KNOT Offshore Partners LP(KNOP) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q3 2024 were $76.3 million, with an operating income of$17.2 million and a net loss of $3.8 million. Adjusted EBITDA was reported at$45.1 million [6] - The company closed Q3 with $77 million in available liquidity, consisting of$67 million in cash and cash equivalents plus $10 million in undrawn capacity on credit facilities [6] - The partnership operated with a utilization rate of 98.8$980 million at the end of Q3, with an average contract duration of 2.8 years [10] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive outlook on industry dynamics and the partnership's positioning to benefit from anticipated market growth [8] - The company noted that while operating expenses increased due to general inflation and higher crewing costs, they expect to recover some costs through insurance claims related to repairs [50][64] Other Important Information - The company reported a slight increase in overall liabilities due to the completion of the Tuva acquisition, while continuing to make contractual debt repayments of approximately $90 million per year [15] - The partnership's debt facilities are primarily secured by vessels, with$907 million out of $947 million in debt facilities secured [18] Q&A Session Summary Question: How much of the OpEx increase was related to the Torill repair? - Management indicated that the repair accounted for under half of the OpEx increase, likely around a quarter [34] Question: How do the new charters compare to previous levels? - Management stated that the new contracts reflect current market conditions, with rates generally improving [49] Question: What factors contributed to the increase in operating expenses year-on-year? - Increased costs were attributed to higher crewing expenses and general inflationary pressures [51] Question: What is the expected run rate for OpEx in Q4? - Management suggested that the Q3 run rate could serve as a good guide for Q4 [62] Question: Will the revolvers be renewed, and what is the expected timeframe? - Management expects to seek renewal of the revolvers, with discussions likely occurring in the first half of next year [68] Question: Can you provide insight into the dividend and potential buybacks? - Management acknowledged the need to rebuild the visible charter pipeline before considering dividend increases or buybacks [95] Question: What is the current hedging strategy regarding interest rates? - Management indicated that they are cautious about entering new swaps at high rates and expect to reduce the hedged portion of debt significantly in 2025 [108]