ABERDEEN, Scotland--(BUSINESS WIRE)--
Highlights
For the three months ended March 31, 2016, KNOT Offshore Partners LP
(“KNOT Offshore Partners” or the “Partnership”) (NYSE:KNOP):
-
Generated total revenues of $42.0 million, operating income of $19.2
million and net income of $10.7 million.
-
Generated Adjusted EBITDA of $33.1 million (1).
-
Generated distributable cash flow of $17.9 million (1).
-
Achieved strong operational performance with 99.8% utilization of the
fleet for scheduled operations and 97.5% utilization taking into
account the planned drydocking of the Bodil Knutsen, which was
completed within 20.5 days.
In addition:
-
End March, 2016, the first oil was loaded from Goliat field in the
Barents Sea to the Hilda Knutsen. The Hilda Knutsen
and Torill Knutsen are two of the three winterized shuttle
tankers specially built to operate on this Arctic oil and gas field,
which is expected to be in production for 15 years.
-
Completed the first drydocking of the Bodil Knutsen within time
and budget. The Bodil Knutsen went back on charter with Statoil
on March 1, 2016.
-
Due to the increase in the price of the Partnership’s common units
from $13.49 at December 31, 2015 to $16.40 on March 31, 2016, the
Partnership elected not to repurchase any common units under its
common unit repurchase program during the first quarter of 2016.
Subsequent events:
-
On April 15, 2016, the Partnership declared a cash distribution of
$0.52 per unit with respect to the quarter ended March 31, 2016 to be
paid on May 16, 2016 to unitholders of record as of the close of
business on May 4, 2016.
-
The Partnership expects that the subordinated units held by Knutsen
NYK Offshore Tankers AS (“Knutsen NYK”) will convert to common units
in May 2016 after the payment of the first quarter distribution.
Financial Results Overview
Total revenues were $42.0 million for the three months ended March 31,
2016 (the “first quarter”) compared to $42.5 million for the three
months ended December 31, 2015 (the “fourth quarter”), a decrease of
$0.5 million. The decrease was mainly due to reduced revenues from the Bodil
Knutsen as a result of its drydocking during the first quarter. This
decrease was partially offset by the full quarterly earnings for the Ingrid
Knutsen in the first quarter of 2016 compared to 77 days in fourth
quarter of 2015, as the acquisition of the Ingrid Knutsen took
place on October 15, 2015.
Vessel operating expenses for the first quarter of 2016 were $7.6
million, consistent with expenses in the fourth quarter of 2015 despite
the fact that the Ingrid Knutsen had 15 more days of operation in
first quarter of 2016. Vessel operating expenses in the first quarter of
2016 also include bunkers consumed for the mobilization before and after
drydocking of the Bodil Knutsen. General and administrative
expenses were at $1.3 million for the first quarter of 2016, an increase
of $0.2 million compared to the fourth quarter of 2015 mainly due to
year end close expenses.
As a result, operating income for the first quarter of $19.2 million
compared to $20.4 million in the fourth quarter of 2015.
Net income for the three months ended March 31, 2016 was $10.7 million
compared to $17.6 million for the three months ended December 31, 2015.
Net income was impacted by the recognition of realized and unrealized
losses on derivative instruments of $3.2 million in the first quarter of
2016 as compared to a gain of $2.1 million in the fourth quarter of
2015. The unrealized non-cash element of the mark-to-market losses was a
$2.3 million loss for the three months ended March 31, 2016 and a $4.9
million gain for the three months ended December 31, 2015. Of the
unrealized loss for the first quarter of 2016, $4.4 million related to
mark-to-market losses on interest rate swaps due to a decrease in long
term interest rates. This loss was partially offset with an unrealized
gain of $2.1 million on foreign exchange contracts due to strengthening
of the Norwegian Kroner (NOK) against the U.S. Dollar.
Net income for the three months ended March 31, 2016 increased by $3.5
million compared to net income for the three months ended March 31,
2015. The increase was primarily due to (i) an increase in operating
income of $3.2 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, and
(ii) a $1.2 million decrease in total finance expense primarily caused
by a $3.2 million realized and unrealized loss on derivative instruments
in the three months ended March 31, 2016 compared to a $5.6 million
realized and unrealized loss on derivative instruments in the three
months ended March 31, 2015. The overall increase in operating income
was partially offset by a $1.3 million reduction in operating income due
to the Bodil Knutsen drydocking during the first quarter of 2016.
All ten of the Partnership’s vessels operated well throughout the first
quarter of 2015 with 99.8% utilization of the fleet for scheduled
operations and 97.5% utilization taking into account the Bodil Knutsen
drydocking.
Distributable cash flow was $17.9 million for the first quarter of 2016
(resulting in a coverage ratio of 1.19), compared to $18.1 million for
the fourth quarter of 2015. The decrease in distributable cash flow is
because of reduced earnings on the Bodil Knutsen as a result of
its drydocking partially offset by a full quarter of earnings from the Ingrid
Knutsen. The distribution declared for the first quarter of 2016 was
$0.52 per unit, equivalent to an annual distribution of $2.08.
Financing and Liquidity
As of March 31, 2016, the Partnership had $48.8 million in available
liquidity which consisted of cash and cash equivalents of $28.8 million
and an undrawn revolving credit facility of $20 million. The undrawn
revolving credit facility is available until June 10, 2019. The
Partnership’s total interest bearing debt outstanding as of March 31,
2016 was $663.1 million ($659.4 million net of debt issuance cost). The
average margin paid on the Partnership’s outstanding debt during the
quarter ended March 31, 2016 was approximately 2.3% over LIBOR.
As of March 31, 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 8.28 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 March 31, 2016, the Partnership had entered into various interest
rate swap agreements for a total notional amount of $410.0 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 March 31,
2016, 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 3.6 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, 2016, the Partnership’s net exposure to floating
interest rate fluctuations on its outstanding debt was approximately
$224.3 million based on total interest bearing debt outstanding of
$663.1 million, less e interest rate swaps of $410.0 million and less
cash and cash equivalents of $28.8 million.
The Partnership’s outstanding interest bearing debt of $663.1 million as
of March 31, 2016 is repayable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Annual
repayment
|
|
|
Balloon
repayment
|
|
(US $ in thousands)
|
|
|
|
|
|
|
|
|
Remainder of 2016
|
|
$
|
41,104
|
|
|
$
|
—
|
|
2017
|
|
|
50,084
|
|
|
|
—
|
|
2018
|
|
|
48,495
|
|
|
|
154,927
|
|
2019
|
|
|
28,582
|
|
|
|
237,678
|
|
2020
|
|
|
17,650
|
|
|
|
—
|
|
2021 and thereafter
|
|
|
71,650
|
|
|
|
12,940
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
257,565
|
|
|
$
|
405,545
|
Torill Knutsen and Hilda Knutsen - Goliat field
The Goliat field is the world’s most northerly offshore development and
is the first field to come on stream in the Barents Sea. It represents
an important milestone as nearly half of the undiscovered resources for
the Norwegian shelf are in the Barents Sea.
According to the operator of the Goliat field, the estimated lifetime of
the field is 15 years with recoverable reserves equivalent to
approximately 178 million barrels of oil. Start-up production volume is
expected to be approximately 100,000 barrels per day.
The Hilda Knutsen and the Torill Knutsen are two of three
specially built winterized shuttle tankers which operate on the Goliat
field. In March 2016, the first oil from the Goliat field was loaded on
to the Hilda Knutsen.
The Hilda Knutsen and Torill Knutsen are on five-year
contracts with Ente Nazionale Idrocarburi S.p.A.(“ENI”). ENI has the
option to extend each such charter by an additional five years. As of
March 31, 2016, the remaining fixed contract durations are 2.4 years and
2.6 years for the Hilda Knutsen and Torill Knutsen
respectively.
Drydocking
In February 2016, the Bodil Knutsen completed its first special
survey drydocking on time and on budget.
Fortaleza Knutsen, which is on long-term bareboat charter to
Petrobras Transporte S.A. (“Transpetro”) completed its first special
survey drydocking in April. Under the terms of its bareboat contract,
Transpetro is responsible for all vessel operating and voyage expenses
including drydock costs. Thus, the drydocking has not resulted in any
off-hire or any costs for the Partnership. During 2016, the Recife
Knutsen and Dan Cisne are expected to complete their first
special surveys, and the cost and off-hire associated with these surveys
will be paid by the charterer.
Partnership Matters
On April 1, 2016, the Partnership announced that Mr. Yoshiyuki Konuma
was stepping down from the board of directors of the Partnership. Mr.
Takuji Banno has been appointed by the Partnership’s general partner to
replace Mr. Konuma. Mr. Banno has served as the General Manager,
Offshore Business Group, Energy Division of Nippon Yusen Kabushiki
Kaisha since April 2012. From April 2011 to April 2012, he served as
Director of Yusen Logistics (Singapore) Pte. Ltd. From October 2006 to
April 2011, he was Director of NYK Logistics (Asia) Pte. Ltd. From June
2002 to October 2006, he was Manager of the LNG Group of Nippon Yusen
Kabushiki Kaisha. Mr. Banno joined Nippon Yusen Kabushiki Kaisha in
April 1990 and has a master’s degree in Business Administration from the
University of Wisconsin-Madison.
Outlook
To date, during the second quarter of 2016, utilization of the
Partnership’s fleet has been 100%. Operating income and distributable
cash flow are expected to improve commencing with 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 March 31, 2016, the Partnership’s fleet of ten vessels had an
average remaining fixed contract duration of 5.3 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. 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 March 31, 2016, the
average remaining fixed contract duration for these vessels is 5.9
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 March 31, 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 4.3 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 Wednesday, May 11,
2016 at noon (Eastern Time) to discuss the results for the first 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.
-
By accessing the webcast, which will be available on the Partnership’s
website: www.knotoffshorepartners.com
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
December 31
|
|
(USD in thousands)
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
|
March 31,
2015
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Time charter and bareboat revenues (1)
|
|
|
$ 41,826
|
|
|
|
$ 42,417
|
|
|
|
$ 36,071
|
|
|
|
$ 154,750
|
|
Other income (2)
|
|
|
200
|
|
|
|
120
|
|
|
|
149
|
|
|
|
274
|
|
Total revenues
|
|
|
42,026
|
|
|
|
42,537
|
|
|
|
36,220
|
|
|
|
155,024
|
|
Vessel operating expenses
|
|
|
7,647
|
|
|
|
7,636
|
|
|
|
6,807
|
|
|
|
27,543
|
|
Depreciation
|
|
|
13,892
|
|
|
|
13,464
|
|
|
|
11,400
|
|
|
|
48,844
|
|
General and administrative expenses
|
|
|
1,308
|
|
|
|
1,058
|
|
|
|
1,068
|
|
|
|
4,290
|
|
Goodwill impairment charge
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,217
|
|
Total operating expenses
|
|
|
22,847
|
|
|
|
22,158
|
|
|
|
19,275
|
|
|
|
86,894
|
|
Operating income
|
|
|
19,179
|
|
|
|
20,379
|
|
|
|
16,945
|
|
|
|
68,130
|
|
Finance income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
2
|
|
|
|
5
|
|
|
|
1
|
|
|
|
8
|
|
Interest expense
|
|
|
(5,029
|
)
|
|
|
(4,731
|
)
|
|
|
(4,186
|
)
|
|
|
(17,451)
|
|
Other finance expense
|
|
|
(267
|
)
|
|
|
(326
|
)
|
|
|
(20
|
)
|
|
|
(504)
|
|
Realized and unrealized gain (loss) on derivative instruments (3)
|
|
|
(3,184)
|
|
|
|
2,145
|
|
|
|
(5,623
|
)
|
|
|
(9,695)
|
|
Net gain (loss) on foreign currency transactions
|
|
|
(35
|
)
|
|
|
30
|
|
|
|
72
|
|
|
|
(105)
|
|
Total finance expense
|
|
|
(8,513)
|
|
|
|
(2,877)
|
|
|
|
(9,756)
|
|
|
|
(27,747)
|
|
Income before income taxes
|
|
|
10,666
|
|
|
|
17,502
|
|
|
|
7,189
|
|
|
|
40,383
|
|
Income tax benefit (expense)
|
|
|
(3)
|
|
|
|
65
|
|
|
|
(3)
|
|
|
|
59
|
|
Net income
|
|
|
10,663
|
|
|
|
17,567
|
|
|
|
7,186
|
|
|
|
40,442
|
|
|
|
|
|
|
|
|
|
Weighted average units outstanding (in thousands of units):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units
|
|
|
18,627
|
|
|
|
18,770
|
|
|
|
13,808
|
|
|
|
16,702
|
|
Subordinated units
|
|
|
8,568
|
|
|
|
8,568
|
|
|
|
8,568
|
|
|
|
8,568
|
|
General partner units
|
|
|
559
|
|
|
|
571
|
|
|
|
457
|
|
|
|
519
|
(1) Time charter revenues for the first quarter of 2016 include a
non-cash item of approximately $1.3 million 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 fourth and
first quarters 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.
(2) Other income for the first
quarter of 2016 and fourth quarter of 2015 is 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.
(3) 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 the
Partnership’s operational costs in NOK.
The mark-to-market net gain
related to interest rate swaps and foreign exchange contracts for the
three months ended December 31, 2015 includes unrealized gain of $4.9
million and realized loss of $2.7 million. Of the realized gain for this
quarter, $1.1 million relates to foreign exchange contracts and hedging
the Partnership’s operational costs in Norwegian Kroner (NOK).
The
mark-to-market net loss related to interest rate swaps and foreign
exchange contracts for the first quarter of 2015 includes unrealized
loss of $4.6 million and realized loss of $1.0 million. Of the
unrealized loss for this quarter, $1.5 million relates to foreign
exchange contracts hedging operational costs in NOK.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
|
|
At March 31,
2016
|
|
|
At December 31,
2015
|
|
(USD in thousands)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
28,782
|
|
|
$
|
23,573
|
|
Amounts due from related parties
|
|
|
123
|
|
|
|
58
|
|
Inventories
|
|
|
864
|
|
|
|
849
|
|
Derivative assets
|
|
|
243
|
|
|
|
—
|
|
Other current assets (1)
|
|
|
1,859
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
31,871
|
|
|
|
26,280
|
|
|
|
|
|
|
|
|
|
|
Long-term assets:
|
|
|
|
|
|
|
|
|
Vessels and equipment:
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
1,351,589
|
|
|
|
1,351,219
|
|
Less accumulated depreciation
|
|
|
(169,686
|
)
|
|
|
(158,292)
|
|
|
|
|
|
|
|
|
|
|
Net property, plant, and equipment
|
|
|
1,181,903
|
|
|
|
1,192,927
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
194
|
|
|
|
695
|
|
Accrued income
|
|
|
461
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,214,429
|
|
|
$
|
1,219,902
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
2,564
|
|
|
$
|
1,995
|
|
Accrued expenses
|
|
|
6,052
|
|
|
|
3,888
|
|
Current portion of long-term debt (1)
|
|
|
48,535
|
|
|
|
48,535
|
|
Derivative liabilities
|
|
|
3,884
|
|
|
|
5,138
|
|
Income taxes payable
|
|
|
122
|
|
|
|
249
|
|
Contract liabilities
|
|
|
1,518
|
|
|
|
1,518
|
|
Prepaid charter and deferred revenue
|
|
|
6,857
|
|
|
|
3,365
|
|
Amount due to related parties
|
|
|
618
|
|
|
|
848
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
70,150
|
|
|
|
65,536
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt (1)
|
|
|
610,894
|
|
|
|
619,187
|
|
Derivative liabilities
|
|
|
4,488
|
|
|
|
1,232
|
|
Contract liabilities
|
|
|
9,378
|
|
|
|
9,757
|
|
Deferred tax liabilities
|
|
|
927
|
|
|
|
877
|
|
Other long-term liabilities
|
|
|
2,171
|
|
|
|
2,543
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
698,008
|
|
|
|
699,132
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Partners’ equity:
|
|
|
|
|
|
|
|
|
Common unitholders
|
|
|
408,388
|
|
|
|
411,317
|
|
Subordinated unitholders
|
|
|
97,814
|
|
|
|
99,158
|
|
General partner interest
|
|
|
10,219
|
|
|
|
10,295
|
|
|
|
|
|
|
|
|
|
|
Total partners’ equity
|
|
|
516,421
|
|
|
|
520,770
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,214,429
|
|
|
$
|
1,219,902
|
(1) 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 March 31, 2016 and December 31, 2015 the
carrying amount of the deferred issuance cost was $3.7 million and $4.0
million, respectively.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’
CAPITAL
|
|
|
|
Partners’ Capital
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
|
Total Partners’
Capital/Owner’s
Equity
|
|
|
|
|
Common
Units
|
|
|
Subordinated
Units
|
|
|
General
Partner
|
|
|
|
|
|
|
|
Consolidated balance at December 31, 2014
|
|
|
$
|
307,544
|
|
|
$
|
103,680
|
|
|
$
|
8,141
|
|
$
|
|
—
|
|
|
$
|
419,365
|
|
Net income
|
|
|
|
4,098
|
|
|
|
2,952
|
|
|
|
136
|
|
|
|
—
|
|
|
|
7,186
|
|
Other comprehensive income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cash distributions
|
|
|
|
(6,765
|
)
|
|
|
(4,471
|
)
|
|
|
(224)
|
|
|
|
—
|
|
|
|
(11,460)
|
|
Consolidated balance at March 31, 2015
|
|
|
|
304,877
|
|
|
|
102,161
|
|
|
|
8,053
|
|
|
|
—
|
|
|
|
415,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance at December 31, 2015
|
|
|
|
411,317
|
|
|
|
99,158
|
|
|
|
10,295
|
|
|
|
—
|
|
|
|
520,770
|
|
Net income
|
|
|
|
6,757
|
|
|
|
3,691
|
|
|
|
215
|
|
|
|
—
|
|
|
|
10,663
|
|
Other comprehensive income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cash distributions
|
|
|
|
(9,686)
|
|
|
|
(5,035)
|
|
|
|
(291)
|
|
|
|
—
|
|
|
|
(15,012)
|
|
Consolidated balance at March 31, 2016
|
|
|
$
|
408,388
|
|
|
$
|
97,814
|
|
|
$
|
10,219
|
|
|
$
|
—
|
|
|
$
|
516,421
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
Three months ended
March 31,
|
|
(USD in thousands)
|
|
2016
|
|
2015
|
|
Cash flows provided by operating activities:
|
|
|
|
|
|
Net income
|
|
$ 10,663
|
|
$ 7,186
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation
|
|
13,892
|
|
11,400
|
|
Amortization of contract intangibles / liabilities
|
|
(380)
|
|
(379)
|
|
Amortization of deferred revenue
|
|
(478)
|
|
(479)
|
|
Amortization of deferred debt issuance cost
|
|
287
|
|
284
|
|
Drydocking expenditure
|
|
2,538
|
|
—
|
|
Income tax expense
|
|
3
|
|
3
|
|
Income taxes paid
|
|
(134)
|
|
(214)
|
|
Unrealized (gain) loss on derivative instruments
|
|
2,259
|
|
4,597
|
|
Unrealized (gain) loss on foreign currency transactions
|
|
(44)
|
|
15
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
Decrease (increase) in amounts due from related parties
|
|
(65)
|
|
(43)
|
|
Decrease (increase) in inventories
|
|
(15)
|
|
(164)
|
|
Decrease (increase) in other current assets
|
|
(59)
|
|
(639)
|
|
Increase (decrease) in trade accounts payable
|
|
523
|
|
(130)
|
|
Increase (decrease) in accrued expenses
|
|
2,165
|
|
1,077
|
|
Decrease (increase) in accrued revenue
|
|
(461)
|
|
—
|
|
Increase (decrease) prepaid revenue
|
|
3,598
|
|
(156)
|
|
Increase (decrease) in amounts due to related parties
|
|
(230)
|
|
(227)
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
34,062
|
|
22,131
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Disposals (additions) to vessel and equipment
|
|
(330)
|
|
52
|
|
|
|
|
|
|
|
Net cash used in (provided by) investing activities
|
|
(330)
|
|
52
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Accumulated interest expense on long-term debt from related parties
|
|
—
|
|
263
|
|
Repayment of long-term debt
|
|
(8,580)
|
|
(8,579)
|
|
Payment on debt issuance cost
|
|
—
|
|
(8)
|
|
Cash distribution
|
|
(15,012)
|
|
(11,460)
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
(23,592)
|
|
20,047
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
145
|
|
(136)
|
|
Net increase in cash and cash equivalents
|
|
5,209
|
|
2,000
|
|
Cash and cash equivalents at the beginning of the period
|
|
23,573
|
|
30,746
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$ 28,782
|
|
$ 32,746
|
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.
Distributable cash flow is a quantitative standard used by investors in
publicly-traded partnerships to assist in evaluating a partnership’s
ability to make quarterly cash distributions. 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 March 31,
2016
(unaudited)
|
|
|
Three Months
Ended December 31, 2015
(unaudited)
|
|
Net income
|
|
$
|
10,663
|
|
|
$
|
17,567
|
|
Add:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13,892
|
|
|
|
13,464
|
|
Other non-cash items; deferred costs amortization debt
|
|
|
287
|
|
|
|
289
|
|
Unrealized losses from interest rate derivatives and foreign
exchange currency contracts
|
|
|
4,348
|
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
Estimated maintenance and replacement capital expenditures
(including drydocking reserve)
|
|
|
(7,894)
|
|
|
|
(7,516)
|
|
Other non-cash items; deferred revenue and accrued income
|
|
|
(1,319)
|
|
|
|
(858)
|
|
Unrealized gains from interest rate derivatives and foreign exchange
currency contracts
|
|
|
(2,089)
|
|
|
|
(4,864)
|
|
|
|
|
|
|
|
|
|
|
Distributable cash flow
|
|
$
|
17,888
|
|
|
$
|
18,082
|
|
Distributions declared
|
|
$
|
15,095
|
|
|
$
|
15,012
|
|
|
|
|
|
|
|
|
|
|
Coverage ratio
|
|
|
1.19
|
|
|
|
1.20
|
Adjusted EBITDA
Adjusted EBITDA refers to earnings before interest, other financial
items, taxes, goodwill impairment charges and depreciation. Adjusted
EBITDA is a non-GAAP financial measure used by investors to measure the
Partnership’s 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
March 31,
2016
(unaudited)
|
|
|
Three Months Ended
December 31,
2015
(unaudited)
|
|
Net income
|
|
$
|
10,663
|
|
|
$
|
17,567
|
|
Interest income
|
|
|
(2)
|
|
|
|
(5)
|
|
Interest expense
|
|
|
5,029
|
|
|
|
4,731
|
|
Depreciation
|
|
|
13,892
|
|
|
|
13,464
|
|
Income tax benefit (expense)
|
|
|
3
|
|
|
|
(65)
|
|
EBITDA
|
|
|
29,585
|
|
|
|
35,692
|
|
Other financial items (a)
|
|
|
3,486
|
|
|
|
(1,849)
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
33,071
|
|
|
$
|
33,843
|
(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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160511005625/en/
Source: Knot Offshore Partners