Highlights
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 September 30, 2018.
|
|
Three Months Ended |
|
|
September 30,
2018 |
June 30,
2018 |
|
September
30, 2017 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
|
(unaudited) |
|
GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
Voyage
revenues |
123,336 |
122,315 |
|
104,285 |
|
Income
from vessel operations |
46,998 |
10,505 |
|
10,322 |
|
Equity
income |
14,679 |
11,194 |
|
1,417 |
|
Net
income (loss) attributable to the partners and preferred
unitholders |
25,950 |
2,734 |
|
(18,896 |
) |
Limited
partners’ interest in net income (loss) per common unit |
0.24 |
(0.05 |
) |
(0.27 |
) |
NON-GAAP FINANCIAL COMPARISON |
Adjusted
net income attributable to the partners and preferred unitholders
(1) |
19,474 |
13,535 |
|
20,925 |
|
Limited
partners’ interest in adjusted net income per common unit |
0.16 |
0.09 |
|
0.22 |
|
Total
cash flow from vessel operations (CFVO) (1) |
132,593 |
115,005 |
|
107,254 |
|
Distributable cash flow (DCF) (1) |
41,214 |
31,116 |
|
40,224 |
|
- These are non-GAAP financial measures. Please refer to
“Definitions and Non-GAAP Financial Measures” and the Appendices to
this release for definitions of these terms and reconciliations of
these non-GAAP financial measures as used in this release to the
most directly comparable financial measures under United States
generally accepted accounting principles (GAAP).
GAAP net income (loss) and non-GAAP adjusted net
income attributable to the partners and preferred unitholders for
the three months ended September 30, 2018, compared to the same
quarter in the prior year, were positively impacted by the
deliveries of liquefied natural gas (LNG) and liquefied petroleum
gas (LPG) carrier newbuildings between July 2017 and September 2018
and by the commencement of short-term charter contracts for certain
of the vessels in the Partnership’s 52 percent-owned joint venture
with Marubeni Corporation (the Teekay LNG-Marubeni Joint Venture).
These increases were partially offset by lower earnings for the
three months ended September 30, 2018 on the Partnership's
multi-gas carriers following the termination by the Partnership of
their previous charter contracts due to non-payment by the
charterer, lower rates earned in 2018 on two conventional tankers
upon the expiration of their fixed-rate charter contracts in 2017,
and a reduction in earnings due to the sale of a conventional
tanker and an LPG carrier in the first quarter of 2018.
In addition, GAAP net income (loss) attributable
to the partners and preferred unitholders was positively impacted
for the three months ended September 30, 2018, compared to the same
quarter of the prior year, by various items, including increases in
unrealized gains on non-designated derivative instruments, foreign
currency exchange gains and a decrease in write-down of
vessels.
CEO Commentary
“Teekay LNG’s results for the third quarter of
2018 improved substantially, with adjusted net income up 44 percent
compared with the second quarter of 2018,” commented Mark Kremin,
President and Chief Executive Officer of Teekay Gas Group Ltd. “The
earnings and cash flow from the delivery and contract start-up of
our recent LNG carrier newbuildings are beginning to have a
positive impact on our financial results, with eight newbuilds
having now delivered since the start of 2018 and an additional
seven LNG carriers, and the Bahrain regasification facility,
expected to commence their fixed-rate contracts during 2019.
Importantly, the vessels that have delivered to-date during 2018
only represent approximately 50 percent of the total $310 million
of expected incremental cash flow from vessel operations relating
to our existing LNG newbuilding program and therefore, we expect
our fixed-rate cash flows will continue to increase through 2019 as
the remaining projects deliver.”
“We are also excited about the fundamental
strength in the current spot LNG carrier market and the
Partnership’s direct exposure to it. In early-September 2018, we
agreed to in-charter the Magellan Spirit from the Teekay LNG-
Marubeni Joint Venture for two years, allowing us to take advantage
of the strengthening spot LNG shipping market and I’m pleased to
report that we have now fixed that ship on a five-month charter
contract to the end of March 2019, which we expect will add
approximately $8 million in incremental profit to Teekay LNG over
the length of this charter alone. In addition, the Torben Spirit
LNG carrier and two Teekay LNG-Marubeni Joint Venture LNG carriers
are scheduled to come off-charter between December 2018 and May
2019 and we are currently in discussions to secure employment for
these vessels at significantly higher rates.”
Mr. Kremin continued, “As announced earlier
today under a separate release, the Board is recommending that
Teekay LNG elect to be treated as a corporation, instead of a
partnership, for U.S. federal income tax purposes, which we believe
is in the best interests of our current and future unitholders
because, by eliminating the burdensome K-1 reporting, we anticipate
that Teekay LNG will be a more attractive investment for larger,
institutional investors. A proxy statement has been filed today and
we urge all common unitholders to vote in favor of the
recommendation put forward by our Board, and alongside our sponsor,
Teekay Corporation, at the special meeting of common unitholders to
be held on December 18, 2018.”
“Furthermore, and as discussed under a separate
release, with approximately half of our newbuilding program now
delivered, and virtually all of our near-term financings completed,
we are today providing 2019 distribution guidance of $0.76 per
common unit on an annualized basis, representing a 36 percent
increase from the current distribution. We believe that this
distribution increase is prudent and is part of a balanced capital
allocation strategy that will allow the Partnership to achieve its
goals of delevering its balance sheet towards its targeted leverage
of 5.5x CFVO, while also returning capital to unitholders in a
sustainable manner.”
Summary of Recent Events
LNG Carrier In-charter
In early-September 2018, the Partnership agreed
to charter-in the Magellan Spirit LNG carrier from its 52%-owned
Teekay LNG-Marubeni Joint Venture for a period of two years. The
vessel was idle for 29 days in September and early-October while
awaiting a suitable charter contract. Since October 3, 2018, the
vessel has been chartered in the spot market at rates well in
excess of the charter-in rate and is now currently employed under a
5-month charter contract through until late-March 2019, prior to
the vessel’s scheduled drydocking in April 2019.
LNG Carrier Newbuilding Deliveries
In July 2018, the Partnership’s 20 percent-owned
joint venture with China LNG Shipping (Holdings) Limited (China
LNG), CETS Investment Management (HK) Co. Ltd. (an affiliate of
China National Offshore Oil Corporation (CNOOC)) and BW LNG
Investments Pte. Ltd. (the Pan Union Joint Venture), took delivery
of one LNG carrier newbuilding, the Pan Europe, which immediately
commenced its 20-year charter contract with Royal Dutch Shell
(Shell).
In July 2018, the Partnership took delivery of
one M-Type, Electronically Controlled, Gas Injection (MEGI) LNG
carrier newbuilding, the Megara, which immediately commenced its
eight-year charter contract with Shell.
In August 2018, the Partnership took delivery of
the Bahrain Spirit floating storage unit (FSU), which immediately
commenced its 21-year charter contract with Bahrain LNG W.L.L (the
Bahrain LNG Joint Venture), in which the Partnership has a 30
percent ownership interest.
In September 2018, the Partnership’s 50
percent-owned joint venture with China LNG (the Yamal LNG Joint
Venture) took delivery of its second ARC7 LNG carrier newbuilding,
the Rudolph Samoylovich, which immediately commenced its 27-year
charter contract with the Yamal LNG project two months ahead of the
original scheduled delivery date.
Crude Tanker Dispositions
In September 2018, the Partnership agreed to
sell the 2003-built African Spirit Suezmax tanker, which had been
trading in the spot tanker market, for gross proceeds of $13.1
million. The vessel was delivered to the buyers in October
2018.
In November 2018, the Partnership agreed to sell
the 2003-built European Spirit Suezmax tanker, which had been
trading in the spot tanker market, for gross proceeds of $16.0
million. The vessel is expected to be delivered to the buyers in
late-2018.
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 E for further details).
|
|
Three Months
Ended |
|
September
30, 2018 |
|
September 30,
2017 |
|
(in thousands of U.S. Dollars) |
|
(unaudited) |
|
|
(unaudited) |
|
|
LiquefiedGasSegment |
ConventionalTankerSegment |
Total |
LiquefiedGasSegment |
ConventionalTankerSegment |
Total |
GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
Voyage revenues |
118,188 |
5,148 |
|
123,336 |
92,700 |
11,585 |
|
104,285 |
Income
(loss) from vessel operations |
51,581 |
(4,583 |
) |
46,998 |
44,902 |
(34,580 |
) |
10,322 |
Equity
income |
14,679 |
— |
|
14,679 |
1,417 |
— |
|
1,417 |
NON-GAAP FINANCIAL COMPARISON |
|
CFVO from consolidated vessels(i) |
84,624 |
128 |
|
84,752 |
68,448 |
6,188 |
|
74,636 |
CFVO from equity-accounted vessels(i) |
47,841 |
— |
|
47,841 |
32,618 |
— |
|
32,618 |
Total CFVO(i) |
132,465 |
128 |
|
132,593 |
101,066 |
6,188 |
|
107,254 |
- These are non-GAAP financial measures. Please refer to
“Definitions and Non-GAAP Financial Measures” and the Appendices to
this release for definitions of these terms and reconciliations of
these non-GAAP financial measures as used in this release to the
most directly comparable financial measures under GAAP.
Liquefied Gas Segment
Income from vessel operations and CFVO from
consolidated vessels increased for the liquefied gas segment for
the three months ended September 30, 2018, compared to the same
quarter of the prior year. Results were positively impacted
primarily by the deliveries of six LNG carrier newbuildings (the
Macoma, Murex, Magdala, Myrina, Megara and Bahrain Spirit) between
October 2017 and September 2018. These increases were partially
offset by lower earnings on seven of the Partnership's multi-gas
carriers following the Partnership's termination of their charter
contracts due to non-payment by the charterer and the time-charter
hire expense incurred on the Magellan Spirit in-chartered from the
Teekay LNG-Marubeni Joint Venture as the vessel was waiting for its
spot charter to commence on October 3, 2018.
Equity income and CFVO from equity-accounted
vessels for the three months ended September 30, 2018, compared to
the same quarter of the prior year, were positively impacted by:
the deliveries of the two ARC7 LNG carrier newbuildings in January
and September 2018 in the Yamal LNG Joint Venture; the deliveries
of three LNG carriers between October 2017 and July 2018 in the
Partnership’s Pan Union Joint Venture, with the Partnership's
ownership interest in these vessels ranging from 20 to 30 percent;
the deliveries of four LPG carriers in the Partnership's 50
percent-owned joint venture with Exmar NV (the Exmar LPG Joint
Venture) between July 2017 and July 2018; and higher fleet
utilization in the Teekay LNG-Marubeni Joint Venture as certain of
the joint venture’s vessels commenced short-term charter contracts
at higher rates compared to the previous period. These increases
were partially offset by: the sale of the Courcheville LPG carrier
in the Exmar LPG Joint Venture in January 2018; and the sale of the
S/S Excelsior LNG carrier in the Partnership’s 50 percent-owned
joint venture with Exmar NV (the Excelsior Joint Venture) in
January 2018. In addition, equity income was positively impacted by
an increase in net unrealized gains on designated and
non-designated derivative instruments in the Partnership's
equity-accounted vessels.
Conventional Tanker Segment
Loss from vessel operations improved and CFVO
from consolidated vessels decreased for the conventional tanker
segment for the three months ended September 30, 2018, compared to
the same quarter of the prior year. These results were impacted by:
the sale of the Teide Spirit in February 2018 and associated
restructuring charges as a result of the sale; and lower rates
earned in 2018 on the African Spirit and European Spirit upon the
expiration of their fixed-rate charter contracts in 2017. In
addition, loss from vessel operations for the three months ended
September 30, 2018, compared to the same quarter of the prior year,
was positively impacted by a reduction of vessel write-downs in
2018, which write-downs for 2018 related to the Partnership's two
vessels held for sale as of September 30, 2018.
Teekay LNG's Fleet
The following table summarizes the Partnership’s
fleet as of November 1, 2018, excluding the Partnership’s 30
percent interest in the Bahrain regasification terminal currently
under construction which is expected to commence operations by
mid-February 2019:
|
|
Number of Vessels |
|
Owned and In-Chartered Vessels(i) |
Newbuildings |
Total |
LNG Carrier Fleet LPG/Multi-gas Carrier
FleetConventional Tanker Fleet |
42(ii)29(iii)3(iv) |
7(ii) — — |
49 29 3 |
Total |
74 |
7 |
81 |
- Includes vessels accounted for as vessels related to capital
leases.
- The Partnership’s ownership interests in these vessels and
newbuildings range from 20 percent to 100 percent.
- The Partnership’s ownership interests in these vessels range
from 50 percent to 99 percent.
- One of the Partnership's conventional tankers, the European
Spirit, is classified as held for sale.
Liquidity
As of September 30, 2018, the Partnership had
total liquidity of $310.5 million (comprised of $139.9 million in
cash and cash equivalents and $170.6 million in undrawn credit
facilities). Giving pro-forma effect to the refinancing and
upsizing of the Partnership’s existing $190 million, 364-day
revolving credit facility with a $225 million, two-year facility,
which closed in early-November 2018, the Partnership’s total
liquidity as at September 30, 2018 would have been $345.5
million.
Conference Call
The Partnership plans to host a conference call
on Thursday, November 15, 2018 at 11:00 a.m. (ET) to discuss the
results for the third quarter of 2018. All unitholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing (888) 204-4368 or (647) 484-0478, if outside North
America, and quoting conference ID code 7444729.
- By accessing the webcast, which will be available on Teekay
LNG’s website at www.teekay.com (the archive will remain on
the website for a period of one year).
An accompanying Third Quarter 2018 Earnings Presentation will
also be available at www.teekay.com in advance of the
conference call start time.
About Teekay LNG Partners L.P.
Teekay LNG Partners is one of the world's
largest independent owners and operators of LNG carriers, providing
LNG, LPG and crude oil marine transportation services primarily
under long-term, fee-based charter contracts through its interests
in 49 LNG carriers (including seven newbuildings), 22 mid-size LPG
carriers, seven multi-gas carriers, and three conventional tankers.
The Partnership's ownership interests in these vessels range from
20 to 100 percent. In addition, the Partnership owns a 30 percent
interest in a regasification terminal, which is currently under
construction. Teekay LNG Partners is a publicly-traded master
limited partnership 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 and preferred units trade on
the New York Stock Exchange under the symbols “TGP”, “TGP PR A” and
“TGP PR B”, respectively.
For Investor Relations enquiries
contact:
Ryan HamiltonTel: +1 (604) 609-2963Website:
www.teekay.com
Definitions and Non-GAAP Financial
Measures
This release includes various financial measures
that are non-GAAP financial measures as defined under the rules of
the U.S. Securities and Exchange Commission. These non-GAAP
financial measures, which include Cash Flow from Vessel Operations,
Adjusted Net Income, and Distributable Cash Flow, are intended to
provide additional information and should not be considered a
substitute for measures of performance prepared in accordance with
GAAP. In addition, these measures do not have standardized meanings
across companies, and therefore may not be comparable to similar
measures presented by other companies. The Partnership believes
that certain investors use this information to evaluate the
Partnership’s financial performance, as does management.
Non-GAAP Financial Measures
Cash Flow from Vessel Operations (CFVO)
represents income (loss) from vessel operations before depreciation
and amortization expense, amortization of in-process revenue
contracts, vessel write-downs, gain and losses on the sales of
vessels and adjustments for direct financing leases to a cash
basis, but includes realized gains or losses on a derivative
charter contract. CFVO from Consolidated Vessels represents CFVO
from vessels that are consolidated on the Partnership’s financial
statements. CFVO from Equity-Accounted Vessels represents the
Partnership’s proportionate share of CFVO from its equity-accounted
vessels. The Partnership does not control its equity-accounted
vessels and as a result, the Partnership does not have the
unilateral ability to determine whether the cash generated by its
equity-accounted vessels is retained within the entities in which
the Partnership holds the equity-accounted investments or
distributed to the Partnership and other owners. In addition, the
Partnership does not control the timing of such distributions to
the Partnership and other owners. Consequently, readers are
cautioned when using total CFVO as a liquidity measure as the
amount contributed from CFVO from Equity-Accounted Vessels may not
be available to the Partnership in the periods such CFVO is
generated by its equity-accounted vessels. CFVO is a non-GAAP
financial measure used by certain investors and management to
measure the operational financial performance of companies. Please
refer to Appendices D and E of this release for reconciliations of
these non-GAAP financial measures to income (loss) from vessel
operations and income from vessel operations of equity-accounted
vessels, respectively, the most directly comparable GAAP measures
reflected in the Partnership’s consolidated financial
statements.
Adjusted Net Income excludes items of income or
loss from GAAP net income (loss) that are typically excluded by
securities analysts in their published estimates of the
Partnership’s financial results. The Partnership believes that
certain investors use this information to evaluate the
Partnership’s financial performance, as does management. Please
refer to Appendix A of this release for a reconciliation of this
non-GAAP financial measure to net income (loss), and refer to
footnote (3) of the Consolidated Statements of Income (Loss) for a
reconciliation of adjusted equity income to equity income, the most
directly comparable GAAP measure reflected in the Partnership’s
consolidated financial statements.
Distributable Cash Flow (DCF) represents GAAP
net income adjusted for write-down of vessels, depreciation and
amortization expense, deferred income tax and other non-cash items,
estimated maintenance capital expenditures, unrealized gains and
losses from non-designated derivative instruments, ineffectiveness
for derivative instruments designated as hedges for accounting
purposes, distributions relating to equity financing of newbuilding
installments, distributions relating to preferred units,
adjustments for direct financing leases to a cash basis and foreign
exchange related items, including the Partnership’s proportionate
share of such items in equity-accounted for investments.
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. DCF is a quantitative standard used in the publicly-traded
partnership investment community and by management to assist in
evaluating financial performance. Please refer to Appendix B of
this release for a reconciliation of this non-GAAP financial
measure to net income, the most directly comparable GAAP measure
reflected in the Partnership’s consolidated financial
statements.
Teekay LNG Partners L.P.
Consolidated Statements of Income (Loss)(in thousands of U.S.
Dollars, except unit and per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Month Ended |
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
2018 |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Voyage revenues |
123,336 |
|
|
122,315 |
|
|
104,285 |
|
|
360,957 |
|
|
306,369 |
|
Voyage expenses |
(7,956 |
) |
|
(7,951 |
) |
|
(1,466 |
) |
|
(21,708 |
) |
|
(3,899 |
) |
Vessel
operating expenses |
(27,621 |
) |
|
(33,969 |
) |
|
(26,724 |
) |
|
(90,057 |
) |
|
(76,113 |
) |
Time-charter hire expense |
(1,690 |
) |
|
— |
|
|
— |
|
|
(1,690 |
) |
|
— |
|
Depreciation and amortization |
(32,238 |
) |
|
(29,794 |
) |
|
(24,980 |
) |
|
(91,299 |
) |
|
(77,894 |
) |
General
and administrative expenses |
(4,183 |
) |
|
(7,096 |
) |
|
(2,793 |
) |
|
(17,850 |
) |
|
(11,592 |
) |
Write-down of vessels(1) |
(2,201 |
) |
|
(33,000 |
) |
|
(38,000 |
) |
|
(53,863 |
) |
|
(50,600 |
) |
Restructuring charges (2) |
(449 |
) |
|
— |
|
|
— |
|
|
(1,845 |
) |
|
— |
|
Income from vessel operations |
46,998 |
|
|
10,505 |
|
|
10,322 |
|
|
82,645 |
|
|
86,271 |
|
Equity income (3) |
14,679 |
|
|
11,194 |
|
|
1,417 |
|
|
52,597 |
|
|
6,797 |
|
Interest
expense |
(35,875 |
) |
|
(28,171 |
) |
|
(20,091 |
) |
|
(88,752 |
) |
|
(57,604 |
) |
Interest
income |
980 |
|
|
902 |
|
|
602 |
|
|
2,796 |
|
|
2,035 |
|
Realized
and unrealized gain (loss) on non- |
|
|
|
|
|
designated derivative instruments(4) |
2,515 |
|
|
4,302 |
|
|
(2,178 |
) |
|
14,818 |
|
|
(8,375 |
) |
Foreign
currency exchange gain (loss)(5) |
1,445 |
|
|
8,443 |
|
|
(5,104 |
) |
|
8,615 |
|
|
(24,497 |
) |
Other income (expense) (6) |
314 |
|
|
350 |
|
|
356 |
|
|
(51,918 |
) |
|
1,137 |
|
Net income (loss) before tax expense |
31,056 |
|
|
7,525 |
|
|
(14,676 |
) |
|
20,801 |
|
|
5,764 |
|
Income tax expense |
(1,549 |
) |
|
(843 |
) |
|
(750 |
) |
|
(3,171 |
) |
|
(1,143 |
) |
Net income (loss) |
29,507 |
|
|
6,682 |
|
|
(15,426 |
) |
|
17,630 |
|
|
4,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in net income (loss) |
3,557 |
|
|
3,948 |
|
|
3,470 |
|
|
(4,160 |
) |
|
10,533 |
|
Preferred unitholders' interest in net income
(loss) |
6,425 |
|
|
6,426 |
|
|
2,813 |
|
|
19,276 |
|
|
8,438 |
|
General
Partner's interest in net income (loss) |
391 |
|
|
(68 |
) |
|
(434 |
) |
|
51 |
|
|
(287 |
) |
Limited
partners’ interest in net income (loss) |
19,134 |
|
|
(3,624 |
) |
|
(21,275 |
) |
|
2,463 |
|
|
(14,063 |
) |
Limited
partners' interest in net income (loss) per common
unit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Basic |
0.24 |
|
|
(0.05 |
) |
|
(0.27 |
) |
|
0.03 |
|
|
(0.18 |
) |
•
Diluted |
0.24 |
|
|
(0.05 |
) |
|
(0.27 |
) |
|
0.03 |
|
|
(0.18 |
) |
Weighted-average number of common units outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Basic |
79,687,499 |
|
|
79,687,499 |
|
|
79,626,819 |
|
|
79,671,051 |
|
|
79,614,731 |
|
• Diluted |
79,859,471 |
|
|
79,687,499 |
|
|
79,626,819 |
|
|
79,832,978 |
|
|
79,614,731 |
|
Total number of common units outstanding at end of
period |
79,687,499 |
|
|
79,687,499 |
|
|
79,626,819 |
|
|
79,687,499 |
|
|
79,626,819 |
|
- The African Spirit and European Spirit conventional tankers
were classified as vessels held for sale upon the expiration of
their time-charter contracts in 2017. The Partnership recorded
aggregate write-downs of $2.2 million and $7.9 million for the
three and nine months ended September 30, 2018, respectively, on
these two conventional tankers as the estimated fair values of
these vessels had decreased. In June 2018, the carrying values for
four of the Partnership's seven wholly-owned multi-gas carriers
(the Napa Spirit, Pan Spirit, Camilla Spirit and Cathinka Spirit)
were written down to their estimated fair values, using appraised
values, as a result of the Partnership's evaluation of alternative
strategies for these assets, combined with the then current charter
rate environment and the outlook for charter rates for these
vessels. The total impairment charge of $33.0 million related to
these four multi-gas carriers is included in write-down of vessels
for the three months ended June 30, 2018 and nine months ended
September 30, 2018. In addition, the Partnership recorded a
write-down of $13.0 million for the nine months ended September 30,
2018 relating to the Alexander Spirit conventional tanker to its
estimated fair value, using an appraised value.This was a result of
changes in the Partnership's expectations of the vessel's future
opportunities after its current contract ends in 2019. The
write-down of vessels of $38.0 and $50.6 million for the three and
nine months ended September 30, 2017, respectively, relates to the
combined write-downs of the African Spirit and European Spirit of
$12.5 million and $25.1 million for the three and nine months ended
September 30, 2017, respectively, upon the Partnership marketing
the vessels for sale in 2017; and the aggregate write-downs of the
Teide Spirit and Toledo Spirit conventional tankers of $25.5
million for the three and nine months ended September 30, 2017 upon
the charterer notifying the Partnership of its intention to sell
the Teide Spirit in 2017 and the Partnership's expectation that the
charterer would sell the Toledo Spirit in 2018.
- In February 2018, the Teide Spirit conventional
tanker was sold and as a result of this sale, the Partnership
recorded restructuring charges of $0.4 million and $1.8 million
relating to seafarer severance costs for the three and nine months
ended September 30, 2018, respectively.
- The Partnership’s proportionate share of items within
equity income as identified in Appendix A of this release is
detailed in the table below. By excluding these items from equity
income, the Partnership believes the resulting adjusted equity
income is a normalized amount that can be used to better evaluate
the financial performance of the Partnership’s equity-accounted
investments. Adjusted equity income is a non-GAAP financial
measure.
|
|
Three Months Ended |
|
Nine Month Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
2018 |
|
2018 |
|
2017 |
|
|
2018 |
|
|
2018 |
|
Equity
income |
14,679 |
|
11,194 |
|
1,417 |
|
|
52,597 |
|
|
6,797 |
|
Proportionate share of unrealized gain on
non-designated derivative instruments |
(2,614 |
) |
(2,977 |
) |
(1,485 |
) |
|
(13,812 |
) |
|
(3,087 |
) |
Proportionate share of ineffective portion of
hedge-accounted interest rate swaps |
(105 |
) |
(1,809 |
) |
968 |
|
|
(5,173 |
) |
|
4,534 |
|
Proportionate share of write-down and loss on sale of
vessel |
— |
|
— |
|
— |
|
|
257 |
|
|
— |
|
Gain on
sale of equity-accounted investment |
— |
|
— |
|
— |
|
|
(5,563 |
) |
|
— |
|
Proportionate share of other items |
(185 |
) |
(128 |
) |
219 |
|
|
(185 |
) |
|
460 |
|
Equity income adjusted for items in Appendix A |
11,775 |
|
6,280 |
|
1,119 |
|
|
28,121 |
|
|
8,704 |
|
- The realized (losses) gains on non-designated
derivative instruments relate to the amounts the Partnership
actually paid or received to settle non-designated derivative
instruments and the unrealized gains (losses) on non-designated
derivative instruments relate to the change in fair value of such
non-designated derivative instruments, as detailed in the table
below:
|
|
Three Months Ended |
|
Nine Month Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Realized (losses) gains relating to: |
|
|
|
|
|
Interest
rate swap agreements |
(3,062 |
) |
|
(4,310 |
) |
|
(4,528 |
) |
|
(11,850 |
) |
|
(13,813 |
) |
Interest
rate swap and swaption agreements termination |
(13,681 |
) |
|
— |
|
|
— |
|
|
(13,681 |
) |
|
(610 |
) |
Toledo Spirit time-charter derivative contract |
1,689 |
|
|
150 |
|
|
646 |
|
|
2,148 |
|
|
526 |
|
|
(15,054 |
) |
|
(4,160 |
) |
|
(3,882 |
) |
|
(23,383 |
) |
|
(13,897 |
) |
Unrealized gains (losses) relating to: |
|
|
|
|
|
Interest
rate swap agreements |
19,278 |
|
|
7,522 |
|
|
1,775 |
|
|
38,698 |
|
|
4,211 |
|
Interest
rate swaption agreements |
— |
|
|
— |
|
|
285 |
|
|
2 |
|
|
427 |
|
Toledo Spirit time-charter derivative contract |
(1,709 |
) |
|
940 |
|
|
(356 |
) |
|
(499 |
) |
|
884 |
|
|
17,569 |
|
|
8,462 |
|
|
1,704 |
|
|
38,201 |
|
|
5,522 |
|
Total realized and unrealized gains (losses) on
non-designated derivative instruments |
2,515 |
|
|
4,302 |
|
|
(2,178 |
) |
|
14,818 |
|
|
(8,375 |
) |
- For accounting purposes, the Partnership is required
to revalue all foreign currency-denominated monetary assets and
liabilities based on the prevailing exchange rates 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 (Loss).Foreign currency exchange gain (loss) includes
realized losses relating to the amounts the Partnership 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.
Foreign currency exchange gain (loss) also includes unrealized
gains relating to the change in fair value of such derivative
instruments, partially offset by unrealized (losses) gains on the
revaluation of the NOK bonds as detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Month Ended |
|
|
September 30,2018 |
|
June 30, 2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2018 |
Realized losses on
cross-currency swaps |
|
(1,744 |
|
|
(1,798 |
) |
|
(1,598 |
) |
|
(4,926 |
) |
|
(7,219 |
) |
Realized losses on
cross-currency swaps termination |
|
(42,271 |
) |
|
— |
|
|
— |
|
|
(42,271 |
) |
|
(25,733 |
) |
Realized gains on
repurchase of NOK bonds |
|
42,271 |
|
|
— |
|
|
— |
|
|
42,271 |
|
|
25,733 |
|
Unrealized gains
(losses) on cross-currency swaps |
|
43,966 |
|
|
(16,566 |
) |
|
20,523 |
|
|
49,734 |
|
|
58,128 |
|
Unrealized (losses)
gains on revaluation of NOK bonds |
|
(41,549 |
) |
|
14,852 |
|
|
(17,906 |
) |
|
(44,184 |
) |
|
(54,837 |
) |
- The Partnership owns a 70 percent interest in Teekay
Nakilat Corporation (the Teekay Nakilat Joint Venture), which
wholly-owns a subsidiary which was the lessee under three separate
30-year capital lease arrangements with a third party for three LNG
carriers (the RasGas II LNG Carriers). Under the terms of these
leases, the lessor claimed tax depreciation on the capital
expenditures it incurred to acquire these vessels and paid the
lessee an upfront benefit in the amount of $60.9 million at the
lease inception. As is typical in these leasing arrangements, tax
and change of law risks were assumed by the lessee, in this case
the Teekay Nakilat Joint Venture. Lease payments under the lease
arrangements were based on certain tax and financial assumptions at
the commencement of the leases in 2006 and subsequently adjusted to
maintain the lessor's agreed after-tax margin. On December 22,
2014, the Teekay Nakilat Joint Venture terminated the leases of the
RasGas II LNG Carriers; however, it remained obligated to the
lessor for changes in tax treatment.The UK taxing authority (HMRC)
has been challenging the use by third parties of similar lease
structures in the United Kingdom courts. One of those challenges
was eventually decided in favor of HMRC, with the lessor and lessee
choosing not to appeal further. This case concluded that capital
allowances are not available to the lessor. On the basis of this
conclusion, HMRC asked lessees on other leases, including the
Teekay Nakilat Joint Venture, to accept that capital allowances are
not available to their lessors. Under the terms of the Teekay
Nakilat Joint Venture lease, the lessor is entitled to make a
determination that additional rentals are due, even where a court
has not made a determination on whether capital allowances are
available or where discussions are otherwise ongoing with HMRC on
the matter (such that additional rentals paid may be rebated in due
course if the final tax position is not as determined by the
lessor). On May 10, 2018, the lessor made a determination that
additional rentals are due under the leases. As a result, during
the nine months ended September 30, 2018, the Teekay Nakilat Joint
Venture recognized an additional tax indemnification guarantee
liability of $53.0 million. The total liability of $63.0 million
was paid during the second and third quarters of 2018.
Teekay LNG Partners L.P.Consolidated Balance
Sheets(in thousands of U.S. Dollars)
|
|
As at September 30,2018 |
As at June 30,2018 |
As at December 31,2017 |
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
Current |
|
|
|
Cash and
cash equivalents |
139,854 |
177,071 |
244,241 |
Restricted cash – current |
36,429 |
53,599 |
22,326 |
Accounts
receivable |
25,732 |
29,679 |
24,054 |
Prepaid
expenses |
9,277 |
4,800 |
6,539 |
Vessels
held for sale |
28,482 |
29,911 |
33,671 |
Current
portion of derivative assets |
1,453 |
3,054 |
1,078 |
Current
portion of net investments in direct financing leases |
12,273 |
10,453 |
9,884 |
Advances
to affiliates |
5,163 |
8,538 |
7,300 |
Other current assets |
4,400 |
2,035 |
— |
Total current assets |
263,063 |
319,140 |
349,093 |
Restricted cash – long-term |
30,159 |
29,823 |
72,868 |
Vessels and equipment |
|
|
|
At cost,
less accumulated depreciation |
1,463,438 |
1,349,449 |
1,416,381 |
Vessels
related to capital leases, at cost, less accumulated |
|
|
|
depreciation |
1,597,418 |
1,406,462 |
1,044,838 |
Advances on newbuilding contracts |
172,248 |
349,169 |
444,493 |
Total vessels and equipment |
3,233,104 |
3,105,080 |
2,905,712 |
Investment in and advances to equity-accounted joint ventures |
1,118,361 |
1,100,674 |
1,094,596 |
Net
investments in direct financing leases |
565,423 |
480,294 |
486,106 |
Derivative assets |
19,164 |
12,878 |
6,172 |
Intangible assets – net |
54,436 |
56,650 |
61,078 |
Goodwill
– liquefied gas segment |
35,631 |
35,631 |
35,631 |
Other assets |
9,148 |
8,055 |
8,043 |
Total assets |
5,328,489 |
5,148,225 |
5,019,299 |
LIABILITIES AND EQUITY |
|
|
|
Current |
|
|
|
Accounts
payable |
4,158 |
2,973 |
3,509 |
Accrued
liabilities |
67,977 |
123,713 |
45,757 |
Unearned
revenue |
23,080 |
25,227 |
25,873 |
Current
portion of long-term debt |
155,261 |
372,378 |
552,404 |
Current
obligations related to capital leases |
81,149 |
83,374 |
106,946 |
In-process contracts |
1,803 |
3,445 |
7,946 |
Current
portion of derivative liabilities |
12,224 |
64,329 |
79,139 |
Advances from affiliates |
20,061 |
18,959 |
12,140 |
Total current liabilities |
365,713 |
694,398 |
833,714 |
Long-term debt |
1,744,961 |
1,355,377 |
1,245,588 |
Long-term obligations related to capital leases |
1,231,839 |
1,123,419 |
904,603 |
Other
long-term liabilities |
41,930 |
42,369 |
58,174 |
Derivative liabilities |
30,877 |
37,059 |
45,797 |
Total liabilities |
3,415,320 |
3,252,622 |
3,087,876 |
Equity |
|
|
|
Limited
partners – common units |
1,510,650 |
1,502,492 |
1,539,248 |
Limited
partners – preferred units |
285,159 |
285,159 |
285,159 |
General
partner |
49,570 |
49,403 |
50,152 |
Accumulated other comprehensive income |
18,158 |
11,772 |
4,479 |
Partners' equityNon-controlling interest |
1,863,53749,632 |
1,848,82646,777 |
1,879,03852,385 |
Total equity |
1,913,169 |
1,895,603 |
1,931,423 |
Total liabilities and total equity |
5,328,489 |
5,148,225 |
5,019,299 |
Teekay LNG Partners L.P.Consolidated Statements of Cash
Flows(in thousands of U.S. Dollars)
|
|
Nine Months Ended |
|
September 30,2018(unaudited) |
|
September 30,2017(unaudited) |
Cash,
cash equivalents and restricted cash provided by (used for) |
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
Net income |
17,630 |
|
|
4,621 |
|
Non-cash
items: |
|
|
Unrealized gain on non-designated derivative instruments |
(38,201 |
) |
|
(5,522 |
) |
Depreciation and amortization |
91,299 |
|
|
77,894 |
|
Write-down of vessels |
53,863 |
|
|
50,600 |
|
Unrealized foreign currency exchange gain and other |
(64,228 |
) |
|
(5,415 |
) |
Equity
income, net of dividends received of $11,583 (2017 - $28,781) |
(41,014 |
) |
|
21,984 |
|
Ineffective portion on qualifying cash flow hedging instruments
included in interest expense |
(740 |
) |
|
755 |
|
Change
in operating assets and liabilities |
3,422 |
|
|
(2,445 |
) |
Expenditures for dry docking |
(10,458 |
) |
|
(17,067 |
) |
Net operating cash flow |
11,573 |
|
|
125,405 |
|
FINANCING ACTIVITIES |
Proceeds
from issuance of long-term debt |
685,547 |
|
|
249,682 |
|
Scheduled repayments of long-term debt |
(131,217 |
) |
|
(136,582 |
) |
Prepayments of long-term debt |
(440,820 |
) |
|
(67,040 |
) |
Debt
issuance costs |
(8,534 |
) |
|
(1,765 |
) |
Proceeds
from financing related to sales and leaseback of vessels |
370,050 |
|
|
335,830 |
|
Scheduled repayments of obligations related to capital leases |
(45,281 |
) |
|
(27,411 |
) |
Cash
distributions paid |
(52,535 |
) |
|
(42,462 |
) |
Dividends paid to non-controlling interest |
(1,290 |
) |
|
(658 |
) |
Other |
— |
|
|
(605 |
) |
Net financing cash flow |
375,920 |
|
|
308,989 |
|
INVESTING ACTIVITIES |
Capital
contributions and advances to equity-accounted joint ventures |
(29,113 |
) |
|
(143,513 |
) |
Return
of capital and repayment of advances from equity-accounted joint
ventures |
5,000 |
|
|
40,320 |
|
Proceeds
from sale of equity-accounted joint venture |
54,438 |
|
|
— |
|
Receipts
from direct financing leases |
8,361 |
|
|
9,203 |
|
Proceeds
from sale of vessel |
— |
|
|
20,580 |
|
Expenditures for vessels and equipment |
(559,172 |
) |
|
(350,137 |
) |
Net investing cash flow |
(520,486 |
) |
|
(423,547 |
) |
(Decrease) increase in cash, cash equivalents and restricted
cash |
(132,993 |
) |
|
10,847 |
|
Cash, cash equivalents and restricted cash, beginning of the
period |
339,435 |
|
|
243,173 |
|
Cash, cash equivalents and restricted cash, end of the
period |
206,442 |
|
|
254,020 |
|
Teekay LNG Partners L.P.Appendix A - Reconciliation of
Non-GAAP Financial MeasuresAdjusted Net Income(in
thousands of U.S. Dollars)
|
|
Three Months EndedSeptember 30, |
|
2018(unaudited) |
|
2017(unaudited) |
Net
income (loss) – GAAP basis |
29,507 |
|
|
(15,426 |
) |
Less: Net income attributable to non-controlling interests |
(3,557 |
) |
|
(3,470 |
) |
Net income (loss) attributable to the partners and
preferred unitholders |
25,950 |
|
|
(18,896 |
) |
Add (subtract) specific
items affecting net income: |
|
|
|
|
|
Write-down of
vessels(1) |
2,201 |
|
|
38,000 |
|
Restructuring
charges(2) |
449 |
|
|
— |
|
Unrealized
foreign currency exchange (gains) losses(3) |
(3,019 |
) |
|
3,548 |
|
Unrealized gains
on non-designated and designated derivative instruments and
other items from equity–accounted
investees(4) |
(2,904 |
) |
|
(298 |
) |
Unrealized gains
on non-designated derivative instruments(5) |
(17,569 |
) |
|
(1,704 |
) |
Realized loss on
interest rate swap termination |
13,681 |
|
|
— |
|
Other items |
396 |
|
|
8 |
|
Non-controlling interests’ share of items above(6) |
289 |
|
|
267 |
|
Total adjustments |
(6,476 |
) |
|
39,821 |
|
Adjusted net income attributable to the partners and
preferred unitholders |
19,474 |
|
|
20,925 |
|
Preferred unitholders' interest in adjusted net income |
6,425 |
|
|
2,813 |
|
General
Partner's interest in adjusted net income |
261 |
|
|
362 |
|
Limited
partners’ interest in adjusted net income |
12,788 |
|
|
17,750 |
|
Limited
partners’ interest in adjusted net income per common unit,
basic |
0.16 |
|
|
0.22 |
|
Weighted-average number of common units outstanding, basic |
79,687,499 |
|
|
79,626,819 |
|
- See Note 1 to the Consolidated Statements of Income (Loss)
included in this release for further details.
- See Note 2 to the Consolidated Statements of Income (Loss)
included in this release for further details.
- Unrealized foreign currency exchange gains (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 (gains) losses on the cross-currency swaps economically
hedging the Partnership’s NOK bonds. This amount excludes the
realized losses relating to the cross- currency swaps for the NOK
bonds. See Note 5 to the Consolidated Statements of Income (Loss)
included in this release for further details.
- Reflects the unrealized gains 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 derivative instruments designated as hedges for
accounting purposes within the Partnership’s equity-accounted
investments. See Note 3 to the Consolidated Statements of Income
(Loss) included in this release for further details.
- Reflects the unrealized gains due to changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes. See Note 4 to the
Consolidated Statements of Income (Loss) included in this release
for further details.
- Items affecting net income (loss) include items from the
Partnership’s consolidated non-wholly-owned subsidiaries. The
specific items affecting net income (loss) 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 the other
specific items affecting net income (loss) listed in the
table.
Teekay LNG Partners L.P.Appendix B -
Reconciliation of Non-GAAP Financial MeasuresDistributable Cash
Flow (DCF)(in thousands of U.S. Dollars, except units
outstanding and per unit data) |
|
Three Months Ended September 30, |
|
|
2018 |
|
2017 |
|
|
(unaudited) |
|
(unaudited) |
|
Net income (loss): |
29,507 |
|
(15,426 |
) |
Add: |
|
|
Depreciation and amortization |
32,238 |
|
24,980 |
|
Partnership’s share of equity–accounted joint ventures' DCF net of
estimated maintenance |
|
|
capital
expenditures(1) |
19,599 |
|
11,008 |
|
Realized
loss on interest rate swap termination |
13,681 |
|
— |
|
Deferred
income tax and other non-cash items |
3,011 |
|
(894 |
) |
Direct
finance lease payments received in excess of revenue recognized and
other |
|
|
adjustments |
2,823 |
|
1,901 |
|
Distributions relating to equity financing of newbuildings |
2,340 |
|
1,589 |
|
Write-down of vessels |
2,201 |
|
38,000 |
|
Less: |
|
|
Unrealized foreign currency exchange (gain) loss |
(3,019 |
) |
3,548 |
|
Distributions relating to preferred units |
(6,425 |
) |
(2,813 |
) |
Equity
income |
(14,679 |
) |
(1,417 |
) |
Estimated
maintenance capital expenditures |
(16,140 |
) |
(13,232 |
) |
Unrealized gain on non-designated derivative instruments |
(17,569 |
) |
(1,704 |
) |
Distributable Cash Flow before Non-controlling interest |
47,568 |
|
45,540 |
|
Non-controlling interests’ share of DCF before estimated
maintenance capital expenditures |
(6,354 |
) |
(5,316 |
) |
Distributable Cash Flow |
41,214 |
|
40,224 |
|
Amount of cash distributions attributable to the General
Partner |
(228 |
) |
(227 |
) |
Limited
partners' Distributable Cash Flow |
40,986 |
|
39,997 |
|
Weighted-average number of common units outstanding |
79,687,499 |
|
79,626,819 |
|
Distributable Cash Flow per limited partner common
unit |
0.51 |
|
0.50 |
|
(1) The estimated maintenance capital expenditures relating to
the Partnership’s share of equity-accounted joint ventures were
$9.6 million and$8.3 million for the three months ended September
30, 2018 and 2017, respectively.
Teekay LNG Partners L.P.Appendix C -
Supplemental Segment Information(in thousands of U.S.
Dollars) |
|
Three Months Ended September 30, 2018
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Voyage
revenues |
118,188 |
|
5,148 |
|
123,336 |
|
Voyage
expenses |
(5,731 |
) |
(2,225 |
) |
(7,956 |
) |
Vessel
operating expenses |
(23,905 |
) |
(3,716 |
) |
(27,621 |
) |
Time-charter hire expense |
(1,690 |
) |
— |
|
(1,690 |
) |
Depreciation and amortization |
(31,309 |
) |
(929 |
) |
(32,238 |
) |
General
and administrative expenses |
(3,972 |
) |
(211 |
) |
(4,183 |
) |
Write-down of vessels |
— |
|
(2,201 |
) |
(2,201 |
) |
Restructuring charges |
— |
|
(449 |
) |
(449 |
) |
Income (loss) from vessel operations |
51,581 |
|
(4,583 |
) |
46,998 |
|
|
|
Three Months Ended September 30, 2017
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Voyage
revenues |
92,700 |
|
11,585 |
|
104,285 |
|
Voyage
expenses |
(716 |
) |
(750 |
) |
(1,466 |
) |
Vessel
operating expenses |
(22,172 |
) |
(4,552 |
) |
(26,724 |
) |
Depreciation and amortization |
(22,580 |
) |
(2,400 |
) |
(24,980 |
) |
General
and administrative expenses |
(2,330 |
) |
(463 |
) |
(2,793 |
) |
Write-down of vessels |
— |
|
(38,000 |
) |
(38,000 |
) |
Income (loss) from vessel operations |
44,902 |
|
(34,580 |
) |
10,322 |
|
Teekay LNG Partners L.P.Appendix D - Reconciliation of
Non-GAAP Financial MeasuresCash Flow from Vessel Operations from
Consolidated Vessels(in thousands of U.S. Dollars) |
|
Three Months Ended September 30, 2018
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Income
(loss) from vessel operations (See Appendix C) |
51,581 |
|
(4,583 |
) |
46,998 |
|
Depreciation and amortization |
31,309 |
|
929 |
|
32,238 |
|
Write-down of vessels |
— |
|
2,201 |
|
2,201 |
|
Amortization of in-process contracts included in voyage
revenues |
(1,089 |
) |
(108 |
) |
(1,197 |
) |
Direct
finance lease payments received in excess of revenue recognized
and |
|
|
|
other
adjustments |
2,823 |
|
— |
|
2,823 |
|
Realized gain on Toledo Spirit derivative contract |
— |
|
1,689 |
|
1,689 |
|
Cash flow from vessel operations from consolidated vessels |
84,624 |
|
128 |
|
84,752 |
|
|
|
Three Months Ended September 30, 2017
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker Segment |
Total |
Income
(loss) from vessel operations (See Appendix C) |
44,902 |
|
(34,580 |
) |
10,322 |
|
Depreciation and amortization |
22,580 |
|
2,400 |
|
24,980 |
|
Write-down of vessels |
— |
|
38,000 |
|
38,000 |
|
Amortization of in-process contracts included in voyage
revenues |
(935 |
) |
(278 |
) |
(1,213 |
) |
Direct
finance lease payments received in excess of revenue
recognized |
1,901 |
|
— |
|
1,901 |
|
Realized gain on Toledo Spirit derivative contract |
— |
|
646 |
|
646 |
|
Cash flow from vessel operations from consolidated vessels |
68,448 |
|
6,188 |
|
74,636 |
|
Teekay LNG Partners L.P.Appendix E -
Reconciliation of Non-GAAP Financial MeasuresCash Flow from Vessel
Operations from Equity-Accounted Vessels(in thousands of
U.S. Dollars) |
|
Three Months Ended |
|
September 30,
2018(unaudited) |
September 30, 2017
(unaudited) |
|
At 100% |
Partnership's
Portion(1) |
At 100% |
Partnership's
Portion(1) |
Voyage
revenues |
159,337 |
|
68,693 |
|
117,013 |
|
52,310 |
|
Voyage
expenses |
(3,143 |
) |
(1,572 |
) |
(3,933 |
) |
(2,015 |
) |
Vessel
operating expenses, time-charter hire expense and |
|
|
|
|
general
and administrative expenses |
(50,914 |
) |
(22,626 |
) |
(43,631 |
) |
(20,246 |
) |
Depreciation and amortization |
(25,839 |
) |
(12,860 |
) |
(29,201 |
) |
(14,486 |
) |
Income from vessel operations of equity-accounted vessels Other
items, including interest expense, realized andunrealized gain
(loss) on derivative instruments |
79,441 (39,045) |
|
31,635 (16,956) |
|
40,248 (31,322) |
|
15,563 (14,146) |
|
Net income / equity income of equity-accounted vessels |
40,396 |
|
14,679 |
|
8,926 |
|
1,417 |
|
Income from vessel operations of equity-accounted vessels |
79,441 |
|
31,635 |
|
40,248 |
|
15,563 |
|
Depreciation and amortization |
25,839 |
|
12,860 |
|
29,201 |
|
14,486 |
|
Direct
finance lease payments received in excess of |
|
|
|
|
revenue
recognized and other adjustments |
11,711 |
|
4,310 |
|
10,018 |
|
3,636 |
|
Amortization of in-process revenue contracts |
(1,800 |
) |
(964 |
) |
(2,065 |
) |
(1,067 |
) |
Cash flow from vessel operations from equity-accounted vessels |
115,191 |
|
47,841 |
|
77,402 |
|
32,618 |
|
(1) The Partnership's equity-accounted vessels
for the three months ended September 30, 2018 and 2017 include: the
Partnership’s 40 percent ownership interest in Teekay Nakilat (III)
Corporation, which owns four LNG carriers; the Partnership’s 49
percent ownership interest in the Partnership’s joint venture with
Exmar NV (the Excalibur Joint Venture), which owns one LNG carrier;
the Partnership's 50 percent ownership interest up to January 2018
in the Excelsior Joint Venture, which owns one regasification unit;
the Partnership’s 33 percent ownership interest in four LNG
carriers servicing the Angola LNG project; the Partnership’s 52
percent ownership interest in the Teekay LNG-Marubeni Joint
Venture, which owns six LNG carriers; the Partnership’s 50 percent
ownership interest in Exmar LPG BVBA, which owns and in-charters 22
LPG carriers as at September 30, 2018, compared to 23 owned and
in-chartered LPG carriers, including six LPG carrier newbuildings,
as at September 30, 2017; the Partnership’s ownership interest
ranging from 20 to 30 percent in three LNG carriers and one LNG
carrier newbuilding as at September 30, 2018 for Shell, compared to
four LNG carrier newbuildings as at September 30, 2017; the
Partnership’s 50 percent ownership interest in two ARC7 LNG
carriers and four ARC7 LNG carrier newbuildings in the Yamal LNG
Joint Venture as at September 30, 2018, compared to six ARC7 LNG
carrier newbuildings as at September 30, 2017; and the
Partnership's 30 percent ownership interest in the Bahrain LNG
Joint Venture, which owns an LNG receiving and regasification
terminal under construction in Bahrain.
Teekay LNG Partners L.P.Appendix F - Summarized
Financial Information of Equity-Accounted Joint
Ventures(in thousands of U.S. Dollars) |
|
As at September 30,
2018(unaudited) |
As at December 31, 2017
(unaudited) |
|
At 100% |
Partnership's Portion(1) |
At 100% |
Partnership's Portion(1) |
Cash and
restricted cash, current and non-current |
390,537 |
168,686 |
295,148 |
128,004 |
Current
portion of derivative assets |
4,709 |
2,196 |
1,594 |
785 |
Other
current assets |
63,168 |
27,207 |
53,068 |
22,661 |
Vessels
and equipment, including vessels related to capital |
|
|
|
|
leases |
2,348,919 |
1,151,294 |
2,202,418 |
1,133,804 |
Advances
on newbuilding contracts |
1,210,375 |
445,543 |
1,211,210 |
450,523 |
Net
investments in direct financing leases, current and |
|
|
|
|
non-current |
3,104,728 |
1,169,737 |
2,013,759 |
722,408 |
Derivative assets |
39,428 |
15,242 |
4,602 |
2,259 |
Other non-current assets |
50,124 |
37,972 |
86,167 |
54,060 |
Total assets |
7,211,988 |
3,017,877 |
5,867,966 |
2,514,504 |
Current portion of long-term debt and obligations related to |
|
|
|
|
capital
leases |
206,241 |
87,555 |
162,915 |
73,975 |
Current
portion of derivative liabilities |
13,773 |
4,716 |
21,973 |
7,217 |
Other
current liabilities |
132,194 |
59,655 |
98,657 |
43,193 |
Long-term debt and obligations related to capital leases |
4,236,959 |
1,700,934 |
3,023,713 |
1,231,433 |
Shareholders' loans, current and non-current |
360,814 |
127,226 |
368,937 |
131,685 |
Derivative liabilities |
37,454 |
12,389 |
73,454 |
24,235 |
Other
long-term liabilities |
66,353 |
34,267 |
77,297 |
39,855 |
Equity |
2,158,200 |
991,135 |
2,041,020 |
962,911 |
Total liabilities and equity |
7,211,988 |
3,017,877 |
5,867,966 |
2,514,504 |
Investments in equity-accounted joint ventures Advances to
equity-accounted joint ventures |
|
991,135 127,226 |
|
962,911 131,685 |
Investments in and advances to equity-accounted joint ventures |
|
1,118,361 |
|
1,094,596 |
(1) The Partnership's equity-accounted vessels
as at September 30, 2018 and December 31, 2017 include: the
Partnership’s 40 percent ownership interest in Teekay Nakilat (III)
Corporation, which owns four LNG carriers; the Partnership’s 49
percent ownership interests in the Excalibur Joint Venture, which
own one LNG carrier; the Partnership's 50 percent ownership
interest up to January 2018 in the Excelsior Joint Venture, which
owned one regasification unit as at December 31, 2017; the
Partnership’s 33 percent ownership interest in four LNG carriers
servicing the Angola LNG project; the Partnership’s 52 percent
ownership interest in the Teekay LNG-Marubeni Joint Venture, which
owns six LNG carriers; the Partnership’s 50 percent ownership
interest in Exmar LPG BVBA, which owns and in-charters 22 LPG
carriers, as at September 30, 2018, compared to 23 owned and
in-chartered LPG carriers including three LPG carrier newbuildings,
as at December 31, 2017; the Partnership’s ownership interest
ranging from 20 percent to 30 percent in three LNG carriers and one
LNG carrier newbuilding as at September 30, 2018 for Shell,
compared to one LNG carrier and three LNG carrier newbuildings as
at December 31, 2017; the Partnership’s 50 percent ownership
interest in two ARC7 LNG carriers and four ARC7 LNG carrier
newbuildings in the Yamal LNG Joint Venture as at September 30,
2018, compared to six ARC7 LNG carrier newbuildings as at December
31, 2017; and the Partnership's 30 percent ownership interest in
the Bahrain LNG Joint Venture, which owns an LNG receiving and
regasification terminal under construction in Bahrain.
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,
among other things, regarding: the timing of newbuilding vessel
deliveries and completion of the Bahrain regasification facility,
and the commencement of related contracts; the strength of the LNG
carrier market; the effects of future newbuilding deliveries on the
Partnership’s future net income and cash flows, and the expected
amount of such incremental cash flow from vessel operations; the
expected amount of incremental profit relating to the charter for
the Magellan Spirit; Teekay LNG’s ability to secure employment for
the Torben Spirit LNG carrier and two Teekay LNG-Marubeni Joint
Venture LNG carriers at higher rates; the effects of Teekay LNG’s
proposed amendments to its U.S. federal income tax status,
including, greater appeal to certain investors, the administrative
burden of K-1s, and the tax effect on and treatment applicable to
Teekay LNG and unitholders upon conversion and in the future;
Teekay LNG’s guidance as to 2019 cash distributions and the impact
of Teekay LNG’s distribution policy and capital allocation strategy
on Teekay LNG’s ability to achieve its targeted leverage; and
Teekay LNG’s ability to benefit from future LNG 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: potential shipyard and project
construction delays, newbuilding specification changes or cost
overruns; 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;
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
Partnership's fleet; higher than expected costs and expenses; the
inability to secure new charters at higher rates; the outcome of
the common unitholder vote at the special meeting to approve the
proposed amendments to the Partnership’s U.S. federal tax status
and related amendments to its partnership agreement, and the actual
tax implications of any such amendments on the Partnership and
unitholders; actual levels of quarterly distributions approved by
the general partner’s board of directors; 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 or the Partnership’s joint ventures’
ability to secure or draw on financings for its vessels; 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, 2017. 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.
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