Capital Clean Energy Carriers Corp. (CCEC) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company's financial health appears strong, with a solid cash balance, ongoing capital investments, and a low net leverage ratio. The Q&A highlighted positive long-term charter rate expectations and resilience despite a soft spot market, indicating future demand growth. The consistent dividend payout further supports a positive sentiment. However, management's reluctance to provide specific guidance on some aspects introduces slight uncertainty. Overall, the positive aspects outweigh the negatives, suggesting a positive stock price movement in the short term.
Key Financial Performance
Net Income $23.1 million for Q3 2025, reflecting a decrease due to the sale of the Manzanillo Express and the special surveys of two LNG carriers.
Special Survey Costs $8.8 million total for two LNG carriers, with $4.4 million per vessel. This was a milestone as it was the first LNG carrier special survey under the company's stewardship.
Dividend Payout $0.15 per share, marking the 74th consecutive quarter of cash dividend distribution since March 2007.
Cash Balance $332.2 million as of the end of Q3 2025, before receiving $26 million from the sale of a container vessel.
Capital Investment Program $2.3 billion ongoing for newbuilds, with $580 million already paid in advances by the end of Q3 2025.
Net Leverage Ratio Below 50%, indicating a strong balance sheet.
Firm Period Charter Backlog $2.8 billion of contracted revenue or 93 years, increasing from $2.2 billion or 68 years in Q4 2024.
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Operating Highlights
Long-term charter coverage: Secured another long-term time charter for up to 10 years on one of the LNG carriers under construction.
Fleet transition: Completed the sale of one of the three remaining container vessels, leaving only two container vessels in the fleet.
Special surveys: Successfully completed special surveys for two LNG carriers, marking their first 5 years of service, with a combined cost of $8.8 million.
LNG market demand: Strong rise in LNG shipping demand due to increased LNG supply growth and new projects reaching final investment decisions (FIDs).
EU ban on Russian LNG: The EU's ban on Russian LNG imports by 2027 is expected to increase global LNG shipping ton-mile demand by approximately 2%.
Vessel scrapping: Record level of vessel removals with 14 LNG carriers scrapped in 2025, reducing older fleet capacity.
Financing secured: Secured financing for all 10 multi-gas carriers under construction, with deliveries starting in January 2026.
Dividend payout: Maintained a $0.15 per share dividend, marking the 74th consecutive quarterly payout.
Balance sheet strength: Cash balance of $332.2 million and a net leverage ratio below 50%.
Fleet strategy: Pivoted from container shipping to gas transportation, with 13 container carrier sales in 24 months.
Customer diversification: Added a new customer to its roster of energy majors, utilities, and traders, further diversifying its customer base.
Future fleet positioning: Focused on securing long-term employment for uncommitted LNG carriers and leveraging multi-gas carriers for energy transition.
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Risk or Challenges
Market Conditions: Challenging market conditions were mentioned, particularly in securing employment for newbuilding vessels. This could impact revenue generation and operational stability.
Regulatory Hurdles: The EU's ban on Russian LNG imports by 2027 could disrupt existing trade routes and require adjustments in shipping logistics, potentially increasing operational costs.
Fleet Utilization: Two LNG carriers underwent special surveys, resulting in 38 days of off-hire and a total cost of $8.8 million, which impacted quarterly results.
Debt and Financing Risks: 79% of the company's total debt is floating, exposing it to interest rate fluctuations despite recent Fed rate cuts. Additionally, financing for six LNG carriers delivering in 2026 and 2027 is still pending.
Aging Fleet Challenges: An increasing number of older LNG vessels are idling or being scrapped, which could lead to market rebalancing but also poses risks for fleet renewal and operational efficiency.
Strategic Execution Risks: The company has three uncommitted LNG carriers under construction, and their employment remains uncertain, which could affect future revenue streams.
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Guidance & Outlook
Revenue Projections: The company expects to generate $2.8 billion in contracted revenue from its LNG fleet, with an additional $1.2 billion if all options are exercised, totaling $4 billion in potential revenue.
Fleet Expansion and Employment: The company has secured financing for all 10 multi-gas carriers under construction, with deliveries starting in January 2026. Three of the six LNG carriers under construction have already secured long-term employment, and the company is actively seeking employment for the remaining three.
Market Trends and Demand: The demand for LNG carriers is expected to rise significantly due to an increase in LNG supply projects reaching final investment decisions (FIDs). The EU's ban on Russian LNG imports by 2027 is anticipated to increase global LNG shipping ton-mile demand by approximately 2% compared to 2024 levels.
Capital Expenditures and Financing: The company has a $2.3 billion newbuilding program, with $580 million already paid in advances. After delivery of all newbuilds, the company expects a net equity inflow of $216 million, excluding cash flow from the existing fleet.
Market Rebalancing: The LNG vessel market is expected to shift from surplus to deficit between 2027 and 2028, driven by increased vessel removals and rising demand for LNG carriers.
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Shareholder Return Plan
Dividend payout: The company fulfilled its ongoing commitment to a fixed distribution of USD 0.15 per share to shareholders. This marks the 74th consecutive quarter of cash dividend payments since the company's listing in March 2007. The dividend will be paid on November 13 to shareholders on record as of November 3.
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Key Q&A
Q:How do the newbuild charter rates compare to the general market appetite, and is there room for long-term rates to change?
A:The latest charter rate is higher than the previous two and is on the high end of the market over the past 4-5 months. Long-term rates for the latest generation two-stroke vessels from 2027-2028 are in the high 80s to low 90s range. Demand from FID projects and new volumes expected by the end of the decade suggest rates may increase further for later deliveries.
Q:What impact should be expected from delays in LNG projects on the carrier market, and how can owners mitigate these effects?
A:Most delays have already been priced in, with major delays stemming from U.S. permit pauses. Projects are expected to start between 2028-2030. Owners can mitigate effects by securing short-term charters (1-2 years) or aligning deliveries with the tight market expected in 2028-2029.
Q:Is the latest charter rate higher than the two fixed six months ago?
A:Yes, the latest charter rate is higher than the previous two, though it involves a slightly later delivery.
Q:Why are long-term charter rates resilient despite a soft spot market in LNG shipping?
A:The resilience is due to an oversupplied spot market with older, less efficient vessels and a future undersupplied market (2027-2028) requiring efficient vessels for increased LNG trade. Long-term charters are priced higher as they anticipate this future demand.
Q:What percentage of LNG shipping is represented by the spot market?
A:The spot market represents less than 15-20% of LNG shipping, mainly involving older tonnage. Newer, efficient vessels are more attractive for long-term charters.
Q:What are the plans for the vessel coming off charter in 2026?
A:Discussions have included short-term charters (1-2 years) with floating or fixed rates. The company is confident in securing employment for the vessel, aiming for redelivery in 2029 to capitalize on market tightness.
Q:What is the interest in the multi-gas carrier due for delivery in January?
A:The vessel, capable of transporting liquid CO2, LPG, ammonia, and petrochemical cargoes, has strong operational flexibility and is attracting interest. The semi-ref segment it will trade in shows solid momentum, with TCE levels ranging from mid-900s to $1 million per month for 4-12 month charters.
Q:What impact will recent U.S. sanctions on LUKOIL and Gazprom have on the LNG market?
A:No additional impact is expected as most major LNG projects, except Yamal, have already been sanctioned. Russian LNG trade to China on dark fleet vessels may increase, but U.S. sanctions are unlikely to directly affect trade.
Q:Is there interest in incremental acquisitions beyond the current order book?
A:The company has significant CapEx ahead but expects a strong cash position by the end of the newbuilding program. While growth is not a current focus, the company may consider acquisitions in the medium to long term, especially given the expected tightness in the LNG market by 2027-2028.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact percentage of the spot market in LNG shipping, stating it as a 'guess' of less than 15-20%. Additionally, they did not provide concrete plans for the vessel coming off charter in 2026, only expressing confidence in securing employment. Similarly, while discussing potential acquisitions, management avoided committing to any specific plans, emphasizing the need for a stable footing first.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Act share
Aristidis year
Aristos Aristidis
CEO Capital
CEO highlight
Capital GP
Commercial Tripodakis
Director afternoon
EU
GP LLC
LNG freight
MGCs
Manzanillo Express
Slide number
age
ban LNG
bar number
carrier term
charter contract
fleet period
fleet year
number vessel
orange
period charter
picture
profile Slide
record cash
removal vessel
rise
surge LNG
survey LNG
vessel delivery
vessel market
vessel period
vessel scrap
CCEC Transcript
Capital Clean Energy Carriers Corp. (CCEC) Q3 2025 Earnings Call Transcript
Positive10-30
The company's financial health appears strong, with a solid cash balance, ongoing capital investments, and a low net leverage ratio. The Q&A highlighted positive long-term charter rate expectations and resilience despite a soft spot market, indicating future demand growth. The consistent dividend payout further supports a positive sentiment. However, management's reluctance to provide specific guidance on some aspects introduces slight uncertainty. Overall, the positive aspects outweigh the negatives, suggesting a positive stock price movement in the short term.
Capital Clean Energy Carriers Corp. (CCEC) Q1 2025 Earnings Call Transcript
Unknown5-8
The earnings call presents a mixed outlook. The company's strong financial metrics, including a stable dividend and significant charter backlog, are positive. However, concerns arise from regulatory issues, supply chain challenges, and market dynamics, such as idle vessels and scrapping trends. The Q&A highlights uncertainties, particularly regarding breakeven expectations for newbuildings. The market's reaction is likely tempered by these mixed signals, resulting in a neutral sentiment for the stock price over the next two weeks.
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