KNOT Offshore Partners LP (NYSE: KNOP)

Sector: Energy Industry: Oil & Gas Midstream CIK: 0001564180
Market Cap 357.55 Mn
P/B 0.68
P/E -8.86
P/S 1.23
ROIC (Qtr) 7.41
Div Yield % 1.20
Rev 1y % (Qtr) 26.97
Total Debt (Qtr) 983.60 Mn
Debt/Equity (Qtr) 1.80
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About

KNOT Offshore Partners LP (KNOP), a company listed on the NYSE under the symbol "KNOP," operates in the offshore shuttle tanker industry. The company's primary business objective is to generate stable cash flows and provide a sustainable quarterly distribution per unit to its unitholders. KNOT Offshore Partners LP's main business activities involve owning and operating shuttle tankers under long-term charters. The company's fleet consists of 18 shuttle tankers, with a total capacity of approximately 2.5 million deadweight tons (dwt), and is spread...

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Investment thesis

Bull case

  • Robust free cash flow of 153.22M exceeds capital expenditure of 233000 by 657.58x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 153.45M provides 23.90x coverage of SG&A expenses 6.42M, showing efficient operational cost management.
  • Tangible assets of 1.72B provide exceptional 26.20x coverage of deferred revenue 65.75M, showing strong service capability backing.
  • Operating cash flow of 153.45M provides strong 37.93x coverage of inventory 4.05M, indicating efficient inventory management.
  • Operating cash flow of 153.45M provides strong 852.50x coverage of tax liabilities 180000, showing excellent fiscal position.

Bear case

  • Operating cash flow of 153.45M barely covers its investment activities of (26M), with a coverage ratio of -5.90, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 153.45M provides thin coverage of dividend payments of (10.41M) with a -14.75 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 77.21M provide limited coverage of acquisition spending of (25.76M), which is -3x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 116.37M show weak coverage of depreciation charges of 117.50M, with a 0.99 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 153.22M represents just -1.46x of debt issuance (105.16M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Concentration Risk Type Breakdown of Revenue (2016)

Concentration Risk Type Breakdown of Revenue (2016)

Peer comparison

Companies in the Oil & Gas Midstream
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ENB Enbridge Inc 112.63 Bn 21.82 2.37 76.66 Bn
2 EPD Enterprise Products Partners L.P. 81.14 Bn 17.33 2.56 33.58 Bn
3 TRP Tc Energy Corp 64.68 Bn 26.06 5.82 43.86 Bn
4 MPLX Mplx Lp 58.19 Bn 14.78 4.97 25.92 Bn
5 KMI Kinder Morgan, Inc. 56.67 Bn 46.57 3.70 32.00 Bn
6 WMB Williams Companies, Inc. 54.06 Bn -94.68 7.35 27.99 Bn
7 LNG Cheniere Energy, Inc. 49.66 Bn -50.93 183.24 25.19 Bn
8 TRGP Targa Resources Corp. 48.94 Bn 0.00 10.77 17.43 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.75 3.63
EV to Cash from Ops. EV/CFO 9.75 38.33
EV to Debt EV to Debt 1.31 -74.71
EV to EBIT EV/EBIT 38.73 18.29
EV to EBITDA EV/EBITDA 9.44 7.00
EV to Free Cash Flow [EV/FCF] EV/FCF 9.96 63.00
EV to Market Cap EV to Market Cap 3.59 2.28
EV to Revenue EV/Rev 4.42 9.80
Price to Book Value [P/B] P/B 0.68 51.38
Price to Earnings [P/E] P/E -8.86 69.14
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.07 -3.69
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 71.20
Dividend per Basic Share Div per Share (Qtr) 0.10 1.46
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 2.32 33.21
Interest Coverage Int. cover (Qtr) 1.85 5.29
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 73.64 -6.96
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 14.85 16,425.73
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -2.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 79.23 -0.02
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 36.52 -3.25
EBIT Growth (1y) % EBIT 1y % (Qtr) 105.91 -7.01
EBT Growth (1y) % EBT 1y % (Qtr) 518.93 -231.64
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -42.37
FCF Growth (1y) % FCF 1y % (Qtr) 18.47 -2.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 23.48 1.01
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.21 0.77
Cash Payout Ratio Cash Payout (Qtr) 0.07 0.21
Cash Ratio Cash Ratio (Qtr) 0.21 0.91
Current Ratio Curr Ratio (Qtr) 0.28 1.78
Debt to Equity Ratio Debt/Equity (Qtr) 1.80 1.13
Interest Cover Ratio Int Coverage (Qtr) 1.85 5.29
Times Interest Earned Times Interest Earned (Qtr) 1.85 5.29
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 65.10 35.43
EBIT Margin % EBIT Margin % (Qtr) 32.40 27.71
EBT Margin % EBT Margin % (Qtr) 14.89 17.46
Gross Margin % Gross Margin % (Qtr) 65.00 48.73
Net Profit Margin % Net Margin % (Qtr) 14.70 15.45