Teekay Tankers Ltd. Reports Fourth Quarter and Annual 2015 Results
HAMILTON, BERMUDA -- (Marketwired) -- 02/18/16 -- Highlights
-- Reported fourth quarter 2015 adjusted net income attributable to
shareholders(1) of $48.5 million, or $0.31 per share, compared to $18.6
million, or $0.21 per share, in the same period of the prior year.
-- Reported fiscal year 2015 adjusted net income attributable to
shareholders of $169.1 million, or $1.29 per share, compared to $33.9
million, or $0.39 per share, in the same period of the prior year.
-- Generated fourth quarter 2015 free cash flow(2) of $74.0 million, or
$0.48 per share, compared to $31.7 million, or $0.35 per share, in the
same period of the prior year.
-- Announced and implemented new variable dividend policy; declared and
paid cash dividend of $0.12 per share for the fourth quarter of 2015, up
from $0.03 per share in the previous quarter.
-- Acquired two purpose-built Lightering Aframax tankers for an aggregate
purchase price of approximately $80 million.
-- In January 2016, refinanced a majority of the Company's fleet with a new
five-year $900 million debt facility.
Teekay Tankers Ltd. (Teekay Tankers or the Company) (NYSE: TNK) today reported adjusted net income attributable to its shareholders(1) of $48.5 million, or $0.31 per share, for the quarter ended December 31, 2015, compared to $18.6 million, or $0.21 per share, for the same period in the prior year. The increase is primarily due to stronger spot tanker rates in the fourth quarter of 2015 compared to the same period in the prior year and an increase in fleet size related to the acquisition of 17 modern, mid-size tankers during 2015 and the expansion of the Company's chartered-in tanker portfolio in 2014 and 2015. Adjusted net income attributable to shareholders excludes a number of specific items that had the net effect of increasing net income attributable to shareholders by $3.9 million, or $0.03 per share, and by $1.7 million, or $0.01 per share, for the three months ended December 31, 2015 and 2014, respectively, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, net income attributable to its shareholders of $52.5 million, or $0.34 per share, and $20.3 million, or $0.22 per share, for the three months ended December 31, 2015 and 2014, respectively. Net revenues(3) were $159.3 million and $77.4 million for the three months ended December 31, 2015 and 2014, respectively.
During the fourth quarter of 2015, the Company generated $74.0 million, or $0.48 per share, of free cash flow(2), compared to $31.7 million, or $0.35 per share, in the fourth quarter of 2014, with the increase due to higher average spot rates earned and an increase in the size of the Company's fleet. On December 14, 2015, Teekay Tankers declared a dividend of $0.12 per share for the fourth quarter of 2015, which was paid on February 12, 2016 to all shareholders of record on February 2, 2016. Since the Company's inception, it has declared dividends in 33 consecutive quarters.
(1) Adjusted net income attributable to shareholders of Teekay Tankers is a
non-GAAP financial measure. Please refer to Appendix A to this release
for a reconciliation of this non-GAAP measure as used in this release to
the most directly comparable financial measure under United States
generally accepted accounting principles (GAAP) and for information
about specific items affecting net income that are typically excluded by
securities analysts in their published estimates of the Company's
financial results.
(2) Free cash flow (FCF) represents net income, plus depreciation and
amortization, unrealized losses from derivatives, non-cash items, FCF
from the equity accounted investments and any write-offs or other non-
recurring items, less unrealized gains from derivatives, equity income
from the equity accounted investments, net income attributable to the
Entities under Common Control and other non-cash items. Please refer to
Appendix B to this release for a reconciliation of free cash flow (a
non-GAAP measure) as used in this release to the most directly
comparable GAAP financial measure.
(3) Net revenues is a non-GAAP financial measure used by certain investors
to measure the financial performance of shipping companies. Please refer
to Appendix C included in this release for a reconciliation of this non-
GAAP measure to the most directly comparable financial measure under
GAAP.
CEO Commentary
"During the quarter, Teekay Tankers generated strong free cash flow of $74.0 million, or $0.48 per share, recording one of Teekay Tankers' strongest quarters ever," commented Kevin Mackay, Teekay Tankers' Chief Executive Officer. "In addition, we announced and implemented our new dividend policy, under which we intend to pay out to our shareholders 30 to 50 percent of the Company's quarterly adjusted net income, while maintaining a minimum quarterly dividend of $0.03 per share. This resulted in a 300 percent increase in our quarterly cash dividend to $0.12 per share for the fourth quarter of 2015. The new dividend policy provides long-term investors the opportunity to directly benefit from the Company's strong earnings while continuing to de-lever our balance sheet, which increases the Company's net asset value and further strengthens our financial position."
"We are also pleased to announce the acquisition of two modern purpose-built Lightering Aframax tankers in December 2015, which complements our recent ship-to-ship transfer acquisition of SPT Inc. and further expands our strategic presence in the U.S. Gulf."
Mr. Mackay continued, "We expect that many of the positive tanker market fundamentals in 2015 will remain in place during 2016, including growing oil demand, high crude oil supply from OPEC, low oil prices, manageable tanker supply growth, ongoing strategic and commercial oil stockpiling, and high refinery throughput. In addition, we expect the recent approval of U.S. crude exports will result in the development of new trade routes and positive demand growth for mid-sized tankers, directly benefiting Teekay Tankers as the world's largest owner and operator in this segment. As well as the expected rise over time of U.S. exports to Europe and Asia via the expanded Panama Canal, which is scheduled to be completed in June 2016, the lifting of the export ban and the resultant narrowing of the WTI/Brent crude oil spread could give rise to increased imports into the U.S. An increase in both U.S. imports and exports of oil is expected to drive demand for mid-size tankers and ship-to-ship transfer services."
Mr. Mackay added "With an owned and chartered-in fleet of approximately 55 modern mid-size tankers and the recent completion of two key financial initiatives, including our new $900 million long-term debt facility and our new dividend policy, we believe Teekay Tankers and its shareholders are well-positioned to benefit from what we anticipate to be a continued strong tanker market."
Summary of Recent Developments
New Dividend Policy
In December 2015, Teekay Tankers announced a new dividend policy under which the Company intends to pay out 30 to 50 percent of its quarterly adjusted net income, with a minimum quarterly dividend of $0.03 per share, subject to any reserves determined to be required by the Company's Board of Directors. The new dividend policy will provide investors the opportunity to participate in earnings from the tanker market while enabling the Company to continue to de-lever its balance sheet. Teekay Tankers implemented this new dividend policy for the fourth quarter of 2015, increasing its quarterly cash dividend to $0.12 per share, which was paid on February 12, 2016.
Expanding Strategic Presence in U.S. Gulf
During the fourth quarter, Teekay Tankers built on its recent ship-to-ship transfer acquisition of SPT Inc. and expanded its U.S. Gulf presence through the acquisition and chartering-in of three purpose-built Lightering Aframax tankers. On December 18, 2015, the Company acquired two Lightering Aframax tankers, the SPT Explorer and Navigator Spirit, from Teekay Offshore Partners L.P. (Teekay Offshore) for an aggregate purchase price of $80 million and chartered-in for five years another Lightering Aframax tanker, which is scheduled to deliver between February and March 2016. The acquisition was fully financed through the assumption of an approximately $50 million revolving credit facility from Teekay Offshore and the Company's existing liquidity. These transactions are expected to be immediately accretive to Teekay Tankers' earnings and free cash flow per share.
New Debt Facility
In January 2016, Teekay Tankers completed a new five-year $900 million long-term debt facility, which was 1.4 times oversubscribed. The new facility includes term loan and revolving credit facility components which were used to refinance 36 of the Company's existing vessels (including 17 vessels acquired during 2015 that were financed with two bridge loan facilities that matured in early-2016, and other vessels previously financed with the Company's primary revolving credit facility which was scheduled to mature in 2017). This new facility extends the Company's debt maturity profile and provides financial flexibility in the future.
Tanker Market
The tanker market in 2015 was the strongest since 2008. The main catalyst for the market strength was continued high levels of global oil production, including an extra 1.0 million barrels per day (mb/d) of crude oil supply from OPEC. Global oil demand was also robust in 2015, growing by 1.7 mb/d, the highest level of growth since the post-financial crisis rebound in 2010. Oil prices fell in 2015 to the lowest average price in 11 years, which was positive for the tanker market as it led to higher refinery throughput to take advantage of strong refining margins, increased commercial and strategic stockpiling of oil, and lower bunker fuel costs for ship owners. Finally, tanker fleet growth remained low with just 2 percent growth in the crude tanker fleet during 2015.
The fourth quarter of 2015 was particularly strong, led by the large crude tanker sectors. This strength was driven by firm underlying fundamentals coupled with seasonal and one-off factors. The fourth quarter saw the onset of winter weather delays, including an increase in transit time through the Turkish Straits and fog in the US Gulf. Ullage-related delays resulted in increased waiting times at discharge ports due to logistical constraints, which further added to rate volatility during the fourth quarter.
Looking ahead, the Company anticipates that many of the positive fundamentals which existed in 2015 will continue during 2016. Global oil demand is forecast to grow by 1.3 mb/d in 2016 (based on the average of IEA, EIA, and OPEC forecasts). While this is a decrease from 2015 oil demand growth of 1.7 mb/d, it is above the average growth rate of 1.0 mb/d over the last decade. Global oil production is anticipated to remain high with no change to OPEC policy expected in 2016. In addition, the return of Iranian production is projected to add up to 0.5 mb/d of supply in 2016, further increasing global crude oil exports and keeping oil prices relatively low. Finally, while tanker fleet growth is set to increase in 2016, the tanker fleet growth is relatively modest for the mid-size sectors with anticipated tanker fleet growth of 4.5 percent and 4.0 percent in the Suezmax and Aframax/LR2 fleets, respectively, which compares favorably to the average fleet growth in the last decade of approximately 5.0 percent per annum. Furthermore, the fleet growth is weighted towards the second half of the year and thus, the full impact should be felt more in 2017 than in 2016.
In addition to positive supply and demand fundamentals, changing trade patterns are expected to benefit the mid-size tanker sectors in 2016. Although it is not expected to immediately translate into an influx of U.S. crude oil into global markets, the relaxation of the U.S. crude oil export ban is already resulting in an increase in European and West African imports to the U.S. Atlantic coast. The spread between the West Texas Intermediate (WTI) and Brent oil price has narrowed enough to make seaborne transportation of oil to the U.S. more economical than rail or truck transportation within the U.S. from domestic producers. Mid-sized tanker markets could also benefit from the expansion of the Panama Canal, which is scheduled to be completed in June 2016, as it will facilitate trade movements between the Atlantic and the Pacific, including crude and condensate exports from the U.S. Gulf to Asian markets.
Overall, the Company expects that 2016 will be a strong year for crude tanker fundamentals driven by high levels of global oil supply, rising oil demand, low oil prices, changing trade routes, and a manageable level of fleet growth.
Operating Results
The following table highlights the operating performance of the Company's time-charter vessels and spot vessels trading in pools measured in net voyage revenue per revenue day, or time-charter equivalent (TCE) rates, before related-party pool management fees, related-party commissions and off-hire bunker expenses:
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Three Months Ended
December 31, September 30, December 31,
2015(v) 2015(v) 2014(v)
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Time Charter-Out Fleet
Suezmax revenue days 350 133 130
Suezmax TCE per revenue day
(i) $28,035 $33,646 $20,326
Aframax revenue days 645 642 658
Aframax TCE per revenue day $20,409 $19,528 $17,662
LR2 revenue days 92 83 -
LR2 TCE per revenue day $25,721 $25,515 -
MR revenue days - - 92
MR TCE per revenue day (ii) - - $37,352
Spot Fleet
Suezmax revenue days 1,415 818 783
Suezmax spot TCE per revenue
day (iii) $41,430 $34,782 $26,627
Aframax revenue days 1,399 1,177 789
Aframax spot TCE per revenue
day (iv) $31,575 $32,269 $25,677
LR2 revenue days 522 773 644
LR2 spot TCE per revenue day $26,468 $33,555 $21,884
MR revenue days 233 276 184
MR spot TCE per revenue day $19,391 $23,782 $17,109
Total Fleet
Suezmax revenue days 1,765 951 913
Suezmax TCE per revenue day $39,178 $34,617 $25,727
Aframax revenue days 2,044 1,819 1,447
Aframax TCE per revenue day $26,228 $25,926 $22,146
LR2 revenue days 614 856 644
LR2 TCE per revenue day $26,356 $32,777 $21,884
MR revenue days 233 276 276
MR TCE per revenue day (ii) $19,391 $23,782 $23,857
(i) The fixed TCE rate for the Suezmax tankers excludes the amortization
of in-process contracts which is recognized in revenue. For the three
months ended December 31, 2015, the fixed TCE rate including the
amortization of in-process revenue contracts is $33,368 per day.
(ii) The charter rate on the Medium Range (MR) tanker includes
approximately $14,000 per day for the additional costs relating to
Australian crew versus international crew.
(iii) The combined average spot TCE rates for the Suezmax tankers trading in
both the Gemini Suezmax pool and non-pool voyage charters were $41,933
per day and $34,774 per day for the three months ended December 31,
2015 and September 30, 2015, respectively.
(iv) The combined average spot TCE rates for the Aframax tankers trading in
both the Aframax Pools and non-pool voyage charters were $28,913 per
day, $29,417 per day and $25,881 day for the three months ended
December 31, 2015, September 30, 2015 and December 31, 2014,
respectively.
(v) The TCE rates in the table above include the results of two
conventional tankers acquired from Teekay Offshore from the date of
their acquisition in December 2015.
Teekay Tankers' Fleet
The following table summarizes the Company's fleet as of February 5, 2016 (including a committed chartered-in vessel yet to be delivered):
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Chartered-in
Owned Vessels Vessels Total
Fixed-rate:
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Suezmax Tankers 3 - 3
Aframax Tankers 7 - 7
LR2 Product Tankers - 1 1
VLCC Tanker(i) 1 - 1
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Total Fixed-Rate Fleet 11 1 12
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Spot-rate:
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Suezmax Tankers 19 - 19
Aframax Tankers(ii) 7 10 17
LR2 Product Tankers(iii) 7 1 8
MR Product Tankers 2 - 2
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Total Spot Fleet 35 11 46
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STS Support Vessels 6 - 6
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Total Teekay Tankers Fleet 52 12 64
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(i) The Company's ownership interest in this vessel is 50 percent.
(ii) Includes nine Aframax tankers with charter-in contracts that are
scheduled to expire between March 2016 and September 2017 and one
chartered-in Aframax tanker that is scheduled to deliver between
February and March 2016 under a contract that expires in March 2021;
three of these charter-in vessel contracts include options to extend.
(iii) Includes one LR2 product tanker with a charter-in contract that is
scheduled to expire in May 2017.
Liquidity and Continuous Offering Program Update
In November 2015, the Company implemented a new continuous offering program (COP) under which the Company may issue new common shares at market prices up to a maximum aggregate amount of $80 million. During the fourth quarter of 2015, the Company sold an aggregate of 2,045,000 common shares under the COP at an average price of $7.14 per share, generating net proceeds of approximately $14.3 million.
As of December 31, 2015, the Company had total liquidity of $111.0 million (comprised of $96.4 million in cash and cash equivalents and $14.6 million in undrawn revolving credit facilities), compared to total liquidity of $206.2 million as at September 30, 2015. The decrease in the Company's liquidity position during the fourth quarter was primarily due to vessel acquisitions, a scheduled amortization on one of the Company's corporate revolving credit facilities, drydocking costs, and working capital timing differences.
Conference Call
The Company plans to host a conference call on Friday, February 19, 2016 at 11:00 a.m. (ET) to discuss its results for the fourth quarter and fiscal year of 2015 and the Company's business outlook. An accompanying investor presentation will be available on Teekay Tankers' website at www.teekaytankers.com prior to the start of the call. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:
-- By dialing (800) 524-8850 or (416) 204-9702, if outside of North
America, and quoting conference ID code 8972345.
-- By accessing the webcast, which will be available on Teekay Tankers'
website at www.teekaytankers.com (the archive will remain on the website
for a period of 30 days).
The conference call will be recorded and available until Friday, March 4, 2016. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 8972345.
About Teekay Tankers
Teekay Tankers currently owns a fleet of 45 double-hull tankers, including 22 Suezmax tankers, 14 Aframax tankers, 7 Long Range 2 (LR2) product tankers and 2 Medium-Range (MR) product tankers, and has 12 contracted time charter-in tankers. Teekay Tankers' vessels are 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 and a minority interest of approximately 10 percent in Tanker Investments Ltd. (OSE: TIL), which currently owns a fleet of 18 modern tankers. 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."
Teekay Tankers Ltd.
Summary Consolidated Statements of Income
(in thousands of U.S. dollars, except share and per share data)
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Three Months Ended
December 31, September 30, December 31,
2015 2015 2014
(unaudited)(1) (unaudited)(1) (unaudited)(1)
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Net pool revenues 107,073 92,022 56,302
Time charter revenues 26,988 20,339 21,434
Voyage charter revenues 20,956 5,502 1,826
Interest income from
investment in term loans - - -
Other revenues (2) 13,969 8,538 -
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Total revenues 168,986 126,401 79,562
Voyage expenses (9,652) (2,653) (2,128)
Vessel operating expenses (50,079) (35,267) (25,279)
Time-charter hire expense (21,720) (21,382) (13,687)
Depreciation and
amortization (25,414) (17,878) (13,559)
General and administrative
expenses (6,362) (4,310) (2,932)
Gain on sale of vessels (3) 771 - -
Restructuring charges (2) - (327) -
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Income from operations 56,530 44,584 21,977
Interest expense (7,730) (4,008) (2,182)
Interest income 40 28 40
Realized and unrealized gain
(loss) on derivative
instruments (4) 498 (1,031) (189)
Equity income (5) 5,480 2,762 1,007
Other (expense) income (1,259) (1,385) 492
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Net income 53,559 40,950 21,145
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Earnings per share
attributable to
shareholders of Teekay
Tankers
- Basic 0.34 0.31 0.23
- Diluted 0.34 0.30 0.22
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Weighted-average number of
total common shares
outstanding
- Basic 154,477,604 134,630,768 89,736,138
- Diluted 155,096,187 135,174,756 90,214,327
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Year Ended
December 31, December 31,
2015 2014
(unaudited)(1) (unaudited)(1)
------------------------------------------------------------
Net pool revenues 370,583 138,631
Time charter revenues 75,375 94,213
Voyage charter revenues 41,283 8,040
Interest income from
investment in term loans - 9,118
Other revenues (2) 26,952 -
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Total revenues 514,193 250,002
Voyage expenses (19,816) (11,223)
Vessel operating expenses (137,164) (98,403)
Time-charter hire expense (74,898) (22,160)
Depreciation and
amortization (73,760) (53,292)
General and administrative
expenses (17,354) (12,821)
Gain on sale of vessels (3) 771 9,955
Restructuring charges (2) (4,772) -
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Income from operations 187,200 62,058
Interest expense (17,389) (9,128)
Interest income 107 287
Realized and unrealized gain
(loss) on derivative
instruments (4) (1,597) (1,712)
Equity income (5) 14,411 5,228
Other (expense) income (3,097) 3,805
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Net income 179,635 60,538
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Earnings per share
attributable to
shareholders of Teekay
Tankers
- Basic 1.36 0.67
- Diluted 1.35 0.66
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Weighted-average number of
total common shares
outstanding
- Basic 130,136,228 85,882,685
- Diluted 130,717,709 86,247,137
(1) The Company acquired two vessels on December 18, 2015 from Teekay
Offshore, which is controlled by Teekay Corporation. Results for the two
conventional tankers for the periods prior to their acquisitions by the
Company when they were owned and operating under the control of Teekay
Corporation, are referred to as the Entities under Common Control and
periods prior to their acquisitions have been recast to include their
results in accordance with Common Control accounting as required under
GAAP. The Entities under Common Control amounts included in the
financial results are summarized for the respective periods in Appendix
A. The amounts included in this release related to the Entities under
Common Controls are preliminary, and will be finalized for inclusion in
the Company's Annual Report on Form 20-F for the year ended December 31,
2015. Any revisions to the preliminary Entities under Common Control
figures are only expected to impact the accounting for the periods prior
to the date the vessels were acquired by the Company, and therefore will
have no effect on the adjusted net income attributable to the
shareholders or free cash flow of the Company for any period, including
the fourth quarter of 2015.
(2) Other revenues includes ship-to-ship transfer business revenue and the
associated 100 percent reimbursement of the Hugli Spirit redundancy cost
from a customer. During the three months ended September 30, 2015, the
Company incurred $0.3 million of restructuring costs related to the
acquisition of the ship-to-ship transfer business. During the year ended
December 31, 2015, the Company incurred $4.7 million of restructuring
charges, of which $4.4 million relates to redundancy costs in connection
with the termination of Australian seafarers of the Hugli Spirit upon
the completion of the contract with its customer during the three months
ended March 31, 2015.
(3) In early-May 2014, the Company sold to Tanker Investments Ltd. (TIL) two
wholly-owned subsidiaries, each of which owns one VLCC, for aggregate
proceeds of $154.0 million plus related working capital on closing of
$1.7 million, resulting in the recognition of a $10 million gain.
(4) Includes realized losses relating to interest rate swaps that relate to
amounts actually paid by the Company of $2.3 million, $2.5 million and
$2.5 million for the three months ended December 31, 2015, September 30,
2015 and December 31, 2014, respectively, and $9.7 million and $10.0
million for the years ended December 31, 2015 and December 31, 2014,
respectively.
(5) Included in equity income are the Company's proportionate share of
earnings from its investment in TIL, which owned 20 conventional tankers
at December 31, 2015, its 50 percent interest in the High-Q joint
venture (High-Q), which owns one VLCC tanker, and its 50 percent
interest in Teekay Tanker Operations Ltd (TTOL), which owns Teekay
Corporation's conventional tanker commercial and technical management
operations.
Components of equity income are detailed in the table below:
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Three Months Ended Year ended
December September December December December
31, 30, 31, 31, 31,
2015 2015 2014 2015 2014
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High-Q Joint Venture 1,182 663 929 3,218 2,702
Tanker Investments Ltd. 2,783 1,083 250 7,280 (184)
Dilution gain in respect
of the Initial Public
Offering of Tanker
Investments Ltd. - - - - 2,054
Teekay Tanker Operations
Ltd. 1,515 1,016 (172) 3,913 656
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Total equity income 5,480 2,762 1,007 14,411 5,228
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Teekay Tankers Ltd.
Summary Consolidated Balance Sheets
(in thousands of U.S. dollars)
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As at As at As at
December 31, September 30, December 31,
2015 2015 2014
(unaudited)(1) (unaudited)(1) (unaudited)(1)
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ASSETS
Cash and cash equivalents 96,417 80,579 162,797
Restricted cash 870 915 -
Pool receivable from affiliates 62,735 36,114 35,254
Accounts receivable 28,313 22,791 4,475
Prepaid assets 24,320 30,379 9,374
Due from affiliates 67,159 50,214 50,279
Vessel held for sale - 10,092 -
Vessels and equipment - net 1,767,925 1,656,084 897,237
Investment in and advances to
equity accounted investments 86,808 81,328 73,397
Derivative asset (2) 5,164 5,421 4,657
Intangible assets - net 29,619 30,391 -
Other non-current assets 146 10,565 3,702
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Total assets 2,169,476 2,014,873 1,241,172
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LIABILITIES AND EQUITY
Accounts payable and accrued
liabilities 78,746 55,267 20,220
Current portion of long-term
debt 163,776 479,133 46,605
Current portion of derivative
liabilities 6,330 6,034 7,263
Current portion of in-process
revenue contracts 1,223 2,143 -
Deferred revenue 2,676 - 637
Due to affiliates 26,630 4,679 10,395
Long-term debt 1,000,829 589,334 661,960
Other long-term liabilities 11,805 14,176 15,814
Equity 877,461 864,107 478,278
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Total liabilities and equity 2,169,476 2,014,873 1,241,172
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(1) In accordance with GAAP, the balance sheets as at December 31, 2015,
September 30, 2015 and December 31, 2014 include the Entities under
Common Control for the two vessels acquired from Teekay Offshore in
December 2015 to reflect the ownership of the vessels from the time they
were owned and operating under the control of Teekay Corporation. The
amounts included in this release related to the Entities under Common
Controls are preliminary, and will be finalized for inclusion in the
Company's Annual Report on Form 20-F for the year ended December 31,
2015. Any revisions to the preliminary Entities under Common Control
figures are expected to impact only the accounting for the periods prior
to the dates the vessels were acquired by the Company, and therefore
will have no effect on the adjusted net income attributable to the
shareholders or free cash flow of the Company for any period, including
the fourth quarter of 2015.
(2) Derivative asset reflects the fair value of a common stock purchase
warrant issued by TIL to the Company in connection with the Company's
involvement in the formation of TIL.
Teekay Tankers Ltd.
Summary Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)
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Year Ended
December 31, December 31,
2015 2014
(unaudited)(1) (unaudited)(1)
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Cash and cash equivalents provided by (used
for)
OPERATING ACTIVITIES
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Net operating cash flow 166,789 20,940
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FINANCING ACTIVITIES
Proceeds from long-term debt, net of
issuance costs 688,695 98,796
Repayments of long-term debt (40,029) (20,367)
Prepayment of long-term debt (191,592) (167,000)
Proceeds from long-term debt of Entities
under Common Control - 10,368
Repayment of long-term debt of Entities
under Common Control (4,632) (3,309)
Net advances to affiliates (825) (17,376)
Acquisition of SPT Explorer and Navigator
Spirit (31,870)
Equity contribution from Teekay Corporation
to Entities under Common Control 1,928 3,001
Equity contribution from Teekay Corporation - 1,267
Cash dividends paid (15,139) (10,165)
Proceeds from equity offerings, net of
offering costs 242,264 111,190
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Net financing cash flow 648,800 6,405
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INVESTING ACTIVITIES
Proceeds from sale of vessels 11,080 154,000
Expenditures for vessels and equipment (236,229) (5,784)
Expenditures for Principal Maritime vessel
acquisitions (612,000) -
Investment in and advances to Teekay Tankers
Operations Ltd. (239) (6,494)
Investment in and advances to Tanker
Investments Ltd. - (35,045)
Investment in and advances from High-Q 1,000 1,950
Term loan advance recoveries - 1,179
Acquisition of SPT (45,581) -
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Net investing cash flow (881,969) 109,806
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(Decrease) increase in cash and cash
equivalents (66,380) 137,151
Cash and cash equivalents, beginning of the
year 162,797 25,646
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Cash and cash equivalents, end of the year 96,417 162,797
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(1) In accordance with GAAP, the statements of cash flow for the years ended
December 31, 2015 and 2014 include the Entities under Common Control
results for the two vessels acquired from Teekay Offshore in December
2015 to reflect the ownership of the vessels from the time they were
owned and operating under the control of Teekay Corporation. The amounts
included in this release related to the Entities under Common Controls
are preliminary, and will be finalized for inclusion in the Company's
Annual Report on Form 20-F for the year ended December 31, 2015. Any
revisions to the preliminary Entities under Common Control figures are
expected to impact only the accounting for the periods prior to the
dates the vessels were acquired by the Company, and therefore will have
no effect on the adjusted net income attributable to the shareholders or
free cash flow of the Company for any period, including the fourth
quarter of 2015.
Teekay Tankers Ltd.
Appendix A - Specific Items Affecting Income
(in thousands of U.S. dollars, except per share amounts)
Set forth below is a reconciliation of the Company's unaudited adjusted net income attributable to the shareholders of Teekay Tankers, a non-GAAP financial measure, to net income as determined in accordance with GAAP. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company's financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Company's financial results. Adjusted net income attributable to the shareholders of Teekay Tankers is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
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Three Months Ended
December 31, 2015 December 31, 2014
(unaudited) (unaudited)
----------------------------------------------------------------------------
$ Per $ Per
$ Share(1) $ Share(1)
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Net income - GAAP basis 53,559 $0.35 21,145 $0.23
Subtract:
Net income attributable to
the Entities under Common
Control (2) (1,072) ($0.01) (886) ($0.01)
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Net income attributable to
shareholders of Teekay
Tankers 52,487 $0.34 20,259 $0.22
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(Subtract) add specific
items affecting net income:
Unrealized gain on
derivative instruments
(3) (2,896) (0.02) (2,335) (0.02)
Gain on sale of vessels (771) (0.01) - -
Other (4) (278) - 652 0.01
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Total adjustments (3,945) ($0.03) (1,683) ($0.01)
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Adjusted net income
attributable to
shareholders of Teekay
Tankers 48,542 $0.31 18,576 $0.21
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Year Ended
December 31, 2015 December 31, 2014
(unaudited) (unaudited)
----------------------------------------------------------------------------
$ Per $ Per
$ Share(1) $ Share(1)
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Net income - GAAP basis 179,635 $1.37 60,538 $0.70
Subtract:
Net income attributable to
the Entities under Common
Control (2) (2,708) ($0.02) (3,396) ($0.04)
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Net income attributable to
shareholders of Teekay
Tankers 176,927 $1.35 57,142 $0.66
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(Subtract) add specific
items affecting net income:
Unrealized gain on
derivative instruments
(3) (8,193) ($0.06) (8,282) ($0.10)
Gain on sale of vessels
(5) (771) ($0.01) (9,955) ($0.12)
Fair value on initial
recognition of stock
purchase warrant (6) - - (3,420) ($0.04)
Dilution gain on equity
accounted investment (7) - - (2,054) ($0.02)
Other (4) 1,132 $0.01 487 $0.01
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Total adjustments (7,832) ($0.06) (23,224) ($0.27)
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Adjusted net income
attributable to
shareholders of Teekay
Tankers 169,095 $1.29 33,918 $0.39
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(1) Fully diluted per share amounts.
(2) The amounts included in this release related to the Entities under
Common Controls are preliminary, and will be finalized for inclusion in
the Company's Annual Report on Form 20-F for the year ended December 31,
2015. Any revisions to the preliminary Entities under Common Control
figures are only expected to impact the accounting for the periods prior
to the date the vessels were acquired by the Company, and therefore will
have no effect on the adjusted net income attributable to the
shareholders or free cash flow of the Company for any period, including
the fourth quarter of 2015.
(3) Reflects the unrealized gain due to changes in the mark-to-market value
of derivative instruments that are not designated as hedges for
accounting purposes, including unrealized gains or losses on interest
rate swaps and the TIL common stock purchase warrant.
(4) The amount recorded for the three months and year ended December 31,
2015 primarily relates to unrealized derivative losses in joint venture,
foreign exchange losses, severance payment related to the dissolution of
the Gemini Pool and restructuring costs related to the acquisition of
the ship-to-ship transfer business.
(5) In May 2014, the Company sold to TIL two wholly-owned subsidiaries, each
of which owned one VLCC, for the aggregate proceeds of $154.0 million
plus related working capital on closing of $1.7 million. The Company
recognized a $10.0 million gain on this transaction.
(6) Reflects the fair value on the initial recognition of the common stock
purchase warrant issued by TIL to the Company during the year ended
December 31, 2014, which was received in connection with the Company's
involvement in the formation of TIL.
(7) Reflects the dilution gain from the common share issuance completed as
part of TIL's initial public offering in March 2014.
Teekay Tankers Ltd.
Appendix B - Reconciliation of Non-GAAP Financial Measure
Free Cash Flow
(in thousands of U.S. dollars, except share and per share data)
Free cash flow (FCF) represents net income, plus depreciation and amortization, unrealized losses from derivatives, non-cash items, FCF from the equity accounted investments and any write-offs or other non-recurring items, less unrealized gains from derivatives, equity income from the equity accounted investments, net income attributable to the Entities under Common Control and other non-cash items.
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Three Months Ended
December 31, 2015
(unaudited)
----------------------------------------------------------------------------
Net income for the period 53,559
Add:
Depreciation and amortization, excluding Entities
under Common Control 25,130
Proportionate share of free cash flow from equity
accounted investments 6,761
Other (1) 3,555
Less:
Unrealized gain on derivative instruments (2,896)
Equity income (5,480)
Net income attributable to the Entities under Common
Control (1,072)
Amortization of in-process revenue contracts (4,769)
Gain on sale of vessels (771)
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Free cash flow 74,017
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Weighted-average number of common shares outstanding
for the quarter 154,477,604
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Free cash flow per share (rounded) 0.48
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(1) Other includes termination fees received on the cancellation of two in-
the-money charter contracts relating to the acquisition of the SPT
Explorer and Navigator Spirit conventional tankers.
Teekay Tankers LTD.
Appendix C - Reconciliation of Non-GAAP Financial Measure
Net Revenues
(in thousands of U.S. dollars)
Net revenues represents revenues less voyage expenses where voyage expenses are comprised of all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies; however, it is not required by GAAP and should not be considered as an alternative to revenues or any other indicator of the Company's performance required by GAAP.
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
2015 2014 2015 2014
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues 168,986 79,562 514,193 250,002
Voyage expenses (9,652) (2,128) (19,816) (11,223)
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Net revenues 159,334 77,434 494,377 238,779
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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 statements regarding: the Company's future dividend payout ratio and anticipated benefits of the new dividend policy; accretion to the Company's earnings and free cash flow from the acquisition and chartering-in of lightering Aframax tankers; the impact of the U.S. government's decision to lift the ban on crude oil exports and of the scheduled opening of the expanded Panama Canal, including the establishment of new trade routes for mid-size tankers; the crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, estimated growth in the world tanker fleet, estimated growth in global oil demand, crude oil tanker demand and OPEC crude oil supply; tanker fleet utilization and spot tanker rates; the effect of lower global oil prices, including the potential impact on oil stockpiling, refinery throughput and bunker fuel prices; the impact of the tanker market on the Company's earnings, free cash flow, net asset value and future dividends; the delivery date of one chartered-in Aframax tanker; and the impact on the financial flexibility as a result of the new debt facility.
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: 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; market reactions to changes in the U.S. crude oil export positions and expansion of the Panama Canal; revenues and costs related to the Company's lightering Aframax tankers; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the amount of cash reserves established by the Company's Board of Directors; actual dividend payout ratios determined by the Company's Board of Directors; increased costs; and other factors discussed in Teekay Tankers' filings from time to time with the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31, 2014 and on Form 6-K for the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015. 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.
Contacts: Investor Relations Enquiries Ryan Hamilton +1 (604) 844-6654 www.teekaytankers.com
Source: Teekay Tankers Ltd.