Teekay Corporation Ltd. · NYSE:TK
Teekay — Teekay Shipping — DnB Markets International Shipping Seminar 2003
23 slides from Teekay's conference presentation, Sep 25, 2003
Slide 1: DnB Markets International Shipping Seminar
Teekay Shipping Corporation DnB Markets International Shipping Seminar Oslo, Norway n September 25, 2003 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, inc luding statements regarding anticipated EBIT
Slide 3: Teekay Shipping Corporation
Teekay Shipping Corporation § The world’s leading marine oil transportation franchise, founded in 1973 § Global organization with 4,200 employees in 15 offices and onboard 147 vessels § Leading industry consolidator; more than tripled in size since 1998 § Growing cash generating power – mid-cycle EB
Slide 4: Teekay is an Integrated Logistics Provider
Teekay is an Integrated Logistics Provider 21 Ships Managed Ships Offshore Loading Logistics / Outsourcing 44 Ships COA Time Chartered-in Floating Storage Tailored mix of Ships fixed-rate and TEEKAY market related and Offtake Long-term Fixed- pricing 103 Ships * rate time charter Spot Charter / Conv
Slide 5: Growing Earnings Power
Growing Earnings Power 12.00 2004: 11.00 Spot Rate Increase EPS Increase Growing operating 10.00 $1,000 TCE/day $0.70/year leverage 9.00 8.00 Increasing Earnings Per Share ($) earnings power 7.00 6.00 5.00 4.00 Declining net income 3.00 break-even TCE rate 2.00 1.00 - $10,000 $12,000 $14,000 $16,000
Slide 6: Unique Blend of Financial Stability and Operating Leverage
Unique Blend of Financial Stability and Operating Leverage Teekay has two complementary businesses: 1. Growing Profitable Long-term Contract Business § Shuttle Tankers § Offshore Marine § Fixed Rate Conventional Tankers 2. Leading Spot Tanker Franchise Teekay Shipping Corporation 6
Slide 7: Predictable & Stable Earnings
Predictable & Stable Earnings EBITDA from Fixed-rate Long-term Contracts 300 280 260 240 220 200 ($) millions 180 160 140 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 * Shuttle Tankers Fixed Rate Conventional Tankers Offshore nAverage ROE > 20% nAverage contract length approximately 7 ye
Slide 8: 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 Teeka
Slide 9: 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& § Sophisticated technology Gas fields Refi
Slide 10: Significant Growth Potential in Offshore Oil
Significant Growth Potential in Offshore Oil § Rapid growth in deepwater exploration § Upside in core North Sea market § Improving extraction technology § Tax incentives § New discoveries § Upside in core Brazil market § Teekay will have 6 shuttle tankers on long term contract with Transpetro by mid
Slide 11: Unique Blend of Financial Stability and Operating Leverage
Unique Blend of Financial Stability and Operating Leverage Teekay has two complementary businesses: 1. Growing Long-term Contract Business 2. Leading Spot Tanker Franchise § Conventional § Lightering Teekay Shipping Corporation 11
Slide 12: Superior Cash Flow Generation from Spot Business
Superior Cash Flow Generation from Spot Business 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 $0.90 $4.40 $11.05 Spot Rate Increase EBITDA Increase $1,000 TCE/day $3
Slide 13: Pre-eminent Market Position
Pre-eminent Market Position § Largest Spot Operator of Medium-Sized Tankers § 60 owned vessels* § 30 chartered-in vessels* § 7 commercially managed vessels § Uniform, Interchangeable Fleet § Unique Global Organization § Biggest portfolio of strategic contracts with blue chip customers High Capacity
Slide 14: World's Largest Operator of Spot Aframax Tankers
World’s Largest Operator of Spot Aframax Tankers 80 70 60 # of Aframax tankers 50 40 30 20 10 0 Teekay MISC GenMar OSG Tanker Pacific Teekay Shipping Corporation 14
Slide 15: Profitable Throughout the Cycle
Profitable Throughout the Cycle Effect of Teekay’s Successful Growth Strategy 1998 1999 2001 Average Market Low Market High Market Teekay Actual Aframax TCE Rates $19,000/day $13,000/day $27,500/day Actual Net Income $71 Million ($20 Million) $337 Million Proforma Net Income* $207 Million $37 Millio
Slide 16: Teekay's Software Value
Teekay’s Software Value Global Business Development Team VALUE ADDED SERVICE OFFERINGS Project / Trusted Long Technical Term Financial Management and Operating Skills and Partner Expertise Teekay’s integrated structure creates value in excess of its hardware Teekay Shipping Corporation 16
Slide 17: How Should the Newly Transformed Teekay Be Valued?
HOW SHOULD THE NEWLY TRANSFORMED TEEKAY BE VALUED? Teekay Shipping Corporation 17
Slide 18: Valuation Method #1
Valuation Method #1 Multiple of Fixed-Rate EBITDA + Book Value of Spot Fleet In millions (except per share data) Balance Sheet data as at June 30, 2003 FIXED-RATE SEGMENT SPOT SEGMENT Fixed-rate segment EBITDA * 280 Book value of spot fleet + JVs 1,370 Multiple ** x9 Total fixed-rate inherent enterp
Slide 19: Share Value Matrix
Share Value Matrix Stock Price % of Spot Book Value Matrix 45% 50% 60% 70% 80% 90% 100% 110% 120% Fixed 8 37.36 39.07 42.49 45.92 49.35 52.77 56.20 59.62 63.05 Rate Segment 9 44.36 46.07 49.49 52.92 56.35 59.77 63.20 66.62 70.05 EBITDA Multiple 10 51.36 53.07 56.49 59.92 63.35 66.77 70.20 73.62 77.0
Slide 20: Valuation Method #2
Valuation Method #2 Multiple of Total EBITDA TEV / EBITDA 2004 Value Gap of 9 $36 per share 8 7.3x 7.1x 6.9x 6.7x 7 6.0x 5.8x 5.7x 6 5.1x 5.0x 5 4 3 2 1 0 I OM G Teekay multiple RM os ay ar * e OS ay tlin elm e ak ek TO tim ek based on 9x fixed- on Ts Te St Te ari Fr M rate EBITDA and ral ne 6x spot
Slide 21: Investment Highlights
Investment Highlights § The largest crude oil tanker company measured by market capitalization, enterprise value, and fleet size § An integrated logistics provider, not just an owner § Financial strength to pursue continued profitable growth § Profitable throughout the cycle; large base of long- ter
Slide 22: 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
Slide 23: 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
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