First Quarter 2016 Results. May 11, 2016

Transcription

1 First Quarter 2016 Results May 11, 2016

2 Notice to Recipients This presentation is not a prospectus and is not an offer to sell, nor a solicitation of an offer to buy, securities. Except for the historical information contained herein, the matters discussed in this presentation include forward-looking statements that involve risks and uncertainties. These risks and uncertainties include, among other things, market conditions and other factors that are described in KNOT Offshore Partners LP s ( KNOP ) filings with the U.S Securities and Exchange Commission ( SEC ), which are available on the SEC s website at Nevertheless, new factors emerge from time to time, and it is not possible for KNOP to predict all of these factors. Further, KNOP 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. KNOP expressly disclaims any intention or obligation to revise or publicly update any forward-looking statements whether as a result of new information, future events or otherwise. The forwardlooking statements contained herein are expressly qualified by this cautionary notice to recipients. 2

3 Financial Highlights Generated total revenues of $42.0 million. Generated operating income of $19.2 million and net income of $10.7 million. Generated Adjusted EBITDA (1) of $33.1 million. Generated distributable cash flow (1) of $17.9, with a coverage ratio of 1.2 impacted by Bodil Knutsen scheduled drydock. Achieved strong operational performance with 99.8% utilization of the fleet for scheduled operations: 97.5% utilization when taking account of scheduled drydocking. Declared cash distribution of $0.52 per unit for Q (1) Adjusted EBITDA and Distributable cash flow are non-gaap financial measures, please see the Appendix for definitions. 3

4 Dry Docking on time and budget Bodil Knutsen Completed its first special survey dry dock on time and budget in February Bareboat vessels Petrobras Transporte Fortaleza completed its first special survey dry dock in April During the year Recife Knutsen and Dan Cisne will commence their first special survey dry docks The cost of dry-docking and the associated off-hire for bareboat vessels are for the charterer s account and will have no impact on the result of the Partnership 4

5 Goliat field First oil field in the Barents Sea Torill Knutsen and Hilda Knutsen are two of three arctic shuttle tankers specially built to operate Goliat field In March first oil was loaded on to Hilda Knutsen Estimated lifetime of the field is 15 years Estimated 178 million recoverable boe Hilda Knutsen and Torill Knutsen on five-year contracts with ENI, remaining contract durations are 2.4 years and 2.6 year, respectively. Important milestone for the Norwegian shelf Barents Sea, nearly half of the undiscovered resources are in the Barents Sea 5

6 Income Statement Unaudited, USD in thousands 1Q Q Q 2015 FY 2015 Time charter and bareboat revenues 41,826 42,417 36, ,750 Other income Total revenues 42,026 42,537 36, ,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 Interest income Interest expense (5,029) (4,731) (4,186) (17,451) Realized and unrealized gain (loss) on derivative instruments (3,184) 2,145 (5,623) (9,695) Other financial items (1) (302) (296) 52 (609) 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 Net Income impacted in Q1 by derivatives loss due to lower US interest rates (1) Other financial items consist of other finance expenses and net gain (loss) on derivative instruments 6

7 Adjusted EBITDA Unaudited, USD in thousands 1Q Q Q 2015 FY2015 Net income 10,663 17,567 7,186 40,443 Interest income (2) (5) (1) (8) Interest expense 5,029 4,731 4,186 17,451 Depreciation 13,892 13,464 11,400 48,844 Goodwill impairment charge 6,217 Income tax (benefits) expense 3 (65) 3 (59) EBITDA 29,585 35,692 22, ,888 Other financial items (a) 3,486 (1,849) 5,571 10,304 Adjusted EBITDA 33,071 33,843 28, ,192 Adjusted EBITDA in line with 4Q despite Bodil dry-docking during quarter (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 7

8 Distributable cash flow Unaudited, USD in thousands 1Q Q2015 1Q 2015 FY2015 Net income 10,663 17,567 7,186 40,442 Add: Depreciation 13,892 13,464 11,400 48,844 Goodwill impairment charge 6,217 Other non-cash items; deferred costs amortization debt ,149 Unrealized losses from interest rate derivatives and forward exchange currency contracts 4,348 4,597 8,629 Less: Estimated maintenance and replacement capital expenditures (including drydocking reserve) (7,895) (7,516) (6,175) (26,704) Other non-cash items; deferred revenue and accrued income (1,319) (858) (858) (3,432) Unrealized gains from interest rate derivatives and forward exchange currency contracts (2,089) (4,864) (8,239) Distributable cash flow (A) 17,888 18,082 16,434 66,907 Total distributions (B) 15,095 15,012 12,053 56,922 Coverage ratio (A/B) 1.19X 1.20X 1.36X 1,18X Coverage ratio based on weighted average unit 1.19X 1.20X 1.36X 1,21X Coverage ratio in line with 4Q despite Bodil dry-docking during quarter 8

9 Balance sheet Unaudited, USD in thousands At March 31, 2016 At December 31, 2015 At March 31, 2016 At December 31, 2015 Current assets: Current liabilities Cash and cash equivalents 28,782 23,573 Current portion of long-term debt 48,535 48,535 Derivative assets 243 Derivative liabilities 3,884 5,138 Other current assets 2,846 2,707 Contract liabilities 1,518 15,18 Other current liabilities 16,213 10,345 Total current assets 31,871 26,280 Total current liabilities 70,150 65,536 Long-term liabilities: Long-term debt 610, ,187 Derivative liabilities 4,488 1,232 Contract liabilities 9,378 9,757 Long-term assets: Deferred tax liabilities Vessels adn equipment 1,181,903 1,192,927 Other long-term liabilities 2,171 2,543 Derivative assets Total liabilities 698, ,132 Accrued income 461 Total long-term assets 1,182,558 1,193,622 Total partners equity 516, ,770 Total assets 1,214,429 1,219,902 Total equity and liabilities 1,214,429 1,219,902 Available liquidity of USD 48.8m vs. requirement of USD 17m 9

10 Stable operational performance results in stable financial performane UTILIZATION (%) REVENUE (USD million) Average of 99.7 % since IPO 100% 99,2%99,3% 99,4% 99,7% 98,9% 99,7% 99,9% 100% 99,6% 99,9%99,8 % 27% CAGR since IPO 34,3 34,7 36, ,3 42,5 42,0 17,3 20,5 22,2 21,8 22,1 Q Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q ADJUSTED EBITDA (USD million) DCF (USD million) 30% CAGR since IPO 25,7 26,5 28,3 28,8 32,2 33,8 33,1 28% CAGR since IPO 14,7 15,1 16,4 16,2 16,2 18,1 17,9 12,7 15,7 16,8 16,1 16,3 7,2 9,3 9,8 8,9 8,1 Q Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q

11 01.jan feb mar apr mai jun jul aug sep okt nov des jan feb mar apr mai jun jul aug sep okt nov des jan feb mar apr mai.16 Unit Price/WTI Rebased e Unit Price Impacted More than Alerian Index by falling Oil Price $35 KNOP V AMLP YIELD AND UNIT PRICE 20% $30 16% $25 $20 12% $15 8% $10 $5 4% $0 0% KNOP Unit Yield AMLP Yield KNOP Unit Price AMLP Index WTI Barrel From July 2014 KNOP unit price has acquired a significant yield premium to the Alerian Index despite recent correction. Oil Price falls have impacted KNOP more than most MLPs 11

12 01.jan feb mar apr mai jun jul aug sep okt nov des jan feb mar apr mai jun jul aug sep okt nov des jan feb mar apr mai.16 WTI Earnings Per Unit of KNOP Climbing Throughout Downturn $120 6,0 $100 5,0 $80 4,0 $60 3,0 $40 2,0 $20 1,0 $0 0,0. EBITDA/Unit Annualised DCF/Unit Annualised KNOP Distribution KNOP Unit Price WTI Barrel KNOP earnings have improved as fleet has expanded contracts are fixed day rates and contracted earnings remain relatively stable 12

13 Low Oil Price - more cost focus Castberg Barents Sea pipeline verses shuttle tanker Fearnleys estimate major cost savings in lower for longer oil price environment when using shuttle tankers 13

14 Long-term Contracts Backed by Leading Energy Companies Name Area (1) Windsor Knutsen Brazil (1) Bodil Knutsen N. Sea Fortaleza Knutsen Brazil Recife Knutsen Brazil Carmen Knutsen Brazil Hilda Knutsen N. Sea Torill Knutsen N. Sea Dan Cisne Brazil Dan Sabia Brazil Ingrid Knutsen N. Sea KNOP fleet has average remaining fixed contract duration of 5.3 (2) years Additional 2.5 years on average in Charterers option (1) KNOT has guaranteed the hire rate to April 2018 (five years from IPO date) (2) Remaining contract life is calculated as of 03/31/

15 Significant fleet growth since IPO 15

16 Dropdown inventory: Five potential acquisitions Name Area Raquel Knutsen Brazil H2816 Brazil H2817 Brazil H686 Brazil H2818 Brazil Fixed contract periods for the dropdown fleet are 5.9 (1) years on average Charterers also have the option to extend these charters by 11.2 years on average (1) Remaining contract life is calculated as of 03/31/

17 Summary 1 Solid contract base Revenue backlog of $ 790 million and average contract duration of 5.3 years (1) 2 Modern shuttle tanker fleet, average age 4.3 years vs. industry average of 11.2 years excluding KNOP fleet (1) 1 3 Excellent operating results 99.7% (2) average utilisation since IPO 4 Large sponser asset base provide substantial dropdown growth potential (1) As of March 31, 2016 (2) Of the fleet for scheduled operation, adjusted for planned off hire the average utilization rate is 99.4% 17

18 Thank you, any questions?

19 Appendix

20 Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA refers to earnings before interest, other financial items, taxes, non-controlling interest, depreciation and amortization. Adjusted EBITDA is a non-gaap financial measure used by investors to measure our 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 and depreciation and amortization, 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. Distributable Cash Flow Distributable cash flow represents net income adjusted for depreciation and amortization, unrealized gains and losses from derivatives, unrealized foreign exchange gains and losses, 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 our 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. 20