Teekay Corporation (
TK)
Q4 2009 Earnings Call Transcript
March, 4, 2010, 11:00 AM ET
Executives
Kent Alekson – Investor Relations Officer
Bjorn Moller - President and Chief Executive Officer
Vincent Lok – Executive VP and Chief Financial Officer
Peter Evensen - Chief Strategy Officer
Analysts
Michael Lever – Credit Suisse
Jonathan Chappell – JP Morgan
Gregory Lewis - Credit Suisse
Justine Fisher - Goldman Sachs
Urs Dur - Lazard Capital
Daniel Burke - Johnson & Rice
Scott Burk – Oppenheimer & Co
Presentation
Operator
Welcome to Teekay Corporation’s fourth quarter and fiscal 2009 earnings 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) At that time if you have a question participants will be asked to press “*1” to register for their question. For assistance during the call please press “*0” on your touchtone phone. As a reminder this call is being recorded.
And now, for opening remarks and introductions, I would like to turn the call over to Mr. Bjorn Moller, Teekay''s President and Chief Executive Officer. Please go ahead.
Kent Alekson - Investor Relations Officer
Before Mr. Moller begins, I would like to direct all participants to our website at www.teekay.com where you will find a copy of the fourth quarter and fiscal 2009 earnings presentation. Mr. Moller 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 our fourth quarter and fiscal 2009 earnings release and earnings presentation available on our website.
I will now turn the call over to Mr. Moller to begin.
Bjorn Moller - President and Chief Executive Officer
Thank you, Kent and good morning everyone. Thank you very much for joining us. As usual I am joined today by our CFO, Vince Lok. For the Q&A session we also have Peter Evenson Teekay’s Chief Strategy Officer and also the CEO of Teekay LNG and Teekay Offshore as well as our corporate Controller Brian Fortier.
We would like to turn to slide 3 of our presentation. We recorded a net loss in the fourth quarter of 2009 primarily due to a continued weakness for tanker market for most of the quarter although we ended the year with the market on a firmer note. For the quarter Teekay reported an adjusted net loss of $33.3 million or $0.45 a share, a slight improvement from the $0.60 share loss in Q3. Due to our profitable fixed rate businesses we still generated significant positive cash flow from vessel operations or CFVO of $129 million, an increase of 16% from the prior quarter. We declared our regular quarterly dividend of 31.625 cents per share. This dividend is entirely funded by the stable distributions we receive from our ownership in our two NOP daughter companies. For fiscal year 2009 adjusted net loss was $87.5 million or $1.20 per share and CFVO was $526 million.
Reviewing recent highlights on slide 4 there have been a number of positive developments on the commercial side. We took delivery of vessels in each of our offshore gas and conventional tanker segments. Our annualized fixed rate CFVO reached to more than $550 million. We expect to continue to grow that fixed rate CFVO as we are currently seeing increased customer entry of fixed rate contracts mainly on the offshore side. In the meantime spur tanker rates are off their Q3 lows due to improving demand even though they have fallen from the recent spike we experienced at the turn of the year.
Another highlight has been the significant progress we continue to make on our financial priorities both building liquidity and reducing debt at the Teekay current level. Of particular note is the highly successful $450 million bond offering completed in January. Also earlier this week we agreed to sell to our daughter company Teekay LNG Partners three tankers with long-term fixed rate charters for $160 million. Vince will address our financial highlights on this later on the call.
Looking briefly now to each of our business segments I will begin with the offshore market on slide 5 where we have seen a recent up-tick in project activity. Global E&P spending is expected to grow by 11% this year linked to a firm oil price outlook and this will drive demand for FPSO, FSO and shuttle tankers. The graph on the top left shows the lull in new FPSO projects during the first half of 2009 following the collapse in oil prices and a subsequent rebound in new projects awards in the latter half of the year once oil prices had stabilized. Ten FPSO contracts were awarded during this period. That still continues to be at the forefront of the new offshore activity and we are also seeing new projects in the North Sea and these are Teekay’s Q4 offshore markets. As I mentioned earlier, we are seeing increased customer entries for fixed rate business much of it in FPSO and shuttle tankers.
Slide 6 covers the recent highlights in Teekay’s offshore activities. In December we completed the conversion of a floating storage unit Falcon Spirit and the vessel commenced its 7.5 year contract in Qatar. The incremental CFVO would be approximately $8 million per year. In our most recent shuttle tanker contract extensions, we have secured rate increases of 10% and over the past several months we have achieved cost reductions through re-flagging of certain shuttle tankers.
