ABERDEEN, Scotland--(BUSINESS WIRE)--
Highlights
For the three months ended June 30, 2016, KNOT Offshore Partners LP
(“KNOT Offshore Partners” or the “Partnership”):
-
Generated highest ever quarterly revenues of $43.1 million, operating
income of $20.2 million and net income of $11.6 million.
-
Generated highest ever quarterly Adjusted EBITDA of $34.1 million.1
-
Generated highest ever quarterly distributable cash flow of
$18.5 million1 with a distribution coverage ratio of
1.23.1
-
Achieved strong operational performance with 99.9% utilization of the
fleet.
In addition:
-
On June 30, 2016, the Partnership entered into an amended and restated
senior secured credit facility, which includes a new revolver facility
tranche of $15 million, in order to further strengthen the balance
sheet and increase financial flexibility.
-
On May 18, 2016, the Partnership’s subordinated units, all of which
were held by Knutsen NYK Offshore Tankers (“Knutsen NYK”), were
converted to common units on a one-for one basis.
-
Due to the increase in the price of the Partnership’s common units
from $16.40 on March 31, 2016 to $18.56 on June 30, 2016, the
Partnership and the Partnership’s general partner elected not to
repurchase any common units under the common unit repurchase program
during the second quarter of 2016.
Subsequent events:
-
On July 15, 2016, the Partnership declared a cash distribution of
$0.52 per unit with respect to the quarter ended June 30, 2016 to be
paid on August 15, 2016 to unitholders of record as of the close of
business on August 3, 2016.
Financial Results Overview
Total revenues were $43.1 million for the three months ended June 30,
2016 (the “second quarter”) compared to $42.0 million for the three
months ended March 31, 2016 (the “first quarter”), an increase of $1.1
million. The increase was mainly due to a full quarter of earnings from
the Bodil Knutsen as the vessel incurred 21 days of off-hire
during the first quarter in connection with its scheduled drydocking.
Vessel operating expenses for the second quarter of 2016 were $8.0
million, compared to $7.6 million in the first quarter. General and
administrative expenses were $0.9 million for the second quarter of
2016, a decrease of $0.4 million compared to the first quarter of 2016
mainly due to year end close expenses in the first quarter.
As a result, operating income for the second quarter of 2016 was $20.2
million compared to $19.2 million in the first quarter of 2016.
Net income for the three months ended June 30, 2016 was $11.6 million
compared to $10.7 million for the three months ended March 31, 2016. Net
income was impacted by the recognition of realized and unrealized losses
on derivative instruments of $3.2 million in the second quarter of 2016,
consistent with realized and unrealized losses on derivative instruments
of $3.2 million in the first quarter of 2016. The unrealized non-cash
element of the mark-to-market losses was a $1.6 million loss for the
three months ended June 30, 2016 and a $2.3 million loss for the three
months ended March 31, 2016. Of the unrealized loss for the second
quarter of 2016, $1.5 million related to mark-to-market losses on
interest rate swaps due to a decrease in long term interest rates.
Net income for the three months ended June 30, 2016 increased by $4.7
million compared to net income for the three months ended June 30, 2015.
The increase was primarily due to (i) an increase in operating income of
$2.8 million due to earnings from the Dan Sabia and the Ingrid
Knutsen being included in the Partnership’s results of operations
from June 15, 2015 and October 15, 2015, respectively, (ii) a
$6.2 million goodwill impairment charge during the three months ended
June 30, 2015 and (iii) a $4.5 million increase in total finance expense
primarily caused by a $3.2 million realized and unrealized loss on
derivative instruments in the three months ended June 30, 2016 compared
to a $0.3 million realized and unrealized gain on derivative instruments
in the three months ended June 30, 2015.
All ten of the Partnership’s vessels operated well throughout the second
quarter of 2016 with 99.9% utilization of the fleet.
Distributable cash flow was $18.5 million for the second quarter of
2016, compared to $17.9 million for the first quarter of 2016. The
increase in the distributable cash flow is mainly due to increased
earnings from the Bodil Knutsen as a result of its drydocking
during the first quarter. The distribution declared for the second
quarter of 2016 was $0.52 per unit, equivalent to an annualized
distribution of $2.08.
Amended and Restated Credit Facility
On June 30, 2016, the Partnership’s subsidiaries KNOT Shuttle Tankers 18
AS, KNOT Shuttle Tankers 17 AS and Knutsen Shuttle Tankers 13 AS, as
borrowers, entered into an amended and restated senior secured credit
facility (the “Amended Senior Secured Loan Facility”), which amended the
Partnership’s original $240 million senior syndicated secured loan
facility secured by the shuttle tankers Bodil Knutsen, Carmen
Knutsen and Windsor Knutsen. The Amended Senior Secured Loan
Facility includes a new revolving credit facility tranche of $15
million, bringing the total revolving credit commitments under the
facility to $35 million. The new revolving credit facility matures in
June 2019, bears interest at LIBOR plus a fixed margin of 2.5% and has a
commitment fee equal to 40% of the margin of the revolving facility
tranche calculated on the daily undrawn portion of such tranche. The
other material terms from the original $240 million facility remain
unaltered including the margin on the existing $ 20 million revolver
credit facility which will remain at 2.125%
Financing and Liquidity
As of June 30, 2016, the Partnership had $55.7 million in available
liquidity which consisted of cash and cash equivalents of $25.7 million
and an undrawn revolving credit facility of $30 million. The undrawn
revolving credit facility is available until June 10, 2019. The
Partnership’s total interest bearing debt outstanding as of June 30,
2016 was $648.5 million ($652.0 million net of debt issuance cost). The
average margin paid on the Partnership’s outstanding debt during the
quarter ended June 30, 2016 was approximately 2.3% over LIBOR.
As of June 30, 2016, the Partnership had entered into foreign exchange
forward contracts, selling a total notional amount of $35.0 million
against the NOK at an average exchange rate of NOK 8.36 per
1.0 U.S. Dollar. These foreign exchange forward contracts are economic
hedges for certain vessel operating expenses and general expenses in NOK.
As of June 30, 2016, the Partnership had entered into various interest
rate swap agreements for a total notional amount of $407.7 million to
hedge against the interest rate risks of its variable rate borrowings.
In March 2016, the Partnership extended $125 million of interest swap
agreements and in April 2016, extended an additional $25 million of
interest swap agreements. These $150 million of interest rate swaps have
an average interest rate of 1.4% and extended the tenor of the
Partnership’s existing interest rate swaps by an average of 2.3 years
from the second half of 2018 to the second half of 2020. As of June 30,
2016, the Partnership receives interest based on three or six month
LIBOR and pays a weighted average interest rate of 1.54% under its
interest rate swap agreements, which have an average maturity of
approximately 3.5 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 June 30, 2016, the Partnership’s net exposure to floating interest
rate fluctuations on its outstanding debt was approximately
$218.6 million based on total interest bearing debt outstanding of
$652.0 million, less interest rate swaps of $407.7 million and less cash
and cash equivalents of $25.7 million.
The Partnership’s outstanding interest bearing debt of $652.0 million as
of June 30, 2016 is repayable as follows:
|
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|
|
|
|
|
|
|
|
|
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Annual
repayment
|
|
|
Balloon
repayment
|
|
(US $ in thousands)
|
|
|
|
|
|
|
|
|
Remainder of 2016
|
|
$
|
30,042
|
|
|
$
|
—
|
|
2017
|
|
|
50,084
|
|
|
|
—
|
|
2018
|
|
|
48,495
|
|
|
|
154,927
|
|
2019
|
|
|
28,582
|
|
|
|
237,678
|
|
2020
|
|
|
17,650
|
|
|
|
—
|
|
2021 and thereafter
|
|
|
71,650
|
|
|
|
12,940
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
246,503
|
|
|
$
|
405,545
|
Outlook
To date, during the third quarter of 2016, utilization of the
Partnership’s fleet has been 100%. Operating income is expected to be at
same level as in the second quarter of 2016, as there is no further
scheduled off-hire for any of the Partnership’s vessels for the
remainder of 2016.
As of June 30, 2016, the Partnership’s fleet of ten vessels had an
average remaining fixed contract duration of 5.1 years. In addition, the
charterers of the Partnership’s time charter vessels have options to
extend their charters by an additional 2.5 years on average.
The Partnership has or expects to receive options to acquire five
vessels controlled by Knutsen NYK pursuant to the terms of the omnibus
agreement entered into in connection with the Partnerships initial
public offering (“IPO”). One of these vessels, the Raquel Knutsen,
delivered in 2015 and is chartered to Repsol Sinopec Brazil under a time
charter that expires in 2025, with options to extend until 2030. Four
vessels are under construction in South Korea and China. As of June 30,
2016, the average remaining fixed contract duration for these five
vessels is 5.8 years. In addition, the charterers have options to extend
these charters by 11.2 years on average.
Pursuant to the omnibus agreement, the Partnership also 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.
There can be no assurance that the Partnership will acquire any vessels
from Knutsen NYK.
The Board believes that there may be opportunities for growth of the
Partnership, which may include current identified acquisition
candidates, and that the demand for offshore shuttle tankers will
continue to grow over time based on identified projects. Future
developments will influenced by the rate of growth of offshore oil
production activities when the existing projects are completed.
The Board is pleased with the results of operations of the Partnership
for the quarter ended June 30, 2016.
About KNOT Offshore Partners LP
KNOT Offshore Partners owns operates and acquires shuttle tankers under
long-term charters in the offshore oil production regions of the North
Sea and Brazil. KNOT Offshore Partners owns and operates a fleet of ten
offshore shuttle tankers with an average age of 4.6 years.
KNOT Offshore Partners is structured as a publicly traded master limited
partnership. KNOT Offshore Partners’ common units trade on the New York
Stock Exchange under the symbol “KNOP.”
The Partnership plans to host a conference call on Thursday, August 11,
2016 at noon (Eastern Time) to discuss the results for the second
quarter of 2016, and invites all unitholders and interested parties to
listen to the live conference call by choosing from the following
options:
-
By dialing 1-855-209-8259 or 1-412-542-4105, if outside North America.
August 10, 2016
KNOT Offshore Partners L.P.
Aberdeen, United Kingdom
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
(USD in thousands)
|
|
June
30, 2016
|
|
|
March
31, 2016
|
|
|
June
30, 2015
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
Time charter and bareboat revenues (1)
|
$
|
|
42,864
|
$
|
|
|
41,826
|
$
|
|
|
36,981
|
|
$
|
|
84,690
|
$
|
|
|
73,052
|
|
|
Other income (2)
|
|
|
199
|
|
|
|
200
|
|
|
|
2
|
|
|
|
399
|
|
|
|
151
|
|
|
Total revenues
|
|
|
43,063
|
|
|
|
42,026
|
|
|
|
36,983
|
|
|
|
85,089
|
|
|
|
73,203
|
|
|
Vessel operating expenses
|
|
|
7,975
|
|
|
|
7,647
|
|
|
|
7,164
|
|
|
|
15,622
|
|
|
|
13,971
|
|
|
Depreciation
|
|
|
13,913
|
|
|
|
13,892
|
|
|
|
11,560
|
|
|
|
27,805
|
|
|
|
22,960
|
|
|
General and administrative expenses
|
|
|
948
|
|
|
|
1,308
|
|
|
|
984
|
|
|
|
2,256
|
|
|
|
2,052
|
|
|
Goodwill impairment charge
|
|
|
—
|
|
|
|
—
|
|
|
|
6,217
|
|
|
|
—
|
|
|
|
6,217
|
|
|
Total operating expenses
|
|
|
22,836
|
|
|
|
22,847
|
|
|
|
25,925
|
|
|
|
45,683
|
|
|
|
45,200
|
|
|
Operating income
|
|
|
20,227
|
|
|
|
19,179
|
|
|
|
11,058
|
|
|
|
39,406
|
|
|
|
28,003
|
|
|
Finance income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
0
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
3
|
|
|
Interest expense
|
|
|
(5,055
|
)
|
|
|
(5,029
|
)
|
|
|
(4,212
|
)
|
|
|
(10,084
|
)
|
|
|
(8,398
|
)
|
|
Other finance expense
|
|
|
(334
|
)
|
|
|
(267
|
)
|
|
|
(79
|
)
|
|
|
(601
|
)
|
|
|
(99
|
)
|
|
Realized and unrealized gain (loss) on derivative instruments(3)
|
|
|
(3,176
|
)
|
|
|
(3,184
|
)
|
|
|
253
|
|
|
|
(6,360
|
)
|
|
|
(5,370
|
)
|
|
Net gain (loss) on foreign currency transactions
|
|
|
(82
|
)
|
|
|
(35
|
)
|
|
|
(132)
|
|
|
|
(117
|
)
|
|
|
(60
|
)
|
|
Total finance expense
|
|
|
(8,646
|
)
|
|
|
(8,513
|
)
|
|
|
(4,168
|
)
|
|
|
(17,159
|
)
|
|
|
(13,924
|
)
|
|
Income before income taxes
|
|
|
11,581
|
|
|
|
10,666
|
|
|
|
6,890
|
|
|
|
22,247
|
|
|
|
14,079
|
|
|
Income tax benefit (expense)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
Net income
|
$
|
|
11,578
|
$
|
|
|
10,663
|
$
|
|
|
6,887
|
$
|
|
|
22,241
|
$
|
|
|
14,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average units outstanding (in thousands of units):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units (4)
|
|
|
22,581
|
|
|
|
18,627
|
|
|
|
15,346
|
|
|
|
20,604
|
|
|
|
14,581
|
|
|
Subordinated units(4)
|
|
|
4,613
|
|
|
|
8,568
|
|
|
|
8,568
|
|
|
|
6,590
|
|
|
|
8,568
|
|
|
General partner units
|
|
|
559
|
|
|
|
559
|
|
|
|
488
|
|
|
|
559
|
|
|
|
472
|
|
-
Time charter revenues for the second and first quarter of 2016 include
a non-cash item of approximately $1.0 million and $1.3 million,
respectively in reversal of contract liability provision, income
recognition of prepaid charter hire and accrued income for the Carmen
Knutsen based on average charter rate for the fixed period. Time
charter revenues for the second quarter of 2015 include a non-cash
item of approximately $0.9 million in reversal of contract liability
provision and income recognition of prepaid charter hire.
-
Other income for the second and first quarter of 2016 is mainly
related to guarantee income from Knutsen NYK. Pursuant to the omnibus
agreement, Knutsen NYK agreed to guarantee the payments of the hire
rate that is equal to or greater than the hire rate payable under the
initial charters of the Bodil Knutsen and the Windsor Knutsen
for a period of five years from the closing date of the IPO. In
October 2015, the Windsor Knutsen commenced operating under a
new BG Group time charter. The hire rate for the new charter is below
the initial charter hire rate and the difference between the new hire
rate and the initial rate is paid by Knutsen NYK.
-
The mark-to-market net loss related to interest rate swaps and foreign
exchange contracts for the three months end June 30, 2016 includes
realized losses of $1.6 million and unrealized losses of $1.6 million.
Of the net unrealized loss for this quarter, a $0.1 million loss
relates to foreign exchange contracts and hedging operational costs in
NOK.
The mark-to-market net loss related to interest rate swaps
and foreign exchange contracts for the three months ended March 31,
2016 includes realized losses of $0.9 million and unrealized losses of
$2.3 million. Of the net unrealized loss for this quarter,
$2.1 million gain relates to foreign exchange contracts and hedging
operational costs in NOK.
The mark-to-market net loss related to
interest rate swaps and foreign exchange contracts for the three
months ended June 30, 2015 includes unrealized gain of $1.6 million
and realized loss of $1.3 million. Of the unrealized gain for this
quarter, $0.4 million relates to foreign exchange contracts hedging
operational costs in NOK.
-
On May 18, 2016 all subordinated units converted into common units on
a one-for-one basis.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30,
2016
|
|
|
At December 31,
2015
|
|
|
(USD in thousands)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
25,667
|
|
|
$
|
23,573
|
|
|
Amounts due from related parties
|
|
|
25
|
|
|
|
58
|
|
|
Inventories
|
|
|
774
|
|
|
|
849
|
|
|
Derivative assets
|
|
|
232
|
|
|
|
—
|
|
|
Other current assets (1)
|
|
|
1,705
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
28,403
|
|
|
|
26,280
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term assets:
|
|
|
|
|
|
|
|
|
|
Vessels and equipment:
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
1,351,838
|
|
|
|
1,351,219
|
|
|
Less accumulated depreciation
|
|
|
(183,598
|
)
|
|
|
(158,292
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net property, plant, and equipment
|
|
|
1,168,240
|
|
|
|
1,192,927
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
—
|
|
|
|
695
|
|
|
Accrued income
|
|
|
706
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,197,349
|
|
|
$
|
1,219,902
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
1,949
|
|
|
$
|
1,995
|
|
|
Accrued expenses
|
|
|
3,469
|
|
|
|
3,888
|
|
|
Current portion of long-term debt (1)
|
|
|
53,888
|
|
|
|
48,535
|
|
|
Derivative liabilities
|
|
|
3,747
|
|
|
|
5,138
|
|
|
Income taxes payable
|
|
|
18
|
|
|
|
249
|
|
|
Contract liabilities
|
|
|
1,518
|
|
|
|
1,518
|
|
|
Prepaid charter and deferred revenue
|
|
|
6,999
|
|
|
|
3,365
|
|
|
Amount due to related parties
|
|
|
492
|
|
|
|
848
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
72,080
|
|
|
|
65,536
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt (1)
|
|
|
594,621
|
|
|
|
619,187
|
|
|
Derivative liabilities
|
|
|
6,028
|
|
|
|
1,232
|
|
|
Contract liabilities
|
|
|
8,998
|
|
|
|
9,757
|
|
|
Deferred tax liabilities
|
|
|
919
|
|
|
|
877
|
|
|
Other long-term liabilities
|
|
|
1,799
|
|
|
|
2,543
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
684,445
|
|
|
|
699,132
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Partners’ equity:
|
|
|
|
|
|
|
|
|
|
Common unitholders
|
|
|
502,756
|
|
|
|
411,317
|
|
|
Subordinated unitholders
|
|
|
—
|
|
|
|
99,158
|
|
|
General partner interest
|
|
|
10,148
|
|
|
|
10,295
|
|
|
|
|
|
|
|
|
|
|
|
|
Total partners’ equity
|
|
|
512,904
|
|
|
|
520,770
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,197,605
|
|
|
$
|
1,219,902
|
|
-
Effective January 1, 2016, the Partnership implemented ASU 2015-03, Interest
– Imputation of Interest (Subtopic 835-30), Simplifying the
Presentation of Debt Issuance Costs, which requires that debt
issuance costs related to a recognized debt liability be presented in
the balance sheet as a direct deduction from the carrying amount of
that debt liability rather than as an asset. The recognition and
measurement guidance for debt issuance costs is not affected.
Therefore, these costs will continue to be amortized as interest
expense using the effective interest method. The new guidance is
applied retrospectively for all periods presented. As of June 30, 2016
and December 31, 2015 the carrying amount of the deferred debt
issuance cost was $3.5 million and $4.0 million, respectively.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
Six months ended
June 30,
|
|
(USD in thousands)
|
2016
|
2015
|
|
Cash flows provided by operating activities:
|
|
|
|
Net income
|
$ 22,241
|
$ 14,073
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
Depreciation
|
27,805
|
22,960
|
|
Amortization of contract intangibles / liabilities
|
(759 )
|
(759 )
|
|
Amortization of deferred revenue
|
(886)
|
(957 )
|
|
Amortization of deferred debt issuance cost
|
573
|
570
|
|
Goodwill impairment charge
|
—
|
6,217
|
|
Drydocking expenditure
|
(2,595)
|
—
|
|
Income tax expense
|
6
|
6
|
|
Income taxes paid
|
(241)
|
(336 )
|
|
Unrealized (gain) loss on derivative instruments
|
3,868
|
3,011
|
|
Unrealized (gain) loss on foreign currency transactions
|
63
|
(46)
|
|
Changes in operating assets and liabilities
|
|
|
|
Decrease (increase) in amounts due from related parties
|
33
|
968
|
|
Decrease (increase) in inventories
|
75
|
124
|
|
Decrease (increase) in other current assets
|
94
|
(1,903 )
|
|
Increase (decrease) in trade accounts payable
|
(87)
|
825
|
|
Increase (decrease) in accrued expenses
|
(419)
|
567
|
|
Decrease (increase) in accrued revenue
|
(706)
|
—
|
|
Increase (decrease) prepaid revenue
|
3,776
|
432
|
|
Increase (decrease) in amounts due to related parties
|
(356)
|
(1,625 )
|
|
|
|
|
|
Net cash provided by operating activities
|
52,485
|
44,127
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
Disposals (additions) to vessel and equipment
|
(521)
|
(770)
|
|
Acquisition of Dan Sabia (net of cash acquired)
|
—
|
(36,843)
|
|
|
|
|
|
Net cash used in investing activities
|
(521 )
|
(37,613)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
Proceeds from long-term debt
|
5,000
|
—
|
|
Repayment of long-term debt
|
(24,642)
|
(46,859 )
|
|
Repayment of long-term debt from related parties
|
—
|
(12,000)
|
|
Payment on debt issuance cost
|
(144)
|
(8)
|
|
Cash distribution
|
(30,107)
|
(23,514 )
|
|
Proceeds from public offering, net of underwriters’ discount
|
—
|
116,924
|
|
Offering cost
|
—
|
(321 )
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
(49,893)
|
34,222
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
23
|
(79 )
|
|
Net increase in cash and cash equivalents
|
2,094
|
40,657
|
|
Cash and cash equivalents at the beginning of the period
|
23,573
|
30,746
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
$ 25,667
|
$ 71,403
|
APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Distributable Cash Flow (“DCF”)
Distributable cash flow represents net income adjusted for depreciation,
unrealized gains and losses from derivatives, unrealized foreign
exchange gains and losses, goodwill impairment charges, other non-cash
items and estimated maintenance and replacement capital expenditures.
Estimated maintenance and replacement capital expenditures, including
estimated expenditures for drydocking, represent capital expenditures
required to maintain over the long-term the operating capacity of, or
the revenue generated by, the Partnership’s capital assets. The
Partnership believes distributable cash flow is an important measure of
operating performance used by management and investors in
publicly-traded partnerships to compare cash generating performance of
the Partnership from period to period and to compare the cash generating
performance for specific periods to the cash distributions (if any) that
are expected to be paid to our unitholders. Distributable cash flow is a
non-GAAP financial measure and should not be considered as an
alternative to net income or any other indicator of KNOT Offshore
Partners’ performance calculated in accordance with GAAP. The table
below reconciles distributable cash flow to net income, the most
directly comparable GAAP measure.
|
|
|
|
|
|
|
|
|
|
|
(USD in thousands)
|
|
Three Months
Ended June 30,
2016
(unaudited)
|
|
|
Three Months
Ended March 31, 2016
(unaudited)
|
|
|
Net income
|
|
$
|
11,578
|
|
|
$
|
10,663
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13,913
|
|
|
|
13,892
|
|
|
Other non-cash items; deferred costs amortization debt
|
|
|
287
|
|
|
|
287
|
|
|
Unrealized losses from interest rate derivatives and foreign
exchange currency contracts
|
|
|
1,608
|
|
|
|
4,348
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Estimated maintenance and replacement capital expenditures
(including drydocking reserve)
|
|
|
(7,894
|
)
|
|
|
(7,894
|
)
|
|
Other non-cash items; deferred revenue and accrued income
|
|
|
(1,032
|
)
|
|
|
(1,319
|
)
|
|
Unrealized gains from interest rate derivatives and foreign exchange
currency contracts
|
|
|
—
|
|
|
|
(2,089
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Distributable cash flow
|
|
$
|
18,460
|
|
|
$
|
17,888
|
|
|
Distributions declared
|
|
$
|
15,027
|
|
|
$
|
15,095
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage ratio(1)
|
|
|
1.23
|
|
|
|
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Distribution coverage ratio is equal to distributable cash flow
divided by distributions declared for the period presented.
|
Adjusted EBITDA
Adjusted EBITDA refers to earnings before interest, depreciation, taxes,
goodwill impairment charges and other financial items (including other
finance expenses, realized and unrealized gain (loss) on derivative
instruments and net gain (loss) on foreign currency transactions).
Adjusted EBITDA is a non-GAAP financial measure used by investors to
measure the Partnership’s performance.
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 Adjusted EBITDA assists 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 Adjusted EBITDA information. This
increased comparability is achieved by excluding the potentially
disparate effects between periods or companies of interest, other
financial items, taxes, goodwill impairment charges and depreciation,
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 Adjusted EBITDA as a financial measure 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. Adjusted EBITDA is a non-GAAP financial
measure and should not be considered as an alternative to net income or
any other indicator of Partnership performance calculated in accordance
with GAAP. The table below reconciles Adjusted EBITDA to net income, the
most directly comparable GAAP measure.
|
|
|
|
|
|
|
|
|
(USD in thousands)
|
|
Three Months Ended
June 30,
2016
(unaudited)
|
|
|
Three Months Ended
March 31,
2016
(unaudited)
|
|
Net income
|
|
$
|
11,578
|
|
|
$
|
10,663
|
|
Interest income
|
|
|
—
|
|
|
|
(2)
|
|
Interest expense
|
|
|
5,055
|
|
|
|
5,029
|
|
Depreciation
|
|
|
13,913
|
|
|
|
13,892
|
|
Income tax benefit
|
|
|
3
|
|
|
|
3
|
|
EBITDA
|
|
|
30,549
|
|
|
|
29,585
|
|
Other financial items (a)
|
|
|
3,592
|
|
|
|
3,486
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
34,141
|
|
|
$
|
33,071
|
(a) Other financial items consist of other finance 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;
-
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;
-
forecasts of KNOT Offshore Partners’ ability to make or increase
distributions on its units and the amount of any such distributions;
-
KNOT Offshore Partners’ ability to integrate and realize the expected
benefits from acquisitions;
-
KNOT Offshore Partners’ anticipated growth strategies;
-
the effects of a worldwide or regional economic slowdown;
-
turmoil in the global financial markets;
-
fluctuations in currencies 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;
-
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;
-
KNOT Offshore Partners’ ability to make additional borrowings and to
access debt and equity markets;
-
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 purchase vessels from Knutsen NYK
in the future;
-
KNOT Offshore Partners’ continued ability to enter into long-term
charters, which KNOT Offshore Partners defines as charters of five
years or more;
-
KNOT Offshore Partners’ ability to maximize the use of its vessels,
including the re-deployment or disposition of vessels no longer under
long-term charter;
-
the financial condition of KNOT Offshore Partners’ existing or future
customers and their ability to fulfil 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;
-
termination dates and extensions of charters;
-
the expected cost of, and KNOT Offshore Partners’ ability to, comply
with governmental regulations, 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;
-
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 KNOT Offshore Partners’ unitholders;
-
estimated future maintenance and replacement capital expenditures;
-
KNOT Offshore Partners’ ability to retain key employees;
-
customers’ increasing emphasis on environmental and safety concerns;
-
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, 2015.
All forward-looking statements included in this release are made only as
of the date of this release on. 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.
1 Adjusted EBITDA and distributable cash flow are non-GAAP
financial measures used by investors to measure the performance of
master limited partnerships. Please see Appendix A for definitions of
Adjusted EBITDA and distributable cash flow and a reconciliation to net
income, the most directly comparable GAAP financial measure.
2 Distribution coverage ratio is equal to distributable cash
flow divided by distributions declared for the period presented.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160810005966/en/
Source: Knot Offshore Partners