Must-know company overview: Is Teekay Tankers undervalued?

Part 4
Must-know company overview: Is Teekay Tankers undervalued? (Part 4 of 7)

Teekay’s in-house business expertise means operational excellence

Teekay’s expertise

As a sponsor, asset manager, and project developer, Teekay Corporation (TK) provides numerous benefits to its daughter subsidiaries and their efficient functioning. Higher fleet utilization through market concentration on key routes, operational control through managing business in-house, and a large fleet of interchangeable uniformly sized vessels are some of the key benefits.

With a strong foundation from Teekay Corporation, Teekay Tankers (TNK) highly benefits from the latter’s competitive advantages—a premier global franchise, operational excellence, and financial strength. TNK therefore has access to a network of strong customer relationships built through superior service, which enhances its ability to secure fixed-rate charter contracts.

 

Op ExpEnlarge Graph

Operational benefits reflect financial statements

For 2013, vessel operating expenses decreased to $91.7 million compared to $96.2 million for 2012, mainly due to cost reduction initiatives for crew-related costs and a reduction in technical management costs.

Further, benefitting through its various initiatives of acquiring interest in Teekay Operations and investments in Tanker Investments Ltd, TNK has recorded favorable results in its latest report. Net revenues for the first quarter of 2014 rose to $61.8 million from $44.9 million recorded in the corresponding quarter a year ago. Meanwhile, net pool revenues significantly surged to $30.2 million from $16.1 million in a year ago.

For the first quarter of 2014, TNK’s recorded voyage expenses stood at $1.4 million, compared to $2.9 million in the corresponding quarter a year ago and $2.5 million in the fourth quarter of 2013. Also, the company’s vessel operating expenses declined to $22.8 million from $23 million a year ago. Its interest expense has dropped 6.5% year-over-year to $2.3 million.

TNK sees competition from peers like Frontline Ltd (FRO), Nordic American Tanker Ltd. (NAT), and DHT Holdings Inc. (DHT), and the Guggenheim Shipping ETF (SEA) tracks these shipping companies.

Let’s see how the company’s balanced chartering mix supports a compelling yield in the next part of this series.

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