Teekay Corporation reported results for the three months ended March 31, 2023. These results include the Company’s publicly-listed consolidated subsidiary, Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK), and all remaining subsidiaries and equity-accounted investments. Teekay, together with its subsidiaries other than Teekay Tankers, is referred to in this release as Teekay Parent. Please refer to the first quarter of 2023 earnings release of Teekay Tankers, which is available on Teekay’s website at www.teekay.com, for additional information on Teekay Tankers’ results.

CEO Commentary

“Teekay posted strong financial results in the first quarter of 2023, reporting the Company’s highest consolidated quarterly net earnings per share in 14 years,” commented Kenneth Hvid, Teekay’s President and CEO. “In addition, Teekay Tankers reported record earnings and cash flows with mid-sized spot charter rates rising to the highest-ever for a first quarter on the back of robust market fundamentals. Spot charter rates for Teekay Tankers’ fleet so far in the second quarter of 2023 remain firm, with its combined Suezmax and Aframax fleet spot rates averaging approximately $60,000 per day based on our bookings to-date.”

“The strong tanker market has enabled Teekay Tankers to transform its balance sheet, create significant equity value, and achieve much greater financial flexibility. As a result, Teekay Tankers has updated its capital allocation plan to include continuing to build financial strength to position the company to act on future investment opportunities at the right point in the cycle, while also returning capital to shareholders. Under this capital allocation plan, Teekay Tankers has implemented a fixed quarterly dividend of $0.25 per share, or $1.00 per share annually, with the first dividend relating to the first quarter of 2023. In addition, the Teekay Tankers board has declared a special dividend of $1.00 per share, for a total dividend of $1.25 per share, from which Teekay Parent’s portion will total approximately $12 million and will be paid in June 2023. Lastly, Teekay Tankers also announced a $100 million Class A common share repurchase program that is expected to be used opportunistically.”

“Since reporting earnings last quarter, Teekay Parent has continued to return capital to its shareholders in an accretive manner. Following the completion of our $30 million share repurchase program that was announced in August 2022, we announced a new $30 million repurchase program in March 2023. Since that time, we have repurchased 2.8 million common shares for $15.8 million. Since August 2022, we have repurchased 9.3 million common shares, or approximately 9.1% of the outstanding common shares immediately prior to commencement of the prior program, at an average price of $4.93 per share.”

Summary of Results

The Company’s GAAP net income attributable to shareholders of Teekay and the Company’s adjusted net income attributable to shareholders of Teekay(1) for the first quarter of 2023 increased compared to the same quarter of the prior year, primarily due to stronger earnings from Teekay Tankers as a result of higher spot tanker rates, which was partially offset by the loss of earnings contribution from the Teekay Gas Business as a result of the sale of the Teekay Gas Business on January 13, 2022.

In addition, consolidated GAAP net income attributable to shareholders of Teekay increased during the first quarter of 2023, compared to the same quarter of the prior year, mainly due to $12.4 million in losses on bond repurchases recognized in the first quarter of 2022.

The following table highlights the operating performance of Teekay Tankers’ vessels trading in revenue sharing arrangements (RSAs), voyage charters and full service lightering, in each case measured in net revenues(a) per revenue day, or time-charter equivalent (TCE) rates, before off-hire bunker expenses:

Please refer to Teekay Tankers’ first quarter of 2023 earnings release for additional information on its financial results.

Summary of Recent Events

Teekay Parent

In March 2023, Teekay’s Board of Directors approved a new $30 million common share repurchase program following the completion of its $30 million common share repurchase program that was announced in August 2022. Since August 2022, Teekay has repurchased a total of approximately 9.3 million common shares, or approximately 9.1% of the outstanding common shares immediately prior to commencement of the prior program, for a total cost of
$45.8 million, representing an average repurchase price of $4.93 per share.

Teekay Tankers

Teekay Tankers has announced an update to its capital allocation plan that includes paying a regular, fixed quarterly cash dividend of $0.25 per common share, with the initial quarterly dividend having been declared for the quarter ended March 31, 2023. In addition, the Teekay Tankers board of directors declared a special cash dividend of $1.00 per common share. The cash dividends are payable on June 2, 2023 to all of Teekay Tankers’ shareholders of record on May 22, 2023.

Teekay Tankers’ board of directors has also authorized a share repurchase program for the repurchase of up to $100 million of Teekay Tankers’ outstanding Class A common shares. Under the program, repurchases can be made from time to time in the open market, through privately negotiated transactions and by any other means permitted under the rules of the U.S. Securities and Exchange Commission, in each case at times and prices considered appropriate by Teekay Tankers. The timing of any purchases and the exact number of shares to be purchased under the program will be subject to the discretion of Teekay Tankers.

In March 2023, Teekay Tankers took delivery of a previously-announced chartered-in Aframax vessel at a rate of $35,750 per day for 24 months with an option to extend for an additional 12 months. Currently, Teekay Tankers has eight vessels on charter-in contracts with an average rate of $24,300 per day.

In May 2023, Teekay Tankers signed a new $350 million secured revolving credit facility agreement to refinance 19 vessels, including nine vessels repurchased from sale-leaseback arrangements in March 2023 with cash, six vessels that will be repurchased by Teekay Tankers in May 2023 from sale-leaseback arrangements, and a further four vessels that are expected to be repurchased in the third quarter of 2023 from their respective sale-leaseback arrangements.

The following table presents Teekay Tankers’ TCE rates booked to-date in the second quarter of 2023 for its spot- traded fleet only, together with the percentage of total revenue days currently fixed for the second quarter:

Source: Teekay