Teekay Tankers Ltd (TNK) Misses Q2 EPS by 25c, Revenues Beat

Teekay Tankers Ltd (NYSE: TNK) reported Q2 EPS of ($1.23), $0.25 worse than the analyst estimate of ($0.98). Revenue for the quarter came in at $123.42 million versus the consensus estimate of $80.65 million.

CEO Commentary

“Crude spot tanker rate weakness persisted in the second quarter of 2021 due to ongoing OPEC+ production cuts resulting from reduced oil demand related to the COVID-19 pandemic, an uneven economic recovery across various geographies, and a concentration of newbuilding deliveries in the first half of 2021,” commented Kevin Mackay, Teekay Tankers’ President and CEO.

“The tanker market weakened further early in the third quarter of 2021, particularly affecting our Suezmax tanker segment due to the timing of repositioning unfixed vessels. While the repositionings should optimize earnings for the full quarter, we have incurred additional bunker fuel expenses in the short-term, resulting in a lower reported third quarter to-date TCE rate,” commented Mr. Mackay. “Looking ahead, although the near-term outlook is uncertain due to COVID-19, we believe many of the leading indicators for a tanker market recovery continue to improve, including planned increases in OPEC+ production, declining global oil inventories, which are already below five-year average levels, and positive tanker fleet supply fundamentals as reflected in a low orderbook, heightened scrapping and a very limited amount of new tanker orders. Based on our forward view, we counter-cyclically in-chartered three Aframax-sized vessels for 18 to 24 months with extension options, which has been a profitable lever for us during past tanker market cycles.”

“The Company has a strong financial position with pro forma liquidity of approximately $274 million(1) and net debt to capitalization of 36 percent at the end of the second quarter of 2021,” commented Mr. Mackay. “As previously announced, we declared purchase options for a total of eight vessels on higher-cost sale-leaseback financings for a total of $185 million, two of which closed in May 2021. We have now signed term sheets for new lower-cost sale-leaseback financings for these eight vessels, totaling $142 million, which are expected to close in the third quarter of 2021 and result in interest expense savings for the first 12 months of approximately $11 million(2).”

For earnings history and earnings-related data on Teekay Tankers Ltd (TNK) click here.

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