Teekay Tankers Ltd. (Teekay Tankers or the Company) (NYSE: TNK)
today reported the Company's results for the quarter ended
March 31, 2020:
Consolidated Financial Summary
| |
Three Months Ended |
| (in
thousands of U.S. dollars, except per share data) |
March 31, 2020 |
December 31, 2019 (3) |
March 31, 2019 (3) |
| GAAP FINANCIAL COMPARISON |
|
|
|
|
Total revenues |
341,900 |
|
311,305 |
|
238,161 |
|
| Income from operations |
120,126 |
|
91,608 |
|
32,097 |
|
| Net income |
106,839 |
|
63,072 |
|
12,447 |
|
| Earnings per share (4) |
3.17 |
|
1.88 |
|
0.37 |
|
| NON-GAAP FINANCIAL COMPARISON |
|
|
| Total Adjusted
EBITDA (1) |
155,370 |
|
132,733 |
|
63,428 |
|
| Adjusted net
income (1) |
109,981 |
|
82,991 |
|
14,647 |
|
| Adjusted earnings
per share (1)(4) |
3.27 |
|
2.47 |
|
0.44 |
|
| Free cash flow
(1) |
141,334 |
|
102,386 |
|
44,554 |
|
(1) 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).
(2) Net debt is a non-GAAP financial measure and
represents short-term, current and long-term debt and current and
long-term obligations related to finance leases less cash and cash
equivalents and restricted cash.
(3) Comparative balances relating to the three
months ended December 31, 2019 and March 31, 2019 have been updated
to reflect results as presented in the Company’s Annual Report on
Form 20-F and Report on Form 6-K for the year ended December 31,
2019 and three months ended March 31, 2020, respectively.
(4) The per share amounts for all periods
presented have been adjusted to reflect a one-for-eight reverse
stock split completed in November 2019.
First Quarter of 2020 Compared to Fourth Quarter of 2019
GAAP net income and non-GAAP adjusted net income
for the first quarter of 2020 improved compared to the fourth
quarter of 2019, primarily due to higher average spot tanker rates,
partially offset by the sale of four Suezmax tankers during
December 2019 and the first quarter of 2020. GAAP net income in the
fourth quarter of 2019 also included adjustments to freight tax
accruals relating to prior periods.
First Quarter of 2020 Compared to First Quarter of 2019
GAAP net income and non-GAAP adjusted net income
for the first quarter of 2020 significantly increased compared to
the same period of the prior year, primarily due to higher average
spot tanker rates and fewer off-hire days, partially offset by the
sale of four Suezmax tankers since December 2019.
CEO Commentary
"In the first quarter of 2020, Teekay Tankers
achieved its highest quarterly adjusted profit in more than 10
years, with adjusted net income of approximately $110 million, or
$3.27 per share, and I am pleased to report that our fleet has
continued to secure strong spot rates in the second quarter of 2020
to-date," commented Kevin Mackay, Teekay Tankers’ President and
Chief Executive Officer. "While COVID-19 is having an unprecedented
impact on the world and is clearly a major focus for us, we are
fortunate to be in a position where our financial results are
stronger so far in 2020 and we have had minimal impacts on our
operations due to the pandemic. We are truly proud of how our
seafarers and onshore colleagues have responded to COVID-19,
implementing new standards which focus on the health and
well-being of everyone involved in our organization, especially our
colleagues at sea, while maintaining consistently safe and
efficient operations for our customers."
"We have continued to execute on our strategic
priorities, taking advantage of the strong spot tanker market over
the last couple of months and opportunistically securing time
charter-out contracts for an additional nine vessels for periods of
six months to two years. We have now secured a total of 13 time
charter-out contracts since October 2019, locking in approximately
$170 million of forward fixed rate revenues(1) at attractive rates
and reducing our free cash flow breakeven to approximately $10,500
per day through the first quarter of 2021. Our low breakeven rate
is expected to enable us to create shareholder value in almost any
market which is important given the current market uncertainty for
the second half of 2020.”
"In addition, we continue to focus on further
increasing our financial strength. With the strong cash flows we
generated from operations and the proceeds from vessel sales in the
first quarter of 2020, we reduced our net debt by approximately
$200 million, or over 20 percent, to $730 million as of March 31,
2020, while also significantly increasing our total liquidity to
$368 million over the same period, and have subsequently continued
to make meaningful progress on both fronts."
Mr. Mackay added, “Our focus on debt reduction
creates shareholder value directly through increased net asset
value and also increased financial flexibility, which is important
in all tanker markets. With a low free cash flow breakeven, a
strong liquidity position, lower balance sheet leverage, no
significant debt maturities until 2024 and our mid-size fleet
profile, we believe that Teekay Tankers is one of the best
positioned companies in our sector to continue creating shareholder
value.”
(1) Commencing from April 1, 2020.
Summary of Recent Events
Since the beginning of the year, Teekay Tankers
has entered into time charter-out contracts for five Suezmax
tankers, each for a duration of one year at an average rate of
$45,600 per day, one Suezmax time charter-out contract for six
months at $52,500 per day, and three time charter-out contracts for
Aframax-sized vessels for one to two years at an average rate of
$26,750 per day.
In late-April 2020, Teekay Tankers closed the
previously announced sale of a portion of its oil and gas
ship-to-ship transfer support business, which also provides gas
terminal management and consulting services, for approximately
$27.0 million, of which approximately $14.3 million has been
received with the remaining amount due in the third quarter of
2020. Teekay Tankers retained its entire Full Service Lightering
business that operates in the U.S. Gulf, which provides
ship-to-ship oil transfers for both U.S. crude imports and exports.
In addition, the Company will continue to operate oil ship-to-ship
transfer support services in North America and the Caribbean, a
business that has synergies with its core Full Service Lightering
business.
Tanker Market
The first quarter of 2020 started on a
relatively strong note, as positive supply and demand fundamentals
existing during the fourth quarter of 2019 continued into the early
part of the year. However, crude tanker spot rates gradually
softened through the course of January 2020 due to lower demand
ahead of Chinese New Year, and weakened further during February
2020 as the COVID-19 outbreak began to impact Asian crude oil
imports.
The tanker market improved quickly during March
2020 with the collapse of the OPEC+ supply agreement and subsequent
price war waged by Saudi Arabia and Russia. Both countries
increased production substantially during March and April 2020,
resulting in higher crude oil exports and increased shipping
demand. At the same time, global oil demand plummeted as lockdown
restrictions were implemented in many parts of the world in order
to halt the spread of the COVID-19 virus. This led to a significant
mismatch between global oil supply and demand and a historic build
in global oil inventories. The rapid build in inventories drove oil
prices to multi-year lows and pushed the crude oil futures curve
into a steep contango, which encouraged oil traders to charter
ships for floating storage. The increasing number of tankers being
utilized for storage led to a tightening of available fleet supply
which, in combination with healthy cargo supply, resulted in
increased tanker fleet utilization. As a result, mid-size tanker
spot rates during the first quarter of 2020 were the highest since
2008.
Crude tanker spot rates have remained firm at
the beginning of the second quarter of 2020. However, the outlook
for spot rates has become more uncertain. In the near-term, global
oil supply is expected to decline substantially, which should
result in fewer spot cargoes. The OPEC+ group of producers have
announced record supply cuts of 9.7 million barrels per day (mb/d)
starting in May 2020, with Saudi Arabia subsequently pledging to
cut supply by a further 1 mb/d in June 2020, while production in
several non-OPEC countries is also starting to decline in response
to lower oil prices. However, these supply cuts may be insufficient
to offset the expected drop in oil demand in the near-term,
potentially resulting in a further build in global oil inventories
and more floating storage demand. The strength of the crude spot
tanker market is likely to be determined by the relative balance
between a decline in spot cargoes, and any rise in floating storage
demand, and we anticipate that the spot tanker market will remain
volatile in the near-term.
Looking further ahead, global oil demand is
expected to begin recovering as lockdown restrictions start to be
lifted across the globe from May 2020 onwards. However, the pace
and strength of this recovery is highly uncertain. OPEC+ supply
cuts are expected to remain in place throughout 2020 into 2021,
although OPEC+ has indicated that the cuts may reduce over time. As
global oil supply and demand adjust, we may see a period of oil
inventory destocking emerge, which may dampen tanker demand in the
medium-term. The redelivery of vessels from floating storage into
the spot trading fleet may also negatively impact crude tanker spot
rates later in 2020 and into 2021.
Against the uncertainty around tanker demand,
the tanker supply fundamentals offer a clear, positive
counterbalance, with a much lower tanker orderbook than in previous
cycles. The tanker orderbook, when measured as a percentage of the
existing fleet, is currently at a 23-year low of around 8 percent.
This compares to an orderbook of around 20 percent at the peak of
the last market cycle in 2015 and just under 50 percent in 2008.
New vessel ordering remains low due to financing constraints and
uncertainty over what type of fuel and propulsion system to choose
given new technology developments and future environmental
legislation, such as IMO 2030. Finally, the global tanker fleet is
aging, with 370 mid-size tankers, or 19 percent of the fleet,
currently 15 years of age or older, and thus likely to face
scrapping in the coming years. Taking all of these factors into
account, net tanker fleet growth is expected to be very low for at
least the next two years.
In summary, the extraordinary upheaval in global
oil markets at the start of 2020 has driven crude tanker spot rates
to the highest level in more than 10 years. In the near-term, we
anticipate that rates will remain volatile due to a continued
mismatch between oil supply and demand and an ongoing need for
floating storage. The medium-term outlook is far less certain, and
a period of lower oil supply coupled with inventory destocking may
weigh on tanker demand. However, very low tanker fleet growth due
to a small orderbook and high scrapping may lead to a faster
rebalancing than in previous market cycles.
Operating Results
The following table highlights the operating
performance of the Company’s time-charter vessels and spot vessels
trading in revenue sharing arrangements (RSAs), voyage charters and
full service lightering, in each case measured in net revenues(i)
per revenue day, or time-charter equivalent (TCE) rates, before
off-hire bunker expenses:
| |
Three Months Ended |
| |
March 31, 2020(ii) |
December 31, 2019(ii) |
March 31, 2019(ii) |
|
Time Charter-Out Fleet |
|
|
|
| Suezmax
revenue days |
|
453 |
|
|
322 |
|
|
90 |
|
| Suezmax
TCE per revenue day |
$33,752 |
$32,370 |
$17,281 |
| Aframax
revenue days |
|
— |
|
|
— |
|
|
75 |
|
| Aframax
TCE per revenue day |
|
— |
|
|
— |
|
$24,276 |
|
|
|
|
|
|
Spot Fleet |
|
|
|
| Suezmax
revenue days |
|
2,071 |
|
|
2,390 |
|
|
2,415 |
|
| Suezmax
spot TCE per revenue day (iii) |
$49,067 |
$39,083 |
$23,568 |
| Aframax
revenue days |
|
1,723 |
|
|
1,929 |
|
|
1,752 |
|
| Aframax
spot TCE per revenue day (iv) |
$34,438 |
$32,951 |
$24,797 |
| LR2
revenue days |
|
953 |
|
|
743 |
|
|
815 |
|
| LR2 spot
TCE per revenue day (v) |
$34,494 |
$26,683 |
$20,694 |
|
|
|
|
|
|
Total Fleet |
|
|
|
| Suezmax
revenue days |
|
2,524 |
|
|
2,712 |
|
|
2,505 |
|
| Suezmax
TCE per revenue day |
$46,317 |
$38,285 |
$23,342 |
| Aframax
revenue days |
|
1,723 |
|
|
1,929 |
|
|
1,827 |
|
| Aframax
TCE per revenue day |
$34,438 |
$32,951 |
$24,775 |
| LR2
revenue days |
|
953 |
|
|
743 |
|
|
815 |
|
| LR2 TCE
per revenue day |
$34,494 |
$26,683 |
$20,694 |
- Net revenues is a non-GAAP financial measure. Please refer to
"Definitions and Non-GAAP Financial Measures" for a definition of
this term.
- Revenue days are the total number of calendar days the
Company's vessels were in its possession during a period, less the
total number of off-hire days during the period associated with
major repairs, dry dockings or special or intermediate surveys.
Consequently, revenue days represent the total number of days
available for the vessel to earn revenue. Idle days, which are days
when the vessel is available to earn revenue but is not employed,
are included in revenue days.
- Includes vessels trading in the Teekay Suezmax RSA, Teekay
Suezmax Classic RSA and non-pool voyage charters.
- Prior to January 1, 2020, includes vessels trading in the
Teekay Aframax RSA, Teekay Aframax Classic RSA, non-pool voyage
charters and full service lightering voyages. Subsequent to January
1, 2020, includes Aframax vessels trading in the Teekay Aframax
RSA, non-pool voyage charters and full service lightering
voyages.
- Prior to January 1, 2020, includes vessels trading in the
Teekay Taurus RSA and non-pool voyage charters. Subsequent to
January 1, 2020, includes LR2 vessels trading in the Teekay Aframax
RSA, non-pool voyage charters, and full service lightering
voyages.
Second Quarter of 2020 Spot Tanker Rates Update
Below is Teekay Tankers’ spot tanker fleet
update for the second quarter of 2020 to-date:
- The portion of the Suezmax fleet trading on the spot market has
secured TCE rates per revenue day of approximately $52,100 on
average, with 69 percent of the available days fixed(1); and
- The portion of the Aframax and LR2 fleet trading on the spot
market has secured TCE rates per revenue day of approximately
$33,600 on average, with 62 percent of the available days
fixed(2)(3).
(1) Combined average TCE rate includes Teekay
Suezmax RSA, Teekay Suezmax Classic RSA and non-pool voyage
charters.
(2) Combined average TCE rate includes Teekay
Aframax RSA, non-pool voyage charters and full service lightering
voyages.
(3) As of January 1, 2020, the Company's Aframax
tankers and LR2 product tankers, excluding those employed under
non-pool voyage charters and full service lightering voyages, are
operating as a combined RSA under the Teekay Aframax RSA.
Teekay Tankers’ Fleet
The following table summarizes the Company’s
fleet as of May 18, 2020:
|
|
Owned and Leased Vessels |
Chartered-in Vessels |
Total |
|
Fixed-rate: |
|
|
|
| Suezmax
Tankers |
10 |
— |
10 |
| Aframax
Tankers(i) |
1 |
— |
1 |
| LR2
Product Tanker |
1 |
— |
1 |
|
Total Fixed-Rate Fleet |
12 |
— |
12 |
|
Spot-rate: |
|
|
|
| Suezmax
Tankers |
16 |
— |
16 |
| Aframax
Tankers(ii) |
16 |
2 |
18 |
| LR2
Product Tankers(iii) |
8 |
2 |
10 |
|
VLCC Tanker(iv) |
1 |
— |
1 |
|
Total Spot Fleet |
41 |
4 |
45 |
|
Total Tanker Fleet |
53 |
4 |
57 |
|
STS Support Vessels |
— |
3 |
3 |
|
Total Teekay Tankers' Fleet |
53 |
7 |
60 |
- One additional time charter-out contract has been secured and
is expected to commence in June 2020.
- Includes two Aframax tankers with charter-in contracts that are
scheduled to expire in March 2021 and September 2021, respectively,
one with an option to extend for one additional year.
- Includes two LR2 product tankers with charter-in contracts that
are scheduled to expire in January 2021, each with an option to
extend for one additional year.
- The Company’s ownership interest in this vessel is 50
percent.
Liquidity Update
As at March 31, 2020, the Company had total
liquidity of $368.1 million (comprised of $205.3 million in cash
and cash equivalents, including $2.0 million of cash in assets held
for sale, and $162.8 million in undrawn capacity from its credit
facilities) compared to total liquidity of $150.3 million as at
December 31, 2019.
Conference Call
The Company plans to host a conference call on
Thursday, May 21, 2020 at 12:00 p.m. (ET) to discuss its results
for the first quarter 2020. All shareholders and interested parties
are invited to listen to the live conference call by choosing from
the following options:
- By dialing (800) 239-9838 or (647) 484-0478, if outside of
North America, and quoting conference ID code 4141060.
- By accessing the webcast, which will be available on Teekay
Tankers’ website at www.teekay.com (the archive will remain on the
website for a period of one year).
An accompanying First Quarter 2020 Earnings
Presentation will also be available at www.teekay.com in advance of
the conference call start time.
About Teekay Tankers
Teekay Tankers currently has a fleet of 52
double-hull tankers (including 26 Suezmax tankers, 17 Aframax
tankers and nine LR2 product tankers), and also has four time
chartered-in tankers. Teekay Tankers’ vessels are typically
employed through a mix of short- or medium-term fixed-rate time
charter contracts and spot tanker market trading. Teekay Tankers
also owns a Very Large Crude Carrier (VLCC) through a 50
percent-owned joint venture. In addition, Teekay Tankers owns a
ship-to-ship transfer business, a portion of which the Company sold
in April 2020. Teekay Tankers was formed in December 2007 by Teekay
Corporation as part of its strategy to expand its conventional oil
tanker business.
Teekay Tankers’ Class A common stock trades on
the New York Stock Exchange under the symbol “TNK.”
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 Securities and Exchange Commission (SEC). These non-GAAP
financial measures, which include Adjusted Net Income, Free Cash
Flow, Net Revenues, and Adjusted EBITDA, are intended to provide
additional information and should not be considered substitutes for
measures of performance prepared in accordance with GAAP. In
addition, these measures do not have standardized definitions
across companies, and therefore may not be comparable to similar
measures presented by other companies. These non-GAAP
measures are used by management, and the Company believes that
these supplemental metrics assist investors and other users of its
financial reports in comparing financial and operating performance
of the Company across reporting periods and with other
companies.
Non-GAAP Financial Measures
Adjusted net income excludes items of income or
loss from GAAP net income that are typically excluded by securities
analysts in their published estimates of the Company’s financial
results. The Company believes that certain investors use this
information to evaluate the Company’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,
the most directly comparable GAAP measure reflected in the
Company’s consolidated financial statements.
Adjusted EBITDA represents net income before
interest, taxes, and depreciation and amortization and is adjusted
to exclude certain items whose timing or amount cannot be
reasonably estimated in advance or that are not considered
representative of core operating performance. Such adjustments
include foreign exchange gains and losses, gains and losses on sale
of vessels, unrealized credit loss adjustments, unrealized gains
and losses on derivative instruments and any write-offs and certain
other income or expenses. Adjusted EBITDA also excludes realized
gains or losses on interest rate swaps as management, in assessing
the Company's performance, views these gains or losses as an
element of interest expense and realized gains or losses on
derivative instruments resulting from amendments or terminations of
the underlying instruments. Consolidated Adjusted EBITDA represents
Adjusted EBITDA from vessels that are consolidated on the Company's
financial statements. Adjusted EBITDA from Equity-Accounted
Joint Venture represents the Company's proportionate share of
Adjusted EBITDA from its equity-accounted joint venture, and as a
result, the Company does not have the unilateral ability to
determine whether the cash generated by its equity-accounted joint
venture is retained within the entity in which the Company holds
the equity-accounted joint venture or distributed to the Company
and other owners. In addition, the Company does not control the
timing of any such distributions to the Company and other owners.
Adjusted EBITDA is a non-GAAP financial measure used by certain
investors and management to measure the operational performance of
companies. Total Adjusted EBITDA represents Consolidated Adjusted
EBITDA plus Adjusted EBITDA from Equity-Accounted Joint Venture.
Please refer to Appendices C and D of this release for
reconciliations of Adjusted EBITDA to net income and equity income,
respectively, which are the most directly comparable GAAP measures
reflected in the Company’s consolidated financial statements.
Free cash flow (FCF) represents net income, plus
depreciation and amortization, unrealized losses from derivative
instruments, loss on sales of vessels, equity loss from the
equity-accounted joint venture, and any write-offs and certain
other non-cash non-recurring items, less unrealized gains from
derivative instruments, gain on sales of vessels, equity income
from the equity-accounted joint venture and certain other non-cash
items. The Company includes FCF from equity-accounted joint venture
as a component of its FCF. FCF from the equity-accounted joint
venture represents the Company’s proportionate share of FCF from
its equity-accounted joint venture. The Company does not control
its equity-accounted joint venture, and as a result, the Company
does not have the unilateral ability to determine whether the cash
generated by its equity-accounted joint venture is retained within
the entity in which the Company holds the equity-accounted joint
venture or distributed to the Company and other owners. In
addition, the Company does not control the timing of such
distributions to the Company and other owners. Consequently,
readers are cautioned when using FCF as a liquidity measure as the
amount contributed from FCF from the equity-accounted joint venture
may not be available to the Company in the periods such FCF is
generated by the equity-accounted joint venture. FCF is a non-GAAP
financial measure used by certain investors and management to
evaluate the Company’s financial and operating performance and to
assess the Company’s ability to generate cash sufficient to repay
debt, pay dividends and undertake capital and dry-dock
expenditures. Please refer to Appendix B to this release for a
reconciliation of this non-GAAP financial measure to net income,
the most directly comparable GAAP financial measure reflected in
the Company’s consolidated financial statements.
Net revenues represent revenues less voyage
expenses. Because the amount of voyage expenses the Company incurs
for a particular charter depends upon the type of the charter, the
Company uses net revenues to improve the comparability between
periods of reported revenues that are generated by the different
types of charters and contracts. The Company principally uses net
revenues, a non-GAAP financial measure, because the Company
believes it provides more meaningful information about the
deployment of the Company's vessels and their performance than does
revenues, the most directly comparable financial measure under
GAAP.
Teekay Tankers Ltd.Summary Consolidated Statements of Income(in
thousands of U.S. dollars, except share and per share data)
| |
|
Three Months Ended |
| |
|
March 31, |
December 31, |
March 31, |
| |
|
2020 |
2019 (1) |
2019 (1) |
| |
|
(unaudited) |
(unaudited) |
(unaudited) |
| |
|
|
|
|
| Voyage charter
revenues (2) |
317,478 |
|
289,857 |
|
222,077 |
|
| Time-charter
revenues |
15,567 |
|
10,680 |
|
3,410 |
|
| Other
revenues (3) |
8,855 |
|
10,768 |
|
12,674 |
|
| Total
revenues |
341,900 |
|
311,305 |
|
238,161 |
|
| |
|
|
|
|
| Voyage expenses
(2) |
(119,241 |
) |
(109,031 |
) |
(102,999 |
) |
| Vessel operating
expenses |
(50,649 |
) |
(51,875 |
) |
(54,587 |
) |
| Time-charter hire
expenses |
(9,879 |
) |
(12,312 |
) |
(9,448 |
) |
| Depreciation and
amortization |
(29,632 |
) |
(31,943 |
) |
(29,865 |
) |
| General and
administrative expenses |
(9,286 |
) |
(8,992 |
) |
(9,165 |
) |
| Loss
and write-down on sale of vessels |
(3,087 |
) |
(5,544 |
) |
— |
|
| Income
from operations |
120,126 |
|
91,608 |
|
32,097 |
|
| |
|
|
|
| Interest
expense |
(15,135 |
) |
(15,679 |
) |
(16,942 |
) |
| Interest
income |
256 |
|
147 |
|
365 |
|
| Realized and
unrealized (loss) gain |
|
|
|
| |
on derivative
instruments (4) |
(827 |
) |
205 |
|
(847 |
) |
| Equity income
(5) |
1,940 |
|
1,693 |
|
753 |
|
| Other
income (expense) |
1,143 |
|
(487 |
) |
(365 |
) |
| Net income
before income tax |
107,503 |
|
77,487 |
|
15,061 |
|
| |
|
|
|
| Income
tax expenses (6) |
(664 |
) |
(14,415 |
) |
(2,614 |
) |
|
Net income |
106,839 |
|
63,072 |
|
12,447 |
|
| |
|
|
|
| Earnings per share
attributable |
|
|
|
| |
to shareholders of
Teekay Tankers |
|
|
|
| |
- Basic (7) |
3.17 |
|
1.88 |
|
0.37 |
|
| |
- Diluted (7) |
3.15 |
|
1.86 |
|
0.37 |
|
|
|
|
|
|
|
| |
|
|
|
|
| Weighted-average
number of total common |
|
|
| |
shares
outstanding |
|
|
|
| |
- Basic (7) |
33,669,967 |
|
33,638,082 |
|
33,584,778 |
|
| |
- Diluted (7) |
33,946,292 |
|
33,948,512 |
|
33,609,540 |
|
| |
|
|
|
|
| Number of
outstanding shares of common stock at the end of the period
(7) |
33,721,161 |
|
33,654,576 |
|
33,623,800 |
|
- Voyage expenses incurred that are recoverable from the
Company's customers in connection with its voyage charter contracts
are reflected in voyage charter revenues and voyage expenses. The
Company recast the results for the three months ended March 2019 to
be consistent with the presentation in the 2019 20-F and this
report for the three months ended March 31, 2020. This had the
impact of increasing both voyage charter revenues and voyage
expenses by $5.7 million for the three months ended March 31,
2019.
- Voyage charter revenues include revenues earned from full
service lightering activities. Voyage expenses include certain
costs associated with full service lightering activities, which
include: short-term in-charter expenses, bunker fuel expenses and
other port expenses totaling $18.7 million, $12.0 million and $11.4
million for the three months ended March 31, 2020, December 31,
2019 and March 31, 2019, respectively.
- Other revenues include lightering support and liquefied natural
gas services revenue, revenue earned from the Company's
responsibilities in employing the vessels subject to the RSAs, and
bunker commissions earned. In April 2020, the Company sold a
portion of its oil and gas ship-to-ship transfer support business,
including its gas terminal management services.
- Includes realized gains on interest rate swaps of $0.5 million,
$0.4 million and $1.0 million for the three months ended March 31,
2020, December 31, 2019 and March 31, 2019, respectively. The
Company also recognized realized gains of $1.1 million for the
three months ended December 31, 2019, relating to its forward
freight agreements.
- Equity income relates to the Company’s 50 percent interest in
the High-Q Investment Ltd. (High-Q) joint venture, which owns one
VLCC tanker.
- Income tax expenses for the three months ended December 31,
2019 includes adjustments to freight tax accruals of $10.9 million
related to periods prior to 2019.
- The number of shares and per share amounts, including
comparative figures, have been adjusted to reflect the changes
resulting from the one-for-eight reverse stock split which took
effect on November 25, 2019.
Teekay Tankers Ltd.Summary Consolidated Balance Sheets(in
thousands of U.S. dollars)
| |
As at |
As at |
| |
March 31, |
December 31, |
| |
2020 |
2019 |
| |
(unaudited) |
(unaudited) |
| ASSETS |
|
|
| Cash and cash equivalents |
203,325 |
|
88,824 |
|
| Restricted cash |
3,318 |
|
3,071 |
|
| Accounts receivable |
108,326 |
|
95,648 |
|
| Bunker and lube oil
inventory |
50,430 |
|
49,790 |
|
| Prepaid expenses |
11,841 |
|
10,288 |
|
| Due from affiliates |
463 |
|
697 |
|
| Current portion of derivative
assets |
— |
|
577 |
|
| Assets held for sale (1) |
50,818 |
|
65,458 |
|
| Accrued
revenue |
66,664 |
|
106,872 |
|
|
Total current assets |
495,185 |
|
421,225 |
|
| Restricted cash –
long-term |
3,437 |
|
3,437 |
|
| Vessels and equipment –
net |
1,157,003 |
|
1,223,085 |
|
| Vessels related to finance
leases – net |
519,210 |
|
527,081 |
|
| Operating lease right-of-use
assets |
15,511 |
|
19,560 |
|
| Investment in and advances to
equity-accounted joint venture |
28,051 |
|
28,112 |
|
| Derivative assets |
— |
|
82 |
|
| Other non-current assets |
1,667 |
|
1,923 |
|
| Intangible assets – net |
2,401 |
|
2,545 |
|
| Goodwill |
2,426 |
|
2,426 |
|
|
Total assets |
2,224,891 |
|
2,229,476 |
|
| |
|
|
| LIABILITIES AND
EQUITY |
|
|
| Accounts payable and accrued
liabilities |
106,820 |
|
130,713 |
|
| Short-term debt |
55,000 |
|
50,000 |
|
| Current portion of long-term
debt |
29,910 |
|
43,573 |
|
| Current portion of derivative
liabilities |
234 |
|
86 |
|
| Current obligations related to
finance leases |
25,775 |
|
25,357 |
|
| Current portion of operating
lease liabilities |
14,049 |
|
16,290 |
|
| Liabilities associated with
assets held for sale (1) |
2,535 |
|
2,980 |
|
| Due to affiliates |
4,677 |
|
2,139 |
|
| Other current liabilities |
5,923 |
|
8,567 |
|
|
Total current liabilities |
244,923 |
|
279,705 |
|
| Long-term debt |
446,766 |
|
516,106 |
|
| Long-term obligations related
to finance leases |
382,905 |
|
389,431 |
|
| Long-term operating lease
liabilities |
1,462 |
|
3,270 |
|
| Other long-term
liabilities |
51,114 |
|
51,044 |
|
| Derivative liabilities |
494 |
|
— |
|
|
Equity |
1,097,227 |
|
989,920 |
|
|
Total liabilities and equity |
2,224,891 |
|
2,229,476 |
|
| Net
debt (2) |
730,276 |
|
929,135 |
|
- In January 2020, the Company reached an agreement to sell a
portion of its oil and gas ship-to-ship transfer support business,
which also provides gas terminal management services, for $26
million, subject to adjustment for the final amounts of cash and
other working capital present on the closing date. The numbers in
these financial statements have been adjusted to reflect the
pending sale. The sale of a portion of the ship-to-ship support
services business and gas terminal management business, including
cash, cash equivalents and restricted cash of $2.4 million and $1.5
million, is classified as held for sale as at March 31, 2020 and
December 31, 2019, respectively. This transaction closed on April
30, 2020. Also included in assets held for sale at March 31, 2020
is one Suezmax vessel (December 31, 2019: two Suezmax
vessels).
- Net debt is a non-GAAP financial measure and represents
short-term, current and long-term debt and current and long-term
obligations related to finance leases less cash and cash
equivalents and restricted cash.
Teekay Tankers Ltd.Summary Consolidated Statements of Cash
Flows(in thousands of U.S. dollars)
| |
|
Three Months Ended |
| |
|
March 31, |
March 31, |
| |
|
2020 |
2019 |
| |
|
(unaudited) |
(unaudited) |
| Cash, cash
equivalents and restricted cash provided by (used for) |
|
|
| OPERATING
ACTIVITIES |
|
|
| Net income |
106,839 |
|
12,447 |
|
| Non-cash
items: |
|
|
|
Depreciation and amortization |
29,632 |
|
29,865 |
|
|
Loss and write-down on sale of vessels |
3,087 |
|
— |
|
|
Unrealized loss on derivative instruments |
1,301 |
|
1,788 |
|
|
Equity income |
(1,940 |
) |
(753 |
) |
|
Income tax expense |
1,439 |
|
2,569 |
|
|
Other |
744 |
|
4,473 |
|
| Change in
operating assets and liabilities |
(1,308 |
) |
6,265 |
|
|
Expenditures for dry docking |
(1,109 |
) |
(10,433 |
) |
|
Net operating cash flow |
138,685 |
|
46,221 |
|
| |
|
|
| FINANCING
ACTIVITIES |
|
|
| Proceeds from
short-term debt |
135,000 |
|
30,000 |
|
| Proceeds from
long-term debt, net of issuance costs |
479,091 |
|
434 |
|
| Scheduled
repayments of long-term debt |
(5,728 |
) |
(25,400 |
) |
| Prepayments of
long-term debt |
(557,368 |
) |
(20,000 |
) |
| Repayments of
short-term debt |
(130,000 |
) |
(5,000 |
) |
| Scheduled
repayments of obligations related to finance leases |
(6,108 |
) |
(5,537 |
) |
|
Net financing cash flow |
(85,113 |
) |
(25,503 |
) |
| |
|
|
| INVESTING
ACTIVITIES |
|
|
| Proceeds from sale
of vessels |
60,915 |
|
— |
|
| Expenditures for
vessels and equipment |
(842 |
) |
(656 |
) |
| Loan
repayments from equity-accounted joint venture |
2,000 |
|
— |
|
|
Net investing cash flow |
62,073 |
|
(656 |
) |
| |
|
|
| Increase in cash,
cash equivalents and restricted cash |
115,645 |
|
20,062 |
|
| Cash,
cash equivalents and restricted cash, beginning of the period |
96,790 |
|
60,507 |
|
|
Cash, cash equivalents and restricted cash, end of the
period |
212,435 |
|
80,569 |
|
Teekay Tankers Ltd.Appendix A - Reconciliation of Non-GAAP
Financial MeasuresAdjusted Net Income(in thousands of U.S. dollars,
except per share amounts)
| |
|
|
Three Months Ended |
| |
|
|
March 31, 2020 |
|
March 31, 2019 |
| |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
$ |
$ Per Share(1) |
|
$ |
$ Per Share(1) |
| Net
income - GAAP basis |
106,839 |
|
$3.17 |
|
|
12,447 |
|
$0.37 |
|
| |
|
|
|
|
|
|
| Add specific items affecting net
income: |
|
|
|
|
|
|
|
Loss and write-down on sale of vessels |
3,087 |
|
$0.10 |
|
|
— |
|
|
— |
|
| |
Unrealized loss on derivative instruments (2) |
1,301 |
|
$0.04 |
|
|
1,788 |
|
$0.06 |
|
|
|
Other
(3) |
(1,246 |
) |
($0.04 |
) |
|
412 |
|
$0.01 |
|
|
Total adjustments |
3,142 |
|
$0.10 |
|
|
2,200 |
|
$0.07 |
|
| Adjusted
net income attributable to shareholders of |
|
|
|
|
|
|
|
Teekay Tankers |
109,981 |
|
$3.27 |
|
|
14,647 |
|
$0.44 |
|
- Basic per share amounts.
- Reflects unrealized gains or losses due to the changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes, including unrealized
gains or losses on interest rate swaps and forward freight
agreements.
- The amount recorded for the three months ended March 31, 2020
primarily relates to unrealized foreign exchange gains, realized
gains from swap termination settlement and debt issuance costs
which were written off in connection with the refinancing of the
Company's debt facilities in January 2020. The amount recorded for
the three months ended March 31, 2019 primarily relates to
unrealized foreign exchange losses.
Teekay Tankers Ltd.Appendix B - Reconciliation of Non-GAAP
Financial MeasuresFree Cash Flow(in thousands of U.S. dollars,
except share data)
| |
|
|
Three Months Ended |
| |
|
|
March 31, 2020 |
March 31, 2019 |
| |
|
|
(unaudited) |
(unaudited) |
| |
|
|
|
|
|
|
|
|
Net
income - GAAP basis |
106,839 |
|
|
12,447 |
|
|
| |
|
|
|
|
|
|
| |
Add: |
|
|
|
|
| |
|
Depreciation and
amortization |
29,632 |
|
|
29,865 |
|
|
| |
|
Proportionate share of free
cash flow from equity-accounted joint venture |
2,415 |
|
|
1,207 |
|
|
| |
|
Unrealized loss on derivative
instruments |
1,301 |
|
|
1,788 |
|
|
| |
|
Loss and write-down on sale of
vessels |
3,087 |
|
|
— |
|
|
| |
|
|
|
|
|
|
| |
Less: |
|
|
|
|
| |
|
Equity income (1) |
(1,940 |
) |
|
(753 |
) |
|
|
|
|
|
|
|
|
|
| Free cash
flow |
141,334 |
|
|
44,554 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding for the period
- basic |
33,669,967 |
|
|
33,584,778 |
|
|
(1) Equity income relates to the Company’s 50 percent interest
in the High-Q joint venture, which owns one VLCC tanker.
Teekay Tankers Ltd.Appendix C - Reconciliation of Non-GAAP
Financial MeasuresTotal Adjusted EBITDA(in thousands of U.S.
dollars)
|
|
Three Months Ended |
| |
March 31, 2020 |
March 31, 2019 |
| |
(unaudited) |
(unaudited) |
| Net income - GAAP basis |
106,839 |
|
12,447 |
|
|
Depreciation and amortization |
29,632 |
|
29,865 |
|
|
Interest expense, net of interest income |
14,879 |
|
16,577 |
|
|
Income tax expense |
664 |
|
2,614 |
|
|
EBITDA |
152,014 |
|
61,503 |
|
|
|
|
|
| Add (subtract) specific income
statement items affecting EBITDA: |
|
|
|
Foreign exchange (gain) loss |
(1,135 |
) |
412 |
|
|
Loss and write-down on sale of vessels |
3,087 |
|
— |
|
|
Realized gain on interest rate swaps |
(523 |
) |
(954 |
) |
|
Unrealized loss on derivative instruments |
1,301 |
|
1,788 |
|
|
Equity income |
(1,940 |
) |
(753 |
) |
|
Consolidated adjusted EBITDA |
152,804 |
|
61,996 |
|
|
Adjusted EBITDA from equity-accounted joint venture (See Appendix
D) |
2,566 |
|
1,432 |
|
|
Total Adjusted EBITDA |
155,370 |
|
63,428 |
|
Teekay Tankers Ltd.Appendix D - Reconciliation of Non-GAAP
Financial MeasuresAdjusted EBITDA from Equity-Accounted Joint
Venture(in thousands of U.S. dollars)
| |
Three Months Ended |
| |
March 31, 2020 |
March 31, 2019 |
| |
(unaudited) |
(unaudited) |
| |
At |
Company's |
At |
Company's |
| |
100% |
Portion (1) |
100% |
Portion (1) |
| Revenues |
5,836 |
|
2,918 |
|
3,210 |
|
1,605 |
|
| Vessel and other operating
expenses |
(705 |
) |
(353 |
) |
(490 |
) |
(245 |
) |
| Depreciation and
amortization |
(951 |
) |
(475 |
) |
(908 |
) |
(454 |
) |
|
Income from vessel operations of equity-accounted joint
venture |
4,180 |
|
2,090 |
|
1,812 |
|
906 |
|
| |
|
|
|
|
| Net interest expense |
(301 |
) |
(151 |
) |
(450 |
) |
(225 |
) |
| Other |
1 |
|
1 |
|
145 |
|
72 |
|
|
Equity income of equity-accounted joint
venture |
3,880 |
|
1,940 |
|
1,507 |
|
753 |
|
| |
|
|
|
|
| Equity income of
equity-accounted joint venture |
3,880 |
|
1,940 |
|
1,507 |
|
753 |
|
|
Depreciation and amortization |
951 |
|
475 |
|
908 |
|
454 |
|
|
Interest expense, net of interest income |
301 |
|
151 |
|
450 |
|
225 |
|
|
EBITDA from equity-accounted joint venture |
5,132 |
|
2,566 |
|
2,865 |
|
1,432 |
|
| |
|
|
|
|
|
Adjusted EBITDA from equity-accounted joint
venture |
5,132 |
|
2,566 |
|
2,865 |
|
1,432 |
|
(1) The Company’s proportionate share of its
equity-accounted joint venture is 50 percent.
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, among other
things, statements regarding: crude oil and refined product tanker
market fundamentals, including the balance of supply and demand in
the oil and tanker markets and the volatility of such markets;
forecasts of worldwide tanker fleet growth or contraction and
newbuilding tanker deliveries and vessel scrapping; estimated
growth in global oil demand and supply; future tanker rates; future
OPEC+ oil production or oil supply cuts; floating storage demand;
the impact of the COVID-19 outbreak and related developments on the
Company's business and tanker market fundamentals; the Company's
forward fixed rate revenues; future free cash flow breakevens;
timing for the commencement of a time charter-out contract; the
Company’s continued operation of its oil ship-to-ship transfer
support services in North America and the Caribbean and the
synergies of that business with the Company’s core Full Service
Lightering business; the Company's liquidity and market position;
the Company’s strategic priorities and anticipated delevering of
the Company’s balance sheet; the Company’s ability to create
shareholder value; and the Company’s positioning within its
industry. 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: changes in tanker
rates; changes in the production of, or demand for, oil or refined
products; changes in trading patterns significantly affecting
overall vessel tonnage requirements; OPEC+ production and supply
levels; oil contango levels; the duration and extent of the
COVID-19 outbreak and any resulting effects on the markets in which
the Company operates; the impact of the COVID-19 outbreak on the
Company’s ability to maintain safe and efficient operations; the
impact of geopolitical tensions and changes in global economic
conditions; greater or less than anticipated levels of tanker
newbuilding orders and deliveries and greater or less than
anticipated rates of tanker scrapping; the potential for early
termination of charter contracts of existing vessels in the
Company's fleet; the inability of charterers to make future charter
payments; the inability of the Company to renew or replace charter
contracts; changes in global oil prices; changes in applicable
industry laws and regulations and the timing of implementation of
new laws and regulations and the impact of such changes, including
IMO 2020 and IMO 2030; increased costs; and other factors discussed
in Teekay Tankers’ filings from time to time with the United States
Securities and Exchange Commission, including its Annual Report on
Form 20-F for the fiscal year ended December 31, 2019. The Company
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company’s
expectations with respect thereto or any change in events,
conditions or circumstances on which any such statement is
based.
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