Teekay Corporation reported results for the three and twelve months ended December 31, 2022. These results include the Company’s publicly-listed consolidated subsidiary, Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK), and all remaining subsidiaries and equity-accounted investments. As a result of Stonepeak’s acquisition of Teekay LNG Partners L.P. (Teekay LNG) (now known as Seapeak LLC) in January 2022, certain information in this release presents Teekay LNG and various subsidiaries that provided the shore-based operations for Teekay LNG and certain of Teekay LNG’s joint ventures under management services contracts (collectively, the Teekay Gas Business) as a discontinued operation. Teekay, together with its subsidiaries other than Teekay Tankers, is referred to in this release as Teekay Parent.
“During the fourth quarter of 2022, mid-sized spot tanker rates surged to among the highest rates ever recorded, which resulted in Teekay posting its highest consolidated adjusted net earnings per share in 14 years,” commented Kenneth Hvid, Teekay’s President and CEO. “In addition, in January 2023, Teekay Parent repaid the remaining amount due at maturity on its convertible bond and is now debt free with over $300 million in cash, which is a major milestone in a six-year journey during which we have focused on simplifying and streamlining our group structure, while strengthening our balance sheet and financial flexibility to support our long-term value-creation strategy.”
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“During the fourth quarter, Teekay Tankers reported its highest ever adjusted net income, driven by strong tanker supply and demand fundamentals, which has been further boosted by an increase in tanker tonne-miles resulting from the structural changes to energy trade flows following Russia’s invasion of Ukraine. The strong tanker market over the past year has transformed Teekay Tankers’ balance sheet, and we are now in the process of refinancing 19 of its sale-leaseback financings completed during the previous cyclical downturn with a new corporate revolver, which is expected to further reduce our interest costs and cash flow break-even levels. The spot charter rates that Teekay Tankers’ fleet has secured so far in first quarter of 2023 remain strong and, with almost all of Teekay Tankers’ fleet currently trading in the spot market, we believe we have significant operating leverage to benefit from this robust tanker market.”
“Lastly, since reporting earnings in November 2022, we have continued to repurchase Teekay’s common shares under our $30 million share repurchase program announced in August 2022, acquiring a further 3.0 million common shares. To-date, we have repurchased 4.5 million common shares, or approximately 4.4% of the outstanding common shares immediately prior to commencement of the program, at an average price of $4.16 per share.”
Summary of Results
The Company’s adjusted net income attributable to shareholders of Teekay(1) for the fourth quarter of 2022 increased compared to the same quarter of the prior year, primarily due to stronger earnings from Teekay Tankers as a result of higher spot tanker rates as well as lower interest expense in Teekay Parent due to bond and convertible debt repurchases completed during 2022, which was partially offset by the loss of earnings contribution from the Teekay Gas Business as a result of the sale of the Teekay Gas Business on January 13, 2022.
In addition, consolidated GAAP net income attributable to shareholders of Teekay increased during the fourth quarter of 2022, compared to the same quarter of the prior year, mainly due to write-downs of $45.9 million primarily related to investments in equity-accounted joint ventures (of which $30 million related to the Teekay Gas Business) which were recognized in the fourth quarter of 2021.
The following table highlights the operating performance of Teekay Tankers’ vessels trading in revenue sharing arrangements (RSAs), on voyage charters and in full service lightering, in each case measured in net revenues(1) per revenue day(2), or time-charter equivalent (TCE) rates, before off-hire bunker expenses:
Please refer to Teekay Tankers’ fourth quarter of 2022 earnings release for additional information on the financial results for Teekay Tankers.
Summary of Recent Events
Since September 30, 2022, Teekay Parent has repurchased an additional 3.0 million of its common shares under its share repurchase program for a total cost of $13.4 million. To-date, Teekay has repurchased a total of approximately
4.5 million common shares under the program, or approximately 4.4% of the outstanding common shares immediately prior to commencement of the program in August 2022, for a total cost of $18.7 million, representing an average repurchase price of $4.16 per share.
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In November 2022, Teekay Tankers entered into a charter-in agreement for one Suezmax vessel at a rate of $32,250 per day for 54 months with an option to extend for an additional 12 months, while simultaneously entering into a charter-out agreement for the same vessel at a rate of $38,475 per day for a 21 to 26-month period. Both charters commenced in December 2022.
In December 2022, Teekay Tankers entered into a charter-in agreement for one Aframax vessel at a rate of $31,150 per day for 36 months with an option to extend for an additional 12 months, while simultaneously entering into a charter-out agreement for the same vessel at a rate of $48,500 per day for a 12-month period. Both charters commenced in February 2023.
In January 2023, the previously announced eco-Aframax newbuilding was delivered to Teekay Tankers under a charter-in agreement for seven years at a rate of $18,700 per day. The charter includes three one-year extension options, as well as a purchase option.
In February 2023, Teekay Tankers entered into a charter-in contract for one Aframax vessel at a rate of $35,750 per day for 24 months with an option to extend for an additional 12 months. The vessel is expected to be delivered prior to the end of the first quarter of 2023.
In January 2023, Teekay Tankers gave notice to exercise nine vessel purchase options under sale-leaseback arrangements for a total of $164 million. Teekay Tankers expects to purchase the vessels in March 2023 using cash on hand.
In February 2023, Teekay Tankers signed a term sheet for a new secured revolving credit facility for up to $350 million to refinance 19 vessels (including the nine vessels mentioned above) currently under sale-leaseback financing arrangements. The facility is expected to be completed during the second quarter of 2023.
Source: Teekay Corporation