Knot Offshore Partners Lp · NYSE:KNOP
Knot Offshore Partners Lp — Investor Day (October 2021)
39 slides from Knot Offshore Partners Lp's investor day presentation, Oct 6, 2021
Slide 1: Virtual Investor Day
Virtual Investor Day October 6, 2021 (NYSE:KNOP)
Slide 2: Notice to Recipients
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 unce
Slide 3: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 4: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 5: Broad and Deep Expertise and Experience
Broad and Deep Expertise and Experience With origins dating to 1896 and headquartered in Established in 1885 and headquartered in Japan, Norway, the Knutsen Group is a fully integrated Nippon Yusen Kabushiki Kaisha (“NYK”) recorded $15 shipping company controlled by KNOP Chairman billion in reve
Slide 6: Strategic Performance
Strategic Performance Four Pillar strategy has stayed firm Resulted in strong and consistent since inception performance for our unitholders Successfully Paid out financed and re- $16.54 per financed all common unit and requirements in $472 million good time at very in total to ADVANCED LONG TERM lo
Slide 7: Strategic Outlook
Strategic Outlook Four Pillar strategy has stayed firm Our ambition for strong and consistent since inception performance continues To prioritise at Target long-term least our current contracts through level of close distribution to our relationships with unit holders and our customers ADVANCED LONG
Slide 8: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 9: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 10: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 11: Shipping Concepts And The Shuttle Tanker Market
Shipping Concepts And The Shuttle Tanker Market A time charter is the hiring of a vessel for a specific period of time where the owner supplies the vessel and A bareboat charter is the hiring of a vessel for a specific crew and the charterer pays for all fuel, port charges, period of time whereby no
Slide 12: A Unique Component Of Offshore Oil Infrastructure
A Unique Component Of Offshore Oil Infrastructure Once in place our fixed-rate charter contracts are unaffected by changes in oil price; and Hire due for the use of our vessels during a charter contract does not depend on our customer’s utilisation. . Advantages vs. Pipelines Key Differences vs.
Slide 13: A Critical Service To Top-Tier Customers
A Critical Service To Top-Tier Customers Sunk cost for field operator Revenue for field operator Seismic Drilling Subsea Production Storage Transport Our customers are globally diverse leaders in offshore energy Integral to operation of long-term offshore projects Contracts and fleet provide stabili
Slide 14: Forward Contracted Revenue
Forward Contracted Revenue At June 30, 2021: Remaining forward contracted revenue of $642million (exc. options) and average remaining charter of 2.3 years Charterers also have the option to extend these charters by a further 2.8 years on average Charterer's Age Current Vessel 2020 2021 2022 2023 202
Slide 15: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 16: Stable Operational and Financial Results Over Time
Stable Operational and Financial Results Over Time… Vessel scheduled utilization (%) Average of 99.5% since IPO in 2013 100% 80% 60% 40% 20% 0% Revenue (USD million) 80 70 60 50 40 30 20 10 0 16 October 6, 2021
Slide 17: Plus Robust Coverage and Reducing Debt Profile
…Plus Robust Coverage and Reducing Debt Profile… Stable distribution with consistently Utilizing cashflows to consistently robust coverage provides security reduce EBITDA leverage ratio(1)(2) (1) Leverage increases due to the acquisition of new vessels 1.8x 6.0 Accelerated debt repayment of c. $90M
Slide 18: Fixed-Rate Contracts Providing Stable Cashflow
…Fixed-Rate Contracts Providing Stable Cashflow… 100 60 Adjusted EBITDA Brent price 90 50 80 Adjusted EBITDA, US$ millions Brent price, US$ per barrel 70 40 60 50 30 40 20 30 20 10 10 0 0 Fixed-rate charter contracts are unaffected by changes in oil price once in place. Fuel costs are paid by th
Slide 19: Access To Future Growth
…Access To Future Growth… Dropdown Inventory at Sponsor – 6 Potential Acquisitions(1) At June 30, 2021: Average contracted charter length of 5.3 years Charterers also have the option to extend these charters by a further 7.3 years on average Fixed contract Expected period Vessel delivery 2020 2021 2
Slide 20: Finance And Refinancing Stability
…Finance And Refinancing Stability… 350,000 300,000 250,000 2020 Adjusted EBITDA: $213M $millions 200,000 150,000 100,000 50,000 0 2021 2022 2023 2024 2025 2026 and thereafter Period Repayment Balloon Repayment Average margin paid on the Partnership’s outstanding debt during 2Q 2021 was approximat
Slide 21: Access To An Extensive Pool of Lenders
…Access To An Extensive Pool of Lenders… 21 October 6, 2021
Slide 22: And A Strong Commitment To ESG
…And A Strong Commitment To ESG KNOP is dedicated to upholding Environmental, Social, and Governmental (“ESG”) principles and driving progress in the shipping industry and beyond and has published an ESG report since 2019. KNOP is party to a range of industry accords and organizations intended t
Slide 23: All Lead To Very Stable And Attractive 1099 Returns
All Lead To Very Stable And Attractive 1099 Returns 500 0.60 450 Aggregate distribution, millions US$ 0.50 400 Distribution per unit, US$ 350 0.40 300 250 0.30 200 0.20 150 100 0.10 50 - - KNOP has returned over 78% of our initial IPO price of $21 as distributions to our unitholders since our IPO in
Slide 24: Priorities And Outlook
Priorities And Outlook Our number one priority is our distribution, together with stability of cashflows and maximizing utilization to enable accretive growth Our objective is to maintain the same principles that have served KNOP and our unitholders well for many years Operate with high utilizat
Slide 25: KNOP Attributes – Our Investment Case
KNOP Attributes – Our Investment Case KNOP is classified as a corporation for U.S. federal income tax purposes. A U.S. holder of KNOP common units will receive a Form 1099 to report distributions received (not a Form K-1). We are a market leader in the operation of shuttle tankers and our Sponso
Slide 26: Agenda
Agenda I Introduction and Agenda II KNOP Strategic Overview Trygve Seglem, Chairman III Shuttle Tanker Fundamentals Fearnleys IV Shuttle Tanker Market Outlook Rystad Energy V Shuttle Tanker Market Overview John Einar Dalsvåg, VP Chartering & Business Development VI KNOP Financial Review And Outlook
Slide 27: Investor Relations Update
Investor Relations Update Bringing a proactive, holistic approach to IR at KNOP Removing barriers to entry for new investors through clear, direct materials and messaging Establishing an unvarnished, up-to-date understanding of prevailing investor views, concerns, and expectations for KNOP Int
Slide 28: Virtual Investor Day, Q&A
Virtual Investor Day, October 6, 2021 Q&A 28
Slide 29: Thank you for your attendance
Virtual Investor Day, October 6, 2021 Thank you for your attendance 29
Slide 30: Appendices
Appendices A Knutsen Group Summary B Tove Knutsen Acquisition C Second Quarter 2021 Financial Results Summary 30 October 6, 2021
Slide 31: Knutsen Group – A fully integrated international shipping company
Appendix A Knutsen Group – A fully integrated international shipping company Technology and Product development (KBAL® + KVOC® + PNG® + PCO2®) Project Technical and Building Development Ship Design Chartering Crewing Commercial Supervision and Management Conversions Finance and Treasury Accounting a
Slide 32: Knutsen Group Head Office, Haugesund, Norway
Knutsen Group Head Office, Haugesund, Norway • Vessel new buildings • Technology • Technical management • Vetting of the vessels • Health, safety, environment and quality (HSEQ) • Accounting • Purchasing and logistics Smedasundet 40 Postbox 2017 N-5504 Haugesund NORWAY 32 October 6, 2021
Slide 33: Tove Knutsen Acquisition in December 2020
Appendix B Tove Knutsen Acquisition in December 2020 153,000 DWT DP2 shuttle tanker. Vessel delivered from shipyard September 28, 2020, sailed to Brazil and undertook series of Equinor and Petrobras (for Brazil operations) approval tests. Commenced 7-year fixed charter to Equinor on November 2
Slide 34: Second Quarter 2021 Financial Results Summary
Appendix C Second Quarter 2021 Financial Results Summary A strong and stable quarter with utilization of 96.9% for scheduled operations (if Windsor Knutsen included). Distributable cashflow of $24.0m, with coverage of 1.32. Paid quarterly distribution of $0.52 for 24th consecutive quarter. $
Slide 35: 2Q 2021 – Income Statement
2Q 2021 – Income Statement Unaudited, USD thousands 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020 FY 2020 Time charter and bareboat revenues 66,513 65,598 69,864 71,241 70,250 278,581 Loss of hire insurance recoveries 4,397 5,882 — — — — Other income 27 1 (5) 39 9 641 Total revenues 70,937 71,481 69,859 7
Slide 36: 2Q 2021 – Adjusted EBITDA
2Q 2021 – Adjusted EBITDA Unaudited, USD thousands 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020 FY 2020 Net income (loss) (10,925) 28,141 24,605 25,076 21,683 65,225 Interest income — — (4) — (3) (125) Interest expense 6,804 7,372 6,113 6,558 8,512 31,645 Depreciation 23,831 23,684 22,466 22,453 22,451 8
Slide 37: 2Q 2021 – Distributable Cash Flow
2Q 2021 – Distributable Cash Flow Unaudited, USD thousands 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020 FY 2020 Net income (loss) (10,925) 28,141 24,605 25,076 21,683 65,225 Add: Depreciation 23,831 23,684 22,466 22,453 22,451 89,743 Write-down 29,421 — — — — — Other non-cash items; amortization of defer
Slide 38: 2Q 2021 – Balance Sheet
2Q 2021 – Balance Sheet Unaudited, USD thousands At Jun 30, At Dec 31, At Jun 30, At Dec 31, 2021 2020 2021 2020 Current assets: Current liabilities: Cash and cash equivalents 51,589 52,583 Current portion of long-term debt 351,370 184,188 Inventories 1,762 2,652 Derivative liabilities 9,984 10,695
Slide 39: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA refers to earnings before interest, depreciation, taxes, goodwill impairment charge and other financial items. Adjusted EBITDA is a non-GAAP financial measure used by investors to measure our performance. Adjusted EBITDA is used as a supple