Capital Product Partners L.P. Announces Second Quarter 2022 Financial Results
Capital Product Partners L.P. (CPLP) reported strong Q2 2022 results, with revenues of $74.0 million, an 86% increase from Q2 2021. However, net income fell to $20.4 million, down 42% year-over-year, largely due to a prior year's sale gain. The Partnership's average number of vessels rose 27%, contributing significantly to revenue. Total expenses increased 60% to $40.9 million, driven by higher voyage and operating costs. CPLP announced a cash distribution of $0.15 per common unit and plans to acquire four vessels valued at $597.5 million.
- Revenue increased by 86% to $74.0 million.
- Net income per common unit (excluding prior gains) increased by 89%.
- Successful announcement of a $597.5 million acquisition of four vessels, expected to generate $73.4 million in annual gross revenue.
- Net income decreased by 42% compared to Q2 2021.
- Total expenses increased by 60%, impacting profitability.
ATHENS, Greece, July 29, 2022 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2022.
Highlights
| Three-month periods ended June 30, | |||||
| 2022 | 2021 | Increase / (Decrease) | |||
| Revenues | | | | ||
| Expenses | | | | ||
| Net Income | | | ( | ||
| Net Income (excluding gain on sale of vessel in 2021) | | | | ||
| Net Income per common unit | | | ( | ||
| Net Income per common unit (excluding gain on sale of vessel in 2021) | | | | ||
| Average number of vessels 1 | 21.0 | 16.5 | | ||
1Average 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.
- Operating Surplus2 and Operating Surplus after the quarterly allocation to the capital reserve for the second quarter of 2022 were
$43.9 million and$12.7 million , respectively. - Announced common unit distribution of
$0.15 for the second quarter of 2022. - Announced an agreement to acquire one 174,000 cubic meter (“CBM”) Liquefied Natural Gas Carrier vessel (“LNG/C”) and three 13,278 twenty-foot equivalent unit (“TEU”) container vessels between October 2022 and May 2023.
- Sold the M/V Archimidis and the M/V Agamemnon generating gross cash proceeds after repaying outstanding debt of
$102.0 million . - Repurchased 185,039 of the Partnership’s common units during the six months ended June 30, 2022, at an average cost of
$15.83 per unit.
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.
In July 2022, the Partnership successfully concluded a
Overview of Second Quarter 2022 Results
Net income for the quarter ended June 30, 2022, was
Total revenue for the quarter ended June 30, 2022, was
Total expenses for the quarter ended June 30, 2022, were
Total other expense, net for the quarter ended June 30, 2022, was
Capitalization of the Partnership
As of June 30, 2022, total cash amounted to
As of June 30, 2022, total partners’ capital amounted to
As of June 30, 2022, the Partnership’s total debt, gross of deferred financing charges, was
Operating Surplus
Operating surplus for the quarter ended June 30, 2022, amounted to
Acquisition of one LNG/C and three 13,278 TEU Container Vessels
On June 7, 2022, the Partnership announced the exercise of its right of first offer to acquire one 174,000 CBM latest generation X-DF LNG/C and three 13,278 TEU hybrid scrubber-fitted Tier III and Phase III, dual fuel ready eco container sister vessels from Capital Maritime & Trading Corp. (the “seller”), for a total consideration of
The LNG/C, to be named “Asterix I”, is currently under construction by Hyundai Heavy Industries Co. Ltd., South Korea, and is expected to be delivered to the Partnership in January 2023 upon its delivery from the shipyard. The LNG/C Asterix I comes with a long-term time charter with Hartree Partners Power & Gas Company (UK) Limited (“Hartree") for a firm period of 5 years, which, together with the optional period, expires in January 2032. The three 13,278 TEU eco container sister vessels, to be named “Manzanillo Express”, “Itajai Express” and “Buenaventura Express”, are currently under construction by Hyundai Samho Industries Co. Ltd., South Korea, and are scheduled for delivery to the Partnership in October 2022, January 2023, and May 2023, upon their respective deliveries from the shipyard. The vessels have secured long-term time charters with Hapag Lloyd Aktiengesellschaft for a firm period of 10 years which, together with the optional periods, expire between October 2038 and May 2039.
The total consideration for the four vessels amounts to
Sale of the M/V Archimidis and the M/V Agamemnon
On July 6, 2022, and July 28, 2022, the Partnership concluded the sale of M/V Archimidis and M/V Agamemnon of a total Net Book Value of
Issue of Senior Unsecured Bonds on the Athens Exchange
In July 2022, the Partnership, through its wholly owned subsidiary, CPLP Shipping Holdings PLC, issued a
COVID-19
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 second quarter of 2022, incremental operating and/or voyage costs associated with COVID-19 were approximately
Any actual impact COVID-19 may have in the longer-run, combined with any measures we take in response to the challenges presented by it, as described in our previous releases, will depend on how the pandemic continues to develop, the continued distribution and effect 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).
Management Commentary
Mr. Jerry Kalogiratos, Chief Executive Officer of our General Partner, commented:
“We are pleased to witness the continued strong financial performance of the Partnership during the second quarter of 2022 compared to the same period last year, primarily as a result of our entry in the LNG shipping sector in the second half of 2021.”
“In parallel, we continue our strategic fleet renewal, having successfully completed the delivery of the M/V Archimidis and the M/V Agamemnon to their buyer, and accordingly, to position the Partnership for further growth with the recently announced acquisitions of three eco, dual fuel ready, hybrid scrubber fitted 13,278 TEU container vessels and one latest generation 174,000 CBM LNG/C – all with long term charters attached.”
“In addition, the successful issue of a
“Returning capital to our unitholders remains a priority for the Partnership, as in addition to our stated quarterly distribution guidance, we continue with our unit buyback program, which also allows us to take advantage of what we believe is a dislocation between the Partnership’s intrinsic value and its equity valuation.”
Unit Repurchase Program
On January 25, 2021, the Partnership’s Board of Directors approved a unit repurchase program, providing the Partnership with authorization to repurchase up to
Quarterly Common Unit Cash Distribution
On July 26, 2022, the Board of Directors of the Partnership (the “Board”) declared a cash distribution of
Market Commentary Update
Container Market
During the second quarter 2022, Clarkson’s time charter rate index increased by
Overall, analysts expect some ‘normalization’ of market conditions in view of the growing economic headwinds in the mid to long run. Meanwhile trade disruptions remain severe and have supported year to date exceptionally tight container shipping market conditions. Adding to scarcity of available vessel capacity and increased expectations that disruptions will take time to ease, the outlook for the sector remains positive in the months ahead.
The container vessel orderbook stands at
LNG Carrier Charter Market
After a soft start in the first quarter of 2022, spot LNG/C charter rates have seen upward pressure through much of the second quarter, which is not typical for the season. The upward trend has been driven by a focus on energy security combined with high gas prices, as many charterers have opted to go long shipping rather than take the risk of being short. Despite an overall improved spot market in the second quarter compared to the previous quarter, the market saw softer freight rates as of late due to the Freeport liquefaction facility shutdown on the back of an accident. Rectification is expected by the fourth quarter, with Freeport representing
The LNG fleet orderbook stands at
The outlook for the LNG sector appears positive overall, with the drive for energy security (especially in Europe) as a result of the Russia-Ukraine war contributing to strong global demand for LNG and accelerated investment in liquefaction and regasification infrastructure.
Conference Call and Webcast
Today, July 29, 2022, the Partnership will host an interactive conference call at 9:00 am Eastern Time to discuss the financial results.
Conference Call Details
Participants should register at Capital Product Partners Earnings Call Registration.
All registrants will receive dial-in information and a PIN allowing them to access the live call.
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 to 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 master limited partnership, is an international owner of ocean-going vessels. CPLP currently owns 19 vessels, including six latest generation LNG/Cs, nine Neo-Panamax container vessels, three Panamax container vessels and one Capesize bulk carrier vessel. This excludes three 13,278 TEU container vessels and one LNG/C that CPLP has agreed to acquire between the third quarter 2022 and the second quarter of 2023.
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, 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, the expected effects of recent vessel acquisitions, the Russia-Ukraine war and COVID-19 on the financial condition and operations of CPLP and the container and LNG/C 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, 2021, filed on April 27, 2022. 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 Kalogiratos
CEO
Tel. +30 (210) 4584 950
E-mail: j.kalogiratos@capitalpplp.com
Capital GP L.L.C.
Nikos Kalapotharakos
CFO
Tel. +30 (210) 4584 950
E-mail: n.kalapotharakos@capitalmaritime.com
Investor Relations / Media
Nicolas Bornozis
Capital Link, Inc. (New York)
Tel. +1-212-661-7566
E-mail: cplp@capitallink.com
Source: 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 | For the six-month | ||||||||
| periods ended June 30, | periods ended June 30, | ||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||
| Revenues | 73,960 | 39,823 | 147,316 | 77,966 | |||||
| Expenses / (income), net: | |||||||||
| Voyage expenses | 4,467 | 2,198 | 8,031 | 4,437 | |||||
| Vessel operating expenses | 14,112 | 10,352 | 28,555 | 18,287 | |||||
| Vessel operating expenses - related parties | 2,312 | 1,320 | 4,571 | 2,602 | |||||
| General and administrative expenses (including | 2,345 | 1,709 | 3,894 | 3,360 | |||||
| Gain on sale of vessel | - | (25,384) | - | (25,384) | |||||
| Vessel depreciation and amortization | 17,661 | 10,067 | 36,032 | 21,147 | |||||
| Operating income, net | 33,063 | 39,561 | 66,233 | 53,517 | |||||
| Other income / (expense), net: | |||||||||
| Interest expense and finance cost | (11,714) | (4,197) | (22,052) | (7,577) | |||||
| Other (expense) / income, net | (931) | 39 | 1,386 | 342 | |||||
| Total other expense, net | (12,645) | (4,158) | (20,666) | (7,235) | |||||
| Partnership’s net income | 20,418 | 35,403 | 45,567 | 46,282 | |||||
| General Partner’s interest in Partnership’s net income | 348 | 655 | 789 | 856 | |||||
| Partnership’s net income allocable to unvested units | 747 | 780 | 1,043 | 1,014 | |||||
| Common unit holders’ interest in Partnership’s net income | 19,323 | 33,968 | 43,735 | 44,412 | |||||
| Net income per: | |||||||||
| • Common units, basic and diluted | 1.00 | 1.89 | 2.26 | 2.46 | |||||
| Weighted-average units outstanding: | |||||||||
| • Common units, basic and diluted | 19,258,982 | 17,995,522 | 19,316,608 | 18,086,778 | |||||
Capital Product Partners L.P.
Unaudited Condensed Consolidated Balance Sheets
(In thousands of United States Dollars)
| As of June 30, 2022 | As of December 31, 2021 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 23,869 | $ | 20,373 | ||
| Trade accounts receivable | 3,688 | 6,025 | ||||
| Prepayments and other assets | 7,253 | 4,835 | ||||
| Inventories | 5,486 | 5,009 | ||||
| Claims | 1,120 | 1,442 | ||||
| Assets held for sale | 80,879 | - | ||||
| Total current assets | 122,295 | 37,684 | ||||
| Fixed assets | ||||||
| Advances for vessels under construction – related party | 30,000 | - | ||||
| Vessels, net | 1,667,224 | 1,781,858 | ||||
| Total fixed assets | 1,697,224 | 1,781,858 | ||||
| Other non-current assets | ||||||
| Above market acquired charters | 40,529 | 48,605 | ||||
| Deferred charges, net | 1,078 | 2,771 | ||||
| Restricted cash | 10,604 | 10,614 | ||||
| Prepayments and other assets | 2,779 | 3,638 | ||||
| Total non-current assets | 1,752,214 | 1,847,486 | ||||
| Total assets | $ | 1,874,509 | $ | 1,885,170 | ||
| Liabilities and Partners’ Capital | ||||||
| Current liabilities | ||||||
| Current portion of long-term debt, net (including | $ | 93,382 | $ | 97,879 | ||
| Trade accounts payable | 9,058 | 9,823 | ||||
| Due to related parties | 4,632 | 2,785 | ||||
| Accrued liabilities | 11,376 | 11,395 | ||||
| Deferred revenue | 7,421 | 8,919 | ||||
| Liability associated with vessels held for sale | 29,062 | - | ||||
| Total current liabilities | 154,931 | 130,801 | ||||
| Long-term liabilities | ||||||
| Long-term debt, net (including | 1,128,439 | 1,211,095 | ||||
| Derivative liabilities | 15,419 | 3,167 | ||||
| Below market acquired charters | 12,523 | 14,643 | ||||
| Total long-term liabilities | 1,156,381 | 1,228,905 | ||||
| Total liabilities | 1,311,312 | 1,359,706 | ||||
| Commitments and contingencies | - | - | ||||
| Total partners’ capital | 563,197 | 525,464 | ||||
| Total liabilities and partners’ capital | $ | 1,874,509 | $ | 1,885,170 | ||
Capital Product Partners L.P.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands of United States Dollars)
| For the six-month periods ended June 30, | |||||||
| 2022 | 2021 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 45,567 | $ | 46,282 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Vessel depreciation and amortization | 36,032 | 21,147 | |||||
| Amortization and write-off of deferred financing costs | 1,053 | 1,533 | |||||
| Amortization / accretion of above / below market acquired charters | 5,956 | 3,217 | |||||
| Gain on sale of vessel | - | (25,384) | |||||
| Equity compensation expense | 1,162 | 1,013 | |||||
| Change in fair value of derivatives | 12,252 | - | |||||
| Unrealized Bond exchange differences | (14,138) | - | |||||
| Changes in operating assets and liabilities: | |||||||
| Trade accounts receivable | 2,337 | (646) | |||||
| Prepayments and other assets | (1,099) | 518 | |||||
| Due from related parties | - | (1,419) | |||||
| Inventories | (823) | (69) | |||||
| Claims | 322 | (30) | |||||
| Trade accounts payable | 1,309 | (587) | |||||
| Due to related parties | 1,847 | (2,957) | |||||
| Accrued liabilities | 413 | 154 | |||||
| Deferred revenue | (1,498) | (758) | |||||
| Dry-docking costs paid | - | (13) | |||||
| Net cash provided by operating activities | $ | 90,692 | $ | 42,001 | |||
| Cash flows from investing activities: | |||||||
| Vessel acquisitions, including time charters attached, and improvements | (1,108) | (36,266) | |||||
| Advances for vessels under construction – related party | (30,000) | - | |||||
| Proceeds and expenses related to the sale of vessels | (1,984) | 98,503 | |||||
| Net cash (used in) / provided by investing activities | $ | (33,092) | $ | 62,237 | |||
| Cash flows from financing activities: | |||||||
| Proceeds from long-term debt | - | 30,030 | |||||
| Deferred financing costs paid | (121) | (653) | |||||
| Payments of long-term debt | (44,997) | (68,117) | |||||
| Repurchase of common units | (2,935) | (3,868) | |||||
| Dividends paid | (6,061) | (3,778) | |||||
| Net cash used in financing activities | $ | (54,114) | $ | (46,386) | |||
| Net increase in cash, cash equivalents and restricted cash | $ | 3,486 | $ | 57,852 | |||
| Cash, cash equivalents and restricted cash at beginning of period | $ | 30,987 | $ | 54,336 | |||
| Cash, cash equivalents and restricted cash at end of period | $ | 34,473 | $ | 112,188 | |||
| Supplemental cash flow information | |||||||
| Cash paid for interest | 20,585 | 5,911 | |||||
| Non-Cash Investing and Financing Activities | |||||||
| Seller’s Credit Agreement | - | 6,000 | |||||
| Capital expenditures included in liabilities | 692 | 1,221 | |||||
| Capitalized dry-docking costs included in liabilities | 29 | 1,636 | |||||
| Deferred financing costs included in liabilities | - | - | |||||
| Expenses for sale of vessel included in liabilities | - | 1,521 | |||||
| Reconciliation of cash, cash equivalents and restricted cash | |||||||
| Cash and cash equivalents | 23,869 | 104,188 | |||||
| Restricted cash – non-current assets | 10,604 | 8,000 | |||||
| Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | 34,473 | $ | 112,188 | |||
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, unrealized Bond exchange differences, change in fair value of derivatives, 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 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 June 30, 2022 | For the three-month period ended March 31, 2022 | For the three-month period ended June 30, 2021 | ||||
| Partnership’s net income | 20,418 | 25,149 | 35,403 | ||||
| Adjustments to reconcile net income to operating surplus prior to Capital | |||||||
| Depreciation, amortization, unrealized Bond exchange differences and change in fair value of derivatives1 | 20,050 | 16,310 | 11,742 | ||||
| Amortization / accretion of above / below market acquired charters and straight-line revenue adjustments | 3,388 | 3,118 | 1,718 | ||||
| Gain on sale of vessel | - | - | (25,384) | ||||
| Operating Surplus prior to capital reserve | 43,856 | 44,577 | 23,479 | ||||
| Capital reserve | (31,109) | (31,064) | (8,271) | ||||
| Operating Surplus after capital reserve | 12,747 | 13,513 | 15,208 | ||||
| Increase in recommended reserves | (9,657) | (10,467) | (13,344) | ||||
| Available Cash | 3,090 | 3,046 | 1,864 | ||||
___________________________________
1 Depreciation, amortization, unrealized Bond 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 Bond exchange differences; and
- Change in fair value of derivatives
FAQ
What were Capital Product Partners' Q2 2022 revenue and earnings results?
How much did CPLP's net income per common unit decline in Q2 2022?
What distribution has Capital Product Partners declared for Q2 2022?
What vessels is CPLP planning to acquire?
