Teekay Tankers Ltd. (NYSE:TNK) Q1 2024 Earnings Call Transcript May 9, 2024

Teekay Tankers Ltd. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to Teekay Tankers Limited First Quarter 2024 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. [Operator Instructions] 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.

Unidentified Company Representative: Before we begin, I would like to direct all participants to our website at www.teekay.com, where you'll find a copy of the first quarter 2024 earnings presentation. Kevin and Stewart 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 is contained in the first quarter 2024 earnings release and earnings presentation available on our website. I will now turn the call over to Kevin Mackay, Teekay Tankers' President and CEO, to begin.

Kevin Mackay: Thank you, Ed. Hello, everyone, and thank you very much for joining us today for Teekay Tankers' first quarter 2024 earnings conference call. Joining me on the call today is Stewart Andrade, Teekay Tankers' CFO; and Christian Waldegrave, our Director of Research. Moving to our recent highlights on Slide 3 of the presentation. Teekay Tankers' generated total adjusted EBITDA of $151 million up from the $127 million we generated last quarter. The company reported adjusted net income of $132 million or $3.86 per share, an increase from a $100 million or $2.91 per share in the fourth quarter of 2023. With our fleet of mid-size tankers trading almost entirely in the strong spot market, Teekay Tankers' high operating leverage enabled us to continue generating significant earnings.

As a reminder, for every $5,000 increase in tanker rates above our free cash flow breakeven of $16,000 per day. We expect to generate approximately $2.40 of annual free cash flow per share. Stewart will provide further information on this later in the presentation. In March, we completed the repurchase of the remaining eight vessels on sale leaseback arrangements for $137 million, reaching the major milestone of being debt free. With our balance sheet strength, recent financial performance, and the positive market outlook, we continue to take a balanced approach to capital allocation. In line with our capital allocation plan, we have declared a fixed quarterly cash dividend of $0.25 per share for the first quarter of 2024. In addition, we have declared a special dividend of $2 per share.

Including these dividends, Teekay Tankers have declared cash dividends of $4.25 per share since updating our capital allocation plan last year. Teekay Tankers' mid-size spot rates for the first quarter of 2024, the second highest in the company's history, second only to last year's spot rates. These firm's spot rates have continued through the first half of the second quarter as well. The recent expansion of the Trans Mountain pipeline to Vancouver with first cargo is planned for this month will create a new source of Aframax demand, which is expected to support Aframax spot tanker rates as volumes ramp up over the coming months. I will talk more about this important development later in the presentation. Looking ahead, tanker supply and demand fundamentals remain positive and point toward continued tanker market strength in the medium term.

See also

30 Largest Software Companies in the World by Market Cap and

15 Best Cuisines in the World.

To continue reading the Q&A session, please click here.