teekay tankers investor day · 2017. 12. 20. · tanker fleet during 2014 through 2016, estimated...
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TEEKAYTEEKAY
TEEKAY TANKERS INVESTOR DAY September 30, 2014
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KEVIN MACKAY President & CEO,
Teekay Tankers
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Photo credit:
Alexandr Lyakhov
Australian Spirit
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Forward Looking Statements
This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as
amended) which reflect management's current views with respect to certain future events and performance. All statements included
in or accompanying this presentation, other than statements of historical fact, are forward-looking statements. Forward-looking
statements are not guarantees and actual results could differ materially from those expressed or implied in the forward-looking
statements. Forward-looking statements in this presentation include, among others, statements regarding: the crude oil and refined
product tanker market fundamentals, including the balance of supply and demand in the tanker market, estimated growth in the world
tanker fleet during 2014 through 2016, estimated growth in global oil demand and crude oil tanker demand in during 2014 through
2016, estimated crude supply and refining capacity in 2014 to 2019, and tanker fleet utilization and spot tanker rates during 2014
through 2016; the Company’s financial position and ability to take advantage of growth opportunities in an expected future tanker
market recovery and its ability to invest in newbuildings; the Company’s plans regarding increased spot market exposure and growth
in capacity through in-charters; the Company’s fixed-rate coverage for the next 12 months; the Company’s growth strategy; the effect
of the Company’s operating leverage on cash available for distribution per share; and the Company’s 2015 expected fleet profile. The
following factors are among those that could cause actual results to differ materially from the forward-looking statements, which
involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in the production of or
demand for oil; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in commercial tanker
pools; greater or less than anticipated levels of tanker newbuilding orders and deliveries or greater or less than anticipated rates of
tanker scrapping; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations;
the potential for early termination of short- or medium-term contracts and inability of the Company to renew or replace short- or
medium-term contracts; changes in interest rates and the financial markets; increases in the Company's expenses, including any dry
docking expenses and associated off-hire days; failure to realize expected benefits of the acquisition of an interest in Teekay
Operations; failure of Teekay Tankers Board of Directors and its Conflicts Committee to accept future acquisitions of vessels that
may be offered by Teekay Corporation or third parties; and other factors discussed in Teekay Tankers’ filings from time to time with
the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31,
2013. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-
looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in
events, conditions or circumstances on which any such statement is based.
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Strong
Operating
Leverage
Leading
Market
Position
Trusted
Operating
Franchise
One of the world’s
largest tanker
owners and
operators
Every $5,000
increase in spot
rates increases
earnings by
$0.45 per share
Over 40 years of
leading commercial
and technical
management
expertise
$250 million
of liquidity and
proven access
to capital
INVESTMENT
HIGHLIGHTS
Stable
Financial
Platform
5
Largest Operator
700M barrels
Cargo Lifted in 2013
82 Vessels Commercially
Managed
125+ Global Customers
2000 Seafarers
$7.37 per share
Dividends Paid
Since IPO
82 64 58 52 48
30 30
TeekayTankers
Sovcomflot Heidmar AET Navig8 Minerva Thenamaris
Of Mid-Sized Tankers
TEEKAY TANKERS AT A GLANCE
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BUSINESS
OVERVIEW
6
7
40 YEARS OF
OPERATIONAL
EXCELLENCE
Commitment to high HSEQ
standards is key to winning and
maintaining business and is the
essence of the Teekay brand.
0
1
2
3
0
0.5
1
1.5
2011 2012 2013
HSEQ KPIs (Per Million Man Hours)
TR
CF
LT
IF
TRCF: Total Recordable Case Frequency
LTIF: Loss Time Injury Frequency
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Photo credit:
Aaron Lobo
Al Marrouna
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Global and Diverse Customer Network
• Customer relationships spanning 40 years based on our reputation for
reliability and operational excellence
• Provides access to diverse cargo streams and agility to respond to changing
market dynamics
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World-Class Operating Franchise
Technical management leverages power of One Teekay
• Over 2,000 seafarers managed directly through manning offices in
Glasgow, Manila, and Mumbai
• Procurement economies of scale
• Shipyard access and negotiating power
Broad commercial footprint
• Over 80 vessels under commercial management
• Variety of contracts provide access to global trade volumes
• Commercial tonnage pools consistently outperform peers and indices
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• Transitioned portfolio and added in-chartered vessels for higher spot
exposure
• Increased liquidity by monetizing investment in term loans ($154m)
• Purchased a 50% interest in Teekay’s conventional tanker franchise
• Co-created Tanker Investments Limited (TIL)
16 15
0
5
10
15
20
25
30
35
40
Nu
mb
er
of
Ve
ss
els
2012 Fleet Profile
Fixed rate vessels Spot (owned vessels) Spot (in-chartered vessels)
48% Spot
Exposure
81% Spot
Exposure
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21
8
0
5
10
15
20
25
30
35
Nu
mb
er
of
Ve
ss
els
Pro forma 2015 Fleet Profile
Well-Positioned for Tanker Market Recovery
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Strong Operating Leverage
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$10,000 $15,000 $20,000 $25,000 $30,000 $35,000
TNK CAD* Per Share Spot Rate Sensitivity
• For every $5,000 per day increase in spot
rates, TNK’s CAD* increases by $0.45 per
share
• Low current CAD break-even rate of
~$10,500 per day
• A 10% increase in vessel values increases
net asset value by ~$0.90 per share
* Cash Available for Distribution represents net income (loss) excluding depreciation and
amortization, unrealized (gains) losses from derivatives, any non-cash items or write-offs of
other non-recurring items.
Aframax Equivalent TCE (12 months ended June 30, 2015)
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TANKER MARKET
OVERVIEW
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13
-1%
0%
1%
2%
3%
4%
5%
6%
7%
-10
0
10
20
30
40
50
60
70
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
% G
DP
Gro
wth
$ 0
00
s / d
ay
Source: Clarksons / IMF
Global GDP Growth Aframax Spot Rates Suezmax Spot Rates
2013 2009-13 Avg Long-term Avg*
Suezmax $14,000 / day $18,500 / day $38,700 / day
Aframax $13,100 / day $13,000 / day $28,500 / day
2009 – 2013: Depressed Tanker Market
Tanker rates during 2009 - 2013 were well below the long-term average
*For the period 2002-2013
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-4,000 -2,000 0 2,000 4,000 6,000 8,000
MR
LR2
Aframax
Suezmax
VLCC
TCE ($ / day)
2014 Change Over 2013 Earnings (Jan-Sep)
$5,600
$7,900
$7,500
$2,200
-$3,500
Source: 90% of Clarksons Reported Rates
2014 Earnings Indicate Rising Market
Mid-sized crude tankers outpacing recovery in other segments
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Flows of Crude are Moving
West to East
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West of Suez East of Suez
Crude Supply Increasing West of Suez
Change 2014 - 2019
2.7
1.1
0.3 0.2 0.2
Latin
America
North
America OPEC
West Africa FSU OPEC
East
Asia
0.6
-0.2
Australia
0.2
Source: IEA
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West of Suez East of Suez
Crude Supply Increasing West of Suez
+3.8
mb/d
+0.6
mb/d
Source: IEA
Change 2014 - 2019
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Refining Capacity Increasing East of Suez
2.4 2.2
0.7 0.6
0.1
Middle
East
China India Other
Asia
FSU OECD
Asia
-0.4
0.8 0.7
0.3 0.2
Latin
America
North
America FSU Africa Europe
-0.6
West of Suez East of Suez
Source: IEA
Change 2014 - 2019
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Refining Capacity Increasing East of Suez
+1.4
mb/d
+5.5
mb/d
West of Suez East of Suez
Source: IEA
Change 2014 - 2019
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MEG - Asia
+280%
WAF- Euro
+74%
WAF - US
-70%
Suezmax Benchmark Routes are Changing
WAF - Asia
+75%
Source: SSY
* Spot routes with greatest tonne-mile in given period
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Aframaxes Remain the Workhorse of the Fleet
Existing Trade Routes
Potential New Routes
Source: SSY
* Spot routes with greatest tonne-mile in given period
22 Source: IEA
To Asia /
Pacific
Refined product surplus
Refined product deficit
Changes in Long-Haul Refined Product Trade
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42 30
11
43
35
15
0
20
40
60
80
100
120
140
160
Aframax
20+ Years 19 Years 16-18 Years 15 Years 14 Years Orderbook
42 30
11
43
35
15
0
20
40
60
80
100
120
140
160
Aframax
Mid-Sized Tanker Fleet Age Profile
50
19
4
30
9
18
0
10
20
30
40
50
60
70
80
90
Suezmax
Note: Uncoated vessels only
Mid-sized tankers aged 15+ years exceed orderbook
Orderbook Existing
Fleet >14
Years
Orderbook Existing
Fleet >14
Years
Source: Clarksons / Internal Estimates
Nu
mb
er
of V
essels
Nu
mb
er
of V
essels
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-4%
-2%
0%
2%
4%
6%
8%
10%
-20
-10
0
10
20
30
40
50
20
10
20
11
20
12
20
13
20
14E
20
15E
20
16E
Nu
mb
er
of
Vessels
Suezmax Fleet Growth
Scrapping Forecast Scrapped Delivery Forecast Delivered Net Fleet Growth (% of Fleet)
-5%
-3%
-1%
1%
3%
5%
-50
-40
-30
-20
-10
0
10
20
30
40
50
20
10
20
11
20
12
20
13
20
14E
20
15E
20
16E
Nu
mb
er
of
Vessels
Aframax Fleet Growth
Source: Clarksons / Internal Estimates
Uncoated vessels only
Shrinking Mid-Sized Fleet
Declining mid-size crude tanker fleet driving a sustained market recovery
25
0%
1%
2%
3%
4%
5%
6%
7%
8%
78%
80%
82%
84%
86%
88%
90%
92%
200
8
200
9
201
0
201
1
201
2
201
3
201
4E
201
5E
201
6E
Tanker Demand Growth Tanker Supply Growth Fleet Utilization
Higher Fleet Utilization Beginning in 2014
Driver for increased rates and asset prices
Source: Platou/Internal Estimates
Fle
et U
tiliz
atio
n
Su
pp
ly/D
em
am
d G
row
th
26
20
30
40
50
60
70
80
90
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Aframax Asset Values
NB 5y-old
Upside to 10y avg.
10%
21%
Source: Clarksons
35
45
55
65
75
85
95
105
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Suezmax Asset Values
NB 5y-old
9%
Upside to 10y avg.
30%
Asset Values Remain Below 10-Year Averages
NB 5 yr old 10 yr avg NB 10 yr avg 5 yr old
$ m
illi
on
s
$ m
illi
on
s
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STRATEGIC
FOCUS
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• Actively pursue in-charters while
managing out-charter portfolio
• Utilize TNK’s operating platform to
pursue consolidation and investment
opportunities
• Invest in newbuildings
• Increase fee revenues from
commercial and technical
management
Teekay Tankers Strategy for Growth Invest and operate throughout the tanker
cycle using a variety of levers
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Photo credit:
Benhur Villavicencio
Mahanadi Spirit
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• Continue to reduce our fixed-rate cover to increase spot fleet
○ 75% of fleet will trade in spot market over the next 12 months
• Further grow our spot fleet capacity through in-charters
○ Recent in-charters added 2,000 operating days
○ Pursue medium-term contracts to increase in-charter portfolio by an additional
15 ship years
• Increase vessels under management and
fee-based revenues
○ Grow existing commercial pools
○ Develop new operating segments to leverage our
commercial and technical expertise
Positioning TNK for Greater Upside to Tanker Market Recovery Rebalancing our portfolio mix
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Since the Financial Crisis:
• Several competitors have restructured or
exited
• Non-traditional financial backers have
entered the market with shorter investment
horizons
• Many new entrants do not have a full
operating platform
The Competitive Landscape Has Changed
Presents TNK with opportunities
for consolidation
30
Photo credit:
Benhur Villavicencio
Mahanadi Spirit
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TNK: Strong Platform for Consolidation
Operational
Financial Technical
Commercial
• Deep customer relationships
• Growing commercial
management platform
• Variety of cargo contracts
• Global footprint and
experience
• 40 years of Operational
Excellence
• Size to deliver reliable
and flexible operations
• Ability to maximize
vessel performance and
voyage returns
• Industry leading HSEQ
• Leveraging power of One
Teekay
• Technical and engineering
expertise
• Strong liquidity
• Financial expertise and
access to diversified
sources of capital
• NYSE listing
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