of the Partnership
declared a cash distribution of $0.15 per common unit for the first
quarter of 2024 payable on May 14, 2024, to common unit holders of
record on May 7, 2024.
LNG Market Update
After a period of historically high rates
following the start of the Russia-Ukraine Conflict, rates are
normalizing toward pre-war levels. Term charter rates for one to
three years have softened and are standing at approximately $85,000
per day. Five-year or longer charter rates remain at higher levels,
indicating that the market is pricing in an anticipated tightening
from 2026.
Global LNG imports remain strong in both
Asia-Pacific and the Atlantic basin region with China continuing to
import increasing volumes. Tonne-miles have been higher in the
first quarter of this year versus the first quarter of last year
due to the issues related to the Suez Canal and the limited use of
the Panama Canal.
Currently, 332 vessels are on order, while the
on-the-water fleet grew by 10 vessels in the same period. The
Orderbook-to-fleet ratio stands at 50.8% of the total fleet.
Appetite still remains strong for LNG carrier newbuilds with 44
newbuilding orders having been placed in the first quarter of
2024.
The LNG shipping market appears balanced for
this and next year with multiple newbuildings being delivered and
only incremental new LNG volumes coming on stream. The LNG shipping
supply-demand balance is expected to start tightening from 2026 as
the next wave of LNG capacity comes online.
Conference Call and Webcast
Today, April 30, 2024, the Partnership will host
an interactive conference call at 9:00 am Eastern Time to discuss
the financial results.
Conference Call Details
Participants should dial into the call 10
minutes before the scheduled time using the following numbers: +1
877 405 1226 (US Toll-Free Dial In) or +1 201 689 7823 (US and
Standard International Dial In). Please quote “Capital Product
Partners” to the operator and/or conference ID 13746395. Click
here for additional participant International Toll-Free access
numbers.
Alternatively, participants can register for the
call using the “call me” option for a faster connection to join the
conference call. You can enter your phone number and let the system
call you right away. Click here for the “call me” option.
Slides and Audio Webcast
There will also be a live, and then archived,
webcast of the conference call and accompanying slides, available
through the Partnership’s website. To listen to the archived audio
file, visit our website http://ir.capitalpplp.com/ and click on
Webcasts & Presentations under our Investor Relations page.
Participants in the live webcast should register on the website
approximately 10 minutes prior to the start of the webcast.
About Capital Product Partners
L.P.
Capital Product Partners L.P. (NASDAQ: CPLP), a
Marshall Islands limited partnership, is an international owner of
ocean-going vessels. CPLP currently owns 19 high specification
vessels, including nine latest generation LNG/Cs and nine
Neo-Panamax container vessels, one of which we have agreed to sell
to an unaffiliated party, and one Panamax container carrier vessel,
which we have also agreed to sell to an unaffiliated party. In
addition, CPLP has agreed to acquire nine additional latest
generation LNG/Cs to be delivered between the second quarter of
2024 and the first quarter of 2027.
For more information about the Partnership,
please visit: www.capitalpplp.com.
Forward-Looking Statements
The statements in this press release that are
not historical facts, including, among other things, the expected
financial performance of CPLP’s business, the transactions
contemplated pursuant to the Umbrella Agreement, CPLP’s ability to
pursue growth opportunities, CPLP’s expectations or objectives
regarding future distributions, unit repurchases, market, vessel
deliveries and charter rate expectations, and, in particular, the
expected effects of recent vessel acquisitions on the financial
condition and operations of CPLP and the container and LNG
industries in general, are forward-looking statements (as such term
is defined in Section 21E of the Securities Exchange Act of 1934,
as amended). These forward-looking statements involve risks and
uncertainties that could cause the stated or forecasted results to
be materially different from those anticipated. For a discussion of
factors that could materially affect the outcome of forward-looking
statements and other risks and uncertainties, see “Risk Factors” in
CPLP’s annual report filed with the SEC on Form 20-F for the year
ended December 31, 2023, filed on April 23, 2024. Unless required
by law, CPLP expressly disclaims any obligation to update or revise
any of these forward-looking statements, whether because of future
events, new information, a change in its views or expectations, to
conform them to actual results or otherwise. CPLP does not assume
any responsibility for the accuracy and completeness of the
forward-looking statements. You are cautioned not to place undue
reliance on forward-looking statements.
CPLP-F Contact Details:Capital GP
L.L.C.Jerry KalogiratosCEOTel. +30 (210) 4584 950 E-mail:
j.kalogiratos@capitalpplp.com
Capital GP L.L.C.Nikos
KalapotharakosCFOTel. +30 (210) 4584 950 E-mail:
n.kalapotharakos@capitalmaritime.com
Investor Relations /
MediaNicolas BornozisCapital Link, Inc. (New York)Tel.
+1-212-661-7566E-mail: cplp@capitallink.comSource: Capital Product
Partners L.P.
Capital Product Partners L.P.Unaudited
Condensed Consolidated Statements of Comprehensive
Income(In thousands of United States Dollars,
except for number of units and earnings per unit)
|
For the three-month |
periods ended March 31, |
|
2024 |
2023 |
Revenues |
$ |
104,494 |
|
$ |
81,016 |
|
Expenses / (income),
net: |
|
|
|
|
Voyage expenses |
|
3,857 |
|
|
3,842 |
|
Vessel operating expenses |
|
19,555 |
|
|
16,820 |
|
Vessel operating expenses -
related parties |
|
3,123 |
|
|
2,522 |
|
General and administrative
expenses |
|
4,421 |
|
|
2,783 |
|
Vessel depreciation and
amortization |
|
23,962 |
|
|
19,178 |
|
Gain on
sale of vessels |
|
(16,411 |
) |
|
- |
|
Operating income, net |
|
65,987 |
|
|
35,871 |
|
Other income /
(expense), net: |
|
|
|
|
Interest expense and finance
cost |
|
(34,043 |
) |
|
(23,682 |
) |
Other
income / (expense), net |
|
1,952 |
|
|
(2,161 |
) |
Total other expense, net |
|
(32,091 |
) |
|
(25,843 |
) |
Partnership’s net
income |
$ |
33,896 |
|
$ |
10,028 |
|
General Partner’s interest in Partnership’s net income |
|
213 |
|
|
170 |
|
Partnership’s net income
allocable to unvested units |
|
152 |
|
|
242 |
|
Common unit holders’ interest
in Partnership’s net income |
|
33,531 |
|
|
9,616 |
|
Net income
per: |
|
|
|
|
Common units, basic
and diluted |
$ |
0.61 |
|
$ |
0.49 |
|
Weighted-average units
outstanding: |
|
|
|
|
Common units, basic
and diluted |
|
54,816,555 |
|
|
19,728,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Product Partners L.P.Unaudited
Condensed Consolidated Balance Sheets(In thousands
of United States Dollars)
|
As of March 31,
2024 |
As of December 31,
2023 |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
146,504 |
|
$ |
192,422 |
Other current assets |
|
193,155 |
|
|
33,082 |
Total current assets |
|
339,659 |
|
|
225,504 |
Fixed assets |
|
|
|
|
|
Advances for vessels under construction – related party |
|
143,000 |
|
|
174,400 |
Vessels, net and vessels under construction |
|
2,721,324 |
|
|
2,632,285 |
Total fixed assets |
|
2,864,324 |
|
|
2,806,685 |
Other non-current assets |
|
|
|
|
|
Restricted cash |
|
11,216 |
|
|
11,721 |
Other non-current assets |
|
101,369 |
|
|
96,389 |
Total non-current assets |
|
2,976,909 |
|
|
2,914,795 |
Total assets |
$ |
3,316,568 |
|
$ |
3,140,299 |
Liabilities and Partners’ Capital |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Current portion of long-term debt, net |
$ |
102,423 |
|
$ |
103,116 |
Other current liabilities |
|
137,795 |
|
|
80,814 |
Total current liabilities |
|
240,218 |
|
|
183,930 |
Long-term liabilities |
|
|
|
|
|
Long-term debt, net |
|
1,776,573 |
|
|
1,672,179 |
Other non-current liabilities |
|
95,845 |
|
|
109,257 |
Total long-term liabilities |
|
1,872,418 |
|
|
1,781,436 |
Total liabilities |
|
2,112,636 |
|
|
1,965,366 |
Total partners’ capital |
|
1,203,932 |
|
|
1,174,933 |
Total liabilities and partners’ capital |
$ |
3,316,568 |
|
$ |
3,140,299 |
|
|
|
|
|
|
Cash Flow Data(In thousands of United
States Dollars)
For the three-month periods ended March
31, |
|
2024 |
2023 |
Net cash provided by operating activities |
|
47,307 |
|
|
38,602 |
|
Net cash provided by / (used in) investing
activities |
|
37,497 |
|
|
(335,224 |
) |
Net cash (used in) / provided by financing
activities |
|
(131,227 |
) |
|
241,611 |
|
Net decrease in cash, cash equivalents and restricted
cash |
|
(46,423 |
) |
|
(55,011 |
) |
Cash, cash equivalents and restricted cash at beginning of
the period |
|
204,143 |
|
|
154,848 |
|
Cash, cash equivalents and restricted cash at end of the
period |
$ |
157,720 |
|
$ |
99,837 |
|
Appendix A – Reconciliation of Non-GAAP Financial
Measure (In thousands of U.S.
Dollars)
Description of Non-GAAP Financial
Measure – Operating SurplusOperating Surplus represents
net income adjusted for depreciation and amortization expense,
exchange differences on Bonds and cash and cash equivalents, change
in fair value of derivatives, impairment and gain on sale of
vessels, amortization / accretion of above / below market acquired
charters and straight-line revenue adjustments.Operating Surplus is
a quantitative measure used in the publicly traded partnership
investment community to assist in evaluating a partnership’s
financial performance and ability to make quarterly cash
distributions. Operating Surplus is not required by accounting
principles generally accepted in the United States (“GAAP”) and
should not be considered a substitute for net income, cash flow
from operating activities and other operations or cash flow
statement data prepared in accordance with GAAP or as a measure of
profitability or liquidity. Our calculation of Operating Surplus
may not be comparable to that reported by other companies. The
table below reconciles Operating Surplus to net income for the
following periods:
Reconciliation of
Non-GAAP Financial
Measure –
Operating Surplus |
For the three-month period ended March 31,
2024 |
For the three-month period ended December
31, 2023 |
For the three-month period ended March 31,
2023 |
Partnership’s net income |
33,896 |
|
|
12,730 |
|
|
10,028 |
|
Adjustments to
reconcile net income
to operating surplus prior to
Capital |
|
|
|
Depreciation, amortization, unrealized Bonds exchange differences
and change in fair value of derivatives1 |
27,022 |
|
|
24,111 |
|
|
23,235 |
|
Impairment of vessels |
- |
|
|
3,541 |
|
|
- |
|
Gain on sale of vessels |
(16,411 |
) |
|
- |
|
|
- |
|
Amortization / accretion of above / below market acquired charters
and straight-line revenue adjustments |
3,798 |
|
|
73 |
|
|
3,055 |
|
Operating Surplus prior to capital reserve |
48,305 |
|
|
40,455 |
|
|
36,318 |
|
Capital reserve |
(38,693 |
) |
|
(38,954 |
) |
|
(33,350 |
) |
Operating Surplus after capital reserve |
9,612 |
|
|
1,501 |
|
|
2,968 |
|
(Increase) / decrease in recommended reserves |
(1,327 |
) |
|
6,807 |
|
|
103 |
|
Available Cash |
8,285 |
|
|
8,308 |
|
|
3,071 |
|
Depreciation, amortization, unrealized
Bonds exchange differences and change in fair value of derivatives
line item includes the following components:
- Vessel depreciation and amortization;
- Deferred financing costs and equity compensation plan
amortization;
- Unrealized Bonds exchange differences;
- Unrealized cash, cash equivalents and restricted cash
exchange differences; and
- Change in fair value of derivatives.
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