4Q24 Results Presentation February 27, 2025 1 Forward looking statements This presentation and any other written or oral statements made by us in connection with this presentation include forward-looking statements within the meaning of and made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address activities and events that will, should, could, are expected to or may occur in the future are fo ...

Financial Data and Key Metrics Changes - Revenue for Q4 2024 increased to $84.6 million, primarily due to fewer drydock days, compared to $77.7 million in Q3 2024 [8][31] - Adjusted EBITDA rose to $55.3 million from $53.7 million in Q3 2024, reflecting the increase in operating revenues [8][33] - Net income for Q4 was $29.4 million, significantly up from $8.1 million in Q3, driven by a $23.5 million swing in net unrealized gains on interest rate swaps [34] Business Line Data and Key Metrics Changes - Time and voyage charter revenues generated an average TCE rate of $73,900 per day across the fleet in Q4, down from $81,600 in Q3 [31] - The operating margin remained strong at 46% of operating revenues, with operating income slightly lower at $38.5 million compared to $38.9 million in Q3 [34][42] Market Data and Key Metrics Changes - The chartering market is experiencing the lowest rates ever seen on two spot market vessels, with rates well below breakeven [3][10] - Fleet utilization was 92% in Q4, with expectations to exceed this in Q1 2025 [10] - The backlog remains strong at $1.7 billion, with over $1 billion in firm contracts [9][35] Company Strategy and Development Direction - The company has decided not to declare a dividend to maintain financial flexibility and capacity for opportunistic growth amid low market rates [4][29] - The strategy includes a combination of spot, short-term, and floating rate deals to navigate the current market conditions [12] - The company is well-positioned to take over business as steam turbine vessels leave the fleet, with a focus on upgrading existing vessels [22][43] Management's Comments on Operating Environment and Future Outlook - Management noted that the lack of a winter market has put significant downward pressure on the chartering market, but they expect conditions to normalize eventually [10][18] - The company anticipates a significant increase in LNG demand by 2030, presenting a long-term opportunity [18] - Management emphasized the importance of maintaining a robust balance sheet and liquidity to weather current market challenges [39][42] Other Important Information - The company has $288 million in liquidity at the end of 2024 and no refinancing needs until mid-2029 [30][39] - The average TCE rate of the firm backlog is above $82,000 per day, indicating strong near-term revenue coverage [35] Q&A Session Summary Question: On the dividend and runway considerations - Management explained that the decision to cut the dividend was made from a position of strength, allowing for a longer runway in case of market delays [49][51] Question: CapEx and upgrades - Management indicated that upgrades have been yielding significant upside, with one upgraded vessel generating over $10,000 a day in total upside [52][54] Question: Layup costs and decisions - Management discussed the costs associated with laying up vessels, noting that cold stacking incurs significant expenses, making it a less attractive option [56][59] Question: Long-term charter discussions - Management noted that the current bid-ask spread is large, causing charters to hesitate in committing to long-term deals despite anticipated supply tightness in 2027 [68][70] Question: Asset acquisition and market conditions - Management acknowledged the need to balance attractive asset values with the unpredictability of the market, indicating a cautious approach to acquisitions [72][74] Question: Trade-offs between growth and repurchases - Management highlighted the importance of considering growth opportunities against share repurchases and dividends, maintaining flexibility for future value creation [79][80] Question: Drivers for lower vessel storage usage - Management attributed lower vessel storage usage to a flat forward curve and the refilling of storage in Europe, impacting trading dynamics [82][84]

Mortgage Rates and Market Trends - Mortgage rates have decreased for two consecutive weeks, with the average rate on a 30-year mortgage falling to 6.95% from 6.96% last week, down from 6.99% a month ago [1] - The average rate on 15-year fixed-rate mortgages also declined to 6.12% from 6.16% [1] - The bond market's reaction to the Fed's interest rate policy significantly influences mortgage rates, with the 10-year Treasury being a major factor [2] Future Expectations - Anticipation of multiple Fed rate cuts has influenced long-term bond yields, which in turn affects mortgage rates [3] - The Fed's December meeting indicated only a couple of cuts in 2025, leading to speculation on how mortgage rates will respond [3] Housing Market Dynamics - Existing home sales rose for the third consecutive month in December, while pending home sales decreased by 5.5% [4] - The inventory of homes for sale has increased nearly 25% compared to the previous year, which may lead to lower prices and attract first-time buyers [5] Investment Opportunities - Companies in the real estate sector are showing promising growth potential, with several stocks having a Zacks Rank 2 (Buy) and a VGM Score of A or B [6] - FirstService Corporation (FSV) has an expected earnings growth rate of 7.9% for the current year, with a consensus estimate improvement of 1.1% over the past 60 days [7] - Jones Lang LaSalle Incorporated (JLL) has a significantly higher expected earnings growth rate of 83.8% for the current year, with a 1.7% improvement in consensus estimates [8] - Brookfield Infrastructure Partners L.P. (BIP) has an expected earnings growth rate of 4.8% for the current year, with a 3% improvement in next-year earnings estimates [9]

Industry Overview - Demand for HVAC systems increased significantly in 2024, driving strong growth for companies like Lennox and Trane Technologies [1] - Lennox's stock rose over 40% and Trane Technologies' stock surged over 55%, outperforming the S&P 500's 25% rise [1] Lennox Performance and Outlook - Lennox's core revenue grew 15% in Q3 2024 to $1.5 billion, with 2% growth from recent acquisitions [2] - The company raised its full-year revenue forecast to 10% growth, with the AES deal contributing 2% [3] - Lennox increased its earnings per share range and improved its free-cash-flow outlook [3] - The company launched the most efficient air conditioner system on the market and formed a joint venture with Samsung to produce heat pumps and other comfort solutions [5] - Lennox expects higher demand for its higher-value products in 2025 and aims to gain a larger share of the commercial market, supported by its new factory in Mexico [5] Trane Technologies Performance and Outlook - Trane Technologies' Q3 2024 revenue rose 11% to $5.4 billion, with adjusted earnings per share surging 21% [4] - The company reported strong bookings of $5.2 billion in Q3, a 5% increase year-over-year [4] - Trane Technologies' backlog increased to $7.2 billion, up from $6.9 billion at the end of 2023, with a strong project pipeline, especially for commercial HVAC solutions [9] - The company expects 2025 to be another strong year, driven by demand for sustainable solutions and commercial HVAC systems [9] Financial Metrics and Valuations - Lennox's home comfort solutions revenue rose 15% to $1 billion, and building climate solutions revenue increased 15% to $465 million [7] - Trane Technologies' adjusted earnings per share soared 24%, and free cash flow jumped 50% [7] - Both companies trade at high valuations, with Trane Technologies at a forward P/E ratio of over 34 times and Lennox at nearly 30 times, compared to the S&P 500's 22 times and Nasdaq-100's 27.5 times [10]

Group 1 - The article emphasizes the author's investment philosophy, focusing on overlooked companies that provide asymmetric risk rewards and attractive dividend yields [1] - The author has a preference for shipping and mining enterprises but is open to exploring other industries if they align with the investment style [1] - The analytical approach combines fundamental analysis with technical analysis to optimize market timing [1] Group 2 - The author expresses a beneficial long position in CLCO shares, indicating a personal investment interest [2] - The article is written independently, reflecting the author's own opinions without external compensation [2] - There is no business relationship with any company mentioned in the article, ensuring an unbiased perspective [2]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 reached $82.4 million, with adjusted EBITDA at $53.7 million, and net income of $8.1 million, impacted by a $15.5 million negative mark on interest rate swaps [5][28] - The dividend has been reduced to $0.15 per share, and a $40 million share buyback program has been introduced [6][29] - TCE revenues were reported at $77.7 million, slightly exceeding guidance, with an average TCE rate of $81,600 per day, up from $78,400 in Q2 [23][24] Business Line Data and Key Metrics Changes - The backlog as of September totaled over $1.7 billion, equivalent to around 60 years of backlog, with an average TCE rate of approximately $80,000 per day per vessel [32] - Operating income for Q3 was $38.9 million, down from $41.4 million in the prior quarter, primarily due to drydock impacts [27] - Vessel operating expenses averaged $17,700 per day per vessel, slightly higher than Q2 but consistent with 2023 levels [25] Market Data and Key Metrics Changes - The LNG shipping market is experiencing a disconnect, with LNG prices remaining strong while shipping rates have declined [12][10] - Cold weather in Europe has led to a steepening of the curve in anticipation of increased demand, although the market remains volatile [14] - The supply of LNG has not significantly increased, contributing to strong pricing and favorable LNG value chain economics [12][13] Company Strategy and Development Direction - The company aims to maximize shareholder value through strategic decisions such as refinancing, dividend adjustments, and share buybacks, positioning itself to seize opportunities in a volatile LNG shipping market [3][9] - The long-term outlook for LNG remains strong, with expectations of increased shipping demand as new projects come online and older vessels exit the market [21][17] - The company is strategically placed to consolidate the market and is considering both asset and corporate opportunities for growth [42][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term market despite short-term challenges, anticipating a recovery as older vessels are phased out and new projects are launched [44][57] - The company expects rates to improve steadily in the first half of 2025 as new projects deliver and older steam turbine vessels are retired [17][18] - Management highlighted the importance of maintaining a strong balance sheet to capitalize on potential market opportunities [44][21] Other Important Information - The company successfully secured bank approvals to refinance a $570 million facility, enhancing financial flexibility and extending maturity to late 2029 [34][35] - Cash and cash equivalents totaled $142 million, up from $84 million in the previous quarter, indicating a solid liquidity position [35] Q&A Session Summary Question: What type of investments is the company anticipating in the current market? - The company is looking at both asset and corporate opportunities, particularly as market conditions may lead to more attractive growth options [41][42] Question: What is the company's confidence level in the current investment climate? - The long-term market outlook is strong, with expectations of improved conditions as older vessels are phased out and new projects come online [44] Question: Is the company open to selling ships in the current market? - The company is open to selling ships if the price is right, particularly those that can be converted into higher-value vessels [45][46] Question: What is the appetite for long-term charters given the current market softness? - There is a bid-ask spread for medium-term charters, but long-term charters are less liquid, with some recent activity noted [50] Question: How does the company view the supply-demand dynamics with upcoming LNG projects? - The company sees a cyclical phenomenon where upcoming LNG projects will primarily benefit Asia, which is favorable for shipping due to longer distances [51] Question: What is the outlook for vessel valuations in light of current TCE rates? - Vessel valuations are holding up relatively well, with newbuild prices showing slight increases, while second-hand market values depend on the specific vessel type [69][70]

Core Viewpoint - Cool Company (CLCO) is expected to report its third-quarter 2024 earnings on November 21, with earnings per share (EPS) estimates remaining unchanged at 39 cents and revenues projected at $76.93 million [1][2]. Earnings Predictions - The Earnings ESP for CLCO is 0.00%, and it currently holds a Zacks Rank of 3 (Hold), indicating that the model does not predict an earnings beat this time [3][4]. Factors Influencing Q3 Results - Time and voyage charter revenues are anticipated to be strong due to full charter coverage and improved drydock performance, although reduced rates on a single variable charter and lower vessel management fees may negatively impact total operating revenues [5]. - Fleet expansion initiatives are viewed positively, and a decrease in fuel costs (with oil prices down 14% during the July-September period) is expected to benefit CLCO's bottom line [6]. - However, geopolitical instability and environmental regulations may pose significant threats to performance by potentially increasing operating expenses [6].

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