Teekay Tankers Ltd. (NYSE:TNK) Q2 2024 Results Conference Call August 1, 2024 11:00 AM ET

Company Participants

Kevin Mackay - President and Chief Executive Officer
Stewart Andrade - Chief Financial Officer
Christian Waldegrave - Director of Research and Commercial Performance

Conference Call Participants

Omar Nokta - Jefferies

Operator

Welcome to Teekay Tankers Ltd. Second Quarter 2024 Earnings Conference Call. [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 2024 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 2024 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 2024 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 3 of the presentation. Teekay Tankers has another strong quarterly result, generating total adjusted EBITDA of $124 million, down from $151 million we generated last quarter. The company reported adjusted net income of $107 million or $3.11 per share, a decrease from $132 million or $3.96 per share in the first quarter of 2024.

With our fleet of midsized tankers, trading almost entirely in the strong spot market, Teekay Tankers' high operating leverage enabled us to continue generating significant earnings and free cash flow. As a reminder, for every $5,000 increase in tanker rates above our free cash flow breakeven of $15,000 per day, we expect to generate approximately $2.36 of annual free cash flow per share. Stewart will provide further information on our ability to generate value for shareholders later in the presentation.

In line with our capital allocation plan, we have declared a fixed quarterly cash dividend of $0.25 per share for the second quarter of 2024. Midsized tanker spot rates remained strong during the second quarter. Start-up and ongoing increase of exports from the Trans Mountain pipeline expansion has been an important source of additional Aframax demand and have helped support rates during the second quarter. I'll give more detail on TMX later in the presentation.