ATHENS, Greece, July 31, 2009 (GLOBE NEWSWIRE) -- Capital Product Partners L.P. (the "Partnership"), (Nasdaq:CPLP), an international owner of modern double-hull tankers, today released its financial results for the second quarter ended June 30, 2009.
The Partnership's net income for the quarter ended June 30, 2009 was $8.0 million, or $0.32 per limited partnership unit, which is $0.03 less than the $0.35 per unit from the previous quarter ended March 31, 2009, and $0.19 lower than the second quarter last year. This drop compared to last year is primarily due to the absence of profit sharing revenues and higher interest expenses.
Operating surplus for the quarter ended June 30, 2009 was $11.5 million, less than the $11.9 million from the first quarter of 2009 and lower than the $15.7 million from the second quarter of 2008. Operating surplus is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. (Please see Appendix A for a reconciliation of this non-GAAP financial measure to net income.)
Revenues for the second quarter of 2009 were $31.2 million compared to $32.0 million of revenues in the second quarter of 2008. There were no profit sharing revenues in the second quarter of 2009 due to the very challenging spot market for both product and crude tankers throughout this period. In the second quarter of 2008 the profit sharing revenues amounted to $4.5 million.
Total operating expenses for the second quarter of 2009 were $16.0 million, including $8.0 million paid to a subsidiary of Capital Maritime & Trading Corp. (Capital Maritime), the Partnership's sponsor, for the commercial and technical management of the fleet, $7.0 million in depreciation and $0.6 million in general and administrative expenses, compared to $13.7 million for the second quarter of 2008. The increase is partly due to certain additional fees and costs incurred in relation to the technical management of our vessels. Interest expense and finance cost for the second quarter of 2009 totaled $7.5 million compared to $5.9 million for the second quarter of 2008. The increase in interest expense is due to the increased debt of the Partnership compared to a year ago, as well as an additional cost of $0.4 million, which is due to the increased funding costs of the banks, incurred in accordance with the terms of our existing loan agreements.
The product tanker spot market remained under severe pressure throughout the second quarter of 2009, as oil product demand continues to appear weak in each of the major OECD regions. U.S. refiners are increasingly able to satisfy domestic demand, the demand for imports of seaborne products globally has diminished and arbitrage opportunities are limited. The Suezmax spot market showed some resistance to the overall tanker market weakness due to increased demand for crude oil from Chinese and Indian refiners out of West Africa as well as from U.S. refiners in May in anticipation of the driving season. However, expectations for any substantial improvement in both the crude and product spot markets are currently low, which are increasingly reflected in the period and sales & purchase market.
Ioannis Lazaridis, Chief Executive Officer and Chief Financial Officer of Capital Product Partners' general partner, said: "Against the backdrop of the most depressed tanker spot market of the last ten years, our performance in the second quarter has been solid. The stability of our revenues is the result of our chartering strategy and the excellent operational performance of our vessels is evidenced by the absence of any material off hire for another quarter. As has been previously announced, we further lengthened the duration of our charters by swapping two of our vessels, Assos and Atrotos, for two of Capital Maritime's vessels, the Agamemnon II and Ayrton II."
As of June 30, 2009, the Partnership's long-term debt remained unchanged compared to the end of 2008 at $474.0 million and partners' equity was $164.1 million. The remaining undrawn amounts under the terms of our debt facilities currently stand at $246.0 million.
Mr. Lazaridis highlighted: "Due to a significant deterioration in the tanker market, the Partnership obtained an amendment to certain terms in its loan agreements effective until end June 2012. The lenders under both facilities have agreed to increase the fleet loan-to-value covenant to 80% from 72.5%. It was also agreed to amend the manner in which market valuations of our vessels are conducted. In exchange, the interest margin for both of our credit facilities will increase to 135-145 bps over LIBOR subject to the level of the asset covenants. Currently the margin on our $370.0 million credit facility is 75bps over LIBOR and on our $350.0 million credit facility it is 110bps over LIBOR. All other terms in both of our facilities remain unchanged."
On July 23, 2009 the Partnership held its Annual General Meeting in Piraeus at which Abel Rasterhoff was re-elected as a Class II Director until the 2012 Annual Meeting of Limited Partners. In addition, a proposal to amend the Company's First Amended and Restated Agreement of Limited Partnership so that, in the case of any meeting of Limited Partners of the Company which has been adjourned for a second time due to absence of a quorum during the first two meetings, the holders of any Outstanding Units of the class or classes for which such meeting has been called represented either in person or by proxy shall constitute a quorum for the purposes of such meeting, provided that such votes present at the third convened meeting represent at least 25% of the outstanding units of the Company, was approved by the majority of the outstanding common units of the Partnership. No other actions were taken at the meeting.
On July 27, 2009, the Board of Directors of the Partnership declared a cash distribution for the second quarter of 2009 of $0.41 per unit, which is equal to the distribution for the first quarter of 2009. The second quarter cash distribution will be paid on August 14, 2009 to unit holders on record on August 6, 2009.
Mr. Lazaridis concluded: "The global economic and credit environment has seen little change over the last quarter and there are no visible prospects for a recovery. We continue to face a severe deterioration in the banking and credit world as well as a major global economic slowdown, whose duration is very difficult to forecast. The continuing weakness in the product and crude tanker market is widely acknowledged to have taken a substantial toll on both the period rates and asset prices but the limited transactions and fixtures taking place do not allow for a proper assessment of current market levels. The continuing poor state of the spot tanker market, the potential vessel deliveries for 2009 and the outlook for global oil demand in 2009, which remains weak (according to IEA -2.9% or -2.5 mb/d versus 2008), are all factors likely to have a further adverse effect on tanker vessel prices and period rates in the short- to medium- term. We have zero capital commitments to purchase or build vessels, we have amended a number of the terms in our loan facilities and our fleet's charter coverage for 2009 and 2010 stands at approximately 100% and 67%, respectively. However, the uncertain prospects for the rest of the year and the lack of tangible recovery signs for 2010 are all likely to have an adverse impact on our results and financial condition over time, particularly as vessels come up for rechartering."
Capital Product Partners will host a conference call to discuss its results today at 10:00 a.m. Eastern Time (U.S.). The public is invited to listen to the conference call by dialing +1 888 935 4577 (U.S. and Canada, toll free), or +1 718 354 1389 (international); reference number 3529343#. Participants should dial in 10 minutes prior to the start of the call. The slide presentation accompanying the conference call will be available on the Partnership's website at www.capitalpplp.com. An audio webcast of the conference call will also be accessible through the website. The relevant links will be found in the Investor Relations section of the website.
About Capital Product Partners L.P.
Capital Product Partners L.P. (Nasdaq:CPLP), a Marshall Islands master limited partnership, is an international owner of modern double-hull tankers. Capital Product Partners L.P. owns 18 modern vessels, including 15 MR tankers, two small product tankers and one Suezmax crude oil tanker. All 18 vessels are under medium to long-term charters to BP Shipping Limited, Morgan Stanley Capital Group Inc., Overseas Shipholding Group, Shell International Trading & Shipping Company Ltd., and Trafigura Beheer B.V.
For more information about the Partnership and to access or request a copy of its Annual Report, please visit our website: www.capitalpplp.com
Forward-Looking Statement:
The statements in this press release that are not historical facts, including our expectations regarding developments in the markets and their effects, the effects on our financial condition and results, the effect of our vessels coming up for rechartering, our expectations regarding oil demand, expectations regarding our ability to react to market conditions and protect the Partnership, our expected charter coverage rates for 2009 and 2010, our future commitments and the effect of the amendments to our credit facilities, may be forward-looking statements (as such term is 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 them 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.
CPLP-F
Capital Product Partners L.P.
Unaudited Condensed Consolidated and Combined Statements of Income
(Notes 1-5)
(In thousands of United States dollars, except number of units and
earnings per unit)
For the three month For the six month
period ended period ended
June 30, June 30,
2009 2008 2009 2008
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenues $ 31,244 $ 32,036 $ 63,574 $ 59,257
--------------------------------------------------------------------
Expenses:
Voyage expenses 247 273 532 563
Vessel operating
expenses - related
party 8,030 6,259 14,698 11,590
Vessel operating
expenses 46 540 499 3,560
General and adminis-
trative expenses 624 721 1,412 1,401
Depreciation 7,003 5,922 14,284 11,684
--------------------------------------------------------------------
Operating income 15,294 18,321 32,149 30,459
--------------------------------------------------------------------
Other income
(expense), net:
Interest expense and
finance cost (7,518) (5,933) (15,391) (11,515)
Interest income 339 203 865 466
Foreign currency
(loss), net (11) 1 3 (57)
--------------------------------------------------------------------
Total other
(expense), net (7,190) (5,729) (14,523) (11,106)
--------------------------------------------------------------------
Net income 8,104 12,592 17,626 19,353
--------------------------------------------------------------------
Less:
Net (loss)/income
attributable to
CMTC operations 88 (293) 810 (1,504)
--------------------------------------------------------------------
Partnership's net
income $ 8,016 $ 12,885 $ 16,816 $ 20,857
====================================================================
General Partner's
interest in Partner-
ship's net income $ 160 $ 258 $ 336 $ 417
Limited Partners'
interest in Partner-
ship's net income $ 7,856 $ 12,627 $ 16,480 $ 20,440
Net income per:
* Common units
(basic and
diluted) 0.32 0.51 0.66 0.89
* Subordinated
units (basic and
diluted) -- 0.51 0.66 0.82
* Total units
(basic and
diluted) 0.32 0.51 0.66 0.87
--------------------------------------------------------------------
Weighted-average
units outstanding:
* Common units
(basic and
diluted) 24,817,151 15,855,067 22,676,582 14,739,845
* Subordinated
units (basic
and diluted) -- 8,805,522 2,140,569 8,805,522
* Total units
(basic and
diluted) 24,817,151 24,660,589 24,817,151 23,545,367
Capital Product Partners L.P.
Unaudited Condensed Consolidated and Combined Balance Sheets
(Notes 1-5)
(In thousands of United States dollars, except number of shares)
June 30, 2009 December 31, 2008
---------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 2,039 $ 43,149
Short term investment 29,610 1,080
Trade accounts receivable 555 6,421
Prepayments and other assets 795 602
Inventories -- 94
---------------------------------------------------------------------
Total current assets 32,999 51,346
---------------------------------------------------------------------
Fixed assets
Vessels, net 651,523 718,153
---------------------------------------------------------------------
Total fixed assets 651,523 718,153
---------------------------------------------------------------------
Other non-current assets
Deferred charges, net 2,690 2,884
Restricted cash 4,500 4,500
---------------------------------------------------------------------
Total non-current assets 658,713 725,537
---------------------------------------------------------------------
Total assets $ 691,712 $ 776,883
---------------------------------------------------------------------
Liabilities and Partners' /
Stockholders' Equity
Current liabilities
Current portion of long-term debt $ -- $ --
Current portion of related party
long-term debt -- 24,538
Trade accounts payable 747 477
Due to related parties 4,348 2,254
Accrued liabilities 554 1,150
Deferred revenue 1,729 3,795
Distribution payable to General
Partner 6,235 --
---------------------------------------------------------------------
Total current liabilities 13,613 32,214
---------------------------------------------------------------------
Long-term liabilities
Long-term debt 474,000 474,000
Long-term related party debt -- 27,762
Deferred revenue 1,683 1,568
Derivative instruments 38,326 47,414
---------------------------------------------------------------------
Total long-term liabilities 514,009 550,744
---------------------------------------------------------------------
Total liabilities 527,622 582,958
---------------------------------------------------------------------
Commitments and contingencies -- --
---------------------------------------------------------------------
Total partners' / stockholders'
equity 164,090 193,925
---------------------------------------------------------------------
Total liabilities and partners' /
stockholders' equity $ 691,712 $ 776,883
---------------------------------------------------------------------
Capital Product Partners L.P.
Unaudited Condensed Consolidated and Combined Statements of Cash
Flows
(Notes 1-5)
(In thousands of United States dollars)
---------------------------------------------------------------------
For the six month period
ended June 30,
2009 2008
Cash flows from operating activities:
Net income $ 17,626 $ 19,353
Adjustments to reconcile net income
to net cash provided by operating
activities:
Vessel depreciation and amortization 14,284 11,684
Amortization of deferred charges 167 249
Changes in operating assets and
liabilities:
Trade accounts receivable 5,753 (1,489)
Due from related parties (11) (235)
Prepayments and other assets (262) (198)
Inventories (178) 177
Trade accounts payable 944 800
Due to related parties 3,871 1,516
Accrued liabilities (430) 449
Deferred revenue (1,951) (2,598)
Dry docking paid -- (251)
---------------------------------------------------------------------
Net cash provided by operating
activities 39,813 29,457
---------------------------------------------------------------------
Cash flows from investing activities:
Vessel advances and acquisitions (26,150) (182,113)
Increase of restricted cash -- (1,000)
Purchase of short term investment (28,530) (21,250)
---------------------------------------------------------------------
Net cash (used in) investing
activities (54,680) (204,363)
---------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term
debt -- 153,500
Proceeds from related party debt/
financing -- 86,523
Payments of long-term debt (8,080)
Payments of related party debt/
financing (23,309) (52,463)
Loan issuance costs (42) (1,868)
Excess of purchase price over book
value of vessels acquired from
entity under common control -- (2,340)
Dividends paid (43,462) (19,125)
Cash balance that was distributed
to the previous owner -- (2)
Capital contributions by CMTC 40,570 1,500
---------------------------------------------------------------------
Net cash (used in) / provided by
financing activities (26,243) 157,645
---------------------------------------------------------------------
Net (decrease) in cash and cash
equivalents (41,110) (17,261)
Cash and cash equivalents at
beginning of period 43,149 19,919
---------------------------------------------------------------------
Cash and cash equivalents at end
of period $ 2,039 $ 2,658
---------------------------------------------------------------------
Supplemental Cash Flow information
Cash paid for interest $ 14,968 $ 10,882
Non-cash Activities
Net book value of vessels
transferred-in, M/T Agamemnon II
and M/T Ayrton II less cash paid. 68,054
Net book value of vessels
transferred-out, M/T Assos and
M/T Atrotos (70,496)
Net liabilities assumed by CMTC
upon vessel contribution to the
Partnership 31,073 74,239
Units issued to acquire vessel
owning company of M/T Amore Mio II. -- $ 37,739
Units issued to acquire vessel
owning company of M/T Amore Mio II. -- $ 10,066
Notes
(1) The unaudited condensed consolidated and combined statements of
income and cash flows for the three and six month period ended June
30, 2009 include the results of operations of:
(a) M/T Agamemnon II and M/T Ayrton II (a 51,238dwt sister MR
product tankers which were delivered to Capital Maritime on
November 24, 2008 and April 10, 2009 respectively) were
acquired from Capital Maritime, an entity under common
control, on April 7 and April 13, 2009 respectively, as
though the transfers had occurred at the beginning of the
earliest period presented and
(b) M/T Assos and M/T Atrotos up to April 6, 2009 and April 12,
2009 which were exchanged on the same date with M/T
Agamemnon II and M/T Ayrton II respectively
The unaudited condensed consolidated and combined statements of
income and cash flows for the three and six month period ended
June 30, 2008 include the results of operations of M/T Amore Mio II
and M/T Aristofanis which were acquired from an entity under common
control on March 27, 2008, and April 30, 2008, respectively, as
though the transfers had occurred at the beginning of the earliest
period presented.
(2) On April 7, and April 13, 2009 the Partnership acquired from
Capital Maritime the shares of the vessel owning companies of the M/T
Agamemnon II and M/T Ayrton II. In exchange Capital Maritime received
all the shares of the vessel owning companies of the M/T Assos and
M/T Atrotos, which were part of the Partnership's fleet, and an
additional cash consideration of $8,000. The amount of $23,708, which
was the difference of the historic cost between these vessels, has
been recorded as an increase in the partners' equity. The cash
consideration of $8,000 reduced the partners' equity and is presented
as an investing activity under vessel advances and acquisitions in
the statements of cash flows for the six month period ended June 30,
2009. As required by the provision of Statement of Financial
Accounting Standards No. 141(r), "Business Combinations" ("SFAS
No. 141(r)"), the Partnership accounted for the acquisition of the
vessel owning companies of the M/T Agamemnon II and M/T Ayrton II as
a transfer of equity interests between entities under common control
at Capital Maritime's carrying amounts (historical cost) of the net
assets contributed. In addition, transfers of equity interests
between entities under common control are accounted for as if the
transfer occurred at the beginning of the earliest period presented,
and prior years financial statements are retroactively adjusted to
furnish comparative information similar to the pooling-of-interest
method of accounting. All assets and liabilities of the vessel owning
companies of the M/T Agamemnon II and M/T Ayrton, except the vessel,
the time charter agreements and necessary permits were retained by
Capital Maritime.
All assets and liabilities of the vessel owning companies of the M/T
Assos and M/T Atrotos, except the vessel and necessary permits were
retained by the Partnership.
(3) On January 29, 2008, June 17, 2008 and August 20, 2008 the
Partnership acquired from Capital Maritime the shares of the vessel
owning company of M/T Alexandros II, M/T Aristotelis II, and M/T Aris
II for a total purchase price of $48,000 each. The vessels have been
recorded in the Partnership's financial statements at the amount of
$46,954, $46,706 and $46,585, respectively, which had been reflected
in Capital Maritime's consolidated financial statements, which differ
from the acquisition price by $1,046, $1,294 and $1,415,
respectively. The amount of the purchase price in excess of Capital
Maritime's basis of the assets amounted to $3,755 was recognized as
a reduction of partners' equity. M/T Alexandros II, M/T Aristotelis
II, and M/T Aris II were delivered to Capital Maritime from the
shipyard on January 29, 2008, June 17, 2008, and August 20, 2008
respectively and on the same date the Partnership acquired the shares
of the respective vessel owning companies. These vessel owning
companies did not have an operating history, as such, there is no
information to retroactively adjust that should be considered. As
required by the provision of Statement of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS No. 141"), the
Partnership accounted for the acquisition of the vessel owning
companies of the M/T Alexandros II, the M/T Aristotelis II and the
M/T Aris II as a transfer of net assets between entities under
common control at Capital Maritime's carrying amounts (historical
cost) of the net assets contributed. All assets, liabilities and
equity other than the relevant vessels, related charter agreements
and related permits, which the vessel owning companies of the M/T
Alexandros II, the M/T Aristotelis and the M/T Aris II had at the
time of the transfer, were retained by Capital Maritime.
(4) On March 27, 2008 and April 30, 2008 the Partnership acquired
from Capital Maritime the shares of the vessel owning companies of
M/T Amore Mio II and M/T Aristofanis for a total consideration of
$85,739 and $21,566 respectively. The acquisition of the shares of
the vessel owning company of M/T Amore Mio II was funded by $2,000
from available cash, $46,000 through a drawn down from the new credit
facility of $350,000, and the remaining amount through the issuance
of 2,048,823 common units to Capital Maritime at a price of $18,42
per unit which represents the closing price of the Partnership's
units on March 26, 2008 as quoted on Nasdaq Stock Exchange. The
acquisition of the shares of the vessel owning company of M/T
Aristofanis was funded by $11,500 through a drawn down from the new
credit facility of $350,000, and the remaining amount through the
issuance of 501,308 common units to Capital Maritime at a price of
$20.08 per unit which represents the closing price of the
Partnership's units on April 29, 2008 as quoted on Nasdaq Stock
Exchange. M/T Amore Mio II and M/T Aristofanis have been recorded in
the Partnership's financial statements at the amount of $85,146 and
$10,831 respectively, reflecting their historical cost in Capital
Maritime's consolidated financial statements, and differ from the
acquisition price by $593 and $10,735 respectively. The amounts of
the purchase price in excess of Capital Maritime's basis of the M/T
Amore Mio II and M/T Aristofanis of $593 and $10,735 respectively
were recognized as a reduction of partners' equity. As required by
the provision of Statement of Financial Accounting Standards No. 141,
"Business Combinations" ("SFAS No. 141"), the Partnership accounted
for the acquisition of the vessel owning companies of M/T Amore Mio
II and M/T Aristofanis as a transfer of equity interests between
entities under common control at Capital Maritime's carrying amounts
(historical cost) of the net assets contributed. In addition,
transfers of equity interests between entities under common control
are accounted for as if the transfer occurred at the beginning of the
earliest period presented, and prior years financial statements are
retroactively adjusted to furnish comparative information similar to
the pooling-of-interest method of accounting.
All assets and liabilities of the vessel owning companies of the M/T
Amore Mio II and M/T Aristofanis except the vessel, the time charter
agreements and necessary permits were retained by Capital Martime.
(5) Short term investment consists of cash time deposits with
original maturities of more than three months.
Capital Product Partners L.P.
Appendix A - Reconciliation of Non-GAAP Financial Measure
(In thousands of U.S. dollars)
Description of Non-GAAP Financial Measure - Operating Surplus
Operating Surplus represents net income adjusted for non cash items
such as depreciation and amortization expense, unearned revenue and
unrealized gain and losses. Replacement capital expenditures
represent those capital expenditures required to maintain over the
long term the operating capacity of, or the revenue generated by, the
Partnership's capital assets. Operating Surplus is a quantitative
standard used in the publicly-traded partnership investment community
to assist in evaluating a partnership's ability to make quarterly
cash distributions. Operating Surplus is not required by accounting
principles generally accepted in the United States and should not be
considered as an alternative to net income or any other indicator of
the Partnership's performance required by accounting principles
generally accepted in the United States. The tables below reconcile
Operating Surplus to net income for the three month period ended
June 30, 2009.
Reconciliation of Non-GAAP Financial Measure -
Operating Surplus
For the three month period ended
June 30, 2009
Net income $8,104
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation and amortization 7,085
Deferred revenue 188
M/T Agamemnon II and M/T Ayrton II
net income from April 1, 2009 to
April 6, 2009 and April 12, 2009
respectively (88)
M/T Agamemnon II and M/T Ayrton II
depreciation and amortization
from April 1, 2009 to
April 6, 2009 and April 12, 2009
respectively (31) 7,154
---------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 15,258
---------------------------------------------------------------------
Replacement Capital Expenditures (3,806)
---------------------------------------------------------------------
OPERATING SURPLUS 11,452
---------------------------------------------------------------------
Recommended reserves (1,069)
---------------------------------------------------------------------
AVAILABLE CASH 10,383
---------------------------------------------------------------------