LNG and LPG owner Teekay LNG Partners has reported a GAAP net income of $44.9 mill and GAAP net income per common unit of $0.46 for the second quarter of 2020.
This compares with a GAAP net income of $16.4 mill and a GAAP net income of $0.12 per common unit recorded in 2Q19.
Adjusted net income was $62.6 mill and adjusted net income per common unit of $0.67 in 2Q20, compared to $34.4 mill and $0.35 EPS for the corresponding quarter of 2019.
Total adjusted EBITDA was $192.3 mill, compared with $162.1 mill in 2Q19, a rise of almost 19% and representing another quarterly record - the eighth consecutive quarterly record, Teekay LNG said.
The Partnership said that GAAP net income and non-GAAP adjusted net income were positively impacted in 2Q20, compared to the same quarter of 2019, by: earnings from six LNGC newbuildings, which were delivered last year; fewer drydocking and repair off-hire days; and higher earnings by certain of the Partnership's joint ventures as their individual projects commenced or vessels commenced charters at, or earned, higher rates.
These increases were partially offset by a reduction in earnings for two LNGCs sold in January 2020, and an oil tanker sold in October, 2019.
When compared with the first quarter of this year, GAAP net income and non-GAAP adjusted net income were also positively impacted by a reduction in operational performance claims; higher earnings in one of the Partnership's joint ventures, due to higher LPG rates; and a decrease in income tax expense. These decreases were partially offset by an increase in vessel operating expenses, due to the timing of repairs and maintenance and an increase in general and administrative expenses, due to additional professional fees incurred in 2Q20.
In addition, GAAP net income was higher in the second quarter as a result of a write-down recorded in 1Q20 and decreases in unrealised losses on non-designated derivative instruments and credit loss provision adjustments in 2Q20, including within the Partnership's equity-accounted joint ventures.
These increases were partially offset by unrealised foreign currency exchange losses incurred in the second quarter, compared to gains in 1Q20.
“We are pleased to report that this was another record quarter for Teekay LNG,” said Mark Kremin, President and CEO Teekay Gas Group Ltd. “While COVID-19 continues to have an unprecedented impact on the world and is a major focus for us, we have been able to fully service our charter contracts and have continued to receive contracted cash flows from our high quality customers.
“As a result of the pandemic, the overall maritime industry has experienced significant challenges related to crew changes, but I am pleased to report that we have safely changed-out a number of crew members on all of our vessels. We continue to work hard with both the industry and inter-governmental organisations to tackle this challenge and bring our remaining overdue colleagues home safely as soon as possible.
“I am truly proud of how our seafarers and onshore colleagues have responded to ensure safe and successful transitions with no reported COVID-19 cases, while providing uninterrupted service to our customers.
“Following the completion of our growth programme late last year, our focus has been primarily on delevering our balance sheet, which also reduces interest costs, and maximising our fleet utilisation, which provides us with stable, predictable cash flows.
“This focus, in combination with consistent operational performance and competitive costs, driven by our economies of scale, has resulted in record Adjusted Net Income and Total Adjusted EBITDA for Teekay LNG this quarter.
“Our LNG fleet is fully-fixed for the remainder of 2020 and 94% fixed for 2021, largely insulating Teekay LNG from the current weak short-term LNG shipping market. Furthermore, all of our charter contracts are currently operating in-line with our expectations, which allows us to reaffirm our previously provided financial guidance for 2020,” he explained.
As of 30th June, 2020, the Partnership had total liquidity of $306.3 mill - comprised of $226.3 mill in cash and cash equivalents and $80 mill in undrawn credit facilities.
Teekay LNG Partners managed 47 LNGCs and 30 LPG/Multi-gas carriers during 2Q20.