Teekay Corporation (Teekay or the Company) (NYSE:TK) today reported
results for the second quarter ended June 30, 2020. These results
include the Company’s two publicly-listed consolidated
subsidiaries, Teekay LNG Partners L.P. (Teekay LNG) (NYSE:TGP) and
Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK) (collectively, the
Daughter Entities), and all remaining subsidiaries and
equity-accounted investments. Teekay, together with its
subsidiaries other than the Daughter Entities, is referred to in
this release as Teekay Parent. Please refer to the second quarter
2020 earnings releases of Teekay LNG and Teekay Tankers, which are
available on Teekay's website at www.teekay.com, for additional
information on their respective results.
Financial Summary
|
Three Months
Ended |
|
June
30, |
March
31, |
June
30, |
(in thousands of U.S. dollars, except per share
amounts) |
2020 |
2020 |
2019 (2) |
|
(unaudited) |
(unaudited) |
(unaudited) |
TEEKAY CORPORATION
CONSOLIDATED |
|
|
GAAP FINANCIAL COMPARISON |
|
|
|
Revenues |
482,805 |
|
574,054 |
|
462,397 |
|
Income from vessel
operations |
148,504 |
|
128,896 |
|
71,463 |
|
Equity income (loss) |
35,343 |
|
2,313 |
|
(6,284 |
) |
Net income (loss) attributable
to |
|
|
|
shareholders of Teekay |
21,723 |
|
(49,805 |
) |
(39,485 |
) |
Earnings (loss) per share attributable to |
|
|
|
shareholders of Teekay |
0.21 |
|
(0.49 |
) |
(0.39 |
) |
NON-GAAP FINANCIAL COMPARISON |
|
|
|
Total adjusted revenues (1) |
592,658 |
|
681,353 |
|
532,138 |
|
Total adjusted EBITDA (1) |
315,869 |
|
342,198 |
|
196,609 |
|
Adjusted net income (loss) attributable |
|
|
|
to shareholders of Teekay (1) |
39,713 |
|
25,259 |
|
(13,368 |
) |
Adjusted net income (loss) per share |
|
|
|
attributable to shareholders of Teekay (1) |
0.39 |
|
0.25 |
|
(0.13 |
) |
TEEKAY PARENT |
|
|
|
NON-GAAP FINANCIAL COMPARISON |
|
|
|
Teekay Parent adjusted EBITDA
(1) |
9,716 |
|
5,139 |
|
3,427 |
|
Total Teekay Parent free cash
flow (1) |
(1,886 |
) |
52,689 |
|
(6,427 |
) |
(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) Comparative balances relating to the three
months ended June 30, 2019 have been recast to reflect results
consistent with the presentation in the Company’s 2019 Annual
Report on Form 20-F and Form 6-K for the three and six months ended
June 30, 2020.
(3) Please refer to “Definitions and Non-GAAP
Financial Measures” for definition of free cash flow in the Teekay
Tankers Second Quarter of 2020 earnings release. The figures also
includes expenditures for drydock and ballast water treatment
system installation.
CEO Commentary
“In the second quarter of 2020, we reported our
third consecutive quarterly adjusted profit, recording consolidated
adjusted net income of $39.7 million, or $0.39 per share, and
increasing our total adjusted EBITDA by approximately $119 million,
or 61 percent, from the same period of last year,” commented
Kenneth Hvid, Teekay’s President and Chief Executive Officer.
“While COVID-19 continues to have an unprecedented impact on the
world and is a major focus for us, Teekay’s fleet has experienced
minimal operational impact. As a result of the pandemic, the
overall maritime industry has experienced significant challenges
related to crew changes, but I am pleased to report that we have
safely changed-out a number of crew members on effectively all our
vessels. We continue to work hard with both the industry and
inter-governmental organizations to tackle this challenge and bring
our remaining overdue colleagues home safely as soon as possible. I
am truly proud of how our seafarers and onshore colleagues have
responded to ensure safe and successful transitions with no
reported COVID-19 cases, while providing uninterrupted service to
our customers.”
“Our strong second quarter results can be
attributed to solid earnings in each of our businesses. Teekay LNG
reported another quarterly record-high in adjusted net income and
total adjusted EBITDA; Teekay Tankers experienced another quarter
of strong spot tanker rates; and our directly-owned FPSO unit
operating results improved as a result of the new bareboat charter
contract on the Foinaven FPSO unit, which eliminated our exposure
to the previous loss-making contract,” commented Mr. Hvid. “Looking
ahead to next quarter, we expect Teekay LNG will continue earning
stable cash flows as a result of its LNG fleet being 100 percent
fixed through the rest of 2020. At Teekay Tankers, the spot tanker
market has come under pressure since mid-May 2020 following three
quarters of very strong spot tanker rates. The near-term outlook
for the tanker business is uncertain at this point, but we are
pleased to have significantly reduced our effective free cash flow
breakevens and near-term spot exposure by locking-in 23 percent of
the tanker fleet on fixed-rate contracts at attractive rates, and
we are encouraged by the fleet supply fundamentals which are
favorable relative to prior market cycles. In addition, the Banff
FPSO unit ceased production on its field in June 2020 and we have
commenced the various decommissioning and subsea remediation
procedures on the field. The FPSO unit is expected to leave
the Banff field during the third quarter of 2020 and prepare for
recycling by the end of the year with the remaining subsea
remediation work expected to be carried out in the summer of
2021.”
“We continue to execute on our delevering path
and further simplifying our structure,” commented Mr. Hvid. “During
the quarter, we reduced our consolidated net debt by over $267
million as a result of strong cash flows, proceeds from asset sales
and cash received from the new Foinaven FPSO unit contract. Over
the past year, we have reduced our consolidated net debt by
approximately $887 million, or 20 percent. In addition, with the
recent refinancing of four of Teekay Tankers’ Suezmax tankers, we
have eliminated all of our remaining guarantees of Teekay Tankers’
debt. As announced in May, we also eliminated the incentive
distribution rights we held in Teekay LNG in exchange for 10.75
million newly-issued Teekay LNG common units.”
Mr. Hvid added, “With our balance sheets
continuing to strengthen, extensive contracted revenues at Teekay
LNG and higher contracted revenue at Teekay Tankers, and no
committed growth capital expenditures or significant near-term debt
maturities, we have made significant progress in both insulating
our companies from near-term market volatility and positioning the
Teekay Group to create long-term shareholder value and remain a
leader in shaping the future of marine energy transportation.”
Summary of Results
Teekay Corporation Consolidated
The Company's consolidated results during the
quarter ended June 30, 2020 improved compared to the same period of
the prior year, primarily due to: higher average spot tanker rates
earned by Teekay Tankers in the second quarter of 2020; higher
earnings in Teekay LNG due to earnings from six liquefied natural
gas (LNG) carrier newbuildings which delivered into its
consolidated fleet and equity-accounted joint ventures last year,
and higher earnings by certain of Teekay LNG's joint ventures as
their individual projects commenced or certain of their vessels
commenced charters at, or earned, higher rates; improved results
from the commencement of the Foinaven FPSO unit's new bareboat
charter in late-March 2020; and fewer dry docking and off-hire days
in the second quarter of 2020. These improvements were partially
offset by Teekay Tankers' sale of four Suezmax tankers during
December 2019 and the first quarter of 2020, as well as the sale of
the non-US portion of the ship-to-ship support services business
and its LNG terminal management business in the second quarter of
2020; a reduction in Teekay LNG's earnings following the sale of
two LNG carriers in early-2020; and a reduction in the Banff FPSO
unit's earnings due to the decommissioning of the Banff oil field,
which commenced on June 1, 2020, and lower oil price tariffs earned
due to lower oil prices in the second quarter of 2020.
In addition, consolidated GAAP net income was
positively impacted in the three months ended June 30, 2020,
compared to the same quarter of the prior year, by various items,
including a reduction in freight tax accruals in the second quarter
of 2020, losses of $10.7 million and $7.8 million recognized in the
second quarter of 2019 relating to the repurchase of Teekay's 8.5%
senior notes due 2020 (the 2020 Notes) and the sale of Teekay
Parent's remaining investment in Altera Infrastructure L.P. (or
Altera), respectively, as well as a $3.1 million gain recognized on
Teekay Tankers' sale of the non-US portion of the ship-to-ship
support services business and its LNG terminal management business
in the second quarter of 2020. These items were partially offset by
a $13.6 million provision in the second quarter of 2020 relating to
an adjustment in the Banff FPSO unit's estimated asset retirement
obligation and the write-down of the unit's remaining residual
value. The Banff FPSO unit's estimated asset retirement obligation
relating to the remediation of the subsea infrastructure, net of a
customer receivable of $8.1 million, was $43.9 million as of June
30, 2020 (excluding remaining operating expenses and recycling
costs relating to the FPSO unit).
Teekay Parent
Total Teekay Parent Free Cash Flow(1) was
negative $1.9 million during the second quarter of 2020, compared
to negative $6.4 million for the same period of the prior year,
primarily due to: the elimination of the operating losses on the
Foinaven FPSO unit as a result of the commencement of the new
bareboat contract at the end of the first quarter of 2020; higher
distributions received from Teekay LNG as a result of Teekay LNG's
32 percent increase in its quarterly cash distributions in May 2020
and the newly-issued Teekay LNG common units Teekay Parent received
as consideration for the Teekay LNG incentive distribution rights
(IDR) transaction completed in May 2020; and lower net interest
expense(1) as a result of the repurchase of unsecured bonds over
the past year and the bond refinancing completed in May 2019. These
increases are partially offset by: higher general and
administrative costs incurred in the second quarter of 2020 mainly
due to a change in timing of the annual equity-based compensation
grants in 2020 and professional fees associated with the IDR
transaction; and lower contribution from the Banff FPSO unit due to
the decommissioning of the Banff oil field, which commenced on June
1, 2020, and lower oil price tariffs earned due to lower oil prices
in the second quarter of 2020.
Please refer to Appendix D of this release for
additional information about Teekay Parent's Free Cash Flow(1).
(1) This is a non-GAAP financial
measure. Please refer to “Definitions and Non-GAAP Financial
Measures” and the Appendices to this release for a definition of
this term and a reconciliation of this non-GAAP financial measure
as used in this release to the most directly comparable financial
measures under GAAP.
Summary Results of Daughter
Entities
Teekay LNG
Teekay LNG’s net income and adjusted net
income(1) and total adjusted EBITDA(1) for the three months
ended June 30, 2020, compared to the same quarter of the prior
year, were positively impacted by: earnings from six LNG carrier
newbuildings which delivered into Teekay LNG's consolidated fleet
and equity-accounted joint ventures last year; fewer dry docking
and repair off-hire days; and higher earnings by certain of Teekay
LNG's joint ventures as their individual projects commenced or
certain of their vessels commenced charters at, or earned, higher
rates. These increases were partially offset by a reduction in
earnings as a result of the sales of two LNG carriers in January
2020, and an oil tanker in October 2019.
Please refer to Teekay LNG's second quarter 2020
earnings release for additional information on the financial
results for this entity.
Teekay Tankers
Teekay Tankers' net income, adjusted net
income(1), and total adjusted EBITDA(1) for the three months ended
June 30, 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 in the second quarter of 2020. These
increases were partially offset by the sale of four Suezmax tankers
during December 2019 and the first quarter of 2020, as well as the
sale of the non-US portion of the ship-to-ship support services
business and the LNG terminal management business in the second
quarter of 2020.
In addition, GAAP net income was positively
impacted in the three months ended June 30, 2020, compared to GAAP
net loss for the same quarter of the prior year, as a result of a
$15.2 million reduction in freight tax accruals and a $3.1 million
gain on sale of assets.
Spot tankers rates have come under pressure
since mid-May 2020 as a result of the unwinding of floating storage
and record OPEC+ production cuts, in addition to lower non-OPEC
production, which reduced crude exports. Teekay Tankers has so far
secured spot tanker rates for its Suezmax and Aframax-sized vessels
of $24,800 per day and $15,200 per day, based on 57 percent and 47
percent of the available spot revenue days fixed to-date in the
third quarter of 2020, respectively, compared to $46,500 per day
and $29,600 per day in the second quarter of 2020,
respectively.
Please refer to Teekay Tankers' second quarter
2020 earnings release for additional information on the financial
results for this entity.
(1) This is a non-GAAP financial
measure. Please refer to “Definitions and Non-GAAP Financial
Measures” and the Appendices to this release for a definition of
this term and a reconciliation of this non-GAAP financial measure
as used in this release to the most directly comparable financial
measures under GAAP.
Summary of Recent Events
Teekay Parent
In July 2020, Teekay Parent secured commitments
for a two-year equity margin revolver of up to $150 million to
refinance its existing facility, which is currently undrawn and
scheduled to mature in December 2020. The new revolver, which has
substantially similar terms to the existing facility, is expected
to be closed in August 2020 and remains subject to final
documentation.
Teekay LNG
In July 2020, Teekay LNG entered into a new
commercial management agreement with the current manager of its
seven wholly-owned multi-gas vessels. The new agreement has a
two-year term commencing in September 2020 and is in direct
continuation of the expiry of the current commercial management
agreement.
In May 2020, Teekay Parent and Teekay LNG
eliminated all of Teekay LNG's IDRs held by Teekay LNG's general
partner (the General Partner) in exchange for 10.75 million
newly-issued Teekay LNG common units. Following the completion of
this transaction on May 11, 2020, Teekay Parent now beneficially
owns approximately 36 million of Teekay LNG's common units and
remains the sole owner of the General Partner, which together
represents an economic interest of approximately 42 percent in
Teekay LNG.
In May 2020, on maturity, Teekay LNG repaid its
1 billion Norwegian Krone (NOK) -denominated bonds and the
associated cross currency swap arrangement. This repayment amounted
to $111 million, net of $23 million of cash collateral released on
the associated cross currency swap.
In May 2020, Teekay LNG's 52 percent-owned joint
venture with Marubeni Corporation (the MALT Joint Venture)
chartered the Marib Spirit LNG carrier to an international trading
company for a period of six months, which commenced in mid-June
2020.
In April 2020, the MALT Joint Venture secured
new charters for the Arwa Spirit and the Methane Spirit LNG
carriers for periods of twelve and eight months, respectively. The
new charters commenced upon completion and in direct continuation
of their existing charters in May and July 2020, respectively.
Teekay Tankers
In August 2020, Teekay Tankers secured a new
three-year, $67 million term loan to refinance four Suezmax
tankers. The proceeds from the new debt facility along with
existing cash are expected to be used to repay approximately $85
million outstanding on Teekay Tankers' existing debt facility with
respect to these vessels that was scheduled to mature in 2021. The
new facility is priced at LIBOR plus 225 basis points and matures
in 2023.
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
$27.1 million, of which approximately $14.3 million was received in
May 2020 with the remaining cash received in July 2020. During the
second quarter of 2020, Teekay Tankers recognized a gain of $3.1
million from this transaction. 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, Teekay Tankers 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.
Liquidity
As at June 30, 2020, Teekay Parent had
total liquidity of approximately $165.5 million (consisting of
$66.9 million of cash and cash equivalents and $98.6 million of
undrawn capacity from a revolving credit facility), up from Teekay
Parent liquidity of $87.1 million as at March 31, 2020.
On a consolidated basis, Teekay had consolidated
total liquidity of approximately $939.4 million (consisting of
$461.2 million of cash and cash equivalents and $478.2 million of
undrawn capacity from its revolving credit facilities), up from
total consolidated liquidity of $827.9 million as at March 31,
2020.
Conference Call
The Company plans to host a conference call on
Thursday, August 13, 2020 at 11:00 a.m. (ET) to discuss its
results for the second quarter of 2020. All shareholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
• By dialing (800) 367-2403 or (647) 490-5367,
if outside North America, and quoting conference ID code
2738323.
• By accessing the webcast, which will be
available on Teekay’s website at www.teekay.com (the archive will
remain on the website for a period of one year).
An accompanying Second Quarter 2020 Earnings
Presentation will also be available at www.teekay.com in advance of
the conference call start time.
About Teekay
Teekay is a leading provider of international
crude oil and gas marine transportation services and also provides
offshore production. Teekay provides these services primarily
through its directly-owned fleet and its controlling ownership
interests in Teekay LNG Partners L.P. (NYSE:TGP), one of the
world’s largest independent owners and operators of LNG carriers,
and Teekay Tankers Ltd. (NYSE:TNK), one of the world’s largest
owners and operators of mid-sized crude tankers. The consolidated
Teekay entities manage and operate total assets under management of
approximately $10 billion, comprised of approximately 140 liquefied
gas, offshore, and conventional tanker assets. With offices in 10
countries and approximately 5,500 seagoing and shore-based
employees, Teekay provides a comprehensive set of marine services
to the world’s leading oil and gas companies.
Teekay’s common stock is listed on the New York
Stock Exchange where it trades under the symbol “TK”.
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 (Loss)
Attributable to Shareholders of Teekay, Teekay Parent Free Cash
Flow, Total Adjusted Revenues, Net Interest Expense, Adjusted
Equity Income 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 meanings across
companies, and therefore may not be comparable to similar measures
presented by other companies. The Company believes that certain
investors use this information to evaluate the Company’s financial
performance, as does management.
Non-GAAP Financial Measures
Total Adjusted EBITDA represents net income
(loss) before interest, taxes, depreciation and amortization,
foreign exchange gain (loss), items included in other (loss)
income, write-down and gain (loss) on sale, gain on commencement of
sales-type lease, equipment and other operating assets, adjustments
for direct financing and sales-type leases to a cash basis,
amortization of in-process revenue contracts, unrealized (losses)
gains on derivative instruments, realized losses on interest rate
swaps, realized losses on interest rate swap amendments and
terminations, unrealized credit loss adjustments, write-downs
related to equity-accounted investments, and our share of the above
items in non-consolidated joint ventures which are accounted for
using the equity method of accounting.
Consolidated Adjusted EBITDA represents Adjusted
EBITDA from vessels that are consolidated on the Company's
financial statements. Adjusted EBITDA from Equity-Accounted
Vessels represents the Company's proportionate share of Adjusted
EBITDA from its equity-accounted vessels. The Company does not have
the unilateral ability to determine whether the cash generated by
its equity-accounted vessels is retained within the entity in which
the Company holds the equity-accounted investments 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. Total Adjusted EBITDA represents Consolidated
Adjusted EBITDA plus Adjusted EBITDA from Equity-Accounted Joint
Ventures. Adjusted EBITDA is a non-GAAP financial measure used by
certain investors and management to measure the operational
performance of companies. Please refer to Appendices C and E of
this release for reconciliations of Adjusted EBITDA to net income
(loss) and equity (loss) income, respectively, which are the most
directly comparable GAAP measures reflected in the Company’s
consolidated financial statements.
Total Adjusted Revenues represents the Company's
revenues from its consolidated vessels, as shown in the Company's
Consolidated Statements of Income (Loss), and its proportionate
ownership percentage of the revenues from its equity-accounted
joint ventures, as shown in Appendix E of this release, and
commencing in 2020, less the Company's proportionate share of
revenues earned directly from its equity-accounted joint ventures.
Please refer to Appendix E of this release for a reconciliation of
this non-GAAP financial measure to revenues and equity income, the
most directly comparable GAAP measure reflected in the Company's
consolidated financial statements. The Company does not have
the unilateral ability to determine whether the cash generated by
its equity-accounted vessels is retained within the entity in which
the Company holds the equity-accounted investments 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 Net Income (Loss) Attributable to
Shareholders of Teekay excludes items of income or loss from GAAP
net income (loss) 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
(loss), and refer to footnote (6) of the statements of income
(loss) for a reconciliation of adjusted equity income to equity
income (loss), the most directly comparable GAAP measure reflected
in the Company’s consolidated financial statements.
Teekay Parent Financial
Measures
Teekay Parent Adjusted EBITDA represents the sum
of (a) distributions or dividends (including payments-in-kind)
relating to a given quarter (but received by Teekay Parent in the
following quarter) as a result of ownership interests in its
consolidated publicly-traded subsidiaries (Teekay LNG and Teekay
Tankers) and its equity-accounted investment in Altera prior to it
being sold in May 2019, net of Teekay Parent’s corporate general
and administrative expenditures for the given quarter and (b)
Adjusted EBITDA attributed to Teekay Parent’s directly-owned and
chartered-in assets.
Teekay Parent Free Cash Flow represents Teekay
Parent Adjusted EBITDA, plus upfront cash receivable in respect of
a sales-type lease, less Teekay Parent’s net interest expense and,
commencing in the second quarter of 2020, asset retirement costs
incurred for the given quarter. Net Interest Expense includes
interest expense (excluding the amortization of prepaid loan
costs), interest income and realized losses on interest rate swaps.
Please refer to Appendices B, C, D and E of this release for
further details and reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP measures reflected in
the Company’s consolidated financial statements.
Teekay CorporationSummary Consolidated Statements of Income
(Loss)(in thousands of U.S. dollars, except share and per share
data)
|
Three Months Ended |
Six Months Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2020 |
2020 |
2019 (1) |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
|
|
Revenues |
482,805 |
|
574,054 |
|
462,397 |
|
1,056,859 |
|
949,270 |
|
|
|
|
|
|
|
Voyage expenses |
(66,896 |
) |
(121,564 |
) |
(103,410 |
) |
(188,460 |
) |
(212,193 |
) |
Vessel operating expenses |
(147,796 |
) |
(153,293 |
) |
(162,621 |
) |
(301,089 |
) |
(319,613 |
) |
Time-charter hire expense |
(17,714 |
) |
(27,056 |
) |
(28,817 |
) |
(44,770 |
) |
(58,655 |
) |
Depreciation and
amortization |
(62,936 |
) |
(72,917 |
) |
(73,849 |
) |
(135,853 |
) |
(145,956 |
) |
General and administrative
expenses |
(23,668 |
) |
(18,277 |
) |
(20,868 |
) |
(41,945 |
) |
(43,840 |
) |
Write-down and gain (loss) on
sale of assets (2) |
(10,669 |
) |
(94,606 |
) |
— |
|
(105,275 |
) |
(3,328 |
) |
Gain on commencement of
sales-type lease (3) |
— |
|
44,943 |
|
— |
|
44,943 |
|
— |
|
Restructuring charges (4) |
(4,622 |
) |
(2,388 |
) |
(1,369 |
) |
(7,010 |
) |
(9,990 |
) |
Income from vessel operations |
148,504 |
|
128,896 |
|
71,463 |
|
277,400 |
|
155,695 |
|
|
|
|
|
|
|
Interest expense |
(59,245 |
) |
(62,520 |
) |
(70,205 |
) |
(121,765 |
) |
(143,876 |
) |
Interest income |
2,314 |
|
2,803 |
|
2,233 |
|
5,117 |
|
4,922 |
|
Realized and unrealized loss
on |
|
|
|
|
|
non-designated derivative instruments (5) |
(9,270 |
) |
(21,663 |
) |
(10,964 |
) |
(30,933 |
) |
(16,387 |
) |
Equity income (loss) (6) |
35,343 |
|
2,313 |
|
(6,284 |
) |
37,656 |
|
(67,937 |
) |
Income tax recovery (expense)
(7) |
17,175 |
|
(3,792 |
) |
(3,404 |
) |
13,383 |
|
(8,440 |
) |
Foreign exchange (loss)
gain |
(8,922 |
) |
6,646 |
|
(5,851 |
) |
(2,276 |
) |
(8,481 |
) |
Other
loss – net (8) |
(399 |
) |
(681 |
) |
(11,099 |
) |
(1,080 |
) |
(11,071 |
) |
Net income
(loss) |
125,500 |
|
52,002 |
|
(34,111 |
) |
177,502 |
|
(95,575 |
) |
Net income attributable
to |
|
|
|
|
|
non-controlling interests |
(103,777 |
) |
(101,807 |
) |
(5,374 |
) |
(205,584 |
) |
(28,167 |
) |
Net income (loss) attributable to the
shareholders |
|
|
|
|
|
of Teekay Corporation |
21,723 |
|
(49,805 |
) |
(39,485 |
) |
(28,082 |
) |
(123,742 |
) |
Earnings (loss) per common
share of Teekay Corporation |
|
|
|
|
|
- Basic |
$ |
0.21 |
|
$ |
(0.49 |
) |
$ |
(0.39 |
) |
$ |
(0.28 |
) |
$ |
(1.23 |
) |
- Diluted |
$ |
0.21 |
|
$ |
(0.49 |
) |
$ |
(0.39 |
) |
$ |
(0.28 |
) |
$ |
(1.23 |
) |
Weighted-average number of
common |
|
|
|
|
|
shares outstanding |
|
|
|
|
|
- Basic |
101,107,362 |
|
100,887,551 |
|
100,783,496 |
|
100,997,456 |
|
100,652,685 |
|
- Diluted |
101,196,383 |
|
100,887,551 |
|
100,783,496 |
|
100,997,456 |
|
100,652,685 |
|
(1) Comparative balances relating to the three
and six months ended June 30, 2019 have been recast to reflect
results consistent with the presentation in the Company’s 2019
Annual Report on Form 20-F and Form 6-K for the three and six
months ended June 30, 2020.
(2) Write-down and gain (loss) on sale of assets
for the three months ended June 30, 2020 includes a $13.6 million
provision in the second quarter of 2020 relating to an adjustment
in the Banff FPSO unit's estimated asset retirement obligation and
the write-down of the unit's remaining residual value, partially
offset by a gain of $3.1 million on the sale of the non-US portion
of Teekay Tankers' ship-to-ship support services business and its
LNG terminal management business. Write-down and gain (loss) on
sale for the three months ended March 31, 2020 includes write-downs
of six multi-gas carriers totaling $45.0 million and write-downs of
two FPSO units totaling $46.5 million.
(3) Gain on commencement of sales-type lease for
the three months ended March 31, 2020 of $44.9 million relates to
the commencement of the sales-type lease for the Foinaven FPSO unit
as a result of a new bareboat charter agreement.
(4) Restructuring charges for the three months
ended June 30, 2020 include severance costs resulting from the
expected termination of the contract for an FSO unit based in
Australia, which are fully recoverable from the customer.
Restructuring charges also include severance costs resulting from
the reorganization and realignment of resources of the Company's
shared services functions, of which a portion of the costs are
recoverable from the customer, Altera. Recoverable severance costs
totalling $4.5 million are presented in revenue for the three
months ended June 30, 2020.
(5) Realized and unrealized losses related to
derivative instruments that are not designated in qualifying
hedging relationships for accounting purposes are included as a
separate line item in the consolidated statements of income (loss).
The realized losses relate to the amounts the Company actually paid
to settle such derivative instruments and the unrealized (losses)
gains relate to the change in fair value of such derivative
instruments, as detailed in the table below:
|
Three Months
Ended |
Six Months
Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2020 |
2020 |
2019 |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
Realized losses relating
to |
|
|
|
|
|
Interest rate swap agreements |
(3,879 |
) |
(2,677 |
) |
(1,785 |
) |
(6,556 |
) |
(3,473 |
) |
Stock purchase warrants (i) |
— |
|
— |
|
(25,559 |
) |
— |
|
(25,559 |
) |
Foreign currency forward contracts |
— |
|
(241 |
) |
— |
|
(241 |
) |
— |
|
Forward freight agreements |
(201 |
) |
(49 |
) |
(29 |
) |
(250 |
) |
(42 |
) |
|
(4,080 |
) |
(2,967 |
) |
(27,373 |
) |
(7,047 |
) |
(29,074 |
) |
Unrealized (losses) gains
relating to |
|
|
|
|
|
Interest rate swap agreements |
(5,251 |
) |
(18,812 |
) |
(8,195 |
) |
(24,063 |
) |
(14,216 |
) |
Foreign currency forward contracts |
53 |
|
202 |
|
(101 |
) |
255 |
|
(101 |
) |
Stock purchase warrants |
— |
|
— |
|
24,584 |
|
— |
|
26,900 |
|
Forward freight agreements |
8 |
|
(86 |
) |
121 |
|
(78 |
) |
104 |
|
|
(5,190 |
) |
(18,696 |
) |
16,409 |
|
(23,886 |
) |
12,687 |
|
Total
realized and unrealized losses on derivative instruments |
(9,270 |
) |
(21,663 |
) |
(10,964 |
) |
(30,933 |
) |
(16,387 |
) |
(1) Stock purchase warrants for the three and six months ended
June 30, 2019 relates to the sale of the Company's remaining
interest in Altera in May 2019. Also refer to footnote (6)(i)
below.
(6) The Company’s proportionate share of items
within equity income (loss) as identified in Appendix A of this
release is detailed in the table below. By excluding these items
from equity income (loss) as reflected in the consolidated
statements of income (loss), the Company believes the resulting
adjusted equity income is a normalized amount that can be used to
evaluate the financial performance of the Company’s
equity-accounted investments. Adjusted equity income is a non-GAAP
financial measure.
|
Three Months
Ended |
Six Months
Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2020 |
2020 |
2019 |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
Equity income (loss) |
35,343 |
|
2,313 |
|
(6,284 |
) |
37,656 |
|
(67,937 |
) |
Proportionate share of
unrealized losses |
|
|
|
|
|
on derivative instruments |
3,806 |
|
22,204 |
|
5,203 |
|
26,010 |
|
13,968 |
|
Loss on sale of investment in
Altera (i) |
— |
|
— |
|
7,853 |
|
— |
|
72,753 |
|
Other
(ii) |
(61 |
) |
8,441 |
|
1,023 |
|
8,380 |
|
1,023 |
|
Equity
income adjusted for items in Appendix A |
39,088 |
|
32,958 |
|
7,795 |
|
72,046 |
|
19,807 |
|
(i) During the three and six months ended June 30, 2019, the
Company recognized a loss of $7.9 million on sale of its investment
in Altera to affiliates of Brookfield Business Partners L.P. (or
Brookfield), which occurred in May 2019. Also refer to footnote
(5)(i) above in respect of gains and losses on stock purchase
warrants.
(ii) Other for the three months ended June 30, 2020 and March
31, 2020 includes credit loss provision adjustments to the
Company's financial instruments upon adoption of ASU 2016-13,
Financial Instruments - Credit Losses: Measurement of Credit Losses
on Financial Instruments (ASU 2016-13).
(7) Income tax recovery (expense) for the three
and six months ended June 30, 2020 includes a reduction in freight
tax accruals of $16.8 million related to periods prior to 2020.
(8) Other loss – net for the three and six
months ended June 30, 2019 includes a $10.7 million loss relating
to the repurchase of the Company's 2020 Notes.
Teekay CorporationSummary Consolidated Balance Sheets(in
thousands of U.S. dollars)
|
As at June 30, |
As at March 31, |
As at June 30, |
|
2020 |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
Cash and cash equivalents - Teekay Parent |
66,917 |
|
48,366 |
|
74,890 |
|
Cash and cash
equivalents - Teekay LNG |
226,328 |
|
312,710 |
|
124,880 |
|
Cash and cash
equivalents - Teekay Tankers |
167,907 |
|
203,325 |
|
35,429 |
|
Assets held for
sale |
— |
|
50,818 |
|
12,300 |
|
Accounts
receivable and other current assets |
318,726 |
|
359,705 |
|
424,735 |
|
Restricted cash -
Teekay Parent |
3,915 |
|
3,569 |
|
2,023 |
|
Restricted cash -
Teekay LNG |
66,147 |
|
113,528 |
|
80,308 |
|
Restricted cash -
Teekay Tankers |
8,203 |
|
6,755 |
|
5,353 |
|
Vessels and
equipment - Teekay Parent |
13,964 |
|
18,791 |
|
284,840 |
|
Vessels and
equipment - Teekay LNG |
2,931,602 |
|
2,959,067 |
|
3,320,937 |
|
Vessels and
equipment - Teekay Tankers |
1,672,976 |
|
1,676,213 |
|
1,856,766 |
|
Operating lease
right-of-use assets |
81,255 |
|
91,624 |
|
185,716 |
|
Net investment in
direct financing and sales-type leases |
554,986 |
|
625,541 |
|
564,685 |
|
Investments in and
loans to equity-accounted investments |
1,102,386 |
|
1,083,741 |
|
1,011,530 |
|
Other
non-current assets |
130,200 |
|
130,051 |
|
141,626 |
|
Total Assets |
7,345,512 |
|
7,683,804 |
|
8,126,018 |
|
LIABILITIES AND EQUITY |
|
|
Accounts payable
and other current liabilities |
441,857 |
|
427,640 |
|
397,111 |
|
Liabilities
associated with assets held for sale |
— |
|
2,535 |
|
— |
|
Short-term debt -
Teekay Tankers |
10,000 |
|
55,000 |
|
15,000 |
|
Current portion of
long-term debt - Teekay Parent |
— |
|
60,000 |
|
36,663 |
|
Current portion of
long-term debt - Teekay LNG |
366,237 |
|
398,839 |
|
468,038 |
|
Current portion of
long-term debt - Teekay Tankers |
53,830 |
|
55,685 |
|
125,661 |
|
Long-term debt -
Teekay Parent |
354,065 |
|
351,594 |
|
345,768 |
|
Long-term debt -
Teekay LNG |
2,568,258 |
|
2,679,835 |
|
2,799,426 |
|
Long-term debt -
Teekay Tankers |
661,627 |
|
829,671 |
|
894,501 |
|
Operating lease
liabilities |
72,982 |
|
83,456 |
|
173,476 |
|
Other long-term
liabilities |
229,415 |
|
252,885 |
|
197,749 |
|
Equity: |
|
|
|
Non-controlling
interests |
2,058,273 |
|
2,085,617 |
|
2,005,399 |
|
Shareholders of Teekay |
528,968 |
|
401,047 |
|
667,226 |
|
Total
Liabilities and Equity |
7,345,512 |
|
7,683,804 |
|
8,126,018 |
|
|
|
|
|
Net debt - Teekay
Parent (1) |
283,233 |
|
359,659 |
|
305,518 |
|
Net debt - Teekay
LNG (1) |
2,642,020 |
|
2,652,436 |
|
3,062,276 |
|
Net
debt - Teekay Tankers (1) |
549,347 |
|
730,276 |
|
994,380 |
|
(1) Net debt is a non-GAAP financial measure and
represents short-term debt, current portion of long-term debt and
long-term debt, less cash and cash equivalents, and, if applicable,
restricted cash.
Teekay CorporationSummary Consolidated Statements of Cash
Flows(in thousands of U.S. dollars)
|
Six Months Ended |
|
June 30, |
|
2020 |
2019 |
|
(unaudited) |
(unaudited) |
Cash, cash equivalents and
restricted cash provided by (used for) |
|
|
OPERATING
ACTIVITIES |
|
|
Net income (loss) |
177,502 |
|
(95,575 |
) |
Non-cash and non-operating
items: |
|
|
Depreciation and amortization |
135,853 |
|
145,956 |
|
Unrealized loss on derivative instruments |
27,544 |
|
14,933 |
|
Write-down and (gain) loss on sale |
105,275 |
|
3,328 |
|
Gain on commencement of sales-type lease |
(44,943 |
) |
— |
|
Equity (income) loss, net of dividends received |
(22,804 |
) |
85,211 |
|
Foreign currency exchange (gain) loss and other |
(7,250 |
) |
34,744 |
|
Direct financing lease
payments received |
334,146 |
|
6,050 |
|
Change in operating assets and
liabilities |
75,978 |
|
18,427 |
|
Expenditures for dry
docking |
(5,608 |
) |
(34,150 |
) |
Net operating cash flow |
775,693 |
|
178,924 |
|
|
|
|
FINANCING
ACTIVITIES |
|
|
Proceeds from issuance of
long-term debt, net of issuance costs |
931,871 |
|
376,658 |
|
Prepayments of long-term
debt |
(1,302,389 |
) |
(759,401 |
) |
Scheduled repayments of
long-term debt |
(240,355 |
) |
(117,110 |
) |
Proceeds from short-term
debt |
205,000 |
|
65,000 |
|
Prepayment of short-term
debt |
(245,000 |
) |
(50,000 |
) |
Proceeds from financing
related to sales-leaseback of vessels |
— |
|
222,400 |
|
Repayments of obligations
related to finance leases |
(47,162 |
) |
(45,928 |
) |
Repurchase of Teekay LNG
common units |
(15,635 |
) |
(12,056 |
) |
Distributions paid from
subsidiaries to non-controlling interests |
(35,519 |
) |
(30,465 |
) |
Cash dividends paid |
— |
|
(5,523 |
) |
Other financing
activities |
(794 |
) |
(580 |
) |
Net financing cash flow |
(749,983 |
) |
(357,005 |
) |
|
|
|
INVESTING
ACTIVITIES |
|
|
Expenditures for vessels and
equipment |
(12,824 |
) |
(89,120 |
) |
Proceeds from sale of vessels
and equipment |
60,915 |
|
— |
|
Proceeds from sale of assets,
net of cash sold |
12,221 |
|
100,000 |
|
Loan repayment by joint
venture |
3,500 |
|
— |
|
Proceeds from sale of
equity-accounted investments and related assets |
— |
|
— |
|
Investment in equity-accounted
investments |
— |
|
(15,555 |
) |
Other investing
activities |
(6,430 |
) |
— |
|
Net investing cash flow |
57,382 |
|
(4,675 |
) |
|
|
|
Increase (decrease) in
cash, cash equivalents and restricted cash |
83,092 |
|
(182,756 |
) |
Cash, cash equivalents and
restricted cash, beginning of the period |
456,325 |
|
505,639 |
|
Cash, cash equivalents and restricted cash, end of the
period |
539,417 |
|
322,883 |
|
Teekay CorporationAppendix A - Reconciliation of Non-GAAP
Financial MeasuresAdjusted Net Income (Loss)(in thousands of U.S.
dollars, except per share data)
|
Three Months Ended |
Six Months Ended |
|
June 30, |
March 31, |
June 30, |
|
2020 |
2020 |
2020 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
$
Per |
|
$
Per |
|
$
Per |
|
$ |
Share(1) |
$ |
Share(1) |
$ |
Share(1) |
Net income – GAAP
basis |
125,500 |
|
|
52,002 |
|
|
177,502 |
|
|
Adjust for: Net income
attributable to |
|
|
|
|
|
|
non-controlling interests |
(103,777 |
) |
|
(101,807 |
) |
|
(205,584 |
) |
|
Net income (loss)
attributable to |
|
|
|
|
|
|
shareholders of Teekay |
21,723 |
|
0.21 |
|
(49,805 |
) |
(0.49 |
) |
(28,082 |
) |
(0.28 |
) |
Add (subtract)
specific items affecting net loss |
|
|
|
|
|
|
Unrealized losses (gains) from derivative |
|
|
|
|
|
|
instruments(2) |
8,995 |
|
0.09 |
|
40,900 |
|
0.41 |
|
49,895 |
|
0.49 |
|
Foreign exchange losses (gains)(3) |
7,492 |
|
0.07 |
|
(8,463 |
) |
(0.08 |
) |
(971 |
) |
(0.01 |
) |
Banff FPSO decommissioning costs, net of |
|
|
|
|
|
|
recoveries(4) |
5,854 |
|
0.06 |
|
— |
|
— |
|
5,854 |
|
0.06 |
|
Write-down and (gain) loss on sale |
|
|
|
|
|
|
of vessels and other assets(5) |
10,669 |
|
0.11 |
|
94,606 |
|
0.94 |
|
105,275 |
|
1.04 |
|
Gain on commencement of sales-type lease(6) |
— |
|
— |
|
(44,943 |
) |
(0.45 |
) |
(44,943 |
) |
(0.44 |
) |
Restructuring charges, net of recoveries |
112 |
|
— |
|
1,188 |
|
0.01 |
|
1,300 |
|
0.01 |
|
Other(7) |
(17,598 |
) |
(0.17 |
) |
8,230 |
|
0.08 |
|
(9,368 |
) |
(0.09 |
) |
Non-controlling interests’ share of items above(8) |
2,466 |
|
0.02 |
|
(16,454 |
) |
(0.16 |
) |
(13,988 |
) |
(0.14 |
) |
Total
adjustments |
17,990 |
|
0.18 |
|
75,064 |
|
0.75 |
|
93,054 |
|
0.92 |
|
Adjusted net income
attributable to |
|
|
|
|
|
|
shareholders of Teekay |
39,713 |
|
0.39 |
|
25,259 |
|
0.25 |
|
64,972 |
|
0.64 |
|
(1) Basic per share amounts.
(2) Reflects unrealized losses (gains) relating
to the change in the mark-to-market value of derivative instruments
that are not designated in qualifying hedging relationships for
accounting purposes, including those losses (gains) included in the
Company's proportionate share of equity income (loss) from joint
ventures.
(3) Foreign currency exchange losses (gains)
primarily relate to the Company’s debt denominated in Euros and
Norwegian Kroner (NOK) and unrealized losses on cross currency
swaps used to economically hedge the principal and interest on NOK
bonds.
(4) In the first quarter of 2020, CNR
International (U.K.) Limited (or CNR) provided formal notice to the
Company of its intention to decommission the Banff field and remove
the Banff FPSO and the Apollo Spirit FSO from the field in June
2020. The oil production under the existing contract for the Banff
FPSO unit ceased in June 2020, and the Company has commenced
decommissioning activities during the second quarter of 2020.
(5) Refer to footnote (2) of the Consolidated
Statements of Income (Loss) for additional information.
(6) Gain on commencement of sales-type lease for
the three months ended March 31, 2020 relates to the commencement
of the sales-type lease for the Foinaven FPSO unit as a result of a
new bareboat charter agreement.
(7) Other for the three and six months ended
June 30, 2020 includes a reduction in freight tax accruals and
credit loss provision adjustments to the Company's financial
instruments upon adoption of ASU 2016-13.
(8) Items affecting net income include items
from the Company’s consolidated non-wholly-owned subsidiaries. The
specific items affecting net income are analyzed to determine
whether any of the amounts originated from a consolidated
non-wholly-owned subsidiary. Each amount that originates from a
consolidated non-wholly-owned subsidiary is multiplied by the
non-controlling interests’ percentage share in this subsidiary to
determine the non-controlling interests’ share of the amount. The
amount identified as “Non-controlling interests’ share of items
above” in the table above is the cumulative amount of the
non-controlling interests’ proportionate share of items listed in
the table.
Teekay Corporation
Appendix A - Reconciliation of Non-GAAP Financial
MeasuresAdjusted Net Income (Loss)(in thousands of U.S. dollars,
except per share data)
|
Three Months Ended |
Six Months Ended |
|
June 30, |
June 30, |
|
2019 |
2019 |
|
(unaudited) |
(unaudited) |
|
|
$
Per |
|
$
Per |
|
$ |
Share(1) |
$ |
Share(1) |
Net loss – GAAP
basis |
(34,111 |
) |
|
(95,575 |
) |
|
Adjust for: Net income
attributable to |
|
|
|
|
non-controlling interests |
(5,374 |
) |
|
(28,167 |
) |
|
Net loss attributable
to |
|
|
|
|
shareholders of Teekay |
(39,485 |
) |
(0.39 |
) |
(123,742 |
) |
(1.23 |
) |
Add (subtract)
specific items affecting net loss |
|
|
|
|
Unrealized (gains) losses from derivative instruments (2) |
(11,206 |
) |
(0.11 |
) |
1,282 |
|
0.01 |
|
Foreign exchange losses (3) |
4,764 |
|
0.05 |
|
5,960 |
|
0.06 |
|
Write-down and loss on sale of vessels and |
|
|
|
|
other assets (4) |
7,853 |
|
0.08 |
|
76,081 |
|
0.76 |
|
Restructuring charges, net of recoveries |
1,369 |
|
0.01 |
|
3,527 |
|
0.04 |
|
Other (5) |
37,329 |
|
0.37 |
|
39,327 |
|
0.39 |
|
Non-controlling interests’ share of items above (6) |
(13,992 |
) |
(0.14 |
) |
(28,758 |
) |
(0.29 |
) |
Total
adjustments |
26,117 |
|
0.26 |
|
97,419 |
|
0.97 |
|
Adjusted net loss
attributable to |
|
|
|
|
shareholders of Teekay |
(13,368 |
) |
(0.13 |
) |
(26,323 |
) |
(0.26 |
) |
(1) Basic per share amounts.
(2) Reflects unrealized (gains) losses relating
to the change in the mark-to-market value of derivative instruments
that are not designated in qualifying hedging relationships for
accounting purposes, including those (gains) losses included in the
Company's proportionate share of equity income (loss) from joint
ventures.
(3) Foreign currency exchange losses primarily
relate to the Company’s debt denominated in Euros and Norwegian
Kroner (NOK) and unrealized losses on cross currency swaps used to
economically hedge the principal and interest on NOK bonds.
(4) Refer to footnote (2) of the Summary
Consolidated Statements of Income (Loss) for additional
information.
(5) Other for the three and six months ended
June 30, 2019 includes the realized loss on sale of stock purchase
warrants in Altera and a loss on the repurchase of 2020 Notes.
Other for the six months ended June 30, 2019 also includes the loan
extinguishment costs related to Teekay LNG's refinancing of one of
its debt facilities.
(6) Items affecting net loss include items from
the Company’s consolidated non-wholly-owned subsidiaries. The
specific items affecting net 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 determine the
non-controlling interests’ share of the amount. The amount
identified as “Non-controlling interests’ share of items above” in
the table above is the cumulative amount of the non-controlling
interests’ proportionate share of items listed in the table.
Teekay CorporationAppendix B - Supplemental Financial
InformationSummary Statement of Income for the Three Months Ended
June 30, 2020(in thousands of U.S. dollars)(unaudited)
|
Teekay |
Teekay |
Teekay |
Consolidation |
Total |
|
LNG |
Tankers |
Parent |
Adjustments(1) |
|
|
|
|
|
|
|
Revenues |
148,205 |
|
246,492 |
|
88,108 |
|
— |
|
482,805 |
|
|
|
|
|
|
|
Voyage expenses |
(5,329 |
) |
(61,558 |
) |
(9 |
) |
— |
|
(66,896 |
) |
Vessel operating expenses |
(28,407 |
) |
(46,218 |
) |
(73,171 |
) |
— |
|
(147,796 |
) |
Time-charter hire expense |
(5,368 |
) |
(9,296 |
) |
(3,050 |
) |
— |
|
(17,714 |
) |
Depreciation and
amortization |
(31,629 |
) |
(29,546 |
) |
(1,761 |
) |
— |
|
(62,936 |
) |
General and administrative
expenses |
(7,883 |
) |
(9,784 |
) |
(6,001 |
) |
— |
|
(23,668 |
) |
Write-down and gain on
sale |
— |
|
2,896 |
|
(13,565 |
) |
— |
|
(10,669 |
) |
Gain on commencement of
sales-type lease |
— |
|
— |
|
— |
|
— |
|
— |
|
Restructuring charges |
— |
|
|
(4,622 |
) |
— |
|
(4,622 |
) |
|
|
|
|
|
|
Income (loss) from
vessel operations |
69,589 |
|
92,986 |
|
(14,071 |
) |
— |
|
148,504 |
|
|
|
|
|
|
|
Interest expense |
(35,143 |
) |
(13,492 |
) |
(10,667 |
) |
57 |
|
(59,245 |
) |
Interest income |
1,697 |
|
567 |
|
107 |
|
(57 |
) |
2,314 |
|
Realized and unrealized loss
on |
|
|
|
|
|
non-designated derivative
instruments |
(8,516 |
) |
(589 |
) |
(165 |
) |
— |
|
(9,270 |
) |
Equity income |
32,155 |
|
3,188 |
|
— |
|
— |
|
35,343 |
|
Equity in earnings of
subsidiaries (2) |
— |
|
— |
|
43,704 |
|
(43,704 |
) |
— |
|
Income tax recovery |
1,804 |
|
14,598 |
|
773 |
|
— |
|
17,175 |
|
Foreign exchange (loss)
gain |
(11,624 |
) |
(87 |
) |
2,789 |
|
— |
|
(8,922 |
) |
Other
(loss) income – net |
(679 |
) |
1,027 |
|
(747 |
) |
— |
|
(399 |
) |
Net
income |
49,283 |
|
98,198 |
|
21,723 |
|
(43,704 |
) |
125,500 |
|
Net income attributable
to |
|
|
|
|
|
non-controlling interests (3) |
(4,349 |
) |
— |
|
— |
|
(99,428 |
) |
(103,777 |
) |
Net income
attributable to shareholders/ |
|
|
|
|
|
unitholders of publicly-listed entities |
44,934 |
|
98,198 |
|
21,723 |
|
(143,132 |
) |
21,723 |
|
(1) Consolidation Adjustments column includes
adjustments which eliminate transactions between Teekay LNG, Teekay
Tankers and Teekay Parent.
(2) Teekay Corporation’s proportionate share of
the net earnings of its publicly-traded subsidiaries.
(3) Net income attributable to non-controlling
interests in the Teekay LNG column represents the joint venture
partners’ share of the net income of its respective consolidated
joint ventures. Net income attributable to non-controlling interest
in the Consolidation Adjustments column represents the public’s
share of the net income of Teekay’s publicly-traded consolidated
subsidiaries.
Teekay CorporationAppendix C - Supplemental Financial
InformationTeekay Parent Summary Operating ResultsFor the Three
Months Ended June 30, 2020(in thousands of U.S.
dollars)(unaudited)
|
|
|
|
Teekay |
|
|
|
Corporate |
Parent |
|
FPSOs |
Other(1) |
G&A |
Total |
|
|
|
|
|
Revenues |
28,787 |
|
59,321 |
|
— |
|
88,108 |
|
|
|
|
|
|
Voyage expenses |
(9 |
) |
— |
|
— |
|
(9 |
) |
Vessel operating expenses |
(24,404 |
) |
(48,767 |
) |
— |
|
(73,171 |
) |
Time-charter hire expense |
(20 |
) |
(3,030 |
) |
— |
|
(3,050 |
) |
Depreciation and
amortization |
(1,761 |
) |
— |
|
— |
|
(1,761 |
) |
General and administrative
expenses |
(578 |
) |
— |
|
(5,423 |
) |
(6,001 |
) |
Write-down of vessels (2) |
(13,565 |
) |
— |
|
— |
|
(13,565 |
) |
Restructuring charges |
10 |
|
(4,632 |
) |
— |
|
(4,622 |
) |
(Loss) income from vessel operations |
(11,540 |
) |
2,892 |
|
(5,423 |
) |
(14,071 |
) |
|
|
|
|
|
Depreciation and
amortization |
1,761 |
|
— |
|
— |
|
1,761 |
|
Amortization of operating
lease liability |
|
|
|
— |
|
and other |
(1,536 |
) |
596 |
|
|
(940 |
) |
Write-down of vessels (2) |
13,565 |
|
— |
|
— |
|
13,565 |
|
Daughter Entities
distributions (3) |
— |
|
— |
|
9,401 |
|
9,401 |
|
Teekay Parent adjusted EBITDA |
2,250 |
|
3,488 |
|
3,978 |
|
9,716 |
|
(1) Includes the results of one chartered-in FSO
unit owned by Altera, which is largely on a flow-through basis with
Teekay Parent earning a small margin.
(2) Write-down of vessels for the three months
ended June 30, 2020 relates to write-down of the remaining residual
value of the Banff FPSO unit and an adjustment to the unit's
estimated asset retirement obligation. In the first quarter of
2020, CNR provided formal notice to Teekay of its intention to
cease production in June 2020 and decommission the Banff field
shortly thereafter. As such, the Company expects to remove the
Banff FPSO and Apollo Spirit FSO from the Banff field in 2020 and
the subsea equipment in 2021. The Company expects to recycle the
FPSO unit and subsea equipment and redeliver the FSO unit to its
owner following removal from the field.
(3) In addition to the adjusted EBITDA generated
by its directly owned and chartered-in assets, Teekay Parent also
receives cash distributions from its consolidated publicly-traded
subsidiary, Teekay LNG. For the three months ended June 30,
2020, Teekay Parent received cash distributions of $9.4 million
from Teekay LNG, including those made with respect to its general
partner interests in Teekay LNG. Distributions received for a
given quarter consist of the amount of distributions relating to
such quarter but received by Teekay Parent in the following
quarter. Please refer to Appendix D of this release for further
details.
Teekay CorporationAppendix D - Reconciliation of Non-GAAP
Financial MeasuresTeekay Parent Free Cash Flow(in thousands of U.S.
dollars, except share and per share data)
|
Three Months Ended |
|
June 30, |
March 31, |
June 30, |
|
2020 |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
Daughter Entities
distributions to Teekay Parent (1) |
|
|
|
Teekay LNG |
|
|
|
Limited Partner interests (2) |
8,990 |
|
6,302 |
|
4,790 |
|
GP interests |
411 |
|
389 |
|
304 |
|
Total Daughter Entity
Distributions to Teekay Parent |
9,401 |
|
6,691 |
|
5,094 |
|
|
|
|
|
FPSOs |
2,250 |
|
(1,448 |
) |
(99 |
) |
Other income and corporate general and administrative expenses |
|
|
|
Other Income |
3,488 |
|
2,021 |
|
1,251 |
|
Corporate general and administrative expenses (3) |
(5,423 |
) |
(2,125 |
) |
(2,819 |
) |
TEEKAY PARENT ADJUSTED EBITDA (4) |
9,716 |
|
5,139 |
|
3,427 |
|
|
|
|
|
Net interest expense (5) |
(8,675 |
) |
(8,577 |
) |
(9,854 |
) |
Asset retirement costs
incurred (6) |
(2,927 |
) |
— |
|
— |
|
Upfront
lease payment received in excess of revenue recognized (7) |
— |
|
56,127 |
|
— |
|
TOTAL TEEKAY PARENT FREE CASH FLOW |
(1,886 |
) |
52,689 |
|
(6,427 |
) |
|
|
|
|
Weighted-average number of common shares -
Basic |
101,107,362 |
100,887,551 |
100,783,496 |
(1) Daughter Entities dividends and
distributions for a given quarter consist of the amount of
dividends and distributions relating to such quarter but received
by Teekay Parent in the following quarter.
(2) Common unit distribution cash flows to
Teekay Parent are based on Teekay Parent’s ownership on the
ex-dividend date for its publicly-traded subsidiary Teekay LNG for
the periods as follows:
|
|
Three Months Ended |
|
|
June
30, |
March
31, |
June
30, |
|
|
2020 |
2020 |
2019 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
Teekay
LNG |
|
|
|
|
|
|
Distribution per common unit |
$ |
0.25 |
|
$ |
0.25 |
|
$ |
0.19 |
|
Common units owned by |
|
|
|
|
|
|
Teekay Parent |
|
35,958,274 |
|
|
25,208,274 |
|
|
25,208,274 |
|
Total distribution |
$ |
8,989,569 |
|
$ |
6,302,069 |
|
$ |
4,789,572 |
|
(3) Increase in corporate general and
administrative expenses for the three months ended June 30, 2020
relates primarily to a change in timing of annual equity-based
compensation grants in 2020 and professional fees associated with
the IDR transaction completed in May 2020.
(4) Please refer to Appendices C and E for
additional financial information on Teekay Parent’s adjusted
EBITDA.
(5) Please see Appendix E to this release for a
description of this measure and a reconciliation of this non-GAAP
financial measure as used in this release to interest expense net
of interest income, the most directly comparable GAAP financial
measure.
(6) Relates to decommissioning activities for
the Banff FPSO, which have been accrued on the balance sheet as an
asset retirement obligation. Please see Appendix C footnote (2) for
additional information.
(7) Upfront lease payment relates to cash
received in early April 2020 in excess of revenue recognized in the
three months ended March 31, 2020, as a result of a new bareboat
charter agreement relating to the Foinaven FPSO unit. Please refer
to Summary Consolidated Statements of Income (Loss) for additional
information.
Teekay CorporationNon-GAAP Financial
Reconciliations
Teekay CorporationAppendix E - Reconciliation of Non-GAAP
Financial MeasuresAdjusted EBITDA - Consolidated(in thousands of
U.S. dollars)
|
Three Months Ended |
|
June 30, |
March 31, |
June 30, |
|
2020 |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
Net income (loss) |
125,500 |
|
52,002 |
|
(34,111 |
) |
Depreciation and
amortization |
62,936 |
|
72,917 |
|
73,849 |
|
Interest expense, net of
interest income |
56,931 |
|
59,717 |
|
67,972 |
|
Income
tax (recovery) expense |
(17,175 |
) |
3,792 |
|
3,404 |
|
EBITDA |
228,192 |
|
188,428 |
|
111,114 |
|
Specific income statement items affecting EBITDA: |
|
|
|
Write-down and (gain) loss on sale of assets |
10,669 |
|
94,606 |
|
— |
|
Gain on commencement of sales-type lease |
— |
|
(44,943 |
) |
— |
|
Adjustments for direct financing and sales-type lease to a cash
basis and other |
2,452 |
|
2,963 |
|
2,782 |
|
Realized and unrealized losses on derivative instruments |
9,270 |
|
21,663 |
|
10,964 |
|
Realized loss from the settlements of non-designated derivative
instruments |
(200 |
) |
(49 |
) |
— |
|
Equity (income) loss |
(35,343 |
) |
(2,313 |
) |
6,284 |
|
Foreign currency exchange loss (gain) |
8,922 |
|
(6,646 |
) |
5,851 |
|
Other expense - net |
399 |
|
681 |
|
11,099 |
|
Consolidated Adjusted EBITDA |
224,361 |
|
254,390 |
|
148,094 |
|
Adjusted EBITDA from equity-accounted vessels (See Appendix E) |
91,508 |
|
87,808 |
|
48,515 |
|
Total Adjusted EBITDA |
315,869 |
|
342,198 |
|
196,609 |
|
Teekay CorporationAppendix E - Reconciliation of Non-GAAP
Financial MeasuresAdjusted EBITDA – Equity-Accounted Vessels(in
thousands of U.S. dollars)
|
Three Months Ended |
|
June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
At |
Company's |
At |
Company's |
At |
Company's |
|
100% |
Portion(1) |
100% |
Portion(1) |
100% |
Portion(1) |
Revenues |
266,539 |
|
115,422 |
|
260,488 |
|
113,054 |
|
174,382 |
|
74,266 |
|
Vessel and other operating
expenses |
(74,233 |
) |
(32,468 |
) |
(74,396 |
) |
(33,336 |
) |
(69,135 |
) |
(30,565 |
) |
Depreciation and amortization |
(26,075 |
) |
(13,006 |
) |
(26,564 |
) |
(13,441 |
) |
(29,459 |
) |
(14,195 |
) |
Income from vessel
operations of equity-accounted vessels |
166,231 |
|
69,948 |
|
159,528 |
|
66,277 |
|
75,788 |
|
29,506 |
|
|
|
|
|
|
|
|
Net interest expense |
(73,310 |
) |
(29,465 |
) |
(76,359 |
) |
(30,644 |
) |
(53,356 |
) |
(21,467 |
) |
Income tax recovery
(expense) |
225 |
|
110 |
|
(598 |
) |
(299 |
) |
(670 |
) |
(246 |
) |
Other items including realized
and |
|
|
|
|
|
|
unrealized loss on derivative |
|
|
|
|
|
|
instruments (2) |
(17,786 |
) |
(5,250 |
) |
(102,926 |
) |
(33,021 |
) |
(18,764 |
) |
(6,224 |
) |
Loss on sale of
equity-accounted |
|
|
|
|
|
|
investments (3) |
|
— |
|
|
— |
|
|
(7,853 |
) |
Net income (loss) /
equity income (loss) of equity-accounted vessels |
75,360 |
|
35,343 |
|
(20,355 |
) |
2,313 |
|
2,998 |
|
(6,284 |
) |
|
|
|
|
|
|
|
Net income (loss) /
equity income (loss) |
|
|
|
|
|
|
of equity-accounted vessels |
75,360 |
|
35,343 |
|
(20,355 |
) |
2,313 |
|
2,998 |
|
(6,284 |
) |
Depreciation and
amortization |
26,075 |
|
13,006 |
|
26,564 |
|
13,441 |
|
29,459 |
|
14,195 |
|
Net interest expense |
73,310 |
|
29,465 |
|
76,359 |
|
30,644 |
|
53,356 |
|
21,467 |
|
Income
tax (recovery) expense |
(225 |
) |
(110 |
) |
598 |
|
299 |
|
670 |
|
246 |
|
EBITDA |
174,520 |
|
77,704 |
|
83,166 |
|
46,697 |
|
86,483 |
|
29,624 |
|
Specific income statement items affecting EBITDA: |
|
|
|
|
|
Adjustments for direct financing and sales-type lease to a cash
basis |
26,381 |
|
9,499 |
|
24,976 |
|
9,025 |
|
16,131 |
|
5,759 |
|
Amortization of in-process contracts and other |
(1,738 |
) |
(945 |
) |
(1,718 |
) |
(935 |
) |
(1,736 |
) |
(945 |
) |
Other items including realized and unrealized loss on derivative
instruments(2) |
17,786 |
|
5,250 |
|
102,927 |
|
33,021 |
|
18,764 |
|
6,224 |
|
Loss on sale of equity-accounted investments (3) |
— |
|
— |
|
— |
|
— |
|
— |
|
7,853 |
|
Adjusted EBITDA from equity-accounted vessels
(4) |
216,949 |
|
91,508 |
|
209,351 |
|
87,808 |
|
119,642 |
|
48,515 |
|
(1) The Company’s proportionate share of its
equity-accounted vessels and other investments ranged from 20% to
52%.
(2) For the three months ended June 30 and March
31, 2020, includes unrealized credit losses recorded upon the
adoption of ASU 2016-13.
(3) For the three months ended June 30, 2019,
includes a loss on sale of the Company's investment in Altera.
(4) Adjusted EBITDA from equity-accounted
vessels represents the Company’s proportionate share of adjusted
EBITDA from its equity-accounted vessels and other investments.
Teekay CorporationAppendix E - Reconciliation of Non-GAAP
Financial MeasuresTotal Adjusted Revenues(in thousands of U.S.
dollars)
|
Three Months Ended |
|
June 30, |
March 31, |
June 30, |
|
2020 |
2020 |
2019
(1) |
|
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
482,805 |
|
574,054 |
|
462,397 |
|
Proportionate
share of revenues |
|
|
|
from equity-accounted joint ventures |
115,422 |
|
113,054 |
|
74,266 |
|
Less proportionate
share of voyage revenues earned |
|
|
|
directly from equity-accounted joint ventures |
(5,569 |
) |
(5,755 |
) |
(4,525 |
) |
Total adjusted revenues |
592,658 |
|
681,353 |
|
532,138 |
|
(1) Comparative balances relating to the three
months ended June 30, 2019 have been recast to reflect results
consistent with the presentation in the Company’s 2019 Annual
Report on Form 20-F and Form 6-K for the three and six months ended
June 30, 2020.
Teekay CorporationAppendix E - Reconciliation of Non-GAAP
Financial MeasuresAdjusted EBITDA - Teekay Parent(in thousands of
U.S. dollars)
|
Three Months
Ended March 31, 2020 |
|
(unaudited) |
|
|
|
|
Teekay |
|
|
|
Corporate |
Parent |
|
FPSOs |
Other |
G&A |
Total |
|
|
|
|
|
Teekay Parent (loss) income from vessel operations |
(12,268 |
) |
1,425 |
|
(2,125 |
) |
(12,968 |
) |
Write-down of
vessels |
46,519 |
|
— |
|
— |
|
46,519 |
|
Gain on
commencement of sales-type lease |
(44,943 |
) |
— |
|
— |
|
(44,943 |
) |
Depreciation and
amortization |
10,646 |
|
— |
|
— |
|
10,646 |
|
Amortization of
in-process revenue contracts and other |
(1,402 |
) |
596 |
|
— |
|
(806 |
) |
Daughter Entities distributions |
— |
|
— |
|
6,691 |
|
6,691 |
|
Adjusted EBITDA – Teekay Parent |
(1,448 |
) |
2,021 |
|
4,566 |
|
5,139 |
|
|
Three Months
Ended June 30, 2019 |
|
(unaudited) |
|
|
|
|
Teekay |
|
|
|
Corporate |
Parent |
|
FPSOs |
Other |
G&A |
Total |
|
|
|
|
|
Teekay Parent (loss) income from vessel operations |
(5,987 |
) |
541 |
|
(2,819 |
) |
(8,265 |
) |
Depreciation and
amortization |
7,811 |
|
42 |
|
— |
|
7,853 |
|
Amortization of
in-process revenue contracts and other |
(1,923 |
) |
668 |
|
— |
|
(1,255 |
) |
Daughter Entities distributions |
— |
|
— |
|
5,094 |
|
5,094 |
|
Adjusted EBITDA – Teekay Parent |
(99 |
) |
1,251 |
|
2,275 |
|
3,427 |
|
Teekay CorporationAppendix E - Reconciliation of Non-GAAP
Financial MeasuresNet Interest Expense - Teekay Parent(in thousands
of U.S. dollars)
|
Three Months Ended |
|
June 30, |
March 31, |
June 30, |
|
2020 |
2020 |
2019 |
|
(unaudited) |
(unaudited) |
(unaudited) |
Interest expense |
(59,245 |
) |
(62,520 |
) |
(70,205 |
) |
Interest income |
2,314 |
|
2,803 |
|
2,233 |
|
Interest expense
net of interest income consolidated |
(56,931 |
) |
(59,717 |
) |
(67,972 |
) |
Less: Non-Teekay
Parent interest expense net of interest income |
(46,371 |
) |
(49,213 |
) |
(56,444 |
) |
Interest expense
net of interest income - Teekay Parent |
(10,560 |
) |
(10,504 |
) |
(11,528 |
) |
Teekay Parent
non-cash accretion and loan cost amortization |
2,191 |
|
2,215 |
|
1,896 |
|
Teekay
Parent realized losses on interest rate swaps |
(306 |
) |
(288 |
) |
(222 |
) |
Net interest expense - Teekay Parent |
(8,675 |
) |
(8,577 |
) |
(9,854 |
) |
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 impact of COVID-19 and related
global events on the Company’s business and financial results; the
Company's ability to complete remaining crew changes and
anticipated timing thereof; the Company's results for the third
quarter of 2020; the future outlook for the tanker market; Teekay
Tankers future free cash flow breakevens for its spot fleet; the
timing on the Banff FPSO unit leaving its field and undergoing
green recycling and the timing and costs associated with the
remediation of the Banff field’s subsea infrastructure and the
Banff FPSO unit's decommissioning and recycling; the Company's
liquidity and the Teekay Group’s positioning for both near-term
market volatility and to create long-term shareholder value and the
ability in the longer-term to shape the future of marine energy
transportation; the Company’s strategic priorities and anticipated
delevering of the Teekay Group’s balance sheets and simplification
of its structure; expected timing for completing the Company’s new
and refinanced debt facilities and the ability of the Company to
use proceeds from new debt facilities to repay its existing
facilities in full; and Teekay Tankers’ continued operation of its
oil ship-to-ship transfer support services in North America and the
Caribbean and the synergies of that business with Teekay Tankers’
core Full Service Lightering business. 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: market or counterparty reaction to changes in
exploration, production and storage of offshore oil and gas, either
generally or in particular regions that would impact expected
future growth; changes in the demand for oil, refined products, LNG
or LPG; changes in trading patterns significantly affecting overall
vessel tonnage requirements; greater or less than anticipated
levels of vessel newbuilding orders and deliveries and greater or
less than anticipated rates of vessel scrapping; changes in global
oil prices or tanker rates; OPEC+ and non-OPEC production and
supply levels; oil contango levels; the duration and extent of the
COVID-19 pandemic and any resulting effects on the markets in which
the Company operates; the impact of the pandemic on the Company’s
ability to maintain safe and efficient operations; issues with
vessel operations; higher than expected costs and expenses,
off-hire days or dry-docking requirements; higher than expected
costs and/or delays associated with the remediation of the Banff
field or the decommission/recycling of the Banff FPSO unit;
changes in applicable industry laws and regulations and the timing
of implementation of new laws and regulations; the effects of IMO
2020 and IMO 2030; the potential for early termination of long-term
contracts of existing vessels; delays in the commencement of
charter or other contracts, including potential further delays to
the commencement of commercial operations of the regasification
terminal in Bahrain; changes in borrowing costs or equity
valuations; declaration by Teekay LNG’s board of directors of
common unit distributions; available cash to reduce financial
leverage at Teekay Parent, Teekay LNG and Teekay Tankers; the
impact of geopolitical tensions and changes in global economic
conditions; and other factors discussed in Teekay’s filings from
time to time with the SEC, including its Annual Report on Form 20-F
for the fiscal year ended December 31, 2019. Teekay 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 Teekay’s expectations with respect
thereto or any change in events, conditions or circumstances on
which any such statement is based.
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