Teekay Corporation Reports Fourth Quarter and Annual 2020 Results

Rhea-AI Summary

Teekay reported a GAAP net loss of $19.4 million, or $0.19 per share, for Q4 2020, while adjusted net income was $2.8 million ($0.03 per share). Fiscal year 2020 showed a significant recovery with adjusted net income of $83 million ($0.82 per share) and total adjusted EBITDA increasing to $1.1 billion, up over 14% from 2019. The company reduced consolidated net debt by $887.8 million, reaching $1.0 billion in total liquidity. Teekay LNG plans to raise common unit distributions by 15% to $1.15 per unit starting Q1 2021.

Positive

• Adjusted net income for fiscal 2020 was $83 million, a significant recovery from a loss in 2019.
• Total adjusted EBITDA rose to $1.1 billion, an increase of over 14% from 2019.
• Consolidated net debt was reduced by $887.8 million, indicating improved financial health.
• Teekay LNG is increasing its common unit distributions by 15%, enhancing shareholder returns.

Negative

• Q4 2020 saw a GAAP net loss of $19.4 million, indicating ongoing financial challenges.
• Teekay Tankers experienced lower average spot tanker rates, negatively impacting profits.
• Increased asset write-downs and freight tax accruals further pressured Q4 results.

Highlights

• GAAP net loss attributable to shareholders of Teekay of $19.4 million, or $0.19 per share, and adjusted net income attributable to shareholders of Teekay⁽¹⁾ of $2.8 million, or $0.03 per share, in the fourth quarter of 2020 (excluding items listed in Appendix A to this release).
• Total adjusted EBITDA⁽¹⁾ of $201.1 million in the fourth quarter of 2020.
• Fiscal year 2020 adjusted net income attributable to shareholders of Teekay⁽¹⁾ significantly improved to $83 million, or $0.82 per share, and total adjusted EBITDA increased to $1.1 billion, up over 14 percent from fiscal year 2019.
• Reduced consolidated net debt by $887.8 million⁽³⁾ in 2020; and total consolidated liquidity increased to $1.0 billion as of December 31, 2020.
• Teekay LNG expects to increase its common unit distributions by 15 percent to $1.15 per common unit on an annualized basis, commencing with the first quarter's distribution to be paid in May 2021; and secured a fixed-rate charter for the 52-percent owned Methane Spirit to early-2023, resulting in its LNG fleet now 97 percent fixed for 2021 and 89 percent fixed for 2022.
• Teekay Tankers declared options to purchase two vessels currently under long-term sale-leaseback financings; and entered into a seven-year (plus options) in-charter agreement for an eco-Aframax tanker newbuilding, which is expected to deliver in the fourth quarter of 2022.

HAMILTON, Bermuda, Feb. 25, 2021 (GLOBE NEWSWIRE) -- Teekay Corporation (Teekay or the Company) (NYSE:TK) today reported results for the fourth quarter and year ended December 31, 2020. These results include the Company’s two publicly-listed consolidated subsidiaries, Teekay LNG Partners L.P. (Teekay LNG) (NYSE:TGP) and Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK) (collectively, the Daughter Entities), and all remaining subsidiaries and equity-accounted investments. Teekay, together with its subsidiaries other than the Daughter Entities, is referred to in this release as Teekay Parent. Please refer to the fourth quarter and annual 2020 earnings releases of Teekay LNG and Teekay Tankers, which are available on Teekay's website at www.teekay.com, for additional information on their respective results.

Financial Summary

		Three Months Ended					Year Ended
		December 31,		September 30,		December 31,	December 31,		December 31,
(in thousands of U.S. dollars, except per share amounts)		2020		2020		2019 (2)	2020		2019 (2)
		(unaudited)		(unaudited)		(unaudited)	(unaudited)		(unaudited)
TEEKAY CORPORATION CONSOLIDATED
GAAP FINANCIAL COMPARISON
Revenues		362,296		396,517		570,285	1,815,672		1,945,391
Income from vessel operations		25,795		11,384		178,736	314,579		204,042
Equity income (loss)		15,285		24,392		31,900	77,333		(14,523	)
Net (loss) income attributable to
	shareholders of Teekay	(19,444	)	(35,407	)	11,343	(82,933	)	(310,577	)
(Loss) earnings per share attributable to
	shareholders of Teekay	(0.19	)	(0.35	)	0.11	(0.82	)	(3.08	)
NON-GAAP FINANCIAL COMPARISON
Total adjusted EBITDA (1)		201,061		226,998		325,465	1,086,126		951,913
Adjusted net income (loss) attributable
	to shareholders of Teekay (1)	2,849		15,229		31,282	83,050		(19,111	)
Adjusted net income (loss) per share
	attributable to shareholders of Teekay (1)	0.03		0.15		0.31	0.82		(0.19	)
TEEKAY PARENT
NON-GAAP FINANCIAL COMPARISON
Teekay Parent adjusted EBITDA (1)		10,553		3,271		13,822	28,657		5,379
Total Teekay Parent free cash flow (1)		353		(17,135	)	4,943	33,999		(34,029	)

(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).
(2)	Comparative balances relating to the three months and year ended December 31, 2019 have been updated to reflect results consistent with the presentation in the Company’s 2019 Annual Report on Form 20-F and this report for the three months and year ended December 31, 2020.
(3)	Including net proceeds from asset sales and the upfront amount received in April 2020 in relation to the new Foinaven FPSO charter contract.

CEO Commentary

“In the fourth quarter of 2020, we recorded another consolidated adjusted profit with Teekay Parent and Teekay LNG reporting stronger adjusted results, while Teekay Tankers' results reflected the recent weakness in the tanker market,” commented Kenneth Hvid, Teekay’s President and CEO. “Despite an unprecedented year marked by continuous volatility across energy markets, our gas business reported its highest ever adjusted net income in 2020, supported by the stable cash flows from its diversified portfolio of long-term contracts, and our tanker business reported its best year ever from a free cash flow perspective, as its spot exposure enabled it to benefit from an extraordinary surge of demand for tankers in the first half of 2020. In 2020, we reported consolidated adjusted net income of $83 million, or $0.82 per share, compared to the prior year's adjusted net loss of $19 million, or $0.19 per share, and we increased our total adjusted EBITDA to $1.1 billion, up nearly 15 percent over the prior year.”

“We also continued to prioritize balance sheet strength and made significant progress in that effort,” continued Mr. Hvid. “In 2020, we reduced our consolidated net debt by approximately $890 million⁽¹⁾, or over 20 percent, and increased our consolidated total liquidity position to $1.0 billion as of year end.”

Mr. Hvid added, “Teekay LNG announced today that it plans to increase its common unit distributions by 15 percent, to $1.15 per common unit per annum, commencing with the first quarter’s distribution to be paid in May 2021. This increase will add to Teekay Parent's free cash flows and represents the third consecutive year of double-digit increases in Teekay LNG's distribution to common unitholders. Importantly, given Teekay LNG's strong earnings and industry-leading backlog of long-term contracts, we believe the increased distribution is well-covered, which allows Teekay LNG to provide an attractive distribution to investors while continuing to delever its balance sheet.”

Mr. Hvid concluded, “All of the accomplishments during the past year would not have been possible without the dedication and perseverance of all our seafarers and onshore colleagues as we have so far successfully navigated through the unique challenges of the COVID-19 pandemic.”

(1)	Including the proceeds from asset sales and the upfront amount received in April 2020 in relation to the new Foinaven FPSO charter contract.

Summary of Results

Teekay Corporation Consolidated

The Company's consolidated results during the fourth quarter of 2020 decreased compared to the same period of the prior year, primarily due to lower earnings from Teekay Tankers as a result of lower average spot tanker rates and a higher number of scheduled drydockings during the fourth quarter of 2020, as well as the cessation of production of the Petrojarl Banff (Banff) FPSO unit in June 2020 due to the decommissioning of the Banff oil field. These decreases were partially offset by higher earnings from Teekay LNG due to the delivery of newbuildings and lower interest expense across Teekay due to both debt reduction over the past year and lower interest rates.

In addition, consolidated GAAP net loss during the fourth quarter of 2020, compared to the same period of the prior year, was impacted by an increase in asset write-downs and an increase in freight tax accruals, including adjustments relating to prior periods (as discussed in the Summary Results for Daughter Entities section).

Teekay Parent

Total Teekay Parent Free Cash Flow⁽¹⁾ was $0.4 million during the fourth quarter of 2020, compared to $4.9 million for the same period of the prior year, primarily due to the decommissioning of the Banff oil field beginning in June 2020 and the associated decommissioning costs incurred during the fourth quarter of 2020, as well as lower cash flows from third-party management services. These items were partially offset by higher distributions received from Teekay LNG as a result of Teekay LNG's 32 percent increase in its quarterly cash distributions commencing in May 2020 and the newly-issued Teekay LNG common units Teekay Parent received as consideration for the Teekay LNG incentive distribution rights (IDR) transaction completed in May 2020, the elimination of the operating losses on the Foinaven FPSO unit as a result of the commencement of the new bareboat contract in the first quarter of 2020, and lower interest and corporate general and administrative expenses in the fourth quarter of 2020.

Please refer to Appendix D of this release for additional information about Teekay Parent's Free Cash Flow⁽¹⁾.

(1)

This is a non-GAAP financial measure. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for a definition of this term and a reconciliation of this non-GAAP financial measure as used in this release to the most directly comparable financial measures under GAAP.

Summary Results of Daughter Entities

Teekay LNG

Teekay LNG’s GAAP net income, adjusted net income⁽¹⁾ and total adjusted EBITDA⁽¹⁾ for the fourth quarter of 2020, compared to the same quarter of the prior year, were positively impacted by the delivery of LNG carrier newbuildings, the commencement of terminal use payments for the 30 percent-owned Bahrain LNG Terminal in one of Teekay LNG's joint ventures and higher liquefied petroleum gas (LPG) rates. These increases were partially offset by more scheduled drydockings during the fourth quarter of 2020, lower charter rates earned by certain LNG carriers and, in addition, the increases in Teekay LNG's non-GAAP adjusted net income⁽¹⁾ were partially offset by the sales of two LNG carriers in January 2020. Teekay LNG's GAAP net income and adjusted net income⁽¹⁾ were further positively impacted by lower net interest expense in the fourth quarter of 2020 primarily as a result of debt repayments over the past year.

In addition, compared to the same period of the prior year, Teekay LNG's GAAP net income in the fourth quarter of 2020 was negatively impacted by asset write-downs relating to four wholly-owned multi-gas carriers for $6 million and four 50 percent-owned LPG carriers for $17 million in the fourth quarter of 2020, a $14.3 million gain recognized in the fourth quarter of 2019 upon the derecognition of two LNG carriers as they were reclassified as sales-type leases, and lower unrealized gains on non-designated derivative instruments in the fourth quarter of 2020 compared to the fourth quarter of 2019.

Please refer to Teekay LNG's fourth quarter 2020 earnings release for additional information on the financial results for this entity.

Teekay Tankers

Teekay Tankers' GAAP net loss, adjusted net loss⁽¹⁾ and total adjusted EBITDA⁽¹⁾ for the fourth quarter of 2020, compared to the fourth quarter of 2019, were negatively impacted primarily by lower average spot tanker rates and a higher number of scheduled drydockings during the fourth quarter of 2020, as well as the sale of four Suezmax tankers during December 2019 and the first quarter of 2020 and the sale of the non-US portion of the ship-to-ship support services and LNG terminal management business in the second quarter of 2020. These decreases were partially offset by lower vessel operating expenses and interest expense in the fourth quarter of 2020, compared to the same period of the prior year. GAAP net loss for the fourth quarter of 2020 was also negatively impacted by an $18.1 million freight tax accrual adjustment, of which $10.5 million relates to 2020 and is included in non-GAAP adjusted net loss. In addition, Teekay Tankers' GAAP net loss in the fourth quarter of 2020 reflects an $18.7 million increase in write-down of assets compared to the fourth quarter of 2019.

Crude spot tanker rate weakness persisted into the fourth quarter of 2020 as a result of OPEC+ production cuts related to reduced oil demand during the COVID-19 pandemic, as well as the return of ships to the global spot trading fleet from the unwinding of floating storage. Teekay Tankers was able to partially mitigate the impact of these weaker spot rates by employing 20 percent of its fleet on fixed-rate charters during the fourth quarter of 2020 at an average rate of $35,700 per day. The weakness in spot tanker rates has continued into the first quarter of 2021, with rates for Suezmax tankers and Aframax / LR2 tankers so far averaging slightly above levels reported in the fourth quarter of 2020.   Tanker demand is expected to improve later in 2021 as vaccination programs are implemented worldwide, at which time the OPEC+ group is expected to return oil supply to the market. Low tanker fleet growth should further help facilitate an improvement in the tanker market, particularly if tanker scrapping increases over the coming months.

Please refer to Teekay Tankers' fourth quarter 2020 earnings release for additional information on the financial results for this entity.

(1)

This is a non GAAP financial measure. Please refer to "Definitions and Non-GAAP Financial Measures" and the Appendices to this release for a definition of this term and a reconciliation of this non-GAAP financial measure as used in this release to the most directly comparable financial measures under GAAP.

Summary of Recent Events

Teekay Parent

Since reporting earnings in mid-November 2020, Teekay Parent has repurchased $5.0 million in principal amount of its existing 9.25 percent Secured Senior Notes for total consideration of $4.8 million at an average all-in price of 95.00. To-date, Teekay Parent has repurchased $12.8 million in principal amount of its existing 5 percent Convertible Senior Notes for total consideration of $10.5 million at an average all-in price of 81.55, and $6.6 million in principal amount of its existing 9.25 percent Secured Senior Notes for total consideration of $6.2 million at an average all-in price of 94.33.

Teekay LNG

In October 2020, the charterer of the 52 percent-owned LNG carrier, Marib Spirit, exercised its options to extend the current charter by 14 months at a higher charter rate, extending the vessel's charter coverage to early-2022.

In December 2020, Teekay LNG's 52 percent-owned joint venture with Marubeni Corporation (the MALT Joint Venture) secured a two-year, fixed-rate charter contract, with a one-year option, for the Methane Spirit, which is expected to commence after its current charter contract ends in March 2021.

In December 2020, Teekay LNG's 50 percent-owned joint venture with Exmar NV (the Exmar LPG Joint Venture) successfully refinanced its $254 million revolving credit facility and term loan by entering into a new revolving credit facility in the amount of $310 million maturing in December 2023.

On February 8, 2021, Teekay LNG's 70 percent-owned joint venture with PT Berlian Laju Tanker (the Tangguh Joint Venture), refinanced its $191.5 million term loan which was scheduled to mature in 2021, by entering into a new $191.5 million term loan maturing in February 2026.

Teekay Tankers

In November 2020, Teekay Tankers declared options to purchase two of its Suezmax vessels that are currently on long-term sale-leaseback financings for approximately $57 million, with expected delivery to Teekay Tankers in May 2021. Teekay Tankers intends to fund the purchase price with existing liquidity and potentially a new long-term debt facility.

In December 2020, Teekay Tankers entered into a seven-year in-charter agreement (plus extension and purchase options) for one eco-Aframax newbuilding vessel at an attractive rate of $18,700 per day, with expected delivery in late-2022.

In February 2021, Teekay Tankers entered into an agreement to sell two unencumbered 2008-built Aframax tankers for total gross proceeds of $32 million, with expected delivery to the buyer in March 2021.

Liquidity

As at December 31, 2020, Teekay Parent had total liquidity of approximately $173.4 million (consisting of $44.8 million of cash and cash equivalents, and $128.6 million of undrawn capacity from a revolving credit facility). On a consolidated basis, as at December 31 2020, Teekay had consolidated total liquidity of approximately $1.0 billion (consisting of $348.8 million of cash and cash equivalents and $658.8 million of undrawn capacity from its credit facilities).

Conference Call

The Company plans to host a conference call on Thursday, February 25, 2021 at 11:00 a.m. (ET) to discuss its results for the fourth quarter and year ended December 31, 2020. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:

• By dialing (866) 248-8441 or (647) 792-1240, if outside North America, and quoting conference ID code 9287182.
  
  
• By accessing the webcast, which will be available on Teekay’s website at www.teekay.com (the archive will remain on the website for a period of one year).

An accompanying Fourth Quarter and Annual 2020 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.

About Teekay

Teekay is a leading provider of international crude oil and gas marine transportation services. Teekay provides these services primarily through its directly-owned fleet and its controlling ownership interests in Teekay LNG Partners L.P. (NYSE:TGP), one of the world’s largest independent owners and operators of LNG carriers, and Teekay Tankers Ltd. (NYSE:TNK), one of the world’s largest owners and operators of mid-sized crude tankers. The consolidated Teekay entities manage and operate total assets under management of approximately $9 billion, comprised of approximately 135 liquefied gas, offshore, and conventional tanker assets. With offices in 10 countries and approximately 5,350 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies.

Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.

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 Securities and Exchange Commission (SEC). These non-GAAP financial measures, which include Adjusted Net Income (Loss) Attributable to Shareholders of Teekay, Teekay Parent Free Cash Flow, Net Interest Expense, Adjusted Equity Income 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 therefore may not be comparable to similar measures presented by other companies. The Company believes that certain investors use this information to evaluate the Company’s financial performance, as does management.

Non-GAAP Financial Measures

Total Adjusted EBITDA represents net (loss) income before interest, taxes, 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 foreign currency exchange gains and losses, any write-downs and/or gains and losses on sale of operating assets, adjustments for direct financing and sales-type leases to a cash basis, amortization of in-process revenue contracts, unrealized gains and losses on derivative instruments, credit loss provision adjustments, write-downs related to equity-accounted investments, our share of the above items in non-consolidated joint ventures which are accounted for using the equity method of accounting, and other income or loss. Total Adjusted EBITDA also excludes realized gains or losses on interest rate swaps as management, in assessing the Company's performance, views these gains or losses as an element of interest expense and realized gains or losses on interest rate swaps resulting from amendments or terminations of the underlying instruments.

Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Company's financial statements. Adjusted EBITDA from Equity-Accounted Vessels represents the Company's proportionate share of Adjusted EBITDA from its equity-accounted vessels. The Company 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 Company holds the equity-accounted investments or distributed to the Company and other owners. In addition, the Company does not control the timing of any such distributions to the Company and other owners. Total Adjusted EBITDA represents Consolidated Adjusted EBITDA plus Adjusted EBITDA from Equity-Accounted Joint Ventures. 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 (loss) income and equity income (loss), respectively, which are the most directly comparable GAAP measures reflected in the Company’s consolidated financial statements.

Adjusted Net Income (Loss) Attributable to Shareholders of Teekay excludes items of income or loss from GAAP net (loss) income that are typically excluded by securities analysts in their published estimates of the Company’s financial results. The Company believes that certain investors use this information to evaluate the Company’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 (loss) income, and refer to footnote (6) of the statements of (loss) income for a reconciliation of adjusted equity income to equity income (loss), the most directly comparable GAAP measure reflected in the Company’s consolidated financial statements.

Teekay Parent Financial Measures

Teekay Parent Adjusted EBITDA represents the sum of distributions or dividends (including payments-in-kind) relating to a given quarter (but received by Teekay Parent in the following quarter) as a result of ownership interests in its consolidated publicly-traded subsidiaries (Teekay LNG and Teekay Tankers), Adjusted EBITDA attributed to Teekay Parent’s directly-owned and chartered-in assets, and Teekay Parent’s corporate general and administrative expenditures for the given quarter.

Teekay Parent Free Cash Flow represents Teekay Parent Adjusted EBITDA, plus upfront cash receivable in respect of a sales-type lease, less Teekay Parent’s net interest expense and, commencing in the second quarter of 2020, asset retirement costs incurred for the given quarter. Net Interest Expense includes interest expense (excluding non-cash accretion and the amortization of prepaid loan costs), interest income and realized losses on interest rate swaps. Please refer to Appendices B, C, D and E of this release for further details and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures reflected in the Company’s consolidated financial statements.

Teekay Corporation
Summary Consolidated Statements of (Loss) Income
(in thousands of U.S. dollars, except share and per share data)

	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2020			2020			2019 (1)			2020			2019 (1)
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues	362,296			396,517			570,285			1,815,672			1,945,391
Voyage expenses	(64,437		)	(61,736		)	(113,655		)	(314,633		)	(423,677		)
Vessel operating expenses	(144,951		)	(153,764		)	(165,216		)	(599,804		)	(644,445		)
Time-charter hire expense	(16,717		)	(18,796		)	(31,174		)	(80,283		)	(118,761		)
Depreciation and amortization	(60,926		)	(64,352		)	(71,083		)	(261,131		)	(290,672		)
General and administrative expenses	(19,210		)	(18,073		)	(17,588		)	(79,228		)	(81,444		)
Write-down and (loss) gain on sale of assets (2)	(28,690		)	(66,273		)	8,803			(200,238		)	(170,310		)
Gain on commencement of sales-type lease (3)	—			—			—			44,943			—
Restructuring charges (4)	(1,570		)	(2,139		)	(1,636		)	(10,719		)	(12,040		)
Income from vessel operations	25,795			11,384			178,736			314,579			204,042
Interest expense	(50,707		)	(53,175		)	(67,476		)	(225,647		)	(279,059		)
Interest income	1,471			1,754			1,397			8,342			7,804
Realized and unrealized (losses) gains on
non-designated derivative instruments (5)	(3,453		)	(1,471		)	4,592			(35,857		)	(13,719		)
Equity income (loss) (6)	15,285			24,392			31,900			77,333			(14,523		)
Income tax expense (7)	(18,669		)	(3,702		)	(13,951		)	(8,988		)	(25,482		)
Foreign exchange loss	(12,499		)	(5,943		)	(10,721		)	(20,718		)	(13,574		)
Other loss – net (8)	(2,355		)	(14,627		)	(1,980		)	(18,062		)	(14,475		)
Net (loss) income	(45,132		)	(41,388		)	122,497			90,982			(148,986		)
Net loss (income) attributable to
non-controlling interests	25,688			5,981			(111,154		)	(173,915		)	(161,591		)
Net (loss) income attributable to the shareholders
of Teekay Corporation	(19,444		)	(35,407		)	11,343			(82,933		)	(310,577		)
(Loss) earnings per common share of Teekay Corporation
- Basic	$	(0.19	)	$	(0.35	)	$	0.11		$	(0.82	)	$	(3.08	)
- Diluted	$	(0.19	)	$	(0.35	)	$	0.11		$	(0.82	)	$	(3.08	)
Weighted-average number of common shares outstanding
- Basic	101,108,886			101,107,371			100,784,425			101,053,095			100,719,224
- Diluted	101,108,886			101,107,371			100,425,574			101,053,095			100,719,224

(1)	Comparative balances relating to the three months and year ended December 31, 2019 have been updated to reflect results consistent with the presentation in the Company’s 2019 Annual Report on Form 20-F and this report for the three months and year ended December 31, 2020.
(2)	Write-down and (loss) gain on sale of assets for the three months ended December 31, 2020 includes write-downs of $28.7 million relating to six Aframax tankers (two of which were classified as held for sale as at December 31, 2020), four multi-gas carriers and two in-charter right-of-use (ROU) assets. Write-down and (loss) gain on sale of assets for the three months ended September 30, 2020 includes write-downs of $66.3 million relating to five Aframax tankers, the Sevan Hummingbird (Hummingbird) FPSO unit, and the Suksan Salamander FSO unit, an operating lease ROU asset. Write-down and (loss) gain on sale of assets for the year ended December 31, 2020 also includes write-downs of six multi-gas carriers totaling $45.0 million, other write-downs of two FPSO units totaling $46.5 million, and a $13.6 million provision relating to an adjustment in the Banff FPSO unit's estimated asset retirement obligation and the write-down of the unit's remaining residual value.
(3)	Gain on commencement of sales-type lease of $44.9 million for the year ended December 31, 2020 relates to the commencement of the sales-type lease for the Foinaven FPSO unit as a result of a new bareboat charter agreement.
(4)	Restructuring charges for the year ended December 31, 2020 includes redundancy accruals arising from the cessation of production of the Banff FPSO unit in June 2020, the restructuring of the Company's tanker operations, and the reorganization and realignment of resources of the Company's shared services functions, of which a portion of the costs were recovered from the customer, Altera Infrastructure LP (Altera). Restructuring charges for the year ended December 31, 2020 also includes severance costs resulting from the termination of the contract for an FSO unit based in Australia, of which a portion of the costs will be recovered from the customer. Recoverable severance costs totaling $5.1 million are presented in revenues for the year ended December 31, 2020.
(5)	Realized and unrealized (losses) gains related to derivative instruments that are not designated in qualifying hedging relationships for accounting purposes are included as a separate line item in the consolidated statements of (loss) income. The realized (losses) gains relate to the amounts the Company actually paid to settle such derivative instruments and the unrealized gains (losses) relate to the change in fair value of such derivative instruments, as detailed in the table below:

		Three Months Ended						Year Ended
		December 31,		September 30,		December 31,		December 31,		December 31,
		2020		2020		2019		2020		2019
		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Realized (losses) gains relating to
	Interest rate swap agreements	(5,578	)	(5,349	)	(2,576	)	(17,483	)	(8,296	)
	Stock purchase warrants (i)	—		—		—		—		(25,559	)
	Foreign currency forward contracts	—		379		(147	)	138		(147	)
	Forward freight agreements	(809	)	(183	)	1,097		(1,242	)	1,490
		(6,387	)	(5,153	)	(1,626	)	(18,587	)	(32,512	)
Unrealized gains (losses) relating to
	Interest rate swap agreements	2,549		3,956		6,961		(17,558	)	(7,878	)
	Foreign currency forward contracts	—		(53	)	336		202		(200	)
	Stock purchase warrants (i)	—		—		—		—		26,900
	Forward freight agreements	385		(221	)	(1,079	)	86		(29	)
		2,934		3,682		6,218		(17,270	)	18,793
Total realized and unrealized (losses) gains on derivative instruments		(3,453	)	(1,471	)	4,592		(35,857	)	(13,719	)

(i)	Stock purchase warrants for the year ended December 31, 2019 relates to the sale of the Company's remaining interest in Altera in May 2019. Also refer to footnote (6)(i) below.

  

(6)

The Company’s proportionate share of items within equity income (loss) as identified in Appendix A of this release is detailed in the table below. By excluding these items from equity income (loss) as reflected in the consolidated statements of (loss) income, the Company believes the resulting adjusted equity income is a normalized amount that can be used to evaluate the financial performance of the Company’s equity-accounted investments. Adjusted equity income is a non-GAAP financial measure.

  

		Three Months Ended						Year Ended
		December 31,		September 30,		December 31,		December 31,	December 31,
		2020		2020		2019		2020	2019
		(unaudited)		(unaudited)		(unaudited)		(unaudited)	(unaudited)
Equity income (loss)		15,285		24,392		31,900		77,333	(14,523	)
Proportionate share of unrealized (gains)
	losses on derivative instruments	(4,214	)	(2,680	)	(6,271	)	19,116	12,867
Loss on sale of investment in Altera (i)		—		—		—		—	72,753
Other (ii)		19,320		8,266		1,436		35,966	2,309
Equity income adjusted for items in Appendix A		30,391		29,978		27,065		132,415	73,406

(i)

During the year ended December 30, 2019, the Company recognized a write-down of $64.9 million on its equity-accounted investment in Altera, and a loss of $7.9 million on sale of its investment in Altera to affiliates of Brookfield Business Partners L.P., which occurred in May 2019. Also refer to footnote (5)(i) above in respect of gains and losses on stock purchase warrants.

(ii)

Other for the three months and year ended December 31, 2020 includes the proportionate share of write-down of vessels in Teekay LNG's equity-accounted investees. Other for the three months and year ended December 31, 2020 and three months ended September 30, 2020 also includes unrealized credit loss provision adjustments to the Company's financial instruments as a result of the adoption in 2020 of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13).

(7)

During the three months ended December 31, 2020, the Company obtained further advice regarding the freight taxes in a certain jurisdiction due to the uncertainty surrounding recent tax changes. Based on this new information and other considerations, the Company increased its provision during the three months ended December 31, 2020 for uncertain tax liabilities by $20.8 million, of which $11.5 million relates to 2020 voyages, and $2.1 million of that balance relates to the fourth quarter of 2020.

(8)

Other loss - net for the three months and year ended December 31, 2020, and three months ended September 30, 2020 includes unrealized credit loss provision adjustments of $1.8 million, $17.0 million and $15.0 million, respectively, as a result of the adoption of ASU 2016-13 effective January 1, 2020. Other loss – net for the year ended December 31, 2019 includes a $10.6 million loss relating to the repurchase of the Company's 2020 Unsecured Senior Notes, which matured in January 2020.

 

Teekay Corporation
Summary Consolidated Balance Sheets
(in thousands of U.S. dollars)

		As at December 31,	As at September 30,	As at December 31,
		2020	2020	2019 (2)
		(unaudited)	(unaudited)	(unaudited)
ASSETS
Cash and cash equivalents - Teekay Parent		44,791	54,655	104,196
Cash and cash equivalents - Teekay LNG		206,762	201,036	160,221
Cash and cash equivalents - Teekay Tankers		97,232	120,872	88,824
Assets held for sale		32,974	—	65,458
Accounts receivable and other current assets		282,242	274,408	393,406
Restricted cash - Teekay Parent		10	4,060	2,048
Restricted cash - Teekay LNG		51,181	53,801	93,070
Restricted cash - Teekay Tankers		5,914	8,123	6,508
Vessels and equipment - Teekay Parent		—	—	95,984
Vessels and equipment - Teekay LNG		2,875,169	2,908,182	3,027,342
Vessels and equipment - Teekay Tankers		1,555,300	1,616,518	1,750,166
Operating lease right-of-use assets		52,961	61,796	159,638
Net investment in direct financing and sales-type leases		528,641	537,142	818,809
Investments in and loans to equity-accounted investments		1,075,653	1,111,660	1,173,728
Other non-current assets		137,082	128,867	133,466
Total Assets		6,945,912	7,081,120	8,072,864
LIABILITIES AND EQUITY
Accounts payable and other current liabilities		456,152	461,664	430,497
Liabilities related to assets held for sale		—	—	2,980
Short-term debt - Teekay Tankers		10,000	20,000	50,000
Current portion of long-term debt - Teekay Parent		—	—	86,674
Current portion of long-term debt - Teekay LNG		322,440	363,161	463,047
Current portion of long-term debt - Teekay Tankers		89,334	37,756	68,930
Long-term debt - Teekay Parent		339,933	346,178	349,403
Long-term debt - Teekay LNG		2,490,695	2,488,953	2,779,253
Long-term debt - Teekay Tankers		513,670	573,381	905,537
Operating lease liabilities		54,290	63,529	148,602
Other long-term liabilities		198,107	196,568	216,348
Equity:
Non-controlling interests		1,989,883	2,033,112	2,089,730
Shareholders of Teekay		481,408	496,818	481,863
Total Liabilities and Equity		6,945,912	7,081,120	8,072,864
Net debt - Teekay Parent (2)		295,132	287,463	329,833
Net debt - Teekay LNG (2)		2,555,192	2,597,277	2,989,009
Net debt - Teekay Tankers (2)		509,858	502,142	929,135

(1)	Comparative balances relating to the year ended December 31, 2019 have been updated to reflect results consistent with the presentation in the Company’s 2019 Annual Report on Form 20-F and this report for the three months and year ended December 31, 2020.
(2)	Net debt is a non-GAAP financial measure and represents short-term debt, current portion of long-term debt and long-term debt, less cash and cash equivalents, and, if applicable, restricted cash.

Teekay Corporation
Summary Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)

	Year Ended
	December 31,
	2020		2019
	(unaudited)		(unaudited)
Cash, cash equivalents and restricted cash provided by (used for)
OPERATING ACTIVITIES
Net income (loss)	90,982		(148,986	)
Non-cash and non-operating items:
Depreciation and amortization	261,131		290,672
Unrealized (gain) loss on derivative instruments and loss on sale of warrants	(9,563	)	20,007
Write-down and loss on sale of assets	200,238		170,310
Gain on commencement of sales-type lease	(44,943	)	—
Equity (income) loss, net of dividends received and return of capital	(5,575	)	54,826
Foreign currency exchange loss and other	99,016		44,835
Receipts from direct financing and sales-type leases	340,931		17,073
Change in operating assets and liabilities	99,172		(4,823	)
Asset retirement obligation expenditures	(17,458	)	—
Expenditures for drydocking	(29,914	)	(60,608	)
Net operating cash flow	984,017		383,306
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, net of issuance costs	1,182,249		527,465
Prepayments of long-term debt	(1,712,828	)	(804,748	)
Scheduled repayments of long-term debt and settlement of related swaps	(305,971	)	(233,734	)
Proceeds from short-term debt	235,000		200,000
Prepayment of short-term debt	(275,000	)	(150,000	)
Proceeds from financing related to sales-leaseback of vessels	—		381,526
Extinguishment of obligations related to finance leases	(29,596	)	(111,617	)
Repayments of obligations related to finance leases	(95,131	)	(95,946	)
Repurchase of Teekay LNG common units	(15,635	)	(25,729	)
Distributions paid from subsidiaries to non-controlling interests	(79,803	)	(63,343	)
Cash dividends paid	—		(5,523	)
Other financing activities	(798	)	(580	)
Net financing cash flow	(1,097,513	)	(382,229	)
INVESTING ACTIVITIES
Expenditures for vessels and equipment, net of warranty settlement	(26,507	)	(109,523	)
Proceeds from sale of vessels and equipment	60,915		31,523
Proceeds from the sale of assets, net of cash sold	24,977		100,000
Capital contributions and advances to equity-accounted joint ventures	(991	)	(72,391	)
Proceeds from repayments of advances to equity-accounted joint ventures	14,650		—
Other investing activities	(9,983	)	—
Net investing cash flow	63,061		(50,391	)
Decrease in cash, cash equivalents and restricted cash	(50,435	)	(49,314	)
Cash, cash equivalents and restricted cash, beginning of the year	456,325		505,639
Cash, cash equivalents and restricted cash, end of the year	405,890		456,325

Teekay Corporation
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income
(in thousands of U.S. dollars, except per share data)

		Three Months Ended								Year Ended
		December 31,				September 30,				December 31,
		2020				2020				2020
		(unaudited)				(unaudited)				(unaudited)
				$ Per				$ Per				$ Per
		$		Share(1)		$		Share(1)		$		Share(1)
Net (loss) income – GAAP basis		(45,132	)			(41,388	)			90,982
Adjust for: Net loss (income) attributable to
non-controlling interests		25,688				5,981				(173,915	)
Net loss attributable to
	shareholders of Teekay	(19,444	)	(0.19	)	(35,407	)	(0.35	)	(82,933	)	(0.82	)
Add (subtract) specific items affecting net loss
	Unrealized (gains) losses from
	derivative instruments(2)	(7,149	)	(0.07	)	(6,362	)	(0.06	)	36,384		0.36
	Foreign currency exchange losses(3)	10,826		0.11		4,275		0.04		14,130		0.14
	Banff FPSO decommissioning costs
	net of (recoveries)(4)	(1,550	)	(0.02	)	10,564		0.10		14,868		0.15
	Write-down and loss on sale of vessels
	and other assets(5)	28,689		0.28		66,872		0.66		200,836		1.99
	Gain on commencement of sales-type lease(6)	—		—		—		—		(44,943	)	(0.44	)
	Restructuring charges, net of recoveries	3,106		0.03		1,186		0.01		5,592		0.06
	Other(7)	25,272		0.25		22,657		0.22		38,561		0.38
	Non-controlling interests’ share of items above(8)	(36,901	)	(0.36	)	(48,556	)	(0.48	)	(99,445	)	(0.98	)
Total adjustments		22,293		0.22		50,636		0.50		165,983		1.64
Adjusted net income attributable to
	shareholders of Teekay	2,849		0.03		15,229		0.15		83,050		0.82

(1)	Basic per share amounts.
(2)	Reflects unrealized (gains) losses relating to the change in the mark-to-market value of derivative instruments that are not designated in qualifying hedging relationships for accounting purposes, including those (gains) losses included in the Company's proportionate share of equity income from joint ventures.
(3)	Foreign currency exchange losses primarily relate to the Company’s debt denominated in Euros and Norwegian Kroner (NOK) and unrealized losses on cross currency swaps used to economically hedge the principal and interest on NOK bonds.
(4)	In the first quarter of 2020, CNR International (U.K.) Limited (or CNR) provided formal notice to the Company of its intention to decommission the Banff field and remove the Banff FPSO and the Apollo Spirit FSO from the field in June 2020. The oil production under the existing contract for the Banff FPSO unit ceased in June 2020, and the Company commenced decommissioning activities during the second quarter of 2020.
(5)	Refer to footnote (2) of the Summary Consolidated Statements of (Loss) Income for additional information.
(6)	Gain on commencement of sales-type lease for the year ended December 31, 2020 relates to the commencement of the sales-type lease for the Foinaven FPSO unit as a result of a new bareboat charter agreement.
(7)	Other for the three months and year ended December 31, 2020, and three months ended September 30, 2020, includes credit loss provision adjustments to the Company's financial instruments upon adoption of ASU 2016-13. Other for the three months and year ended December 31, 2020 also includes the proportionate share of write-down of vessels in Teekay LNG's equity-accounted investees, and adjustments to freight tax accruals for periods prior to 2020.
(8)	Items affecting net income include items from the Company’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 determine 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 items listed in the table.

Teekay Corporation
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Loss)
(in thousands of U.S. dollars, except per share data)

		Three Months Ended				Year Ended
		December 31,				December 31,
		2019				2019
		(unaudited)				(unaudited)
				$ Per				$ Per
		$		Share(1)		$		Share(1)
Net income (loss) – GAAP basis		122,497				(148,986	)
Adjust for: Net income attributable to
	non-controlling interests	(111,154	)			(161,591	)
Net income (loss) attributable to
	shareholders of Teekay	11,343		0.11		(310,577	)	(3.08	)
Add (subtract) specific items affecting net loss
	Unrealized gains from non-designated derivative instruments(2)	(12,488	)	(0.12	)	(5,923	)	(0.06	)
	Foreign currency exchange losses(3)	9,612		0.10		8,513		0.08
	Write-down and (gain) loss on sale of vessels and
	other assets	(8,803	)	(0.09	)	243,063		2.41
	Restructuring charges, net of recoveries	(612	)	(0.01	)	3,329		0.03
	Other(4)	18,710		0.19		59,304		0.59
	Non-controlling interests’ share of items above(5)	13,520		0.13		(16,820	)	(0.17	)
Total adjustments		19,939		0.20		291,466		2.89
Adjusted net income (loss) attributable to
	shareholders of Teekay	31,282		0.31		(19,111	)	(0.19	)

(1)	Basic per share amounts.
(2)	Reflects unrealized gains relating to the change in the mark-to-market value of derivative instruments that are not designated in qualifying hedging relationships for accounting purposes, including those gains included in the Company's proportionate share of equity income (loss) from joint ventures.
(3)	Foreign currency exchange losses primarily relate to the Company’s debt denominated in Euros and Norwegian Kroner (NOK) and unrealized losses on cross currency swaps used to economically hedge the principal and interest on NOK bonds.
(4)	Other for the three months and year ended December 31, 2019 includes adjustments to freight tax accruals for periods prior to 2019, and the impact of the Awilco charter contracts being reclassified from operating leases to sales-type leases. Other for the year ended December 31, 2019 also includes upfront fees on the refinancing of a vessel, the realized loss on sale of stock purchase warrants in Altera, a loss on the repurchase of 2020 Notes, and the loan extinguishment costs related to Teekay LNG's refinancing of one of its debt facilities.
(5)	Items affecting net income (loss) include items from the Company’s consolidated non-wholly-owned subsidiaries. The specific items affecting net income (loss) 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 determine 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 items listed in the table.

Teekay Corporation
Appendix B - Supplemental Financial Information
Summary Statement of Income (Loss) for the Three Months Ended December 31, 2020  
(in thousands of U.S. dollars)
(unaudited)

		Teekay		Teekay		Teekay		Consolidation	Total
		LNG		Tankers		Parent		Adjustments(1)
Revenues		154,076		127,802		80,418		—	362,296
Voyage expenses		(5,798	)	(58,649	)	10		—	(64,437	)
Vessel operating expenses		(31,243	)	(41,030	)	(72,678	)	—	(144,951	)
Time-charter hire expense		(6,294	)	(8,096	)	(2,327	)	—	(16,717	)
Depreciation and amortization		(32,883	)	(28,043	)	—		—	(60,926	)
General and administrative expenses		(6,689	)	(10,049	)	(2,472	)	—	(19,210	)
Write-down of assets		(6,000	)	(24,282	)	1,592		—	(28,690	)
Restructuring charges		—		—		(1,570	)	—	(1,570	)
Income (loss) from vessel operations		65,169		(42,347	)	2,973		—	25,795
Interest expense		(30,431	)	(10,345	)	(9,931	)	—	(50,707	)
Interest income		1,411		39		21		—	1,471
Realized and unrealized (loss) gain on
	non-designated derivative instruments	(3,020	)	(390	)	(43	)	—	(3,453	)
Equity income (loss)		15,359		(74	)	—		—	15,285
Equity in earnings of subsidiaries (2)		—		—		(8,814	)	8,814	—
Income tax (expense) recovery		(1,364	)	(19,030	)	1,725		—	(18,669	)
Foreign exchange loss		(6,618	)	(1,268	)	(4,613	)	—	(12,499	)
Other (loss) income – net		(1,721	)	128		(762	)	—	(2,355	)
Net income (loss)		38,785		(73,287	)	(19,444	)	8,814	(45,132	)
Net (income) loss attributable to
	non-controlling interests (3)	(3,643	)	—		—		29,331	25,688
Net income (loss) attributable to shareholders/
	unitholders of publicly-listed entities	35,142		(73,287	)	(19,444	)	38,145	(19,444	)

(1)	Consolidation Adjustments column includes adjustments which eliminate transactions between Teekay LNG, Teekay Tankers and Teekay Parent.
(2)	Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries.
(3)	Net (income) loss attributable to non-controlling interests in the Teekay LNG column represents the joint venture partners’ share of the net income of its respective consolidated joint ventures. Net (income) loss attributable to non-controlling interest in the Consolidation Adjustments column represents the public’s share of the net income of Teekay’s publicly-traded consolidated subsidiaries.

Teekay Corporation
Appendix B - Supplemental Financial Information
Summary Statement of Income (loss) for the Year Ended December 31, 2020  
(in thousands of U.S. dollars)
(unaudited)

		Teekay		Teekay		Teekay		Consolidation		Total
		LNG		Tankers		Parent		Adjustments(1)
Revenues		591,103		886,434		338,135		—		1,815,672
Voyage expenses		(17,394	)	(297,225	)	(14	)	—		(314,633	)
Vessel operating expenses		(116,396	)	(184,233	)	(299,175	)	—		(599,804	)
Time-charter hire expense		(23,564	)	(36,341	)	(20,378	)	—		(80,283	)
Depreciation and amortization		(129,752	)	(117,213	)	(14,166	)	—		(261,131	)
General and administrative expenses		(26,904	)	(39,006	)	(13,318	)	—		(79,228	)
Write-down and loss on sale of assets		(51,000	)	(69,446	)	(79,792	)	—		(200,238	)
Gain on commencement of sales-type lease		—		—		44,943		—		44,943
Restructuring charges		—		(1,398	)	(9,321	)	—		(10,719	)
Income (loss) from vessel operations		226,093		141,572		(53,086	)	—		314,579
Interest expense		(132,806	)	(51,525	)	(41,462	)	146		(225,647	)
Interest income		6,884		1,199		405		(146	)	8,342
Realized and unrealized loss on
	non-designated derivative instruments	(33,334	)	(2,220	)	(303	)	—		(35,857	)
Equity income		72,233		5,100		—		—		77,333
Equity in earnings of subsidiaries (2)		—		—		10,713		(10,713	)	—
Income tax (expense) recovery		(3,492	)	(7,283	)	1,787		—		(8,988	)
Foreign exchange (loss) gain		(21,356	)	(734	)	1,372		—		(20,718	)
Other (loss) income – net		(16,910	)	1,207		(2,359	)	—		(18,062	)
Net income (loss)		97,312		87,316		(82,933	)	(10,713	)	90,982
Net income attributable to
	non-controlling interests (3)	(9,955	)	—		—		(163,960	)	(173,915	)
Net income (loss) attributable to shareholders/
	unitholders of publicly-listed entities	87,357		87,316		(82,933	)	(174,673	)	(82,933	)

(1)	Consolidation Adjustments column includes adjustments which eliminate transactions between Teekay LNG, Teekay Tankers and Teekay Parent.
(2)	Teekay Corporation’s proportionate share of the net earnings of its publicly-traded subsidiaries.
(3)	Net income attributable to non-controlling interests in the Teekay LNG column represents the joint venture partners’ share of the net income of its respective consolidated joint ventures. Net income attributable to non-controlling interest in the Consolidation Adjustments column represents the public’s share of the net income of Teekay’s publicly-traded consolidated subsidiaries.

Teekay Corporation
Appendix C - Supplemental Financial Information
Teekay Parent Summary Operating Results
For the Three Months Ended December 31, 2020
(in thousands of U.S. dollars)
(unaudited)

							Teekay
					Corporate		Parent
	FPSOs		Other(1)		G&A		Total
Revenues	17,987		62,431		—		80,418
Voyage expenses	—		10		—		10
Vessel operating expenses	(12,708	)	(59,970	)	—		(72,678	)
Time-charter hire expense	—		(2,327	)	—		(2,327	)
General and administrative expenses	(197	)	—		(2,275	)	(2,472	)
Write-down of vessels	1,592		—		—		1,592
Restructuring charges	(334	)	(1,236	)	—		(1,570	)
Income (loss) from vessel operations	6,340		(1,092	)	(2,275	)	2,973
Adjustment for sales-type lease	(207	)	—		—		(207	)
Daughter Entities distributions (2)	—		—		9,379		9,379
Teekay Parent adjusted EBITDA	4,541		(1,092	)	7,104		10,553

(1)

Includes the results relating to third-party management services as well as one chartered-in FSO unit owned by Altera, which is on a flow-through basis with Teekay Parent earning a small margin.

(2)

In addition to the adjusted EBITDA generated by its directly owned and chartered-in assets, Teekay Parent also receives cash distributions from its consolidated publicly-traded subsidiary, Teekay LNG. For the three months ended December 31, 2020, Teekay Parent received cash distributions of $9.4 million from Teekay LNG, including those made with respect to its general partner interests in Teekay LNG. Distributions received for a given quarter consist of the amount of distributions relating to such quarter but received by Teekay Parent in the following quarter. Please refer to Appendix D of this release for further details.

Teekay Corporation
Appendix D - Reconciliation of Non-GAAP Financial Measures
Teekay Parent Free Cash Flow
(in thousands of U.S. dollars, except share and per share data)

		Three Months Ended						Year Ended
		December 31,		September 30,		December 31,		December 31,		December 31,
		2020		2020		2019		2020		2019
		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Daughter Entities distributions to
	Teekay Parent (1)
	Teekay LNG
	Limited Partner interests (2)	8,990		8,990		4,790		33,272		19,160
	GP interests	389		389		300		1,556		1,209
Total Daughter Entity Distributions to
	Teekay Parent	9,379		9,379		5,090		34,828		20,369
	FPSOs	4,541		(7,376	)	9,363		(2,033	)	(6,935	)
	Other income and corporate general
	and administrative expenses
	Other (loss) income	(1,092	)	2,891		2,498		7,308		5,097
	Corporate general and
	administrative expenses	(2,275	)	(1,623	)	(3,129	)	(11,446	)	(13,152	)
TEEKAY PARENT ADJUSTED EBITDA (3)		10,553		3,271		13,822		28,657		5,379
Net interest expense (4)		(7,937	)	(8,237	)	(8,879	)	(33,426	)	(39,408	)
Asset retirement costs incurred (5)		(2,263	)	(12,169	)	—		(17,359	)	—
Upfront lease payment received in excess
	of revenue recognized (6)	—		—		—		56,127		—
TOTAL TEEKAY PARENT FREE
	CASH FLOW	353		(17,135	)	4,943		33,999		(34,029	)
Weighted-average number of
	common shares - Basic	101,108,886		101,107,371		100,784,425		101,053,095		100,719,224

(1)	Daughter Entities dividends and distributions for a given quarter consist of the amount of dividends and distributions relating to such quarter but received by Teekay Parent in the following quarter.
(2)	Common unit distribution cash flows to Teekay Parent are based on Teekay Parent’s ownership on the ex-dividend date for its publicly-traded subsidiary, Teekay LNG, for the periods as follows:

		Three Months Ended								Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2020			2020			2019			2020			2019
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Teekay LNG
Distribution per common unit	$	0.25		$	0.25		$	0.19		$	1.00		$	0.76
Common units owned by
Teekay Parent		35,958,274			35,958,274			25,208,274			35,958,274			25,208,274
Total distribution	$	8,989,569		$	8,989,569		$	4,789,572		$	33,270,776		$	19,158,288

(3)	Please refer to Appendices C and E for additional financial information on Teekay Parent’s adjusted EBITDA.
(4)	Please see Appendix E to this release for a description of this measure and a reconciliation of this non-GAAP financial measure as used in this release to interest expense net of interest income, the most directly comparable GAAP financial measure.
(5)	Relates to decommissioning activities for the Banff FPSO unit, which have been accrued on the balance sheet as an asset retirement obligation.
(6)	Upfront lease payment relates to cash received in early April 2020 in excess of revenue recognized in the three months ended March 31, 2020 as a result of a new bareboat charter agreement relating to the Foinaven FPSO unit. Please refer to Summary Consolidated Statements of (Loss) Income for additional information.

Teekay Corporation
Non-GAAP Financial Reconciliations

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Consolidated
(in thousands of U.S. dollars)

		Three Months Ended
		December 31,		September 30,		December 31,
		2020		2020		2019 (1)
		(unaudited)		(unaudited)		(unaudited)
Net (loss) income		(45,132	)	(41,388	)	122,497
Depreciation and amortization		60,926		64,352		71,083
Interest expense, net of interest income		49,236		51,421		66,079
Income tax expense		18,669		3,702		13,951
EBITDA		83,699		78,087		273,610
Specific income statement items affecting EBITDA:
	Write-down and loss (gain) on sale of assets	28,690		66,273		(8,803	)
	Adjustments for direct financing and sales-type lease to a cash basis and other	3,371		2,976		9,429
	Realized and unrealized losses (gains) on derivative instruments	3,453		1,471		(4,592	)
	Realized (gains) losses from the settlements of non-designated derivative instruments	(810	)	195		1,097
	Equity income	(15,285	)	(24,392	)	(31,900	)
	Foreign currency exchange loss	12,499		5,943		10,721
	Other loss - net (2)	2,355		14,627		1,980
Consolidated Adjusted EBITDA		117,972		145,180		251,542
Adjusted EBITDA from equity-accounted vessels (See Appendix E)		83,089		81,818		73,923
Total Adjusted EBITDA		201,061		226,998		325,465

(1)	Comparative balances relating to the three months ended December 31, 2019 have been updated to reflect results as presented in the Company’s Annual Report for the year ended December 31, 2019.
(2)	Please refer to footnote (8) of the Summary Consolidated Statements of (Loss) Income of this release for further details.

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Consolidated
(in thousands of U.S. dollars)

		Year Ended
		December 31,		December 31,
		2020		2019 (1)
		(unaudited)		(unaudited)
Net income (loss)		90,982		(148,986	)
Depreciation and amortization		261,131		290,672
Interest expense, net of interest income		217,305		271,255
Income tax expense		8,988		25,482
EBITDA		578,406		438,423
Specific income statement items affecting EBITDA:
	Write-down and loss on sale of assets	200,238		170,310
	Gain on commencement of sales-type lease	(44,943	)	—
	Adjustments for direct financing and sales-type lease to a cash basis and other	11,762		17,505
	Realized and unrealized losses on derivative instruments	35,857		13,719
	Realized (gains) losses from the settlements of non-designated derivative instruments	(864	)	1,532
	Equity (income) loss	(77,333	)	14,523
	Foreign currency exchange loss	20,718		13,574
	Other loss - net (1)	18,062		14,475
Consolidated Adjusted EBITDA		741,903		684,061
Adjusted EBITDA from equity-accounted vessels (See Appendix E)		344,223		267,852
Total Adjusted EBITDA		1,086,126		951,913

(1)	Comparative balances relating to the year ended December 31, 2019 have been updated to reflect results as presented in the Company’s Annual Report for the year ended December 31, 2019.

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA – Equity-Accounted Vessels
(in thousands of U.S. dollars)

		Three Months Ended
		December 31, 2020				September 30, 2020				December 31, 2019
		(unaudited)				(unaudited)				(unaudited)
		At		Company's		At		Company's		At		Company's
		100%		Portion(1)		100%		Portion(1)		100%		Portion(1)
Revenues		249,460		107,964		248,474		107,619		223,716		100,267
Vessel and other operating expenses		(77,168	)	(33,836	)	(77,966	)	(34,522	)	(73,139	)	(32,600	)
Depreciation and amortization		(24,699	)	(12,814	)	(27,436	)	(13,804	)	(29,609	)	(14,392	)
Write-down of vessels		(34,000	)	(17,000	)	—		—		—		—
Income from vessel operations of equity-accounted vessels		113,593		44,314		143,072		59,293		120,968		53,275
Net interest expense		(66,493	)	(26,922	)	(61,774	)	(25,228	)	(62,291	)	(25,821	)
Income tax expense		(2,863	)	(1,080	)	(449	)	(235	)	(200	)	(107	)
Other items including realized and unrealized
	loss on derivative instruments (2)	(4,485	)	(1,027	)	(26,624	)	(9,438	)	12,823		4,553
Net income / equity income of equity-accounted vessels		39,752		15,285		54,225		24,392		71,300		31,900
Net income / equity income
	of equity-accounted vessels	39,752		15,285		54,225		24,392		71,300		31,900
Depreciation and amortization		24,699		12,814		27,436		13,804		29,609		14,392
Net interest expense		66,493		26,922		61,774		25,228		62,291		25,821
Income tax expense		2,863		1,080		449		235		200		107
EBITDA		133,807		56,101		143,884		63,659		163,400		72,220
Specific income statement items affecting EBITDA:
	Adjustments for direct financing and sales-type lease to a cash basis	27,387		9,917		26,752		9,677		19,286		7,212
	Write-down of vessels	34,000		17,000		—		—		—		—
	Amortization of in-process contracts and other	(1,759	)	(956	)	(1,759	)	(956	)	(1,758	)	(956	)
	Other items including realized and unrealized loss (gain) on derivative instruments(2)	4,485		1,027		26,624		9,438		(12,823	)	(4,553	)
Adjusted EBITDA from equity-accounted vessels (3)		197,920		83,089		195,501		81,818		168,105		73,923

(1)	The Company’s proportionate share of its equity-accounted vessels and other investments ranged from 20% to 52%.
(2)	Includes credit loss provision adjustments recorded upon the adoption of ASU 2016-13 for the three months ended December 31, 2020 and September 30, 2020.
(3)	Adjusted EBITDA from equity-accounted vessels represents the Company’s proportionate share of adjusted EBITDA from its equity-accounted vessels and other investments.

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA – Equity-Accounted Vessels
(in thousands of U.S. dollars)

		Year Ended
		December 31, 2020				December 31, 2019
		(unaudited)				(unaudited)
		At		Company's		At		Company's
		100%		Portion(1)		100%		Portion(1)
Revenues		1,024,961		444,059		1,100,576		385,529
Vessel and other operating expenses		(303,763	)	(134,162	)	(421,592	)	(138,293	)
Depreciation and amortization		(104,774	)	(53,065	)	(201,478	)	(68,921	)
Write-down of vessels		(34,000	)	(17,000	)	—		—
Income from vessel operations of equity-accounted vessels		582,424		239,832		477,506		178,315
Net interest expense		(277,936	)	(112,259	)	(278,572	)	(99,567	)
Income tax expense		(3,685	)	(1,504	)	(6,078	)	(1,757	)
Other items including realized and unrealized loss on
	derivative instruments (2)	(151,821	)	(48,736	)	(85,088	)	(18,911	)
Write-down and loss on sale of equity-accounted
	investments (3)	—		—		—		(72,603	)
Net income / equity income (loss) of equity-accounted vessels		148,982		77,333		107,768		(14,523	)
Net income / equity income (loss) of
	equity-accounted vessels	148,982		77,333		107,768		(14,523	)
Depreciation and amortization		104,774		53,065		201,478		68,921
Net interest expense		277,936		112,259		278,572		99,567
Income tax expense		3,685		1,504		6,078		1,757
EBITDA		535,377		244,161		593,896		155,722
Specific income statement items affecting EBITDA:
	Adjustments for direct financing and sales-type
	lease to a cash basis	105,496		38,118		67,807		24,574
	Write-down of vessels	34,000		17,000		—		—
	Amortization of in-process contracts and other	(6,974	)	(3,792	)	(6,974	)	(3,793	)
	Other items including realized and unrealized loss on
	derivative instruments(2)	151,822		48,736		83,913		18,746
	Loss on sale of equity-accounted investments	—		—		—		72,603
Adjusted EBITDA from equity-accounted vessels (4)(5)		819,721		344,223		738,642		267,852

(1)	For the year ended December 31, 2020, the Company’s proportionate share of its equity-accounted vessels and other investments ranged from 20% to 52%. For the year ended December 31, 2019, the Company’s proportionate share of its equity-accounted vessels and other investments, ranged from 20% to 52%, excluding its investment in Altera which was 14% until the sale thereof in May 2019.
(2)	For the year ended December 31, 2020, includes credit loss provision adjustments recorded upon the adoption of ASU 2016-13.
(3)	For the year ended December 31, 2019, includes a write-down and loss on sale of the Company's investment in Altera.
(4)	Adjusted EBITDA from equity-accounted vessels represents the Company’s proportionate share of adjusted EBITDA from its equity accounted vessels and other investments.
(5)	The Company sold its investment in Altera in May 2019 and consequently did not include any share of Altera's adjusted EBITDA for the last three quarters of 2019.

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Teekay Parent
(in thousands of U.S. dollars)

	Three Months Ended September 30, 2020
	(unaudited)
									Teekay
							Corporate		Parent
	FPSOs			Other			G&A		Total
Teekay Parent loss from vessel operations		(20,586	)		(6,811	)	(1,623	)		(29,020	)
Write-down of assets		12,200			9,100		—			21,300
Depreciation and amortization		1,759			—		—			1,759
Amortization of operating lease liability and other		(749	)		602		—			(147	)
Daughter Entities distributions		—			—		9,379			9,379
Adjusted EBITDA – Teekay Parent		(7,376	)		2,891		7,756			3,271

	Three Months Ended December 31, 2019
	(unaudited)
								Teekay
						Corporate		Parent
	FPSOs			Other		G&A		Total
Teekay Parent income (loss) from vessel operations		4,792			1,861	(3,129	)		3,524
Write-down of vessels		2			—	—			2
Depreciation and amortization		6,052			35	—			6,087
Amortization of in-process revenue contracts and other		(1,483	)		602	—			(881	)
Daughter Entities distributions		—			—	5,090			5,090
Adjusted EBITDA – Teekay Parent		9,363			2,498	1,961			13,822

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA - Teekay Parent
(in thousands of U.S. dollars)

	Year Ended December 31, 2020
	(unaudited)
									Teekay
							Corporate		Parent
	FPSOs			Other			G&A		Total
Teekay Parent loss from vessel operations		(38,054	)		(3,586	)	(11,446	)		(53,086	)
Write-down of assets		70,692			9,100		—			79,792
Gain on commencement of sales-type lease		(44,943	)		—		—			(44,943	)
Depreciation and amortization		14,166			—		—			14,166
Amortization of operating lease liability and other		(3,894	)		1,794		—			(2,100	)
Daughter Entities distributions		—			—		34,828			34,828
Adjusted EBITDA – Teekay Parent		(2,033	)		7,308		23,382			28,657

	Year Ended December 31, 2019
	(unaudited)
								Teekay
						Corporate		Parent
	FPSOs			Other		G&A		Total
Teekay Parent (loss) income from vessel operations		(208,167	)		2,225	(13,152	)		(219,094	)
Write-down of vessels		178,330			—	—			178,330
Depreciation and amortization		29,710			195	—			29,905
Amortization of in-process revenue contracts and other		(6,808	)		2,677	—			(4,131	)
Daughter Entities distributions		—			—	20,369			20,369
Adjusted EBITDA – Teekay Parent		(6,935	)		5,097	7,217			5,379

Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Net Interest Expense - Teekay Parent
(in thousands of U.S. dollars)

		Three Months Ended						Year Ended
		December 31,		September 30,		December 31,		December 31,		December 31,
		2020		2020		2019		2020		2019
		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Interest expense		(50,707	)	(53,175	)	(67,476	)	(225,647	)	(279,059	)
Interest income		1,471		1,754		1,397		8,342		7,804
Interest expense net of interest income
	consolidated	(49,236	)	(51,421	)	(66,079	)	(217,305	)	(271,255	)
Less: Non-Teekay Parent interest
	expense net of interest income	(39,326	)	(41,338	)	(55,322	)	(176,248	)	(225,027	)
Interest expense net of interest income -
	Teekay Parent	(9,910	)	(10,083	)	(10,757	)	(41,057	)	(46,228	)
Teekay Parent non-cash accretion and
	loan cost amortization	2,376		2,188		2,161		8,970		7,823
Teekay Parent realized losses on
	interest rate swaps	(403	)	(342	)	(283	)	(1,339	)	(1,003	)
Net interest expense - Teekay Parent		(7,937	)	(8,237	)	(8,879	)	(33,426	)	(39,408	)

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 impact of COVID-19, market volatility and related global events on the Company’s business and financial results, including the impact and timing of coronavirus vaccination programs; estimated fluctuations in global oil demand and supply levels, including anticipated future fluctuations in global oil inventories and the timing thereof; forecasts of worldwide tanker fleet growth or contraction and vessel scrapping; the future outlook of the tanker market; fixed charter coverage for Teekay LNG’s fleet for 2021 and 2022; the expected increase in Teekay LNG’s common unit distribution commencing in the first quarter of 2021 (and the coverage of such increased distribution payments), as well as the effect thereof on Teekay Parent’s free cash flows and on Teekay LNG’s delevering plans and investor returns; the timing of the delivery of the Teekay Tankers’ newbuilding subject to a new long-term in-charter agreement; Teekay Tankers’ plans to potentially finance, and the timing of closing, the re-purchase of sale-leaseback vessels; the financial impact and timing of closing additional vessel sales; continued receipt of terminal use payments in respect of the Bahrain LNG regasification terminal; and the timing of commencement of new 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: market or counterparty reaction to changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth; changes in the demand for oil, refined products, LNG or LPG; changes in trading patterns significantly affecting overall vessel tonnage requirements; greater or less than anticipated levels of vessel newbuilding orders and deliveries and greater or less than anticipated rates of vessel scrapping; changes in global oil prices or tanker rates; OPEC+ and non-OPEC production and supply levels; the duration and extent of the COVID-19 pandemic and any resulting effects on the markets in which the Company operates; the impact of the pandemic on the Company’s ability to maintain safe and efficient operations; the impact and timing of coronavirus vaccination programs; issues with vessel operations; higher than expected costs and expenses, off-hire days or dry-docking requirements (both scheduled and unscheduled); higher than expected costs and/or delays associated with the remediation of the Banff field or the decommission/recycling of the Banff FPSO unit; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations, including IMO 2030; the potential for early termination of long-term contracts of existing vessels; changes in borrowing costs or equity valuations; declaration by Teekay LNG’s board of directors of common unit distributions; potential lack of cash flow for Teekay LNG to continue paying distributions on its common units and other securities; available cash to reduce financial leverage at Teekay Parent, Teekay LNG and Teekay Tankers; the impact of geopolitical tensions and changes in global economic conditions; the ability to partially recover severance costs from the termination of the contract for an FSO unit based in Australia; and other factors discussed in Teekay’s filings from time to time with the SEC, including its Annual Report on Form 20-F for the fiscal year ended December 31, 2019. Teekay expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Teekay’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

 

FAQ

What were Teekay's Q4 2020 earnings results?

Teekay reported a GAAP net loss of $19.4 million, or $0.19 per share, with adjusted net income of $2.8 million, or $0.03 per share.

How did Teekay perform in fiscal year 2020 compared to 2019?

Teekay's adjusted net income for 2020 was $83 million, significantly better than a loss in 2019, and total adjusted EBITDA increased to $1.1 billion.

What is Teekay's plan regarding unit distributions?

Teekay LNG plans to increase its common unit distributions by 15% to $1.15 per unit starting in Q1 2021.

What financial improvements did Teekay achieve in 2020?

Teekay reduced consolidated net debt by $887.8 million and improved total liquidity to $1.0 billion.

What challenges did Teekay face in Q4 2020?

Teekay Tankers faced lower average spot tanker rates and increased asset write-downs impacting financial performance.