Teekay LNG Partners Reports Second Quarter 2016 Results
/EINPresswire.com/ -- HAMLITON, BERMUDA -- (Marketwired) -- 08/04/16 -- Highlights
-- Reported GAAP net income attributable to the partners of $43.1 million
and adjusted net income attributable to the partners of $53.8 million
(excluding items listed in Appendix A to this release) in the second
quarter of 2016.
-- Generated distributable cash flow of $76.1 million, or $0.95 per common
unit, in the second quarter of 2016.
-- In June 2016, the Exmar LPG joint venture took delivery of the seventh
of its 12 mid-size LPG carrier newbuildings, which will commence a five-
year charter with Statoil in August 2016.
-- On August 1, 2016, the Partnership's second MEGI LNG carrier
newbuilding, Oak Spirit, commenced its five-year, fee-based charter with
Cheniere Energy.
-- Continued to make significant progress on the debt financing for the
Partnership's existing newbuilding projects.
-- Declared second quarter 2016 cash distribution of $0.14 per common unit.
Teekay GP L.L.C., 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, 2016.
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Three Months Ended
(in thousands of U.S. June 30, March 31, June 30,
Dollars) 2016 2016 2015
(unaudited) (unaudited) (unaudited)
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GAAP FINANCIAL COMPARISON
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Voyage revenues 99,241 95,771 98,608
Income from vessel
operations 47,554 16,983 43,856
Equity income 29,567 9,498 29,002
Net income (loss)
attributable to the
partners 43,071 (37,138) 58,093
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NON-GAAP FINANCIAL
COMPARISON
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Total cash flow from vessel
operations (CFVO)(1) 135,127 114,429 119,698
Distributable cash flow
(DCF)(1) 76,067 54,404 65,768
Adjusted net income
attributable to the
partners (1) 53,780 34,151 39,464
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(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).
CEO Commentary
"The Partnership generated strong cash flows in the second quarter of 2016, which were augmented by a favorable settlement we received relating to an LNG carrier charter contract dispute in our 52 percent-owned MALT joint venture, as well as a full quarter of earnings from our recently delivered Creole Spirit MEGI LNG carrier which commenced its five-year charter contract with Cheniere Energy in late-February 2016" commented Peter Evensen, Chief Executive Officer of Teekay GP LLC.
"Since reporting earnings in May 2016, the Partnership has continued to execute on its portfolio of profitable growth projects," Mr. Evensen continued. "The Partnership took delivery of its second MEGI LNG carrier newbuilding, the Oak Spirit, which commenced its five-year charter contract with Cheniere Energy on August 1st, and our Exmar LPG joint venture took delivery of its seventh of 12 medium-sized gas carrier newbuildings, which commences its five-year charter contract with Statoil in late-August, both of which are expected to provide cash flow growth starting in the third quarter of 2016."
Mr. Evensen added, "Securing long-term financing for our growth projects that deliver through 2020 has been a major focus area. We continued to make good progress this quarter in securing the required debt financing and, since May 2016, have secured lender credit approvals on over $900 million(1) of new debt financings, including three MEGI LNG carrier newbuildings, the first two Yamal LNG Arc7 newbuildings and the majority of our remaining LPG carrier newbuildings."
Summary of Recent Events
Delivery Update on the Second MEGI LNG Carrier Newbuilding for Cheniere Energy
On August 1, 2016, the Partnership's second MEGI LNG carrier newbuilding, Oak Spirit, commenced its five-year fee-based contract with Cheniere Energy. The vessel is expected to earn annual cash flow from vessel operations(2) and distributable cash flow(2) of approximately $25 million and $15 million, respectively.
Delivery Deferral Option on Uncommitted MEGI LNG Carrier
In July 2016, Teekay LNG reached an agreement with Daewoo Shipbuilding and Marine Engineering (DSME) that allows the Partnership to elect to defer delivery of its unchartered MEGI LNG carrier, Torben Spirit, from its original delivery date of February 2017 to December 2017. Teekay LNG is currently pursuing employment opportunities for this vessel and will decide in late-2016 on whether to defer the delivery.
(1) Based on Teekay LNG's proportionate ownership interests in the projects. (2) This is a non-GAAP financial measure. Please refer to "Definitions and Non-GAAP Financial Measures" for definitions of this term. A reconciliation with respect to this forward looking statement has been omitted in reliance with the 'unreasonable efforts' exception.
Operating Results
The following table highlights certain financial information for Teekay LNG's two segments: the Liquefied Gas Segment and the Conventional Tanker Segment (please refer to the "Teekay LNG's Fleet" section of this release below and Appendices C through E for further details).
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Three Months Ended
June 30, 2016
(in thousands of U.S. Dollars) (unaudited)
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Liquefied Conventional
Gas Tanker
Segment Segment Total
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GAAP FINANCIAL COMPARISON
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Voyage revenues 84,497 14,744 99,241
Income from vessel operations 42,484 5,070 47,554
Equity income 29,567 - 29,567
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NON-GAAP FINANCIAL COMPARISON
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CFVO from consolidated
vessels(i) 67,572 8,116 75,688
CFVO from equity accounted
vessels(i) 59,439 - 59,439
Total CFVO(i) 127,011 8,116 135,127
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Three Months Ended
June 30, 2015
(in thousands of U.S. Dollars) (unaudited)
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Liquefied Conventional
Gas Tanker
Segment Segment Total
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GAAP FINANCIAL COMPARISON
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Voyage revenues 77,466 21,142 98,608
Income from vessel operations 37,821 6,035 43,856
Equity income 29,002 - 29,002
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NON-GAAP FINANCIAL COMPARISON
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CFVO from consolidated
vessels(i) 60,290 11,466 71,756
CFVO from equity accounted
vessels(i) 47,942 - 47,942
Total CFVO(i) 108,232 11,466 119,698
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(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 Gas Segment
Income from vessel operations and cash flow from vessel operations from consolidated vessels increased primarily due to the delivery of Creole Spirit MEGI LNG carrier newbuilding, which commenced its five-year charter contract with Cheniere Energy in late-February 2016.
Equity income and cash flow from vessel operations from equity accounted vessels increased primarily due to the favorable settlement of a disputed charter contract termination related to one of the vessels in the Partnership's 52 percent-owned LNG joint venture with Marubeni Corporation (or the MALT Joint Venture), of which Teekay LNG's share was $20.3 million. This increase was partially offset by the temporary deferral of a portion of the charter payments for the Marib Spirit and Arwa Spirit effective January 2016 in the Partnership's MALT Joint Venture, the impact of the amended charter contracts associated with the Partnership's four 33 percent-owned Angola LNG carriers servicing the Angola LNG project which resulted in a positive cumulative adjustment in the quarter ended June 30, 2015, the impact of lower medium sized LPG carrier spot rates and the redelivery of an older in-chartered LPG carrier (net of the additions of three LPG carrier newbuildings delivered from September 2015 to June 2016 in the Partnership's 50 percent-owned Exmar LPG joint venture). Equity income was also impacted by unrealized losses on derivative instruments compared to unrealized gains in the same period of the prior year.
Conventional Tanker Segment
Income from vessel operations and cash flow from vessel operations decreased primarily due to the sales of the Bermuda Spirit and Hamilton Spirit in April and May 2016, respectively, and lower charter rates upon the charterer exercising its one-year extension options between September 2015 to January 2016 for the European Spirit, African Spirit and Asian Spirit.
Teekay LNG's Fleet
The following table summarizes the Partnership's fleet as of August 1, 2016:
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Number of Vessels
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Owned In-Chartered
Vessels(i) Vessels Newbuildings Total
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LNG Carrier Fleet 31(ii) - 19(ii) 50
LPG/Multigas Carrier
Fleet 22(iii) 2(iv) 5(iv) 29
Conventional Tanker
Fleet 6 - - 6
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Total 59 2 24 85
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(i) Owned vessels includes vessels accounted for under capital 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 99 percent.
(iv) The Partnership's interest in these vessels is 50 percent.
Liquidity
As of June 30, 2016, the Partnership had total liquidity of $261.4 million (comprised of $127.5 million in cash and cash equivalents and $133.9 million in undrawn credit facilities). Giving pro-forma effect to the delivery and associated financing of the Oak Spirit MEGI LNG carrier in July 2016, the Partnership's total liquidity at June 30, 2016 would have been approximately $295 million.
Conference Call
The Partnership plans to host a conference call on Thursday, August 4, 2016 at 11:00 a.m. (ET) to discuss the results for the second quarter of 2016. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
-- By dialing (800) 505-9568 or (416) 204-9271, if outside North America,
and quoting conference ID code 3296714.
-- By accessing the webcast, which will be available on Teekay LNG's
website at www.teekay.com (the archive will remain on the web site for a
period of 30 days).
An accompanying Second Quarter Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
The conference call will be recorded and made available until Thursday, August 18, 2016. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 3296714.
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, LPG and crude oil marine transportation services primarily under long-term, fee-based charter contracts through its interests in 50 LNG carriers (including one LNG regasification unit and 19 newbuildings), 29 LPG/Multigas carriers (including two in-chartered LPG carriers and five newbuildings) and six conventional tankers. The Partnership's interests in these vessels range from 20 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) 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 trade on the New York Stock Exchange under the symbol "TGP".
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 U.S. Securities and Exchange Commission. These non-GAAP financial measures, which include Cash Flow from Vessel Operations, Adjusted Net Income, and Distributable Cash Flow, are intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings, and may not be comparable to similar measures presented by other companies. The Partnership believes that certain investors use this information to evaluate the Partnership's financial performance.
Cash Flow from Vessel Operations
Cash flow from vessel operations (CFVO) represents income from vessel operations before depreciation and amortization expense, amortization of in-process revenue contracts, vessel write-downs, gains or losses on the sale of vessels and adjustments for direct financing leases to a cash basis, but includes realized gains or losses on the settlement of foreign currency forward contracts and a derivative charter contract. CFVO from Consolidated Vessels represents CFVO from vessels that are consolidated on the Partnership's financial statements. CFVO from Equity Accounted Vessels represents the Partnership's proportionate share of CFVO from its equity-accounted vessels. CFVO is a non-GAAP financial measure used by certain investors to measure the operational financial performance of companies. Please refer to Appendices D and E of this release for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures reflected in the Partnership's consolidated financial statements.
Adjusted Net Income
Adjusted net income excludes from net income items of income or loss 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. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure reflected in the Partnership's consolidated financial statements.
Distributable Cash Flow
Distributable cash flow (DCF) represents 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, ineffectiveness for derivative instruments designated as hedges for accounting purposes, distributions relating to equity financing of newbuilding installments, adjustments for direct financing leases to a cash basis and foreign exchange related items, including the Partnership's proportionate share of such items in 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. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating financial performance. Please refer to Appendix B of this release for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure reflected in the Partnership's consolidated financial statements.
Teekay LNG Partners L.P.
Consolidated Statements of Income (Loss)
(in thousands of U.S. Dollars, except units outstanding)
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Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
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Voyage revenues 99,241 95,771 98,608 195,012 195,934
Voyage expenses (542) (457) (373) (999) (691)
Vessel operating
expenses (22,412) (21,853) (24,102) (44,265) (45,736)
Depreciation and
amortization (22,869) (23,611) (23,209) (46,480) (46,778)
General and
administrative
expenses (5,864) (5,428) (7,068) (11,292) (13,776)
Loss on sale of
vessels(1) - (27,439) - (27,439) -
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Income from
vessel
operations 47,554 16,983 43,856 64,537 88,953
Equity income(2) 29,567 9,498 29,002 39,065 47,060
Interest
expense(3) (13,269) (13,997) (11,153) (27,266) (21,257)
Interest income 545 602 611 1,147 1,345
Realized and
unrealized
(loss) gain on
non-designated
derivative
instruments(4) (17,321) (38,089) 10,888 (55,410) (3,144)
Foreign currency
exchange (loss)
gain(5) (525) (10,118) (9,546) (10,643) 16,384
Other income 407 419 335 826 778
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Net income
(loss) before
tax expense 46,958 (34,702) 63,993 12,256 130,119
Income tax
expense (252) (261) (258) (513) (33)
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Net income
(loss) 46,706 (34,963) 63,735 11,743 130,086
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Non-controlling
interest in net
income (loss) 3,635 2,175 5,642 5,810 8,925
General
Partner's
interest in net
income (loss) 862 (743) 8,568 119 17,210
Limited
partners'
interest in net
income (loss) 42,209 (36,395) 49,525 5,814 103,951
Weighted-average
number of
common
Basic 79,571,820 79,557,872 78,590,812 79,564,846 78,552,784
Diluted 79,695,804 79,557,872 78,659,264 79,640,818 78,609,057
Total number of
common units
outstanding at
end of period 79,571,820 79,571,820 78,813,676 79,571,820 78,813,676
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(1) Loss on sale of vessels relates to Centrofin exercising its purchase
options to acquire the Bermuda Spirit and Hamilton Spirit Suezmax tankers
during the three months ended March 31, 2016. The Bermuda Spirit was sold to
Centrofin on April 15, 2016 and the Hamilton Spirit was sold to Centrofin on
May 17, 2016 for gross proceeds of $94 million. The Partnership received a
total of $50 million from Centrofin prior to the commencement of the two
charters and thus, the purchase option prices were lower than they would
have otherwise been. Such amounts received from Centrofin were accounted for
under GAAP as deferred revenue (prepayment of future charter payments) and
not as a reduction in the purchase price of the vessels, and was amortized
to revenues over the 12-year charter periods on a straight-line basis.
Approximately $28 million of $50 million has been recognized to revenues
since the inception of the charters, which approximates the $27 million loss
on sale recognized in the first quarter of 2016.
(2) Equity income includes unrealized gains/losses on non-designated
derivative instruments and any ineffectiveness for derivative instruments
designated as hedges for accounting purposes:
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Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
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Equity income 29,567 9,498 29,002 39,065 47,060
Proportionate share of
unrealized losses (gains)
on non-designated
derivative instruments 1,741 3,978 (8,082) 5,719 (6,956)
Proportionate share of
ineffective portion of
hedge accounted interest
rate swaps 514 160 (394) 674 -
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Equity income excluding
unrealized gains/losses on
designated and non-
designated derivative
instruments 31,822 13,636 20,526 45,458 40,104
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(3) Included in interest expense is ineffectiveness for derivative
instruments designated as hedges for accounting purposes, as detailed in the
table below (excludes any interest rate swap agreements designated and
qualifying cash flow hedges in the Partnership's equity accounted joint
ventures):
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Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
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Ineffective portion on
qualifying cash flow
hedging instruments 484 (1,398) - (914) -
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(4) The realized (losses) gains on non-designated derivative instruments
relate to the amounts the Partnership actually paid or received to settle
non-designated derivative instruments and the unrealized (losses) gains on
non-designated derivative instruments relate to the change in fair value of
such non-designated derivative instruments, as detailed in the table below:
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Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
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Realized (losses) gains
relating to:
Interest rate swap
agreements (6,613) (6,643) (7,319) (13,256) (14,624)
Toledo Spirit time-charter
derivative contract - 630 - 630 (570)
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(6,613) (6,013) (7,319) (12,626) (15,194)
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Unrealized (losses) gains
relating to:
Interest rate swap
agreements (6,220) (20,657) 17,424 (26,877) 13,067
Interest rate swaption
agreements (7,088) (11,669) 593 (18,757) 593
Toledo Spirit time-charter
derivative contract 2,600 250 190 2,850 (1,610)
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(10,708) (32,076) 18,207 (42,784) 12,050
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Total realized and
unrealized (losses) gains
on non-designated
derivative instruments (17,321) (38,089) 10,888 (55,410) (3,144)
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(5) For accounting purposes, the Partnership is required to revalue all
foreign currency-denominated monetary assets and liabilities based on the
prevailing exchange rate 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 (Loss).
Foreign currency exchange (loss) gain includes realized losses relating to the amounts the Partnership paid to settle the Partnership's non-designated cross-currency swaps that were entered into as economic hedges in relation to the Partnership's Norwegian Kroner (NOK) denominated unsecured bonds. The Partnership issued NOK 700 million, NOK 900 million, and NOK 1,000 million of unsecured bonds between May 2012 and May 2015. Foreign currency exchange (loss) gain also includes unrealized gains (losses) relating to the change in fair value of such derivative instruments, partially offset by unrealized (losses) gains on the revaluation of the NOK bonds as detailed in the table below:
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Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
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Realized losses on cross-
currency swaps (2,329) (2,291) (1,488) (4,620) (2,889)
Unrealized (losses) gains
on cross-currency swaps (6,571) 21,312 (1,741) 14,741 (18,786)
Unrealized gains (losses)
on revaluation of NOK
bonds 3,567 (20,430) 1,415 (16,863) 17,631
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Teekay LNG Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. Dollars)
----------------------------------------------------------------------------
As at As at As at
June 30, March 31, December 31,
2016 2016 2015
(unaudited) (unaudited) (unaudited)
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ASSETS
Current
Cash and cash equivalents 127,498 114,145 102,481
Restricted cash - current 6,096 6,100 6,600
Lease receivable - 94,392 -
Accounts receivable 13,524 12,235 22,081
Prepaid expenses 4,388 5,470 4,469
Current portion of derivative
assets 113 - -
Current portion of net
investments in direct
financing leases 18,328 17,986 20,606
Advances to affiliates 17,173 15,524 13,026
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Total current assets 187,120 265,852 169,263
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Restricted cash - long-term 104,328 100,090 104,919
Vessels and equipment
At cost, less accumulated
depreciation 1,430,545 1,444,950 1,595,077
Vessels under capital leases,
at cost, less accumulated
depreciation 289,797 292,145 88,215
Advances on newbuilding
contracts 374,937 368,825 424,868
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Total vessels and equipment 2,095,279 2,105,920 2,108,160
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Investment in and advances to
equity accounted joint
ventures 933,812 892,492 883,731
Net investments in direct
financing leases 635,351 640,836 646,052
Other assets 8,876 11,409 20,811
Derivative assets 2,350 3,016 5,623
Intangible assets - net 74,362 76,551 78,790
Goodwill - liquefied gas
segment 35,631 35,631 35,631
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Total assets 4,077,109 4,131,797 4,052,980
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LIABILITIES AND EQUITY
Current
Accounts payable 2,287 2,345 2,770
Accrued liabilities 31,769 32,734 37,456
Unearned revenue 17,575 15,857 19,608
Current portion of long-term
debt 227,595 135,551 197,197
Current obligations under
capital lease 62,973 64,024 4,546
Current portion of in-process
contracts 14,199 12,886 12,173
Current portion of derivative
liabilities 83,412 39,229 52,083
Advances from affiliates 15,285 13,393 22,987
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Total current liabilities 455,095 316,019 348,820
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Long-term debt 1,662,693 1,851,788 1,802,012
Long-term obligations under
capital lease 166,269 167,857 54,581
Long-term unearned revenue 10,994 11,319 30,333
Other long-term liabilities 64,587 70,118 71,152
In-process contracts 14,152 17,570 20,065
Derivative liabilities 186,321 210,128 182,338
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Total liabilities 2,560,111 2,644,799 2,509,301
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Equity
Limited partners 1,456,786 1,425,633 1,472,327
General Partner 48,469 47,833 48,786
Accumulated other comprehensive
loss (15,679) (11,618) (2,051)
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Partners' equity 1,489,576 1,461,848 1,519,062
Non-controlling interest (1) 27,422 25,150 24,617
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Total equity 1,516,998 1,486,998 1,543,679
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Total liabilities and total
equity 4,077,109 4,131,797 4,052,980
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(1) Non-controlling interest includes: a 30 percent equity interest in the
RasGas II joint venture (which owns three LNG carriers); a 31 percent equity
interest in Teekay BLT Corporation (a joint venture which owns two LNG
carriers); and a one percent equity interest in several of the Partnership's
ship-owning subsidiaries or joint ventures, which in each case represents
the ownership interest not owned by the Partnership.
Teekay LNG Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. Dollars)
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Six Months Ended
June 30, June 30,
2016 2015
(unaudited) (unaudited)
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Cash and cash equivalents provided by (used for)
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OPERATING ACTIVITIES
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Net income 11,743 130,086
Non-cash items:
Unrealized loss (gain) on non-designated
derivative instruments 42,784 (12,050)
Depreciation and amortization 46,480 46,778
Loss on sale of vessels 27,439 -
Unrealized foreign currency exchange loss (gain)
and other 4,888 (21,526)
Equity income, net of dividends received of
$4,191 (2015 - $45,000) (34,874) (2,060)
Ineffective portion on qualifying cash flow
hedging instruments included in interest
expense 914 -
Change in operating assets and liabilities (14,590) (20,767)
Expenditures for dry docking (2,356) (1,424)
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Net operating cash flow 82,428 119,037
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FINANCING ACTIVITIES
----------------------------------------------------------------------------
Proceeds from issuance of long-term debt 131,645 233,175
Debt issuance costs (420) (1,796)
Scheduled repayments of long-term debt (108,842) (66,600)
Prepayments of long-term debt (157,239) (90,000)
Scheduled repayments of capital lease obligations (9,319) (2,196)
Decrease (increase) in restricted cash 2,284 (9,930)
Proceeds from equity offerings, net of offering
costs - 16,166
Cash distributions paid (22,732) (127,239)
Dividends paid to non-controlling interest (150) -
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Net financing cash flow (164,773) (48,420)
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INVESTING ACTIVITIES
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Capital contributions to equity accounted joint
ventures (20,167) (3,235)
Loan repayments from equity accounted joint
ventures - 13,987
Receipts from direct financing leases 12,979 9,063
Proceeds from sale of vessels 94,311 -
Proceeds from sale-lease back 179,434 -
Expenditures for vessels and equipment (159,195) (143,080)
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Net investing cash flow 107,362 (123,265)
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Increase (decrease) in cash and cash equivalents 25,017 (52,648)
Cash and cash equivalents, beginning of the period 102,481 159,639
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Cash and cash equivalents, end of the period 127,498 106,991
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Teekay LNG Partners L.P.
Appendix A - Reconciliation of Non-GAAP Financial Measures
Specific Items Affecting Net Income
(in thousands of U.S. Dollars)
----------------------------------------------------------------------------
Three Months Ended
June 30,
2016 2015
(unaudited) (unaudited)
----------------------------------------------------------------------------
Net income - GAAP basis 46,706 63,735
Less:
Net income attributable to non-controlling
interests (3,635) (5,642)
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Net income attributable to the partners 43,071 58,093
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Add (subtract) specific items affecting net
income:
Unrealized foreign currency exchange (gains)
losses(1) (1,971) 8,722
Unrealized losses (gains) on non-designated
derivative instruments(2) 10,708 (18,207)
Ineffective portion on qualifying cash flow
hedging instruments included in interest
expense(3) (484) -
Unrealized losses (gains) on non-designated
and designated derivative instruments and
other items from equity accounted
investees(4) 2,250 (8,476)
Amended charter contract in equity accounted
investee(5) - (2,626)
Non-controlling interests' share of items
above(6) 206 1,958
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Total adjustments 10,709 (18,629)
----------------------------------------------------------------------------
Adjusted net income attributable to the
partners 53,780 39,464
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Unrealized foreign exchange (gains) losses 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 (gains) losses on the cross-currency
swaps economically hedging the Partnership's NOK bonds and excludes the
realized (losses) gains relating to the cross-currency swaps for the NOK
bonds.
(2) Reflects the unrealized losses due to changes in the mark-to-market
value of derivative instruments that are not designated as hedges for
accounting purposes. See note 4 to the Consolidated Statements of Income
(Loss) included in this release for further details.
(3) Reflects the ineffectiveness for derivative instruments designated as
hedges for accounting purposes. See note 3 to the Consolidated Statements of
Income (Loss) included in this release for further details.
(4) Reflects the unrealized losses (gains) due to changes in the mark-to-
market value of derivative instruments that are not designated as hedges for
accounting purposes and any ineffectiveness for derivative instruments
designated as hedges for accounting purposes within the Partnership's
equity-accounted investments. See note 2 to the Consolidated Statements of
Income (Loss) included in this release for further details.
(5) Reflects the impact related to years prior to 2015 resulting from
amended charter contracts associated with the Partnership's 33 percent
interest in four LNG carriers servicing the Angola LNG project. The
charterer agreed to amend the charter contract to a cost pass-through basis
retroactive to 2011, resulting in the inclusion of a cumulative adjustment
from 2011 which increased equity income in the quarter ended June 30, 2015.
(6) 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 listed above" in the table above
is the cumulative amount of the non-controlling interests' proportionate
share of items 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,
2016 2015
(unaudited)
----------------------------------------------------------------------------
Net income: 46,706 63,735
Add:
Depreciation and amortization 22,869 23,209
Partnership's share of equity accounted
joint ventures' DCF net of estimated
maintenance
capital expenditures(1) 39,442 26,394
Direct finance lease payments received in
excess of revenue recognized 4,969 4,465
Distributions relating to equity financing
of newbuildings - 4,097
Unrealized losses (gains) on non-designated
derivative instruments 10,708 (18,207)
Deferred income tax and other non-cash items 629 (648)
Less:
Equity income (29,567) (29,002)
Estimated maintenance capital expenditures (11,968) (11,778)
Ineffective portion on qualifying cash flow
hedging instruments included in interest
expense (484) -
Unrealized foreign currency exchange (gains)
losses (1,971) 8,722
----------------------------------------------------------------------------
Distributable Cash Flow before Non-controlling
interest 81,333 70,987
Non-controlling interests' share of DCF before
estimated maintenance capital expenditures (5,266) (5,219)
----------------------------------------------------------------------------
Distributable Cash Flow 76,067 65,768
Amount of cash distributions attributable to
the General Partner (227) (8,683)
----------------------------------------------------------------------------
Limited partners' Distributable Cash Flow 75,840 57,085
Weighted-average number of common units
outstanding 79,571,820 78,590,812
----------------------------------------------------------------------------
Distributable Cash Flow per limited partner
unit 0.95 0.73
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The estimated maintenance capital expenditures relating to the Partnership's share of equity accounted joint ventures were $7.4 million and $7.2 million for the three months ended June 30, 2016 and 2015, respectively.
Teekay LNG Partners L.P.
Appendix C - Supplemental Segment Information
(in thousands of U.S. Dollars)
----------------------------------------------------------------------------
Three Months Ended June 30, 2016
(unaudited)
----------------------------------------------------------------------------
Liquefied Conventional
Gas Tanker Total
Segment Segment
----------------------------------------------------------------------------
Voyage revenues 84,497 14,744 99,241
Voyage expenses (126) (416) (542)
Vessel operating expenses (16,734) (5,678) (22,412)
Depreciation and amortization (20,474) (2,395) (22,869)
General and administrative
expenses (4,679) (1,185) (5,864)
----------------------------------------------------------------------------
Income from vessel operations 42,484 5,070 47,554
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended June 30, 2015
(unaudited)
----------------------------------------------------------------------------
Liquefied Conventional
Gas Tanker Total
Segment Segment
----------------------------------------------------------------------------
Voyage revenues 77,466 21,142 98,608
Voyage expenses - (373) (373)
Vessel operating expenses (16,127) (7,975) (24,102)
Depreciation and amortization (18,004) (5,205) (23,209)
General and administrative
expenses (5,514) (1,554) (7,068)
----------------------------------------------------------------------------
Income from vessel operations 37,821 6,035 43,856
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Teekay LNG Partners L.P.
Appendix D - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations from Consolidated Vessels
(in thousands of U.S. Dollars)
-------------------------------------------------------------------------
Three Months Ended June 30, 2016
(unaudited)
-------------------------------------------------------------------------
Liquefied Conventional
Gas Tanker Total
Segment Segment
-------------------------------------------------------------------------
Income from vessel operations
(See Appendix C) 42,484 5,070 47,554
Depreciation and amortization 20,474 2,395 22,869
Amortization of in-process
contracts included in voyage
revenues (355) (278) (633)
Direct finance lease payments
received in excess of revenue
recognized 4,969 - 4,969
Cash flow adjustment for two
Suezmax tankers(1) - 929 929
-------------------------------------------------------------------------
Cash flow from vessel
operations from consolidated
vessels 67,572 8,116 75,688
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended June 30, 2015
(unaudited)
-------------------------------------------------------------------------
Liquefied Conventional
Gas Tanker Total
Segment Segment
-------------------------------------------------------------------------
Income from vessel operations
(See Appendix C) 37,821 6,035 43,856
Depreciation and amortization 18,004 5,205 23,209
Amortization of in-process
contracts included in voyage
revenues - (278) (278)
Direct finance lease payments
received in excess of revenue
recognized 4,465 - 4,465
Cash flow adjustment for two
Suezmax tankers(1) - 504 504
-------------------------------------------------------------------------
Cash flow from vessel
operations from consolidated
vessels 60,290 11,466 71,756
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) The Partnership's charter contracts for two of its former Suezmax
tankers, the Bermuda Spirit and Hamilton Spirit, were amended in 2012, which
had the effect of reducing the daily charter rates by $12,000 per day for
duration of 24 months ending September 30, 2014. The cash impact of the
change in hire rates was not fully reflected in the Partnership's statements
of income and comprehensive income (loss) as the change in the lease
payments was being recognized on a straight-line basis over the term of the
lease. In addition, the charterer of these two Suezmax tankers exercised its
purchase options on these two vessels as permitted under the charter
contract agreements and were redelivered during the second quarter of 2016.
Teekay LNG Partners L.P.
Appendix E - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations from Equity Accounted Vessels
(in thousands of U.S. Dollars)
----------------------------------------------------------------------------
Three Months Ended
June 30, 2016 June 30, 2015
(unaudited) (unaudited)
----------------------------------------------------------------------------
At Partnership's At Partnership's
100% Portion(1) 100% Portion(1)
----------------------------------------------------------------------------
Voyage revenues 168,854 78,956 156,517 70,669
Voyage expenses (3,354) (1,682) (9,399) (4,729)
Vessel operating expenses (42,296) (19,669) (40,977) (19,114)
Depreciation and
amortization (25,474) (12,744) (22,833) (11,565)
----------------------------------------------------------------------------
Income from vessel
operations of equity
accounted vessels 97,730 44,861 83,308 35,261
Other items, including
interest expense and
realized and unrealized
gain (loss) on derivative
instruments (36,247) (15,294) (10,352) (6,259)
----------------------------------------------------------------------------
Net income / equity income
of equity accounted
vessels 61,483 29,567 72,956 29,002
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel
operations of equity
accounted vessels 97,730 44,861 83,308 35,261
Depreciation and
amortization 25,474 12,744 22,833 11,565
Direct finance lease
payments received in
excess of revenue
recognized 8,868 3,219 8,296 3,010
Amortization of in-process
revenue contracts (2,704) (1,385) (3,719) (1,894)
----------------------------------------------------------------------------
Cash flow from vessel
operations from equity
accounted vessels 129,368 59,439 110,718 47,942
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The Partnership's equity accounted vessels for the three months ended
June 30, 2016 and 2015 include: the Partnership's 40 percent ownership
interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers;
the Partnership's ownership interest ranging from 49 percent to 50 percent
in the Excalibur and Excelsior joint ventures, which owns one LNG carrier
and one regasification unit, respectively; the Partnership's 33 percent
ownership interest in four LNG carriers servicing the Angola LNG project;
the Partnership's 52 percent ownership interest in Malt LNG Netherlands
Holding B.V., the joint venture between the Partnership and Marubeni
Corporation, which owns six LNG carriers; the Partnership's 50 percent
ownership interest in Exmar LPG BVBA, which owns and in-charters 23 vessels,
including five newbuildings, as at June 30, 2016, compared to 24 vessels
owned and in-chartered, including eight newbuildings, as at June 30, 2015;
the Partnership's 30 percent ownership interest in two LNG carrier
newbuildings and 20 percent ownership interest in two LNG carrier
newbuildings for Shell; and the Partnership's 50 percent ownership interest
in six LNG carrier newbuildings in the joint venture between the Partnership
and China LNG Shipping (Holdings) Limited.
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 regarding: expected profitability of existing growth projects; the timing of newbuilding vessel deliveries, the commencement of related contracts, and the timing and amount of related cash flow from vessel operations and distributable cash flow; the ability to secure employment opportunities for the Torben Spirit, the growth of the Partnership's future cash flows; and the timing and certainty of securing financing for the Partnership's committed growth projects. 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: potential shipyard and project construction delays, newbuilding specification changes or cost overruns; 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 long-term contracts of existing vessels in the Teekay LNG fleet; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; the Partnership's and the Partnership's joint ventures' ability to secure financing for its existing newbuildings and projects; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2015. 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.
Contacts:
Investor Relations enquiries:
Ryan Hamilton
+1 (604) 609-6442
www.teekay.com
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