Highlights
- GAAP net income attributable to the partners and preferred unitholders of $53.3 million and GAAP net income per common unit of $0.53 in the second quarter of 2021.
- Adjusted net income(1) attributable to the partners and preferred unitholders of $57.0 million and adjusted net income per common unit of $0.57 in the second quarter of 2021 (excluding other items listed in Appendix A to this release).
- Total adjusted EBITDA(1) of $183.5 million in the second quarter of 2021.
- The Partnership’s LNG fleet is 98 percent fixed for the remainder of 2021, and 89 percent fixed for 2022.
- Current strong LNG shipping fundamentals expected to persist into 2022.
HAMILTON, Bermuda, Aug. 05, 2021 (GLOBE NEWSWIRE) -- Teekay GP L.L.C., the general partner (the General Partner) of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP), today reported the Partnership’s results for the quarter ended June 30, 2021.
Consolidated Financial Summary
| Three Months Ended | |||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |
| (in thousands of U.S. Dollars, except per unit data) | (unaudited) | (unaudited) | (unaudited) |
| GAAP FINANCIAL COMPARISON | |||
| Voyage revenues | 148,769 | 152,802 | 148,205 |
| Income from vessel operations | 64,736 | 70,611 | 69,589 |
| Equity income | 28,940 | 37,516 | 32,155 |
| Net income attributable to the partners and preferred unitholders | 53,288 | 87,591 | 44,934 |
| Limited partners’ interest in net income per common unit | 0.53 | 0.92 | 0.46 |
| NON-GAAP FINANCIAL COMPARISON | |||
| Total adjusted EBITDA(1) | 183,512 | 184,287 | 192,340 |
| Distributable cash flow (DCF)(1) | 78,979 | 82,019 | 83,170 |
| Adjusted net income attributable to the partners and preferred unitholders(1) | 57,017 | 60,466 | 62,643 |
| Limited partners’ interest in adjusted net income per common unit | 0.57 | 0.61 | 0.67 |
| (1) | These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP). |
Second Quarter of 2021 Compared to First Quarter of 2021
GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders were reduced for the three months ended June 30, 2021, compared to the three months ended March 31, 2021, primarily due to an increase in scheduled dry dockings during the second quarter of 2021, and the timing of planned repairs and maintenance activities.
GAAP net income attributable to the partners and preferred unitholders for the three months ended June 30, 2021 was also negatively impacted by changes in unrealized gains and losses on non-designated derivative instruments in the second quarter of 2021 compared to the first quarter of 2021.
Second Quarter of 2021 Compared to Second Quarter of 2020
GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders for the three months ended June 30, 2021, compared to the same quarter of the prior year, were impacted primarily by an increase in scheduled dry dockings during the second quarter of 2021, the redeployment of an LNG carrier under a market-linked contract in March 2021, and the timing of vessel operating expenditures for certain of the Partnership's LNG carriers. These decreases were partially offset by a decrease in operational claims under certain of the Partnership’s charter contracts and lower net interest expense during the second quarter of 2021.
GAAP net income attributable to the partners and preferred unitholders was also positively impacted by changes in unrealized gains and losses on non-designated derivative instruments and foreign currency exchange in the second quarter of 2021 compared to the second quarter of 2020.
CEO Commentary
“Teekay LNG reported another quarter of strong results today, with second quarter of 2021 adjusted net income(1) of $0.57 per common unit and over $183.5 million of total adjusted EBITDA(1),” commented Mark Kremin, President and Chief Executive Officer of Teekay Gas Group Ltd. “As expected, our results in the second quarter reflect a heavier than normal drydock schedule. Looking ahead, our third quarter 2021 results are also expected to be impacted by a heavy drydock schedule; however, for the fourth quarter of 2021, we are expecting a bounce back as a result of a substantially reduced number of drydock days across the fleet.”
Mr. Kremin continued, “The spot and term charter market for LNG carriers has been counter-seasonally strong over the past six months, and LNG supply and demand fundamentals are pointing to continued strength through the rest of 2021 and into 2022. This should benefit the Creole Spirit, which is on a market-linked contract until mid-February 2022.” Mr. Kremin continued, “We believe this market strength could also be a tailwind for Teekay LNG next year as we have a few LNG carriers expected to roll-off of their current contracts during the first half of next year. We do, however, continue to have nearly all of our 2021 and the vast majority of our 2022 revenue days already secured on fixed-rate charters and generating consistent cash flow.”
| (1) | These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP). |
Operating Results
The following table highlights certain financial information for Teekay LNG’s segments: the Liquefied Natural Gas Segment and the Liquefied Petroleum Gas Segment (please refer to the “Teekay LNG’s Fleet” section of this release below and Appendices D and E for further details).
| Three Months Ended | |||||||
| June 30, 2021 | June 30, 2020 | ||||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | |||||
| Liquefied Natural Gas Segment | Liquefied Petroleum Gas Segment | Total | Liquefied Natural Gas Segment | Liquefied Petroleum Gas Segment | Total | ||
| GAAP FINANCIAL COMPARISON | |||||||
| Voyage revenues | 136,764 | 12,005 | 148,769 | 137,822 | 10,383 | 148,205 | |
| Income (loss) from vessel operations | 65,868 | (1,132) | 64,736 | 69,232 | 357 | 69,589 | |
| Equity income | 26,000 | 2,940 | 28,940 | 27,795 | 4,360 | 32,155 | |
| NON-GAAP FINANCIAL COMPARISON | |||||||
| Consolidated adjusted EBITDA(i) | 100,222 | 557 | 100,779 | 103,190 | 1,420 | 104,610 | |
| Adjusted EBITDA from equity-accounted vessels(i) | 72,186 | 10,547 | 82,733 | 75,824 | 11,906 | 87,730 | |
| Total adjusted EBITDA(i) | 172,408 | 11,104 | 183,512 | 179,014 | 13,326 | 192,340 | |
| (i) | These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under GAAP. |
Liquefied Natural Gas Segment
Income from vessel operations and consolidated adjusted EBITDA(1) for the LNG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, decreased primarily due to scheduled dry dockings during the second quarter of 2021, the redeployment of an LNG carrier under a market-linked contract in March 2021 and the timing of vessel operating expenditures for certain of the Partnership's LNG carriers. These decreases were partially offset by reduced operational claims on certain of the Partnership's LNG carriers during the second quarter of 2021.
Equity income and adjusted EBITDA from equity-accounted vessels(1) for the LNG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, decreased primarily due to lower earnings from the Partnership's 52 percent-owned joint venture with Marubeni Corporation (the MALT Joint Venture) as a result of lower charter rates earned upon redeployment of the Marib Spirit, Arwa Spirit and Methane Spirit between May 2020 and April 2021, and an increase in off-hire days for scheduled dry dockings and unscheduled repairs in certain of the Partnership's joint ventures during the second quarter of 2021.
Liquefied Petroleum Gas Segment
Loss from vessel operations increased and consolidated adjusted EBITDA(1) decreased for the LPG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, primarily due to the scheduled dry docking of one of the Partnership's LPG carriers during the second quarter of 2021. This decrease was partially offset by higher spot LPG rates earned during the second quarter of 2021.
Equity income and adjusted EBITDA from equity-accounted vessels(1) for the LPG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, decreased primarily due to the scheduled dry docking of one of the LPG carriers in the Partnership's 50 percent-owned LPG joint venture with Exmar NV (the Exmar LPG Joint Venture). This decrease was partially offset by higher spot LPG rates earned during the second quarter of 2021.
| (1) | These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under GAAP. |
Teekay LNG's Fleet
The following table summarizes the Partnership’s fleet as of August 1, 2021. In addition, the Partnership owns a 30 percent interest in an LNG regasification terminal in Bahrain.
| Number of Vessels | |
| Owned and In-Chartered Vessels(i) | |
| LNG Carrier Fleet | 47(ii) |
| LPG/Multi-gas Carrier Fleet | 30(iii) |
| Total | 77 |
| (i) | Includes vessels leased by the Partnership from third parties and accounted for as finance leases. |
| (ii) | The Partnership’s ownership interests in these vessels range from 20 percent to 100 percent. |
| (iii) | The Partnership’s ownership interests in these vessels range from 50 percent to 100 percent. |
Liquidity
As of June 30, 2021, the Partnership had total liquidity of $381.9 million (comprised of $144.2 million in cash and cash equivalents and $237.7 million in undrawn credit facilities) compared to $406.2 million as of March 31, 2021.
Conference Call
The Partnership plans to host a conference call on Thursday, August 5, 2021 at 1:00 p.m. (ET) to discuss the results for the second quarter of 2021. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
- By dialing 1 (800) 430-8332 or 1 (647) 792-1240, if outside North America, and quoting conference ID code 4740273.
- By accessing the webcast, which will be available on Teekay LNG’s website at www.teekay.com (the archive will remain on the website for a period of one year).
An accompanying Second Quarter 2021 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
About Teekay LNG Partners L.P.
Teekay LNG Partners is one of the world's largest independent owners and operators of LNG carriers, providing LNG and LPG services primarily under long-term, fee-based charter contracts through its interests in 47 LNG carriers, 23 mid-size LPG carriers, and seven multi-gas carriers. The Partnership's ownership interests in these vessels range from 20 to 100 percent. In addition, the Partnership owns a 30 percent interest in an LNG regasification terminal. Teekay LNG Partners is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Teekay LNG Partners’ common units and preferred units trade on the New York Stock Exchange under the symbols “TGP”, “TGP PR A” and “TGP PR B”, respectively.
For Investor Relations enquiries contact:
Ryan Hamilton
Tel: +1 (604) 609-2963
Website: www.teekay.com
Definitions and Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the SEC. These non-GAAP financial measures which include Adjusted Net Income Attributable to the Partners and Preferred Unitholders, Distributable Cash Flow and Adjusted EBITDA, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings across companies, and may not be comparable to similar measures presented by other companies. These non-GAAP measures are used by management, and the Partnership believes that these supplementary metrics assist investors and other users of its financial reports in comparing financial and operating performance of the Partnership across reporting periods and with other companies.
Non-GAAP Financial Measures
Adjusted EBITDA represents net income before interest, taxes, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include unrealized credit loss provisions, unrealized gains or losses on non-designated derivative instruments, write-downs of vessels, gains or losses on sales of vessels, foreign currency exchange gains or losses, adjustments for direct financing and sales-type leases to a cash basis, and certain other income or expenses. Adjusted EBITDA also excludes realized gains or losses on interest rate swaps as management, in assessing the Partnership's performance, views these gains or losses as an element of interest expense and realized gains or losses on derivative instruments resulting from amendments or terminations of the underlying instruments. Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Partnership's financial statements. Adjusted EBITDA from Equity-Accounted Vessels represents the Partnership's proportionate share of Adjusted EBITDA from its equity-accounted vessels. The Partnership does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Partnership holds the equity-accounted investments or distributed to the Partnership and other owners. In addition, the Partnership does not control the timing of any such distributions to the Partnership and other owners. Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Please refer to Appendices C and E of this release for reconciliations of Adjusted EBITDA to net income and equity income, respectively, which are the most directly comparable GAAP measures reflected in the Partnership’s consolidated financial statements.
Adjusted Net Income Attributable to the Partners and Preferred Unitholders excludes items of income or loss from GAAP net income that are typically excluded by securities analysts in their published estimates of the Partnership’s financial results. The Partnership believes that certain investors use this information to evaluate the Partnership’s financial performance, as does management. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to net income, and refer to footnote (2) of the Consolidated Statements of Income for a reconciliation of adjusted equity income to equity income, the most directly comparable GAAP measure reflected in the Partnership’s consolidated financial statements.
Distributable Cash Flow (DCF) represents GAAP net income adjusted for depreciation and amortization expense, deferred income tax and other non-cash items, estimated maintenance capital expenditures, unrealized gains and losses from non-designated derivative instruments, realized losses on interest rate swap termination, unrealized credit loss provisions, distributions relating to preferred units, adjustments for direct financing and sales-type leases to a cash basis, unrealized foreign currency exchange gains or losses, write-downs of vessels, gains or losses on sales of vessels, and the Partnership’s proportionate share of such items in its equity-accounted for investments. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership’s capital assets. DCF is a quantitative standard used in the publicly-traded partnership investment community and by management to assist in evaluating financial performance. Please refer to Appendix B of this release for a reconciliation of this non-GAAP financial measure to net income, the most directly comparable GAAP measure reflected in the Partnership’s consolidated financial statements.
Teekay LNG Partners L.P.
Consolidated Statements of Income
(in thousands of U.S. Dollars, except unit and per unit data)
| Three Months Ended | Six Month Ended | |||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
| Voyage revenues | 148,769 | 152,802 | 148,205 | 301,571 | 288,092 | |
| Voyage expenses | (6,360) | (7,183) | (5,329) | (13,543) | (7,646) | |
| Vessel operating expenses | (32,536) | (30,089) | (28,407) | (62,625) | (54,511) | |
| Time-charter hire expenses | (5,867) | (5,850) | (5,368) | (11,717) | (11,290) | |
| Depreciation and amortization | (32,349) | (31,902) | (31,629) | (64,251) | (64,268) | |
| General and administrative expenses | (6,921) | (7,167) | (7,883) | (14,088) | (14,050) | |
| Write-down of vessels(1) | — | — | — | — | (45,000) | |
| Income from vessel operations | 64,736 | 70,611 | 69,589 | 135,347 | 91,327 | |
| Equity income(2) | 28,940 | 37,516 | 32,155 | 66,456 | 32,528 | |
| Interest expense | (30,084) | (29,652) | (35,143) | (59,736) | (71,847) | |
| Interest income | 1,302 | 2,006 | 1,697 | 3,308 | 4,067 | |
| Realized and unrealized (loss) gain on non-designated derivative instruments(3) | (2,870) | 6,618 | (8,516) | 3,748 | (28,987) | |
| Foreign currency exchange (loss) gain (4) | (2,843) | 6,960 | (11,624) | 4,117 | (6,885) | |
| Other expense(5) | (1,088) | (3,769) | (679) | (4,857) | (1,040) | |
| Net income before income tax expense | 58,093 | 90,290 | 47,479 | 148,383 | 19,163 | |
| Income tax (expense) recovery | (1,815) | 777 | 1,804 | (1,038) | (708) | |
| Net income | 56,278 | 91,067 | 49,283 | 147,345 | 18,455 | |
| Non-controlling interest in net income | 2,990 | 3,476 | 4,349 | 6,466 | 6,515 | |
| Preferred unitholders' interest in net income | 6,425 | 6,425 | 6,425 | 12,850 | 12,850 | |
| General partner's interest in net income (loss) | 823 | 1,426 | 713 | 2,249 | (76) | |
| Limited partners’ interest in net income (loss) | 46,040 | 79,740 | 37,796 | 125,780 | (834) | |
| Limited partners' interest in net income (loss) per common unit: | ||||||
| • Basic | 0.53 | 0.92 | 0.46 | 1.45 | (0.01) | |
| • Diluted | 0.53 | 0.92 | 0.46 | 1.44 | (0.01) | |
| Weighted-average number of common units outstanding: | ||||||
| • Basic | 86,970,999 | 86,955,664 | 82,197,665 | 86,963,374 | 79,629,623 | |
| • Diluted | 87,133,146 | 87,091,656 | 82,262,235 | 87,112,516 | 79,629,623 | |
| Total number of common units outstanding at end of period | 86,984,843 | 86,964,523 | 86,927,558 | 86,984,843 | 86,927,558 | |
| (1) | In the first quarter of 2020, the Partnership wrote-down six wholly-owned multi-gas carriers (the Pan Spirit, Unikum Spirit, Vision Spirit, Camilla Spirit, Sonoma Spirit and Cathinka Spirit) to their estimated fair values. The total impairment charge of $45.0 million related to these six multi-gas carriers is included in write-down of vessels for the six months ended June 30, 2020. |
| (2) | The Partnership’s proportionate share of items within equity income as identified in Appendix A of this release are detailed in the table below. By excluding these items from equity income, the Partnership believes the resulting adjusted equity income is a normalized amount that can be used to better evaluate the financial performance of the Partnership’s equity-accounted investments. Adjusted equity income is a non-GAAP financial measure. |
| Three Months Ended | Six Month Ended | |||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||
| Equity income | 28,940 | 37,516 | 32,155 | 66,456 | 32,528 | |
| Proportionate share of unrealized loss (gain) on non-designated interest rate swaps | 2,310 | (15,410) | 3,806 | (13,100) | 26,010 | |
| Proportionate share of unrealized credit loss provisions (reversals) | 635 | 6,677 | (423) | 7,312 | 8,557 | |
| Proportionate share of other items | 182 | (320) | 362 | (138) | (177) | |
| Equity income adjusted for items in Appendix A | 32,067 | 28,463 | 35,900 | 60,530 | 66,918 | |
| (3) | The realized losses on non-designated derivative instruments relate to the amounts the Partnership actually paid to settle non-designated derivative instruments and the unrealized gains (losses) on non-designated derivative instruments relate to the change in fair value of such non-designated derivative instruments, as detailed in the table below: |
| Three Months Ended | Six Month Ended | |||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||
| Realized losses relating to: | ||||||
| Interest rate swap agreements | (3,925) | (4,473) | (3,662) | (8,398) | (6,573) | |
| Interest rate swap agreement termination(i) | — | (18,012) | — | (18,012) | — | |
| Foreign currency forward contracts | — | — | — | — | (241) | |
| (3,925) | (22,485) | (3,662) | (26,410) | (6,814) | ||
| Unrealized gains (losses) relating to: | ||||||
| Interest rate swap agreements | 1,055 | 29,103 | (4,854) | 30,158 | (22,375) | |
| Foreign currency forward contracts | — | — | — | — | 202 | |
| 1,055 | 29,103 | (4,854) | 30,158 | (22,173) | ||
| Total realized and unrealized (losses) gains on non-designated derivative instruments | (2,870) | 6,618 | (8,516) | 3,748 | (28,987) | |
| (i) | The termination of an interest rate swap agreement during the three months ended March 31, 2021 and the six months ended June 30, 2021 was in connection with a debt refinancing completed in February 2021 at a lower all-in interest rate. | |
| (4) | For accounting purposes, the Partnership is required to revalue all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rates at the end of each reporting period. This revaluation does not affect the Partnership’s cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized foreign currency translation gains or losses in the Consolidated Statements of Income. Foreign currency exchange (loss) gain includes realized gains (losses) relating to the amounts the Partnership paid to settle the Partnership’s Norwegian Krone (NOK) denominated unsecured bonds and the associated non-designated cross currency swaps that were entered into as economic hedges in relation to the NOK denominated bonds. Foreign currency exchange (loss) gain also includes unrealized (losses) gains relating to the change in fair value of such derivative instruments and unrealized gains (losses) on the revaluation of the NOK bonds as detailed in the table below: | |
| Three Months Ended | Six Month Ended | |||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||
| Realized losses on cross-currency swaps | (1,293) | (1,345) | (1,430) | (2,638) | (3,247) | |
| Realized losses on cross-currency swaps maturity | — | (33,844) | — | (33,844) | ||
| Realized gains on repurchase of NOK bonds | — | — | 33,844 | — | 33,844 | |
| Unrealized (losses) gains on cross currency swaps | (2,262) | 5,129 | 45,881 | 2,867 | (3,659) | |
| Unrealized gains (losses) on revaluation of NOK bonds | 2,217 | (1,189) | (53,794) | 1,028 | 179 | |
| (5) | Includes unrealized credit loss provisions of $0.7 million, $3.7 million and $0.3 million for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively, and $4.4 million and $0.2 million for the six months ended June 30, 2021 and June 30, 2020, respectively. |
Teekay LNG Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. Dollars)
| As at June 30, | As at March 31, | As at December 31, | |
| 2021 | 2021 | 2020 | |
| (unaudited) | (unaudited) | (unaudited) | |
| ASSETS | |||
| Current | |||
| Cash and cash equivalents | 144,206 | 163,480 | 206,762 |
| Restricted cash – current | 8,610 | 5,702 | 8,358 |
| Accounts receivable | 12,230 | 15,100 | 7,631 |
| Prepaid expenses | 11,948 | 13,566 | 9,259 |
| Current portion of derivative assets | 258 | 124 | — |
| Current portion of net investments in direct financing leases, net | 14,285 | 14,022 | 13,969 |
| Current portion of advances to equity-accounted joint ventures, net | 8,160 | 10,994 | 10,991 |
| Advances to affiliates | 6,940 | 6,844 | 4,924 |
| Other current assets | 3,071 | 237 | 237 |
| Total current assets | 209,708 | 230,069 | 262,131 |
| Restricted cash – long-term | 37,384 | 39,034 | 42,823 |
| Vessels and equipment | |||
| At cost, less accumulated depreciation | 1,197,551 | 1,209,622 | 1,220,355 |
| Vessels related to finance leases, at cost, less accumulated depreciation | 1,644,654 | 1,650,959 | 1,654,814 |
| Operating lease right-of-use assets | 13,887 | 17,357 | 20,750 |
| Total vessels and equipment | 2,856,092 | 2,877,938 | 2,895,919 |
| Investments in and advances to equity-accounted joint ventures, net | 1,117,271 | 1,118,104 | 1,056,792 |
| Net investments in direct financing leases, net | 487,276 | 492,027 | 500,101 |
| Other assets | 26,386 | 24,386 | 22,382 |
| Derivative assets | 6,925 | 9,532 | 4,505 |
| Intangible assets, net | 30,082 | 32,296 | 34,510 |
| Goodwill | 34,841 | 34,841 | 34,841 |
| Total assets | 4,805,965 | 4,858,227 | 4,854,004 |
| LIABILITIES AND EQUITY | |||
| Current | |||
| Accounts payable | 3,721 | 4,104 | 4,883 |
| Accrued liabilities | 64,113 | 71,512 | 81,706 |
| Unearned revenue | 17,800 | 23,700 | 30,254 |
| Current portion of long-term debt | 355,081 | 350,273 | 250,508 |
| Current obligations related to finance leases | 72,925 | 72,422 | 71,932 |
| Current portion of operating lease liabilities | 13,887 | 14,164 | 14,003 |
| Current portion of derivative liabilities | 26,375 | 26,047 | 56,925 |
| Advances from affiliates | 8,086 | 9,353 | 11,047 |
| Total current liabilities | 561,988 | 571,575 | 521,258 |
| Long-term debt | 1,062,298 | 1,094,044 | 1,221,705 |
| Long-term obligations related to finance leases | 1,232,130 | 1,250,647 | 1,268,990 |
| Long-term operating lease liabilities | — | 3,193 | 6,747 |
| Other long-term liabilities | 56,104 | 55,544 | 56,063 |
| Derivative liabilities | 29,131 | 30,293 | 32,971 |
| Total liabilities | 2,941,651 | 3,005,296 | 3,107,734 |
| Equity | |||
| Limited partners – common units | 1,545,448 | 1,523,746 | 1,465,408 |
| Limited partners – preferred units | 285,159 | 285,159 | 285,159 |
| General partner | 47,613 | 47,225 | 46,182 |
| Accumulated other comprehensive loss | (72,272) | (61,375) | (103,836) |
| Partners' equity | 1,805,948 | 1,794,755 | 1,692,913 |
| Non-controlling interest | 58,366 | 58,176 | 53,357 |
| Total equity | 1,864,314 | 1,852,931 | 1,746,270 |
| Total liabilities and total equity | 4,805,965 | 4,858,227 | 4,854,004 |
Teekay LNG Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. Dollars)
| Six Months Ended | ||
| June 30, | June 30, | |
| 2021 | 2020 | |
| (unaudited) | (unaudited) | |
| Cash, cash equivalents and restricted cash provided by (used for) | ||
| OPERATING ACTIVITIES | ||
| Net income | 147,345 | 18,455 |
| Non-cash and non-operating items: | ||
| Unrealized (gain) loss on non-designated derivative instruments | (30,158) | 22,173 |
| Depreciation and amortization | 64,251 | 64,268 |
| Write-down of vessels | — | 45,000 |
| Unrealized foreign currency exchange (gain) loss including the effect of the settlement of cross currency swaps | (8,199) | 3,660 |
| Equity income, net of distributions received $28,589 (2020 – $14,852) | (37,867) | (17,676) |
| Amortization of deferred financing issuance costs included in interest expense | 2,840 | 3,001 |
| Change in unrealized credit loss provisions included in other expense | 4,417 | 160 |
| Other non-cash items | 1,786 | 1,663 |
| Change in operating assets and liabilities: | ||
| Receipts from direct financing and sales-type leases | 7,285 | 267,463 |
| Expenditures for dry docking | (8,412) | (1,927) |
| Other operating assets and liabilities | (57,704) | 17,621 |
| Net operating cash flow | 85,584 | 423,861 |
| FINANCING ACTIVITIES | ||
| Proceeds from issuance of long-term debt | 212,691 | 446,650 |
| Scheduled repayments of long-term debt and settlement of related swaps | (150,528) | (194,831) |
| Prepayments of long-term debt | (111,543) | (525,021) |
| Financing issuance costs | (2,461) | (2,601) |
| Scheduled repayments of obligations related to finance leases | (35,867) | (34,893) |
| Repurchase of common units | — | (15,635) |
| Cash distributions paid | (60,426) | (47,295) |
| Dividends paid to non-controlling interests | (2,670) | — |
| Acquisition of non-controlling interest in certain of the Partnership's subsidiaries | — | (2,219) |
| Net financing cash flow | (150,804) | (375,845) |
| INVESTING ACTIVITIES | ||
| Expenditures for vessels and equipment | (12,853) | (8,832) |
| Proceeds from repayments of advances to equity-accounted joint ventures | 10,330 | — |
| Net investing cash flow | (2,523) | (8,832) |
| (Decrease) increase in cash, cash equivalents and restricted cash | (67,743) | 39,184 |
| Cash, cash equivalents and restricted cash, beginning of the period | 257,943 | 253,291 |
| Cash, cash equivalents and restricted cash, end of the period | 190,200 | 292,475 |
| Supplemental cash flow information | ||
| The accompanying notes are an integral part of the consolidated financial statements. | ||
Teekay LNG Partners L.P.
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income
(in thousands of U.S. Dollars)
| Three Months Ended | |||
| June 30, | March 31, | June 30, | |
| 2021 | 2021 | 2020 | |
| (unaudited) | (unaudited) | (unaudited) | |
| Net income – GAAP basis | 56,278 | 91,067 | 49,283 |
| Less: net income attributable to non-controlling interests | (2,990) | (3,476) | (4,349) |
| Net income attributable to the partners and preferred unitholders | 53,288 | 87,591 | 44,934 |
| Add (subtract) specific items affecting net income: | |||
| Foreign currency exchange losses (gains)(1) | 1,550 | (8,305) | 10,194 |
| Unrealized credit loss provisions (reversals), unrealized losses and (gains) on non-designated derivative instruments and other items from equity-accounted investees(2) | 3,127 | (9,053) | 3,745 |
| Unrealized (gains) losses on non-designated derivative instruments and realized loss from interest rate swap termination(3) | (1,055) | (11,091) | 4,854 |
| Unrealized credit loss provisions and other items(4) | 383 | 823 | (1,619) |
| Non-controlling interests’ share of items above(5) | (276) | 501 | 535 |
| Total adjustments | 3,729 | (27,125) | 17,709 |
| Adjusted net income attributable to the partners and preferred unitholders | 57,017 | 60,466 | 62,643 |
| Preferred unitholders' interest in adjusted net income | 6,425 | 6,425 | 6,425 |
| General partner's interest in adjusted net income | 889 | 950 | 1,044 |
| Limited partners’ interest in adjusted net income | 49,703 | 53,091 | 55,174 |
| Limited partners’ interest in adjusted net income per common unit, basic | 0.57 | 0.61 | 0.67 |
| Weighted-average number of common units outstanding, basic | 86,970,999 | 86,955,664 | 82,197,665 |
| (1) | Foreign currency exchange losses (gains) primarily relate to the Partnership’s revaluation of all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period and unrealized losses (gains) on the cross-currency swaps economically hedging the Partnership’s NOK bonds. This amount excludes the realized losses relating to the cross currency swaps for the NOK bonds. See Note 4 to the Consolidated Statements of Income included in this release for further details. |
| (2) | Reflects the proportionate share of unrealized credit loss provisions (reversals) and unrealized losses or gains due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes in the Partnership's equity-accounted investees. See Note 2 to the Consolidated Statements of Income included in this release for further details. |
| (3) | Reflects the unrealized (gains) losses due to changes in the mark-to-market value of the Partnership's derivative instruments that are not designated as hedges for accounting purposes and realized losses related to interest rate swap agreement termination. See Note 3 to the Consolidated Statements of Income included in this release for further details. |
| (4) | Includes adjustments for unrealized credit loss provisions and adjustments relating to changes in deferred tax balances. |
| (5) | Items affecting net income include items from the Partnership’s consolidated non-wholly-owned subsidiaries. The specific items affecting net income are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to arrive at the non-controlling interests’ share of the amount. The amount identified as “non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of the other specific items affecting net income listed in the table. |
Teekay LNG Partners L.P.
Appendix B - Reconciliation of Non-GAAP Financial Measures
Distributable Cash Flow (DCF)
(in thousands of U.S. Dollars, except units outstanding and per unit data)
| Three Months Ended | |||
| June 30, | March 31, | June 30, | |
| 2021 | 2021 | 2020 | |
| (unaudited) | (unaudited) | (unaudited) | |
| Net income | 56,278 | 91,067 | 49,283 |
| Add: | |||
| Partnership’s share of equity-accounted joint ventures' DCF net of estimated maintenance capital expenditures(1) | 40,356 | 36,356 | 42,725 |
| Depreciation and amortization | 32,349 | 31,902 | 31,629 |
| Direct financing lease payments received in excess of revenue recognized and other adjustments | 3,694 | 3,576 | 3,392 |
| Foreign currency exchange loss (gain) | 1,550 | (8,305) | 10,194 |
| Unrealized credit loss provisions | 744 | 3,673 | 260 |
| Deferred income tax and other non-cash items | 652 | (1,216) | 271 |
| Subtract: | |||
| Unrealized (gains) losses on non-designated derivative instruments and realized loss from interest rate swap termination | (1,055) | (11,091) | 4,854 |
| Distributions relating to preferred units | (6,425) | (6,425) | (6,425) |
| Estimated maintenance capital expenditures | (14,511) | (14,365) | (14,513) |
| Equity income | (28,940) | (37,516) | (32,155) |
| Distributable Cash Flow before non-controlling interest | 84,692 | 87,656 | 89,515 |
| Non-controlling interests’ share of DCF before estimated maintenance capital expenditures | (5,713) | (5,637) | (6,345) |
| Distributable Cash Flow | 78,979 | 82,019 | 83,170 |
| Amount of cash distributions attributable to the General Partner | (447) | (447) | (411) |
| Limited partners' Distributable Cash Flow | 78,532 | 81,572 | 82,759 |
| Weighted-average number of common units outstanding, basic | 86,970,999 | 86,955,664 | 82,197,665 |
| Distributable Cash Flow per limited partner common unit | 0.90 | 0.94 | 1.03 |
| (1) | The Partnership’s share of estimated maintenance capital expenditures relating to its equity-accounted joint ventures were $15.2 million, $15.1 million and $15.2 million for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively. |
Teekay LNG Partners L.P.
Appendix C - Reconciliation of Non-GAAP Financial Measures
Total Adjusted EBITDA
(in thousands of U.S. Dollars)
| Three Months Ended | |||
| June 30, | March 31, | June 30, | |
| 2021 | 2021 | 2020 | |
| (unaudited) | (unaudited) | (unaudited) | |
| Net income | 56,278 | 91,067 | 49,283 |
| Depreciation and amortization | 32,349 | 31,902 | 31,629 |
| Interest expense, net of interest income | 28,782 | 27,646 | 33,446 |
| Income tax expense (recovery) | 1,815 | (777) | (1,804) |
| EBITDA | 119,224 | 149,838 | 112,554 |
| Add (subtract) specific income statement items affecting EBITDA: | |||
| Foreign currency exchange loss (gain) | 2,843 | (6,960) | 11,624 |
| Other expense | 1,088 | 3,769 | 679 |
| Equity income | (28,940) | (37,516) | (32,155) |
| Realized and unrealized loss (gain) on non-designated derivative instruments | 2,870 | (6,618) | 8,516 |
| Direct financing lease payments received in excess of revenue recognized and other adjustments | 3,694 | 3,576 | 3,392 |
| Consolidated adjusted EBITDA | 100,779 | 106,089 | 104,610 |
| Adjusted EBITDA from equity-accounted vessels (See Appendix E) | 82,733 | 78,198 | 87,730 |
| Total adjusted EBITDA | 183,512 | 184,287 | 192,340 |
Teekay LNG Partners L.P.
Appendix D - Reconciliation of Non-GAAP Financial Measures
Consolidated Adjusted EBITDA by Segment
(in thousands of U.S. Dollars)
| Three Months Ended June 30, 2021 | |||
| (unaudited) | |||
| Liquefied Natural Gas Segment | Liquefied Petroleum Gas Segment | Total | |
| Voyage revenues | 136,764 | 12,005 | 148,769 |
| Voyage expenses | (841) | (5,519) | (6,360) |
| Vessel operating expenses | (27,260) | (5,276) | (32,536) |
| Time-charter hire expenses | (5,867) | — | (5,867) |
| Depreciation and amortization | (30,660) | (1,689) | (32,349) |
| General and administrative expenses | (6,268) | (653) | (6,921) |
| Income (loss) from vessel operations | 65,868 | (1,132) | 64,736 |
| Depreciation and amortization | 30,660 | 1,689 | 32,349 |
| Direct financing lease payments received in excess of revenue recognized and other adjustments | 3,694 | — | 3,694 |
| Consolidated adjusted EBITDA | 100,222 | 557 | 100,779 |
| Three Months Ended June 30, 2020 | |||
| (unaudited) | |||
| Liquefied Natural Gas Segment | Liquefied Petroleum Gas Segment | Total | |
| Voyage revenues | 137,822 | 10,383 | 148,205 |
| Voyage expenses | (806) | (4,523) | (5,329) |
| Vessel operating expenses | (24,599) | (3,808) | (28,407) |
| Time-charter hire expenses | (5,368) | — | (5,368) |
| Depreciation and amortization | (30,566) | (1,063) | (31,629) |
| General and administrative expenses | (7,251) | (632) | (7,883) |
| Income from vessel operations | 69,232 | 357 | 69,589 |
| Depreciation and amortization | 30,566 | 1,063 | 31,629 |
| Direct financing lease payments received in excess of revenue recognized and other adjustments | 3,392 | — | 3,392 |
| Consolidated adjusted EBITDA | 103,190 | 1,420 | 104,610 |
Teekay LNG Partners L.P.
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA from Equity-Accounted Vessels
(in thousands of U.S. Dollars)
| Three Months Ended | ||||
| June 30, 2021 | June 30, 2020 | |||
| (unaudited) | (unaudited) | |||
| At | Partnership's | At | Partnership's | |
| 100% | Portion(1) | 100% | Portion(1) | |
| Voyage revenues | 247,932 | 106,795 | 258,426 | 111,365 |
| Voyage recoveries (expenses) | 264 | 123 | (1,360) | (638) |
| Vessel operating expenses, time-charter hire expenses and general and administrative expenses | (77,413) | (33,567) | (72,316) | (31,551) |
| Depreciation and amortization | (25,588) | (12,811) | (25,123) | (12,530) |
| Income from vessel operations of equity-accounted vessels | 145,195 | 60,540 | 159,627 | 66,646 |
| Net interest expense | (61,882) | (25,112) | (73,082) | (29,351) |
| Income tax (expense) recovery | (359) | (126) | 225 | 110 |
| Other items including realized and unrealized losses on derivative instruments and unrealized credit loss provisions | (21,026) | (6,362) | (17,786) | (5,250) |
| Net income / equity income of equity-accounted vessels | 61,928 | 28,940 | 68,984 | 32,155 |
| Net income / equity income of equity-accounted LNG vessels | 55,917 | 26,000 | 60,105 | 27,795 |
| Net income / equity income of equity-accounted LPG vessels | 6,011 | 2,940 | 8,879 | 4,360 |
| Net income / equity income of equity-accounted vessels | 61,928 | 28,940 | 68,984 | 32,155 |
| Depreciation and amortization | 25,588 | 12,811 | 25,123 | 12,530 |
| Net interest expense | 61,882 | 25,112 | 73,082 | 29,351 |
| Income tax expense (recovery) | 359 | 126 | (225) | (110) |
| EBITDA from equity-accounted vessels | 149,757 | 66,989 | 166,964 | 73,926 |
| Add (subtract) specific income statement items affecting EBITDA: | ||||
| Other items including realized and unrealized losses on derivative instruments and unrealized credit loss provisions | 21,026 | 6,362 | 17,786 | 5,250 |
| Direct financing and sales-type lease payments received in excess of revenue recognized | 28,493 | 10,327 | 26,381 | 9,499 |
| Amortization of in-process contracts | (1,738) | (945) | (1,738) | (945) |
| Adjusted EBITDA from equity-accounted vessels | 197,538 | 82,733 | 209,393 | 87,730 |
| Adjusted EBITDA from equity-accounted LNG vessels | 176,443 | 72,186 | 185,577 | 75,824 |
| Adjusted EBITDA from equity-accounted LPG vessels | 21,095 | 10,547 | 23,816 | 11,906 |
| (1) | The Partnership's equity-accounted vessels for the three months ended June 30, 2021 and 2020 include: the Partnership’s 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent ownership interest in the Partnership’s joint venture with Exmar NV (the Excalibur Joint Venture), which owns one LNG carrier; the Partnership’s 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnership’s 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnership’s 50 percent ownership interest in the Exmar LPG Joint Venture, which owns and in-charters 23 LPG carriers; the Partnership’s ownership interest ranging from 20 to 30 percent in four LNG carriers chartered to Shell (the Pan Union Joint Venture); the Partnership’s 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain. |
Teekay LNG Partners L.P.
Appendix F - Summarized Financial Information of Equity-Accounted Joint Ventures
(in thousands of U.S. Dollars)
| As at June 30, 2021 | As at December 31, 2020 | |||
| (unaudited) | (unaudited) | |||
| At | Partnership's | At | Partnership's | |
| 100% | Portion(1) | 100% | Portion(1) | |
| Cash and restricted cash, current and non-current | 544,217 | 227,017 | 549,454 | 225,049 |
| Other current assets | 100,022 | 38,945 | 67,580 | 25,415 |
| Property, plant and equipment, including owned vessels, vessels related to finance leases and operating lease right-of-use assets | 1,910,189 | 973,272 | 1,961,820 | 1,000,386 |
| Net investments in sales-type and direct financing leases, current and non-current | 5,308,933 | 2,049,238 | 5,384,652 | 2,077,707 |
| Derivative assets | 10,158 | 5,085 | — | — |
| Other non-current assets | 94,795 | 53,958 | 87,248 | 51,812 |
| Total assets | 7,968,314 | 3,347,515 | 8,050,754 | 3,380,369 |
| Current portion of long-term debt and obligations related to finance leases and operating leases | 324,331 | 137,890 | 306,185 | 129,538 |
| Current portion of derivative liabilities | 69,363 | 28,153 | 68,966 | 27,988 |
| Other current liabilities | 153,601 | 60,435 | 164,266 | 65,311 |
| Long-term debt and obligations related to finance leases and operating leases | 4,649,780 | 1,878,654 | 4,789,260 | 1,938,748 |
| Shareholders' loans, current and non-current | 327,977 | 113,816 | 341,113 | 121,778 |
| Derivative liabilities | 190,039 | 76,509 | 280,480 | 112,922 |
| Other long-term liabilities | 82,170 | 36,443 | 70,743 | 33,353 |
| Equity | 2,171,053 | 1,015,615 | 2,029,741 | 950,731 |
| Total liabilities and equity | 7,968,314 | 3,347,515 | 8,050,754 | 3,380,369 |
| Investments in equity-accounted joint ventures | 1,015,615 | 950,731 | ||
| Advances to equity-accounted joint ventures | 113,816 | 121,778 | ||
| Unrealized credit loss provisions | (4,000) | (4,726) | ||
| Investments in and advances, net to equity-accounted joint ventures, current and non-current | 1,125,431 | 1,067,783 | ||
| (1) | The Partnership's equity-accounted vessels as at June 30, 2021 and December 31, 2020 include: the Partnership’s 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent ownership interest in the Excalibur Joint Venture, which owns one LNG carrier; the Partnership’s 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnership’s 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnership’s 50 percent ownership interest in the Exmar LPG Joint Venture, which owns and in-charters 23 LPG carriers; the Partnership’s ownership interest ranging from 20 percent to 30 percent in four LNG carriers chartered to Shell in the Pan Union Joint Venture; the Partnership’s 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain. |
Forward-Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements, among other things, regarding: the Partnership’s ability to continue to generate strong earnings and cash flows despite market volatility and cyclicality; expected upcoming decreases in the overall number of drydocks for the Partnership’s vessels and the anticipated financial benefits to the Partnership from such drydock reductions; the counter-seasonal strength in LNG shipping rates, including the expected supply and demand fundamentals in the near-term charter market for LNG carriers and the potential positive impact these tailwinds may have on the Creole Spirit and the Partnership's other vessels rolling off contract in 2022; the Partnership's ability to derive benefits from any upside in market strength; the ability of the Partnership to fully utilize certain of its vessels; the ability of the Partnership to execute on its balanced capital allocation strategy including delevering of its balance sheet and returning capital to unitholders, while pursuing growth, including expected increases in financial flexibility as a result of implementing such strategy; fixed charter coverage for the Partnership's LNG fleet for the remainder of 2021 and 2022; the ability of the Partnership to realize and receive the full benefits from its contractual backlog of revenue under its long-term charter contracts; the ability to continue to pay increased distributions on its common units; and the expected cash flows from, and the continued performance of, the Partnership's and its joint ventures' charter contracts.
The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of charter contracts of existing vessels in the Partnership's fleet; higher than expected costs and expenses, including as a result of off-hire days or drydocking requirements (both scheduled and unscheduled); delays in the Partnership’s ability to successfully and timely complete drydockings; the potential for the COVID-19 pandemic to impact the Partnership's drydock activities, or operations in general; general market conditions and trends, including spot, multi-month and multi-year charter rates; the potential for the COVID-19 pandemic to impact global demand for LNG and LPG and the associated impact on LNG and LPG charter rates; inability of customers of the Partnership or any of its joint ventures to make future payments under contracts; potential further delays to the formal commencement of commercial operations of the Bahrain Regasification Terminal; the inability of the Partnership to renew or replace charter contracts on existing vessels; potential lack of cash flow to reduce balance sheet leverage or of excess capital available to allocate towards returning capital to unitholders; potential lack of cash flow to continue paying distributions on the Partnership’s common units and other securities; and other factors discussed in Teekay LNG's filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2020. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.