ABERDEEN, Scotland--(BUSINESS WIRE)--May 20, 2025--
KNOT Offshore Partners LP $(KNOP)$:
Financial Highlights
For the three months ended March 31, 2025 ("Q1 2025"), KNOT Offshore Partners LP ("KNOT Offshore Partners" or the "Partnership"):
-- Generated total revenues of $84.0 million, operating income of $23.4
million and net income of $7.6 million.
-- Generated Adjusted EBITDA1 of $52.2 million.
-- Reported $100.8 million in available liquidity at March 31, 2025, which
was comprised of cash and cash equivalents of $67.3 million and undrawn
revolving credit facility capacity of $33.5 million.
Other Partnership Highlights and Events
-- Fleet operated with 96.9% utilization for scheduled operations in Q1
2025, and 99.5% utilization taking into account the scheduled drydockings
of the Raquel Knutsen and the Windsor Knutsen, for which the relevant
off-hire periods commenced late in Q1 2025.
-- On April 9, 2025, the Partnership declared a quarterly cash distribution
of $0.026 per common unit with respect to Q1 2025, which was paid on May
8, 2025, to all common unitholders of record on April 28, 2025. On the
same day, the Partnership declared a quarterly cash distribution to
holders of Series A Convertible Preferred Units ("Series A Preferred
Units") with respect to Q1 2025 in an aggregate amount of $1.7 million.
-- In January 2025, the final insurance claim payment was received in
respect of repair work and loss of hire for the Torill Knutsen, which had
arisen from the breakage of a generator rotor in January 2024.
-- On January 21, 2025, Petrorio exercised its option to extend the contract
of the Brasil Knutsen for two periods of 30 days from May 1, 2025.
Redelivery will be July 1, 2025. The vessel will commence on a new time
charter with Equinor in the third quarter of 2025 for a fixed period of
two years, with options for the charterer to extend the charter by two
further one-year periods.
-- On January 24, 2025, Shell exercised its option to switch from a time
charter on the Vigdis Knutsen to a bareboat charter. This change will
take effect during or after July 2025. At the same time, the fixed
duration of this charter was extended from 2027 to 2030, with an option
for the charterer to extend the charter by a further two years.
-- On March 3, 2025, the Partnership's wholly owned subsidiary, KNOT Shuttle
Tankers AS ("KST"), acquired from Knutsen NYK Offshore Tankers AS
("Knutsen NYK"), KNOT Shuttle Tankers 27 AS, the company that owns the
shuttle tanker Live Knutsen (the "Live Knutsen Acquisition").
Simultaneously, KST sold KNOT Shuttle Tankers 21 AS, the company that
owns the shuttle tanker Dan Sabia, to Knutsen NYK. This effected a swap
of these two vessels, the terms of which were set out in our press
release of February 27, 2025.
-- On March 23, 2025, the Hilda Knutsen began operating under a time charter
with Shell for a fixed period of one year.
-- On April 15, 2025, Petrorio extended the redelivery timing for the Brasil
Knutsen to September 2025, following which the time charter to Equinor
will commence.
________________________
(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures used by
management and external users of the Partnership's financial statements.
Please see Appendix A for definitions of EBITDA and Adjusted EBITDA and a
reconciliation to net income, the most directly comparable GAAP financial
measure.
Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, "We are pleased to report another strong performance in Q1 2025, marked by safe operation at more than 99% fleet utilization from scheduled operations, consistent revenue and operating income generation, and material progress in securing additional charter coverage for our fleet.
As of the date of this release and including contractual updates since March 31, 2025, we have now secured approximately 96% of charter coverage for the final three quarters of 2025, and approximately 75% for 2026. Having executed a number of new contracts and extensions over the last year, we have established good momentum in a strengthening market and remain focused on strengthening and extending our fleetwide charter coverage.
In Brazil, the main offshore oil market where we operate, the outlook is continuing to improve, with robust demand and increasing charter rates. Driven by Petrobras' continued high production levels and FPSO start-ups in the pre-salt fields that rely upon shuttle tankers, we believe the world's biggest shuttle tanker market is tightening materially. Our secondary geography, in the North Sea, has taken longer to re-balance, but we welcome the news of the new FPSO production starts for both the UK North Sea-based Penguins and Barents Sea-based Johan Castberg.
We continue to believe that growth of offshore oil production in shuttle tanker-serviced fields across both Brazil and the North Sea is on track to outpace shuttle tanker supply growth throughout the coming years, driven most notably by the aggressive expansion of Brazilian deepwater production capacity, particularly as increasing numbers of shuttle tankers reach or exceed typical retirement age. We are aware of newbuild shuttle tanker orders, including six for Knutsen NYK, all of which are scheduled for delivery over 2025--2028. We anticipate that all these new orders are backed by charters to clients in Brazil, and see this as a sign of confidence in the medium-to-long term demand for the global shuttle tanker fleet. Particularly when considered in the context of the increasing numbers of shuttle tankers reaching or exceeding typical retirement age, as well as yard capacity constraints limiting material new orders into late 2027 or thereafter, we anticipate that these newbuild deliveries will be readily absorbed by the expanding market for shuttle tankers.
As the largest owner and operator of shuttle tankers (together with our sponsor, Knutsen NYK), we believe we are well positioned to benefit from such an improving charter market. We remain focused on generating certainty and stability of cash flows from long-term employment with high-quality counterparties, both through continued chartering and through the consummation of accretive dropdown transactions. We are confident that continued operational performance and the successful execution of our strategy in an improving market environment can increase our cash flow generation, strengthen our forward visibility, and create sustainable unitholder value in the quarters and years ahead."
Financial Results Overview
Results for Q1 2025 (compared to those for the three months ended December 31, 2024 ("Q4 2024")) included:
-- Revenues of $84.0 million in Q1 2025 ($91.3 million in Q4 2024), where Q4
2024 had included one-off insurance proceeds of $5.9 million.
-- Gain from disposal of vessel of $1.3 million in Q1 2025 ($0 in Q4 2024).
-- Vessel operating expenses of $30.6 million in Q1 2025 ($26.2 million in
Q4 2024), with the increase due primarily to higher maintenance and
provisioning costs and the EU ETS costs.
-- Depreciation of $28.8 million in Q1 2025 ($28.4 million in Q4 2024).
-- General and administrative expenses of $1.8 million in Q1 2025 ($1.5
million in Q4 2024).
-- Operating income consequently of $23.4 million in Q1 2025 ($34.7 million
in Q4 2024).
-- Interest expense of $14.9 million in Q1 2025 ($16.2 million in Q4 2024)
-- Realized (i.e. cash) gain on derivative instruments of $3.1 million in Q1
2025 (gain of $3.7 million in Q4 2024), and unrealized (i.e. non-cash)
loss of $4.5 million in Q1 2025 (unrealized gain of $0.9 million in Q4
2024). Together, there was a realized and unrealized loss on derivative
instruments of $1.3 million in Q1 2025 (gain $4.6 million in Q4 2024).
-- Net income consequently of $7.6 million in Q1 2025 (net income of $23.3
million in Q4 2024).
By comparison with the three months ended March 31, 2024 ("Q1 2024"), results for Q1 2025 included:
-- an increase of $3.7 million in operating income (to $23.4 million in Q1
2025 from operating income of $19.7 million in Q1 2024), driven primarily
by higher utilization of the fleet, greater charter revenues and gain
from disposal of vessel.
-- an increase of $3.2 million in finance expense (to finance expense of
$15.3 million in Q1 2025 from finance expense of $12.1 million in Q1
2024), due primarily to an unrealized loss on derivative instruments in
Q1 2025 compared to an unrealized gain in Q1 2024.
-- an increase of $0.2 million in net income (to a net income of $7.6
million in Q1 2025 from net income of $7.4 million in Q1 2024).
Financing and Liquidity
As of March 31, 2025, the Partnership had $100.8 million in available liquidity, which was comprised of cash and cash equivalents of $67.3 million and $33.5 million of capacity under its revolving credit facilities. The Partnership's revolving credit facilities mature between August 2025 and November 2025.
The Partnership's total interest-bearing obligations outstanding as of March 31, 2025 were $949 million ($944.3 million net of debt issuance costs). The average margin paid on the Partnership's outstanding debt during Q1 2025 was approximately 2.23% over SOFR. These obligations are repayable as follows:
(U.S.
Dollars in Sale & Period Balloon
thousands) Leaseback repayment repayment Total
----------- ------------ ------------ ---------------- --------
Remainder of
2025 $ 10,912 $ 64,402 $ 153,083 $228,397
2026 15,060 68,004 285,447 368,511
2027 15,751 31,525 93,598 140,874
2028 16,520 13,241 78,824 108,585
2029 17,232 -- -- 17,232
2030 and
thereafter 85,367 -- -- 85,367
-------- -------- --- ----------- -------
Total $ 160,842 $ 177,172 $ 610,952 $948,966
-------- -------- --- ----------- -------
As of March 31, 2025, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $462.3 million, to hedge against the interest rate risks of its variable rate borrowings. As of March 31, 2025, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 2.38% under its interest rate swap agreements, which have an average maturity of approximately 1.53 years. The Partnership does not apply hedge accounting for derivative instruments, and its financial results are impacted by changes in the market value of such financial instruments.
As of March 31, 2025, the Partnership's net exposure to floating interest rate fluctuations was approximately $258.6 million based on total interest-bearing contractual obligations of $949 million, less the Raquel Knutsen and Torill Knutsen sale and leaseback facilities of $160.8 million, less interest rate swaps of $462.3 million, and less cash and cash equivalents of $67.3 million.
Assets Owned by Knutsen NYK
Pursuant to the omnibus agreement the Partnership entered into with Knutsen NYK at the time of its initial public offering, the Partnership has the option to acquire from Knutsen NYK any offshore shuttle tankers that Knutsen NYK acquires or owns that are employed under charters for periods of five or more years.
While the Partnership continues to believe that key components of its strategy and value proposition are accretive investment in the fleet and a long-term, sustainable distribution, there can be no assurance that the Partnership will acquire any additional vessels from Knutsen NYK. Given the relationship between the Partnership and Knutsen NYK, any such acquisition would be subject to the approval of the Conflicts Committee of the Partnership's Board of Directors.
Knutsen NYK owns, or has ordered, the following vessels and has entered into the following charters:
1. In June 2022, Daqing Knutsen was delivered to Knutsen NYK from the yard
in China and commenced on a five-year time charter contract with
PetroChina International (America) Inc for operation in Brazil. The
charterer has options to extend the charter by up to a further five
years.
2. In July 2022, Frida Knutsen was delivered to Knutsen NYK from the yard in
Korea and commenced in December 2022 on a seven-year time charter
contract with Eni for operation in North Sea. The charterer has options
to extend the charter by up to a further three years.
3. In August 2022, Sindre Knutsen was delivered to Knutsen NYK from the yard
in Korea and commenced in September 2023 on a five-year time charter
contract with Eni for operation in the North Sea. The charterer has
options to extend the charter by up to a further five years.
4. In November 2022, Knutsen NYK entered into a new fifteen-year time
charter contract with Petrobras for a vessel to be constructed and which
will operate in Brazil, where the charterer has an option to extend the
charter by up to five further years. The vessel will be built in China
and is expected to be delivered in late 2025.
5. In February 2024, Knutsen NYK entered into a new ten-year time charter
contract with Petrobras for each of three vessels to be constructed and
which will operate in Brazil, where the charterer has an option to extend
each charter by up to five further years. The vessels will be built in
China and are expected to be delivered over 2026 - 2027.
6. In August 2024, Knutsen NYK entered into a new seven-year time charter
contract with Petrorio for a vessel to be constructed and which will
operate in Brazil, where the charterer has an option to extend the
charter by up to eight further years. The vessel will be built in China
and is expected to be delivered early in 2027.
7. In October 2024, Hedda Knutsen was delivered to Knutsen NYK from the yard
in China and commenced in December 2024 on a ten-year time charter
contract with Petrobras for operation in Brazil. Petrobras has the option
to extend the charter by up to five further years.
8. In March 2025, Knutsen NYK entered into a new seven-year time charter
contract with Equinor for a vessel to be constructed and which will
operate in Brazil, where the charterer has an option to extend the
charter by up to thirteen further years. The vessel will be built in
China and is expected to be delivered early in 2028.
Board of Directors Change
Effective April 1, 2025, the Partnership's general partner appointed Mr. Masami Okubo to replace Mr. Yasuhiro Fukuda, both of whom are employees of Nippon Yusen Kabushiki Kaisha ("NYK"), on the Partnership's Board of Directors.
Outlook
As at March 31, 2025: (i) the Partnership had charters with an average remaining fixed duration of 2.3 years, with the charterers of the Partnership's vessels having options to extend their charters by an additional 4.7 years on average and (ii) the Partnership had $853.8 million of remaining contracted forward revenue, excluding charterers' options and charters agreed or signed after that date. As at March 31, 2025, the eighteen vessels which comprise the Partnership's fleet had an average age of 9.8 years. The market for shuttle tankers in Brazil, where fourteen of our current fleet operated during Q1 2025, has continued to tighten, driven by a significant pipeline of new production growth over the coming years, a limited newbuild order book, and typical long-term project viability requiring a Brent oil price of only $35 per barrel.
Shuttle tanker demand in the North Sea has remained subdued for some years, driven by the impact of COVID--19--related project delays. These conditions persisted into recent quarters, awaiting anticipated new oil production starts. Most notably, the long-anticipated Johan Castberg field in the Barents Sea and the new Penguins FPSO in the North Sea entered production recently.
Looking ahead, based on supply and demand factors with significant forward visibility and committed capital from industry participants, we believe that the overall medium and long-term outlook for the shuttle tanker market remains favourable.
In the meantime, the Partnership intends to pursue long-term visibility from its charter contracts, build its liquidity, pursue accretive dropdown transactions supportive of long-term cash flow generation, and position itself to benefit from its market-leading role in an improving shuttle tanker market. The Partnership continues to believe that key components of its strategy and value proposition are accretive investment in the fleet and a long-term, sustainable distribution.
In the near term, the Partnership believes that there are compelling opportunities to deploy a material portion of its cash flow to facilitate dropdown transactions. The Partnership believes that dropdowns will lead to an increase in the Partnership's capital value, with growth in contractual backlog leading to increasing cash flow over time. Together with reductions in the average age of the fleet, this increased cash flow should also facilitate refinancings. Combined with strong market fundamentals, this should provide for the opportunity to increase sustainable distribution levels in the future.
About KNOT Offshore Partners LP
KNOT Offshore Partners LP owns, operates and acquires shuttle tankers primarily under long-term charters in the offshore oil production regions of Brazil and the North Sea.
KNOT Offshore Partners LP is structured as a publicly traded master limited partnership but is classified as a corporation for U.S. federal income tax purposes, and thus issues a Form 1099 to its unitholders, rather than a Form K--1. KNOT Offshore Partners LP's common units trade on the New York Stock Exchange under the symbol "KNOP".
The Partnership plans to host a conference call on Wednesday May 21, 2025 at 9:30 AM (Eastern Time) to discuss the results for Q1 2025. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
-- By dialing 1--833--470--1428 from the US, dialing 1--833--950--0062 from
Canada or 1--404--975--4839 if outside North America -- please join the
KNOT Offshore Partners LP call using access code 259019.
-- By accessing the webcast on the Partnership's website:
www.knotoffshorepartners.com.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
-------------------------------
December
March 31, 31, March 31,
(U.S. Dollars in thousands) 2025 2024 2024
--------------------------- --------- --------- ---------
Operating revenues:
Time charter and bareboat
revenues $ 82,991 $ 84,434 $ 73,362
Voyage revenues (1) 466 438 2,715
Loss of hire insurance
recoveries -- 5,892 --
Other income 572 491 555
------- ------- -------
Total revenues 84,029 91,255 76,632
------- ------- -------
Gain from disposal of
vessel 1,342 -- --
Operating expenses:
Vessel operating expenses 30,609 26,205 25,909
Voyage expenses and
commission (2) 767 430 1,635
Depreciation 28,763 28,425 27,742
General and administrative
expenses 1,796 1,530 1,637
------- ------- -------
Total operating expenses 61,935 56,590 56,923
------- ------- -------
Operating income (loss) 23,436 34,665 19,709
------- ------- -------
Finance income (expense):
Interest income 748 1,055 828
Interest expense (14,902) (16,167) (17,465)
Other finance expense (152) (87) (269)
Realized and unrealized gain
(loss) on derivative
instruments (3) (1,344) 4,560 5,002
Net gain (loss) on foreign
currency transactions 374 (772) (226)
------- ------- -------
Total finance income
(expense) (15,276) (11,411) (12,130)
------- ------- -------
Income (loss) before income
taxes 8,160 23,254 7,579
Income tax benefit (expense) $(579.SI)$ (3) (141)
------- ------- -------
Net income (loss) $ 7,581 $ 23,251 $ 7,438
------- ------- -------
Weighted average units
outstanding (in thousands
of units):
Common units 34,045 34,045 34,045
Class B units (4) 252 252 252
General Partner units 640 640 640
__________________________
(1) Voyage revenues are revenues unique to spot voyages.
(2) Voyage expenses and commission are expenses unique to spot
voyages, including bunker fuel expenses, port fees, cargo
loading and unloading expenses, agency fees and commission.
(3) Realized gain (loss) on derivative instruments relates to
amounts the Partnership actually received (paid) to settle
derivative instruments, and the unrealized gain (loss) on
derivative instruments relates to changes in the fair value of
such derivative instruments, as detailed in the table below.
Three Months Ended
------------------------------------
March 31, December 31, March 31,
(U.S. Dollars in
thousands) 2025 2024 2024
------------------------- ----------- ------------ ---------
Realized gain (loss):
Interest rate swap
contracts $ 3,111 $ 3,698 $ 4,063
------ -------- -----
Total realized gain
(loss): 3,111 3,698 4,063
------ -------- -----
Unrealized gain (loss):
Interest rate swap
contracts (4,455) 862 939
------ -------- -----
Total unrealized gain
(loss): (4,455) 862 939
------ -------- -----
Total realized and
unrealized gain (loss) on
derivative instruments: $ (1,344) $ 4,560 $ 5,002
====== ======== =====
________________________
(4) On September 7, 2021, the Partnership entered into an exchange
agreement with Knutsen NYK, and the Partnership's general partner
whereby Knutsen NYK contributed to the Partnership all of Knutsen
NYK's incentive distribution rights ("IDRs"), in exchange for the
issuance by the Partnership to Knutsen NYK of 673,080 common units
and 673,080 Class B Units, whereupon the IDRs were cancelled (the
"IDR Exchange"). As of March 31, 2025, 420,675 of the Class B
Units had been converted to common units.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(U.S. Dollars in thousands) At March 31, 2025 At December 31, 2024
---------------------------- ------------------- ----------------------
ASSETS
Current assets:
Cash and cash equivalents $ 67,260 $ 66,933
Amounts due from related
parties 2,092 2,230
Inventories 4,247 3,304
Derivative assets 6,445 8,112
Other current assets 19,411 14,793
--------------- ------------------
Total current assets 99,455 95,372
--------------- ------------------
Long-term assets:
Vessels, net of accumulated
depreciation 1,535,408 1,462,192
Right-of-use assets 4,100 1,269
Deferred tax assets 3,027 3,326
Derivative assets 3,276 5,189
Accrued income 6,151 4,817
--------------- ------------------
Total Long-term assets 1,551,962 1,476,793
--------------- ------------------
Total assets $ 1,651,417 $ 1,572,165
=============== ==================
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable $ 7,970 $ 5,766
Accrued expenses 14,891 11,465
Current portion of long-term
debt 249,437 256,659
Current lease liabilities 986 1,172
Income taxes payable 25 60
Current portion of contract
liabilities 5,529 2,889
Prepaid charter 5,244 7,276
Amount due to related parties 6,032 1,835
--------------- ------------------
Total current liabilities 290,114 287,122
--------------- ------------------
Long-term liabilities:
Long-term debt 694,827 648,075
Lease liabilities 3,114 97
Derivative liabilities 661 --
Contract liabilities 44,737 23,776
Deferred tax liabilities 98 91
Deferred revenues 1,752 1,869
--------------- ------------------
Total long-term liabilities 745,189 673,908
--------------- ------------------
Total liabilities 1,035,303 961,030
--------------- ------------------
Commitments and
contingencies
Series A Convertible
Preferred Units 84,308 84,308
Equity:
Partners' capital:
Common unitholders: 518,491 513,603
Class B unitholders: 3,871 3,871
General partner interest: 9,444 9,353
--------------- ------------------
Total partners' capital 531,806 526,827
--------------- ------------------
Total liabilities and equity $ 1,651,417 $ 1,572,165
=============== ==================
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
Partners' Capital
-----------------------------
Accumulated Series A
Class General Other Total Convertible
(U.S. Dollars Common B Partner Comprehensive Partners' Preferred
in thousands) Units Units Units Income (Loss) Capital Units
Three Months
Ended March
31, 2024 and
2025
Consolidated
balance at
December 31,
2023 $510,013 $3,871 $ 9,285 $ -- $ 523,169 $ 84,308
------- ----- ----- ------------ ------- -------
Net income
(loss) 5,632 -- 106 -- 5,738 1,700
Other
comprehensive
income -- -- -- -- -- --
Cash
distributions (885) -- (17) -- (902) (1,700)
------- ----- ----- ------------ ------- -------
Consolidated
balance at
March 31,
2024 $514,760 $3,871 $ 9,374 $ -- $ 528,005 $ 84,308
------- ----- ----- ------------ ------- -------
Consolidated
balance at
December 31,
2024 $513,603 $3,871 $ 9,353 $ -- $ 526,827 $ 84,308
------- ----- ----- ------------ ------- -------
Net income
(loss) 5,773 -- 108 -- 5,881 1,700
Other
comprehensive
income -- -- -- -- -- --
Cash
distributions (885) -- (17) -- (902) (1,700)
------- ----- ----- ------------ ------- -------
Consolidated
balance at
March 31,
2025 $518,491 $3,871 $ 9,444 $ -- $ 531,806 $ 84,308
------- ----- ----- ------------ ------- -------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31,
--------------------------------------
(U.S. Dollars in thousands) 2025 2024
--------------------------------- --------------- --------------
OPERATING ACTIVITIES
Net income (loss) (1) $ 7,581 $ 7,438
Adjustments to reconcile net
income (loss) to cash provided
by operating activities:
Depreciation 28,763 27,742
Amortization of contract
intangibles / liabilities (862) --
Amortization of deferred
revenue (117) (117)
Amortization of deferred debt
issuance cost 567 546
Drydocking expenditure (979) 97
Income tax (benefit)/expense 579 142
Income taxes paid (52) (23)
Unrealized (gain) loss on
derivative instruments 4,455 (939)
Unrealized (gain) loss on
foreign currency
transactions (355) 187
Gain from disposal of vessel (1,342) --
Changes in operating assets and
liabilities:
Decrease (increase) in amounts
due from related parties (327) (851)
Decrease (increase) in
inventories (1,365) (590)
Decrease (increase) in other
current assets (3,085) (2,775)
Decrease (increase) in accrued
income (1,334) --
Increase (decrease) in trade
accounts payable 3,003 (3,418)
Increase (decrease) in accrued
expenses 67 (434)
Increase (decrease) prepaid
charter (2,033) --
Increase (decrease) in amounts
due to related parties 2,857 (209)
----------- ----------
Net cash provided by operating
activities 36,021 26,796
----------- ----------
INVESTING ACTIVITIES
Additions to vessel and
equipment (213) (70)
Proceeds from asset swap (net
cash) 1,040 --
----------- ----------
Net cash provided by (used in)
investing activities 827 (70)
----------- ----------
FINANCING ACTIVITIES
Repayment of long-term debt (34,078) (37,700)
Cash distributions (2,602) (2,602)
----------- ----------
Net cash used in financing
activities (36,680) (40,302)
----------- ----------
Effect of exchange rate
changes on cash 159 (102)
Net increase (decrease) in
cash and cash equivalents 327 (13,678)
Cash and cash equivalents at
the beginning of the period 66,933 63,921
----------- ----------
Cash and cash equivalents at the
end of the period $ 67,260 $ 50,243
----------- ----------
__________________________
(1) Included in net income (loss) is interest paid amounting to $14.5
million and $17.2 million for the three months ended March 31, 2025 and
2024, respectively.
APPENDIX A--RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before interest, depreciation, impairments and taxes. Adjusted EBITDA is defined as earnings before interest, depreciation, impairments, taxes and other financial items (including other finance expenses, realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions). EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as the Partnership's lenders, to assess its financial and operating performance and compliance with the financial covenants and restrictions contained in its financing agreements. Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership's financial and operating performance. The Partnership believes that EBITDA and Adjusted EBITDA assist its management and investors by increasing the comparability of its performance from period to period and against the performance of other companies in its industry that provide EBITDA and Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, taxes, impairments and depreciation, as applicable, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including EBITDA and Adjusted EBITDA as financial measures benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership's ongoing financial and operational strength in assessing whether to continue to hold common units. EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as alternatives to net income or any other indicator of Partnership performance calculated in accordance with GAAP.
The table below reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP measure.
Three Months Ended
-----------------------------------
March 31, December 31,
2025 2024
(U.S. Dollars in thousands) (unaudited) (unaudited)
------------------------------ -------------------- -------------
Net income (loss) $ 7,581 $ 23,251
Interest income (748) (1,055)
Interest expense 14,902 16,167
Depreciation 28,763 28,425
Income tax expense 579 3
EBITDA 51,077 66,791
Other financial items (a) 1,122 (3,701)
Adjusted EBITDA $ 52,199 $ 63,090
_________________________________
(a) Other financial items consist of other finance income (expense),
realized and unrealized gain (loss) on derivative instruments and net
gain (loss) on foreign currency transactions.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements concerning future events and KNOT Offshore Partners' operations, performance and financial condition. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "project," "will be," "will continue," "will likely result," "plan," "intend" or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond KNOT Offshore Partners' control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include statements with respect to, among other things:
-- market trends in the shuttle tanker or general tanker industries,
including hire rates, factors affecting supply and demand, and
opportunities for the profitable operations of shuttle tankers and
conventional tankers;
-- market trends in the production of oil in the North Sea, Brazil and
elsewhere;
-- Knutsen NYK's and KNOT Offshore Partners' ability to build shuttle
tankers and the timing of the delivery and acceptance of any such vessels
by their respective charterers;
-- KNOT Offshore Partners' ability to purchase vessels from Knutsen NYK in
the future;
-- KNOT Offshore Partners' ability to enter into long-term charters, which
KNOT Offshore Partners defines as charters of five years or more, or
shorter- term charters or voyage contracts;
-- KNOT Offshore Partners' ability to refinance its indebtedness on
acceptable terms and on a timely basis and to make additional borrowings
and to access debt and equity markets;
-- KNOT Offshore Partners' distribution policy, forecasts of KNOT Offshore
Partners' ability to make distributions on its common units, Class B
Units and Series A Preferred Units, the amount of any such distributions
and any changes in such distributions;
-- KNOT Offshore Partners' ability to integrate and realize the expected
benefits from acquisitions;
-- impacts of supply chain disruptions and the resulting inflationary
environment;
-- KNOT Offshore Partners' anticipated growth strategies;
-- the effects of a worldwide or regional economic slowdown;
-- turmoil in the global financial markets;
-- fluctuations in currencies, inflation and interest rates;
-- fluctuations in the price of oil;
-- general market conditions, including fluctuations in hire rates and
vessel values;
-- changes in KNOT Offshore Partners' operating expenses, including
drydocking and insurance costs and bunker prices;
-- recoveries under KNOT Offshore Partners' insurance policies;
-- the length and cost of drydocking;
-- KNOT Offshore Partners' future financial condition or results of
operations and future revenues and expenses;
-- the repayment of debt and settling of any interest rate swaps;
-- planned capital expenditures and availability of capital resources to
fund capital expenditures;
-- KNOT Offshore Partners' ability to maintain long-term relationships with
major users of shuttle tonnage;
-- KNOT Offshore Partners' ability to leverage Knutsen NYK's relationships
and reputation in the shipping industry;
-- KNOT Offshore Partners' ability to maximize the use of its vessels,
including the re-deployment or disposition of vessels no longer under
charter;
-- the financial condition of KNOT Offshore Partners' existing or future
customers and their ability to fulfill their charter obligations;
-- timely purchases and deliveries of newbuilds;
-- future purchase prices of newbuilds and secondhand vessels;
-- any impairment of the value of KNOT Offshore Partners' vessels;
-- KNOT Offshore Partners' ability to compete successfully for future
chartering and newbuild opportunities;
-- acceptance of a vessel by its charterer;
-- the impacts of the Russian war with Ukraine, the conflict between Israel
and Hamas and the other conflicts in the Middle East;
-- termination dates and extensions of charters;
-- the expected cost of, and KNOT Offshore Partners' ability to, comply with
governmental regulations (including climate change regulations) and
maritime self-regulatory organization standards, as well as standard
regulations imposed by its charterers applicable to KNOT Offshore
Partners' business;
-- availability of skilled labor, vessel crews and management;
-- the effects of outbreaks of pandemics or contagious diseases, including
the impact on KNOT Offshore Partners' business, cash flows and operations
as well as the business and operations of its customers, suppliers and
lenders;
-- KNOT Offshore Partners' general and administrative expenses and its fees
and expenses payable under the technical management agreements, the
management and administration agreements and the administrative services
agreement;
-- the anticipated taxation of KNOT Offshore Partners and distributions to
its unitholders;
-- estimated future capital expenditures;
-- Marshall Islands economic substance requirements;
-- KNOT Offshore Partners' ability to retain key employees;
-- customers' increasing emphasis on climate, environmental and safety
concerns;
-- the impact of any cyberattack;
-- potential liability from any pending or future litigation;
-- potential disruption of shipping routes due to accidents, political
events, piracy or acts by terrorists;
-- future sales of KNOT Offshore Partners' securities in the public market;
-- KNOT Offshore Partners' business strategy and other plans and objectives
for future operations; and
-- other factors listed from time to time in the reports and other documents
that KNOT Offshore Partners files with the U.S. Securities and Exchange
Commission, including its Annual Report on Form 20--F for the year ended
December 31, 2024 and subsequent reports on Form 6--K.
All forward-looking statements included in this release are made only as of the date of this release. New factors emerge from time to time, and it is not possible for KNOT Offshore Partners to predict all of these factors. Further, KNOT Offshore Partners cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward- looking statement. KNOT Offshore Partners does not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in KNOT Offshore Partners' expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250520988722/en/
CONTACT: Questions should be directed to:
Derek Lowe via email at ir@knotoffshorepartners.com
(END) Dow Jones Newswires
May 20, 2025 16:15 ET (20:15 GMT)
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