Teekay Offshore GP LLC (TOO GP), the general partner of Teekay
Offshore Partners L.P. (Teekay Offshore or the Partnership)
(NYSE:TOO), today reported the Partnership’s results for the
quarter ended March 31, 2019.
Consolidated Financial Summary
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 (2) |
2018 |
(in thousands of U.S. Dollars, except per unit
data) |
(unaudited) |
(unaudited) |
(unaudited) |
GAAP FINANCIAL
RESULTS |
|
|
|
Revenues |
336,637 |
|
445,213 |
|
323,199 |
|
Net (loss) income |
(2,598 |
) |
67,842 |
|
16,060 |
|
Limited partners'
interest in net income (loss) per common unit - basic |
(0.03 |
) |
0.14 |
|
0.04 |
|
|
|
|
|
NON-GAAP
FINANCIAL RESULTS: |
|
|
|
Adjusted EBITDA
(1) |
188,150 |
|
289,548 |
|
160,447 |
|
Adjusted net income
attributable to the partners and preferred unitholders (1) |
29,510 |
|
130,463 |
|
8,296 |
|
Limited partners'
interest in adjusted net income per common unit (1) |
0.05 |
|
0.30 |
|
0.00 |
|
|
|
|
|
|
|
|
- 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).
- Please refer to Appendices to the
release announcing the results for the fourth quarter of 2018
attached as Exhibit 1 to the Form 6-K filed with the Securities and
Exchange Commission on February 13, 2019, for a reconciliation of
these non-GAAP measures to the most directly comparable financial
measures under GAAP.
First Quarter of 2019 Compared to First Quarter
of 2018
Revenues were $337 million in the first quarter
of 2019, an increase of $14 million compared to $323 million in the
same quarter of the prior year, primarily due to higher utilization
in the Towage segment.
Net loss was $3 million for the first quarter of
2019 compared to net income of $16 million in the same quarter of
the prior year, as an increase in operating income of $63 million
(including the absence of a $28 million write-down of two shuttle
tankers recognized in the first quarter of 2018) was more than
offset by a $78 million increase in unrealized fair value losses on
derivative instruments, primarily related to a decrease in interest
rates.
Non-GAAP Adjusted EBITDA was $188 million in the
first quarter of 2019, an increase of $28 million compared to $160
million in the first quarter of 2018, primarily due to higher
earnings in all six of the Partnership's operating segments,
particularly in the Towage and Shuttle Tanker segments, with
earnings of $10 million and $9 million, respectively.
Non-GAAP Adjusted Net Income was $30 million for
the first quarter of 2019, an increase of $21 million compared to
the same quarter in the prior year, due to higher Adjusted EBITDA
as well as a decrease in depreciation and amortization of $5
million, partially offset by an increase in interest expense of $11
million.
First Quarter of 2019 Compared to Fourth Quarter
of 2018
Revenues and net income decreased by $109 and
$70 million, respectively, in the first quarter of 2019, compared
to the prior quarter, primarily due to $91 million of revenue
recorded in the fourth quarter of 2018 relating to a positive
settlement with Petrobras and a $6 million decrease in the
amortization of non-cash deferred revenue relating to the Piranema
Spirit FPSO unit. The impact of these items on net income was
partially offset by the absence of a $19 million write-down of the
HiLoad DP unit recognized in the prior quarter and a $7 million
decrease in unrealized fair value losses on derivative
instruments.
Non-GAAP Adjusted EBITDA and Adjusted Net Income
both decreased by $101 million for the first quarter of 2019,
compared to the prior quarter, primarily due to the $91 million
impact from the Petrobras settlement and the $6 million decrease in
the amortization of non-cash deferred revenue relating to the
Piranema Spirit FPSO unit, as well as an additional $8 million
decrease in Adjusted EBITDA in the FPSO segment, partially offset
by a $5 million increase in Adjusted EBITDA in the Towage
segment.
Please refer to “Operating Results” for
additional information on variances by segment and Appendices A and
B for reconciliations between GAAP net (loss) income and
non-GAAP Adjusted EBITDA and Adjusted Net Income, respectively.
CEO Commentary
“We are pleased to announce another solid
operational quarter with Adjusted EBITDA of $188 million. Excluding
the Petrobras settlement last quarter and a non-cash FPSO revenue
item, this is nearly in-line with the very strong Adjusted EBITDA
for the fourth quarter of 2018. We are particularly encouraged by
the improved results within the Towage segment, on the back of high
fleet utilization this quarter. Compared to the first quarter of
2018, our Adjusted EBITDA improved by $28 million, with increases
in all six operating segments,” commented Ingvild Sæther, President
and CEO of Teekay Offshore Group Ltd.
“We continue to work closely with Alpha
Petroleum in their attempt to complete the financing of the
development of the U.K. Cheviot field which remains a pre-condition
to effect the new charter contract for the redeployment of the
Petrojarl Varg FPSO. We expect a decision to be made in the second
quarter of 2019.”
Ms. Sæther added, "It has been a busy quarter on
the financing side, and we were pleased to announce the long-term
financing of the first four shuttle tanker newbuildings at
competitive terms and backed by a combination of ECAs and
commercial banks. We are also making good progress on the financing
of the two remaining newbuildings. In addition, in the second
quarter of 2019, we expect to close a refinancing of the ShuttleCo
revolving credit facility offering improved terms, especially in
relation to debt amortization that we expect will be reduced from
$100 million to $54 million per year."
Summary of Recent Events
Financing Initiatives
In April 2019, the Partnership secured a new
$414 million long-term debt facility to be used to finance four
LNG-fueled Suezmax DP2 shuttle tanker newbuildings. Upon
anticipated delivery in 2019 and 2020, two of the vessels will
commence operations under the Partnership’s master agreement with
Equinor, while the remaining two vessels will join the
Partnership’s contract of affreightment (CoA) shuttle tanker
portfolio in the North Sea. The new facility is funded and
guaranteed by both Canadian and Norwegian export credit agencies,
and commercial banks and bears interest at LIBOR plus a margin of
225 basis points, and has a tenor for up to 12 years from the
delivery date of each vessel and a blended repayment profile of 18
years.
In late-April 2019, the Partnership closed a
$100 million refinancing of the Piranema Spirit, Voyageur Spirit
and Petrojarl Varg FPSO units. The previous credit facility matured
at the same time with a balloon payment of $35 million. The new
revolving credit facility bears interest at LIBOR plus a margin of
300 basis points and reduces to $45 million over three years,
reflecting the relative short current contract backlog for these
FPSO units.
FSO Unit Sale
In April 2019, the Partnership completed the
sale of the Pattani Spirit FSO unit for total proceeds of
approximately $16 million. The Partnership expects to record a gain
on sale of approximately $11 million during the second quarter of
2019. There was no outstanding debt facility relating to this
unit.
Shuttle Tanker Sales
In April 2019, the Partnership delivered the
1998-built Alexita Spirit shuttle tanker and the 2001-built Nordic
Spirit shuttle tanker to their respective buyers for total proceeds
of approximately $9 million per vessel. The Partnership expects to
record a gain on the sale of approximately $1 million per vessel in
the second quarter of 2019.
FPSO Unit Contract Extension
In January 2019, the Partnership secured a
contract extension with Petrobras to extend the employment of the
Piranema Spirit FPSO unit on the Brazilian field. The contract
extension commenced in February 2019 for a period of three years
and includes customer termination rights with 10 months' advance
notice.Operating Results
The commentary below compares certain results of
our operating segments for the three months ended March 31, 2019 to
the same period of the prior year, unless otherwise noted.
FPSO Segment
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
136,560 |
|
143,651 |
|
134,238 |
|
Adjusted EBITDA |
94,420 |
|
108,543 |
|
91,297 |
|
|
|
|
|
|
|
|
Adjusted EBITDA (including Adjusted EBITDA of
equity-accounted vessels) increased by $3 million primarily due to:
$13 million from the commencement of operations of the Petrojarl I
FPSO unit in May 2018; and $12 million from the accelerated
amortization of non-cash deferred revenue relating to the Piranema
Spirit FPSO unit; partially offset by a decrease of $21 million due
to the Piranema Spirit, Voyageur Spirit and Rio das Ostras FPSO
units contract extensions, as charter rates were lower than the
original contracts.
Adjusted EBITDA decreased by $14 million
compared to the three months ended December 31, 2018 primarily due
to: the $6 million decrease in the accelerated amortization of
non-cash deferred revenue relating to the Piranema Spirit FPSO unit
and $5 million from the timing of maintenance bonuses related to
equity-accounted FPSO units.
Shuttle Tanker Segment
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
137,337 |
|
206,212 |
|
143,856 |
|
Adjusted EBITDA |
67,337 |
|
124,038 |
|
58,248 |
|
|
|
|
|
|
|
|
Adjusted EBITDA increased by $9 million
primarily due to: an increase of $4 million from the Nordic
Brasilia and Nordic Rio operating in the conventional tanker market
during the first quarter of 2019 after their redelivery in 2017 and
the vessels undergoing subsequent repairs and maintenance during
the first quarter of 2018; $3 million due to the timing of
dry-docking of vessels and $2 million of lower vessel operating
expenses.
Adjusted EBITDA decreased by $57 million
compared to the three months ended December 31, 2018, primarily due
to $55 million of revenues related to the positive settlement with
Petrobras recorded in the prior quarter.
FSO Segment
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
34,654 |
|
36,734 |
|
33,397 |
|
Adjusted EBITDA |
23,335 |
|
25,508 |
|
21,465 |
|
|
|
|
|
|
|
|
Adjusted EBITDA increased by $2 million
primarily due to a provision recorded for a settlement with the
charterer of the Dampier Spirit FSO unit in the first quarter of
2018.
UMS Segment
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
1,622 |
|
36,536 |
|
— |
|
Adjusted EBITDA |
1,316 |
|
35,011 |
|
(2,661 |
) |
|
|
|
|
|
|
|
Adjusted EBITDA increased by $4 million
primarily due to a $3 million insurance settlement received in the
first quarter of 2019.
Adjusted EBITDA decreased by $34 million
compared to the three months ended December 31, 2018, primarily due
$37 million of revenues related to the positive settlement with
Petrobras recorded in the prior quarter.
Towage Segment
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
21,986 |
|
15,252 |
|
7,611 |
|
Adjusted EBITDA |
4,120 |
|
(1,202 |
) |
(5,391 |
) |
|
|
|
|
|
|
|
Adjusted EBITDA increased by $10 million
primarily due to an increase in the utilization of the towage fleet
to 96% from 47%.
Conventional Tanker Segment
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
Revenues |
4,478 |
|
6,828 |
|
5,017 |
|
Adjusted EBITDA |
(1,203 |
) |
(880 |
) |
(2,509 |
) |
|
|
|
|
|
|
|
Adjusted EBITDA of ($1) million improved by $1
million. The time-charter-in contracts for these two conventional
tankers expired in March 2019 and April 2019, respectively, and the
vessels were returned to their owners. The Partnership no longer
has activity in the conventional tanker segment.
Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s
fleet as of April 30, 2019. In comparison to the
previously-reported fleet table in the release for the fourth
quarter of 2018, Teekay Offshore's fleet has decreased due to the
redelivery of the two in-chartered conventional tankers in March
and April 2019, respectively, and the sale of the Alexita Spirit
and the Nordic Spirit shuttle tankers and the Pattani Spirit FSO
unit in April 2019.
|
Number of Vessels |
|
Owned Vessels |
Chartered-in Vessels |
Committed Newbuildings |
Total |
FPSO Segment |
8 |
|
(i) |
— |
|
|
— |
|
|
8 |
Shuttle Tanker
Segment |
25 |
|
(ii) |
2 |
|
|
6 |
|
(iii) |
33 |
FSO Segment |
5 |
|
|
— |
|
|
— |
|
|
5 |
UMS Segment |
1 |
|
|
— |
|
|
— |
|
|
1 |
Towage Segment |
10 |
|
|
— |
|
|
— |
|
|
10 |
Conventional
Segment |
— |
|
|
— |
|
|
— |
|
|
— |
Total |
49 |
|
|
2 |
|
|
6 |
|
|
57 |
- Includes two FPSO units, the Cidade
de Itajai and Pioneiro de Libra, in which Teekay Offshore’s
ownership interest is 50 percent.
- Includes four shuttle tankers in
which Teekay Offshore’s ownership interest is 50 percent and one
HiLoad DP unit.
- Includes six DP2 shuttle tanker
newbuildings scheduled for delivery in late-2019 through
early-2021, two of which will operate under Teekay Offshore's
master agreement with Equinor and four of which will join Teekay
Offshore's CoA portfolio in the North Sea.
Liquidity Update
As of March 31, 2019, the Partnership had
total liquidity of $183 million, a decrease of $42 million compared
to December 31, 2018. The decrease in liquidity is primarily
due to a delay in the expected refinancing of the Partnership's
FPSO revolving credit facility. This FPSO revolving credit facility
refinancing closed in late-April 2019 and added approximately $65
million of liquidity to the Partnership.
Conference Call
The Partnership plans to host a conference call
on Tuesday, April 30, 2019 at 12:00 p.m. (ET) to discuss the
results for the first quarter of 2019. All unitholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing 1-800-667-5617 or +1
(647) 490-5367, if outside North America, and quoting conference ID
code 6062087
- By accessing the webcast, which
will be available on Teekay Offshore's website at www.teekay.com
(the archive will remain on the website for a period of one
year).
An accompanying First Quarter 2019 Earnings
Presentation will also be available at www.teekay.com in advance of
the conference call start time.
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 others:
the timing and certainty of the effectiveness of the agreement with
Alpha to develop the Cheviot field, including satisfaction by Alpha
of the financing and other conditions precedent to its
effectiveness, which conditions remain out of our control; the
anticipated financing for two newbuilds; the closing and timing of
the expected refinancing of the ShuttleCo revolving credit
facility, and the expected related reduction in debt amortization;
the expected recording of gains on sales of the Pattani Spirit FSO
unit and Alexita Spirit shuttle tanker; the timing of shuttle
tanker newbuilding deliveries and the commencement of related
contracts; and the effect of recently completed financing
transactions on the Partnership’s future debt maturity profile. 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 exploration, production
and storage of offshore oil and gas, either generally or in
particular regions that would impact expected future growth,
particularly in or related to North Sea, Brazil and East Coast of
Canada offshore fields; shipyard delivery delays and cost overruns;
delays in the commencement of charter contracts; the Partnership’s
ability to collect the amounts due under the settlement agreement
with Petrobras; the ability of Alpha to satisfy all of the
conditions precedent relating to the contract with Alpha, including
obtaining required funding for the project and the timing of any
such satisfaction; the outcome of discussions and negotiations
relating to financing transactions and the terms of the related
credit facilities; and other factors discussed in Teekay Offshore’s
filings from time to time with the SEC, including its Report on
Form 20-F for the fiscal year ended December 31, 2018. The
Partnership 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
Partnership’s expectations with respect thereto or any change in
events, conditions or circumstances on which any such statement is
based.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is a leading
international midstream services provider to the offshore oil
production industry, primarily focused on the ownership and
operation of critical infrastructure assets in offshore oil regions
of the North Sea, Brazil and the East Coast of Canada. Teekay
Offshore has consolidated assets of approximately $5.2 billion,
comprised of 57 offshore assets, including floating production,
storage and offloading (FPSO) units, shuttle tankers (including six
newbuildings), floating storage and offtake (FSO) units,
long-distance towing and offshore installation vessels and a unit
for maintenance and safety (UMS). The majority of Teekay Offshore’s
fleet is employed on medium-term, stable contracts. Brookfield
Business Partners L.P. (NYSE:BBU)(TSX:BBU.UN), together with its
institutional partners (collectively Brookfield), and Teekay
Corporation (NYSE:TK) own 51 percent and 49 percent, respectively,
of Teekay Offshore’s general partner.
Teekay Offshore's common units and preferred
units trade on the New York Stock Exchange under the symbols "TOO",
"TOO PR A", "TOO PR B" and "TOO PR E", respectively.
For Investor Relations enquiries contact:
Ryan HamiltonTel: +1 (604) 609-2963Website:
www.teekay.com
Teekay Offshore Partners L.P.Summary Consolidated Statements of
(Loss) Income
|
Three Months Ended |
|
March 31, |
December 31, |
March 31, |
|
2019 |
2018 |
2018 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
Revenues |
336,637 |
|
445,213 |
|
323,199 |
|
|
|
|
|
Voyage expenses |
(34,066 |
) |
(39,402 |
) |
(35,006 |
) |
Vessel operating
expenses |
(101,219 |
) |
(108,592 |
) |
(115,382 |
) |
Time-charter hire
expenses |
(12,453 |
) |
(13,281 |
) |
(12,727 |
) |
Depreciation and
amortization |
(89,466 |
) |
(91,023 |
) |
(94,304 |
) |
General and
administrative |
(16,992 |
) |
(14,335 |
) |
(17,786 |
) |
(Write-down) and gain
on sale of vessels |
— |
|
(16,414 |
) |
(28,496 |
) |
Restructuring recovery |
— |
|
379 |
|
— |
|
Operating
income |
82,441 |
|
162,545 |
|
19,498 |
|
|
|
|
|
Interest expense |
(52,414 |
) |
(53,424 |
) |
(41,573 |
) |
Interest income |
1,070 |
|
1,215 |
|
658 |
|
Realized and unrealized
(loss) gain on derivative instruments |
(31,390 |
) |
(40,465 |
) |
34,450 |
|
Equity income |
886 |
|
5,237 |
|
13,998 |
|
Foreign currency
exchange loss |
(568 |
) |
(3,344 |
) |
(1,943 |
) |
Other
expense - net |
(354 |
) |
(40 |
) |
(3,270 |
) |
(Loss) income
before income tax expense |
(329 |
) |
71,724 |
|
21,818 |
|
Income tax expense |
(2,269 |
) |
(3,882 |
) |
(5,758 |
) |
Net (loss) income |
(2,598 |
) |
67,842 |
|
16,060 |
|
|
|
|
|
Non-controlling
interests in net (loss) income |
285 |
|
1,476 |
|
(7,859 |
) |
Preferred unitholders'
interest in net (loss) income |
8,038 |
|
8,038 |
|
7,370 |
|
General partner’s
interest in net (loss) income |
(83 |
) |
443 |
|
126 |
|
Limited partners’
interest in net (loss) income |
(10,838 |
) |
57,885 |
|
16,423 |
|
Limited partner's
interest in net (loss) income for basic net (loss) income per
common unit |
(10,838 |
) |
57,885 |
|
16,423 |
|
Limited partner's
interest in net (loss) income per common unit |
|
|
|
-
basic |
(0.03 |
) |
0.14 |
|
0.04 |
|
-
diluted |
(0.03 |
) |
0.12 |
|
0.03 |
|
Weighted-average number
of common units: |
|
|
|
-
basic |
410,342,692 |
|
410,314,977 |
|
410,101,480 |
|
-
diluted |
410,342,692 |
|
475,565,613 |
|
475,447,576 |
|
Total
number of common units outstanding at end of period |
410,400,988 |
|
410,314,977 |
|
410,260,795 |
|
|
|
|
|
|
|
|
Teekay Offshore Partners L.P.Consolidated Balance Sheets
|
As at |
As at |
|
March 31, 2019 |
December 31, 2018 |
(in
thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
Current |
|
|
Cash and cash
equivalents |
182,791 |
|
225,040 |
|
Restricted
cash |
6,349 |
|
8,540 |
|
Accounts
receivable |
122,083 |
|
141,903 |
|
Vessels
held for sale |
20,027 |
|
12,528 |
|
Prepaid
expenses |
30,062 |
|
32,199 |
|
Due from
related parties |
39,118 |
|
58,885 |
|
Other current assets |
9,506 |
|
11,879 |
|
Total current assets |
409,936 |
|
490,974 |
|
|
|
|
|
|
|
Vessels and
equipment |
|
|
At cost, less accumulated depreciation |
4,103,831 |
|
4,196,909 |
|
Advances on
newbuilding contracts |
140,553 |
|
73,713 |
|
Investment
in equity accounted joint ventures |
213,047 |
|
212,202 |
|
Deferred
tax asset |
8,746 |
|
9,168 |
|
Due from
related parties |
954 |
|
949 |
|
Other
assets |
214,943 |
|
198,992 |
|
Goodwill |
129,145 |
|
129,145 |
|
Total assets |
5,221,155 |
|
5,312,052 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
Current |
|
|
Accounts
payable |
10,990 |
|
16,423 |
|
Accrued
liabilities |
108,577 |
|
129,896 |
|
Deferred
revenues |
59,325 |
|
55,750 |
|
Due to
related parties |
167,292 |
|
183,795 |
|
Current
portion of derivative instruments |
18,245 |
|
23,290 |
|
Current
portion of long-term debt |
480,484 |
|
554,336 |
|
Other current liabilities |
10,002 |
|
15,062 |
|
Total current liabilities |
854,915 |
|
978,552 |
|
|
|
|
Long-term
debt |
2,561,154 |
|
2,543,406 |
|
Derivative
instruments |
120,103 |
|
94,354 |
|
Other long-term liabilities |
238,049 |
|
236,616 |
|
Total liabilities |
3,774,221 |
|
3,852,928 |
|
|
|
|
|
|
|
Equity |
|
|
Limited
partners - common units |
873,126 |
|
883,090 |
|
Limited
partners - preferred units |
384,274 |
|
384,274 |
|
General
Partner |
14,969 |
|
15,055 |
|
Warrants |
132,225 |
|
132,225 |
|
Accumulated
other comprehensive income |
7,187 |
|
7,361 |
|
Non-controlling interests |
35,153 |
|
37,119 |
|
Total equity |
1,446,934 |
|
1,459,124 |
|
Total liabilities and total
equity |
5,221,155 |
|
5,312,052 |
|
|
|
|
|
|
Teekay Offshore Partners L.P.Consolidated Statements of Cash
Flows
|
Three Months Ended |
|
March 31, 2019 |
March 31, 2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
Cash, cash equivalents
and restricted cash provided by (used for) |
|
|
OPERATING
ACTIVITIES |
|
|
Net income |
(2,598 |
) |
16,060 |
|
Adjustments to
reconcile net (loss) income to net operating cash flow: |
|
|
Unrealized loss (gain) on derivative instruments |
27,243 |
|
(57,313 |
) |
Equity
income |
(886 |
) |
(13,998 |
) |
Depreciation and amortization |
89,466 |
|
94,304 |
|
Write-down of vessels |
— |
|
28,496 |
|
Deferred
income tax expense |
570 |
|
4,222 |
|
Amortization of in-process revenue contracts |
(15,062 |
) |
(3,142 |
) |
Direct
financing lease payments received |
303 |
|
— |
|
Expenditures for dry docking |
(3,184 |
) |
(4,650 |
) |
Other |
(3,672 |
) |
4,237 |
|
Change in
non-cash working capital items related to operating activities |
6,382 |
|
(38,989 |
) |
Net operating cash flow |
98,562 |
|
29,227 |
|
FINANCING
ACTIVITIES |
|
|
Proceeds from long-term
debt |
40,356 |
|
156,520 |
|
Scheduled repayments of
long-term debt and settlement of related swaps |
(104,441 |
) |
(134,846 |
) |
Prepayments of
long-term debt |
— |
|
(40,000 |
) |
Debt issuance
costs |
— |
|
(6,264 |
) |
Proceeds from issuance
of preferred units |
— |
|
120,000 |
|
Expenses relating to
equity offerings |
— |
|
(3,997 |
) |
Cash distributions paid
by the Partnership |
(8,038 |
) |
(9,506 |
) |
Cash distributions paid
by subsidiaries to non-controlling interests |
(2,251 |
) |
— |
|
Other |
(614 |
) |
(457 |
) |
Net financing cash flow |
(74,988 |
) |
81,450 |
|
INVESTING
ACTIVITIES |
|
|
Net payments for
vessels and equipment, including advances on newbuilding contracts
and conversion costs |
(68,014 |
) |
(145,801 |
) |
Direct financing lease
payments received |
— |
|
1,282 |
|
Acquisition of companies from Teekay Corporation (net of cash
acquired of $26.6 million) |
— |
|
25,254 |
|
Net investing cash flow |
(68,014 |
) |
(119,265 |
) |
Decrease in cash, cash
equivalents and restricted cash |
(44,440 |
) |
(8,588 |
) |
Cash,
cash equivalents and restricted cash, beginning of the period |
233,580 |
|
250,294 |
|
Cash, cash equivalents and restricted cash, end of the
period |
189,140 |
|
241,706 |
|
|
|
|
|
|
Definitions and Non-GAAP Financial Measures
This release includes various financial measures
that are non-GAAP financial measures as defined under the rules of
the U.S. Securities and Exchange Commission (SEC). These non-GAAP
financial measures, including Consolidated Adjusted EBITDA,
Adjusted EBITDA and Adjusted Net Income, 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, and may
not be comparable to similar measures presented by other companies.
These non-GAAP measures are used by management, and the Partnership
believes that these supplementary metrics assist investors and
other users of its financial reports in comparing financial and
operating performance of the Partnership across reporting periods
and with other companies.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA represents net
(loss) 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 vessel write-downs, gains or losses on the sale
of vessels, unrealized gains or losses on derivative instruments,
foreign exchange gains or losses, losses on debt repurchases, and
certain other income or expenses. Consolidated Adjusted EBITDA also
excludes realized gains or losses on interest rate swaps as
management, in assessing the Partnership'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 also excludes equity income as the Partnership does
not control its equity-accounted investments, and as a result, the
Partnership does not have the unilateral ability to determine
whether the cash generated by its equity-accounted investments is
retained within the entity in which the Partnership holds the
equity-accounted investment or distributed to the Partnership and
other owners. In addition, the Partnership does not control the
timing of any such distributions to the Partnership and other
owners.
Adjusted EBITDA represents Consolidated Adjusted
EBITDA further adjusted to include the Partnership's proportionate
share of consolidated adjusted EBITDA from its equity-accounted
joint ventures and to exclude the non-controlling interests'
proportionate share of the consolidated adjusted EBITDA from the
Partnership's consolidated joint ventures. Readers are cautioned
when using Adjusted EBITDA as a liquidity measure as the amount
contributed from Adjusted EBITDA from the equity-accounted
investments may not be available or distributed to the Partnership
in the periods such Adjusted EBITDA is generated by the
equity-accounted investments. Please refer to Appendices A and C of
this release for reconciliations of Adjusted EBITDA to net (loss)
income and equity income, respectively, the most directly
comparable GAAP measures reflected in the Partnership’s
consolidated financial statements.
Adjusted Net Income represents net (loss) income
adjusted to exclude the impact of certain items whose timing or
amount cannot be reasonably estimated in advance or that are not
considered representative of core operating performance consistent
with the calculation of Adjusted EBITDA. Adjusted Net Income
includes realized gains or losses on interest rate swaps as an
element of interest expense and excludes income tax expenses or
recoveries from changes in valuation allowance or uncertain tax
provisions. Please refer to Appendix B of this release for a
reconciliation of this non-GAAP financial measure to net (loss)
income, the most directly comparable GAAP measure reflected in the
Partnership’s consolidated financial statements.
Teekay Offshore Partners L.P.Appendix A - Reconciliation of
Non-GAAP Financial MeasuresAdjusted EBITDA
|
Three Months Ended |
|
March 31, |
|
2019 |
2018 |
(in
thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
|
|
|
Net (loss)
income |
(2,598 |
) |
16,060 |
|
Depreciation and amortization |
89,466 |
|
94,304 |
|
Interest expense, net of interest income |
51,344 |
|
40,915 |
|
Income tax expense |
2,269 |
|
5,758 |
|
EBITDA |
140,481 |
|
157,037 |
|
Add (subtract) specific income
statement items affecting EBITDA: |
|
|
Write-down and (gain)
on sale of vessels |
— |
|
28,496 |
|
Realized and unrealized loss (gain) on derivative
instruments |
31,390 |
|
(34,450 |
) |
Equity income |
(886 |
) |
(13,998 |
) |
Foreign currency exchange loss |
568 |
|
1,943 |
|
Other expense - net |
354 |
|
3,270 |
|
Realized (loss) gain on foreign currency forward
contracts |
(1,175 |
) |
620 |
|
Total adjustments |
30,251 |
|
(14,119 |
) |
Consolidated Adjusted EBITDA |
170,732 |
|
142,918 |
|
Add: Adjusted EBITDA from equity-accounted vessels (See
Appendix C) |
20,796 |
|
21,929 |
|
Less: Adjusted EBITDA attributable to non-controlling
interests (1) |
(3,378 |
) |
(4,400 |
) |
Adjusted EBITDA |
188,150 |
|
160,447 |
|
|
|
|
|
|
- Adjusted EBITDA attributable to non-controlling interests is
summarized in the table below.
|
Three Months Ended |
|
March 31, |
|
2019 |
2018 |
(in
thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
Net income
(loss) attributable to non-controlling interests |
285 |
|
(7,859 |
) |
Depreciation and amortization |
2,684 |
|
4,564 |
|
Interest expense, net of interest income |
412 |
|
577 |
|
EBITDA
attributable to non-controlling interests |
3,381 |
|
(2,718 |
) |
Add (subtract) specific income
statement items affecting EBITDA: |
|
|
(Gain) on sale and write-down of vessels |
— |
|
7,096 |
|
Foreign exchange (gain) loss |
(3 |
) |
22 |
|
Total adjustments |
(3 |
) |
7,118 |
|
Adjusted EBITDA attributable to non-controlling
interests |
3,378 |
|
4,400 |
|
|
|
|
|
|
Teekay Offshore Partners L.P.Appendix B - Reconciliation of
Non-GAAP Financial MeasuresAdjusted Net Income
|
Three Months Ended |
|
March 31, 2019 |
March 31, 2018 |
(in
thousands of U.S. Dollars, except per unit data) |
(unaudited) |
(unaudited) |
Net (loss) income |
(2,598 |
) |
16,060 |
|
Adjustments: |
|
|
Net income (loss) attributable to non-controlling
interests |
285 |
|
(7,859 |
) |
Net
(loss) income attributable to the partners and preferred
unitholders |
(2,883 |
) |
23,919 |
|
Add
(subtract) specific items affecting net income (loss): |
|
|
Write-down and (gain) on sale of vessels |
— |
|
28,496 |
|
Unrealized loss (gain) on derivative instruments |
27,243 |
|
(50,975 |
) |
Realized loss on interest rate swap amendments |
— |
|
10,000 |
|
Foreign currency exchange loss (1) |
132 |
|
650 |
|
Other expense - net |
354 |
|
3,270 |
|
Deferred income tax expense relating to Norwegian tax
structure |
434 |
|
4,674 |
|
Other adjustments (2) |
— |
|
812 |
|
Adjustments related to equity-accounted vessels (3) |
4,233 |
|
(5,432 |
) |
Adjustments related to non-controlling interests (4) |
(3 |
) |
(7,118 |
) |
Total adjustments |
32,393 |
|
(15,623 |
) |
Adjusted net income attributable to the
partners and preferred unitholders |
29,510 |
|
8,296 |
|
Preferred
unitholders' interest in adjusted net income |
8,038 |
|
7,370 |
|
General
Partner's interest in adjusted net income |
163 |
|
7 |
|
Limited
partners' interest in adjusted net income |
21,309 |
|
919 |
|
Limited
partners' interest in adjusted net income per common unit,
basic |
0.05 |
|
0.00 |
|
Weighted-average number of common units outstanding,
basic |
410,342,692 |
|
410,101,480 |
|
|
|
|
|
|
- Foreign currency exchange loss
(gain) primarily relates to the Partnership's revaluation of all
foreign currency-denominated assets and liabilities based on the
prevailing exchange rate at the end of each reporting period and
unrealized gain or loss related to the Partnership's cross-currency
swaps related to the Partnership's Norwegian Krone (NOK) bonds, and
excludes the realized gain or loss relating to the Partnership's
cross-currency swaps and NOK bonds.
- Other adjustments primarily
reflects voyage expenses, vessel operating expense, depreciation
and amortization expense, general and administrative expenses
relating to the Petrojarl I FPSO unit while undergoing
upgrades.
- Reflects the Partnership's
proportionate share of specific items affecting the net income of
the Cidade de Itajai FPSO unit and Pioneiro de Libra FPSO unit
equity-accounted joint ventures, including the unrealized gain or
loss on derivative instruments and the foreign exchange gain or
loss.
- Items affecting net (loss) income
include amounts attributable to the Partnership’s consolidated
non-wholly-owned subsidiaries. Each item affecting net (loss)
income is analyzed to determine whether any of the amounts
originated from a consolidated non-wholly-owned subsidiary. Each
amount that originates from a consolidated non-wholly-owned
subsidiary is multiplied by the non-controlling interests’
percentage share in this subsidiary to arrive at the
non-controlling interests’ share of the amount. The adjustments
relate to the gain on sale or write-down of vessels and foreign
currency exchange gain or loss within the Partnership's
consolidated non-wholly-owned subsidiaries.
Teekay Offshore Partners L.P.Appendix C - Reconciliation of
Non-GAAP Financial MeasuresAdjusted EBITDA From Equity-Accounted
Vessels
|
Three Months Ended |
Three Months Ended |
|
March 31, 2019 |
March 31, 2018 |
(in thousands
of U.S. Dollars) |
(unaudited) |
(unaudited) |
|
At 100% |
Partnership's 50% |
At 100% |
Partnership's 50% |
Revenues |
59,725 |
|
29,863 |
|
59,657 |
|
29,829 |
|
Vessel and other operating expenses |
(18,133 |
) |
(9,067 |
) |
(15,800 |
) |
(7,900 |
) |
Depreciation and amortization |
(17,170 |
) |
(8,584 |
) |
(14,726 |
) |
(7,363 |
) |
Operating income of equity-accounted vessels |
24,422 |
|
12,212 |
|
29,131 |
|
14,566 |
|
Net interest expense (1) |
(12,080 |
) |
(6,040 |
) |
(1,519 |
) |
(760 |
) |
Realized and unrealized (loss) gain on derivative
instruments (2) |
(10,265 |
) |
(5,133 |
) |
1,368 |
|
684 |
|
Foreign currency exchange
loss |
(2 |
) |
(1 |
) |
(656 |
) |
(328 |
) |
Total other items |
(22,347 |
) |
(11,174 |
) |
(807 |
) |
(404 |
) |
Net income / equity income of equity-accounted
vessels before income tax expense |
2,075 |
|
1,038 |
|
28,324 |
|
14,162 |
|
Income tax expense |
(304 |
) |
(152 |
) |
(327 |
) |
(164 |
) |
Net income / equity income of
equity-accounted vessels |
1,771 |
|
886 |
|
27,997 |
|
13,998 |
|
Depreciation and amortization |
17,170 |
|
8,584 |
|
14,726 |
|
7,363 |
|
Net
interest expense (1) |
12,080 |
|
6,040 |
|
1,519 |
|
760 |
|
Income tax expense |
304 |
|
152 |
|
327 |
|
164 |
|
EBITDA |
31,325 |
|
15,662 |
|
44,569 |
|
22,285 |
|
Add (subtract) specific items affecting
EBITDA: |
|
|
|
|
Realized
and unrealized loss (gain) on derivative instruments (2) |
10,265 |
|
5,133 |
|
(1,368 |
) |
(684 |
) |
Foreign currency exchange loss |
2 |
|
1 |
|
656 |
|
328 |
|
Adjusted EBITDA
from equity-accounted vessels |
41,592 |
|
20,796 |
|
43,857 |
|
21,929 |
|
|
|
|
|
|
|
|
|
|
- Net interest expense for the three
months ended March 31, 2018 includes an unrealized gain of $9.7
million ($4.9 million at the Partnership's 50% share) and a
realized loss of $1.1 million ($0.6 million at the Partnership's
50% share) related to interest rate swaps designated and qualifying
as cash flow hedges for the Pioneiro de Libra FPSO unit.
- Realized and unrealized (loss) gain
on derivative instruments includes an unrealized loss of $8.5
million ($4.2 million at the Partnership’s 50% share) for the three
months ended March 31, 2019 related to interest rate swaps for the
Cidade de Itajai and Pioneiro de Libra FPSO units and an unrealized
gain of $1.8 million ($0.9 million at the Partnership’s 50% share)
for the three months ended March 31, 2018 related to interest rate
swaps for the Cidade de Itajai FPSO unit.
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