Teekay Tankers .(TNK)2021-05-13 20:54Financial Data and Key Metrics Changes - Teekay Tankers generated total adjusted EBITDA of approximately $16 million during Q1 2021, an increase of $6 million from Q4 2020 [7] - The company reported a total adjusted net loss of approximately $22 million or $0.65 per share in Q1 2021, an improvement from an adjusted net loss of $41 million or $1.21 per share in Q4 2020 [7][8] - Liquidity at the end of Q1 2021 was $372 million, with a net debt to capitalization ratio of 32% [8][23] Business Line Data and Key Metrics Changes - Spot tanker rates remained generally weak during Q1 2021 due to the ongoing impact of COVID-19, with global oil demand falling by around 1 million barrels per day [11] - Despite weak spot rates, Teekay Tankers managed to mitigate the impact through fixed rate time charters, particularly in the Suez Max fleet, where earnings reached around $16,800 per day compared to spot earnings of around $10,700 per day [12][13] Market Data and Key Metrics Changes - The first quarter saw 4.5 million deadweight tons of tankers returned to the trading fleet from floating storage, worsening the supply-demand imbalance [12] - The company noted that Aframax rates reached $20,000 per day on some trade routes in March due to temporary disruptions caused by bad weather and the Suez Canal blockage [12] Company Strategy and Development Direction - Teekay Tankers is focused on maintaining a strong balance sheet and reducing overall cost of capital, with plans to refinance vessels with lower-cost sale leaseback financings [8][24] - The company is optimistic about a market rebound starting in the second half of 2021, driven by improved global economic outlook and rising oil demand [16][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing uncertainties due to COVID-19 but expressed optimism about the long-term fundamentals supporting tanker market recovery [15][21] - The International Monetary Fund (IMF) has increased its forecast for global GDP growth in 2021, which is expected to positively impact oil demand [16] Other Important Information - Teekay Tankers has exercised purchase options on eight vessels, with transactions expected to close in May and September [9][24] - The company has a manageable debt repayment profile with no significant maturities until 2024 [25] Q&A Session Summary Question: How much of new debt do you foresee replacing the $186 million versus current liquidity? - Management indicated that they will refinance $140 million with new lower-cost leasebacks and use about $45 million of existing liquidity for the remainder [32] Question: What is the expected spread benefit from the new facilities? - The spread on the $140 million refinancing is about 5%, with expected interest savings of at least $8 million in 2022 [34] Question: How do you view the outlook for product tankers compared to crude tankers? - Management stated that the majority of exposure will remain in the crude space, with confidence in the fundamentals aligning for improvement [41] Question: Any appetite for signing time charters to stabilize cash flow? - Management is looking at opportunities on a case-by-case basis but has not seen favorable numbers to lock in for 12 months [44] Question: How much more is left in storage impacting rates? - Land-based storage is nearly back to normal levels, and floating storage is also close to normal, which is positive for future demand [49] Question: Do you see more chance of upside in the market? - Management believes fundamentals are pointing towards improvement, but they will remain cautious due to uncertainties [58]