Teekay Corporation Ltd. · NYSE:TK
Teekay — Non-Deal Roadshow (January 2004)
43 slides from Teekay's roadshow presentation, January 2004
Slide 1: Teekay: The Midstream Oil Services Provider
Teekay: The Midstream Oil Services Provider January 2004 NYSE: TK www.teekay.com
Slide 2: Forward Looking Statements
Forward Looking Statements This document 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 anticipated EBITD
Slide 3: Teekay Shipping Highlights
Teekay Shipping Highlights We transport over 10% of the world’s seaborne crude oil The largest crude oil tanker company measured by market capitalization, enterprise value, and fleet size Growing fixed-rate business = Growing cash generating power – approximately $8.85 mid-cycle CEPS* equating
Slide 4: This is Teekay
This is Teekay World’s largest medium-size spot tanker franchise World’s largest shuttle tanker operator – North Sea / Brazil Proven track record of accretive acquisitions High return organic growth 15 vessels on order 11 vessels delivered in last 13 months Attractively priced given po
Slide 5: Teekay Years Ago
Teekay 5 Years Ago Teekay circa 1998 Teekay was a price 43 ships owned, 3 chartered-in taker in a highly Predominantly regional spot market fragmented and operator cyclical commodity $3m long-term fixed-rate cash flows business 8 offices worldwide 47% leverage $541m market capitalizati
Slide 6: Actively Managing the Cycle to Increase Shareholder Value
Actively Managing the Cycle to Increase Shareholder Value $50,000 $45,000 Acquired UNS L/T Contracts $40,000 Ordered Raised Flexible Realized Aframax TCE Newbuildings Financing Reduced $35,000 Debt ConocoPhillips L/T Contracts $30,000 L/T Contracts with Transpetro $25,000 Acquired Navion Increased D
Slide 7: Successful Acquisition Strategy
Successful Acquisition Strategy Bona Shipholding Acquisition (1999) - $450 million Significant entry into Atlantic Aframax trades World leadership in Aframax market Ugland Nordic Shipping (UNS) Acquisition (2001) - $780 million Strategic beachhead into shuttle tanker market ConocoPhillip
Slide 8: Teekay's Transformation Strategy of 1999
Teekay’s Transformation Strategy of 1999 Increase size of spot fleet Teekay needed to further increase scale, capacity, flexibility and utilization but still had to time the market to achieve goals Build a direct customer sales force Service offerings stress customer service and innovative c
Slide 9: Increase Size and Scope of Aframax Fleet
Increase Size and Scope of Aframax Fleet Acquired Bona in 1999 for $450 million in cash and stock High quality fleet consisting of 26 ships concentrated in the Atlantic basin Acquired Navion’s conventional tanker business Broadened our service offerings into related market segments: VLCC, Su
Slide 10: Spot Segment: Economies of Scale
Spot Segment: Economies of Scale Allows us to service customers and offer innovative contracts on a global basis Obtain repeat business because of customer focus Leader in commercial and marine operations: HSEQ focus One of only two shipping companies to achieve ISO 9001- for Quality, ISO
Slide 11: World's Largest Operator of Medium-Sized Tankers
World’s Largest Operator of Medium-Sized Tankers Aframax Sized Vessels 90 80 14 Vessels Newbuildings 70 60 # of vessels 50 40 71 4 30 20 32 1 1 10 23 13 10 0 (a) Teekay Shipping Malaysian Intn'l General Maritime Overseas Tanker Pacific Shipping Corp. Shipholding Group Mngmt (a) Includes owned and in
Slide 12: Spot Segment: Results to Date
Spot Segment: Results to Date Transformed from a regional operator to the only real global mid-size tanker operator Built a strategic contract portfolio in the conventional market with strong customer relationships Leading consolidator in a fragmented industry Increasingly chartering-in ship
Slide 13: Teekay's Transformation Strategy in 1999
Teekay’s Transformation Strategy in 1999 Increase size of spot fleet Teekay needed to further increase scale, capacity, flexibility and utilization but still had to time the market to achieve goals Build a direct customer sales force Service offerings stress customer service and innovative c
Slide 14: Pre-eminent Market Position
Pre-eminent Market Position Unique, direct to customer sales force comprised of both business development and chartering professionals Biggest portfolio of strategic contracts with blue chip customers featuring backhaul cargoes Largest spot operator of medium-sized tankers 58 owned vessels*
Slide 15: Blue Chip Customer Base
Blue Chip Customer Base Teekay Shipping Corporation 15
Slide 16: Teekay's Transformation Strategy in 1999
Teekay’s Transformation Strategy in 1999 Increase size of spot fleet Teekay needed to further increase scale, capacity, flexibility and utilization but still had to time the market to achieve goals Build a direct customer sales force Service offerings stress customer service and innovative c
Slide 17: The World Leader in Offshore Loading
The World Leader in Offshore Loading Approximately half of Teekay’s capital is now invested in “floating pipelines” Navion - the leading offshore loading logistics provider UNS - the leading shuttle tanker time-charter entity Significant long-term stable cash flow High profitability Teekay
Slide 18: Attractive Market Characteristics
Attractive Market Characteristics Barriers to Entry The North Sea No spot market No speculative newbuilding ordering Marginal fields & deepwater Operational know-how is critical exploration Economies of scale required for efficient scheduling Oil& Gas Sophisticated technology fields Refi
Slide 19: Significant Growth Potential in Offshore Oil
Significant Growth Potential in Offshore Oil Rapid growth in deepwater exploration BP has indicated its intention to spend over $15 billion over the next 10 years finding and producing new energy supplies Upside in core North Sea market Improving extraction technology Tax incentives New
Slide 20: Predictable & Stable Earnings
Predictable & Stable Earnings EBITDA from Fixed-rate Long-term Contracts 300 280 260 240 220 200 ($) millions 180 160 140 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Shuttle Tankers Fixed Rate Conventional Tankers Offshore Average ROE > 20% Average contract length appro
Slide 21: Teekay's Transformation Strategy in 1999
Teekay’s Transformation Strategy in 1999 Increase size of spot fleet Teekay needed to further increase scale, capacity, flexibility and utilization but still had to time the market to achieve goals Build a direct customer sales force Service offerings stress customer service and innovative c
Slide 22: Teekay's Software Proposition
Teekay’s Software Proposition Global Business Development Team VALUE ADDED SERVICE OFFERINGS Trusted Long Project / Term Financial Technical and Operating Management Partner Skills and Expertise Teekay’s integrated structure creates value in excess of its hardware Teekay Shipping Corporation 22
Slide 23: Teekay's Software Proposition Case Studies
Teekay’s Software Proposition Case Studies Through existing relationship Teekay secured two shuttle tanker contracts with Petrobras 2nd Petrobras Innovative Contract contract structure proposed to Unocal Teekay Marine Teekay Tanker Services directed Services purchased two the conversion to Unocal FS
Slide 24: Complementary Businesses Create Synergies
Complementary Businesses Create Synergies SPT Lightering using Teekay Aframaxes Shuttle tankers can trade in the Spot market Conversion of older Aframaxes into FSOs Common Customers Assets can be deployed in ChevronTexaco, Exxon, spot, shuttle and FSO Statoil, Petrobras, BP, Shell segments Shu
Slide 25: The Transformation of Teekay
The Transformation of Teekay 1998 2004 Regional Leader in World Leader in Mid-size Tankers Marine Oil Transportation 45 ships 157 ships carrying over 10% of the world’s sea borne oil trade Teekay Shipping Corporation 25
Slide 26: Teekay Today
Teekay Today Teekay circa 1998 Teekay today 43 ships owned, 3 chartered-in 89 ships owned, 53 chartered-in, 18 managed Predominantly spot market operator Balanced mix of spot / fixed-rate business $3 million long-term fixed-rate cash $285 million in long-term fixed-rate flows cash flows
Slide 27: Teekay is an Integrated Logistics Provider
Teekay is an Integrated Logistics Provider 21 Ships Managed Ships Offshore Loading Logistics / Outsourcing 53 Ships COA Time Chartered-in Floating Storage Tailored mix of Ships TEEKAY fixed-rate and and Offtake market related NETWORK Long-term Fixed- pricing 104 Ships * rate time charter Spot Charte
Slide 28: More Than Just a Tanker Company
More Than Just a Tanker Company We are now further penetrating our customer’s logistics chain: Have a push/pull strategy with our customers Leader in Push: FSO’s – taking worldwide Innovative mooring systems for marginal fields Leader in Pull: Leading shuttle tanker operator – employing shuttle
Slide 29: Teekay is a Midstream Seaborne Oil Services Provider
Teekay is a Midstream Seaborne Oil Services Provider Teekay Shipping Corporation 29
Slide 30: Teekay – Fully Integrated Midstream Services Provider
Teekay – Fully Integrated Midstream Services Provider Example of Teekay’s Integrated Oil Transportation Network: Oil transported from Statfjord field on Navion Shuttle Tanker Example of Teekay’s Transported by Navion Integrated Oil chartering to Gulf of Transportation Network: Mexico Oil stored in T
Slide 31: Growth in Revenues and Cash Flow lead to Balance Sheet Flexibility
Growth in Revenues and Cash Flow lead to Balance Sheet Flexibility $1,200 $450 Net Voyage Revenues Income from Vessel Operations $400 $1,000 $350 $800 $300 91% in millions % R= in millions $600 R = 38 $250 CAG CAG $200 $400 $150 $200 $100 $50 $0 1999 2000 2001 2002 2003 $0 annualized 1999 2000 2001
Slide 32: Consistent Balance Sheet and Market Cap. Growth
Consistent Balance Sheet and Market Cap. Growth $4,000 $45 Book Value per Share Total Assets $39.82 $40 $3,500 % = 16 $35.35 $35.82 R $35 CAG $3,000 $30 $28.56 in $ per share $2,500 in millions $25 $22.87 $2,000 $20 = 15% AGR $1,500 $15 C $1,000 $10 $500 $5 $0 $0 1999 2000 2001 2002 Sept. 30, 1999 2
Slide 33: Free Cash Flow Yield
Free Cash Flow Yield in millions (except per share data) Free Cash Flow per Share Calculation Cash Flow Yield Calculation Projected EBITDA * $ 550.3 Projected 2004 Free Cash Flow $ 321.3 less: Net Interest payments ** $ (76.0) less: Principal payments ** $ (130.0) Market Capitalization @ $62/share =
Slide 34: Complementary Businesses Create Cash Floor with No Ceiling
Complementary Businesses Create Cash Floor with No Ceiling Fixed-Rate EBITDA Spot-based EBITDA 800 700 600 ($) millions 500 400 Floor 300 * 200 100 0 Low-cycle Mid-cycle High-cycle ($13,000/day) ($18,000/day) ($27,500/day) Proforma 2004 EPS $0.68 $4.10 $10.55 Spot Rate Increase EBITDA Increase $1,00
Slide 35: Growing Earnings Power
Growing Earnings Power 12.00 11.00 2004: Spot Rate Increase EPS Increase Growing operating 10.00 $1,000 TCE/day ~ $0.68/year leverage 9.00 8.00 Increasing Earnings Per Share ($) earnings power 7.00 6.00 5.00 4.00 Declining net 3.00 income break-even TCE rate 2.00 1.00 - $10,000 $12,000 $14,000 $16,0
Slide 36: How Should Teekay be Valued?
How Should Teekay be Valued? Historically, tanker companies have been valued based on ‘steel value’ alone. Teekay is an integrated logistics provider, and not just a conventional tanker company Teekay Shipping Corporation 36
Slide 37: Valuation Method
Valuation Method Multiple of Fixed-Rate EBITDA + Book Value of Spot Fleet In millions (except per share data) Balance Sheet data as at Sept 30, 2003 FIXED-RATE SEGMENT SPOT SEGMENT Fixed-rate segment EBITDA * 285 Book value of spot fleet + JVs 1,365 Multiple *** x9 Multiple ** x 1.6 Total fixed-rate
Slide 38: Share Value Matrix
Share Value Matrix Stock Price Multiple of Spot Book Value Matrix 1.0x 1.1x 1.2x 1.3x 1.4x 1.5x 1.6x 1.7x Fixed 8 52.25 55.49 58.74 61.99 65.24 68.49 71.75 75.00 Rate Segment 9 59.03 62.28 65.53 68.78 72.03 75.28 78.54 81.78 EBITDA Multiple 10 65.82 69.07 72.32 75.56 78.81 82.06 85.32 88.57 Value Ga
Slide 39: Investment Highlights
Investment Highlights An integrated supplier of Midstream oil services, not just an owner Financial strength to pursue continued profitable growth Profitable throughout the cycle; large base of long-term fixed-rate business coupled with significant spot market upside Market has not yet recog
Slide 40: Appendix
Appendix NYSE: TK www.teekay.com
Slide 41: Multiple Comparisons
Multiple Comparisons Price to book value multiples for shipping group TEV / EBITDA 2004 Multiples Teekay 1.6 x Pipelines & Transportation Frontline 1.7 x Buckeye Partners 13.7 x General Maritime 1.3 x Enbridge Energy 12.4 x Stelmar Shipping 1.2 x Enterprise Products 12.6 x OMI 1.5 x Kinder Morgan En
Slide 42: Teekay Fleet Composition
Teekay Fleet Composition Teekay Shipping Corporation Fleet List as at Jan. 16, 2004 Number of Vessels Chartered-in Newbuildings Owned Vessels Vessels on Order Total Spot Tanker Fleet: VLCC's 1 2 - 3 Suezmaxes 1 5 - 6 Aframaxes 43 15 12 70 OBOs - 5 - 5 Large Product Tankers - 2 - 2 Small Product Tank
Slide 43: Appendix – EBITDA Reconciliation
Appendix – EBITDA Reconciliation EBITDA represents net income (loss) before interest expense, income tax expense, depreciation and amortization expense, minority interest, foreign exchange gains (losses) and gains (losses) on disposition of assets. EBITDA is included because such data is used by c