Capital Product Partners L.P. Announces First Quarter 2018 Financial Results and Fleet Employment updates
The Partnership’s net income for the quarter ended
Operating surplus prior to allocations to our capital reserve and distributions to the Class B Units for the quarter ended
Total revenues for the first quarter of 2018 reached
Total expenses for the first quarter of 2018 were
Total other expense, net for the first quarter of 2018 was
As of
Total cash as of
As of
Fleet Employment Update
The Partnership has reached an agreement with Pacific International Lines (“PIL”) to extend the charter of the M/V ‘Agamemnon’ (108,892 dwt / 8,266 TEU, container carrier built 2007,
The Partnership has also agreed to charter the M/V ‘Archimidis’ (108,892 dwt / 8,266 TEU, container carrier built 2006,
Finally, the M/T 'Active' (50,136 dwt, IMO II/III Eco Chemical/Product Tanker built 2015,
Following the employment updates listed above, the Partnership’s charter coverage for the remainder of 2018 is 66%.
Quarterly Common and Class B Unit Cash Distribution
On
In addition, on
Market Commentary
Product Tanker Market
Product tanker spot rates remained on average at similar levels to the previous quarter and overall below historical averages. Global refinery throughputs declined from the record levels seen in the fourth quarter of 2017, partly due to refinery maintenance in certain regions, reducing product export volumes and subsequent demand for product tankers during the quarter. Enquiries for product tankers remained subdued as a result of the ongoing inventories drawdowns and lower Chinese oil product exports east of Suez. On the positive side, the product tanker spot market saw spots of increased demand in the Western hemisphere in January, supported by increased West African gasoline demand and solid U.S. product exports, while the Far East market saw increased activity towards the end the quarter on the back of a surge in Chinese product exports.
Period product tanker rates remained flat. However, one-year period rates for MR product tankers remain on average approximately 10% higher year-on-year, reflecting the increasing positive outlook for the sector.
On the supply side, the orderbook remains close to historically low levels. As at the end of the first quarter of 2018, the MR product tanker orderbook stood at approximately 8.0% of the current worldwide fleet. In addition, product tanker deliveries continued to experience significant slippage during the first quarter of 2018, as 34.1% of the expected MR and handy size tanker newbuildings were not delivered on schedule. Looking ahead, analysts estimate that net fleet growth for product tankers will slow to 1.4% in 2018, which would represent the slowest rate of growth since 2000, while product tanker deadweight demand will grow by 3.6%. Rising products imports into non-OECD countries and growth in products exports from the U.S.,
Suezmax Tanker Market
The Suezmax spot market saw one of the lowest quarters in terms of earnings for the last thirty years. High vessel supply, as a result of the heavy newbuilding deliveries in 2017 and a return of crude vessels from storage, kept rates under pressure. On the demand side, growth was limited by the oil production cut agreement between
The time charter market for Suezmaxes remained illiquid and period rates weakened further close to historically low levels, mirroring the negative rate development in the spot market.
On the supply side, the Suezmax orderbook represented at the end of the first quarter of 2018 approximately 9.3% of the current worldwide fleet. The delivery of new vessels is expected to slow down going forward, as 22 and 19 vessels are expected to be delivered for the remainder of 2018 and in 2019, respectively, assuming no cancellations or slippage. Analysts estimate that slippage for the first quarter of 2018 amounted to 23.3% of expected deliveries. In 2018, Suezmax dwt demand is projected to grow by 5.1%, as the negative impact from the
Finally, it is worth highlighting that overall tanker demolition accelerated significantly in the first quarter of 2018, amounting to 7.9 million dwt including four Suezmax vessels. This represents the highest demolition level since the third quarter of 1982. In 2017, 11.1 million dwt were scrapped for the year, compared with the 2.5 million dwt demolished in 2016.
Neo-Panamax Container Market
Chartering activity for container vessels remained relatively healthy in the first quarter of 2018, despite this traditionally being a seasonally weaker period. Notably, the idle container fleet stood at the end of the first quarter of 2018 at approximately 2% of the current fleet, on par with the end of 2017, but substantially lower when compared to 7% at the end of 2016.
At the end of the first quarter of 2018, the container orderbook remained at historically low levels, standing at 12.7% of the current fleet, down from 13.4% in the previous quarter. Slippage for 2018 is estimated at 27%, while container vessel demolition for full year 2018 is estimated at 299,300 TEUs.
Overall, analysts expect container vessel demand to grow by 5% in 2018, while the container fleet is expected to expand by 4.4%.
Management Commentary
Mr.
“Despite the overall weakness of the tanker and in particular the Suezmax market, which experienced multi-decade lows during the quarter, as well as the impact of increased expenses associated with certain of our vessels that affected our results for this quarter, our course remains unchanged: our remaining charter coverage over the next five years, our sound balance sheet with no material short-term debt maturities and the diversified nature of our fleet underpin our common unit distributions and position us well for a potential recovery in the tanker market in the medium- to long-run.
“Finally, we are pleased to have expanded our fleet in the first quarter of 2018 with the addition of the M/T ‘Aristaios’, a modern, eco ice class Aframax with a remaining four years of charter employment to a reputable charterer and to have secured employment for two of our container vessels at substantially improved charter rates, which are expected to commence towards the end of the second quarter of 2018.”
Conference Call and Webcast
Today,
Conference Call Details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (U.S. Toll Free Dial In), 0800 953 0329 (UK Toll Free Dial In) or +44 (0)1452 542 301 (Standard International Dial In). Please quote “Capital Product Partners.”
A replay of the conference call will be available until
Slides and Audio Webcast
There will also be a simultaneous live webcast over the Internet, through the
About
For more information about the Partnership, please visit our website: www.capitalpplp.com.
Forward-Looking Statements
The statements in this press release that are not historical facts, including, among other things, our ability to obtain financing and pursue growth opportunities, our expectations or objectives regarding future distribution amounts, our capital reserve, future earnings, our expectations regarding employment of our vessels, redelivery dates and charter rates, fleet growth, market and charter rate expectations, 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. Unless required by law, we expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, to conform them to actual results or otherwise. We assume no responsibility for the accuracy and completeness of the forward-looking statements. We make no prediction or statement about the performance of our units.
CPLP-F
Contact Details:
Jerry Kalogiratos
CEO
Tel. +30 (210) 4584 950
E-mail: j.kalogiratos@capitalpplp.com
Nikos Kalapotharakos
CFO
Tel. +30 (210) 4584 950
E-mail: n.kalapotharakos@capitalmaritime.com
Investor Relations / Media
Capital Link, Inc. (
Tel. +1-212-661-7566
E-mail: cplp@capitallink.com
Source:
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, |
||||
| 2018 | 2017 | |||
| Revenues | 57,413 | 50,308 | ||
| Revenues – related party | 8,126 | 9,962 | ||
| Total Revenues | 65,539 | 60,270 | ||
| Expenses: | ||||
| Voyage expenses | 8,978 | 2,288 | ||
| Vessel operating expenses | 21,797 | 16,845 | ||
| Vessel operating expenses - related party | 3,028 | 2,783 | ||
| General and administrative expenses | 1,722 | 1,435 | ||
| Vessel depreciation and amortization | 18,332 | 18,526 | ||
| Operating income | 11,682 | 18,393 | ||
| Otherincome / (expense), net: | ||||
| Interest expense and finance cost | (6,391) | (6,350) | ||
| Other (expenses) / income | (31) | 210 | ||
| Total other expense, net | (6,422) | (6,140) | ||
| Partnership’s net income | 5,260 | 12,253 | ||
| Preferred unit holders’ interest in Partnership’s net income | 2,775 | 2,775 | ||
| General Partner’s interest in Partnership’s net income | 47 | 184 | ||
| Common unit holders’ interest in Partnership’s net income | 2,438 | 9,294 | ||
| Net income per: | ||||
|
0.02 | 0.08 | ||
| Weighted-average units outstanding: | ||||
|
126,701,690 | 121,985,686 | ||
| Total comprehensive income: | 5,260 | 12,253 | ||
Unaudited Condensed Consolidated Balance Sheets
(In thousands of United States Dollars)
| Assets | ||
| Current assets | As of March 31, 2018 | As of December 31, 2017 |
| Cash and cash equivalents | 40,730 | 63,297 |
| Restricted cash | 516 | - |
| Trade accounts receivable, net | 6,337 | 4,772 |
| Prepayments and other assets | 3,361 | 3,046 |
| Inventories | 5,774 | 5,315 |
| Assets held for sale | 29,002 | 29,027 |
| Total current assets | 85,720 | 105,457 |
| Fixed assets | ||
| Vessels, net | 1,290,960 | 1,265,196 |
| Total fixed assets | 1,290,960 | 1,265,196 |
| Other non-current assets | ||
| Above market acquired charters | 80,489 | 75,035 |
| Deferred charges, net | 1,716 | 1,519 |
| Restricted cash | 17,984 | 18,000 |
| Prepayments and other assets | 874 | 1,009 |
| Total non-current assets | 1,392,023 | 1,360,759 |
| Total assets | 1,477,743 | 1,466,216 |
| Liabilities and Partners’ Capital | ||
| Current liabilities | ||
| Current portion of long-term debt, net | 52,979 | 50,514 |
| Trade accounts payable | 11,635 | 9,631 |
| Due to related parties | 18,678 | 14,234 |
| Accrued liabilities | 15,298 | 15,111 |
| Deferred revenue, current | 18,318 | 18,800 |
| Liability associated with vessel held for sale | 14,383 | 14,781 |
| Total current liabilities | 131,291 | 123,071 |
| Long-term liabilities | ||
| Long-term debt, net | 417,270 | 403,820 |
| Deferred revenue | 3,429 | 5,920 |
| Total long-term liabilities | 420,699 | 409,740 |
| Total liabilities | 551,990 | 532,811 |
| Commitments and contingencies | ||
| Total partners’ capital | 925,753 | 933,405 |
| Total liabilities and partners’ capital | 1,477,743 | 1,466,216 |
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands of United States Dollars)
| For the three month periods ended March 31, |
|||||||
| 2018 | 2017 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | 5,260 | 12,253 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Vessel depreciation and amortization | 18,332 | 18,526 | |||||
| Amortization of deferred financing costs | 394 | 233 | |||||
| Amortization of above market acquired charters | 4,091 | 3,851 | |||||
| Equity compensation expense | 238 | 295 | |||||
| Changes in operating assets and liabilities: | |||||||
| Trade accounts receivable, net | (1,565) | 532 | |||||
| Prepayments and other assets | (180) | 33 | |||||
| Inventories | (434) | (1,152) | |||||
| Trade accounts payable | 1,157 | 2,299 | |||||
| Due to related parties | 4,444 | (3,675) | |||||
| Accrued liabilities | 143 | 805 | |||||
| Deferred revenue | (2,973) | (915) | |||||
| Dry-docking costs paid | (175) | (1,030) | |||||
| Net cash provided by operating activities | 28,732 | 32,055 | |||||
| Cash flows from investing activities: | |||||||
| Vessel acquisitions and improvements including time charter agreements | (24,410) | (1,218) | |||||
| Net cash used in investing activities | (24,410) | (1,218) | |||||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of Partnership units | - | 3,969 | |||||
| Expenses paid for issuance of Partnership units | - | (9) | |||||
| Deferred financing costs paid | (31) | - | |||||
| Payments of long-term debt | (13,208) | (4,339) | |||||
| Dividends paid | (13,150) | (12,758) | |||||
| Net cash used in financing activities | (26,389) | (13,137) | |||||
| Net (decrease) / increase in cash, cash equivalents and restricted cash | (22,067) | 17,700 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 81,297 | 124,678 | |||||
| Cash, cash equivalents and restricted cash at end of period | 59,230 | 142,378 | |||||
| Supplemental cash flow information | |||||||
| Cash paid for interest | $ | 5,599 | $ | 6,115 | |||
| Non-Cash Investing and Financing Activities | |||||||
| Offering expenses included in liabilities | $ | - | $ | 97 | |||
| Capital expenditures included in liabilities | $ | 703 | $ | 989 | |||
| Capitalized dry docking costs included in liabilities | $ | 540 | $ | 111 | |||
| Deferred financing costs included in liabilities | $ | 50 | $ | - | |||
| Assumption of loan regarding the acquisition of the shares of the company owning the M/T Aristaios | $ | 28,333 | $ | - | |||
| Reconciliation of cash, cash equivalents and restricted cash | |||||||
| Cash and cash equivalents | $ | 40,730 | $ | 124,378 | |||
| Restricted cash - Current assets | $ | 516 | $ | - | |||
| Restricted cash - Non-current assets | $ | 17,984 | $ | 18,000 | |||
| Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | 59,230 | $ | 142,378 | |||
Appendix A – Reconciliation of Non-GAAP Financial Measure (In thousands of U.S. dollars)
Description of Non-GAAP Financial Measure – Operating Surplus
Operating Surplus represents net income adjusted for depreciation and amortization expense, amortization of above 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
| Reconciliation of Non-GAAP Financial Measure – Operating Surplus | For the three-month period ended March 31, 2018 |
For the three-month period ended March 31, 2017 | For the three-month period ended December 31, 2017 |
| Partnership’s netincome | 5,260 | 12,253 | 6,760 |
| Adjustments to reconcile net income to operating surplus prior to Capital Reserve and Class B Preferred Units distribution | |||
| Depreciation and amortization1 | 18,954 | 19,054 | 19,062 |
| Amortization of above market acquired charters and straight line revenue adjustments | 1,762 | 1,401 | 1,223 |
| Impairment of vessel | - | - | 3,282 |
| Operating Surplus prior to capital reserve and Class B Preferred Units distribution | 25,976 | 32,708 | 30,327 |
| Capital reserve | (13,208) | (14,644) | (13,208) |
| Class B preferred units distribution | (2,775) | (2,775) | (2,775) |
| Operating Surplus after capital reserve and Class B Preferred Units distribution | 9,993 | 15,289 | 14,344 |
| Decrease/(increase) in recommended reserves | 382 | (5,203) | (3,969) |
| Available Cash | 10,375 | 10,086 | 10,375 |
1Depreciation and amortization line item includes the following components:
- Vessel depreciation and amortization; and
- Deferred financing costs and equity compensation plan amortization.
Source: Capital Product Partners L.P.
