KNOT Offshore Partners LP(KNOP) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $96.9 million, with operating income at $30.6 million and net income at $15.1 million. Adjusted EBITDA was reported at $61.6 million [4][9] - Available liquidity as of September 30, 2025, was $125.2 million, consisting of $77.2 million in cash and cash equivalents, plus $48 million in undrawn capacity on credit facilities, which is $20.4 million higher than at the end of Q2 2025 [4][9] Business Line Data and Key Metrics Changes - The company operated with a utilization rate of 99.9%, accounting for scheduled dry docking, resulting in an overall utilization of 96.5% [4] - The company extended its backlog to $963 million of fixed contracts, averaging 2.6 years, with potential for more if all options are exercised [8][9] Market Data and Key Metrics Changes - The shuttle tanker market is tightening in both Brazil and the North Sea, driven by FPSO startups and ramp-ups, which are expected to increase shuttle tanker demand [8][12] - Petrobras' five-year plan indicates that overall production volumes and project startup timelines in the pre-salt region are in line with or above prior expectations, suggesting a positive outlook for the Brazilian offshore market [12][13] Company Strategy and Development Direction - The company is focused on maintaining a robust financial model, evidenced by successful refinancing efforts and a commitment to debt repayment of $95 million or more per year [9][10] - The company has established a buyback program and completed the purchase of the Dan Cisne, indicating a strategy to enhance shareholder value and fleet growth [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the shuttle tanker demand absorbing the current order book, with expectations of a medium-term shortage of shuttle tankers against forthcoming production [13] - The management refrained from commenting on specific rates related to the Fortaleza contract but indicated satisfaction with the expected rate change [19][20] Other Important Information - An unsolicited and non-binding offer from the sponsor, KNOT, to buy publicly owned common units for $10 per unit is currently under evaluation by the Conflicts Committee [3][4] - The company has completed its refinancing schedule for the year, securing loans and credit facilities to support its operations [8][10] Q&A Session Summary Question: Can you provide insight on the potential rate change for Fortaleza when it moves to KNOT? - Management did not comment on individual rates but expressed satisfaction with the expected rate [19][20] Question: How many dry dockings are expected in 2026? - Management confirmed that there would likely be four to five dry dockings in 2026 [21] Question: Will G&A expenses change with the acquisition of Dan Cisne? - Management indicated that G&A is not expected to change materially and will remain around $1.6 million per quarter [22] Question: Has the unit buyback program concluded? - Management confirmed that the buyback program has concluded, stopping at three units instead of the full ten [25][26] Question: What is the expected timeframe for the independent committee process regarding the KNOT offer? - Management stated that no further information is available beyond the press release and that the process is ongoing [28][30]