Thank you for standing by, and welcome to the Capital Product Partners' Fourth Quarter 2023 Financial Results Conference Call. We have with us today Mr. Jerry Kalogiratos, Chief Executive Officer; Mr. Spyros Leoussis; and Mr. Nikos Kalapotharakos, Chief Financial Officer of the company. At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session [Operator Instructions] I must advise you this conference is being recorded February 2, 2024. The statements 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 unit buyback amounts, capital reserve amounts, distribution 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 21E 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 are 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 expectation to conform to actual results or otherwise. We make no prediction or statement about the performance of our common units. I would now like to turn the call over to your speaker today, Mr. Kalogiratos. Please go ahead, sir.

Thank you, Rob, and thank you all for joining us today. As a reminder, we will be referring to the supporting slides available on our website as we go through today's presentation. On November 13 of last year, we announced a strategic transaction for the partnership, which aims to transform CPLP into a leading LNG and energy transition focused shipping corporation. We started executing on our business plan directly thereafter by concluding a $500 million rights offering and successfully closed the agreement to acquire 11 latest-generation two-stroke LNG carriers with deliveries from the fourth quarter of 2023 through to the first quarter of 2027. We also agreed to negotiate the conversion of the partnership from a limited partnership to a corporation with customary corporate governance provisions by June of this year. Finally, we also secured rights of first refusal on two very large ammonia carriers and two liquid CO2 carriers currently on order by Capital Maritime. On closing of the transaction on December 21st, we took delivery of the first vessel under this agreement, the LNG Carrier Amore Mio I. And shortly thereafter, on January 2nd, we took delivery of the second vessel, the LNG Carrier Axios II. In addition, we also agreed to sell the 5,000 TEU container vessel Long Beach Express in line with our stated intention to divest gradually from our legacy container assets. Turning to the partnership's financial preference, net income for the fourth quarter of 2023 was $12.7 million, or $16.3 million, excluding $3.5 million impairment associated with the sale of two of our vessels. Our board of directors has declared a cash distribution of $0.15 per common unit for the fourth quarter of 2023. The fourth quarter cash distribution will be paid on February 13th to common unitholders of record on February 6. Finally,…

Thank you, Jerry. Overall, the reduced focus on energy security along with warm weather and full gas inventories, resulted in a decline in gas prices in 2023. This, combined with prolonged availability throughout the year, has kept charter rates lower compared to previous years. Spot rates for a two-stroke vessel averaged $171,250 per day in Q4 2023, while the one-year time charter rate as of the end of January 2024 stood at $75,000 per day. Notably, five-year time charter rates have exceeded those for shorter durations, reflecting anticipation of tightening conditions from 2026. On the longer term, ten-year rates exhibited an upward trend in 2023, influenced by increases in newbuilding prices and interest rate, although, this trend has moderated recently. Charter markets for two strokes are expected to remain generally healthy in 2024 and 2025. The preference for two-stroke vessels remains robust, as the benefits of higher carrying capacity and lower boil-off are still significant even at lower gas prices. Rate differentials to older, less efficient on it, continue to increase and have now split rates even for 138,000 to 145,000 steam vessels. As the market recognizes a material difference for an additional few thousand cubic meters of carrying capacity and the impact of EXI regulations on vessel speed. The United States became the world's largest exporter in 2023, a position held by Qatar for the last few years, closely followed by Australia, while China reclaimed its position as the largest importer. In Europe, gas storage level reached historic highs, with several Asian importers having also reached full capacity. The focus on canals heightened 2023 and early this year as reduced rainfall in Panama led to fewer transit slots through the canal. This could lead in additional demand for four to five LNG carriers per month from Q1 2024 until restrictions ease. Additionally, security concerns in the Red Sea have prompted vessels to avoid the Bab al-Mandab Strait and Suez Canal, choosing the Cape of Good Hope assets instead. Analysts expect that redirecting all LNG carriers via the Cape of Good Hope should create additional demand for LNG vessels. Finally, the LNG fleet order book currently starts at approximately 52% of the total fleet, encompassing 341 vessels on order. Shipyards responding to heightened demand, find themselves fully booked through 2027. The new building price stands at more than $260 million per vessel for basic specification vessels. In 2023, there were 68 new orders, a decrease from the record setting 185 ships ordered in 2022. More ordering is expected in order to meet the demand for anticipated liquefaction volumes in the years ahead. If liquefaction projects adhere to timelines and propose projects secure final investment decision, the demand for new build is poised to outstrip current yard capacity until the decades end.

Thank you, Spyros. As a final comment from me and before we move to questions, I would like to draw your attention to Slide 16. Here you can see an updated timeline of what we have set out to do. In the fourth quarter of 2023, we announced and closed the agreement for the acquisition of the 11 LNG carriers. We completed the $500 million rights offering, acquired the LNG/C Amore Mio and the four remaining vessels, and paid the 10% deposit for the initial vessels. We're now in the first quarter of 2024 have already taken delivery of the LNG/C Axios II and agreed to sell one of our container vessels. Now, looking ahead, we are going to focus on the following key steps. Firstly, the conversion of the corporate structure from an MLP to an LNG and Energy Transition Shipping Corporation, which we hope to include over the coming months. Secondly, and after the conversion, we will be working with our Board to define the new capital allocation policy free of the MLP mantle. Thirdly, we will continue to look for opportunistic divestments of our container vessels. And finally, we will continue to execute on our business plan by taking delivery of the next three LNG carriers with long-term employment in place in May, June and July of this year. And with that, I’m happy to answer any questions you may have. Rob, please open the floor for questions.

Thank you. [Operator Instructions] Our first question comes from Omar Nokta with Jefferies. Please proceed with your question.

Thank you. Hey, guys. Good afternoon. Thanks for the update. Hi, Jerry. Yes, I just wanted to ask a few questions for me, but maybe just a simple one just to start off on the planned corporate conversion from a partnership to a corporation. Just simply noticed in the release the date of June 21, it’s a bit of an exact date. How do you feel negotiations or discussions are going on to make that deadline? And then what happens if it’s not done by then?

So this was the undertaking that the GP and the partnership gave to each other when the wider transaction was being negotiated. So the idea is to – this is the, let’s say, the deadline. There is now – there are no direct consequences envisioned under the Umbrella Agreement. In the end, it is an intention to negotiate a commitment from both sides. But what I can tell you is that both the GP and the partnership are very much motivated to get the conversion done. We are still in early innings, as it is a process. And both parties potentially are engaging advisors and whatnot. But I think it’s more a question of a few months rather than stretching beyond the deadline. As I said, I think both the GP, so Capital Maritime and affiliates want to see the conversion take place sooner than later and so is the Board and the partnership. So I’m quite optimistic that we will be able to conclude this much earlier than the target date.

Okay. Thanks, Jerry, for that. That’s clear. And then maybe just I know you addressed this in the past. And I could sort of get a sense of it. But maybe just want to hear it from you, kind of. How are you thinking about the platform and the business overall once this corporate conversion is official? How do you see this affecting or changing maybe the management operations or strategy? Any color you can give on that.

I think it is mostly conversion that will affect corporate governance. So the abolition of the GP and the GP rights, as well as the IDRs and whatnot. I don’t think it will significantly change the strategy that we have already set out. I mean, already the partnership has moved away from the contracted cash flow model. We now have acquired assets, a number of assets that have charters in place, but we also have a number of assets that do not have employment in what we perceive to be a very attractive period of time given LNG fundamental. So in terms, I think, of the shipping strategy. Already, we have moved to a more mix model, if you want, with both contracted cash flows and potential exposure to the underlying markets with first-class assets. Now with regard to – I think to the distribution or the capital allocation policy, I think that’s probably where you should expect also to see changes. The MLP model is more rigid in a way with asset distribution and moving from there onwards. Definitely CPLP going ahead expects to remain a disciplined steward of investor capital and will consider – will continue to be to have a balanced approach towards growth, debt repayment and distributions like we have done over the last few years. And we are going to definitely retain the $0.15 per unit until we set out a new capital allocation policy. But I think overall, the intention is to move to a floating dividend policy tied to a percent that’s payout of free cash flow generation and earnings. So that’s shareholders participate in the potential upside as we fix our vessels going forward. But I think the details of that are going to be carved out once we have completed also the conversion of the partnership between corporation. And of course, there is – there are numerous parameters due to this. But we’ll talk about that when I think we have more details.

Okay. Sounds good. We look forward to that. And then maybe just a final quick one for me. What’s the right share count we should be using now pro forma or unit count pro forma the rights offering and the backstop agreement.

It’s 55.3 million. I can give the exact share count offline.

Sounds good. Thank you. That’s helpful. Thanks Jerry. I’ll turn it over.

Thank you, Omar.

Our next question comes from Ben Nolan with Stifel. Please proceed with your question. Q - Ben Nolan Yes. Hi Jerry. So actually, I wanted to go back a little bit to the first part of the question, Omar’s question. Can you help me understand what exactly is being negotiated, I don’t think that IDRs are really a factor here. So how should we think about the – what is, what’s, I guess, being negotiated? And how do you think about what that means from a monetary perspective maybe just a little bit more detail on what that process looks like.

So the conversion entails the abolition of the GP, which means that there will be a sale of the GP units to the partnership. The consideration – what is – what will be negotiated, it's not being currently, will be the consideration for the sale of these GP units. The GP units come with two things, the IDRs, which as you say, are far off the money, and certain corporate governance rights and control. There is a multitude of precedents out there in the space. I think really what has to happen is the analysis of these precedents, what applies here, and what is really the value for the sale of these units, if any, incrementally to the – to their obvious economic value. The – I should add that the consideration, again, the way that the consideration can be paid, be it cash, shares, combination thereof is also something that could potentially discuss. So these are really the considerations around it. I cannot provide a framework because I mean, simply I don't have one yet. But I think as soon as we have something that we can announce, we will happily do so. This is the idea, after all, we want to have this done sooner than later and behind us in order to move forward.

Okay. That's helpful and appreciating that, you can't say what you don't know. So we'll see. But that framing in is helpful. And then secondly, just curious, obviously, we've seen a pretty sizable pullback in LNG spot rates here. Obviously, there's seasonality and everything else as you guys talked about. But with respect to the new builds that are yet to be contracted, maybe could you talk to the appetite of charters for, they're obviously going to be world class assets that are high performing and everything else, but in a weaker environment. Has there been a change in the appetite for charters to contract those? And how are you thinking about the timeframe for when you would expect to have employment locked in on those?

Hi Ben. I'll take this. This is Spyros. So yes, from our point of view, we see a very strong appetite from charters to charter vessels. Obviously, this is totally uncorrelated to the current market. We are talking about two, three years ahead of time. We don't have a specific timeline. I mean, we expect to fix before delivery. Let's say that's our timeline and this is a strategy that we have implemented in the past and it has been quite successful because we were able to capitalize effectively on the scarcity of slots and ships availability closer to delivery instead of competing with new building slots. In terms of interest, we are seeing interest from all sorts of charters from – either from fleet replacement projects, which I think will be quite significant also going forward. But obviously from new projects that will seek to transport the new LNG that they will be producing.

Okay. Have you – I guess just follow on. I know it's early, but has there been any change in the rate or maybe the tenor of contracts at all, given the current spot weakness? Or is the market – long-term market sort of looking through that, do you think?

As I told you, I think the long-term market is totally uncorrelated. The correlation – a strong correlation for the long-term market is the building price as you know remains quite robust, and we don't see any reason for disabling prices to reduce going forward either than I think most likely is to move a bit further upwards rather than downwards. So I think that's the main – and also, obviously, interest rates is a big element to the price of – to the rate that we are seeing on long-term projects. So actually the trend for long-term projects has been to – for prices to increase. If you see, I think the last – the last one on the year – on the 10-year mark, we are talking about six-digit charters.

Okay. I appreciate it. Thank you, guys.

Thank you.

Our next question is from Liam Burke with B. Riley Securities. Please proceed with your question.

Thank you. Hi, Jerry. How are you today?

Hi, Liam I'm well. How are you?

I'm good, thank you. You sold the Long Beach, you're beginning to divest of the container vessels. Could you give us a sense as to the cadence? I mean, are you seeing a lot of interest, especially when you're looking at a container fleet, that's probably going to have excess capacity for the next couple of years?

That's a good question, Liam. Actually, we definitely have seen no lack of interest. I don't forget that container owners and operators alike are coming from two years of an exceptional market. So balance sheet – most balanced are quite loaded and people are seeking quality tonnage like ours. So far we have had approaches for all our vessels. But we are quite opportunistic in the way that we engage. We believe that dogmatic exits have no place in shipping and there have been examples of that. I think you have to make sure that you're getting proper value as a function of your contracted cash flows, expected cash flows and of course residual value. So in the end, we wouldn't mind keeping certain assets and just let them generate cash flow if we're not getting the proper price. But on the other hand, when we see what we perceive as a good valuation, we will be taking that. Having said that and to answer your first part of your question, I expect that we will be able to announce more in the first half of 2024. But again, I don't want to commit to a specific time line for divesting from all the assets. This is not the intention.

That's certainly fair. And then on the Amore Mio I, you've got a period time chart for three years. Are you comfortable with that duration? Or would you prefer to have been longer understanding like rates are short-term, rates are a little softer. Why three years, generally, I think that it would go a little longer.

So the Amore Mio I had a very attractive charter in place. I mean, the – just from these three years, we expect to generate or until it is November 2026, right? So until November 2026, the vessel is expected to generate about $162 million of EBITDA. So that's better than many long-term charters in place. And the other attraction of this three year deal is that the vessel is coming off charter right at the time when we think that there will be big demand from a new liquefaction projects. So it's really at the end of 2026, which is for us a very good position. But really, the reason that we think the three years was the high rate. It was – I think it was a very good trade-off.

Great. Thank you, Jerry.

Thank you, Liam.

There are no further questions at this time. I'd like to turn the call back over to the CEO for closing comments.

Thank you, Rob, and thank you all once again for listening in today.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.