Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $95.5 million, up from $71.9 million in Q3 2022, primarily due to revenue from four new vessels and increased daily rates for LNG carriers [5] - Net income for Q3 2023 was $17 million, compared to $11.5 million in Q3 2022, with net income per common unit rising to $0.84 from $0.57 [12][36] - Total expenses increased to $51 million in Q3 2023 from $40.4 million in Q3 2022, with vessel operating expenses rising to $22.3 million from $17 million [35] - Interest expense and finance costs rose to $27.8 million in Q3 2023 from $14.9 million in Q3 2022, attributed to increased indebtedness and higher interest rates [6] Business Line Data and Key Metrics Changes - The partnership's current fleet charter coverage for 2023 and 2024 stands at 100%, with a remaining charter duration of 6.5 years and a contracted revenue backlog exceeding $1.7 billion [12] - Total contracted revenues for the LNG fleet increased by 127% to $2.5 billion, providing strong cash flow visibility [29] Market Data and Key Metrics Changes - The global LNG market capacity is expected to increase by 70% by 2030, with production capacity projected to exceed 750 million tons annually [45] - The LNG fleet on the water consists of 736 vessels, with an order book of around 300 vessels, indicating a tight supply situation [46] Company Strategy and Development Direction - The company plans to change its name to Capital New Energy Carriers L.P. and transition from an MLP model to a corporate structure, focusing primarily on LNG shipping and energy transition [8][16] - A $500 million rights issue is planned to fund the acquisition of 11 new LNG carriers, with the aim of becoming one of the largest U.S. listed operators of two-stroke LNG carriers [10][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the LNG market's growth, driven by geopolitical factors and increasing demand for flexible natural gas supply [22] - The company anticipates a significant cash flow generation potential post-transaction, despite a higher unit count after the rights issue [32] Other Important Information - Total debt increased to $1.6 billion, up from $1.3 billion at year-end 2022, primarily due to financing new vessel acquisitions [37] - The company has committed to opportunistically divest from its container vessels while maintaining rights of first refusal on ammonia and CO2 carriers [39] Q&A Session Summary Question: How did the company arrive at the asset valuations? - The valuations were negotiated by independent directors and based on third-party charter attached appraisals and cash flow multiples [68] Question: What is the company's strategy for locking in cash flow visibility for new vessels? - The company is in discussions with charters and aims to capitalize on favorable market conditions for LNG carriers [62] Question: How does the company plan to manage leverage and the sale of container vessels? - The company will approach the market opportunistically for divesting container vessels, with a current net LTV of around 50% [81][83] Question: What are the anticipated hurdles in converting from an MLP to a corporate structure? - Management does not foresee significant hurdles, with discussions ongoing to negotiate terms for corporate governance [94] Question: What is the current liquidity situation in the term charter market for LNG vessels? - The liquidity in the term charter market has slowed compared to the previous year, but the company expects increased activity as older vessels are phased out [98]
Capital Product Partners L.P.(CPLP) - 2023 Q3 - Earnings Call Transcript