Teekay Tankers Ltd. (NYSE:TNK) Q2 2023 Earnings Conference Call August 3, 2023 11:00 AM ET

Company Participants

Kevin Mackay - President and Chief Executive Officer

Stewart Andrade - Chief Financial Officer

Conference Call Participants

Jon Chappell - Evercore ISI

Omar Nokta - Jefferies

Nathan Ho - Bank of America

Operator

Welcome to Teekay Tankers Ltd. Second Quarter 2023 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you'll be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded.

Now, for opening remarks and introductions, I would like to turn the call over to the company. Please go ahead.

Unidentified Company Representative

Before we begin, I would like to direct all participants to our website at www.teekay.com, where you will find a copy of the second quarter 2023 earnings presentation. Kevin and Stewart will review this presentation during today's conference call.

Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the second quarter 2023 earnings release and earnings presentation available on our website.

I will now turn the call over to Kevin Mackay, Teekay Tankers' President and CEO, to begin.

Kevin Mackay

Thank you, Ed. Hello, everyone, and thank you very much for joining us today for Teekay Tankers' Second Quarter 2023 Earnings Conference Call. Joining me on the call today are Stewart Andrade, Teekay Tankers' CFO; and Christian Waldegrave, our Director of Research.

Moving to our recent highlights on slide three of the presentation, Teekay Tankers generated total adjusted EBITDA of approximately $185 million in the second quarter, more than triple the $58 million we generated in the same quarter of last year.

We reported adjusted net income of $149 million or $4.38 per share, almost six times last year's second quarter levels of $25.7 million or $0.76 per share, respectively. As a reminder, given our high operating leverage, for every $5,000 increase in day rates above our free cash flow breakeven of $16,000 per day, we expect to generate approximately $2.60 of annual free cash flow per share.

Our second quarter results reflect the high operating leverage as our owned fleet and eight vessels chartered-in fleet generated a total of $170 million of free cash flow. In line with our fixed quarterly dividend policy announced last quarter, we have declared a cash dividend of $0.25 per share for the second quarter of 2023. We have also continued to exercise purchase options on sale leaseback vessels in this case, giving notice on an additional four vessels for $57 million.