the partnership remains financially resilient with a strong contracted revenue position of $854 million at the end of Q1 on fixed contracts, which averaged 2.3 years in duration.
— Derek Lowe
03Detailed Report
KNOP
Company KNOP
Period
Q1 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 27, 2026
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Executive Summary
KNOT Offshore Partners reported solid operating and cash-flow performance for Q1 2025, supported by a strong fixed charter backlog and disciplined capital management. Revenue of $84.0 million translated to adjusted EBITDA of approximately $52.2 million and net income of $7.6 million, with utilization at 99.5% (96.9% including two dry dockings). The company closed the quarter with $101 million in available liquidity and a debt repayment trajectory of roughly $90 million per year, underpinning a resilient balance sheet despite near-term refinancing needs.
Management remains constructive on medium- to long-term dynamics driven by Brazilian oil-field growth (pre-salt developments and FPSO deployments) and North Sea activity (Johan Castberg, Penguins) that support continued shuttle-tanker demand. KNOP emphasized a firm contracted revenue position of $854 million with average contract duration 2.3 years, plus options averaging 4.7 years, which strengthens visibility and the potential for accretive drop-downs from sponsor Knutsen NYK. The near-term focus includes addressing four debt facilities maturing in 2025–2026, pursuing refinancings on favorable terms, and selectively pursuing vessel drop-downs to lower fleet age and extend long-term cash flow. Management also signaled ongoing hedging renewal activity as swaps mature, with a disciplined approach to financing decisions in a tight market.
From a risk/return standpoint, KNOP offers a defensible, asset-light style revenue stream with meaningful upside from continued market tightness and the sponsor’s drop-down program, but with liquidity and refinancing risk to monitor as multiple debt facilities approach maturity in the 2025–2026 window.
Liquidity and cash flow
- Net cash provided by operating activities: $36.02m
- Free Cash Flow: $35.81m
- Cash and cash equivalents: $67.26m; undrawn credit capacity implied in liquidity: $34.0m; total available liquidity: $101m
- Capex (net of drops): $-0.21m; depreciation: $28.0m (approx. per period)
- Net debt: $881.10m; total debt: $948.36m; long-term debt: $697.94m; short-term debt: $250.42m
Balance sheet health
- Total assets: $1.651B; total liabilities: $1.034B; total stockholders’ equity: $616.11m
- Interest coverage: ~1.56x; Debt to capitalization: ~60.6%; Debt to equity: ~1.54x
Backlog and coverage
- Fixed revenue backlog: $854m remaining on fixed contracts; average duration 2.3 years; options add ~4.7 years of potential coverage
- 96% fixed charter coverage for the last three quarters of 2025; ~75% fixed for 2026 (open exposure increases later in 2026)
- Four refinancings due in 2025; management indicates refi activity is underway with a track record of successful refinancings
Drop-down program and sponsor relationships
- Sponsor Knutsen NYK has 11 potential drop-down vessels; current near-term execution highlighted by Dan Sabia ↔ Live Knutsen swap completed in Q1
- Hilda Knutsen on hire with Shell for 1 year; Raquel Knutsen option period extends to 2030; ongoing discussions of additional drop-downs (2–4 months per transaction to complete)
- Strategic aim to lower fleet age and grow long-term cash flow through accretive drop-downs; potential to increase leverage modestly to fund buy-downs when terms are favorable
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
84.03M
15.06%
-7.92%
Gross Profit
52.65M
167.65%
45.47%
Operating Income
23.44M
29.47%
-32.39%
Net Income
7.58M
243.53%
-67.39%
EPS
0.22
246.67%
-67.16%
Key Financial Ratios
Gross Profit Margin
Excellent
62.70%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Excellent
27.90%
Operating margin is exceptional, indicating strong pricing power and operational efficiency
Net Profit Margin
Fair
9.02%
Net profit margin is moderate, room for improvement in cost management
Return on Assets
Weak
0.46%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
1.23%
Return on equity suggests inefficient capital allocation
Current Ratio
Concern
0.34
Current ratio below safe levels, potential liquidity risk
Debt to Equity
High Risk
1.54
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
Value
8.04x
P/E ratio suggests potential undervaluation or stable earnings
Price to Book
Undervalued
0.40x
Trading below book value, potential value opportunity or distressed
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