Capital Clean Energy Carriers (CCEC) Q2 2024 earnings summary

Executive summary

• Announced conversion from partnership/MLP to corporation (C-Corp), rebranding as Capital Clean Energy Carriers Corp., with a strategic pivot to LNG and energy transition shipping; conversion expected to complete by August 26, 2024.

• Fleet transformation underway: 36 vessels (once all delivered), including 12 LNG carriers and 8 container vessels currently in operation, with an average fleet age of 2.3 years as of June 30, 2024.

• Significant investment of $756 million in 10 new gas carriers, including dual-fuel LPG and LCO2 vessels, with deliveries scheduled between Q1 2026 and Q3 2027.

• Completed sale of five container vessels in Q2, generating a $15.2 million gain, and continued divestment of non-core container assets.

• Strong cash flow stability with average charter coverage of 7.2 years and $2.8 billion in contracted revenue, 85% from LNG assets.

Financial highlights

• Q2 2024 net income: $34.2 million, up from $7.4 million in Q2 2023, with EPS at $0.62 versus $0.36.

• Q2 2024 total revenue: $97.7 million, up 10% year-over-year, driven by new LNG vessels.

• Q2 2024 expenses: $48.3 million, down 5% year-over-year due to fewer container vessels.

• Interest expense rose to $31.4 million (from $25.5 million) due to higher debt and interest rates.

• Cash distribution of $0.15 per common unit declared for Q2 2024.

Outlook and guidance

• Intends to maintain $0.15 per unit quarterly distribution in the near term, with potential for increases as new vessels deliver and cash flow grows.

• Contract backlog exceeds $2.8 billion, supporting growth with 16 new vessels to be delivered over 30 months.

• Plans to move to a floating dividend policy tied to free cash flow or net income once growth phase matures.

• Transition to a growth-oriented C-Corp structure is expected to expand the investor base and improve trading liquidity.

• Continued monetization of container fleet to finance newbuilds and reduce debt.