CPLP - Capital Product Partners L.P. Announces Fourth Quarter 2023 Financial Results | Benzinga

ATHENS, Greece, Feb. 02, 2024 (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 fourth quarter ended December 31, 2023.

Highlights

• Operating Surplus³ and Operating Surplus after the quarterly allocation to the capital reserve for the fourth quarter of 2023 were $40.5 million and $1.5 million, respectively.
• Announced common unit distribution of $0.15 for the fourth quarter of 2023.
• Concluded a $500.0 million rights offering (the "Rights Offering") and successfully closed a transaction to acquire 11 latest generation two-stroke (MEGA) Liquefied Natural Gas Carriers ("LNG/C") to be delivered between the fourth quarter of 2023 and the first quarter of 2027 (the "LNG/C Transaction").
• On December 21, 2023 and January 2, 2024, the Partnership took delivery of the LNG/C Amore Mio I and the LNG/C Axios II, respectively, pursuant to the LNG/C Transaction.
• Agreed to sell the 5,100 Twenty-foot Equivalent Unit ("TEU") container vessel the M/V Long Beach Express.
  

¹ Adjusted Net Income (excluding impairment of vessels) and Adjusted Net Income per common unit (excluding impairment of vessels) are non-GAAP financial measures used to measure the financial performance of the Partnership and we believe these non-GAAP measures are useful to analysts and investors in comparing the results of operations between periods. These non-GAAP measures are not required by accounting principles generally accepted in the United States ("GAAP") and should not be considered a substitute for Net income and Net Income per common unit prepared in accordance with GAAP or as a measure of profitability.

² 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.

³ Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other 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 Fourth Quarter 2023 Results

Net income for the quarter ended December 31, 2023, was $12.7 million, compared with net income of $21.1 million for the fourth quarter of 2022. Taking into account the interest attributable to the general partner and the allocation of net income to unvested units, net income per common unit for the quarter ended December 31, 2023, was $0.48, or $0.61 per common unit, if we exclude impairment of vessels in that quarter, compared to net income per common unit of $1.03 for the fourth quarter of 2022.

Total revenue for the quarter ended December 31, 2023, was $95.5 million, compared to $79.9 million during the fourth quarter of 2022. The increase in revenue was primarily attributable to the revenue contributed by the newbuilding vessels acquired by the Partnership, namely the M/V Manzanillo Express acquired on October 12, 2022, the M/V Itajai Express acquired on January 10, 2023, the LNG/C Asterix I acquired on February 17, 2023, the M/V Buenaventura Express acquired on June 20, 2023 and the LNG/C Amore Mio I acquired on December 21, 2023, partly offset by the sale of the M/V Cape Agamemnon on November 7, 2023.

Total expenses for the quarter ended December 31, 2023, were $55.1 million, compared to $42.1 million in the fourth quarter of 2022. Total vessel operating expenses during the fourth quarter of 2023 amounted to $20.6 million, compared to $17.3 million during the fourth quarter of 2022. The increase in vessel operating expenses was mainly due to the net increase in the average number of vessels in our fleet. Total expenses for the fourth quarter of 2023 also include a non-cash impairment charge of $3.5 million in total that we recognized in connection with the sale of the M/V Cape Agamemnon and the M/V Long Beach Express, and vessel depreciation and amortization of $22.2 million, compared to $17.0 million in the fourth quarter of 2022. The increase in depreciation and amortization during the fourth quarter of 2023 was mainly attributable to the net increase in the average size of our fleet. General and administrative expenses for the fourth quarter of 2023 increased to $5.7 million, compared to $4.0 million in the fourth quarter of 2022, mainly due to the costs incurred in connection with the LNG/C Transaction.

Total other expense, net for the quarter ended December 31, 2023, was $27.7 million compared to $16.6 million for the fourth quarter of 2022. Total other expense, net includes interest expense and finance cost of $27.9 million for the fourth quarter of 2023, compared to $18.4 million for the fourth quarter of 2022. The increase in interest expense and finance cost was mainly attributable to the increase in the Partnership's average indebtedness and the increase in the weighted average interest rate compared to the fourth quarter of 2022.

Capitalization of the Partnership

As of December 31, 2023, total cash amounted to $204.1 million. Total cash includes restricted cash of $11.7 million, which represents the minimum liquidity requirement under our financing arrangements.

As of December 31, 2023, total partners' capital amounted to $1,174.9 million, an increase of $536.5 million compared to $638.4 million as of December 31, 2022. The increase reflects net income for the year ended December 31, 2023, other comprehensive income of $3.2 million relating to the net effect of the cross-currency swap agreement we designated as an accounting hedge, the amortization associated with the equity incentive plan of $3.8 million and the net result from the issuance of common units in connection with the Rights Offering of $498.7 million, partly offset by distributions declared and paid during the period in a total amount of $12.2 million and the cost of repurchasing our common units under our Unit Repurchase Program for an aggregate amount of $4.1 million.

As of December 31, 2023, the Partnership's total debt was $1,787.8 million before financing fees, reflecting an increase of $488.6 million compared to $1,299.2 million as of December 31, 2022. The increase is attributable to the assumption of $196.3 million of indebtedness in connection with the acquisition of the LNG/C Amore Mio I in December 2023, the drawdown of $392.0 million of new debt in relation to the acquisition of the newbuilding vessels acquired by the Partnership during the first half of 2023 and a $10.0 million increase in the U.S. Dollar equivalent of the euro-denominated bonds issued by CPLP Shipping Holdings Plc in July 2022 and October 2021 as of December 31, 2023, partly offset by the scheduled principal payments for the period of $86.4 million and the early repayment in full of the facility we entered into with CMB Financial Leasing Co., Ltd in 2021 to partly finance the acquisition of the three Panamax container vessels the M/V Long Beach Express, the M/V Seattle Express and the M/V Fos Express of a total amount of $23.4 million.

Operating Surplus

Operating surplus for the quarter ended December 31, 2023, amounted to $40.5 million, compared to $41.7 million for the previous quarter ended September 30, 2023, and $37.3 million for the quarter ended December 31, 2022. We allocated $39.0 million to the capital reserve, an increase of $4.5 million compared to the previous quarter due to the net increase in the rate of amortization of our debt. Operating surplus for the quarter ended December 31, 2023, after the quarterly allocation to the capital reserve, was $1.5 million. Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other 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.

Rights Offering and Standby Purchase Agreement

The Rights Offering was launched on November 27, 2023, in order to finance a portion of the purchase price under the LNG/C Transaction. As previously announced, the Rights Offering resulted in subscriptions for 445,988 common units. These common units were issued to participating unitholders on December 21, 2023.

In connection with the Rights Offering, the Partnership entered into a Standby Purchase Agreement (the "Standby Purchase Agreement") with Capital Maritime & Trading Corp. ("Capital Maritime" or "CMTC"), pursuant to which Capital Maritime agreed to purchase from CPLP at $14.25 per Common Unit (the subscription price in the Rights Offering), the number of common units offered that were not issued pursuant to the Rights Offering. Because the Rights Offering was not fully subscribed, on December 21, 2023, Capital Maritime purchased 34,641,731 Common Units pursuant to the Standby Purchase Agreement, as set forth in the following table:

LNG/C Transaction

On December 21, 2023, the Partnership announced the closing of the umbrella agreement in respect of the LNG/C Transaction (the "Umbrella Agreement"), entered into on November 13, 2023, with Capital Maritime and Capital GP L.L.C. (the "General Partner"), providing for the acquisition of 11 latest generation two-stroke (MEGA) LNG/Cs (the "Vessels") for a total acquisition price of $3,130.0 million. Upon the closing of the Umbrella Agreement, the Partnership entered into 11 share purchase agreements to acquire 100% of the equity interests in each vessel-owning company of the Vessels (the "Vessel SPAs").

Each Vessel will have a capacity of 174,000 Cubic Meters and was built or is under construction at Hyundai Heavy Industries Co., LTD and Hyundai Samho Heavy Industries Co. Ltd., South Korea (collectively, "Hyundai").

On December 21, 2023, and upon entry into the Vessel SPAs for LNG/Cs Axios II, Assos, Apostolos, Aktoras, Archimidis and Agamemnon (the "Initial Vessels"), we paid to Capital Maritime a deposit of $174.4 million, or 10% of the aggregate acquisition price of the Initial Vessels. We closed the Vessel SPA for the LNG/C Axios II upon delivery of the Vessel on January 2, 2024 and we expect to close the remaining acquisitions of each of the vessel-owning companies of the Initial Vessels upon each Vessel's delivery from Hyundai. The remaining purchase price with respect to each Initial Vessel will be paid upon delivery of such vessel and closing of the applicable Vessel SPA, with a total of $1,287.0 million remaining due for the Initial Vessels.

On December 21, 2023, and upon entry into the Vessel SPAs for LNG/Cs Alcaios I, Antaios I, Athlos and Archon (the "Remaining Vessels"), the Partnership paid Capital Maritime $138.1 million to acquire 100% of the equity interests in each of the vessel-owning companies of the Remaining Vessels, which are expected to be delivered to the Partnership between the third quarter of 2026 and the first quarter of 2027. We expect to pay an additional amount of $909.9 million to Hyundai in pre-delivery and delivery installments for the Remaining Vessels.

The Umbrella Agreement and the Standby Purchase Agreement permit the Partnership and Capital Maritime to net payments due to each other under the transactions contemplated by the Umbrella Agreement, including the Vessel SPAs and the Standby Purchase Agreement. The following table describes the amounts that paid or deemed paid by each of the Partnership and Capital Maritime on December 21, 2023:

?he balance of the consideration for the acquisitions of the five Initial Vessels and the four Remaining Vessels under the Umbrella Agreement will be funded by a combination of commercial debt, an unsecured seller's credit ...

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