Teekay Tankers Plans to Expand Its Fleet

Teekay Tankers Ltd. on Thursday reported its results for the three months ended December 31, 2012. During the fourth quarter of 2012, the Company generated $10.8 million, or $0.13 per share, in Cash Available for Distribution(2), compared to $9.7 million, or $0.12 per share, in the third quarter of 2012. On February 20, 2013, Teekay Tankers declared a dividend of $0.03 per share(3) for the fourth quarter of 2012, which will be paid on March 11, 2013 to all shareholders of record on March 4, 2013.

Since the Company’s initial public offering in December 2007, it has declared a dividend in 21 consecutive quarters, which now totals $7.185 per share on a cumulative basis (including the dividend to be paid on March 11, 2013).

“Stronger spot rates materialized for brief periods later in the fourth quarter; however, the current oversupply of tanker capacity, combined with reduced OPEC oil production, has largely offset any seasonal strengthening of crude tanker rates so far in the first quarter of 2013,” commented Bruce Chan , Teekay Tankers’ Chief Executive Officer. “On a positive note, increasing product tanker demand has led to relatively stronger LR2 product tanker rates, a trend that we believe will continue in the medium-term due to the increased refinery capacity east of Suez, and a corresponding increase in long-haul product tanker demand.”

“As a result of the continuing weak tanker market across most segments, delays to the expected tanker market recovery and a further decline in vessel market values during the course of the year, Teekay Tankers’ US GAAP financial results for the fourth quarter of 2012 include a non-cash vessel impairment charge of approximately $353 million,” Mr. Chan added. “Vessel values over the past five years have fallen significantly, and ships recorded on the books at these historically high values have become impaired. The ships which were affected the most are the Suezmaxes acquired by Teekay Corporation in 2007, and recorded on Teekay Tankers’ balance sheet at the same values due to dropdown accounting rules. It is important to note that for the 13 vessels acquired more recently, in June 2012, had these ships been recorded on our balance sheet at Teekay Tankers’ actual purchase price, rather than Teekay Corporation’s book value, none of these vessels would have been written-down. The vessel impairment charge included in our fourth quarter results is non-cash in nature and does not impact the Company’s Cash Available for Distribution or cash dividend, nor does it affect any covenants related to Teekay Tankers’ debt facilities.”

1. Adjusted net loss attributable to shareholders of Teekay Tankers is a non-GAAP financial measure. Please refer to Appendix a to this release for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP) and for information about specific items affecting net loss that are typically excluded by securities analysts in their published estimates of the Company’s financial results.
2. Cash Available for Distribution represents net income (loss), plus depreciation and amortization, unrealized losses from derivatives, non- cash items and any write-offs or other non-recurring items, less unrealized gains from derivatives and net income attributable to the historical results of vessels acquired by the Company from Teekay Corporation, for the period when these vessels were owned and operated by Teekay Corporation.
3. Please refer to Appendix B to this release for the calculation of the cash dividend amount.

“Despite the weak tanker market outlook for 2013, Teekay Tankers remains financially strong with a manageable debt level and over $325 million of available liquidity as at December 31, 2012,” Mr. Chan continued. “At the current cyclically low asset values for both secondhand and newbuilding tankers, we believe this market provides favorable opportunities for investment in future growth either through the ordering of new, fuel-efficient vessels or the acquisition of quality on-the-water tonnage.”

Mr. Chan continued, “In line with our goals of fleet renewal and growth, we have also elected to move Teekay Tankers to a fixed dividend policy. Commencing with the first quarter 2013 dividend, payable in June 2013, the dividend will be fixed at an annual amount of $0.12 per share, payable quarterly. We believe this is a sustainable level based on our existing fleet size and employment mix, and is a prudent policy which will enable us to retain an increasing amount of operating cash flow as the tanker market recovers for investment in Teekay Tankers’ future growth.”