Capital Clean Energy Carriers Corp. (CCEC) Q4 2025 Earnings Call Transcript

Thank you for standing by, and welcome to the Clean Capital Energy Carriers Corp. Fourth Quarter 2025 Financial Results Conference Call. We have with us today Mr. Jerry Calgarados, Chief Executive Officer, Mr. Brian Gallagher, Executive Vice President, Investor Relations, and Mr. Nikos Tripadakis, Chief Commercial Officer. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask questions, you will need to press star 1 on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today, Thursday, March 5, 2026. Statements in today's conference call that are not historical facts, including our expectations regarding the sale or acquisition transactions, their expected effects 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 amounts, dividend coverage, future earnings, future leverage, capital allocation, as well as our expectations regarding market fundamentals and the employment of our vessels, including delivery dates, redelivery dates, and charter rates may be forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve risks and uncertainties like a clause, 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. I would now like to hand the call over to our speaker today, Mr. Brian Gallagher. Please go ahead.

Thank you, Operator. Good morning or afternoon to wherever you are. Thank you for listening to the Capital Clean Energy Carrier's Q4 2025 earnings call. As a reminder, we'll be referring to the supporting slides available on our website as we go through today's presentation. Let's start with the highlights on slide four. An exceptionally busy quarter has continued with subsequent events into the current quarter, but is pleasing to report the company is continuing to make progress on multiple fronts. The key highlight from Q4 was our contracting of three latest technology LNG carriers. This opportunistic transaction illustrated our capability to act with conviction and speed in capturing what we believe will be valuable and timely additions to our fleet. More details from Gerry on that later on. Elsewhere, early on in the current quarter, we welcome the active into our fleet, the world's first 22,000 cubic metre liquid CO2 multi-grass carrier. But we also said goodbye to another container vessel as we pressed on with our focus on gas transportation. In terms of our governance and ongoing focus on sustainability, the company was pleased to gain accreditation from the CDP in our first submission to that particular platform. The LNG shipping spot market had a robust, if short-lived, upturn during Q4 with freight rates touching $100,000 per day. This is an encouraging feature for the future development and potential earnings power from the sector, and there are some key underlying trends which will require consideration, and they'll be covered later on in the presentation. We are acutely aware of the current and fast-moving dynamic in the Middle East impacting LNG and gas shipping sectors, which our Head of Commercial, Nikos Trobodakis, will provide some thoughts on later on. And naturally, management will be available to take questions after the formal presentation. Moving back to Q4 and our reporting, net income from continued operations for the quarter came in at $28.4 million, from which we fulfilled our commitment to a fixed distribution of 15 US cents dividends per share to our shareholders, retaining the company record of distributing a cash dividend for every single quarter since our listing in March 2007. With that, I'll hand it over to our chief executive, Jerry O'Kelidrotis, to run through, firstly, the financial highlights.

Thank you, Brian, and good morning or afternoon to everyone listening in. For further container sales and the fourth quarter of 25 is no different. As Brian pointed out, we have now classified Buenaventura Express under discontinued operations due to its sale, which nevertheless had the full quarter before being delivered to its new owners in January. The sale of the Buenaventura represents the 14th container carrier sale in 24 months, consistent with the company's strategy to pivot to gas. Their classification of the Buenaventura Express and their discontinued operations affected our results compared, for example, to the previous quarter. This leaves the company with just one container vessel. It continues to generate positive cash flows for the company as it is on a long-term charter with a blue-chip partner to 2033 and options to extend to 2039. We have made significant progress. always remain focused on ensuring value creation for shareholders. The last container asset, if it is accretive, this strategy has served us well with the 14 other vessels and we will continue on the same path. The dividend payout remains the core component of the company's value proposition to shareholders. The 15 cents dividend was paid on February 12th to shareholders on record on February 3rd. This was the 75th consecutive quarter that the company has paid account. And now to the balance sheet on slide 7. We closed the year with a solid cash position of $296 million, including restricted cash, and a net leverage ratio just short of 49%. As mentioned earlier, we also finalized the sale of a 13,700 EU container vessel in early 26, continuing our disciplined capital recycling strategy. Finally, just a week ago, we issued a 200 million euro bond listed at the Athens Stock Exchange, further enhancing our balance of finance on the funding of the nine LNG carriers still due for delivery. We are very encouraged with the program to be able to report much more on this front in the next quarterly call. Provide long-term visibility and stability. We have 90 years of contracted backlog at an average TCE of approximately 86,800 per day, representing 2.7 billion of contracted revenue. If all extension options are exercised, this increases to 123 years or approximately 3.9 9 billion in contracted revenues. A recently announced order for three new LNG carry new builds, shown at the bottom of this slide, positions us to benefit from increased LNG shipping demand towards continuing to be in constant dialogue with counterparties regarding our LNG fleet in what has become increasingly a more active period market and looking for the right employment structure for our remaining six open new builds. In the updates we will have four upcoming dry docks for our LNG fleet. In the first quarter of this year we have the Adamastos and in the next quarter we expect to have the dry docking of the Aristarchos, the Attalos, and the Asclepios. In terms of cash cost, the guidance remains the same as in previous quarters, at 5 million only in cost per dry dock, and around 20-25 days of hire. Two more vessels during the second quarter of 2026, our second liquid share-2 carrier and handy LPG carrier, the Amadeus, at the end of April, and also our first fuel fuel 45,000 cubic medium LPG carrier via Aristogenes. The funding of our new building program is well supported. We have already paid a portion of the required CAPEX, supported by generally generated cash flows, asset monetization, and attractive debt financing terms. We progress through 2026 and 2027. We expect CAPEX to be mostly weighted towards JLNG carriers, for which we assume on average approximately 7%. The picture that you see is before tapping into the proceeds of the 250 million euro bond issue. Neatly, to look briefly at the key events for the company during the new LNG carriers on slide 11. The LNG carriers with delivery scheduled of one vessel in the fourth quarter of 28 and two in the first quarter of 29. See boil-off rates as well as liquefaction capacity, placing them among the highest-performing users at HD Hyundai Sam point South Korean attractive terms. The delivery profile is optimized for a market period, where the order book looks particularly undersupplied in view of the anticipated demand, giving us significant commercial optionality. We delivered the world's first 22,000 cubic liquid CO2 multi-gas carrier, the ACTIV. This vessel is capable of transporting liquid CO2, LPG and ammonium and other petrochemicals and remains fully competitive in the conventional semi-ref gas. The vessel is already employed on a six-month optional extension, demonstrating immediate commercial demand. As mentioned earlier, we successfully raised last month 250 million euro through a newly issued unsecured bond, taking advantage of a favorable interest rate environment. After hedging the currency of the new bond, it was supposed to be approximately 5 spot 11 for 295 million in dollar terms. the new bond will be used to refinance our outstanding bond of 100 million issued in 2021 maturing later this year the rest of the process will be used to finance our new building program and for general corporate care now to turn to our chief commercial officer nicos who will run through our lng market slides i will then be available to answer your questions along with nicos and brian

at the end of the call nicos over to you ready and uh good morning of course the war in the middle lists and how it will affect the energy market and in our case the energy shipping market is in everyone's mind i will come back to this at the end of my presentation please allow me to start with the main highlight of q4 which has been the unexpectedly strong red 14 shows spot rates rose strongly to exceed a hundred thousand dollars a day in mid-december the highest level of the past two years an unexpected surge in energy production from the u.s arbitrage and logistical constraints led to an absorption of available tonnage and the significant increase in spark reminder of the fragility of the LNG shipping supply-demand balance during winter months when modest changes in cargo economics, production volumes, or port and canal logistic proportionate impact on freight markets. However, as we will see in slide 15, not all vessel types benefit in a similar way from a surge in spot rate. On the left-hand side, what is interesting is that the charter rates for steam vessels during that period captured around 50% of the rates of a two-stroke modern vessel, but in 2025, 20%, even though the market has been consistently lower compared to the five-year average. Worth noting is that even though two-stroke charter rates rose by approximately 32,000 a day on average through Q4, about 7,000 a day, and continue to trade below two-stroke vessels, like the one CCC owns, and all of the benefits in a rising market, while older vessels remain unattractive as long as two-stroke vessels are available, even if the charter rate for two-strokes is approximately 400% higher as D25. This scores the increasing obsolescence of older technology and supports our strategy for investing exclusively in modern, high-efficiency LNG carriers. Turning now to slide 16, for older vessels described so far have led to 2025 becoming a record year in terms of scrapping, with 15 vessels exiting the fleet. Looking at the age, the re-delivery profile from current charters and the fact that these vessels would operate below their OPEX break-even in the spot market, even when the spot market goes through its seasonal spikes, the commercial removal of those vessels either through laying up or scrapping to the other end of the spectrum and specifically new buildings on C-17, a clear pattern emerged in Q4 with an increase in ordering we were part of for the rest of the year combined, indicating greater confidence amongst ship owners regarding the dynamics of the LMG market. This has led to a slight uptick in new building prices, as we can see in the right of slide 17. We expect this trend to continue as limited yard capacity for deliveries in 2028 and 2029 meets the surge in demand for LMG carriers stemming from the doubling of U.S. LMG production. Limited capacity for 2028 and 2029 provides a very good opportunity to look at the order book availability and CCEC's market share of open new buildings. Slide 18. It is demonstrated that out of the 30 new buildings in the order book, six of those are rolled by CCEC. Owner with the largest market share of the open order book and in prime position to capitalize from the increased demand expected in 2027 onwards as charters. Slide 19. We would like to summarize our view on the long-term supply. As with any shipping segment, there are always a lot of cross-current and moving parts. We have tried to incorporate the recent supply and demand developments on this chart and represent the maximum potential growth in demand for LNG carriers in view of global LNG projects, extending to 2032. The blue dashed line represents the number of LNG vessels required based solely to have reached an FID status, which is a relatively conservative approach, as we expect more projects to reach FID in the months to follow. The gray bar represents the gross number of LNG carriers, being the estimate from CCAC on LNG vessel removals. The dark-gray bars finally represent the net number between vessel deliveries and removals. In summary, we anticipate the LNG shipping market to reach an inflection point in late 2027 or early 2028, with new energy supply requiring a substantial number of additional Demand is anticipated to outpace vessel supply, creating a construction. As mentioned at the beginning of my presentation, we need to address the current situation in the Middle East. The U.S.-Iran conflict following the coordinated U.S.-Israel strikes on Iran on the 28th of February has significantly increased geopolitical risk in the Persian Gulf and particularly around the Strait of Hormuz, a critical energy shipping interference ending normal shipping patterns and the flow of energy commodities and has created a situation where Western affiliated vessels face particularly high risks and costs when transiting in the region. The conflict has major implications for the global LNG market, as made from the Arabian Gulf, mainly from Qatar's Ras Lathan export comp, 32 million tons of LNG in 2025, accounting for nearly a fifth of the global LNG trade, and these volumes must have long disruption, could therefore materially impact LNG supply, particularly to Asia, which receives more than 30% of its LNG imports from Gulf, from the Arabian Gulf, and producers such as Qatar, Oman, and the UAE. At the same time, regional gas supply disruptions are increasing LNG demand even further. Israel has shut down at least two major gas fields due to security concerns, potentially forcing Egypt and Jordan to increase LNG imports by up to 65 cargos per year to replace lost pipeline gas supply. Combined with the Arabian Gulf export vessels operating in the region, the situation could significantly tighten global LNG markets as a prolonged closure of the straitover moves will lead to increased competition for the limited flexible supply, mainly from the U.S., and result in significant price increases in gas in the duration of the company and how long this situation will last, but the effects on the gas and shipping markets in less than a week are very clear. Global gas prices for the prompt months have more than doubled at some point during this week, with Asian gas prices commanding a significant premium over TTS. The increase in global prices, in combination with the surge in toned-mile demand due to an open arbitrage to the east has led to an unprecedented rise in small charter rates from circa $40,000 a day last week to around $300,000 for March and April loadings and even rates above $100,000 a day for 12 months. It is clear, the longer the situation continues, markets will price the risk accordingly and the rise in commodity prices will further support the rate. Thank you to our presentation for today. I'm happy to open the floor.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset by pressing the star keys. Our first question is from Alexander Bidwell with Webber Research and Advisory. Please proceed.

Good afternoon. How are you guys doing? I'm doing good, thanks. I just wanted to see if you guys could give a little bit more color on, I guess, the potential implications of this shutdown of Middle Eastern supplies on the carrier market. We've seen, I guess, as you mentioned, we've seen spot rates climb pretty drastically over the last couple of days. But what is the, I guess, the longer-term implications of having a significant amount of supply taken offline?

A million-dollar question right now, but we'll try to answer it in the best way we can. The Middle East mainly supplies Asian markets, and unlike what happened in 2022 when Russian gas flows to Europe were cut and Europe could replace from the U.S., there is no way to replace this. This coaching would be to increase the price. That would lead to an increased open arbitrage to the East, and the market already now is undersupplied for us. who could expect how much is something that remains to be seen.

Thank you. Thank you for the color there. Then just kind of switching gears, so I believe one container vessel left in the fleet. Can you give us a sense of how you're looking at disposal options and just a general idea of what that timeline might be?

Yeah, so we have been always quite opportunistic in the way that we have approached the sale of our container vessels, and especially these ones, the 13,000 EU containers, we have already sold two, we're down to one. They have a long-term charter and good cash flow visibility, good counterparty. The financing also on this vessel is less flexible than others. So while it's not impossible to transfer or sell this asset, it's equity in its structure. So I think we're going to be quite opportunistic. If we see a similarly attractive deal, we will look at selling the vessel, or we might simply stick with it until closer to the end of the charter. Again, we will be driven more by the opportunity and less by a specific timeline to divest from this container. I mean, we have sold already 14 out of the 15.

Our next question is from John Chappell with Evercore ISI. Please proceed.

Is there any intake advantage of the move in the charter?

Let me comment on the first part and then maybe Nikos can pick up the second part with regard to the long-term curve, but you are right to point out that in terms of re-deliveries, the first vessel that we have is the Amore Neo in Q3, but we do have some of our new builds coming much earlier in Q3, and while some of them we have already have employment in place. We have flexibility in swapping this with other later sisters. So there is the potential for us if we see the market interest to be able to offer earlier positions very late Q2. I think it will very much depend on how long this lasts, as Nico said, and we don't have immense visibility here. Nico, would you like maybe to say a few words as to how you see the long-term curve being affected right now?

Yeah, so the market, given the arbitrage pointing to Europe and, you know, ostensibly oversupply of vessels in the Atlantic, but now what this situation has created, and the longer it lasts, it's more aware and more eager to take a term position, is that the interest to the East has made this high rates just to be able to lift those volumes.

And we have already seen inquiries for the market, but already at higher levels on so it has certainly affected the market but we need the five seven a little bit commercially sensitive but i think it's super important in the context of trying to understand is there any way that the active has um and then maybe the extension and then i guess

the other see the delivery schedule uh in the presentation or the press release anywhere just want to make sure that the delivery schedule is last the remainder this year and those ships going forward yes of course John yes the the table has not changed deliveries have not changed so as I said during my prepare to the next the carrier toward 45,000 cubic and this your fuel mgc in early June these are the next cup and the delivery schedule for the rest now if the active really went directly into the trade as a semi-ref LPG ammonia carrier and I think this is how we should be thinking about it until we see a more mature LCO2 market. So in terms of numbers, if you want to think about a TCE after the ballast days and repositioning from the CPI into the trade, that's probably for the first six months you can assume close to $21,000 per day. The rate was $25,000, but as I said, the repositioning weighs in on the first six months. And then there is an option for the charter. If it's exercised, then headline rate is 32. Assuming that option is exercised, the blended average, including repositioning, is around $25,000, $26,000 per day.

Our next question is from Liam Burke Please proceed.

Thank you. Good afternoon, Jerry. Good afternoon, Nikos. It's not great in light of the shortage of LNG carriers, but what is your deliveries of the non-LNG carriers at their market?

So typically there you will find a lot of liquidity anywhere between 6 to 12 months, and then some demands in the two to three year, occasionally five years. but definitely shorter than the 7, 10, 12 years or more that you see in the LNG market. But I think you could safely say that the most liquid part, the most volume is on the 6 to 12 months TCs.

A look on the longer durations that they're kicked around. Is there sufficient return on those rates or do you prefer to keep them in on the...

With the kind of rate that we see nowadays, I mean, since the delivery of the first vessel market has tightened, both for our handy-sized LPG carriers as well as for MGCs, I think the returns are quite decent. And if we see the opportunity, we will try to lock them in for a market today for a 45,000-cubic dual-fuel vessel. It's probably somewhere around the $40,000 per day mark, give or take, which is quite decent returns. Thank you, Gary.

As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question is from Omar Nukta with Quarkson Securities. Please proceed.

Thank you for the update. Obviously, a lot of stuff that are directly affected by this contract with them. Does that at all affect?

We haven't been affected at all. All charters continue with their ongoing charter commitments, and we don't have any vessels within the Gulf. It's relatively smooth, described it that way, given the turmoil.

Thanks for that. And then just something separate, just an accounting question. Just in terms of the remaining U-build cap assets roughly at $2.4 billion, how much of that do you have secured in bank lines?

There have been already financed, actions for the remaining LNG carriers. As we typically do, you should expect that we will be financing the earlier deliveries and then for later deliveries, I mean, finance everything this year, simply because we don't want to incur this quarter. We will have a lot more news on the financing of the LNG carriers to be delivered this year and next. In terms of the breakdown, let me shoot you an email later on with the exact...

If there are no further questions at this time, I would like to turn the conference back over to Mr. Calagiratos for closing remarks.

Thank you, Operator, and thank you, everyone, for joining us today.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.