Capital Product Partners L.P. Announces Strong Third Quarter Financial Results
ATHENS, Greece, Oct 31, 2008 (GlobeNewswire via COMTEX News Network) -- Capital Product Partners L.P. (the "Partnership"), (Nasdaq:CPLP), an international owner of modern double-hull tankers, today released its financial results for the third quarter ended September 30, 2008.
The Partnership's net income for the quarter ended September 30, 2008 was $15.7 million, or $0.56 per limited partnership unit, which is up from $0.50 per unit in the previous quarter ended June 30, 2008 and up from $0.35 per unit in the third quarter of 2007. The higher number of vessels in the fleet and growth in profit sharing revenue drove these increases.
Operating surplus for the period was a record $18.7 million, up from $15.7 million in the previous quarter. Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master partnerships. (Please see Appendix A for a reconciliation of this non-GAAP measure to net income.)
Revenues for the third quarter were $36.0 million, consisting of $29.4 million fixed revenue from time charter agreements and $6.6 million in profit sharing revenues. The high level of profit sharing revenue is a result of an especially strong product tanker market as well as a solid crude tanker market during the quarter and illustrates the upside potential of the Partnership's chartering strategy.
Total operating expenses were $13.9 million, including $6.5 million in fees for the commercial and technical management of the fleet paid to a subsidiary of Capital Maritime & Trading Corp. (Capital Maritime), the Partnership's sponsor, $6.5 million in depreciation and $0.7 million in general and administrative expenses. Net interest expense and finance cost for the quarter totaled $6.5 million.
Ioannis Lazaridis, Chief Executive Officer and Chief Financial Officer of Capital Product Partners' general partner, said "The record third quarter results enabled us to maintain our unit distribution coverage at high levels."
The clean spot product market strengthened for the second consecutive quarter with rates driven by continued U.S. exports of distillates to Europe as well as the effect of tropical storms and of hurricane Ike at the end of the quarter, which resulted in lower refinery utilization and higher imports to the U.S. The third quarter market for suezmax crude tankers was overall solid with rates softening in August from the record highs of the second quarter, while improving in September. Activity in the product time-charter market increased in the third quarter with rates staying at high levels.
Mr. Lazaridis added, "During the third quarter we took advantage of the strong time-charter market and extended the time charter agreements for the Agisilaos and the Arionas at gross rates of $20,000 (net rates $19,750) per day for an additional 13 months. The new time charter rates are higher than the rates the vessels will be earning at the end of their current time-charters. Both time charter agreements will also continue to be subject to the same profit sharing arrangements they are currently under which allows each party to share additional revenues above the base rate on a 50/50 basis. We are very pleased to note that almost all of our fleet is under charter for 2009."
On August 20, 2008, the Partnership took delivery of its eighteenth tanker, the Aris II. The Aris II is the third of three 51,000 dwt MR chemical/product tanker sister vessels, all of which are under 10-year bareboat charters. The vessel's purchase price was funded with debt through draw-downs on the Partnership's revolving credit facilities and with $2 million in cash. The Partnership has no further contractual obligations for additional vessels, but has a right of first refusal on six MR product tankers from Capital Maritime if medium-to long-term charters are arranged for them.
As of September 30, 2008, the Partnership's long-term debt was $474 million and partners' equity was $199 million. Current undrawn debt facilities amount to $246 million.
On October 24, 2008, the Board of Directors of the Partnership declared a cash distribution for the third quarter of $0.41 per unit, unchanged from the previous cash distribution of $0.41 per unit, and 6.5 percent higher than the 3Q 2007 distribution. The cash distribution will be paid on November 17, 2008, to unit holders of record on November 7, 2008.
Mr. Lazaridis concluded, "Today we face a severe deterioration in the banking and credit world as well as the near certainty of a major global economic slowdown, whose duration is very difficult to forecast and which will significantly impact world trade. At the same time vessels' cost environment continues to be inflationary. In this context we seek to maintain high distribution coverage and a strong balance sheet. Our revolving credit facilities are non-amortizing until June 2012 for the $370 million facility and until March 2013 for the $350 million facility. With $246 million in remaining undrawn credit facilities and access to the sponsor's fleet of modern vessels and newbuildings and relationships with charterers, we believe we are adequately placed to face the upcoming market."
Capital Product Partners will host a conference call to discuss its results today at 10:00 a.m. Eastern Time. The public is invited to listen to the conference call by dialing +1 866-793-4279 (U.S. and Canada), or +1 703-621-9126 (international); reference number 631019. Participants should dial in 10 minutes prior to the start of the call. The slide presentation accompanying the conference call will be available on the Partnership's website at www.capitalpplp.com. An audio webcast of the conference call will also be accessible through the website. The relevant links will be found in the Investor Relations section of the website.
About Capital Product Partners L.P.
Capital Product Partners L.P. (Nasdaq:CPLP), a Marshall Islands master limited partnership, is an international owner of modern double-hull tankers. Capital Product Partners L.P. owns 18 modern vessels, including 15 MR tankers, two small product tankers and one Suezmax crude oil tanker. All 18 vessels are under medium to long-term charters to BP Shipping Limited, Morgan Stanley Capital Group Inc., Overseas Shipholding Group, Shell International Trading & Shipping Company Ltd., and Trafigura Beheer B.V. For more information about the Partnership, please visit our website: www.capitalpplp.com
Forward Looking Statement:
The statements in this press release that are not historical facts, including expected duration and expiration dates of our charters and potential future growth, may be 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 common units.
CPLP-F
Capital Product Partners L.P.
Unaudited Condensed Consolidated and Predecessor Combined Statements
of Income
(Notes 1-4)
(In thousands of United States dollars, except number of units and
earnings per unit)
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For the three month For the nine month
period ended period ended
September 30, September 30,
2008 2007 2008 2007
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Revenues 36,037 24,104 95,292 57,563
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Expenses:
Voyage expenses 264 1,956 826 2,428
Vessel operating
expenses - related
party 6,474 3,858 18,064 7,424
Vessel operating
expenses -- 1,191 3,560 5,023
General and
administrative
expenses 672 449 2,073 877
Depreciation and
amortization 6,524 4,399 18,208 9,902
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Operating income 22,103 12,251 52,561 31,909
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Other income (expense),
net:
Interest expense and
finance cost (6,779) (3,350) (18,294) (7,862)
Loss on interest rate
agreements -- -- -- (3,763)
Interest income 319 259 785 421
Foreign currency
gain/(loss), net 7 (17) (49) (35)
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Total other income
(expense), net (6,453) (3,108) (17,558) (11,239)
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Net income 15,650 9,143 35,003 20,670
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Less:
Net income attributable
to predecessor
operations -- (1,193) 1,504 (7,783)
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Partnership's net
income 15,650 7,950 36,507 12,887
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General Partner's
interest in
Partnership's net
income $ 1,657 $ 159 $ 1,572 $ 258
Limited Partners'
interest in
Partnership's net
income 13,993 7,791 34,935 12,629
Net income per:
* Common units (basic
and diluted) 0.56 0.38 1.46 0.74
* Subordinated units
(basic and diluted) 0.56 0.30 1.46 0.30
* Total units (basic
and diluted) 0.56 0.35 1.46 0.57
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Weighted-average units
outstanding:
* Common units (basic
and diluted) 16,011,629 13,512,500 15,166,867 13,512,500
* Subordinated units
(basic and diluted) 8,805,522 8,805,522 8,805,522 8,805,522
* Total units (basic and
diluted) 24,817,151 22,318,022 23,972,389 22,318,022
Capital Product Partners L.P.
Unaudited Condensed Consolidated and Predecessor Combined Balance
Sheets
(Notes 1-4)
(In thousands of United States dollars,)
September 30, December 31,
2008 2007
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Assets
Current assets
Cash and cash equivalents $ 7,677 $ 19,919
Short term investment 25,500 --
Trade accounts receivable 3,058 2,600
Due from related parties -- 4,262
Prepayments and other assets 582 410
Inventories -- 320
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Total current assets 36,817 27,511
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Fixed assets
Vessels, net 648,430 525,199
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Total fixed assets 648,430 525,199
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Other non-current assets
Deferred charges, net 2,834 1,031
Derivative instruments 773 --
Restricted cash 4,500 3,250
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Total non-current assets 656,537 529,480
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Total assets 693,354 $556,991
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Liabilities and Partners' / Stockholders' Equity
Current liabilities
Current portion of long-term debt $ -- $ 768
Current portion of related party long-term debt -- 5,933
Trade accounts payable 357 1,271
Due to related parties 117 65
Accrued liabilities 601 763
Deferred revenue 385 3,473
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Total current liabilities 1,460 12,273
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Long-term liabilities
Long-term debt 474,000 281,812
Long-term related party debt -- 62,984
Deferred revenue 1,410 690
Derivative instruments 17,619 14,051
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Total long-term liabilities 493,029 359,537
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Total liabilities 494,489 371,810
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Stockholders' Equity
Common stock -- --
Additional paid in capital - Predecessor -- 18,060
Retained earnings - Predecessor -- 5,182
Partners' Equity
General Partner interest 5,080 3,444
Limited Partners
- Common 126,265 102,130
- Subordinated 80,603 66,653
Accumulated other comprehensive loss (13,083) (10,288)
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Total partners' / stockholders' equity 198,865 185,181
---------------------------------------------------------------------
Total liabilities and partners' / stockholders'
equity 693,354 $556,991
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Capital Product Partners L.P.
Unaudited Condensed Consolidated and Predecessor Combined Statements
of Cash Flows
(Notes 1-4)
(In thousands of United States dollars)
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For the nine month period
ended September 30,
2008 2007
Cash flows from operating activities:
Net income $ 35,003 $ 20,670
Adjustments to reconcile net income to net
cash provided by operating activities:
Vessel depreciation and amortization 18,208 9,902
Amortization of deferred charges 310 121
Loss on interest rate swap agreement -- 3,763
Changes in operating assets and
liabilities:
Trade accounts receivable (1,495) (3,394)
Due from related parties (235) (3,880)
Prepayments and other assets (525) (311)
Inventories 177 (829)
Trade accounts payable 933 1,530
Due to related parties 1,246 3,700
Accrued liabilities 213 (90)
Deferred revenue (2,368) 8,296
Dry docking expenses paid (251) (921)
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Net cash provided by operating activities 51,216 38,557
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Cash flows from investing activities:
Vessel acquisitions (200,939) (331,800)
Increase of restricted cash (1,250) (3,250)
Purchase of short term investment (Note 4) (25,500) --
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Net cash used in investing activities (227,689) (335,050)
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Cash flows from financing activities:
Proceeds from issuance of long-term debt 199,500 305,051
Due to related party 60,543 109,711
Payments of long-term debt (8,080) (16,333)
Payments of related party debt/financing (52,463) (893)
Loan issuance costs (1,870) (1,092)
Payment of offering expenses (134) --
Excess of purchase price over book value of
vessels acquired from entity under
common control (3,755) (80,866)
Dividends paid (29,508) (33,258)
Cash balance that was distributed to the
previous owner (2) (2,251)
Capital contributions by predecessor -- 31,279
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Net cash provided by financing activities 164,231 311,348
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Net (decrease) / increase in cash and cash
equivalents (12,242) 14,855
Cash and cash equivalents at beginning of
period 19,919 1,239
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Cash and cash equivalents at end of period $ 7,677 $ 16,094
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Supplemental Cash Flow information
Cash paid for interest $ 12,662 $ 9,188
Units issued to acquire vessel owning
company of M/T Amore Mio II $ 37,739
Units issued to acquire vessel owning
company of M/T Aristofanis $ 10,066
Change in accrued and payable offering
expenses $ 109
Notes
(1) The unaudited condensed consolidated and predecessor combined financial statements of income and cash flows for the nine month period ended September 30, 2008 include the results of operations of M/T Amore Mio II and M/T Aristofanis which were acquired from an entity under common control on March 27, 2008, and April 30, 2008, respectively, as though the transfers had occurred at the beginning of the earliest period presented. The unaudited condensed consolidated and predecessor combined statements of income and cash flows for the nine month period ended September 30, 2007 include the results of operations of M/T Attikos, M/T Amore Mio II and M/T Aristofanis which were acquired from an entity under common control on September 24, 2007, March 27, 2008 and April 30, 2008, respectively, as though the transfer had occurred at the beginning of the earliest period presented. The unaudited condensed consolidated and predecessor combined balance sheet as of December 31, 2007 has been retroactively adjusted to include M/T Amore Mio II and M/T Aristofanis assets, liabilities and owners equity.
(2) On January 29, 2008, June 17, 2008 and August 20, 2008 the Partnership acquired from Capital Maritime the shares of the vessel owning companies of M/T Alexandros II, M/T Aristotelis II, and M/T Aris II for a total purchase price of $48,000 each. The vessels have been recorded in the Partnership's financial statements at the amount of $46,954, $46,706 and $46,585, respectively, which were reflected in Capital Maritime's consolidated financial statements, which differ from the acquisition price by $1,046, $1,294 and $1,415, respectively. The amount of the purchase price in excess of Capital Maritime's basis of the assets of $3,755 was recognized as a reduction of partners' equity and is presented as a financing activity in the statement of cash flows. M/T Alexandros II, M/T Aristotelis II, and M/T Aris II were delivered to Capital Maritime from the shipyard on January 29, 2008, June 17, 2008, and August 20, 2008, respectively, and on the same date the Partnership acquired the shares of the respective vessel owning companies. These vessel owning companies did not have an operating history, as such, there is no information to retroactively adjust that should be considered. Accordingly the M/T Alexandros II, the M/T Aristotelis II and the M/T Aris II were transferred to the Partnership at historical cost at the dates of transfer to the Partnership. All assets, liabilities and equity other than the relevant vessels, related charter agreements and related permits, which the vessel owning companies of the M/T Alexandros II, the M/T Aristotelis and the M/T Aris II had at the time of the transfer, were retained by Capital Maritime.
(3) On March 27, 2008 and April 30, 2008 the Partnership acquired from Capital Maritime the shares of the vessel owning companies of M/T Amore Mio II and M/T Aristofanis for a total consideration of $85,739 and $21,566 respectively. The acquisition of the shares of the vessel owning company of M/T Amore Mio II was funded by $2,000 from available cash, $46,000 through a drawn down from the new credit facility of $350,000, and the remaining amount through the issuance of 2,048,823 common units to Capital Maritime at a price of $18.42 per unit which represents the closing price of the Partnership's units on March 26, 2008 as quoted on Nasdaq Stock Exchange. The acquisition of the shares of the vessel owning company of M/T Aristofanis was funded by $11,500 through a drawn down from the new credit facility of $350,000, and the remaining amount through the issuance of 501,308 common units to Capital Maritime at a price of $20.08 per unit which represents the closing price of the Partnership's units on April 29, 2008 as quoted on Nasdaq Stock Exchange. M/T Amore Mio II and M/T Aristofanis have been recorded in the Partnership's financial statements at the amount of $85,146 and $10,831, respectively, reflecting their historical cost in Capital Maritime's consolidated financial statements, and differ from the acquisition price by $593 and $10,735 respectively. The amounts of the purchase price in excess of Capital Maritime's basis of the M/T Amore Mio II and M/T Aristofanis of $593 and $10,735, respectively, were recognized as a reduction of partners' equity. As required by the provision of Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS No. 141"), the Partnership accounted for the acquisition of the vessel owning companies of M/T Amore Mio II and M/T Aristofanis as a transfer of net assets between entities under common control at Capital Maritime's carrying amounts (historical cost) of the net assets contributed. In addition, transfers of net assets between entities under common control are accounted for as if the transfer occurred at the beginning of the earliest period presented, and prior years financial statements are retroactively adjusted to furnish comparative information similar to the pooling-of-interest method of accounting.
(4) Short term investment consists of cash time deposit with original maturity of six months.
Capital Product Partners L.P.
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 non cash items
such as depreciation and amortization expense, unearned revenue and
unrealized gain and losses. Replacement capital expenditures
represent those capital expenditures required to maintain over the
long term the operating capacity of, or the revenue generated by, the
Partnership's capital assets. Operating Surplus is a quantitative
standard used in the publicly-traded partnership investment community
to assist in evaluating a partnership's ability to make quarterly
cash distributions. Operating Surplus is not required by accounting
principles generally accepted in the United States and should not be
considered as an alternative to net income or any other indicator of
the Partnership's performance required by accounting principles
generally accepted in the United States. The table below reconciles
Operating Surplus to net income.
Reconciliation of Non-GAAP Financial Measure - For the three month
Operating Surplus period ended
September 30, 2008
Net income $15,650
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 6,584
Deferred revenue 162 6,746
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NET CASH PROVIDED BY OPERATING ACTIVITIES 22,396
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Replacement Capital Expenditures (3,705)
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OPERATING SURPLUS 18,691
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Recommended reserves (8,308)
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AVAILABLE CASH 10,383
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This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Capital Product Partners L.P.
Capital GP L.L.C.
Ioannis Lazaridis, Chief Executive Officer and Chief
Financial Officer
+30-210-458-4950
i.lazaridis@capitalpplp.com
Capital Maritime & Trading Corp.
Merete Serck-Hanssen, SVP Finance
+1 (203) 539-6273
m.serckhanssen@capitalpplp.com
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