Filing summary
Entity and period: The supplied filing is Capital Product Partners L.P.’s Form 20-F for the fiscal year ended December 31, 2021, not a filing under the name Capital Clean Energy Carriers Corp. The filing provides annual results, not a separate fourth-quarter income statement or cash flow statement.
Business context
The Partnership owned 21 vessels at year-end: 14 containerships, six LNG carriers and one Capesize drybulk carrier. Its strategy was to grow through vessel acquisitions while securing medium- to long-term time charters. The six LNG carriers acquired in 2021 were delivered with charters to BP, Cheniere or Engie.
Financial performance and liquidity
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | $184.7 million | $140.9 million |
| Operating income | $118.1 million | $47.2 million |
| Net income | $98.2 million | $30.4 million |
| Net income per common unit | $5.14 | $1.60 |
| Cash from operations | $111.2 million | $80.7 million |
| Cash used in investing | $175.1 million | $185.2 million |
| Cash from financing | $40.6 million | $95.4 million |
Revenue increased 31% year over year, primarily reflecting a larger average fleet, higher charter rates on certain vessels and fewer survey-related off-hire days. Net income also benefited from a $46.8 million vessel-sale gain; excluding that gain, operating income was approximately $71.2 million. Reported operating margin was about 63.9%, or about 38.6% excluding the sale gain. Interest expense and finance costs were $20.1 million, versus $16.7 million; the weighted-average interest rate declined to 2.9% from 3.6%.
At December 31, 2021, total assets were $1.885 billion, total liabilities $1.360 billion and partners’ capital $525.5 million. Gross debt was $1.317 billion, up from $379.7 million a year earlier, largely following the LNG acquisitions. Scheduled debt payments were $100.1 million in 2022 and $163.3 million in 2023. Cash and cash equivalents were $20.4 million, with $10.6 million restricted; total cash including restricted cash was $31.0 million. The Partnership had no undrawn financing and reported covenant compliance. Management said working capital should meet existing liquidity needs for at least 12 months, subject to market and financing conditions.
Operating cash flow rose to $111.2 million. The Partnership spent $368.1 million on vessel acquisitions and improvements and received $193.0 million net from vessel sales. It paid $7.6 million in common-unit distributions during 2021. A $0.15-per-unit fourth-quarter distribution was declared in January 2022 and paid in February.
Material changes and financing
- Acquired six latest-generation LNG carriers for stated total consideration of approximately $1.223 billion, financed through cash, assumed secured debt, common units, seller credit and bond proceeds. These were related-party transactions involving CGC Operating.
- Acquired three Panamax containerships from sponsor Capital Maritime for $40.5 million and sold two Neo-Panamax vessels for $195.0 million, recognizing the $46.8 million gain.
- Issued €150 million of senior unsecured bonds, due October 2026, with a 2.65% coupon. Cross-currency swaps were used to convert the euro exposure to fixed-rate U.S.-dollar cash flows through October 2025.
- Repurchased 382,250 common units for $4.5 million under a $30 million, two-year authorization.
Outlook, risks and unusual items
No quantified earnings or distribution guidance was provided. Management emphasized chartering vessels on medium- to long-term fixed-rate contracts, disciplined acquisitions and access to external financing. Charter expirations, including LNG charters with earliest expirations beginning in 2023, create future re-chartering exposure.
- Charterer concentration was significant: HMM and Hapag-Lloyd accounted for 29% and 24% of 2021 revenue, respectively.
- Debt increased substantially; $988 million was floating-rate debt at year-end. A 100-basis-point LIBOR increase was estimated to raise annual interest expense by approximately $4.6 million, all else equal. Debt covenants can restrict distributions and require collateral or liquidity actions.
- Shipping-market cyclicality, vessel oversupply, charterer creditworthiness, vessel values, fuel and operating costs, and access to refinancing may affect results. The sole drybulk vessel was exposed to the volatile spot market.
- COVID-19 caused crew, off-hire and operating disruptions. The Russia-Ukraine conflict and related sanctions introduced uncertainty around trade, energy markets and crew changes; the filing said its financial impact could not be estimated.
- Environmental regulation may require additional capital spending or affect vessel utilization and values. The filing also disclosed insurance limitations, including no off-hire insurance.
- Acquisitions and management arrangements involved related parties; the filing describes potential conflicts of interest and limits on unitholder remedies. The 2021 financial statements received an unqualified audit opinion, and management and the auditor reported effective internal controls.
Key facts for investors to verify
- Confirm the issuer and reporting period: this is Capital Product Partners L.P.’s FY 2021 annual report, not a standalone Q4 filing for Capital Clean Energy Carriers Corp.
- Review the audited financial statements and debt notes, especially the $1.317 billion gross debt, 2022–2023 maturities, floating-rate exposure and covenant requirements.
- Assess the sustainability of earnings apart from the $46.8 million vessel-sale gain and the impact of the enlarged fleet’s operating and financing costs.
- Verify charter terms, renewal options and counterparty exposure, particularly HMM and Hapag-Lloyd concentration and the approaching LNG charter expirations.
- Review the related-party LNG acquisitions, valuation and financing terms, and the distribution’s compatibility with liquidity needs and bond restrictions.