Teekay Corporation
Q4 2020 Earnings Call Transcript

Published: 25 Feb 2021

[Operator:]

Welcome to Teekay Corporation's Fourth Quarter and Fiscal 2020 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. 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.

[Ryan Hamilton:]

Before we begin, I'd like to direct all participants to our website at www.teekay.com, where you'll find a copy of the fourth quarter and annual 2020 earnings presentation. Kenneth and Vince 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.

[Vince Lok:]

Thanks, Ryan. Hello, everyone. Thank you for joining us today for Teekay Corporation's fourth quarter and annual 2020 earnings conference call. We hope that you and your families are all healthy and safe. Before I hand the call over to Kenneth I will briefly review our financial results for the fourth quarter and fiscal 2020 as well as how we have strengthened our financial foundations across the Teekay Group over the past several years, starting with our recent highlights on slide three of the presentation. In the fourth quarter of 2020 we reported our fifth consecutive quarterly adjusted profit with consolidated adjusted net income of $3 million or $0.03 per share, compared to adjusted net income of $15 million or $0.15 per share in the prior quarter. We also generated a total adjusted EBITDA of $201 million, compared to $227 million in the previous quarter. Compared to Q3, Q4 included strong adjusted results from Teekay Parent and Teekay LNG, while Teekay Tankers results reflected the recent weakness in the tanker market. Despite an unprecedented year marked by continuous volatility across the energy markets, our gas business reported its highest ever adjusted net income. And our tanker business reported its best year ever from a free cash flow perspective. For the full year 2020, we reported consolidated adjusted net income of $83 million or $0.82 per share, compared to the prior years adjusted net loss of $19 million or $0.19 per share. And we increased our total adjusted EBITDA to $1.1 billion, up nearly 15% over 2019. Compared to the prior year, our stronger results this year can be attributed to higher adjusted earnings in each of our main businesses. With this growth program completed in early 2020, Teekay LNG generated strong earnings this year supported by the stable cash flows from its diversified portfolio of long term contracts. Teekay Tankers through its spot exposure benefited from an extraordinary surge in tanker demand in the first half of 2020 and it's well timed fixed rate charters secured during that period at attractive levels. And Teekay Parents results improved due to the new foreign haven FPSO contract entered into in March 2020, higher cash flows from the Hummingbird FPSO and lower net G&A and interest expense partially offset by lower earnings from the vamp FPSO, which ceased production and decommissioning in June 2020, which Kenneth will discuss in more detail later in the presentation. Looking ahead, we are expecting the first quarter results to be more or less in line with the fourth quarter. Teekay LNG is expected to have another strong quarter, while the weak tanker market continues to weigh on Teekay Tankers results. For guidance on our first quarter results, please refer to the appendix to this presentation.

[Kenneth Hvid:]

Thanks, Vince. And good morning everyone. Turning to slide five we continue to make progress and winding down our FPSO segments. The point even FPSO continues to operate under its long term, bareboat charter contracts at a nominal day rate, since receiving an upfront $67 million cash payment in April 20. This eliminated all operational exposures to the previous loss making contract. We're pleased to report that we have successfully completed phase one of the vamp FPSO decommissioning project with net cost coming in below budget. During Q4 we recorded positive EBITDA of $2 million on the unit which came in approximately $7 million better than our forecasts of negative EBITDA of $5 million for the quarter as a result of lower costs and higher cost recoveries.

[Operator:]