Cool Company (CLCO) Q4 2024 earnings summary

Executive summary

• Q4 2024 saw operating profitability and modest revenue and adjusted EBITDA growth, supported by a strong charter backlog and over $1 billion in firm contracted revenue, despite historically low spot market rates and a lack of a winter market.

• Adjusted EBITDA rose to $55.3 million from $53.7 million in Q3, with net income for Q4 at $29.4 million, mainly due to significant unrealized mark-to-market gains on interest rate swaps.

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

• Liquidity remains robust at $288 million, with no debt maturities until mid-2029 and a well-spaced charter backlog.

• Delivery of newbuild Kool Tiger and upgrades to Kool Husky and Kool Glacier enhanced fleet capabilities, with Kool Tiger employed on the spot market pending long-term charter.

Financial highlights

• Q4 2024 revenue increased to $84.6 million, mainly due to fewer dry dock days, and exceeded initial guidance.

• Adjusted EBITDA for Q4 was $55.3 million, with a margin of approximately 65%.

• Net income for Q4 was $29.4 million, up from $8.1 million in Q3, driven by a $23.5 million swing in net unrealized gains on interest rate swaps.

• Operating income was $38.5 million, slightly down from $38.9 million in Q3 due to higher OpEx.

• Average TCE for Q4 was $73,900/day, with 92% fleet utilization.

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.

• 2025 ton-mile development expected at 4%, with 2026 projected at 17% as new LNG projects come online.

• Significant upside potential if TFDE spot rates recover, with illustrative scenarios showing $60M+ upside in 2025 and $100M+ in 2026.

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

• Management anticipates volatility but sees favorable conditions for modern LNG carriers as new projects absorb excess tonnage.