Teekay Tankers Ltd. (Teekay Tankers or the Company) (NYSE: TNK)
today reported the Company's results for the quarter ended
March 31, 2019:
Consolidated Financial Summary
|
Three Months Ended |
(in thousands of U.S. dollars, except per share
data) |
March 31, 2019 |
|
|
December 31, 2018 |
|
|
March 31, 2018 |
|
|
GAAP FINANCIAL COMPARISON |
|
|
|
|
|
|
Total revenues |
232,501 |
|
|
239,724 |
|
|
168,465 |
|
|
Income (loss) from operations |
32,097 |
|
|
31,206 |
|
|
(8,421 |
) |
|
Net income (loss) |
12,447 |
|
|
11,502 |
|
|
(19,153 |
) |
|
Earnings (loss) per share |
0.05 |
|
|
0.04 |
|
|
(0.07 |
) |
|
NON-GAAP FINANCIAL COMPARISON |
|
|
|
|
|
Total Adjusted
EBITDA (1) |
63,428 |
|
|
63,030 |
|
|
22,342 |
|
|
Adjusted net
income (loss) (1) |
14,647 |
|
|
14,002 |
|
|
(21,976 |
) |
|
Adjusted earnings
(loss) per share (1) |
0.05 |
|
|
0.05 |
|
|
(0.08 |
) |
|
Free cash flow
(1) |
44,554 |
|
|
44,580 |
|
|
7,862 |
|
|
In the first quarter of 2019, the Company made
certain changes to its non-GAAP financial measures to more closely
align with internal management reporting and annual reporting filed
with the U.S. Securities and Exchange Commission (SEC) under Form
20-F. Total Cash Flow from Vessel Operations (CFVO) and CFVO of
Equity-Accounted for Investment are replaced with Total Adjusted
EBITDA and Adjusted EBITDA from Equity-Accounted Vessel,
respectively. Please refer to "Definitions and Non-GAAP Financial
Measures" in this release for definitions of these non-GAAP
financial measures and information about the changes made.
(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).
First Quarter of 2019 Compared to Fourth Quarter of 2018
GAAP net income and non-GAAP adjusted net income
for the first quarter of 2019 improved compared to the prior
quarter, primarily as a result of higher average spot tanker rates
and lower general and administrative expenses. This was partially
offset by higher vessel operating expenses due to the timing of
purchases.
First Quarter of 2019 Compared to First Quarter of 2018
GAAP net income and non-GAAP adjusted net income
for the first quarter of 2019 significantly improved compared to
the GAAP net loss and non-GAAP adjusted net loss in the same period
of the prior year, primarily due to substantially higher average
spot tanker rates, partially offset by higher interest expense
associated with the sale-leaseback transactions relating to ten
tankers that were completed in September and November 2018.
CEO Commentary
“Average crude tanker spot rates moderately
increased during the first quarter of 2019, which resulted
in another profitable quarter and slightly
improved results over the prior quarter,” commented Kevin
Mackay, Teekay Tankers’ President and Chief Executive Officer.
“However, spot tanker rates declined towards the latter half of the
first quarter, and the market faces a number of seasonal and other
short-term headwinds, which are expected to reduce our earnings
during the second quarter of 2019. We believe these factors are
temporary in nature and expect a significant firming in the
tanker market from the second half of 2019 due to positive
underlying oil demand, an expected increase in U.S. crude oil
exports, higher OPEC production, lower tanker fleet growth, and the
positive impacts of IMO 2020.”
Mr. Mackay added, "With a stronger
liquidity position, market-leading position in our vessel
sectors and significant operating leverage, we believe we
are well-positioned to benefit from a tanker market
recovery in the second half of 2019 and into 2020."
Summary of Recent Developments
In May 2019, Teekay Tankers completed the
previously announced sale-leaseback transaction relating to two
Suezmax tankers. The transaction increases the Company’s liquidity
position by approximately $25 million after the repayment of
outstanding debt related to these vessels.
In addition, in May 2019, Teekay Tankers
increased the amount available under the loan to finance working
capital for the Company's revenue sharing agreement (RSA) pool
management operations, which provides $15 million of additional
liquidity.
In April 2019, Teekay Tankers entered into a
time charter-in contract for an Aframax vessel for a firm period of
2 years, plus an extension option, which is expected to commence by
July 2019 at a daily rate of $21,000.
In January 2019, Teekay Tankers entered into a
time charter-out contract for one Suezmax tanker for a firm period
of six months at a daily rate of $27,500.
Teekay Tankers' current dividend policy is to
pay out 30 to 50 percent of its quarterly adjusted net income,
subject to reserves the Board of Directors may determine are
necessary for the prudent operation of the Company. Given losses
generated during the first three quarters of 2018, and the
additional debt incurred from recent financing transactions to
improve Teekay Tankers' liquidity position as well as the current
tanker market weakness, the Company has elected to reserve the
amount that would have otherwise been paid out as a dividend for
the first quarter of 2019 to reduce outstanding debt.
Tanker Market
Average crude tanker spot rates moderately
increased during the first quarter of 2019, as some of the positive
drivers from late 2018 continued into early 2019. These included
high seasonal oil demand, the impact of winter weather delays, and
relatively high global oil production prior to the full
implementation of OPEC supply cuts. However, spot tanker rates
weakened as the quarter went on, and the market faces a number of
near-term headwinds during the second quarter of 2019.
Global crude oil production has fallen by
approximately 2.5 million barrels per day (mb/d) since the start of
the year, primarily due to a reduction in OPEC supply. Lower OPEC
production is a result of both high adherence to the 1.2 mb/d of
cuts announced at the start of the year, and additional unplanned
outages in Iran and Venezuela due to the impact of U.S. sanctions.
Tanker demand has also been dampened by heavier than normal
refinery maintenance during the second quarter of 2019. This comes
as refiners look to complete maintenance and upgrade programs early
this year in anticipation of much stronger demand in the second
half of the year, when they will need to operate at high throughput
levels in order to produce sufficient distillates to meet the new
IMO 2020 regulations. Finally, the start of 2019 has seen
relatively high tanker fleet growth, with total growth of 12.6
million deadweight tonnes (mdwt), or 2.1 percent, since the start
of the year. The high fleet growth at the start of 2019 has been
driven by a front-heavy newbuilding delivery schedule and just 0.8
mdwt scrapped in 2019 year-to-date.
Underlying global oil demand remains firm with
forecast growth of 1.3 mb/d in 2019 (average of IEA, EIA and OPEC
forecasts). More importantly, refinery runs are expected to
increase during the second half of the year as refiners prepare for
the upcoming IMO 2020 regulations and the resultant increase in
distillate demand that these regulations are expected to bring.
Demand is also expected to be boosted by a significant increase in
global refining capacity during the second half of the year, with
the IEA forecasting a 4.6 mb/d increase in global refinery
throughput between the seasonal low point in March 2019 and the
anticipated seasonal peak in August 2019. This should generate
significant demand for both crude and product tankers from the
third quarter of the year.
Tanker demand should be further boosted by an
increase in U.S. crude oil exports later in the year as new
pipeline capacity comes online linking the Permian Basin to the
U.S. Gulf Coast. It is expected that U.S. crude oil exports may
reach 4 mb/d by the end of the year, increasing mid-size tanker
demand for direct exports to Europe as well as Aframax lightering
demand for exports to Asia on VLCCs. In addition, the Company
expects that OPEC may start returning barrels to the market in the
second half of the year in order to keep the market well supplied
as demand rises. However, the political situations in Iran,
Venezuela and Libya remain as wild cards.
Tanker fleet growth is expected to slow down
considerably from the second half of 2019 as the orderbook rolls
off. The tanker orderbook currently stands at 59.4 mdwt compared to
a total fleet of 600.7 mdwt, or 9.9 percent of the existing fleet.
This is the lowest orderbook-to-fleet ratio since 1997 and paves
the way for relatively low levels of fleet growth over the next two
years. Fleet growth could be further dampened in the coming months
due to an expected increase in off-hire time as vessels are taken
out of service to be fitted with scrubbers in advance of the IMO
2020 regulations.
In summary, the tanker market faces headwinds
which may impact earnings in the near-term. However, the Company
believes that these headwinds are temporary in nature and will
reverse in the second half of the year, leading to a firmer tanker
market from the second half of 2019 and into 2020.
Operating Results
The following table highlights the operating
performance of the Company’s time-charter vessels and spot vessels
trading in RSAs, voyage charters and full service lightering, in
each case measured in net revenues(v) per revenue day, or
time-charter equivalent (TCE) rates, before off-hire bunker
expenses:
|
Three Months Ended |
|
March 31, 2019(i) |
December 31, 2018(i) |
March 31, 2018(i) |
Time Charter-Out Fleet |
|
|
|
|
|
|
Suezmax revenue days |
|
90 |
|
|
|
180 |
|
|
|
295 |
|
|
Suezmax
TCE per revenue day |
$17,281 |
|
|
$20,868 |
|
|
$20,236 |
|
|
Aframax
revenue days |
|
75 |
|
|
|
172 |
|
|
|
597 |
|
|
Aframax
TCE per revenue day |
$24,276 |
|
|
$23,230 |
|
|
$21,024 |
|
|
LR2
revenue days |
|
— |
|
|
|
12 |
|
|
|
179 |
|
|
LR2 TCE
per revenue day |
|
— |
|
|
$16,583 |
|
|
$17,162 |
|
|
|
|
|
|
|
|
|
Spot Fleet |
|
|
|
|
|
|
Suezmax
revenue days |
|
2,415 |
|
|
|
2,427 |
|
|
|
2,375 |
|
|
Suezmax
spot TCE per revenue day (ii) |
$23,568 |
|
|
$23,554 |
|
|
$12,543 |
|
|
Aframax
revenue days |
|
1,752 |
|
|
|
1,612 |
|
|
|
1,156 |
|
|
Aframax
spot TCE per revenue day (iii) |
$24,797 |
|
|
$22,023 |
|
|
$15,083 |
|
|
LR2
revenue days |
|
815 |
|
|
|
724 |
|
|
|
531 |
|
|
LR2 spot
TCE per revenue day (iv) |
$20,694 |
|
|
$19,806 |
|
|
$11,973 |
|
|
|
|
|
|
|
|
|
Total Fleet |
|
|
|
|
|
|
Suezmax
revenue days |
|
2,505 |
|
|
|
2,607 |
|
|
|
2,670 |
|
|
Suezmax
TCE per revenue day |
$23,342 |
|
|
$23,369 |
|
|
$13,394 |
|
|
Aframax
revenue days |
|
1,827 |
|
|
|
1,784 |
|
|
|
1,753 |
|
|
Aframax
TCE per revenue day |
$24,775 |
|
|
$22,139 |
|
|
$17,106 |
|
|
LR2
revenue days |
|
815 |
|
|
|
736 |
|
|
|
710 |
|
|
LR2 TCE
per revenue day |
$20,694 |
|
|
$19,754 |
|
|
$13,282 |
|
|
(i) Revenue days are the total number of
calendar days the Company's vessels were in its possession during a
period, less the total number of off-hire days during the period
associated with major repairs, dry dockings or special or
intermediate surveys. Consequently, revenue days represents the
total number of days available for the vessel to earn revenue. Idle
days, which are days when the vessel is available to earn revenue
yet is not employed, are included in revenue days. (ii) Includes
vessels trading in the Teekay Suezmax RSA, Teekay Suezmax Classic
RSA and non-pool voyage charters. (iii) Includes vessels
trading in the Teekay Aframax RSA, Teekay Aframax Classic RSA,
non-pool voyage charters and full service lightering voyages.
(iv) Includes vessels trading in the Teekay Taurus RSA and
non-pool voyage charters. (v) Net revenues is a non-GAAP
financial measure. Please refer to "Definitions and Non-GAAP
Financial Measures" for a definition of this term.
Second Quarter of 2019 Spot Tanker Rates Update
Below is Teekay Tankers’ spot tanker fleet
update for the second quarter of 2019 to-date:
- The portion of the Suezmax fleet
trading on the spot market has secured TCE per revenue day of
approximately $17,300 per day on average with 61 percent of the
available days fixed(1);
- The portion of the Aframax fleet
trading on the spot market has secured TCE per revenue day of
approximately $21,200 per day on average with 55 percent of the
available days fixed(2); and
- The portion of the Long Range 2
(LR2) product tanker fleet trading on the spot market has secured
TCE per revenue day of approximately $15,000 per day on average
with 54 percent of the available days fixed(3).
(1) Combined average TCE rate includes Teekay
Suezmax RSA, Teekay Suezmax Classic RSA and non-pool voyage
charters.(2) Combined average TCE rate includes Teekay Aframax RSA,
Teekay Aframax Classic RSA, non-pool voyage charters and full
service lightering voyages.(3) Combined average TCE rate includes
Teekay Taurus RSA and non-pool voyage charters.
Teekay Tankers’ Fleet
The following table summarizes the Company’s
fleet as of May 1, 2019:
|
Owned and Leased Vessels |
Chartered-in Vessels |
Total |
Fixed-rate: |
|
|
|
Suezmax
Tankers |
1 |
— |
1 |
Total Fixed-Rate Fleet |
1 |
— |
1 |
Spot-rate: |
|
|
|
Suezmax
Tankers |
29 |
— |
29 |
Aframax
Tankers(i) |
17 |
3 |
20 |
LR2
Product Tankers(ii) |
9 |
2 |
11 |
VLCC Tanker(iii) |
1 |
— |
1 |
Total Spot Fleet |
56 |
5 |
61 |
Total Conventional Fleet |
57 |
5 |
62 |
STS Support Vessels |
3 |
3 |
6 |
Total Teekay Tankers' Fleet |
60 |
8 |
68 |
(i) Includes three Aframax tankers with
charter-in contracts that are scheduled to expire in November 2019,
December 2019 and March 2021, respectively. (ii) Includes two
LR2 product tankers with charter-in contracts that are scheduled to
expire in January 2021, each with an option to extend for one
additional year. (iii) The Company’s ownership interest in
this vessel is 50 percent.
Liquidity Update
As at March 31, 2019, the Company had total
liquidity of $116.2 million (comprised of $75.0 million in cash and
cash equivalents and $41.2 million in undrawn from its revolving
credit facilities and working capital loan) compared to total
liquidity of $66.7 million as at December 31, 2018. With the
completion of the two-vessel sale-leaseback financing transaction
and an increase in the limit of the Company’s working capital loan
facility in May 2019, the Company had total liquidity of
approximately $160 million on May 22, 2019.
Conference Call
The Company plans to host a conference call on
Thursday, May 23, 2019 at 1:00 p.m. (ET) to discuss its results for
the first quarter of 2019. All shareholders and interested parties
are invited to listen to the live conference call by choosing from
the following options:
- By dialing (800) 667-5617 or (647)
490-5367, if outside of North America, and quoting conference ID
code 8155152.
- By accessing the webcast, which
will be available on Teekay Tankers’ website at
www.teekay.com (the archive will remain on the website for a
period of one year).
An accompanying First Quarter 2019 Earnings
Presentation will also be available at www.teekay.com in
advance of the conference call start time.
About Teekay Tankers
Teekay Tankers currently owns a fleet of 56
double-hull tankers, including 30 Suezmax tankers, 17 Aframax
tankers, nine Long Range 2 (LR2) product tankers, and three
ship-to-ship support vessels, and has eight contracted time
charter-in vessels. Teekay Tankers’ vessels are typically employed
through a mix of short- or medium-term fixed-rate time charter
contracts and spot tanker market trading. The Company also owns a
Very Large Crude Carrier (VLCC) through a 50 percent-owned joint
venture. In addition, Teekay Tankers owns a ship-to-ship transfer
business. Teekay Tankers was formed in December 2007 by Teekay
Corporation as part of its strategy to expand its conventional oil
tanker business.
Teekay Tankers’ common stock trades on the New
York Stock Exchange under the symbol “TNK.”
For Investor Relationsenquiries
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 SEC. These non-GAAP financial measures, which include Adjusted
Net Income (Loss), Free Cash Flow, Net Revenues and, commencing in
the first quarter of 2019, Adjusted EBITDA, are intended to provide
additional information and should not be considered substitutes for
measures of performance prepared in accordance with GAAP. In
addition, these measures do not have standardized definitions
across companies, and therefore may not be comparable to similar
measures presented by other companies. These non-GAAP
measures are used by management, and the Company believes that
these supplemental metrics assist investors and other users of its
financial reports in comparing financial and operating performance
of the Company across reporting periods and with other
companies.
In prior periods, the Company reported CFVO, as
a non-GAAP measure. In the first quarter of 2019, the Company made
certain changes to its non-GAAP financial measures to more closely
align with internal management reporting, annual reporting filed
with the SEC under Form 20-F and metrics used by certain investors.
Total CFVO and CFVO of Equity-Accounted for Investment are replaced
with Total Adjusted EBITDA and Adjusted EBITDA from
Equity-Accounted Vessel, respectively, for current and comparative
periods.
Non-GAAP Financial Measures
Adjusted net income (loss) 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), the most directly comparable GAAP measure
reflected in the Company’s consolidated financial statements.
Adjusted EBITDA represents net income (loss)
before interest, taxes, and depreciation and amortization and is
adjusted to exclude certain items whose timing or amount cannot be
reasonably estimated in advance or that are not considered
representative of core operating performance. Such adjustments
include foreign exchange gains and losses, gains and losses on sale
of vessels, unrealized gains and losses on derivative instruments
and certain other income or expenses. Adjusted EBITDA also excludes
realized gains or losses on interest rate swaps as management, in
assessing the Company's performance, views these gains or losses as
an element of interest expense and realized gains or losses on
derivative instruments resulting from amendments or terminations of
the underlying instruments. Consolidated Adjusted EBITDA represents
Adjusted EBITDA from vessels that are consolidated on the Company's
financial statements. Adjusted EBITDA from Equity-Accounted
Vessel represents the Company's proportionate share of Adjusted
EBITDA from its equity-accounted vessel, and as a result, the
Company does not have the unilateral ability to determine whether
the cash generated by its equity-accounted vessel is retained
within the entity in which the Company holds the equity-accounted
for investment or distributed to the Company and other owners. In
addition, the Company does not control the timing of any such
distributions to the Company and other owners. Adjusted EBITDA is
non-GAAP financial measure used by certain investors and management
to measure the operational performance of companies. Please refer
to Appendices C and D of this release for reconciliations of
Adjusted EBITDA to net income (loss) and equity income,
respectively, which are the most directly comparable GAAP measures
reflected in the Company’s consolidated financial statements.
Free cash flow (FCF) represents net income
(loss), plus depreciation and amortization, unrealized losses from
derivatives, certain non-cash items, loss on sales of vessels,
equity loss from the equity-accounted for investments, and any
write-offs or other non-recurring items, less unrealized gains from
derivatives, equity income from the equity-accounted for
investments, gain on sales of vessels and certain other non-cash
items. The Company also includes FCF from equity-accounted for
investments as a component of its FCF. FCF from the
equity-accounted for investments represents the Company’s
proportionate share of FCF from its equity-accounted for
investments. The Company does not control its equity-accounted for
investments, and as a result, the Company does not have the
unilateral ability to determine whether the cash generated by its
equity-accounted for investments is retained within the entity in
which the Company holds the equity-accounted for investment or
distributed to the Company and other owners. In addition, the
Company does not control the timing of such distributions to the
Company and other owners. Consequently, readers are cautioned when
using FCF as a liquidity measure as the amount contributed from FCF
from the equity-accounted for investments may not be available to
the Company in the periods such FCF is generated by the
equity-accounted for investments. FCF is a non-GAAP financial
measure used by certain investors and management to evaluate the
Company’s financial and operating performance and to assess the
Company’s ability to generate cash sufficient to repay debt, pay
dividends and undertake capital and dry dock expenditures. Please
refer to Appendix B to this release for a reconciliation of this
non-GAAP financial measure to net (loss) income, the most directly
comparable GAAP financial measure reflected in the Company’s
consolidated financial statements.
Net revenues represent revenues less voyage
expenses. Because the amount of voyage expenses the Company incurs
for a particular charter depends upon the type of the charter, the
Company uses net revenues to improve the comparability between
periods of reported revenues that are generated by the different
types of charters and contracts. The Company principally uses net
revenues, a non-GAAP financial measure, because the Company
believes it provides more meaningful information about the
deployment of the Company's vessels and their performance than does
revenues, the most directly comparable financial measure under
GAAP.
Teekay Tankers Ltd.Summary Consolidated Statements of Income
(Loss)(in thousands of U.S. dollars, except share and per share
data)
|
Three Months Ended |
|
|
March 31, |
December 31, |
March 31, |
|
|
2019 |
2018 |
2018 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
|
|
Voyage charter revenues (1) |
216,417 |
|
219,371 |
|
135,642 |
|
|
Time-charter
revenues |
3,410 |
|
8,039 |
|
22,110 |
|
|
Other
revenues (2) |
12,674 |
|
12,314 |
|
10,713 |
|
|
Total
revenues |
232,501 |
|
239,724 |
|
168,465 |
|
|
|
|
|
|
|
Voyage expenses
(1) |
(97,339 |
) |
(110,602 |
) |
(79,993 |
) |
|
Vessel operating
expenses |
(54,587 |
) |
(51,323 |
) |
(52,995 |
) |
|
Time-charter hire
expenses |
(9,448 |
) |
(4,841 |
) |
(4,683 |
) |
|
Depreciation and
amortization |
(29,865 |
) |
(29,916 |
) |
(29,430 |
) |
|
General
and administrative expenses |
(9,165 |
) |
(11,836 |
) |
(9,785 |
) |
|
Income
(loss) from operations |
32,097 |
|
31,206 |
|
(8,421 |
) |
|
|
|
|
|
|
Interest
expense |
(16,942 |
) |
(16,987 |
) |
(12,729 |
) |
|
Interest
income |
365 |
|
311 |
|
158 |
|
|
Realized and
unrealized (loss) gain on derivative instruments (3) |
(847 |
) |
(1,693 |
) |
3,013 |
|
|
Equity income
(4) |
753 |
|
955 |
|
694 |
|
|
Other
expense |
(2,979 |
) |
(2,290 |
) |
(1,868 |
) |
|
Net income (loss) |
12,447 |
|
11,502 |
|
(19,153 |
) |
|
|
|
|
|
|
Earnings (loss)
per share attributable to shareholders of Teekay Tankers |
|
|
|
|
- Basic |
0.05 |
|
0.04 |
|
(0.07 |
) |
|
- Diluted |
0.05 |
|
0.04 |
|
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of total common shares outstanding |
|
|
|
- Basic |
268,678,226 |
|
268,558,556 |
|
268,292,374 |
|
|
- Diluted |
268,876,324 |
|
268,759,554 |
|
268,292,374 |
|
|
|
|
|
|
|
|
Number of
outstanding shares of common stock at the end of the period |
268,990,399 |
|
268,558,556 |
|
268,558,556 |
|
|
(1) Voyage charter revenues include revenues
earned from full service lightering activities. Voyage expenses
include certain costs associated with full service lightering
activities, which include: short-term in-charter expenses, bunker
fuel expenses and other port expenses totaling $11.4 million, $23.8
million and $21.4 million for the three months ended March 31,
2019, December 31, 2018 and March 31, 2018, respectively.
(2) Other revenues include lightering support
and liquefied natural gas services revenue, and pool management
fees and commission revenues.
(3) Includes realized losses and gains relating
to interest rate swaps entered into by the Company. For the three
months ended March 31, 2019, December 31, 2018 and March 31, 2018,
the Company recognized realized gains on its interest rate swaps of
$1.0 million, $0.7 million and $0.2 million, respectively. The
Company also recognized realized losses of $13 thousand and
realized gains of $0.3 million for the three months ended March 31,
2019 and December 31, 2018, respectively, relating to its forward
freight agreements.
(4) Equity income relates to the Company’s 50
percent interest in the High-Q Investment Ltd. (High-Q) joint
venture, which owns one VLCC tanker.
Teekay Tankers Ltd.Summary Consolidated Balance Sheets(in
thousands of U.S. dollars)
|
As at |
As at |
|
March 31, |
December 31, |
|
2019 |
2018 |
|
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
|
Cash and cash equivalents |
75,045 |
|
|
54,917 |
|
|
Restricted cash |
2,087 |
|
|
2,153 |
|
|
Pool receivable from
affiliates |
31,535 |
|
|
56,549 |
|
|
Accounts receivable |
29,946 |
|
|
17,365 |
|
|
Due from affiliates |
7,979 |
|
|
39,663 |
|
|
Current portion of derivative
assets |
2,277 |
|
|
2,905 |
|
|
Bunker and lube oil inventory
(1) |
50,485 |
|
|
23,179 |
|
|
Prepaid expenses (1) |
11,649 |
|
|
10,917 |
|
|
Other current assets |
53,369 |
|
|
17,943 |
|
|
Restricted cash -
long-term |
3,437 |
|
|
3,437 |
|
|
Vessels and equipment –
net |
1,388,464 |
|
|
1,401,551 |
|
|
Vessels related to finance
leases – net |
475,962 |
|
|
482,010 |
|
|
Operating lease right-of-use
assets (2) |
22,014 |
|
|
— |
|
|
Investment in and advances to
equity-accounted for investment |
26,520 |
|
|
25,766 |
|
|
Derivative assets |
1,829 |
|
|
2,973 |
|
|
Intangible assets – net |
11,055 |
|
|
11,625 |
|
|
Other non-current assets |
1,074 |
|
|
74 |
|
|
Goodwill |
8,059 |
|
|
8,059 |
|
|
Total assets |
2,202,786 |
|
|
2,161,086 |
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Accounts payable and accrued
liabilities |
74,338 |
|
|
52,002 |
|
|
Short-term debt (3) |
25,000 |
|
|
— |
|
|
Due to affiliates |
23,456 |
|
|
18,570 |
|
|
Current portion of derivative
liabilities |
105 |
|
|
57 |
|
|
Current portion of long-term
debt |
101,227 |
|
|
106,236 |
|
|
Current obligation related to
finance leases |
20,616 |
|
|
20,896 |
|
|
Current portion of operating
lease liabilities (2) |
12,038 |
|
|
— |
|
|
Other current liabilities |
417 |
|
|
— |
|
|
Long-term debt |
590,085 |
|
|
629,170 |
|
|
Long-term obligation related
to finance leases |
349,137 |
|
|
354,393 |
|
|
Long-term operating lease
liabilities (2) |
9,976 |
|
|
— |
|
|
Other long-term
liabilities |
36,343 |
|
|
32,829 |
|
|
Equity |
960,048 |
|
|
946,933 |
|
|
Total liabilities and equity |
2,202,786 |
|
|
2,161,086 |
|
|
(1) Effective March 31, 2019, the Company
separately presented bunker and lube oil inventory on the Company’s
balance sheet. Such balance was previously classified as prepaid
expenses. Bunker and lube oil inventory has increased significantly
in the first quarter of 2019 as a result of a change to the
Company’s revenue sharing arrangements (or RSAs) whereby the
Company now directly procures and has legal title to the bunker
fuel for the vessels in the RSAs, with such assets being used as
collateral for the new working capital loan arrangement entered
into by the Company. Bunker and lube oil inventory is stated
at cost which is determined on a first in, first out
basis. Comparative figures have been reclassified to conform
to the presentation adopted in the current period.
(2) Upon adoption of the new lease accounting
standard on January 1, 2019, the Company's chartered-in vessels,
with lease terms of more than one year, are now treated as
operating lease right-of-use assets and operating lease
liabilities. This resulted in an increase in the Company’s assets
and liabilities by $22.0 million at March 31, 2019. This adoption
had no impact on the Company’s Consolidated Statements of Income
(Loss).
(3) Short-term debt relates to the Company’s
working capital loan that was first drawn during the first quarter
of 2019.
Teekay Tankers Ltd.Summary Consolidated Statements of Cash
Flows(in thousands of U.S. dollars)
|
Three Months Ended |
|
March 31, |
March 31, |
|
2019 |
2018 |
|
(unaudited) |
(unaudited) |
Cash, cash
equivalents and restricted cash provided by (used for) |
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
Net income (loss) |
12,447 |
|
|
(19,153 |
) |
|
Non-cash
items: |
|
|
|
|
Depreciation and amortization |
29,865 |
|
|
29,430 |
|
|
Unrealized loss (gain) on derivative instruments |
1,788 |
|
|
(2,823 |
) |
|
Equity income |
(753 |
) |
|
(694 |
) |
|
Other |
7,042 |
|
|
3,223 |
|
|
Change in
operating assets and liabilities |
6,265 |
|
|
(9,517 |
) |
|
Expenditures for dry docking |
(10,433 |
) |
|
(5,292 |
) |
|
Net operating cash flow |
46,221 |
|
|
(4,826 |
) |
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
Proceeds from
short-term debt |
30,000 |
|
|
— |
|
|
Proceeds from
long-term debt, net of issuance costs |
434 |
|
|
30,468 |
|
|
Scheduled
repayments of long-term debt |
(25,400 |
) |
|
(38,706 |
) |
|
Prepayment of
long-term debt |
(20,000 |
) |
|
— |
|
|
Repayment of
short-term debt |
(5,000 |
) |
|
— |
|
|
Scheduled
repayments of obligation related to finance leases |
(5,537 |
) |
|
(1,740 |
) |
|
Cash dividends
paid |
— |
|
|
(8,052 |
) |
|
Other |
— |
|
|
(92 |
) |
|
Net financing cash flow |
(25,503 |
) |
|
(18,122 |
) |
|
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
Expenditures for
vessels and equipment |
(656 |
) |
|
(1,622 |
) |
|
Return
of capital from equity-accounted for investment |
— |
|
|
746 |
|
|
Net investing cash flow |
(656 |
) |
|
(876 |
) |
|
|
|
|
|
|
Increase
(decrease) in cash, cash equivalents and restricted cash |
20,062 |
|
|
(23,824 |
) |
|
Cash,
cash equivalents and restricted cash, beginning of the period |
60,507 |
|
|
75,710 |
|
|
Cash, cash equivalents and restricted cash, end of the
period |
80,569 |
|
|
51,886 |
|
|
Teekay Tankers Ltd.Appendix A - Reconciliation of Non-GAAP
Financial MeasuresAdjusted Net Income (Loss)(in thousands of U.S.
dollars, except per share amounts)
|
Three Months Ended |
|
March 31, 2019 |
|
March 31, 2018 |
|
|
(unaudited) |
|
(unaudited) |
|
|
$ |
|
|
$ Per Share(1) |
|
|
$ |
|
|
$ Per Share(1) |
|
|
Net income (loss) - GAAP basis |
12,447 |
|
|
$0.05 |
|
|
(19,153 |
) |
|
($0.07 |
) |
|
|
|
|
|
|
|
|
|
|
Add specific items affecting net
income (loss): |
|
|
|
|
|
|
|
|
Unrealized loss (gain) on derivative instruments (2) |
1,788 |
|
|
— |
|
|
(2,823 |
) |
|
($0.01 |
) |
|
Other (3) |
412 |
|
|
— |
|
|
— |
|
|
— |
|
|
Total adjustments |
2,200 |
|
|
— |
|
|
(2,823 |
) |
|
($0.01 |
) |
|
Adjusted
net income (loss) attributable to shareholders of |
|
|
|
|
|
|
|
|
Teekay Tankers |
14,647 |
|
|
$0.05 |
|
|
(21,976 |
) |
|
($0.08 |
) |
|
(1) Basic per share amounts.
(2) Reflects unrealized gains or losses due to
the changes in the mark-to-market value of derivative instruments
that are not designated as hedges for accounting purposes,
including unrealized gains or losses on interest rate swaps and
forward freight agreements.
(3) The amount recorded for the three months
ended March 31, 2019 primarily relates to unrealized foreign
exchange losses.
Teekay Tankers Ltd.Appendix B - Reconciliation of Non-GAAP
Financial MeasuresFree Cash Flow(in thousands of U.S. dollars,
except share data)
|
|
|
Three Months Ended |
|
|
|
March 31, 2019 |
March 31, 2018 |
|
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
|
Net
income (loss) - GAAP basis |
12,447 |
|
|
(19,153 |
) |
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
Depreciation and amortization |
29,865 |
|
|
29,430 |
|
|
|
|
Proportionate share of free
cash flow from equity-accounted for investment |
1,207 |
|
|
1,102 |
|
|
|
|
Unrealized loss on derivative
instruments |
1,788 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
Equity income (1) |
(753 |
) |
|
(694 |
) |
|
|
|
Unrealized gain on derivative
instruments |
— |
|
|
(2,823 |
) |
|
|
|
|
|
|
|
|
Free cash
flow |
44,554 |
|
|
7,862 |
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding for the period - basic |
268,678,226 |
|
|
268,292,374 |
|
|
|
|
|
|
|
(1) Equity income relates to the Company’s 50
percent interest in the High-Q joint venture, which owns one VLCC
tanker.
Teekay Tankers Ltd.Appendix C - Reconciliation of Non-GAAP
Financial MeasuresTotal Adjusted EBITDA(in thousands of U.S.
dollars)
|
Three Months Ended |
|
March 31, 2019 |
March 31, 2018 |
|
(unaudited) |
(unaudited) |
Net income (loss) - GAAP basis |
12,447 |
|
(19,153 |
) |
Depreciation and amortization |
29,865 |
|
29,430 |
|
Interest expense, net of interest income |
16,577 |
|
12,571 |
|
Freight tax and other tax expenses |
2,614 |
|
1,878 |
|
EBITDA |
61,503 |
|
24,726 |
|
|
|
|
Add (subtract) specific income
statement items affecting EBITDA: |
|
|
Foreign exchange loss |
412 |
|
20 |
|
Realized gain on interest rate swaps |
(954 |
) |
(190 |
) |
Unrealized loss (gain) on derivative instruments |
1,788 |
|
(2,823 |
) |
Equity income |
(753 |
) |
(694 |
) |
Consolidated adjusted EBITDA |
61,996 |
|
21,039 |
|
Adjusted EBITDA from equity-accounted vessel (See Appendix D) |
1,432 |
|
1,303 |
|
Total Adjusted EBITDA |
63,428 |
|
22,342 |
|
Teekay Tankers Ltd.Appendix D - Reconciliation of Non-GAAP
Financial MeasuresAdjusted EBITDA from Equity-Accounted Vessel(in
thousands of U.S. dollars)
|
Three Months Ended |
|
March 31, 2019 |
March 31, 2018 |
|
(unaudited) |
(unaudited) |
|
At |
Company's |
At |
Company's |
|
100% |
Portion (1) |
100% |
Portion (1) |
Revenues |
3,210 |
|
1,605 |
|
3,375 |
|
1,688 |
|
Vessel and other operating
expenses |
(490 |
) |
(245 |
) |
(769 |
) |
(385 |
) |
Depreciation and
amortization |
(908 |
) |
(454 |
) |
(830 |
) |
(415 |
) |
Income from vessel operations of equity-accounted vessel |
1,812 |
|
906 |
|
1,776 |
|
888 |
|
|
|
|
|
|
Net interest expense |
(450 |
) |
(225 |
) |
(407 |
) |
(204 |
) |
Realized and unrealized gain
on derivative instruments |
— |
|
— |
|
19 |
|
10 |
|
Other |
145 |
|
72 |
|
— |
|
— |
|
Equity income of equity-accounted vessel |
1,507 |
|
753 |
|
1,388 |
|
694 |
|
|
|
|
|
|
Equity income of
equity-accounted vessel |
1,507 |
|
753 |
|
1,388 |
|
694 |
|
Depreciation and amortization |
908 |
|
454 |
|
830 |
|
415 |
|
Interest expense, net of interest income |
450 |
|
225 |
|
407 |
|
204 |
|
EBITDA from equity-accounted vessel |
2,865 |
|
1,432 |
|
2,625 |
|
1,313 |
|
|
|
|
|
|
Add (subtract) specific income
statement items affecting EBITDA: |
|
|
|
|
Realized and unrealized gain on derivative instruments |
— |
|
— |
|
(19 |
) |
(10 |
) |
Adjusted EBITDA from equity-accounted vessel |
2,865 |
|
1,432 |
|
2,606 |
|
1,303 |
|
(1) The Company’s proportionate share of its
equity-accounted vessel is 50 percent.
Forward Looking Statements
This release contains forward-looking statements
(as defined in Section 21E of the Securities Exchange Act of 1934,
as amended) which reflect management’s current views with respect
to certain future events and performance, including, among other
things, statements regarding: the effect of financing transactions
recently completed on the Company’s liquidity; expected contract
commencement dates; and crude oil and refined product tanker market
fundamentals, including the balance of supply and demand in the oil
and tanker markets, the occurrence and expected timing of a tanker
market recovery, forecasts of worldwide tanker fleet growth, the
amount of tanker scrapping and newbuilding tanker deliveries,
estimated growth in global oil demand and supply, future tanker
rates, future OPEC oil production, the expected increase in global
refinery throughput, the expected increase in U.S. crude oil
production and exports and the corresponding impact on mid-size
tanker demand, and estimated impact of IMO 2020 regulations on
tanker demand. 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: the potential for
early termination of charter contracts of existing vessels in the
Company's fleet; the inability of charterers to make future charter
payments; the inability of the Company to renew or replace charter
contracts; changes in tanker rates; changes in the production of,
or demand for, oil or refined products; changes in trading patterns
significantly affecting overall vessel tonnage requirements;
greater or less than anticipated levels of tanker newbuilding
orders and deliveries and greater or less than anticipated rates of
tanker scrapping; changes in global oil prices; changes in
applicable industry laws and regulations and the timing of
implementation of new laws and regulations and the impact of such
changes; increased costs; and other factors discussed in Teekay
Tankers’ filings from time to time with the United States
Securities and Exchange Commission, including its Annual Report on
Form 20-F for the fiscal year ended December 31, 2018. The Company
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company’s
expectations with respect thereto or any change in events,
conditions or circumstances on which any such statement is
based.
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