Prepared remarks
Good day, everyone, and welcome to the Capital Clean Energy Carriers Corp. Second Quarter 2026 Financial Results. Please note that this event is being recorded. I will now turn the call over to today's host, Brian Gallagher, Head of Investor Relations. Brian, please go ahead.
Thank you, and a warm welcome to our call today. With us, we have the management team: myself, Brian Gallagher; Mr. Nikolaos Kalapotharakos, our Chief Financial Officer; Jack Neilan, our Commercial Head of LPG; along with Nikolaos Tripodakis, our Chief Commercial Officer for the call. Also joining us for the Q&A session is our Chief Executive, Jerry Kalogiratos. Before we begin, I'd like to make the following statement. I must advise you that this conference is being recorded as of today, Wednesday, July 29, 2026. The statements in today's conference call that are not historical facts, including our expectations regarding sale or acquisition transactions and the expected effect on us, cash generation, equity returns and future debt levels, our ability to pursue future 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 that could cause the stated or forecasted returns and 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 or changes 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. With that, I'll now move on to the presentation on the screen in front of you. Starting on our highlights page for Q2 2026 on Slide 4: it was a very busy and productive quarter on every front. Operationally, we took delivery of four vessels in the quarter: two LNG carriers, a Handy LPG/LCO2 carrier and one dual-fuel medium gas carrier, with a further medium gas carrier delivered this month. We also announced a joint venture on an LNG bunkering vessel, and we initiated a $20 million buyback program during the quarter. On the financials, net income from continuing operations for the second quarter was $29 million, and we declared a dividend of $0.15 per share. Strategically, CCEC is now the largest U.S.-listed LNG company by tonnage with a diversified customer base and a total of $2.9 billion in firm contracted revenues. If full charter options are exercised across the fleet, contracted revenue backlog exceeds $4.3 billion. So another strong quarter for the company. I'll now hand it over to our CFO, Nikolaos, to take us through the financial highlights.
Thank you, Brian, and good morning or afternoon to everyone on the call. Before turning to the financials, I would like to touch upon the dividend payout, which remains a core component of the company's value proposition to our shareholders. The $0.15 dividend we have declared will be paid on August 13 to shareholders of record on August 4. Please note that this is the 77th consecutive quarter that the company is paying a cash dividend since its IPO in 2007. Now going back to the company's financials and more specifically the statement of income. Our net income from continuing operations was $29 million for the second quarter of 2026 compared to $29.7 million during the same period in the previous year. Revenues for the three-month period ended June 30 rose to $104.9 million, up from $96.7 million during the same period in 2025. The increase was mainly attributed to the increase in the average number of vessels in our fleet, following the deliveries of our two Handy gas carriers, Active and Amadeus, the delivery of our first dual-fuel medium gas carrier, Aristogenis, and the deliveries of the two LNG carriers, Archimidis and Agamemnon. There are two cost line movements worth highlighting this quarter. First, vessel operating expenses increased during the quarter compared to the same period last year, mainly due to approximately $3.5 million of additional costs incurred by certain of our vessels passing their special survey this year, coupled with the increase in the average size of our fleet. Second, depreciation and amortization rose, also reflecting the increase in the average size of our fleet, following the delivery of five new vessels during the first half of this year. Moving on to our special survey schedule, we currently have two LNG carriers, Attalos and Asklipios, which are expected to pass their special surveys this August. After that, no vessels are scheduled for special survey until 2028. Our guidance remains unchanged at a cost of approximately $5 million per dry dock and around 20 to 25 off-hire days, although the dry docks completed so far have come in ahead of budget and with fewer off-hire days. Now moving to our balance sheet, total assets grew to $4.7 billion from $4.1 billion at year-end, mainly driven by fixed assets, which rose to $4.3 billion as our newbuilding program progressed and we took delivery of vessels. Total shareholders' equity currently stands at $1.5 billion. We maintained a solid cash position of $269 million and a net leverage ratio of approximately 54%. During the quarter, we fully repaid our EUR 150 million bond issued back in 2021, funded from the proceeds of the EUR 250 million bond we issued during the first quarter of this year, which pays a coupon of 3.75% per annum, thus extending the maturity profile of our debt at relatively low cost. Regarding our CapEx program, the funding of our newbuilding program is a high priority. We have already paid a significant portion of the required CapEx, drawing mainly on internally generated cash flows, asset monetization and attractive debt financing, including the recent bond issuance. As we progress through 2026 and 2027, we expect CapEx to be weighted mostly towards the LNG carriers. Assuming 70% financing for the vessels that do not yet have debt arrangements in place and without taking internally generated cash flows into account, we expect the company to be fully funded for the remaining CapEx with a significant amount of cash to be released back to the company. Turning to our interest rate risk management: with rates staying higher for longer and uncertainty about the path of monetary policy, we have decided to take some of that uncertainty off the table. During May and July, we executed two zero-cost collars on compounded SOFR, one for $600 million and the second for $200 million in notional, both with three-year tenures, bringing our total protected notional to $800 million. The collars sit between a weighted average floor of roughly 3.7% and a cap of 4.3%. Consequently, if SOFR stays elevated or moves higher, our exposure is capped while we still retain the benefit if rates decline. As a result, approximately 50% of our total debt is currently either fixed rate based or protected against rising interest rates. With that, I will now pass this on to our Head of Commercial, Nikolaos Tripodakis, to go through the LNG industry update.
Thank you, Nikolaos, and good morning or afternoon, everyone. I will run through a brief update on the LNG markets over the past quarter and thoughts on market development, starting on Slide 12 with a new venture for us. Our LNG charter book gives us exceptional forward revenue visibility. The contracted revenue backlog stands at approximately $2.8 billion with an average remaining firm charter duration of 6.5 years. If you include all of the charter extension options, that backlog increases to $4.1 billion and the average duration extends to 9.4 years. As you can see from the chart, these charters run deep into the 2030s: firm coverage extends as far as 2037 and with options that are not visible in the chart as far out as 2043. This is long-dated contracted cash flow that underpins our dividend and investment program. During Q2 2026, we secured employment for three of our newbuilding vessels that were delivered in June and July. This leaves only the Amore Mio I open for 2026. This vessel has already secured long-term employment commencing in Q1 2027, and we remain confident that we will be able to capitalize on the seasonal strength of the winter market by securing an attractive bridging charter before she begins her 10-year employment. Looking further ahead, we expect the delivery of three additional vessels during Q1 2027, one of which has already secured long-term employment with a supermajor commencing in 2028. We believe it is still relatively early to execute on the remaining positions. However, as we move closer to delivery, we expect to see growing commercial interest and begin more attractive discussions with potential charters. Moving now to Slide 13 and a recap of how the LNG market reacted to the supply disruptions over the past few months: the headline for the LNG market during Q2 has been the rebalancing of volumes following the Qatari outage. Even though the impact of the loss of Qatari volumes has been and is still evident in elevated gas prices in Europe and Asia, the ramping up of production, mainly from the United States, has acted as a buffer. At the same time, strong demand from Egypt, India and Bangladesh has helped to counter the drop in purchasing from traditional buyers like China, Japan and Korea. If you look at the balance change from March to June 2026, the single largest move came from Qatar and the United Arab Emirates with supply available to the market tightened by around 292 million cubic meters per day. However, the increase in production by 132 million cubic meters per day from the U.S. led to a net supply loss of 96 million cubic meters per day, and it is more clear than ever that the role of the United States as a dominant and reliable LNG producer is increasing, and we continue to believe that the importance of the U.S. will only increase in the future. Moving now on to Slides 14 and 15: please allow me to summarize our view on the current LNG market dynamics. Two clear trends have been reshaping the LNG trade flows since the war started. First, more U.S. LNG cargoes are heading to Asia, significantly increasing freight tonne-mile demand. U.S. LNG exports to Asia have been climbing throughout 2026, reaching roughly 4.1 million tonnes in May, the highest monthly level across three years shown on the chart. The second trend is that European gas inventories are sitting well below the five-year seasonal average. European storage in 2026 has been consistently in the low- to mid-30% of capacity, materially below where it was in the prior two years and consistently at the lower end or even lower than the five-year average. This combination of Asia purchasing more U.S. LNG cargoes, while Europe runs down its buffers, has kept gas prices elevated and supported freight rates throughout the year. At the same time, the market is set for a volatile winter where the main importing regions will compete against each other for the scarce flexible availability of U.S. cargoes. This competition between Europe and Asia for the few flexible cargoes creates volatility around arbitrage opportunities and leads to fewer relet vessels being offered as shipping length becomes the means to capture the option value on the European and Asian gas price spreads. Turning to Slide 16 and the breakdown of supply growth towards the end of the decade: looking further out, the supply growth story extends well into the early 2030s and is heavily weighted towards the United States. As mentioned earlier, the U.S. is now expected to have more than 255 million tonnes per annum of liquefaction capacity by the end of 2031. When you add the recovery of Middle East volumes, the delayed North Field expansion and continued U.S. growth, global liquefaction capacity pushes toward roughly 900 million tonnes per annum by the early 2030s. It's worth noting there's a near-term wrinkle: 2026 actually sees the loss of 12.8 million tonnes per annum and the idling of some capacity—around a 4% annualized loss this year—even as new U.S. and Asia Pacific volumes come online. But the medium-term trajectory is clearly one of sustained U.S.-led supply growth. Moving to Slide 17, where we look at our shipping supply and demand outlook, we see that the inflection point when demand outpaces newbuilding deliveries is in early 2028. On the supply side, net fleet deliveries build to a peak of around 292 vessels in 2029 and then decline as scrapping accelerates. We expect cumulative scrapping of over 160 vessels by 2031 based on the dry docking schedule and time charter redeliveries. On the demand side, the vessels required to serve FID and committed LNG capacity climb sharply to roughly 706 vessels by 2031 on an FID and committed basis, far outstripping the net fleet additions of around 255 ships. This concludes the LNG market update. Please allow me to hand the presentation over to Jack Neilan, Head of LPG, to introduce the dynamics of that market.
Thank you, Nikolaos. Good morning, good afternoon, everyone. What we want to achieve over the next few slides is to provide a succinct but hopefully interesting insight into our medium gas carrier fleet within CCEC, the market dynamics, our positioning and strategy. Kicking off on Slide 19 with a summary of our fleet: this slide lays out our LPG fleet delivery schedule. The key message is that this is a focused investment program built around two market pillars, medium gas carriers and Handysize liquid CO2 carriers presented as one unified investment case. The program totals 348,000 cubic meters of capacity across ten vessels with delivery staged from January 2026 through July 2027, arriving steadily each quarter. On the LCO2 side, Active and Amadeus have already delivered and are tunneling oil and LPG. On the MGC side, Aristogenis has delivered into a 12-month LPG employment and Aridaios was delivered on July 23 and is currently balancing towards the U.S. Gulf. By July 2027, the program is complete. On the commercial side, our chartering strategy reflects the nature of each market. The MGC segment is dominated by shorter time charter durations of six to 12 months. So our approach there is built around a deliberate balance between spot and short-term charter exposure while also reviewing longer-term opportunities as they arise. This gives us the flexibility to capture upside as the freight market strengthens, while still securing a base layer of contracted cash flow and earnings visibility appropriate to this segment. It allows us to respond to near-term rate volatility, such as we've seen recently in the Atlantic Basin, without sacrificing the predictability our investors expect from a program of this scale. Looking a bit deeper at our positioning on Slide 20: this is really the heart of our gas investment thesis. I'd like to summarize it as earning on LPG today, built for the energy transition of tomorrow. On the CO2 side, we have four 22,000 cubic meter liquid CO2 carriers, the largest such vessels in the world, with global CO2 capture expected to reach around 210 million tonnes per annum by 2030. There are 12 LCO2 carriers already in operation or on order and the fleet is set to scale potentially to 55 vessels by 2030 according to DNV. We are a genuine first mover in an entirely new shipping segment. Our MGCs are liquid dual-fuel ammonia-ready newbuilds, giving them the flexibility to trade LPG and ammonia, including low-carbon ammonia as that market scales. Our liquid CO2 carriers go a step further: with the same LPG and ammonia trading flexibility as the MGCs, but with the added capability to shift into LCO2 as that market develops. This is an elegant part of the structure—both vessel types earn cash flow from the LPG and ammonia market today. In practice, that means every vessel in this program benefits from today's established LPG economics, entering a market with record U.S. export volumes and structurally tight tonne-mile demand. So across the fleet, we get paid on established LPG economics now while holding a layer of optionality for the energy transition. Let me spend a moment on why we're confident in the LPG markets in the short to medium term. Global LPG demand is being filled by three structural forces. The first and largest is residential and commercial use—cooking, water and space heating—which accounts for around 58% of global LPG demand across more than 280 million households, driven by rural-to-urban switching away from biomass and coal in emerging economies like India, Africa and Southeast Asia. The second is petrochemical feedstock at around 30% of demand, where propane and butane are cracked for ethylene and propylene. There are currently more than 22 new PDH plants commissioning, with China leading the propane import growth. The third is cleaner-fuel switching as LPG displaces higher-emission coal, wood and diesel. To frame the size of the market, global LPG was worth $149.6 billion in 2025 and is forecast to grow at a rate of 3% to 4.5% compound annually through 2034. On the shipping side, the LPG map is being reborn by three forces. First, a U.S. supply unlock: U.S. seaborne LPG exports have climbed from around 1.45 million barrels per day in 2020 to an estimated 2.7 million by 2026, an 86% increase, with the Enterprise 300,000 barrels per day Houston Ship Channel expansion coming online in 2026 and the Neches River Terminal Phase 2 to follow. Second, an Asia pull: India is targeting 10% of its LPG from the U.S., with its national oil companies already locked into 2.2 million tonnes of term barrels for 2026. Third—and crucial for tonnage—a tonne-mile lift: every U.S. Gulf cargo to Asia represents roughly a 70-day round voyage versus 25 days for an AG-to-India cargo. Those long-haul voyages absorb capacity and tighten effective tonnage. LPG freight is fundamentally the price that clears the U.S.-to-Asia arbitrage, so this dynamic drives both volatility and earnings in the segment. How is CCEC positioned within this MGC market? We have six dual-fuel MGC carriers on order: four 45,000 cubic meter and two 40,000 cubic meter vessels for delivery across 2026 and 2027. Both vessel types are capable of carrying LPG, ammonia and petrochemical gases. The competitive advantages of these vessels are threefold: greater cargo intake, enhanced design and dual-fuel capability together delivering a lower cost base than what is currently on the water. The enhanced designs include shaft generators, reducing daily fuel consumption from the auxiliary engines, along with two deck tanks that enable both dual-fuel bunker flexibility and the ability to store cargo for grade change. With this, we are seeing a meaningful shift in charterers' preference towards dual-fuel technology as conventional units face rising regulatory compliance costs and a widening premium to dual-fuel tonnage. These vessels are built at Hyundai Mipo and Nantong CIMC. Lastly, I'd like to draw your attention to the recent trading picture. The LPG market since the onset of the U.S.-Iran conflict has shown how resilient it can be. Since a large proportion of LPG and ammonia exports were blocked in the Strait of Hormuz, buyers have had to look further afield to meet requirements, resulting in a switch in trading patterns and an overall increase in tonne-miles across both the Handy and MGC markets. The charts illustrate recent freight rates, which again justify the point that LPG freight is the clearing price of the arbitrage and that product volatility generally works in the direction of stronger earnings for well-positioned tonnage. I'll now pass you back to Brian to provide a summary before we open to questions.
Thank you, Jack. On the conclusion slide, bringing the different assets together: you can see a pictorial view of our fleet, both on the water and anticipated. This captures the full picture of what we've built and what we intend to build: an ultra-diversified gas fleet designed to meet the challenges and opportunities ahead. On the water, we have LNG carriers—all latest generation dual-fuel 174,000 cubic meter vessels—supported by MGC gas carriers that Jack has described with LPG and ammonia capability and also four liquid CO2 multi-gas carriers transporting CO2, LPG and ammonia. At the bottom of this summary slide, we show we have a new LNG bunkering vessel alongside our single legacy container vessel, which remains on a long-term charter with associated optionality. For those focused on the equity story, a few reference points: we trade under the ticker CCEC on NASDAQ. We are domiciled in the Marshall Islands with headquarters in Athens, Greece. We have 60.3 million shares in issue and our market capitalization is approximately $1.4 billion today. This is a modern, contracted, diversified fleet attached to a clear equity story. That concludes our prepared remarks. Thank you very much for your attention. I'll now open it to my colleagues for questions.
Questions and answers
So while we don't know for sure when the conflict in the Middle East will end, the JKM and TTF forward curves seem to have priced in a degree of continued impact into early 2027. How does this compare to the sentiment you're seeing amongst charterers as well as shipping appetite over the next 12 months?
I think the spot charter rates speak for themselves to answer this, Alex, because the situation has been consistent throughout this conflict: higher flat prices, the JKM-TTF spread being wide all the way to now, as you mentioned, into Q1. This has led to significantly higher spot charter rates compared to pre-conflict levels. To put things in perspective, the average spot charter rate so far this year has been $93,000, whereas last year it was $39,000. The whole situation is very much front of mind and the forward curve is backwardated. It all comes down to how long this conflict will last. For as long as it lasts, the volatility and the uncertainty will lead to freight being the means, as we mentioned in the presentation, to capture the option value of a wider spread.
All right. Appreciate the color. So switching gears over to LNG bunkering. Following the announcement of the JV, how are you thinking about LNG bunkering with respect to the overall business? And how might you go about growing your footprint beyond the first vessel?
Alex, it is a new segment for us. The LNG bunkering business is quite different from the transportation of the commodity per se. It is a market that has a strong growth trajectory in view of the dual-fuel LNG fleet that is either in the water or under construction, with robust growth. At the same time, the end users and charterers for these types of vessels are a relatively small number of companies—either supermajors or specialized companies active in the bunkering business. So I think we would be cautious and typically invest in assets where we have visibility in terms of the employment as we contract the vessel. Here, we proceeded with contracting the newbuild together with CMA on a 50-50 basis with the expectation that this vessel will service the CMA LNG fleet down the line.
On the Alcaios I, you had secured an 18-month charter. I know you had an index-linked charter rate on that. But what was the logic of taking a shorter duration? Was the charter rate that attractive where you would sacrifice duration for payment?
The logic behind the duration is that we do not have any deliveries of our newbuilding vessels in the first half of 2028. That was one of the reasons why we chose this structure. It's helpful to diversify our redelivery profile and keep options open across quarters through Q2 2029. We always want to have options to explore every potential long-term charter possibility. We feel that the weakness in the front of the curve will have dissipated by the time this vessel redelivers. At the same time, we get a floating rate, which combined with a very strong view on this winter, fits into a trade that we're very happy to have done.
Great. And on the LPG front, obviously the nature of that service is shorter duration. In the prepared comments, there was some discussion about exploring longer-term charters. How realistic is that? Or is this mainly going to stay a shorter-duration business?
Yes. The MGCs mostly trade on much shorter terms. There are some traders that look toward longer-term commitments to bring down unit cost; those opportunities do arise. We assessed some opportunities when balancing vessels toward the U.S. Gulf, but the strength in the West at the moment made the decision easy for us to play the shorter-term spot market. So we plan to cover for the next six to 12 months before considering any longer-term commitments that may come along.
A sensible update. I just have a couple of quick questions. Maybe just on the index-linked contract you mentioned last quarter when looking to take advantage of the stronger spot market in LNG and you fast-tracked some newbuilding deliveries. You put Alcaios away for 18 months on that index-linked charter. Can you give some detail on that? Is that contract structured with a base rate plus profit share, or is it simply a variable rate moving with the spot market?
As a comment on the fast-tracking of newbuilds: this was a decision we took early into the conflict and it carried significant risk, which has played out well given that we managed to secure a nine-month charter at what has been basically the average of the spot market this year—so a very healthy rate. Regarding Alcaios and the 18-month floating contract: the index linkage is based on the Atlantic spot charter rate for modern two-stroke vessels. There is no floor and no ceiling; it simply tracks what the market is trading in the Atlantic.
Okay. And then a follow-up on the next newbuilding, I think it's called Antaios, which I believe comes either later this year or early next year. What are your thoughts on that vessel? Any chance to fast-track that one also if there's an opportunity? And how are you thinking about chartering that ship?
That's a good question. We are not discussing fast-tracking those Q1 positions at this stage. For those ships, we are exploring long-term charters starting in 2027. We believe it is still early in the market to lock in long tenors, and we will have more visibility as we come closer to delivery. We expect by September or October to have a clearer view on the best option for those vessels.
I guess maybe looking at some of the supply-side of the market here, given the elevated order book across the industry, how are you thinking about the relative opportunities and risks across LNG carriers versus midsized gas carriers over the next several years? Specifically for you, what underpins your confidence in the current size mix of your fleet? Are there any areas you would look to increase or reduce exposure to as this newbuild cycle unfolds?
That's a fair question. We have five remaining LNG positions that do not have long-term employment in place: two ships in Q1 2027 and three later (one end of 2028, two in Q1 2029). We would like to see more visibility regarding employment for these vessels before contracting additional LNG carriers. That doesn't mean all uncommitted newbuilds must be fixed away, but some positions should be before we expand. We remain constructive on the LNG market: current turmoil has created short-term opportunities and may have slightly delayed the recovery, but additional LNG volumes continue to come and are predominantly U.S.-led. Given where demand is headed and geopolitical considerations, there should be additional effort to source LNG away from the Gulf, supporting demand and tonne-miles. So we are keeping a close eye on the market and will remain open to opportunities, especially back-to-back deals that could be accretive. On other gas segments, such as LPG, we are constructive on long-term fundamentals. The market can absorb the order book, and dual-fuel or high-specification ships will be in demand. In short, we have a substantial program that has been derisked in many ways, backed by cash flows and capital, and we need to see more employment visibility. We remain open to new opportunities as they arise.
Very clear. And maybe one quick follow-up: leverage ticked up sequentially during the quarter. What is your target leverage range today? And as you think about balancing growth investments and returning cash to shareholders, how should we think about that?
In terms of leverage, we continue to be in the very low-50s as a net leverage ratio against the fair market value of our assets, so we are at strong levels. We are, of course, in a growth phase as we take delivery of assets over the next few quarters, so you might see leverage increase somewhat; we expect that to be temporary. With the debt amortization schedules we have, leverage should peak over the next two to three quarters and then start coming off. Regarding the dividend, we have communicated previously that once we are at or close to the end of our original newbuilding program, we will reconsider our dividend policy. The Board will stick to that guidance. By the end of this year, if not early next year, once we have more visibility on the employment of the LNG carriers due in Q1 2027, we can be more constructive on the dividend and consider revisions. That guidance is irrespective of any additional newbuilds like the 2029 vessels that were subsequent to that guidance or any other acquisitions.
Ladies and gentlemen, this concludes today's presentation. Thank you for joining us. You may now disconnect your line. Have a great day.