Capital Clean Energy Carriers Corp. Common Share 2026 Q3 Earnings Call

Good evening and good afternoon to those of you in the U.S., and welcome to the Capital Clean Energy Carriers Q3 2026 Earnings Call. My name is Brian Gallagher, Head of Investor Relations. With me today, I have Jerry Kalogiratos, our Chief Executive, Nikos Kalapotharakos, our CFO, Nikos Tripodakis, our Chief Commercial Officer and Head of LNG Commercial, and Jack Neilan, our Head of LPG Commercial. Before we start, please note that today's presentation contains forward-looking statements, and actual results may differ materially. Please refer to the notice on slide 2 and the risk factors in our 2025 annual report on Form 20-F. Let's kick off looking at the key highlights from the Q3 that we've just finished.

In the third quarter, we took delivery of three vessels, the LNG carrier Alcaios I, the dual-fuel MGC carrier Aridaios in July, and the LCO2 multi-gas carrier Alkimos in September. During the quarter, we also secured new employment for two LNG carriers and four gas carriers. The TCE for the quarter was just under $84,000 a day for our LNG fleet and just under $41,000 a day for our gas fleet. Net income from continuing operations was $34.6 million, up 52% compared to the same period last year, and we declared a dividend of $0.15 per share, our 78th consecutive cash quarterly dividend. Contracted revenue stand at around $2.8 billion for the group, or $4.2 billion for the group, including options. That gives you a sense of the highlights. I'll now pass on to Nikos with regard to the financials.

Thank you, Brian. Before turning to the financials, I would like to touch on our dividend payout, which remains a core part of the company's value proposition to our shareholders. As already announced on October 22nd, we declared a quarterly cash dividend of $0.50 per share. This is our 78th consecutive quarterly dividend since our IPO in 2007. The dividend will be paid on November 12th to shareholders of record as of November 3rd. Turning now to the income statement. Revenue for the three months ended September 30th, 2026, increased to $138.1 million from $95.6 million during the same period last year. The 44% increase primarily reflects the growth in the average number of vessels in our fleet to 19.7 vessels from 13 vessels during the same period last year, following the delivery of three handy gas carriers, two dual-fuel medium gas carriers, and three LNG carriers during 2026.

Voyage expenses for the third quarter of 2026 increased to $9 million from $2.2 million in the third quarter of 2025. The increase was mainly due to voyage expenses incurred by certain of our vessels during their delivery from the yard and the start of their employment, as well as ballast legs associated with certain of our vessels passing their five-year special survey. Vessel operating expenses and depreciation and amortization increased by $6.2 million and $8.6 million respectively compared to the same period in the previous year, mainly due to the increase in the average number of vessels in our fleet. Interest expense and finance cost increased to $33.7 million from $25.5 million during the same period last year. The increase mainly reflects higher average indebtedness following the financing of the vessels delivered this year, partly offset by a decrease in the weighted average interest rate on our debt.

Therefore, net income from continuing operations was $34.6 million for the quarter, or $0.57 per share, corresponding to an increase of 52% compared to the same period last year, as this year's deliveries start to contribute. Moving on to our balance sheet. We maintain a solid cash position with total cash of $287 million, including restricted cash, and a net leverage ratio adjusted for the fair market value of our vessels at approximately 55%. Total assets grew to $4.9 billion. That is an increase of more than 20% from the beginning of 2026, as we took delivery of eight vessels this year. Shareholders' equity rose by $87 million, or by 6%, to approximately $1.6 billion. As of quarter end, total debt stood at $3.2 billion. Floating rate debt, which makes up approximately 78% of our total debt, carried an average margin of 1.70%.

Our fixed rate debt, together with the $800 million of zero-cost interest rate collars entered into during the second and third quarters of this year, make approximately 47% of our total debt either fixed or hedged. Let me now turn to our CapEx program. Our new building program is well-funded. We have already paid a substantial portion of the CapEx from internally generated cash, asset monetizations, and attractive debt financing, including our bond issuance in February. Assuming 70% debt financing for the vessels that do not yet have facilities in place, and excluding future operating cash flows and net proceeds from the sale of Amore Mio I to the previously announced LNG joint venture, we expect to fully fund the remaining CapEx while also releasing significant liquidity to the company.

Let me now hand over to Nikos Tripodakis, our head of LNG commercial, for an update on our LNG fleet and the market.

Niko. Thank you, Nikos. I would like to start with slide 10, which shows our charter book for our 21 latest generation LNG carriers, 15 on the water and six under construction.

Our total contracted backlog is around $2.7 billion, with an average firm duration of 6.4 years, rising to $4 billion and 9.4 years if all options are exercised. Long-term charters with high-quality counterparties insulated us from this quarter's spot volatility. Our market exposure is deliberate and limited. Alcaios I is on an 18-month index-linked charter to early 2028. Athlos will start a one-year index-linked charter on delivery before her seven-year charter, and we have five newbuilding positions open. We also continue to lengthen the book.

The sale of Amore Mio I to our joint venture with BGN at $230 million remains on track to complete in the first quarter of 2027, when she starts a 10-year charter with two three-year extension options. Until then, she is employed on a three-month charter. For our open positions, latest generation two-stroke vessels like ours remain the first to be fixed and command a clear premium over older tonnage, which gives us confidence as we market them for long-term employment. Moving on to slide 11, we can see that the LNG market has proven more resilient than initially expected after the outbreak of war. Qatari and UAE volumes have been largely shut in. However, an increase in production, mainly from the U.S., has partially offset the volumes lost, the rest of the lost output being met by lower demand in Europe and North Asia.

The U.S. has stepped up to replace part of the lost Middle East volumes. Year-on-year, U.S. project expansions have added roughly eight cargoes a week, offsetting around 40% of the loss from Qatar. Global LNG exports in the first nine months were down just 1.3%, as record U.S. output and new startups absorbed most, but not all, of the UAE Gulf shortfall. For shipping, this matters as U.S. cargoes travel much further to reach Asian buyers, which supports ton mile demand over time. On the import side, global LNG imports were down 1.7% year-on-year. North Asia, Europe, and buyers that depend on Qatari supply cut back as prices rose, while Egypt, Thailand, India, and Taiwan increased their imports. Export growth came mainly from the U.S., Canada, and West Africa.

The longer the Gulf disruption lasts, the more buyers will look to diversify towards Atlantic supply, which is structurally positive for long-haul shipping. Even Qatar is now purchasing U.S. LNG volumes in order to diversify. For shipping, a strong first half of 2026 gave way to a softer third quarter as the risk premium faded and vessel availability rose. Atlantic two-stroke spot rates averaged around $51,000 a day, with a low of around $10,000 a day in August. The quarter itself was very volatile. Long-haul two-stroke rates were above $90,000 a day at the start of July, before falling sharply in August as the inter-basin arbitrage closed and prompt tonnage built up. Pacific rates held up for longer, averaging around $56,000 a day.

A late quarter pickup in U.S. Gulf requirements showed how quickly the market can tighten, but the depth of available tonnage, new building deliveries, relets, and shorter rotations limited the recovery. However, as it is always the case with shipping, volatility is a double-edged sword, and as we can see in slide 12, this winter holds a significant risk premium. Moving on to slide 12, Europe enters this winter with gas storage at historically low levels. EU storage was around 74% full in mid-October, roughly 11% lower than a year ago, and key markets such as Germany and the Netherlands are near 60% full. A backwardated forward curve through the summer gave little incentive to refill from the spot market, and that leaves Europe more dependent on LNG this winter and more exposed to cold weather and supply disruption.