Capital Product Partners L.P. (CPLP)
Q4 2012 Earnings Call
January 31, 2013, 10:00 a.m. ET
Executives
Ioannis Lazaridis – CEO and CFO
Analysts
Jonathan Chappell – Evercore Partners
Justin Yagerman (Josh)– Deutsche Bank
Mike Webber – Wells Fargo
Paul Jacob – Raymond James
Ken Hoexter (Wilson) – Bank of America/Merrill Lynch
Presentation
Operator
Operator
Thank you for standing by and welcome to the Capital Product Partners Fourth Quarter 2012 Financial Results Conference Call. We have with us Mr. Ioannis Lazaridis, Chief Executive Officer and Chief Financial Officer of the Partnership. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and-answer session. (Operator Instructions)
I must advise you that this conference is being recorded today,Thursday, January 31, 2013.
The statements in today’s conference call that are not historical facts, including our expectations regarding developments in the markets, our expected charter coverage ratio for 2013, and expectations regarding our quarterly distribution may be forward-looking statements, such as defined in Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements involve risks and uncertainties that could cause the stated or forecasted results to be materially different from those anticipated. Unless required by law, we expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations to conform to actual results or otherwise. We assume no responsibility for the accuracy and completeness of the forward-looking statements. We make no prediction or statement about the performance of our common units.
I would now like to hand the call over to your speaker today, Mr. Lazaridis. Please go ahead, sir.
Thank you, [inaudible], and thank you all for joining us today. As a reminder, we will be referring to the supporting slides available on our website as we go through today’s presentation.
Starting with slide one, I’m going to make some comparison on today’s call between the fourth quarter of 2012 and the fourth quarter of 2011, as this is the most meaningful analogy in our business.
On January 22, 2012, our Board of Directors declared a cash distribution of $0.2325 per common unit for the fourth quarter of 2012, in line with the managements annual distribution guidance. The fourth quarter common unit cash distribution will be paid on February 15, 2013 to unit holders of record of February 8, 2013.
Our partnership’s operating surplus for the quarter amounted to 22.5 million or 19.2 million adjusted for the payment of distributions to the Class B unit holders, following the issuance of 15.6 million Class B convertible preferred units during the second quarter of 2012.
As announced, on January 7, 2013, we acquired from our sponsor Capital Maritime and Trading Corp. two 8,000 TEU container vessels, with a three to seven year time charter employment to industry leader Maersk line.
As consideration for the acquisition, the partnership contribute the VLCC Tankers of Alexander the Great and Achilleas. As a result of this transaction, we incurred a non-cash impairment charge of $43.2 million, which we will discuss shortly.
In addition, we have extended the employment of M/T Amore Mio II with BP Singapore for floating storage at the gross rate of $17,500 per day, for a additional nine months, commencing from March of 2013, with a charter’s option to extend for an additional three months.
Another tanker Arionas was also extended for another 12 months, at the same rate with our sponsor, Capital Maritime and Trading with the earliest expected redelivery in September 2013. As of the end of the fourth quarter, the average remaining charter duration of the partnership stands at 3.7 years, with charter coverage of 81% for 2015.
Turning to slide 2, our revenues for the fourth quarter of 2012, were 38.3 million, including 0.3 million in profit sharing revenues compared to 44 million in the fourth quarter of 2011. The partnerships high revenues in the fourth quarter of 2011, reflect primarily the fact of following the acquisition of crude carriers on September 30, 2011. A number of the partnerships vessels operating on the voyage tankers earning voyage income of $9.7 million, compared to zero voyage income in the fourth quarter of 2012, as all of our vessels were on period.
Total expenses for the fourth quarter of 2012 were $69.5 million compared to 35.3 million in the fourth quarter of 2011, primarily driven by an increased and expense, resulting from the impairment charge, and the decrease in voyage expenses, as the partnerships vessels were operating on the period charters during the fourth quarter of 2012.
The impairment charge, which is a non-cash item, represents the difference between the carrying values and the fair market values of M/T Alexander the Great and . On the day they were sold by Capital Products to our sponsor, Capital Maritime in exchange for the motor vessels Archimidis and Agamemnon, the two containers.
The vessel operating expenses for the fourth quarter of 2012 amounted to 11.2 million compared to 11.9 million in the fourth quarter of 2011, including a $4.7 million charge by a subsidiary of our sponsor Capital Maritime, for the commercial and technical management of our fleet, under the terms of our management agreements, compared to $7.8 million in the fourth quarter of 2011.
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