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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Teekay Tankers Ltd | NYSE:TNK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.53 | 0.91% | 58.66 | 58.99 | 57.59 | 58.13 | 198,665 | 21:00:04 |
Highlights
Consolidated Financial Summary | ||||||||||||||
Three Months Ended | Year Ended | |||||||||||||
(in thousands of U.S. dollars, except per share data) | December 31, 2018 | September 30, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||
GAAP FINANCIAL COMPARISON | ||||||||||||||
Total revenues | 239,724 | 175,915 | 105,229 | 755,763 | 431,178 | |||||||||
Income (loss) from operations | 31,206 | (2,166 | ) | 2,822 | 7,204 | 1,416 | ||||||||
Net income (loss) | 11,502 | (17,484 | ) | (1,879 | ) | (52,548 | ) | (58,023 | ) | |||||
Earnings (loss) per share | 0.04 | (0.07 | ) | (0.01 | ) | (0.20 | ) | (0.31 | ) | |||||
NON-GAAP FINANCIAL COMPARISON | ||||||||||||||
Total cash flow from vessel operations (1) | 62,254 | 27,750 | 32,134 | 128,870 | 123,138 | |||||||||
Adjusted net income (loss) (1) | 14,002 | (18,001 | ) | (5,939 | ) | (54,718 | ) | (19,945 | ) | |||||
Adjusted earnings (loss) per share (1) | 0.05 | (0.07 | ) | (0.03 | ) | (0.20 | ) | (0.11 | ) | |||||
Free cash flow (1) | 44,580 | 12,558 | 22,859 | 66,980 | 87,875 |
Fourth Quarter of 2018 Compared to Third Quarter of 2018
GAAP net income and non-GAAP adjusted net income for the fourth quarter of 2018 improved compared to the prior quarter, primarily as a result of higher average spot tanker rates. This was partially offset by an increase in general and administrative expenses, a portion of which is non-recurring.
Fourth Quarter of 2018 Compared to Fourth Quarter of 2017
GAAP net income and non-GAAP adjusted net income for the fourth quarter of 2018 compared to the GAAP net loss and non-GAAP adjusted net loss in the same period of the prior year were positively affected by higher average spot tanker rates and the acquisition of Tanker Investments Ltd. in late-November 2017. This was 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
“Crude tanker spot rates reached three-year highs during the fourth quarter of 2018, driven by winter seasonality underpinned by positive supply and demand fundamentals, which led to our results exceeding the prior quarter and the same quarter of the previous year,” commented Kevin Mackay, Teekay Tankers’ President and Chief Executive Officer. “This strength continued into early Q1-2019 and I am pleased that our secured first quarter to-date spot rates are significantly higher than the fourth quarter. However, in the last few weeks, crude tanker rates have declined from those highs, as a result of OPEC supply cuts, higher fleet growth, and the impact of seasonal refinery maintenance which we believe could weigh on crude tanker demand as we go through the first half of 2019. We believe the near-term headwinds should however give way to a much stronger second half of 2019 and 2020 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.”
"We continue to focus on strengthening our balance sheet and financial position. Since the beginning of 2018, we have completed various financing initiatives and recently signed a term sheet for a further sale-leaseback transaction, all of which have or are expected to increase our liquidity position and extend our maturity profile."
Mr. Mackay added, “Consistent with our strategy and based on our forward views of the market, we recently entered into time charter-in contracts for 2.5 Aframax/LR2 vessels for periods ranging from 1 to 2 years with extension options. Securing these new vessels at attractive charter rates, will add to our significant operating leverage and further position Teekay Tankers to add value and benefit from an expected strengthening global tanker market as we move through 2019 and into 2020."
Summary of Recent Events
In November 2018, Teekay Tankers completed a sale-leaseback transaction relating to four vessels and a loan to finance working capital for the Company's revenue sharing agreement (RSA) pool management operations, which when fully drawn will contribute a total of $40 million of additional liquidity after the repayment of outstanding debt related to the four vessels.
In addition, in February 2019, Teekay Tankers signed a term sheet for a further sale-leaseback transaction relating to two Suezmax tankers. The transaction, once completed, is expected to further increase the Company’s liquidity position by approximately $25 million after the repayment of outstanding debt related to these vessels. The transaction, which remains subject to final lessor approval and customary closing conditions, is expected to be completed in the first quarter of 2019.
Since November 2018, Teekay Tankers entered into time charter-in contracts for 2.5 Aframax tanker vessel equivalents for periods ranging 1 to 2 years with extension options. The new time charter-in contracts have a weighted average daily rate of $17,600.
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 the tanker market weakness and losses generated during the first three quarters of 2018, and the additional debt incurred from recent sale-leaseback transactions to improve Teekay Tankers' liquidity position, the Company has elected to reserve the amount that would have otherwise been paid out as a dividend for the fourth quarter of 2018 to repay outstanding debt.
Tanker Market
Crude tanker spot rates improved significantly during the fourth quarter of 2018, spurred by both winter market seasonality and positive underlying supply and demand fundamentals. In the fourth quarter of 2018, OPEC crude oil production rose to 32.4 million barrels per day (mb/d), the highest level since July 2017 and up from 31.4 mb/d earlier in 2018. Most of this increase came from the Middle East, where higher production levels more than offset lower output from Venezuela and Iran. Russian oil production reached a record high 11.5 mb/d by the end of 2018, which was positive for mid-size tanker demand in the Mediterranean / Black Sea and Baltic Sea regions. Rising U.S. exports also supported tanker demand, with U.S. crude oil production reaching a record high 11.7 mb/d and crude oil exports reaching 2.5 mb/d during the fourth quarter of 2018. This was positive for both crude tanker demand, as well as lightering demand in the U.S. Gulf.
Crude tanker spot rates have softened through the first quarter of 2019, which is typical for this time of year as refineries enter into seasonal maintenance programs. OPEC supply cuts are also weighing on crude tanker demand, with OPEC (plus select non-OPEC partners) pledging to cut production by 1.2 mb/d starting in January 2019. Early data suggests that OPEC is achieving high compliance with these cuts, which is negative for crude tanker demand in the near-term. Venezuelan crude oil production could also decline in the near-term due to impending U.S. sanctions, though this may be offset by longer voyage distances as Venezuela looks to sell its oil into other markets, such as Asia. The Company expects OPEC cuts to have a negative impact on tanker demand through the first half of 2019; however, looking ahead to the second half of 2019, with well balanced oil markets, the Company believes that OPEC will increase production when oil demand is expected to increase substantially versus first half 2019 levels, driving positive crude tanker demand.
The global tanker fleet grew by just 5.7 million deadweight (mdwt), or 1.0 percent, in 2018, which was the lowest level of tanker fleet growth since 2001. High tanker scrapping was the main driver of low fleet growth in 2018, with a total of 22.4 mdwt removed, representing the fifth highest scrapping year on record. Looking ahead, the Company expects an increase in tanker fleet growth during 2019 as a firmer freight rate environment should lead to relatively fewer vessels sold for scrap. The Company forecasts total tanker fleet growth of approximately 3.5 percent during 2019, with much of this growth weighted towards the first half of 2019. The Company expects this will further add to pressure on the tanker market during the early part of 2019, although it paves the way for much lower fleet growth in the second half of 2019 and into 2020, when the Company forecasts that the global tanker fleet will grow by less than 2 percent.
Global oil demand remains firm, with a forecast of 1.4 mb/d growth in 2019 (average of IEA, EIA and OPEC forecasts). Furthermore, the Company expects that tanker demand will be boosted in 2019 by an increase in global refining capacity. According to the IEA, a total of 2.6 mb/d of new refining capacity will come online in 2019, which is the largest annual increase on record. This should be positive for both crude and product tanker demand. The Company also expects that the new IMO 2020 regulations will be positive for tanker demand, as it may lead to an increase in refinery throughput. The new regulations could also open up a number of new trade patterns and arbitrage opportunities for both crude and product, which would be beneficial for overall tonne-mile demand. Finally, new pipeline capacity to the U.S. Gulf Coast is expected to result in increased U.S. crude exports during the second half of 2019 from approximately 2.5 mb/d at present to approximately 4 mb/d, which is expected to contribute to both crude tanker demand and U.S. Gulf lightering demand.
In summary, the Company believes that OPEC supply cuts, higher fleet growth, and the impact of seasonal refinery maintenance could weigh on tanker demand through the first half of 2019. However, the Company believes that this will give way to a much stronger second half of 2019 and 2020 due to strong underlying oil demand, an increase in U.S. crude oil exports, the return of OPEC crude oil supply, lower tanker fleet growth, and the positive impact of IMO 2020 regulations.
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 | Year Ended | ||||||||||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||||||||||||
2018(i) | 2018(i) | 2017(i) | 2018(i) | 2017(i) | |||||||||||||||||||||||||
Time Charter-Out Fleet | |||||||||||||||||||||||||||||
Suezmax revenue days | 180 | 162 | 438 | 819 | 1,853 | ||||||||||||||||||||||||
Suezmax TCE per revenue day | $20,868 | $17,630 | $21,821 | $20,144 | $24,198 | ||||||||||||||||||||||||
Aframax revenue days | 172 | 393 | 658 | 1,674 | 2,283 | ||||||||||||||||||||||||
Aframax TCE per revenue day | $23,230 | $20,559 | $21,145 | $21,216 | $22,085 | ||||||||||||||||||||||||
LR2 revenue days | 12 | 92 | 183 | 420 | 837 | ||||||||||||||||||||||||
LR2 TCE per revenue day | $16,583 | $17,732 | $17,176 | $17,287 | $18,063 | ||||||||||||||||||||||||
Spot Fleet | |||||||||||||||||||||||||||||
Suezmax revenue days | 2,427 | 2,476 | 1,679 | 9,795 | 5,621 | ||||||||||||||||||||||||
Suezmax spot TCE per revenue day (ii) | $23,554 | $15,825 | $15,294 | $16,154 | $16,627 | ||||||||||||||||||||||||
Aframax revenue days | 1,612 | 1,402 | 766 | 5,515 | 3,956 | ||||||||||||||||||||||||
Aframax spot TCE per revenue day (iii) | $22,023 | $13,693 | $16,773 | $16,034 | $15,739 | ||||||||||||||||||||||||
LR2 revenue days | 724 | 644 | 438 | 2,488 | 1,771 | ||||||||||||||||||||||||
LR2 spot TCE per revenue day (iv) | $19,806 | $12,527 | $14,323 | $14,131 | $14,407 | ||||||||||||||||||||||||
Total Fleet | |||||||||||||||||||||||||||||
Suezmax revenue days | 2,607 | 2,638 | 2,117 | 10,614 | 7,474 | ||||||||||||||||||||||||
Suezmax TCE per revenue day | $23,369 | $15,936 | $16,644 | $16,461 | $18,504 | ||||||||||||||||||||||||
Aframax revenue days | 1,784 | 1,795 | 1,424 | 7,189 | 6,239 | ||||||||||||||||||||||||
Aframax TCE per revenue day | $22,139 | $15,197 | $18,794 | $17,240 | $18,061 | ||||||||||||||||||||||||
LR2 revenue days | 736 | 736 | 621 | 2,908 | 2,608 | ||||||||||||||||||||||||
LR2 TCE per revenue day | $19,754 | $13,178 | $15,165 | $14,587 | $15,580 |
First Quarter of 2019 Spot Tanker Rates Update
Below is Teekay Tankers’ spot tanker fleet update for the first quarter of 2019 to-date:
(1) Combined average TCE rate includes Teekay Suezmax RSA, Teekay Classic Suezmax RSA and non-pool voyage charters.(2) Combined average TCE rate includes Teekay Aframax RSA, non-pool voyage charters and full service lightering voyages.(3) 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 February 1, 2019:
Owned andCapital LeaseVessels | Chartered-inVessels | Total | |
Fixed-rate: | |||
Suezmax Tankers | 1 | — | 1 |
Aframax Tankers | 1 | — | 1 |
Total Fixed-Rate Fleet | 2 | — | 2 |
Spot-rate: | |||
Suezmax Tankers | 29 | — | 29 |
Aframax Tankers(i) | 16 | 3 | 19 |
LR2 Product Tankers(ii) | 9 | 2 | 11 |
VLCC Tanker(iii) | 1 | — | 1 |
Total Spot Fleet | 55 | 5 | 60 |
Total Conventional Fleet | 57 | 5 | 62 |
STS Support Vessels | 3 | 3 | 6 |
Total Teekay Tankers' Fleet | 60 | 8 | 68 |
Liquidity Update
As at December 31, 2018, the Company had total liquidity of $66.7 million (comprised of $54.9 million in cash and cash equivalents and $11.8 million in undrawn revolving credit facilities) compared to total liquidity of $89.2 million as at September 30, 2018. The Company’s liquidity as at December 31, 2018 does not reflect Teekay Tankers' loan to finance working capital for the Company's RSA pool management operations, which will contribute approximately $20 million of liquidity when fully drawn. Due to timing of various receipts and payments, the Company’s working capital balances were temporarily elevated at December 31, 2018, resulting in temporarily low liquidity. As of February 20, 2019, the Company had total liquidity of approximately $115 million, which does not reflect the signed term sheet for a sale-leaseback transaction announced today, which is expected to add approximately $25 million of additional liquidity.
Conference Call
The Company plans to host a conference call on Thursday, February 21, 2019 at 1:00 p.m. (ET) to discuss its fourth quarter and annual 2018 results. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:
An accompanying Fourth Quarter 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 42 double-hull tankers, including 25 Suezmax tankers, nine Aframax tankers, eight Long Range 2 (LR2) product tankers, and three ship-to-ship support vessels, and has five Suezmax tankers, eight Aframax tankers, and one LR2 product tanker related to capital leases and 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 U.S. Securities and Exchange Commission. These non-GAAP financial measures, which include Adjusted Net Income (Loss), Cash Flow from Vessel Operations, Free Cash Flow, and Net Revenues are intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized definitions across companies, and therefore may not be comparable to similar measures presented by other companies. These non-GAAP measure are used by management, and the Company believes that these supplemental metrics assist investors and other users of its financial reports in comparing financial and operating performance of the Company across reporting periods and with other companies.
Non-GAAP Financial Measures
Adjusted net income (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.
Cash flow from vessel operations (CFVO) represents income (loss) from operations before depreciation and amortization expense, amortization of in-process revenue contracts, vessel write-downs, and gains or losses on the sale of vessels and equipment. CFVO - Consolidated represents CFVO from vessels that are consolidated on the Company’s financial statements. CFVO - Equity Investments represents the Company’s proportionate share of CFVO from its equity-accounted vessels and other investments. The Company does not control the equity-accounted vessels and investments, and as a result, the Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels and other investments is retained within the entity in which the Company holds the equity-accounted 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 total CFVO as a liquidity measure as the amount contributed from CFVO - Equity Investments may not be available to the Company in the periods such CFVO is generated by its equity-accounted vessels and other investments. CFVO is a non-GAAP financial measure used by certain investors and management to measure the operational financial performance of companies. Please refer to Appendices C of this release for reconciliations of these non-GAAP financial measures to income from vessel operations and income from vessel operations of equity-accounted investments, respectively, 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, FCF from equity-accounted investments, loss on sales of vessels, and any write-offs or other non-recurring items, less unrealized gains from derivatives, equity income from the equity-accounted investments, gain on sales of vessels and certain other non-cash items. The Company includes FCF from equity-accounted investments as a component of its FCF. FCF from the equity-accounted investments represents the Company’s proportionate share of FCF from its equity-accounted investments. The Company does not control its equity-accounted investments, and as a result, the Company 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 Company holds the equity-accounted 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 investments may not be available to the Company in the periods such FCF is generated by the equity-accounted 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.
Entities under common control represent a transfer of a business between entities under common control. As a result, Teekay Tankers consolidated financial statements prior to the date the interests in these entities were actually acquired by the Company are retroactively adjusted to include the results of these entities during the periods they were under common control of Teekay Corporation and had begun operations.
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.
Important Notice to Reader
Effective January 1, 2018, the Company adopted the new revenue accounting standard, which had no impact on net loss but a material effect on revenues and voyage expenses since adoption. Prior to January 1, 2018, the Company presented the net allocation for its vessels participating in RSAs as net pool revenues. The Company has determined that it is the principal in voyages its vessels perform that are included in the RSAs. As such, commencing January 1, 2018, the Company presents revenue from those voyages in voyage charter revenues and the difference between this amount and the Company's net allocation from the RSA is presented as voyage expenses. This had the effect of increasing both voyage charter revenues and voyage expenses for the three months ended December 31, 2018 and September 30, 2018 and the year ended December 31, 2018 by $90.2 million, $73.6 million, and $292.6 million, respectively.
Teekay Tankers Ltd.Summary Consolidated Statements of Income (Loss)(in thousands of U.S. dollars, except share and per share data)
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited)(1) | ||||||||||||||||||||||||
Voyage charter revenues (2)(4) | 219,371 | 152,047 | 30,893 | 651,388 | 125,774 | |||||||||||||||||||||||
Time-charter revenues | 8,039 | 12,326 | 26,998 | 59,786 | 112,100 | |||||||||||||||||||||||
Other revenues (3) | 12,314 | 11,542 | 11,374 | 44,589 | 53,368 | |||||||||||||||||||||||
Net pool revenues (4) | — | — | 35,964 | — | 139,936 | |||||||||||||||||||||||
Total revenues | 239,724 | 175,915 | 105,229 | 755,763 | 431,178 | |||||||||||||||||||||||
Voyage expenses (2)(4) | (110,602 | ) | (83,048 | ) | (20,443 | ) | (360,576 | ) | (77,368 | ) | ||||||||||||||||||
Vessel operating expenses | (51,323 | ) | (52,161 | ) | (43,440 | ) | (209,131 | ) | (175,389 | ) | ||||||||||||||||||
Time-charter hire expense | (4,841 | ) | (4,317 | ) | (3,202 | ) | (19,538 | ) | (30,661 | ) | ||||||||||||||||||
Depreciation and amortization | (29,916 | ) | (29,595 | ) | (26,829 | ) | (118,514 | ) | (100,481 | ) | ||||||||||||||||||
General and administrative expenses | (11,836 | ) | (8,747 | ) | (8,004 | ) | (39,775 | ) | (32,879 | ) | ||||||||||||||||||
(Loss) gain on sales of vessels | — | — | (489 | ) | 170 | (12,984 | ) | |||||||||||||||||||||
Restructuring charges | — | (213 | ) | — | (1,195 | ) | — | |||||||||||||||||||||
Income (loss) from operations | 31,206 | (2,166 | ) | 2,822 | 7,204 | 1,416 | ||||||||||||||||||||||
Interest expense | (16,987 | ) | (15,006 | ) | (9,613 | ) | (58,653 | ) | (31,294 | ) | ||||||||||||||||||
Interest income | 311 | 250 | 163 | 879 | 907 | |||||||||||||||||||||||
Realized and unrealized (loss) gain | ||||||||||||||||||||||||||||
on derivative instruments (5) | (1,693 | ) | 596 | 2,028 | 3,032 | 1,319 | ||||||||||||||||||||||
Equity income (loss) (6) | 955 | (359 | ) | 1,804 | 1,220 | (25,370 | ) | |||||||||||||||||||||
Other (expense) income | (2,290 | ) | (799 | ) | 917 | (6,230 | ) | (5,001 | ) | |||||||||||||||||||
Net income (loss) | 11,502 | (17,484 | ) | (1,879 | ) | (52,548 | ) | (58,023 | ) | |||||||||||||||||||
Loss per share attributable | ||||||||||||||||||||||||||||
to shareholders of Teekay Tankers | ||||||||||||||||||||||||||||
- Basic | 0.04 | (0.07 | ) | (0.01 | ) | (0.20 | ) | (0.31 | ) | |||||||||||||||||||
- Diluted | 0.04 | (0.07 | ) | (0.01 | ) | (0.20 | ) | (0.31 | ) | |||||||||||||||||||
Weighted-average number of total common | ||||||||||||||||||||||||||||
shares outstanding | ||||||||||||||||||||||||||||
- Basic (1) | 268,558,556 | 268,558,556 | 212,107,100 | 268,492,922 | 187,235,377 | |||||||||||||||||||||||
- Diluted (1) | 268,759,554 | 268,558,556 | 212,107,100 | 268,492,922 | 187,235,377 | |||||||||||||||||||||||
Number of outstanding shares of common stock at the end of the period | 268,558,556 | 268,558,556 | 268,201,638 | 268,558,556 | 268,201,638 | |||||||||||||||||||||||
Components of equity income (loss) are detailed in the table below:
Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||||
High-Q Joint Venture | 955 | (359 | ) | 735 | 1,220 | 3,072 | ||||||||||||||||||||||||||||||
Tanker Investments Ltd. | — | — | (322 | ) | — | (1,706 | ) | |||||||||||||||||||||||||||||
Fair value adjustment of | ||||||||||||||||||||||||||||||||||||
Tanker Investments Ltd. (i) | — | — | 1,391 | — | (26,733 | ) | ||||||||||||||||||||||||||||||
Gemini Tankers L.L.C. | — | — | — | — | (3 | ) | ||||||||||||||||||||||||||||||
Total equity income (loss) | 955 | (359 | ) | 1,804 | 1,220 | (25,370 | ) |
Teekay Tankers Ltd. | |||||||||||||||
Summary Consolidated Balance Sheets | |||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||
As at | As at | As at | |||||||||||||
December 31, | September 30, | December 31, | |||||||||||||
2018 | 2018 | 2017 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | 54,917 | 54,361 | 71,439 | ||||||||||||
Restricted cash | 2,153 | 1,794 | 1,599 | ||||||||||||
Pool receivable from affiliates | 56,549 | 26,923 | 15,550 | ||||||||||||
Accounts receivable | 17,365 | 17,048 | 19,288 | ||||||||||||
Due from affiliates | 39,663 | 50,551 | 49,103 | ||||||||||||
Current portion of derivative assets | 2,905 | 3,075 | 1,016 | ||||||||||||
Prepaid expenses | 34,096 | 22,662 | 18,690 | ||||||||||||
Other current assets | 17,943 | 1,385 | — | ||||||||||||
Restricted cash – long-term | 3,437 | 2,672 | 2,672 | ||||||||||||
Vessels and equipment – net | 1,401,551 | 1,556,959 | 1,737,792 | ||||||||||||
Vessels related to capital leases – net | 482,010 | 340,961 | 227,722 | ||||||||||||
Investment in and advances to equity-accounted | |||||||||||||||
investments | 25,766 | 24,811 | 25,460 | ||||||||||||
Derivative assets | 2,973 | 5,531 | 4,226 | ||||||||||||
Intangible assets – net | 11,625 | 12,320 | 14,605 | ||||||||||||
Other non-current assets | 74 | 82 | 127 | ||||||||||||
Goodwill | 8,059 | 8,059 | 8,059 | ||||||||||||
Total assets | 2,161,086 | 2,129,194 | 2,197,348 | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Accounts payable and accrued liabilities | 52,002 | 41,069 | 42,468 | ||||||||||||
Current portion of long-term debt | 106,236 | 103,843 | 166,745 | ||||||||||||
Current portion of derivative liabilities | 57 | — | — | ||||||||||||
Current obligation related to capital leases | 20,896 | 15,839 | 7,227 | ||||||||||||
Deferred revenue | — | 89 | 557 | ||||||||||||
Due to affiliates | 18,570 | 18,391 | 19,717 | ||||||||||||
Long-term debt | 629,170 | 703,235 | 785,557 | ||||||||||||
Long-term obligation related to capital leases | 354,393 | 280,871 | 141,681 | ||||||||||||
Other long-term liabilities | 32,829 | 30,646 | 26,795 | ||||||||||||
Equity | 946,933 | 935,211 | 1,006,601 | ||||||||||||
Total liabilities and equity | 2,161,086 | 2,129,194 | 2,197,348 | ||||||||||||
Teekay Tankers Ltd. | ||||||||||||||
Summary Consolidated Statements of Cash Flows | ||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||
Year Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||
2018 | 2017 | |||||||||||||
(unaudited) | (unaudited)(1) | |||||||||||||
Cash, cash equivalents and restricted cash (used for) provided by | ||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||
Net loss | (52,548 | ) | (58,023 | ) | ||||||||||
Non-cash items: | ||||||||||||||
Depreciation and amortization | 118,514 | 100,481 | ||||||||||||
(Gain) loss on sales of vessels | (170 | ) | 12,984 | |||||||||||
Unrealized gain on derivative instruments | (579 | ) | (937 | ) | ||||||||||
Equity (income) loss | (1,220 | ) | 25,370 | |||||||||||
Other | 11,664 | 8,093 | ||||||||||||
Change in operating assets and liabilities | (54,952 | ) | 6,590 | |||||||||||
Expenditures for dry docking | (27,972 | ) | (14,069 | ) | ||||||||||
Net operating cash flow | (7,263 | ) | 80,489 | |||||||||||
FINANCING ACTIVITIES | ||||||||||||||
Proceeds from long-term debt, net of issuance costs | 81,397 | 232,825 | ||||||||||||
Repayments of long-term debt | (165,365 | ) | (109,006 | ) | ||||||||||
Prepayment of long-term debt | (137,717 | ) | (443,796 | ) | ||||||||||
Proceeds from financing related to sales and leaseback of vessels | 241,339 | 153,000 | ||||||||||||
Scheduled repayments of obligation related to capital leases | (14,958 | ) | (4,090 | ) | ||||||||||
Cash dividends paid | (8,052 | ) | (20,679 | ) | ||||||||||
Proceeds from equity offerings, net of offering costs | — | 8,521 | ||||||||||||
Proceeds from issuance of common stock, net of share issuance costs | — | 5,000 | ||||||||||||
Other | (92 | ) | (241 | ) | ||||||||||
Net financing cash flow | (3,448 | ) | (178,466 | ) | ||||||||||
INVESTING ACTIVITIES | ||||||||||||||
Proceeds from sales of vessels | 589 | 52,131 | ||||||||||||
Expenditures for vessels and equipment | (5,827 | ) | (4,732 | ) | ||||||||||
Return of capital from equity-accounted investment | 746 | — | ||||||||||||
Loan repayments from equity-accounted investment | — | 550 | ||||||||||||
Cash acquired in TIL acquisition, net of transaction fees | — | 30,831 | ||||||||||||
Net investing cash flow | (4,492 | ) | 78,780 | |||||||||||
Decrease in cash, cash equivalents and restricted cash | (15,203 | ) | (19,197 | ) | ||||||||||
Cash, cash equivalents and restricted cash, beginning of the year | 75,710 | 94,907 | ||||||||||||
Cash, cash equivalents and restricted cash, end of the year | 60,507 | 75,710 |
Teekay Tankers Ltd. | |||||||||||||||||||||||||||||||||
Appendix A - Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||||
Adjusted Net Income (Loss) | |||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars, except per share amounts) | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
$ | $ PerShare(1) | $ | $ PerShare(1) | ||||||||||||||||||||||||||||||
Net income (loss) - GAAP basis | 11,502 | $0.04 | (1,879 | ) | ($0.01 | ) | |||||||||||||||||||||||||||
Add specific items affecting net loss: | |||||||||||||||||||||||||||||||||
Loss on sale of vessels | — | — | 489 | — | |||||||||||||||||||||||||||||
Unrealized loss (gain) on derivative instruments (3) | 2,708 | $0.01 | (2,205 | ) | ($0.01 | ) | |||||||||||||||||||||||||||
Other (4) | (208 | ) | — | (2,344 | ) | ($0.01 | ) | ||||||||||||||||||||||||||
Total adjustments | 2,500 | $0.01 | (4,060 | ) | ($0.02 | ) | |||||||||||||||||||||||||||
Adjusted net income (loss) attributable to shareholders of Teekay | |||||||||||||||||||||||||||||||||
Tankers | 14,002 | $0.05 | (5,939 | ) | ($0.03 | ) |
Year Ended | |||||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
$ | $ PerShare(1) | $ | $ PerShare(1) | ||||||||||||||||||||||||||||||
Net loss - GAAP basis | (52,548 | ) | ($0.20 | ) | (58,023 | ) | ($0.31 | ) | |||||||||||||||||||||||||
Subtract: | |||||||||||||||||||||||||||||||||
Net income attributable to the Entities under Common Control (2) | — | — | (1,303 | ) | ($0.01 | ) | |||||||||||||||||||||||||||
Net loss attributable to shareholders of Teekay Tankers | (52,548 | ) | ($0.20 | ) | (59,326 | ) | ($0.32 | ) | |||||||||||||||||||||||||
Add specific items affecting net loss: | |||||||||||||||||||||||||||||||||
(Gain) loss on sale of vessels | (170 | ) | — | 12,984 | $0.07 | ||||||||||||||||||||||||||||
Unrealized gain on derivative instruments (3) | (579 | ) | — | (937 | ) | ($0.01 | ) | ||||||||||||||||||||||||||
Other (4) | (1,421 | ) | — | 27,334 | $0.15 | ||||||||||||||||||||||||||||
Total adjustments | (2,170 | ) | — | 39,381 | $0.21 | ||||||||||||||||||||||||||||
Adjusted net loss attributable to shareholders of Teekay | |||||||||||||||||||||||||||||||||
Tankers | (54,718 | ) | ($0.20 | ) | (19,945 | ) | ($0.11 | ) |
Teekay Tankers Ltd. | ||||||||||||||||||||||||||||||
Appendix B - Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||
Free Cash Flow | ||||||||||||||||||||||||||||||
(in thousands of U.S. dollars, except share data) | ||||||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||||||
December 31,2018 | December 31,2017 | December 31,2018 | December 31,2017 | |||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||
Net income (loss) - GAAP basis | 11,502 | (1,879 | ) | (52,548 | ) | (58,023 | ) | |||||||||||||||||||||||
Subtract: | ||||||||||||||||||||||||||||||
Net income attributable to the Entities under Common Control (1) | — | — | — | (1,303 | ) | |||||||||||||||||||||||||
Net income (loss) attributable to shareholders of Teekay Tankers | 11,502 | (1,879 | ) | (52,548 | ) | (59,326 | ) | |||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||
Depreciation and amortization | 29,916 | 26,829 | 118,514 | 100,481 | ||||||||||||||||||||||||||
Proportionate share of free cash flow from equity-accounted investments | 1,409 | 1,429 | 2,983 | 8,284 | ||||||||||||||||||||||||||
Unrealized loss on derivative instruments | 2,708 | — | 2,708 | 1,700 | ||||||||||||||||||||||||||
Loss on sales of vessels | — | 489 | — | 12,984 | ||||||||||||||||||||||||||
Equity loss (2) | — | — | — | 24,063 | ||||||||||||||||||||||||||
Other | — | — | — | 2,325 | ||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||
Equity income (2) | (955 | ) | (1,804 | ) | (1,220 | ) | — | |||||||||||||||||||||||
Unrealized gain on derivative instruments | — | (2,205 | ) | (3,287 | ) | (2,636 | ) | |||||||||||||||||||||||
Gain on sale of vessels | — | — | (170 | ) | — | |||||||||||||||||||||||||
Free cash flow | 44,580 | 22,859 | 66,980 | 87,875 | ||||||||||||||||||||||||||
Weighted-average number of common shares outstanding for the period - basic | 268,558,556 | 212,107,100 | 268,492,922 | 187,235,377 | ||||||||||||||||||||||||||
Teekay Tankers Ltd. | |||||||||||||||||||||
Appendix C - Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||
Cash Flow from Vessel Operations - Consolidated | |||||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||
December 31,2018 | September 30,2018 | December 31,2017 | December 31,2018 | December 31,2017 | |||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||
Income (loss) from operations - GAAP basis | 31,206 | (2,166 | ) | 2,822 | 7,204 | 1,416 | |||||||||||||||
Depreciation and amortization | 29,916 | 29,595 | 26,829 | 118,514 | 100,481 | ||||||||||||||||
Loss (gain) on sale of vessels | — | — | 489 | (170 | ) | 12,984 | |||||||||||||||
CFVO – Consolidated | 61,122 | 27,429 | 30,140 | 125,548 | 114,881 | ||||||||||||||||
Less: CFVO attributable to the Entities under Common Control | — | — | — | — | (2,546 | ) | |||||||||||||||
CFVO – Equity Investments (See this Appendix C) | 1,132 | 321 | 1,994 | 3,322 | 10,803 | ||||||||||||||||
Total CFVO | 62,254 | 27,750 | 32,134 | 128,870 | 123,138 | ||||||||||||||||
Teekay Tankers Ltd. | ||||||||||||||||||||||||||||||||
Appendix C - Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||
Cash Flow from Vessel Operations - Equity-Accounted Investments | ||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
At | Company's | At | Company's | At | Company's | |||||||||||||||||||||||||||
100% | Portion (1) | 100% | Portion (1) | 100% | Portion (1) | |||||||||||||||||||||||||||
Revenues | 2,851 | 1,426 | 1,363 | 682 | 19,237 | 3,509 | ||||||||||||||||||||||||||
Vessel and other operating expenses | (588 | ) | (294 | ) | (722 | ) | (361 | ) | (10,739 | ) | (1,515 | ) | ||||||||||||||||||||
Depreciation and amortization | (908 | ) | (454 | ) | (903 | ) | (452 | ) | (6,316 | ) | (1,035 | ) | ||||||||||||||||||||
Income (loss) from vessel operations of equity-accounted investments | 1,355 | 678 | (262 | ) | (131 | ) | 2,182 | 959 | ||||||||||||||||||||||||
Interest expense | (451 | ) | (226 | ) | (456 | ) | (228 | ) | (3,137 | ) | (507 | ) | ||||||||||||||||||||
Realized and unrealized gain on derivative instruments | — | — | — | — | 21 | 11 | ||||||||||||||||||||||||||
Other | 1,006 | 503 | — | — | (445 | ) | (50 | ) | ||||||||||||||||||||||||
Equity income (loss) of equity-accounted vessels (2) | 1,910 | 955 | (718 | ) | (359 | ) | (1,379 | ) | 413 | |||||||||||||||||||||||
Income (loss) from vessel operations of equity-accounted investments | 1,355 | 678 | (262 | ) | (131 | ) | 2,182 | 959 | ||||||||||||||||||||||||
Depreciation and amortization | 908 | 454 | 903 | 452 | 6,316 | 1,035 | ||||||||||||||||||||||||||
Cash flow from vessel operations of equity-accounted investments | 2,263 | 1,132 | 641 | 321 | 8,498 | 1,994 |
Teekay Tankers Ltd. | ||||||||||||||||||||
Appendix C - Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
Cash Flow from Vessel Operations - Equity-Accounted Investments | ||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Year Ended | ||||||||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
At | Company's | At | Company's | |||||||||||||||||
100% | Portion (1) | 100% | Portion (1) | |||||||||||||||||
Revenues | 9,601 | 4,801 | 107,689 | 17,470 | ||||||||||||||||
Vessel and other operating expenses | (2,958 | ) | (1,479 | ) | (58,429 | ) | (6,667 | ) | ||||||||||||
Depreciation and amortization | (3,490 | ) | (1,745 | ) | (35,072 | ) | (5,250 | ) | ||||||||||||
Income from vessel operations of equity-accounted investments | 3,153 | 1,577 | 14,188 | 5,553 | ||||||||||||||||
Interest expense | (1,751 | ) | (876 | ) | (17,436 | ) | (2,569 | ) | ||||||||||||
Realized and unrealized gain on derivative instruments | 32 | 16 | 27 | 14 | ||||||||||||||||
Other | 1,006 | 503 | (3,140 | ) | (330 | ) | ||||||||||||||
Equity income (loss) of equity-accounted vessels (2) | 2,440 | 1,220 | (6,361 | ) | 2,668 | |||||||||||||||
Income from vessel operations of equity-accounted investments | 3,153 | 1,577 | 14,188 | 5,553 | ||||||||||||||||
Depreciation and amortization | 3,490 | 1,745 | 35,072 | 5,250 | ||||||||||||||||
Cash flow from vessel operations of equity-accounted investments | 6,643 | 3,322 | 49,260 | 10,803 |
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 timing and certainty of completing the sale-leaseback transaction for two vessels and the effect of the transaction, as well as other recent financing transactions, on the Company’s liquidity and future debt maturity profile; crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, the occurrence and expected timing of a stronger tanker market in the second half of 2019 and into 2020, forecasts of worldwide tanker fleet growth, the amount of tanker scrapping, estimated growth in global oil demand and supply, future OPEC oil supply, the impact of U.S. and Venezuelan crude oil production and exports on mid-size tanker demand, the impact of new pipeline capacity in the U.S. Gulf Coast, and estimated impact of IMO 2020 regulations; and the Company’s ability to benefit from a strengthening tanker market. 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 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; failure to complete the sale-leaseback transaction; 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, 2017. 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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