Capital Clean Energy Carriers Corp. Q3 FY2025 earnings call

Key Points:

• Increased charter coverage with a long-term time charter for an LNG carrier under construction.
• Sold 1 of 3 remaining container vessels, leaving 2 on long-term charters.
• Secured financing for all MGCs and LCO2 multi-gas carriers with deliveries starting in January 2026.
• Net income from continued operations was $23.1 million, with net income reflecting special surveys on 2 LNG carriers.
• Fulfilled fixed distribution of $0.15 per share, maintaining a record of quarterly dividends since 2007.
• Completed special surveys on 2 LNG carriers ahead of schedule, with total cost approximately $8.8 million.
• Balance sheet strong with $332.2 million cash, and 79% of debt is floating; expecting benefits from Fed rate cuts.
• Secured a long-term time charter for 7 years with options for an LNG vessel, commencing in Q1 2028.
• Diversified contracted revenue backlog with no single counterparty exceeding 19% of $3 billion backlog.

The company's continued operations fleet consists of 12 LNG carriers and 2 container vessels. Net income from continued operations for the quarter was $23.1 million. The Manzanillo Express container vessel was sold and classified under discontinued operations. The LNG carrier segment is the primary contributor, with the container vessel segment reduced to 2 vessels after the sale. Revenue from LNG carriers is significant, and the container vessel segment's contribution is now minor due to the sale.

Forward-Looking:

• Expect net equity inflow of $216 million after delivery of all newbuilds, before considering cash flow from existing fleet.
• Average charter duration across fleet is 6.9 years, with LNG fleet having firm charter backlog of $2.8 billion (93 years) and potential $4 billion (126 years) if options exercised.
• Anticipate LNG market to shift from surplus to deficit between 2027-2028 due to supply and demand dynamics.
• Confident in securing employment for remaining uncommitted LNG newbuilds despite market conditions.

Risks:

• Market uncertainties related to LNG project delays or changes in regulatory environments.
• Potential impact of sanctions on LNG trade, though most effects may already be priced in.
• Idling of older vessels with lack of commercial opportunities leading to demolition sales.
• Oversupply in the spot market for LNG carriers contrasting with undersupply in the future for efficient tonnage.

Q: Taking a look at the newbuild charter, how do rates sit compared to market appetite?

A: The latest charter is higher than previous ones, in the high 80s to low 90s range, and seen as the low end of future rates with later deliveries being stronger.

Q: Qatar pushing back LNG project guidance, impact on carrier market?

A: Most delays already priced in; Trump administration resumption of permits helps, and owners can secure short-term charters or align with future volumes.

Q: Vessel coming off charter in 2026, renewal discussions?

A: Mostly turning down bids, confident in securing employment, with 1 year to decide and focusing on right type of employment.

Q: Interest in multi-gas carriers?

A: Charterers interested in flexibility of multi-gas carriers, with early vessel due in January, trading in semi-ref segment with solid momentum and healthy freight levels.

Q: EU ban on Russian LNG, impact?

A: Most effects already priced in, with potential for more Russian LNG to China, but recent U.S. sanctions likely not directly affecting trade.

Q: Incremental acquisitions?

A: Too early to discuss, but after newbuild program, there may be cash to look at acquisitions, leveraging market tightness in the medium to long term