HAMILTON, BERMUDA — (Marketwire) — 08/09/12 — Teekay Corporation (Teekay or the Company) (NYSE: TK) today reported an adjusted net loss attributable to stockholders of Teekay(1) of $17.0 million, or $0.25 per share, for the quarter ended June 30, 2012, compared to adjusted net loss attributable to the stockholders of Teekay of $36.3 million, or $0.51 per share, for the same period of the prior year. Adjusted net loss attributable to stockholders of Teekay excludes a number of specific items that had the net effect of increasing GAAP net loss by $30.2 million (or $0.43 per share) for the three months ended June 30, 2012 and increasing GAAP net loss by $60.2 million (or $0.85 per share) for the three months ended June 30, 2011, as detailed in Appendix A to this release. Including these items, the Company reported on a GAAP basis, net loss attributable to the stockholders of Teekay of $47.3 million, or $0.68 per share, for the quarter ended June 30, 2012, compared to net loss attributable to the stockholders of Teekay of $96.5 million, or $1.36 per share, for the same period of the prior year. Net revenues(2) for the second quarter of 2012 were $442.7 million, compared to $433.0 million for the same period of the prior year.
For the six months ended June 30, 2012, the Company reported an adjusted net loss attributable to stockholders of Teekay(1) of $37.8 million, or $0.55 per share, compared to adjusted net loss attributable to the stockholders of Teekay of $64.1 million, or $0.90 per share, for the six months ended June 30, 2011. Adjusted net loss attributable to stockholders of Teekay excludes a number of specific items that had the net effect of increasing GAAP net loss by $8.4 million (or $0.12 per share) for the six months ended June 30, 2012 and increasing GAAP net loss by $62.0 million (or $0.87 per share) for the six months ended June 30, 2011, as detailed in Appendix A to this release. Including these items, the Company reported on a GAAP basis, a net loss attributable to the stockholders of Teekay of $46.2 million, or $0.67 per share, for the six months ended June 30, 2012, compared to a net loss attributable to the stockholders of Teekay of $126.1 million, or $1.77 per share, for the six months ended June 30, 2011. Net revenues(2) for the six months ended June 30, 2012 were $899.7 million, compared to $875.9 million for the same period of the prior year.
On July 6, 2012, the Company declared a cash dividend on its common stock of $0.31625 per share for the quarter ended June 30, 2012. The cash dividend was paid on July 27, 2012, to all shareholders of record on July 17, 2012.
“With the announcement of many significant transactions in our core businesses during 2011, one of our main areas of focus in 2012 has been the efficient execution of our existing project development portfolio,” commented Peter Evensen, Teekay Corporation–s President and Chief Executive Officer. “Later this month, the Voyageur Spirit FPSO upgrade is expected to be completed and will sail away from the shipyard in time for the expected oil field start-up during the fourth quarter. The Cidade de Itajai FPSO conversion is also now largely complete and expected to sail for Brazil in August in preparation for its charter with Petrobras, which is expected to commence in late-2012. In May of this year, steel cutting began on the first two of four newbuilding Suezmax class shuttle tankers that Teekay Offshore will directly acquire for its contract with BG in the Brazil offshore market commencing in mid- to late-2013. And lastly, construction on our largest project to date, the $1 billion Knarr FPSO newbuilding, is proceeding on schedule and first-oil on the Knarr field in the North Sea is expected in the first quarter of 2014.”
“Operationally, we have been focused on integrating our recent asset acquisitions and various initiatives aimed at enhancing the profitability of our existing assets,” Mr. Evensen continued. “During the next few weeks, Teekay will take over technical management of the final of the six Maersk LNG carriers that the Teekay LNG-Marubeni joint venture acquired earlier this year. During the second quarter, Teekay LNG took advantage of the strong fundamentals in the LNG shipping market to secure a new three-year charter for the Magellan Spirit LNG carrier, which will commence immediately after the expiration of the current charter in September 2013. With the completion of the sale of the majority of our owned conventional crude and product tanker assets to Teekay Tankers in June, Teekay Parent–s exposure to the conventional tanker market is now mostly indirect through its equity ownership in a significantly larger Teekay Tankers. Our remaining in-chartered conventional fleet continues to reduce rapidly with eight vessels, or over one-third of the Teekay Parent in-charter fleet, redelivered in the first half of 2012 and two more vessels scheduled to be redelivered in the second half of the year. We have also made significant progress on our previously announced ship management joint venture with Anglo-Eastern, which we expect will result in cost savings commencing in the fourth quarter of this year.”
“The pace of tendering activity in the gas and offshore sectors continues to be strong,” Mr. Evensen added. “With the completion of our most recent LNG carrier newbuildings in the first quarter, our gas business development team has been actively bidding on both on-the-water and newbuilding LNG investment opportunities. In our offshore business, we are actively assessing various long-term projects which if acquired, will not begin construction until our current projects have been delivered and are generating cash flow.”
“Our current focus on project execution is aligned with our objectives of enhancing Teekay–s net asset value and profitability,” Mr. Evensen concluded. “The acquisition and delivery of gas and offshore assets by our publicly traded master limited partnerships provides growing cash flows to Teekay Parent from its GP and LP ownership interests in Teekay LNG and Teekay Offshore, while dropdowns have the added benefit of deleveraging the Teekay Parent balance sheet and thereby creating future financial flexibility. This includes our recent offer to sell the Voyageur Spirit FPSO to Teekay Offshore Partners upon commencement of its charter contract in the North Sea during the fourth quarter of 2012.”
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 Ltd. (Teekay Tankers) (NYSE: TNK) and Teekay Parent (which excludes the results attributed to Teekay Offshore, Teekay LNG and Teekay Tankers). A brief description of each entity and an analysis of its respective financial results follow the tables below. Please also refer to the “Fleet List” section below and Appendix B to this release for further details.
Teekay Offshore Partners L.P.
Teekay Offshore is an international provider of marine transportation, oil production and storage services to the offshore oil industry through its fleet of 40 shuttle tankers (including four chartered-in vessels and four newbuildings under construction), three floating, production, storage and offloading (FPSO) units, five floating storage and offtake (FSO) units and nine conventional oil tankers, in which its interests range from 50 to 100 percent. Teekay Offshore also has the right to participate in certain other FPSO and vessel opportunities. Teekay Parent currently owns a 30.9 percent interest in Teekay Offshore (including the 2 percent sole general partner interest).
Cash flow from vessel operations from Teekay Offshore increased to $109.8 million in the second quarter of 2012, from $95.2 million in the same period of the prior year. This increase was primarily due to a full quarter contribution from the Piranema Spirit FPSO unit acquired on November 30, 2011, the Scott Spirit and Peary Spirit shuttle tanker newbuildings acquired subsequent to June 30, 2011, and decreases in time-charter hire expense, vessel operating costs and restructuring charges in the shuttle tanker fleet. Time-charter hire expense decreased due to the redelivery of one in-chartered vessel in the fourth quarter of 2011 and fewer short-term chartered-in days. Vessel operating costs decreased due to the cold lay-up of the Basker Spirit shuttle tanker commencing in the third quarter of 2011 and other operating cost savings initiatives. A decrease in vessel operating expenses from the Rio das Ostras FPSO due to higher maintenance costs incurred while the unit was undergoing upgrades during the first half of 2011 further contributed to the increase in cash flow from vessel operations.
In July 2012, Teekay Offshore sold 1.7 million common units in a private placement for net proceeds of $45.9 million (including the general partners– contribution), which will be used to partially finance the shipyard installments relating to four newbuilding shuttle tankers being constructed by Samsung Heavy Industries, for a total delivered cost of approximately $470 million. Upon their scheduled delivery in mid- to late-2013, the vessels will commence operations under 10-year time-charter contracts, which include certain contract extension and vessel purchase options, with a subsidiary of BG Group plc to provide shuttle tanker services in Brazil.
In June 2012, Teekay Parent offered to sell to Teekay Offshore the Voyageur Spirit FPSO unit upon commencement of its new time-charter contract in the fourth quarter of 2012. The offer is currently being reviewed by the Conflicts Committee of Teekay Offshore–s Board of Directors. In addition, in June 2012, Talisman Energy, the current charterer of the Teekay Offshore-owned FPSO unit, the Petrojarl Varg, elected to exercise the first of three three-year extension options on the contract, extending the firm charter period until June 30, 2016.
Also in June 2012, Teekay Offshore sold a 1997-built conventional Aframax tanker to a third party buyer for net proceeds of $8.7 million. As a result of the early termination of the associated time-charter to Teekay Parent, Teekay Offshore received a termination fee of $14.7 million from Teekay Parent.
For the second quarter of 2012, Teekay Offshore–s quarterly distribution was $0.5125 per common unit. The cash distribution received by Teekay Parent based on its common unit ownership and general partnership interest in Teekay Offshore totaled $14.3 million for the second quarter of 2012, as detailed in Appendix D to this release.
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 charter contracts with major energy and utility companies through its current fleet of 27 LNG carriers, five LPG carriers and 11 conventional tankers, in which Teekay LNG–s interests range from 33 to 100 percent. Teekay Parent currently owns a 40.1 percent interest in Teekay LNG (including the 2 percent sole general partner interest).
Including cash flows from equity accounted vessels, Teekay LNG–s total cash flow from vessel operations increased to $109.0 million in the second quarter of 2012, from $77.6 million in the same period of the prior year. This increase primarily resulted from the acquisition of a 52 percent interest in six LNG carriers from A.P. Moller-Maersk in February 2012 (the MALT LNG Carriers), the acquisition of a 33 percent interest in four Angola LNG Carriers from Teekay between August 2011 and January 2012, the acquisition of newbuilding Multigas/LPG carriers in June, September and October 2011, and reduced vessel operating expenses in 2012 primarily due to timing of services and maintenance in relation to scheduled drydockings.
In early May 2012, Teekay LNG issued in the Norwegian bond market NOK 700 million in senior unsecured bonds that mature in May 2017. The aggregate principal amount of the bonds is equivalent to approximately USD 125 million and all interest and principal payments were swapped into USD. The proceeds from the bond issuance have been used to reduce amounts outstanding under Teekay LNG–s revolving credit facilities and for general partnership purposes. Teekay LNG is applying to list the bonds on the Oslo Stock Exchange.
For the second quarter of 2012, Teekay LNG–s quarterly distribution was $0.675 per common unit. The cash distribution received by Teekay Parent based on its common unit ownership and general partnership interest in Teekay LNG totaled $22.5 million for the second quarter of 2012 as detailed in Appendix D to this release.
Teekay Tankers Ltd.
Teekay Tankers currently owns a fleet of 12 Aframax tankers, 10 Suezmax tankers, three Long Range 2 (LR2) product tankers, three MR product tankers, and a 50 percent interest in a Very Large Crude Carrier (VLCC) newbuilding scheduled to deliver in April 2013. In addition, Teekay Tankers currently time-charters in one Aframax tanker and has invested $115 million in first-priority mortgage loans secured by two 2010-built VLCCs which yield an annualized fixed-rate return of 10 percent. Of the 29 vessels currently in operation, 15 are employed on fixed-rate time-charters, generally ranging from one to three years in initial duration, with the remaining vessels trading in Teekay–s spot tanker pools. Based on its current ownership of Class A common stock and its ownership of 100 percent of the outstanding Teekay Tankers Class B stock, Teekay Parent currently owns a 25 percent economic interest in and has voting control of Teekay Tankers.
In the second quarter of 2012, cash flow from vessel operations from Teekay Tankers decreased to $15.4 million from $17.9 million in the same period of the prior year, primarily due to lower average realized tanker rates for its spot Aframax fleet and expiry of certain time-charter contracts, partially offset by higher average realized tanker rates for its spot Suezmax fleet during the second quarter of 2012, compared to the same period of the prior year.
In June 2012, Teekay Tankers completed the acquisition from Teekay Parent of 13 double-hull conventional oil and product tankers, along with related time-charter contracts, debt facilities and other assets and rights, for an aggregate purchase price of $454.2 million. Upon closing of the transaction in late June 2012, Teekay received as partial consideration $25 million of new Teekay Tankers Class A shares issued at a price of $5.60 per share. As a result, Teekay Parent–s economic ownership interest in Teekay Corporation, including 100 percent of Teekay Tankers– Class B common stock, increased from approximately 20 percent currently to approximately 25 percent upon closing of the transaction and Teekay–s voting control of Teekay Tankers increased from approximately 51 percent to approximately 53 percent.
On August 8, 2012, Teekay Tankers declared a second quarter 2012 dividend of $0.11 per share which will be paid August 27, 2012 to all shareholders of record on August 20, 2012. As a result, based on its ownership of Teekay Tankers Class A and Class B shares, the dividend to be paid to Teekay Parent will total $2.3 million for the second quarter of 2012.
Teekay Parent
In addition to its equity ownership interests in Teekay Offshore, Teekay LNG and Teekay Tankers, Teekay Parent directly owns several vessels, which, as at August 1, 2012, included four conventional Suezmax tankers and four FPSO units. In addition, Teekay Parent currently has one newbuilding FPSO unit under construction, owns a 50 percent interest in an FPSO unit currently under conversion, and has agreed to acquire one FPSO unit later in 2012 upon completion of capital upgrades and commencement of its time-charter contract. As at August 1, 2012, Teekay Parent also had 13 chartered-in conventional tankers (including five vessels owned by its subsidiaries), two chartered-in LNG carriers owned by Teekay LNG and two chartered-in shuttle tankers owned by Teekay Offshore.
For the second quarter of 2012, Teekay Parent–s negative cash flow from vessel operations was $25.9 million, compared to negative cash flow from vessel operations of $25.8 million in the same period of the prior year. The slight increase in negative cash flow is primarily due to a $14.7 million termination fee paid for the termination of the Hamane Spirit time-charter in contract with Teekay Offshore in the second quarter of 2012 and higher vessel operating expenses in Teekay Parent–s equity accounted investments compared to the same period in the prior year, offset by the acquisition of the Hummingbird Spirit FPSO unit on November 30, 2011 and lower time-charter hire expense due to redeliveries of time-chartered in vessels during the past year.
In June 2012, Teekay Parent sold to Teekay Tankers 13 of its 17 remaining directly-owned conventional tankers and related time-charter contracts, debt facilities and other assets and rights, as discussed under the Teekay Tankers section above.
Fleet List
The following table summarizes Teekay–s consolidated fleet of 149 vessels as at August 1, 2012, including chartered-in vessels and vessels under construction/conversion but excluding vessels managed for third parties:
Liquidity and Capital Expenditures
As at June 30, 2012, Teekay had consolidated liquidity of $1.5 billion (consisting of $665.7 million cash and cash equivalents and $838.5 million of undrawn revolving credit facilities) of which $387.8 million of liquidity (consisting of $352.8 million cash and cash equivalents and $35.0 million of undrawn revolving credit facilities) is attributable to Teekay Parent. Pro Forma for $45 million of proceeds from the July 2012 Teekay Offshore equity private placement and approximately $168 million of drawings on the Knarr FPSO construction loan facility, Teekay had total consolidated liquidity of $1.7 billion, of which $555.4 million was attributable to Teekay Parent.
The following table provides the Company–s remaining capital commitments relating to its portion of acquisitions, newbuildings and conversions and related total financing completed as at June 30, 2012:
As indicated above, the Company had total capital expenditure commitments pertaining to its portion of acquisitions, newbuildings and conversions of approximately $1.4 billion remaining as at June 30, 2012. The Company–s current pre-arranged financing of approximately $589 million mostly relates to its remaining 2012 capital expenditure commitments. The Company is in the process of obtaining additional debt financing to fund its remaining capital expenditure commitments relating to the four shuttle tanker newbuildings and the Knarr FPSO newbuilding, which are scheduled to deliver in mid- to late-2013.
Conference Call
The Company plans to host a conference call on August 9, 2012 at 11:00 a.m. (ET) to discuss its results for the second quarter of 2012. An accompanying investor presentation will be available on Teekay–s website at 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:
The conference call will be recorded and available until Thursday, August 16, 2012. 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 4705713.
About Teekay
Teekay Corporation is an operational leader and project developer in the marine midstream space. Through its general partnership interests in two master limited partnerships, Teekay LNG Partners L.P. (NYSE: TGP) and Teekay Offshore Partners L.P. (NYSE: TOO), its controlling ownership of Teekay Tankers Ltd. (NYSE: TNK), and its fleet of directly-owned vessels, Teekay is responsible for managing and operating consolidated assets of over $11 billion, comprised of approximately 150 liquefied gas, offshore, and conventional tanker assets. With offices in 16 countries and approximately 6,400 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world–s leading oil and gas companies, and its reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.
Teekay–s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.
Set forth below is a reconciliation of the Company–s unaudited adjusted net loss attributable to the stockholders of Teekay, a non-GAAP financial measure, to net income (loss) attributable to stockholders of Teekay 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 loss attributable to the stockholders of Teekay is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
Set forth below is a reconciliation of the Company–s unaudited adjusted net loss attributable to the stockholders of Teekay, a non-GAAP financial measure, to net income (loss) attributable to stockholders of Teekay 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 loss attributable to the stockholders of Teekay is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
Set forth below is a reconciliation of unaudited cash flow from vessel operations, a non-GAAP financial measure, to income (loss) from vessel operations as determined in accordance with GAAP, for Teekay Parent–s primary operating segments. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate Teekay Parent–s financial performance. Disaggregated cash flow from vessel operations for Teekay Parent, as provided below, is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
Set forth below is a reconciliation of unaudited cash flow from vessel operations, a non-GAAP financial measure, to income from vessel operations as determined in accordance with GAAP, for Teekay Parent–s primary operating segments. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate Teekay Parent–s financial performance. Disaggregated cash flow from vessel operations for Teekay Parent, as provided below, is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
Set forth below is an unaudited calculation of Teekay Parent free cash flow for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011, and June 30, 2011. The Company defines free cash flow, a non-GAAP financial measure, as cash flow from vessel operations attributed to its directly-owned and in-chartered assets, distributions received as a result of ownership interests in its publicly-traded subsidiaries (Teekay LNG, Teekay Offshore, and Teekay Tankers), net of interest expense and drydock expenditures in the respective period. For a reconciliation of Teekay Parent cash flow from vessel operations for the three months ended June 30, 2012 to the most directly comparable financial measure under GAAP please refer to Appendix C to this release. For a reconciliation of Teekay Parent cash flow from vessel operations to the most directly comparable GAAP financial measure for the three months ended March 31, 2012, December 31, 2011, September 30, 2011, and June 30, 2011, please see the Company–s website at . Teekay Parent free cash flow, as provided below, is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
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: tanker market fundamentals, including the balance of supply and demand in the tanker market and the impact of seasonal factors on spot tanker charter rates; the estimated cost and timing of delivery of FPSO and shuttle tanker newbuildings/conversions in progress and the effect on the Company–s future cash flows and profitability; the estimated timing of commencement of new charter contracts upon delivery of FPSO and shuttle tanker newbuildings/conversions in progress; the potential sale of the Voyageur Spirit FPSO from Teekay Parent to Teekay Offshore; the impact on Teekay Parent–s cash flows from its GP and LP ownership interests in Teekay LNG and Teekay Offshore resulting from acquisitions and delivery of assets by Teekay LNG and Teekay Offshore; the estimated timing for the completion of the Company–s takeover of technical management of the MALT LNG Carriers; the expected timing of the commencement of the new charter contract for the Magellan Spirit LNG carrier; expected timing of redeliveries of vessels chartered-in by Teekay Parent; expected timing for commencement of cost savings related to the Company–s ship management joint venture with Anglo-Eastern; the Company–s future capital expenditure commitments and the debt financings that the Company expects to obtain for its remaining unfinanced capital expenditure commitments; and fundamentals of the offshore and LNG industries and the Company–s ability to complete future growth projects and acquisitions.
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 production of or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs and FPSOs; decreases in oil production by or increased operating expenses for FPSO units; trends in prevailing charter rates for shuttle tanker and FPSO contract renewals; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts or complete existing contract negotiations; changes affecting the offshore tanker market; shipyard production delays and cost overruns; changes in the Company–s expenses; the Company–s future capital expenditure requirements and the inability to secure financing for such requirements; the inability of the Company to complete vessel sale transactions to its public company subsidiaries or to third parties; factors impeding the expected transfer of technical management of the MALT LNG Carriers; factors impeding or preventing the establishment of the Company–s ship management joint venture with Anglo-Eastern; conditions in the United States capital markets; and other factors discussed in Teekay–s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2011. 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:
Teekay Corporation
Kent Alekson
Investor Relations Enquiries
+1 (604) 844-6654