Teekay Tankers (TNK) Q1 2026 Earnings Transcript

Motley Fool Transcribing, The Motley Fool

Thu, May 14, 2026 astatine 12:15 PM CDT 23 min read

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DATE

Thursday, May 14, 2026 astatine 11 a.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Kenneth Hvid

• Chief Financial Officer — Brody Speers

• Head of Research — Christian Waldegrave

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Full Conference Call Transcript

Starting connected descent 3 of the presumption we volition screen Teekay Tankers' caller highlights. Teekay Tankers reported GAAP nett income of $154 cardinal oregon $4.42 per stock and adjusted nett income of $128 cardinal oregon $3.69 per stock successful the archetypal quarter, which are implicit $30 cardinal amended than past 4th and 2 to 3x the results posted successful the aforesaid play of the anterior year. Spot tanker rates during the archetypal 4th were adjacent grounds highs for archetypal quarter, averaging astir $61 1000 per time crossed our midsized tanker fleet. With our important spot vulnerability and a debased escaped currency travel breakeven, we generated astir $143 cardinal successful escaped currency travel from operations, which has accrued our currency presumption to conscionable shy of $1 cardinal with nary indebtedness arsenic of 4th end. We proceed to execute connected our fleet renewal strategy, which includes acquiring modern vessels portion selling our older vessels. I americium pleased to denote that we person entered into agreements to get 2 Korean resale Suezmax newbuildings for a full of $190 cardinal which are expected to beryllium delivered successful 2027. We besides sold 1 2009 physique Suezmax of $53.5 million, resulting successful an expected summation connected merchantability of $32.5 cardinal that volition beryllium recorded successful Q2 2026. In addition, we person completed the antecedently announced income of 2 Suezmax tankers for full proceeds of $73 cardinal and recorded gains of income of $22.7 cardinal successful the archetypal 4th So acold this year, we person acquired oregon agreed to get 5 modern vessels for a full committedness of $332 cardinal and person sold oregon agreed to merchantability 4 vessels for $211 million. We besides took vantage of the beardown spot marketplace we opportunistically outchartered 1 Suezmax for $80 1000 per time per time for 10 to 12 months. And this past week, we outchartered 1 Aframax vas for $60 1000 per time for 12 months. Looking up to the 2nd quarter, we expect adjacent amended results with tanker rates reaching grounds levels. So acold successful the 2nd quarter, we person secured spot rates of $142 1000 $122 1000 and $98 1000 per time for VLCC, Suezmax, and Aframax LR2 fleets, respectively, with astir 71% of spot days booked for OVLCC and connected average, astir 57% of spot days booked for Suezmax and Aframax LR2s. Lastly, Teekay Tankers has declared its regular fixed quarterly dividend of $0.25 per share. And successful addition, we declared a peculiar dividend of $1.00 per share, which, similar anterior years, is based connected the erstwhile year's fiscal results. Moving to descent 4, we look astatine caller developments successful the spot market. Spot tanker rates successful Q1 were adjacent to grounds highs for archetypal quarter. Just down rates seen successful the 2023. It is worthy noting that spot rates were precise steadfast adjacent earlier the caller US Iran conflict. Due to a operation of rising seaborne lipid commercialized volumes, tightening of sanctions against Russia, Iran, and Venezuela, and the interaction of fleet consolidation successful the VLCC sector. In particular, the removal of President Nicolas Maduro of Venezuela by The United States and the consequent freeing up of Venezuelan crude lipid exports to determination connected compliant tonnage to destinations specified arsenic the U.S. Gulf, Europe, and India benefited midsized crude tanker request successful Q1. Midsized spot tanker rates person continued to emergence astatine the commencement of Q2, owed to the interaction of caller events successful the Middle East reaching grounds highs of implicit $120 1000 per time during April, I volition speech much astir the reasons for these grounds precocious rates successful the adjacent fewer slides. Turning to descent 5. We are experiencing an unprecedented lipid proviso disruption with the effectual closure of the Strait of Hormuz. On February 28, The United States and Israel launched a bid of attacks against Iran targeting subject and authorities sites. Iran subsequently responded by attacking a scope of subject and civilian assets crossed the Middle East region, including vessels transiting the Strait of Hormuz. Since then, The US has besides implemented a blockade aimed astatine preventing ships from entering oregon leaving Iranian ports, The nett effect has been a important driblet successful vas postulation done the Strait Of Hormuz, which successful crook has led to a crisp diminution successful Middle East lipid accumulation and exports, portion Saudi Arabia and The UAE person been capable to divert immoderate of their export volumes to ports extracurricular of the Middle East Gulf, namely Yanbu successful the Red Sea and Fujairah successful the Gulf of Oman, Total crude lipid exports from the portion person fallen astir 10 cardinal barrels per time compared to prewar levels. Partially offsetting the proviso nonaccomplishment has been a corresponding summation successful crude lipid export from the Atlantic Basin and the West Coast Of The Americas wherever exports person accrued by astir 4.5 cardinal barrels per time since the commencement of the war. This has been astir evident successful the U.S. Gulf, wherever crude lipid exports reached a grounds precocious of 5 cardinal barrels per time successful April 2026. Boosted by the merchandise of lipid from the U.S. Strategic Petroleum Reserve. While an summation successful proviso from the Atlantic is obscurity adjacent enough, to offset the nonaccomplishment of exports from the Middle East Gulf,, the resultant summation successful voyage distances and associated trading inefficiencies person combined to boost spot tanker rates arsenic elaborate connected the adjacent slide. Turning to descent 6. We reappraisal the commercialized inefficiencies which person supported tanker rates. First, a fig of vessels are trapped and incapable to exit the Middle East Gulf, via the Strait Of Hormuz, which has reduced effectual fleet supply. And the clip of astatine the clip of writing, we number a full of 100 tankers of Aframax size oregon larger, which are trapped westbound of Hormuz, of which 59 are VLCCs accounting for astir 8% of the non sanctioned fleet. In addition, determination are a further 86 vessels of Aframax size oregon larger, which are presently bare and sitting idle conscionable extracurricular the Strait Of Hormuz oregon disconnected the West Coast Of India successful anticipation of a imaginable reopening, of which implicit 50 are VLCCs. Secondly, the unreserved to find replacement barrels, peculiarly by Asian refiners which person been astir impacted by the nonaccomplishment of Middle East oil, has led to an summation successful vessels ballasting agelong haul from the Pacific Basin to the Atlantic successful bid to unafraid cargoes. A ample proportionality of these vessels are past sailing backmost to Asia erstwhile loaded successful bid to conscionable Asian refinery demand. Finally, the summation successful vessels loading successful the Atlantic and sailing agelong haul to Asia has not been constricted to the VLCC sector. As we person besides seen a important lengthening successful laden voyage distances for Aframax and Suezmaxes. As shown by the chart, mean Aframax voyage distances for vessels loading successful the U.S. Gulf person accrued by 30% twelvemonth connected twelvemonth portion a grounds 69 Suezmaxes loaded from the U.S. Gulf during April. Many of which are fixed for Asian destinations. We person adjacent seen 5 Suezmax cargoes load from the U.S. Gulf and transit to Asia via the Panama Canal. Which is simply a precise antithetic commercialized and highlights the lengths to which refiners successful Asia are consenting to spell successful bid to marque up for the shortfall successful Middle East lipid supply. Turning to descent 7. Look astatine the mean word tanker proviso and request outlook. Given the ongoing struggle successful the Middle East and the precocious grade of unpredictability regarding erstwhile and however the struggle whitethorn beryllium resolved, it is precise hard to measure what volition hap to tanker tonne mile request should the Strait Of Hormuz reopen arsenic it volition beryllium connected however rapidly vas transits resume and the gait astatine which Middle East lipid producers tin resume exports. What we bash cognize is that planetary lipid inventories are being depleted crossed some commercialized and strategical stockpiles, This could make further tanker request erstwhile the struggle is resolved arsenic these inventories volition person to beryllium replenished. In addition, a propulsion for vigor information could pb to immoderate countries gathering oregon expanding their strategical reserves successful bid to safeguard immoderate aboriginal disruption. Some countries whitethorn besides look to diversify their sources of crude lipid imports, which could pb to longer voyage distances and, therefore, higher ton mile request successful the mean term. On the fleet proviso side, the tanker bid publication continues to grow owed to the comparatively precocious gait of caller vas ordering successful the caller months. However, a deficiency of scrapping means that the tanker fleet is rapidly aging. With the mean property of the planetary tanker fleet presently the highest successful implicit 30 years. As such, the tanker bid publication is mostly offset by the fig of compliant tankers reaching property 20 implicit the aforesaid clip framework successful which the bid publication volition deliver. Not to notation the ample acheronian fleet of tankers, which already has an mean property of good implicit 20 years. In short, portion the tanker bid publication appears ample connected the surface, these vessels are needed to regenerate the older fleet of tankers, which are approaching the extremity of their trading lives successful the coming years. Though the timing of erstwhile vessels volition exit the fleet is uncertain. Turning to Slide 8. We item our capableness to make agelong word shareholder value. This includes: first, our quality to make important escaped currency travel with a debased escaped currency travel breakeven. In the past 4 quarters, we person generated $380 cardinal oregon $11.14 per stock successful escaped currency travel oregon astir a 30% escaped currency travel output based connected the closing stock terms astatine the extremity of Q1 25. With our caller outcharters and nary debt, our existent escaped currency travel breakeven has decreased to astir $8.2 1000 per time for the adjacent 12 months, which allows america to make important currency flows successful astir immoderate tanker market.