Cool Company (CLCO) Q4 2024 earnings summary

Executive summary

• Q4 2024 saw operating revenues rise to $84.6 million from $82.4 million in Q3, with net income surging to $29.4 million, mainly due to significant unrealized gains on interest rate swaps.

• Adjusted EBITDA increased to $55.3 million from $53.7 million in Q3, despite historically low spot market rates and a lack of a winter market, supported by a strong charter backlog.

• No dividend declared for Q4 to preserve financial flexibility amid sub-break-even spot rates and market uncertainty.

• Delivery of newbuild Kool Tiger and upgrades to Kool Husky and Kool Glacier enhanced fleet capabilities; Kool Tiger and Kool Glacier employed in the spot market pending long-term charters.

• Fleet utilization reached 92% in Q4, with expectations to exceed this in Q1 2025.

Financial highlights

• Q4 revenue increased to $84.6 million, mainly due to fewer dry dock days and newbuild Kool Tiger entering the fleet.

• Adjusted EBITDA for Q4 was $55.3 million; operating income was $38.5 million; net income was $29.4 million, driven by mark-to-market gains on interest rate swaps.

• TCE revenues were $80.8 million, with an average TCE rate of $73,900 per day and 92% fleet utilization.

• Liquidity at year-end 2024 was $288 million, with $165 million in cash and $123 million undrawn under RRCF.

• No debt maturities until mid-2029; average interest rate below 6%, with 77% of debt hedged or fixed.

Outlook and guidance

• Revenue guidance for Q1 2025 is similar to Q4, supported by the chartering team’s performance and new charters offsetting additional dry-dock days.

• Market normalization is expected as new LNG projects come online in 2025–2026, with significant upside potential if spot rates recover.

• 2025 ton-mile growth expected at 4%, with 2026 projected at 17% as new production ramps up.

• Long-term charter rates remain resilient, and supply-demand tightening is expected as older steam turbine vessels exit the market.

• Over $1 billion in firm contracted revenue backlog provides earnings visibility, but exposure remains for vessels coming open over time.