Investor Presentation • May 27, 2020
Investor Presentation
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Q1 2020 Presentation Oslo, 27 May 2020
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. 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.
The presentation should not form the basis for any investments nor be deemed to constitute investment advice by the Company including its affiliates or any of their directors, officers, agents, employees or advisers. An investment in the Company's securities involves risk, and several factors could cause the actual results, performance or achievements that may be expressed or implied by statements and information in this presentation and by attending or reading the presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you must make your own independent assessment of the information contained in the presentation after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates, projections, opinions or other forward-looking statements contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should make its own verifications in relation to such matters.
This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances, not historical facts, and are sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this presentation (including assumptions, opinions and views of the Company or opinions cited from third party sources) are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company, any of its parent or subsidiary undertakings, or any such person's officers, directors, or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors, nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments described herein.
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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 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.
This presentation speaks as of May 2020. Neither the delivery of this presentation nor any further discussions by the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not intend to, or will assume any obligation to, update this presentation or any of the information included herein.
This presentation shall be governed by Norwegian law. Any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of the Norwegian courts with the Oslo City Court as exclusive legal venue.
Business and market update
2020 Q1 results
Summary and outlook
Substantially lower carbon intensity than standard vessels (EEOI)
Ambitious and detailed environmental policy and strategy
LR1 tanker earnings Dry bulk earnings
| Strong CABU and CLEANBU TCE earnings in combi-trades |
• CABU of \$20,283/day • CLEANBU of \$20,932/day |
|---|---|
| Improved EBITDA and positive EBT |
• 40% EBITDA improvement compared to Q4 2019 • EBT of USD 4.3 million in Q1 2020 |
| Expanding tanker coverage in a strong tanker market |
• CLEANBU tanker TC contracts 2x 3-6 + 1x 9-12 months durations • Two CABU CSS COA renewals for 1 and 3 years |
| Fully financed after securing bank financing for CLEANBU 7 & 8 |
• Up to USD 60 million loan facility credit approved for 2021 newbuilds • Issue of KCC04 NOK 500 million bond and partly repurchase of KCC03 |
| Tripling dividend payment for Q1 2020 |
• ~ USD 1.44 million / USD 0.03 per share dividends |
Business and market update
2020 Q1 results
Summary and outlook
Enclosures
Increasing Australian imports from Far East due to tight situation in US Caustic soda market following reduced US operating rates
US and Far East export prices of CSS in dry mt
Solid CSS cargo bookings in 1st half 2020 – positive outlook for 2nd half 2020
USD per onhire day (LHS) and % in combi trade. Premium to standard MR-tankers (T) and panamax dry bulk (B) in table below.
USD per onhire day (LHS). Premium to standard MR-tankers (T) and panamax dry bulk (B) in table below.
Source: Baltic Exchange, Clarksons Note: TCE Earnings per onhire day is an alternative performance measure (please see slide 31-33 in enclosures for more details)
CLEANBU onhire days CLEANBU TCE earnings per onhire day (\$/d)
CLEANBU TCE Earnings USD per onhire day (LHS) and % in combi trade. Premium to standard LR1 (T) and Kamsarmax dry bulk vessels (B)1
1) Source: Clarksons, Baltic Exchange Note: TCE Earnings USD per onhire day is an alternative performance measure (please see slide 31-33 in enclosures for more details)
Note: OPEX USD per day (CABU Opex \$/d) is an alternative performance measure (please see slide 31-33 in enclosures for more details)
Note: 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 in port included). In theory, this index will show the good energy efficiency for well as one or two longer ballast voyages e.g. when positioning CABU vessels to/from trading in Americas. These variations are evident when we look at the historical numbers, but will most likely be more stable when we have a larger fleet. End date of a voyage is decisive for which period EEOI for a voyage is included. The average CO2 emissions per vessel is calculated based on the total CO2 emissions for the fleet, divided on the number of ship years. Number of ship years is the total calendar time minus off-hire time while new delivered vessels are counted from date of delivery. Quarterly figures are annualized for average CO2 emission per vessel.
16
China daily coal consumption year-over-year %-change
17
1) Source: Baltic Exchange, Company data 2) Balance per mid May 2020, see enclosures for detailed coverage overview
*2H 2020: Operational coverage (Fixed rate + Floating rate coverage)=38% | Financial coverage (Fixed rate coverage+FFA = 34%)
2) Balance per mid May 2020, see enclosures for detailed coverage overview
Business and market update
2020 Q1 results
Summary and outlook
| Income Statement ('000 USD) |
Q1 2020 |
Q4 2019 |
Q1 2019 |
|---|---|---|---|
| Net revenues | 22 403 | 18 826 | 13 326 |
| Operating expenses, vessels | (8 253) | (8 512) | (6 962) |
| SG&A | (1 325) | (1 275) | (1 627) |
| EBITDA | 12 825 | 9 038 | 4 737 |
| EBITDA adjusted1 | 12 856 | 9 193 | 5 289 |
| Depreciation | (4 354) | (4 530) | (2 778) |
| EBIT | 8 472 | 4 508 | 1 958 |
| Net financial items | (4 158) | (2 759) | (2 761) |
| Profit before tax (EBT) | 4 314 | 1 749 | (802) |
| Tax | - | (15) | - |
| Profit after tax | 4 314 | 1 734 | (802) |
| EPS | 0.09 | 0.04 | (0.02) |
Year-on-year adjusted EBITDA1 (MUSD)
Q1 2020 vs Q1 2019
Quarter-on-quarter adjusted EBITDA1 (MUSD)
Q1 2020 vs Q4 2019
1) Estimated total interest bearing debt based on current knowledge about delivery dates of newbuilds. Numbers include bank debt for two newbuilds with delivery in 2021 where bank debt has been credit approved, estimated to be concluded in Q2 2020. Short term overdraft facility not included. NOK 400mn of KCC04 bond hedged to USD.
31 Dec 2019 31 Mar 2020
Business and market update
2020 Q1 results
Summary and outlook
| Strong CABU outlook on the back of high CSS bookings |
• 100% of CABU capacity booked for 2Q 2020 - guiding increased to \$19-20,000/day • Strong CSS cargo bookings - ~70% of capacity booked for 2H 2020. • Positive trade outlook despite COVID-19 situation |
|---|---|
| Stronger CLEANBU earnings based on concluded tanker coverage |
• 100% of CLEANBU capacity booked for 2Q 2020 – guiding \$28-29,000/day • TC-fixtures and FFAs secure ~ 60% of CLEANBU tanker market exposure in 2H 2020 • Phase-in of CLEANBU vessels progressing |
| COVID-19 risks, but upside potential in dry and fuel markets when world economy "restarts" |
• Continued high uncertainties in the current COVID-19 situation, but world economy has likely passed the through in April-May • KCC resilient being fully financed and having solid cash position • Upside potential in dry bulk and fuel market |
Business and market update
2020 Q1 results
Summary and outlook
| CABU: CSS contract coverage | Dry bulk contract coverage | ||||||
|---|---|---|---|---|---|---|---|
| # of days | Q2 2020 | 2H 2020 | 1H 2021 | # of days | Q2 2020 | 2H 2020 | 1H 2021 |
| Fixed rate COA/Spot | 439 | 457 | 188 | Fixed rate COA/Spot | 300 | 254 | 70 |
| Floating rate COA | 16 | 119 | 150 | Floating rate COA | 0 | 90 | 210 |
| Total contract days | 455 | 576 | 338 | Total contract days | 300 | 344 | 280 |
| FFA coverage | - | - | - | FFA coverage | 40 | 90 | - |
| Available wet days | 455 | 787 | 751 | Available wet days | 393 | 915 | 1 342 |
| CLEANBU: CPP contract coverage | ||||
|---|---|---|---|---|
| # of days | Q2 2020 | 2H 2020 | 1H 2021 | |
| Fixed rate COA/Spot | 231 | 231 | 42 | |
| Floating rate COA | - | - | - | |
| Total contract days | 231 | 231 | 338 | |
| FFA coverage | - | 97 | 23 | |
| Available wet days | 231 | 526 | 684 |
Definitions and reconciliation
Reconciliation of average TCE earnings USD/day
| USD'000 | CABU | CLEANBU | Total Q1 2020 |
|---|---|---|---|
| Net revenues from operations of vessels | 16453 | 5953 | 22 406 |
| IFRS 15 adjustment (load-to-discharge) | 80 | (340) | (259) |
| Net revenues ex IFRS adjustment | 16 534 | 5613 | 22 147 |
| Onhiredays | 815 | 268 | 1083 |
| TCE earnings (\$/d) | 20 283 | 20 932 | 20 444 |
Reconciliation CLEANBU earnings in combi trade and outside combi trade
| USD'000 | Main combi | Outside combi | Total CLEANBU |
|---|---|---|---|
| Q1 2020 | |||
| Net revenues from operations of vessels | 4565 | 1388 | 5953 |
| IFRS 15 adjustment (load-to-discharge) | (310) | (30) | (340) |
| Net revenues ex IFRS adjustment | 4 2 5 5 | 1358 | 5 6 1 3 |
| Not corrected adjustment on Q1 voyage* | ٠ | 200 | 200 |
| Net revenue adjusted | 4 2 5 5 | 1558 | 5813 |
| Onhiredays | 177 | 91 | 268 |
| TCE earnings (\$/d) | 24 000 | 17 120 | 21 670 |
Reconciliation Opex \$/d CLEANBU vessels in operations
| Reconciliation of CLEANBU opex per day | |
|---|---|
| USD'000 | Q1 2020 |
| Operating expenses, vessels | 2.515 |
| Leasing cost previously presented as opex | 27 |
| Start-up cost CLEANBU vessels | 31 |
| Crew cost after delivery (adj/reclass) | |
| Operating expenses vessels not delivered | 207 |
| Operating expenses, vessels in operation | 2305 |
| Operating days | 273 |
| Opex per day (\$/d) for vessels in operation | 8 44 2 |
| USD'000 | Q1 2020 |
|---|---|
| Profit before tax (EBT) | 4314 |
| Compensation cancelled COA volumes in 2019 | (677) |
| Start up costs CLEANBU vessels | 31 |
| Reversal provision | |
| Realised effects repurchase of KCC03 (Q1 2020, note 7) | 651 |
| Fair value changes interest rate swaps (mainly realised effects, Q1 | 293 |
| Loss on foreign exchange | 255 |
| Underlying EBT | 4867 |
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