Capital Product Partners L.P. Announces Third Quarter 2017 Financial Results and the Successful Refinancing of Substantially All of the Partnership's Indebtedness
The Partnership's net income for the quarter ended
Operating surplus prior to allocations to our capital reserve and distributions to the Class
Total revenues for the third quarter of 2017 reached
Total expenses for the third quarter of 2017 were
Total other expense, net for the third quarter of 2017 was
As of
Total cash as of
As of
Refinancing of Four of our Existing Credit Facilities
On
The New Facility is comprised of two tranches. Tranche A amounts to
Following the refinancing, our debt consists only of the loans outstanding under the New Facility of
As of the date of this release, the principal repayment schedule under our two remaining credit facilities is as follows:
| Facility | (In millions of |
|||||||||||||||
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Total | |||||||||
| New Facility | - | 52.8 | 52.8 | 52.8 | 52.8 | 52.8 | 196.0 (1) | 460.0 | ||||||||
| 2015 Credit Facility | - | 0.3 | 1.3 | 1.3 | 1.3 | 11.6 (2) | - | 15.8 | ||||||||
| Total | - | 53.1 | 54.1 | 54.1 | 54.1 | 64.4 | 196.0 | 475.8 | ||||||||
| (1) Including |
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| (2) Including |
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Fleet Employment Update
The M/T 'Miltiadis M II' (162,397 dwt, Ice Class 1A Crude/Product Tanker built 2006, Daewoo Shipbuilding & Marine Engineering Co., Ltd.
On
The M/T 'Amadeus' (50,108 dwt, IMO II/III Eco Chemical/Product Tanker built 2015, Samsung Heavy Industries (Nigbo) Co. Ltd.) secured employment with
The M/T 'Aktoras' (36,759 dwt, IMO II/III Chemical Product Tanker built 2006 Hyundai Mipo Dockyard,
The employment of M/T 'Miltadis M II,' M/T 'Aktoras' and M/T '
As a result of the above employments, the Partnership's charter coverage for 2017 and 2018 is 90% and 60%, respectively.
Quarterly Common and Class B Unit Cash Distribution
On
In addition, on
Market Commentary
Product Tanker Market
The product tanker spot market modestly improved in the third quarter of 2017 compared to the previous quarter, although rates remained on average at relatively depressed levels. The improvement was fueled by firm oil demand on the back of robust economic growth in
In the period market, rates remained flat compared to the previous quarter, while activity was dominated by short-term charters of up to one year.
On the supply side, despite somewhat increased activity in terms of new orders for product tankers in the first nine months of 2017, the orderbook remains at historically low levels. The MR product tanker orderbook currently stands at 7.2%, the lowest level on record. In addition, product tanker deliveries continued to experience significant slippage during the first nine months of 2017, as 33.5% of the expected MR and handy size tanker newbuildings were not delivered on schedule. Analysts estimate that net fleet growth for product tankers will amount to 4.5% in 2017, below the 2016 growth rate of 6.2%. On the demand side, analysts expect growth of 3.7% in 2017 on the back of growing intra-Asian and
Suezmax Tanker Market
Sentiment in the Suezmax spot market was soft during the third quarter of 2017, as rates further retreated compared to the preceding quarter. Rapid fleet growth was a key factor for the weak spot rate environment, as newbuilding vessels continued to enter the market at a high pace. At the same time, demand was seasonally weaker, with crude oil imports to
With spot freight rates at subdued levels during the third quarter, the time charter Suezmax market was marked by low activity and rates.
On the supply side, the Suezmax orderbook represented, at the end of the third quarter of 2017, approximately 11.0% of the current fleet. Contracting activity continues to be limited, as 12 Suezmax tankers have been ordered since the beginning of the year. Analysts estimate that slippage for the first nine months of 2017 amounted to 15.5% of the expected deliveries. In terms of demand, Suezmaxes are projected to experience solid growth of 7.2% in full year 2017, driven by a significant increase in US exports this year, higher crude volumes from the
Finally, it is worth highlighting that overall tanker demolition activity has increased with 7.1 million dwt being sold for scrap in the first nine months of 2017 -- representing an increase of 5.6 million dwt over the same period last year.
Neo-Panamax Container Market
While the overall time charter rate index improved during the third quarter of 2017 compared to the previous quarter, demand for Neo-Panamax container vessels decreased in line with seasonal container vessel demand patterns.
The overall increase in container vessel demand for the year to date has led to a further decrease of the idle container fleet from 2.7% at the end of the second quarter of 2017 to approximately 1.7% at the end of the third quarter.
In addition, analysts have revised their demand growth projections for containerized cargo for full year 2017 to 5.2% from 4.8% in the previous quarter.
At the same time, the expected net fleet growth for 2017 has increased from 2.7% at the end of previous quarter to 3.4%, due to a slowdown in container vessel demolition, as well as reduced slippage for newbuilding deliveries in the third quarter of 2017. Analysts estimate that approximately 355,606 TEUs have been scrapped in the first nine months of 2017, compared to 442,460 in the same period last year. At the end of the third quarter of 2017, the container orderbook stood at 13.8% of the current fleet.
Management Commentary
Mr.
"We are pleased to have completed a major milestone for the Partnership with the refinancing of substantially all of the Partnership's indebtedness at the beginning of the fourth quarter 2017. As previously announced, there are a number of benefits to the completed refinancing. First, the refinancing provides our unitholders enhanced visibility on our financial position and the maturity profile of our indebtedness, as our new credit facility does not mature until the fourth quarter of 2023. Second, the refinancing has significantly reduced our indebtedness, with our pro forma debt to capitalization ratio amounting to 33.7 % as of
"With the refinancing transaction behind us, we expect to turn our focus to growth. As previously disclosed, we have access to a range of acquisition opportunities from Capital Maritime. We aim, subject to market conditions and the availability of financing, to take advantage of these opportunities going forward with the objective of further increasing the long-term distributable cash flow of the Partnership and our common unit distributions."
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 (
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, projected net book value of the collateral fleet, 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
| 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 |
For the nine-month periods ended |
||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Revenues | $ | 51,540 | $ | 53,390 | $ | 151,704 | $ | 153,138 | |||||||||
| Revenues - related party | 11,139 | 6,878 | 33,306 | 26,081 | |||||||||||||
| Total Revenues | 62,679 | 60,268 | 185,010 | 179,219 | |||||||||||||
| Expenses: | |||||||||||||||||
| Voyage expenses | 4,260 | 3,326 | 10,085 | 7,338 | |||||||||||||
| Voyage expenses - related party | - | 79 | - | 268 | |||||||||||||
| Vessel operating expenses | 18,473 | 16,404 | 54,457 | 49,095 | |||||||||||||
| Vessel operating expenses - related party | 2,970 | 2,733 | 8,655 | 8,034 | |||||||||||||
| General and administrative expenses | 1,587 | 1,782 | 4,562 | 4,503 | |||||||||||||
| Vessel depreciation and amortization | 18,544 | 18,089 | 55,614 | 53,479 | |||||||||||||
| Operating income | 16,845 | 17,855 | 51,637 | 56,502 | |||||||||||||
| Other income / (expense), net: | |||||||||||||||||
| Interest expense and finance cost | (7,485 | ) | (6,020 | ) | (20,544 | ) | (18,079 | ) | |||||||||
| Interest and other income /(expense), net | 291 | (65 | ) | 630 | 322 | ||||||||||||
| Total other expense, net | (7,194 | ) | (6,085 | ) | (19,914 | ) | (17,757 | ) | |||||||||
| Partnership's net income | $ | 9,651 | $ | 11,770 | $ | 31,723 | $ | 38,745 | |||||||||
| Preferred unit holders' interest in Partnership's net income | 2,776 | 2,776 | 8,326 | 8,326 | |||||||||||||
| 129 | 177 | 449 | 603 | ||||||||||||||
| Common unit holders' interest in Partnership's net income | 6,746 | 8,817 | 22,948 | 29,816 | |||||||||||||
| Net income per: | |||||||||||||||||
| Common unit, basic and diluted | $ | 0.05 | $ | 0.07 | $ | 0.19 | $ | 0.25 | |||||||||
| Weighted-average units outstanding: | |||||||||||||||||
| Common units, basic and diluted | 123,923,678 | 119,631,339 | 122,941,059 | 119,583,592 | |||||||||||||
| Total comprehensive income: | $ | 9,651 | $ | 11,770 | $ | 31,723 | $ | 38,745 | |||||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||
| (In thousands of United States Dollars) | ||||
| Assets | ||||
| Current assets | As of 2017 |
As of 2016 |
||
| Cash and cash equivalents | 158,190 | 106,678 | ||
| Trade accounts receivable, net | 4,138 | 2,497 | ||
| Prepayments and other assets | 2,609 | 3,943 | ||
| Inventories | 5,683 | 4,761 | ||
| Total current assets | 170,620 | 117,879 | ||
| Fixed assets | ||||
| Vessels, net | 1,315,133 | 1,367,731 | ||
| Total fixed assets | 1,315,133 | 1,367,731 | ||
| Other non-current assets | ||||
| Above market acquired charters | 78,659 | 90,243 | ||
| Deferred charges, net | 2,082 | 4,154 | ||
| Restricted cash | 18,000 | 18,000 | ||
| Prepayments and other assets | 1,160 | 598 | ||
| Total non-current assets | 1,415,034 | 1,480,726 | ||
| Total assets | 1,585,654 | 1,598,605 | ||
| Liabilities and Partners' Capital | ||||
| Current liabilities | ||||
| Current portion of long-term debt, net | 154,306 | 39,568 | ||
| Trade accounts payable | 13,966 | 8,686 | ||
| Due to related parties | 12,585 | 16,095 | ||
| Accrued liabilities | 10,484 | 7,861 | ||
| Deferred revenue, current | 18,301 | 19,986 | ||
| Total current liabilities | 209,642 | 92,196 | ||
| Long-term liabilities | ||||
| Long-term debt, net | 430,719 | 562,619 | ||
| Deferred revenue | 8,469 | 16,033 | ||
| Total long-term liabilities | 439,188 | 578,652 | ||
| Total liabilities | 648,830 | 670,848 | ||
| Commitments and contingencies | ||||
| Partners' capital | 936,824 | 927,757 | ||
| Total liabilities and partners' capital | 1,585,654 | 1,598,605 | ||
| Unaudited Condensed Consolidated Statements of Cash Flows | ||||||
| (In thousands of United States Dollars) | ||||||
| For the nine-month periods ended |
||||||
| 2017 | 2016 | |||||
| Cash flows from operating activities: | ||||||
| Net income | 31,723 | 38,745 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Vessel depreciation and amortization | 55,614 | 53,479 | ||||
| Amortization and write off of deferred financing costs | 848 | 1,012 | ||||
| Amortization of above market acquired charters | 11,584 | 10,685 | ||||
| Equity compensation expense | 876 | 802 | ||||
| Changes in operating assets and liabilities: | ||||||
| Trade accounts receivable, net | (1,641 | ) | (326 | ) | ||
| Prepayments and other assets | 772 | (1,276 | ) | |||
| Inventories | (922 | ) | 1 | |||
| Trade accounts payable | 6,911 | 2,750 | ||||
| Due to related parties | (3,510 | ) | (8,929 | ) | ||
| Accrued liabilities | 1,035 | 377 | ||||
| Deferred revenue | (9,249 | ) | 29,308 | |||
| Dry-docking costs paid | (1,130 | ) | (3,670 | ) | ||
| Net cash provided by operating activities | 92,911 | 122,958 | ||||
| Cash flows from investing activities: | ||||||
| Vessel acquisitions and improvements including time charter agreements | (1,848 | ) | (74,409 | ) | ||
| Increase in restricted cash | - | (500 | ) | |||
| Net cash used in investing activities | (1,848 | ) | (74,909 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from issuance of Partnership units | 15,124 | 1,637 | ||||
| Expenses paid for issuance of Partnership units | (185 | ) | (138 | ) | ||
| Proceeds from issuance of long-term debt | - | 35,000 | ||||
| Deferred financing costs paid | (2,994 | ) | (31 | ) | ||
| Payments of long-term debt | (13,016 | ) | (13,016 | ) | ||
| Dividends paid | (38,480 | ) | (56,131 | ) | ||
| Net cash used in financing activities | (39,551 | ) | (32,679 | ) | ||
| Net increase in cash and cash equivalents | 51,512 | 15,370 | ||||
| Cash and cash equivalents at beginning of period | 106,678 | 90,190 | ||||
| Cash and cash equivalents at end of period | 158,190 | 105,560 | ||||
| Supplemental cash flow information | ||||||
| Cash paid for interest | 18,884 | 17,921 | ||||
| Non-Cash Investing and Financing Activities | ||||||
| Offering expenses included in liabilities | 97 | 743 | ||||
| Capital expenditures included in liabilities | 479 | 507 | ||||
| Capitalized dry docking costs included in liabilities | 11 | 813 | ||||
| Loan issuance costs included in liabilities | 2,000 | - | ||||
Appendix A -- Reconciliation of Non-GAAP Financial Measure (In thousands of
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 |
For the three-month period ended |
For the three-month period ended |
|||
| Partnership's net income | 9,651 | 11,770 | 9,819 | |||
| Adjustments to reconcile net income to operating surplus prior to Capital Reserve and Class B Preferred Units distribution | ||||||
| Depreciation and amortization(i) | 19,193 | 18,604 | 19,060 | |||
| Amortization of above market acquired charters and straight line revenue adjustments | 1,471 | 1,332 | 1,576 | |||
| Proceeds from the sale of HMM shares | - | 29,706 | - | |||
| Operating Surplus prior to capital reserve and Class B Preferred Units distribution | 30,315 | 61,412 | 30,455 | |||
| Capital reserve | (14,644) | (14,644) | (14,644) | |||
| Class B preferred units distribution | (2,776) | (2,776) | (2,775) | |||
| Operating Surplus after capital reserve and Class B Preferred Units distribution | 12,895 | 43,992 | 13,036 | |||
| Increase in recommended reserves | (2,520) | (34,705) | (2,950) | |||
| Available Cash | 10,375 | 9,287 | 10,086 | |||
1 Depreciation and amortization line item includes the following components:
- Vessel depreciation and amortization; and
- Deferred financing costs and equity compensation plan amortization.
Contact Details:
CEO and CFO
Tel. +30 (210) 4584 950
E-mail: j.kalogiratos@capitalpplp.com
Investor Relations / Media
Capital
Tel. +1-212-661-7566
E-mail: cplp@capitallink.com
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