Capital Clean Energy Carriers Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025
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Operator

Thank you for standing by, and welcome to the Capital Clean Energy Carrier Corp first quarter twenty twenty five financial results conference call. We have with us mister Jerry Collodiarata, chief executive officer, mister Brian Gallagher, executive vice president, investor relations, and mister Nikos Chubodakis, chief commercial officer. At this time, all participants are in a listen only mode. There'll be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press 11 on your telephone and wait for your name to be announced.

Operator

I must advise you that this conference is being recorded today, Thursday, 05/08/2025. The statement in today's conference call that are not historical facts, including our expectations regarding acquisition, transactions, and their expected effect on us, cash generation, equity returns, and future debt levels, our ability to pursue growth opportunities, our expectations or objectives regarding future distribution amounts, or share buyback amount, capital reserve amount, dividend coverage, future earnings, capital allocation, as well as our expectations regarding market fundamentals and the employment of our vessels, including redelivery dates and charter rates, may be forward looking statements as such as defined in section 21 e 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 make no prediction or statement about the performance of our common shares.

Operator

I would now like to hand over to your first speaker today, mister Brian Gallagher. Please go ahead, sir.

Brian Gallagher
Brian Gallagher
Executive Vice President of Investor Relation at Capital Clean Energy Carriers

Thank you, operator. Good morning and afternoon to whoever you are, and thank you for listening to the Capital Clean Energy Carriers q one twenty twenty five earnings call. As a reminder, we will be referring to the supporting slides available on our website as we go through today's presentation. Let's start then on slide four with the highlights. First quarter twenty twenty five was an important quarter for the company in many respects.

Brian Gallagher
Brian Gallagher
Executive Vice President of Investor Relation at Capital Clean Energy Carriers

Firstly, net income from operations for the quarter amounted to just under $81,000,000, including a 46,200,000.0 gain from the sale of two container vessels. This included in the earnings release in our discontinued operation. These are the last two of the five five thousand TEU containers that we agreed to sell last year, and they they were delivered to the new owners during this quarter. Overall, we have raised a total of 472,200,000.0 in net proceeds from the sale of 12 container vessels since December 2023, and have recycled this capital into our focus on gas transportation assets. Another key development in the quarter is that we have secured employment for two of our new building LNG carriers for five and seven years respectively, both with an additional five year option.

Brian Gallagher
Brian Gallagher
Executive Vice President of Investor Relation at Capital Clean Energy Carriers

My colleague, Nikos, will cover that in more detail later. What is more, during the first quarter of the year, the LNG carrier, Infosys two, commenced its seven year airboat charter where the charter has the option to extend by an additional three years. The new charters, in addition to certain options exercised by one of our charters, has increased our firm charter backlog to $3,100,000,000. We believe that these charters further cooperate our view on the positive fundamentals of the longer term energy shipping market and provide our investment visibility into both employment prospects and cash flows, while in advance in our first energy new building delivery. With that, I'll now turn it over to chief executive chair in Kalajurontis and Nikos Trudovakis, our chief commercial officer for the remainder of the presentation.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Thank you, Brian, and good morning to everyone listening in today. It has been indeed a very busy quarter across all fronts, and it's also reflected in our financials, which you'll find on Slide six. As Brian pointed out, we derived a further $46,000,000 in one of gains this quarter from completing the sale of the last two out of the five container vessels we agreed to sell last year. We will continue to be opportunistic about the sale of the three remaining container vessels as these are modern eco vessels with long term cash flow attached. The dividend, as we discussed on the last call, is a core component of the company's value proposition to shareholders and making this quarter the seventy second consecutive quarter that the company has paid a cash dividend.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Turning to slide seven, we can see that our capital base continues to consolidate and we await the next schedule of seats to be delivered next year. Our cash position continues to be solid, supported by the completion of two further container sales, bringing total cash to 420,000,000. With a great deal of uncertainty volatility injected into capital markets in recent months, money markets continue to factor in almost a hundred basis points in interest rate cut by the Fed during 02/2025. And we take this opportunity to remind investors that CCC could be beneficial to such a move given 80% of our funding is on closing rates. Finally, our balance sheet is strong, which is important within the business we operate, but the main development for this quarter is a reduction of our open LNG carriers closer by one third, enhancing the contract flex of our existing LNG charter book.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

We expect this development to further enhance our financial flexibility. I will now turn to the more strategic matters on slide nine. Our average charter duration now stands at 7.3 across the fleet with our LNG fleet showcasing a charter backlog of ninety one years or 2,800,000,000.0 of contract revenue. As you can see at the bottom of the schedule, two of our six LNG carriers under construction have now been placed on an energy super major for five and seven years, respectively, with options to extend both charters by further five years. This is in addition to certain options exercised by one of our charters for three existing vessels.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

This translates into another outstanding time charter equivalent for our fleet across current charters of approximately 87,300 or $91,001.50 that is per day, including all options. In summary, our charter book continues to expand as we work towards fixing term employment for the remaining assets in our fleet. Turning now to slide 10 and looking at the contracted revenue base in more detail. The impact of these charter extensions and the two new charters has boosted our total contracted backlog, including our container vessels, to 3,100,000,000.0 or 4,500,000,000.0 should all options be exercised. The pie chart illustrates the breakdown of our total time charter revenue base using the same charter periods.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

This remains the core strength of our proposition as a company that is counterparty diversity. You will notice slightly partial from earlier presentations where we included the names of all our counterparties. As our counterparties increased and rose in an effort to preserve confidentiality of certain commercial agreements, we have moved this to a more simplified format. It is important to highlight here that in the energy shipping industry, charters are typically super majors and other national or international energy companies, utility traders, the production plant operators with high credit credentials. Overall, when it comes to CCC, no single counterparty represents more than 20% of the 3,100,000,000.0 contract revenue backlog.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

This directly provides the company a very strong framework to build their gas transportation portfolio further with a mix of existing corporate relationships and new customers. I will finish off this session now with a quick look at our new building CapEx program and our expectations with regards to financing described with more detail on slide 11. So we ended the quarter with 420,000,000 of cash on our balance sheet, which provides a solid buffer for the business. Clearly, our recent contract wins and option declarations, as we have said previously, give us further financial flexibility. From our new building program of $2,300,000,000 underway, we have already paid advances by quarter end to the tune of $467,000,000 Assuming we finance 70% of the acquisition price of the LNG carriers and 50% of the other gas vessels, with debts amounting to approximately 1,560,000,000, That would leave us with an excess equity of hundred and 5,000,000 at slide 11 shows.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

That is without taking into account capital generation from our existing fleet. I would like to turn now to our Chief Commercial Officer, Nikos Chikosakis, who will run through our energy market slides. I will be available to answer your questions at the end of the call. Nikos, over to you.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

Thank you, Jerry, and good morning or afternoon, everybody.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

There are two important issues to deal before I move on to the market focused commentary on ING. Firstly, the effect of The US Trade Representative recently announced policy These are the things that the new Trump administration has proposed to be levied on trips entering US ports and which have been substantially reduced in their potential impact from the original proposals. As part of the language shipping is concerned, we expect minimum impact. The US is targeting a rising percentage of US LNG exports to be transported on US flat, operated, or built LNG carriers from 2028 onwards. And until then, LNG shipping is exempted from any such levy.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

In any case, CCEC is heavily insulated against this development as none of our LNG fleet on the water was built in China, and none of our six LNG carriers are under construction are either being built in China either. Moreover, we view any theoretical suspension of LNG export licenses as a low probability scenario with the exact mechanisms of such tensions still unclear. So far on the effects of the USTR forces are concerned, in our view, our business model is unaffected for now, but we will, of course, continue to closely monitor any developments. Moving on to the impact of tariffs. On slide 14 shows, it is perhaps counterintuitive for The US, the largest LNG exporter, and China, the world's biggest importer, to have little direct energy profit between them.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

However, this has been increasingly the case of the graph in the left hand side shows. Indeed, there have been no direct cargoes from The US to China since February, and trade has been modest in recent years between the two nations. We summarize our portion of medium and longer term potential impacts from tariffs on the right hand side of slide 14. A positive development in this situation could be the signing of bilateral agreement between The US and other nations with the aim to alleviate tariffs and balance the trade deficit with The US. More sale and purchase agreements from The US l for US LNG project will facilitate new final investment decisions and, as such, significantly boost demand for LNG trade.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

A potential headwind if tariffs persist, however, could be the rising cost of the LNG project looking to reach that FID. The financing, operational, and capital funding costs for US projects have risen since the pandemic, and the effect of tariffs is likely to further increase this cost and potentially delay FID. This remains a fast moving, complicated, and very important issue, and we will be looking to update investors going forward. Turning now to the energy market itself. On slide 15, we have highlighted three key areas.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

Point number one, it is great that new billing prices remain firm. There was a single order for an energy vessel during q one for a reported price north of 260,000,000. Prices for new buildings have been above 250,000,000 since February 2023 according to brokers and have not been affected by the weakness in the spot market throughout 2024 and 2025. The trend is now further expected to increase due to Trump's regulatory release for US LNG projects on the one hand and port fees on Chinese base ships on the other. On the first point, we have seen multiple new sale and purchase agreement signed since the beginning of the year as well as the first final investment decision since 02/2023 from one side on the 16,500,000 tons per annum Louisiana NG project.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

On the second point, The US Trade Representative in Poland, Portuguese, and Chinese building vessels is expected to increase demand for Korean built vessels and, as such, strengthen new building prices further. Point number two on graph on the slide 15 illustrates that the longer term time mark time charter market has remained almost immune from the volatility and largely downward movement in spot rates over the past twelve to eighteen months. Ten year rates remain in the high eighties to low nineties range. As with the strength in new building prices, long term rates continue to reflect the fact that despite the weakness in the prone to the curve, the energy shipping market has and continues to be short modern tonnage from 2026 and 2027 onwards. Lastly, point number three shows how short term time charter rates have been recovering from the lows we have seen in January.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

While the scale of this chart does not illustrate the scale of the recovery, spot rates have increased by around 300 from below 10 k per day in January to around 40,000 per day at the April. This recovery has been a combination of an increase in spot requirements throughout the first quarter, windows of open arbitrage to Asia, which removed shipping length in the Atlantic Basin, and that was repositioned east and also reduced appetite from charterers to realize their own tonnage. And finally, as illustrated in the next chart, an increase in the number of idle steam and trash fuel vessels. Looking now on slide 16, we can see the energy card investment supply dynamics. Slide 15 illustrates the effect that the weakness in the current spot market has had on older tonnage and how operators of such tonnage are responding to the low charter rate environment.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

On the left hand side, you can see the percentage of idle steam and dry fuel vessels with idle being defined as vessels being static for fourteen days or longer. It is clear that there has been a steep increase in the percentage of idle vessels throughout the past year as the percentage of both idle steam and dry fuel vessels is currently the highest it has been over the past five years for both vessel types. According to market analysts, at the end of q one twenty twenty five, the number of idle steam vessels reached 41, up from 19 in q three twenty twenty four, while eighteen five fuel vessels were idle at the end of q one twenty five from only two in q three twenty twenty four. Moreover, there are some interesting points around scrapping as we can see on the chart on the right hand side. Firstly, while relatively small in absolute number, 2024 saw a record number of LNG vessels being scrapped.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

Secondly, q one twenty twenty five has already seen the highest number of scrapping of any quarter with three vessels sold for demolition, a number that if annualized would mean that 12 LNG vessels will exit the fleet, which is a 50% increase from the previous record year. In conclusion, the combination of record high ID and scrapping of older vessels supports our view that in the current energy market where large, efficient, and regulation compliance vessels are required, there is limited room for older ships. Moving over to slide 17, we can see what is, in our view, a relatively neutral approach to the energy shipping supply and demand balance projection. The approach in this chart is realistic, aiming to consider all parameters that affect both the supply and the demand side. The basic premise under this analysis is that only projects that have reached the criteria considered on the demand side, and only vessels that are on order are considered for the supply side.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

With relatively conservative assumptions around vessel scrapping and online demand, both in terms of East West arbitrage and transiting fulfillment, we can see that towards the end of twenty twenty six and the very beginning of 2027, the market is balancing. From q one twenty twenty eight, the market becomes significantly short, more than tonnage with a deficit reaching approximately 100,000 by 2029 once we have the recent FID on Woodside Louisiana LNG. This deficit could widen even further by 2029 to twenty twenty thirty if we consider the circa 80,000,000 tons per annum of pre FID projects and the fact that there is limited yard capacity available, especially on pre 2030. As we all know, this analysis is multivariate and can be affected by many parameters. However, it is a strong view that there is significant upside from this base case.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

As an example for this, if the proportion of US LNG delivered to Asia instead of your Europe increases by just 10%, everything else in the analysis being equal, then the market will rebalance more than a year earlier in q one twenty twenty six. Thank you, everybody. And I will now turn it back to Jake for the summary.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Thank you, Nicholas. Moving to slide 19.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

I firmly believe that the progress made during the reported quarter in solidifying our existing charter book and place into the medium term charter with a new high quality customer further improves the company outlook and visibility for our shareholders. On the remaining LNG carriers, we have an order. We'll continue to be opportunistic about fixing long term employment as they are increasingly fewer and committed LNG newbuildings available at this time when we see growing activity in the LNG industry with both new SDAs being signed and FIDs being dated, as Nico described earlier. We're also engaged in constructive discussions with the rest of our gas vessels, recognizing, however, that these will be employed in the more shorter term market and is more likely than not, where we would be able to provide deployment updates only closer to their delivery. The two remaining container vessels are well underpinned on long term contracts, potentially out to the end of the next decade, but provide optionality for CPC going forward.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Now turning to the last slide in the deck. Capital green energy carriers have continued to deliver on the objectives we set out, and the scale of the delivery has been strong for this quarter. Our energy charter group has increased further. We derisk a third of our energy order book by securing employment for two of our vessels while retaining optionality with three containers of fleet and with a strong balance sheet, which includes over $420,000,000 of cash. Importantly, this company has and will continue to have going forward a very dense fleet, delivering the lowest unit rate cost possible today for our customer with the lowest environmental footprint, both critical aspects to success given the commercial requirements of our customers and the emerging regulatory environment when it comes to carbon and methane emissions.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Looking forward, CCC is expected to control the largest LNG two stroke carrier fleet available to investors upon delivery in addition to the other 10 multi gas vessels. The company has considerable contract coverage of over seven years already and strong visibility on cash flows, while we believe that we have an advantage over many of our peers in only being invested in the latest gas technology vessels with fewer fewer capabilities. However, we're not satisfied or tend to do it. We need to address the deployment of our LPG and liquid fuel two portfolio as we start delivering early next year. We need to continue to raise the profile and recognition of the company's capital markets and gain traction with investors.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

So plenty of work to do, but the first quarter shows that the company is capable often our growth traffic trajectory. With that, I will now pass it back to the operator for questions.

Operator

Thank you. To ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We will now go to our first question. One moment, please.

Operator

And your first question comes from the line of John Chappell from Evercore. Please go ahead.

Jonathan Chappell
Senior Managing Director at Evercore ISI

Thank you. Good afternoon, Jerry.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Hi, John.

Jonathan Chappell
Senior Managing Director at Evercore ISI

So first question is on the CapEx schedule. It looks like about $486,000,000 that was pegged for 1Q 'twenty six has been shifted about half to 3Q 'twenty six and half to 1Q 'twenty seven.

Jonathan Chappell
Senior Managing Director at Evercore ISI

Is that your choice, you know, based on kind of chartering opportunities? Or was that something from the shipyard or maybe even the financing side?

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

It's been very well reported. We have been able with our partners to adjust some of our CapEx and operational scheduling, which we have reflected in the CapEx schedule we we provide every quarter. And it was some optionality that we had arranged with our partners, the the shipbuilder at a minimum cost.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

And this together with the charter opportunities we see in the market and the the next bill that we have in deploying these assets is has been a very valuable tool. So we decided to sweep sweep some of the deliveries by Okay.

Jonathan Chappell
Senior Managing Director at Evercore ISI

Thanks. And then on the gas carriers, I understand that we're gonna have to wait to get closer to delivery to have a better idea. But maybe you can just help us understand how the discussions are going at this point, some of the potential liquids that could be carried or relatively new markets unestablished.

Jonathan Chappell
Senior Managing Director at Evercore ISI

You know, what are these conversations that you've had so far? And is there a rough kind of target at this point, understanding we're still maybe twelve months away, to kind of think about from either duration or a type of rate perspective?

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

So as we discussed a couple of quarters ago when we went through the I'll I'll start with the inventory to carry the handy the handy that's right. So as we discussed a couple of quarters ago, there is a lot of activity on the front of the movement of liquid CO2 and the number of projects. Some of them have taken FID, and we have already an operational project, Northern Light.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

But the the timeline of most of these projects is from 02/1928, '2 thousand '20 '9 onwards. So our current discussions around the four liquid share two carriers, which are effectively the same US from handysize multi gas vessels that can carry LPG as well as ammonia and other cargoes. And in addition, of course, to liquid CO2 is has been around either large companies that have different types of gas volumes, including gray as well as low carbon ammonia, LPG, and are also involved in the liquid fuel to supply chains. So some of these guys, they are interested in taking vessels like this for three to five years and be able to deploy them across their logistics needs. But I think also you have the more if you want, normal energy and ammonia business that would that would very much interested in vessels like that.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

The order book for handicides, the same rare vessels is extremely small. Actually, we control a big very big part of it. And we see good interest also for these vessels in the, let's say, sports calls and calls, right, because this is more a sort of fee market. So one to three year type of charters. Usually, this type of demand where where you see most of the bids is will become more active, much closer to delivery.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

So multiple type, you know, lines of inquiries, but I think the default would be to trade them as effectively handicapped LPG ammonia carriers.

Jonathan Chappell
Senior Managing Director at Evercore ISI

Got it. Thanks very much, Jerry.

Operator

Thank you. Your next question comes from the line of Liam Burke from B. Riley Securities. Please go ahead.

Liam Burke
Managing Director at B. Riley Securities

Thank you. Hi, Jerry.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Hi, Liam. How are you?

Liam Burke
Managing Director at B. Riley Securities

Fine.

Liam Burke
Managing Director at B. Riley Securities

Thank you. I hope you're doing well. Your analysis between production coming online in 2027 and, an aging fleet would not only imply a stabilization of supply demand, but capacity constraint beyond the 2728 time frame. Are your potential charters of the four unchartered LNG vessels recognizing this? And are you seeing that in your negotiations?

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Liam, I'll let Nikos take this one.

Nikos Kalapotharakos
Nikos Kalapotharakos
CFO at Capital Clean Energy Carriers

Alright. Thank you.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

Hi, Yaman. Thank you for this question.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

It's actually a very good one. And I think that's exactly what our recent deals reflect. I you know, the front of the curve can be very low and the spot market can be weak. The one year market can be weak. But when it comes to the supply and demand fundamentals in terms of serious charters that are looking for multiple vessels, efficient vessels, then the weakness dissipates and we'll visit, you know, rates and periods around the 90,000 per day mark.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

So I don't know if that answers your question, but charters, yes, understand this benefits coming in the market from 2728 onwards and pay rates that reflect that.

Liam Burke
Managing Director at B. Riley Securities

Great. Thanks. Jerry, on the '4 Handysize on order, if the do you see the potential for them to operate in the LPG spot market for their for the time they're delivering until you can secure work for them?

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Yeah.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Absolutely. I mean, these are moving gas vessels. Well, the same as side, very very attractive ships. And the and as I I said earlier on because the order book is very small and this is an amazing fleet in the water, we see quite a bit of interest from, let's say, kind of normal chartering inquiries that we could trade in the gray ammonia and LPG business.

Liam Burke
Managing Director at B. Riley Securities

Great. Thank you, Jerry. Thank you, Jerry. Thank you, Jamie.

Operator

Thank you. Your next question comes from the line of Alexander Bidwell from Weber Research and Advisory. Please go ahead.

Alexander Bidwell
Associate Analyst at Webber Research & Advisory

Good afternoon. Thanks thanks for the time. So the the three options exercise in the on water vessels and the two charters for the new builds delivering in 2027 seems to point towards a very clear demand for tonnage 2027 onwards. Are you seeing any uptick in appetite for longer term charters in the near term, so say late 'twenty five into 2026? Or Charter is expecting spot the stock market to be more efficient for them?

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

In terms of earlier delivery, 2025 and 2026, anybody that expected volumes for those figures have already secured shipping for them. And they're sort of a lag in terms of how the delay of some projects we expect in 2024, '20 '20 '5 has affected the market exactly because charters have been covered with a certain positions for those periods. What we do see for the year that is in 2025 and 2026 are opportunistic charters that are trying to take advantage of the weakness in the front of the curve to basically buy some optionality for the years in which they anticipate the deficit of freight to kick in. For example, starting 2025, '2 years plus one plus one in terms of options. That is something very common recently when we're discussing about the bids in the market for 2025 and 2026, but not for longer periods.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

There has been one discussion for 2026 delivery for seven years That concluded this year, but that has been the only one.

Alexander Bidwell
Associate Analyst at Webber Research & Advisory

Alright. Thank you. Thank you for the color there. And then looking, I guess, over at sort of global supply demand.

Alexander Bidwell
Associate Analyst at Webber Research & Advisory

So there's a significant amount of attention on these new liquefaction volumes hitting the market. What sort of developments are you seeing on the regas side? And what potential headwinds or tailwinds could we see in the carrier market stemming from a over or undersupply of regas capacity?

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

It's a good question. And what I can tell you in terms of regas capacity, both in Europe and Asia, is that in the multiples in terms of liquefaction capacity.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

So we don't expect any issues when it comes to regasification capacity being able to cover the liquefaction capacity. China, Japan, Europe have multiples in terms of their demand for that capacity.

Alexander Bidwell
Associate Analyst at Webber Research & Advisory

Okay. And then just a quick follow-up. Just looking at a seasonal basis, do you see any, I guess, potential tailwinds from flooding storage opportunities as we we enter a period of oversupply of local fashion capacity?

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

If we're seeing any tailwinds from sorry. I didn't hear that.

Alexander Bidwell
Associate Analyst at Webber Research & Advisory

So do you foresee any tailwinds from floating storage opportunities as we enter a period of oversupply of liquefaction capacity sort of in the back half of the decade?

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

It's an interesting question. Traditionally, floating for LNG has not worked the same way that it's Norway because, obviously, of the boil off, it comes at an extra cost.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

So you need the contango between specific parts of the curve to be steep. And what we're seeing right now with, you know, all the risks, the geopolitical risks around Europe and the prices of global markets, European prices, and Asian prices, we do not see any floating storage being incentivized right now. Obviously, this can change, and it depends a lot on seasonal patterns, you know, storage deficits and container in the curve. But as of now, we cannot really say that floating storage really be or is you know, there are any indications that it will be a demand faster.

Alexander Bidwell
Associate Analyst at Webber Research & Advisory

Alright. Thank you, Jerry. I'll turn it back over.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Thank you.

Operator

Thank you. Your next question comes from the line of Omar Nokta from Jefferies. Please go ahead.

Omar Nokta
Managing Director at Jefferies LLC

Hey. Hi, Jerry. Hi, Nikos. Good morning or good afternoon. Just a couple of follow ups on the on the two new building charters.

Omar Nokta
Managing Director at Jefferies LLC

Obviously, nice to see that. And as you mentioned, you showed that the the the sector the the business is still operating or functioning appropriately. You didn't explicitly give a rate that, you know, because you sort of mentioned in in your comments that in 2027 rates are closer to 90,000. It should reach out with that kind of what the the rate achieved is on these charges?

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

Yes.

Omar Nokta
Managing Director at Jefferies LLC

Okay. Good. And then what's the expected sort of given the financing that you put on, what what do you think the breakeven's gonna be on these on these new buildings?

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

We have not hi, Omar, Jerry. We have not yet concluded on the financing of these assets.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

We we can provide a breakeven number potentially in a couple of quarters when we have more visibility.

Omar Nokta
Managing Director at Jefferies LLC

Okay. Thank you. And then just finally, just on those the interesting kind of, you know, note that you have on those charges is that you can swap you can swap two other later generation shifts at your choosing, it sounds like. Clearly, it gives you some flexibility.

Omar Nokta
Managing Director at Jefferies LLC

Can you just maybe just two questions on that. Can you give us a sense of what what is the what would you say is late generation? Is that all of your shifts, or is it just the new builds? And then also, you know, what circumstances or conditions would you wanna do that where you'd wanna substitute? Thank you.

Nikos Tripodakis
Nikos Tripodakis
Chief Commercial Officer at Capital Clean Energy Carriers

So that's a it's a very good question. Just to clarify what it means, it means that it is within our option to deliver any of the vessels we have our new buildings to those two charters. And a situation whereby we would be incentivized to do something like that would be, you know, let's say we would secure a very good shorter term rate for one of the vessels delivering in towards the end of twenty twenty six, let's say, six month winter charter at very high rates, and then we could deliver that vessel to the or your major charger. So it provides a lot of flexibility and optionality for us, which in a market like this is very valuable.

Omar Nokta
Managing Director at Jefferies LLC

Yes. Great. Well, thank you. That's it for me.

Operator

Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone keypad. That is star one and one if you would like to ask a question. We will now go to the next question. And your next question comes from the line of Clement Mullins from Value Investor's Edge. Please go ahead.

Climent Molins
Head of Shipping Research at Value Investor's Edge

Hi. Good afternoon. Thank you for taking my questions. Most have already been covered, but I wanted to delve a bit into your U. S.

Climent Molins
Head of Shipping Research at Value Investor's Edge

Port fiscal entry. You mentioned U. S. Built LNG carriers by 2029 sounds optimistic, which is almost a given. But could you talk a bit further about your, let's say, theoretical cost expectations for a US built LNG carrier relative to the usual Korean deal?

Climent Molins
Head of Shipping Research at Value Investor's Edge

And secondly, based on the current proposal, who will be responsible for complying with this regulation?

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

So, Kevin, now this is the more appropriate stuff that we're going into. The and I don't think anybody has full clarity. I what I can tell you from our previous experience is that the rule of thumb has been that the cost of The US field ship of any type has been maybe three, four times the the cost of building the same ship in Korea or China. In this particular case, when we're talking about energy carriers where they are also additional challenges with containment systems, LNG, fuel engines, cryogenics, and other more complex machinery.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

I mean, there has been even failures at the beginning in a very large shipyards in Korea, you know, when the the shipyard was when the the industry started trying new new systems. So I I think it's going to be quite challenging for, you know, in nascent APR capacity to take on such projects if that exists at all, which then people say that there's no no such secret capacity for another two or three years. Now with regards to who exactly is going to be responsible to to prevent that, it looks to me, but again, I'm not % sure if there is clarity on that, that it's going to be the liquefaction operators, the exporters that will they will have to ensure that their volume is transported on in US field energy ships. Makes sense. Thank you for the color, and thank you for taking my questions. Thank you.

Operator

Thank you. There are currently no further questions. I will now hand the call back to Jerry for closing remarks.

Gerasimos Kalogiratos
Gerasimos Kalogiratos
CEO and Director at Capital Clean Energy Carriers

Thank you, Sharon, and thank you all for joining us today.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Brian Gallagher
      Brian Gallagher
      Executive Vice President of Investor Relation
    • Gerasimos Kalogiratos
      Gerasimos Kalogiratos
      CEO and Director
    • Nikos Tripodakis
      Nikos Tripodakis
      Chief Commercial Officer
    • Nikos Kalapotharakos
      Nikos Kalapotharakos
      CFO
Analysts
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Key Takeaways

  • Net income from operations was $81 million in Q1 2025, including a $46.2 million gain from selling two container vessels, and the company has raised $472.2 million from 12 container sales since December 2023 to reinvest in gas transportation assets.
  • Secured five- and seven-year charters (with additional five-year options) for two newbuilding LNG carriers and commenced a seven-year charter for LNG Carrier InfoSky II, boosting the firm charter backlog to $3.1 billion.
  • Ended the quarter with $420 million of cash, a strong balance sheet with 80% of debt at fixed rates, and paid the seventy-second consecutive quarterly cash dividend, underpinning financial flexibility.
  • Average charter duration across the fleet rose to 7.3 years, with an LNG charter backlog of $2.8 billion and blended time charter equivalent rates of approximately $87K–$91K/day (including options).
  • Market fundamentals point to tightening LNG shipping supply from 2028, supported by record scrapping and high idle rates for older tonnage, which underpins demand for modern, eco-efficient vessels.
AI Generated. May Contain Errors.
Earnings Conference Call
Capital Clean Energy Carriers Q1 2025
00:00 / 00:00

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