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¨
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
|
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Name of each exchange on which registered
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Class A common stock, par value of $0.01 per share
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New York Stock Exchange
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U.S. GAAP
ý
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International Financial Reporting Standards as issued by the International Accounting Standards Board
¨
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Other
¨
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PAGE
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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Item 5.
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Item 6.
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Item 7.
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Item 8.
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Item 9.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16A.
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Item 16B.
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Item 16C.
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Item 16D.
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Item 16E.
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Item 16F.
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Item 16G.
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Item 16H.
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•
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our future financial condition, results of operations and future revenues, expenses and capital expenditures, and our expected financial flexibility and ability to fund capital expenditures and pursue acquisitions and other expansion opportunities, including vessel acquisitions;
|
•
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our dividend policy and ability to pay dividends on shares of our common stock;
|
•
|
the crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, changes in the world tanker fleet, changes in global oil and refined products demand and tanker demand, the rate of global oil production (including the effect of OPEC supply cuts), and changes in long-haul crude tanker movements, trading patterns, tanker fleet utilization and spot tanker rates;
|
•
|
anticipated levels of tanker newbuilding orders and deliveries and rates of tanker scrapping or use of tankers for floating storage;
|
•
|
our compliance with, and the effect on our business and operating results of, covenants under our term loans, credit facilities and obligations related to capital leases;
|
•
|
our expectation regarding the ability of Teekay Corporation to comply with its covenants under our loan arrangements which Teekay Corporation is a guarantor, including our expectation that Teekay Corporation will refinance its senior notes due in 2020;
|
•
|
future oil prices, production and refinery capacity;
|
•
|
the effect of global oil prices, including the potential impact on oil stockpiling, refinery throughput, bunker fuel prices, and oil futures markets;
|
•
|
our expectations about the availability of vessels to purchase, the expected costs and time it may take to acquire vessels or construct and deliver newbuildings;
|
•
|
the ability to leverage Teekay Corporation’s relationships and reputation in the shipping industry;
|
•
|
the expected benefits of participation in revenue sharing arrangements (or
RSAs
) and purchasing alliances;
|
•
|
the effectiveness of our chartering strategy in capturing upside opportunities and reducing downside risks, including our ability to take advantage of any tanker market recovery;
|
•
|
the expected benefits of our ship-to-ship transfer business, including, among others, the ability of the business to provide stable cash flow to help us partially manage the cyclicality of the tanker market, and our ability to grow our presence in, and take advantage of the expected increased volumes moving in and out of, the U.S. Gulf, and to increase our market share in the ship-to-ship global support business;
|
•
|
the expected benefits of our acquisitions of vessels or businesses;
|
•
|
our expectation that our U.S. Gulf lightering business will complement our spot trading strategy in the Caribbean to the U.S. Gulf market, allowing us to better optimize the deployment of the fleet that we trade in this region through better scheduling flexibility and utilization;
|
•
|
the ability to maximize the use of vessels, including the redeployment of vessels no longer under time charters;
|
•
|
our expectation regarding our vessels’ ability to perform to specifications and maintain their hire rates;
|
•
|
operating expenses, availability of crew, number of off-hire days, dry-docking requirements and insurance costs;
|
•
|
the impact and expected cost of, and our ability to comply with, new and existing governmental regulations and maritime self-regulatory organization standards applicable to our business, including the expected cost to install ballast water treatment systems on our tankers in compliance with International Maritime Organization (or
IMO
) proposals and the effect of IMO 2020;
|
•
|
our ability to obtain all permits, licenses and certificates material to the conduct of our operations;
|
•
|
the impact on us and the shipping industry of environmental liabilities, including climate change;
|
•
|
expenses under service agreements with other affiliates of Teekay Corporation;
|
•
|
the anticipated taxation of our company and of dividends to our shareholders;
|
•
|
our expectations as to the useful vessel lives and any impairment of our vessels or of goodwill;
|
•
|
our customers’ increasing emphasis on environmental and safety concerns;
|
•
|
meeting our going concern requirements and our liquidity needs, including anticipated funds and sources of financing for liquidity and capital expenditure needs and the sufficiency of cash flows, and our estimation that we will have sufficient liquidity for at least a one-year period;
|
•
|
our ability to refinance existing debt obligations, to raise additional debt and capital to fund capital expenditures and negotiate extensions or redeployments of existing assets;
|
•
|
the uncertainty of the completion of the February 2019 sale-leaseback financing transaction for two of our Suezmax tankers, the timing of the completion and the expected impact on our liquidity position;
|
•
|
our expectations and hedging activities relating to foreign exchange, interest rate and spot market risks;
|
•
|
the ability of counterparties to our derivative and other contracts to fulfill their contractual obligations;
|
•
|
the delivery timing of new charter-in vessels;
|
•
|
our position that we are not a passive foreign investment company; and
|
•
|
our business strategy and other plans and objectives for future operations.
|
Item 1.
|
Identity of Directors, Senior Management and Advisors
|
Item 2.
|
Offer Statistics and Expected Timetable
|
Item 3.
|
Key Information
|
•
|
We previously presented the net allocation for its vessels participating in RSAs as net pool revenues. We have determined that we are the principal in voyages our vessels perform that are included in the RSAs. As such, the revenue from those voyages is presented in voyage charter revenues and the difference between this amount and our net allocation from the RSA is presented as voyage expenses. This had the effect of increasing voyage charter revenues and voyage expenses for the year ended
December 31, 2018
by
$292.6 million
. There was
no
cumulative impact to opening equity as at January 1, 2018.
|
•
|
We previously presented all accrued revenue as a component of accounts receivable. We have determined that if the right to such consideration is conditioned upon something other than the passage of time, such accrued revenue should be presented apart from accounts receivable. This had the effect of increasing other current assets and decreasing accounts receivable by
$17.9 million
at
December 31, 2018
.
|
Cash, cash equivalents and restricted cash provided by (used for):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating cash flows
|
(7,263
|
)
|
|
80,489
|
|
|
206,546
|
|
|
201,821
|
|
|
15,881
|
|
|||||
Financing cash flows
|
(3,448
|
)
|
|
(178,466
|
)
|
|
(290,853
|
)
|
|
647,678
|
|
|
6,150
|
|
|||||
Investing cash flows
|
(4,492
|
)
|
|
78,780
|
|
|
21,824
|
|
|
880,011
|
|
|
116,300
|
|
|||||
Number of outstanding shares of common stock at the end of the year
|
268,558,556
|
|
|
268,201,638
|
|
|
159,304,136
|
|
|
156,030,618
|
|
|
112,064,036
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
(8)
|
395,187
|
|
|
353,810
|
|
|
496,939
|
|
|
515,954
|
|
|
266,225
|
|
|||||
EBITDA
(9)
|
133,152
|
|
|
78,175
|
|
|
209,150
|
|
|
278,059
|
|
|
132,604
|
|
|||||
Adjusted EBITDA
(9)
|
129,559
|
|
|
125,664
|
|
|
240,198
|
|
|
286,504
|
|
|
121,836
|
|
|||||
Capital expenditures
|
|
|
|
|
|
|
|
|
|||||||||||
Expenditures for vessels and equipment
(10)
|
(5,827
|
)
|
|
(4,732
|
)
|
|
(9,226
|
)
|
|
(848,229
|
)
|
|
(2,084
|
)
|
|||||
Expenditures for dry docking
|
(27,896
|
)
|
|
(16,239
|
)
|
|
(9,340
|
)
|
|
(39,617
|
)
|
|
(17,072
|
)
|
|||||
Fleet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Average number of tankers
(11)
|
|
|
|
|
|
|
|
|
|
||||||||||
Suezmax
|
30.0
|
|
|
21.1
|
|
|
22.0
|
|
|
13.4
|
|
|
10.0
|
|
|||||
Aframax
|
19.2
|
|
|
17.3
|
|
|
21.8
|
|
|
22.0
|
|
|
15.4
|
|
|||||
Product
|
9.0
|
|
|
7.5
|
|
|
9.2
|
|
|
12.2
|
|
|
7.6
|
|
|||||
VLCC
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
0.8
|
|
(1)
|
The comparative periods do not include the impact of the January 1, 2018 adoption of ASU 2014-09,
Revenue from Contracts with Customers
(or
ASU 2014-09
). Refer to Item 18: Financial Statements: Note 2 Recent Accounting Pronouncements.
|
(2)
|
Voyage expenses are all expenses unique to a particular voyage, including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Voyage expenses also include certain costs associated with full service lightering activities, which include: short-term in-charter expenses, bunker fuel expenses and other port expenses. The comparative periods do not include the impact of the January 1, 2018 adoption of ASU 2014-09. Refer to Item 18: Financial Statements: Note 2 - Recent Accounting Pronouncements.
|
(3)
|
Vessel operating expenses include crewing, repairs and maintenance, insurance, stores, lube oils, and communication expenses among others.
|
(4)
|
Time-charter hire expense includes vessel operating lease expense incurred to charter-in vessels.
|
(5)
|
(Loss) earnings per share is determined by dividing (a) net (loss) income after (deducting) adding the amount of net income (loss) attributable to the Entities under Common Control that were purchased solely with cash by (b) the weighted-average number of shares outstanding during the applicable period and the equivalent shares outstanding that are attributable to the Entities under Common Control. The calculation of weighted-average number of shares includes the total Class A and total Class B shares outstanding during the applicable period. The computation of diluted earnings per share assumes the exercise of all dilutive stock options and restricted stock units using the treasury stock method. The computation of diluted loss per share does not assume such exercises.
|
(6)
|
Vessels and equipment and vessels related to capital leases consists of vessels, at cost less accumulated depreciation.
|
(7)
|
Total debt includes the current and long-term portion of debt, current and long-term portion of obligations related to capital leases and long-term amounts due to affiliates.
|
(8)
|
Net revenues is a non-GAAP financial measure. Consistent with general practice in the shipping industry, we use “net revenues” (defined as revenues less voyage expenses) as a measure of equating revenues generated from voyage charters to revenues generated from time charters, which assists us in making operating decisions about the deployment of our vessels and their performance. Under time charters, the charterer pays the voyage expenses, whereas under voyage charters, the ship-owner pays these expenses. Some voyage expenses are fixed, and the remainder can be estimated. If we, as the ship owner, pay the voyage expenses, we typically pass the approximate amount of these expenses on to our customers by charging higher rates under the contract to them. As a result, although revenues from different types of contracts may vary, the net revenues are comparable across the different types of contracts. We principally use net revenues because it provides more meaningful information to us than revenues, the most directly comparable GAAP financial measure. Net revenues are also widely used by investors and analysts in the shipping industry for comparing financial performance between companies and to industry averages. The following table reconciles net revenues with revenues:
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Revenues
|
$
|
755,763
|
|
|
$
|
431,178
|
|
|
$
|
550,543
|
|
|
$
|
534,681
|
|
|
$
|
267,075
|
|
Interest income from investment in term loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,118
|
|
|||||
Voyage expenses
|
(360,576
|
)
|
|
(77,368
|
)
|
|
(53,604
|
)
|
|
(18,727
|
)
|
|
(9,968
|
)
|
|||||
Net revenues
|
$
|
395,187
|
|
|
$
|
353,810
|
|
|
$
|
496,939
|
|
|
$
|
515,954
|
|
|
$
|
266,225
|
|
(9)
|
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA before foreign exchange gain (loss), (loss) gain on sale of vessels, realized (gains) losses on interest rate swaps, unrealized gains on derivative instruments, dilution gain on share issuance by the equity-accounted for investment, fair value adjustment of the equity-accounted for investment and share of the above items in non-consolidated equity-accounted for investments. EBITDA and Adjusted EBITDA are used as supplemental financial performance measures by management and by external users of our financial statements, such as investors. EBITDA and Adjusted EBITDA assist our management and investors by increasing the comparability of our fundamental performance from period to period and against the fundamental performance of other companies in our industry that provide EBITDA or Adjusted EBITDA-based information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest expense, taxes, depreciation or amortization (or other items in determining Adjusted EBITDA), which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA and Adjusted EBITDA benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength and health in order to assess whether to continue to hold our equity.
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||
Reconciliation of "EBITDA" and "Adjusted EBITDA” to “Net (loss) income”
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net (loss) income
|
$
|
(52,548
|
)
|
|
$
|
(58,023
|
)
|
|
$
|
67,823
|
|
|
$
|
183,626
|
|
|
$
|
68,906
|
|
|
Depreciation and amortization
|
118,514
|
|
|
100,481
|
|
|
104,149
|
|
|
73,760
|
|
|
53,292
|
|
||||||
Interest expense, net of interest income
|
57,774
|
|
|
30,387
|
|
|
29,667
|
|
|
17,267
|
|
|
8,429
|
|
||||||
Freight tax and other tax expenses
|
9,412
|
|
|
5,330
|
|
|
7,511
|
|
|
3,406
|
|
|
1,977
|
|
||||||
EBITDA
|
$
|
133,152
|
|
|
$
|
78,175
|
|
|
$
|
209,150
|
|
|
$
|
278,059
|
|
|
$
|
132,604
|
|
|
Foreign exchange (gain) loss
(i)
|
(3,133
|
)
|
|
(79
|
)
|
|
(1,413
|
)
|
—
|
|
(613
|
)
|
|
292
|
|
|||||
(Gain) loss on sale of vessels
|
(170
|
)
|
|
12,984
|
|
|
20,594
|
|
|
(771
|
)
|
|
(9,955
|
)
|
||||||
Realized (gain) loss on interest rate swaps
|
(2,316
|
)
|
|
994
|
|
|
12,797
|
|
|
9,790
|
|
|
9,993
|
|
||||||
Unrealized gain on derivative instruments
|
(579
|
)
|
|
(937
|
)
|
|
(9,679
|
)
|
|
(8,193
|
)
|
|
(11,676
|
)
|
||||||
Fair value on initial recognition of stock purchase warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,420
|
)
|
||||||
Dilution gain on equity-accounted for investment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,054
|
)
|
||||||
Fair value adjustment of TIL
|
—
|
|
|
26,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Adjustments related to equity-accounted for investments
(ii)
|
2,605
|
|
|
7,794
|
|
|
8,749
|
|
|
8,232
|
|
|
6,052
|
|
||||||
Adjusted EBITDA
|
$
|
129,559
|
|
|
$
|
125,664
|
|
|
$
|
240,198
|
|
|
$
|
286,504
|
|
|
$
|
121,836
|
|
(i)
|
Foreign exchange (gain) loss includes an unrealized gain of
$3.2 million
in 2018 (2017 - loss of
$0.2 million
, 2016 - loss of
$46.0 thousand
, 2015 - gain of
$1.0 thousand
, and 2014 - loss of
$0.2 million
).
|
(ii)
|
The following table reflects certain non-GAAP adjustments to the results of our equity-accounted for investments. The adjusted results should not be considered as an alternative to any measure of financial performance presented in accordance with GAAP. Adjustments to equity investments include some, but not all, items that affect equity income and these measures and adjustments may vary among other companies and may not be comparable to adjustments to similarly titled measures of other companies. It should be noted that this measure includes the Adjusted EBITDA from our equity-accounted for investments. We do not have control over the operations, nor do we have any legal claim to the revenue and expenses of our equity-accounted for investments.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
1,745
|
|
|
5,250
|
|
|
5,866
|
|
|
4,517
|
|
|
2,979
|
|
|||||
Interest expense, net of interest income
|
876
|
|
|
2,562
|
|
|
2,868
|
|
|
2,763
|
|
|
1,446
|
|
|||||
Income tax (recovery) expense
|
—
|
|
|
(1
|
)
|
|
(107
|
)
|
|
602
|
|
|
1,359
|
|
|||||
Realized and unrealized (gain) loss on derivative instruments
|
(16
|
)
|
|
(14
|
)
|
|
115
|
|
|
344
|
|
|
416
|
|
|||||
Foreign exchange (gain) loss
|
—
|
|
|
(3
|
)
|
|
7
|
|
|
6
|
|
|
3
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|||||
Adjustments related to equity-accounted for investments
|
$
|
2,605
|
|
|
$
|
7,794
|
|
|
$
|
8,749
|
|
|
$
|
8,232
|
|
|
$
|
6,052
|
|
(10)
|
Excludes vessels purchased in connection with our acquisition of Tanker Investments Ltd. (or
TIL
). Please read Item 18. Financial Statements
:
Note 23 - Acquisition of Tanker Investments Ltd.
|
(11)
|
Average number of tankers consists of the average number of vessels that were in our possession during a period, including time-chartered in vessels, the vessel owned by our High-Q Investment Ltd. (or
High-Q
) joint venture with Wah Kwong Maritime Transport Holdings Ltd. and vessels of the Entities under Common Control.
|
•
|
restructuring our debt;
|
•
|
seeking additional debt or equity capital;
|
•
|
selling additional assets or equity interest in certain assets or joint venture;
|
•
|
further reducing cash dividends;
|
•
|
reducing, delaying or cancelling business activities, acquisitions, investments or capital expenditures; or
|
•
|
seeking bankruptcy protection.
|
•
|
environmental concerns and regulations;
|
•
|
the number of newbuilding deliveries;
|
•
|
the scrapping rate of older vessels;
|
•
|
conversion of tankers to other uses; and
|
•
|
the number of vessels that are out of service.
|
•
|
supply of oil and oil products;
|
•
|
demand for oil and oil products;
|
•
|
regional availability of refining capacity;
|
•
|
global and regional economic and political conditions;
|
•
|
the distance oil and oil products are to be moved by sea; and
|
•
|
changes in seaborne and other transportation patterns.
|
•
|
a reduction in exploration for or development of new oil fields or energy projects, or the delay or cancellation of existing projects as energy companies lower their capital expenditures budgets, which may reduce our growth opportunities;
|
•
|
potential lower demand for tankers, which may reduce available charter rates and revenue to us upon chartering or rechartering of our vessels;
|
•
|
customers failing to extend or renew contracts upon expiration;
|
•
|
the inability or refusal of customers to make charter payments to us due to financial constraints or otherwise; or
|
•
|
declines in vessel values, which may result in losses to us upon vessel sales or impairment charges against our earnings.
|
•
|
identify suitable tankers or shipping companies for acquisitions or joint ventures;
|
•
|
integrate successfully any acquired tankers or businesses with our existing operations; and
|
•
|
obtain required financing for our existing and any new operations.
|
•
|
fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;
|
•
|
be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet;
|
•
|
decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;
|
•
|
significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;
|
•
|
incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired; or
|
•
|
incur other significant charges, such as impairment of intangible assets, asset devaluation or restructuring charges.
|
•
|
incur additional indebtedness and guarantee indebtedness;
|
•
|
pay dividends or make other distributions or repurchase or redeem our capital stock;
|
•
|
prepay certain debt;
|
•
|
issue certain preferred shares or similar equity securities;
|
•
|
make loans and investments;
|
•
|
enter into a new line of business;
|
•
|
incur or permit certain liens to exist;
|
•
|
enter into transactions with affiliates;
|
•
|
create unrestricted subsidiaries;
|
•
|
transfer, sell, convey or otherwise dispose of assets;
|
•
|
make certain acquisitions and investments;
|
•
|
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
|
•
|
consolidate, merge or sell all or substantially all of our assets.
|
•
|
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms;
|
•
|
we will need a substantial portion of our cash flow to make principal and interest payments on our debt and lease payments on our obligations related to capital leases, reducing the funds that would otherwise be available for operations, business opportunities and dividends to our shareholders;
|
•
|
our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our industry or the economy generally; and
|
•
|
our debt level may limit our flexibility in responding to changing business and economic conditions.
|
•
|
marine disasters;
|
•
|
bad weather or natural disasters;
|
•
|
mechanical or electrical failures;
|
•
|
grounding, capsizing, fire, explosions and collisions;
|
•
|
piracy (hijacking and kidnapping);
|
•
|
cyber attack;
|
•
|
human error; and
|
•
|
war and terrorism.
|
•
|
death or injury to persons, loss of property or damage to the environment and natural resources;
|
•
|
delays in the delivery of cargo;
|
•
|
loss of revenues from charters;
|
•
|
liabilities or costs to recover any spilled oil or other petroleum products and to restore the eco-system affected by the spill;
|
•
|
governmental fines, penalties or restrictions on conducting business;
|
•
|
higher insurance rates; and
|
•
|
damage to our reputation and customer relationships generally.
|
•
|
maximize revenues of our tankers included in the RSAs;
|
•
|
acquire new tankers or obtain new time charters;
|
•
|
renew existing time charters upon their expiration;
|
•
|
successfully interact with shipyards during periods of shipyard construction constraints;
|
•
|
obtain financing on commercially acceptable terms; or
|
•
|
maintain satisfactory relationships with suppliers and other third parties.
|
•
|
our Chief Executive Officer and Chief Financial Officer and four of our current directors or expected nominees for election as directors at our 2019 annual meeting of shareholders also serve as officers or directors of Teekay Corporation, and we have limited their fiduciary duties regarding corporate opportunities that may be attractive to both Teekay Corporation and us;
|
•
|
our Manager, a subsidiary of Teekay Corporation, advises our Board of Directors about the amount and timing of asset purchases and sales, capital expenditures, borrowings, issuances of additional common stock and cash reserves, each of which can affect our ability to pay dividends to our shareholders and the amount of the performance fee payable to our Manager under the Management Agreement;
|
•
|
our executive officers and those of our Manager do not spend all their time on matters related to our business; and
|
•
|
our Manager will advise us of costs incurred by it and its affiliates that it believes are reimbursable by us.
|
Item 4.
|
Information on the Company
|
A.
|
History and Development of the Company
|
B.
|
Business Overview
|
|
Owned and Leased Vessels
|
|
Chartered-in
Vessels
|
|
Total
|
|||
Fixed-rate:
|
|
|
|
|
|
|||
Suezmax Tanker
|
1
|
|
|
—
|
|
|
1
|
|
Aframax Tanker
|
1
|
|
|
—
|
|
|
1
|
|
Total Fixed-Rate Fleet
(1)
|
2
|
|
|
—
|
|
|
2
|
|
Spot-rate:
|
|
|
|
|
|
|||
Suezmax Tankers
|
29
|
|
|
—
|
|
|
29
|
|
Aframax Tankers
|
16
|
|
|
3
|
|
|
19
|
|
Long Range 2 Product Tankers
|
9
|
|
|
—
|
|
|
9
|
|
VLCC Tanker
(2)
|
1
|
|
|
—
|
|
|
1
|
|
Total Spot Fleet
(3)
|
55
|
|
|
3
|
|
|
58
|
|
Total Conventional Fleet
|
57
|
|
|
3
|
|
|
60
|
|
Ship-to-Ship Support Vessels
|
3
|
|
|
3
|
|
|
6
|
|
Total Teekay Tankers Fleet
|
60
|
|
|
6
|
|
|
66
|
|
(1)
|
Both time-charter out contracts are scheduled to expire in 2019.
|
(2)
|
We own one VLCC through a 50/50 joint venture with Wah Kwong Maritime Transport Holdings Limited (please refer to Item 18 - Financial Statements: Note 7 - Investments in and advances to Equity-Accounted for Investments).
|
(3)
|
A total of 47 of our owned and leased vessels operated in the spot market in RSAs, which are managed by the Pool Managers. As at December 31, 2018, the RSAs in which we participate were comprised of a total of 33 Suezmax tankers, 35 Aframax tankers, and ten LR2 product tankers (of which eight LR2 tankers were cross-trading in the Aframax RSA), including vessels owned by other members of the RSAs.
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Ashkini Spirit
|
165,200
|
|
|
2003
|
|
RSA
|
|
—
|
|
—
|
Aspen Spirit
|
156,800
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Athens Spirit
|
158,500
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Atlanta Spirit
|
158,700
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Baker Spirit
|
156,900
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Barcelona Spirit
|
158,500
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Beijing Spirit
|
156,500
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Cascade Spirit
|
156,900
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Copper Spirit
|
156,800
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Dilong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Godavari Spirit
|
159,100
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
Iskmati Spirit
|
165,300
|
|
|
2003
|
|
RSA
|
|
—
|
|
—
|
Jiaolong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Kaveri Spirit
|
159,100
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
London Spirit
|
158,500
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Los Angeles Spirit
|
159,200
|
|
|
2007
|
|
RSA
|
|
—
|
|
—
|
Montreal Spirit
|
150,000
|
|
|
2006
|
|
Time charter
|
|
$17,500
|
|
Aug-19
|
Moscow Spirit
|
156,500
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Narmada Spirit
|
159,200
|
|
|
2003
|
|
RSA
|
|
—
|
|
—
|
Pinnacle Spirit
|
160,400
|
|
|
2008
|
|
RSA
|
|
—
|
|
—
|
Rio Spirit
|
158,400
|
|
|
2013
|
|
RSA
|
|
—
|
|
—
|
Seoul Spirit
|
160,000
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Shenlong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Summit Spirit
|
160,500
|
|
|
2008
|
|
RSA
|
|
—
|
|
—
|
Sydney Spirit
|
158,500
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Tahoe Spirit
|
156,900
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Tianlong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Tokyo Spirit
|
150,000
|
|
|
2006
|
|
RSA
|
|
—
|
|
—
|
Vail Spirit
|
157,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Zenith Spirit
|
160,500
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Total Capacity
|
4,749,900
|
|
|
|
|
|
|
|
|
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Americas Spirit
|
111,900
|
|
|
2003
|
|
Spot
|
|
—
|
|
—
|
Australian Spirit
|
111,900
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
Axel Spirit
|
115,400
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
Blackcomb Spirit
|
109,000
|
|
|
2010
|
|
Spot
|
|
—
|
|
—
|
Emerald Spirit
|
109,100
|
|
|
2009
|
|
Spot
|
|
—
|
|
—
|
Erik Spirit
|
115,500
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Esther Spirit
(1)
|
115,400
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
Everest Spirit
(1)
|
115,000
|
|
|
2004
|
|
Time charter
|
|
$25,000
|
|
Apr-19
|
Explorer Spirit
|
105,800
|
|
|
2008
|
|
Spot
|
|
—
|
|
—
|
Garibaldi Spirit
|
109,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Helga Spirit
|
115,500
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Matterhorn Spirit
|
114,800
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Navigator Spirit
|
105,800
|
|
|
2008
|
|
Spot
|
|
—
|
|
—
|
Peak Spirit
|
104,600
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Tarbet Spirit
|
107,500
|
|
|
2009
|
|
Spot
|
|
—
|
|
—
|
Whistler Spirit
|
109,100
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Yamato Spirit
|
107,600
|
|
|
2008
|
|
RSA
|
|
—
|
|
—
|
Total Capacity
|
1,882,900
|
|
|
|
|
|
|
|
|
|
(1)
|
The Aframax tanker
Esther Spirit
replaced the
Everest Spirit
in January 2019 for the remaining period of the time-charter out contract.
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Donegal Spirit
|
105,600
|
|
|
2006
|
|
RSA
|
|
—
|
|
—
|
Galway Spirit
|
105,600
|
|
|
2007
|
|
RSA
|
|
—
|
|
—
|
Hovden Spirit
|
105,300
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Leyte Spirit
|
109,700
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Limerick Spirit
|
105,600
|
|
|
2007
|
|
RSA
|
|
—
|
|
—
|
Luzon Spirit
|
109,600
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Sebarok Spirit
|
109,600
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Seletar Spirit
|
109,000
|
|
|
2010
|
|
Spot
|
|
—
|
|
—
|
Trysil Spirit
|
105,300
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Total Capacity
|
965,300
|
|
|
|
|
|
|
|
|
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Hong Kong Spirit
(1)
|
319,000
|
|
|
2013
|
|
Pool
|
|
—
|
|
—
|
(1)
|
The VLCC vessel,
Hong Kong Spirit
, is owned through a 50/50 joint venture and is employed in a spot market pool managed by a third party.
|
•
|
Expand our fleet through accretive acquisitions.
Since our initial public offering, we have purchased 21 conventional tankers from Teekay Corporation, 18 conventional tankers resulting from the merger with TIL, 17 conventional tankers from third parties and two conventional tankers from TOO. In the future, we anticipate growing our fleet primarily through acquisitions of tankers from third parties, by securing additional in-chartered vessels and by ordering newbuildings.
|
•
|
Tactically manage our mix of spot, charter, lightering, and LNG terminal management and consultancy contracts.
We employ a chartering strategy that seeks to capture upside opportunities in the spot market while using fixed-rate contracts to reduce downside risks. We believe that our experience operating through cycles in the tanker spot market will assist us in employing this strategy and seeking to maximize operating results. In addition, we expect that the July 2015 acquisition of TMS will provide stable cash flow, to partially offset volatility in the tanker market, through global ship-to-ship support services, full service lightering, and LNG terminal management and consultancy services.
|
•
|
Increase cash flow by participating in RSAs.
We believe that the cash flow we derive over time from operating a significant number of our vessels in the RSAs together with third party vessels exceeds the amount we would otherwise derive by operating these vessels outside of the RSAs due to higher vessel utilization and daily revenues. We also derive RSA and vessel management income through the operations of the Pool Managers. We seek to increase this fee income by increasing the number of vessels participating in the applicable RSAs.
|
•
|
Provide superior customer service by maintaining high reliability, safety, environmental and quality standards.
We believe that energy companies and oil traders seek transportation partners that have a reputation for high reliability, safety, environmental and quality standards. We leverage our reputation and operational expertise to further expand these relationships with consistent delivery of superior customer service through our Manager.
|
•
|
vessel maintenance (including repairs and dry docking) and certification;
|
•
|
crewing by competent seafarers;
|
•
|
purchasing of stores, bunkers and spare parts;
|
•
|
shipyard supervision;
|
•
|
insurance; and
|
•
|
financial management services.
|
•
|
our vessels and operations adhere to our operating standards;
|
•
|
the structural integrity of the vessel is being maintained;
|
•
|
machinery and equipment is being maintained to give reliable service;
|
•
|
we are optimizing performance in terms of speed and fuel consumption; and
|
•
|
our vessels' appearance supports our brand and meets customer expectations.
|
•
|
natural resources damages and the related assessment costs;
|
•
|
real and personal property damages;
|
•
|
net loss of taxes, royalties, rents, fees and other lost revenues;
|
•
|
lost profits or impairment of earning capacity due to property or natural resources damage;
|
•
|
net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and
|
•
|
loss of subsistence use of natural resources.
|
•
|
address a “worst case” scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a “worst case discharge”;
|
•
|
describe crew training and drills; and
|
•
|
identify a qualified individual with full authority to implement removal actions.
|
C.
|
Organizational Structure
|
D.
|
Property, Plant and Equipment
|
E.
|
Taxation of the Company
|
1.
|
United States Taxation
|
2.
|
Marshall Islands Taxation
|
3.
|
Other Taxation
|
Item 4A.
|
Unresolved Staff Comments
|
Item 5.
|
Operating and Financial Review and Prospects
|
•
|
Voyage charters are charters for shorter intervals that are priced on a current or “spot” market rate then adjusted for pool participation based on predetermined criteria, if applicable; and
|
•
|
Time charters, whereby vessels are chartered to customers for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates or current market rates.
|
(1)
|
“Hire” rate refers to the basic payment from the charterer for the use of the vessel.
|
(2)
|
Voyage expenses are all expenses unique to a particular voyage, including any fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions.
|
(3)
|
Vessel operating expenses include crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses.
|
(4)
|
“Off-hire” refers to the time a vessel is not available for service.
|
•
|
Adoption of Accounting Standards Update 2014-09.
In May 2014, the Financial Accounting Standards Board (or
FASB
) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (or
ASU 2014-09
) (please read "Item 18 – Financial Statements: Note 2 – Recent Accounting Pronouncements"). We have adopted ASU 2014-09 as a cumulative-effect adjustment as of January 1, 2018, and as a result, comparative 2017 and 2016 periods do not reflect the effect of this new standard. The following differences had a material effect on revenues reported in the year ended December 31, 2018:
|
◦
|
We previously presented the net allocation for its vessels participating in RSAs as net pool revenues. We have determined that we are the principal in voyages our vessels perform that are included in the RSAs. As such, the revenue from those voyages is presented in voyage charter revenues and the difference between this amount and our net allocation from the RSA is presented as voyage expenses. This had the effect of increasing voyage charter revenues and voyage expenses for the year ended
December 31, 2018
by
$292.6 million
. There was
no
cumulative impact to opening equity as at January 1, 2018.
|
◦
|
We previously presented all accrued revenue as a component of accounts receivable. We have determined that if the right to such consideration is conditioned upon something other than the passage of time, such accrued revenue should be presented apart from accounts receivable. This had the effect of increasing other current assets and decreasing accounts receivable by
$17.9 million
at
December 31, 2018
.
|
•
|
Our financial results reflect the results of TTOL for all periods TTOL was under common control.
Our May 2017 acquisition from Teekay of the remaining 50% interest in TTOL was deemed to be a business acquisition between entities under common control. Accordingly, we have accounted for this transaction in a manner similar to the pooling of interests method. Under this method of accounting our consolidated financial statements, for periods prior to the respective date the controlling interest in TTOL was actually acquired by us, is retroactively adjusted to include the results TTOL. The period retroactively adjusted includes all periods that we and TTOL, as applicable, were both under the common control of Teekay and had begun operations. All financial or operational information contained herein for the periods prior to the respective date the controlling interests in TTOL was actually acquired by us, and during which we and TTOL were under common control of Teekay, are retroactively adjusted to include the results of TTOL and are also referred to as the “
Entities under Common Control”
.
|
•
|
Our voyage revenues are affected by cyclicality in the tanker markets.
The cyclical nature of the tanker industry causes significant increases or decreases in the revenue we earn from our vessels, particularly those we trade in the spot market.
|
•
|
Tanker rates also fluctuate based on seasonal variations in demand
. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and increased refinery maintenance. In addition, unpredictable weather patterns during the winter months tend to disrupt vessel scheduling, which historically has increased oil price volatility and oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended December 31 and March 31.
|
•
|
Our U.S. Gulf lightering business competes with alternative methods of delivering crude oil to ports, which may limit our earnings in this area of our operations.
Our U.S. Gulf lightering business faces competition from alternative methods of delivering
|
•
|
Vessel operating and other costs are facing industry-wide cost pressures
.
The shipping industry continues to forecast a shortfall in qualified personnel, although weak tanker markets may ease officer shortages. We will continue to focus on our manning and training strategies to meet future needs. In addition, factors such as client demands for enhanced training and physical equipment, pressure on commodity and raw material prices, as well as changes in regulatory requirements could also contribute to operating expenditure increases. We continue to take action aimed at improving operational efficiencies, and to temper the effect of inflationary and other price escalations; however, increases to operational costs may well occur in the future.
|
•
|
The amount and timing of dry dockings of our vessels can significantly affect our revenues between periods
. Our vessels are normally off hire when they are being dry docked. We had eight vessels drydock in
2018
, compared to seven vessels which dry docked in
2017
and two vessels which dry docked in
2016
. The total number of off-hire days relating to dry dockings during the years ended December 31,
2018
,
2017
and
2016
were 295, 221, and 82, respectively. For our current fleet, there are 17 owned and leased vessels scheduled to dry dock in 2019.
|
•
|
an increase in income from operations of $16.9 million primarily due to lower operating losses in 2018 as a result of the sales of the
Ganges Spirit, Yamuna Spirit, Kyeema Spirit, Kareela Spirit
and
Kanata Spirit
in 2017
;
|
•
|
an increase in income from operations of $3.9 million primarily due to our full service lightering (or
FSL
) operations as a result of higher realized FSL spot rates and changes in the utilization of dedicated FSL vessels;
|
•
|
an increase in income from operations of $3.3 million resulting from lower operating expenses primarily due to the scope and timing of repairs and planned maintenance activities in 2018 as compared to 2017; and
|
•
|
an increase in income from operations of $2.0 million due to the redeliveries to their owners of various in-chartered tankers whose earnings were lower than their time-charter hire expenses;
|
•
|
a net decrease in income from operations of $20.9 million primarily due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates.
|
(1)
|
The comparative period does not include the impact of the January 1, 2018 adoption of ASU 2014-09. Please refer to Item 18 - Financial Statements: Note 2 - Recent Accounting Pronouncements.
|
(2)
|
Includes
$12.5 million
and
$10.5 million
of voyage expenses for the years ended
December 31, 2018
and 2017, respectively, relating to lightering support services which the STS transfer segment provided to the conventional tanker segment for FSL operations.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2018
|
||||||||||||||||
|
Revenues
(1)(2)
|
Voyage Expenses
(1)(3)
|
Adjustments
(4)
|
TCE Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(4)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$359,711
|
|
|
($202,639
|
)
|
|
$1,144
|
|
|
$158,216
|
|
9,795
|
|
|
$16,154
|
|
Voyage-charter contracts - Aframax
(5)
|
|
$236,137
|
|
|
($148,629
|
)
|
|
$915
|
|
|
$88,423
|
|
5,515
|
|
|
$16,034
|
|
Voyage-charter contracts - LR2
|
|
$71,175
|
|
|
($36,172
|
)
|
|
$154
|
|
|
$35,157
|
|
2,488
|
|
|
$14,131
|
|
Time-charter out contracts - Suezmax
|
|
$16,899
|
|
|
($606
|
)
|
|
$204
|
|
|
$16,497
|
|
819
|
|
|
$20,144
|
|
Time-charter out contracts - Aframax
|
|
$35,602
|
|
|
($566
|
)
|
|
$470
|
|
|
$35,506
|
|
1,674
|
|
|
$21,216
|
|
Time-charter out contracts - LR2
|
|
$7,357
|
|
|
($94
|
)
|
|
$4
|
|
|
$7,267
|
|
420
|
|
|
$17,287
|
|
Total
|
|
$726,881
|
|
|
($388,706
|
)
|
|
$2,891
|
|
|
$341,066
|
|
20,711
|
|
|
$16,469
|
|
(1)
|
The impact of our January 1, 2018 adoption of ASU 2014-09 increased revenues and voyage expenses by $292.5 million for 2018. Please refer to Item 1 – Financial Statements: Note 2 – Recent Accounting Pronouncements for further details.
|
(2)
|
Excludes $5.9 million of commissions and management fees earned from TTOL from the management of external vessels trading in RSAs and $2.9 million of bunker commissions earned.
|
(3)
|
Includes $12.5 million of inter-segment voyage expenses relating to lightering support services provided by the STS transfer segment and $15.6 million of voyage expenses incurred by the vessels that were internally chartered from the RSA to perform full service lightering.
|
(4)
|
Average TCE per Revenue Day excludes off-hire bunker and other expenses (income) included as part of the adjustments.
|
(5)
|
Includes $104.9 million of revenues and $80.6 million of voyage expenses related to the full service lightering business, which includes $12.5 million of inter-segment voyage expenses referenced in note 3 relating to the full service lightering business by the STS transfer segment.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
(2)
|
Adjustments
(3)
|
TCE Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(3)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$98,550
|
|
|
($5,618
|
)
|
|
$525
|
|
|
$93,457
|
|
5,621
|
|
|
$16,627
|
|
Voyage-charter contracts - Aframax
(4)
|
|
$141,763
|
|
|
($80,220
|
)
|
|
$727
|
|
|
$62,270
|
|
3,956
|
|
|
$15,739
|
|
Voyage-charter contracts - LR2
|
|
$25,353
|
|
|
($141
|
)
|
|
$306
|
|
|
$25,518
|
|
1,771
|
|
|
$14,407
|
|
Voyage-charter contracts - MR
|
|
$11
|
|
—
|
|
|
($10
|
)
|
|
$1
|
|
—
|
|
—
|
|
||
Time-charter out contracts - Suezmax
|
|
$45,745
|
|
|
($932
|
)
|
|
$18
|
|
|
$44,831
|
|
1,853
|
|
|
$24,198
|
|
Time-charter out contracts - Aframax
|
|
$50,964
|
|
|
($686
|
)
|
|
$151
|
|
|
$50,429
|
|
2,283
|
|
|
$22,085
|
|
Time-charter out contracts - LR2
|
|
$15,391
|
|
|
($265
|
)
|
|
($13
|
)
|
|
$15,113
|
|
837
|
|
|
$18,063
|
|
Total
|
|
$377,777
|
|
|
($87,862
|
)
|
|
$1,704
|
|
|
$291,619
|
|
16,321
|
|
|
$17,867
|
|
(1)
|
Excludes $10.4 million of commissions and management fees earned by TTOL from the management of external vessels trading in the RSAs, $2.6 million of bunker commissions earned and $0.6 million of revenue earned from a profit-sharing agreement.
|
(2)
|
Includes $10.5 million of inter-segment voyage expenses relating to lightering support services provided by the STS transfer segment.
|
(3)
|
Average TCE per Revenue Day excludes off-hire bunker and other expenses (income) included as part of the adjustments.
|
(4)
|
Includes $92.8 million of revenues and $72.4 million of voyage expenses related to the full service lightering business, which include $10.5 million of inter-segment voyage expenses referenced in note 2 relating to the full service lightering business by the STS transfer segment.
|
•
|
a net increase of $67.4 million primarily due to the addition of 18 vessels that we acquired as part of our merger with Tanker Investments Ltd. (or
TIL
), which was completed in the fourth quarter of 2017, and the addition of five Aframax in-chartered tankers that were delivered to us during 2018, partially offset by the redeliveries of various in-chartered tankers to their owners at various times during 2017 and the sales of one Suezmax tanker and three Aframax tankers in 2017;
|
•
|
an increase of $3.9 million due to an increase in the number of voyages related to our full service lightering operations in 2018 compared to 2017; and
|
•
|
a net increase of $0.9 million due to a higher average realized spot tanker rates earned by our Aframax tankers, partially offset by lower average realized spot tanker rates earned by our Suezmax and LR2 tankers in 2018 compared to 2017;
|
•
|
a net decrease of $19.9 million due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates in 2018 compared to 2017;
|
•
|
a decrease of $4.5 million due to lower commissions and management fees earned from TTOL from the management of fewer external vessels trading in the RSAs in 2018 compared to 2017; and
|
•
|
a net decrease of $4.0 million due to more off-hire days, higher off-hire bunker and other expenses in 2018 compared to 2017.
|
•
|
an increase of $50.7 million primarily due to the addition of 18 vessels that we acquired in the merger with TIL in November 2017;
|
•
|
a decrease of $7.6 million primarily resulting from the sales of three Aframax tankers and two Suezmax tankers during 2017;
|
•
|
a decrease of $3.1 million due to the scope of repairs and planned maintenance activities in 2018 as compared to 2017; and
|
•
|
a decrease of $1.6 million primarily due to lower port expenses and insurance premiums paid in 2018 as compared to 2017.
|
•
|
an increase of $4.0 million due to higher administrative, strategic management, and other fees incurred relating to changes in levels of corporate support due to the increase in fleet size resulting from the merger with TIL in November 2017;
|
•
|
a net increase of $1.9 million due to higher corporate expenses incurred during 2018 primarily as a result of professional fees related to management initiatives and higher director liability insurance costs incurred in 2018 as compared to 2017, partially offset by lower legal fees incurred related to the STX arbitration in 2018 as compared to 2017; and
|
•
|
an increase of $0.5 million primarily due to an increase in fees paid to our Board of Directors.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2018
|
|
2017
|
||
High-Q Joint Venture
|
1,220
|
|
|
3,071
|
|
Tanker Investments Ltd.
|
—
|
|
|
(28,443
|
)
|
Gemini Tankers L.L.C.
|
—
|
|
|
2
|
|
Total equity income (loss)
|
1,220
|
|
|
(25,370
|
)
|
•
|
a decrease in equity losses of $28.4 million primarily due to a $26.7 million net write-down of our investment in TIL to its fair market value in 2017 and lower equity losses in 2018, both resulting from the TIL merger;
|
•
|
a decrease in equity income of $1.9 million
primarily resulting from lower earnings recognized in 2018 due to the dry dock of the joint venture's VLCC, which was completed in June 2018, and the expiry of the time-charter out contract for the VLCC in May 2018, which subsequently traded on spot voyages at lower average realized rates.
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars, except percentages)
|
2018
|
|
2017
|
|
% Change
|
|||
Revenues
(1)
|
48,175
|
|
|
50,422
|
|
|
(4
|
)%
|
Less: voyage expenses
|
—
|
|
|
—
|
|
|
—
|
%
|
Net revenues
|
48,175
|
|
|
50,422
|
|
|
(4
|
)%
|
Vessel operating expenses
|
(34,853
|
)
|
|
(39,649
|
)
|
|
(12
|
)%
|
Time-charter hire expense
|
(6,001
|
)
|
|
(4,995
|
)
|
|
20
|
%
|
Depreciation and amortization
|
(4,452
|
)
|
|
(5,048
|
)
|
|
(12
|
)%
|
General and administrative expenses
|
(3,294
|
)
|
|
(3,340
|
)
|
|
(1
|
)%
|
Gain on sale of vessels
|
170
|
|
|
50
|
|
|
240
|
%
|
Restructuring charges
|
(1,043
|
)
|
|
—
|
|
|
100
|
%
|
Loss from vessel operations
|
(1,298
|
)
|
|
(2,560
|
)
|
|
(49
|
)%
|
(1)
|
Includes
$12.5 million
of revenues for the year ended
December 31, 2018
(2017 -
$10.5 million
) relating to lightering support services which the STS transfer segment provided to the conventional tanker segment for FSL operations.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2018
|
|
2017
|
||
Interest expense
|
(58,653
|
)
|
|
(31,294
|
)
|
Interest income
|
879
|
|
|
907
|
|
Realized and unrealized gain on derivative instruments
|
3,032
|
|
|
1,319
|
|
Freight tax and other expenses
|
(9,412
|
)
|
|
(5,330
|
)
|
Other income
|
3,182
|
|
|
329
|
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars, except percentages)
|
2017
(1)
|
|
2016
(1)
|
|
% Change
|
|||
Revenues
|
391,267
|
|
|
512,608
|
|
|
(24
|
)%
|
Less: voyage expenses
(2)
|
(87,879
|
)
|
|
(56,805
|
)
|
|
55
|
%
|
Net revenues
|
303,388
|
|
|
455,803
|
|
|
(33
|
)%
|
Vessel operating expenses
|
(135,740
|
)
|
|
(150,100
|
)
|
|
(10
|
)%
|
Time-charter hire expense
|
(25,666
|
)
|
|
(57,368
|
)
|
|
(55
|
)%
|
Depreciation and amortization
|
(95,433
|
)
|
|
(99,024
|
)
|
|
(4
|
)%
|
General and administrative expenses
|
(29,539
|
)
|
|
(29,432
|
)
|
|
—
|
%
|
Loss on sale of vessels
|
(13,034
|
)
|
|
(20,926
|
)
|
|
(38
|
)%
|
Income from vessel operations
|
3,976
|
|
|
98,953
|
|
|
(96
|
)%
|
Equity (loss) income
|
(25,370
|
)
|
|
7,680
|
|
|
(430
|
)%
|
(1)
|
The comparative periods do not include the impact of the January 1, 2018 adoption of ASU 2014-09. Refer to Item 18 - Financial Statements: Note 2 - Recent Accounting Pronouncements.
|
(2)
|
Includes $10.5 million and $3.2 million of voyage expenses for the year ended December 31, 2017 and 2016, respectively, relating to lightering support services which the STS transfer segment provided to the conventional tanker segment for FSL operations.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
(2)
|
Adjustments
(3)
|
TCE Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(3)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$98,550
|
|
|
($5,618
|
)
|
|
$525
|
|
|
$93,457
|
|
5,621
|
|
|
$16,627
|
|
Voyage-charter contracts - Aframax
(4)
|
|
$141,763
|
|
|
($80,220
|
)
|
|
$727
|
|
|
$62,270
|
|
3,956
|
|
|
$15,739
|
|
Voyage-charter contracts - LR2
|
|
$25,353
|
|
|
($141
|
)
|
|
$306
|
|
|
$25,518
|
|
1,771
|
|
|
$14,407
|
|
Voyage-charter contracts - MR
|
|
$11
|
|
—
|
|
|
($10
|
)
|
|
$1
|
|
—
|
|
—
|
|
||
Time-charter out contracts - Suezmax
|
|
$45,745
|
|
|
($932
|
)
|
|
$18
|
|
|
$44,831
|
|
1,853
|
|
|
$24,198
|
|
Time-charter out contracts - Aframax
|
|
$50,964
|
|
|
($686
|
)
|
|
$151
|
|
|
$50,429
|
|
2,283
|
|
|
$22,085
|
|
Time-charter out contracts - LR2
|
|
$15,391
|
|
|
($265
|
)
|
|
($13
|
)
|
|
$15,113
|
|
837
|
|
|
$18,063
|
|
Total
|
|
$377,777
|
|
|
($87,862
|
)
|
|
$1,704
|
|
|
$291,619
|
|
16,321
|
|
|
$17,867
|
|
(1)
|
Excludes $10.4 million of commissions and management fees earned from TTOL from the management of external vessels trading in the RSAs, $2.6 million of bunker commissions earned and $0.6 million of in-process revenue contract revenue.
|
(2)
|
Includes $10.5 million of inter-segment voyage expenses relating to lightering support services provided by the STS transfer segment to the FSL business.
|
(3)
|
Average TCE per Revenue Day excludes off-hire bunker and other expenses included as part of the adjustments.
|
(4)
|
Includes $92.8 million of revenues and $72.4 million of voyage expenses related to the FSL business, which includes $10.5 million of inter-segment voyage expenses referenced in note 2 above.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2016
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
(2)
|
Adjustments
(3)
|
TCE Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(2)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$184,965
|
|
|
($5,068
|
)
|
|
($59
|
)
|
|
$179,838
|
|
6,705
|
|
|
$26,820
|
|
Voyage-charter contracts - Aframax
(4)
|
|
$158,272
|
|
|
($50,185
|
)
|
|
$392
|
|
|
$108,479
|
|
5,145
|
|
|
$21,086
|
|
Voyage-charter contracts - LR2
|
|
$48,599
|
|
|
$53
|
|
|
($36
|
)
|
|
$48,616
|
|
2,572
|
|
|
$18,903
|
|
Voyage-charter contracts - MR
|
|
$8,305
|
|
|
($30
|
)
|
|
$302
|
|
|
$8,577
|
|
535
|
|
|
$16,035
|
|
Time-charter out contracts - Suezmax
|
|
$30,597
|
|
|
($731
|
)
|
|
$99
|
|
|
$29,965
|
|
1,029
|
|
|
$29,124
|
|
Time-charter out contracts - Aframax
|
|
$54,593
|
|
|
($338
|
)
|
|
$40
|
|
|
$54,295
|
|
2,327
|
|
|
$23,332
|
|
Time-charter out contracts - LR2
|
|
$12,201
|
|
|
($273
|
)
|
|
($30
|
)
|
|
$11,898
|
|
526
|
|
|
$22,629
|
|
Total
|
|
$497,532
|
|
|
($56,572
|
)
|
|
$708
|
|
|
$441,668
|
|
18,839
|
|
|
$23,445
|
|
(1)
|
Excludes $11.2 million of commissions and management fees earned by TTOL from the management of external vessels trading in the RSAs, $2.6 million of bunker commissions earned and $1.2 million of in-process revenue contract revenue.
|
(2)
|
Includes $3.2 million of inter-segment voyage expenses relating to lightering support services provided by the STS transfer segment to the FSL business and excludes $0.3 million of voyage expenses incurred by TTOL.
|
(3)
|
Average TCE per Revenue Day excludes $0.7 million in pool management fees and commissions payable for commercial management for our vessels, off-hire bunker and other expenses, all of which are included as part of the adjustments.
|
(4)
|
Includes $48.2 million of revenues and $34.8 million of voyage expenses related to the FSL business, which includes $3.2 million of inter-segment voyage expenses referenced in note 2, above.
|
•
|
a decrease of $66.5 million due to lower average realized spot tanker rates earned by our Suezmax, Aframax and LR2 tankers in 2017 compared to 2016;
|
•
|
net decreases of $59.3 million primarily due to the redeliveries of various in-charters to their owners at various times during 2016 and 2017 and the sale of two Suezmax product tankers, three Aframax tankers and two MR product tankers in 2016 and 2017, partially offset by the addition of 18 vessels that we acquired as part of the TIL merger on November 27, 2017 and three Aframax in-charters that were delivered to us during 2016 and 2017;
|
•
|
a net decrease of $29.3 million due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates and more vessels that transitioned from voyage charter to full service lightering employment in 2017 compared to 2016;
|
•
|
a decrease of $1.2 million due to in-process revenue contract amortization that we recognized in revenue in the first quarter of 2016;
|
•
|
a net decrease of $1.4 million due to more off-hire days, higher off-hire bunker and other expenses in 2017 compared to 2016;
|
•
|
a decrease of $0.9 million for 2017 due to one additional calendar day in 2016 as it was a leap year; and
|
•
|
a decrease of $0.9 million due to lower commissions and management fees earned from TTOL from the management of external vessels trading in the RSAs and bunker commissions received in 2017 compared to 2016;
|
•
|
an increase of $7.0 million due to an increase in the number of voyages related to our full service lightering operations in 2017 compared to 2016.
|
•
|
a net decrease of $13.5 million primarily resulting from the sales of two MR tankers in the second half of 2016, of two Suezmax tankers in the first quarter of 2017, of one Aframax tanker in second quarter of 2017 and of two Aframax tankers in the second half of 2017;
|
•
|
a decrease of $3.0 million due to the scope of repairs and planned maintenance activities in 2017 as compared to 2016;
|
•
|
a decrease of $2.9 million due to higher transition costs incurred in 2016 compared to 2017 directly relating to 12 Suezmax tankers, which were acquired in the latter part of 2015; and
|
•
|
a decrease of $0.8 million primarily due to costs related to the change from external to in-house ship management and lower insurance premiums paid during the year;
|
•
|
an increase of $5.4 million primarily resulting from the acquisition of 10 Suezmax tankers, six Aframax tankers and two LR2 product tankers which were acquired as a result of the merger with TIL in November 2017; and
|
•
|
an increase of $0.3 million due to higher fleet overhead costs, primarily resulting from the timing of seafarer training, crew agency fees and other initiatives.
|
•
|
an increase of $2.3 million due to higher administrative, strategic management, and other fees incurred due primarily to differences in annual bonuses and financial system changes;
|
•
|
a decrease of $1.3 million due to higher corporate expenses incurred during 2016 primarily as a result of legal expenses related to our vessel construction and option agreements with STX of South Korea; and
|
•
|
a decrease of $0.6 million primarily due to decreased stock-based compensation granted to our Board of Directors, one of our officers and certain employees of Teekay subsidiaries that provided services to us.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
||
High-Q Joint Venture
|
3,071
|
|
|
4,359
|
|
Tanker Investments Ltd.
|
(28,443
|
)
|
|
3,515
|
|
Gemini Tankers L.L.C.
|
2
|
|
|
(194
|
)
|
Total equity (loss) income
|
(25,370
|
)
|
|
7,680
|
|
•
|
a decrease of $31.9 million primarily due to a $26.7 million net write-down of our investment in TIL to its fair market value in June 2017 and prior to the TIL merger completion and lower equity earnings from TIL resulting from overall lower realized average spot rates earned in 2017 compared to 2016; and
|
•
|
a decrease of $1.3 million due to lower equity earnings from our High-Q Investment Ltd (or High-Q) joint venture primarily resulting from profit share recognized in the second quarter of 2016 as VLCC rates averaged above certain thresholds, triggering a profit sharing with the customer.
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars, except percentages)
|
2017
|
|
2016
|
|
% Change
|
|||
Revenues
(1)
|
50,422
|
|
|
41,136
|
|
|
23
|
%
|
Less: voyage expenses
|
—
|
|
|
—
|
|
|
—
|
%
|
Net revenues
|
50,422
|
|
|
41,136
|
|
|
23
|
%
|
Vessel operating expenses
|
(39,649
|
)
|
|
(32,498
|
)
|
|
22
|
%
|
Time-charter hire expense
|
(4,995
|
)
|
|
(2,279
|
)
|
|
119
|
%
|
Depreciation and amortization
|
(5,048
|
)
|
|
(5,125
|
)
|
|
(2
|
)%
|
General and administrative expenses
|
(3,340
|
)
|
|
(3,767
|
)
|
|
(11
|
)%
|
Gain on sale of vessels
|
50
|
|
|
332
|
|
|
(85
|
)%
|
Loss from vessel operations
|
(2,560
|
)
|
|
(2,201
|
)
|
|
16
|
%
|
(1)
|
Includes
$10.5 million
of revenues for the year ended
December 31, 2017
(
2016
-
$3.2 million
) relating to lightering support services which the STS transfer segment provided to the conventional tanker segment for FSL operations.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
||
Interest expense
|
(31,294
|
)
|
|
(29,784
|
)
|
Interest income
|
907
|
|
|
117
|
|
Realized and unrealized gain (loss) on derivative instruments
|
1,319
|
|
|
(964
|
)
|
Freight tax and other expenses
|
(5,330
|
)
|
|
(7,511
|
)
|
Other income
|
329
|
|
|
1,533
|
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars)
|
2018
|
|
2017
|
|
2016
|
|||
Net cash flow (used for) provided by operating activities
|
(7,263
|
)
|
|
80,489
|
|
|
206,546
|
|
Net cash flow used for financing activities
|
(3,448
|
)
|
|
(178,466
|
)
|
|
(290,853
|
)
|
Net cash flow (used for) provided by investing activities
|
(4,492
|
)
|
|
78,780
|
|
|
21,824
|
|
•
|
a net decrease of $61.5 million in operating cash flows in 2018 due to the timing of the settlement of operating assets and liabilities, primarily related to the timing of settlements of our pool receivables and due to affiliates accounts compared to the prior year;
|
•
|
a decrease of $13.9 million in operating cash flows in 2018 relating to higher expenditures for dry-docking activities. In 2018, we dry docked five Suezmax tankers and three Aframax tankers, whereas in 2017, we dry docked three Suezmax tankers and four Aframax tankers; and
|
•
|
a net decrease of $12.3 million in operating earnings in 2018 primarily due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates, partially offset by lower operating losses in 2018 as a result of the vessel sales in 2017.
|
•
|
a net decrease of $97.2 million in operating earnings in 2017 primarily as a result of lower average realized TCE rates, the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates and more vessels which transitioned from voyage charter to full service lightering employment in 2017 compared to 2016;
|
•
|
a net decrease of $23.4 million in operating cash flows in 2017 due to the timing of the settlement of operating assets and liabilities, primarily resulting from lower settlements of our pool receivables due to changes in the average realized TCE rates in 2017 compared to the prior year and higher settlements of our due to affiliates accounts, partially offset by the timing of our 2016 first quarter dividends which were declared at the end of 2015; and
|
•
|
a decrease of $5.5 million in operating cash flows in 2017 relating to higher expenditures for dry-docking activities. In 2017, we dry docked three Suezmax tankers and four Aframax tankers, whereas in 2016 we dry docked two Suezmax tankers.
|
•
|
a net decrease of $186.6 million in cash outflows due to a net decrease in repayments and prepayments on our term loans and revolving credit facilities, partially offset by the proceeds received from the two sale-leaseback financing transactions which completed in 2018; and
|
•
|
a decrease of $12.6 million in cash outflows related to lower cash dividends paid during 2018, as a result of changes to our dividend policy;
|
•
|
a decrease of $13.5 million in cash inflows from proceeds received from equity offerings, including our continuous offering program (or
COP
) and proceeds from an issuance of 2.2 million shares of Class A common stock to Teekay; and
|
•
|
an increase of $10.9 million in cash outflows due to the scheduled payments on our capital lease obligations which we entered into in July 2017, September 2018 and November 2018.
|
•
|
a net decrease of $68.8 million in cash outflows due to a decrease in repayments and prepayments on our term loans and revolving credit facilities, partially offset by the 2016 refinancing of our long-term debt facilities and the 2017 sale-leaseback financing transaction;
|
•
|
a decrease of $26.2 million in cash outflows related to lower cash dividends paid during 2017, resulting from lower earnings as our dividend policy is based on adjusted net (loss) income, partially offset by the increase in the number of our shares of outstanding Class A and B common stock from issuances of our shares in 2016 and 2017;
|
•
|
a decrease of $15.0 million in cash outflows, related to the return of capital in 2016 by the Entities under Common Control to Teekay; and
|
•
|
an increase of $6.0 million in cash inflows from proceeds received from equity offerings, including our COP which we relaunched in November 2016 and proceeds from an issuance of 2.2 million shares of Class A common stock to Teekay;
|
•
|
an increase of $4.1 million in cash outflows due to the scheduled payments on our capital lease obligations which we entered into in July 2017.
|
•
|
a decrease of $51.5 million in cash inflows related to the sales of one lightering support vessel during the year ended December 31, 2018, compared to the sales of two Suezmax tankers and three Aframax tankers for the prior year;
|
•
|
a decrease of $30.8 million in cash inflows related to cash acquired, net of transaction costs, in the TIL merger in 2017; and
|
•
|
an increase of $1.1 million in cash outflows due to higher capital expenditures for the fleet for the year ended December 31, 2018 as compared to the prior year.
|
•
|
a net increase of $30.8 million in cash acquired, net of transaction costs, in the TIL merger;
|
•
|
an increase of $24.6 million in cash inflows related to the sales of two Suezmax tankers, three Aframax tankers and one lightering support vessel during the year ended December 31, 2017, compared to the sale of two MR tankers and two lightering support vessels for the same period in the prior year; and
|
•
|
a decrease of $4.5 million in cash outflows due to fewer capital expenditures for the fleet for the year ended December 31, 2017 as compared to the prior year;
|
•
|
a decrease of $3.0 million in cash inflows related to loan repayments to us from our High-Q joint venture.
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Beyond
2023
|
|||||||
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. Dollar-Denominated Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Scheduled repayments of revolving facilities, term loans and other debt
(1)
|
266.7
|
|
|
106.7
|
|
|
118.6
|
|
|
28.8
|
|
|
12.6
|
|
|
—
|
|
|
—
|
|
Repayments at maturity of revolving facilities, term loans and other debt
(1)
|
475.3
|
|
|
—
|
|
|
—
|
|
|
401.3
|
|
|
74.0
|
|
|
—
|
|
|
—
|
|
Scheduled repayments of obligations related to capital leases
(2)
|
375.3
|
|
|
20.9
|
|
|
21.8
|
|
|
23.4
|
|
|
25.3
|
|
|
27.2
|
|
|
256.7
|
|
Chartered-in vessels (operating leases)
(3)
|
62.5
|
|
|
36.9
|
|
|
23.5
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
1,179.8
|
|
|
164.5
|
|
|
163.9
|
|
|
455.6
|
|
|
111.9
|
|
|
27.2
|
|
|
256.7
|
|
(1)
|
Excludes expected interest payments of $31.4 million (2019), $26.3 million (2020), $14.1 million (2021) and $2.3 million (2022). Expected interest payments are based on the existing interest rates for fixed-rate loans of 5.4% and existing interest rates for variable-rate loans at LIBOR plus margins that range from 0.30% to 2.75% at December 31, 2018. The expected interest payments do not reflect the effect of related interest rate swaps that we have used to hedge certain of our floating-rate debt.
|
(2)
|
Excludes imputed interest payments of $27.1 million (2019), $25.5 million (2020), $23.8 million (2021), $22.0 million (2022), $20.0 million (2023) and $63.4 million (thereafter).
|
(3)
|
Excludes payments required if we exercise all options to extend the terms of in-chartered leases signed as of December 31, 2018. If we exercise all options to extend the terms of signed in-chartered leases, we would expect total payments of $39.4 million (2019), $28.9 million (2020), and $2.6 million (2021).
|
Aframax, Suezmax and Product Tankers
(in thousands of U.S. dollars, except number of vessels) |
# Vessels
|
|
Market
Values (1) |
|
Carrying
Values |
|||
Conventional Tankers
(2)
|
11
|
|
|
163,400
|
|
|
276,763
|
|
Conventional Tankers
(3)
|
32
|
|
|
816,000
|
|
|
1,281,396
|
|
Total
|
43
|
|
|
979,400
|
|
|
1,558,159
|
|
(1)
|
Market values are determined using reference to second-hand market comparables. Since vessel values can be volatile, our estimates of market value shown above may not be indicative of either the current or future prices we could obtain if we sold any of the vessels.
|
(2)
|
Undiscounted cash flows are marginally greater than the carrying values.
|
(3)
|
Undiscounted cash flows are significantly greater than the carrying values.
|
Item 6.
|
Directors, Senior Management and Employees
|
Name
|
|
Age
|
|
Position
|
Stewart Andrade
|
|
46
|
|
Chief Financial Officer
|
Arthur Bensler
|
|
61
|
|
Chair of the Board of Directors
|
Richard J.F. Bronks
|
|
53
|
|
Director
(1)
|
Richard T. du Moulin
|
|
72
|
|
Director
(1)
|
Kenneth Hvid
|
|
50
|
|
Director
|
William Lawes
|
|
75
|
|
Director
(1)
|
Kevin Mackay
|
|
50
|
|
President and Chief Executive Officer
|
Bjorn Moller
|
|
61
|
|
Director
|
Richard Paterson
|
|
67
|
|
Director
(1)
|
(1)
|
Member of Audit Committee, Conflicts Committee, and Nominating and Governance Committee.
|
•
|
the integrity of our consolidated financial statements;
|
•
|
our compliance with legal and regulatory requirements;
|
•
|
the independent auditors’ qualifications and independence; and
|
•
|
the performance of our internal audit function and independent auditors.
|
•
|
reviews specific matters that the Board believes may involve conflicts of interest between us and our controlling shareholder Teekay Corporation or its affiliates (other than us) or represent material related-party transactions, including transactions between us and our or Teekay Corporation’s officers or directors or their affiliates; and
|
•
|
determines if the resolution of the conflict of interest is fair and reasonable to us and recommends to the Board action to be taken with respect to any such matter.
|
•
|
identifies individuals qualified to become Board members and recommends to the Board nominees for election as directors;
|
•
|
maintains oversight of the operation and effectiveness of the Board and our corporate governance;
|
•
|
develops, updates and recommends to the Board corporate governance principles and policies applicable to us, monitors compliance with these principles and policies;
|
•
|
discharges responsibilities of the Board relating to its compensation;
|
•
|
exercises overall responsibility for approving and evaluating our incentive compensation and equity-based plans;
and
|
•
|
oversees the evaluation of the Board and its committees.
|
Identity of Person or Group
|
Class A
Common
Stock
|
|
Percent of Class A
Common Stock
Owned
|
|
Percent of Total
Class A and Class B
Common Stock
Owned
|
|||
All directors and executive officers as a group (9 persons)
(1)
|
2,748,305
|
|
|
1.2
|
%
|
|
1.0
|
%
|
(1)
|
Excludes shares of Class A and Class B common stock beneficially owned by Teekay Corporation. Please read Item 7 - Major Shareholders and Related Party Transactions for more detail.
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
A.
|
Major Shareholders
|
(1)
|
The voting power represented by shares beneficially owned by Teekay Corporation is 9.7% for its Class A common stock, 44.5% for its Class B common stock and 54.1% for its total Class A and Class B common stock.
|
(2)
|
According to the Schedule 13G filed with the SEC on February 8, 2019, BlackRock, Inc. has sole voting power and sole dispositive power as to 16,483,004 and 16,936,909 of the shares, respectively. The voting power represented by shares beneficially owned by BlackRock, Inc. is 7.1% for its Class A common stock.
|
(3)
|
According to the Schedule 13G/A filed with the SEC on February 13, 2019, Huber Capital Management, LLC has sole voting power and sole dispositive power as to 6,815,661 and 12,838,805 of the shares, respectively. The voting power represented by shares of Class A common stock beneficially owned by Huber Capital Management, LLC is 2.9%.
|
B.
|
Related Party Transactions
|
•
|
Teekay Corporation and its other affiliates may engage in the same or similar activities or lines of business as us, and that we will not be deemed to have an interest or expectancy in any business opportunity, transaction or other matter (each a
Business Opportunity
) in which Teekay Corporation or any of its other affiliates engages or seeks to engage merely because we engage in the same or similar activities or lines of business as that related to such Business Opportunity;
|
•
|
if Teekay Corporation or any of its other affiliates acquires knowledge of a potential Business Opportunity that may be deemed to constitute a corporate opportunity of both Teekay Corporation and us, then (i) none of Teekay Corporation, our Manager or any of their officers or directors will have any duty to communicate or offer such Business Opportunity to us and (ii) Teekay Corporation may pursue or acquire such Business Opportunity for itself or direct such Business Opportunity to another person or entity; and
|
•
|
any Business Opportunity of which our Manager or any person who is an officer or director of Teekay Corporation (or any of its other affiliates) and of us becomes aware shall be a Business Opportunity of Teekay Corporation.
|
•
|
Commercial services fee
. Prior to October 1, 2018, we paid a commercial services fee equal to 1.25% of the gross revenue attributable to the vessels our Manager commercially managed for us
and which operated under time charters or were spot traded
(excluding vessels participating in
the RSAs
). Subsequent to our acquisition of the remaining 50% interest in TTOL in May 2017, our share of the Manager's commercial management fees has been eliminated. Commencing October 1, 2018, we elected to provide our own commercial services, effectively eliminating the prior subcontracting arrangement between our Manager and TTOL.
|
•
|
Technical services fee
. Prior to October 1, 2018, w
e paid an annual fee per vessel for technical services our Manager provided to us.
Commencing October 1, 2018, we elected to provide our own technical services, effectively eliminating the prior subcontracting arrangement between our Manager and TTOL.
|
•
|
Administrative and strategic services fees
. We pay fees that reimburse our Manager for its related direct and indirect expenses in providing administrative and strategic services and which include a profit margin based on the most recent transfer pricing study performed by an independent, nationally recognized accounting firm with respect to similar services.
|
Item 8.
|
Financial Information
|
Item 9.
|
The Offer and Listing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 10.
|
Additional Information
|
a)
|
Management Agreement dated December 18, 2007 between Teekay Tankers Ltd. and Teekay Tankers Management Services Ltd., as amended by Amendment No. 1 dated as of May 7, 2009, Amendment No. 2 dated as of September 21, 2010, Amendment No. 3 dated as of January 1, 2011 and Amendment No. 4 dated as of March 31, 2019. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Management Agreement.
|
b)
|
Addendum to Management Agreement dated March 23, 2016 between Teekay Tankers Ltd. and Teekay Tankers Management Services Ltd. This Addendum allows Teekay Tankers Management Services Ltd. to sub-contract commercial management of vessels to certain parties, subject to certain terms.
|
c)
|
Technical Services Agreement dated December 18, 2007 between Teekay Tankers Management Services Ltd. and Teekay Shipping Limited. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Technical Services Agreement.
|
d)
|
Commercial Management Services Agreement dated February 29, 2008 between Teekay Tankers Management Services Ltd. and Teekay Chartering Limited. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Commercial Management Agreement.
|
e)
|
Teekay Tankers Ltd. 2007 Long-Term Incentive Plan.
|
f)
|
Registration Rights Agreement between Teekay Tankers Ltd. and Teekay Corporation.
|
g)
|
Shareholders Agreement dated September 30, 2010 for a U.S. $98,000,000 shipbuilding contract among Teekay Tankers Holding Ltd., Kriss Investment Company and High-Q Investment Ltd.
|
h)
|
Master Ship Management Agreement dated August 31, 2012 between Teekay Shipping Limited and Teekay Marine Ltd. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Master Ship Management Agreement.
|
i)
|
Secured Term Loan and Revolving Credit Facility Agreement dated January 8, 2016 between Teekay Tankers Ltd., Nordea Bank Finland PLC and various other banks, for a $894.4 million long-term debt facility, consisting of both a term loan and a revolving credit facility, which is scheduled to mature in January 2021.
|
j)
|
Secured Term Loan Facility Agreement dated August 28, 2015 between Teekay Tankers Ltd., ABN AMRO Capital USA LLC and various other banks for the principal amount of $397.2 million, which matured on January 29, 2016. The loan facility is secured by the 12 modern Suezmax tankers we acquired from Principal Maritime and has a variable interest rate of LIBOR plus a margin of 2.25%. Repayments are to be made in two equal quarterly installments of $10.0 million with a balloon repayment due at maturity. This loan facility was refinanced through the new loan agreement in January 2016, referred to above.
|
k)
|
Secured Term Loan Facility Agreement dated January 30, 2015 between Teekay Tankers Ltd., ABN AMRO Capital USA LLC, DNB Capital LLC and DNB Markets, Inc., for the principal amount of approximately $126.6 million, which matured on January 29, 2016. The loan facility is secured by the four LR2 product tankers and one Aframax tanker we acquired during the quarter ended March 31, 2015 and has a variable interest rate of LIBOR plus a margin of 2.50% to 2.80%. Repayments are to be made in four equal quarterly installments of $3.0 million with a balloon repayment due at maturity. This loan facility was refinanced through the new loan agreement in January 2016, referred to above.
|
l)
|
Equity Distribution Agreement, dated November 18, 2015, between Teekay Tankers Ltd. and Evercore Group L.L.C. Under this Agreement, we implemented a continuous offering program through which we may, from time to time, issue Class A common stock with an aggregate offering price of up to $80.0 million, through Evercore, as sale agent.
|
m)
|
Equity Distribution Agreement, dated June 4, 2015, between Teekay Tankers Ltd. and Evercore Group L.L.C. Under this Agreement, we implemented a continuous offering program through which we may, from time to time, issue Class A common stock with an aggregate
|
n)
|
Registration Rights Agreement, dated August 4, 2015, by and among Teekay Tankers Ltd. and Veritable Maritime Holdings, LLC. Under this Agreement, we agreed to prepare and file a shelf registration statement to register offers and sales of certain shares of our Class A Common Stock that we issued to Veritable Maritime Holdings, LLC and certain of its affiliates as partial consideration for our purchase of certain vessels from certain wholly-owned indirect subsidiaries of Veritable Maritime Holdings, LLC.
|
o)
|
Common Stock Purchase Agreement, dated August 4, 2015, by and among Teekay Tankers Ltd. and the purchasers named therein. Under this Agreement, we issued 9,118,797 shares of our Class A Common Stock to a group of institutional investors for $6.65 per share.
|
p)
|
Secured Revolving Credit Facility Agreement dated December 18, 2017 between Teekay Tankers Ltd., Nordea Bank AB and various other banks, for a $270.0 million long-term debt facility which is scheduled to mature in December 2022.
|
q)
|
Agreement and Plan of Merger, dated as of May 31, 2017, by and among Teekay Tankers Ltd., Royal 2017 Ltd. and Tanker Investments Ltd. (or
TIL
) under which we completed a merger with TIL by acquiring all of the remaining 27.0 million issued and outstanding common shares of TIL, by way of a share-for-share exchange of 3.3 shares of our Class A common stock for each share of TIL common stock, and as a result, TIL became a wholly-owned subsidiary.
|
r)
|
Voting and Support Agreement, dated as of May 31, 2017, between Teekay Corporation, Teekay Holdings Limited, Teekay Finance Limited, Tanker Investments Ltd. and Teekay Tankers Ltd., providing, among other things, that Teekay Corporation will support the Merger with TIL.
|
s)
|
Purchase Agreement, dated as of May 31, 2017, between Teekay Tankers Ltd. and Teekay Holdings Limited (or
THL
), under which we purchased the remaining 50% of the issued and outstanding shares of Teekay Tanker Operations Ltd. from THL.
|
t)
|
Voting and Support Agreement, dated as of September 14, 2017, by and among Teekay Tankers Ltd., Huber Capital Management, LLC and Joseph R. Huber, providing, among other things, that Huber Capital Management, LLC and Joseph R. Huber would vote certain shares of the Company's Class A Common Stock in favor of a charter amendment in connection with our merger with TIL.
|
u)
|
Share Subscription Agreement, dated January 13, 2017, between Teekay Tankers Ltd. and THL, under which we agreed to issue a total of 2,155,172 shares of our Class A common stock for an aggregate purchase price of $5,000,000.
|
•
|
dealers in securities or currencies,
|
•
|
traders in securities that have elected the mark-to-market method of accounting for their securities,
|
•
|
persons whose functional currency is not the U.S. dollar,
|
•
|
persons holding our common stock as part of a hedge, straddle, conversion or other “synthetic security” or integrated transaction,
|
•
|
certain U.S. expatriates,
|
•
|
financial institutions,
|
•
|
insurance companies,
|
•
|
persons subject to the alternative minimum tax,
|
•
|
persons that actually or under applicable constructive ownership rules own 10% or more of our stock (by vote or value), and
|
•
|
entities that are tax-exempt for U.S. federal income tax purposes.
|
•
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for our common stock;
|
•
|
the amount allocated to the current taxable year and any taxable year prior to the taxable year we were first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income in the current taxable year;
|
•
|
the amount allocated to each of the other taxable years would be subject to U.S. federal income tax at the highest rate of tax in effect for the applicable class of taxpayer for that year; and
|
•
|
an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
•
|
fails to timely provide an accurate taxpayer identification number;
|
•
|
is notified by the IRS that it has failed to report all interest or distributions required to be shown on its U.S. federal income tax returns; or
|
•
|
in certain circumstances, fails to comply with applicable certification requirements.
|
Item 11.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
Fair Value
Asset /
(Liability)
|
|
Rate
(1)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
(in millions of U.S. dollars, except percentages)
|
|||||||||||||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Variable rate
|
(96.7
|
)
|
|
(108.6
|
)
|
|
(392.8
|
)
|
|
(86.6
|
)
|
|
—
|
|
|
—
|
|
|
(684.7
|
)
|
|
(666.8
|
)
|
|
4.5
|
%
|
Fixed-rate
|
(10.0
|
)
|
|
(10.0
|
)
|
|
(37.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.3
|
)
|
|
(56.2
|
)
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Obligation related to capital leases
|
(20.9
|
)
|
|
(21.8
|
)
|
|
(23.4
|
)
|
|
(25.3
|
)
|
|
(27.2
|
)
|
|
(256.7
|
)
|
|
(375.3
|
)
|
|
(377.7
|
)
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest Rate Swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Dollar-denominated interest rate swaps
(2)
|
46.3
|
|
|
46.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92.6
|
|
|
1.3
|
|
|
1.5
|
%
|
U.S. Dollar-denominated interest rate swaps
(2)
|
—
|
|
|
—
|
|
|
150.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150.0
|
|
|
3.2
|
|
|
1.6
|
%
|
U.S. Dollar-denominated interest rate swap
(2)
|
—
|
|
|
—
|
|
|
50.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50.0
|
|
|
1.5
|
|
|
1.2
|
%
|
(1)
|
Rate refers to the weighted-average interest rate for our long-term debt as at December 31, 2018, including the margin we pay on our variable-rate and fixed-rate debt, and the average imputed interest rate we pay for our capital lease obligations.
|
(2)
|
Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on LIBOR. The average variable rate paid to us under our interest rate swaps is set quarterly at the three-month LIBOR.
|
Item 12.
|
Description of Securities Other than Equity Securities
|
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Item 15.
|
Controls and Procedures
|
Item 16A.
|
Audit Committee Financial Expert
|
Item 16B.
|
Code of Ethics
|
Item 16C.
|
Principal Accountant Fees and Services
|
(1)
|
Audit fees represent fees for professional services provided in connection with the audit of our consolidated financial statements, review of our quarterly consolidated financial statements, as well as other professional services in connection with the review of our regulatory filings.
|
(2)
|
For 2018 and 2017, tax fees principally included corporate tax compliance fees.
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Item 16F.
|
Change in Registrant’s Certifying Accountant
|
Item 16G.
|
Corporate Governance
|
•
|
As a foreign private issuer, we are not required to obtain shareholder approval prior to the adoption of equity compensation plans or certain equity issuances, including, among others, issuing 20% or more of our outstanding common shares or voting power in a transaction.
|
Item 16H.
|
Mine Safety Disclosure
|
Item 17.
|
Financial Statements
|
Item 18.
|
Financial Statements
|
Item 19.
|
Exhibits
|
(1)
|
Previously filed as Exhibits 3.2, 10.1, 10.3 and 4.1 to the Company’s Amendment No. 1 to the Registration Statement on Form F-1 (Registration No. 33-147798), filed with the SEC on December 11, 2007, and hereby incorporated by reference to such Amendment No. 1 to Registration Statement.
|
(2)
|
Previously filed as Exhibits 4.1 and 4.2 to the Company’s Report on Form 6-K furnished to the SEC on May 28, 2008, and hereby incorporated by reference to such Report.
|
(3)
|
Previously filed as an exhibit to the Company’s Report on Form 6-K furnished to the SEC on September 30, 2009, and hereby incorporated by reference to such Report.
|
(4)
|
Previously filed as an exhibit to the Company’s Report on Form 6-K furnished to the SEC on June 1, 2010 and hereby incorporated by reference to such Report.
|
(5)
|
Previously filed as an exhibit to the Company’s Report on Form 6-K furnished to the SEC on September 10, 2010 and hereby incorporated by reference to such Report.
|
(6)
|
Previously filed as Exhibit 4.11 to the Company’s Report on Form 6-K furnished to the SEC on November 30, 2010 and hereby incorporated by reference to such Report.
|
(7)
|
Previously filed as Exhibit 4.12 to the Company’s Report on Form 6-K furnished to the SEC on November 30, 2010 and hereby incorporated by reference to such Report.
|
(8)
|
Previously filed as Exhibit 4.19, 4.20 and 4.21to the Company’s Report on Form 20-F filed with the SEC on April 27, 2016 and hereby incorporated by reference to such Report.
|
(9)
|
Previously filed as Exhibit 4.17 to the Company’s Report on Form 6-K furnished to the SEC on September 17, 2012 and hereby incorporated by reference to such Report.
|
(10)
|
Previously filed as Exhibit 99.1 to the Company’s Registration Statement on Form, S-8 filed with the SEC on March 21, 2018 and hereby incorporated by reference to such Registration Statement.
|
(11)
|
Previously filed as Exhibit 10.2 to the Company’s Report on Form 6-K filed with the SEC on November 18, 2015 and hereby incorporated by reference to such Report.
|
(12)
|
Previously filed as Exhibit 10.1 to the Company’s Report on Form 6-K furnished to the SEC on August 7, 2015 and hereby incorporated by reference to such Report.
|
(13)
|
Previously filed as Exhibits 1.1, 1.2, and 1.3 to the Company’s Report on Form 6-K filed with the SEC on June 1, 2017 and hereby incorporated by reference to such Report.
|
(14)
|
Previously filed as Exhibits 1.1 and 10.3 to the Company’s Report on Form 6-K filed with the SEC on November 18, 2015 and hereby incorporated by reference to such Report.
|
(15)
|
Previously filed as Exhibit 1.1 to the Company’s Report on Form 6-K filed with the SEC on June 4, 2015 and hereby incorporated by reference to such Report.
|
(16)
|
Previously filed as Appendix D to Exhibit 99.1 to the Company's Report on Form 6-K filed with the SEC on October 25, 2017 and hereby incorporated by reference to such Report.
|
(17)
|
Previously filed as Exhibit 1.1 to the Company's Report on Form 6-K filed with the SEC on November 30, 2018 and hereby incorporated by reference to such Report.
|
(18)
|
Previously filed as Exhibits 4.5, 4.7, 4.19, 4.25 and 4.30 to the Company Report on Form 20-F filed with the SEC on April 24, 2018 and hereby incorporated by reference to such Report.
|
(19)
|
Previously filed as Exhibit 10.4 to the Company’s Report on Form 20-F filed with the SEC on April 27, 2016 and hereby incorporated by reference to such Report.
|
(20)
|
Previously filed as Exhibit 4.2 to the Company’s Report on Form 20-F filed with the SEC on April 12, 2011 and hereby incorporated by reference to such Report.
|
|
|
|
|
TEEKAY TANKERS LTD.
|
||
|
|
|
|
|||
Date: April 10, 2019
|
|
|
|
By:
|
|
/s/ Stewart Andrade
|
|
|
|
|
|
|
Stewart Andrade
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
Year Ended
December 31, 2018 $ |
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
||||||
REVENUES
|
|
|
|
|
|
||||||
Voyage charter revenues
(notes 2 and 3)
|
651,388
|
|
|
125,774
|
|
|
90,032
|
|
|||
Time charter revenues
(notes 3 and 15e)
|
59,786
|
|
|
112,100
|
|
|
97,374
|
|
|||
Other revenues
(notes 3 and 15e)
|
44,589
|
|
|
53,368
|
|
|
53,029
|
|
|||
Net pool revenues
(notes 2, 3, 15e and 15h)
|
—
|
|
|
139,936
|
|
|
310,108
|
|
|||
Total revenues
|
755,763
|
|
|
431,178
|
|
|
550,543
|
|
|||
|
|
|
|
|
|
||||||
Voyage expenses
(notes 2 and 15e)
|
(360,576
|
)
|
|
(77,368
|
)
|
|
(53,604
|
)
|
|||
Vessel operating expenses
(notes 15e and 15f)
|
(209,131
|
)
|
|
(175,389
|
)
|
|
(182,598
|
)
|
|||
Time-charter hire expense
(note 11
)
|
(19,538
|
)
|
|
(30,661
|
)
|
|
(59,647
|
)
|
|||
Depreciation and amortization
|
(118,514
|
)
|
|
(100,481
|
)
|
|
(104,149
|
)
|
|||
General and administrative expenses
(note 15e)
|
(39,775
|
)
|
|
(32,879
|
)
|
|
(33,199
|
)
|
|||
Gain (loss) on sale of vessels
(note 20)
|
170
|
|
|
(12,984
|
)
|
|
(20,594
|
)
|
|||
Restructuring charges
|
(1,195
|
)
|
|
—
|
|
|
—
|
|
|||
Income from operations
|
7,204
|
|
|
1,416
|
|
|
96,752
|
|
|||
|
|
|
|
|
|
||||||
Interest expense
|
(58,653
|
)
|
|
(31,294
|
)
|
|
(29,784
|
)
|
|||
Interest income
|
879
|
|
|
907
|
|
|
117
|
|
|||
Realized and unrealized gain (loss) on derivative instruments
(note 12)
|
3,032
|
|
|
1,319
|
|
|
(964
|
)
|
|||
Equity income
(loss)
(note 7)
|
1,220
|
|
|
(25,370
|
)
|
|
7,680
|
|
|||
Freight tax and other tax expenses
(note 21)
|
(9,412
|
)
|
|
(5,330
|
)
|
|
(7,511
|
)
|
|||
Other income
(note 16)
|
3,182
|
|
|
329
|
|
|
1,533
|
|
|||
Net (loss) income
|
(52,548
|
)
|
|
(58,023
|
)
|
|
67,823
|
|
|||
|
|
|
|
|
|
||||||
Per common share amounts
(note 19)
|
|
|
|
|
|
||||||
• Basic (loss) earnings per share
|
|
($0.20
|
)
|
|
|
($0.31
|
)
|
|
|
$0.40
|
|
• Diluted (loss) earnings per share
|
|
($0.20
|
)
|
|
|
($0.31
|
)
|
|
|
$0.40
|
|
• Cash dividends declared
|
|
$0.03
|
|
|
|
$0.12
|
|
|
|
$0.18
|
|
|
|
|
|
|
|
||||||
Weighted-average number of Class A and Class B common stock outstanding
(note 19)
|
|
|
|
|
|
||||||
• Basic
|
268,492,922
|
|
|
187,235,377
|
|
|
170,098,572
|
|
|||
• Diluted
|
268,492,922
|
|
|
187,235,377
|
|
|
170,340,639
|
|
|
As at
December 31, 2018 $ |
|
As at
December 31, 2017 $ |
||
ASSETS
|
|
|
|
||
Current
|
|
|
|
||
Cash and cash equivalents
|
54,917
|
|
|
71,439
|
|
Restricted cash
(note 17)
|
2,153
|
|
|
1,599
|
|
Pool receivables from affiliates, net
(note 15h)
|
56,549
|
|
|
15,550
|
|
Accounts receivable, including affiliate balances of $2.1 million (2017 - $0.8 million)
|
17,365
|
|
|
19,288
|
|
Due from affiliates
(note 15f)
|
39,663
|
|
|
49,103
|
|
Current portion of derivative assets
(note 12)
|
2,905
|
|
|
1,016
|
|
Prepaid expenses
|
34,096
|
|
|
18,690
|
|
Other current assets
(note 2)
|
17,943
|
|
|
—
|
|
Total current assets
|
225,591
|
|
|
176,685
|
|
Restricted cash - long-term
(note 17)
|
3,437
|
|
|
2,672
|
|
Vessels and equipment
At cost, less accumulated depreciation of $494.4 million (2017 - $512.0 million) (notes 10 and 20 ) |
1,401,551
|
|
|
1,737,792
|
|
Vessels related to capital leases
At cost, less accumulated depreciation of $111.3 million (2017 - $25.4 million ) (notes 11 and 20) |
482,010
|
|
|
227,722
|
|
Investment in and advances to equity-accounted for investments
(note 7)
|
25,766
|
|
|
25,460
|
|
Derivative assets (
note 12)
|
2,973
|
|
|
4,226
|
|
Other non-current assets
|
74
|
|
|
127
|
|
Intangible assets
At cost, less accumulated depreciation of $10.9 million (2017 - $8.2 million) (note 8) |
11,625
|
|
|
14,605
|
|
Goodwill
(note 8)
|
8,059
|
|
|
8,059
|
|
Total assets
|
2,161,086
|
|
|
2,197,348
|
|
LIABILITIES AND EQUITY
|
|
|
|
||
Current
|
|
|
|
||
Accounts payable, including affiliate balances of $0.6 million (2017 - $nil)
|
11,146
|
|
|
7,860
|
|
Accrued liabilities
(notes 9, 12 and 15f)
|
40,856
|
|
|
34,608
|
|
Current portion of long-term debt
(note 10
)
|
106,236
|
|
|
166,745
|
|
Current portion of derivative liabilities
(note 12)
|
57
|
|
|
—
|
|
Current obligation related to capital leases
(note 11
)
|
20,896
|
|
|
7,227
|
|
Deferred revenue
|
—
|
|
|
557
|
|
Due to affiliates
(note 15f)
|
18,570
|
|
|
19,717
|
|
Total current liabilities
|
197,761
|
|
|
236,714
|
|
Long-term debt
(note 10
)
|
629,170
|
|
|
785,557
|
|
Long-term obligation related to capital leases
(note 11
)
|
354,393
|
|
|
141,681
|
|
Other long-term liabilities
(note 21)
|
32,829
|
|
|
26,795
|
|
Total liabilities
|
1,214,153
|
|
|
1,190,747
|
|
Commitments and contingencies
(notes 7, 10, 11 and 1
2)
|
|
|
|
||
Equity
|
|
|
|
||
Common stock and additional paid-in capital (585.0 million shares authorized, 231.6 million Class A and 37.0 million class B shares issued and outstanding as of December 31, 2018) (2017 - 385.0 million shares authorized, 231.2 million Class A and 37.0 million Class B shares issued and outstanding)
(notes 5 and 14)
|
1,295,929
|
|
|
1,294,998
|
|
Accumulated deficit
|
(348,996
|
)
|
|
(288,397
|
)
|
Total equity
|
946,933
|
|
|
1,006,601
|
|
Total liabilities and equity
|
2,161,086
|
|
|
2,197,348
|
|
|
Year Ended
December 31, 2018 $ |
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
|||
Cash, cash equivalents and restricted cash (used for) provided by
|
|
|
|
|
|
|||
OPERATING ACTIVITIES
|
|
|
|
|
|
|||
Net (loss) income
|
(52,548
|
)
|
|
(58,023
|
)
|
|
67,823
|
|
Non-cash items:
|
|
|
|
|
|
|||
Depreciation and amortization
|
118,514
|
|
|
100,481
|
|
|
104,149
|
|
(Gain) loss on sale of vessels
(note 20)
|
(170
|
)
|
|
12,984
|
|
|
20,594
|
|
Unrealized gain on derivative instruments
(note 12)
|
(579
|
)
|
|
(937
|
)
|
|
(9,679
|
)
|
Equity (income) loss
(note 7)
|
(1,220
|
)
|
|
25,370
|
|
|
(7,680
|
)
|
Other
|
11,664
|
|
|
8,093
|
|
|
9,943
|
|
Change in operating assets and liabilities
(note 17)
|
(54,952
|
)
|
|
6,590
|
|
|
30,004
|
|
Expenditures for dry docking
|
(27,972
|
)
|
|
(14,069
|
)
|
|
(8,608
|
)
|
Net operating cash flow
|
(7,263
|
)
|
|
80,489
|
|
|
206,546
|
|
|
|
|
|
|
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
|||
Proceeds from long-term debt, net of issuance costs
|
81,397
|
|
|
232,825
|
|
|
906,149
|
|
Repayments of long-term debt
|
(165,365
|
)
|
|
(109,006
|
)
|
|
(162,092
|
)
|
Prepayment of long-term debt
|
(137,717
|
)
|
|
(443,796
|
)
|
|
(979,877
|
)
|
Proceeds from financing related to sales and leasebacks
(note 11
)
|
241,339
|
|
|
153,000
|
|
|
—
|
|
Scheduled repayments of obligations related to capital leases
(note 11
)
|
(14,958
|
)
|
|
(4,090
|
)
|
|
—
|
|
Return of capital to Teekay Corporation
(note 4)
|
—
|
|
|
—
|
|
|
(15,000
|
)
|
Cash dividends paid
|
(8,052
|
)
|
|
(20,679
|
)
|
|
(46,847
|
)
|
Proceeds from equity offerings, net of offering costs
(note 5)
|
—
|
|
|
8,521
|
|
|
7,558
|
|
Proceeds from issuance of common stock, net of share issuance costs
(note 5)
|
—
|
|
|
5,000
|
|
|
—
|
|
Other
|
(92
|
)
|
|
(241
|
)
|
|
(744
|
)
|
Net financing cash flow
|
(3,448
|
)
|
|
(178,466
|
)
|
|
(290,853
|
)
|
|
|
|
|
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
|||
Proceeds from the sales of vessels and equipment
(note 20)
|
589
|
|
|
52,131
|
|
|
27,550
|
|
Expenditures for vessels and equipment
|
(5,827
|
)
|
|
(4,732
|
)
|
|
(9,226
|
)
|
Loan repayments from equity-accounted for investment (
note 7)
|
—
|
|
|
550
|
|
|
3,500
|
|
Return of capital from equity-accounted for investments
|
746
|
|
|
—
|
|
|
—
|
|
Cash acquired in TIL acquisition, net of transaction fees
(note 23)
|
—
|
|
|
30,831
|
|
|
—
|
|
Net investing cash flow
|
(4,492
|
)
|
|
78,780
|
|
|
21,824
|
|
|
|
|
|
|
|
|||
Decrease in cash, cash equivalents and restricted cash
|
(15,203
|
)
|
|
(19,197
|
)
|
|
(62,483
|
)
|
Cash, cash equivalents and restricted cash, beginning of the year
|
75,710
|
|
|
94,907
|
|
|
157,390
|
|
Cash, cash equivalents and restricted cash, end of the year
(note 17d)
|
60,507
|
|
|
75,710
|
|
|
94,907
|
|
|
EQUITY
|
||||||||||||||||
|
Equity of Entities under Common Control
$ |
|
Common Stock and Paid-in Capital
|
|
|
|
|
||||||||||
|
Thousands of Common Stock
# |
|
Class A
$ |
|
Class B
$ |
|
Accumulated Deficit
$ |
|
Total
$ |
||||||||
Balance as at December 31, 2015
|
22,018
|
|
|
156,031
|
|
|
1,032,239
|
|
|
62,635
|
|
|
(217,413
|
)
|
|
899,479
|
|
Net income
|
4,968
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,855
|
|
|
67,823
|
|
Proceeds from issuance of Class A common stock, net of offering costs
(note 5)
|
—
|
|
|
3,020
|
|
|
7,558
|
|
|
—
|
|
|
—
|
|
|
7,558
|
|
Net change in parent's equity from Entities under Common Control
(note 4)
|
130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130
|
|
Return of capital from Entities under Common Control
(note 4)
|
(15,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,000
|
)
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,122
|
)
|
|
(28,122
|
)
|
Equity-based compensation
(note 14)
|
—
|
|
|
253
|
|
|
872
|
|
|
—
|
|
|
—
|
|
|
872
|
|
Balance as at December 31, 2016
|
12,116
|
|
|
159,304
|
|
|
1,040,669
|
|
|
62,635
|
|
|
(182,680
|
)
|
|
932,740
|
|
Net income (loss)
|
1,304
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,327
|
)
|
|
(58,023
|
)
|
Proceeds from issuance of Class A common stock, net of offering costs
(note 5)
|
—
|
|
|
5,955
|
|
|
13,521
|
|
|
—
|
|
|
—
|
|
|
13,521
|
|
Acquisition of the remaining 50% of TTOL
(note 5)
|
(13,420
|
)
|
|
13,775
|
|
|
—
|
|
|
25,897
|
|
|
(25,711
|
)
|
|
(13,234
|
)
|
Acquisition of TIL
(note 5)
|
—
|
|
|
88,978
|
|
|
151,262
|
|
|
—
|
|
|
—
|
|
|
151,262
|
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,679
|
)
|
|
(20,679
|
)
|
Equity-based compensation
(note 14)
|
—
|
|
|
190
|
|
|
1,014
|
|
|
—
|
|
|
—
|
|
|
1,014
|
|
Balance as at December 31, 2017
|
—
|
|
|
268,202
|
|
|
1,206,466
|
|
|
88,532
|
|
|
(288,397
|
)
|
|
1,006,601
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,548
|
)
|
|
(52,548
|
)
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,052
|
)
|
|
(8,052
|
)
|
Equity-based compensation
(note 14)
|
—
|
|
|
357
|
|
|
1,220
|
|
|
—
|
|
|
—
|
|
|
1,220
|
|
Other
|
—
|
|
|
—
|
|
|
(289
|
)
|
|
—
|
|
|
1
|
|
|
(288
|
)
|
Balance as at December 31, 2018
|
—
|
|
|
268,559
|
|
|
1,207,397
|
|
|
88,532
|
|
|
(348,996
|
)
|
|
946,933
|
|
1.
|
Summary of Significant Accounting Policies
|
Class of Financing Receivable
|
|
Credit Quality Indicator
|
|
Grade
|
|
December 31, 2018
$ |
|
December 31, 2017
$ |
|
Advances to equity-accounted for investments
|
|
Other internal metrics
|
|
Performing
|
|
9,930
|
|
9,930
|
|
|
|
|
|
|
|
9,930
|
|
9,930
|
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Balance at the beginning of the year
|
48,460
|
|
|
49,298
|
|
|
62,146
|
|
Cost incurred for dry docking
|
27,896
|
|
|
16,239
|
|
|
9,340
|
|
Dry-dock amortization
|
(20,326
|
)
|
|
(17,077
|
)
|
|
(18,736
|
)
|
Vessel sales
|
(11
|
)
|
|
—
|
|
|
(3,452
|
)
|
Balance at the end of the year
|
56,019
|
|
|
48,460
|
|
|
49,298
|
|
2.
|
Recent Accounting Pronouncements
|
•
|
The Company previously presented the net allocation for its vessels participating in RSAs as net pool revenues. The Company has determined that it is the principal in voyages its vessels perform that are included in the RSAs. As such, the revenue from those voyages is presented in voyage charter revenues and the difference between this amount and the Company's net allocation from the RSA is presented as voyage expenses. This had the effect of increasing voyage charter revenues and voyage expenses for the year ended
December 31, 2018
by
$292.6 million
. There was
no
cumulative impact to opening equity as at January 1, 2018.
|
•
|
The Company previously presented all accrued revenue as a component of accounts receivable. The Company has determined that if the right to such consideration is conditioned upon something other than the passage of time, such accrued revenue should be presented apart from accounts receivable. This had the effect of increasing other current assets and decreasing accounts receivable by
$17.9 million
at
December 31, 2018
.
|
3.
|
Revenue
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Voyage charters
(1)
|
|
|
|
|
|
|||
Suezmax
|
359,443
|
|
|
6,696
|
|
|
11,218
|
|
Aframax
|
119,830
|
|
|
26,250
|
|
|
30,591
|
|
LR2
|
67,245
|
|
|
—
|
|
|
—
|
|
Full service lightering
|
104,870
|
|
|
92,828
|
|
|
48,223
|
|
Total
|
651,388
|
|
|
125,774
|
|
|
90,032
|
|
|
|
|
|
|
|
|||
Time-charters
|
|
|
|
|
|
|||
Aframax
|
35,531
|
|
|
50,964
|
|
|
54,593
|
|
Suezmax
|
16,898
|
|
|
45,745
|
|
|
30,597
|
|
LR2
|
7,357
|
|
|
15,391
|
|
|
12,184
|
|
Total
|
59,786
|
|
|
112,100
|
|
|
97,374
|
|
|
|
|
|
|
|
|||
Other revenue
|
|
|
|
|
|
|||
Ship-to-ship support services
|
28,629
|
|
|
33,436
|
|
|
29,973
|
|
Commercial management
|
8,829
|
|
|
12,946
|
|
|
13,834
|
|
LNG terminal management, consultancy, procurement and other
|
7,131
|
|
|
6,986
|
|
|
9,222
|
|
Total
|
44,589
|
|
|
53,368
|
|
|
53,029
|
|
|
|
|
|
|
|
|||
Net pool revenues
(1)
|
|
|
|
|
|
|||
Suezmax
|
—
|
|
|
91,854
|
|
|
173,747
|
|
Aframax
|
—
|
|
|
22,718
|
|
|
79,457
|
|
LR2
|
—
|
|
|
25,353
|
|
|
48,599
|
|
MR
|
—
|
|
|
11
|
|
|
8,305
|
|
Total
|
—
|
|
|
139,936
|
|
|
310,108
|
|
Total revenues
|
755,763
|
|
|
431,178
|
|
|
550,543
|
|
(1)
|
Prior to the January 1, 2018 adoption of ASU 2014-09, the Company presented the net allocation for its vessels participating in RSAs as net pool revenues. The Company has determined that it is the principal in voyages performed by its vessels included in the RSAs. As such, the revenue from those voyages is presented in voyage charter revenues and the difference between this amount and the Company's net allocation from the RSA is presented as voyage expenses. The adoption of ASU 2014-09 had the impact of increasing voyage charter revenues and voyage expenses for the year ended
December 31, 2018
by
$292.6 million
. The comparative periods do not include the impact of the January 1, 2018 adoption of ASU 2014-09.
|
4.
|
Acquisition of Entities under Common Control
|
5.
|
Public Offerings and Private Placements
|
Date
|
Number of Common Stock Issued
|
|
Offering Price
(Per Share) |
|
Gross Proceeds
|
|
Net Proceeds
|
|
Teekay's Ownership After the Offering
|
|
Use of Proceeds
|
||||||
Continuous offering program during 2016
|
3,020,000
|
|
(1)
|
$2.38 - $2.75
|
|
|
7,747
|
|
|
7,558
|
|
|
(1
|
)
|
|
General corporate purposes
|
|
January 2017
|
2,155,172
|
|
(2)
|
|
$2.32
|
|
|
5,000
|
|
|
5,000
|
|
|
25.7
|
%
|
|
General corporate purposes
|
May 2017
|
13,775,224
|
|
(3)
|
|
$1.88
|
|
|
25,897
|
|
|
25,897
|
|
|
31.4
|
%
|
|
Acquisition of controlling interest in TTOL
|
November 2017
|
88,977,544
|
|
(4)
|
|
$1.70
|
|
|
151,262
|
|
|
151,262
|
|
|
24.1
|
%
|
|
TIL Merger
|
Continuous offering program during 2017
|
3,800,000
|
|
(5)
|
$2.26 - $2.41
|
|
|
8,826
|
|
|
8,521
|
|
|
(5
|
)
|
|
General corporate purposes
|
(1)
|
In December 2016, the Company re-opened its
$80.0 million
continuous offering program (or
COP
). The portion of the Company's voting power and ownership held by Teekay at December 31, 2016 was
52.9%
and
25.4%
, respectively.
|
(2)
|
Represents Class A common shares issued in a private placement to Teekay. The gross proceeds were used for general corporate purposes, including to strengthen the Company's liquidity position and to delever its balance sheet.
|
(3)
|
Represents Class B common shares issued to Teekay as consideration for the Company's acquisition of the remaining
50%
interest in TTOL, which shares had an approximate value of
$25.9 million
, or
$1.88
per share, on the closing date of the transaction (notes 4 and 7).
|
(4)
|
Represents Class A common shares issued to the shareholders of TIL as consideration for the Company's acquisition of the remaining
88.7%
interest in TIL. The shares had an approximate value of
$151.3 million
, or
$1.70
per share, on the closing date of the transaction (notes 7 and 23).
|
(5)
|
In January 2017, the Company re-opened its
$80.0 million
COP. The portion of the Company's voting power and ownership held by Teekay at December 31, 2017 was
54.1%
and
28.8%
respectively.
|
6.
|
Segment Reporting
|
Year Ended December 31, 2018
|
Conventional
Tanker Segment $ |
|
Ship-to-Ship
Transfer Segment $ |
|
Inter-segment
Adjustment (1) $ |
|
Total
$ |
||||
Revenues
(2)(3)
|
720,076
|
|
|
48,175
|
|
|
(12,488
|
)
|
|
755,763
|
|
Voyage expenses
(3)
|
(373,064
|
)
|
|
—
|
|
|
12,488
|
|
|
(360,576
|
)
|
Vessel operating expenses
|
(174,278
|
)
|
|
(34,853
|
)
|
|
—
|
|
|
(209,131
|
)
|
Time-charter hire expense
|
(13,537
|
)
|
|
(6,001
|
)
|
|
—
|
|
|
(19,538
|
)
|
Depreciation and amortization
|
(114,062
|
)
|
|
(4,452
|
)
|
|
—
|
|
|
(118,514
|
)
|
General and administrative expenses
(4)
|
(36,481
|
)
|
|
(3,294
|
)
|
|
—
|
|
|
(39,775
|
)
|
Gain on sale of vessel
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
Restructuring charges
|
(152
|
)
|
|
(1,043
|
)
|
|
—
|
|
|
(1,195
|
)
|
Income (loss) from operations
|
8,502
|
|
|
(1,298
|
)
|
|
—
|
|
|
7,204
|
|
Equity income
|
1,220
|
|
|
—
|
|
|
—
|
|
|
1,220
|
|
Year Ended December 31, 2017
|
Conventional
Tanker Segment $ |
|
Ship-to-Ship
Transfer Segment $ |
|
Inter-segment
Adjustment (1) $ |
|
Total
$ |
||||
Revenues
(2)(3)
|
391,267
|
|
|
50,422
|
|
|
(10,511
|
)
|
|
431,178
|
|
Voyage expenses
(3)
|
(87,879
|
)
|
|
—
|
|
|
10,511
|
|
|
(77,368
|
)
|
Vessel operating expenses
|
(135,740
|
)
|
|
(39,649
|
)
|
|
—
|
|
|
(175,389
|
)
|
Time-charter hire expense
|
(25,666
|
)
|
|
(4,995
|
)
|
|
—
|
|
|
(30,661
|
)
|
Depreciation and amortization
|
(95,433
|
)
|
|
(5,048
|
)
|
|
—
|
|
|
(100,481
|
)
|
General and administrative expenses
(4)
|
(29,539
|
)
|
|
(3,340
|
)
|
|
—
|
|
|
(32,879
|
)
|
(Loss) gain on sale of vessel
|
(13,034
|
)
|
|
50
|
|
|
—
|
|
|
(12,984
|
)
|
Income (loss) from operations
|
3,976
|
|
|
(2,560
|
)
|
|
—
|
|
|
1,416
|
|
Equity loss
|
(25,370
|
)
|
|
—
|
|
|
—
|
|
|
(25,370
|
)
|
Year Ended December 31, 2016
|
Conventional
Tanker Segment $ |
|
Ship-to-Ship
Transfer Segment $ |
|
Inter-segment
Adjustment (1) $ |
|
Total
$ |
||||
Revenues
(2)(3)
|
512,608
|
|
|
41,136
|
|
|
(3,201
|
)
|
|
550,543
|
|
Voyage expenses
(3)
|
(56,805
|
)
|
|
—
|
|
|
3,201
|
|
|
(53,604
|
)
|
Vessel operating expenses
|
(150,100
|
)
|
|
(32,498
|
)
|
|
—
|
|
|
(182,598
|
)
|
Time-charter hire expense
|
(57,368
|
)
|
|
(2,279
|
)
|
|
—
|
|
|
(59,647
|
)
|
Depreciation and amortization
|
(99,024
|
)
|
|
(5,125
|
)
|
|
—
|
|
|
(104,149
|
)
|
General and administrative expenses
(4)
|
(29,432
|
)
|
|
(3,767
|
)
|
|
—
|
|
|
(33,199
|
)
|
(Loss) gain on sale of vessel
|
(20,926
|
)
|
|
332
|
|
|
—
|
|
|
(20,594
|
)
|
Income (loss) from operations
|
98,953
|
|
|
(2,201
|
)
|
|
—
|
|
|
96,752
|
|
Equity income
|
7,680
|
|
|
—
|
|
|
—
|
|
|
7,680
|
|
(1)
|
The ship-to-ship transfer segment provides lightering support services to the conventional tanker segment for full service lightering operations and the pricing for such services is based on actual costs incurred during 2018 and 2017 (2016 - based on estimated costs of approximately
$25,000
per voyage).
|
(2)
|
Revenues, net of the inter-segment adjustment, earned from the ship-to-ship transfer segment are reflected in other revenues in the Company's consolidated statements of (loss) income.
|
(3)
|
The comparative periods do not include the impact of the January 1, 2018 adoption of ASU 2014-09 (see note 2).
|
(4)
|
Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources) (note 15e).
|
|
As at
December 31, 2018 $ |
|
As at
December 31, 2017 $ |
||
Conventional Tanker
|
2,069,854
|
|
|
2,089,099
|
|
Ship-to-Ship Transfer
|
36,315
|
|
|
36,810
|
|
Cash and cash equivalents
|
54,917
|
|
|
71,439
|
|
Total assets
|
2,161,086
|
|
|
2,197,348
|
|
7.
|
Investments in and advances to Equity-Accounted for Investments
|
|
Year Ended December 31,
|
||||
|
2018
$ |
|
2017
$ |
||
High-Q Joint Venture
|
25,766
|
|
|
24,546
|
|
Gemini Tankers L.L.C.
|
—
|
|
|
914
|
|
Total
|
25,766
|
|
|
25,460
|
|
a.
|
The Company has a joint venture arrangement with Wah Kwong Maritime Transport Holdings Limited (or
Wah Kwong
), whereby the Company has a
50%
economic interest in the High-Q joint venture, which is jointly controlled by the Company and Wah Kwong. The High-Q joint venture owns
one
VLCC, which traded on a fixed time charter-out contract that expired in May 2018. Under the fixed contract, the vessel earned a daily rate and an additional amount if the daily rate of sub-charter earnings exceeded a certain threshold. The VLCC completed its dry dock in July 2018 and subsequently began trading on spot voyage charters in a pool managed by a third party.
|
b.
|
On May 31, 2017, the Company entered into a Merger Agreement to acquire the remaining
27.0 million
issued and outstanding common shares of TIL, by way of a share-for-share exchange of
3.3
shares of Class A common stock of the Company for each of TIL common stock not owned by the Company. Prior to the completion of the merger, the Company accounted for its
11.3%
investment in TIL using the equity method. On November 27, 2017, the Company completed the merger with TIL, and the Company remeasured its equity investment in TIL to fair value based on the relative share exchange value at the date of the acquisition, which resulted in the recognition of a net write-down of
$26.7 million
presented in equity income (loss) on the consolidated statements of (loss) income (note 23).
|
c.
|
On May 31, 2017, the Company acquired from Teekay Holdings Ltd., a wholly-owned subsidiary of Teekay, the remaining
50%
interest in TTOL for
$39.0 million
, which included
$13.1 million
for assumed working capital (note 4). The Company issued approximately
13.8 million
shares of the Company's Class B common stock to Teekay as consideration in addition to the working capital consideration of
$13.1 million
. As a result, the Company now consolidates TTOL and thus, all comparative periods have been retroactively adjusted to include TTOL on a consolidated basis (note 4) and TTOL's results are not included in the summary of equity-accounted for investment results below. Prior to the May 31, 2017 purchase, the Company equity-accounted for its initial
50%
interest in TTOL.
|
|
As at December 31,
|
||||
|
2018
$ |
|
2017
$ |
||
Cash, cash equivalents and restricted cash
|
1,697
|
|
|
2,231
|
|
Other current assets
|
2,488
|
|
|
4,774
|
|
Vessels and equipment
|
81,789
|
|
|
83,417
|
|
|
|
|
|
||
Current portion of long-term debt
|
5,378
|
|
|
5,616
|
|
Other current liabilities
|
452
|
|
|
572
|
|
Long-term debt
|
31,742
|
|
|
36,645
|
|
Other non-current liabilities
|
20,436
|
|
|
19,207
|
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Revenues
|
9,601
|
|
|
107,691
|
|
|
169,631
|
|
Income from operations
|
4,159
|
|
|
11,640
|
|
|
62,998
|
|
Realized and unrealized (loss) gain on derivative instruments
|
(104
|
)
|
|
26
|
|
|
(244
|
)
|
Net income (loss)
|
2,441
|
|
|
(8,967
|
)
|
|
39,536
|
|
8.
|
Goodwill and Intangible Assets
|
|
As at
|
||||
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|
$
|
|
$
|
||
Customer relationships
At cost, less accumulated amortization of $8.2 million (2017 - $6.0 million) (1) |
9,724
|
|
|
11,853
|
|
Customer contracts
At cost, less accumulated amortization of $2.7 million (2017 - $2.0 million) (1) |
1,901
|
|
|
2,642
|
|
Favorable time-charter out contracts
At cost, less accumulated amortization of $nil (2017 - $0.2 million) |
—
|
|
|
110
|
|
|
11,625
|
|
|
14,605
|
|
(1)
|
The customer relationships and customer contracts are being amortized over weighted average amortization periods of
10 years
and
7.6 years
, respectively. Amortization of intangible assets for the year ended December 31, 2018 was
$2.9 million
(2017 -
$3.3 million
, 2016 -
$3.9 million
). Amortization of intangible assets for the five years subsequent to 2018 is expected to be
$2.2 million
(2019),
$2.0 million
(2020),
$1.8 million
(2021),
$1.6 million
(2022),
$1.5 million
(2023) and
$2.5 million
(thereafter).
|
9.
|
Accrued Liabilities
|
|
Year Ended December 31,
|
||||
|
2018
$ |
|
2017
$ |
||
Voyage and vessel
|
23,922
|
|
|
19,404
|
|
Corporate accruals
|
1,587
|
|
|
1,244
|
|
Interest and dividends
|
6,678
|
|
|
3,984
|
|
Payroll and benefits (note 15h)
|
8,669
|
|
|
9,976
|
|
Total
|
40,856
|
|
|
34,608
|
|
10.
|
Long-Term Debt
|
|
Year Ended December 31,
|
||||
|
2018
$ |
|
2017
$ |
||
Revolving credit facilities due through 2022
|
417,997
|
|
|
539,735
|
|
Term loans due through 2021
|
323,995
|
|
|
423,512
|
|
Total principal
|
741,992
|
|
|
963,247
|
|
Less: unamortized discount and debt issuance costs
|
(6,586
|
)
|
|
(10,945
|
)
|
Total debt
|
735,406
|
|
|
952,302
|
|
Less: current portion
|
(106,236
|
)
|
|
(166,745
|
)
|
Non-current portion of long-term debt
|
629,170
|
|
|
785,557
|
|
11.
|
Leases
|
|
As at
|
|
As at
|
||
|
December 31, 2018
|
|
December 31, 2017
|
||
|
$
|
|
$
|
||
Total obligations related to capital leases
|
375,289
|
|
|
148,908
|
|
Less: current portion
|
(20,896
|
)
|
|
(7,227
|
)
|
Long-term obligations related to capital leases
|
354,393
|
|
|
141,681
|
|
Year
|
|
Commitment
|
||
2019
|
|
$
|
47,962
|
|
2020
|
|
$
|
47,373
|
|
2021
|
|
$
|
47,237
|
|
2022
|
|
$
|
47,230
|
|
2023
|
|
$
|
47,222
|
|
Thereafter
|
|
$
|
320,064
|
|
12.
|
Derivative Instruments
|
|
Interest Rate Index
|
|
Notional Amount
$ |
|
Fair Value /
Carrying Amount of Asset $ |
|
Remaining
Term (years) |
|
Fixed Interest
Rate (1) |
||
LIBOR-Based Debt:
|
|
|
|
|
|
|
|
|
|
||
U.S. Dollar-denominated interest rate swaps
(2)
|
LIBOR
|
|
92,563
|
|
|
1,250
|
|
|
2.0
|
|
1.46%
|
U.S. Dollar-denominated interest rate swaps
|
LIBOR
|
|
150,000
|
|
|
3,175
|
|
|
2.0
|
|
1.55%
|
U.S. Dollar-denominated interest rate swaps
|
LIBOR
|
|
50,000
|
|
|
1,453
|
|
|
2.0
|
|
1.16%
|
(1)
|
Excludes the margin the Company pays on its variable-rate debt, which, as of
December 31, 2018
ranged from
0.30%
to
3.50%
.
|
(2)
|
Notional amount reduces quarterly.
|
|
Current portion of derivative assets
$ |
|
Derivative assets
$ |
|
Accrued assets (liabilities)
$ |
|
Current portion of derivative liabilities
$ |
||||
As at December 31, 2018
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
|
2,905
|
|
|
2,973
|
|
|
422
|
|
|
—
|
|
Forward freight agreements
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(57
|
)
|
|
2,905
|
|
|
2,973
|
|
|
419
|
|
|
(57
|
)
|
|
|
|
|
|
|
|
|
||||
As at December 31, 2017
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
|
1,016
|
|
|
4,226
|
|
|
(39
|
)
|
|
—
|
|
|
1,016
|
|
|
4,226
|
|
|
(39
|
)
|
|
—
|
|
|
Year Ended
December 31, 2018 $ |
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
|||
Realized gains (losses) relating to:
|
|
|
|
|
|
|||
Interest rate swaps agreements
|
2,316
|
|
|
(994
|
)
|
|
(12,797
|
)
|
Time-charter swap agreement
|
—
|
|
|
1,106
|
|
|
2,154
|
|
Forward freight agreements
|
137
|
|
|
270
|
|
|
—
|
|
|
2,453
|
|
|
382
|
|
|
(10,643
|
)
|
|
|
|
|
|
|
|||
Unrealized gains (losses) relating to:
|
|
|
|
|
|
|||
Interest rate swaps agreements
|
636
|
|
|
2,099
|
|
|
13,681
|
|
Stock purchase warrant
|
—
|
|
|
(287
|
)
|
|
(4,877
|
)
|
Time-charter swap agreement
|
—
|
|
|
(875
|
)
|
|
875
|
|
Forward freight agreements
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
579
|
|
|
937
|
|
|
9,679
|
|
Total realized and unrealized gain (loss) on derivatives
|
3,032
|
|
|
1,319
|
|
|
(964
|
)
|
13.
|
Fair Value Measurements
|
a.
|
The fair values of the Company’s interest rate swap agreements are the estimated amounts that the Company would receive or pay to terminate the agreements at the reporting date, taking into account current interest rates, and if the swap is not collateralized, the current credit worthiness of either the Company or the swap counterparties. The estimated amount is the present value of future cash flows. The inputs used to determine the future cash flows include the fixed interest rate of the swaps and market interest rates. Given the current volatility in the credit markets, it is reasonably possible that the amounts recorded as derivative assets and liabilities could vary by material amounts in the near term.
|
b.
|
In 2016, Company entered into a time-charter swap agreement for
55%
of
two
Aframax equivalent vessels (note 12). The fair value of this derivative agreement was the estimated amount that the Company would receive or pay to terminate the agreement at the reporting date, based on the present value of the Company's projection of future Aframax spot market tanker rates, which were derived from current Aframax spot market tanker rates and estimated future rates, as well as an estimated discount rate. The time-charter swap agreement was completed as of December 31, 2017.
|
|
Year Ended
December 31, 2017 $ |
|
Fair value asset - beginning of the year
|
875
|
|
Settlements
|
(1,106
|
)
|
Realized and unrealized gain
|
231
|
|
Fair value asset - at the end of the year
|
—
|
|
c.
|
The estimated fair value of the stock purchase warrant as of December 31, 2016 was based on the historical volatility of comparable companies of
47.83%
. On November 27, 2017, the merger of TIL was completed, resulting in TIL becoming a wholly-owned subsidiary of the Company. Under the terms of the agreement, warrants to purchase or acquire shares of common stock of TIL that had not been exercised as of the effective time of the merger, were canceled. As a result,
no
value was recorded for this warrant in the Company's consolidated balance sheets at December 31, 2017 (notes 7b and 12).
|
|
Year Ended
December 31, 2017 $ |
|
Fair value at the beginning of the year
|
287
|
|
Unrealized loss included in earnings
|
(287
|
)
|
Fair value at the end of the year
|
—
|
|
Level 1.
|
Observable inputs such as quoted prices in active markets;
|
Level 2.
|
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
Level 3.
|
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Fair Value Hierarchy Level
|
|
Carrying Amount Asset/ (Liability)
$ |
|
Fair Value Asset/ (Liability)
$ |
|
Carrying Amount Asset/ (Liability)
$ |
|
Fair Value Asset/ (Liability)
$ |
||||
Recurring:
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents and restricted cash
(note 17d)
|
Level 1
|
|
60,507
|
|
|
60,507
|
|
|
75,710
|
|
|
75,710
|
|
Derivative instruments
(note 12)
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
(1)
|
Level 2
|
|
5,878
|
|
|
5,878
|
|
|
5,242
|
|
|
5,242
|
|
Freight forward agreements
(1)
|
Level 2
|
|
(57
|
)
|
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
|
||||
Advances to equity-accounted for investments
|
Note (2)
|
|
9,930
|
|
|
Note (2)
|
|
|
9,930
|
|
|
Note (2)
|
|
Long-term debt, including current portion
|
Level 2
|
|
(735,406
|
)
|
|
(723,031
|
)
|
|
(952,302
|
)
|
|
(946,105
|
)
|
Obligations related to capital leases, including current portion
|
Level 2
|
|
(375,289
|
)
|
|
(377,652
|
)
|
|
(148,908
|
)
|
|
(147,401
|
)
|
(1)
|
The fair values of the Company's interest rate swap agreements and FFAs at
December 31, 2018
and 2017 exclude accrued interest income and expenses, which are recorded in accounts receivables and accrued liabilities, respectively, in these consolidated financial statements.
|
(2)
|
The advances to equity-accounted for investments, together with the Company’s investments in the equity-accounted for investments, form the net aggregate carrying value of the Company’s interests in the equity-accounted for investments in these consolidated financial statements. The fair values of the individual components of such aggregate interests as at December 31, 2018 and 2017 were not determinable.
|
14.
|
Capital Stock
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Options (#)
|
|
Weighted-Average Exercise Price ($)
|
|
Options (#)
|
|
Weighted-Average Exercise Price ($)
|
|
Options (#)
|
|
Weighted-Average Exercise Price ($)
|
||||||
Outstanding - beginning of year
|
1,670,305
|
|
|
3.10
|
|
|
822,345
|
|
|
3.99
|
|
|
321,609
|
|
|
4.39
|
|
Granted
|
1,240,424
|
|
|
1.22
|
|
|
882,741
|
|
|
2.23
|
|
|
500,736
|
|
|
3.74
|
|
Forfeited / expired
|
(34,765
|
)
|
|
1.56
|
|
|
(34,781
|
)
|
|
2.23
|
|
|
—
|
|
|
—
|
|
Outstanding - end of year
|
2,875,964
|
|
|
2.31
|
|
|
1,670,305
|
|
|
3.10
|
|
|
822,345
|
|
|
3.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Exercisable - end of year
|
1,797,493
|
|
|
2.69
|
|
|
1,055,250
|
|
|
3.34
|
|
|
530,034
|
|
|
3.97
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Options (#)
|
|
Weighted-Average Grant Date Fair Value ($)
|
|
Options (#)
|
|
Weighted-Average Grant Date Fair Value ($)
|
|
Options (#)
|
|
Weighted-Average Grant Date Fair Value ($)
|
||||||
Outstanding non-vested stock options - beginning of year
|
615,055
|
|
|
2.68
|
|
|
292,311
|
|
|
4.02
|
|
|
132,689
|
|
|
4.75
|
|
Granted
|
736,326
|
|
|
1.22
|
|
|
486,329
|
|
|
2.23
|
|
|
216,043
|
|
|
3.74
|
|
Vested
|
(238,145
|
)
|
|
2.95
|
|
|
(128,804
|
)
|
|
4.14
|
|
|
(56,421
|
)
|
|
4.64
|
|
Forfeited / expired
|
(34,765
|
)
|
|
1.56
|
|
|
(34,781
|
)
|
|
2.23
|
|
|
—
|
|
|
—
|
|
Outstanding non-vested stock options - end of year
|
1,078,471
|
|
|
1.66
|
|
|
615,055
|
|
|
2.68
|
|
|
292,311
|
|
|
4.02
|
|
15.
|
Related Party Transactions
|
a.
|
On November 27, 2017, the Company completed its merger with TIL. As consideration for the merger, the Company issued
88,977,544
Class A common shares to the TIL shareholders (other than the Company and its subsidiaries), including
8,250,000
shares to Teekay, for
$151.3 million
, or
$1.70
per share (notes 5 and 23).
|
b.
|
On May 31, 2017, the Company acquired from Teekay Holdings Ltd., a wholly-owned subsidiary of Teekay, the remaining
50%
of TTOL, which owns conventional tanker commercial management and technical management operations and currently administers
four
commercially-managed tanker revenue sharing arrangements (notes 4 and 7c).
|
c.
|
In January 2017, the Company issued
2,155,172
shares of Class A common stock in a private placement to Teekay at a price of
$2.32
per share for gross proceeds of
$5.0 million
(note 5).
|
d.
|
The Company's operations are conducted in part by its subsidiaries who receive services from Teekay's wholly-owned subsidiary, Teekay Shipping Ltd. (or
the Manager,
formerly known as Teekay Tankers Management Services Ltd.), and its affiliates. The Manager provides various services under a long-term management agreement (the
Management Agreement
). Commencing October 1, 2018, the Company elected to receive commercial and technical management services for its owned and leased vessels (other than certain former TIL vessels, which are managed by a third party) from its wholly-owned subsidiaries and will no longer contract these services from the Manager. Prior to this date, the Manager was required to provide these services to the Company, which it did by subcontracting such services from the Company's subsidiary TTOL and its affiliates.
C
ertain of the Company’s vessels participate in revenue sharing arrangements that, with the exception of a Medium Range (or
MR
) revenue sharing arrangement, are managed by TTOL or
Teekay Tankers Chartering Pte Ltd.
(collectively, the
Pool Managers
).
|
e.
|
Amounts received and paid by the Company for such related party transactions for the periods indicated were as follows:
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Time-charter revenues
(i)
|
—
|
|
|
—
|
|
|
5,404
|
|
RSA pool management fees and commissions
(ii)
|
—
|
|
|
(2,799
|
)
|
|
(9,813
|
)
|
Commercial management fees
(iii)
|
—
|
|
|
(1,187
|
)
|
|
(1,870
|
)
|
Vessel operating expenses - technical management fee
(iv)
|
(10,400
|
)
|
|
(8,775
|
)
|
|
(9,155
|
)
|
Strategic and administrative service fees
(v
)
|
(32,918
|
)
|
|
(21,185
|
)
|
|
(10,122
|
)
|
Secondment fees
(vi)
|
(679
|
)
|
|
(382
|
)
|
|
—
|
|
Lay-up services revenues
(vii)
|
—
|
|
|
33
|
|
|
302
|
|
LNG terminal services revenues
(viii)
|
1,689
|
|
|
388
|
|
|
70
|
|
Technical management fee recoveries
(ix)
|
13,811
|
|
|
7,666
|
|
|
—
|
|
Service revenues
(x)
|
1,019
|
|
|
1,939
|
|
|
—
|
|
Entities under Common Control (note 4)
|
|
|
|
|
|
|||
RSA pool management fees and commissions
(ii)
|
—
|
|
|
2,799
|
|
|
9,813
|
|
Commercial management fees
(iii)
|
—
|
|
|
1,187
|
|
|
1,870
|
|
Strategic and administrative service
fees
(v)
|
—
|
|
|
(7,026
|
)
|
|
(15,508
|
)
|
Secondment fees
(vi)
|
—
|
|
|
(248
|
)
|
|
(644
|
)
|
Technical management fee revenues
(ix)
|
—
|
|
|
4,890
|
|
|
11,742
|
|
Service revenues
(x)
|
—
|
|
|
1,772
|
|
|
5,482
|
|
i
|
In December 2015, the Company chartered-out the
Navigator Spirit
to Teekay under a fixed-rate time-charter contract, which was due to expire in July 2016. On May 18, 2016, the contract was transferred to the
Americas Spirit
, which subsequently expired on July 15, 2016.
|
ii.
|
The Company’s share of TTOL’s fees for revenue sharing arrangements are reflected as a reduction to net pool revenues from affiliates on the Company’s consolidated statements of (loss) income. The Company acquired the remaining
50%
interest in TTOL on May 31, 2017 (notes 4 and note 7c). Subsequent to the acquisition, the Company's share of TTOL's fees has been eliminated.
|
iii.
|
The Manager’s commercial management fees for vessels on time-charter out contracts and spot-traded vessels, which are not included in the RSAs. These fees are reflected in voyage expenses on the Company’s consolidated statements of (loss) income. Subsequent to the Company's acquisition of the remaining
50%
interest in TTOL, the Company's share of the Manager's commercial management fees has been eliminated.
|
iv.
|
The cost of ship management services provided by the Manager has been presented as vessel operating expenses on the Company’s consolidated statements of (loss) income. Commencing October 1, 2018, the Company has elected to receive ship management services for its own vessels from its wholly-owned subsidiaries and will no longer subcontract these services from the Manager.
|
v.
|
The Manager’s strategic and administrative service fees have been presented in general and administrative fees, except for fees related to technical management services, which have been presented in vessel operating expenses, on the Company’s consolidated statements of (loss) income. The Company’s executive officers are employees of Teekay or subsidiaries thereof, and their compensation (other than any awards under the Company’s long-term incentive plan described in note 14) is set and paid by Teekay or such other subsidiaries. The Company reimburses Teekay for time spent by its executive officers on the Company’s management matters through the strategic portion of the management fee.
|
vi.
|
The Company pays secondment fees for services provided by some employees of Teekay. Secondment fees have been presented in general and administrative expenses, except for fees related to technical management services, which have been presented in vessel operating expenses on the Company's consolidated statements of (loss) income.
|
vii.
|
The Company recorded revenue of
$0.3 million
for the year ended December 31, 2016 to provide lay-up services to Teekay for
two
of its in-chartered vessels.
|
viii.
|
In November 2016, the Company's ship-to-ship transfer business signed an operational and maintenance subcontract with Teekay LNG Bahrain Operations L.L.C., an entity wholly-owned by TGP, for the Bahrain LNG Import Terminal. The terminal is owned by Bahrain LNG W.I.L., a joint venture for which Teekay LNG Operating L.L.C., an entity wholly-owned by TGP, has a
30%
interest.
|
ix.
|
The Company receives reimbursements from Teekay, which subcontracts technical management services from the Manager. These reimbursements have been presented in general and administrative expenses on the Company's consolidated statements of (loss) income. Commencing October 1, 2018, the Company has elected to receive technical management services for its own vessels from its wholly-owned subsidiaries and will no longer subcontract these services from the Manager.
|
x.
|
The Company recorded revenue of
$1.0 million
and
$1.9 million
for the years ended December 31, 2018 and 2017, respectively, relating to TTOL's administration of certain revenue sharing arrangements and provision of certain commercial services to participants in the arrangements. The Company also recorded revenue of
$1.8 million
and
$5.5 million
for the years ended December 31, 2017 and 2016, respectively, associated with the Entities under Common Control. Commencing October 1, 2018, the Company has elected to receive certain commercial services from its wholly-owned subsidiaries and will no longer subcontract these services from the Manager.
|
f.
|
The Manager and other subsidiaries of Teekay collect revenues and remit payments for expenses incurred by the Company’s vessels. Such amounts, which are presented in the consolidated balance sheets in due from affiliates or due to affiliates, are without interest or stated terms of repayment. In addition,
$7.6 million
and
$8.7 million
were payable to the Manager as at
December 31, 2018
and
2017
, respectively, for reimbursement of the Manager’s crewing and manning costs to operate the Company’s vessels and such amounts are included in accrued liabilities in the consolidated balance sheets. The amounts owing from the RSAs, which are reflected in the consolidated
|
g.
|
The Management Agreement provides for payment to the Manager of a performance fee in certain circumstances. If
Gross Cash Available for Distribution
for a given fiscal year exceeds
$3.20
per share of the Company’s weighted average outstanding common stock (or the
Incentive Threshold
), the Company is generally required to pay a performance fee equal to
20%
of all
Gross Cash Available for Distribution
for such year in excess of the Incentive Threshold. The Company did
no
t incur any performance fees for the years ended
December 31, 2018
,
2017
and
2016
. Cash Available for Distribution represents net income plus depreciation and amortization, unrealized losses from derivatives, non-cash items and any write-offs or other non-recurring items, less unrealized gains from derivatives and net income attributable to the historical results of vessels acquired by the Company from Teekay, prior to their acquisition by us, for the period when these vessels were owned and operated by Teekay.
Gross Cash Available for Distribution
represents Cash Available for Distribution without giving effect to any deductions for performance fees and reduced by the amount of any reserves the Company’s Board of Directors may establish during the applicable fiscal period that have not already reduced the
Cash Available for Distribution
.
|
h.
|
Pursuant to certain RSAs, TTOL provides certain commercial services to the RSA participants and administers the RSAs in exchange for a fee currently equal to
1.25%
of the gross revenues attributable to each RSA participant’s vessels and a fixed amount per vessel per day which ranges from
$275
to
$350
. Voyage revenues and voyage expenses of the Company’s vessels operating in these RSAs are pooled with the voyage revenues and voyage expenses of other RSA participants. The resulting net pool revenues, calculated on a time-charter equivalent basis, are allocated to the RSA participants according to an agreed formula. The pool receivable from affiliates as at
December 31, 2018
and
2017
was
$56.5 million
and
$15.6 million
, respectively.
|
i.
|
Pursuant to a service agreement with the Teekay Aframax RSA, from time to time, the Company may hire vessels to perform full service lightering services.
During 2018, 2017 and 2016, the Company recognized
$28.4 million
,
$14.1 million
and
$13.1 million
, respectively,
related to vessels which were chartered-in from the RSA to assist with full service lightering operations. These amounts have been presented in voyage expenses on the Company's consolidated statements of (loss) income.
|
16.
|
Other Income
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Foreign exchange gain
|
3,133
|
|
|
79
|
|
|
1,413
|
|
Other income
|
49
|
|
|
250
|
|
|
120
|
|
Total
|
3,182
|
|
|
329
|
|
|
1,533
|
|
17.
|
Supplemental Cash Flow Information
|
a.
|
The changes in non-cash working capital items related to operating activities for the years ended
December 31, 2018
,
2017
and
2016
are as follows:
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Accounts receivable, including other current assets
|
(16,020
|
)
|
|
14,603
|
|
|
(108
|
)
|
Pool receivables from affiliates
|
(40,999
|
)
|
|
16,193
|
|
|
38,137
|
|
Due from affiliates
|
9,440
|
|
|
17,562
|
|
|
18,371
|
|
Prepaid expenses
|
(15,507
|
)
|
|
8,767
|
|
|
2,313
|
|
Accounts payable and accrued liabilities
|
9,778
|
|
|
(13,996
|
)
|
|
(26,821
|
)
|
Due to affiliates
|
(1,147
|
)
|
|
(32,641
|
)
|
|
(3,606
|
)
|
Deferred revenue
|
(557
|
)
|
|
(3,898
|
)
|
|
1,718
|
|
Other
|
60
|
|
|
—
|
|
|
—
|
|
Change in operating assets and liabilities
|
(54,952
|
)
|
|
6,590
|
|
|
30,004
|
|
b.
|
Cash interest paid (including interest paid by the Entities under Common Control) during the years ended
December 31, 2018
,
2017
, and
2016
totaled
$47.6 million
,
$26.4 million
, and
$38.5 million
, respectively.
|
c.
|
In November 2017, the Company acquired the outstanding shares of TIL through issuing
89.0 million
Class A common shares, which was treated as a non-cash transaction in the Company's consolidated statement of cash flows. As a result of this transaction, the Company acquired
$37.6 million
in cash and paid
$6.9 million
in transaction costs
(note 23).
|
d.
|
The Company maintains restricted cash deposits relating to certain contracts which were assumed as part of the acquisition of the ship-to-ship transfer business in 2015, LNG terminal management and for certain freight forward agreements (note 12). Attached to these contracts are certain performance guarantees required by the Company. The Company also maintains restricted cash deposits for the purposes of the margin requirements of the Company's obligations related to certain capital leases (note 11). Total cash, cash equivalents and restricted cash are as follows:
|
|
As at December 31, 2018
|
|
As at December 31, 2017
|
|
As at December 31, 2016
|
|
As at December 31, 2015
|
||||
|
$
|
|
$
|
|
$
|
|
$
|
||||
Cash and cash equivalents
|
54,917
|
|
|
71,439
|
|
|
94,157
|
|
|
156,520
|
|
Restricted cash
- current
|
2,153
|
|
|
1,599
|
|
|
750
|
|
|
870
|
|
Restricted cash - long-term
|
3,437
|
|
|
2,672
|
|
|
—
|
|
|
—
|
|
|
60,507
|
|
|
75,710
|
|
|
94,907
|
|
|
157,390
|
|
18.
|
Liquidity
|
19.
|
(Loss) Earnings Per Share
|
|
Year Ended December 31,
|
|||||||
|
2018
$ |
|
2017
$ |
|
2016
$ |
|||
Net (loss) income
|
(52,548
|
)
|
|
(58,023
|
)
|
|
67,823
|
|
|
|
|
|
|
|
|||
Weighted-average number of common shares - basic
(1)
|
268,492,922
|
|
|
187,235,377
|
|
|
170,098,572
|
|
Dilutive effect of stock-based awards
|
—
|
|
|
—
|
|
|
242,067
|
|
Weighted average number of common shares - diluted
(1)
|
268,492,922
|
|
|
187,235,377
|
|
|
170,340,639
|
|
(Loss) earnings per common share:
|
|
|
|
|
|
|||
- Basic
|
(0.20
|
)
|
|
(0.31
|
)
|
|
0.40
|
|
- Diluted
|
(0.20
|
)
|
|
(0.31
|
)
|
|
0.40
|
|
(1)
|
The weighted-average number of common shares outstanding for periods prior to May 2017 has been retroactively adjusted to include the approximately
13.8 million
shares of the Company's Class B common stock issued to Teekay as consideration for the acquisition of
50%
of TTOL in May 2017.
|
20.
|
Sale of Vessels
|
21.
|
Freight Tax and Other Tax Expenses
|
|
Year Ended December 31,
|
||||
|
2018
$ |
|
2017
$ |
||
Balance of unrecognized tax benefits as at January 1
|
26,054
|
|
|
12,882
|
|
Increases related to the TIL merger
(note 23)
|
—
|
|
|
8,528
|
|
Increases for positions related to the current year
|
5,399
|
|
|
1,910
|
|
Changes for positions taken in prior years
|
1,701
|
|
|
3,641
|
|
Decreases related to statute of limitations
|
(1,095
|
)
|
|
(907
|
)
|
Balance of unrecognized tax benefits as at December 31
|
32,059
|
|
|
26,054
|
|
22.
|
Shipbuilding Contracts
|
23.
|
Acquisition of Tanker Investments Ltd.
|
24.
|
Subsequent Events
|
a.
|
In February 2019, the Company signed a term sheet for a
$63.7 million
sale-leaseback financing transaction for
two
of its Suezmax tankers. If completed, the Company expects to increase its liquidity position by approximately
$25 million
after the repayment of outstanding debt related to these vessels. The transaction, which remains subject to customary conditions precedent and execution of definitive documentation, is expected to be completed in the second quarter of 2019.
|
Name of Subsidiary
|
State or Jurisdiction of Incorporation
|
Proportion of Ownership Interest
|
Americas Spirit L.L.C.
|
Marshall Islands
|
100%
|
Ashkini Spirit L.L.C.
|
Marshall Islands
|
100%
|
Athens Spirit L.L.C.
|
Marshall Islands
|
100%
|
Atlanta Spirit L.L.C.
|
Marshall Islands
|
100%
|
Australian Spirit L.L.C.
|
Marshall Islands
|
100%
|
Axel Spirit L.L.C.
|
Marshall Islands
|
100%
|
Barcelona Spirit L.L.C.
|
Marshall Islands
|
100%
|
Beijing Spirit L.L.C.
|
Marshall Islands
|
100%
|
Dilong Spirit L.L.C.
|
Marshall Islands
|
100%
|
Donegal Spirit L.L.C.
|
Marshall Islands
|
100%
|
Erik Spirit L.L.C.
|
Marshall Islands
|
100%
|
Esther Spirit L.L.C.
|
Marshall Islands
|
100%
|
Everest Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Explorer Spirit L.L.C.
|
Marshall Islands
|
100%
|
Freeport Landholdings LLC
|
USA
|
100%
|
Galway Spirit L.L.C.
|
Marshall Islands
|
100%
|
Ganges Spirit L.L.C.
|
Marshall Islands
|
100%
|
Godavari Spirit L.L.C.
|
Marshall Islands
|
100%
|
Halo Fenders L.L.C.
|
Marshall Islands
|
100%
|
Helga Spirit L.L.C.
|
Marshall Islands
|
100%
|
Hugli Spirit L.L.C.
|
Marshall Islands
|
100%
|
Iskmati Spirit L.L.C.
|
Marshall Islands
|
100%
|
Jiaolong Spirit L.L.C.
|
Marshall Islands
|
100%
|
Kanata Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Kareela Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Kaveri Spirit L.L.C.
|
Marshall Islands
|
100%
|
Kyeema Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Limerick Spirit L.L.C.
|
Marshall Islands
|
100%
|
London Spirit L.L.C.
|
Marshall Islands
|
100%
|
Los Angeles Spirit L.L.C.
|
Marshall Islands
|
100%
|
Matterhorn Spirit L.L.C.
|
Marshall Islands
|
100%
|
Montreal Spirit L.L.C.
|
Marshall Islands
|
100%
|
Moscow Spirit L.L.C.
|
Marshall Islands
|
100%
|
Narmada Spirit L.L.C.
|
Marshall Islands
|
100%
|
Navigator Spirit L.L.C
|
Marshall Islands
|
100%
|
Pinnacle Spirit L.L.C.
|
Marshall Islands
|
100%
|
Rio Spirit L.L.C.
|
Marshall Islands
|
100%
|
Seoul Spirit L.L.C.
|
Marshall Islands
|
100%
|
Shenlong Spirit L.L.C.
|
Marshall Islands
|
100%
|
SPT Marine Transfer Services Ltd.
|
Bermuda
|
100%
|
STX Hull No. S1672 L.L.C.
|
Marshall Islands
|
100%
|
STX Hull No. S1673 L.L.C.
|
Marshall Islands
|
100%
|
STX Hull No. S1674 L.L.C.
|
Marshall Islands
|
100%
|
STX Hull No. S1675 L.L.C.
|
Marshall Islands
|
100%
|
1.
|
I have reviewed this Annual Report on Form 20-F of Teekay Tankers Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
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4.
|
The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
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5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing equivalent functions): and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
Date: April 10, 2019
|
|
By:
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/s/ Kevin Mackay
|
|
|
|
Kevin Mackay
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 20-F of Teekay Tankers Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
Date: April 10, 2019
|
|
By:
|
/s/ Stewart Andrade
|
|
|
|
Stewart Andrade
|
|
|
|
Chief Financial Officer
|
(1)
|
The Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Kevin Mackay
|
|
|
Kevin Mackay
|
|
|
President and Chief Executive Officer
|
|
(1)
|
The Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Stewart Andrade
|
|
|
Stewart Andrade
|
|
|
Chief Financial Officer
|
|