Teekay Corporation Reports Fourth Quarter and Annual Results.
Teekay Corporation yesterday reported an adjusted net loss attributable to stockholders of Teekay of $33.3 million, or $0.45 per share, for the quarter ended December 31, 2009, compared to adjusted net income of $53.2 million, or $0.73 per share, attributable to the stockholders of Teekay for the same period of the prior year. Adjusted net income (loss) attributable to stockholders of Teekay excludes a number of specific items which had the net effect of increasing net income by $49.1 million (or $0.67 per share) for the three months ended December 31, 2009 and decreasing net income by $704.1 million (or $9.71 per share) for the three months ended December 31, 2008, as detailed in Appendix A to this release. Including these items, the Company reported on a GAAP basis, net income attributable to the stockholders of Teekay of $15.9 million(2), or $0.22 per share, for the quarter ended December 31, 2009, compared to net loss attributable to the stockholders of Teekay of $650.9 million(2), or $8.98 per share, for the same period of the prior year. Net revenues(3) for the fourth quarter of 2009 were $448.9 million, compared to $611.6 million for the same period of the prior year.
For the year ended December 31, 2009, the Company reported an adjusted net loss attributable to stockholders of Teekay of $87.5 million, or $1.20 per share, compared to adjusted net income attributable to stockholders of Teekay of $285.3 million, or $3.94 per share, for the same period of the prior year, excluding a number of specific items which had the net effect of increasing net income by $202.0 million (or $2.77 per share) in 2009 and decreasing net income by $754.8 million or $10.42 per share in 2008, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, net income attributable to the stockholders of Teekay of $114.5 million, or $1.57 per share for the year ended December 31, 2009, compared to net loss attributable to the stockholders of Teekay of $469.4 million, or $6.48 per share, for the same period of the prior year. Net revenues for the twelve months ended December 31, 2009 were $1.9 billion compared to $2.5 billion for the prior year.
On January 5, 2010, the Company declared a cash dividend on its common stock of $0.31625 per share for the quarter ended December 31, 2009. The cash dividend was paid on January 29, 2010, to all shareholders of record on January 15, 2010.
Commenting on Teekay's results, Bjorn Moller, Teekay's President and Chief Executive Officer stated: "The contribution from our growing fixed-rate businesses proved particularly valuable during the second half of 2009, providing cash flow stability through one of the most volatile spot tanker markets in decades" Mr. Moller continued, "In the fourth quarter, Teekay generated over $129 million of cash flow from vessel operations, despite the spot tanker market weakness that persisted through most of the quarter. We expect 2010 will bring continued tanker market volatility; however our fixed-rate offshore, liquefied gas and conventional tanker businesses will provide Teekay with a significant base of stable cash flows while our spot-traded fleet retains the potential upside to the spot tanker market."
Mr. Moller continued, "We have made great progress in 2009 on the key priorities we communicated at our June 2009 investor meeting. Since that time, we have continued to reduce our exposure to the spot tanker market through selling and chartering-out spot-trading tankers and re-delivering in-chartered vessels. The re-delivery of spot in-chartered vessels alone has resulted in quarterly cost savings of over $85 million for the fourth quarter of 2009 compared to the fourth quarter of 2008. In addition, our focus on cost management has resulted in significant savings in overhead and vessel operating expenses. At the same time, our unique corporate structure and strategy of selling assets to our three daughter public companies has enabled accretive growth at our daughter companies while achieving our objective of reducing net debt at the Teekay parent level. Through vessel sales to third parties and our daughter companies, as well as cash flow from operations, Teekay parent's total net debt and newbuilding commitments were reduced by over $600 million in during 2009."
Mr. Moller added, "Teekay enters 2010 financially well-positioned with over $2.8 billion of total consolidated liquidity, including a fully-financed newbuilding program, with a favorable debt maturity profile with no significant near-term maturities, and with no current debt covenant concerns. Our successful $450 million bond offering completed in January 2010 has extended the maturity of a significant portion of our debt, which provides Teekay with greater financial flexibility going forward. In 2010, our key priorities include continuing to reduce net debt at the Teekay parent company level and to improve our profitability. We have been able to achieve substantial cost savings during 2009 and our focus in 2010 will be to sustain those cost savings while also achieve higher revenues, particularly in our offshore segment."
Teekay Offshore Partners L.P.
Teekay Offshore is an international provider of marine transportation and storage services to the offshore oil industry. Through its 51 percent ownership interest in Teekay Offshore Operating L.P. (OPCO), Teekay Offshore operates a fleet of 33 shuttle tankers (including seven chartered-in vessels), four floating storage and offtake (FSO) units, nine conventional oil tankers and two lightering vessels. Teekay Offshore also has direct ownership interests in two shuttle tankers, one FSO unit, one floating, production, storage and offloading (FPSO) unit and has the right to participate in certain other FPSO opportunities. As at December 31, 2009, Teekay Parent directly owned the remaining 49 percent interest in OPCO, as well as a 40.47 percent interest in Teekay Offshore (including the two percent sole general partner interest).
Cash flow from vessel operations from Teekay Offshore increased to $73.2 million in the fourth quarter of 2009, from $65.3 million in the same period of the prior year. This increase was primarily due to the acquisition from Teekay of the Petojarl Varg FPSO in September 2009 as well as lower time-charter hire expense as a result of a reduced in-chartered fleet, partially offset by lower shuttle tanker fleet utilization.
Teekay LNG Partners L.P.
Teekay LNG provides liquefied natural gas (LNG), liquefied petroleum gas (LPG) and crude oil marine transportation services under long-term, fixed-rate time-charter contracts with major energy and utility companies through its current fleet of 15 LNG carriers, three LPG carriers and eight Suezmax crude oil tankers. In addition, Teekay LNG expects to take delivery of three newbuilding LPG carriers in 2010 and 2011. Teekay Parent currently owns a 49.2 percent interest in Teekay LNG (including the two percent sole general partner interest).
Cash flow from vessel operations from Teekay LNG during the fourth quarter of 2009 increased to $60.4 million from $54.2 million in the same period of the prior year. This increase was primarily due to the delivery of the first two Skaugen LPG/Multigas carriers from subsidiaries of IM Skaugen ASA in April and November 2009, the acquisition of a 70 percent interest in the two Tangguh LNG carriers in August 2009 and the effect of the strengthening of the Euro against the U.S. Dollar on the Partnership's Euro-denominated revenues, partially offset by a decrease in the Teide Spirit profit share (the time charter for the Teide Spirit contains a profit share component tied to spot tanker rates which is determined in the fourth quarter of each year). In addition, there was a reduction in revenue in the fourth quarter of 2009 compared to the same quarter of the prior year due to a decrease in LIBOR which affected the daily charter rates that are adjusted for changes in LIBOR under the time-charter contracts for five of the Partnership's Suezmax tankers. This reduction is offset by a corresponding decrease in net interest expense.
On November 24, 2009, Teekay LNG completed a follow-on equity offering of 3.95 million common units (including the exercised portion of the underwriters' overallotment option), raising net proceeds of $91.9 million. Proceeds from the offering were used to repay amounts drawn under Teekay LNG's revolving credit facilities and for general corporate purposes.
On March 2, 2010, Teekay LNG agreed to acquire from Teekay two 2009-built Suezmax tankers and one 2007-built Handymax product tanker, and their respective long-term time-charter contracts, for a total cost of $160 million. This transaction is expected to be completed in mid-March 2010.
Teekay Tankers Ltd.
Teekay Tankers currently owns a fleet of nine Aframax tankers and three Suezmax tankers. Seven of the 12 vessels are currently employed on fixed-rate time charters mostly ranging from one to three years in initial duration, with the remaining vessels trading in the spot tanker market. Based on the existing fleet employment profile, approximately 55 percent of Teekay Tankers revenue days in 2010 are under fixed-rate charters. Teekay Parent currently owns a 42.2 percent interest in Teekay Tankers (including 100 percent of the outstanding Class B common shares).
Cash flow from vessel operations from Teekay Tankers decreased to $14.5 million in the fourth quarter of 2009, from $22.3 million in the same period of the prior year, primarily due to a decrease in spot tanker rates in the fourth quarter of 2009 compared to the same period of the prior year.
In addition to its equity ownership interests in Teekay Offshore, Teekay LNG and Teekay Tankers, Teekay directly owns a substantial fleet of vessels. As at February 28, 2010, this included 26 conventional tankers, four FPSOs, a 33 percent interest in four newbuilding LNG carriers under construction, four Aframax shuttle tanker newbuildings under construction, and one recently converted FSO unit. In addition, Teekay Parent had 34 chartered-in conventional tankers (including 10 vessels owned by its subsidiaries) and two chartered-in LNG carriers owned by Teekay LNG.
For the fourth quarter of 2009, Teekay Parent's cash flow from vessel operations decreased by $76.1 million from the same period of the prior year, primarily due to a decrease in average spot tanker rates and a decrease of 1,735 spot revenue days compared to the fourth quarter of 2008. Revenue days represent the total number of vessel calendar days less off-hire associated with major repairs, drydockings, or mandated surveys. In addition, Teekay Parent's fourth quarter 2009 cash flow from vessel operations was lower due to the sale of the Petrojarl Varg FPSO unit to Teekay Offshore in September 2009. The decrease in cash flow from vessel operations from Teekay Parent was partially offset by lower time-charter hire expense and reduced operating and overhead expenses as a result of cost reduction initiatives.
During the latter part of the fourth quarter, spot tanker rates recovered from the multi-year lows of the previous quarter as a result of increased global oil demand, rising supply from both OPEC and non-OPEC sources, seasonal factors such as weather-related vessel delays and an increase in the use of conventional tankers for floating storage volumes, which tightened active fleet supply. Spot tanker rates remained strong during the first few weeks of 2010 largely due to severe winter weather conditions in the Northern Hemisphere which led to increased oil demand and caused weather-related delays. Subsequently, spot tanker rates have softened in late January and February due to easing seasonal factors and an increase in available fleet capacity as a result of a reduction in global floating storage volumes.
In January 2010, the International Monetary Fund (IMF) raised its global GDP growth forecast for 2010 to 3.9 percent from 3.1 percent. The upward adjustment is a result of indications of a stronger and faster recovery of the global economy than was previously anticipated. The International Energy Agency (IEA) has forecasted that global oil demand in 2010 will average 86.5 million barrels per day (mb/d) which represents a 1.6 mb/d (or 1.8 percent) increase from 2009 when global oil demand contracted by 1.5 percent compared to the prior year.
In 2009, the world tanker fleet grew by 7.3 percent as approximately 48 million deadweight tonnes (mdwt) of new capacity joined the worldwide fleet and approximately 19 mdwt was removed through scrapping or conversion for other uses. The tanker newbuilding delivery profile for 2010 is similar to 2009. However, there is potential for an increase in scrapping due to the International Maritime Organization (IMO) targeted phase-out of single hull tankers which could have a dampening effect on tanker supply and lead to lower fleet growth in 2010 compared to the prior year.
Teekay Corporation transports approximately 10 percent of the world's seaborne oil, has built a significant presence in the liquefied natural gas shipping sector through its publicly-listed subsidiary, Teekay LNG Partners L.P., is further growing its operations in the offshore oil production, storage and transportation sector through its publicly-listed subsidiary, Teekay Offshore Partners L.P., and continues to expand its conventional tanker business through its publicly-listed subsidiary, Teekay Tankers Ltd. With a fleet of 155 vessels, offices in 16 countries and approximately 6,300 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world's leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. Teekay's reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.