KNOT Offshore Partners LP (NYSE:KNOP) Q4 2018 Earnings Conference Call - Final Transcript

Mar 14, 2019 • 12:00 pm ET


KNOT Offshore Partners LP (NYSE:KNOP) Q4 2018 Earnings Conference Call - Final Transcript


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Good afternoon and welcome to the KNOT Offshore Partners LP Earnings Release Fourth Quarter 2018 Conference Call. All participants will be in listen-only mode.

After today's presentation there will be an opportunity to ask questions. (Operator Instructions)

Please note, this event is being recorded.

I would like to now turn the conference over to John Costain. Please go ahead.

John Costain

Thank you. If any of you have not read the earnings release or slide presentation, they're both available on Investors section of our website.

On today's call, our review will include non-US GAAP measures, such as distributable cash flow and adjusted earnings before interest, taxation, depreciation, amortization, the EBITDA.

The earnings release includes a reconciliation of these non-US GAAP measures to the most directly comparable GAAP financial measures. A quick reminder that any forward-looking statements made during today's call are subject to risks and uncertainties, and these are discussed at length in our annual and quarterly SEC filings. As you know, actual events and results can differ materially from those forward-looking statements. The partnership does not undertake a duty to update any forward-looking statements.

So, introduction. KNOT Offshore Partners, focuses on the shuttle tanker segment. Tthe individual tanker is field-specific and an integral component in the offshore value production chain. Shuttle tankers operate in a niche space and under non-volume-based contracts to transport oil from a offshore production units to shoreside. Being built to the charterers' requirements, the tankers are generally used on specific oil fields, enabling the partnership to yield both sustainable and stable revenue, longer term. Oil production continues to move further offshore, so shuttle tankers operate in a space which will see substantial growth in the coming years.

Our sponsors are very experienced operator, having been involved in the design and construction of this type of vessel, growing its fleet organically for more than 30 years and is part of one of the largest shipping groups in the world, Nippon Yusen or NYK. NYK is a member of the Mitsubishi Keiretsu.

Now, the presentation slide three. For the fourth quarter 2018, the partnership generated another very solid set of results. Total revenues of $70.9 million, operating income of $33 million, net cash flow of $8.8 million and adjusted EBITDA of $55.4 million. The partnership generated distributable cash flow at $27.3 million, after declining a cash distribution of $0.52 per unit, this gives a coverage of $1.51 for the quarter. During the quarter, the fleet operates with 99.7% utilization, for scheduled operations and 98.3% utilization, taking into account, the scheduled drydocking of the Ingrid Knutsen, which was off-hire for 20 days in Q4.

Since our initial public offering in 2013, we declared and paid common unit distributions of $11.34 and our current distribution has remained unchanged since 2015, at over 11% from the current unit price. On 17, December 2018, the partnership and the subsidiary of Royal Dutch Shell agreed to suspend Windsor Knutsen contract for a minimum of 12 months and a maximum of -- sorry, minimum of 10