KNOT Offshore Partners LP(KNOP) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q4 2024 were $91.3 million, operating income was$34.7 million, and net income was $23.3 million [5] - Adjusted EBITDA was reported at$63.1 million, with available liquidity at $90 million, consisting of$67 million in cash and cash equivalents and $23 million in undrawn credit facilities [6] - The company operated at a utilization rate of 98.3$870 million at the end of Q4, with fixed contracts averaging 2.4 years in duration [12] - The recent swap of Dan Sabia for Live Knutsen is expected to bring nearly 5 years of fixed charter revenue, enhancing fleet and pipeline growth without new funding [15] Market Data and Key Metrics Changes - Significant growth is anticipated in production fields serviced by shuttle tankers, particularly in Brazil and the North Sea [8] - The North Sea's Johan Castberg FPSO is expected to start production shortly, while the Penguins FPSO has recently begun production [9][10] Company Strategy and Development Direction - The company aims to pursue long-term charter visibility and accretive investments in the fleet to support sustainable distributions [25] - The partnership is focused on filling charter coverage gaps, with 75% of 2026's capacity already fixed [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding industry dynamics and the partnership's positioning to benefit from market conditions [7] - The company is addressing upcoming debt refinancings and is making good progress against an improving market backdrop [31] Other Important Information - The company closed an insurance claim for Torill Knutsen totaling less than $6 million [14] - The partnership's overall liabilities decreased by$29 million in 2024 despite the acquisition of Tuva [16] Q&A Session Summary Question: Capital allocation with improved liquidity - Management highlighted the importance of maintaining liquidity and prioritizing debt renegotiations while also focusing on filling charter coverage [34][36] Question: Charter coverage and vessel fit for demand - Management expressed confidence that available vessels will meet the demand profile in both the North Sea and Latin America [38][39] Question: Open windows for Fortaleza and Recife charters - Management indicated that the larger size of Fortaleza and Recife reduces concerns about rechartering compared to smaller vessels [42] Question: Impact of bareboat chartering on cash flow - Management confirmed that the bareboat terms are commercially comparable to previous time charters, extending fixed coverage for the vessel [48] Question: Time charter revenue expectations - Management noted that the increase in time charter revenue was driven by new operations starting in Q4, with expectations for continued growth in Q2 [56][60] Question: Debt repayment schedule post-acquisition - Management stated that more details on the debt facility for Live Knutsen will be disclosed in the upcoming 20-F filing [108] Question: North Sea market comparison with Brazil - Management acknowledged the strengthening of both markets but refrained from making direct comparisons regarding growth potential [111]