Knot Offshore Partners LP Earnings Release—interim Results for the Period Ended December 31, 2023
For the three months ended
-
Generated total revenues of
$73.0 million , operating income of$18.1 million and net loss of$5.3 million . -
Generated Adjusted EBITDA1 of
$45.7 million -
Reported
$63.9 million in available liquidity atDecember 31, 2023 , which was comprised of cash and cash equivalents of$63.9 million .
Other Partnership Highlights and Events
-
Fleet operated with 99.6% utilization for scheduled operations in Q4 2023, and 96.0% utilization taking into account the scheduled drydockings of the
Torill Knutsen and theIngrid Knutsen , which were carried out during Q4 2023. -
On
January 16, 2024 , the Partnership declared a quarterly cash distribution of$0.026 per common unit with respect to Q4 2023, which was paid onFebruary 8, 2024 , to all common unitholders of record onJanuary 29, 2024 . On the same day, the Partnership declared a quarterly cash distribution to holders of Series A Convertible Preferred Units (“Series A Preferred Units”) with respect to Q4 2023 in an aggregate amount of$1.7 million . -
On
January 9, 2024 , an extension to the existing bareboat charter party for theDan Sabia was signed with Transpetro, extending the vessel’s fixed employment to earlyJune 2024 . -
On
December 15, 2023 , Repsol Sinopec exercised its extension option to the existing time charter for theCarmen Knutsen extending the vessel’s fixed employment tomid-January 2025 . A further 1 year’s option remains available to Repsol. -
On
December 15, 2023 , the Partnership received theDan Cisne back via redelivery, following expiry of its bareboat charter party to Transpetro. TheDan Cisne is being assessed for shuttle tanker operation in theNorth Sea and has also been deployed on short-term conventional tanker contracts inEurope . -
The
Hilda Knutsen ,Torill Knutsen andBodil Knutsen each continued to operate on separate time charter contracts with a subsidiary of the Partnership’s sponsor,Knutsen NYK Offshore Tankers AS (“Knutsen NYK”), at a reduced charter rate. OnJanuary 2, 2024 , these rolling monthly contracts were extended toJanuary 2025 (in the cases of theHilda Knutsen and theTorill Knutsen ) andMarch 2024 for theBodil Knutsen , to terminate in time for delivery to Equinor. -
The Partnership continues to market the
Hilda Knutsen ,Torill Knutsen ,Dan Cisne andDan Sabia for new, third-party employment and is in active discussions with both existing charterers and others, including Knutsen NYK. -
On
November 2, 2023 , the Partnership entered into an at-the-market sales agreement withB. Riley Securities, Inc. (the “Agent”) pursuant to which the Partnership may offer and sell up to$100 million of common units (the “ATM program”), from time to time, through the Agent. This new sales agreement replaces and supersedes the prior sales agreement with the Agent entered into onAugust 26, 2021 .
1 EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management and external users of the Partnership’s financial statements. Please see Appendix A for definitions of EBITDA and Adjusted EBITDA and a reconciliation to net income, the most directly comparable GAAP financial measure.
Including those contracts signed since
In
We are aware that Knutsen NYK has recently ordered three new shuttle tankers with delivery over 2026-2027; and we note recent reports of another operator ordering three new shuttle tankers, with delivery by early 2027. We anticipate that all these new orders are backed by charters to clients in
As the largest owner and operator of shuttle tankers (together with our sponsor, Knutsen NYK), we believe we are well positioned to benefit from such an improving charter market. We remain focused on generating certainty and stability of cashflows from long-term employment with high quality counterparties, and are confident that continued operational performance and execution of our strategy can create unitholder value in the quarters and years ahead.”
Financial Results Overview
Results for Q4 2023 (compared to those for the three months ended
-
Revenues of
$73.0 million in Q4 2023 ($72.7 million in Q3 2023), with the increase due to loss of hire insurance recoveries in Q4 2023. -
Vessel operating expenses of
$25.5 million in Q4 2023 ($23.2 million in Q3 2023), with the increase due to higher costs for supplies, equipment and repairs. -
Depreciation of
$27.6 million in Q4 2023 ($27.5 million in Q3 2023). -
General and administrative expenses of
$1.6 million in Q4 2023 ($1.1 million in Q3 2023). -
Operating income consequently of
$18.1 million in Q4 2023 ($20.6 million in Q3 2023). -
Interest expense of
$18.1 million in Q4 2023 ($18.5 million in Q3 2023) with the decrease due to outstanding debt decreasing and lower fluctuations in interest rates. -
Realized and unrealized loss on derivative instruments of
$4.8 million in Q4 2023 (gain of$4.4 million in Q3 2023), including unrealized loss (i.e. non-cash) elements of$8.9 million in Q4 2023 (gain of$0.5 million in Q3 2023). -
Net loss consequently of
$5.3 million in Q4 2023 (net income of$12.6 million in Q3 2023).
By comparison with the three months ended
-
a decrease of
$1.5 million in operating income (to$18.1 million in Q4 2023 from$19.6 million in Q4 2022), driven primarily by higher vessel operating expenses; -
an increase of
$9.1 million in finance expense (to finance expense of$22.3 million in Q4 2023 from finance expense of$13.2 million in Q4 2022), due to fluctuations in interest rates; and -
a decrease of
$11.3 million in net income (to a net loss of$5.3 million in Q4 2023 from net income of$6.0 million in Q4 2022).
Fleet utilization
The Partnership’s vessels operated throughout Q4 2023 with 99.6% utilization for scheduled operations, and 96.0% utilization taking into account the scheduled drydockings of the
Financing and Liquidity
As of
The Partnership’s total interest-bearing obligations outstanding as of
( |
|
Sale &
|
|
|
Period
|
|
|
Balloon
|
|
|
Total |
|
||||
2024 |
|
$ |
13,805 |
|
|
$ |
76,650 |
|
|
$ |
63,393 |
|
|
$ |
153,848 |
|
2025 |
|
|
14,399 |
|
|
|
68,581 |
|
|
|
181,583 |
|
|
|
269,563 |
|
2026 |
|
|
15,060 |
|
|
|
51,596 |
|
|
|
219,521 |
|
|
|
286,177 |
|
2027 |
|
|
15,751 |
|
|
|
26,481 |
|
|
|
— |
|
|
|
42,232 |
|
2028 and thereafter |
|
|
119,120 |
|
|
|
13,241 |
|
|
|
78,824 |
|
|
|
211,185 |
|
Total |
|
$ |
178,135 |
|
|
$ |
236,549 |
|
|
$ |
548,321 |
|
|
$ |
963,005 |
|
As of
As of
On
In
On
Assets Owned by Knutsen NYK
Pursuant to the omnibus agreement the Partnership entered into with Knutsen NYK at the time of its initial public offering, the Partnership has the option to acquire from Knutsen NYK any offshore shuttle tankers that Knutsen NYK acquires or owns that are employed under charters for periods of five or more years.
There can be no assurance that the Partnership will acquire any additional vessels from Knutsen NYK. Given the relationship between the Partnership and Knutsen NYK, any such acquisition would be subject to the approval of the Conflicts Committee of the Partnership’s Board of Directors.
Knutsen NYK owns, or has ordered, the following vessels and has entered into the following charters:
1. |
In |
|
2. |
In |
|
3. |
In |
|
4. |
In |
|
5. |
In |
|
6. |
In |
|
7. |
In |
|
8. |
In |
|
Outlook
At
The market for shuttle tankers in
Shuttle tanker demand in the
Looking ahead, based on supply and demand factors with significant forward visibility and committed capital from industry participants, we believe that the overall medium and long-term outlook for the shuttle tanker market remains favourable.
In the meantime, the Partnership intends to pursue long-term visibility from its charter contracts, build its liquidity, and position itself to benefit from its market-leading position in an improving shuttle tanker market.
The Partnership’s financial information for the year ended
About
The Partnership plans to host a conference call on
-
By dialing 1-833-470-1428 from the US, dialing 1-833-950-0062 from
Canada or 1-404-975-4839 if outsideNorth America – please join theKNOT Offshore Partners LP call using access code 617850. - By accessing the webcast on the Partnership’s website: www.knotoffshorepartners.com.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||||||
( |
|
December
|
|
|
September
|
|
|
December
|
|
|
2023 |
|
|
2022 |
|
|||||
Time charter and bareboat revenues |
|
$ |
72,039 |
|
|
$ |
72,188 |
|
|
$ |
66,084 |
|
|
$ |
277,084 |
|
|
$ |
262,797 |
|
Voyage revenues (1) |
|
|
— |
|
|
|
10 |
|
|
|
4,689 |
|
|
|
8,849 |
|
|
|
4,689 |
|
Loss of hire insurance recoveries |
|
|
505 |
|
|
|
— |
|
|
|
758 |
|
|
|
2,840 |
|
|
|
758 |
|
Other income (2) |
|
|
485 |
|
|
|
485 |
|
|
|
83 |
|
|
|
1,943 |
|
|
|
341 |
|
Total revenues |
|
|
73,029 |
|
|
|
72,683 |
|
|
|
71,614 |
|
|
|
290,716 |
|
|
|
268,585 |
|
Vessel operating expenses |
|
|
25,457 |
|
|
|
23,164 |
|
|
|
19,820 |
|
|
|
93,351 |
|
|
|
86,032 |
|
Voyage expenses and commission (3) |
|
|
306 |
|
|
|
375 |
|
|
|
2,814 |
|
|
|
5,536 |
|
|
|
2,814 |
|
Depreciation |
|
|
27,594 |
|
|
|
27,472 |
|
|
|
27,785 |
|
|
|
110,902 |
|
|
|
107,419 |
|
Impairment (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49,649 |
|
|
|
— |
|
General and administrative expenses |
|
|
1,571 |
|
|
|
1,083 |
|
|
|
1,606 |
|
|
|
6,142 |
|
|
|
6,098 |
|
Total operating expenses |
|
|
54,928 |
|
|
|
52,094 |
|
|
|
52,025 |
|
|
|
265,580 |
|
|
|
202,363 |
|
Operating income (loss) |
|
|
18,101 |
|
|
|
20,589 |
|
|
|
19,589 |
|
|
|
25,136 |
|
|
|
66,222 |
|
Finance income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
992 |
|
|
|
932 |
|
|
|
472 |
|
|
|
3,468 |
|
|
|
822 |
|
Interest expense |
|
|
(18,101 |
) |
|
|
(18,493 |
) |
|
|
(15,358 |
) |
|
|
(72,070 |
) |
|
|
(42,604 |
) |
Other finance expense |
|
|
(176 |
) |
|
|
(228 |
) |
|
|
(103 |
) |
|
|
(589 |
) |
|
|
(628 |
) |
Realized and unrealized gain (loss) on derivative instruments (5) |
|
|
(4,806 |
) |
|
|
4,361 |
|
|
|
1,663 |
|
|
|
5,369 |
|
|
|
35,510 |
|
Net gain (loss) on foreign currency transactions |
|
|
(224 |
) |
|
|
14 |
|
|
|
81 |
|
|
|
(237 |
) |
|
|
220 |
|
Total finance income (expense) |
|
|
(22,315 |
) |
|
|
(13,414 |
) |
|
|
(13,245 |
) |
|
|
(64,059 |
) |
|
|
(6,680 |
) |
Income (loss) before income taxes |
|
|
(4,214 |
) |
|
|
7,175 |
|
|
|
6,344 |
|
|
|
(38,923 |
) |
|
|
59,542 |
|
Income tax benefit (expense) |
|
|
(1,068 |
) |
|
|
5,466 |
|
|
|
(317 |
) |
|
|
4 595 |
|
|
|
(875 |
) |
Net income (loss) |
|
|
(5,282 |
) |
|
|
12,641 |
|
|
|
6,027 |
|
|
|
(34,328 |
) |
|
|
58,667 |
|
Weighted average units outstanding (in thousands of units): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units |
|
|
34,045 |
|
|
|
34,045 |
|
|
|
34,009 |
|
|
|
34,045 |
|
|
|
33,882 |
|
Class B units (6) |
|
|
252 |
|
|
|
252 |
|
|
|
289 |
|
|
|
252 |
|
|
|
416 |
|
|
|
|
640 |
|
|
|
640 |
|
|
|
640 |
|
|
|
640 |
|
|
|
640 |
|
(1) Voyage revenues are revenues unique to spot voyages. | ||||||||||||||||||||
(2) The |
||||||||||||||||||||
(3) Voyage expenses and commission are expenses unique to spot voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, agency fees and commission. | ||||||||||||||||||||
(4) The carrying value of each of the |
||||||||||||||||||||
(5) Realized gain (loss) on derivative instruments relates to amounts the Partnership actually received (paid) to settle derivative instruments, and the unrealized gain (loss) on derivative instruments relates to changes in the fair value of such derivative instruments, as detailed in the table below. | ||||||||||||||||||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||||||
( |
|
|
|
|
September
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|||||
Realized gain (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contracts |
|
$ |
4,141 |
|
|
$ |
3,963 |
|
|
$ |
1,229 |
|
|
$ |
14,648 |
|
|
$ |
(2,478 |
) |
Foreign exchange forward contracts |
|
|
— |
|
|
|
(79 |
) |
|
|
(502 |
) |
|
|
(79 |
) |
|
|
(502 |
) |
Total realized gain (loss): |
|
|
4,141 |
|
|
|
3,884 |
|
|
|
727 |
|
|
|
14,569 |
|
|
|
(2,980 |
) |
Unrealized gain (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contracts |
|
|
(8,947 |
) |
|
|
352 |
|
|
|
(282 |
) |
|
|
(9,200 |
) |
|
|
38,490 |
|
Foreign exchange forward contracts |
|
|
— |
|
|
|
125 |
|
|
|
1,218 |
|
|
|
— |
|
|
|
— |
|
Total unrealized gain (loss): |
|
|
(8,947 |
) |
|
|
477 |
|
|
|
936 |
|
|
|
(9,200 |
) |
|
|
38,490 |
|
Total realized and unrealized gain (loss) on derivative instruments: |
|
$ |
(4,806 |
) |
|
$ |
4,361 |
|
|
$ |
1,663 |
|
|
$ |
5,369 |
|
|
$ |
35,510 |
|
(6) On |
||||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET |
||||||||
( |
|
At |
|
|
At |
|||
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
63,921 |
|
|
$ |
47,579 |
|
Amounts due from related parties |
|
|
348 |
|
|
|
1,998 |
|
Inventories |
|
|
3,696 |
|
|
|
5,759 |
|
Derivative assets |
|
|
13,019 |
|
|
|
15,070 |
|
Other current assets |
|
|
8,795 |
|
|
|
15,528 |
|
Total current assets |
|
|
89,779 |
|
|
|
85,934 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Vessels, net of accumulated depreciation |
|
|
1,492,998 |
|
|
|
1,631,380 |
|
Right-of-use assets |
|
|
2,126 |
|
|
|
2,261 |
|
Deferred tax assets |
|
|
4,358 |
|
|
|
— |
|
Derivative assets |
|
|
7,229 |
|
|
|
14,378 |
|
Total Long-term assets |
|
|
1,506,711 |
|
|
|
1,648,019 |
|
Total assets |
|
$ |
1,596,490 |
|
|
$ |
1,733,953 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
10,243 |
|
|
$ |
4,268 |
|
Accrued expenses |
|
|
14,775 |
|
|
|
10,651 |
|
Current portion of long-term debt |
|
|
151,796 |
|
|
|
369,787 |
|
Current lease liabilities |
|
|
982 |
|
|
|
715 |
|
Income taxes payable |
|
|
44 |
|
|
|
699 |
|
Current portion of contract liabilities |
|
|
— |
|
|
|
651 |
|
Prepaid charter |
|
|
467 |
|
|
|
1,504 |
|
Amount due to related parties |
|
|
2,106 |
|
|
|
1,717 |
|
Total current liabilities |
|
|
180,413 |
|
|
|
389,992 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
804,993 |
|
|
|
686,601 |
|
Lease liabilities |
|
|
1,144 |
|
|
|
1,546 |
|
Deferred tax liabilities |
|
|
127 |
|
|
|
424 |
|
Deferred revenues |
|
|
2,336 |
|
|
|
3,178 |
|
Total long-term liabilities |
|
|
808,600 |
|
|
|
691,749 |
|
Total liabilities |
|
|
989,013 |
|
|
|
1,081,741 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Series A Convertible Preferred Units |
|
|
84,308 |
|
|
|
84,308 |
|
Equity: |
|
|
|
|
|
|
|
|
Partners’ capital: |
|
|
|
|
|
|
|
|
Common unitholders |
|
|
510,013 |
|
|
|
553,922 |
|
Class B unitholders |
|
|
3,871 |
|
|
|
3,871 |
|
General partner interest |
|
|
9,285 |
|
|
|
10,111 |
|
Total partners’ capital |
|
|
523,169 |
|
|
|
567,904 |
|
Total liabilities and equity |
|
$ |
1,596,490 |
|
|
$ |
1,733,953 |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL |
||||||||||||||||||||||||
|
|
Partners' Capital |
|
|
Accumulated |
|
|
|
|
|
Series A |
|
||||||||||||
( |
|
|
|
|
|
|
|
General |
|
|
Other |
|
|
Total |
|
|
Convertible |
|
||||||
Three Months Ended |
|
Common
|
|
|
Class B
|
|
|
Partner
|
|
|
Comprehensive
|
|
|
Partners'
|
|
|
Preferred
|
|
||||||
Consolidated balance at |
|
$ |
566,079 |
|
|
$ |
5,301 |
|
|
$ |
10,365 |
|
|
$ |
— |
|
|
$ |
581,745 |
|
|
$ |
84,308 |
|
Net income |
|
|
4,220 |
|
|
|
28 |
|
|
|
79 |
|
|
|
— |
|
|
|
4 327 |
|
|
|
1,700 |
|
Conversion of Class B to common units (1) |
|
|
1,283 |
|
|
|
(1,283 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash distributions |
|
|
(17,660 |
) |
|
|
(175 |
) |
|
|
(333 |
) |
|
|
— |
|
|
|
(18,168 |
) |
|
|
(1,700 |
) |
Consolidated balance at |
|
$ |
553,922 |
|
|
$ |
3,871 |
|
|
$ |
10,111 |
|
|
$ |
— |
|
|
$ |
567,904 |
|
|
$ |
84,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance at |
|
$ |
517,751 |
|
|
$ |
3,871 |
|
|
$ |
9,431 |
|
|
$ |
— |
|
|
$ |
531,053 |
|
|
$ |
84,308 |
|
Net income (loss) |
|
|
(6,853 |
) |
|
|
— |
|
|
|
(129 |
) |
|
|
— |
|
|
|
(6,982 |
) |
|
|
1,700 |
|
Conversion of Class B to common units (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash distributions |
|
|
(885 |
) |
|
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(902 |
) |
|
|
(1,700 |
) |
Consolidated balance at |
|
$ |
510,013 |
|
|
$ |
3,871 |
|
|
$ |
9,285 |
|
|
$ |
— |
|
|
$ |
523,169 |
|
|
$ |
84,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance at |
|
$ |
568,762 |
|
|
$ |
9,453 |
|
|
$ |
10,492 |
|
|
$ |
— |
|
|
$ |
588,707 |
|
|
$ |
84,308 |
|
Net income |
|
|
50,297 |
|
|
|
619 |
|
|
|
951 |
|
|
|
— |
|
|
|
51,867 |
|
|
|
6,800 |
|
Conversion of Class B to common units (1) |
|
|
5,238 |
|
|
|
(5,238 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash distributions |
|
|
(70,375 |
) |
|
|
(963 |
) |
|
|
(1,332 |
) |
|
|
— |
|
|
|
(72,670 |
) |
|
|
(6,800 |
) |
Consolidated balance at |
|
$ |
553,922 |
|
|
$ |
3,871 |
|
|
$ |
10,111 |
|
|
$ |
— |
|
|
$ |
567,904 |
|
|
$ |
84,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance at |
|
$ |
553,922 |
|
|
$ |
3,871 |
|
|
$ |
10,111 |
|
|
$ |
— |
|
|
$ |
567,904 |
|
|
$ |
84,308 |
|
Net income (loss) |
|
|
(40,368 |
) |
|
|
— |
|
|
|
(760 |
) |
|
|
— |
|
|
|
(41,128 |
) |
|
|
6,800 |
|
Conversion of Class B to common units (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash distributions |
|
|
(3,541 |
) |
|
|
— |
|
|
|
(66 |
) |
|
|
— |
|
|
|
(3,607 |
) |
|
|
(6,800 |
) |
Consolidated balance at |
|
$ |
510,013 |
|
|
$ |
3,871 |
|
|
$ |
9,285 |
|
|
$ |
— |
|
|
$ |
523,169 |
|
|
$ |
84,308 |
|
(1) On |
||||||||||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS |
||||||||
|
|
|
||||||
|
|
Year Ended |
|
|||||
( |
|
2023 |
|
|
2022 |
|
||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income (loss) (1) |
|
$ |
(34,328 |
) |
|
$ |
58,667 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
110,902 |
|
|
|
107,419 |
|
Impairment |
|
|
49,649 |
|
|
|
— |
|
Amortization of contract intangibles / liabilities |
|
|
(651 |
) |
|
|
(1,442 |
) |
Amortization of deferred revenue |
|
|
(467 |
) |
|
|
— |
|
Amortization of deferred debt issuance cost |
|
|
2,503 |
|
|
|
2,692 |
|
Drydocking expenditure |
|
|
(19,375 |
) |
|
|
(17,614 |
) |
Income tax expense |
|
|
(4,595 |
) |
|
|
875 |
|
Income taxes paid |
|
|
(665 |
) |
|
|
(422 |
) |
Unrealized (gain) loss on derivative instruments |
|
|
9,200 |
|
|
|
(38,490 |
) |
Unrealized (gain) loss on foreign currency transactions |
|
|
67 |
|
|
|
49 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Decrease (increase) in amounts due from related parties |
|
|
1,650 |
|
|
|
723 |
|
Decrease (increase) in inventories |
|
|
2,139 |
|
|
|
(2,163 |
) |
Decrease (increase) in other current assets |
|
|
6,735 |
|
|
|
(9,689 |
) |
Decrease (increase) in accrued revenue |
|
|
— |
|
|
|
1,450 |
|
Increase (decrease) in trade accounts payable |
|
|
5,867 |
|
|
|
251 |
|
Increase (decrease) in accrued expenses |
|
|
4,125 |
|
|
|
3,528 |
|
Increase (decrease) prepaid charter |
|
|
(1,504 |
) |
|
|
(4,682 |
) |
Increase (decrease) in amounts due to related parties |
|
|
389 |
|
|
|
(210 |
) |
Net cash provided by operating activities |
|
|
131,641 |
|
|
|
100,942 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Disposals (additions) to vessel and equipment |
|
|
(2,779 |
) |
|
|
(3,309 |
) |
Acquisition of Synnøve Knutsen (net of cash aquired) |
|
|
— |
|
|
|
(32,205 |
) |
Net cash used in investing activities |
|
|
(2,779 |
) |
|
|
(35,514 |
) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
|
250,000 |
|
|
|
167,000 |
|
Repayment of long-term debt |
|
|
(349,642 |
) |
|
|
(166,609 |
) |
Payment of debt issuance cost |
|
|
(2,461 |
) |
|
|
(889 |
) |
Cash distributions |
|
|
(10,407 |
) |
|
|
(79,470 |
) |
Net cash used in financing activities |
|
|
(112,510 |
) |
|
|
(79,968 |
) |
Effect of exchange rate changes on cash |
|
|
(10 |
) |
|
|
(174 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
16,342 |
|
|
|
(14,714 |
) |
Cash and cash equivalents at the beginning of the period |
|
|
47,579 |
|
|
|
62,293 |
|
Cash and cash equivalents at the end of the period |
|
$ |
63,921 |
|
|
$ |
47,579 |
|
(1) Included in net income (loss) is interest paid amounting to |
||||||||
APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before interest, depreciation and taxes. Adjusted EBITDA is defined as earnings before interest, depreciation, impairments, taxes and other financial items (including other finance expenses, realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions). EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as the Partnership’s lenders, to assess its financial and operating performance and compliance with the financial covenants and restrictions contained in its financing agreements. Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership’s financial and operating performance. The Partnership believes that EBITDA and Adjusted EBITDA assist its management and investors by increasing the comparability of its performance from period to period and against the performance of other companies in its industry that provide EBITDA and Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, taxes, impairments and depreciation, as applicable, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including EBITDA and Adjusted EBITDA as financial measures benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership’s ongoing financial and operational strength in assessing whether to continue to hold common units. EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as alternatives to net income or any other indicator of Partnership performance calculated in accordance with GAAP.
The table below reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP measure.
|
|
Three Months Ended, |
|
|
Year Ended |
|
||||||||||
( |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
(5,282 |
) |
|
$ |
6,027 |
|
|
$ |
(34,328 |
) |
|
$ |
58,667 |
|
Interest income |
|
|
(992 |
) |
|
|
(472 |
) |
|
|
(3,468 |
) |
|
|
(822 |
) |
Interest expense |
|
|
18,101 |
|
|
|
15,358 |
|
|
|
72,070 |
|
|
|
42,604 |
|
Depreciation |
|
|
27,594 |
|
|
|
27,785 |
|
|
|
110,902 |
|
|
|
107,419 |
|
Impairment |
|
|
— |
|
|
|
— |
|
|
|
49,649 |
|
|
|
— |
|
Income tax expense (benefit) |
|
|
1,068 |
|
|
|
317 |
|
|
|
(4,595 |
) |
|
|
875 |
|
EBITDA |
|
|
40,489 |
|
|
|
49,015 |
|
|
|
190,230 |
|
|
|
208,743 |
|
Other financial items (a) |
|
|
5,206 |
|
|
|
(1,641 |
) |
|
|
(4,543 |
) |
|
|
(35,102 |
) |
Adjusted EBITDA |
|
$ |
45,695 |
|
|
$ |
47,374 |
|
|
$ |
185,687 |
|
|
$ |
173,641 |
|
(a) Other financial items consist of other finance income (expense), realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions. | ||||||||||||||||
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements concerning future events and KNOT Offshore Partners’ operations, performance and financial condition. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “will be,” “will continue,” “will likely result,” “plan,” “intend” or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond KNOT Offshore Partners’ control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include statements with respect to, among other things:
- market trends in the shuttle tanker or general tanker industries, including hire rates, factors affecting supply and demand, and opportunities for the profitable operations of shuttle tankers and conventional tankers;
-
market trends in the production of oil in the
North Sea ,Brazil and elsewhere; - Knutsen NYK’s and KNOT Offshore Partners’ ability to build shuttle tankers and the timing of the delivery and acceptance of any such vessels by their respective charterers;
- KNOT Offshore Partners’ ability to purchase vessels from Knutsen NYK in the future;
-
KNOT Offshore Partners’ ability to enter into long-term charters, which
KNOT Offshore Partners defines as charters of five years or more, or shorter- term charters or voyage contracts; - KNOT Offshore Partners’ ability to refinance its indebtedness on acceptable terms and on a timely basis and to make additional borrowings and to access debt and equity markets;
-
KNOT Offshore Partners’ distribution policy, forecasts of KNOT Offshore Partners’ ability to make distributions on its common units, Class
B Units and Series A Preferred Units, the amount of any such distributions and any changes in such distributions; - KNOT Offshore Partners’ ability to integrate and realize the expected benefits from acquisitions;
- impacts of supply chain disruptions that began during the COVID-19 pandemic and the resulting inflationary environment;
- KNOT Offshore Partners’ anticipated growth strategies;
- the effects of a worldwide or regional economic slowdown;
- turmoil in the global financial markets;
- fluctuations in currencies, inflation and interest rates;
- fluctuations in the price of oil;
- general market conditions, including fluctuations in hire rates and vessel values;
- changes in KNOT Offshore Partners’ operating expenses, including drydocking and insurance costs and bunker prices;
- recoveries under KNOT Offshore Partners’ insurance policies;
- the length and cost of drydocking;
- KNOT Offshore Partners’ future financial condition or results of operations and future revenues and expenses;
- the repayment of debt and settling of any interest rate swaps;
- planned capital expenditures and availability of capital resources to fund capital expenditures;
- KNOT Offshore Partners’ ability to maintain long-term relationships with major users of shuttle tonnage;
- KNOT Offshore Partners’ ability to leverage Knutsen NYK’s relationships and reputation in the shipping industry;
- KNOT Offshore Partners’ ability to maximize the use of its vessels, including the re-deployment or disposition of vessels no longer under charter;
- the financial condition of KNOT Offshore Partners’ existing or future customers and their ability to fulfill their charter obligations;
- timely purchases and deliveries of newbuilds;
- future purchase prices of newbuilds and secondhand vessels;
- any impairment of the value of KNOT Offshore Partners’ vessels;
- KNOT Offshore Partners’ ability to compete successfully for future chartering and newbuild opportunities;
- acceptance of a vessel by its charterer;
-
the impacts of the Russian war with
Ukraine , the conflict betweenIsrael andHamas and the other conflicts in theMiddle East ; - termination dates and extensions of charters;
- the expected cost of, and KNOT Offshore Partners’ ability to, comply with governmental regulations (including climate change regulations) and maritime self-regulatory organization standards, as well as standard regulations imposed by its charterers applicable to KNOT Offshore Partners’ business;
- availability of skilled labor, vessel crews and management, including possible disruptions due to the COVID-19 outbreak;
- the effects of outbreaks of pandemics or contagious diseases, including the impact on KNOT Offshore Partners’ business, cash flows and operations as well as the business and operations of its customers, suppliers and lenders;
- KNOT Offshore Partners’ general and administrative expenses and its fees and expenses payable under the technical management agreements, the management and administration agreements and the administrative services agreement;
-
the anticipated taxation of
KNOT Offshore Partners and distributions to its unitholders; - estimated future capital expenditures;
-
Marshall Islands economic substance requirements; - KNOT Offshore Partners’ ability to retain key employees;
- customers’ increasing emphasis on climate, environmental and safety concerns;
- the impact of any cyberattack;
- potential liability from any pending or future litigation;
- potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;
- future sales of KNOT Offshore Partners’ securities in the public market;
- KNOT Offshore Partners’ business strategy and other plans and objectives for future operations; and
-
other factors listed from time to time in the reports and other documents that
KNOT Offshore Partners files with theU.S. Securities and Exchange Commission , including its Annual Report on Form 20-F for the year endedDecember 31, 2022 , and subsequent reports on Form 6-K.
All forward-looking statements included in this release are made only as of the date of this release. New factors emerge from time to time, and it is not possible for
View source version on businesswire.com: https://www.businesswire.com/news/home/20240226692794/en/
ir@knotoffshorepartners.com
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