Teekay Tankers Posts Net Loss in Q3

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Teekay Tankers reported the Company’s results for the quarter ended September 30, 2017.

The company said it disposed of two 1999-built Aframax tankers since August 2017, collecting aggregate proceeds of approximately USD 12.7 million.

One Aframax tanker was delivered in September 2017 and the other is scheduled to be delivered in the second half of November 2017 to an undisclosed owner.

The tanker owner further said that it has secured a time charter-out contract on an Aframax tanker for a firm period of 12 months at a daily rate of USD 15,000, plus a 12-month extension option at a higher rate, which commenced in October 2017.

The company recorded GAAP net loss of USD 22.4 million and adjusted net loss for the third quarter of 2017 of USD 14 million amid lower average spot tanker rates and a decrease in the company’s fleet size. The loss is much wider when compared to last year’s equivalent of USD 5.2 million.

GAAP net loss was also impacted by higher losses on vessel sales.

Highlights

  • Reported GAAP net loss of $22.4 million, or $0.12 per share, and adjusted net loss(1) of $14.0 million, or $0.08 per share, in the third quarter of 2017.
  • Cash flow from vessel operations (1) of $20.6 million in the third quarter of 2017.
  • Declared cash dividend of $0.03 per share for the third quarter of 2017, representing the minimum quarterly dividend.
  • Teekay Tankers’ two largest shareholders will vote their shares in favor of the Company’s proposed charter amendment to permit the merger with Tanker Investments Ltd (TIL); and two independent proxy advisory firms, Glass Lewis & Co. LLC (Glass Lewis) and Institutional Shareholder Services Inc. (ISS), have recommended that shareholders vote ”FOR” the proposed charter amendment to permit the merger with TIL.
  • Completed the sale of an older Aframax tanker and agreed to sell an additional older Aframax tanker for aggregate proceeds of $12.7 million.
  • Announced new share repurchase program of up to $45 million of Teekay Tankers Class A common shares.

CEO Commentary

“I’m pleased to report that we have secured support from our two largest shareholders, Teekay Corporation and Huber Capital, for the proposed charter amendment to permit the merger with TIL, and two independent proxy advisory firms, Glass Lewis and ISS, have recommended that shareholders vote ’FOR’ the proposed charter amendment to permit the merger with TIL, which we view as strategically important for Teekay Tankers,” commented Kevin Mackay, Teekay Tankers’ President and Chief Executive Officer. “Including our existing vessels, the combined company will own and operate 59 conventional tankers, solidifying our market-leading presence in key markets, while also modernizing our fleet at the right point in the tanker market cycle. We believe this merger is in the best interests of Teekay Tankers’ shareholders as it is expected to be immediately accretive to earnings, reduces our average fleet age, reduces our cash break-even rate, and strengthens our balance sheet.  The date of the special meeting of shareholders has now been set for November 17, 2017 and we urge all shareholders to vote in favor of increasing the authorized share count which will allow us to move ahead with the proposed merger.”

Mr. Mackay continued, “The proposed merger was priced using a fixed share-for-share exchange ratio based on the underlying fair market value of each fleet as determined earlier this year and, since that time, the fair market values of each respective fleet have remained relatively constant. As a result, the fundamental merger economics continue to remain intact for both Teekay Tankers and TIL shareholders.”

Mr. Mackay added, ”Seasonal weakness combined with global inventory drawdowns as crude oil pricing moved into backwardation contributed to weak spot tanker rates in the third quarter of 2017.  Our fixed charter coverage and our growing lightering business helped to mitigate some of this tanker market weakness during the quarter.  Since that time, we have seen a significant uptick in crude tanker rates into the fourth quarter, supported by refineries returning from seasonal maintenance and an increase in long-haul movements from the Atlantic to the Pacific, which is increasing tanker ton-mile demand.  Looking ahead to 2018, we expect that a significant slowdown in tanker fleet growth coupled with better oil market fundamentals will lead to a recovery in tanker rates.”

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