TNK - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen, welcome to the Teekay Tankers Ltd's First Quarter 2022 Earnings Results Conference Call.

During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. [Operator Instructions] Thank you.

As a reminder, this call is being recorded.

and to would the remarks the to opening over call company. for introductions, like I turn Now Please go ahead.

Christian Waldegrave

you copy call. forward-looking during from Actual to results differ Before we earnings our where allow materially remind to direct presentation. statements. all find contains begin, you I will review this would Please website like today Kevin and at quarter the first of to statements. presentation Stewart that participants will XXXX projected forward-looking those a by results today's conference me our discussion www.teekaytankers.com may

actual Additional to the information call over concerning will begin. results in earnings factors CEO to Mackay, is available Kevin statements to earnings differ that the in I Tankers' could on those and turn quarter President website. and XXXX cause release now from the contained Teekay first materially forward-looking presentation our

Kevin Mackay

Call. Teekay today Hello, quarter XXXX Thank joining for you, thank Conference us much Christian. you Tankers first very everyone, for and Earnings

today Teekay Joining the Stewart Director Research. Tankers' Waldegrave, Christian me our call CFO and of on are Andrade,

quarter. to from fourth $XX slide quarter adjusted the XXXX, generated increase Teekay of Tankers We the million in first per share million or quarter, of $XX three adjusted million per of XXXX. on our EBITDA recent during an net loss million presentation. $X.XX total reported in the adjusted first approximately an an of loss an or of prior the net $X.XX quarter $XX.X Moving of the improvement $X.X highlights in share from

spot primarily quarter-over-quarter rates. improved higher were results Our tanker to due

in year taken as will market, driven saw tanker the In primarily a in and spike attractive spot rates supported strength, Rates firm positioned discuss later ton-mile Russia-Ukraine quarter all the late given the the well by flow slow asset most vessel notable the first we into we freight oil increased which second market on rally recent Stewart have We The by focus of midsize the tanker its to increase to maintained conflict. the in generate pronounced vessels a demand. sales in we operate, continue to have quarter was market, are that of a strong nearly segment spot our a which start cash to trading in refinancings in in disruptions impact after presentation. strengthening the with market. the advantage financial our of patterns, trading

have built This in million XXXX Finally, vessels as of were Aframax completed management, announced. XXXX vessel three part and in we sales includes for sale XXXX one sold approximately ongoing previously million. that $XX approximately built fleet of two $XX XXXX the for and

number the to a recent weak demand, and slide increase oil relatively in to We market. also led of during expected Spot inventories. the oil the production in due than these of of quarter. rates drawdown high which supply growth Omicron on included the months year four. factors, in lower developments variant to at ongoing impact oil due tanker global the look were impacted two tanker a tanker first the temporary continued spot Turning Further, prices, an costs in bunker earnings oil to outages COVID-XX

detail Suezmax cargoes. on I increase Ukraine of the market invasion Aframax of an give Russians rerouting to on later the February, of the invasion in to the impact late sectors rates, and particularly Russia's in tanker Ukraine the disruptions in presentation. in However, led trade and will of more tanker due

throughout levels the since year have Suezmax right the Aframax late As seen above side of and sectors volatility with and February in averaging you exhibited see well slide, rate can depressed this significant on rates the XXXX. earlier the

volatility to be market in the of the We near term. an expect this feature ongoing

In date. spot respectively. and Aframax five, rates a and Suezmax Teekay quarter slide the second quarter-to-date approximately XX% second approximately and provide of bookings on to our averaged per booked revenue of summary spot Tankers' the based days day, we quarter have Turning to $XX,XXX in $XX,XXX XX% day second per

quarter. approximately second the $XX,XXX on per surging based quarter-to-date LRXs levels Aframaxs tankers a very spot of performance fleet, averaged the in LRX market, muted recently would relatively that of days strengthening approximately have significantly after early have booked, outperforming XX% bookings revenue day. here the note our in the very been larger to For part the high second I with

a Russian Turning crude countries following oil. to at reduce their invasion to for near-term outlook patterns of Ukraine West the the slide shifts purchases has in conflict we of in Russian midsize tanker trading in in oil February. The look six. demand many look significant Ukraine led I, late as to

shown by Sea left and remained oil of the slide, exports Baltic crude chart since hand Russian the have steady As on out the the relatively Black innovation.

included both to short heading oil a there and Middle to -- in the Suez, has short same and replace corresponding oil US However, At a with of East. had Russian India. further and most notably the Europe imports Gulf, decrease destinations to of in been in afield, proportion oil oil have Africa exports West crude volume time increase to East haul crude the Europe and the

the of The therefore higher crude of significantly lengthening oil voyage in the at XXXX and the As highest lot the to the from of trade distances more compared net have changing Gulf right moved by average the ton-mile and chart midsized discharge and rates options, and benefited with greater changes Due need for have to nature on were impact the a regions the being on exports shown relatively VLCCs, of these majority the been where end demand. of to involved the tankers April Aframaxe’s patterns March from Suezmaxe’s. US vast has since Europe slide, these flexibility remained weak.

may alternate oil recent phase of over refine expect of crude six patterns the to over period end Given proposal the trade and all persist out Union's next we extended by months an European Russian the products time. XXXX, imports these

approximately and comprises global fleet which owned supply the which finding Aframax fleet segment. this further In fleet X% ships, available to operated is harder tightens in of trade of addition, the Russian

at limit believe look since tanker the seen of continue fleet the fundamentals, shipyard decades. million supply just of new in most are XXXX we seven, orders slide with in this to lack last new deadweight capacity quarter highest new the to currently lowest first placed $X.X few are we since a tons which which Rising the and XXXX. year, of the positive prices, build at least Turning orders

order two there shipyards the being are middle -- of vast through XXXX. see percentage most slide, can you The from in available capacity stands order the And new delivery the when to book book as X.X%, in recording with a the there next tankers the just at order full three which XXXX limited major order fleet started for the with data in As existing measured of is lowest past XXXX. charts for Clarkson years. top on few tankers is delivery the since very and tanker

very to XXXX and order tanker until The of tanker book, tanker and large three the in are years. to years, fleet low ordering vessels capacity over age lack fleet out. should levels low tanker lead next a Finally, of an of two of likely small growth reach significant be late of XX the levels aging set A number fleet new to shipyard phased the continues to number combination to age. a few with a next

and for tanker XXXX to potentially is growth XXXX zero current following have To invasion negative when XXXX in Our tanker coming increased X% in weeks spot Russia's fleet up, sum continues volatile expected ship rates growth in and forecast around Ukraine situation removals XXXX exceed deliveries. tanker new to as by remain months fleet the followed growth look to in the and unfold. and of are

very due to very slide. the low rates. turn to call an is longer-term growth, outlook Stewart to now outlook near-term the anticipated should fleet of positive support cover the the I'll over stronger appears Although uncertain, which financial tanker period

Stewart Andrade

Kevin. Thanks,

built as to of cost advantage slide eight, March vessels, firm March was taking transactions, three highlight also completed completed leaseback Turning in vessels. forma we sale these the asset have of refinancings from $XXX of prices. we million. sale during through low liquidity our the pro the In XX Including foundation. the And liquidity of and company's XXXX increase XX healthy XXXX financial previously we our announced year April,

we and in inception sale also purchase throughout the refinancings leaseback an some years. cases two include that exercise the can after lease options Importantly, other starting terms. cases, In

to when unwind reflects by mentioned the of last originally position, we we able as This these attractive sale-leasebacks to as compared market tanker terms on As announced as secured leasebacks year. these stronger new higher of were well values. we strength the indicated the financial asset Tankers Teekay expensive transactions, those sale

Tankers to generate has will us reduce cash that, over positioned XX% no have XX% With also enable extended With profile while net increasing about in for flow, will Kevin exceptionally cap XXXX, we and debt well of to of in of repayment to to or addition -- the rates now fleet Teekay through to significant turn vessels the operating that turn leverage liquidity, our In strengthening take in our appreciably, March turn shareholders. call I our as debt XX. advantage financing to significant was we are value conclude. high spot the further activity debt, market, to while such trading which debt maturities this XX creating

Kevin Mackay

how at remain chain and opportunities shifts the continue in freight the flows chain market likely position to difficult spot maximize a expanding volatility war almost from has geopolitical it, predict resulting have supply Steward. performance. factors new good seen arise. position midsized It’s in so the Ukraine supply the us But to into when number increased to a to continue our prominent Thanks, market. in of which completely rates spot fleet significant recently recede just of Operating strong will as the best Driven tensions a most and normal. until they volatility by least are a and tankers generate will sanctions driven we significant puts these cash these rate notably strong, is settle return quarter-to-date long and to in

years shipyard outlook operator, about are market that, in minimal it. available prospects low Teekay to Looking forward, the with take that With very available before fact to we quite Tankers and XXXX, in now capacity the order positive and we a questions. change our book feel coming for

Operator

ISI. Evercore Jon with take Please Thank from Instructions] go our question you. first We'll ahead. Chappell [Operator

Jon Chappell

of and last going on difficult Thank on X.X [indiscernible]. done easy the Good afternoon forward, operating sheet are you've heavy bookings people's or periods. of most you significant the lifting good your a your on verge hopefully a over morning. views to-date Stewart, afternoon, I XQ depending the lot guess years, you, starting balance of cash you. with the Based Good mostly one, generating pretty on the through market flow.

down pay do lease You be one to mentioned finance of else, still some of leases. flexibility pivot cash around the uses you capital or returns. growth for the whether the that's start something number Would priority or to

Stewart Andrade

Jon. Good Hi, question.

been down to further. You sheet our over term puts the a think market on it's where tough debt a we quarters is and advantage We know us tanker that near definitely six which allow in strengthening last balance the the the returns four of for our long-term for take be to focus opportunities going have and bank to ultimately in that shareholders. can will us position best the paying

would and balance focused on to I down we short be the term expect So debt sheet. pay will definitely that in the strengthen continuing

Jon Chappell

focus debt? And bank to leases still on as opposed a

Stewart Andrade

with conditions on that continue monitor and any at the will given I expect market or liquidity current leases don't levels, doing will our forward, market. I be we to the think Going are taking be we where don't more we'll we -- that moment, the

at those can relative is refinancing look requirements our going and the of terms I we'll terms -- think between the two for of forward, terms we terms of capital. balance take In the in achieve a

think when that have we I further. plans but in probably we need things don't refinance explore at for are financing to both So for the moment, any those the will future, avenues anything we doing

Jon Chappell

that sense. Okay makes

VLCCs, diesel to tanker aspirations Kevin, you your the crude the of maybe dangerous, Afras to of having the then maybe can Afras. markets impact seem most broader obviously LRXs of and potentially Christian, are remedy. and consistently has the have the maybe clean well dislocations market directly these done talk going Suez Second your that to two-parter, diesel and about really the incredibly a a plans question, in a these and that outperforming pull to and Christian any on have Kevin, is take longer don't but to of And bit LRXs in done issues? just terms well, them tail because has near-term up, you some there or some diesel from problems been shortages market product relative a to

Christian Waldegrave

Yeah. think especially situation obviously market Inventories low. in are side. Hi, very right the the you product extremely as Jon. the said, diesel I now, is on Yes, tight

at has I closures since recovered a is high a the last little regional throughput exacerbated You'll of years refinery well the the the have and in couple probably of the said, of a diesel. factors. Atlantic, quite seen are operating in at especially bit that been bit of in Europe. the of the guess fact the one predominantly Western as record a that’s by I that, mismatch margins demand we've that in low. inventories Hemisphere, and some very in are drawn that's result seen a kind down quite as of highs start There is been And a pandemic, bit have couple for refineries

demand parts really ton driven haul, hard so the I capacity to then in would have season. the volumes And are terms meet lifted. towards There's the market, forward Atlantic probably much think where come East of more be to and miles now, to obviously longer the now Atlantic. going travel and And what's in little the coming the that's refineries those work we're summer lots demand. restrictions products towards been Middle the out going getting bit So I to having really Asia the having and India - world the into the back, supply we to with the side a has there's on diesel that spec east, pandemic's the in move think it's so the of of particularly look

jet margins So increase gasoline well. now well you're fuel as starting and to the as see

demand. and for So the the to forward. side have very going Refinery be that's to I LRXs. to think throughput drive tend whole continue I the that product particular going is where to is tankers product demand to And going tight going increase, to meet the in

I fleet it does like with there on on some there. to maybe the is love hand and to look doing legs about our to the would we're the there. talk what plans side So LRXs to going be it over Kevin, product

Kevin Mackay

happens that are the at It's bulk to which to be have washing in Atlantic, clean. trading good something the costs and crude the a in in position really convert. like additional question, other dedicated in two. have dirty to changeover to and moment that. to really we week from two condensate that is to the Asia team for up prime chartering pick some last are to ships the Jon, at clean looking and or the of easier having incur that a facilitate It's crudes chemical fully been the things I much without And LRXs At moment

thing So chase one to want is the we do don't markets.

could same East So to And the we've way, are Far the the ships owners we thinking on opportunities balance the Atlantic. on got into crude get in LRXs missing be other side if up. a positioning cleaned out

into get clean we that something can take cargoes you'll has it's swiftly, going to long of to looking sustain it if between market at, another few it right and probably think the up are to ships. going you balance how which see I that to does is So fully. get do it think be you combination do to But us we market

that it's on we're So actively daily something working now.

Jon Chappell

and Stewart Christian. Kevin, Thanks, thoughtful. Very Okay.

Kevin Mackay

Jon. Thanks,

Operator

take Wainwright. We'll Fyhr from with our Magnus ahead. HC go Please next question

Magnus Fyhr

you bullish answered either Aframaxs crude exposure the you the most do where or segment -- clean mean, Yes. dirty, far have as you there with do a Hi, preference with to both versus as you on now I are side? in Suezmaxes questions just my and but the both --

Kevin Mackay

ground and the resilient, you markets If if Suezmaxes less way US you have regions last the spiked Gulf across been Europe, East of well its despite less the saw currently. that so and the that most in we in Transatlantic. Suezmax has has look are that weeks, come will, at performed parts the have in off the as well very and the as the Aframax in Far over few of obviously, held

our today to seeing disruption and think is -- and So out the these based on it dislocation how but is patterns obviously volatility weeks. but this Aframaxs, preference so the much we're play hard to this between really is spikes return trade I call to over two segments going coming

think they you are I know it's -- when take to to higher. and to to So tend too in we do dive early outperform because go off Aframaxs tend as say Suezmax spike going

sure Aframax, I both spikes we whatever coverage generation making at So from position fleets LTXs And maximize we've and we good segments. we got convert us. and this of just that point, our offers in if try both to are think the Suezmax market revenue our

Magnus Fyhr

And your ships they you from market changes looking about traders Okay. second the any the see for year? securing clients do currently? are of half at the How

Kevin Mackay

that sort twelve certainly customer in commodity moment. it's of But The LRXs three, somewhat Yeah. clean more on up terms month talking picked two, has are short-term deals. definitely levels, of a terms haven't But shorter term the the the the picked up time segments certainly charter year interest has of in we period yet market again, stretch they're in at anybody six, inquiry hot side, of mid-term moment, out of type the of last all across couple seen three at about weeks.

Magnus Fyhr

charter you look three those into you really you And that developing give have any short-term two, wait before some of Okay. would securing kinds to not to protection, or see protection given don't the ships? much charters year

Kevin Mackay

Russia's with invasion. I think caused is the we for that here market, views Magnus, volatility believe disruptions on by while, our a

given supply longer think the term I is. on we're fleet market, where positive

lock longer-term think see you'll to charters. rush in mid-term, So I don't us

exposed to want more point. this route in we at market. and volatility locking of to the before to And spot start think that positioning thinking some fleet I try our the we're think to the I and enjoy fully earnings maximize be about we

Magnus Fyhr

I That’s Good. what want Thanks. to hear.

Kevin Mackay

Thanks.

Magnus Fyhr

Ken We'll take question with next Hoexter Bank ahead. from of Please our go America.

Ken Hoexter

Great. and Good Steward Christian. morning, Kevin,

line, the I EBITDA. maybe your And looking earnings now? just positive just the down quarters earnings, of at on cost. gave on you the update but bottom right, guess, market What's of rates, way breakeven thoughts cost side So maybe thoughts on the obviously, posted you -- negative all an but going us on your just what's just equation, the -- on six your

Stewart Andrade

So the I’ll take question. first the of part

Kevin Mackay

to want that? you Steward, grad

Stewart Andrade

the question So, part your first. first of Ken, taking

flow dry including about Our $XX,XXX breakeven, day. free is docking cash per

So the a through to on as long position please? sorry, your were are second as we're could $XX,XXX in of a average we about to pay I'm down day then fleet pay down where the we you repeat debt. able question, part --

Ken Hoexter

-- the cost, thoughts first right. was your breakeven the just one maybe just second well, was Yeah, the on and one

So there you it's so on or the vessel rates we any whether can do if start scale to think is OpEx side, you as cost anything here? about just thoughts extra can

Stewart Andrade

seen Yeah, QX couple forward. quarters income the through of going the I flowing think through to cost and are last statement similar relatively be that you've going the in

OpEx, rate per the I in a say be will G&A and run that our quarter, would to low -- on million $XX of So range. in about $X that so million sort quarter, $XX million interest $XX.X million

remainder expecting through over front. that not materially year on the we're of So the anything there different

Ken Hoexter

rates right. I where stay to And sure thought spot, start you you're want rolling I make in caught just at Kevin, just earlier charters, want clarify, still not want there. yet locking in said to you Helpful. process your and to you

Kevin Mackay

Yeah. correct. That's

Ken Hoexter

sense additional may a then with And on okay, sales level, in that is today is recognition past, sales say, more are? rates, spot you've I not the there value some them there recognizing you of is the be it where valuation market values to your at thoughts is think -- can market any certain well, that do if Okay. you'd show the the with holders done for do that -- equity makes where

Kevin Mackay

we what's at purchase standalone sale basis deals and asset can determined and each are I value Obviously, the a generate think for on prices of we in terms look deal we shareholders. advantage best is dry and take those the docking that us selling seen that of you've of had expansion for eliminated some that ships due that and were monetize been we've high, and older assets.

got So in fleet. what left the we've

and volatility that. the at anticipate we over the certainly moment try to I next given that we months, think to ourselves keep want few exposed the

at be as to not on decisions asset any eye this looking But the keep we where when an spot to we're going those and always see be So actively we generated. make to we relative to sell values value point. is curve are ships forward and where we additional think going

Ken Hoexter

Yeah. -- your there earlier normalized quickly this the at of Russia-Ukraine of my on -- one, shifting once obviously a a talked history, -- thought you What's on this is the -- looks impact guess, it Is like. last world historical the there -- what history just is of about length just length given is on how comes And hauls. impacts this things to or your look conclusion, on depends based your rates? to I

Kevin Mackay

our or trading when think to adapting don't leave day and to maximize going keep take the our day like. how as minds opportunities side We by mine. this stream to to I’ll to changing of revenue fleet this what predict going is is have greater at things just how can and anybody looking look are long than other arise. that I

Ken Hoexter

Appreciate Steward. Thanks, the thoughts. Kevin. Thanks,

Kevin Mackay

Ken. Thanks,

Operator

Please our next with from go Jefferies. take Robertson question ahead. We'll Chris

Chris Robertson

and for morning Good Hi. my taking questions. thanks

Kevin Mackay

Hi, Chris. Hoexter - Q Ken

Chris Robertson

pressures on crew seeing are about follow cost related OpEx you to if especially transfers? year, questions you prices Ken's Just as what to oil to it talk rising any and Can up this relates and expenses.

Kevin Mackay

through flow -- our which term, have are you've there certainly we inflation the crew some how We'll extent, depending coming long way. how as I everybody any obviously, all which on to over monitor and see pressures, certainly could mentioned increasing material wages, seen to expenses in continue cost up our are into end we And which that it’s things have goes. and to change, haven't Currently transportation, then guess in for bear a few picture of there. see be most have in we're our about pressures most that's it, expenses on OpEx guess the how picture, the to side but portion that next that we'll I inflationary significant not -- flow we supply the overall, see market longer-term start and we're quite to a if certainly yet. for But have impact, of comparison but bit any developing the years, over could but some we comfortable there those concerned I'd to haven't outstanding are companies. Yes. tankers, front, given all through too industries seen to OpEx impact are inflationary really

mentioned are is oil of bunker of not prices, that's rates volatility much also oil figures notwithstanding in in our our we're obviously, but where some we've flowing and enjoyed You stronger obviously QX economics OpEx, prices the prices. rates that fixed-to-date our our high, the where high -- through having and and of experiencing voyage periods one part spot that are, picture

So continued have front. the hopefully volatility allows good to on us that returns

Chris Robertson

like into higher things enough. flowing through fair aren't oil the costs then lubricant higher and Yeah, prices Okay. that? And

Kevin Mackay

we At have lube, point, contracts of will. in and they some oil -- A a place. lot our things

it at in the on time, wouldn't at that, a results oils. don't to an the but over certainly. may start if percentage of oils look will of inflationary lube to you and I material lube overall So in, our be you have anything if look our but OpEx as have come front me, exact pressures inflation impact percentage

Chris Robertson

that? dry of scheduled CapEx side for can through of the you us expense vessels great. unrelated. Okay, on is XX this My year, docking question walk the second kind totally But

Stewart Andrade

Yeah. Sure.

water -- we're both So about you $XX related both expecting system give ballast in are numbers I'll million the treatment BWTS, dry-dock dry-dock and to QX, installations.

about four about in -- note but those in and remaining so depending QX, we're vessels dry-docks a on million. shift quarters to around sometimes the in QX I approximately six $X bit, that's dates million $XX little for expecting vessel year. three the exact see million, one the what about expecting then that expecting $XX.X of QX So for of timing QX sorry, about was million, overall, million that $XX and $XX in and vessels should

Chris Robertson

I Thank for All that time. the right. appreciate Yeah. color. you

Kevin Mackay

You're welcome.

Operator

any questions we the I would remarks. for to back At company this closing time further queue. no conference have the the turn like over or to in additional

Kevin Mackay

all calling joining today for call. look to us we you earnings for in. and quarterly months our speaking next at you in Thank time Thanks three forward

Operator

and gentlemen, appreciate your you may participation, today's Ladies this concludes now We conference. disconnect.

Teekay Tankers (TNK) 13 May 222022 Q1 Earnings call transcript