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Teekay Tankers: Surfing The Unexpected Giant Waves With Care

Mar. 10, 2021 8:16 AM ETTeekay Tankers Ltd. (TNK)5 Comments


  • Teekay Tankers, Ltd. ended the fiscal year 2020 with a strong liquidity position over $370 million and reduced net debt by $419 million.
  • The Fiscal Year end result still reported a positive growth despite the negative trend in its quarterly net income.
  • The company reported a net loss of $73.3 million in the fourth quarter of 2020.

Teekay Tankers Ltd. (NYSE:TNK), a firm that operates through crude oil and refined petroleum products tankers, and ship-to-ship transfer segments, seems to be riding the giant waves whether up or down. Crude oil prices hit major slumps and oil demand drastically declined during the pandemic. It affected the operations of the firm's oil tankers, reporting negative growth in quarterly sales for the year 2020. Amidst the pandemic effect, Tankers still made a positive growth in its net income ending the fiscal year 2020. The firm has taken measures during the unexpected waves by reducing its net debt to have a strong liquidity position while in the middle of the crisis. This is proof of the company's strength and perseverance to maintain its stability. One can see it in the stock price movement as it starts to show an increase in the first quarter of 2021.

Analyzing the Financials of the Company

Teekay Tankers Ltd. struggled in terms of sales as growth turned out to be negative for three consecutive quarters ending of the fiscal year. As the oil demand was reduced due to the COVID-19 pandemic and the unwinding of floating storage of the firm, operating sales/revenue decreased further at the end of the fourth quarter of the fiscal year 2020.

Sales/Revenue for the fourth quarter of 2019-2020 decreased by approximately 60% from $303.89M to $127.8M. COGS also decreased by approximately 32% from $198.96M to $135.82M. As COGS and Sales/Revenue decreased, Net Income was insanely decreased by 216% to a negative Net income of ($73.29M) from $63.07 in fourth. quarter 2020 and 2019, respectively. This is also the result of a continuous decrease in revenue days per total fleet as one of the firm's main sources of revenue that can be seen on the chart "QUARTERLY REVENUE DAY PER TOTAL FLEET." below. And also, the decrease in net income from the fourth quarter 2019 to 2020 was negatively impacted by

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Comments (5)

7519671 profile picture
While ROA and ROE give useful perspectives on certain aspects of a company, the most appropriate measure of profitability for a hard-asset-heavy company like TNK is Return on Invested Capital (ROIC)-- some call it ROCE or Return on Investment.
Reuters sez TNK's ROI is 12.32% -- not blow your socks off, but I'd take it.
@7519671 what all do you include in the "invested capital"?
7519671 profile picture
@mendo pretty much growth capex, but companies take wide latitude on what they include under non-GAAP terms. ROE describes how a company's stock has done. ROA a broad category of assets. ROIC: you buy a second hot dog grill that lets you sell an additional numbr of hot dogs that generate a certain amount of free cash from which you pay back the invested capital and cover SG&A etc. and leaves you with an identifiable IRR.
The company will be using some of their cash position to buy back the expensive leases on their fleet which they took in previous years. This will lower their breakeven level but will not return TK to profitability until the market turns up in the 2nd half of 2021 hopefully.
Hohum profile picture
@nomad33 - You are mixing up your stock tickers. TK is the parent entity, essentially just a holding company. TNK is the ticker for Teekay Tankers. Yes, TNK is essentially playing a waiting game to the 2nd half. Most oftheir time-charter coverage runs of the current qtr or the next qtr.
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