HAMILTON, BERMUDA--(Marketwired - May 19, 2016) -
Highlights
- Generated distributable cash flow of $54.4 million, or $0.68 per common unit, in the first quarter of 2016.
- Generated total cash flow from vessel operations of $114.4 million in the first quarter of 2016 compared to $119.0 million from the same period of the prior year.
- Declared first quarter 2016 cash distribution of $0.14 per common unit.
- In February 2016, the world's first MEGI LNG carrier newbuilding, Creole Spirit, commenced its five-year, fixed-rate charter with Cheniere Energy.
- In April 2016, Yamal LNG announced they have secured plant financing for the Yamal LNG Project.
- Total liquidity of approximately $264 million as at March 31, 2016.
Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP), today reported the Partnership's results for the quarter ended March 31, 2016. During the first quarter of 2016, the Partnership generated distributable cash flow(1) of $54.4 million, or $0.68 per common unit, compared to $66.2 million, or $0.73 per common unit, in the same period of the prior year. The decrease in distributable cash flow was primarily due to lower revenues from the Partnership's 52 percent-owned Malt LNG joint venture, lower revenues from two of the Partnership's Suezmax tankers upon the charterer exercising its one-year extension options between September 2015 and January 2016, and lower capitalized distributions relating to equity financing of newbuildings as a result of the temporary reduction in cash distributions on the Partnership's common units announced in December 2015. These decreases were partially offset by the Creole Spirit liquefied natural gas (LNG) carrier commencing its charter contract in late-February 2016.
On April 1, 2016, the Partnership declared a cash distribution of $0.14 per common unit for the quarter ended March 31, 2016. The cash distribution was paid on May 13, 2016 to all common unitholders of record on April 29, 2016.
(1) Distributable cash flow is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. Please see Appendix B for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP).
CEO Commentary
"The Partnership continued to generate strong cash flows in the first quarter of 2016, delivering results that were in line with our expectations," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "While there continues to be volatility in the energy markets and a weak spot LNG shipping market, our business remains stable with approximately 97 percent of the Partnership's LNG fleet fixed in 2016. In addition, the pace of LNG newbuilding orders remains low and long-term fundamentals in the LNG industry remain positive."
Mr. Evensen continued, "In the second quarter of 2016, the Partnership will begin to benefit from a full quarter of cash flow from our first MEGI LNG carrier newbuilding, the Creole Spirit, which delivered in late-February and subsequently transported its first U.S. shale gas cargo to Europe from Cheniere's Sabine Pass LNG export facility. The Partnership's second MEGI LNG carrier newbuilding is now undergoing sea trials and is on-track to commence its five-year charter with Cheniere in the third quarter of 2016."
Mr. Evensen added, "The sponsors of the Yamal LNG project recently announced a significant milestone for the project in securing long-term plant financing. Further, our jointly-owned ARC7 Ice-Class LNG carrier newbuildings with China LNG Shipping reached a milestone of our own during April when steel was cut on our first vessel which is scheduled to deliver in the first quarter of 2018. Executing on Teekay LNG's robust pipeline of profitable growth projects that are scheduled to deliver in 2016 through 2020 remains a top priority, and we continue to make significant progress on securing financing for these remaining newbuildings."
Summary of Recent Events
Delivery Update on the First Two MEGI LNG Carrier Newbuildings for Cheniere Energy
In late-February 2016, Teekay LNG's first MEGI LNG carrier newbuilding, Creole Spirit, commenced its five-year fee-based charter contract with Cheniere Energy. The Partnership's second MEGI LNG carrier newbuilding, Oak Spirit, has commenced sea trials and is on schedule to begin its five-year fee-based contract with Cheniere Energy in the third quarter of 2016. Each vessel is expected to earn annual cash flow from vessel operations(1) and distributable cash flow of approximately $50 million and $30 million, respectively. In early-February 2016, Teekay LNG secured a 10-year, $360 million long-term lease facility, which will be used to finance both vessels.
Sale of the Bermuda Spirit and Hamilton Spirit Suezmax Tankers
During February and March 2016, Centrofin, the charterer of the Bermuda Spirit and Hamilton Spirit Suezmax tankers, exercised its options under the charter contract to purchase both vessels for a total purchase price of approximately $94 million. The Bermuda Spirit was sold on April 15, 2016 and the Hamilton Spirit was sold on May 17, 2016 and we used substantially all of the proceeds from these sales to repay existing term loans associated with these vessels.
As described in note 1 of the Consolidated Statements of (Loss) Income included in this release, an accounting loss of approximately $27 million was recognized in the three months ended March 31, 2016 as a result of Centrofin exercising its purchase options to acquire the two vessels. The accounting loss was mainly as a result of a timing difference between the different amortization periods applied to the vessels (25 years) and the $50 million of upfront payments received from Centrofin at the inception of the charter contracts (12 years).
Yamal LNG Financing and Project Update
In July 2014, Teekay LNG, through a 50/50 joint venture with China LNG Shipping (Holdings) Limited (China LNG), finalized agreements to provide six internationally-flagged Ice-Class LNG carriers for the Yamal LNG Project in Northern Russia. Our joint venture's vessels, which are scheduled to deliver between the first quarter of 2018 and the first quarter of 2020, will operate under time-charter contracts until December 31, 2045, plus extension options. In April 2016, Yamal LNG announced it had secured approximately $16.2 billion equivalent in long-term external plant financing for the Yamal LNG Project from Chinese and Russian sources. Yamal LNG has announced that these loan facilities, combined with previous financing provided by the National Welfare Fund is the full external funding required for the Yamal LNG Project. As of March 31, 2016, the Yamal LNG Project is reported to be 51 percent complete, with the first LNG train being over 65 percent complete.
The Teekay LNG/China LNG joint venture is currently in discussions with lenders on the financing of its Ice-Class LNG carrier newbuildings.
(1) CFVO is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. CFVO is not required by GAAP and should not be considered as an alternative to net income, equity income or any other indicator of the Partnership's performance required by GAAP. Please see Appendix E for a reconciliation of CFVO from consolidated vessels (a non-GAAP measure) as used in this release to the most directly comparable GAAP financial measure.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(1) of $34.2 million for the quarter ended March 31, 2016, compared to $43.9 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net loss attributable to partners by $71.3 million and increasing net income attributable to the partners by $19.1 million for the three months ended March 31, 2016 and 2015, respectively, primarily relating to unrealized losses on derivative instruments, foreign currency exchange gains and losses and loss on sale of vessels as detailed in Appendix A to this release. Including these items, the Partnership reported net loss attributable to the partners, on a GAAP basis, of $37.1 million for three months ended March 31, 2016 and net income attributable to the partners of $63.1 million for the three months ended March 31, 2015.
Adjusted net income attributable to the partners for the three months ended March 31, 2016 decreased from the same period in the prior year primarily due to a temporary deferral of a portion of the charter payments for the Partnership's 52 percent-owned Marib Spirit and Arwa Spirit LNG carriers effective January 2016, lower charter rate on the redeployment of the Partnership's 52 percent-owned Methane Spirit after its original time charter contract expired in March 2015 and lower charter rates upon the charterer exercising its one-year extension options between September 2015 to January 2016 for the European Spirit, African Spirit and Asian Spirit Suezmax tankers. These decreases were partially offset by the Creole Spirit LNG carrier commencing its charter contract in late-February 2016 and increased revenue days for the Magellan Spirit LNG carrier due to the disputed termination of its charter contract and unscheduled off-hire in the first quarter of 2015.
For accounting purposes, the Partnership is required to recognize the changes in the fair value of its outstanding derivative instruments that are not designated as hedges for accounting purposes and any ineffectiveness for derivative instruments designated as hedges for accounting purposes in net (loss) income. This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on derivative instruments on the consolidated statements of (loss) income as detailed in notes 3, 4, 5 and 6 to the Consolidated Statements of (Loss) Income included in this release.
(1) Adjusted net income attributable to the partners is a non-GAAP financial measure. Please refer to Appendix A to this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP and information about specific items affecting net (loss) income which are typically excluded by securities analysts in their published estimates of the Partnership's financial results.
Operating Results
The following table highlights certain financial information for Teekay LNG's two segments: the Liquefied Gas Segment and the Conventional Tanker Segment (please refer to the "Teekay LNG's Fleet" section of this release below and Appendices C through F for further details).
| Three Months Ended | ||||||||||||
| March 31, 2016 | March 31, 2015 | |||||||||||
| (unaudited) | (unaudited) | |||||||||||
| (in thousands of U.S. Dollars) | Liquefied Gas Segment |
Conventional Tanker Segment |
Total | Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||||
| Net voyage revenues(i) | 78,468 | 16,846 | 95,314 | 75,934 | 21,074 | 97,008 | ||||||
| Vessel operating expenses | (15,232 | ) | (6,621 | ) | (21,853 | ) | (14,306 | ) | (7,328 | ) | (21,634 | ) |
| Depreciation and amortization | (18,685 | ) | (4,926 | ) | (23,611 | ) | (18,306 | ) | (5,263 | ) | (23,569 | ) |
| CFVO from consolidated vessels(ii) | 63,132 | 10,548 | 73,680 | 60,704 | 12,001 | 72,705 | ||||||
| CFVO from equity accounted vessels(iii) | 40,749 | - | 40,749 | 46,304 | - | 46,304 | ||||||
| Total CFVO(ii)(iii) | 103,881 | 10,548 | 114,429 | 107,008 | 12,001 | 119,009 | ||||||
| (i) Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net voyage revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see Appendix C for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. |
| (ii) Cash flow from vessel operations (CFVO) from consolidated vessels represents income (loss) from vessel operations before (a) depreciation and amortization expense, (b) loss on sale of vessels, (c) amortization of in-process contracts included in voyage revenues, and includes (d) adjustments for direct financing leases to a cash basis, realized gains or losses on the Toledo Spirit derivative contract and the revenue for two Suezmax tankers recognized on a cash basis. CFVO is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. CFVO is not required by GAAP and should not be considered as an alternative to net (loss) income, equity income or any other indicator of the Partnership's performance required by GAAP. Please see Appendix E for a reconciliation of CFVO from consolidated vessels (a non-GAAP measure) as used in this release to the most directly comparable GAAP financial measure. |
| (iii) The Partnership's equity accounted investments for the three months ended March 31, 2016 and 2015 include the Partnership's proportionate share of its equity accounted vessels' CFVO. Please see Appendix F for a description and reconciliation of CFVO from equity accounted vessels (a non-GAAP measure) as used in this release to the most directly comparable GAAP financial measure. |
Liquefied Gas Segment
Cash flow from vessel operations from the Partnership's Liquefied Gas segment, excluding equity accounted vessels, was $63.1 million in the first quarter of 2016, compared to $60.7 million in the same quarter of the prior year. The increase was primarily due to the Creole Spirit commencing its five-year charter contract with Cheniere Energy in late-February 2016, partially offset by scheduled off-hire relating to an in-water survey for the Catalunya Spirit in the first quarter of 2016.
Cash flow from vessel operations from the Partnership's equity accounted vessels in the Liquefied Gas segment was $40.7 million in the first quarter of 2016 compared to $46.3 million in the same quarter of the prior year. The decrease was primarily due to a temporary deferral of a portion of the charter payments for the Marib Spirit and Arwa Spirit effective January 2016 and lower charter rates on the redeployment of the Methane Spirit after its original time-charter contract expired in March 2015. These vessels are all owned through the Partnership's 52 percent interest in the Malt LNG joint venture with Marubeni Corporation. These decreases were partially offset by increased cash flows from the Partnership's 50 percent interest in Exmar LPG BVBA as a result of two LPG carrier newbuildings that delivered in November 2015 and February 2016, net of the redelivery of one in-chartered vessel during the fourth quarter of 2015, and increased revenue days for the Partnership's 52 percent-owned Magellan Spirit due to its disputed charter contract termination and unscheduled off-hire in the first quarter of 2015.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership's Conventional Tanker segment decreased to $10.5 million in the first quarter of 2016, compared to $12.0 million in the same quarter of the prior year. The decrease was primarily related to an adjustment upon finalization of the Partnership's 2015 profit share relating to the Teide Spirit recorded in the first quarter of 2016 and lower charter rates upon the charterer exercising its one-year extension options between September 2015 to January 2016 for the European Spirit, African Spirit and Asian Spirit.
Teekay LNG's Fleet
The following table summarizes the Partnership's fleet as of May 18, 2016:
| Number of Vessels | ||||
| Owned Vessels |
In-Chartered Vessels |
Newbuildings |
Total |
|
| LNG Carrier Fleet | 30 (i) | - | 20 (i) | 50 |
| LPG/Multigas Carrier Fleet | 21 (ii) | 2 (iii) | 6 (iii) | 29 |
| Conventional Tanker Fleet | 6 | - | - | 6 |
| Total | 57 | 2 | 26 | 85 |
| (i) The Partnership's ownership interests in these vessels range from 20 percent to 100 percent. |
| (ii) The Partnership's ownership interests in these vessels range from 50 percent to 99 percent. |
| (iii) The Partnership's interest in these vessels is 50 percent. |
Liquidity
As of March 31, 2016, the Partnership had total liquidity of $264.1 million (comprised of $114.1 million in cash and cash equivalents and $150.0 million in an undrawn credit facility).
Availability of 2015 Annual Report
Teekay LNG Partners L.P. filed its 2015 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC) on April 27, 2016. Copies are available on Teekay LNG's website, under "Investors - Teekay LNG Partners L.P. - Financials & Presentations", at www.teekay.com. Unitholders may request a printed copy of this annual report, including the complete audited financial statements free of charge by contacting Teekay LNG's Investor Relations.
Conference Call
The Partnership plans to host a conference call on Friday, May 20, 2016 at 10:00 a.m. (ET) to discuss the results for the first quarter of 2016. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
- By dialing (800) 505-9568 or (416) 204-9271, if outside North America, and quoting conference ID code 9220450.
- By accessing the webcast, which will be available on Teekay LNG's website at www.teekay.com (the archive will remain on the web site for a period of 30 days).
An accompanying First Quarter Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
The conference call will be recorded and made available until Friday, June 3, 2016. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 9220450.
About Teekay LNG Partners L.P.
Teekay LNG Partners is one of the world's largest independent owners and operators of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts through its interests in 50 LNG carriers (including one LNG regasification unit and 20 newbuildings), 29 LPG/Multigas carriers (including two in-chartered LPG carriers and six newbuildings) and six conventional tankers. The Partnership's interests in these vessels range from 20 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".
Teekay LNG Partners L.P.
Consolidated Statements of (Loss) Income
(in thousands of U.S. Dollars, except units outstanding)
| Three Months Ended | ||||||
| March 31, | December 31, | March 31, | ||||
| 2016 | 2015 | 2015 | ||||
| (unaudited) | (unaudited) | (unaudited) | ||||
| Voyage revenues | 95,771 | 103,642 | 97,326 | |||
| Voyage expenses | (457 | ) | (215 | ) | (318 | ) |
| Vessel operating expenses | (21,853 | ) | (24,046 | ) | (21,634 | ) |
| Depreciation and amortization | (23,611 | ) | (23,002 | ) | (23,569 | ) |
| General and administrative expenses | (5,428 | ) | (5,666 | ) | (6,708 | ) |
| Loss on sale of vessels(1) | (27,439 | ) | - | - | ||
| Restructuring charges(2) | - | (491 | ) | - | ||
| Income from vessel operations | 16,983 | 50,222 | 45,097 | |||
| Equity income(3) | 9,498 | 23,588 | 18,058 | |||
| Interest expense(4) | (13,997 | ) | (10,827 | ) | (10,104 | ) |
| Interest income | 602 | 539 | 734 | |||
| Realized and unrealized (loss) gain on | ||||||
| non-designated derivative instruments(5) | (38,089 | ) | 9,957 | (14,032 | ) | |
| Foreign currency exchange (loss) gain(6) | (10,118 | ) | 5,712 | 25,930 | ||
| Other income | 419 | 355 | 443 | |||
| Net (loss) income before tax expense | (34,702 | ) | 79,546 | 66,126 | ||
| Income tax (expense) recovery | (261 | ) | (2,431 | ) | 225 | |
| Net (loss) income | (34,963 | ) | 77,115 | 66,351 | ||
| Non-controlling interest in net (loss) income | 2,175 | 4,891 | 3,283 | |||
| General Partner's interest in net (loss) income | (743 | ) | 1,444 | 8,642 | ||
| Limited partners' interest in net (loss) income | (36,395 | ) | 70,780 | 54,426 | ||
| Weighted-average number of common units outstanding: | ||||||
| • Basic | 79,557,872 | 79,528,595 | 78,514,335 | |||
| • Diluted | 79,557,872 | 79,596,288 | 78,553,194 | |||
| Total number of common units outstanding at end of period | 79,571,820 | 79,551,012 | 78,537,584 | |||
| (1) Loss on sale of vessels relates to Centrofin exercising its purchase options to acquire the Bermuda Spirit and Hamilton Spirit Suezmax tankers during the three months ended March 31, 2016. The Bermuda Spirit was sold to Centrofin on April 15, 2016 and the Hamilton Spirit was sold to Centrofin on May 17, 2016 for gross proceeds of $94 million. The Partnership received a total of $50 million from Centrofin prior to the commencement of the two charters and thus, the purchase option prices were lower than they would have otherwise been. Such amounts received from Centrofin were accounted for as deferred revenue (prepayment of future charter payments) instead of as a reduction in the purchase price of the vessels, and was amortized to revenues over the 12-year charter periods on a straight-line basis. Approximately $28 million of $50 million has been recognized to revenues since the inception of the charters, which approximates the $27 million loss on sale recognized in the first quarter of 2016. |
| (2) Restructuring charges for the three months ended December 31, 2015 are primarily related to seafarer severance payments upon the charterer's request to change the crew nationality from an Australian crew to an international crew on the Alexander Spirit. This restructuring charge was reimbursed by the charterer, which was included in voyage revenues. |
| (3) Equity income includes unrealized gains/losses on non-designated derivative instruments, any ineffectiveness for derivative instruments designated as hedges for accounting purposes and gains or losses on sales of vessels as detailed in the table below: |
| Three Months Ended | ||||
| March 31, | December 31, | March 31, | ||
| 2016 | 2015 | 2015 | ||
| Equity income | 9,498 | 23,588 | 18,058 | |
| Proportionate share of unrealized loss (gain) on non-designated derivative instruments | 3,978 | (6,798 | ) | 1,126 |
| Proportionate share of ineffective portion of hedge accounted interest rate swaps | 160 | (357 | ) | 394 |
| Proportionate share of loss on sale of vessel | - | 1,228 | - | |
| Equity income excluding unrealized gains/losses on designated and non-designated derivative instruments and loss on sale of vessel | 13,636 | 17,661 | 19,578 | |
| (4) Included in interest expense is ineffectiveness for derivative instruments designated as hedges for accounting purposes, as detailed in the table below: |
| Three Months Ended | ||||
| March 31, | December 31, | March 31, | ||
| 2016 | 2015 | 2015 | ||
| Ineffective portion on qualifying cash flow hedging instruments | (1,398 | ) | - | - |
| (5) The realized (losses) gains on non-designated derivative instruments relate to the amounts the Partnership actually paid or received to settle non-designated derivative instruments and the unrealized (losses) gains on non-designated derivative instruments relate to the change in fair value of such non-designated derivative instruments, as detailed in the table below: |
| Three Months Ended | ||||||
| March 31, | December 31, | March 31, | ||||
| 2016 | 2015 | 2015 | ||||
| Realized (losses) gains relating to: | ||||||
| Interest rate swap agreements | (6,643 | ) | (7,112 | ) | (7,305 | ) |
| Toledo Spirit time-charter derivative contract | 630 | (3,185 | ) | (570 | ) | |
| (6,013 | ) | (10,297 | ) | (7,875 | ) | |
| Unrealized (losses) gains relating to: | ||||||
| Interest rate swap agreements | (20,657 | ) | 13,933 | (4,357 | ) | |
| Interest rate swaption agreements | (11,669 | ) | 4,551 | - | ||
| Toledo Spirit time-charter derivative contract | 250 | 1,770 | (1,800 | ) | ||
| (32,076 | ) | 20,254 | (6,157 | ) | ||
| Total realized and unrealized (losses) gains on non-designated derivative instruments | (38,089 | ) | 9,957 | (14,032 | ) | |
| (6) For accounting purposes, the Partnership is required to revalue all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period. This revaluation does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized foreign currency translation gains or losses in the Consolidated Statements of (Loss) Income. |
| Foreign currency exchange (loss) gain includes realized losses relating to the amounts the Partnership paid to settle the Partnership's non-designated cross-currency swaps that were entered into as economic hedges in relation to the Partnership's Norwegian Kroner (NOK) denominated unsecured bonds. The Partnership issued NOK 700 million, NOK 900 million, and NOK 1,000 million of unsecured bonds between May 2012 and May 2015. Foreign currency exchange (loss) gain also includes unrealized gains (losses) relating to the change in fair value of such derivative instruments, partially offset by unrealized (losses) gains on the revaluation of the NOK bonds as detailed in the table below: |
| Three Months Ended | |||
| March 31, | December 31, | March 31, | |
| 2016 | 2015 | 2015 | |
| Realized losses on cross-currency swaps | (2,291) | (2,472) | (1,401) |
| Unrealized gains (losses) on cross-currency swaps | 21,312 | (7,934) | (17,045) |
| Unrealized (losses) gains on revaluation of NOK bonds | (20,430) | 11,310 | 16,216 |
Teekay LNG Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. Dollars)
| As at March 31, |
As at December 31, |
|||
| 2016 | 2015 | |||
| (unaudited) | (unaudited) | |||
| ASSETS | ||||
| Current | ||||
| Cash and cash equivalents | 114,145 | 102,481 | ||
| Restricted cash - current | 6,100 | 6,600 | ||
| Lease receivable | 94,392 | - | ||
| Accounts receivable | 12,235 | 22,081 | ||
| Prepaid expenses | 5,470 | 4,469 | ||
| Current portion of net investments in direct financing leases | 17,986 | 20,606 | ||
| Advances to affiliates | 15,524 | 13,026 | ||
| Total current assets | 265,852 | 169,263 | ||
| Restricted cash - long-term | 100,090 | 104,919 | ||
| Vessels and equipment | ||||
| At cost, less accumulated depreciation | 1,444,950 | 1,595,077 | ||
| Vessels under capital leases, at cost, less accumulated depreciation | 292,145 | 88,215 | ||
| Advances on newbuilding contracts | 368,825 | 424,868 | ||
| Total vessels and equipment | 2,105,920 | 2,108,160 | ||
| Investment in and advances to equity accounted joint ventures | 892,492 | 883,731 | ||
| Net investments in direct financing leases | 640,836 | 646,052 | ||
| Other assets | 11,409 | 20,811 | ||
| Derivative assets | 3,016 | 5,623 | ||
| Intangible assets - net | 76,551 | 78,790 | ||
| Goodwill - liquefied gas segment | 35,631 | 35,631 | ||
| Total assets | 4,131,797 | 4,052,980 | ||
| LIABILITIES AND EQUITY | ||||
| Current | ||||
| Accounts payable | 2,345 | 2,770 | ||
| Accrued liabilities | 32,734 | 37,456 | ||
| Unearned revenue | 15,857 | 19,608 | ||
| Current portion of long-term debt | 135,551 | 197,197 | ||
| Current obligations under capital lease | 64,024 | 4,546 | ||
| Current portion of in-process contracts | 12,886 | 12,173 | ||
| Current portion of derivative liabilities | 39,229 | 52,083 | ||
| Advances from affiliates | 13,393 | 22,987 | ||
| Total current liabilities | 316,019 | 348,820 | ||
| Long-term debt | 1,851,788 | 1,802,012 | ||
| Long-term obligations under capital lease | 167,857 | 54,581 | ||
| Long-term unearned revenue | 11,319 | 30,333 | ||
| Other long-term liabilities | 70,118 | 71,152 | ||
| In-process contracts | 17,570 | 20,065 | ||
| Derivative liabilities | 210,128 | 182,338 | ||
| Total liabilities | 2,644,799 | 2,509,301 | ||
| Equity | ||||
| Limited partners | 1,425,633 | 1,472,327 | ||
| General Partner | 47,833 | 48,786 | ||
| Accumulated other comprehensive loss | (11,618 | ) | (2,051 | ) |
| Partners' equity | 1,461,848 | 1,519,062 | ||
| Non-controlling interest (1) | 25,150 | 24,617 | ||
| Total equity | 1,486,998 | 1,543,679 | ||
| Total liabilities and total equity | 4,131,797 | 4,052,980 | ||
| (1) Non-controlling interest includes: a 30 percent equity interest in the RasGas II joint venture (which owns three LNG carriers); a 31 percent equity interest in Teekay BLT Corporation (a joint venture which owns two LNG carriers); and a one percent equity interest in several of the Partnership's ship-owning subsidiaries or joint ventures, which in each case represents the ownership interest not owned by the Partnership. |
Teekay LNG Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. Dollars)
| Three Months Ended | |||||
| March 31, | March 31, | ||||
| 2016 | 2015 | ||||
| (unaudited) | (unaudited) | ||||
| Cash and cash equivalents provided by (used for) | |||||
| OPERATING ACTIVITIES | |||||
| Net (loss) income | (34,963 | ) | 66,351 | ||
| Non-cash items: | |||||
| Unrealized loss on non-designated derivative instruments | 32,076 | 6,157 | |||
| Depreciation and amortization | 23,611 | 23,569 | |||
| Loss on sale of vessels | 27,439 | - | |||
| Unrealized foreign currency exchange loss (gain) and other | 9,366 | (28,914 | ) | ||
| Equity income, net of dividends received of nil (2015 - $45,000) | (9,498 | ) | 26,942 | ||
| Ineffective portion on qualifying cash flow hedging instruments included in interest expense | 1,398 | - | |||
| Change in operating assets and liabilities | (11,589 | ) | (6,097 | ) | |
| Expenditures for dry docking | (155 | ) | (511 | ) | |
| Net operating cash flow | 37,685 | 87,497 | |||
| FINANCING ACTIVITIES | |||||
| Proceeds from issuance of long-term debt | 3,364 | 38,967 | |||
| Scheduled repayments of long-term debt | (29,792 | ) | (21,733 | ) | |
| Prepayments of long-term debt | (20,000 | ) | (40,000 | ) | |
| Scheduled repayments and prepayment of capital lease obligations | (6,681 | ) | (1,094 | ) | |
| Decrease (increase) in restricted cash | 6,591 | (12,146 | ) | ||
| Proceeds from equity offerings, net of offering costs | - | 6,753 | |||
| Cash distributions paid | (11,364 | ) | (63,609 | ) | |
| Dividends paid to non-controlling interest | (23 | ) | - | ||
| Net financing cash flow | (57,905 | ) | (92,862 | ) | |
| INVESTING ACTIVITIES | |||||
| Additional capital contributions to equity accounted joint ventures | (4,029 | ) | (1,533 | ) | |
| Loan repayments from equity accounted joint ventures | - | 13,987 | |||
| Receipts from direct financing leases | 7,836 | 1,381 | |||
| Proceeds from sale-lease back | 179,434 | - | |||
| Expenditures for vessels and equipment | (151,357 | ) | (61,699 | ) | |
| Net investing cash flow | 31,884 | (47,864 | ) | ||
| Increase (decrease) in cash and cash equivalents | 11,664 | (53,229 | ) | ||
| Cash and cash equivalents, beginning of the period | 102,481 | 159,639 | |||
| Cash and cash equivalents, end of the period | 114,145 | 106,410 | |||
Teekay LNG Partners L.P.
Appendix A - Specific Items Affecting Net (Loss) Income
(in thousands of U.S. Dollars)
Set forth below is a reconciliation of the Partnership's unaudited adjusted net income attributable to the partners, a non-GAAP financial measure, to net (loss) income attributable to the partners as determined in accordance with GAAP. The Partnership believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Partnership's financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Partnership's financial results. Adjusted net income attributable to the partners is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
| Three Months Ended | |||||
| March 31, | |||||
| 2016 | 2015 | ||||
| (unaudited) | (unaudited) | ||||
| Net (loss) income - GAAP basis | (34,963 | ) | 66,351 | ||
| Less: | |||||
| Net income attributable to non-controlling interests | (2,175 | ) | (3,283 | ) | |
| Net (loss) income attributable to the partners | (37,138 | ) | 63,068 | ||
| Add (subtract) specific items affecting net income: | |||||
| Unrealized foreign currency exchange loss (gain)(1) | 7,740 | (27,262 | ) | ||
| Unrealized losses on non-designated derivative instruments(2) | 32,076 | 6,157 | |||
| Ineffective portion on qualifying cash flow hedging instruments included in interest expense(3) | 1,398 | - | |||
| Unrealized losses on non-designated and designated derivative instruments and other items from equity accounted investees(4) | 4,138 | 1,520 | |||
| Loss on sale of vessels(5) | 27,439 | - | |||
| Non-controlling interests' share of items above(6) | (1,502 | ) | 436 | ||
| Total adjustments | 71,289 | (19,149 | ) | ||
| Adjusted net income attributable to the partners | 34,151 | 43,919 | |||
| (1) Unrealized foreign exchange losses (gains) primarily relate to the Partnership's revaluation of all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period and unrealized losses (gains) on the cross-currency swaps economically hedging the Partnership's NOK bonds and excludes the realized (losses) gains relating to the cross currency swaps for the NOK bonds. |
| (2) Reflects the unrealized losses due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes. See note 5 to the Consolidated Statements of (Loss) Income included in this release for further details. |
| (3) Reflects the ineffectiveness for derivative instruments designated as hedges for accounting purposes. See note 4 to the Consolidated Statements of (Loss) Income included in this release for further details |
| (4) Reflects the unrealized losses due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes and any ineffectiveness for derivative instruments designated as hedges for accounting purposes within the Partnership's equity-accounted investments. See note 3 to the Consolidated Statements of (Loss) Income included in this release for further details. |
| (5) Loss on sale of vessels relates to Centrofin exercising its purchase options to acquire the Bermuda Spirit and Hamilton Spirit Suezmax tankers during the three months ended March 31, 2016. The Bermuda Spirit was sold to Centrofin on April 15, 2016 and the Hamilton Spirit was sold to Centrofin on May 17, 2016 for gross proceeds of $94 million. The Partnership received a total of $50 million from Centrofin prior to the commencement of the two charters and thus, the purchase option prices were lower than they would have otherwise been. Such amounts received from Centrofin were accounted for as deferred revenue (prepayment of future charter payments) instead of as a reduction in the purchase price of the vessels, and was amortized to revenues over the 12-year charter periods on a straight-line basis. Approximately $28 million of $50 million has been recognized to revenues since the inception of the charters, which approximates the $27 million loss on sale recognized in the first quarter of 2016. |
| (6) Items affecting net (loss) income include items from the Partnership's consolidated non-wholly-owned subsidiaries. The specific items affecting net (loss) income are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests' percentage share in this subsidiary to arrive at the non-controlling interests' share of the amount. The amount identified as "non-controlling interests' share of items listed above" in the table above is the cumulative amount of the non-controlling interests' proportionate share of items listed in the table. |
Teekay LNG Partners L.P.
Appendix B - Reconciliation of Non-GAAP Financial Measures Distributable Cash Flow (DCF)
(in thousands of U.S. Dollars, except units outstanding)
Distributable cash flow represents net income adjusted for depreciation and amortization expense, deferred income tax and other non-cash items, estimated maintenance capital expenditures, unrealized gains and losses from non-designated derivative instruments, ineffectiveness for derivative instruments designated as hedges for accounting purposes, distributions relating to equity financing of newbuilding installments, equity income, adjustments for direct financing leases to a cash basis, loss on sale of vessels and foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Distributable cash flow is not required by GAAP and should not be considered as an alternative to net (loss) income or any other indicator of the Partnership's performance required by GAAP. The table below reconciles distributable cash flow to net (loss) income.
| Three Months Ended | |||||
| March 31, | |||||
| 2016 | 2015 | ||||
| (unaudited) | |||||
| Net (loss) income: | (34,963 | ) | 66,351 | ||
| Add: | |||||
| Depreciation and amortization | 23,611 | 23,569 | |||
| Loss on sale of vessels | 27,439 | - | |||
| Partnership's share of equity accounted joint ventures' DCF net of estimated maintenance capital expenditures(1) | 20,573 | 25,209 | |||
| Direct finance lease payments received in excess of revenue recognized | 4,866 | 4,401 | |||
| Distributions relating to equity financing of newbuildings | - | 3,916 | |||
| Unrealized losses on non-designated derivative instruments | 32,076 | 6,157 | |||
| Ineffective portion on qualifying cash flow hedging instruments included in interest expense | 1,398 | - | |||
| Unrealized foreign currency exchange loss (gain) | 7,740 | (27,262 | ) | ||
| Less: | |||||
| Deferred income tax and other non-cash items | (1,372 | ) | (1,068 | ) | |
| Equity income | (9,498 | ) | (18,058 | ) | |
| Estimated maintenance capital expenditures | (11,976 | ) | (11,662 | ) | |
| Distributable Cash Flow before Non-controlling interest | 59,894 | 71,553 | |||
| Non-controlling interests' share of DCF before estimated maintenance capital expenditures | (5,490 | ) | (5,352 | ) | |
| Distributable Cash Flow | 54,404 | 66,201 | |||
| Amount of cash distributions attributable to the General Partner | (227 | ) | (8,653 | ) | |
| Limited partners' Distributable Cash Flow | 54,177 | 57,548 | |||
| Weighted-average number of common units outstanding | 79,557,872 | 78,514,335 | |||
| Distributable Cash Flow per limited partner unit | 0.68 | 0.73 | |||
| (1) The estimated maintenance capital expenditures relating to the Partnership's share of equity accounted joint ventures were $7.4 million and $7.0 million for the three months ended March 31, 2016 and 2015, respectively. |
Teekay LNG Partners L.P.
Appendix C - Reconciliation of Non-GAAP Financial Measures
Net Voyage Revenues
(in thousands of U.S. Dollars)
Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net voyage revenues is a non-GAAP measure used by certain investors to measure the financial performance of shipping companies. Net voyage revenues is not required by GAAP and should not be considered as an alternative to voyage revenues or any other indicator of the Partnership's performance required by GAAP.
| Three Months Ended March 31, 2016 | ||||||
| (unaudited) | ||||||
| Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||
| Voyage revenues | 78,585 | 17,186 | 95,771 | |||
| Voyage expenses | (117 | ) | (340 | ) | (457 | ) |
| Net voyage revenues | 78,468 | 16,846 | 95,314 | |||
| Three Months Ended March 31, 2015 | ||||||
| (unaudited) | ||||||
| Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||
| Voyage revenues | 75,934 | 21,392 | 97,326 | |||
| Voyage expenses | - | (318 | ) | (318 | ) | |
| Net voyage revenues | 75,934 | 21,074 | 97,008 | |||
Teekay LNG Partners L.P.
Appendix D - Supplemental Segment Information
(in thousands of U.S. Dollars)
| Three Months Ended March 31, 2016 | ||||||
| (unaudited) | ||||||
| Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||
| Net voyage revenues (See Appendix C) | 78,468 | 16,846 | 95,314 | |||
| Vessel operating expenses | (15,232 | ) | (6,621 | ) | (21,853 | ) |
| Depreciation and amortization | (18,685 | ) | (4,926 | ) | (23,611 | ) |
| General and administrative expenses | (4,362 | ) | (1,066 | ) | (5,428 | ) |
| Loss on sale of vessels | - | (27,439 | ) | (27,439 | ) | |
| Income (loss) from vessel operations | 40,189 | (23,206 | ) | 16,983 | ||
| Three Months Ended March 31, 2015 | ||||||
| (unaudited) | ||||||
| Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||
| Net voyage revenues (See Appendix C) | 75,934 | 21,074 | 97,008 | |||
| Vessel operating expenses | (14,306 | ) | (7,328 | ) | (21,634 | ) |
| Depreciation and amortization | (18,306 | ) | (5,263 | ) | (23,569 | ) |
| General and administrative expenses | (5,325 | ) | (1,383 | ) | (6,708 | ) |
| Income from vessel operations | 37,997 | 7,100 | 45,097 | |||
Teekay LNG Partners L.P.
Appendix E - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations from Consolidated Vessels
(in thousands of U.S. Dollars)
Cash flow from vessel operations from consolidated vessels represents income (loss) from vessel operations before (a) depreciation and amortization expense, (b) loss on sale of vessels, (c) amortization of in-process contracts included in voyage revenues, and includes (d) adjustments for direct financing leases to a cash basis, realized gains or losses on the Toledo Spirit derivative contract, and the revenue for two Suezmax tankers recognized a cash basis. The Partnership's direct financing leases for the periods indicated relate to the Partnership's 69 percent interest in two LNG carriers, the Tangguh Sago and Tangguh Hiri, and the two LNG carriers acquired from Awilco LNG ASA. The Partnership's cash flow from vessel operations from consolidated vessels does not include the Partnership's cash flow from vessel operations from its equity accounted joint ventures. Cash flow from vessel operations is included because certain investors use cash flow from vessel operations to measure a company's financial performance, and to highlight this measure for the Partnership's consolidated vessels. Cash flow from vessel operations from consolidated vessels is not required by GAAP and should not be considered as an alternative to net (loss) income or any other indicator of the Partnership's performance required by GAAP.
| Three Months Ended March 31, 2016 | ||||||
| (unaudited) | ||||||
| Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||
| Income (loss) from vessel operations (See Appendix D) | 40,189 | (23,206 | ) | 16,983 | ||
| Depreciation and amortization | 18,685 | 4,926 | 23,611 | |||
| Loss on sale of vessels | - | 27,439 | 27,439 | |||
| Amortization of in-process contracts included in voyage revenues | (608 | ) | (278 | ) | (886 | ) |
| Direct finance lease payments received in excess of revenue recognized | 4,866 | - | 4,866 | |||
| Realized gain on Toledo Spirit derivative contract | - | 630 | 630 | |||
| Cash flow adjustment for two Suezmax tankers(1) | - | 1,037 | 1,037 | |||
| Cash flow from vessel operations from consolidated vessels | 63,132 | 10,548 | 73,680 | |||
| Three Months Ended March 31, 2015 | ||||||
| (unaudited) | ||||||
| Liquefied Gas Segment |
Conventional Tanker Segment |
Total | ||||
| Income from vessel operations (See Appendix D) | 37,997 | 7,100 | 45,097 | |||
| Depreciation and amortization | 18,306 | 5,263 | 23,569 | |||
| Amortization of in-process contracts included in voyage revenues | - | (278 | ) | (278 | ) | |
| Direct finance lease payments received in excess of revenue recognized | 4,401 | - | 4,401 | |||
| Realized loss on Toledo Spirit derivative contract | - | (570 | ) | (570 | ) | |
| Cash flow adjustment for two Suezmax tankers(1) | - | 486 | 486 | |||
| Cash flow from vessel operations from consolidated vessels | 60,704 | 12,001 | 72,705 | |||
| (1) The Partnership's charter contracts for two of its Suezmax tankers, the Bermuda Spirit and Hamilton Spirit, were amended in 2012, which had the effect of reducing the daily charter rates by $12,000 per day for duration of 24 months ending September 30, 2014. The cash impact of the change in hire rates is not fully reflected in the Partnership's statements of (loss) income and comprehensive (loss) income as the change in the lease payments is being recognized on a straight-line basis over the term of the lease. In addition, the charterer of these two Suezmax tankers exercised its purchase options on these two vessels as permitted under the charter contract agreements and as a result, the charter contracts have been reclassified as sales-type leases. |
Teekay LNG Partners L.P.
Appendix F - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations from Equity Accounted Vessels
(in thousands of U.S. Dollars)
Cash flow from vessel operations from equity accounted vessels represents the Partnership's proportionate share of income from vessel operations from equity accounted vessels before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts, and includes (c) adjustments for direct financing leases to a cash basis. Cash flow from vessel operations from equity accounted vessels is included because certain investors use cash flow from vessel operations to measure a company's financial performance, and to highlight this measure for the Partnership's equity accounted joint ventures. Cash flow from vessel operations from equity accounted vessels is not required by GAAP and should not be considered as an alternative to equity income or any other indicator of the Partnership's performance required by GAAP.
| Three Months Ended | ||||||||
| March 31, 2016 | March 31, 2015 | |||||||
| (unaudited) | (unaudited) | |||||||
| At 100% |
Partnership's Portion(1) |
At 100% |
Partnership's Portion(1) |
|||||
| Net voyage revenues | 129,200 | 58,413 | 139,031 | 63,745 | ||||
| Vessel operating expenses | (41,581 | ) | (19,367 | ) | (39,686 | ) | (18,562 | ) |
| Depreciation and amortization | (24,609 | ) | (12,311 | ) | (23,477 | ) | (11,904 | ) |
| Income from vessel operations of equity accounted vessels | 63,010 | 26,735 | 75,868 | 33,279 | ||||
| Other items, including interest expense and realized and unrealized gain (loss) on derivative instruments | (42,242 | ) | (17,237 | ) | (36,791 | ) | (15,221 | ) |
| Net income / equity income of equity accounted vessels | 20,768 | 9,498 | 39,077 | 18,058 | ||||
| Income from vessel operations | 63,010 | 26,735 | 75,868 | 33,279 | ||||
| Depreciation and amortization | 24,609 | 12,311 | 23,477 | 11,904 | ||||
| Direct finance lease payments received in excess | ||||||||
| of revenue recognized | 8,786 | 3,186 | 8,584 | 3,134 | ||||
| Amortization of in-process revenue contracts | (2,899 | ) | (1,483 | ) | (3,959 | ) | (2,013 | ) |
| Cash flow from vessel operations from equity accounted vessels | 93,506 | 40,749 | 103,970 | 46,304 | ||||
| (1) The Partnership's equity accounted vessels for the three months ended March 31, 2016 and 2015 include: the Partnership's 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership's ownership interest ranging from 49 percent to 50 percent in the Excalibur and Excelsior joint ventures, which owns one LNG carrier and one regasification unit, respectively; the Partnership's 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnership's 52 percent ownership interest in Malt LNG Netherlands Holding B.V., the joint venture between the Partnership and Marubeni Corporation, which owns six LNG carriers; the Partnership's 50 percent ownership interest in Exmar LPG BVBA, which owns and in-charters 23 vessels, including six newbuildings, as at March 31, 2016, compared to 24 vessels owned and in-chartered, including eight newbuildings, as at March 31, 2015; the Partnership's 30 percent ownership interest in two LNG carrier newbuildings and 20 percent ownership interest in two LNG carrier newbuildings for BG Group acquired in June 2014; and the Partnership's 50 percent ownership interest in six LNG carrier newbuildings in the joint venture between the Partnership and China LNG Shipping (Holdings) Limited established in July 2014. |
Forward-Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: expected profitability of existing growth projects; the timing of newbuilding vessel deliveries and project start-up and the commencement of related contracts; the stability and growth of the Partnership's business and future cash flows, including the cash flow impact relating to the two MEGI LNG carrier newbuildings commencing charters to Cheniere during 2016; the percentage of the Partnership's LNG fleet that is subject to fixed-rate charters in 2016; fundamentals in the liquefied gas industry; the impact of the long-term plant financing for the Yamal LNG Project on the financing of the Partnership's ARC7 Ice-Class LNG carrier newbuildings; the financing of the Partnership's remaining newbuildings; and the charter payment deferral on the Partnership's two 52 percent-owned LNG carriers on charter to the Yemen LNG project. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: potential shipyard and project construction delays, newbuilding specification changes or cost overruns; changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts of existing vessels in the Teekay LNG fleet; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; factors affecting the outcome of the Partnership's dispute over the Magellan Spirit; the Partnership's and the Partnership's joint ventures' ability to raise financing for its existing newbuildings and projects; factors affecting the resumption of the LNG plant in Yemen; the inability of the Partnership to collect the deferred charter payments from the Yemen LNG project; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2015. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
Contact Information:
Investor Relations enquiries
Ryan Hamilton
+1 (604) 609-6442
www.teekay.com