Teekay Corporation Ltd. · NYSE:TK
Teekay — Investor Presentation (May 2004)
24 slides from Teekay's investor presentation, May 13, 2004
Slide 1: Financial Strategy
Financial Strategy Peter Evensen, CFO May 13th 2004 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 Teekay’s growth p
Slide 3: 2003 Produced Record Cash Flow for Teekay
2003 Produced Record Cash Flow for Teekay Cash Flow from Vessel Operations $700 $600 $500 (in millions) $400 Record Cash Flow from $300 Vessel Operations $200 $100 Capital expenditures in $0 1999 2000 2001 2002 2003 2003 of approx. $1.1 billion Net Income $400 Maintained liquidity and $350 fle
Slide 4: Q1 2004: A Record Quarter for Teekay
Q1 2004: A Record Quarter for Teekay Quarterly Cash Flow from Vessel Operations $300 Record earnings of $189 million or $4.37 per share $200 Record cash flow from vessel (in millions) operations from both segments: $100 Spot Tanker segment: $192 million Fixed-rate segment: $70.3 million $0 Q
Slide 5: Financial Strategy Supports Corporate Strategy
Financial Strategy Supports Corporate Strategy Corporate Strategy Financial Strategy To be the Premier Maintain financial Provider of Marine strength and Services to the Oil flexibility and Gas Industry Reduce Weighted Average Cost of Capital Disciplined growth strategy Access to a broad r
Slide 6: Financial Strength and Flexibility
Financial Strength and Flexibility Strong Balance Sheet Liquidity Pro Forma for Tapias acquisition ($ millions) at Mar. 31, 2004 ($ millions) Cash 304 Total Revolving 872 Credit Facilities Debt 2,350 Undrawn Revolving 482 Net Debt 2,046 Credit Facilities Shareholders Equity 1,921 Cash 304 Total Capi
Slide 7: Total Fixed Charges Covered by Fixed Rate Cash Flow Alone
Total Fixed Charges Covered by Fixed Rate Cash Flow Alone Fixed Charges Coverage from Fixed-rate Segment in 2005 in $ millions Projected 2005 CFVO - Fixed - rate Segment Only $ 400.0 * (A) Projected 2005 Fixed Charges Net Interest Payments $ 120.0 * Principal Payments $ 210.0 * Drydock Costs $ 20.0
Slide 8: Lowering Weighted Average Cost of Capital
Lowering Weighted Average Cost of Capital Kexim Fixed-rate loans 4-5% Bank Loan Spreads Under LIBOR + 100 bps Financing of Fixed-Rate Contract Business Up to 100% gearing Non-recourse Long duration financings Teekay Shipping Corporation: The Marine Midstream Company 8
Slide 9: Interest Rate Exposure
Interest Rate Exposure $1,500 Swaps Contracts with Interest Rate Adjustments Premium Equity Participating Security Units Total Fixed Rate Debt $1,250 $1,000 $750 $500 $250 $0 2004 2005 2006 2007 2008 2009 2010 2011 Teekay Shipping Corporation: The Marine Midstream Company 9
Slide 10: Disciplined Growth Strategy
Disciplined Growth Strategy Spot Fixed-Rate Medium-Term Long-Term Conventional Conventional Liquefied Natural Typical Tankers Tankers Gas Carriers Shipping Shuttle Tankers Assets Offshore Installations Target Leverage 0-40% up to 75% up to 90% Range mid-cycle IRR > WACC IRR > WACC IRR > Critical WAC
Slide 11: Tapias: Low-Risk Long Term Contracts
Tapias: Low-Risk Long Term Contracts Contracts include cost escalations, “locking in” our cash flows Loss of hire insurance in place on contracts Interest Rates: hedged to match duration of charter terms or; “flow through” to the charter party Long repayment profile of principal matches
Slide 12: Teekay Fixed-rate Segment Returns Analysis
Teekay Fixed-rate Segment Returns Analysis Teekay’s existing and Q1 2004 projected fixed-rate Capital ROIC contract fleet is Invested projected to have a Spot Tanker $1.15 billion 57% cash-on-cash return Segment of over 13% Fixed-rate $1.84 billion 8% Segment Fixed-rate Segment ROIC Increasing 16.0%
Slide 13: Financial Strategy for Cash Generated
Financial Strategy for Cash Generated 1. Delever the Balance Sheet 2. Fund profitable growth Net debt to capitalization Maintain sufficient liquidity to take expected to rise to approx. 48% advantage of growth with inclusion of Tapias debt opportunities Over $500 million in newbuild Acquisit
Slide 14: Acquisitions De-levered Quickly
Acquisitions De-levered Quickly 60.0% Acquired Acquired Navion Bona $800 m $450 m Acquired Tapias 50.0% $810 m Acquired UNS $780 m 40.0% Issued Convertible Pref. Shares 30.0% 20.0% Mar. 04 Q1 '99 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02
Slide 15: Broad Access to Capital Sources
Broad Access to Capital Sources Bank Loans Export Credit Agencies Kexim Bond Market Sale / Leasebacks KG’s Shipowners Equity and Equity-linked In-chartering Teekay Shipping Corporation: The Marine Midstream Company 15
Slide 16: Teekay Valuation Metric
Teekay Valuation Metric In millions (except per share data) Balance Sheet data as at March, 2004 (adj. for Tapias) FIXED-RATE SEGMENT SPOT SEGMENT LNG SEGMENT Fixed-rate segment CFVO * 315 Book value of spot fleet + JVs 1,294 LNG fixed-rate CFVO 80 Multiple ** x 10 Multiple *** x 1.5 Multiple **** x
Slide 17: 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 9 53.72 56.71 59.70 62.68 65.67 68.66 71.65 74.64 Rate Segment 10 60.99 63.98 66.97 69.96 72.95 75.93 78.92 81.91 CFVO Multiple 11 68.27 71.26 74.25 77.23 80.22 83.21 86.20 89.19 Value G
Slide 18: P/E Multiple Comparisons
P/E Multiple Comparisons 30x 2004 Sector Price to Earnings at Mar. 2004 During early 1998, a period of record earnings for the sector, 25x the average P/E was 12x 20x 15x 10x 5x x Large Offshore Onshore Oil Service Geophysical Production and Average Offshore Offshore Maritime Teekay Diversified Dril
Slide 19: P/Cflow Multiple Comparisons
P/Cflow Multiple Comparisons 2004 Sector Price to Cashflow at Mar. 2004 18x 16x 14x 12x 10x 8x 6x 4x 2x x Large Offshore Oil Service Onshore Average Production and Geophysical Offshore Offshore Maritime Teekay Diversified Drilling Equipment Drilling Well Services Services Construction Transportation
Slide 20: Peer Comparisons
Peer Comparisons 4,500 3,000 Total E nterprise V alue Market C apitaliz ation (May 10, 2004) $3,938 $2,672 4,000 $3,443 2,500 3,500 $1,968 3,000 2,000 2,500 1,500 2,000 $1,258 $1,602 1,000 $928 1,500 $1,288 $1,265 $1,213 $810 $729 $918 1,000 $798 $432 $430 500 500 0 0 T eekay F rontline O SG O MI G
Slide 21: Peer Comparisons Continued
Peer Comparisons Continued 10 8 2004 Price to Earnings 7.2x EV / EBITDA - 2004E 8.8x 7.0x 9 6.8x 7 8 7.4x 6.0x 5.9x 7.2x 6 5.5x 6.7x 7 6.1x 4.8x 5.7x 5 6 4.4x 4.8x 4 5 4.2x 4 3 3 2 2 1 1 0 0 TORM Stelmar Teekay Tsakos OMI Frontline Genmar OSG OSG TORM Stelmar Teekay OMI Tsakos Genmar Frontline 2.5 1
Slide 22: Significant Operating Leverage
Significant Operating Leverage $10.00 2004: $9.00 Spot Rate increase $1,000 TCE/day EPS Increase above $13,000 / day ~ $0.16 - $0.17 / qtr $8.00 $7.00 Quarterly Earnings Per Share ($) $6.00 $5.00 Actual Q1 2004 EPS $4.00 EPS using Clarkson Q2, 2004 $3.00 quarter to date TCE Quarterly for 2004 $2.00
Slide 23: Investment Highlights
Investment Highlights An integrated supplier of Midstream oil services, not just a ship owner Recent acquisition provides attractive entry into high growth LNG shipping sector Financial strength to pursue continued profitable growth Positioned to benefit from strong tanker market Profitabl
Slide 24: Appendix – Reconciliation of Cash flow from vessel operations
Appendix – Reconciliation of Cash flow from vessel operations Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense. Cash flow from operations is included because such data is used by certain investors to measure a company's financia