Cool Company Ltd. (CLCO) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights several negative factors: reduced dividends, significant unrealized losses, and market oversupply impacting rates. Despite some positive elements like increased revenue and cash position, the Q&A session reveals concerns about market conditions and unclear strategies. The negative sentiment is further reinforced by regulatory challenges and economic factors, leading to a cautious outlook. The share buyback program is a positive, but overall, the sentiment leans negative due to financial risks and market volatility.
Key Financial Performance
Revenue $82.4 million, an increase from $76.4 million in the previous quarter, primarily driven by one vessel transitioning to a one-year fixed charter at almost double the previous rate.
Adjusted EBITDA $53.7 million, down from $55.7 million in the previous quarter, mainly due to lower operating revenues.
Net Income $8.1 million, a decrease from $26.1 million in the previous quarter, primarily due to a swing of $16.5 million in net unrealized losses on interest rate swaps.
Dividend Reduced to $0.15 per share, reflecting the impact of drydock expenses and the introduction of a buyback program.
Backlog $1.7 billion, equivalent to around 60 years of backlog or an average of $80,000 per day per vessel.
Cash and Cash Equivalents $142 million, up from $84 million in the previous quarter, mainly due to drawing on debt capacity under newbuild financings.
Available Liquidity Approximately $200 million, including $54 million from recent funding and an additional $120 million of borrowing capacity under the new revolving credit facility.
Operating Income $38.9 million, down from $41.4 million in the prior quarter, driven by higher TCE revenues offset by drydock impacts.
Operating Margin 47% of operating revenues, slightly lower than in Q2.
Vessel Operating Expenses $17,700 per day per vessel, slightly higher than Q2 but consistent with 2023 levels.
Average TCE Rate $81,600 per day across the fleet, up from $78,400 in Q2.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Vessel Deliveries: The Kool Tiger and Kool Glacier were delivered and are currently trading in the spot market.
Market Positioning: The company anticipates a strong long-term LNG market, with expectations of increased shipping demand as new LNG export projects in the US are expected to resume.
Backlog: The company has a backlog of $1.7 billion, which provides substantial revenue coverage for the upcoming years.
Refinancing: The company secured refinancing for its $570 million facility, extending maturity to late 2029 and adding $120 million in borrowing capacity.
Dividend and Buyback Program: The dividend has been reduced to $0.15 per share, and a $40 million share buyback program has been initiated.
Strategic Shift: The company is strategically positioned to consolidate the market and seize growth opportunities as asset prices potentially decline.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Market Conditions: Current market conditions are described as disappointing, particularly with LNG shipping rates falling below levels not seen since 2018. This has resulted in a lack of long-term charter agreements and a disconnect between LNG and LNG shipping markets.
Supply Chain Challenges: The company faces challenges due to a high number of newbuild vessels entering the market, which creates competition and impacts shipping rates. Additionally, the transition from older steam turbine vessels to newer models is expected to take time, affecting supply dynamics.
Economic Factors: The company anticipates a volatile market environment, with potential growth opportunities arising from lower asset prices. However, they must balance this with the impact on their own fleet and market conditions.
Regulatory Issues: Regulatory changes regarding LNG export projects in the US may soon be relaxed, which could lead to increased shipping demand. However, the current market is characterized by uncertainty and a lack of liquidity.
Financial Risks: The company reported a significant unrealized loss of $15.5 million on interest rate swaps, which has impacted net income. Additionally, the reduction of dividends to $0.15 per share reflects the financial strain from drydocking and market conditions.
Competitive Pressures: There is a significant bid-ask spread in the market, making it difficult to close medium to long-term charter deals. The company is also facing competition from newbuilds that are primarily matched to new LNG supply.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Dividend and Buyback Program: The dividend has been reduced to $0.15 per share, while a $40 million share buyback program has been introduced to return capital to shareholders.
Refinancing of Debt: The company has secured commercial bank approval to refinance a $570 million facility, extending maturity to late 2029 and adding up to $120 million in additional borrowing capacity.
Market Positioning: The strategic move aims to maximize shareholder value during a potentially volatile LNG shipping market.
Focus on LNG Market: The company anticipates strong medium to long-term demand for LNG, with expectations of relaxed moratoriums on new LNG export projects in the US.
Fleet Management: The company is strategically positioned to consolidate the market and is open to growth opportunities, including asset acquisitions.
Revenue Guidance: Revenue for Q4 is expected to reflect the completion of one drydock and the renewal of one vessel contract at a low spot rate.
Backlog: The backlog totals over $1.7 billion, providing substantial revenue coverage, with 80% coverage in 2025.
Market Outlook: The company expects rates to improve steadily in the first half of 2025 as new LNG projects come online.
Long-term Market Confidence: The long-term LNG market is viewed as exceptionally strong, with over 100 million tonnes per annum of potential projects by the end of the decade.
Scrapping of Older Vessels: The company anticipates an acceleration in the scrapping of older steam turbine vessels, which will tighten capacity in the market.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividend per share: $0.15 per share, reduced from previous levels.
Share buyback program: $40 million share buyback program approved, to be executed over 24 months.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:You mentioned that current market conditions could create growth opportunities. Maybe you could elaborate on the type of investments you are anticipating here.
A:We've gone through the past few years of very robust markets and we've always had an ambition to grow. Now we're going to go into an environment where we do think things will start to make sense. The kind of opportunities we're looking at might be assets or might be corporate in nature.
Q:What makes you feel confident that now is a good time to invest?
A:The long-term market is looking exceptionally strong. The short-term we view as being more a period of indigestion as these vessels come in advance of the projects for which they were originally chartered.
Q:Are you also open to selling ships in the current market? For example, could you consider selling the newbuild without firm contract?
A:We do look at options for selling ships. We have sold ships in the past and those types of things are not off the table. Would we sell a newbuild? At a certain price, of course.
Q:With the current softness in the spot market, could you provide a little bit of color on what sort of appetite you're seeing for long-term charters?
A:Right now there's a bid-ask spread for medium-type charters. You're not seeing so many of those deals close. But there is action on long-term charters.
Q:With the next wave of LNG projects coming online in 2025-2026, what sort of activity are you seeing on the downstream end to soak up new LNG supplies?
A:There are a few projects out there, but I don't think they're particularly meaningful in the overall scheme of things. In general, we see the bulk of the forthcoming volumes going more to Asia.
Q:Can we get a little more specific on long-term charters on the Kool Tiger?
A:There will be maybe shorter term periods of employment pending longer-term employment for the Kool Tiger.
Q:Do you expect the trend of scrapping older steam turbine vessels to accelerate and possibly tighten capacity in 2025?
A:Massively. It will take a few months, but if you're looking 6, 12 months down the line, you're not going to schedule one of these vessels.
Q:Is there a viable option for the steamships to go into the Russian trades?
A:People are talking about it, but it doesn't really feel like it's getting established in the same way that it did on the liquids side.
Q:What do you think would be the price for a newbuild and if there are any options out there, what a resale could be done at?
A:The newbuilds market has been relatively quiet. Our sense is that it has started to come up a little, but we're not talking about big amounts.
Q:Review of Unclear Management Responses
A:Management's response lacked clarity on the specific types of investments they are anticipating in the current market conditions, as well as the details regarding the appetite for long-term charters.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Basin
Frode
Glacier
Kool Tiger
LNG price
NAV
RRCF
TCE rate
bank
borrowing capacity
broker
buyback program
capital
cargo
condition
couple
course
covenant
curve
deal
dividend buyback
dividend policy
employment
end decade
facility
hire
impact
indigestion
kind
lot
newbuilds
owner
position
project
refinancing
sense
spread
strength
type
valuation
vessel fleet
weather
week
CLCO Transcript
Cool Company Ltd. (CLCO) Q2 2025 Earnings Call Transcript
Positive8-28
The earnings call summary shows strong financial performance with increased EBITDA and net income, and a successful share buyback program. The Q&A session revealed optimism in the charter market and asset management, though some details were vague. The positive sentiment from the liquefaction side and strategic asset management indicates potential growth. Despite minor declines in TCE, the overall financial health and strategic initiatives suggest a positive outlook. The company's liquidity position and operational efficiencies further support a positive sentiment.
Cool Company Ltd. (CLCO) Q1 2025 Earnings Call Transcript
Unknown5-21
The earnings call reveals mixed signals: while there's a strong backlog and liquidity position, financial metrics like net income and EBITDA have declined. The Q&A indicates interest in longer-term charters and potential market opportunities, but also highlights geopolitical and economic pressures. The share repurchase program is a positive factor, but increased expenses and financial risks temper optimism. Overall, the neutral sentiment reflects balanced positive and negative factors, with no clear catalyst for significant stock movement.
Cool Company Ltd. (CLCO) Q4 2024 Earnings Call Transcript
Unknown2-27
The earnings call summary reflects several challenges: the chartering market is at historic lows, supply chain issues, and geopolitical tensions. Although financial metrics like revenue and EBITDA have improved, the lack of dividend declaration and unclear guidance on vessel usage and charters are concerning. The Q&A section reveals management's evasive responses, particularly on layup costs and charter commitments, further adding to negative sentiment. Despite financial flexibility and a strong backlog, the market's current state and management's unclear communication suggest a negative stock price reaction in the short term.
Cool Company Ltd. (CLCO) Q3 2024 Earnings Call Transcript
Unknown11-22
The earnings call summary highlights several negative factors: reduced dividends, significant unrealized losses, and market oversupply impacting rates. Despite some positive elements like increased revenue and cash position, the Q&A session reveals concerns about market conditions and unclear strategies. The negative sentiment is further reinforced by regulatory challenges and economic factors, leading to a cautious outlook. The share buyback program is a positive, but overall, the sentiment leans negative due to financial risks and market volatility.
CLCO Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
