Capital Product Partners L.P. (the “Partnership,” or “CPLP”)
(NASDAQ: CPLP), an international owner of ocean-going vessels,
today released its financial results for the first quarter ended
March 31, 2019.
As previously announced, the share-for-share
transaction with DSS Holdings L.P. (the “DSS Transaction”),
involving debt prepayment in the aggregate principal amount of
$146.5 million, the full redemption and retirement of our Class B
Convertible Preferred Units (the “Class B Units”) at par value and
the spin-off of our 25 crude and product tankers (the “Tanker
Business”), was completed on March 27, 2019.
We currently own a fleet of 11 vessels,
consisting of ten neo panamax container vessels and one drybulk
vessel.
In this press release, we present our financial
results for the three months ended March 31, 2019, as well as
comparative periods, on a continuing operations basis, except where
reference is made to discontinued operations.
For the first quarter of 2018, our financial
results from continuing operations include revenues, expenses and
cash flows arising from, in addition to our current fleet of 11
vessels, the M/T Amore Mio II, which we sold and delivered on
October 15, 2018 and the M/T Aristotelis, which we sold and
delivered on April 25, 2018. These two tankers were not part
of the Tanker Business that we spun off in the DSS Transaction.
All per unit data have been retrospectively
adjusted to reflect the impact of the one-for-seven reverse unit
split we effected on March 27, 2019.
Overview of First Quarter 2019 Results
Net income from continuing operations for the
quarter ended March 31, 2019 was $7.2 million, compared to net
income from continuing operations of $3.0 million for the first
quarter of 2018. After taking into account the preferred interest
in net income attributable to the holders of the Class B Units
(which includes, for the quarter ended March 31, 2019, the original
issue discount of certain Class B Units that were redeemed as part
of the DSS Transaction) and the interest attributable to the
general partner, net loss from continuing operations per common
unit for the quarter ended March 31, 2019 was $0.10, compared to
net income per common unit of $0.01 for the first quarter of
2018.
Total revenue was $26.8 million for the quarter
ended March 31, 2019, reflecting a decrease of 9% compared to $29.4
million during the first quarter of 2018. The decrease in revenue
was mainly attributable to the period-on-period decrease in the
average number of our vessels as our fleet included the M/T Amore
Mio II and the M/T Aristotelis in the first quarter of 2018 (which
we disposed of in October 2018 and April 2018, respectively),
partially offset by the increase in the average charter rates
earned by certain of our vessels compared to the first quarter of
2018.
Total expenses for the quarter ended March 31,
2019 were $15.4 million, compared to $21.9 million in the first
quarter of 2018. Voyage expenses for the quarter ended March 31,
2019 decreased to $0.5 million, compared to $3.2 million in the
first quarter of 2018, mainly due to the period-on-period decrease
in the number of days during which certain of our vessels were
employed under voyage charters. Total vessel operating expenses
during the first quarter of 2019 amounted to $6.6 million, compared
to $8.4 million during the first quarter of 2018. The decrease in
operating expenses was mainly due to the decrease in the average
number of vessels in our fleet following the disposal of the M/T
Amore Mio II and the M/T Aristotelis. Total expenses for the first
quarter of 2019 also include vessel depreciation and amortization
of $7.2 million, compared to $8.6 million in the first quarter of
2018. The decrease in depreciation and amortization was similarly
attributable to the decrease in the average number of vessels in
our fleet. General and administrative expenses for the first
quarter of 2019 amounted to $1.0 million as compared to $1.7
million in the first quarter of 2018. Transaction expenses related
to the DSS Transaction were recognized and presented under
discontinued operations.
Total other expense, net for the quarter ended
March 31, 2019 was $4.2 million compared to $4.5 million for the
first quarter of 2018. Total other expense, net includes interest
expense and finance costs of $4.6 million for both the first
quarter of 2019 and the first quarter of 2018.
Capitalization of the Partnership
As of March 31, 2019, total cash, including
restricted cash under our 2017 credit facility, amounted to $79.0
million. Restricted cash under our 2017 credit facility amounted to
$5.5 million.
As of March 31, 2019, total partners’ capital
amounted to $406.7 million, a decrease of $474.6 million compared
to $881.3 million (including discontinued operations) as of
December 31, 2018. The decrease was primarily due to the spin-off
of the Tanker Business, the redemption of our Class B Units at par
value for $116.9 million, distributions declared and paid in the
total amount of $11.3 million for the first quarter of 2019 and the
total net loss of $139.3 million for the period (including an
impairment charge of $149.6 million related to the DSS Transaction
as further described below). The impact of these factors on total
partners’ capital was partially offset by the receipt of $319.7
million from DSS as per the terms of the DSS Transaction.
As of March 31, 2019, the Partnership’s total
debt was $285.5 million, reflecting a decrease of $160.4 million
compared to $445.9 million (including discontinued operations) as
of December 31, 2018. The decrease is attributable to the
prepayment of our debt of $146.5 million in connection with the DSS
Transaction and scheduled principal amortization for the
period.
Operating Surplus
Operating surplus for the quarter ended March
31, 2019 (including the contribution of the Tanker Business)
amounted to $30.5 million, compared to $26.0 million for the first
quarter of 2018, and $33.4 million for the previous quarter ended
December 31, 2018. For the first quarter of 2019, we allocated $7.7
million to the capital reserve compared to $13.6 million in the
previous quarter reflecting the reduction in CPLP’s total
outstanding indebtedness. Operating surplus after the quarterly
allocation to the capital reserve and the accrued distributions of
the Class B Units outstanding until their redemption on March 27,
2019, was $20.2 million for the quarter ended March 31, 2019.
Operating surplus is a non-GAAP financial measure used by certain
investors to evaluate 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.
Discontinued Operations
In accordance with Accounting Standards Update
(“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures
of Disposals of Components of an Entity, the assets and liabilities
and results of operations of the Tanker Business we spun off in the
DSS Transaction are reported as discontinued operations for all
periods presented.
Net loss from discontinued operations for the
first quarter ended March 31, 2019 was $146.5 million, or $7.91 per
unit, compared to net income from discontinued operations of $2.3
million, or $0.12 per unit for the first quarter of 2018. Results
from discontinued operations for the first quarter of 2019 reflect
a charge of $149.6 million to reduce the carrying value of the
vessels forming part of the Tanker Business to their estimated fair
value.
Quarterly Common Unit Cash
Distribution
On May 3, 2019, the Board of Directors of the
Partnership (the “Board”) declared a cash distribution of $0.315
per common unit for the first quarter of 2019 payable on May 15,
2019 to common unit holders of record on May 13, 2019.
Market Commentary
Neo-Panamax Container Market
Neo-Panamax container vessels experienced
increased activity during the first quarter of 2019, compared to
the fourth quarter of 2018. While charter rates for feeder and
panamax vessels remained relatively flat due to, among other
things, the overhang of idle tonnage, charter rates for Neo-panamax
vessels, especially 8,000 TEU designs or larger, saw marked
increases, with 12-month charters being contracted at average daily
gross rates of approximately $24,000.
At the end of the first quarter of 2019, the
idle container fleet was estimated to represent approximately 3.2%
of the current worldwide fleet, a slight uptick from the end of
2018. However, the idle fleet has since then declined to an
estimated 1.5% of the current worldwide fleet as at the end of
April 2019.
At the end of the first quarter of 2019, the
container orderbook remained close to historically low levels and
was estimated by analysts to stand at 12.6% of the current
worldwide fleet. Non-delivery (slippage) of new containership
capacity expected to be delivered in the first quarter 2019 is
estimated by analysts to be 41% in TEU terms. Further, scrapping in
the first quarter of 2019 is estimated to have increased to 70,000
TEU compared to 24,600 TEU in the first quarter of 2018.
Management Commentary
Mr. Jerry Kalogiratos, Chief Executive Officer of our General
Partner, commented:
“The first quarter of 2019 marked an important
milestone for the Partnership, as it saw the completion of the
spin-off and merger of our Tanker Business with DSS in a strategic
transaction for the Partnership. We believe that to date the DSS
transaction has overall been an accretive transaction for our
unitholders. Among other metrics, the sum-of-the-part equity value
as of the date of this announcement was greater than the
stand-alone market capitalization of CPLP immediately before the
consummation of the transaction.”
“Importantly, this transaction allows CPLP to
reshape its business towards a modern fleet with remaining charter
duration of more than five years, providing CPLP unitholders with
increased stability and cash flow visibility. On that basis, we are
looking forward to expanding our asset base again with modern
vessels employed under medium- to long-term charters with a view to
growing our long-term distributable cash flow.”
Conference Call and Webcast
Today, May 13, 2019, 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
877 553 9962 (U.S. Toll Free Dial In), 0808 238 0669 (UK Toll Free
Dial In) or +44 (0)2071 928592 (Standard International Dial In).
Please quote “Capital Product Partners.”
A replay of the conference call will be
available until Monday, May 20, 2019 by dialing 1 866 331 1332
(U.S. Toll Free Dial In), 0808 2380 667 (UK Toll Free Dial In) or
+44 (0)3333 009 785 (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 ocean-going vessels. CPLP currently owns 11 vessels,
including ten neo panamax container vessels and one capesize bulk
carrier.
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
anticipated benefits of the DSS Transaction, the expected financial
performance of CPLP’s remaining business, CPLP’s ability to pursue
growth opportunities, CPLP’s expectations or objectives regarding
future distributions, and 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. 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. 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
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 periods ended March 31, |
|
2019 |
|
2018 |
|
Revenues |
26,817 |
|
28,715 |
|
Revenues – related party |
- |
|
701 |
|
Total revenues |
26,817 |
|
29,416 |
|
Expenses: |
|
|
Voyage expenses |
534 |
|
3,209 |
|
Vessel operating expenses |
5,658 |
|
7,269 |
|
Vessel operating expenses -
related party |
957 |
|
1,103 |
|
General and administrative
expenses |
1,007 |
|
1,722 |
|
Vessel
depreciation and amortization |
7,236 |
|
8,615 |
|
Operating income |
11,425 |
|
7,498 |
|
Other income /
(expense), net: |
|
|
Interest expense and finance
cost |
(4,614 |
) |
(4,556 |
) |
Other
income |
419 |
|
53 |
|
Total other expense, net |
(4,195 |
) |
(4,503 |
) |
Partnership’s net income from continuing
operations |
7,230 |
|
2,995 |
|
Preferred unit holders’
interest in Partnership’s net income from continuing
operations |
8,996 |
|
2,775 |
|
General Partner’s interest in
Partnership’s net income from continuing operations |
(34 |
) |
4 |
|
Common unit holders’ interest
in Partnership’s net income from continuing operations |
(1,732 |
) |
216 |
|
Partnership’s net (loss) / income from
discontinued operations |
(146,535 |
) |
2,265 |
|
Partnership’s net (loss) / income |
(139,305 |
) |
5,260 |
|
Net (loss) / income
from continuing operations per: |
|
|
Common unit, basic and diluted |
(0.10 |
) |
0.01 |
|
Weighted-average units
outstanding: |
|
|
Common units, basic and diluted |
18,178,100 |
|
18,100,241 |
|
Net (loss) / income
from discontinued operations per: |
|
|
Common unit, basic and diluted |
(7.91 |
) |
0.12 |
|
Weighted-average units
outstanding: |
|
|
Common units, basic and diluted |
18,178,100 |
|
18,100,241 |
|
Net (loss) / income
from operations per: |
|
|
Common unit, basic and diluted |
(8.01 |
) |
0.13 |
|
Weighted-average units
outstanding: |
|
|
Common units, basic and diluted |
18,178,100 |
|
18,100,241 |
|
|
|
|
|
|
Capital Product Partners L.P.Unaudited
Condensed Consolidated Balance Sheets(In thousands
of United States Dollars)
|
|
|
Assets |
|
Current assets |
As of March 31,2019 |
As of December 31,2018 |
Cash and cash equivalents |
73,450 |
21,203 |
Trade accounts receivable, net |
8,210 |
16,126 |
Prepayments and other assets |
2,444 |
2,017 |
Inventories |
1,601 |
1,516 |
Claims |
230 |
- |
Current assets from discontinued operations |
- |
23,698 |
Total current assets |
85,935 |
64,560 |
Fixed assets |
|
|
Vessels, net |
579,028 |
586,100 |
Total fixed assets |
579,028 |
586,100 |
Other non-current assets |
|
|
Above market acquired charters |
57,109 |
60,655 |
Restricted cash |
5,500 |
16,996 |
Prepayments and other assets |
2,419 |
2,466 |
Non-current assets from discontinued operations |
- |
654,468 |
Total non-current assets |
644,056 |
1,320,685 |
Total assets |
729,991 |
1,385,245 |
Liabilities and Partners’ Capital |
|
|
Current liabilities |
|
|
Current portion of long-term debt, net |
29,716 |
37,479 |
Trade accounts payable |
20,691 |
14,348 |
Due to related parties |
6,119 |
17,742 |
Accrued liabilities |
10,394 |
16,740 |
Deferred revenue, current |
4,767 |
7,315 |
Current liabilities from discontinued operations |
- |
21,535 |
Total current liabilities |
71,687 |
115,159 |
Long-term liabilities |
|
|
Long-term debt, net |
251,565 |
253,932 |
Deferred revenue |
47 |
96 |
Long-term liabilities from discontinued operations |
- |
134,744 |
Total long-term liabilities |
251,612 |
388,772 |
Total liabilities |
323,299 |
503,931 |
Commitments and contingencies |
|
|
Total partners’ capital |
406,692 |
881,314 |
Total liabilities and partners’ capital |
729,991 |
1,385,245 |
|
|
|
Capital Product Partners L.P.Unaudited
Condensed Consolidated Statements of Cash Flows(In
thousands of United States Dollars)
|
|
|
|
|
|
|
For the three
monthperiods ended March 31, |
|
2019 |
|
2018 |
|
Cash flows from operating
activities of continuing operations: |
|
|
|
|
Net income from continuing operations |
|
7,230 |
|
|
2,995 |
|
Adjustments to reconcile
net income to net cash provided by operating activities of
continuing operations: |
|
|
|
|
Vessel depreciation and
amortization |
|
7,236 |
|
|
8,615 |
|
Amortization of deferred
financing costs |
|
263 |
|
|
300 |
|
Amortization of above market
acquired charters |
|
3,546 |
|
|
3,545 |
|
Equity compensation expense |
|
- |
|
|
238 |
|
Changes in operating
assets and liabilities: |
|
|
|
|
Trade accounts receivable,
net |
|
7,916 |
|
|
(1,565 |
) |
Prepayments and other assets |
|
(380 |
) |
|
1,299 |
|
Insurance claims |
|
(230 |
) |
|
- |
|
Inventories |
|
(85 |
) |
|
391 |
|
Trade accounts payable |
|
6,954 |
|
|
1,156 |
|
Due to related parties |
|
(11,623 |
) |
|
4,444 |
|
Accrued liabilities |
|
(6,323 |
) |
|
144 |
|
Deferred revenue |
|
(2,597 |
) |
|
(2,660 |
) |
Dry-docking costs paid |
|
(361 |
) |
|
(175 |
) |
Net cash provided by operating activities of continuing
operations |
|
11,546 |
|
|
18,727 |
|
Cash flows from investing
activities of continuing operations: |
|
|
|
|
Vessel improvements |
|
(436 |
) |
|
- |
|
Net cash used in investing activities of continuing
operations |
|
(436 |
) |
|
- |
|
Cash flows from financing
activities of continuing operations: |
|
|
|
|
Deferred financing costs
paid |
|
(770 |
) |
|
(31 |
) |
Payments of long-term debt |
|
(9,623 |
) |
|
(10,061 |
) |
Redemption of Class B unit
holders |
|
(116,850 |
) |
|
- |
|
Dividends paid |
|
(11,263 |
) |
|
(13,150 |
) |
Net cash used in financing activities of continuing
operations |
|
(138,506 |
) |
|
(23,242 |
) |
Net decrease in cash, cash equivalents and restricted cash
from continuing operations |
|
(127,396 |
) |
|
(4,515 |
) |
Cash flows from
discontinued operations |
|
|
|
|
Operating
activities |
|
9,919 |
|
|
10,005 |
|
Investing
activities |
|
- |
|
|
(24,410 |
) |
Financing activities |
|
158,228 |
|
|
(3,147 |
) |
Net increase / (decrease) in cash, cash equivalents and
restricted cash from discontinued operations |
|
168,147 |
|
|
(17,552 |
) |
Net increase / (decrease) in cash, cash equivalents and
restricted cash |
|
40,751 |
|
|
(22,067 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
38,199 |
|
|
71,297 |
|
Cash, cash equivalents and restricted cash at end of
period |
|
78,950 |
|
|
49,230 |
|
Supplemental cash flow
information |
|
|
|
|
Cash paid for interest |
|
7,888 |
|
|
5,599 |
|
Non-Cash Investing and
Financing Activities |
|
|
|
|
Capital expenditures included in
liabilities |
|
275 |
|
|
703 |
|
Capitalized dry docking costs
included in liabilities |
|
119 |
|
|
540 |
|
Deferred financing costs included
in liabilities |
|
- |
|
|
50 |
|
Reconciliation of cash,
cash equivalents and restricted cash |
|
|
|
|
Cash and cash equivalents |
|
73,450 |
|
|
31,246 |
|
Restricted cash - Non-current assets |
|
5,500 |
|
|
17,984 |
|
Total cash, cash equivalents and restricted cash
shown in the statements of cash flows |
|
78,950 |
|
|
49,230 |
|
|
|
|
|
|
|
|
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 (loss)/income
adjusted for depreciation and amortization expense, impairment of
vessels, 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-monthperiod endedMarch 31,
2019 |
For the three-monthperiod endedDecember
31, 2018 |
For the three-monthperiod endedMarch 31,
2018 |
Partnership’s net income from continuing
operations |
7,230 |
|
6,947 |
|
2,995 |
|
Adjustments
to reconcile net income to operating surplus prior to
Capital Reserve and Class B Preferred Units
distribution |
|
|
|
Depreciation and
amortization1 |
7,493 |
|
7,564 |
|
9,147 |
|
Amortization of above market
acquired charters and straight line revenue adjustments |
1,414 |
|
1,407 |
|
1,218 |
|
Operating Surplus from continuing operations |
16,137 |
|
15,918 |
|
13,360 |
|
Add: Operating Surplus
from discontinued operations |
14,394 |
|
17,461 |
|
12,616 |
|
Total
Operating Surplus from operations |
30,531 |
|
33,379 |
|
25,976 |
|
Capital reserve |
(7,703 |
) |
(13,597 |
) |
(13,208 |
) |
Class B preferred units distributions2 |
(2,652 |
) |
(2,775 |
) |
(2,775 |
) |
Operating
Surplus after capital reserve and Class B Preferred Units
distribution |
20,176 |
|
17,007 |
|
9,993 |
|
(Increase) / Decrease in recommended reserves |
(14,340 |
) |
(11,171 |
) |
382 |
|
Available
Cash |
5,836 |
|
5,836 |
|
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.
2 For the quarter ended March 31, 2019,
this reflects accrued distributions on Class B units outstanding
until their redemption on March 27, 2019, which was included in the
redemption price.
Capital Product Partners (NASDAQ:CPLP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Capital Product Partners (NASDAQ:CPLP)
Historical Stock Chart
From Apr 2023 to Apr 2024