Highlights
Teekay Tankers Ltd. (Teekay Tankers or the Company) (NYSE: TNK)
today reported the Company's results for the quarter ended
September 30, 2018:
|
Three Months Ended |
(in
thousands of U.S. dollars, except per share data) |
September 30, 2018 |
June 30, 2018 |
September 30, 2017 |
GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
Total
revenues |
175,915 |
|
|
171,659 |
|
|
91,238 |
|
|
Loss from
operations |
(2,166 |
) |
|
(13,415 |
) |
|
(13,734 |
) |
|
Net
loss |
(17,484 |
) |
|
(27,413 |
) |
|
(22,380 |
) |
|
Loss per
share |
(0.07 |
) |
|
(0.10 |
) |
|
(0.12 |
) |
|
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
Total cash
flow from vessel operations (1) |
27,750 |
|
|
16,554 |
|
|
20,551 |
|
|
Adjusted
net loss (1) |
(18,001 |
) |
|
(28,743 |
) |
|
(13,966 |
) |
|
Adjusted
loss per share (1) |
(0.07 |
) |
|
(0.11 |
) |
|
(0.08 |
) |
|
Free cash
flow (1) |
12,558 |
|
|
1,980 |
|
|
11,947 |
|
|
(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).
GAAP net loss and non-GAAP adjusted net loss for
the third quarter of 2018 compared to the same period of the prior
year were negatively affected by the expiry of time-charter out
contracts for various vessels which have subsequently traded in the
spot market at lower rates, and costs associated with the
sale-leaseback transactions relating to six Aframax tankers. These
were partially offset by higher average spot tanker rates in the
third quarter of 2018 compared to the same period in the prior
year. GAAP net loss in the third quarter of 2017 included a loss on
sales of vessels.
Compared to the second quarter of 2018, GAAP net
loss and non-GAAP adjusted net loss for the third quarter of 2018
were primarily affected by higher average spot tanker rates.
CEO Commentary
“Crude tanker rates strengthened
counter-seasonally during the third quarter of 2018, which is
typically the weakest quarter of the year, and exceeded
our results from last quarter,” commented Kevin
Mackay, Teekay Tankers’ President and Chief Executive
Officer. “In the fourth quarter to-date, crude tanker
rates have continued to strengthen, driven
primarily by very low fleet growth as a result
of high scrapping activity and higher oil
production from OPEC, Russia and the United
States. Higher oil production in the United States
is also positive for mid-size tanker demand due to direct
exports to Europe
on Suezmax and Aframax tankers and reverse
lightering demand in the U.S. Gulf. Looking ahead, we
are very encouraged by the recent strength in crude
tanker rates, and we believe that we are at the beginning of a
more sustained recovery in the tanker market.”
“While the tanker market improves, we
continue to work on various financing initiatives,
including the recent completion of
two sale-leaseback transactions and a loan
to fund working capital in our revenue sharing agreement (RSA)
pooling operations, all of which have
further improved Teekay Tankers' liquidity and
extended our debt maturity profile.”
Summary of Recent Developments
Completed Financings
In September and November 2018, Teekay
Tankers completed two sale-leaseback
transactions relating to six vessels and four vessels,
respectively.
Also in November 2018, Teekay
Tankers completed a loan to finance working capital for
the Company's RSA pool management operations.
These transactions provide a total of
approximately $100 million of liquidity after the repayment of
outstanding debt related to the ten vessels, of which approximately
$40 million of liquidity relates to transactions that closed after
September 30, 2018.
Tanker Market
Crude tanker spot rates firmed
counter-seasonally during the third quarter of 2018, which is
typically the weakest quarter of the year, as higher OPEC and
Russian oil production, coupled with strong crude oil exports out
of the U.S. Gulf, offset the impact of seasonally lower oil demand.
Crude tanker rates during the third quarter of 2018 averaged higher
than rates in the second quarter for the first time since 2014.
Crude tanker rates have continued to strengthen
during the early part of the fourth quarter of 2018, particularly
in the Atlantic Basin with Aframax tanker rates in this
region attaining levels not seen since December 2016
and Suezmax tanker rates averaging the highest since
March 2017. While the Pacific Aframax market has not risen as
strongly, rates have trended higher than prior quarters. This
strength in rates is being driven by high levels of global oil
production in recent months, with OPEC adding a net 1.0 million
barrels per day (mb/d) of crude oil production to the
market since April 2018. Most of this increase has come from the
Middle East and Libya, with increased production in these regions
more than offsetting lower production from Venezuela and Iran.
Russia has added 0.4 mb/d of oil production over the same time
frame, which has increased mid-size tanker demand in the Baltic,
Black Sea and Mediterranean. U.S. crude oil exports have also
increased in recent months, and have averaged over 2 mb/d since May
2018. This is also positive for mid-size tanker demand, due to both
direct exports to Europe on Aframaxes and Suezmaxes and
through reverse lightering demand in the U.S. Gulf.
New U.S. sanctions on Iranian crude oil imports
entered into force on November 5, 2018. However, it is becoming
more apparent that the other members of OPEC have sufficient spare
oil production capacity to be able to offset any decline in Iranian
exports. In addition, the U.S. recently granted waivers to eight
countries, allowing them to continue importing Iranian crude for
the next six months. The resulting increase in oil production has
pushed crude oil prices back below $70/bbl, which is positive for
tanker earnings in the near-term due to lower bunker costs.
However, it may cause OPEC to revisit production levels in the
coming months, which could create some rate volatility through the
early part of 2019.
One of the key drivers behind the recent
strengthening in crude tanker rates is the very low level of fleet
growth seen year-to-date. During the first nine months of 2018, a
total of 22.7 million deadweight tonnes (mdwt) of tankers
were delivered into the fleet while 19.2 mdwt were
removed for scrapping, resulting in net fleet growth of just
3.5 mdwt (or 0.6 percent). Looking ahead, the Company
forecasts that fleet growth will increase moderately in 2019 due to
a relatively lower level of scrapping, but is expected to
remain below long-term average levels of approximately 3 percent.
The Company expects that fleet growth will also remain low in 2020
based on the current orderbook and the very limited remaining slots
available at shipyards in that year.
Global oil demand remains firm, though
forecasting agencies have slightly revised down their outlook for
2019 based on expectations of a modest slowdown in the global
economy. Nevertheless, the forecast of 1.4 mb/d oil demand growth
in 2019 (average of IEA, EIA and OPEC forecasts), is only
marginally lower than estimated growth of 1.5 mb/d in 2018, which
is expected to help support crude tanker demand next year.
According to the EIA, U.S. crude oil production is forecast to
increase by 1.2 mb/d in 2019. Much of this additional production is
anticipated to be available for export from the second half of
2019, when new pipeline capacity is due to come online bringing
shale oil from the Permian region to the U.S. Gulf coast. Finally,
the introduction of the new IMO regulations on sulphur content in
bunker fuels due to come into force on January 1, 2020, is expected
to be positive for tanker demand due to an increase in refinery
throughput, the emergence of new long-haul trade routes, and the
potential for floating storage demand for both crude and product
tankers.
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 |
|
September 30, 2018(i) |
June 30, 2018(i) |
September 30, 2017(i) |
Time Charter-Out Fleet |
|
|
|
|
|
|
Suezmax revenue days |
|
162 |
|
|
|
182 |
|
|
|
390 |
|
|
Suezmax TCE per revenue day |
$ |
17,630 |
|
|
$ |
21,508 |
|
|
$ |
23,098 |
|
|
Aframax revenue days |
|
393 |
|
|
|
512 |
|
|
|
550 |
|
|
Aframax TCE per revenue day |
$ |
20,559 |
|
|
$ |
21,269 |
|
|
$ |
21,937 |
|
|
LR2 revenue days |
|
92 |
|
|
|
137 |
|
|
|
184 |
|
|
LR2 TCE per revenue day |
$ |
17,732 |
|
|
$ |
17,214 |
|
|
$ |
17,134 |
|
|
|
|
|
|
|
|
|
Spot Fleet |
|
|
|
|
|
|
Suezmax revenue days |
|
2,476 |
|
|
|
2,516 |
|
|
|
1,415 |
|
|
Suezmax spot TCE per revenue day (ii) |
$ |
15,825 |
|
|
$ |
12,745 |
|
|
$ |
13,426 |
|
|
Aframax revenue days |
|
1,402 |
|
|
|
1,345 |
|
|
|
869 |
|
|
Aframax spot TCE per revenue day (iii) |
$ |
13,693 |
|
|
$ |
12,113 |
|
|
$ |
11,750 |
|
|
LR2 revenue days |
|
644 |
|
|
|
590 |
|
|
|
433 |
|
|
LR2 spot TCE per revenue day (iv) |
$ |
12,527 |
|
|
$ |
10,854 |
|
|
$ |
10,627 |
|
|
|
|
|
|
|
|
|
Total Fleet |
|
|
|
|
|
|
Suezmax revenue days |
|
2,638 |
|
|
|
2,698 |
|
|
|
1,805 |
|
|
Suezmax TCE per revenue day |
$ |
15,936 |
|
|
$ |
13,336 |
|
|
$ |
15,516 |
|
|
Aframax revenue days |
|
1,795 |
|
|
|
1,857 |
|
|
|
1,419 |
|
|
Aframax TCE per revenue day |
$ |
15,197 |
|
|
$ |
14,638 |
|
|
$ |
15,566 |
|
|
LR2 revenue days |
|
736 |
|
|
|
727 |
|
|
|
617 |
|
|
LR2 TCE per revenue day |
$ |
13,178 |
|
|
$ |
12,057 |
|
|
$ |
12,568 |
|
|
- 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.
- Includes vessels trading in the Teekay Suezmax RSA and non-pool
voyage charters.
- Includes vessels trading in the Teekay Aframax RSA, Teekay
Aframax Classic RSA, non-pool voyage charters and full service
lightering voyages.
- Includes vessels trading in the Teekay Taurus RSA and non-pool
voyage charters.
- Net revenues is a non-GAAP financial measure. Please refer to
"Definitions and Non-GAAP Financial Measures" for a definition of
this term.
Fourth Quarter of 2018 Spot Tanker Rates
Update
Below is Teekay Tankers’ spot tanker fleet
update for the fourth quarter of 2018 to-date:
- The portion of the Suezmax fleet trading on the spot market has
secured TCE per revenue day of approximately $19,000 per day on
average with 59 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 $19,900 per day on
average with 54 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 $17,000 per day on average with 42 percent of the
available days fixed(3).
(1) Combined average TCE rate
includes Suezmax RSA and non-pool voyage charters.(2)
Combined average TCE rate includes Aframax RSA, non-pool voyage
charters and full service lightering voyages.(3)
Combined average TCE rate includes Taurus RSA and non-pool
voyage charters.
Teekay Tankers’ Fleet
The following table summarizes the Company’s
fleet as of November 1, 2018 (including one committed time
charter-in contract for an Aframax tanker which is expected to
commence during November 2018):
|
Owned andCapital LeaseVessels |
Chartered-inVessels |
Total |
Fixed-rate: |
|
|
|
Suezmax Tankers |
2 |
— |
2 |
Aframax Tankers |
3 |
— |
3 |
LR2 Product Tanker |
— |
— |
— |
Total Fixed-Rate Fleet |
5 |
— |
5 |
Spot-rate: |
|
|
|
Suezmax Tankers |
28 |
— |
28 |
Aframax Tankers(i) |
14 |
2 |
16 |
LR2 Product
Tankers |
9 |
— |
9 |
VLCC
Tanker(ii) |
1 |
— |
1 |
Total Spot
Fleet |
52 |
2 |
54 |
Total Conventional Fleet |
57 |
2 |
59 |
STS Support Vessels |
3 |
3 |
6 |
Total Teekay
Tankers' Fleet |
60 |
5 |
65 |
- Includes two Aframax tankers with charter-in contracts that are
scheduled to expire in November 2019 and March 2021.
- The Company’s ownership interest in this vessel is 50
percent.
Liquidity Update
As at September 30, 2018, the Company had
total liquidity of $89.2 million (comprised of $54.4 million in
cash and cash equivalents and $34.8 million in undrawn revolving
credit facilities), compared to total liquidity of $80.2 million as
at June 30, 2018. The Company’s liquidity as of September 30, 2018
does not reflect the sale-leaseback transaction and
working capital loan that were completed in November
2018, which total approximately $40 million of additional
liquidity to Teekay Tankers.
Conference Call
The Company plans to host a conference call on
Thursday, November 15, 2018 at 1:00 p.m. (ET) to discuss its
results for the third quarter of 2018. All shareholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing (888) 220-8451 or (647) 484-0475, if outside of
North America, and quoting conference ID code 1928190.
- 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 Third 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 46
double-hull tankers, including 26 Suezmax tankers, 11 Aframax
tankers, and nine Long Range 2 (LR2) product tankers, and has four
Suezmax tankers and six Aframax tankers related to capital leases
and two 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 (Loss) Income, Free
Cash Flow, Net Revenues and Cash Flow from Vessel Operations, 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. The
Company believes that certain investors use this information to
evaluate the Company’s financial performance, as does
management.
Consolidated Financial
Measures
Adjusted net (loss) income excludes items of
income or loss from GAAP net income that are typically excluded by
securities analysts in their published estimates of the Company’s
financial results. The Company believes that certain investors use
this information to evaluate the Company’s financial performance,
as does management. Please refer to Appendix A of this release for
a reconciliation of this non-GAAP financial measure to net (loss)
income, 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. The Company previously 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 September
30, 2018, and June 30, 2018 and the nine months ended September 30,
2018 by $73.6 million, $67.5 million, and $202.4 million,
respectively.
Teekay Tankers Ltd.Summary Consolidated
Statements of Loss(in thousands of U.S. dollars, except
share and per share data)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
June 30, |
September 30, |
|
September 30, |
September 30, |
|
|
|
2018 |
2018 |
2017 |
|
2018 |
2017 |
|
|
|
(unaudited) |
(unaudited) |
(unaudited)(1) |
|
(unaudited) |
(unaudited)(1) |
|
|
|
|
|
|
|
|
|
|
Voyage
charter revenues (2)(4) |
152,047 |
|
144,328 |
|
25,397 |
|
|
432,017 |
|
94,881 |
|
|
Time-charter revenues |
12,326 |
|
17,384 |
|
24,681 |
|
|
51,820 |
|
85,102 |
|
|
Other
revenues (3) |
11,542 |
|
9,947 |
|
12,914 |
|
|
32,202 |
|
41,994 |
|
|
Net pool revenues (4) |
— |
|
— |
|
28,246 |
|
|
— |
|
108,535 |
|
|
Total revenues |
175,915 |
|
171,659 |
|
91,238 |
|
|
516,039 |
|
330,512 |
|
|
|
|
|
|
|
|
|
|
|
Voyage
expenses (2)(4) |
(83,048 |
) |
(86,933 |
) |
(18,303 |
) |
|
(249,974 |
) |
(61,488 |
) |
|
Vessel
operating expenses |
(52,161 |
) |
(52,652 |
) |
(40,958 |
) |
|
(157,808 |
) |
(131,949 |
) |
|
Time-charter hire expense |
(4,317 |
) |
(5,697 |
) |
(5,835 |
) |
|
(14,697 |
) |
(27,459 |
) |
|
Depreciation and amortization |
(29,595 |
) |
(29,573 |
) |
(24,328 |
) |
|
(88,598 |
) |
(73,652 |
) |
|
General and
administrative expenses |
(8,747 |
) |
(9,407 |
) |
(7,622 |
) |
|
(27,939 |
) |
(24,875 |
) |
|
Gain (loss)
on sales of vessels |
— |
|
170 |
|
(7,926 |
) |
|
170 |
|
(12,495 |
) |
|
Restructuring charge |
(213 |
) |
(982 |
) |
— |
|
|
(1,195 |
) |
— |
|
|
Loss from operations |
(2,166 |
) |
(13,415 |
) |
(13,734 |
) |
|
(24,002 |
) |
(1,406 |
) |
|
|
|
|
|
|
|
|
|
Interest
expense |
(15,006 |
) |
(13,931 |
) |
(7,299 |
) |
|
(41,666 |
) |
(21,681 |
) |
|
Interest
income |
250 |
|
160 |
|
305 |
|
|
568 |
|
744 |
|
|
Realized
and unrealized gain (loss) |
|
|
|
|
|
|
|
on
derivative instruments (5) |
596 |
|
1,116 |
|
390 |
|
|
4,725 |
|
(709 |
) |
|
Equity
(loss) income (6) |
(359 |
) |
(70 |
) |
(274 |
) |
|
265 |
|
(27,174 |
) |
|
Other expense |
(799 |
) |
(1,273 |
) |
(1,768 |
) |
|
(3,940 |
) |
(5,918 |
) |
|
Net loss |
(17,484 |
) |
(27,413 |
) |
(22,380 |
) |
|
(64,050 |
) |
(56,144 |
) |
|
|
|
|
|
|
|
|
|
Loss per
share attributable |
|
|
|
|
|
|
|
|
to shareholders of
Teekay Tankers |
|
|
|
|
|
|
|
|
- Basic and
Diluted |
(0.07 |
) |
(0.10 |
) |
(0.12 |
) |
|
(0.24 |
) |
(0.31 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of total common |
|
|
|
|
|
|
|
shares outstanding |
|
|
|
|
|
|
|
|
- Basic and Diluted
(1) |
268,558,556 |
|
268,558,556 |
|
179,224,094 |
|
|
268,470,804 |
|
178,853,698 |
|
|
|
|
|
|
|
|
|
|
|
Number of
outstanding shares of common stock at the end of the
period |
268,558,556 |
|
268,558,556 |
|
179,224,094 |
|
|
268,558,556 |
|
179,224,094 |
|
|
- Prior to May 31, 2017, the Company owned 50 percent of Teekay
Tanker Operations Ltd. (TTOL) and accounted for this investment
using the equity method of accounting. The Company acquired the
remaining 50 percent of TTOL on May 31, 2017 from Teekay
Corporation, resulting in the Company owning 100 percent of TTOL
and consolidating its results. Periods prior to May 31, 2017 have
been recast to include 100 percent of TTOL's results on a
consolidated basis in accordance with common control accounting as
required under GAAP. As a result, the weighted-average number of
common shares outstanding for periods prior to May 2017 has been
retroactively adjusted to include the approximately 13.8 million
shares of the Company's Class B common stock issued to Teekay
Corporation as consideration for the acquisition. The impact of
this recasting is referred to herein as the "Entities under Common
Control", and such amounts are summarized for the respective
periods in Appendix A.
- 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 $12.4 million, $22.9 million and $17.0
million for the three months ended September 30, 2018, June 30,
2018 and September 30, 2017, respectively, and $56.7 million and
$52.4 million for the nine months ended September 30, 2018 and
September 30, 2017, respectively.
- Other revenues include lightering support and liquefied natural
gas services revenue, and pool management fee and commission
revenues earned from TTOL.
- Commencing January 1, 2018, the Company adopted Accounting
Standards Update 2014-09 as required under GAAP. The Company
previously 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,
revenue from those voyages is presented 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 impact of increasing both voyage charter revenues and voyage
expenses for the three months ended September 30, 2018 and June 30,
2018 and the nine months ended September 30, 2018 by $73.6 million,
$67.5 million, and $202.4 million, respectively. This change has
been adopted prospectively from January 1, 2018.
- Includes realized losses and gains relating to interest rate
swaps entered into by the Company. For the three months ended
September 30, 2018, June 30, 2018 and September 30, 2017, the
Company recognized a realized gain on its interest rate swaps of
$0.7 million, a realized gain of $0.7 million and a realized loss
of $0.2 million, respectively, and a realized gain of $1.6 million
and a realized loss of $0.9 million for the nine months ended
September 30, 2018 and 2017, respectively. The Company recognized
realized gains relating to a time-charter swap agreement of $1.1
million for the nine months ended September 30, 2017.
- Included in equity (loss) income are the Company’s 50 percent
interest in the High-Q Investment Ltd. (High-Q) joint venture,
which owns one VLCC tanker, its 50 percent interest in Gemini
Tankers L.L.C. (until March 2018, when the remaining capital was
returned to the Company), and its proportionate 11.3 percent share
of earnings from its investment in Tanker Investments Ltd. (TIL)
until November 27, 2017, when the Company completed a merger with
TIL. From that date, TIL became a wholly-owned subsidiary of
the Company, and it has been consolidated.
Components of equity (loss) income are detailed
in the table below:
|
|
Three Months Ended |
Nine Months Ended |
|
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
|
2018 |
2018 |
2017 |
2018 |
2017 |
High-Q
Joint Venture |
(359 |
) |
|
(70 |
) |
|
788 |
|
|
265 |
|
|
2,337 |
|
|
Tanker
Investments Ltd. |
— |
|
|
— |
|
|
(1,064 |
) |
|
— |
|
|
(1,384 |
) |
|
Fair value
adjustment of |
|
|
|
|
|
|
|
|
|
|
|
Tanker Investments Ltd.
(i) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(28,124 |
) |
|
Gemini Tankers L.L.C. |
— |
|
|
— |
|
|
2 |
|
|
— |
|
|
(3 |
) |
|
Total equity (loss) income |
(359 |
) |
|
(70 |
) |
|
(274 |
) |
|
265 |
|
|
(27,174 |
) |
|
- As part of the accounting for the TIL merger, GAAP treats the
Company's existing equity investment in TIL as being disposed of at
its existing fair value and concurrently repurchased at such fair
value, which is included in the cost of the acquisition of the 100
percent controlling interest in TIL. In June 2017, it was
determined at that time that recovery of the carrying value of the
Company's investment in TIL prior to closing of the merger would be
unlikely. Consequently, a non-cash impairment of $28.1 million was
required under GAAP to be recognized in the three months ended June
30, 2017 based on the difference between the carrying value of the
investment at June 30, 2017 and its fair value based on the TIL
share price on that date.
Teekay Tankers Ltd.Summary Consolidated
Balance Sheets(in thousands of U.S. dollars)
|
As at |
As at |
As at |
|
September 30, |
June 30, |
December 31, |
|
2018 |
2018 |
2017 |
|
(unaudited) |
(unaudited) |
(unaudited)(1) |
ASSETS |
|
|
|
|
|
|
Cash and cash
equivalents |
54,361 |
|
|
48,457 |
|
|
71,439 |
|
|
Restricted cash |
1,794 |
|
|
1,858 |
|
|
1,599 |
|
|
Pool receivable from
affiliates |
26,923 |
|
|
24,714 |
|
|
15,550 |
|
|
Accounts
receivable |
17,048 |
|
|
15,912 |
|
|
19,288 |
|
|
Due from
affiliates |
50,551 |
|
|
50,034 |
|
|
49,103 |
|
|
Current portion of
derivative assets |
3,075 |
|
|
2,728 |
|
|
1,016 |
|
|
Prepaid expenses |
22,662 |
|
|
21,523 |
|
|
18,690 |
|
|
Other current
assets |
1,385 |
|
|
3,103 |
|
|
— |
|
|
Restricted cash -
long-term |
2,672 |
|
|
2,672 |
|
|
2,672 |
|
|
Vessels and equipment –
net |
1,556,959 |
|
|
1,695,722 |
|
|
1,737,792 |
|
|
Vessels related to
capital leases – net |
340,961 |
|
|
221,825 |
|
|
227,722 |
|
|
Investment in and
advances to equity-accounted |
|
|
|
|
|
|
investments |
24,811 |
|
|
25,170 |
|
|
25,460 |
|
|
Derivative assets |
5,531 |
|
|
5,797 |
|
|
4,226 |
|
|
Intangible assets –
net |
12,320 |
|
|
13,030 |
|
|
14,605 |
|
|
Other non-current
assets |
82 |
|
|
92 |
|
|
127 |
|
|
Goodwill |
8,059 |
|
|
8,059 |
|
|
8,059 |
|
|
Total assets |
2,129,194 |
|
|
2,140,696 |
|
|
2,197,348 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Accounts payable and
accrued liabilities |
41,069 |
|
|
39,885 |
|
|
42,468 |
|
|
Current portion of
long-term debt |
103,843 |
|
|
155,089 |
|
|
166,745 |
|
|
Current portion of
derivative liabilities |
— |
|
|
16 |
|
|
— |
|
|
Current obligation
related to capital leases |
15,839 |
|
|
7,454 |
|
|
7,227 |
|
|
Deferred revenue |
89 |
|
|
61 |
|
|
557 |
|
|
Due to affiliates |
18,391 |
|
|
39,422 |
|
|
19,717 |
|
|
Long-term debt |
703,235 |
|
|
778,728 |
|
|
785,557 |
|
|
Long-term obligation
related to capital leases |
280,871 |
|
|
137,951 |
|
|
141,681 |
|
|
Other long-term
liabilities |
30,646 |
|
|
29,620 |
|
|
26,795 |
|
|
Equity |
935,211 |
|
|
952,470 |
|
|
1,006,601 |
|
|
Total liabilities and equity |
2,129,194 |
|
|
2,140,696 |
|
|
2,197,348 |
|
|
- See note 1 to the Summary Consolidated Statements of Loss
included in this release for further details.
Teekay Tankers Ltd.Summary Consolidated
Statements of Cash Flows(in thousands of U.S. dollars)
|
|
Nine Months Ended |
|
|
September 30, |
September 30, |
|
|
2018 |
2017 |
|
|
(unaudited) |
(unaudited)(1) |
Cash, cash
equivalents and restricted cash (used for) provided by |
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net
loss |
(64,050 |
) |
|
(56,144 |
) |
|
Non-cash
items: |
|
|
|
|
Depreciation and amortization |
88,598 |
|
|
73,652 |
|
|
(Gain) loss on sales of vessels |
(170 |
) |
|
12,495 |
|
|
Unrealized (gain) loss on derivative instruments |
(3,287 |
) |
|
1,268 |
|
|
Equity (income) loss |
(265 |
) |
|
27,174 |
|
|
Other |
8,166 |
|
|
8,827 |
|
|
Change in
operating assets and liabilities |
(17,402 |
) |
|
7,013 |
|
|
Expenditures for dry docking |
(17,035 |
) |
|
(6,448 |
) |
|
Net operating cash flow |
(5,445 |
) |
|
67,837 |
|
|
FINANCING ACTIVITIES |
|
|
|
|
Proceeds
from long-term debt, net of issuance costs |
46,128 |
|
|
14,919 |
|
|
Repayments
of long-term debt |
(92,380 |
) |
|
(82,054 |
) |
|
Prepayment
of long-term debt |
(102,717 |
) |
|
(222,302 |
) |
|
Proceeds
from financing related to sales and leaseback of vessels |
156,644 |
|
|
153,000 |
|
|
Scheduled
repayments of obligation related to capital leases |
(8,841 |
) |
|
(2,312 |
) |
|
Cash
dividends paid |
(8,052 |
) |
|
(15,302 |
) |
|
Proceeds
from equity offerings, net of offering costs |
— |
|
|
8,565 |
|
|
Proceeds
from issuance of Class A common stock |
— |
|
|
5,000 |
|
|
Other |
(92 |
) |
|
(241 |
) |
|
Net financing cash flow |
(9,310 |
) |
|
(140,727 |
) |
|
INVESTING ACTIVITIES |
|
|
|
|
Proceeds
from sales of vessels |
589 |
|
|
45,859 |
|
|
Expenditures for vessels and equipment |
(3,463 |
) |
|
(3,503 |
) |
|
Return of
capital from equity-accounted investment |
746 |
|
|
— |
|
|
Loan repayments from equity-accounted investment |
— |
|
|
550 |
|
|
Net investing cash flow |
(2,128 |
) |
|
42,906 |
|
|
|
|
|
|
|
Decrease in
cash, cash equivalents and restricted cash |
(16,883 |
) |
|
(29,984 |
) |
|
Cash, cash equivalents and restricted cash, beginning
of the period |
75,710 |
|
|
94,907 |
|
|
Cash, cash equivalents and restricted cash, end
of the period |
58,827 |
|
|
64,923 |
|
|
- See note 1 to the Summary Consolidated Statements of Loss
included in this release for further details.
Teekay Tankers Ltd.Appendix A -
Reconciliation of Non-GAAP Financial
MeasuresAdjusted Net Loss(in thousands of
U.S. dollars, except per share amounts)
|
|
|
Three Months Ended |
|
|
|
September 30, 2018 |
|
September 30, 2017 |
|
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
$ |
$ Per Share(1) |
|
$ |
$ Per Share(1) |
|
Net loss - GAAP basis |
(17,484 |
) |
|
($ |
0.07 |
) |
|
(22,380 |
) |
|
($ |
0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
Add
specific items affecting net loss: |
|
|
|
|
|
|
|
|
|
Loss on
sales of vessels |
— |
|
|
|
— |
|
|
7,926 |
|
|
$ |
0.04 |
|
|
|
Unrealized
gain on derivative instruments (2) |
(4 |
) |
|
|
— |
|
|
(310 |
) |
|
|
— |
|
|
|
Other (3) |
(513 |
) |
|
|
— |
|
|
798 |
|
|
|
— |
|
|
Total adjustments |
(517 |
) |
|
|
— |
|
|
8,414 |
|
|
$ |
0.04 |
|
|
Adjusted net loss attributable to shareholders of
Teekay |
|
|
|
|
|
|
|
|
|
Tankers |
(18,001 |
) |
|
($ |
0.07 |
) |
|
(13,966 |
) |
|
($ |
0.08 |
) |
|
- Basic per share amounts.
- Reflects unrealized gains or losses due to the changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes, including unrealized
gains or losses on interest rate swaps.
- The amount recorded for the three months ended September 30,
2018 primarily relates to foreign exchange gains, debt issuance
costs which were written off in connection with the refinancing of
the Company's debt facilities and restructuring charges. The
amount recorded for the three months ended September 30, 2017
includes the unrealized derivative gains and losses in joint
ventures and foreign exchange gains and 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 |
|
|
|
September 30, 2018 |
September 30, 2017 |
|
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
|
Net loss - GAAP basis |
(17,484 |
) |
|
(22,380 |
) |
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
Depreciation and
amortization |
29,595 |
|
|
24,328 |
|
|
|
|
Proportionate share of
free cash flow from equity-accounted investments |
92 |
|
|
1,364 |
|
|
|
|
Loss on sales of
vessels |
— |
|
|
7,926 |
|
|
|
|
Equity loss (1) |
359 |
|
|
274 |
|
|
|
|
Other |
— |
|
|
745 |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
Unrealized gain on
derivative instruments |
(4 |
) |
|
(310 |
) |
|
|
|
|
|
|
|
|
Free cash flow |
12,558 |
|
|
11,947 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding for the period
- basic |
268,558,556 |
|
|
179,224,094 |
|
|
|
|
|
|
|
- Included in equity loss is the Company’s 50 percent interest in
the High-Q joint venture, which owns one VLCC tanker. For the
three months ended September 30, 2017, equity loss also included
the Company's 50 percent interest in Gemini Tankers L.L.C. and its
proportionate 11.3 percent share of earnings from its investment in
TIL prior to the TIL merger.
Teekay Tankers Ltd.Appendix C -
Reconciliation of Non-GAAP Financial MeasuresCash
Flow from Vessel Operations - Consolidated(in thousands of
U.S. dollars)
|
Three Months Ended |
|
September 30, 2018 |
June 30, 2018 |
September 30, 2017 |
|
(unaudited) |
(unaudited) |
(unaudited) |
Loss from operations -
GAAP basis |
(2,166 |
) |
(13,415 |
) |
(13,734 |
) |
Depreciation and
amortization |
29,595 |
|
29,573 |
|
24,328 |
|
(Gain)
loss on sales of vessels |
— |
|
(170 |
) |
7,926 |
|
CFVO –
Consolidated |
27,429 |
|
15,988 |
|
18,520 |
|
CFVO – Equity
Investments (See this Appendix C) |
321 |
|
566 |
|
2,031 |
|
Total CFVO |
27,750 |
|
16,554 |
|
20,551 |
|
Teekay Tankers Ltd.Appendix C -
Reconciliation of Non-GAAP Financial MeasuresCash
Flow from Vessel Operations - Equity-Accounted
Investments(in thousands of U.S. dollars)
|
Three Months Ended |
|
September 30, 2018 |
June 30, 2018 |
September 30, 2017 |
|
(unaudited) |
(unaudited) |
(unaudited) |
|
At |
Company's |
At |
Company's |
At |
Company's |
|
100 |
% |
Portion (1) |
100% |
Portion (1) |
100% |
Portion (1) |
Revenues |
1,363 |
|
682 |
|
2,012 |
|
1,006 |
|
24,861 |
|
4,144 |
|
Vessel and other
operating expenses |
(722 |
) |
(361 |
) |
(880 |
) |
(440 |
) |
(16,463 |
) |
(2,113 |
) |
Depreciation and
amortization |
(903 |
) |
(452 |
) |
(849 |
) |
(425 |
) |
(9,740 |
) |
(1,422 |
) |
(Loss) income from vessel operations of equity-accounted
investments |
(262 |
) |
(131 |
) |
283 |
|
141 |
|
(1,342 |
) |
609 |
|
Interest expense |
(456 |
) |
(228 |
) |
(436 |
) |
(218 |
) |
(4,740 |
) |
(686 |
) |
Realized and unrealized
gain (loss) on derivative instruments |
— |
|
— |
|
13 |
|
7 |
|
(2 |
) |
(1 |
) |
Other |
— |
|
— |
|
— |
|
— |
|
(1,756 |
) |
(199 |
) |
Equity loss of equity-accounted vessels |
(718 |
) |
(359 |
) |
(140 |
) |
(70 |
) |
(7,840 |
) |
(277 |
) |
|
|
|
|
|
|
|
(Loss) income from
vessel operations of equity-accounted investments |
(262 |
) |
(131 |
) |
283 |
|
141 |
|
(1,342 |
) |
609 |
|
Depreciation and
amortization |
903 |
|
452 |
|
849 |
|
425 |
|
9,740 |
|
1,422 |
|
Cash flow from vessel operations of equity-accounted
investments |
641 |
|
321 |
|
1,132 |
|
566 |
|
8,398 |
|
2,031 |
|
(1) The Company’s proportionate
share of its equity-accounted vessels and other investments ranges
from 11.3 percent to 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 and future debt
maturity profile; 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 more sustained tanker market
recovery, forecasts of worldwide tanker fleet growth, the amount of
tanker scrapping and newbuild tanker deliveries, estimated growth
in global oil demand and supply, future tanker rates, future OPEC
oil supply, the impact of U.S. crude oil production and exports 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, 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.
Teekay Tankers (NYSE:TNK)
Historical Stock Chart
From Apr 2024 to May 2024
Teekay Tankers (NYSE:TNK)
Historical Stock Chart
From May 2023 to May 2024