Highlights
- First quarter 2009 cash flow from vessel operations of $153.5 million
- First quarter 2009 adjusted net income of $10.9 million, or $0.15 per share (excluding specific items which increased net income by $70.6 million, or $0.97 per share)
- Current liquidity at the end of the first quarter of over $2.0 billion; $2.9 billion in consolidated total liquidity including pre-arranged newbuilding financing
HAMILTON, BERMUDA -- (Marketwire) -- 07/28/09 -- Teekay Corporation (Teekay or the Company) (NYSE: TK) today reported adjusted net income(1) of $10.9 million, or $0.15 per share, for the quarter ended March 31, 2009, compared to adjusted net income of $60.7 million, or $0.83 per share, for the same period of the prior year. Adjusted net income excludes a number of specific items which had the net effect of increasing net income by $70.6 million (or $0.97 per share) for the three months ended March 31, 2009 and decreasing net income by $165.9 million (or $2.28 per share) for the three months ended March 31, 2008, as detailed in Appendix A to this release. Including these items, the Company reported net income attributable to the stockholders of Teekay, on a GAAP basis, of $81.5 million(2), or $1.12 per share, for the quarter ended March 31, 2009, compared to a net loss attributable to the stockholders of Teekay, on a GAAP basis, of $105.1 million(2), or $1.45 per share, for the same period of the prior year. Net revenues(3) for the first quarter of 2009 were $525.9 million compared to $571.0 million for the same period of the prior year.
On June 4, 2009, the Company declared a cash dividend on its common stock of $0.31625 per share for the quarter ended June 30, 2009. The cash dividend was paid on July 24, 2009, to all shareholders of record on July 10, 2009.
"The current weak spot tanker market highlights the value of Teekay's business model of building industry-leading franchises within our Marine Midstream platform, which generate long-term, stable cash flows," commented Bjorn Moller, Teekay Corporation's President and Chief Executive Officer. "As well, we have taken additional measures over the past several months to further strengthen our position," continued Mr. Moller. "We have reduced our exposure to the spot tanker market by selling and chartering out a number of our spot vessels and allowing our existing in-charters to expire. Significant progress has also been made on company-wide initiatives to reduce overhead and vessel operating expenses, which combined with our rapidly declining in-chartered fleet will reduce our cash flow breakeven levels. Recently, two of our daughter companies were able to raise a total of $139 million of equity capital and we successfully extended a portion of our 2011 debt maturities, both of which give us additional financial flexibility. Although we have over $2.0 billion in consolidated liquidity and a fully-financed newbuilding program, a key focus for the company is to further enhance our financial flexibility through deleveraging and building on our already significant liquidity position."
(1) Adjusted net income 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 information about specific items affecting net income which are typically excluded by securities analysts in their published estimates of the Company's financial results.
(2) Effective January 1, 2009, Teekay adopted Statement of Financial Accounting Standards No. 160 (SFAS 160), "Non-controlling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51." SFAS 160 amended the accounting and reporting for non-controlling interest, which is now classified as a component of equity. SFAS 160 requires retrospective adoption of the presentation and disclosure requirements for existing non-controlling interests. All other requirements of SFAS 160 are applied prospectively.
(3) Net revenues represents revenues less voyage expenses. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company's web site at www.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable financial measure under United States GAAP.
Operating Results
The following tables highlight certain financial information for each of Teekay's four publicly-listed entities: Teekay Offshore Partners L.P. (Teekay Offshore) (NYSE: TOO), Teekay LNG Partners L.P. (Teekay LNG) (NYSE: TGP), Teekay Tankers (Teekay Tankers) (NYSE: TNK) and Teekay, excluding results attributed to Teekay Offshore, Teekay LNG and Teekay Tankers, referred to herein as Teekay Parent. A brief description of each entity and an analysis of its respective financial results follows the tables below. Please also refer to the "Fleet List" section below and Appendix B to this release for further details.
---------------------------------------------------------------------------
Three Months Ended March 31, 2009
(unaudited)
Teekay Teekay Consol-
Offshore LNG Teekay idation Teekay
(in thousands of Partners Partners Tankers Teekay Adjust- Corporation
U.S. dollars) LP LP Ltd. Parent ments Consolidated
---------------------------------------------------------------------------
Net revenues(1) 158,612 75,155 29,924 305,993 (43,802) 525,882
---------------------------------------------------------------------------
Vessel operating
expenses(1) 50,734 18,741 7,678 72,175 - 149,328
Time-charter hire
Expense 32,145 - - 148,485 (43,802) 136,828
Depreciation and
Amortization 34,531 19,326 5,955 46,741 - 106,553
---------------------------------------------------------------------------
Cash flow from
vessel
operations(2) 57,033 49,213 20,828 26,397 - 153,471
---------------------------------------------------------------------------
Net debt(3) 1,406,417 1,366,728 295,516 1,140,227 - 4,208,888
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three Months Ended March 31, 2008
(unaudited)
Teekay Teekay Consol-
Offshore LNG Teekay idation Teekay
(in thousands of Partners Partners Tankers Teekay Adjust- Corporation
U.S. dollars) LP(4) LP(4) Ltd.(4) Parent ments Consolidated
---------------------------------------------------------------------------
Net revenues(1) 152,409 65,727 26,575 380,836 (54,593) 570,954
---------------------------------------------------------------------------
Vessel operating
expenses(1) 41,931 15,400 5,580 85,524 - 148,435
Time-charter hire
Expense 33,646 - - 165,867 (54,593) 144,920
Depreciation and
Amortization 32,546 16,072 3,489 45,600 - 97,707
---------------------------------------------------------------------------
Cash flow from
vessel
operations(2) 61,864 46,367 19,674 62,913 - 190,818
---------------------------------------------------------------------------
Net debt(3) 1,421,632 1,912,884 103,723 1,754,889 - 5,193,128
---------------------------------------------------------------------------
(1) Commencing in the quarter ended March 31, 2009, and applied
retroactively, the gains and losses related to non-designated derivative
instruments have been reclassified to a separate line item in the
Statements of Income (Loss) and are no longer included in the amounts
above.
(2) Cash flow from vessel operations represents income from vessel
operations before depreciation and amortization expense, vessel/
goodwill write-downs, gains or losses on the sale of vessels and
unrealized gains and losses relating to derivatives, but includes
realized gains and losses on the settlement of foreign currency forward
contracts. Cash flow from vessel operations is a non-GAAP financial
measure used by certain investors to measure the financial performance
of shipping companies. Please see the Company's web site at
www.teekay.com for a reconciliation of this non-GAAP measure as used in
this release to the most directly comparable GAAP financial measure.
(3) Net debt represents current and long-term debt less cash and, if
applicable, current and long-term restricted cash.
(4) Excludes the historical results of assets acquired from Teekay Parent
for the periods prior to their acquisition by Teekay Offshore, Teekay
LNG and Teekay Tankers as those results are included in the historical
results for Teekay Parent.
Teekay Offshore Partners L.P.
Teekay Offshore is an international provider of marine transportation and storage services to the offshore oil industry. Through its 51 percent ownership interest in Teekay Offshore Operating L.P. (OPCO), Teekay Offshore operates a fleet of 33 shuttle tankers (including eight chartered-in vessels), four Floating Storage and Offtake (FSO) units, nine double-hull conventional oil tankers and two lightering vessels. Teekay Offshore also has direct ownership interests in two shuttle tankers and one FSO unit and has the right to participate in certain Floating Production, Storage and Offloading (FPSO) opportunities. Teekay Parent directly owns the remaining 49 percent interest in OPCO, as well as a 49.99 percent interest in Teekay Offshore (including the two percent General Partner interest).
Cash flow from vessel operations from Teekay Offshore decreased to $57.0 million in the first quarter of 2009, from $61.9 million in the same period of the prior year, primarily due to an increase in vessel operating costs related to its shuttle tanker operations and $2.2 million of restructuring costs associated with the re-flagging of certain Norwegian-flagged shuttle tankers in order to reduce future crewing costs. These cost increases were partially offset by contributions from two Aframax lightering vessels acquired in the second quarter of 2008.
Teekay LNG Partners L.P.
Teekay LNG provides liquefied natural gas (LNG), liquefied petroleum gas (LPG) and crude oil marine transportation services under long-term, fixed-rate time-charter contracts with major energy and utility companies through its current fleet of thirteen LNG carriers, two LPG carriers and eight Suezmax crude oil tankers. In addition, Teekay LNG expects to acquire two newbuilding LNG carriers from Teekay Parent during the third quarter of 2009 and take delivery of four newbuilding LPG carriers in late-2009 and 2010. Teekay Parent currently owns a 53 percent interest in Teekay LNG (including the two percent General Partner interest).
Cash flow from vessel operations from Teekay LNG during the first quarter of 2009 increased to $49.2 million from $46.4 million in the same period of the prior year. This increase was primarily due to the acquisition of the two Kenai LNG carriers from Teekay Parent in April 2008. This increase was partially offset by a reduction in revenue on five Suezmax tankers whereby their daily charter rates are adjusted for changes in LIBOR (offset by a corresponding reduction in interest expense relating to these vessels), as well as $2.0 million of restructuring costs incurred in the first quarter of 2009 to transfer certain ship management functions from Teekay LNG's Spain office to a subsidiary of Teekay Parent.
On March 30, 2009, Teekay LNG completed a follow-on equity offering of four million common units, raising gross proceeds of $70.4 million. Proceeds were used to repay amounts drawn under Teekay LNG's revolving credit facilities.
Subsequent to the first quarter of 2009, Teekay LNG took delivery of the first of five LPG carriers from subsidiaries of IM Skaugen ASA (Skaugen). Upon their delivery, the vessels will commence service under 15-year fixed-rate charters to Skaugen.
Teekay Tankers Ltd.
Teekay Tankers was formed in December 2007 by Teekay Parent as part of its strategy to expand its conventional oil tanker business. Teekay Tankers currently owns a fleet of nine double-hull Aframax tankers and three double-hull Suezmax tankers. Teekay Parent currently owns a 42.2 percent interest in Teekay Tankers (including 100 percent of the Class B common shares).
Cash flow from vessel operations from Teekay Tankers increased to $20.8 million in the first quarter of 2009, from $19.7 million in the same period of the prior year, primarily due to an increase in the size of the fleet, partially offset by a decrease in spot tanker rates in the first quarter of 2009 compared to the same period of the prior year.
On June 24, 2009, Teekay Tankers acquired a 2003-built Suezmax tanker (the Ashkini Spirit) from Teekay Parent for $57.0 million. To finance this acquisition, Teekay Tankers issued seven million Class A common shares, raising gross proceeds of $68.6 million. Proceeds in excess of the purchase price were used to repay a portion of debt outstanding under Teekay Tankers' revolving credit facility.
Teekay Parent
In addition to its equity ownership interests in Teekay Offshore, Teekay LNG and Teekay Tankers, Teekay Corporation directly owns a substantial fleet of vessels at the 'Parent' company level. As at July 1, 2009, this included 28 conventional tankers (including two Suezmax newbuildings under construction), five FPSOs primarily through its wholly-owned subsidiary, Teekay Petrojarl AS (Teekay Petrojarl), two newbuilding LNG carriers expected to be acquired by Teekay LNG in the third quarter of 2009, a 33 percent interest in four newbuilding LNG carriers under construction and five shuttle tankers (including four Aframax shuttle tanker newbuildings under construction). In addition, as at July 1, 2009, Teekay Parent had 46 chartered-in conventional tankers (including 10 vessels owned by its subsidiaries) and two chartered-in LNG carriers owned by Teekay LNG.
Cash flow from vessel operations from Teekay Parent decreased to $26.4 million in the first quarter of 2009, from $62.9 million in the same period of the prior year, primarily due to a decrease in average spot tanker rates and higher operating expenses in the first quarter of 2009, partially offset by higher cash flow from the FPSO fleet and lower general and administrative expenses as a result of cost reduction initiatives.
On June 24, 2009, Teekay Parent sold a 2003-built Suezmax tanker (the Ashkini Spirit) to Teekay Tankers for $57.0 million. A portion of the proceeds were used to repay drawn amounts under Teekay Parent's revolving credit facilities.
Tanker Market
Average spot rates for crude oil tankers have declined in the first half of 2009, primarily due to three main factors:
- Global oil demand has contracted as a result of the economic downturn with the International Energy Agency (IEA) forecasting a decline of 2.5 million barrels per day (mb/d) in 2009;
- OPEC has announced production cuts of 4.2 mb/d since September 2008, which has reduced the amount of oil available for transportation; and
- The tanker fleet has grown at an above-average pace in the first half of 2009 with net growth of 18.2 million deadweight tonnes (mdwt), or 4.5 percent, since the start of the year.
Seasonal factors such as oil refinery maintenance and the onset of the North Sea oil field maintenance season have further affected crude oil tanker demand in the second quarter of 2009. The removal of up to 40 Very Large Crude Carriers (VLCCs) from the world tanker fleet for use as floating storage has helped tighten active fleet supply to some extent and was one of the reasons for the run-up in crude tanker rates during June 2009.
As of July 10, 2009, the IEA projected global oil demand to average 83.3 mb/d for 2009 which represents a 2.5 mb/d, or 2.9 percent, decline from 2008. The IEA projects that oil demand will recover in 2010 to 85.2 mb/d, an increase of 1.4 mb/d, or 1.7 percent, based on a recovery in the global economy.
The world tanker orderbook for the remainder of 2009 and 2010 is larger than in previous years, which could lead to continued above-average fleet growth.
