Capital Clean Energy Carriers Corp. Q2 FY2023 earnings call

• Took delivery of the motor vessel Buenaventura Express and LNG Carrier Asterix I; agreed to sell the dry cargo vessel Cape Agamemnon with delivery expected in Q4 2023.
• Completed dry dock and energy efficiency/emissions abatement upgrades on the Athos and Athenian.
• Second quarter 2023 net income was $7.4 million; Board declared a $0.15 per common unit cash distribution.
• Continued unit buyback program, repurchasing 156,560 common units at an average cost of $13.30 per unit.
• Latest acquisition cycle completed with delivery of three 13,000 TEU container vessels and the Asterix I, reducing fleet average age and carbon intensity.

Total revenue for the second quarter of 2023 was $88.5 million, an increase from $74 million in the second quarter of 2022. This increase was primarily due to revenue from newly delivered 13,000 TEU container vessels and the LNG Carrier Asterix I, partially offset by the sale of two 8,000 TEU container vessels in July 2022. Total expenses for the second quarter of 2023 were $58.6 million compared to $40.9 million in the second quarter of 2022. Vessel operating expenses rose to $23.5 million from $16.4 million, interest expense increased to $25.5 million from $11.7 million. Net income for the quarter was $7.4 million. The Partnership's charter coverage for both 2023 and 2024 stands at 96% with a contracted revenue backlog of more than $1.8 billion.

• Charter coverage for 2023 and 2024 remains at 96% with a contracted revenue backlog over $1.8 billion.
• Potential growth opportunities exist with Capital Maritime's order book of additional LNG carriers, some of which already have secured term employment.
• Intention to focus on growing distributable cash flow and renewing the fleet, leveraging financial flexibility and cash flow generation.

• Interest rate changes could impact interest expense and finance costs.
• Market fundamentals affecting charter rates for LNG and container vessels may pose risks.
• Refinancing risks related to large debt maturities, though prudent capital reserve allocation and cash generation mitigate some concerns.

Q: Omar Nokta with Jefferies asked about drop-down opportunities for LNG carriers, timing, and potential monetization of containerships.

A: Jerry Kalogiratos responded that growth is strategic, noting the need to wait on timing of vessel deliveries and funding, and mentioning potential to monetize containerships but emphasizing it is early in consideration.

Q: Frank Galanti with Stifel inquired about leverage, debt maturity in 2026, and split between share buybacks and distributions.

A: Jerry Kalogiratos stated they have time to address the 2026 debt maturity, focus on returning a quarter to fifth of capital to shareholders, with current distribution policy aligned with the interest rate environment.

Q: Unidentified Analyst from Value Investor's Edge asked about environmental upgrades and dry-docking schedule.

A: Jerry Kalogiratos discussed theoretical efficiency improvements from bow modifications and paints, and stated no additional dry-docking is scheduled for the remainder of 2023.