Published on January 31, 2009
Fourth Quarter 2008 Earnings Presentation January 30th, 2009 Capital Product Partners L.P. www.capitalpplp.com
Disclosures This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current assumptions and expectations with respect to expected future events and performance. All statements, other than statements of historical facts, including anticipated expiration of our charters and charter coverage for 2009 and 2010, foreseeable financial position, future distribution levels, future levels of profit-sharing revenues, future cash distribution policy, anticipated required levels of reserves and timing of potential purchases of vessels and possible effects of the early termination of the subordination and amendments to the partnership agreement as well as expected oil product demand and production, are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, and undue reliance should not be placed upon them. Many factors could cause forecasted and actual results to differ materially from those anticipated or implied in these forward-looking statements. For a more comprehensive discussion of the risk factors affecting our business please see our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission, a copy of which can also be found on our website www.capitalpplp.com. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies and industry sources. 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. Neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We make no prediction or statement about the performance of our common units. For more information about the Partnership, please visit our website: www.capitalpplp.com i
Fourth Quarter 2008 Results Highlights 1 Strong Profit Share and the Full Impact of the Completion of our Contracted Acquisitions Drove Solid Results: – Net Income of $14.3 Million - EPU of $0.54. – Profit Sharing Revenues of $6.1 Million. – Operating Surplus of $17.4 Million. Non-Recurring Exceptional Cash Distribution of $1.05 per unit: – Returning Profit Sharing Revenues Earned During 2008. – Creating Value for our Unitholders. – Little Opportunity for Vessel Acquisitions. – Board believes Reserves Levels are Adequate. – Reverting to Previously Stated Distribution Policy from Q1 2009 Onwards. Strong Financial Position To Weather Uncertain Times: – Long-Term Contracts. – Reputable Counterparties. – Remaining Undrawn Debt Capacity of $246 Million. – Adequate Reserves.
Strong Fourth Quarter Results 2 Statement of Income (Dollars in thousands) For the three-month For the three-month period ended period ended December 31, 2008 December 31, 2007 Revenues $36,222 $28,981 Expenses: Voyage expenses 246 1,125 Vessel operating expenses – related party 7,489 5,264 Vessel operating expenses - 1,264 General and administrative expenses 744 600 Depreciation 6,823 5,461 Operating income 20,920 15,267 Other income (expense), net: Interest expense and finance cost (7,154) (5,259) Loss on interest rate agreements - - Interest income 498 291 Foreign currency gain/(loss), net (4) (12) Total other expense, net (6,660) (4,980) 14,260 10,287 Net income Less Net (income)/loss attributable to predecessor (1,604) operations $14,260 $8,683 Partnership’s Net income
Non-Recurring Exceptional Cash Distribution of $1.05 3 CPLP earned $17.6mil in profit sharing revenues in 2008. Our distributions are determined from the base earnings excluding profit sharing revenues. Returning Value to Unitholders: – Absence of investment opportunities due to the crisis in equity and credit markets and weak shipping markets. – No debt amortization obligations until June 2012 at the earliest. – Continue to have strong balance sheet with adequate reserves following the exceptional distribution. – The Partnership owns a young, high specification fleet chartered with reputable counterparties. – 97% of Charter Revenues fixed for 2009 and 60% for 2010. From Q1 2009 we expect to return to our previously stated distribution policy subject to Board approval. Sponsor Exits Subordination*: – Payment of exceptional distribution brings total 2008 distributions to $2.27 (50% above annual MQD). – Subordinated units convert to common following payment of distribution. – Partnership and Sponsor interests are well aligned – Capital Maritime is the largest single shareholder (46.6% ownership incl. 2% in GP units). – The level of the distribution triggers payment of $12.5mil from operating surplus to the General Partner in Incentive Distribution Rights (IDRs) to be received in four equal quarterly installments with the first being paid this quarter and subject to the Partnership distributing at least the MQD in each subsequent quarter. – Termination of the subordination provides additional flexibility to the Partnership. * Please read the press release of January 30, 2009 for more details.
Operating Surplus 4 Operating Surplus for Calculation of Unit Distribution (Dollars in thousands, except per unit amounts) For the three-month For the twelve-month period ended period ended December 31, 2008 December 31, 2008 Net income $14,260 $49,263 Adjustments to net income Depreciation and amortization 6,906 25,424 Deferred revenue 6 602 Amore Mio II and Aristofanis net income in 2008 prior to their contribution to the Partnership - 1,504 Amore Mio II and Aristofanis depreciation and amortization in 2008 prior to their contribution to the Partnership - 6,912 (1,329) 26,201 PARTNERSHIP’S NET CASH PROVIDED BY OPERATING ACTIVITIES 21,172 75,464 Replacement Capital Expenditures (3,814) (13,572) OPERATING SURPLUS 17,358 61,892 Reduction in recommended reserves* 21,956 8,317 AVAILABLE CASH ** $39,314 $70,209 * Reserves are reduced to pay the non-recurring exceptional distribution and the IDRs ** Available cash includes payment of $12.5m for Incentive Distribution Rights. The GP shall receive these IDRs in four equal quarterly installments, with the first installment being paid this quarter and subject to the Partnership distributing at least the MQD in each subsequent quarter.
Strong Balance Sheet 5 Consolidated Balance Sheet (Dollars in thousands) As of As of December 31, December 31, 2008 2007 Assets $51,220 $27,511 Total current assets 641,607 525,199 Total fixed assets 7,327 4,281 Other non-current assets 700,154 556,991 Total assets Liabilities and Stockholders’/Partners’ Equity 4,997 12,273 Total current liabilities 522,982 359,537 Total long-term liabilities Partners’ Equity - 18,060 Additional Paid in Capital - Predecessor - 5,182 Retained Earnings 5,773 3,444 General Partner Limited Partners 127,259 102,130 Common 82,794 66,653 Subordinated (43,651) (10,288) Accumulated Other Comprehensive Income 172,175 185,181 Total Partners’ / Stockholders’ equity Total liabilities and Partners’/Stockholders’ equity $700,154 $556,991
High Utilization of fleet in Q4 but Outlook remains weak 6 Average Clean Product Tanker Earnings 2004-2009 Source: Clarksons Intelligence Network CPLP average spot earnings: US$/Day MR vessels*: $31,284 in Q4-08 vs. 2004 2005 2006 2007 2008 Average CPLP TC Base Rate 2009 $30,763 in Q3-08 $49,000 Suezmax: $66,652 in Q4-08 vs. $44,000 $83,725 in Q3-08 $39,000 Healthy 4Q MR spot market however outlook uncertain: $34,000 – Lower demand for oil products. $29,000 – High oil inventory levels stateside. $24,000 Resilient Suezmax spot rates during Q4- $19,000 08. $14,000 Nov Nov Jul Jul Jan Jan Jan Jun Jun Global oil product demand has been Mar Mar Apr Apr Feb Feb Aug Aug Aug Sep Sep Oct Oct May May Dec Dec revised downwards and is expected to decline by 0.7% in 2009 averaging at 86.6 mbd (EIA). 3 Year MR TC Rate Source: Clarksons Intelligence Network EIA expects 2010 oil demand to grow 3 Year MR TC … 1% to 87.6 mbd. TC Rate ($/day) Estimated global refinery crude $25,000 throughput has been lowered to 72.3 $24,000 mbd for 1Q09, as a result of weaker demand, poor economics, and reduced $23,000 plant operation rates. $22,000 OPEC announced 4.2 mbd cut in $21,000 production with effect from January $20,000 2009. $19,000 $18,000 $17,000 $16,000 $15,000 Jan-2005 Nov-2005 Jan-2006 Nov-2006 Jan-2007 Nov-2007 Jan-2008 Nov-2008 Jan-2009 Jul-2005 Jul-2006 Jul-2007 Jul-2008 May-2005 May-2006 May-2007 May-2008 Mar-2005 Mar-2006 Mar-2007 Mar-2008 Sep-2005 Sep-2006 Sep-2007 Sep-2008 * Average calculated for the nine MRs on Time Charter to BP and Morgan Stanley with profit sharing arrangements. Note: Clarksons Intelligence Network stopped providing asset valuation data since October 2008
Modern Fleet with Strong Counterparties 7 Profit Vessel Dwt Built Type Charterer Share 47,000 2007 TC 50/50 Axios 47,000 2007 TC 50/50 Avax 37,000 2006 TC 50/50 Agisilaos IPO 37,000 2006 TC 50/50 Arionas 8 Fleet 37,000 2006 BB - Atlantas 37,000 2006 BB - Aktoras 37,000 2007 BB - Aiolos 47,000 2006 TC 50/50 Assos 47,000 2007 TC 50/50 Atrotos 47,000 2007 TC 50/50 Akeraios 5 2007 47,000 2007 TC 50/50 Anemos I 47,000 2007 TC 50/50 Apostolos 12,000 2005 TC - Attikos 160,000 2001 TC 50/50 Amore Mio II 12,000 2005 TC - Aristofanis 51,000 2008 BB - 5 Alexandros II 2008 51,000 2008 BB - Aristotelis II 51,000 2008 BB - Aris II Average Remaining Charter Duration: 4.5* Years * As of 12/31/2008 Average Fleet Age: 2.8* Years
High Charter Coverage Medium Term 8 Dec-2008 2010 Aristofanis 03/10 04/08 Amore Mio II 01/11 03/08 Attikos 09/07 09/09 Atlantas 03/14 Avax 05/10 Aktoras 06/14 Agisilaos 03/10 Assos 10/09 Arionas 06/10 Axios 01/10 02/15 Aiolos 04/10 Atrotos 05/07 07/07 Akeraios 06/10 08/10 Anemos I 09/07 09/07 Apostolos 08/10 Alexandros II 01/08 12/17 05/18 Aristotelis II 06/08 Aris II 07/18 08/08 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Capital Product Partners L.P. 9
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