Teekay Tankers Ltd. Q4 FY2024 earnings call

• Teekay Tankers reported financial results for Q4 2024 and full-year 2024, including adjusted net income and free cash flow figures.
• Conducted fleet management activities: sold older vessels and signed to acquire a modern LR2 tanker.
• Completed CNK's acquisition of the Teekay Australia business, making Teekay Tankers a fully integrated shipping company.
• Made a passive investment in Ardmore Shipping Corporation, owning 5.1% of the company.
• Highlighted impact of geopolitical events (Ukraine, Middle East, sanctions, tariffs) on tanker market.
• Underlying tanker supply and demand fundamentals point to a balanced market over the medium term.
• Teekay Tankers is well positioned with high operating leverage and low free cash flow breakeven of $14,300 per day.

Teekay Tankers reported adjusted net income of $52 million or $1.50 per share for the fourth quarter of 2024. For the full year 2024, adjusted net income was $355 million or $10.31 per share. In the fourth quarter, free cash flow was $69 million, and for the full year, it was $450 million. The company sold two 2009-built Suezmaxes and one 2006-built LR2 for a combined $96 million, with total proceeds from selling five vessels amounting to $160 million and expected book gains on sale near $60 million. They also signed an MOA to acquire a modern LR2 tanker expected to close in the second quarter. Teekay Tankers is now a fully integrated shipping company with the completion of CNK's acquisition of the Teekay Australia business.

No specific upward/downward revision of guidance mentioned. Discussed ongoing fleet management renewal plan and capital allocation including fixed dividend and potential special dividend consideration.

• Geopolitical uncertainties such as conflicts in Ukraine and the Middle East, which could impact tanker ton-mile demand and shadow fleet servicing Russian oil exports.
• Sanctions on crude oil exports from Russia, Iran, and Venezuela, affecting seaborne trade patterns and tanker demand.
• Tariffs on oil trade flows, which could divert exports and impact tanker ton-mile demand, along with associated uncertainties and supply chain inefficiencies.

Q: Jon Chappell with Evercore ISI asked about the Ardmore investment and comparison to buying back own shares.

A: Kenneth Hvid explained the Ardmore investment is a small, opportunistic financial investment, not straying from core business, and mentioned capital allocation including fixed dividend and potential special dividend.

Q: Omar Nokta with Jefferies asked about cash deployment and potential evolution of the platform.

A: Kenneth Hvid stated the core priority is the core fleet, and the Ardmore investment is small; emphasized being patient in deploying cash.

Q: Omar Nokta asked about market impact of EU sanctions on 150+ tankers.

A: Christian Waldegrave said sanctions placed on January 10th impacted Russian exports and led to shifts in crude sourcing, causing volatility in the freight market.

Q: Ken Hoexter with Bank of America asked about rates pressure and geopolitical outcomes.

A: Kenneth Hvid discussed factors driving rate shifts like West-East arbitrage and replacement barrels, and noted uncharted territory with geopolitical events and their impact on tanker demand and fleet composition.