This release includes business updates and unaudited interim financial results for the three ("Q3", "Q3 2024" or the "Quarter") and nine months ("9M 2024") ended September 30, 2024 of Cool Company Ltd. ("CoolCo" or the "Company") (NYSE:CLCO / CLCO.OL).
Q3 Highlights and Subsequent Events
- Generated total operating revenues of $82.4 million in Q3, compared to $83.4 million for the second quarter of 2024 ("Q2" or "Q2 2024"), due to three vessels undergoing scheduled drydocking during the Quarter;
- Net income of $8.11 million in Q3, compared to $26.51 million for Q2 with the decrease primarily related to a loss in our mark-to-market interest rate swaps;
- Achieved average Time Charter Equivalent Earnings ("TCE")2 of $81,600 per day for Q3, compared to $78,400 per day for Q2, primarily due to contribution from one vessel that recently started a higher rate charter;
- Adjusted EBITDA2 of $53.7 million for Q3, compared to $55.7 million for Q2;
- Took delivery of newbuild vessel, Kool Tiger, from shipyard in October which was repositioned in the Atlantic Basin for spot market employment on an interim basis until a long-term charter is secured;
- Completed drydocks for two vessels during Q3 2024, taking around 21 days and ahead of schedule. Subsequent to the Quarter, a drydock for another vessel was completed, which included LNGe upgrades;
- Obtained commercial bank approval for a refinancing of our $570 million bank facility into a reducing revolving credit facility, which will provide approximately $120 million in additional borrowing capacity, while lowering margin and extending maturity to late 2029;
- Declared a quarterly dividend of $0.15 per share, payable to shareholders of record on December 2, 2024;
- Subsequent to Quarter end, the Board approved a share repurchase program of up to $40 million to be executed over a 24-month period.
Richard Tyrrell, CEO, commented:
“Our contracted fleet and efficient dry-docking enabled us to reach the upper end of TCE guidance for the third quarter, despite a soft market backdrop that is expected to impact us in the fourth quarter. While we work to secure their long-term employment, the newly delivered Kool Tiger and the available Kool Glacier are currently subject to weaker rates in the short-term market. However, by design, our backlog from our remaining 10 vessels and one newbuild vessel, set for delivery in January, limits our exposure.
This winter's market is expected to be impacted by unfavorable short-term trading dynamics and the delivery of orderbook vessels in the fourth quarter ahead of the new LNG supply they are intended to serve. LNG prices for immediate delivery have remained high, encouraging prompt delivery rather than the contango-driven floating storage that is customary at the onset of winter. Additionally, high prices in Europe have closed the East-West arbitrage that would result in a greater number of cargoes shipping to the distant East. While these trading dynamics could quickly reverse, we nevertheless expect vessels delivered ahead of their intended liquefaction projects to be absorbed in stages throughout 2025 as those projects and their associated LNG volumes come online. If the current market has a silver lining, it is the knocking out of the steam-turbine vessels from the fleet. These are falling off charter at a rate of 20-30 per year (in addition to the 92 that have already reached this age), not being extended, and exiting the active market in a way that cannot be easily reversed.
Longer-term, LNG remains the transition fuel of choice with well-established geopolitical credentials that are highly supportive of future development. It is expected that the moratorium on new LNG export projects in the US will soon be relaxed, resulting in material additional shipping demand towards the end of this decade.
CoolCo anticipates that current market conditions will provide growth opportunities, which it intends to seize from a position of strength. We are in the process of refinancing our $570 million bank facility into a reducing revolving credit facility, further increasing our liquidity by approximately $120 million while lowering the margin and extending the maturity from early 2027 to late 2029 (with options for two one-year extensions). After the transaction closes, our nearest debt maturity will come due in 4.5 years.
In connection with our current drydocking cycle (with 3 dry-dockings either finishing or starting during the third quarter), we have also reduced the quarterly dividend payment in line with our variable dividend policy's parameters and expanded this policy to include a share repurchase program as a capital return alternative, approving a buyback program of up to $40 million over 24 months. By targeting repurchases of shares trading well below our Net Asset Value, and our own assessment of the inherent value and prospects of the business, we aim to capitalize on the current market price of our shares and deliver enhanced value to our shareholders.”
