Financial Data and Key Metrics Changes - The partnership's net income for Q3 2020 was $7.8 million, compared to $3.4 million in Q3 2019, reflecting a significant increase [5][10] - Revenues for the quarter were $35.5 million, up from $26.4 million in Q3 2019, primarily due to fleet expansion [7] - Total expenses increased to $23.8 million from $19.3 million in Q3 2019, with voyage expenses rising significantly [9][10] - Total debt increased to $389 million from $162.4 million at the end of 2019, attributed to new loans and leaseback transactions [13] Business Line Data and Key Metrics Changes - The partnership secured employment for the container vessel Adonis with Zim for 12 to 14 months, contributing to a charter coverage of 91% for the remainder of 2020 and 86% for 2021 [5][16] - The sole dry bulk vessel, Cape Agamemnon, completed its 10-year charter and is now trading in the spot market [7][16] Market Data and Key Metrics Changes - The container charter market rebounded significantly in Q3 2020, with rates for 12-month charters for standard 8,500 TEU containers increasing from around $7,000 per day to over $30,000 per day [18][19] - The idle fleet decreased from approximately 11% in May to less than 4% by the end of Q3 2020, indicating improved market conditions [19] - The container order book is at historical lows, with only 303 units representing 8% of the total worldwide container fleet [20] Company Strategy and Development Direction - The company aims to balance capital allocation between fleet replenishment and returning capital to unitholders, considering the current market conditions [25][34] - The strategy includes securing longer-term charters as market conditions improve, with a focus on maintaining flexibility in operations [28][39] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the recovery of the global economy and containerized freight, while acknowledging uncertainties due to the pandemic [21][22] - The company is well-positioned to handle increased volatility and potentially acquire distressed assets if necessary [21][22] Other Important Information - The partnership's operating surplus for Q3 was $21 million, with $11.7 million available after capital reserve allocations [11] - The company has demonstrated commitment from its sponsor, who purchased approximately 234,000 common units in the open market [6] Q&A Session Summary Question: Capital allocation perspective and cash usage - Management indicated that liquidity is being retained for flexibility amid COVID-19 uncertainties, with potential for increased distributions or unit buybacks depending on equity valuation [24][25] Question: Re-contracting and charter duration - Management noted that while shorter tenures were common, there is now a willingness to consider longer charters due to improved market conditions [26][28] Question: New vessel orders and acquisitions - Management stated that while there is more flexibility now, the focus remains on second-hand ships rather than new builds, given the current market dynamics [30][32] Question: Charter renewal for Magdalena - Management expects to lock in terms for the new charter before year-end, given the current strength of the market [37][38] Question: Future of Cape Agamemnon post-dry docking - Management plans to remain opportunistic regarding the Cape Agamemnon, deciding between time charter or potential sale based on market conditions [39]
Capital Product Partners L.P.(CPLP) - 2020 Q3 - Earnings Call Transcript