Teekay LNG Partners Reports First Quarter 2014 Results
HAMILTON, BERMUDA--(Marketwired - May 15, 2014) -
Highlights
- Generated distributable cash flow of $60.1 million in the first
quarter of 2014, an increase of 12 percent from the first quarter
of 2013.
- Declared first quarter 2014 cash distribution of $0.6918 per
unit.
- In March 2014, Teekay LNG, through a new 50/50 joint venture,
signed a letter of intent to provide six icebreaker LNG carriers
for the Yamal LNG project.
- In April 2014, the Exmar LPG joint venture took delivery of the
first of 12 LPG carrier newbuildings.
- Total liquidity of approximately $416 million as at March 31,
2014.
Teekay GP L.L.C., the general partner of Teekay LNG Partners
L.P. (Teekay LNG or the Partnership) (NYSE:TGP),
today reported the Partnership's results for the quarter ended
March 31, 2014. During the first quarter of 2014, the Partnership
generated distributable cash flow(1) of $60.1 million, compared to
$53.7 million in the same quarter of the previous year. The
increase in distributable cash flow was primarily due to the
Partnership's February 2013 acquisition of a 50 percent interest in
Exmar LPG BVBA (Exmar LPG), a liquefied petroleum gas
(LPG) carrier joint venture with Exmar N.V.
(Exmar), and the Partnership's acquisition and
charter-back of two liquefied natural gas (LNG) carriers
from Awilco LNG ASA (Awilco) in September and November
2013. The increase was partially offset by reduced cash flow as a
result of the sale of two 2000-built conventional tankers, the
Tenerife Spirit and the Algeciras Spirit, in
December 2013 and February 2014, respectively.
On April 9, 2014, the Partnership declared a cash distribution
of $0.6918 per unit for the quarter ended March 31, 2014. The cash
distribution was paid on May 9, 2014 to all unitholders of record
on April 25, 2014.
"The Partnership's portfolio of long-term fixed-rate contracts
generated stable cash flows during the first quarter," commented
Peter Evensen, Chief Executive Officer of Teekay GP LLC. "With 100
percent of Teekay LNG's on-the-water LNG carrier fleet operating
under fixed-rate contracts with an average duration of 12 years,
the Partnership is largely insulated from short-term shipping rate
fluctuations and well-positioned for expected future growth. We
expect short-term volatility in the LNG shipping market to continue
through 2016, prior to the expected start-up of several new LNG
liquefaction projects. During the next three years, Teekay LNG has
only limited exposure to potential market weakness with charters
for only two of the Partnership's LNG carriers, both of which are
52 percent-owned, scheduled to expire during that period."
"Our LPG carriers also continue to report stable results," Mr.
Evensen continued. "We are pleased to report that in early-April
2014, the Partnership's Exmar LPG joint venture took delivery of
the Waasmunster, the first of 12 mid-size LPG carrier
newbuildings, marking a milestone in the LPG joint venture's growth
strategy."
Mr. Evensen added, "Looking ahead, I am pleased to confirm that
the Partnership, through a new 50/50 joint venture, signed a letter
of intent to provide six icebreaker LNG carriers for the Yamal LNG
project. The project, which is being developed by Novatek, Total,
and CNPC, is currently scheduled for start-up in late-2017 and is
expected to produce 16.5 million metric tons of LNG per annum. Upon
finalization of the contracts, these six icebreaker LNG carriers
will further complement Teekay LNG's existing pipeline of growth
projects scheduled to deliver between 2014 and 2018, which includes
11 LPG carrier newbuildings, through our Exmar LPG joint venture,
and five MEGI LNG carrier newbuildings."
Recent
Transactions
In late-March 2014, the Partnership, through a new 50/50 joint
venture with a China-based liquefied natural gas (LNG)
shipping company, signed a letter of intent to provide six
internationally-flagged icebreaker LNG carriers for the Yamal LNG
project, located on the Yamal Peninsula in Northern Russia. The
Yamal LNG project is a joint venture between Russia-based Novatek
(60 percent), France-based Total (20 percent) and China-based China
National Petroleum Corporation (CNPC) (20 percent), and will
consist of three LNG trains for a total capacity of 16.5 million
metric tons of LNG per annum, which is currently scheduled to
start-up in late-2017. The LNG will be transported from Northern
Russia to Europe and Asia. The new 50/50 joint venture is currently
in the process of negotiating contract terms, including the
shipbuilding contracts and related time-charters, and expects to
finalize these agreements during 2014.
Financial
Summary
The Partnership reported adjusted net income attributable to the
partners(1) (as detailed in Appendix A to this release) of
$41.8 million for the quarter ended March 31, 2014, compared to
$39.1 million for the same period of the prior year. Adjusted net
income attributable to the partners excludes a number of specific
items that had the net effect of decreasing net income by $3.6
million and increasing net income by $15.4 million for the three
months ended March 31, 2014 and 2013, respectively, as detailed in
Appendix A. Including these items, the
Partnership reported net income attributable to the partners, on a
GAAP basis, of $38.2 million and $54.4 million for the three months
ended March 31, 2014 and 2013, respectively.
Adjusted net income attributable to the partners for the three
months ended March 31, 2014 increased from the same period in the
prior year, mainly due to the acquisitions of, and contributions
by, the two Awilco LNG carriers in late-2013, and the acquisition
of a 50 percent ownership interest in Exmar LPG in February 2013,
which was partially offset by the sale of two 2000-built
conventional tankers, the Tenerife Spirit and the
Algeciras Spirit, in December 2013 and February 2014,
respectively.
For accounting purposes, the Partnership is required to
recognize the changes in the fair value of its outstanding
derivative instruments that are not designated as hedges for
accounting purposes in net income. This method of accounting does
not affect the Partnership's cash flows or the calculation of
distributable cash flow, but results in the recognition of
unrealized gains or losses on the consolidated statements of income
as detailed in notes 3, 4 and 5 to the Summary Consolidated
Statements of Income and Comprehensive Income included in this
release.
(1) Adjusted net income attributable to the partners is a
non-GAAP financial measure. Please refer to Appendix A to
this release for a reconciliation of this non-GAAP measure to the
most directly comparable financial measure under GAAP and
information about specific items affecting net income which are
typically excluded by securities analysts in their published
estimates of the Partnership's financial results.
Operating
Results
The following table highlights certain financial information for
Teekay LNG's two segments: the Liquefied Gas segment and the
Conventional Tanker segment (please refer to the "Teekay LNG's
Fleet" section of this release below and Appendices C
through F for further details).
|
Three Months
Ended |
Three Months
Ended |
|
March 31,
2014 |
March 31,
2013 |
|
(unaudited) |
(unaudited) |
(in thousands of U.S. Dollars) |
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Net voyage revenues(i) |
74,141 |
26,016 |
100,157 |
68,030 |
28,686 |
96,716 |
Vessel operating expenses |
14,714 |
9,542 |
24,256 |
13,993 |
11,323 |
25,316 |
Depreciation and amortization |
18,113 |
5,997 |
24,110 |
17,290 |
6,853 |
24,143 |
CFVO from consolidated vessels(ii) |
58,565 |
12,869 |
71,434 |
51,937 |
13,633 |
65,570 |
CFVO from equity accounted vessels(iii) |
48,140 |
- |
48,140 |
41,999 |
- |
41,999 |
Total CFVO(ii) |
106,705 |
12,869 |
119,574 |
93,936 |
13,633 |
107,569 |
(i) Net voyage revenues represents voyage revenues less voyage
expenses, which comprise all expenses relating to certain voyages,
including bunker fuel expenses, port fees, canal tolls and
brokerage commissions. Net voyage revenues is a non-GAAP financial
measure used by certain investors to measure the financial
performance of shipping companies. Please see Appendix C
for a reconciliation of this non-GAAP measure as used in this
release to the most directly comparable GAAP financial
measure. |
(ii) Cash flow from vessel operations (CFVO) from
consolidated vessels represents income from vessel operations
before (a) depreciation and amortization expense, (b) amortization
of in-process revenue contracts, and includes (c) adjustments for
direct financing leases and two Suezmax tankers to a cash basis.
CFVO is included because certain investors use this data to measure
a company's financial performance. CFVO is not required by GAAP and
should not be considered as an alternative to net income, equity
income or any other indicator of the Partnership's performance
required by GAAP. Please see Appendix E for a
reconciliation of CFVO from consolidated vessels (a non-GAAP
measure) as used in this release to the most directly comparable
GAAP financial measure. |
(iii) The Partnership's equity accounted investments for the three
months ended March 31, 2014 and 2013 include the Partnership's 40
percent interest in Teekay Nakilat (III) Corporation, which owns
four LNG carriers; the Partnership's 50 percent interest in the
Excalibur and Excelsior joint ventures with Exmar, which own one
LNG carrier and one regasification unit, respectively; the
Partnership's 33 percent interest in four LNG carriers servicing
the Angola LNG Project; the Partnership's 52 percent interest in
Malt LNG Netherlands Holdings B.V., the joint venture between the
Partnership and Marubeni Corporation, which owns six LNG carriers
(Malt LNG Carriers); and the Partnership's equity 50
percent interest in Exmar LPG BVBA, the joint venture between the
Partnership and Exmar, acquired in February 2013, which currently
owns and charters-in 26 vessels in the LPG carrier segment,
including 11 newbuildings. Please see Appendix F for a
description and reconciliation of CFVO from equity accounted
vessels (a non-GAAP measure) as used in this release to the most
directly comparable GAAP financial measure. |
Liquefied Gas Segment
Cash flow from vessel operations from the Partnership's
Liquefied Gas segment, excluding equity accounted vessels,
increased to $58.6 million in the first quarter of 2014 from $51.9
million in the same quarter of the prior year. The increase was
primarily the result of the delivery in late-2013 of two LNG
carrier newbuildings acquired from Awilco, and was partially offset
by 18 days of unscheduled off-hire due to repairs required for one
of the Partnership's LNG carriers during the first quarter of
2014.
Cash flow from vessel operations from the Partnership's equity
accounted vessels in the Liquefied Gas segment increased to $48.1
million in the first quarter of 2014 from $42.0 million in the same
quarter of the prior year, primarily due to the acquisition of a 50
percent ownership interest in Exmar LPG in February 2013.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership's
Conventional Tanker segment decreased to $12.9 million in the first
quarter of 2014 from $13.6 million in the same quarter of the prior
year, primarily due to the sale of two Suezmax conventional
tankers, Tenerife Spirit and Algeciras Spirit, in
December 2013 and February 2014, respectively, partially offset by
$1.6 million in additional revenues from two of the Partnership's
Suezmax conventional tankers as result of higher spot tanker rates.
The time-charter contract for these vessels currently includes a
fixed component plus a variable component, which is based on the
spot Suezmax tanker rates.
Teekay LNG's
Fleet
The following table summarizes the Partnership's fleet as of May
1, 2014:
|
Number of Vessels |
|
Owned Vessels |
|
In-Chartered Vessels |
|
Newbuildings |
|
Total |
LNG Carrier Fleet |
29 |
(i) |
- |
|
5 |
|
34 |
LPG/Multigas Carrier Fleet |
16 |
(ii) |
4 |
(iii) |
11 |
(iii) |
31 |
Conventional Tanker Fleet |
9 |
|
- |
|
- |
|
9 |
Total |
54 |
|
4 |
|
16 |
|
74 |
(i)The Partnership's ownership interests in these vessels range
from 33 percent to 100 percent. |
(ii)The Partnership's ownership interests in these vessels range
from 50 percent to 99 percent. |
(iii)The Partnership's interest in these vessels is 50
percent. |
Liquidity
As of March 31, 2014, the Partnership had total liquidity of
$416.0 million (comprised of $94.8 million in cash and cash
equivalents and $321.2 million in undrawn credit facilities).
Availability of 2013
Annual Report
The Partnership filed its 2013 Annual Report on Form 20-F with
the U.S. Securities and Exchange Commission (SEC) on April
29, 2014. Copies of this report are available on Teekay LNG's
website, under "Financials - Annual Reports", at www.teekaylng.com.
Unitholders may request a printed copy of this Annual Report,
including the complete audited financial statements, free of charge
by contacting Teekay LNG Partners Investor Relations.
Conference
Call
The Partnership plans to host a conference call on Friday, May
16, 2014 at 11:00 a.m. (ET) to discuss the results for the first
quarter of 2014. All unitholders and interested parties are invited
to listen to the live conference call by choosing from the
following options:
- By dialing (866) 322-2356 or
(416) 640-3405, if
outside North America, and quoting conference ID code 1662980.
- By accessing the webcast, which will be available on Teekay
LNG's website at www.teekaylng.com (the archive will remain on the
web site for a period of 30 days).
A supporting First Quarter 2014 Earnings Presentation will also
be available at www.teekaylng.com in advance of the conference call
start time. The conference call will be recorded and made available
until Friday, May 23, 2014. This recording can be accessed
following the live call by dialing (888) 203-1112 or
(647) 436-0148, if
outside North America, and entering access code 1662980.
About Teekay LNG
Partners L.P.
Teekay LNG Partners is the world's second largest independent
owner and operator of LNG carriers, providing LNG, LPG and crude
oil marine transportation services primarily under long-term,
fixed-rate charter contracts through its interests in 34 LNG
carriers (including one LNG regasification unit and five
newbuildings), 31 LPG/Multigas carriers (including four
chartered-in LPG carriers and 11 newbuildings) and nine
conventional tankers. The Partnership's interests in these vessels
range from 33 to 100 percent. Teekay LNG Partners L.P. is a
publicly-traded master limited partnership (MLP) formed by
Teekay Corporation (NYSE:TK) as part of its strategy to expand its
operations in the LNG and LPG shipping sectors. Teekay LNG
Partners' common units trade on the New York Stock Exchange under
the symbol "TGP".
TEEKAY LNG PARTNERS L.P. |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME |
|
(in thousands of U.S. Dollars, except units
outstanding) |
|
|
Three Months
Ended |
|
March
31, |
December
31, |
March
31, |
2014 |
2013 |
2013 |
|
(unaudited) |
(unaudited) |
(unaudited) |
VOYAGE REVENUES |
101,490 |
|
104,858 |
|
97,107 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
Voyage expenses |
1,333 |
|
869 |
|
391 |
|
Vessel operating expenses |
24,256 |
|
25,164 |
|
25,316 |
|
Depreciation and amortization |
24,110 |
|
24,145 |
|
24,143 |
|
General and administrative |
6,408 |
|
5,438 |
|
5,469 |
|
Loan loss recovery(1) |
- |
|
(3,804 |
) |
- |
|
Restructuring charge(2) |
- |
|
1,786 |
|
- |
|
Total operating expenses |
56,107 |
|
53,598 |
|
55,319 |
|
Income from vessel operations |
45,383 |
|
51,260 |
|
41,788 |
|
OTHER ITEMS |
|
|
|
|
|
|
Equity income(3) |
20,373 |
|
28,602 |
|
26,424 |
|
Interest expense |
(14,831 |
) |
(15,775 |
) |
(13,248 |
) |
Interest income |
648 |
|
1,019 |
|
515 |
|
Realized and unrealized loss on |
|
|
|
|
|
|
derivative instruments(4) |
(7,521 |
) |
(5,238 |
) |
(8,285 |
) |
Foreign exchange (loss) gain(5) |
(779 |
) |
(5,188 |
) |
8,211 |
|
Other income - net |
218 |
|
214 |
|
469 |
|
|
(1,892 |
) |
3,634 |
|
14,086 |
|
Net income before tax expense |
43,491 |
|
54,894 |
|
55,874 |
|
Income tax expense |
(395 |
) |
(2,722 |
) |
(843 |
) |
Net income |
43,096 |
|
52,172 |
|
55,031 |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
Unrealized net (loss) gain on qualifying |
|
|
|
|
|
|
cash flow hedging instruments |
|
|
|
|
|
|
in
equity accounted joint ventures net of |
|
|
|
|
|
|
amounts reclassified to equity income |
(552 |
) |
1,680 |
|
- |
|
Other comprehensive (loss) income |
(552 |
) |
1,680 |
|
- |
|
Comprehensive income |
42,544 |
|
53,852 |
|
55,031 |
|
Non-controlling interest in net income |
4,850 |
|
4,644 |
|
586 |
|
General Partner's interest in net income |
7,155 |
|
7,338 |
|
5,965 |
|
Limited partners' interest in net income |
31,091 |
|
40,190 |
|
48,480 |
|
Weighted-average number of common units outstanding: |
|
|
|
|
|
|
•
Basic |
74,199,534 |
|
73,971,294 |
|
69,683,763 |
|
•
Diluted |
74,226,654 |
|
73,995,463 |
|
69,686,503 |
|
Total number of units outstanding at end of period |
74,211,160 |
|
74,196,294 |
|
69,683,763 |
|
(1)In early-2012, Teekay BLT Corporation (Teekay Tangguh Joint
Venture), in which the Partnership has a 69 percent ownership
interest, advanced amounts to P.T. Berlian Laju Tanker, the parent
company of the non-controlling shareholder of the Teekay Tangguh
Joint Venture, as an advance of dividends. In July 2012, P.T.
Berlian Laju Tanker entered into a court-supervised restructuring
in Indonesia in order to restructure its debts. In September 2013,
the Teekay Tangguh Joint Venture recorded a $3.8 million loan loss
provision relating to the advances to P.T. Berlian Laju Tanker, as
it was probable, at that time, that the carrying value of the loan
was impaired. However, during the fourth quarter of 2013, as P.T.
Berlian Laju Tanker had sufficiently restructured its business, the
Teekay Tangguh Joint Venture reassessed the probability of
collectability of this advance and reversed the loan loss provision
previously recorded in September 2013. On February 1, 2014, the
Teekay Tangguh Joint Venture declared dividends of $69.5 million,
of which $14.4 million was used to offset the total advances to its
non-controlling shareholder and P.T. Berlian Laju Tanker. |
(2)Restructuring charge primarily relates to seafarer severance
payments upon sale of two conventional tankers under capital
lease. |
(3)Equity income includes unrealized gains on derivative
instruments and any ineffectiveness for any derivative instruments
designated as hedges for accounting purposes as detailed in the
table below: |
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2014 |
2013 |
2013 |
Equity income |
20,373 |
28,602 |
|
26,424 |
|
Proportionate share of unrealized loss (gains) on derivative
instruments |
1,053 |
(5,798 |
) |
(4,599 |
) |
Proportionate share of ineffective portion of hedge accounted |
|
|
|
|
|
interest rate swap |
- |
514 |
|
- |
|
Equity income excluding unrealized gains on derivative
instruments |
|
|
|
|
|
and ineffective portion of hedge accounted interest rate swap |
21,426 |
23,318 |
|
21,825 |
|
(4)The realized losses relate to the amounts the Partnership
actually paid to settle derivative instruments and the unrealized
(losses) gains relate to the change in fair value of such
derivative instruments as detailed in the table below: |
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
2014 |
2013 |
2013 |
Realized (losses) gains relating to: |
|
|
|
|
|
|
Interest rate swaps |
(9,244 |
) |
(9,535 |
) |
(9,526 |
) |
Toledo Spirit time-charter derivative contract |
- |
|
641 |
|
- |
|
|
(9,244 |
) |
(8,894 |
) |
(9,526 |
) |
Unrealized gains (losses) relating to: |
|
|
|
|
|
|
Interest rate swaps |
4,023 |
|
2,556 |
|
(1,259 |
) |
Toledo Spirit time-charter derivative contract |
(2,300 |
) |
1,100 |
|
2,500 |
|
|
1,723 |
|
3,656 |
|
1,241 |
|
Total realized and unrealized losses on derivative instruments |
(7,521 |
) |
(5,238 |
) |
(8,285 |
) |
(5)For accounting purposes, the Partnership is required to revalue
all foreign currency-denominated monetary assets and liabilities
based on the prevailing exchange rate at the end of each reporting
period. This revaluation does not affect the Partnership's cash
flows or the calculation of distributable cash flow, but results in
the recognition of unrealized foreign currency translation gains or
losses in the consolidated statements of income and comprehensive
income. Foreign exchange (loss) gain includes realized (losses)
gains relating to the amounts the Partnership received (paid) to
settle the Partnership's non-designated cross currency swaps that
were entered into as economic hedges in relation to the
Partnership's Norwegian Kroner (NOK)-denominated unsecured
bonds. The Partnership issued NOK 700 million and NOK 900 million
of unsecured bonds in May 2012 and September 2013 that mature in
2017 and 2018, respectively. Foreign exchange (loss) gain also
includes unrealized (losses) gains relating to the change in fair
value of such derivative instruments, partially offset by
unrealized gains (losses) on the revaluation of the NOK bonds as
detailed in the table below: |
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
2014 |
2013 |
2013 |
Realized (losses) gains on cross-currency swaps |
(365 |
) |
(216 |
) |
58 |
|
Unrealized gains (losses) on cross-currency swaps |
3,917 |
|
(2,832 |
) |
(6,191 |
) |
Unrealized (losses) gains on revaluation of NOK bonds |
(3,653 |
) |
2,512 |
|
5,923 |
|
|
TEEKAY LNG PARTNERS L.P. |
CONSOLIDATED BALANCE SHEETS |
|
(in thousands of U.S. Dollars) |
|
|
As at March
31, |
As at December
31, |
|
2014 |
2013 |
|
(unaudited) |
(unaudited) |
ASSETS |
|
|
Current |
|
|
Cash and cash equivalents |
94,824 |
139,481 |
Accounts receivable |
19,601 |
19,844 |
Prepaid expenses |
7,478 |
5,756 |
Current portion of derivative assets |
17,921 |
18,444 |
Current portion of net investments in direct financing leases |
16,886 |
16,441 |
Current portion of advances to joint venture partner |
- |
14,364 |
Advances to affiliates |
3,606 |
6,634 |
Total current assets |
160,316 |
220,964 |
|
|
|
Restricted cash - long-term |
498,208 |
497,298 |
|
|
|
Vessels and equipment |
|
|
At
cost, less accumulated depreciation |
1,244,537 |
1,253,763 |
Vessels under capital leases, at cost, less accumulated
depreciation |
535,700 |
571,692 |
Advances on newbuilding contracts |
98,055 |
97,207 |
Total vessels and equipment |
1,878,292 |
1,922,662 |
Investment in and advances to equity accounted joint ventures |
691,804 |
671,789 |
Net investments in direct financing leases |
679,013 |
683,254 |
Other assets |
31,162 |
28,284 |
Derivative assets |
84,241 |
62,867 |
Intangible assets - net |
94,413 |
96,845 |
Goodwill - liquefied gas segment |
35,631 |
35,631 |
Total assets |
4,153,080 |
4,219,594 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Current |
|
|
Accounts payable |
3,498 |
1,741 |
Accrued liabilities |
43,615 |
45,796 |
Unearned revenue |
12,819 |
15,455 |
Current portion of long-term debt |
97,583 |
97,114 |
Current obligations under capital lease |
93,613 |
31,668 |
Current portion of derivative liabilities |
78,452 |
76,980 |
Advances from affiliates |
25,154 |
19,270 |
Total current liabilities |
354,734 |
288,024 |
Long-term debt |
1,661,435 |
1,680,393 |
Long-term obligations under capital lease |
472,990 |
566,661 |
Long-term unearned revenue |
35,312 |
36,689 |
Other long-term liabilities |
73,705 |
73,140 |
Derivative liabilities |
147,628 |
130,903 |
Total liabilities |
2,745,804 |
2,775,810 |
|
|
|
Equity |
|
|
Limited partners |
1,319,280 |
1,338,133 |
General Partner |
52,143 |
52,526 |
Accumulated other comprehensive (loss) income |
(421) |
131 |
Partners' equity |
1,371,002 |
1,390,790 |
Non-controlling interest (1) |
36,274 |
52,994 |
Total equity |
1,407,276 |
1,443,784 |
|
|
|
Total liabilities and total equity |
4,153,080 |
4,219,594 |
(1) Non-controlling interest includes a 30 percent equity interest
in the RasGas II project (which owns three LNG carriers), a 31
percent equity interest in the Tangguh Project (which owns two LNG
carriers), a 1 percent equity interest in two LNG carriers
(Arctic Spirit and Polar Spirit), a 1 percent
equity interest in the Excalibur joint venture (which owns one LNG
carrier), a 1 percent equity interest in the five LPG/Multigas
carriers that are chartered out to I.M. Skaugen ASA, and a 1
percent equity interest in two LNG carriers chartered out to
Awilco, which in each case represents the ownership interest not
owned by the Partnership. |
|
TEEKAY LNG PARTNERS L.P. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(in thousands of U.S. Dollars) |
|
|
Three Months Ended |
March 31, |
March 31, |
|
2014 |
2013 |
|
$ |
$ |
Cash and cash equivalents provided by (used for) |
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net income |
43,096 |
|
55,031 |
|
Non-cash items: |
|
|
|
|
|
Unrealized gain on derivative instruments |
(1,723 |
) |
(1,241 |
) |
|
Depreciation and amortization |
24,110 |
|
24,143 |
|
|
Unrealized foreign currency exchange loss (gain) |
332 |
|
(9,016 |
) |
|
Equity income |
(20,373 |
) |
(26,424 |
) |
|
Amortization of deferred debt issuance costs and other |
285 |
|
672 |
|
Change in operating assets and liabilities |
1,493 |
|
3,639 |
|
Expenditures for dry docking |
(5,821 |
) |
(10,243 |
) |
|
|
|
|
|
Net operating cash flow |
41,399 |
|
36,561 |
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Proceeds from issuance of long-term debt |
3,648 |
|
178,797 |
|
Scheduled repayments of long-term debt |
(21,421 |
) |
(18,785 |
) |
Prepayments of long-term debt |
(5,000 |
) |
(10,000 |
) |
Scheduled repayments of capital lease obligations |
(1,779 |
) |
(2,592 |
) |
Advances to equity accounted joint ventures |
- |
|
(16,785 |
) |
Increase in restricted cash |
(564 |
) |
(424 |
) |
Cash distributions paid |
(58,895 |
) |
(52,972 |
) |
Novation of derivative liabilities |
2,985 |
|
- |
|
Dividends allocated to non-controlling interest |
(7,206 |
) |
(144 |
) |
|
|
|
|
|
Net financing cash flow |
(88,232 |
) |
77,095 |
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Purchase of equity accounted investments |
- |
|
(136,841 |
) |
Receipts from direct financing leases |
3,796 |
|
1,591 |
|
Expenditures for vessels and equipment |
(1,620 |
) |
(1,001 |
) |
|
|
|
|
|
Net investing cash flow |
2,176 |
|
(136,251 |
) |
|
|
|
|
|
Decrease in cash and cash equivalents |
(44,657 |
) |
(22,595 |
) |
Cash and cash equivalents, beginning of the period |
139,481 |
|
113,577 |
|
|
|
|
|
|
Cash and cash equivalents, end of the period |
94,824 |
|
90,982 |
|
TEEKAY LNG
PARTNERS L.P.
APPENDIX A -
SPECIFIC ITEMS AFFECTING NET INCOME
(in thousands of
U.S. Dollars)
Set forth below is a reconciliation of the Partnership's
unaudited adjusted net income attributable to the partners, a
non-GAAP financial measure, to net income attributable to the
partners as determined in accordance with GAAP. The Partnership
believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use this information to
evaluate the Partnership's financial performance. The items below
are also typically excluded by securities analysts in their
published estimates of the Partnership's financial results.
Adjusted net income attributable to the partners is intended to
provide additional information and should not be considered a
substitute for measures of performance prepared in accordance with
GAAP.
|
Three Months Ended |
March 31 |
March 31 |
2014 |
2013 |
(unaudited) |
(unaudited) |
Net income - GAAP basis |
43,096 |
|
55,031 |
|
Less: |
|
|
|
|
|
Net income attributable to non-controlling interest |
(4,850 |
) |
(586 |
) |
Net income attributable to the partners |
38,246 |
|
54,445 |
|
Add (subtract) specific items affecting net
income: |
|
|
|
|
|
Unrealized foreign currency exchange losses (gains) (1) |
306 |
|
(8,048 |
) |
|
Unrealized gains from derivative instruments(2) |
(1,723 |
) |
(1,241 |
) |
|
Unrealized losses (gains) from derivative instruments and other
items from equity accounted investees(3) |
2,019 |
|
(4,599 |
) |
|
Non-controlling interests' share of items above(4) |
2,954 |
|
(1,506 |
) |
Total adjustments |
3,556 |
|
(15,394 |
) |
Adjusted net income attributable to the partners |
41,802 |
|
39,051 |
|
|
|
|
|
|
(1) Unrealized foreign exchange losses primarily relate to the
Partnership's revaluation of all foreign currency-denominated
monetary assets and liabilities based on the prevailing exchange
rate at the end of each reporting period and unrealized loss on the
cross-currency swap economically hedging the Partnership's NOK bond
and excludes the realized gains (losses) relating to the cross
currency swaps for the NOK bonds. |
(2) Reflects the unrealized losses (gains) due to changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes. |
(3) Reflects the unrealized (gains) losses due to changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes and any
ineffectiveness for any derivative instruments designated as hedges
for accounting purposes within the Partnership's equity-accounted
investments. Also reflects the Partnership's proportionate share of
a loss of $1.0 million on the sale of a vessel in Exmar LPG during
the three months ended March 31, 2014. |
(4) Items affecting net income include items from the Partnership's
wholly-owned subsidiaries, its consolidated non-wholly-owned
subsidiaries and its proportionate share of items from equity
accounted for investments. The specific items affecting net income
are analyzed to determine whether any of the amounts originated
from a consolidated non-wholly-owned subsidiary. Each amount that
originates from a consolidated non-wholly-owned subsidiary is
multiplied by the non-controlling interests' percentage share in
this subsidiary to arrive at the non-controlling interests' share
of the amount. The amount identified as "non-controlling interests'
share of items listed above" in the table above is the cumulative
amount of the non-controlling interests' proportionate share of
items listed in the table. |
TEEKAY LNG
PARTNERS L.P.
APPENDIX B -
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
DISTRIBUTABLE CASH
FLOW (DCF)
(in thousands of
U.S. Dollars)
Description of Non-GAAP Financial Measure - Distributable Cash
Flow (DCF)
Distributable cash flow represents net income adjusted for
depreciation and amortization expense, non-cash items, estimated
maintenance capital expenditures, unrealized gains and losses from
derivatives, distributions relating to equity financing of
newbuilding installments, equity income, write down of vessels,
adjustments for direct financing leases to a cash basis, deferred
income taxes and foreign exchange related items. Maintenance
capital expenditures represent those capital expenditures required
to maintain over the long-term the operating capacity of, or the
revenue generated by, the Partnership's capital assets.
Distributable cash flow is a quantitative standard used in the
publicly-traded partnership investment community to assist in
evaluating a partnership's ability to make quarterly cash
distributions. Distributable cash flow is not required by GAAP and
should not be considered as an alternative to net income or any
other indicator of the Partnership's performance required by GAAP.
The table below reconciles distributable cash flow to net
income.
|
Three Months
Ended |
Three Months
Ended |
March 31,
2014 |
March 31,
2013 |
(unaudited) |
(unaudited) |
|
|
|
|
|
Net income: |
43,096 |
|
55,031 |
|
Add: |
|
|
|
|
|
Depreciation and amortization |
24,110 |
|
24,143 |
|
|
Partnership's share of equity accounted joint ventures' DCF before
estimated maintenance and capital expenditures |
34,228 |
|
31,343 |
|
|
Unrealized foreign exchange loss (gain) |
306 |
|
(8,048 |
) |
|
Distributions relating to equity financing of newbuildings |
1,828 |
|
- |
|
|
Direct finance lease payments received in excess of revenue
recognized |
3,886 |
|
1,584 |
|
Less: |
|
|
|
|
|
Unrealized gain on derivatives and other non-cash items |
(3,916 |
) |
(3,725 |
) |
|
Estimated maintenance capital expenditures |
(19,432 |
) |
(16,399 |
) |
|
Equity income |
(20,373 |
) |
(26,424 |
) |
Distributable Cash Flow before Non-controlling
interest |
63,733 |
|
57,505 |
|
|
Non-controlling interests' share of DCF before estimated
maintenance capital expenditures |
(3,604 |
) |
(3,840 |
) |
Distributable Cash Flow |
60,129 |
|
53,665 |
|
TEEKAY LNG
PARTNERS L.P.
APPENDIX C -
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
NET VOYAGE
REVENUES
(in thousands of
U.S. Dollars)
Description of Non-GAAP Financial Measure - Net Voyage
Revenues
Net voyage revenues represents voyage revenues less voyage
expenses, which comprise all expenses relating to certain voyages,
including bunker fuel expenses, port fees, canal tolls and
brokerage commissions. Net voyage revenues is included because
certain investors use this data to measure the financial
performance of shipping companies. Net voyage revenues is not
required by GAAP and should not be considered as an alternative to
voyage revenues or any other indicator of the Partnership's
performance required by GAAP.
|
Three Months
Ended March 31, 2014 |
|
(unaudited) |
|
|
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Voyage revenues |
74,964 |
26,526 |
101,490 |
Voyage expenses |
823 |
510 |
1,333 |
Net voyage revenues |
74,141 |
26,016 |
100,157 |
|
|
|
|
|
Three Months
Ended March 31, 2013 |
|
(unaudited) |
|
|
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Voyage revenues |
68,030 |
29,077 |
97,107 |
Voyage expenses |
- |
391 |
391 |
Net voyage revenues |
68,030 |
28,686 |
96,716 |
TEEKAY LNG
PARTNERS L.P.
APPENDIX D -
SUPPLEMENTAL SEGMENT INFORMATION
(in thousands of
U.S. Dollars)
|
Three Months Ended March 31, 2014 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Net voyage revenues (See Appendix C) |
74,141 |
26,016 |
100,157 |
Vessel operating expenses |
14,714 |
9,542 |
24,256 |
Depreciation and amortization |
18,113 |
5,997 |
24,110 |
General and administrative |
4,748 |
1,660 |
6,408 |
Income from vessel operations |
36,566 |
8,817 |
45,383 |
|
|
|
|
|
Three Months Ended March 31, 2013 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Net voyage revenues (See Appendix C) |
68,030 |
28,686 |
96,716 |
Vessel operating expenses |
13,993 |
11,323 |
25,316 |
Depreciation and amortization |
17,290 |
6,853 |
24,143 |
General and administrative |
3,684 |
1,785 |
5,469 |
Income from vessel operations |
33,063 |
8,725 |
41,788 |
TEEKAY LNG
PARTNERS L.P.
APPENDIX E -
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CASH FLOW FROM
VESSEL OPERATIONS
FROM CONSOLIDATED
VESSELS
(in thousands of
U.S. Dollars)
Description of Non-GAAP Financial Measure - Cash Flow from
Vessel Operations from Consolidated Vessels
Cash flow from vessel operations from consolidated vessels
represents income from vessel operations before (a) depreciation
and amortization expense, (b) amortization of in-process revenue
contracts included in voyage revenues, and includes (c) adjustments
for direct financing leases and two Suezmax tankers to a cash
basis. The Partnership's direct financing leases for the periods
indicated relates to the Partnership's 69 percent interest in two
LNG carriers, the Tangguh Sago and Tangguh Hiri,
and the two LNG carriers acquired from Awilco in September and
November 2013. The Partnership's cash flow from vessel operations
from consolidated vessels does not include the Partnership's cash
flow from vessel operations from its equity accounted joint
ventures. Cash flow from vessel operations is included because
certain investors use cash flow from vessel operations to measure a
company's financial performance, and to highlight this measure for
the Partnership's consolidated vessels. Cash flow from vessel
operations from consolidated vessels is not required by GAAP and
should not be considered as an alternative to net income or any
other indicator of the Partnership's performance required by
GAAP.
|
Three Months
Ended March 31, 2014 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Income from vessel operations (See Appendix D) |
36,566 |
8,817 |
|
45,383 |
|
Depreciation and amortization |
18,113 |
5,997 |
|
24,110 |
|
Amortization of in-process revenue contracts included in voyage
revenues |
- |
(278 |
) |
(278 |
) |
Direct finance lease payments received in excess of revenue
recognized |
3,886 |
- |
|
3,886 |
|
Cash flow adjustment for two Suezmax tankers(1) |
- |
(1,667 |
) |
(1,667 |
) |
Cash flow from vessel operations from consolidated vessels |
58,565 |
12,869 |
|
71,434 |
|
|
|
|
|
|
|
|
Three Months
Ended March 31, 2013 |
|
|
(unaudited) |
|
|
Liquefied Gas Segment |
Conventional Tanker Segment |
|
Total |
|
Income from vessel operations (See Appendix D) |
33,063 |
8,725 |
|
41,788 |
|
Depreciation and amortization |
17,290 |
6,853 |
|
24,143 |
|
Amortization of in-process revenue contracts included in voyage
revenues |
- |
(278 |
) |
(278 |
) |
Direct finance lease payments received in excess of revenue
recognized |
1,584 |
- |
|
1,584 |
|
Cash flow adjustment for two Suezmax tankers(1) |
- |
(1,667 |
) |
(1,667 |
) |
Cash flow from vessel operations from consolidated vessels |
51,937 |
13,633 |
|
65,570 |
|
(1) The Partnership's charter contracts for two of its Suezmax
tankers, the Bermuda Spirit and Hamilton Spirit,
were amended in 2012, which had the effect of reducing the daily
charter rates by $12,000 per day for a duration of 24 months
commencing October 1, 2012. However, during this period, if Suezmax
spot tanker rates exceed the amended rates, the charterer will pay
the Partnership the excess amount up to a maximum of the original
daily charter rate. The cash impact of the change in hire rates is
not fully reflected in the Partnership's statements of income and
comprehensive income as the change in the lease payments is being
recognized on a straight-line basis over the term of the
lease. |
TEEKAY LNG
PARTNERS L.P.
APPENDIX F -
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CASH FLOW FROM
VESSEL OPERATIONS FROM EQUITY ACCOUNTED VESSELS
(in thousands of
U.S. Dollars)
Description of Non-GAAP Financial Measure - Cash Flow from
Vessel Operations from Equity Accounted Vessels
Cash flow from vessel operations from equity accounted vessels
represents income from vessel operations before (a) depreciation
and amortization expense, (b) amortization of in-process revenue
contracts, and (c) loss on sale of vessel, and includes (d)
adjustments for direct financing leases to a cash basis. Cash flow
from vessel operations from equity accounted vessels is included
because certain investors use cash flow from vessel operations to
measure a company's financial performance, and to highlight this
measure for the Partnership's equity accounted joint ventures. Cash
flow from vessel operations from equity-accounted vessels is not
required by GAAP and should not be considered as an alternative to
equity income or any other indicator of the Partnership's
performance required by GAAP.
|
Three Months
Ended March 31, 2014 |
Three Months
Ended March 31, 2013 |
|
(unaudited) |
(unaudited) |
|
At 100% |
Partnership's Portion (1) |
At 100% |
Partnership's Portion (1) |
Voyage revenues |
147,941 |
|
68,475 |
|
127,152 |
|
57,962 |
|
Vessel and other operating expenses |
44,773 |
|
20,896 |
|
32,684 |
|
15,237 |
|
Depreciation and amortization |
21,918 |
|
11,111 |
|
18,418 |
|
9,396 |
|
Loss on sale of vessel |
1,931 |
|
966 |
|
- |
|
- |
|
Income from vessel operations of equity accounted vessels |
79,319 |
|
35,502 |
|
76,050 |
|
33,329 |
|
Interest expense − net |
(20,302 |
) |
(9,452 |
) |
(15,517 |
) |
(6,885 |
) |
Realized and unrealized loss on derivative instruments |
(17,133 |
) |
(5,825 |
) |
(1,094 |
) |
(360 |
) |
Other income − net |
377 |
|
148 |
|
402 |
|
340 |
|
Other items |
(37,058 |
) |
(15,129 |
) |
(16,209 |
) |
(6,905 |
) |
|
|
|
|
|
|
|
|
|
Net income / equity income of equity accounted vessels |
42,261 |
|
20,373 |
|
59,841 |
|
26,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from vessel operations |
79,319 |
|
35,502 |
|
76,050 |
|
33,329 |
|
Depreciation and amortization |
21,918 |
|
11,111 |
|
18,418 |
|
9,396 |
|
Loss on sale of vessel |
1,931 |
|
966 |
|
- |
|
- |
|
Direct finance lease payments received in excess of revenue
recognized |
7,462 |
|
2,707 |
|
6,876 |
|
2,495 |
|
Amortization of in-process revenue contracts |
(4,225 |
) |
(2,146 |
) |
(6,200 |
) |
(3,221 |
) |
Cash flow from vessel operations from equity accounted vessels |
106,405 |
|
48,140 |
|
95,144 |
|
41,999 |
|
(1) The Partnership's equity accounted investments for the three
months ended March 31, 2014 and 2013 include the Partnership's 40
percent interest in Teekay Nakilat (III) Corporation, which owns
four LNG carriers; the Partnership's 50 percent interest in the
Excalibur and Excelsior joint ventures, which owns one LNG carrier
and one regasification unit, respectively; the Partnership's 33
percent interest in four LNG carriers servicing the Angola LNG
Project; the Partnership's 52 percent interest in Malt LNG
Netherlands Holdings B.V., the joint venture between the
Partnership and Marubeni Corporation, which owns six LNG carriers;
and the Partnership's 50 percent interest in Exmar LPG BVBA, the
joint venture between the Partnership and Exmar, acquired in
February 2013, which owns and charters-in 14 vessels in the LPG
carrier segment, excluding 12 newbuildings, as at March 31, 2014
and 17 vessels, excluding eight newbuildings, as at March 31,
2013. |
FORWARD LOOKING
STATEMENTS
This release contains forward-looking statements (as defined in
Section 21E of the Securities Exchange Act of 1934, as amended)
which reflect management's current views with respect to certain
future events and performance, including statements regarding:
future growth opportunities and expectations, including the
Partnership's ability to successfully bid for new LNG shipping and
floating regasification projects and the effect of any such
projects on the Partnership's results of operations; the expected
delivery dates for the Partnership's newbuilding vessels and, if
applicable, commencement of their time charter contracts; the
potential for the Partnership, through a new 50/50 joint venture
with a China-based LNG shipping company, to provide six icebreaker
LNG carriers for the Yamal LNG project, and the magnitude of such
project, if completed; the average remaining contract length on the
Partnership's LNG fleet; the Partnership's exposure to spot and
short-term LNG shipping rates; and LNG/LPG shipping market
fundamentals. The following factors are among those that could
cause actual results to differ materially from the forward-looking
statements, which involve risks and uncertainties, and that should
be considered in evaluating any such statement: shipyard
construction delays or cost overruns; availability of suitable LNG
shipping, LPG shipping, floating storage and regasification and
other growth project opportunities; changes in production of LNG or
LPG, either generally or in particular regions; changes in trading
patterns or timing of start-up of new LNG liquefaction and
regasification projects significantly affecting overall vessel
tonnage requirements; competitive dynamics in bidding for potential
LNG, LPG or floating regasification projects; the Partnership's
ability to secure new contracts through bidding on project tenders;
failure by Teekay LNG to secure financing for newbuildings;
potential failure of the Yamal LNG Project to be completed for any
reason, including due to lack of funding as a result of existing or
future sanctions against Russia and Russian entities and
individuals, which may affect partners in the project; potential
inability of the Partnership's joint venture to negotiate
acceptable terms and documentation relating to its proposed
participation in the Yamal LNG Project; failure by the Partnership
to secure the required contracts for the Yamal LNG project for six
icebreaker LNG carriers; potential delays or cancellation of the
Yamal LNG project; changes in applicable industry laws and
regulations and the timing of implementation of new laws and
regulations; the potential for early termination of long-term
contracts of existing vessels in the Teekay LNG fleet; the
inability of charterers to make future charter payments; the
inability of the Partnership to renew or replace long-term
contracts on existing vessels; the Partnership's ability to raise
financing for its existing newbuildings or to purchase additional
vessels or to pursue other projects; and other factors discussed in
Teekay LNG Partners' filings from time to time with the SEC,
including its Report on Form 20-F for the fiscal year ended
December 31, 2013. The Partnership expressly disclaims any
obligation to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in the Partnership's expectations with respect thereto or any
change in events, conditions or circumstances on which any such
statement is based.
Investor Relations EnquiriesRyan Hamilton+1 (604)
609-6442www.teekaylng.com
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