Teekay Corp (TK) Q3 2024 report

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Commented on subsidiary Teekay Tankers (TNK) a day or two ago. More recently, Teekay Corp (TK) mgmt have forced out the TNK mgmt CEO, and taken over TNK C-suite role. The Q3 report adds more color to the developments.

TK had been somewhat of a holding company prior to the most recent moves. But, Slide 3 suggests TK will completely be a holding company after TK’s Australian operations and shore-based employees transition to TNK.

  • TK repurchased $59M in company shares
  • TK declared a $1/sh special div
  • Purchased $50M in TNK shares @ $58.85/sh
  • Authorized an additional $40M buy-back of shares (TK or TNK? )

In light of Slides 3 & 11, I should mention a risk.
Teekay (TK) owned some offshore assets separate from its former offshore subsidiary, Teekay Offshore (former TOO). Even though Teekay lost control of its subsidiaries Teekay Offshore and Teekay Gas Partners (former TGP), those separate assets allowed one to view the parent entity as a separate company. TK added the Australian Operations shortly after.

With the transfer of Australian Operations and onshore staff to TNK, not sure how Teekay Corp (TK) can avoid being considered a PFIC (Passive Foreign Investment Company) now? Not a tax professional - but just mentioning this item.

TK slides seem to have additional data on TNK

  • While skimming TNK’s report, I missed the dry-dock Slide. But, TK report (Slide 5) suggests TNK should benefit from additional fleet days - 10 vessels in dry-dock for some portion of Q3 2024. No issue with the timing. Q3 being the weakest qtr is the best time to have vessels in dry dock.
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Did peruse thru the TK Earnings Call transcript–
https://seekingalpha.com/article/4731866-teekay-corporation-ltd-tk-q3-2024-earnings-call-transcript#comment-98958851

Three analysts - the last one (Ken Hoexter) did pose a few pointed questions along the lines of my concerns. But more to the point -
Good morning, So if – I just want to revisit the question earlier. If you’re buying all of the stuff and you said now Teekay TNK looks more like what Teekay did can you clarify why you still have the dual listing? And will we see further consolidation into that?

Some nice color on TMX. 24 cargos last month. The cargos are either direct to Asia or sail down to Central America, combined with other cargos for shipment to Asia. Had been aware of this data-point from a prior event- Canadian port draft restrictions limit vessel size to Aframax. This means the Canadian portion of the cargo transfer is an Aframax only trade.

Australian Operations: About $10M EBITDA on $100M in rev. A small surprise to me - a portion of Australian Operations has been in place for over 30 years.

[Edit: The transcript details suggest the share buyback would be TK shares. And how does one value TK, if there are no additional businesses at the corporate level, and all the operations are now down at the subsidiary/TNK level? ]

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