Capital Product Partners L.P. (the “Partnership” or “CPLP”)
(NASDAQ:CPLP), an international diversified shipping partnership,
today released its financial results for the second quarter ended
June 30, 2018.
The Partnership’s net income for the quarter
ended June 30, 2018 was $4.0 million, compared with $9.8 million
for the second quarter of 2017 and $5.3 million for the previous
quarter ended March 31, 2018. After taking into account the
preferred interest in net income attributable to the holders of the
12,983,333 Class B Convertible Preferred Units outstanding as of
June 30, 2018 (the “Class B Units”, and such holders the “Class B
Unitholders”), and the interest attributable to the general
partner, net income per common unit for the quarter ended June 30,
2018 was $0.01, compared to $0.06 for the second quarter of 2017
and $0.02 for the previous quarter ended March 31, 2018.
Operating surplus prior to allocations to our
capital reserve and distributions to the Class B Units for the
quarter ended June 30, 2018 amounted to $24.9 million, compared to
$30.5 million for the second quarter of 2017, and $26.0 million for
the previous quarter ended March 31, 2018. In line with the
previous quarter, we allocated $13.2 million to the capital reserve
during the second quarter of 2018. Operating surplus after the
quarterly allocation to the capital reserve and distributions to
the Class B Unitholders was $8.9 million for the second quarter of
2018. 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.
Total revenues for the second quarter of 2018
amounted to $65.5 million corresponding to an increase of 5.5%
compared to $62.1 million during the second quarter of 2017. The
increase in total revenues was primarily a result of the increase
in the average number of vessels in our fleet following the
acquisition of the M/T ‘Aristaios’ in January 2018 and the higher
number of voyage charters performed by our vessels compared to the
second quarter of 2017. The impact of these factors was partially
offset by lower average charter rates earned by certain of our
vessels compared to the corresponding period in 2017 and by an
increase in off-hire days in connection with passing special
surveys for certain of our vessels.
Total expenses for the second quarter of 2018
were $55.0 million compared to $45.7 million in the second quarter
of 2017. Voyage expenses for the second quarter of 2018 were $9.4
million compared to $3.5 million in the second quarter of 2017. The
increase was mainly attributable to the increase in the number of
voyage charters performed by certain of our vessels in the second
quarter of 2018 compared to the same period in 2017, as due to the
depressed tanker market and the limited liquidity of the tanker
period market, we have chosen to trade certain of our vessels in
the spot market until we see a more sustained recovery in period
tanker rates. Total vessel operating expenses during the second
quarter of 2018 amounted to $25.4 million, compared to $22.0
million during the second quarter of 2017. The increase in
operating expenses mainly reflects the increase in the number of
vessels in our fleet incurring operating expenses, following the
redelivery of three vessels previously employed under bareboat
charters and the acquisition of the M/T ‘Aristaios’ in January
2018, as well as increased operating expenses incurred during the
second quarter of 2018 in connection with the special surveys of
certain of our vessels. Total expenses for the second quarter of
2018 also include vessel depreciation and amortization of $18.7
million, compared to $18.5 million in the second quarter of 2017.
General and administrative expenses for the second quarter of 2018
amounted to $1.5 million, in line with the second quarter of
2017.
Total other expense, net, for the second quarter
of 2018 was $6.5 million compared to $6.6 million in the second
quarter of 2017. Total other expense, net, includes interest
expense and finance costs of $7.2 million for the second quarter of
2018, compared to $6.7 million in the second quarter of 2017. The
increase primarily reflects higher interest costs incurred during
the second quarter of 2018, mainly as a result of an increase in
the LIBOR weighted average interest rate compared to the same
period in 2017 and the partial write-off of deferred financing
costs associated with the mandatory debt prepayment in connection
to the sale of M/T ‘Aristotelis’ in April 2018.
As of June 30, 2018, total partners’ capital
amounted to $916.9 million, a decrease of $16.5 million compared to
$933.4 million as of December 31, 2017. The decrease was primarily
due to the distributions declared and paid during the first half of
2018 in the total amount of $26.3 million, partially offset by net
income for the period.
Total cash as of June 30, 2018 amounted to $51.0
million, of which restricted cash (under our credit facilities)
amounted to $18.5 million.
As of June 30, 2018, the Partnership’s total
debt was $478.9 million, an increase of $3.1 million compared to
$475.8 million as of December 31, 2017. The increase in the
Partnership’s total debt was attributed to the assumption of a
$28.3 million term loan in connection with the acquisition of the
M/T ‘Aristaios’ and a $15.6 million term loan in relation to the
acquisition of the M/T ‘Anikitos’, partially offset by scheduled
loan principal payments during the first half of 2018 and the
mandatory prepayment of $14.4 million made under the 2017 credit
facility in connection to the sale of the M/T ‘Aristotelis’.
Fleet Employment Update
During the quarter, the Partnership has reached
an agreement to charter eight of its product tankers:
The M/T ‘Avax’, the M/T ‘Axios’ and the M/T
‘Assos’ (apx. 47,800 dwt, Ice Class 1A IMO II/III chemical product
tanker, built 2006/2007 Hyundai Mipo Dockyard, South Korea) have
secured employment for two years (+/- 30 days) at a gross daily
rate of $13,850 with Petrobras. The charterer has the option to
extend the respective time charters for an additional eleven months
(+/-30 days) at the same rate.
Furthermore, and as previously announced, the
M/T ‘Alexandros II’, the M/T ‘Aristotelis II’, the M/T ‘Aris II’
and the M/T ‘Ayrton II’ (aprx. 51,000 dwt, IMO II/III
chemical/product tanker, built 2009/2008 STX Offshore &
Shipbuilding Co., Ltd, South Korea), have also secured employment
with Petrobras for two years (+/- 30 days) at a gross daily rate of
$14,700. The charterer has the option to extend the respective time
charters for an additional eleven months (+/-30 days) at $14,850
per day.
Certain of these new charters are subject to
vetting inspections of the respective vessels and are expected to
commence in the third quarter of 2018.
In addition, the M/T ‘Alkiviadis’ (36,721 dwt,
Ice Class 1A IMO II/III chemical/product tanker, built 2006 Hyundai
Mipo Dockyard Company Ltd., South Korea) secured a twenty month
(+/- 30 days) extension of its present time charter with CSSA
S.A., a fully owned subsidiary of Total S.A., at a gross daily rate
of $12,500. The charter extension will commence in August 2018.
Following the employment updates listed above,
the Partnership’s charter coverage for the remainder of 2018 is
77%.
Quarterly Common and Class B Unit Cash
Distribution
On July 18, 2018, the Board of Directors of the
Partnership (the “Board”) declared a cash distribution of $0.08 per
common unit for the second quarter of 2018 payable on August 14,
2018 to common unit holders of record on August 2, 2018.
In addition, on July 18, 2018, the Board
declared a cash distribution of $0.21375 per Class B Unit for the
second quarter of 2018, in line with the requirements of the
Partnership’s Second Amended and Restated Partnership Agreement, as
amended. The second quarter of 2018 Class B Unit cash distribution
will be paid on August 10, 2018 to Class B Unitholders of record on
August 2, 2018.
Market Commentary
Product Tanker Market
Product tanker spot rates retreated in the
second quarter of 2018 compared to the previous quarter. In the
Atlantic, the market experienced solid demand for much of the
quarter as a result of an increase in gasoline imports to the U.S.
Atlantic coast. Despite this improvement, rates for Medium Range
(“MR”) product tankers on the benchmark transatlantic trade
retreated due to tonnage oversupply and the negative sentiment in
the wider product tanker market. In the U.S. Gulf region, declining
refinery utilization rates in the first part of the quarter reduced
product export volumes from the region, while lower imports into
Mexico and Brazil also limited trading activity. Concurrently, the
market was pressured by high tonnage availability, which was
further increased by ballasters arriving from the U.S. East Coast.
In the eastern hemisphere, the market was similarly uneventful.
Increased competition from Long Range product tankers in
conjunction with a large number of crude tanker newbuildings
delivering from Asian shipyards, which were subsequently carrying
clean cargoes on their maiden voyages, had a negative impact on
demand for product tanker tonnage.
Period product tanker rates decreased in tandem
with the spot market. However, time charter activity was maintained
at relatively robust levels during the quarter, partly reflecting
the positive outlook for the sector.
On the supply side, the orderbook remains close
to historically low levels. As at the end of the second 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 half of 2018, as 35.8% 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 1.5% in 2018, which would represent the slowest rate of
growth since 2000, while product tanker deadweight demand will grow
by 2.6%.
Suezmax Tanker Market
Suezmax spot market rates hovered at
historically low levels during the second quarter of 2018, although
a modest improvement was recorded compared to the first quarter of
the year. This performance reflected a number of factors, including
the build-up of a significant oversupply of vessels following
strong fleet growth in recent years. Moreover, growth in seaborne
crude trade was limited by the oil production cut agreement between
OPEC and non-OPEC oil producers, as the compliance rate relative to
the production quotas stood at 147% in May, while a sharp decline
in Venezuelan exports added pressure on the market. Nonetheless,
rising long-haul exports between the Atlantic and Asia ameliorated
some of the negative pressure, with U.S. crude exports spiking to a
record of 2.6 mb/d in early May.
The time charter market for Suezmaxes saw
limited activity and accordingly period rates softened further,
reflecting the depressed spot rate environment.
On the supply side, the Suezmax orderbook
represented at the end of the second quarter of 2018 approximately
8.8% of the current worldwide fleet. The delivery of new vessels is
expected to slow down going forward, as 17 and 19 vessels are
expected to be delivered for the remainder of 2018 and in 2019,
respectively, assuming no cancellations or slippage. In 2018,
Suezmax dwt demand is projected to grow by 3.5%, as the negative
impact from the OPEC-led supply cuts will soon start to be phased
out following a recent decision by OPEC to increase oil output and
as long-haul exports from the Atlantic basin to Asia are expected
to increase.
Finally, it is worth highlighting that
demolition activity has significantly accelerated in 2018 compared
to the already high demolition activity registered in 2017, when
11.1 million dwt of tanker tonnage was scrapped. In particular,
total tanker demolition amounted to approximately 15.0 million dwt
during the first half of 2018 including 13 Suezmax vessels. This
represents among the highest demolition levels on record for this
period of time.
Neo-Panamax Container Market
Chartering activity for container vessels was
relatively healthy during the second quarter of 2018, despite the
high influx of large container newbuildings above 14,500 TEU.
However, discussions on the imposition of tariffs, in particular
between the U.S. and China, negatively affected owners’ and
charterers’ sentiment towards the end of the quarter. Notably, the
idle container fleet stood at the end of the second quarter of 2018
at approximately 1% of the current fleet, compared to 2% at the end
of 2017, and substantially lower when compared to 7% at the end of
2016.
At the end of the second quarter of 2018, the
container orderbook remained close to historically low levels,
standing at 11.7% of the current fleet, down from 13% in the
previous quarter. Slippage for the first half of 2018 is estimated
at 18%, while container vessel demolition for full year 2018 is
projected at 137,000 TEUs.
Overall, analysts project container vessel
demand to grow by 5.3% in 2018, while the container fleet is also
projected to expand by 5.3%.
Management Commentary
Mr. Jerry Kalogiratos, Chief Executive Officer
of the Partnership’s General Partner, commented:
“The overall weakness of the tanker and, in
particular, the Suezmax market, which continued to experience
multi-decade lows, and the off hire and expenses related to certain
of our vessels undergoing special survey continued to adversely
affect our financial results and common unit distribution coverage
this quarter. Looking ahead, we are pleased to have secured period
charter coverage for eight of our product tankers this quarter - at
attractive rates relative to current market levels - and which are
expected to commence in the third quarter of this year. In
addition, only two of our vessels are scheduled to undergo
drydocking for the rest of year, which are expected to occur in the
third quarter of 2018.”
Conference Call and Webcast
Today, July 27, 2018, the Partnership will host
an interactive conference call at 9:00 am Eastern Time to discuss
the financial results.
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 August 3, 2018 by dialing 1 866 247 4222 (U.S. Toll
Free Dial In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0)1452
550 000 (Standard International Dial In). Access Code:
69648481#.
Slides and Audio Webcast
There will also be a simultaneous live webcast
over the Internet, through the Capital Product Partners website,
www.capitalpplp.com. 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 tanker, container and drybulk vessels. The Partnership
currently owns 37 vessels, including twenty-one modern MR (Medium
Range) product tankers, four Suezmax crude oil tankers, one Aframax
crude/product oil tanker, ten Neo Panamax container vessels and one
Capesize bulk carrier. Its vessels trade predominantly under period
charters.
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:
Capital GP L.L.C.Jerry
KalogiratosCEOTel. +30 (210) 4584 950 E-mail:
j.kalogiratos@capitalpplp.com
Capital GP L.L.C.Nikos
KalapotharakosCFOTel. +30 (210) 4584 950 E-mail:
n.kalapotharakos@capitalmaritime.com
Investor Relations /
MediaNicolas BornozisCapital Link, Inc. (New York)Tel.
+1-212-661-7566E-mail: cplp@capitallink.comSource: 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 period
ended June 30, |
For the six-month period ended June
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenues |
|
60,959 |
|
|
49,856 |
|
|
118,372 |
|
|
100,164 |
|
Revenues – related party |
|
4,583 |
|
|
12,205 |
|
|
12,709 |
|
|
22,167 |
|
Total revenues |
|
65,542 |
|
|
62,061 |
|
|
131,081 |
|
|
122,331 |
|
Expenses: |
|
|
|
|
Voyage
expenses |
|
9,419 |
|
|
3,537 |
|
|
18,397 |
|
|
5,825 |
|
Vessel
operating expenses |
|
22,291 |
|
|
19,139 |
|
|
44,088 |
|
|
35,984 |
|
Vessel
operating expenses - related party |
|
3,126 |
|
|
2,902 |
|
|
6,154 |
|
|
5,685 |
|
General and
administrative expenses |
|
1,464 |
|
|
1,540 |
|
|
3,186 |
|
|
2,975 |
|
Vessel
depreciation and amortization |
|
18,667 |
|
|
18,544 |
|
|
36,999 |
|
|
37,070 |
|
Operating income |
|
10,575 |
|
|
16,399 |
|
|
22,257 |
|
|
34,792 |
|
Other income / (expense),
net: |
|
|
|
|
Interest
expense and finance cost |
|
(7,209 |
) |
|
(6,709 |
) |
|
(13,600 |
) |
|
(13,059 |
) |
Interest and other income |
|
661 |
|
|
129 |
|
|
630 |
|
|
339 |
|
Total other expense, net |
|
(6,548 |
) |
|
(6,580 |
) |
|
(12,970 |
) |
|
(12,720 |
) |
Partnership’s net
income |
|
4,027 |
|
|
9,819 |
|
|
9,287 |
|
|
22,072 |
|
Preferred
unit holders’ interest in Partnership’s net income |
|
2,775 |
|
|
2,775 |
|
|
5,550 |
|
|
5,550 |
|
General
Partner’s interest in Partnership’s net income |
|
24 |
|
|
136 |
|
|
71 |
|
|
320 |
|
Common unit
holders’ interest in Partnership’s net income |
|
1,228 |
|
|
6,908 |
|
|
3,666 |
|
|
16,202 |
|
Net income
per: |
|
|
|
|
- Common unit, basic and diluted
|
$ 0.01 |
|
$ 0.06 |
|
$ 0.03 |
|
$ 0.13 |
|
Weighted-average units outstanding: |
|
|
|
|
- Common units, basic and diluted
|
|
126,701,690 |
|
|
122,892,517 |
|
|
126,701,690 |
|
|
122,441,607 |
|
Total comprehensive income: |
|
4,027 |
|
|
9,819 |
|
|
9,287 |
|
|
22,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Product Partners L.P.Unaudited
Condensed Consolidated Balance Sheets(In thousands
of United States Dollars)
Assets |
|
Current assets |
As of June 30,2018 |
As of
December 31,2017 |
Cash and cash equivalents |
32,464 |
63,297 |
Restricted cash |
1,011 |
- |
Trade accounts receivable, net |
7,263 |
4,772 |
Prepayments and other assets |
4,089 |
3,046 |
Inventories |
10,331 |
5,315 |
Assets held for sale |
- |
29,027 |
Total current assets |
55,158 |
105,457 |
Fixed assets |
|
|
Vessels, net |
1,304,172 |
1,265,196 |
Total fixed assets |
1,304,172 |
1,265,196 |
Other non-current assets |
|
|
Above market acquired charters |
76,798 |
75,035 |
Deferred charges, net |
2,220 |
1,519 |
Restricted cash |
17,489 |
18,000 |
Prepayments and other assets |
724 |
1,009 |
Total non-current assets |
1,401,403 |
1,360,759 |
Total assets |
1,456,561 |
1,466,216 |
Liabilities and Partners’ Capital |
|
|
Current liabilities |
|
|
Current portion of long-term debt, net |
53,102 |
50,514 |
Trade accounts payable |
17,592 |
9,631 |
Due to related parties |
13,704 |
14,234 |
Accrued liabilities |
16,988 |
15,111 |
Deferred revenue, current |
17,272 |
18,800 |
Liability associated with vessel held for sale |
- |
14,781 |
Total current liabilities |
118,658 |
123,071 |
Long-term liabilities |
|
|
Long-term debt, net |
420,129 |
403,820 |
Deferred revenue |
916 |
5,920 |
Total long-term liabilities |
421,045 |
409,740 |
Total liabilities |
539,703 |
532,811 |
Commitments and contingencies |
|
|
Total partners’
capital |
916,858 |
933,405 |
Total liabilities and partners’
capital |
1,456,561 |
1,466,216 |
|
|
|
Capital Product Partners L.P.Unaudited
Condensed Consolidated Statements of Cash Flows(In
thousands of United States Dollars)
|
|
For the six
monthperiods ended June 30, |
|
|
2018 |
|
|
|
2017 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net
income |
|
|
|
9,287 |
|
|
|
|
|
22,072 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Vessel
depreciation and amortization |
|
|
|
36,999 |
|
|
|
|
|
37,070 |
|
Amortization and write off of deferred financing costs |
|
|
|
972 |
|
|
|
|
|
485 |
|
Amortization of above market acquired charters |
|
|
|
8,278 |
|
|
|
|
|
7,744 |
|
Equity
compensation expense |
|
|
|
466 |
|
|
|
|
|
578 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Trade
accounts receivable, net |
|
|
|
(2,491 |
) |
|
|
|
|
358 |
|
Prepayments
and other assets |
|
|
|
(758 |
) |
|
|
|
|
351 |
|
Inventories |
|
|
|
(4,851 |
) |
|
|
|
|
383 |
|
Trade
accounts payable |
|
|
|
6,488 |
|
|
|
|
|
3,511 |
|
Due to
related parties |
|
|
|
(530 |
) |
|
|
|
|
(6,439 |
) |
Accrued
liabilities |
|
|
|
1,308 |
|
|
|
|
|
468 |
|
Deferred
revenue |
|
|
|
(6,532 |
) |
|
|
|
|
(3,206 |
) |
Dry-docking costs paid |
|
|
|
(677 |
) |
|
|
|
|
(1,055 |
) |
Net cash provided by operating
activities |
|
|
|
47,959 |
|
|
|
|
|
62,320 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Vessel
acquisitions and improvements including time charter
agreements |
|
|
|
(40,499 |
) |
|
|
|
|
(1,386 |
) |
Proceeds from sale of vessel |
|
|
|
29,400 |
|
|
|
|
|
- |
|
Net cash used in investing
activities |
|
|
|
(11,099 |
) |
|
|
|
|
(1,386 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds
from issuance of Partnership units |
|
|
|
- |
|
|
|
|
|
5,120 |
|
Expenses
paid for issuance of Partnership units |
|
|
|
- |
|
|
|
|
|
(120 |
) |
Deferred
financing costs paid |
|
|
|
(94 |
) |
|
|
|
|
(14 |
) |
Payments of
long-term debt |
|
|
|
(40,799 |
) |
|
|
|
|
(8,677 |
) |
Dividends paid |
|
|
|
(26,300 |
) |
|
|
|
|
(25,619 |
) |
Net cash used in financing
activities |
|
|
|
(67,193 |
) |
|
|
|
|
(29,310 |
) |
Net (decrease) / increase in cash, cash
equivalents and restricted cash |
|
|
|
(30,333 |
) |
|
|
|
|
31,624 |
|
Cash, cash equivalents and restricted cash at
beginning of period |
|
|
|
81,297 |
|
|
|
|
|
124,678 |
|
Cash, cash equivalents and restricted cash at
end of period |
|
|
|
50,964 |
|
|
|
|
|
156,302 |
|
Supplemental cash flow information |
|
|
|
|
|
|
|
Cash paid
for interest |
|
|
$11,747 |
|
|
|
|
$12,547 |
|
Non-Cash Investing and Financing Activities |
|
|
|
|
|
|
|
Offering
expenses included in liabilities |
|
|
|
$- |
|
|
|
|
$113 |
|
Capital
expenditures included in liabilities |
|
|
$808 |
|
|
|
|
$941 |
|
Sale of
vessel expenses included in liabilities |
|
|
|
538 |
|
|
|
|
|
- |
|
Capitalized
dry docking costs included in liabilities |
|
|
$1,097 |
|
|
|
|
$86 |
|
Assumption
of loan regarding the acquisition of the shares of the companies
owning the M/T Aristaios and the M/T Anikitos |
|
|
$43,958 |
|
|
|
|
|
$- |
|
Reconciliation of cash, cash equivalents and restricted
cash |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$32,464 |
|
|
|
|
$138,302 |
|
Restricted
cash - Current assets |
|
|
$1,011 |
|
|
|
|
|
$- |
|
Restricted cash - Non-current assets |
|
|
$17,489 |
|
|
|
|
$18,000 |
|
Total cash, cash equivalents and restricted
cash shown in the statements of cash
flows |
|
|
$50,964 |
|
|
|
|
$156,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 the United
States 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 accounting
principles generally accepted in the United States 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, 2018 |
For the three-month period ended June 30,
2017 |
For the three-month period ended March 31,
2018 |
Partnership’s net
income |
4,027 |
9,819 |
5,260 |
Adjustments to reconcile net income to
operating surplus prior to Capital Reserve and Class B Preferred
Units distribution |
|
|
|
Depreciation and amortization1 |
19,462 |
19,060 |
18,954 |
Amortization of above market acquired charters and straight line
revenue adjustments |
1,379 |
1,576 |
1,762 |
Operating Surplus prior to capital reserve and
Class B Preferred Units distribution |
24,868 |
30,455 |
25,976 |
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 |
8,885 |
13,036 |
9,993 |
Decrease/(increase) in recommended reserves |
1,490 |
(2,950) |
382 |
Available Cash |
10,375 |
10,086 |
10,375 |
|
|
|
|
_____________________________________
1 Depreciation and amortization line item includes the
following components:
- Vessel depreciation and amortization; and
- Deferred financing costs and equity compensation plan
amortization.
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