Teekay Corporation reports third quarter results

Friday, November 9, 2012      
 
  • Third quarter 2012 total cash flow from vessel operations of $191.6 million, up 11 percent from the same period of the prior year.
  • Third quarter 2012 adjusted net loss attributable to stockholders of Teekay of $20.0 million, or $0.29 per share.

Teekay Corporation (NYSE:TK) -

Highlights

  • Third quarter 2012 total cash flow from vessel operations of $191.6 million, up 11 percent from the same period of the prior year.
  • Third quarter 2012 adjusted net loss attributable to stockholders of Teekay of $20.0 million, or $0.29 per share (excluding specific items which increased GAAP net loss by $0.3 million, or $0.00 per share).
  • Agreed to sell the Voyageur Spirit FPSO to Teekay Offshore for $540 million; transaction expected to be completed in December 2012.
  • Cidade de Itajai FPSO sea trials underway; expected to leave shipyard for Brazil in mid-November 2012.
  • Total consolidated liquidity of approximately $2.0 billion as at September 30, 2012, pro forma for Teekay Corporation's October 2012 US $123 million Norwegian bond offering.

Teekay Corporation (Teekay or the Company) (NYSE:TK) today reported an adjusted net loss attributable to stockholders of Teekay(1) of $20.0 million, or $0.29 per share, for the quarter ended September 30, 2012, compared to an adjusted net loss attributable to stockholders of Teekay of $40.6 million, or $0.58 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 $0.3 million, or $0.00 per share, for the three months ended September 30, 2012 and increasing GAAP net loss by $250.6 million, or $3.62 per share, for the three months ended September 30, 2011, as detailed in Appendix A to this release. Including these items, the Company reported on a GAAP basis, net loss attributable to stockholders of Teekay of $20.3 million, or $0.29 per share, for the quarter ended September 30, 2012, compared to net loss attributable to stockholders of Teekay of $291.2 million, or $4.20 per share, for the same period of the prior year. Net revenues(2) for the third quarter of 2012 were $433.9 million, compared to $428.5 million for the same period of the prior year.

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For the nine months ended September 30, 2012, the Company reported an adjusted net loss attributable to stockholders of Teekay(1) of $57.8 million, or $0.84 per share, compared to an adjusted net loss attributable to stockholders of Teekay of $104.7 million, or $1.48 per share, for the nine months ended September 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 $8.7 million, or $0.12 per share, for the nine months ended September 30, 2012 and increasing GAAP net loss by $312.6 million, or $4.42 per share, for the nine months ended September 30, 2011, as detailed in Appendix Ato this release. Including these items, the Company reported on a GAAP basis, a net loss attributable to stockholders of Teekay of $66.5 million, or $0.96 per share, for the nine months ended September 30, 2012, compared to a net loss attributable to stockholders of Teekay of $417.3 million, or $5.90 per share, for the nine months ended September 30, 2011. Net revenues(2) for the nine months ended September 30, 2012 were $1,333.5 million, compared to $1,304.4 million for the same period of the prior year.

On October 5, 2012, the Company declared a cash dividend on its common stock of $0.31625 per share for the quarter ended September 30, 2012. The cash dividend was paid on October 26, 2012, to all shareholders of record on October 17, 2012.

  1. Adjusted net (loss) income attributable to stockholders of Teekay is a non-GAAP financial measure. Please refer to Appendix A to this release for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP) and for information about specific items affecting net income that are typically excluded by securities analysts in their published estimates of the Company's financial results.
  2. Net revenues represents revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company's website 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 GAAP.

"During the third quarter, we continued to make progress on executing on our multiple projects, most notably the completion of upgrades to the Voyageur Spirit FPSO," commented Peter Evensen, Teekay Corporation's Chief Executive Officer. "The Voyageur Spirit arrived at the Huntington Field in early October, and the sale of this FPSO unit to Teekay Offshore is expected to be completed shortly after production start-up which is expected to occur in mid-December 2012. Factoring the approximately $130 million of capital upgrade payments funded by Teekay, the assumption of Sevan's $230 million debt facility secured by the Voyageur Spirit and payments to Sevan bondholders, Teekay Offshore's $540 million purchase price will be approximately $90 million above Teekay Parent's acquisition cost."

Mr. Evensen continued, "The Cidade de Itajai FPSO conversion project experienced a two-month delay to its delivery from the shipyard which has no material financial impact to Teekay. The FPSO unit is expected to leave the shipyard in mid-November destined for offshore Brazil where it will begin preparations for its nine-year contract with Petrobras during the first quarter of 2013. In October, the Petrojarl Knarr FPSO hull was completed and launched and installation of the topside processing equipment and turret is underway. The Petrojarl Knarr FPSO is expected to achieve first oil on its North Sea field in the first half of 2014. Construction on Teekay Offshore's newbuilding shuttle tankers is also proceeding on schedule with steel cutting initiated on three of the four vessels, which are expected to deliver in mid- to late-2013. Finally, repairs on thePetrojarl Banff FPSO are underway, with all long lead-time items ordered and the unit on track for re-installation on the field in the fourth quarter of 2013."

"Operationally, we have made progress on our cost-savings initiatives including, the contractual redelivery of in-chartered conventional tankers and the establishment of our new ship management subsidiary, Teekay Marine Ltd.," Mr. Evensen continued. "All employees and systems have now been transferred into our subsidiary, Teekay Marine Ltd. and the transfer of technical management for Teekay's conventional tanker fleet to Teekay Marine was completed in September. Also in September, we commenced a reorganization of our onshore shuttle tanker operations, which is expected to provide additional cost savings upon completion in mid-2013."

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.

Three Months Ended September 30, 2012
(unaudited)
(in thousands of U.S. dollars) Teekay Offshore Partners LP Teekay LNG Partners LP Teekay Tankers Ltd. Teekay Parent Consolidation Adjustments Teekay Corporation Consolidated
Net revenues 203,731 97,863 43,912 126,354 (37,997 ) 433,863
Vessel operating expense 70,767 21,992 23,529 66,293 - 182,581
Time-charter hire expense 14,910 - 804 49,014 (37,342 ) 27,386
Depreciation and amortization 47,768 24,570 17,896 22,522 - 112,756
CFVO - Consolidated(1)(2)(3) 95,528 71,178 16,252 (29,170 ) - 153,788
CFVO - Equity Investments(4) - 40,550 - (2,750 ) - 37,800
CFVO - Total 95,528 111,728 16,252 (31,920 ) - 191,588
Three Months Ended September 30, 2011
(unaudited)
(in thousands of U.S. dollars) Teekay Offshore Partners LP Teekay LNG Partners LP Teekay Tankers Ltd. Teekay Parent Consolidation Adjustments Teekay Corporation Consolidated
Net revenues 208,804 96,949 28,966 152,625 (58,833 ) 428,511
Vessel operating expense 71,641 22,366 10,908 67,457 - 172,372
Time-charter hire expense 18,620 - 1,610 86,036 (58,833 ) 47,433
Depreciation and amortization 46,905 23,032 10,797 27,012 - 107,746
CFVO - Consolidated(1)(2)(3) 105,227 70,402 14,521 (32,736 ) - 157,414
CFVO - Equity Investments(4) - 15,202 - 348 - 15,550
CFVO - Total 105,227 85,604 14,521 (32,388 ) - 172,964

  1. Cash flow from vessel operations (CFVO) represents income from vessel operations before depreciation and amortization expense, amortization of in-process revenue contracts, vessel write-downs, gains and losses on the sale of vessels, adjustments for direct financing leases to a cash basis, and unrealized gains and losses relating to derivatives, but includes realized gains and losses on the settlement of foreign currency forward contracts. CFVO - Consolidated represents CFVO from vessels that are consolidated on the Company's financial statements. Cash flow from vessel operations is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please refer to Appendix B and Appendix C of this release and see the Company's website 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.
  2. Excludes CFVO relating to assets acquired from Teekay Parent for the periods prior to their acquisition by Teekay Offshore, Teekay LNG and Teekay Tankers, respectively, as those results are included in the historical results for Teekay Parent.
  3. In addition to CFVO from directly owned vessels, Teekay Parent also receives cash dividends and distributions from its daughter public companies. For the three months ended September 30, 2012 and 2011, Teekay Parent received daughter company dividends and distributions totaling $38.0 million and $34.9 million, respectively. The dividends and distributions received by Teekay Parent include, among others, those made with respect to its general partner interests in Teekay Offshore and Teekay LNG. Please refer to Appendix D to this release for further details.
  4. CFVO - Equity Investments represents the Company's proportionate share of CFVO from its equity-accounted vessels and other investments. Please refer to Appendix B of this release and see the Company's website 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.

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 39 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 29.4 percent interest in Teekay Offshore (including the 2 percent sole general partner interest).

For the third quarter of 2012, Teekay Offshore's quarterly distribution was $0.5125 per common unit. The cash distribution to be received by Teekay Parent based on its common unit ownership and general partnership interest in Teekay Offshore totals $14.6 million for the third quarter of 2012, as detailed in Appendix D to this release.

Cash flow from vessel operations from Teekay Offshore decreased to $95.5 million in the third quarter of 2012, from $105.2 million in the same period of the prior year. This decrease was primarily due to the sale of two conventional tankers and the lay-up of two conventional tankers during the past four quarters following expiry of their time-charter contracts, and the dry-docking of the Navion Saga FSO during a portion of the third quarter of 2012. This was partially offset by a full quarter contribution from the Scott Spirit shuttle tanker newbuilding that delivered in the fourth quarter of 2011, the acquisition of the Piranema Spirit FPSO unit on November 30, 2011, decreases in time-charter hire expense due to the redelivery of one in-chartered vessel in the fourth quarter of 2011, and lower vessel operating costs due to lower repairs, maintenance and crewing costs and the lay-up of the Navion Torinita shuttle tanker commencing in the second quarter of 2012 upon expiration of its charter.

In September 2012, Teekay Offshore completed a public equity offering of 7.8 million common units (including 0.4 million units issued upon exercise of the underwriters' overallotment option), raising net proceeds of $211.5 million (including the general partners' contribution). Net proceeds will be used to partially finance the $540 million acquisition by Teekay Offshore from Teekay of the Voyageur Spirit FPSO, which is expected to occur in mid-December following start-up on the Huntington Field in the North Sea. The 2009-built Voyageur Spirit will operate under a five-year time-charter contract with E.ON which includes certain extension options.

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 deliveries 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 July 2012, Teekay Offshore sold a 1992-built shuttle tanker, the Navion Fennia, to a third party buyer for net proceeds of $7.0 million.

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 37.5 percent interest in Teekay LNG (including the 2 percent sole general partner interest).

For the third quarter of 2012, Teekay LNG's quarterly distribution was $0.675 per common unit. The cash distribution to be received by Teekay Parent based on its common unit ownership and general partnership interest in Teekay LNG totals $23.0 million for the third quarter of 2012, as detailed in Appendix D to this release.

Including cash flows from equity-accounted vessels, Teekay LNG's total cash flow from vessel operations increased to $111.7 million in the third quarter of 2012, from $85.6 million in the same period of the prior year. This increase was primarily due to 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 the four Angola LNG carriers from Teekay between August 2011 and January 2012, and the acquisition of newbuilding Multigas/LPG carriers in September and October of 2011.

In September 2012, Teekay LNG completed a public equity offering of 4.8 million common units (including 0.2 million units issued upon exercise of the underwriters' overallotment option), raising net proceeds of $182.2 million (including the general partners' contribution). Net proceeds have been used for general corporate purposes and to reduce amounts outstanding under Teekay LNG's revolving credit facilities, which may be withdrawn to finance future newbuilding deliveries or vessel acquisitions.

Teekay Tankers Ltd.

Teekay Tankers currently owns a fleet of 29 vessels, including 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 loans 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 25.1 percent economic interest in and has voting control of Teekay Tankers.

On November 7, 2012, Teekay Tankers declared a third quarter 2012 dividend of $0.02 per share which will be paid November 26, 2012 to all shareholders of record on November 19, 2012. Based on its ownership of Teekay Tankers Class A and Class B shares, the dividend to be paid to Teekay Parent will total $0.4 million for the third quarter of 2012.

In the third quarter of 2012, cash flow from vessel operations from Teekay Tankers increased to $16.3 million from $14.5 million in the same period of the prior year, primarily due to the contribution from 13 vessels acquired from Teekay Corporation in June 2012, partially offset by the expiration of certain time-charter contracts, and subsequent renegotiation at lower tanker rates, over the course of the past year.

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 November 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 and resell this unit to Teekay Offshore following commencement of its time-charter contract. As at November 1, 2012, Teekay Parent also had 14 chartered-in conventional tankers (including seven vessels owned by its subsidiaries), two chartered-in LNG carriers owned by Teekay LNG, and two chartered-in shuttle tankers and two chartered-in FSOs owned by Teekay Offshore.

For the third quarter of 2012, Teekay Parent generated negative cash flow from vessel operations of $31.9 million, compared to negative cash flow from vessel operations of $32.4 million in the same period of the prior year. The relative increase in cash flow is due to lower time-charter hire expense as a result of the redelivery of time-chartered in vessels during the past year and the acquisition of the Hummingbird Spirit FPSO in November 2011, partially offset by the sale of the 13 conventional tankers to Teekay Tankers in June 2012, the Petrojarl Banff FPSO being off-hire since its December 2011 storm-related incident and a planned maintenance shut-down on the Foinaven FPSO during the third quarter of 2012.

In the third quarter of 2012, Teekay Parent sold its 40 percent interest in the Ikdam FPSO to a third party resulting in a gain of $10.8 million.

In early October 2012, Teekay Parent issued in the Norwegian bond market NOK 700 million in senior unsecured bonds that mature in October 2015. The aggregate principal amount of the bonds is equivalent to approximately USD 123 million and all interest and principal payments were swapped into USD at a fixed rate of 5.5 percent. The proceeds from the bond issuance have been used to reduce amounts outstanding under Teekay Parent's revolving credit facilities and for general corporate purposes. Teekay Parent is applying to list the bonds on the Oslo Stock Exchange.

In late October 2012, Teekay Parent received notification from Statoil ASA that commercial services of the Petrojarl I FPSO will no longer be required on the Glitne field in the North Sea beyond April 2013. The Petrojarl I has been servicing Statoil at the Glitne field since August 2001. Teekay Parent is currently reviewing redeployment opportunities for the Petrojarl I upon completion of the charter with Statoil.

Fleet List

The following table summarizes Teekay's consolidated fleet of 147 vessels as at November 1, 2012, including chartered-in vessels and vessels under construction/conversion but excluding vessels managed for third parties:

Number of Vessels(1)
Owned Chartered-in Newbuildings /
Vessels Vessels Conversions Total
Teekay Parent Fleet(2)(3)
Aframax Tankers(4) - 6 - 6
Suezmax Tankers(4) 4 - - 4
MR Product Tankers - 1 - 1
FPSO Units(5) 4 - 3 7
Total Teekay Parent Fleet 8 7 3 18
Teekay Offshore Fleet 48 4 4 56
Teekay LNG Fleet 43 - 43
Teekay Tankers Fleet 28 1 1 30
Total Teekay Consolidated Fleet 127 12 8 147

  1. Ownership interests in these vessels range from 33 percent to 100 percent. Excludes vessels managed on behalf of third parties.
  2. Excludes two LNG carriers chartered-in from Teekay LNG.
  3. Excludes two shuttle tankers and two FSOs chartered-in from Teekay Offshore.
  4. Excludes five Aframax tankers chartered-in from Teekay Offshore and two Suezmax tankers chartered-in from Teekay Tankers.
  5. Includes one FPSO unit, the Voyageur Spirit, that for accounting purposes is a variable interest entity (VIE) whereby Teekay is the primary beneficiary. As a result, the Company has consolidated the VIE even though the Company does not expect to acquire the FPSO unit until December 2012.

Liquidity and Capital Expenditures

As at September 30, 2012, Teekay had consolidated liquidity of $1.9 billion (consisting of $586.9 million cash and cash equivalents and $1,322.0 million of undrawn revolving credit facilities), of which $397.9 million of liquidity (consisting of $262.9 million cash and cash equivalents and $135.0 million of undrawn revolving credit facilities) is attributable to Teekay Parent. Giving pro forma effect for the NOK 700 million (approximately USD 123 million equivalent) of proceeds from Teekay Parent's senior unsecured Norwegian bond issuance completed in early October 2012, Teekay had total consolidated liquidity of approximately $2.0 billion as at September 30, 2012, of which $520.9 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 September 30, 2012:

(in millions) 2012 2013 2014 Total Amount Financed
to Date
Teekay Offshore(1) $45 $323 - $368 -
Teekay LNG - - - - -
Teekay Tankers(2) $10 $27 - $37 $34
Teekay Parent(3) $284 $56 $343 $683 $237(4)
Total Teekay Corporation Consolidated $339 $406 $343 $1,088 $271(4)

  1. Includes capital expenditures related to four newbuilding shuttle tankers.
  2. Includes remaining capital expenditures related to Teekay Tankers' 50 percent interest in the Wah Kwong VLCC Newbuilding.
  3. Includes remaining capital expenditures related to the Knarr FPSO newbuilding, the upgrade and acquisition by Teekay from Sevan of theVoyageur Spirit FPSO unit (net of the existing $230 million debt facility which Teekay Parent will assume as part of the acquisition and is currently accounted for on Teekay Parent's Balance Sheet as the Voyageur Spirit is deemed a variable interest entity) and Teekay Parent's 50 percent interest in the Cidade de Itajai FPSO unit.
  4. Includes a firm commitment to upsize the Voyageur Spirit FPSO debt facility by $100 million syndicated by a bank group in November 2012.

As indicated above, the Company had total capital expenditure commitments pertaining to its portion of acquisitions, newbuildings and conversions of approximately $1.1 billion remaining as at September 30, 2012. The Company's current pre-arranged financing of approximately $271 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, which are scheduled to deliver in mid- to late-2013 and the Knarr FPSO newbuilding, which is scheduled to deliver in the first half of 2014.


 

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Teekay Corporation Bermuda Worldwide Finance Operations Update Production Update LNG North Sea


This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More


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