Teekay Tankers Ltd. Reports Fourth Quarter and Annual 2019 Results

Donnerstag, 27. Februar 2020 08:00

Highlights

  • Reported GAAP net income of $63.1 million, or $1.88 per share, and adjusted net income(1) of $83.0 million, or $2.47 per share, in the fourth quarter of 2019 (excluding items listed in Appendix A to this release).
  • Total Adjusted EBITDA(1) of $131.5 million in the fourth quarter of 2019.
  • Secured strong first quarter of 2020 to-date spot tanker rates of $51,700 per day and $38,600 per day for Teekay Tankers' Suezmax and Aframax fleet, up from $39,100 per day and $33,000 per day, respectively, in the fourth quarter of 2019.
  • Since November 2019, Teekay Tankers has entered into agreements to opportunistically sell four Suezmax tankers (three of which have delivered) and an agreement to sell a portion of its ship-to-ship transfer support services business for combined sales proceeds of approximately $104 million.
  • Including the proforma impact of recently agreed asset sales, Teekay Tankers' net debt(2) as of December 31, 2019 would have been approximately $844 million, a decrease of approximately $153 million, or 15 percent, from September 30, 2019.
  • In January 2020, completed the previously-announced 5-year, $533 million revolving credit facility to refinance 31 vessels, extending 2020/2021 maturities to the end of 2024.
  • Including the proforma impact of recently agreed asset sales and of the debt refinancing, Teekay Tankers' total liquidity as of December 31, 2019 would have been $260 million, up from $95.1 million as of September 30, 2019.

VANCOUVER, British Columbia, Feb. 27, 2020 (GLOBE NEWSWIRE) -- Teekay Tankers Ltd. (Teekay Tankers or the Company) (NYSE: TNK) today reported the Company's results for the quarter and year ended December 31, 2019:

Consolidated Financial Summary

 Three Months EndedYear Ended
(in thousands of U.S. dollars, except per share data)December 31,
2019
September 30,
2019
December 31,
2018
December 31,
2019
December 31,
2018
GAAP FINANCIAL COMPARISON         
Total revenues303,885  182,304  239,724  920,967  755,763 
Income (loss) from operations90,388  (4,873) 31,206  122,663  7,204 
Net income (loss)63,072  (19,850) 11,502  41,362  (52,548)
Earnings (loss) per share (3)1.88  (0.59) 0.34  1.23  (1.57)
NON-GAAP FINANCIAL COMPARISON        
Total Adjusted EBITDA (1)131,513  27,837  62,254  258,974  128,870 
Adjusted net income (loss) (1)82,991  (21,173) 14,002  64,323  (54,718)
Adjusted earnings (loss) per share (1)(3)2.47  (0.63) 0.42  1.91  (1.63)
Free cash flow (1)102,386  11,735  44,580  178,057  66,980 
  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).
  2. Net debt is a non-GAAP financial measure and represents short-term, current and long-term debt and current and long-term obligations related to finance leases less cash and cash equivalents and restricted cash. Proforma for $85.1 million of agreed asset sales that have closed, or are expected to close, in the first and second quarters of 2020.
  3. The per share amounts for all periods presented have been adjusted to reflect a one-for-eight reverse stock split completed in November 2019.

Fourth Quarter of 2019 Compared to Third Quarter of 2019

GAAP net income and non-GAAP adjusted net income for the fourth quarter of 2019 significantly improved compared to the prior quarter, primarily due to higher average spot tanker rates. GAAP net income in the fourth quarter of 2019 also included foreign exchange losses, unrealized losses on derivative instruments and write-downs / losses on vessel sales, while GAAP net loss in the third quarter of 2019 included foreign exchange gains and unrealized gains on derivative instruments.

Fourth Quarter of 2019 Compared to Fourth Quarter of 2018

GAAP net income and non-GAAP adjusted net income for the fourth quarter of 2019 significantly increased compared to the same period of the prior year, primarily due to higher average spot tanker rates.

CEO Commentary

“With average crude spot tanker rates reaching their highest levels since 2008, Teekay Tankers had one of its most profitable quarters since the end of the tanker market super-cycle in 2009, generating adjusted net income of approximately $83 million, or $2.47 per share,” commented Kevin Mackay, Teekay Tankers’ President and CEO. “This strength continued into the early part of 2020, and I am pleased that the spot rates our fleet has secured in the first quarter of 2020 to-date are significantly higher than those achieved in the fourth quarter. Crude spot tanker rates have come under pressure in recent weeks, primarily due to the coronavirus and the removal of sanctions against COSCO; however, we continue to believe that the tanker supply and demand fundamentals point towards an improved rate environment in the medium-term."

“Since November 2019, we have taken advantage of improved tanker market conditions to execute on many of the strategic priorities that we laid out at our recent Teekay Group Investor Day, with the goal of creating shareholder value and strengthening our balance sheet,” continued Mr. Mackay. “We have agreed to several opportunistic asset sales for combined proceeds of over $100 million at attractive levels, which when combined with strong free cash flow from operations, is accelerating our planned balance sheet delevering efforts. To illustrate this point, taking into account cash flows in the fourth quarter of 2019 and the impact of agreed asset sales, Teekay Tankers' proforma net debt has decreased by approximately $153 million, or 15 percent, since the end of the third quarter of 2019.”

“On January 1, 2020, the shipping industry implemented IMO 2020 low sulphur regulations, moving to a new emissions standard that limits marine fuel sulphur content to 0.5 percent. Teekay Tankers fully supports the use of cleaner burning fuels across the industry, in line with one of our core values of Sustainability. We experienced a smooth transition to the lower sulphur fuels, which we attribute to our extensive preparations over the past three years and to having secured supply contracts covering approximately 75 percent of our fuel requirements in 2020.”

“With significant operating leverage, a strong liquidity position, ongoing balance sheet delevering and our mid-size fleet profile, we believe that Teekay Tankers is one of the best positioned companies in our sector to create shareholder value.”

Summary of Recent Events

Since November 2019, Teekay Tankers has entered into agreements to sell three 2003-built and one 2004-built Suezmax tankers in separate transactions for combined sales proceeds of approximately $78 million. The first three vessels were delivered to their respective buyers between December 2019 and February 2020, with the fourth vessel expected to be delivered in April 2020.

In December 2019, Teekay Tankers entered into a one-year time charter-out contract for a Suezmax tanker at approximately $36,000 per day, which commenced in the same month. This charter is in addition to the one-year time charter-out contracts secured for three Suezmax tankers in October 2019 at an average rate of approximately $37,500 per day, which commenced in October and November 2019.

In January 2020, Teekay Tankers entered into the previously-announced five-year, $533 million long-term debt facility to refinance 31 vessels. The proceeds from the new debt facility were used to repay approximately $455 million of the Company’s existing debt. The new debt facility has substantially similar terms to the facilities it replaced and extends balloon maturities from 2020/2021 until the end of 2024. Following the closing of the debt facility, Teekay Tankers had three unencumbered vessels, including two of the vessels agreed to be sold as highlighted above.

In January 2020, Teekay Tankers reached an agreement to sell a portion of its oil and gas ship-to-ship transfer support services business, which also provides gas terminal management and gas consulting services, for approximately $26 million. The sale is expected to close late in the first quarter of 2020 or early in the second quarter of 2020. Teekay Tankers will retain its entire Full Service Lightering business that operates in the U.S. Gulf, which provides ship-to-ship oil transfers for both U.S. crude imports and exports. In addition, the Company will continue to operate oil ship-to-ship transfer support services in North America and the Caribbean, a business that has synergies with its core Full Service Lightering business.

Tanker Market

Crude tanker spot rates started to tighten late in the third quarter of 2019; in the fourth quarter of 2019 rates increased to the highest levels since 2008, which can be attributed to a combination of firmer underlying tanker supply and demand fundamentals, normal winter seasonality, and one-off events.  According to the International Energy Agency (IEA), global oil demand increased by 1.7 mb/d year-on-year in the fourth quarter of 2019, with refinery throughput also having increased after a period of extended maintenance earlier in the year. Atlantic basin crude oil production was a significant driver of tanker tonne-mile demand in the fourth quarter, spurred by an increase in U.S. crude oil exports, along with new volumes from Brazil and Norway, much of which moved long-haul to refineries in Asia.

On the tanker fleet supply side, U.S. sanctions on two subsidiaries of leading Chinese state-owned shipping and logistics company, COSCO, removed 26 VLCCs from the trading fleet, which led to a rapid tightening of available fleet supply. Furthermore, an increase in floating storage ahead of the IMO 2020 regulations coming into force and the removal of vessels from the trading fleet to retrofit scrubbers also served to tighten fleet supply during the fourth quarter of 2019.

Crude tanker spot rates were firm during January 2020, but have come under pressure in February due to the impact of the coronavirus in China and the return of the previously-sanctioned COSCO vessels to the trading fleet. While it is too early to determine the full impact of the coronavirus outbreak, oil demand is currently being negatively impacted and it is likely that refinery runs will be cut in order to maintain margins and prevent a large build-up of product inventories. There is also a risk that OPEC will implement further oil supply cuts, with a technical panel comprised of OPEC countries and associate members recommending a cut of 0.6 mb/d ahead of the full committee meeting scheduled for early-March 2020. These factors could cause near-term tanker demand, and therefore rates, to be negatively impacted in the coming weeks and months. However, this could be partially mitigated by lower crude oil prices, which is leading to lower fuel costs for vessel owners, and the potential for stockpiling of oil and floating storage demand as the crude oil futures curve has now moved into a contango pricing structure.

Although the tanker market faces some near-term challenges, the Company believes longer-term fundamentals remain positive. A relatively small tanker orderbook and anticipated scrapping activity in an aging global fleet is expected to result in relatively low tanker fleet growth over the next two years. The Company estimates tanker fleet growth of approximately 3 percent in 2020 and 1.5 percent in 2021, which are both well below tanker fleet growth of 5.8 percent in 2019. Furthermore, new vessel ordering remains at relatively low levels given constrained access to capital and uncertainty over future industry regulatory and technology changes. The removal of vessels from the global trading fleet for scrubber retrofitting should also help tighten vessel supply during 2020, particularly during the first half of the year, as well as meaningful delays for drydocking and scrubber retrofitting in China as a result of the coronavirus.

On the tanker demand side, further growth in non-OPEC oil supply from the Atlantic basin is expected to drive significant tanker tonne-mile growth in 2020. According to the IEA, non-OPEC supply is forecasted to grow by over 2 mb/d in 2020, driven by growth from the U.S., Brazil, Norway and Guyana. Even after taking into account the anticipated impact of the coronavirus, global refinery throughput is projected to increase by 0.7 mb/d in 2020, with much of the growth coming from Asia. This is not only expected to create additional tonne-mile demand, but also stretch the fleet between the Atlantic and Pacific basins and lead to more vessels having to ballast back to the Atlantic to load cargoes. As a result, the Company expects positive growth in tanker demand once the near-term uncertainty associated with the coronavirus has passed.

Operating Results

The following table highlights the operating performance of the Company’s time-charter vessels and spot vessels trading in revenue sharing arrangements (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 EndedYear Ended
 December 31, 2019(i)September 30, 2019(i)December 31, 2018(i)December 31, 2019(i)December 31, 2018(i)
Time Charter-Out Fleet          
Suezmax revenue days 322   92   180   595   819  
Suezmax TCE per revenue day$32,370  $20,488  $20,868  $25,945  $20,144  
Aframax revenue days       172   75   1,674  
Aframax TCE per revenue day      $23,230  $24,276  $21,216  
LR2 revenue days       12      420  
LR2 TCE per revenue day      $16,583     $17,287  
           
Spot Fleet          
Suezmax revenue days 2,390   2,576   2,427   9,798   9,795  
Suezmax spot TCE per revenue day (ii)$39,083  $16,321  $23,554  $23,892  $16,154  
Aframax revenue days 1,929   1,821   1,612   7,265   5,515  
Aframax spot TCE per revenue day (iii)$32,951  $14,850  $22,023  $23,323  $16,034  
LR2 revenue days 743   781   724   3,178   2,488  
LR2 spot TCE per revenue day (iv)$26,683  $14,686  $19,806  $19,293  $14,131  
           
Total Fleet          
Suezmax revenue days 2,712   2,668   2,607   10,393   10,614  
Suezmax TCE per revenue day$38,285  $16,465  $23,369  $24,010  $16,461  
Aframax revenue days 1,929   1,821   1,784   7,340   7,189  
Aframax TCE per revenue day$32,951  $14,850  $22,139  $23,333  $17,240  
LR2 revenue days 743   781   736   3,178   2,908  
LR2 TCE per revenue day$26,683  $14,686  $19,754  $19,293  $14,587  
  1. 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 represent 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 but is not employed, are included in revenue days.
  2. Includes vessels trading in the Teekay Suezmax RSA, Teekay Suezmax Classic RSA and non-pool voyage charters.
  3. Includes vessels trading in the Teekay Aframax RSA, Teekay Aframax Classic RSA, non-pool voyage charters and full service lightering voyages.
  4. Includes vessels trading in the Teekay Taurus RSA and non-pool voyage charters.
  5. Net revenues is a non-GAAP financial measure. Please refer to "Definitions and Non-GAAP Financial Measures" for a definition of this term.

First Quarter of 2020 Spot Tanker Rates Update

Below is Teekay Tankers’ spot tanker fleet update for the first quarter of 2020 to-date:

  • The portion of the Suezmax fleet trading on the spot market has secured TCE rates per revenue day of approximately $51,700 on average, with 77 percent of the available days fixed(1); and
  • The portion of the Aframax/LR2 fleet trading on the spot market has secured TCE rates per revenue day of approximately $38,600 on average, with 63 percent of the available days fixed(2)(3).
  1. Combined average TCE rate includes Teekay Suezmax RSA, Teekay Suezmax Classic RSA and non-pool voyage charters.
  2. Combined average TCE rate includes Teekay Aframax RSA, non-pool voyage charters and full service lightering voyages.
  3. As of January 1, 2020, Teekay Tankers' Aframax tankers and LR2 product tankers, excluding those employed under non-pool voyage charters and full service lightering voyages, are operating as a combined RSA under the Teekay Aframax RSA.

Teekay Tankers’ Fleet

The following table summarizes the Company’s fleet as of February 24, 2020 (excluding one Suezmax tanker that the Company has entered into an agreement to sell, which is scheduled to be delivered in April 2020):

 Owned and Leased VesselsChartered-in VesselsTotal
Fixed-rate:   
Suezmax Tankers55
Total Fixed-Rate Fleet55
Spot-rate:   
Suezmax Tankers2121
Aframax Tankers(i)17219
LR2 Product Tankers(ii)9211
VLCC Tanker(iii)11
Total Spot Fleet48452
Total Tanker Fleet53457
STS Support Vessels235
Total Teekay Tankers' Fleet55762
  1. Includes two Aframax tankers with charter-in contracts that are scheduled to expire in March 2021 and September 2021, respectively, one with an option to extend for one additional year.
  2. Includes two LR2 product tankers with charter-in contracts that are scheduled to expire in January 2021, each with an option to extend for one additional year.
  3. The Company’s ownership interest in this vessel is 50 percent.

Liquidity Update

As at December 31, 2019, the Company had total liquidity of $150.3 million (comprised of $89.9 million in cash and cash equivalents, including $1.1 million of cash in assets held for sale, and $60.4 million in undrawn capacity from its revolving credit facilities) compared to total liquidity of $95.1 million as at September 30, 2019. Including the proforma impact of the agreed asset sales and the debt refinancing completed or to be completed after December 31, 2019, liquidity would have been approximately $260 million as at December 31, 2019.

Conference Call

The Company plans to host a conference call on Thursday, February 27, 2020 at 1:00 p.m. (ET) to discuss its fourth quarter and annual 2019 results. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing (800) 367-2403 or (647) 490-5367, if outside of North America, and quoting conference ID code 9736884.
  • 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 Fourth 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 has a fleet of 52 double-hull tankers (including 26 Suezmax tankers, 17 Aframax tankers and nine LR2 product tankers), and two ship-to-ship support vessels, and also has seven time chartered-in tankers. Teekay Tankers’ vessels are typically employed through a mix of short- or medium-term fixed-rate time charter contracts and spot tanker market trading. Teekay Tankers 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, a portion of which the Company has recently agreed to sell. Teekay Tankers was formed in December 2007 by Teekay Corporation as part of its strategy to expand its conventional oil tanker business.

Teekay Tankers’ Class A common stock trades on the New York Stock Exchange under the symbol “TNK.”

For Investor Relations enquiries contact:

Ryan Hamilton
Tel:  +1 (604) 609-2963
Website:  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 Securities and Exchange Commission (SEC). These non-GAAP financial measures, which include Adjusted Net Income (Loss), Free Cash Flow, Net Revenues and, commencing in the first quarter of 2019, Adjusted EBITDA, are intended to provide additional information and should not be considered substitutes 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.  These non-GAAP measures are used by management, and the Company believes that these supplemental metrics assist investors and other users of its financial reports in comparing financial and operating performance of the Company across reporting periods and with other companies.

In prior periods, the Company reported cash flow from vessel operations (CFVO) as a non-GAAP measure. In the first quarter of 2019, the Company made certain changes to its non-GAAP financial measures to more closely align with internal management reporting, Company reporting in its SEC Annual Report on Form 20-F and metrics used by certain investors. Total CFVO and CFVO from Equity-Accounted Joint Venture are replaced with Total Adjusted EBITDA and Adjusted EBITDA from Equity-Accounted Joint Venture, respectively, for current and comparative periods.

Non-GAAP Financial Measures

Adjusted net income (loss) excludes items of income or loss from GAAP net income (loss) 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 income (loss), the most directly comparable GAAP measure reflected in the Company’s consolidated financial statements.

Adjusted EBITDA represents net income (loss) before interest, taxes, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include foreign exchange gains and losses, gains and losses on sale of vessels, unrealized gains and losses on derivative instruments and any write-offs and certain other income or expenses. Adjusted EBITDA also excludes realized gains or losses on interest rate swaps as management, in assessing the Company's performance, views these gains or losses as an element of interest expense and realized gains or losses on derivative instruments resulting from amendments or terminations of the underlying instruments. Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Company's financial statements.  Adjusted EBITDA from Equity-Accounted Joint Venture represents the Company's proportionate share of Adjusted EBITDA from its equity-accounted joint venture, and as a result, the Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted joint venture is retained within the entity in which the Company holds the equity-accounted joint venture or distributed to the Company and other owners. In addition, the Company does not control the timing of any such distributions to the Company and other owners. Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Total Adjusted EBITDA represents Consolidated Adjusted EBITDA plus Adjusted EBITDA from Equity-Accounted Joint Venture. Please refer to Appendices C and D of this release for reconciliations of Adjusted EBITDA to net income (loss) and equity income (loss), respectively, which are 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 derivative instruments, loss on sales of vessels, equity loss from the equity-accounted joint venture, and any write-offs and certain other non-cash non-recurring items, less unrealized gains from derivative instruments, gain on sales of vessels, equity income from the equity-accounted joint venture and certain other non-cash items. The Company includes FCF from equity-accounted joint venture as a component of its FCF. FCF from the equity-accounted joint venture represents the Company’s proportionate share of FCF from its equity-accounted joint venture. The Company does not control its equity-accounted joint venture, and as a result, the Company does not have the unilateral ability to determine whether the cash generated by its equity-accounted joint venture is retained within the entity in which the Company holds the equity-accounted joint venture 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 joint venture may not be available to the Company in the periods such FCF is generated by the equity-accounted joint venture. 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 income (loss), the most directly comparable GAAP financial measure reflected in the Company’s consolidated financial statements.

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.

Teekay Tankers Ltd.
Summary Consolidated Statements of Income (Loss)
(in thousands of U.S. dollars, except share and per share data)

  Three Months Ended Year Ended
  December 31,September 30,December 31, December 31,December 31, 
  201920192018 20192018 
  (unaudited)(unaudited)(unaudited) (unaudited)(unaudited) 
         
Voyage charter revenues (1)283,757 173,034 219,371  860,013 651,388  
Time-charter revenues10,580 1,909 8,039  17,355 59,786  
Other revenues (2)9,548 7,361 12,314  43,599 44,589  
Total revenues303,885 182,304 239,724  920,967 755,763  
         
Voyage expenses (1)(102,831)(87,726)(110,602) (380,564)(360,576) 
Vessel operating expenses(51,875)(48,539)(51,323) (208,601)(209,131) 
Time-charter hire expenses(12,312)(10,637)(4,841) (43,189)(19,538) 
Depreciation and amortization(31,943)(31,536)(29,916) (124,002)(118,514) 
General and administrative expenses(8,992)(8,739)(11,836) (36,404)(39,775) 
(Loss) gain and write-down on sale       
  of vessels(5,544)   (5,544)170  
Restructuring charges     (1,195) 
Income (loss) from operations90,388 (4,873)31,206  122,663 7,204  
        
Interest expense(15,679)(16,134)(16,987) (65,362)(58,653) 
Interest income147 138 311  871 879  
Realized and unrealized gain (loss)       
  on derivative instruments (3)205 1,453 (1,693) (967)3,032  
Equity income (4)1,693 68 955  2,345 1,220  
Freight tax and other tax (expenses)       
  recoveries (5)(13,195)602 (1,435) (18,883)(9,412) 
Other (expense) income(487)(1,104)(855) 695 3,182  
Net income (loss)63,072 (19,850)11,502  41,362 (52,548) 
        
Earnings (loss) per share attributable       
 to shareholders of Teekay Tankers       
 - Basic (6)1.88 (0.59)0.34  1.23 (1.57) 
 - Diluted (6)1.86 (0.59)0.34  1.23 (1.57) 
         
         
Weighted-average number of total common      
 shares outstanding       
 - Basic (6)33,638,082 33,623,800 33,569,630  33,617,635 33,561,615  
 - Diluted (6)33,952,442 33,623,800 33,594,944  33,732,167 33,561,615  
         
Number of outstanding shares of common stock at the end of the period33,654,576 33,623,800 33,569,630  33,654,576 33,569,630  
  1. 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 $12.0 million, $9.0 million and $23.8 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively, and $51.9 million and $80.5 million for the years ended December 31, 2019 and December 31, 2018, respectively.
     
  2. Other revenues include lightering support and liquefied natural gas services revenue, and pool management fees and commission revenues.
     
  3. Includes realized gains on interest rate swaps of $0.4 million, $0.6 million and $0.7 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively, and realized gains of $2.8 million and $2.3 million for the years ended December 31, 2019 and 2018, respectively. The Company also recognized realized gains of $1.1 million, $0.4 million and $0.3 million for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively, and realized gains of $1.5 million and $0.1 million for the years ended December 31, 2019 and 2018, respectively, relating to its forward freight agreements.
     
  4. Equity income relates to the Company’s 50 percent interest in the High-Q Investment Ltd. (High-Q) joint venture, which owns one VLCC tanker.
     
  5. Freight tax and other tax (expenses) recoveries for the three months and year ended December 31, 2019, includes adjustments to freight tax accruals of $10.9 million related to periods prior to 2019.
     
  6. The number of shares and per share amounts, including comparative figures, have been adjusted to reflect the changes resulting from the one-for-eight reverse stock split which took effect on November 25, 2019.

Teekay Tankers Ltd.
Summary Consolidated Balance Sheets
(in thousands of U.S. dollars)

 As atAs atAs at
 December 31,September 30,December 31,
 201920192018
 (unaudited) (6)(unaudited) (6)(unaudited)
ASSETS      
Cash and cash equivalents88,824  76,705  54,917  
Restricted cash3,071  2,341  2,153  
Pool receivable from affiliates  562  56,549  
Accounts receivable104,228  52,245  17,365  
Bunker and lube oil inventory (1)49,790  50,473  23,179  
Prepaid expenses (1)10,288  14,108  10,917  
Due from affiliates697  1,634  39,663  
Current portion of derivative assets577  1,878  2,905  
Assets held for sale (2)65,458      
Accrued revenue106,872  61,598  17,943  
Total current assets429,805  261,544  225,591  
Restricted cash – long-term3,437  3,437  3,437  
Vessels and equipment – net1,223,085  1,310,541  1,401,551  
Vessels related to finance leases – net527,081  525,597  482,010  
Operating lease right-of-use assets (3)19,560  23,595    
Investment in and advances to equity-accounted joint venture28,112  26,418  25,766  
Derivative assets82  82  2,973  
Other non-current assets1,923  910  74  
Intangible assets – net2,545  9,955  11,625  
Goodwill2,426  8,059  8,059  
Total assets2,238,056  2,170,138  2,161,086  
       
LIABILITIES AND EQUITY      
Accounts payable and accrued liabilities139,293  101,343  52,002  
Short-term debt (4)50,000  50,000    
Current portion of long-term debt43,573  101,295  106,236  
Current portion of derivative liabilities86    57  
Current obligations related to finance leases25,357  24,875  20,896  
Current portion of operating lease liabilities (3)16,290  16,405    
Liabilities associated with assets held for sale (2)2,980      
Due to affiliates2,139  1,241  18,570  
Other current liabilities8,567  255    
Total current liabilities288,285  295,414  197,761  
Long-term debt516,106  507,665  629,170  
Long-term obligations related to finance leases389,431  396,059  354,393  
Long-term operating lease liabilities (3)3,270  7,190    
Other long-term liabilities51,044  37,474  32,829  
Derivative liabilities  49    
Equity989,920  926,287  946,933  
Total liabilities and equity2,238,056  2,170,138  2,161,086  
       
Net debt (5)929,135  997,411  1,050,188  
  1. Commencing in 2019, the Company is separately presenting bunker and lube oil inventory on its balance sheets. Such amounts were previously classified as prepaid expenses. Bunker and lube oil inventory has increased significantly commencing in the first quarter of 2019 as a result of changes to the Company’s RSAs whereby the Company now directly procures and has legal title to the bunker fuel for the vessels in the RSAs; such assets are being used as collateral for the new loan to finance its pool management operations. Bunker and lube oil inventory is stated at cost which is determined on a first-in, first-out basis. Comparative figures have been reclassified to conform to the presentation adopted in the current period.
     
  2. In January 2020, the Company reached an agreement to sell a portion of its ship-to-ship transfer support services business and its LNG terminal management business for approximately $26 million, subject to certain adjustments including the final amounts of cash and other working capital present on the closing date. The sale is expected to close late in the first quarter of 2020 or early in the second quarter of 2020. The numbers in these financial statements have been adjusted to reflect the pending sale. The sale of a portion of the ship-to-ship support services business and LNG terminal management business, including cash, cash equivalents and restricted cash of $1.5 million, is classified as held for sale as at December 31, 2019. Also included in assets held for sale at December 31, 2019 are two Suezmax vessels, Iskmati Spirit and Narmada Spirit.
     
  3. Upon adoption of the new lease accounting standard on January 1, 2019, the Company's chartered-in vessels, with lease terms of more than one year, are now treated as operating lease right-of-use assets and operating lease liabilities. This resulted in increases in the Company’s assets and liabilities of $19.6 million and $23.6 million at December 31, 2019 and September 30, 2019, respectively. This adoption had no impact on the Company’s Consolidated Statements of Income (loss).
     
  4. Short-term debt relates to the Company’s loan to finance its RSA management operations that was initially drawn during the first quarter of 2019.
     
  5. Net debt is a non-GAAP financial measure and represents short-term, current and long-term debt and current and long-term obligations related to finance leases less cash and cash equivalents and restricted cash.
     
  6. In late-2018, the Company initiated a new RSA structure under a newly formed subsidiary, Teekay Tankers Chartering Pte. Ltd (TTCL). In the third quarter of 2019, the Company had substantially completed the transition of its RSA activities under TTCL. Under the TTCL structure, the balances in the RSA are consolidated, reflecting the Company’s rights and obligations as per the TTCL RSA agreements, whereas the previous RSA structure had an agency agreement and therefore balances were not consolidated. The transition to TTCL has therefore resulted in notable increases in various balance sheet working capital categories.

Teekay Tankers Ltd.
Summary Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)

  Year Ended
  December 31,December 31,
  20192018
  (unaudited)(unaudited)
Cash, cash equivalents and restricted cash provided by (used for)    
OPERATING ACTIVITIES    
Net income (loss)41,362  (52,548) 
Non-cash items:    
Depreciation and amortization124,002  118,514  
Loss (gain) and write-down on sale of vessels5,544  (170) 
Unrealized loss (gain) on derivative instruments5,247  (579) 
Equity income(2,345) (1,220) 
Other22,139  11,664  
Change in operating assets and liabilities(30,038) (54,952) 
Expenditures for dry docking(48,250) (27,972) 
Net operating cash flow117,661  (7,263) 
     
FINANCING ACTIVITIES    
Proceeds from short-term debt200,000    
Proceeds from long-term debt, net of issuance costs57,086  81,397  
Scheduled repayments of long-term debt(101,107) (165,365) 
Prepayments of long-term debt(135,110) (137,717) 
Prepayments of short-term debt(150,000)   
Proceeds from financing related to sales and leaseback of vessels63,720  241,339  
Scheduled repayments of obligations related to finance leases(24,221) (14,958) 
Cash dividends paid  (8,052) 
Other(126) (92) 
Net financing cash flow(89,758) (3,448) 
     
INVESTING ACTIVITIES    
Proceeds from sale of vessel20,008  589  
Expenditures for vessels and equipment(11,628) (5,827) 
Return of capital from equity-accounted joint venture  746  
Net investing cash flow8,380  (4,492) 
     
Increase (decrease) in cash, cash equivalents and restricted cash36,283  (15,203) 
Cash, cash equivalents and restricted cash, beginning of the year60,507  75,710  
Cash, cash equivalents and restricted cash, end of the year96,790  60,507  

Teekay Tankers Ltd.
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Loss)
(in thousands of U.S. dollars, except per share amounts)

   Three Months Ended
   December 31, 2019 December 31, 2018 
   (unaudited) (unaudited) 
   $$ Per Share(1) $$ Per Share(1) 
Net income - GAAP basis63,072  $1.88  11,502  $0.34  
          
Add specific items affecting net loss:        
 Loss and write-down on sale of vessels5,544  $0.16       
 Unrealized loss on derivative instruments (2)1,287  $0.04  2,708  $0.08  
 Other (3)13,088  $0.39  (208)    
Total adjustments19,919  $0.59  2,500  $0.08  
Adjusted net income attributable to shareholders of        
 Teekay Tankers82,991  $2.47  14,002  $0.42  


   Year Ended
   December 31, 2019 December 31, 2018 
   (unaudited) (unaudited) 
   $$ Per Share(1) $$ Per Share(1) 
Net income (loss) - GAAP basis41,362  $1.23  (52,548) ($1.57) 
          
Add specific items affecting net loss:        
 Loss (gain) and write-down on sale of vessels5,544  $0.16  (170)    
 Unrealized loss (gain) on derivative instruments (2)5,247  $0.16  (579) ($0.02) 
 Other (3)12,170  $0.36  (1,421) ($0.04) 
Total adjustments22,961  $0.68  (2,170) ($0.06) 
Adjusted net income (loss) attributable to shareholders of        
 Teekay Tankers64,323  $1.91  (54,718) ($1.63) 
  1. Basic per share amounts.
  2. 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 and forward freight agreements.
  3. The amount recorded for the three months and year ended December 31, 2019 primarily relates to adjustments to freight tax accruals of prior years and unrealized foreign exchange gains and losses. The amount recorded for the year ended December 31, 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, freight tax accruals of prior years and restructuring charges.


Teekay Tankers Ltd.
Appendix B - Reconciliation of Non-GAAP Financial Measures
Free Cash Flow
(in thousands of U.S. dollars, except share data)

   Three Months EndedYear Ended
   December 31, 2019December 31, 2018December 31, 2019December 31, 2018
   (unaudited)(unaudited)(unaudited)(unaudited)
           
 Net income (loss) - GAAP basis63,072  11,502  41,362  (52,548) 
           
 Add:        
  Depreciation and amortization31,943  29,916  124,002  118,514  
  Proportionate share of free cash flow from equity-accounted joint venture2,233  1,409  4,247  2,983  
  Unrealized loss on derivative instruments1,287  2,708  5,652  2,708  
  Loss and write-down on sale of vessels5,544    5,544    
           
 Less:        
  Equity income (1)(1,693) (955) (2,345) (1,220) 
  Unrealized gain on derivative instruments    (405) (3,287) 
  Gain on sale of vessel      (170) 
           
Free cash flow102,386  44,580  178,057  66,980  
           
Weighted-average number of common shares outstanding for the period - basic33,638,082  33,569,630  33,617,635  33,561,615  

(1)    Equity income relates to the Company’s 50 percent interest in the High-Q joint venture, which owns one VLCC tanker.


Teekay Tankers Ltd.
Appendix C - Reconciliation of Non-GAAP Financial Measures
Total Adjusted EBITDA
(in thousands of U.S. dollars)

 Three Months EndedYear Ended
 December 31, 2019December 31, 2018December 31, 2019December 31, 2018
 (unaudited)(unaudited)(unaudited)(unaudited)
Net income (loss) - GAAP basis63,072 11,502 41,362 (52,548)
Depreciation and amortization31,943 29,916 124,002 118,514 
Interest expense, net of interest income15,532 16,676 64,491 57,774 
Freight tax and other tax expenses (recoveries)13,195 (602)18,883 9,412 
EBITDA123,742 57,492 248,738 133,152 
     
Add (subtract) specific income statement items affecting EBITDA:    
Foreign exchange loss (gain)615 2,892 (486)(3,133)
Loss (gain) and write-down on sale of vessels5,544  5,544 (170)
Realized gain on interest rate swaps(395)(742)(2,791)(2,316)
Unrealized loss (gain) on derivative instruments1,287 2,708 5,247 (579)
Equity income(1,693)(955)(2,345)(1,220)
Other income – net (273) (186)
Consolidated adjusted EBITDA129,100 61,122 253,907 125,548 
Adjusted EBITDA from equity-accounted joint venture (See Appendix D)2,413 1,132 5,067 3,322 
Total Adjusted EBITDA131,513 62,254 258,974 128,870 


Teekay Tankers Ltd.
Appendix D - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA from Equity-Accounted Joint Venture
(in thousands of U.S. dollars)

 Three Months Ended
 December 31, 2019December 31, 2018
 (unaudited)(unaudited)
 AtCompany'sAtCompany's
 100%Portion (1)100%Portion (1)
Revenues5,300 2,650 2,851 1,426 
Vessel and other operating expenses(554)(277)(588)(294)
Depreciation and amortization(1,081)(540)(908)(454)
Income from vessel operations of equity-accounted joint venture3,665 1,833 1,355 678 
     
Net interest expense(359)(180)(451)(226)
Other80 40 1,006 503 
Equity income of equity-accounted joint venture3,386 1,693 1,910 955 
     
Equity income of equity-accounted joint venture3,386 1,693 1,910 955 
Depreciation and amortization1,081 540 908 454 
Interest expense, net of interest income359 180 451 226 
EBITDA from equity-accounted joint venture4,826 2,413 3,269 1,635 
     
Add (subtract) specific income statement items affecting EBITDA:    
Other  (1,006)(503)
Adjusted EBITDA from equity-accounted joint venture4,826 2,413 2,263 1,132 
  1. The Company’s proportionate share of its equity-accounted joint venture is 50 percent.


Teekay Tankers Ltd.
Appendix D - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA from Equity-Accounted Joint Venture
(in thousands of U.S. dollars)

 Year Ended
 December 31, 2019December 31, 2018
 (unaudited)(unaudited)
 AtCompany'sAtCompany's
 100%Portion (1)100%Portion (1)
Revenues12,282 6,141 9,601 4,801 
Vessel and other operating expenses(2,373)(1,186)(2,958)(1,479)
Depreciation and amortization(3,805)(1,903)(3,490)(1,745)
Income from vessel operations of equity-accounted joint venture6,104 3,052 3,153 1,577 
     
Net interest expense(1,639)(819)(1,751)(876)
Realized and unrealized gain on derivative instruments  32 16 
Other225 112 1,006 503 
Equity income of equity-accounted joint venture4,690 2,345 2,440 1,220 
     
Equity income of equity-accounted joint venture4,690 2,345 2,440 1,220 
Depreciation and amortization3,805 1,903 3,490 1,745 
Interest expense, net of interest income1,639 819 1,751 876 
EBITDA from equity-accounted joint venture10,134 5,067 7,681 3,841 
     
Add (subtract) specific income statement items affecting EBITDA:    
Realized and unrealized gain on derivative instruments  (32)(16)
Other  (1,006)(503)
Adjusted EBITDA from equity-accounted joint venture10,134 5,067 6,643 3,322 
  1. The Company’s proportionate share of its equity-accounted joint venture is 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: crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the oil and tanker markets; forecasts of worldwide tanker fleet growth or contraction and newbuilding tanker deliveries; estimated growth in global oil demand and supply; future tanker rates; future OPEC oil production or oil supply cuts; expected changes in global refinery throughput; the potential impact of IMO 2020 regulations and scrubber installations on tanker supply and demand; the potential impact of the coronavirus outbreak on global refinery throughput and oil and tanker supply and demand; agreed asset sales by the Company and the anticipated timing of closings of such transactions; the Company's liquidity and market position; and the Company’s strategic priorities and anticipated delevering of the Company’s balance sheet. 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 tanker rates; changes in the production of, or demand for, oil or refined products; changes in trading patterns significantly affecting overall vessel tonnage requirements; OPEC production and supply levels; the duration and extent of the coronavirus outbreak; the impact of geopolitical tensions and changes in global economic conditions; greater or less than anticipated levels of tanker newbuilding orders and deliveries and greater or less than anticipated rates of tanker scrapping; 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 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, including IMO 2020; 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, 2018. 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. 

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