l pany .(CLCO) - 2024 Q2 - Quarterly Report

Management's Discussion and Analysis of Financial Condition and Results of Operations Overview and Recent Developments CoolCo, an LNGC pure-play, secured a 14-year newbuild charter, upsized a $200 million loan, and maintained $0.41 quarterly dividends - The company's strategy focuses on being an LNGC pure play with a mix of short and long-term charters, funded growth from two newbuild vessels, and potential market consolidation[12] - Secured a 14-year charter with GAIL (India) Limited for one of its two newbuild MEGA LNG carriers, commencing early 2025[13] - Upsized an existing term loan facility by $200 million to prepare for the maturity of two sale and leaseback facilities in Q1 2025[14] - Declared quarterly cash dividends of $0.41 per common share for Q4 2023 and Q1 2024[15] Operating Results H1 2024 total operating revenues decreased 9% to $171.5 million, with average daily TCE rate down 6% Operating Results Comparison (Six Months Ended June 30) | Metric (in thousands of $) | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | 171,497 | 188,965 | (17,468) | (9)% | | Vessel operating expenses | (34,631) | (37,423) | 2,792 | (7)% | | Administrative expenses | (11,323) | (12,865) | 1,542 | (12)% | | Other non-operating income | — | 42,549 | (42,549) | (100)% | | Gains on derivative instruments | 15,366 | 10,704 | 4,662 | 44% | | Average daily TCE rate ($) | 77,800 | 82,500 | (4,700) | (6)% | - Time and voyage charter revenues decreased by $18.1 million (10%) due to vessel idling and dry dock maintenance[18] - Vessel operating expenses decreased by $2.8 million (7%), primarily due to the sale of the Golar Seal vessel in March 2023[20] - H1 2024 lacked 'Other non-operating income', contrasting with a $42.5 million gain from the Golar Seal vessel sale in H1 2023[21] Liquidity and Capital Resources H1 2024 cash decreased to $86.5 million, operating cash flow fell 31%, and total contractual obligations reached $1.19 billion Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity (in thousands of $) | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 81,369 | 117,581 | (36,212) | | Net cash (used in) / provided by investing activities | (25,377) | 182,996 | (208,373) | | Net cash used in financing activities | (106,829) | (120,207) | 13,378 | | Net (decrease) / increase in cash | (50,837) | 180,370 | (231,207) | | Cash at end of period | 86,501 | 313,447 | (226,946) | - Cash from operations decreased by $36.2 million, primarily due to higher dry dock expenditure and working capital timing[27] - Investing activities used $25.4 million for newbuilds and upgrades, contrasting with $183.0 million provided by the Golar Seal sale in the prior year[28] - Financing activities used $106.8 million, including $58.0 million in debt repayments and $44.0 million in dividend payments[29] Contractual Obligations as of June 30, 2024 | Obligation Type (in millions of $) | Total | Remainder of 2024 | 2025-2026 | 2027-2028 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt (CoolCo & VIE) | 1,009.4 | 139.1 | 153.7 | 448.4 | 268.2 | | Interest commitments | 175.6 | 29.0 | 97.4 | 42.4 | 6.8 | | Operating lease obligations | 3.2 | 0.5 | 1.2 | 1.0 | 0.5 | | Total | 1,188.2 | 168.6 | 252.3 | 491.8 | 275.5 | Quantitative and Qualitative Disclosures About Market Risk Key Market and Operational Risks The company manages interest rate risk with swaps covering 70% of debt, faces foreign currency exposure, and navigates significant operational risks - Interest rate risk on floating-rate debt is managed with swaps, hedging 70% of exposure on major facilities at an average fixed rate of 3.42% as of June 30, 2024[35] - Foreign currency risk from NOK and EUR expenses means a hypothetical 10% USD depreciation would increase H1 2024 expenses by $0.5 million (NOK) and $1.1 million (EUR)[36][37] - Operational risks encompass marine disasters, mechanical failures, piracy, and political events, potentially causing revenue loss, property damage, and increased insurance costs[40] - Credit risk is concentrated with major reputable banks, which the company considers a remote risk[39] Unaudited Condensed Consolidated Financial Statements Financial Performance (Statements of Operations & Comprehensive Income) H1 2024 net income decreased to $63.3 million from $114.8 million, with basic and diluted EPS falling to $1.17 Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric (in thousands of $) | 2024 | 2023 | | :--- | :--- | :--- | | Total operating revenues | 171,497 | 188,965 | | Operating income | 85,458 | 97,506 | | Other non-operating income | — | 42,549 | | Net income | 63,290 | 114,778 | | Net income attributable to Owners | 62,641 | 113,835 | | Basic and diluted EPS ($) | $1.17 | $2.12 | Financial Position (Balance Sheets) Total assets decreased to $2.02 billion, liabilities fell to $1.19 billion, and equity rose to $826.9 million as of June 30, 2024 Consolidated Balance Sheet Highlights | Metric (in thousands of $) | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 84,362 | 133,496 | | Vessels and equipment, net | 1,685,936 | 1,700,063 | | Newbuildings | 206,549 | 181,904 | | Total assets | 2,017,695 | 2,056,943 | | Current portion of long-term debt | 175,156 | 194,413 | | Long-term debt | 827,241 | 866,671 | | Total liabilities | 1,190,750 | 1,250,363 | | Total equity | 826,945 | 806,580 | Cash Flows (Statements of Cash Flows) H1 2024 saw a net cash decrease of $50.8 million, with operating cash flow down 31% and $106.8 million used in financing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric (in thousands of $) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | 81,369 | 117,581 | | Net cash (used in) / provided by investing activities | (25,377) | 182,996 | | Net cash used in financing activities | (106,829) | (120,207) | | Net (decrease) / increase in cash | (50,837) | 180,370 | | Cash at end of period | 86,501 | 313,447 | Notes to the Financial Statements Notes detail company structure, two newbuild vessel commitments, over $900 million in outstanding debt, and derivative use for interest rate risk Newbuildings (Note 12) The company is acquiring two newbuild LNG carriers for $235 million each, with $206.5 million capitalized and $269.6 million remaining committed - Exercised option to acquire two newbuild LNG carriers for approximately $235 million each, scheduled for late 2024 delivery[103] Newbuildings Expenditure as of June 30, 2024 | Component (in thousands of $) | Amount | | :--- | :--- | | Shipyard Installments | 202,984 | | Onsite Supervision Costs | 900 | | Interest cost capitalized | 1,754 | | Other Costs | 911 | | Total Newbuildings | 206,549 | - As of June 30, 2024, remaining commitments for newbuild vessels are approximately $269.6 million[103] Debt (Note 15) Total debt reached $1.0 billion as of June 30, 2024, primarily from two major facilities, with a $200 million upsize for refinancing Debt Summary as of June 30, 2024 | Debt Component (in thousands of $) | Amount | | :--- | :--- | | Current portion of long-term debt | 175,156 | | Long-term debt | 827,241 | | Total Debt (net of deferred charges) | 1,002,397 | - The $520 million term loan facility was upsized by $200 million in March 2024 to refinance Q1 2025 sale & leaseback maturities[112] - The company was in compliance with all financial covenants under its debt agreements as of June 30, 2024[116] Subsequent Events (Note 22) On August 29, 2024, the company declared a cash dividend of $0.41 per ordinary share for Q2 2024 - On August 29, 2024, a cash distribution of $0.41 per share was declared for the three months ended June 30, 2024[135]