Teekay Tankers Misses 4Q Profit forecasts
Teekay Tankers Ltd. reported adjusted net income attributable to its shareholders of $48.5 million, or $0.31 per share, for the quarter ended December 31, 2015, compared to $18.6 million, or $0.21 per share, for the same period in the prior year.
The results fell short of Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of 42 cents per share.
The increase is primarily due to stronger spot tanker rates in the fourth quarter of 2015 compared to the same period in the prior year and an increase in fleet size related to the acquisition of 17 modern, mid-size tankers during 2015 and the expansion of the Company's chartered-in tanker portfolio in 2014 and 2015. Adjusted net income attributable to shareholders excludes a number of specific items that had the net effect of increasing net income attributable to shareholders by $3.9 million, or $0.03 per share, and by $1.7 million, or $0.01 per share, for the three months ended December 31, 2015 and 2014, respectively.
Including these items, the Company reported, on a GAAP basis, net income attributable to its shareholders of $52.5 million, or $0.34 per share, and $20.3 million, or $0.22 per share, for the three months ended December 31, 2015 and 2014, respectively. Net revenues(3) were $159.3 million and $77.4 million for the three months ended December 31, 2015 and 2014, respectively.
During the fourth quarter of 2015, the Company generated $74.0 million, or $0.48 per share, of free cash flow, compared to $31.7 million, or $0.35 per share, in the fourth quarter of 2014, with the increase due to higher average spot rates earned and an increase in the size of the Company's fleet. On December 14, 2015, Teekay Tankers declared a dividend of $0.12 per share for the fourth quarter of 2015, which was paid on February 12, 2016 to all shareholders of record on February 2, 2016. Since the Company's inception, it has declared dividends in 33 consecutive quarters.
"During the quarter, Teekay Tankers generated strong free cash flow of $74.0 million, or $0.48 per share, recording one of Teekay Tankers' strongest quarters ever," commented Kevin Mackay, Teekay Tankers' Chief Executive Officer. "In addition, we announced and implemented our new dividend policy, under which we intend to pay out to our shareholders 30 to 50 percent of the Company's quarterly adjusted net income, while maintaining a minimum quarterly dividend of $0.03 per share. This resulted in a 300 percent increase in our quarterly cash dividend to $0.12 per share for the fourth quarter of 2015. The new dividend policy provides long-term investors the opportunity to directly benefit from the Company's strong earnings while continuing to de-lever our balance sheet, which increases the Company's net asset value and further strengthens our financial position."
"We are also announce the acquisition of two modern purpose-built Lightering Aframax tankers in December 2015, which complements our recent ship-to-ship transfer acquisition of SPT Inc. and further expands our strategic presence in the U.S. Gulf."
Mr. Mackay continued, "We expect that many of the positive tanker market fundamentals in 2015 will remain in place during 2016, including growing oil demand, high crude oil supply from OPEC, low oil prices, manageable tanker supply growth, ongoing strategic and commercial oil stockpiling, and high refinery throughput. In addition, we expect the recent approval of U.S. crude exports will result in the development of new trade routes and positive demand growth for mid-sized tankers, directly benefiting Teekay Tankers as the world's largest owner and operator in this segment. As well as the expected rise over time of U.S. exports to Europe and Asia via the expanded Panama Canal, which is scheduled to be completed in June 2016, the lifting of the export ban and the resultant narrowing of the WTI/Brent crude oil spread could give rise to increased imports into the U.S. An increase in both U.S. imports and exports of oil is expected to drive demand for mid-size tankers and ship-to-ship transfer services."
Mackay added "With an owned and chartered-in fleet of approximately 55 modern mid-size tankers and the recent completion of two key financial initiatives, including our new $900 million long-term debt facility and our new dividend policy, we believe Teekay Tankers and its shareholders are well-positioned to benefit from what we anticipate to be a continued strong tanker market."