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Klaveness Combination Carriers
Investor Presentation • Feb 16, 2024
3644_rns_2024-02-16_908df19c-b345-40ea-86c2-16afd6724a9a.pdf
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Fourth Quarter 2023 Oslo, 16 February 2024
Disclaimer
This presentation has been prepared by Klaveness Combination Carriers ASA (the "Company") and is furnished to you for information purposes only and may not be reproduced or redistributed, in whole or in part, to any other person. Making this presentation available in no circumstances whatsoever implies the existence of a commitment or contract by or with the Company, or any of its affiliated entities, or any of its or their respective subsidiaries, directors, officers, representatives, employees, advisers or agents (collectively, "Affiliates") for any purpose. The presentation does not constitute or form part of any offering of securities, and the contents of this presentation have not been reviewed by any regulatory authority.
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The information and opinions contained in this document are provided as at the date of this presentation and may be subject to change without notice. Except as required by law, neither the Company nor any of its affiliates undertake any obligation to update any forward-looking statements or other information herein for any reason after the date of this presentation or to conform these statements to actual results or to changes in our expectations or publicly release or inform of the result of any revisions to these forward-looking statements which the Company or any of its affiliates may make to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.
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Agenda
Quarterly performance overview
Market review and commercial update
Financial update
Sustainability efforts
Summary and outlook
Strong end to a spectacular 2023
Highlights Q4 2023 KCC TCE earnings1
- EBT of USD 25.9 million and EBITDA of USD 36.5 million
- Both CABUs and CLEANBUs deliver above expectations in a buoyant product tanker market and an improved dry bulk market
- Caustic soda COAs secured for ~100% of CABU wet capacity in 2024
1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
4
Solid performance reflected in high dividends
Highlights FY 2023
6 1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
Agenda
Quarterly performance overview
Market review and commercial update
Financial update
Sustainability efforts
Summary and outlook
Stronger markets towards end of 2023, momentum continues in 2024
TCE earnings and fuel price development1
1) Source: Clarksons Securities and Clarksons SIN
- Strengthening product tanker markets through Q4, especially in the Atlantic
- Rates spiked in Q1 2024 following disruption in Red Sea/Suez transits
- Dry bulk market fueled by continued healthy Chinese demand and disruptions
- Strong dry bulk outlook post Chinese New Year
Solid tanker market fundamentals despite increased newbuild ordering
Oil consumption and production trending upwards1 OECD stocks below 5-year average1 Significant increase in contracting
activity2
1) Source: EIA Short-Term Energy Outlook (STEO) February 2024, forecast period shows average Q1-Q4 2024 2) Source: Clarksons SIN February 2024
9
Disruptions support an already strong product tanker market
10
Strong short term dry bulk market outlook – fundamentals improving
Suez and Panama disruptions also a driver in the dry bulk market
0.90% 2.40% 3.50% Panama Disruption Suez Disruption Combined Effect
# of Panama and Suez transits, dry bulk fleet1 Potential dry bulk utilization increase from canal closures2
Record high TCE earnings in 2023
Historic average TCE earnings1 vs. standard tonnage2
1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
13
2) Standard tonnage for bulk carriers are calculated averages of Panamax and Kamsarmax earnings and CABU and CLEANBU onhire days. Standard tonnage for product tankers are calculated averages of MR and LR1 earnings and CABU and CLEANBU onhire days.
Strong relative performance in second half of 2023
Quarterly KCC fleet TCE earnings1 vs. standard tonnage2
1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
14
2) Standard tonnage for bulk carriers are calculated averages of Panamax and Kamsarmax earnings weighted by CABU and CLEANBU onhire days respectively. Standard tonnage for product tankers are calculated averages of MR and LR1 earnings weighted by CABU and CLEANBU onhire days respectively.
Solid CABU TCE earnings – a continued success story
% of days in tanker and dry bulk trades % days in combination trades & ballast Quarterly TCE earnings1 (\$/day)
85%
16%
1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
Combi in % Ballast in %
15
The CLEANBUs get the best out of a stronger product tanker market
1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
16
Agenda
Quarterly performance overview
Market review and commercial update
Financial update
Sustainability efforts
Summary and outlook
EBITDA soars 31% Q-o-Q CLEANBU TCE earnings and on-hire days drive growth
EBITDA Q4 2023 compared to Q3 2023 (\$ millions)
Continued normal variations in OPEX/day
Off-hire
| Q4 2023 | Q3 2023 | 2023 | 2022 | |
|---|---|---|---|---|
| On-hire days | 1 442 | 1 360 | 5 626 | 5 518 |
| Scheduled off-hire | 10 | 108 | 178 | 201 |
| Unscheduled off-hire | 19 | 4 | 37 | 122 |
OPEX (\$/day)1 Comments
- Continued normal variations between quarters
- Operating expenses, vessels were up USD 1.6 million/ 3% from 2022 to 2023
- Condition-based maintenance
- Inflation, forwarding cost, travel, service personnel
- One CLEANBU vessel started dry docking in Q4 with in total 10 off-hire days
- One CLEANBU vessel and one CABU vessel is scheduled to dry dock in Q1 2024, see more details on slide 41
1) OPEX \$/day is an alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
Profit and loss Q4 2023 Solid value creation
| USD thousand (unaudited accounts) | Q4 2023 | Q3 2023 | Quarterly variance | ||
|---|---|---|---|---|---|
| Net revenues from operations of vessels | 53 110 | 43 796 | 21.3 % | Q4 2023 | Q3 2023 |
| Operating expenses, vessels | (13 114) | (13 190) | 0.6 % | Earnings per share1 | Earnings per share1 |
| SG&A | (3 460) | (2 694) | 28.4 % | \$0.43 | \$0.27 |
| Dividend per share2 | Dividend per share2 | ||||
| EBITDA | 36 536 | 27 912 | 30.9 % | \$0.35 | \$0.25 |
| Depreciation | (7 455) | (7 929) | 6.0 % | ROCE3 | ROCE3 |
| 19% | 13% | ||||
| EBIT | 29 081 | 19 983 | 45.5 % | ROE3 | ROE3 |
| Net financial items | (3 190) | (3 672) | 13.1 % | 29% | 18% |
| Profit after tax | 25 892 | 16 311 | 58.7 % |
EBITDA +26% Y-o-Y driven by +30% increase in CABU TCE earnings
EBITDA 2023 compared to 2022 (\$ millions)
Profit and loss FY 2023 Record financial results
| USD thousand (unaudited accounts) | 2023 | 2022 | Yearly variance | ||
|---|---|---|---|---|---|
| Net revenues from operations of vessels | 196 805 | 164 620 | 19.6 % | 2023 | 2022 |
| Operating expenses, vessels | (50 237) | (48 575) | 3.4 % | Earnings per share1 | Earnings per share1 |
| SG&A | (11 620) | (9 091) | 27.8 % | \$1.52 | \$1.16 |
| EBITDA | 134 947 | 106 955 | 26.2 % | Dividend per share2 | Dividend per share2 |
| \$1.25 | \$1.01 | ||||
| Depreciation | (31 842) | (31 344) | 1.6 % | ROCE3 | ROCE3 |
| EBIT | 103 105 | 75 611 | 36.4 % | 17% | 12% |
| ROE3 | ROE3 | ||||
| Net financial items | (16 206) | (14 741) | 9.9 % | 24% | 20% |
| Profit after tax | 86 899 | 60 869 | 42.8 % |
1) Basic earnings per share. Calculated basis 52 331 922 shares for 2022 and 56 996 430 for 2023 (average total shares adjusted for treasury shares) 2) Including dividend approved in fiscal year 3) ROCE/ROE is based on annualized EBIT/Profit after tax. ROE and ROCE are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
Balance sheet Solid balance sheet
| USD thousand (unaudited accounts) | 31 Dec 2023 | 30 Sep 2023 | Quarterly variance |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Vessels | 497 072 | 503 162 | (6 090) |
| Nebuilding contracts | 17 591 | 17 481 | 110 |
| Other non-current assets | 6 432 | 6 451 | (19) |
| Current assets | |||
| Other current assets | 38 875 | 36 388 | 2 487 |
| Cash and cash equivalents | 68 071 | 64 194 | 3 877 |
| Total assets | 628 041 | 627 676 | 365 |
| EQUITY AND LIABILITIES | |||
| Equity | 361 698 | 353 401 | 8 297 |
| Non-current liabilities | |||
| Mortage debt | 154 835 | 160 979 | (6 145) |
| Long-term financial liabilities | 657 | 2 201 | (1 545) |
| Long-term bond loan | 66 897 | 63 905 | 2 992 |
| Current liabilities | |||
| Short-term mortage debt | 25 199 | 25 199 | - |
| Other interest-bearing liabilities | - | - | - |
| Other current liabilities | 18 755 | 21 990 | (3 235) |
| Total liabilities | 266 342 | 274 275 | (7 932) |
| Total liabilities and equity | 628 041 | 627 676 | 365 |
57.6% 56.3% Equity ratio1 Equity ratio1 Q4 2023 Q3 2023
1) Equity ratio is an alternative performance measure (APM) which is defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report. 2) Available long-term liquidity = Cash and cash equivalents plus available undrawn capacity under revolving credit facilities
Cash flow Maintaining a solid available liquidity position
Comments
- No large events in Q4 driving cash changes
- Short-term overdraft facility renewed in Q4 and reduced to USD 8 million, down from USD 15 million
- Available long-term liquidity (cash and RCF capacity) USD 181.1 million per year-end 2023, up from USD 177.2 million from end of Q3 2023
Solid available liquidity position as funds have been secured for future investments in newbuilds and energy efficiency measures
Agenda
Quarterly performance overview
Market review and commercial update
Financial update
Sustainability efforts
Summary and outlook
Strong carbon intensity performance in 2023
Carbon intensity (EEOI)1
Y-o-Y change was driven by…
- More transport work / higher cargo weight
- More �me spent sailing at sea
- Lower average speed
- Improved energy efficiency of the fleet
- Higher propor�on of �me sailing in ballast
- MV Bass, fixed on a 2-year TC opera�ng as a pure product tanker
26
1) EEOI = EEOI (Energy Efficiency Operational Index) is defined by IMO and represents CO2 emitted per transported cargo per nautical mile for a period of time (both fuel consumption at sea and port included). 2) Average CO2 emissions per vessel-year = total emissions/vessel year. Vessel years = days available – off-hire days at yards. When new vessels are delivered to the fleet, the vessel years are calculated from the date the vessel is delivered.
Improving the energy efficiency through proven and reliable technologies
Energy efficiency investments in 2021-20231 (USDm) Additional USD 19.4m committed for 2024 and 2025
• Additional ~19.4m committed for 2024 and 2025
installation on CABU III newbuilds
27 1) Including retrofit of MV Baru 2023/2024
Delivering profitable decarbonization
Fuel cost for shipping will increase through introduction of carbon taxes and mandatory blending of low carbon fuel
The value of efficiency and the payback of KCC's energy efficiency investments increase with higher fuel prices
28 1) Calculated on a weighted cash-on-cash basis * Average fuel price Singapore delivered for January 2024, Average EUA price for January 2024. Actual fuel price 2021-2023 has been higher ** VLSO equivalent price
KCC scores an A- for "climate change" in annual CDP disclosure
Agenda
Quarterly performance overview
Market review and commercial update
Financial update
Sustainability efforts
Summary and outlook
CABU tanker capacity almost fully booked for 2024
Strong CSS cargo booking to Australia in 20241 # of voyages
Split of CSS COA booking2
% share of CABU tanker days
Continued growth prospects in Australian CSS imports
Australian alumina refinery CSS imports following curtailment of one of six plants during 2024 Million WMT
Growing CSS imports to the new Australian battery material industry Million WMT
Trading flexibility essential to get the most out of volatile markets
Large trading flexibility being a product tanker, chemical tanker and dry bulk vessel
Increasing share of tanker trading dependent on relative strength of the tanker market
CLEANBU - Building customer base, but maintain CPP market exposure
Strong increase in customer base
# of concept approvals
Maintain high share of spot / index linked COA1
% share of tanker trading
Positive outlook, but likely continued high volatility
Historical pricing and forward derivative pricing1
Source: Klaveness, Baltic Exchange and Clarksons SIN as of February 2024 KMAX dry bulk vessel = P5TC, LR1 tanker = TC5 TCE, VLSFO = VSLFO Singapore. Forward TC5 TCE based on TC5 FFA assessment and forward VLSFO price.
Continued performance earnings in Q1 2024 – the CLEANBUs excel
Q1 2024 TCE earnings guiding vs. actual last two quarters
Estimate based on booked cargoes and expected employment for open capacity basis forward freight pricing (FFA)1)
1) TCE earnings \$/day are alternative performance measures (APMs) which are defined and reconciled in the excel sheet "APM4Q2023" published on the Company's homepage (www.combinationcarriers.com) Investor Relations/Reports and Presentations under the section for the Q4 2023 report.
Best risk-adjusted return in dry bulk/tanker shipping
2019 – 2023 average annualized quarterly return on invested capital (%) 1
Volatility % (annualized quarterly standard deviation)
Annual Report and ESG Performance Report 2023 to be released 8 March 2024
FUTURE BOUND
Dry dockings and estimated CAPEX next 12 months (\$ millions)
| Vessel | Dry docking and other technical upgrades |
Energy efficiency measures |
Total cost Timing* |
Expected off-hire days |
|
|---|---|---|---|---|---|
| Baru | 2.4 | 5.4 | 7.8 | Q4 2023 - Q1 2024 |
95 |
| Barcarena | 1.6 | - | 1.6 | Q1 2024 |
22 |
| Banastar | 1.8 | - | 1.8 | Q2 2024 |
40 |
| Balzani | 1.1 | 0.4 | 1.5 | Q2 2024 |
16 |
| Barracuda | 1.7 | 5.0 | 6.7 | Q3 2024 |
65 |
| Barramundi | 1.7 | 5.2 | 6.9 | Q3 2024 |
65 |
| Balboa | 1.7 | 4.5 | 6.2 | Q4 2024 |
65 |
Detailed 2024 contract coverage – wet
Contract coverage (as per 15 Feb 2024)
| CABU: CSS contract coverage | |||||||
|---|---|---|---|---|---|---|---|
Total wet contract coverage
| # of days | Q1-24 | Q2-24 | Q3-24 | Q4-24 | 2024 |
|---|---|---|---|---|---|
| Fixed rate COA/TC/Spot | 766 | 211 | 244 | 232 | 1 454 |
| Floating rate COA | 205 | 231 | 260 | 696 | |
| Total contract days | 766 | 416 | 475 | 492 | 2 150 |
| FFA coverage | |||||
| Available wet days | 802 | 804 | 795 | 783 | 3 184 |
| Fixed rate coverage | 96 % | 26 % | 31 % | 30 % | 46 % |
| Operational coverage | 96 % | 52% | 60 % | 63 % | 68 % |
CLEANBU: CPP contract coverage
| # of days | Q1-24 | Q2-24 | Q3-24 | Q4-24 | 2024 |
|---|---|---|---|---|---|
| Fixed rate COA/TC/Spot | 421 | 91 | 92 | 92 | 696 |
| Floating rate COA | 40 | 40 | 65 | 145 | |
| Total contract days | 421 | 131 | 132 | 157 | 841 |
| FFA coverage | |||||
| Available wet days CLEANBU | 457 | 462 | 428 | 447 | 1 793 |
Detailed 2024 contract coverage – dry bulk
Contract coverage (as per 15 Feb 2024)
| Total dry bulk contract coverage | ||||||||
|---|---|---|---|---|---|---|---|---|
