This release includes business updates and unaudited interim
financial results for the three ("Q3", "Q3 2023" or the "Quarter")
and nine months ("9M 2023") ended September 30, 2023 of Cool
Company Ltd. ("CoolCo" or the "Company").
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Q3 Highlights and Subsequent Events
- Generated total operating revenues of $92.9 million in Q3,
compared to $90.3 million for the second quarter of 2023 ("Q2" or
"Q2 2023");
- Net income of $39.21 million in Q3, compared to $44.61 million
for Q2, decrease was primarily due to lower unrealized
mark-to-market gains on our interest rate swaps;
- Achieved average Time Charter Equivalent Earnings ("TCE")2 of
$82,400 per day for Q3, compared to $81,100 per day for Q2;
- Adjusted EBITDA2 of $62.8 million for Q3, compared to $59.9
million for Q2;
- Subsequent to the Quarter, the Company announced that it had
entered into sale and leaseback financing arrangements (the “Sale
and Leasebacks”) with Huaxia Financial Leasing Co. Ltd for the two
state-of-the-art MEGA LNG carriers (the "Newbuilds");
- Declared a dividend for Q3 of $0.41 per share, to be paid to
shareholders of record on December 7, 2023.
Richard Tyrrell, CEO, commented:
"In the third quarter, we benefited from strong operational
performance, a seasonal uplift on our variable rate contract and
the fleet’s fixed-rate, medium- and long-term charter coverage.
Additionally, we took measured exposure to the charter market in
the form of one vessel that we chose to deploy directly in the spot
market while waiting for the right term opportunity. The net result
was a sequentially higher TCE level at $82,400 per day. While not
currently reaching the levels seen in the months following the
Russian invasion of Ukraine, rates in the early fourth quarter have
settled in at levels above historic norms for both the industry and
for the CoolCo fleet. This provides us upside on legacy contracts
as they renew and scope to maintain TCE performance.
"During the second half of 2023, newbuild deliveries have been
limited and overall fleet supply has remained well-balanced against
demand. The last two newbuilds in the market from independent
owners that deliver ahead of CoolCo’s 2024 deliveries have now
secured long-term employment, positioning our Newbuilds as both the
next in line and some of the only uncommitted newbuilds currently
available before 2026. Newbuild pricing has remained elevated
relative to historical levels at approximately $260 million per
vessel, which along with the current interest rate environment is
providing significant support to the long-term charter rates
available for newbuilds while also discouraging incremental
newbuild orders. Moving forward, a continued strength in gas prices
and tightening regulations are expected to put increasing pressure
on the large number of remaining steam turbine vessels in the
market, likely resulting in heavy scrapping in the coming
years.
"As the weather begins to turn colder in the Northern
Hemisphere, seasonal support for LNG Carrier demand typically
ratchets up. We have thus far seen only limited term chartering
activity ahead of the 2023/24 winter market, but with the continued
absence of Europe’s traditional supply backstop from Russian
pipeline gas and few vessels currently employed as floating
storage, the potential for weather events to produce volatility,
and thus demand for LNG carriers, is heightened. Ultimately, energy
security remains a top priority for many LNG importing nations, and
we expect European demand to remain strong and Asian demand to
continue its recovery. In the meantime, CoolCo is financially well
positioned with $1.5 billion of contracted revenue backlog as of
quarter end and built-in near-term earnings growth from its fully
financed Newbuilds. We plan to maintain a patient, long-term
perspective in our vessel chartering decisions intended to provide
attractive returns and well-supported dividends for our
shareholders.”
Financial Highlights
The table below sets forth certain key financial information for
Q3 2023, Q2 2023, 9M 2023 and the nine month period ended September
30, 2022 ("9M 2022"), split between Successor and Predecessor
periods, as defined below.
Q3 2023
Q2 2023
9M 2023
9M 2022
(in thousands of $, except TCE)
Successor
Successor
Successor
Successor
Predecessor
Total
Time and voyage charter revenues
84,523
82,071
257,761
104,535
37,289
141,824
Total operating revenues
92,901
90,316
281,864
122,723
43,456
166,179
Operating income
48,336
45,484
145,844
62,055
27,728
89,783
Net income 1
39,170
44,646
153,952
54,431
23,244
77,675
Adjusted EBITDA2
62,754
59,894
190,466
75,964
33,473
109,437
Average daily TCE2 (to the closest
$100)
82,400
81,100
82,400
66,500
57,100
63,800
Note: As noted previously, the commencement of operations
and funding of CoolCo and the acquisition of its initial tri-fuel
diesel electric ("TFDE") LNG carriers, The Cool Pool Limited and
the shipping and FSRU management organization from Golar LNG
Limited ("Golar") were completed in a phased process. It commenced
with the funding of CoolCo on January 27, 2022 and concluded with
the acquisition of the LNG carrier and FSRU management organization
on June 30, 2022, with vessel acquisitions taking place on
different dates over that period. Results for the nine months that
commenced January 1, 2022 and ended September 30, 2022 have
therefore been split between the period prior to the funding of
CoolCo and various phased acquisitions of vessel and management
entities (the "Predecessor" period) and the period subsequent to
the various phased acquisitions (the "Successor" period). The
combined results are not in accordance with U.S. GAAP and consist
of the aggregate of selected financial data of the Successor and
Predecessor periods. No other adjustments have been made to the
combined presentation. We cannot adequately benchmark the operating
results for the nine month period ended September 30, 2023 against
the previous period reported in our comparative unaudited financial
information without combining the applicable Successor and
Predecessor periods and do not believe that reviewing the results
of the periods in isolation would be useful in identifying trends
in or reaching conclusions regarding our overall operating
performance.
LNG Market Review
The average Japan/Korea Marker gas price ("JKM") for the Quarter
was $11.81/MMBtu compared to $11.06/MMBtu for Q2 2023. The Quarter
commenced with Dutch Title Transfer Facility gas price ("TTF") at
$10.91/MMBtu and quoted TFDE headline spot rates of $69,250 per
day. The Quarter concluded with TTF at $12.61/MMBtu and quoted TFDE
headline spot rates of $188,750 per day. The TFDE headline spot
rate has subsequently fallen to $167,500 per day, however,
achieving this rate is very much dependent on vessel position given
market illiquidity.
Coming out of the seasonally quieter summer months in the
northern hemisphere, the LNG carrier market has continued to be
characterized by a relative lack of chartering liquidity. Both
trading opportunities that rely on LNG carriers for floating
storage capacity and periods of West-East arbitrage have been
limited. Despite European gas storage reaching full capacity,
concerns about security of supply have supported gas prices,
leading to LNG being regasified rather than held in floating
storage.
With Russian pipeline gas still off limits to the majority of
Europe, importers have a limited buffer to the risk of natural gas
demand spikes during winter weather events. In this context,
exacerbated by LNG carrier positioning and recent constraints in
the Panama Canal, there is an increased potential for volatility,
regional arbitrage, and atypical trading and chartering activity if
importers find themselves facing a gas shortage.
The ultimate outcome of the upcoming winter market is yet to be
seen, but volatility in the LNG market is likely to be a
significant feature in the coming months and years. This is
especially true as more destination-flexible volumes enter the
market, and energy traders play an increasingly prominent role.
Operational Review
CoolCo's fleet continued to perform well with a Q3 fleet
utilization of 97.3% with the remaining covered by a ballast bonus,
compared to 100% for the first half of the 2023. There are no
drydocks planned for 2023, with the next drydock expected during
the second quarter of 2024.
Subsequent to the Quarter, a ship management services customer
has decided to transfer up to nine vessels for which CoolCo
currently provides technical management to managers that solely
provide ship management services over the course of 2024. This is
not expected to materially impact CoolCo's earnings and we expect
to incur some immaterial restructuring costs to adjust our
operations in light of this change.
Business Development
On June 28, 2023, the Company announced that it had exercised
its option to acquire the Newbuilds, Kool Tiger and Kool Panther
from affiliates of EPS Ventures Ltd. (“EPS”). The Newbuilds are
scheduled to be delivered from Hyundai Samho Heavy Industries
("HHI") in Korea in September and December of 2024. The two
Newbuilds have been acquired for an amount of approximately $234
million per vessel. The initial option exercise price was $56.9
million per vessel, resulting in a total of $113.8 million paid to
EPS on July 3, 2023.
In October 2023, the Company announced that it had entered into
Sale and Leasebacks for the Newbuilds with Huaxia Financial Leasing
Co. Ltd. The Sale and Leasebacks are on a fixed rate per day basis
for 10 years, with extension options, an implied fixed interest
rate just under 6% and a minimum loan-to-value of 80%, with
potential for additional capacity contingent upon the terms of the
charter employment that the Company anticipates securing in advance
of the Newbuilds' deliveries. The Sale and Leaseback financing also
offers pre-delivery financing of the Newbuilds.
CoolCo continues to be in discussions with multiple potential
charterers seeking employment for the Newbuilds.
Financing and Liquidity
In July 2023, the Company announced that the syndicate of
existing lenders in the $570 million bank facility approved a
reduction of the interest rate margin from 225 basis points to 220
basis points after the Company achieved the sustainability criteria
outlined in the loan agreement.
As of September 30, 2023, CoolCo had cash and cash equivalents
of $152.2 million and total short and long-term debt, net of
deferred finance charges, amounted to $1,045.3 million. Total
Contractual Debt1 stood at $1,161.4 million, which comprised of
$494.8 million in respect of the $570 million bank facility
maturing in March 2027, $481.3 million in respect of the $520
million term loan facility, maturing in May 2029, and $185.3
million in respect of the two sale and leaseback facilities
maturing in the first quarter of 2025 (Kool Ice and Kool
Kelvin).
Overall, the Company’s interest rate on its debt is fixed or
hedged for approximately 85% of the notional amount of debt,
adjusting for existing cash on hand.
Corporate and Other Matters
As of September 30, 2023, CoolCo had 53,688,462 shares issued
and outstanding. Of these, 31,254,390 shares (58.2%) were owned by
EPS Ventures Ltd ("EPS") and 22,434,072 (41.8%) were publicly
owned.
In line with the Company’s variable dividend policy, the Board
has declared a Q3 dividend of $0.41 per ordinary share. The record
date is December 7, 2023 and the dividend will be distributed to
DTC-registered shareholders on or around December 15, 2023, while
due to the implementation of the Central Securities Depositories
Regulation in Norway, the dividend will be distributed to Euronext
VPS-registered shareholders on or around December 20, 2023.
Outlook
Since the end of the Quarter, TTF has increased to $14.51/MMBtu
and TFDE spot rates have increased to $167,500 per day.
In the coming years, the global supply of LNG is set to increase
by more than 50% based on projects that have already reached Final
Investment Decision ("FID"). At least 40 million tonnes per annum
(mtpa) of capacity have reached FID in 2023 alone, equivalent to
approximately 10% of total LNG production in 2022. To understand
the current 51% orderbook-to-fleet ratio (by volume), it is
critical to recognize that the orderbook has overwhelmingly been
built based on long-term contracts to service new liquefaction
facilities. The timing and quantity of their deliveries are
intended to match the commencement of new production. Furthermore,
to the extent that project development delays result in vessels
delivering to their charterers before their intended startup time,
we would expect to see a dynamic similar to that which has recently
prevailed. In such a scenario, the market is sharply divided
between charterers seeking to fill interim periods in the spot
market and owners such as CoolCo, who are in a position to offer
multi-year time charters. Numerous liquefaction projects are still
under development in North America, the Middle East, and various
other geographies. This supply is expected to meet gas demand
arising from the continued strong and widespread desire to
decarbonize both through complementing renewables with gas and gas
substituting for the vast amounts of coal still being consumed.
Among LNG carriers currently on the water, the older, less
efficient vessels in the charter market are expected to face
growing competitive pressure over time, particularly among the
steam turbine vessels that continue to make up over 30% of the
global fleet by volume. The imposition of the International
Maritime Organization's (IMO) carbon intensity indicator (CII)
rules from the beginning of this year, as well as forthcoming
European carbon pricing set to come into effect next year, are set
to increase the relative advantage of modern, efficient TFDE and
2-stroke tonnage, such as those in the CoolCo fleet.
The limited supply of modern vessels available for time charter
employment through the medium-term is concentrated among a small
number of owners, including CoolCo. Given the improved bargaining
position afforded by a combination of scarcity and concentration,
such owners have remained focused primarily on longer-term charters
that would bridge the period from now until the next wave of LNG
supply is expected to arrive in 2026-2027. A newbuild vessel
ordered today would have a lead time of approximately four years
and a purchase price exceeding $260 million, limiting the
likelihood of unforeseen newbuild tonnage during that period while
providing support for the rate benchmark against which the overall
fleet is priced.
1 Net income includes mark-to market gain
on interest rate swaps amounting to $9.7 million for Q3 2023, $16.7
million for Q2 2023 and $20.4 million for 9M 2023.
2 Refer to 'Appendix A' - Non-GAAP
financial measures and definitions, for definitions of these
measures and a reconciliation to the nearest GAAP measure.
FORWARD LOOKING STATEMENTS
This press release and any other written or oral statements made
by us in connection with this press release include forward-looking
statements. All statements, other than statements of historical
facts, that address activities and events that will, should, could,
are expected to or may occur in the future are forward-looking
statements. These forward-looking statements are made under the
"safe harbor" provisions of the U.S. Private Securities Litigation
Reform Act of 1995. You can identify these forward-looking
statements by words or phrases such as “believe,” “anticipate,”
“intend,” “estimate,” “forecast,” “project,” “plan,” “potential,”
“will,” “may,” “should,” “expect,” “could,” “would,” “predict,”
“propose,” “continue,” or the negative of these terms and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include statements
relating to our expectations on chartering and chartering strategy,
outlook, expected results and performance, expected drydockings,
delivery dates of newbuilds, dividends and dividend policy,
expected growth in LNG supply, expected industry and business
trends including expected trends in LNG demand and market trends,
expected trends in LNG shipping capacity including expected
scrapping and expected costs and timing for newbuilds, expected
impacts to our restructuring costs due to our adjustments in
operations, LNG vessel supply and demand, and factors impacting
supply and demand of vessels such as CII and European carbon
pricing backlog, rates and expected trends in charter and spot
rates, expectations on rates for future charters, contracting,
utilization (including expected revenue backlog), LNG vessel
newbuild order-book, expected winter demand and volatility
statements under “LNG Market Review” and “Outlook”, statements
about our ship management business and other non-historical
matters.
The forward-looking statements in this document are based upon
management’s current expectations, estimates and projections. These
statements involve significant risks, uncertainties, contingencies
and factors that are difficult or impossible to predict and are
beyond our control, and that may cause our actual results,
performance or achievements to be materially different from those
expressed or implied by the forward-looking statements. Numerous
factors could cause our actual results, level of activity,
performance or achievements to differ materially from the results,
level of activity, performance or achievements expressed or implied
by these forward-looking statements including:
- our limited operating history under the CoolCo name;
- changes in demand in the LNG shipping industry, including the
market for modern tri-fuel diesel electric (“TFDE”) vessels we
acquired from Golar LNG Limited (the “Original Vessels”) and four
vessels, comprising of two modern 2-stroke and two TFDE, acquired
from Quantum Crude Tankers Ltd, an affiliate of EPS (the “Acquired
Vessels”) (the Original Vessels and Acquired Vessels are
collectively referred to as the “Vessels”);
- general LNG market conditions, including fluctuations in
charter hire rates and vessel values;
- our ability to successfully employ our vessels and at
attractive rates;
- changes in the supply of LNG vessels;
- our ability to procure or have access to financing and
refinancing;
- our continued borrowing availability under our credit
facilities and compliance with the financial covenants
therein;
- potential conflicts of interest involving our significant
shareholders;
- our ability to pay dividends;
- general economic, political and business conditions, including
sanctions and other measures;
- changes in our operating expenses due to inflationary pressure
and volatility of supply and maintenance including fuel or cooling
down prices and lay-up costs when vessels are not on charter,
drydocking and insurance costs;
- fluctuations in foreign currency exchange and interest
rates;
- vessel breakdowns and instances of loss of hire;
- vessel underperformance and related warranty claims;
- potential disruption of shipping routes and demand due to
accidents, piracy or political events and/or instability, including
the ongoing conflicts in the Middle East;
- compliance with, and our liabilities under, governmental, tax
environmental and safety laws and regulations;
- information system failures, cyber incidents or breaches in
security;
- adjustments in our ship management business and related
costs;
- changes in governmental regulation, tax and trade matters and
actions taken by regulatory authorities; and
- other risks indicated in the risk factors included in CoolCo’s
Annual Report on Form 20-F for the year ended December 31, 2022 and
other filings with the U.S. Securities and Exchange
Commission.
The foregoing factors that could cause our actual results to
differ materially from those contemplated in any forward-looking
statement included in this report should not be construed as
exhaustive. Moreover, we operate in a very competitive and rapidly
changing environment. New risks and uncertainties emerge from time
to time, and it is not possible for us to predict all risks and
uncertainties that could have an impact on the forward-looking
statements contained in this press release. The results, events and
circumstances reflected in the forward-looking statements may not
be achieved or occur, and actual results, events or circumstances
could differ materially from those described in the forward-looking
statements.
As a result, you are cautioned not to place undue reliance on
any forward-looking statements which speak only as of the date of
this press release. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise unless
required by law.
Responsibility Statement
We confirm that, to the best of our knowledge, the interim
unaudited condensed consolidated financial statements for the three
and nine months ended September 30, 2023, which have been prepared
in accordance with accounting principles generally accepted in the
United States (US GAAP) give a true and fair view of the Company’s
consolidated assets, liabilities, financial position and results of
operations. To the best of our knowledge, the financial report for
the three and nine months ended September 30, 2023, includes a fair
review of important events that have occurred during the period and
their impact on the interim unaudited condensed consolidated
financial statements, the principal risks and uncertainties, and
major related party transactions.
November 28, 2023
Cool Company Ltd.
Hamilton, Bermuda
Questions should be directed to:
c/o Cool Company Ltd - +44 207 659
1111
Richard Tyrrell - Chief Executive
Officer
Cyril Ducau (Chairman of the Board)
John Boots - Chief Financial Officer
Antoine Bonnier (Director)
Mi Hong Yoon (Director)
Neil Glass (Director)
Peter Anker (Director)
COOL COMPANY LTD
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three months
ended
For the nine months
ended
Jul-Sep 2023
Apr-Jun 2023
Jul-Sep 2022
Jan-Sep 2023
Jan-Sep 2022
(in thousands of $)
Successor
(Consolidated)
Successor
(Consolidated)
Successor
(Consolidated)1
Successor
(Consolidated)
Successor
(Consolidated)1
Predecessor (Combined
Carve-out)2
Time and voyage charter revenues
84,523
82,071
54,713
257,761
104,535
37,289
Vessel and other management fee
revenues
3,860
3,757
3,684
10,993
3,684
6,167
Amortization of intangible assets and
liabilities - charter agreements, net
4,518
4,488
7,434
13,110
14,504
—
Total operating revenues
92,901
90,316
65,831
281,864
122,723
43,456
Vessel operating expenses
(18,556
)
(18,835
)
(11,409
)
(55,979
)
(24,781
)
(7,706
)
Voyage, charter hire and commission
expenses, net
(1,137
)
(877
)
(855
)
(3,512
)
(1,212
)
(1,229
)
Administrative expenses
(5,936
)
(6,222
)
(3,696
)
(18,797
)
(6,262
)
(5,422
)
Depreciation and amortization
(18,936
)
(18,898
)
(13,447
)
(57,732
)
(28,413
)
(5,745
)
Total operating expenses
(44,565
)
(44,832
)
(29,407
)
(136,020
)
(60,668
)
(20,102
)
Other operating income
—
—
—
—
—
4,374
Operating income
48,336
45,484
36,424
145,844
62,055
27,728
Other non-operating income
—
21
—
42,549
—
—
Financial income/(expense):
Interest income
2,176
2,791
330
6,484
389
4
Interest expense
(20,379
)
(19,863
)
(8,500
)
(59,727
)
(15,172
)
(4,725
)
Gains on derivative instruments
9,689
16,705
9,527
20,393
9,527
—
Other financial items, net
(605
)
(414
)
(868
)
(1,411
)
(2,227
)
622
Financial income/(expense), net
(9,119
)
(781
)
489
(34,261
)
(7,483
)
(4,099
)
Income before income taxes and
non-controlling interests
39,217
44,724
36,913
154,132
54,572
23,629
Income taxes, net
(47
)
(78
)
(141
)
(180
)
(141
)
(385
)
Net income
39,170
44,646
36,772
153,952
54,431
23,244
Net (income)/loss attributable to
non-controlling interests
(340
)
344
(1,091
)
(1,283
)
(1,902
)
(8,206
)
Net income attributable to the Owners
of Cool Company Ltd
38,830
44,990
35,681
152,669
52,529
15,038
Net income/(loss) attributable
to:
Owners of Cool Company Ltd
38,830
44,990
35,681
152,669
52,529
15,038
Non-controlling interests
340
(344
)
1,091
1,283
1,902
8,206
Net income
39,170
44,646
36,772
153,952
54,431
23,244
(1)
The commencement of operations and funding
of CoolCo and the acquisition of its initial TFDE LNG carriers, The
Cool Pool Limited and the shipping and FSRU management organization
from Golar LNG Limited ("Golar") was completed in a phased process.
On January 26, 2022, CoolCo entered into various agreements (the
"Vessel SPA") with Golar, as amended on February 25, 2022, pursuant
to which CoolCo acquired all of the outstanding shares of nine of
Golar’s wholly-owned subsidiaries on various dates in March and
April 2022. Eight of these entities were each the registered or
disponent owner or lessee of the following modern LNG carriers:
Crystal, Ice, Bear, Frost, Glacier, Snow, Kelvin and Seal (disposed
subsequently). The Cool Pool Limited was the entity responsible for
the marketing of these LNG carriers. For CoolCo, for the three and
nine month periods ended September 30, 2022, the successor period
reflects the period beginning from January 27, 2022 with the
closing of CoolCo’s Norwegian equity raise and the date CoolCo
operations substantially commenced and were considered meaningful.
Vessel SPA acquisition dates were staggered reflecting results, as
the successor, from the date CoolCo obtained control of the
respective vessel entities.
(2)
Predecessor period includes results derived from the carve-out of
historical operations from Golar entities acquired by CoolCo as
part of the Vessel SPA and ManCo SPA until the day before the
staggered acquisition date per legal entity during the period
beginning from January 1, 2022 to June 30, 2022.
COOL COMPANY LTD
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
At September 30,
At December 31,
(in thousands of $)
2023
2022
(Audited)
ASSETS
Current assets
Cash and cash equivalents
152,179
129,135
Restricted cash and short-term
deposits
3,549
3,435
Intangible assets, net
2,158
5,552
Trade receivable and other current
assets
10,483
6,225
Inventories
3,952
991
Total current assets
172,321
145,338
Non-current assets
Restricted cash
468
507
Intangible assets, net
8,654
8,315
Newbuildings
136,767
—
Vessels and equipment, net
1,715,429
1,893,407
Other non-current assets
26,130
10,494
Total assets
2,059,769
2,058,061
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt and
short-term debt
150,237
180,065
Trade payables and other current
liabilities
114,622
98,524
Total current liabilities
264,859
278,589
Non-current liabilities
Long-term debt
895,101
958,237
Other non-current liabilities
94,051
105,722
Total liabilities
1,254,011
1,342,548
Equity
Owners' equity includes 53,688,462 common
shares of $1.00 each, issued and outstanding
735,519
646,557
Non-controlling interests
70,239
68,956
Total equity
805,758
715,513
Total liabilities and equity
2,059,769
2,058,061
COOL COMPANY LTD
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the nine months
ended
Jan-Sep 2023
Jan-Sep 2022
(in thousands of $)
Successor
(Consolidated)
Successor
(Consolidated)
Predecessor (Combined
Carve-out)
Operating activities
Net income
153,952
54,431
23,244
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expenses
57,732
28,413
5,745
Amortization of intangible assets and
liabilities arising from charter agreements, net
(13,110
)
(14,504
)
—
Amortization of deferred charges and fair
value adjustments
3,228
1,584
1,588
Gain on sale of Golar Seal vessel
(42,549
)
—
—
Drydocking expenditure
(4,372
)
—
—
Compensation cost related to share-based
payment
1,792
67
238
Change in fair value of derivative
instruments
(13,043
)
(9,527
)
—
Changes in assets and liabilities:
Trade accounts receivable
(4,294
)
(790
)
(117
)
Inventories
(2,961
)
(4
)
—
Other current and other non-current
assets
(4,098
)
3,262
(7,226
)
Amounts (due to) / from related
parties
(1,270
)
3,583
1,252
Trade accounts payable
22,476
(574
)
(400
)
Accrued expenses
(6,123
)
5,764
(180
)
Other current and non-current
liabilities
1,935
(6
)
2,957
Net cash provided by operating
activities
149,295
71,699
27,101
Investing activities
Additions to vessels and equipment
(147,792
)
—
—
Proceeds on sale of vessel
184,300
—
—
Additions to intangible assets
(997
)
—
—
Consideration for acquisition of vessels
and management entities
—
(218,276
)
—
Net cash provided by / (used in)
investing activities
35,511
(218,276
)
—
Financing activities
Proceeds from short-term and long-term
debt
70,000
570,000
—
Repayments of short-term and long-term
debt
(164,296
)
(57,507
)
(498,832
)
Repayments of Parent's funding
—
—
(136,351
)
Financing arrangement fees and other
costs
(1,892
)
(6,569
)
—
(Repayments to) / contributions from
CoolCo in connection with acquisition, net of equity proceeds
—
(581,072
)
581,072
Net proceeds from equity raise
—
269,547
—
Cash dividends paid
(65,499
)
—
—
Net cash used in / (provided by)
financing activities
(161,687
)
194,399
(54,111
)
Net increase / (decrease) in cash, cash
equivalents and restricted cash
23,119
—
47,822
(27,010
)
Cash, cash equivalents and restricted
cash at beginning of period
133,077
50,892
77,902
Cash, cash equivalents and restricted
cash at end of period
156,196
—
98,714
50,892
COOL COMPANY LTD
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
For the nine months ended
September 30, 2023
(in thousands of $, except number of
shares)
Number of common
shares
Owners’ Share Capital
Additional Paid-in
Capital(1)
Retained Earnings
Owners' Equity
Non- controlling
Interests
Total Equity
Consolidated successor balance at
December 31, 2022 (Audited)
53,688,462
53,688
507,127
85,742
646,557
68,956
715,513
Net income
—
—
—
152,669
152,669
1,283
153,952
Share based payments contribution
—
—
1,792
—
1,792
—
1,792
Dividends
—
—
—
(65,499)
(65,499)
—
(65,499)
Consolidated successor balance at
September 30, 2023
53,688,462
53,688
508,919
172,912
735,519
70,239
805,758
For the nine months ended
September 30, 2022
(in thousands of $, except number of
shares)
Number of common
shares
Parent’s / Owners’ Share
Capital
Contributed/ Additional
Paid-in Capital (1)
Retained (Deficit) /
Earnings
Total Parent's / Owners'
Equity
Non- controlling
Interests
Total Equity
Combined carve-out predecessor balance
at December 31, 2021 (Audited)
1,010,000
1,010
779,852
(212,305)
568,557
174,498
743,055
Net income
—
—
—
15,038
15,038
8,206
23,244
Share based payments contribution
—
—
238
—
238
—
238
Deconsolidation of lessor
VIEs
—
—
—
—
—
(115,412)
(115,412)
Combined carve-out predecessor balance
upon disposal
1,010,000
1,010
780,090
(197,267)
583,833
67,292
651,125
Cancellation of Parent's equity
(1,000,000)
(1,000)
(780,090)
197,267
(583,823)
—
(583,823)
Combined carve-out equity
balance prior to acquisition
10,000
10
—
—
10
67,292
67,302
Consolidated successor balance upon
acquisition
10,000
10
—
—
10
—
10
Issuance of shares from private
placement
27,500,000
27,500
239,393
—
266,893
—
266,893
Issuance of shares to Golar
12,500,000
12,500
115,393
—
127,893
—
127,893
Recognition of non-controlling
interest upon acquisition
—
—
—
—
—
67,292
67,292
Fair value adjustment in relation to
acquisition
—
—
—
—
—
(95)
(95)
Net income
—
—
—
52,529
52,529
1,902
54,431
Share based payments contribution
—
—
67
—
67
—
67
Consolidated successor balance at
September 30, 2022
40,010,000
40,010
354,853
52,529
447,392
69,099
516,491
(1) Additional paid-in capital refers to
the amounts of capital contributed or paid-in over and above the
par value of the Company's issued share capital.
APPENDIX A - NON-GAAP FINANCIAL MEASURES AND
DEFINITIONS
Non-GAAP Financial Metrics Arising from How Management
Monitors the Business
In addition to disclosing financial results in accordance with
U.S. generally accepted accounting principles (US GAAP), this
earnings release and the associated investor presentation and
discussion contain references to the non-GAAP financial measures
which are included in the table below. We believe these non-GAAP
financial measures provide investors with useful supplemental
information about the financial performance of our business, enable
comparison of financial results between periods where certain items
may vary independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating our business and measuring our performance. These
non-GAAP financial measures should not be considered a substitute
for, or superior to, financial measures calculated in accordance
with US GAAP, and the financial results calculated in accordance
with US GAAP. Non-GAAP measures are not uniformly defined by all
companies, and may not be comparable with similar titles, measures
and disclosures used by other companies. The reconciliations from
these results should be carefully evaluated.
Non-GAAP measure
Closest equivalent US GAAP
measure
Adjustments to reconcile to
primary financial statements prepared under US GAAP
Rationale for
adjustments
Performance
Measures
Adjusted EBITDA
Net income
'+/- Other non-operating income
+/- Net financial expense, representing:
Interest income, Interest expense, Gains/(Losses) on derivative
instruments and Other financial items, net
+/- Income taxes, net
+ Depreciation and amortization
- Amortization of intangible assets and
liabilities - charter agreements, net
Increases the comparability of total
business performance from period to period and against the
performance of other companies by removing the impact of other
non-operating income, depreciation, amortization of intangible
assets and liabilities -charter agreements, net, financing and tax
items.
Average daily TCE
Time and voyage charter revenues
- Voyage, charter hire and commission
expenses, net
The above total is then divided by
calendar days less scheduled off-hire days.
- Measure of the average daily net revenue
performance of a vessel.
- Standard shipping industry performance
measure used primarily to compare period-to-period changes in the
vessel’s net revenue performance despite changes in the mix of
charter types (i.e. spot charters, time charters and bareboat
charters) under which the vessel may be employed between the
periods.
- Assists management in making decisions
regarding the deployment and utilization of its fleet and in
evaluating financial performance.
Liquidity
measures
Total Contractual Debt
Total debt (current and non-current), net
of deferred finance charges
+ VIE Consolidation and fair value
adjustments upon acquisition
+ Deferred Finance Charges
We consolidate two lessor VIEs for our
sale and leaseback facilities (for the vessels Ice and Kelvin).
This means that on consolidation, our contractual debt is
eliminated and replaced with the Lessor VIEs’ debt.
Contractual debt represents our actual
debt obligations under our various financing arrangements before
consolidating the Lessor VIEs.
The measure enables investors and users of
our financial statements to assess our liquidity and the split of
our debt (current and non-current) based on our underlying
contractual obligations.
Total Company Cash
CoolCo cash based on GAAP measures:
+ Cash and cash equivalents
+ Restricted cash and short-term deposits
(current and non-current)
- VIE restricted cash and short-term
deposits (current and non-current)
We consolidate lessor VIEs for our sale
and leaseback facilities. This means that on consolidation, we
include restricted cash held by the lessor VIEs.
Total Company Cash represents our cash and
cash equivalents and restricted cash and short-term deposits
(current and non-current) before consolidating the lessor VIEs.
Management believes that this measure
enables investors and users of our financial statements to assess
our liquidity and aids comparability with our competitors.
Reconciliations -
Performance Measures
Adjusted EBITDA
For the three months
ended
Jul-Sep 2023
Apr-Jun 2023
Jul-Sep 2022
(in thousands of $)
Successor
(Consolidated)
Successor
(Consolidated)
Successor
(Consolidated)
Net income
39,170
44,646
36,772
Other non-operating income
—
(21
)
Interest income
(2,176
)
(2,791
)
(330
)
Interest expense
20,379
19,863
8,500
Gains on derivative instruments
(9,689
)
(16,705
)
(9,527
)
Other financial items, net
605
414
868
Income taxes, net
47
78
141
Depreciation and amortization
18,936
18,898
13,447
Amortization of intangible assets and
liabilities - charter agreements, net
(4,518
)
(4,488
)
(7,434
)
Adjusted EBITDA
62,754
59,894
42,437
For the nine months
ended
Jan-Sep 2023
Jan-Sep 2022
(in thousands of $)
Successor
(Consolidated)
Successor
(Consolidated)1
Predecessor (Combined
Carve-out)2
Net income
153,952
54,431
23,244
Other non-operating income
(42,549
)
—
—
Interest income
(6,484
)
(389
)
(4
)
Interest expense
59,727
15,172
4,725
Gains on derivative instruments
(20,393
)
(9,527
)
—
Other financial items, net
1,411
2,227
(622
)
Income taxes, net
180
141
385
Depreciation and amortization
57,732
28,413
5,745
Amortization of intangible assets and
liabilities - charter agreements, net
(13,110
)
(14,504
)
—
Adjusted EBITDA
190,466
75,964
33,473
Average daily TCE
For the three months
ended
Jul-Sep 2023
Apr-Jun 2023
Jul-Sep 2022
(in thousands of $, except number of days
and average daily TCE)
Successor
(Consolidated)
Successor
(Consolidated)
Successor
(Consolidated)
Time and voyage charter revenues
84,523
82,071
54,713
Voyage, charter hire and commission
expenses, net
(1,137
)
(877
)
(855
)
83,386
81,194
53,858
Calendar days less scheduled off-hire
days
1,012
1,001
736
Average daily TCE (to the closest
$100)
$
82,400
$
81,100
$
73,200
For the nine months
ended
Jan-Sep 2023
Jan-Sep 2022
(in thousands of $, except number of days
and average daily TCE)
Successor
(Consolidated)
Successor
(Consolidated)1
Predecessor (Combined
Carve-out)2
Time and voyage charter revenues
257,761
104,535
37,289
Voyage, charter hire and commission
expenses, net
(3,512
)
(1,212
)
(1,229
)
254,249
103,323
36,060
Calendar days less scheduled off-hire
days
3,084
1,553
631
Average daily TCE (to the closest
$100)
$
82,400
$
66,500
$
57,100
(1)
The commencement of operations and funding
of CoolCo and the acquisition of its initial TFDE LNG carriers, The
Cool Pool Limited and the shipping and FSRU management organization
from Golar LNG Limited ("Golar") was completed in a phased process.
On January 26, 2022, CoolCo entered into various agreements (the
"Vessel SPA") with Golar, as amended on February 25, 2022, pursuant
to which CoolCo acquired all of the outstanding shares of nine of
Golar’s wholly-owned subsidiaries on various dates in March and
April 2022. Eight of these entities are each the registered or
disponent owner or lessee of the following modern LNG carriers:
Crystal, Ice, Bear, Frost, Glacier, Snow, Kelvin and Seal (disposed
subsequently). The Cool Pool Limited was the entity responsible for
the marketing of these LNG carriers. For CoolCo, for the three and
six month periods ended June 30, 2022, the successor period
reflects the period beginning from January 27, 2022 with the
closing of CoolCo’s Norwegian equity raise and the date CoolCo
operations substantially commenced and were considered meaningful.
Vessel SPA acquisition dates were staggered reflecting results, as
the successor, from the date CoolCo obtained control of the
respective vessel entities.
(2)
Predecessor period includes results
derived from the carve-out of historical operations from Golar
entities acquired by CoolCo as part of the Vessel SPA and ManCo SPA
until the day before the staggered acquisition date per legal
entity during the period beginning from January 1, 2022 to June 30,
2022.
Reconciliations - Liquidity
measures
Total Contractual Debt
(in thousands of $)
At September 30, 2023
At December 31,
2022
Total debt (current and non-current) net
of deferred finance charges
1,045,338
1,138,302
Add: VIE consolidation and fair value
adjustments
109,958
106,829
Add: Deferred finance charges
6,057
6,186
Total Contractual Debt
1,161,353
1,251,317
Total Company Cash
(in thousands of $)
At September 30, 2023
At December 31,
2022
Cash and cash equivalents
152,179
129,135
Restricted cash and short-term
deposits
4,017
3,942
Less: VIE restricted cash
(3,549
)
(3,435
)
Total Company Cash
152,647
129,642
Other definitions
Contracted Revenue Backlog
Contracted revenue backlog is defined as the contracted daily
charter rate for each vessel multiplied by the number of scheduled
hire days for the remaining contract term. Contracted revenue
backlog is not intended to represent adjusted EBITDA or future
cashflows that will be generated from these contracts. This measure
should be seen as a supplement to and not a substitute for our US
GAAP measures of performance.
This information is subject to the disclosure requirements in
Regulation EU 596/2014 (MAR) article 19 number 3 and section 5-12
of the Norwegian Securities Trading Act.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231127928743/en/
Cool Company Ltd - +44 207 659 1111 / ir@coolcoltd.com
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