Capital Clean Energy Carriers announces Q3 Financial Results

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Capital Clean Energy Carriers, an international owner of ocean-going vessels, released its financial results for the third quarter ended September 30, 2024.

Key Quarterly Highlights

  • Announced dividend of $0.15 for the third quarter of 2024.
  • Completed conversion from a Marshall Islands limited partnership to a Marshall Islands corporation, and name change to “Capital Clean Energy Carriers Corp.” on August 26, 2024.
  • Announced the sale of five debt-free container sister vessels, for an expected book gain of $118.4 million.
  • Refinanced the Liquified Natural Gas Carrier Attalos and the LNG/C Asklipios releasing $72.6 million of additional liquidity net of financing charges and extending the maturities to 2031.

In November 2023, the Company announced its decision to shift its strategic focus towards the transportation of various forms of gas to industrial customers, including liquefied natural gas and new commodities emerging as a result of the energy transition. As a result, the Company agreed to acquire 11 newbuild LNG/Cs (the “Newbuild LNG/C Vessels”) and in June 2024, the Company further invested in 10 gas carriers, including four LCO2/multi gas and six LPG-ammonia carriers. Since December 2023, the Company has also completed or entered into agreements for the sale of 12 container vessels. In view of this strategic shift, we present our financial results for all periods presented on a continuing operations basis, except where reference is made to discontinued operations.

Financial results from continuing operations include revenues, expenses and cash flows arising from our 15 vessels currently in-the-water, including 12 latest generation LNG/Cs and three 13,000 twenty equivalent unit (“TEU”) Neo-Panamax container vessels.

Financial results from discontinued operations include revenues, expenses and cash flows arising from the 12 container vessels we have sold or agreed to sell following the announcement of our strategic shift in November 2023. Please refer to Appendix A Discontinued Operations.

Key Financial Highlights (continuing operations)

 Three-month periods ended September 30,
 20242023Increase / (Decrease)
Revenues$106.0 million$63.9 million66%
Expenses$48.9 million$33.3 million47%
Interest expense and finance cost$40.7 million$25.6 million59%
Net Income$15.8 million$5.0 million216%
Average number of vessels115.011.036%


Management Commentary

Mr. Jerry Kalogiratos, Chief Executive Officer of CCEC, commented:
“I am pleased to see our company, under its new name of Capital Clean Energy Carriers Corp., advancing steadily in line with our chosen strategy. The recent name change and our conversion to a corporation with enhanced standards of corporate governance is an important step in reinforcing our platform further and expanding the Company to a broader investor base. The accretive sale of our five Neo Panamax container vessels, agreed upon during the quarter, reflects management’s commitment to deliver on our objective of positioning the Company as premier carrier of gas including emerging trades from the energy transition. Since February 2024, our group has taken advantage of positive container market dynamics and in total sold or agreed to sell 12 container vessels raising approximately $472.0 million in net proceeds, thereby further strengthening our financial position. We believe that with a robust gas-focused platform, CCEC is well placed to grow over the next two years, as we bring an additional 16 state-of-the-art new vessels in operation. This growth is further supported by a current contracted revenue backlog of more than $2.6 billion. The board and management look forward to enhancing the Company’s profile and reach a broader and more diversified investor base in the current quarter and beyond.”

Overview of Third Quarter 2024 Results

Net income from continuing operations for the quarter ended September 30, 2024, was $15.8 million compared with net income from continuing operations of $5.0 million for the third quarter of 2023.

Upon conversion from a Marshall Islands limited partnership to a Marshall Islands corporation the 348,570 general partner units and all the incentive distribution rights, were exchanged for an aggregate of 3,500,000 common shares. The amount of $46.2 million, representing the difference between the book value of the general partner units and the fair value of the common shares, was presented as a deemed dividend to the General Partner. As a result, net loss from continuing operations per share for the quarter ended September 30, 2024, was $0.54. After adjusting for the deemed dividend to the General Partner, the adjusted net income from continuing operations per share for the quarter ended September 30, 2024, was $0.28. This compares to a net income from continuing operations per common unit of $0.25 for the third quarter of 2023.

Total revenue from continuing operations for the quarter ended September 30, 2024, was $106.0 million, compared to $63.9 million during the third quarter of 2023. The increase in revenue was attributable to the five newbuilding LNG carrier vessels acquired by the Company, namely the LNG/C Amore Mio I acquired in the fourth quarter of 2023, the LNG/C Axios II acquired in the first quarter of 2024 and the LNG/C Apostolos, the LNG/C Aktoras and the LNG/C Assos acquired in the second quarter of 2024, which increased the average number of vessels from 11 to 15 compared to the same quarter last year.

Total expenses from continuing operations for the quarter ended September 30, 2024, were $48.9 million, compared to $33.3 million in the third quarter of 2023. Total vessel operating expenses from continuing operations during the third quarter of 2024 amounted to $17.1 million, compared to $13.0 million during the third quarter of 2023. The increase in vessel operating expenses from continuing operations was mainly due to the net increase in the average number of vessels in our fleet. Total expenses from continuing operations for the third quarter of 2024 also include vessel depreciation and amortization of $24.2 million, compared to $14.2 million in the third quarter of 2023. The increase in depreciation and amortization from continuing operations during the third quarter of 2024 was attributable to the net increase in the average number of vessels in our fleet. General and administrative expenses from continuing operations for the third quarter of 2024 increased to $4.7 million, compared to $2.6 million in the third quarter of 2023, mainly due to costs associated with the investment in 10 latest technology gas carriers announced in June 2024, and the corporate conversion and name change that became effective in August 2024.

Total other expenses, net from continuing operations for the quarter ended September 30, 2024, was $41.3 million compared to $25.5 million for the third quarter of 2023. Total other expenses, net from continuing operations include interest expense and finance cost of $40.7 million for the third quarter of 2024, compared to $25.6 million for the third quarter of 2023. The increase in interest expense and finance cost from continuing operations was mainly attributable to the increase in the Company’s average indebtedness, as a result of the net increase in the average number of vessels in our fleet, partly offset by the decrease in the weighted average interest rate compared to the third quarter of 2023.

Company Capitalization

As of September 30, 2024, total cash amounted to $183.1 million. Total cash includes restricted cash of $18.3 million, which represents the minimum liquidity requirement under our financing arrangements.

As of September 30, 2024, the Company’s total shareholders’ equity amounted to $1,245.4 million, an increase of $70.5 million compared to $1,174.9 million as of December 31, 2023. The increase reflects net income of $91.4 for the nine months to September 30, 2024, the amortization associated with the equity incentive plan of $4.5 million, partly offset by distributions declared and paid during the period in a total amount of $25.1 million and the other comprehensive loss of $0.4 million relating to the net effect of the cross-currency swap agreement we designated as an accounting hedge.

As of September 30, 2024, the Company’s total debt (including debt classified within discontinued operations) was $2,698.1 million before financing fees, reflecting an increase of $910.3 million compared to $1,787.8 million as of December 31, 2023. The increase is attributable to (i) the drawdown of $910.0 million in total of bank debt and the drawdown of $134.8 million in total under the $220.0 million unsecured seller’s credit issued to the Company by Capital Maritime & Trading Corp. (the “Seller’s Credit”), in connection with the acquisition of the LNG/C Axios II, the LNG/C Assos, the LNG/C Apostolos and the LNG/C Aktoras (ii) the refinancing of the outstanding indebtedness of the LNG/C Aristidis I the LNG/C Attalos and the LNG/C Asklipios discussed below, which released $130.2 million gross of additional liquidity and (iii) the $2.3 million increase as of September 30, 2024 in the U.S. Dollar equivalent of the euro-denominated bonds issued by CPLP Shipping Holdings Plc in July 2022 and October 2021. The increase of the Company’s total debt was partly offset by (i) scheduled principal payments for the period of $85.4 million, (ii) the early repayment in full of the facilities related to the M/V Athos the M/V Aristomenis and the M/V Akadimos in the amount of $88.9 million in total due to the vessels’ sale, and (iii) the repayment of $92.6 million of the Seller’s Credit.

LNG/Cs Financing Updates

On August 23, 2024, the Company agreed to refinance the financing facility for the LNG/C Attalos, by fully repaying outstanding debt of $123.6 million and drawing $162.5 million under a new financing arrangement. The outstanding amount is repayable in 84 monthly instalments of $0.7 million, together with a repurchase obligation of $100.0 million due at the expiration of the lease in July 2031.

On August 23, 2024, the Company agreed to refinance the financing facility for the LNG/C Asklipios by fully repaying outstanding debt of $126.7 million and drawing $162.5 million under a new financing arrangement. The outstanding amount is repayable in 84 monthly instalments of $0.7 million, together with a repurchase obligation of $100.0 million due at the expiration of the lease in July 2031.

On July 16, 2024, the Company repaid in full the $192.0 bridge loan facility of the LNG/C Apostolos and drew a $240.0 million Japanese Operating Lease with Call Option (“JOLCO”). The JOLCO amount consists of 80% debt and 20% tax equity, with escalating amortization, an eight-year term and a balloon payment of $166.8 million due in July 2032.

Following the above financings, as of September 30, 2024, the weighted average margin for our floating debt was 1.90% over SOFR, which represents a 56-basis points reduction compared to September 30, 2023. As of September 30, 2024, the weighted average interest rate for our fixed rate debt was 4.61%.

Completion of Corporate Conversion and Change of Name

On August 26, 2024, we completed our conversion from a Marshall Islands master limited partnership to a Marshall Islands corporation (the “Conversion”) and changed our name to “Capital Clean Energy Carriers Corp.” with the new Nasdaq stock market ticker of “CCEC” (the “Name Change”).

The Conversion and the Name Change are key milestones in our strategic pivot towards the transportation of various forms of natural gas to industrial customers, including LNG and new commodities emerging as a result of the energy transition, as initially announced in November 2023. To achieve our strategic pivot, we agreed in November 2023 to acquire the Newbuild LNG/C Vessels, of which five vessels are already on the water and the remaining six vessels are expected to be delivered between the first quarter of 2026 and the first quarter of 2027. In June 2024, we also invested in 10 state-of-the-art, high-specification gas carriers, including four unique handy multi gas carriers that can carry liquid CO2. These, along with the Newbuild LNG/C Vessels, collectively form the “Energy Transition Vessels”. This $3.9 billion investment, notable both in asset value and scope, demonstrates our commitment to becoming a leading provider of transportation for LNG and other clean fuels.

Preliminary Capex Schedule in USD million, as of September 30, 2024:

 2024202520262027TOTAL
 Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 
LNG/Cs249.925.650.6511.051.2149.7149.7307.21,294.9
Gas Fleet38.37.122.515.522.074.0105.4123.247.789.346.935.9627.8
TOTAL38.37.172.441.172.6585.0156.6272.9197.4396.546.935.91,922.7


Sale of five 5,023 TEU Container Vessels

On September 23, 2024, the Company announced it had entered into five memoranda of agreement for the sale of five container sister vessels: the M/V Hyundai Prestige, the M/V Hyundai Premium, the M/V Hyundai Paramount, the M/V Hyundai Privilege and the M/V Hyundai Platinum, (each 63,010 DWT/ 5,023 TEU container vessel, built 2013, Hyundai Heavy Industries Co., Ltd., S. Korea) to a third party. The vessels are expected to be delivered to their new owners progressively between November 2024 and January 2025.

The Company expects to record a gain of $118.4 million from sales. All five vessels are debt-free, and the cash proceeds will be used to pay down debt and for general corporate purposes. 

Quarterly Dividend Distribution

On October 30, 2024, the Board of Directors of the Company declared a cash dividend per share of $0.15 for the third quarter of 2024 payable on November 15, 2024, to shareholders of record on November 11, 2024.

LNG Market Update

The LNG 2-stroke spot market average for the third quarter of 2024 was 73,404 per day compared to 160,308 per day for the same period last year. Spot rates weakened further into the fourth quarter despite the typical seasonal patterns, and as a result charter rates are expected to be significantly weaker this year compared to previous years amidst firm fleet growth and delayed project start-ups.  

Overall, while Red Sea disruption and US-Asia volumes have driven a strong gain in LNG tonne-mile trade year to date, market conditions remain subdued due to the increased fleet capacity growth, expected at 7.6% this year and 10.9% next year.

CCEC’s on the water fleet is largely shielded from spot market conditions, as our first open newbuilding is scheduled for delivery in January 2026, and the earliest charter expiry of our existing vessels is not before November 2026.