Teekay Tankers Ltd. Q2 FY2025 earnings call

• Teekay Tankers had strong Q2 financials with GAAP net income of $62.6M and adjusted net income of $48.7M.
• Spot rates were counter seasonally strong, outperforming previous quarters and long-term averages, generating significant free cash flow.
• Fleet renewal strategy includes selling older vessels, acquiring modern ones; in July, acquired a Suezmax and a VLCC, and agreed to sell certain vessels for gains.
• Third quarter to date spot rates secured: $31,400 per day for Suezmax and $28,200 per day for Aframax LR2, with ~43% of spot base booked.
• Near-term oil fundamentals: Global oil production expected to increase due to OPEC+ unwind and new offshore production, potentially supporting tanker rates.
• Medium-term outlook: Fleet supply balanced with stable order book and aging fleet, but geopolitical factors add complexity to tanker rate direction.

Teekay Tankers reported GAAP net income of $62.6 million or $1.81 per share and adjusted net income of $48.7 million or $1.41 per share in the second quarter. Second quarter spot rates were counter seasonally strong, outperforming the last 2 quarters and long-term averages. The company generated approximately $62.8 million in free cash flow from operations, had a cash and short-term investment position of $712 million and no debt at quarter end. In 2025, Teekay Tankers has sold or agreed to sell 11 vessels for total gross proceeds of $340 million and estimated book gains on sale of approximately $100 million. In July, it acquired 1 modern Suezmax and agreed to acquire the remaining 50% ownership interest in the Hong Kong Spirit VLCC, and agreed to sell 4 Suezmaxes and 1 LR2 for a combined total of $158.5 million with an estimated book gain on sale of approximately $46 million. Revenue contribution details aren't explicitly broken down by product segment beyond Teekay Tankers' overall performance.

• Teekay Tankers believes there are potential tailwinds for tanker markets towards the end of the year and medium-term fundamentals remain balanced though with geopolitical complexity.
• Plan to gradually change the pace of buying to renew and grow fleet in an accretive manner to future earnings.
• Near-term focus is on reloading on core asset classes of Aframaxes and Suezmaxes, with potential to look at other asset classes over medium term.

• Geopolitical factors such as OPEC+ completing unwinding of voluntary supply cuts, EU introducing new price cap on Russian crude exports, US sanctions on Iranian crude, which will likely influence volatility in spot tanker rates.

Q: Omar Nokta asked about expanding on fleet renewal comments, specifically pace of acquisitions and capital deployment.

A: Kenneth Hvid responded that selling of older ships was largely done, and they will recycle capital to gradually add newer ships, with priority on core segments of Aframaxes and Suezmaxes in near term, possibly looking at other asset classes medium term.

Q: Tim Chang on behalf of Ken Hoexter asked about OPEC+ unwinding production cuts and impact on rates, and run rate of other revenue.

A: Christian Waldegrave said more oil volumes from OPEC+ and non-OPEC in Atlantic Basin later in year, with winter seasonally stronger for rates; Brody Speers stated other revenue was higher due to a one-time restructuring charge in Australian business related to an FPSO contract expiration