Q4 2021 Teekay Corp Earnings Call
Welcome to Teekay Corporation's fourth quarter and fiscal 2021 earnings results Conference call.
During the call all participants will be in a listen only mode. Afterwards, you will be invited to participate in a question and answer session at that time. If you have a question participants will be asked to press star One to register for a question.
For assistance during the call. Please press star zero on your Touchtone phone as a reminder, this call is being recorded now for opening remarks, and introductions I would like to turn the call over to the company. Please go ahead.
Before we before we begin I'd like to direct all participants to our website at www Dot Teekay dot com, where you'll find a copy of the fourth quarter and fiscal year 2021 earnings presentation.
As president and CEO , Okay, that's bad and Teekay CFO , Vince Lok will review this presentation. During today's conference call. Please allow me to remind you that our discussion today contains forward looking statements actual results may differ materially from results projected by those forward looking statements additional information concerning factors that could cause actual results to materially differ from those in the forward looking.
Statements contained in the fourth quarter and fiscal year 2021 earnings release and presentation available on our website with that I'll now turn over the call to Vince to begin.
Thanks, Brian .
Morning, everyone and thank you for joining us today for Teekay Corporation's fourth quarter and fiscal 2021 earnings conference call.
Before I hand, the call over to Kenneth I will briefly review our financial results.
Starting with our recent highlights on slide three of the presentation.
In the fourth quarter, we reported a consolidated adjusted profit of $8 million or <unk> <unk> per share up from 95000 in the prior quarter.
We also generated total adjusted EBITDA of $182 million up from $165 million in the previous quarter.
Our Q4 results were stronger mainly due to a modest improvement in spot tanker rates.
In fiscal year 2021, we reported a consolidated adjusted net profit of $20 million or <unk> 19 per share.
$283 million or <unk> 82 per share in the prior year and generated total adjusted EBITDA of $721 million compared to $1 1 billion in the prior year. This.
This decrease primarily reflects the exceptionally strong tanker market in the first half of 2020.
Please note that our consolidated net income and total adjusted EBITDA results for Q4 and fiscal 2021 include Teekay LNG, even though teekay Lng's results are presented as discontinued operations in our financial statements.
On January 13th of this year, we successfully completed the sale of all of our interest in Teekay LNG to stone peak.
Bringing in gross cash proceeds of approximately $641 million to Teekay parent.
Upon closing the sale, we expeditiously eliminated approximately $330 million of high cost debt ranging between 5% and 9.25%.
Teekay parent is now largely debt free with a net cash position of over $300 million.
Looking ahead to Q1, we expect our consolidated results to be lower as a result of the sale of our interest in Teekay LNG in mid January 2022, partially offset by significantly lower interest expense due to teekay parent now being largely debt free.
Our guidance on our first quarter results. Please refer to the appendix of this presentation with that I will now turn the call over to Kenneth.
Thanks, Vince and good morning, everyone turning to slide four I will comment on the steps we have taken the past year to position teekay for the future.
We expanded our asset light Marine services business in Australia through our new strategic long term contract with the Australian Government Department of Defense in September last year, we've had a presence in Australia. Since 1997 and were now providing services for nine Australian government vessels, which provides a solid and profitable foundation to further grow.
This business.
We continue to wind down our <unk> business, starting with the balance of the decommissioning of the unit is now completed and we are nearing completion of the recycling of the unit in Europe . We're now planning for the decommissioning of our remaining two if dsos. We received the formal notifications from our customers and expect the contracts to end on the hummingbird in FY <unk>.
We are in May and August 2022, respectively humming.
Hummingbirds decommissioning process is well advanced and relatively straightforward.
Given decommissioning and recycling cost is expected to be largely covered by a contractual payment from the customer.
As Vince mentioned earlier, we completed the sale of all our interest in Teekay LNG, just don't peak with Teekay parent realizing total shareholder return of two out of 3% on an annual IRR of 12, 5% since <unk> IPO in 2005.
Since announcing the GDP still in peak merger in early October last year. The team has been working very hard on separating GDP from the rest of the Teekay group and setting up both companies for future success.
We have now transitioned all the gas employees to GDP, which is being rebranded as see peak and we expect the remaining restructuring and transition activities to be completed throughout 2022.
Lastly, we are now transformed our balance sheet and in our lossless debt free with a net cash position of over $300 million.
Turning to slide five we look at Teekay <unk> current portfolio as mentioned on the previous slide we have a number of transition activities that will continue throughout 2022, as we're evolving both our organization structure and our business mix. We are excited about the opportunities to create shareholder value with a lean organizational structure and stronger balance sheet.
Starting with our position and our publicly traded daughter subsidiary Teekay tankers, which is a well established platform that provides significant and diversified exposure to a tanker market recovery.
We have reasonably opportunistically invested $10 million of our cash balance to further build our position in TNK acquiring shares in the open market at an average price of $11 <unk> per share with these purchases. We now have an economic ownership of over 31% and voting control of over 55% in <unk>.
K <unk>.
On Tnk's closing price yesterday, our current position is valued at $125 million or $1 23 per <unk> share.
Next is our marine services for the Australian government, which is a specialized asset light niche business with a strong counterparty. This long term contract business currently contributes a stable annual.
Profit of $5 million to $6 million with the potential for future growth.
And this is one example, where we're able to leverage our operating platform to enhance our profitability with minimal invested capital.
Lastly, as mentioned earlier, our net cash position is over $300 million equal to over $3 per Teekay Corp share and we can't stress enough the importance of having financial strength and flexibility is a critical ingredient to achieving higher returns and allows us to be opportunistic and countercyclical looking ahead, we stand to benefit.
From the strong operating franchise and capabilities developed over our nearly 50 year history combined with our renewed financial flexibility.
As the world pushes for greater energy diversification and a lower environmental footprint, we expect to see investment opportunities in both the broader shipping sector and potentially new and adjacent markets. We believe that teekay is well positioned to patiently and selectively pursue a range of attractive future investment alternatives.
That leverage our core competences relationships and institutional knowledge to create long term shareholder value.
Please refer back to our earnings conference call last quarter, where we provided some comments on future opportunities, including the broader shipping sector and participation in the global energy transition.
Before we conclude this call with the completion of the sale of Teekay LNG to stone peak in the near term most of our consolidated earnings will closely mirrored that of Teekay tankers on.
On a quarterly basis TNK provides a detailed outlook on the tanker market along with various operational and financial updates at this time, we believe it will be duplicative for Teekay Corp. To also have quarterly earnings calls starting next quarter Teekay Corp will continue to provide the quarterly earnings releases. However, our investor conference calls won't be on a.
Scheduled quarterly basis, but is that it will be more event driven as we enter into new investments in the future.
Although our Investor Conference.
Conference calls will be more AD hoc going forward, we fully intend to maintain transparency and want to continue to have frequent dialogue with investors. So please reach out to our Investor Relations group with that operator, we are now available to take questions.
Alright.
Jeff.
Please go ahead.
Go ahead for any questions operator.
Okay, and if you'd like to ask a question press star one on your keypad.
And there are no questions in the queue at this time.
We just had a late question would you like to take that question.
Thank you for listening today I am pleased Q&A.
Case earnings Conference call. Following this call with Tnk's.
As CEO .
<unk> and CFO .
Thank you.
And this does conclude today's call. We do thank you again for your participation and you may now disconnect.
Okay.