Financial Data and Key Metrics Changes - The partnership's net income for Q1 2022 was $25.1 million, a 130% increase from $10.9 million in Q1 2021 [6][12] - Revenues for the quarter were $73.4 million, up from $38.1 million in the same period last year, primarily due to a 38% increase in the average number of vessels in the fleet [9] - Total expenses for Q1 2022 were $40.2 million, compared to $24.2 million in Q1 2021, with vessel operating expenses rising to $16.7 million from $9.2 million [10][11] Business Line Data and Key Metrics Changes - The six LNG carriers acquired in late 2021 generated $37.6 million in revenue during the quarter, accounting for over 50% of total revenue [15] - The partnership's operating surplus for Q1 was $44.6 million, with an adjusted operating surplus of $13.5 million after capital reserve allocation [7][12] Market Data and Key Metrics Changes - European LNG imports are expected to increase by 25% by the end of 2022, with Europe significantly increasing its share of total US LNG volumes [18][20] - The LNG shipping demand fundamentals remain robust, with global LNG trade projected to grow by 6.6% in 2022 [19] - The container ship charter market reached new highs, with charter rates for certain vessels hitting approximately $95,000 per day [23] Company Strategy and Development Direction - The company is focusing on dropdown opportunities, particularly targeting vessels with long-term charters to ensure cash flow visibility [32][35] - The partnership aims to balance growth in its asset base with returning capital to unit holders through distributions and buybacks [35][47] Management's Comments on Operating Environment and Future Outlook - Management noted that the LNG market fundamentals are improving due to geopolitical factors, particularly the shift away from Russian gas [20] - The company anticipates that the container market will remain positive in the short to medium term despite potential economic slowdowns [30] Other Important Information - The partnership's total debt decreased by $26 million to $1.9 billion, reflecting scheduled principal payments and currency translation effects [13][14] - The company has a cash balance of around $50 million and expects to generate approximately $88 million in annualized free cash flow [40][41] Q&A Session Summary Question: How does the company plan on funding the equity portion of dropdown opportunities? - Management indicated that strong free cash flow, refinancing options, and potential external capital sources would be utilized to fund dropdowns [37][39][42] Question: Is the priority for free cash related to growth opportunities? - Management confirmed that as dropdowns are completed, capital returns to unit holders will also increase, balancing growth and returns [46][48] Question: What is the status of the Cape Agamemnon's special survey and CapEx requirements? - The next special survey is due in 2025, with some incremental CapEx anticipated, but not material [49][50] Question: What is the outlook on interest rates and their impact on acquisitions? - Management noted that while interest rates are rising, transactions must remain accretive to cash flow, and they are mindful of the cost of capital [56][58] Question: Is there a change in the ability to forward fix charters? - Management acknowledged a wait-and-see mode in the charter market, but still sees opportunities for unique vessels like the AKADIMOS [60][62]
Capital Product Partners L.P.(CPLP) - 2022 Q1 - Earnings Call Transcript