TNK - Earnings call transcript Q2 2024

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Operator

Welcome to Teekay Tankers Ltd.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

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

Lee Edwards

earnings would www.teekay.com, direct a where the quarter I our participants copy begin, second at website you XXXX we like all to to of Before presentation. will find this Kevin and during conference call. presentation Stewart today's review will

our to Actual forward-looking differ from that may those by today results contains Please allow projected you forward-looking discussion me materially remind statements. results statements.

earnings could forward-looking release materially differ second in the statements Additional on contained to quarter earnings our information from and results XXXX concerning presentation available cause actual factors the is that in website. those

the will now over I Teekay Mackay, Tankers' and turn begin. call to to Kevin CEO, President

Kevin Mackay

Ed. Hello, you, Second much Teekay you very Tankers' for joining Quarter XXXX Thank Call. and today Conference for everyone, us Earnings thank

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

highlights The reported recent million total result, quarterly Slide per from $XXX or generated on another quarter or from million the share the of million $XXX down $X.XX share, X first income generating has Tankers $X.XX a presentation. XXXX. in $XXX million, company our decrease we to adjusted quarter. Moving net Teekay of strong $XXX adjusted per of EBITDA of last

of Tankers' continue and the entirely trading tankers, spot market, flow. us strong cash free Teekay fleet almost generating our high With enabled midsized leverage earnings operating in to significant

free $X.XX annual breakeven cash a per reminder, of As for flow day, generate every tanker rates of $XX,XXX flow approximately expect $X,XXX our free per in above increase we share. to cash

ability later the in on will We shareholders provide presentation. information to generate for our value further

spot detail remained the have the to and for more has from Mountain quarter. exports XXXX. TMX dividend and rates quarter. second plan, of source an been later quarterly the additional of I'll presentation. support during give helped Aframax strong on second of share in during we per ongoing In demand expansion have the important rates pipeline line increase the tanker declared cash allocation of with second Midsized quarter fixed our $X.XX capital Start-up a Trans

of ahead, in and additional $XX.X the supply ships and fundamentals continue company And into nearly last XX demand further that multiyear at positive in-charter then charter. a in in-chartered fund for rate Aframax day strength tanker a modern redeployed to eco-design older for the X-year purchase a XXXX-built, on Since period of market, in the combined million. tanker the million a an per that our look option of extended towards price our X secured of for an finally, call, $XX Looking capital market. sold and point earnings we and $XX,XXX Aframax existing months

out-chartering also $XX,XXX deals charter portfolio. for The day. in of charter illustrates While Aframax value X spread an months active the at between these tank XX per

to market. recent the X. Turning spot tanker dynamics Slide look in We at

spot during crude the highlights, As strong second and the tanker midsized stable mentioned in quarter. remained rates

the marked which second during region tanker fact, rates and including ongoing attacks to Trans crude expansion in per months. level X the In spot and historical QX the rates both over Spot third Suezmax the averaged of last Aframax midsized quarter stability a elevated day, row $XX,XXX in demonstrating above due exports the shipping. in tanker factors oil quarter, disruptions on combination Sea rates pipeline on Red start a by and supported the the were merchant of of Mountain

half tanker demand of switch With a supported for other already the factors in previously set global midsized through underpinning to rates tonne-mile to were has expect market. tanker addition, and the demand firm year. tightness spot market crude tanker we crude tanker an product LRXs well intact, market remain to trading remaining the oil In remain second product that increasing strong some to firm trading, led tanker -- clean to oil

day date. to approximately $XX,XXX of spot to approximately size update Slide Suezmax last Suezmax per Aframax have year. provide and bookings well third spot We days QX rates Tankers' to date, on our Aframax quarter vessel averaged size quarter and XX% and third of XX% day, $XX,XXX on X. rates in in Based Teekay booked, our and revenue respectively, tanker an Turning per secured the above

Importantly, being of by a million. rate average chartered-in current which value again market. per once fleet of has vessel the the $XX,XXX approximately are $XX fleet, Tankers Teekay I X highlight of With value an the X spot in trading chartered-in day, in-charter created mark-to-market strong level

at towards to tanker which supply Turning factors, believe we look market continued and demand Slide We point strength. X.

million per of Looking per grow forecast A by at XXXX the agencies. expected barrels major growth non-OPEC oil substantial both oil and in to this the oil positive is XXXX, Brazil, of X market, demand demand. from is for day demand Basin, supply be the to increased United around Canada, met by as average Atlantic projected countries States, global and led X.X by energy in portion tanker the the which be Guyana will from

to this Which fourth demand announced of over intention per X.X OPEC+ unwind onwards. further starting the to year. support cuts of October addition, their day in give from course quarter barrels production months, In Group the XX could voluntary the million tanker crude

TMX seaborne to boost vessel loading in from pipeline, Vancouver mid-May. with start-up quarter trade, received Aframax the Turning the of oil a the from the in market second the first

a month. June to are from terminal Exports in Aframax As Aframax demand. TMX of XX tankers, day totaled per loadings Aframax barrels pipeline opening and XXX,XXX is the July or all specific for per approximately approximately exports positive via in the this XXX,XXX

expected As in supporting Volumes at for graph months, coast barrels transfer of shown Pacific the XXX,XXX or every in towards the day to X lightering California tankers. West area day, on slide, Aframax capacity the off are per of the zone TMX on ship-to-ship in region. and cargoes, coming discharge loading middle larger loading Aframax increase the Pacific Coast and U.S. full the Asia in to Aframax demand the approximately further

longer causing X.X shipping evident on Sea, the from haul million Hope. This the by increasing are Good an to Geopolitical sector. attacks events XXXX in movements been has per voyages of product average of Good flows, per product barrels Red X.X the Cape on day We tanker date. trade Hope, seaborne in ongoing in which in continue can to particularly million divert to to impact prominently most of by day the barrels XXXX Cape find vessels the

Given year the long-haul the nature sector beneficiary LRX has these that of elevated these primary movements, half segment. the with the first rates been diversions the in of from in spot

XX of which effect the from LRXs As start tightening a knock-on of clean on a XX vessels to products, result, oil LRX between Aframax also supply number with had the trading fleet crude switched trading crude by clean were fleet to since increasing year, has in the sector. the a

fleet to tanker Turning supply.

the during half Just And of year the of late million deadweight year. are the total track to on this tonnes X.X deliveries XXXXs. tankers global tanker delivered this into since the new first fleet lowest

minimal fleet year. this As tanker such, growth we expect

of around fleet pace as long-term ordering is in new modest versus XX% average the still order the relatively Although tanker of recent book of the at months, XX%. increased has the existing a percentage

XXXX almost ] main In sectors. are addition, and yards or shipyard LNG as tankers particularly through [ from full now exercise capacity through the that is back estimate orders, XX% building becoming increasingly carrier XXXX. from capable and are larger of full shipyards the with fill We scarce, containership up

of the X.X taking tanker to next to with half scope such, years add fleet with out meaningfully the little order some for XXXX As tanker the second yards book until delivery. orders stretches XXXX, over now already

tanker customers to tanker firm is periods market our should ensure of aging strong view, customers half to that the in until Combined years a up to of in tanker indicates of belief inquiries with are the share at to and firm and levels noting spot a we tanker remain activity a combination charter should This seeing remain term. that second worth activity It an that and secure years. modest rates. for a vessels book that X of XXXX, rates. over X The X order positive low increased appear over remains fleet time growth, believe growing next lack for fleet demand tanker shipyard also medium of the place we at increase conditions continuation capacity as growth the this from

slide. to next over Stewart turn I'll the to the now call cover

Stewart Andrade

put Tankers firm of well Turning value vessel this rates. positioned to deployed in fleet in highlight the tanker of context. to how a we flow. our worth free Slide significant to spot moment shareholder this It creating market, period significant spot is continue into Teekay amount continue X. to With a XX is We taking XX% of generate cash

tanker market be levels current the an has price approximately high free Teekay at we placed by expected the share sees from cash $X,XXX free in for is increase yield continue company's leverage in freight operating approximately toward per Tankers' increased flow rates share our approximately to each price, well benefiting cash months. our remain tripled years, yield last of XX above period XX% With if achieved last pointing free breakeven. day strength, the X our extended that flow rates X.X% While the spot our to at fundamentals cash flow are over

turn to I call to will back the now Kevin conclude.

Kevin Mackay

the and fundamentals Thanks, years outperformance remains tanker intact. past Stewart. have the X driven summary, In clear in midsized which

shareholders. flow continue While free Teekay position strength a about value we prospects optimistic and expect Tankers the Meanwhile, for the in are spot we remains tanker to continued seasonality, rate our market. normal and building significant for in volatility cash great generating

operator, to take now available we're questions. that, With

Operator

[Operator with Instructions] We'll go Omar Nokta Jefferies. to first

Omar Nokta

I've the on time. acquisition my the got questions first, I a in first congrats guess, way, by your couple first on from side. -- some of

since Tankers has at least longer, ship. it's think been to I Teekay X perhaps acquired the years, not a X

you we of capital. we So you've very think from acquisitions should just in that how be the But been bit in on you aggressive cash years the here, much balance throughout about methodical? are going perhaps more to about sheet, on for more financially, have opportunity, terms how Are or that given terms outlook? think when the front, patient you of obviously, just where deploying looking the as you market highlighted a

Kevin Mackay

Omar, yes, good question.

from of it tackle angles. couple a I'll think, I

been all, recognize to and to since deploy be it's important capital think it's I able to a allocation First position a a plan. that, have balanced while of been we've capital in

our extremely to deploy happy where with the fleet options at in we're to how we different So look today and the have is capital. ability

cyclical, a in fleet We're time, business our industrial ages. it's and that's over

be feel for important fleet. is need about to do our significant to this capital it's we to And and fleet. we have I given in the be think So renewal, asset keep point where amount while are, go we investors I recognize, more that selective there important our in timing recognize at it Having that, we right. said to prudent reinvesting renewing prices that in will time, how of more deploy a fleet towards we a our think that do it's

and seen few in of what asset fleet presentation. and past efficient our do our more prices last to sell give and strong, years capital recently, believe, we're I that of elevated some into seeing we crystallize continue few taking market the So the going the redeploying us more the as in some some pointed us and you've spot to value out ships that is that that assets on the down today. is of to the remain the modern then market longevity it exposure And of quarters out in older the

won't and at will So it renewal be I it prudent understand done to and this measured think a for scale capital mass time. It done, but in a it's yes, think renewal, environment, in a I be important on manner. will fleet deploy wholesale this fleet we point in investors be towards will

Omar Nokta

Are guess acquiring nicely like 'XXs looks bit it in proceeds those mean [ the matched shrink those given to you you're Is master fleet, willing a like to And the of moving have 'XX-built. clearly, the you two to perhaps I a sold that Understood. I guess, modern guess, does modernize. shrink of ship ], fleet you I already that it terms right? the sounds critical as forward, up willing

Kevin Mackay

to ability not different call in think that important. size, trading. It volatility last assets is us markets mentioned on beholden I I the inherent quarter to scale that's We're fleet a deploy gives specific the in and capture tanker Yes. the obviously

look at environment if value. same important of the can on that. have we're limited But lifespan ships the our elevated, asset And we'll we some number it's the an eye of prices we you have. time, are keep And a doing we're that in sell we units, fixated where on off older not left, when at

generating the on an But also cash we're those older other flow awful of lot hand, assets. from free

this we're us value. So of you've not point, to scared But And deploy it's which doing some that the and best to a sell. renew. question capital math at seeing one also seen of provides the us

Omar Nokta

on And today, pretty me. one solid charter Great. year. which a you just a what was spot announced year and it. you from market then that Aframax The basically final year, year full the record captured the Got X Yes. $XX,XXX last for

-- And you've disclosed vessel that is for so is this that I don't of acquisition But the the know charter. -- And the earning 'XX-built if Aframax? specifically was -- deal too is just to Or that? derisking this simply then the the Anything entry this of investments was what the it a charter? this pass share you're willing to on drove good up? into

Kevin Mackay

our a as Yes. fleet We portfolio. at look

basically was the matter it good front we us. ship deployed. or gets for that it locking specific So the a day XX in set which case, felt We that's $XX,XXX this in out hedge. months, doesn't opportunity next at put for a look in of And

deploy to It But specific that's the next it's our that business. just ship. over day at decided the still we It's that's any So really apply of portfolio. in, it's XX months. how we look ship coming -- a guaranteed to to $XX,XXX doesn't more

Omar Nokta

quick, years, and you've done, guys you what just been accomplish the very methodical, very -- real in several terms have would of patient. to been say, I over I past And guess, able guess been very, well

gone. you has the got it year be, obviously dividend finally now to ships. Introduced you're wanted which You acquiring where debt a last and to

nice So a it's very very, development.

Operator

to We'll with go Bank Ken of next America. Hexter

Adam Rusckowski

We about heard wanted Rusckowski competitors shifting the impact. of talk Hexter. the This product seeing the one about well, trade. -- on of to Ken more on temporary to your Adam clean I is side, this peers, ships as LRX for talk just a

and tightness that of creating So do trend the see some question you is, sustainability this how it's the the Aframax the on of side?

Kevin Mackay

has good clean, a depending we've the I ships, Yes, certainly been crude them. made is how as oil. trade I'd fungible that on those a market recent move at in strong. is think, earnings. between in that's than And deployed we've We've half remained our we asset. into It months, deploying that's how the back and vessel And to that refer look our and view rather than of it's question. LRX LRX past We, more comments can LRXs crude fixing the

And other think the owners same. look I will at

the some market the and going strength. of -- I is we're the think the thing but tanker interesting pickup, for sort of term at some product the immediate see sector that that should shoulder forward,

yes, But So, assets I immediate a phenomenon X go whether a of that's the longer freights. ships over and moving of that temporary in the term, are fungible don't time, over come think period they between so.

Adam Rusckowski

then all or the these of far? Mountain Trans shifted movements, more of what so? thinking of seen you outlook term you've the seen long ton-mile you've the And or impact your on pipeline, that next at on early given some And Helpful. on so over year are given voyages the how has this what

Christian Waldegrave

Yes.

when depending quarter it where create reported, to up on could XX Aframaxes Mountain for demand going. to Trans last we I the pipeline XX think we that, they're with said

I think about full of the Aframaxes to day. couple months capacity seen XX we're not up We're full we've per first XX capacity quite or month, per X what Aframaxes approximately to is loading XX the whereas yet. is in

terms And around where bit. moved a of little they're it's in going,

to ships long-haul if Coast In mile saw the going zone. to ships Asia. first saw the we obviously of Pacific we think or area the lightering in that's direct U.S. more and tonne X they to down of June, to the most go more go I a driver Asia, months West July,

and trade the it's develop. of sort going patterns take In several fully think for truth, months to weeks to I

from demand Aframax I mile more nice terms a months it's come tonne to added first TMX that the Aframaxes for driving demand, in there's in start, it's of and So we think couple certainly of the think here, for Pacific. been definitely

Operator

any does would closing call question-and-answer to company back for remarks. to I turn the This session. conclude like the the over

Kevin Mackay

look quarter. we and today, you. us you to joining to speaking for you Thank Thank forward next

Operator

Thank conclude participation. today's your call. for conference does you This

You may disconnect. now

Teekay Tankers (TNK) 1 Aug 242024 Q2 Earnings call transcript