News Content
Teekay Tankers Ltd. Reports Third Quarter Results
Teekay Tankers Ltd. yesterday reported an adjusted net loss attributable to shareholders of Teekay Tankers of $4.0 million, or $0.05 per share, for the quarter ended September 30, 2013, compared to adjusted net loss attributable to shareholders of Teekay Tankers of $7.7 million, or $0.09 per share, for the same period in the prior year.
The decrease in adjusted net loss attributable to shareholders of Teekay Tankers is primarily due to a decrease in depreciation expense as a result of vessel impairments recorded in the fourth quarter of 2012 and stronger Aframax spot rates in the third quarter of 2013 compared to the same period of the prior year, partially offset by the change in employment of certain of the Company's vessels from fixed rates to lower spot rates on expiry of their fixed-rate charters, lower average realized spot tanker rates for Suezmax and LR2 vessels and a reduction in interest income earned from the Company's investment in term loans. Adjusted net loss attributable to shareholders of Teekay Tankers excludes a number of specific items that had the net effect of increasing net loss attributable to shareholders of Teekay Tankers by $10.6 million, or $0.12 per share, and $2.0 million, or $0.03 per share, for the three month periods ended September 30, 2013 and September 30, 2012, respectively, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, a net loss attributable to shareholders of Teekay Tankers of $14.6 million, or $0.17 per share, for the quarter ended September 30, 2013, compared to a net loss attributable to shareholders of Teekay Tankers of $9.7 million, or $0.12 per share, for the quarter ended September 30, 2012. Net revenues were $39.0 million and $43.9 million for the quarters ended September 30, 2013 and September 30, 2012, respectively.
"Relatively stronger spot tanker earnings and lower vessel operating expenses resulted in higher cash flows for Teekay Tankers in the third quarter compared to the second quarter," commented Bruce Chan, Teekay Tankers' Chief Executive Officer. "During this period of spot tanker market weakness, we continue to focus on the strong fixed-rate coverage of our fleet as demonstrated by our previously announced one-year Aframax time-charter out extension at a rate of $15,150 per day. This contract extension preserves our forecasted fixed-rate coverage at approximately 40 percent for the next 12 months and 35 percent for fiscal 2014."
Mr. Chan continued, "Due to our fixed-rate charter coverage, available liquidity of approximately $226 million as at September 30, 2013 and no significant debt maturities until 2017, we believe Teekay Tankers is financially stable and well-positioned to benefit from a tanker market recovery. In addition, with Teekay Tankers' transition to a fixed dividend policy in the first quarter of this year, an increasing portion of our future operating cash flow will be retained as the tanker market recovers, positioning the Company for future growth."
For the nine months ended September 30, 2013, the Company reported an adjusted net loss attributable to shareholders of Teekay Tankers of $13.9 million, or $0.17 per share, compared to adjusted net loss attributed to the shareholders of Teekay Tankers of $3.7 million, or $0.05 per share, for the same period in the prior year. The increase in adjusted net loss attributable to shareholders of Teekay Tankers is primarily due to the change in employment of certain of the Company's vessels from fixed rates to lower spot rates on expiry of their fixed-rate charters, lower average spot realized tanker rates for the first nine months of 2013 compared to the same period in the prior year and a reduction in interest income earned from the Company's investment in term loans, partially offset by a decrease in depreciation expense as a result of vessel impairments recorded in the fourth quarter of 2012. Adjusted net loss attributable to shareholders of Teekay Tankers excludes a number of specific items that had the net effect of increasing net loss attributable to shareholders of Teekay Tankers by $8.4 million, or $0.1 per share, and $0.8 million or $0.01 per share, for the nine month periods ended September 30, 2013 and September 30, 2012, respectively, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, a net loss attributable to shareholders of Teekay Tankers of $22.3 million, or $0.27 per share, for the nine months ended September 30, 2013, compared to a net loss attributable to shareholders of Teekay Tankers of $4.4 million, or $0.06 per share, for the nine months ended September 30, 2012. Net revenues were $122.1 million and $148.3 million for the nine months ended September 30, 2013 and September 30, 2012, respectively.
The Company's financial statements for prior periods include the historical results of the 13 vessels acquired by the Company from Teekay Corporation in June 2012, referred to herein as the Dropdown Predecessor, for the periods when these vessels were owned and operated by Teekay Corporation, which includes all of 2012.
During the third quarter of 2013, the Company generated $8.7 million, or $0.10 per share, of Cash Available for Distribution, compared to $5.6 million, or $0.07 per share, in the second quarter of 2013. On October 4, 2013, Teekay Tankers declared its fixed dividend of $0.03 per share for the third quarter of 2013, which was paid on October 25, 2013 to all shareholders of record on October 16, 2013. Since the Company's initial public offering in December 2007, it has declared dividends in 24 consecutive quarters, which now totals $7.275 per share on a cumulative basis.
Summary of Recent Events
First Priority VLCC Mortgage Loans
In the third quarter of 2013, the Company recorded a $10.4 million loss provision on its investment in term loans secured by two 2010-built Very Large Crude Carrier (VLCC) vessels. This provision reflects the estimated loss that could be incurred based on the Company's current estimates of the amounts recoverable based on the two VLCC vessels' future operating cash flows and the net proceeds from their eventual sale. The actual amount recoverable from the Company's investment in the term loans may vary from the Company's current estimates depending on various factors, including the vessels' actual future operating cash flows and actual net proceeds realized from the sale of the vessels.
Currently, one of the vessels is trading in the spot tanker market under Teekay Tankers' management while the other vessel remains under detention by the authorities in Egypt. The insurers of this vessel are currently in negotiations with the authorities in Egypt to expedite its release. Once the vessel is released, it is expected that it will commence trading in the spot tanker market under Teekay Tankers' management.
Long Range 2 (LR2) Product Tanker Newbuilding Orders
In October 2013, Teekay Tankers exercised options with STX Offshore & Shipbuilding Co., Ltd. (STX) of South Korea to order four fuel-efficient 113,000 dead-weight tonne LR2 product tankers, in addition to the four tankers it ordered from STX in April 2013. The payment of the first shipyard installments on these recent four additional vessels by Teekay Tankers to STX is contingent on the Company receiving acceptable refund guarantees from the shipyard for vessel installment payments. To date, Teekay Tankers has not made any installment payments to the yard for any of the eight LR2 product tanker newbuildings ordered in April and October 2013. Prior to receiving the refund guarantees, Teekay Tankers has the right to cancel the newbuilding orders at its discretion. STX has been unable to secure the refund guarantees; therefore, Teekay Tankers is evaluating its alternatives, including legal action for damages.
Fixed Rate Time-Charter Coverage
In July 2013, Teekay Tankers extended a time-charter out contract for the Aframax tanker, Kanata Spirit, for 12 months at a rate of $15,150 per day.
Source: Teekay Tankers Ltd.
The decrease in adjusted net loss attributable to shareholders of Teekay Tankers is primarily due to a decrease in depreciation expense as a result of vessel impairments recorded in the fourth quarter of 2012 and stronger Aframax spot rates in the third quarter of 2013 compared to the same period of the prior year, partially offset by the change in employment of certain of the Company's vessels from fixed rates to lower spot rates on expiry of their fixed-rate charters, lower average realized spot tanker rates for Suezmax and LR2 vessels and a reduction in interest income earned from the Company's investment in term loans. Adjusted net loss attributable to shareholders of Teekay Tankers excludes a number of specific items that had the net effect of increasing net loss attributable to shareholders of Teekay Tankers by $10.6 million, or $0.12 per share, and $2.0 million, or $0.03 per share, for the three month periods ended September 30, 2013 and September 30, 2012, respectively, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, a net loss attributable to shareholders of Teekay Tankers of $14.6 million, or $0.17 per share, for the quarter ended September 30, 2013, compared to a net loss attributable to shareholders of Teekay Tankers of $9.7 million, or $0.12 per share, for the quarter ended September 30, 2012. Net revenues were $39.0 million and $43.9 million for the quarters ended September 30, 2013 and September 30, 2012, respectively.
"Relatively stronger spot tanker earnings and lower vessel operating expenses resulted in higher cash flows for Teekay Tankers in the third quarter compared to the second quarter," commented Bruce Chan, Teekay Tankers' Chief Executive Officer. "During this period of spot tanker market weakness, we continue to focus on the strong fixed-rate coverage of our fleet as demonstrated by our previously announced one-year Aframax time-charter out extension at a rate of $15,150 per day. This contract extension preserves our forecasted fixed-rate coverage at approximately 40 percent for the next 12 months and 35 percent for fiscal 2014."
Mr. Chan continued, "Due to our fixed-rate charter coverage, available liquidity of approximately $226 million as at September 30, 2013 and no significant debt maturities until 2017, we believe Teekay Tankers is financially stable and well-positioned to benefit from a tanker market recovery. In addition, with Teekay Tankers' transition to a fixed dividend policy in the first quarter of this year, an increasing portion of our future operating cash flow will be retained as the tanker market recovers, positioning the Company for future growth."
For the nine months ended September 30, 2013, the Company reported an adjusted net loss attributable to shareholders of Teekay Tankers of $13.9 million, or $0.17 per share, compared to adjusted net loss attributed to the shareholders of Teekay Tankers of $3.7 million, or $0.05 per share, for the same period in the prior year. The increase in adjusted net loss attributable to shareholders of Teekay Tankers is primarily due to the change in employment of certain of the Company's vessels from fixed rates to lower spot rates on expiry of their fixed-rate charters, lower average spot realized tanker rates for the first nine months of 2013 compared to the same period in the prior year and a reduction in interest income earned from the Company's investment in term loans, partially offset by a decrease in depreciation expense as a result of vessel impairments recorded in the fourth quarter of 2012. Adjusted net loss attributable to shareholders of Teekay Tankers excludes a number of specific items that had the net effect of increasing net loss attributable to shareholders of Teekay Tankers by $8.4 million, or $0.1 per share, and $0.8 million or $0.01 per share, for the nine month periods ended September 30, 2013 and September 30, 2012, respectively, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, a net loss attributable to shareholders of Teekay Tankers of $22.3 million, or $0.27 per share, for the nine months ended September 30, 2013, compared to a net loss attributable to shareholders of Teekay Tankers of $4.4 million, or $0.06 per share, for the nine months ended September 30, 2012. Net revenues were $122.1 million and $148.3 million for the nine months ended September 30, 2013 and September 30, 2012, respectively.
The Company's financial statements for prior periods include the historical results of the 13 vessels acquired by the Company from Teekay Corporation in June 2012, referred to herein as the Dropdown Predecessor, for the periods when these vessels were owned and operated by Teekay Corporation, which includes all of 2012.
During the third quarter of 2013, the Company generated $8.7 million, or $0.10 per share, of Cash Available for Distribution, compared to $5.6 million, or $0.07 per share, in the second quarter of 2013. On October 4, 2013, Teekay Tankers declared its fixed dividend of $0.03 per share for the third quarter of 2013, which was paid on October 25, 2013 to all shareholders of record on October 16, 2013. Since the Company's initial public offering in December 2007, it has declared dividends in 24 consecutive quarters, which now totals $7.275 per share on a cumulative basis.
Summary of Recent Events
First Priority VLCC Mortgage Loans
In the third quarter of 2013, the Company recorded a $10.4 million loss provision on its investment in term loans secured by two 2010-built Very Large Crude Carrier (VLCC) vessels. This provision reflects the estimated loss that could be incurred based on the Company's current estimates of the amounts recoverable based on the two VLCC vessels' future operating cash flows and the net proceeds from their eventual sale. The actual amount recoverable from the Company's investment in the term loans may vary from the Company's current estimates depending on various factors, including the vessels' actual future operating cash flows and actual net proceeds realized from the sale of the vessels.
Currently, one of the vessels is trading in the spot tanker market under Teekay Tankers' management while the other vessel remains under detention by the authorities in Egypt. The insurers of this vessel are currently in negotiations with the authorities in Egypt to expedite its release. Once the vessel is released, it is expected that it will commence trading in the spot tanker market under Teekay Tankers' management.
Long Range 2 (LR2) Product Tanker Newbuilding Orders
In October 2013, Teekay Tankers exercised options with STX Offshore & Shipbuilding Co., Ltd. (STX) of South Korea to order four fuel-efficient 113,000 dead-weight tonne LR2 product tankers, in addition to the four tankers it ordered from STX in April 2013. The payment of the first shipyard installments on these recent four additional vessels by Teekay Tankers to STX is contingent on the Company receiving acceptable refund guarantees from the shipyard for vessel installment payments. To date, Teekay Tankers has not made any installment payments to the yard for any of the eight LR2 product tanker newbuildings ordered in April and October 2013. Prior to receiving the refund guarantees, Teekay Tankers has the right to cancel the newbuilding orders at its discretion. STX has been unable to secure the refund guarantees; therefore, Teekay Tankers is evaluating its alternatives, including legal action for damages.
Fixed Rate Time-Charter Coverage
In July 2013, Teekay Tankers extended a time-charter out contract for the Aframax tanker, Kanata Spirit, for 12 months at a rate of $15,150 per day.
Source: Teekay Tankers Ltd.
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