Teekay Tankers Ltd. · NYSE:TNK
Teekay Tankers — Investor Day (September 2014)
32 slides from Teekay Tankers's investor day presentation, Sep 30, 2014
Slide 1: Teekay Tankers Investor Day
TEEKAY TEEKAY TEEKAY TANKERS INVESTOR DAY September 30, 2014
Slide 2: Kevin Mackay, President & CEO
KEVIN MACKAY President & CEO, Teekay Tankers Photo credit: Alexandr Lyakhov Australian Spirit 2
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation 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. All statements included in or accompanying t
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Leading Strong Trusted Stable Market Operating Operating Financial Position Leverage Franchise Platform One of the world’s Every $5,000 Over 40 years of $250 million largest tanker increase in spot leading commercial of liquidity and owners and rates increases and technical pro
Slide 5: Teekay Tankers at a Glance
TEEKAY TANKERS AT A Largest Operator Of Mid-Sized Tankers GLANCE 82 64 58 2000 52 48 30 30 Seafarers Teekay Sovcomflot Heidmar AET Navig8 Minerva Thenamaris Tankers 82 Vessels 700M barrels 125+ Commercially Cargo Lifted in 2013 Global Customers Managed $7.37 per share Dividends Paid Since IPO 5
Slide 6: Business Overview
BUSINESS OVERVIEW 6
Slide 7: 40 Years of Operational Excellence
40 YEARS OF OPERATIONAL EXCELLENCE Commitment to high HSEQ standards is key to winning and maintaining business and is the essence of the Teekay brand. HSEQ KPIs (Per Million Man Hours) 1.5 3 1 2 TRCF LTIF 0.5 1 0 0 2011 2012 2013 TRCF: Total Recordable Case Frequency LTIF: Loss Time Injury Frequenc
Slide 8: Global and Diverse Customer Network
Global and Diverse Customer Network • Customer relationships spanning 40 years based on our reputation for reliability and operational excellence • Provides access to diverse cargo streams and agility to respond to changing market dynamics 8
Slide 9: World-Class Operating Franchise
World-Class Operating Franchise Broad commercial footprint • Over 80 vessels under commercial management • Variety of contracts provide access to global trade volumes • Commercial tonnage pools consistently outperform peers and indices Technical management leverages power of One Teekay • Over 2,000
Slide 10: Well-Positioned for Tanker Market Recovery
Well-Positioned for Tanker Market Recovery • Transitioned portfolio and added in-chartered vessels for higher spot exposure • Increased liquidity by monetizing investment in term loans ($154m) • Purchased a 50% interest in Teekay’s conventional tanker franchise • Co-created Tanker Investments Limite
Slide 11: Strong Operating Leverage
Strong Operating Leverage • For every $5,000 per day increase in spot rates, TNK’s CAD* increases by $0.45 per share • Low current CAD break-even rate of ~$10,500 per day • A 10% increase in vessel values increases net asset value by ~$0.90 per share TNK CAD* Per Share Spot Rate Sensitivity $2.50 $2
Slide 12: Tanker Market Overview
TANKER MARKET OVERVIEW 12
Slide 13: 2009 – 2013: Depressed Tanker Market
2009 – 2013: Depressed Tanker Market Tanker rates during 2009 - 2013 were well below the long-term average Global GDP Growth Aframax Spot Rates Suezmax Spot Rates 70 7% 60 6% $ 000s / day % GDP Growth 50 5% 40 4% 30 3% 20 2% 10 1% 0 0% -10 -1% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 14: 2014 Earnings Indicate Rising Market
2014 Earnings Indicate Rising Market Mid-sized crude tankers outpacing recovery in other segments 2014 Change Over 2013 Earnings (Jan-Sep) VLCC $5,600 Suezmax $7,900 Aframax $7,500 LR2 $2,200 MR -$3,500 -4,000 -2,000 0 2,000 4,000 6,000 8,000 TCE ($ / day) Source: 90% of Clarksons Reported Rates 14
Slide 15: Flows of Crude are Moving West to East
Flows of Crude are Moving West to East 15
Slide 16: Crude Supply Increasing West of Suez
Crude Supply Increasing West of Suez Change 2014 - 2019 West of Suez East of Suez 2.7 1.1 0.6 0.3 0.2 0.2 0.2 -0.2 North Latin OPEC Africa FSU OPEC Asia Australia America America West East Source: IEA 16
Slide 17: Crude Supply Increasing West of Suez
Crude Supply Increasing West of Suez Change 2014 - 2019 West of Suez East of Suez +3.8 mb/d +0.6 mb/d Source: IEA 17
Slide 18: Refining Capacity Increasing East of Suez
Refining Capacity Increasing East of Suez Change 2014 - 2019 West of Suez East of Suez 2.4 2.2 0.8 0.7 0.7 0.6 0.3 0.2 -0.6 0.1 -0.4 North Latin FSU Africa Europe China Middle India Other FSU OECD America America East Asia Asia Source: IEA 18
Slide 19: Refining Capacity Increasing East of Suez
Refining Capacity Increasing East of Suez Change 2014 - 2019 West of Suez East of Suez +5.5 +1.4 mb/d mb/d Source: IEA 19
Slide 20: Suezmax Benchmark Routes are Changing
Suezmax Benchmark Routes are Changing WAF- Euro +74% WAF - US -70% MEG - Asia +280% WAF - Asia +75% Source: SSY * Spot routes with greatest tonne-mile in given period 20
Slide 21: Aframaxes Remain the Workhorse of the Fleet
Aframaxes Remain the Workhorse of the Fleet Existing Trade Routes Potential New Routes Source: SSY * Spot routes with greatest tonne-mile in given period 21
Slide 22: Changes in Long-Haul Refined Product Trade
Changes in Long-Haul Refined Product Trade To Asia / Pacific Refined product surplus Refined product deficit Source: IEA 22
Slide 23: Mid-Sized Tanker Fleet Age Profile
Mid-Sized Tanker Fleet Age Profile Mid-sized tankers aged 15+ years exceed orderbook Aframax Suezmax Aframax 20+ Years 19 Years 16-18 Years 15 Years 14 Years Orderbook 160 90 160 140 80 140 15 70 18 15 120 120 60 Number of Vessels Number of Vessels 100 9 35 35 100 50 80 80 40 30 60 43 43 60 30 50 40
Slide 24: Shrinking Mid-Sized Fleet
Shrinking Mid-Sized Fleet Declining mid-size crude tanker fleet driving a sustained market recovery Suezmax Fleet Growth Aframax Fleet Growth Scrapping Forecast Scrapped Delivery Forecast Delivered Net Fleet Growth (% of Fleet) 50 10% 50 5% 40 40 8% 30 3% 30 6% Number of Vessels 20 Number of Vessels
Slide 25: Higher Fleet Utilization Beginning in 2014
Higher Fleet Utilization Beginning in 2014 Driver for increased rates and asset prices Tanker Demand Growth Tanker Supply Growth Fleet Utilization 92% 8% 90% 7% Supply/Demamd Growth 6% Fleet Utilization 88% 5% 86% 4% 84% 3% 82% 2% 80% 1% 78% 0% 2014E 2015E 2016E 2008 2009 2010 2011 2012 2013 Source:
Slide 26: Asset Values Remain Below 10-Year Averages
Asset Values Remain Below 10-Year Averages Suezmax Asset Values Aframax Asset Values 90 105 NB 5y-old NB 5y-old 30% 80 95 21% 9% 10% 70 85 Upside to 10y avg. Upside to 10y avg. $ millions $ millions 60 75 50 65 40 55 45 30 35 20 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2
Slide 27: Strategic Focus
STRATEGIC FOCUS 27
Slide 28: Teekay Tankers Strategy for Growth
Teekay Tankers Strategy for Growth Invest and operate throughout the tanker cycle using a variety of levers • Actively pursue in-charters while managing out-charter portfolio • Utilize TNK’s operating platform to pursue consolidation and investment opportunities • Invest in newbuildings • Increase f
Slide 29: Positioning TNK for Greater Upside to Tanker Market Recovery
Positioning TNK for Greater Upside to Tanker Market Recovery Rebalancing our portfolio mix • Continue to reduce our fixed-rate cover to increase spot fleet ○ 75% of fleet will trade in spot market over the next 12 months • Further grow our spot fleet capacity through in-charters ○ Recent in-charters
Slide 30: The Competitive Landscape Has Changed
The Competitive Landscape Has Changed Since the Financial Crisis: • Several competitors have restructured or exited • Non-traditional financial backers have entered the market with shorter investment horizons • Many new entrants do not have a full operating platform Presents TNK with opportunities f
Slide 31: TNK: Strong Platform for Consolidation
TNK: Strong Platform for Consolidation • Deep customer relationships • 40 years of Operational • Growing commercial Excellence management platform • Size to deliver reliable • Variety of cargo contracts and flexible operations • Global footprint and • Ability to maximize experience vessel performanc
Slide 32: Bringing Energy To
BRINGING ENERGY TO