Cool Company Ltd’s Earnings Call: Growth Amid Challenges

Cool Company Ltd ((CLCO)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cool Company Ltd’s recent earnings call painted a mixed picture, with positive revenue and backlog growth juxtaposed against challenges such as declining TCE rates and increased interest expenses. The overall sentiment was cautiously optimistic, highlighting a strong strategic position despite some market hurdles.

Revenue and EBITDA Growth

Cool Company Ltd reported an increase in total operating revenue, reaching $85.5 million in Q1 2025, up from $84.6 million in the previous quarter. The adjusted EBITDA for the period was $53.4 million, indicating solid financial performance and efficient cost management.

Strong Contracted Revenue Backlog

The company boasts a robust contracted revenue backlog exceeding $1.6 billion, which equates to approximately 59 vessel years or an average of 4.5 years per vessel. This backlog underscores the company’s strong market position and future revenue visibility.

Fleet Operating Expense Reduction

Cool Company Ltd successfully reduced its average vessel operating expenses to $16,300 per day per vessel, down from $17,600 a year ago. This reduction reflects the company’s focus on operational efficiencies and cost control.

LNG Supply Growth

The company anticipates a significant increase in LNG supply, projecting over 20% growth from 2024 levels by the end of 2026. This growth is expected to provide new opportunities and bolster the company’s long-term strategy.

Decline in Average TCE Rates

The average Time Charter Equivalent (TCE) rate fell to $70,600 per day from $73,900 in the previous quarter, primarily due to increased repositioning expenses. This decline poses a challenge to maintaining profitability in the near term.

Interest Expenses and Net Income Decrease

Net income saw a significant decrease to $9.1 million from $29.4 million in Q4 2024, influenced by $2.8 million in interest expenses related to newbuild delivery. This decline highlights the financial pressures faced by the company.

Challenging Market Conditions

Market conditions remain tough, with rates yet to recover significantly, impacting near-term profitability. The company continues to navigate these challenges while seeking opportunities for growth.

Forward-Looking Guidance

Cool Company Ltd provided forward-looking guidance that underscores its strategic focus. The company reported a cash and cash equivalents total of approximately $136 million and total available liquidity of $256 million. With 83% of 2025 vessel days covered and a focus on long-term charter opportunities, the company is well-positioned for future growth, supported by projected increases in LNG supply.

In summary, Cool Company Ltd’s earnings call revealed a company navigating a complex landscape. While revenue and backlog growth are promising, challenges such as declining TCE rates and market conditions require careful management. The company’s strategic focus on operational efficiency and long-term opportunities positions it well for future success.