Capital Product Partners L.P. Announces Third Quarter 2021 Financial Results
|Three-month periods ended
|Net Income per common unit||51%|
|Average number of vessels1||16.6||14.0||19%|
- Operating Surplus2 and Operating Surplus after the quarterly allocation to the capital reserve for the third quarter of 2021 were
$25.8 millionand $11.3 million, respectively.
- Announced common unit distribution of
$0.10for the third quarter of 2021.
- Took delivery of two LNG carriers (“LNGC”) on
September 3, 2021pursuant to the agreement announced on August 31, 2021for the acquisition of three LNGCs.
- Successfully concluded a €150.0 million Senior Unsecured Bonds (the “Bonds”) issue on the Athens Exchange.
- Exercised the option to acquire three additional LNGCs with long-term charters attached. The acquisition is expected to be financed with the proceeds from the Bonds, sale and lease back financing and cash at hand.
- Repurchased 379,660 of the Partnership’s common units during the nine months ended
September 30, 2021, at an average cost of $11.73per unit.
1 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.
2 Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master 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 Third Quarter 2021 Results
Net income for the quarter ended
Total revenue was
Total expenses for the quarter ended
Total other expense, net for the quarter ended
Capitalization of the Partnership
Operating surplus for the quarter ended
Update on the Acquisition of the Initial Fleet of LNG Carriers
Quarterly principal repayments under the BOC lease amount to
The seller’s financing component of the consideration is unsecured, interest free and not required to be repaid for twelve months from the delivery of the vessels.
Issue of Senior Unsecured Bonds on The Athens Exchange
Exercise of Option to Acquire Three Additional LNG Carriers
The Partnership exercised the option to acquire three additional X-DF LNGCs with long-term employment in place (the “Optional Vessels”). The option was granted in connection with the acquisition of the Initial Fleet of LNGCs announced on
The acquisition of the Optional Vessels is expected to be financed with the net proceeds from the Bonds, the assumption of
The transaction was negotiated and unanimously approved by the conflicts committee of the Board of Directors (“Committee”) and was also unanimously approved by the full Board of Directors. Evercore Group LLC served as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisors to the Committee.
We continue to monitor the impact of COVID-19 on the Partnership’s financial condition and operations, and on the container and LNG industry in general. While it is not always possible to distinguish incremental costs or off-hire associated with the impact of COVID-19 on our operations, we estimate that for the third quarter of 2021, incremental operating and/or voyage costs associated with COVID-19 were approximately
The actual impact of the COVID-19 pandemic in the longer run, as well as the extent of any measures we take in response to the challenges presented by it, as described in our previous releases, will depend on how the pandemic will continue to develop, the continued distribution of vaccines, the duration and extent of the restrictive measures that are associated with the pandemic and their further impact on global economy and trade. Currently, the container charter market is benefiting from the impact of COVID-19 on the global trade logistics chain (see also Market Commentary Update below).
“We are pleased to see the continued strong financial performance of the Partnership during the third quarter of 2021 compared to the same period last year. The improved performance reflects in part the favorable underlying container chartering market dynamics, but also importantly, the increased fleet size of the Partnership with the addition of three container vessels earlier in the year and two LNGCs towards the end of the quarter.”
“The recent issue of €150.0 million in unsecured Bonds at what we consider very attractive pricing, allowed us to exercise the option for the acquisition of an additional three latest generation XDF LNGCs, all built in 2021. The acquisition is expected to be financed with the proceeds from the Bonds, novation of the existing debt and cash at hand. With the addition of these three LNGCs to our fleet and the LNGC ‘Aristidis I’ and the disposal of the M/V ‘Adonis’, we expect by year end to control a fleet of 21 vessels including 14 container panamax and post panamax vessels, one dry bulk Capesize vessel and six latest generation XDF LNGCs. The total contracted revenues of the fleet as of the end of the third quarter will increase from
Unit Repurchase Program
Quarterly Common Unit Cash Distribution
Market Commentary Update
Momentum remains strong in the container market with charter rates reaching all-time highs across all segments. The limited supply of container tonnage is driving charterers’ interest for long-term charters and/or vessel acquisitions at record high levels, as demand remains robust and supply chain issues remain unresolved.
Analysts expect container vessel demand to grow by 6.2% in 2021, while supply growth for 2021 is estimated at 4.5%. The container vessel orderbook stands at 23%, up from 20% in the previous quarter. As of quarter end, slippage including cancellations of newbuilding container vessels stood at 13.0% in TEU compared to 22% in the previous quarter.
During the third quarter of 2021, the LNGC period market saw a continuation of the trend that started during the second quarter with energy and gas companies continuing to secure modern tonnage for medium to long term charters. Over the last few months, approximately 21 modern vessels equipped with slow speed 2-stroke engines were employed into multiyear charters reducing the number of available modern vessels. Spot market rates continued to improve during the course of the third quarter and experienced upward momentum in view of the seasonal demand uptick and increased natural gas and LNG prices worldwide.
As of quarter end, the LNG fleet orderbook stood at 127 vessels. Shipyard availability for LNGCs is limited due to a number of large projects taking up available berths, while newbuilding prices have experienced 10%-15% increase over the course of the last six months.
Conference Call and Webcast
Conference Call Details
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (877) 553-9962 (US Toll Free Dial In), 0(808) 238-0669 (
Slides and Audio Webcast
There will also be a live, and then archived, webcast of the conference call and accompanying slides, available through the Company’s website. To listen to the archived audio file, visit our http://ir.capitalpplp.com/ and click on Webcasts & Presentations under our Investor Relations page. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
For more information about the Partnership, please visit: www.capitalpplp.com.
The statements in this press release that are not historical facts, including, among other things, the expected financial performance of CPLP’s business, CPLP’s ability to pursue growth opportunities, CPLP’s expectations or objectives regarding future distributions, unit repurchase, market and charter rate expectations, and, in particular, (i) the expected effects of recent vessel acquisitions, (ii) the use of proceeds of the bond offering and (iii) the effects of COVID-19 on financial condition and operations of CPLP and the container industry 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
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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
|For the nine - month
|Expenses / (income), net:|
|Vessel operating expenses||9,901||8,192||28,188||24,715|
|Vessel operating expenses - related parties||1,405||1,267||4,007||3,708|
|General and administrative expenses||2,555||1,835||5,915||5,442|
|Gain on sale of vessel||-||-||(25,384||)||-|
|Vessel depreciation and amortization||10,954||10,625||32,101||30,727|
|Other income / (expense), net:|
|Interest expense and finance cost||(3,631||)||(3,536||)||(11,208||)||(13,383||)|
|Other income / (expense)||228||(380||)||570||(268||)|
|Total other expense, net||(3,403||)||(3,916||)||(10,638||)||(13,651||)|
|Partnership’s net income||11,875||7,769||58,157||23,099|
|General Partner’s interest in Partnership’s net income||216||142||1,072||424|
|Common unit holders’ interest in Partnership’s net income||11,659||7,627||57,085||22,675|
|Net income per:|
|Common unit, basic and diluted||0.62||0.41||3.08||1.22|
|Weighted-average units outstanding:|
|Common units, basic and diluted||18,201,471||18,194,142||18,125,429||18,194,142|
Unaudited Condensed Consolidated Balance Sheets
(In thousands of United States Dollars)
|Cash and cash equivalents||56,604||47,336|
|Trade accounts receivable||3,262||2,855|
|Prepayments and other assets||4,178||3,314|
|Assets held for sale||72,834||-|
|Total current assets||140,994||57,779|
|Total fixed assets||980,841||712,197|
|Other non-current assets|
|Above market acquired charters||35,636||34,579|
|Deferred charges, net||3,725||6,001|
|Prepayments and other assets||3,970||4,642|
|Total non-current assets||1,033,172||764,419|
|Liabilities and Partners’ Capital|
|Current portion of long-term debt, net||66,849||35,810|
|Trade accounts payable||10,473||9,029|
|Due to related parties||3,112||3,257|
|Liability associated with vessel held for sale||45,863||-|
|Total current liabilities||141,080||61,606|
|Long-term debt, net||533,853||338,514|
|Below market acquired charters||12,297||-|
|Total long-term liabilities||546,150||338,514|
|Commitments and contingencies|
|Total partners’ capital||486,936||422,078|
|Total liabilities and partners’ capital||1,174,166||822,198|
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands of United States Dollars)
|For the nine-month
periods ended September 30,
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Vessel depreciation and amortization||32,101||30,727|
|Amortization and write-off of deferred financing costs||1,886||2,680|
|Amortization / accretion of above / below market acquired charters||4,861||9,421|
|Gain on sale of vessel||(25,384||)||-|
|Equity compensation expense||1,528||1,534|
|Changes in operating assets and liabilities:|
|Trade accounts receivable||(407||)||(323||)|
|Prepayments and other assets||130||560|
|Trade accounts payable||689||4,591|
|Due to related parties||(145||)||(421||)|
|Dry-docking costs paid||(13||)||(4,882||)|
|Net cash provided by operating activities||74,923||64,138|
|Cash flows from investing activities:|
|Vessel acquisitions, including time charters attached, and improvements||(102,002||)||(186,575||)|
|Proceeds from sale of vessel, net||98,467||-|
|Net cash used in investing activities||(3,535||)||(186,575||)|
|Cash flows from financing activities:|
|Proceeds from long-term debt||30,030||270,850|
|Deferred financing costs paid||(663||)||(4,718||)|
|Payments of long-term debt||(79,383||)||(144,270||)|
|Repurchase of common units||(4,465||)||-|
|Net cash (used in) / provided by financing activities||(60,120||)||106,684|
|Net increase / (decrease) in cash, cash equivalents and restricted cash||11,268||(15,753||)|
|Cash, cash equivalents and restricted cash at beginning of period||54,336||63,464|
|Cash, cash equivalents and restricted cash at end of period||65,604||47,711|
|Supplemental cash flow information|
|Cash paid for interest||9,581||12,328|
|Non-Cash Investing and Financing Activities|
|Seller’s credit agreements||16,000||-|
|Financing arrangements assumed in connection with the acquisition of companies owning vessels||304,355||-|
|Common units issued in connection with the acquisition of companies owning vessels||15,277||-|
|Capital expenditures included in liabilities||1,048||1,790|
|Capitalized dry-docking costs included in liabilities||2,097||1,641|
|Deferred financing costs included in liabilities||-||49|
|Expenses for sale of vessel included in liabilities||1,485||-|
|Reconciliation of cash, cash equivalents and restricted cash|
|Cash and cash equivalents||56,604||32,811|
|Restricted cash - current assets||-||7,900|
|Restricted cash - non-current assets||9,000||7,000|
|Total cash, cash equivalents and restricted cash shown in the statements of cash flows||65,604||47,711|
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, sale of vessel result, 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
|Reconciliation of Non-GAAP
Financial Measure – Operating Surplus
|For the three-month
|For the three-month
|For the three-month
|Partnership’s net income||11,875||35,403||7,769|
|Adjustments to reconcile net income to operating surplus prior to Capital Reserve|
|Depreciation and amortization1||11,819||11,742||11,513|
|Amortization / accretion of above / below market acquired charters and straight-line revenue adjustments||2,123||1,718||1,755|
|Gain on sale of vessel||-||(25,384)||-|
|Operating Surplus prior to capital reserve||25,817||23,479||21,037|
|Operating Surplus after capital reserve||11,312||15,208||11,735|
|Increase in recommended reserves||(9,337)||(13,344)||(9,838)|
1 Depreciation 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.