Teekay Tankers Q3 2025 Earnings Report

Teekay Tankers EPS Results

• Actual EPS: $1.54
• Consensus EPS: $1.50
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.23

Teekay Tankers Revenue Results

• Actual Revenue: $229.02 million
• Expected Revenue: $133.65 million
• Beat/Miss: Beat by +$95.37 million
• YoY Revenue Growth: -16.50%

Teekay Tankers Announcement Details

• Quarter: Q3 2025
• Date: 10/29/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, October 29, 2025
• Conference Call Time: 3:00AM ET

Teekay Tankers (NYSE:TNK) Ltd is an oil tanker shipping company that owns and operates a fleet of modern crude oil and petroleum product tankers. Listed on the New York Stock Exchange under the ticker symbol TNK, the company provides seaborne transportation services for crude oil, refined petroleum products and petrochemicals. Its operations range across major global trade lanes, offering a mix of spot market voyages and time-charter contracts to a diverse customer base in the oil and energy sector.

The company’s fleet includes a mix of Medium Range (MR), Long Range (LR1 and LR2), Suezmax and Aframax tankers designed to meet various cargo specifications and port restrictions. By balancing its exposure between fixed-rate fixtures and the spot market, Teekay Tankers aims to optimize revenue generation while maintaining operational flexibility. Its vessels are employed on routes spanning the Atlantic, Pacific and Indian Ocean regions, linking key oil-producing areas with major consumption centers worldwide.

Teekay Tankers was established through a corporate spin-off from Teekay Corporation, leveraging established maritime expertise and operational infrastructure. Headquartered in Hamilton, Bermuda, the company benefits from a global network of offices and technical partners overseeing crewing, maintenance and regulatory compliance. The management team comprises maritime industry professionals with extensive experience in tanker operations, finance and risk management, guiding the company’s strategic direction in a highly cyclical market.

Teekay Tankers Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Teekay reported a strong Q3 with GAAP net income of $92.1 million ($2.66/share), adjusted net income of $53.3 million ($1.54/share), generated roughly $69 million of free cash flow, ended the quarter with $775 million cash and no debt, and declared a regular dividend of $0.25 per share.
• Positive Sentiment: Spot tanker rates were "counter-seasonally" strong across VLCC, Suezmax and Aframax driven by the unwind of OPEC cuts and rising non‑OPEC supply, with global seaborne crude volumes at record highs and management expecting a firm winter market into Q4.
• Positive Sentiment: Management is executing a fleet renewal program—acquiring a modern Suezmax and remaining JV interest in a VLCC while selling older tonnage (gross proceeds of $158.5 million, estimated book gains ~ $47.5 million)—which has lowered the fleet free cash flow breakeven from $13,000/day to $11,300/day.
• Positive Sentiment: The company emphasizes a disciplined capital strategy with no debt and substantial cash, prioritizing reinvestment in core Aframax/Suezmax assets, opportunistic time‑charters to lock attractive rates, and continuing shareholder returns.
• Neutral Sentiment: Geopolitical developments (sanctions on Russian oil, Red Sea/Middle East risks, and the recent U.S.–China port/fee pause) are creating trade inefficiencies and volatility that could boost demand for compliant, conventional tankers but also leave near‑term uncertainty for market direction.

Presentation

[Operator]

Welcome to the Teekay Group Third Quarter 2025 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At that time, if you have a question, participants will be asked to press Star one to register for a question. For assistance during the call, please press Star zero on your touchtone telephone. 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.

[Edward Lee, General Counsel at Teekay Corporation]

Before we begin, I would like to direct all participants to our website at www.teekay.com where you'll find a copy of the Teekay Group's third quarter 2025 earnings presentation. Kenneth 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 third quarter 2025 Teekay Group earnings presentation available on our website.

[Edward Lee, General Counsel at Teekay Corporation]

I will now turn the call over to Kenneth Hvid, Teekay Corporation and Teekay Tankers Ltd. President and CEO, to begin.

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

Thank you, Ed. Hello everyone, and thank you very much for joining us today for the Teekay Group's third quarter 2025 earnings conference call. Joining me on the call today for the Q&A session is Brody Speers Teekay Corporation and Teekay Tankers Ltd. Chief Financial Officer, Ryan Hamilton, our Vice President, Finance and Corporate Development, and Christian Waldegrave, our Director of Research. Starting on slide 3 of the presentation, we will cover Teekay Tankers Ltd.'s recent highlights. Teekay Tankers Ltd. has reported the best quarter in the last 12 months with GAAP net income of $92.1 million, $2.66 per share and adjusted net income of

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

$53.3 million or $1.54 per share in the third quarter. Third quarter spot rates remained counter-seasonally strong, with rates meaningfully above the historical average for the third quarter. Further, with spot rates well above our free cash flow breakeven levels, the company generated approximately $69 million in free cash flow from operations, and at the end of the quarter had a cash position of $775 million with no debt. Teekay Tankers Ltd. continues to execute on its fleet renewal strategy, delivering on its previously announced transactions. Since the beginning of the third quarter we have completed the acquisition of one modern Suezmax and the remaining 50% ownership

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

interest in a VLCC from our joint venture partner in addition, the company completed the sales of five of four Suezmax tankers which delivered to their new owners in the third and fourth quarters. The combined gross proceeds of the five vessel sales is $158.5 million and we expect an estimated book gain on sales of approximately $47.5 million recorded in the third and fourth quarters. In addition, the strength in the spot market supported the time charter market and the company opportunistically out chartered one Suezmax vessel for $42,500 per day and two Aframax sized vessels for an average time charter rate of $33,275 per day for periods ranging from 12 to 18

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

months. Two of these charters have already commenced with the remaining charter set to start in November. Looking at our fourth quarter to date, we have secured spot rates of $63,745, $50,000, and $35,200 per day for our VLCC, Suezmax, and Aframax LR2 fleets respectively, with approximately 47%-54% of spot days booked. We believe the tanker market is well positioned for firm winter market, which we'll discuss in more detail in the next few slides. Lastly, Teekay Tankers Ltd. has declared its regular fixed dividend of $0.25 per share. Moving to slide 4, we look at recent developments in the spot tanker market. Spot tanker rates improved during the third quarter of 2025

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

with rates on a par with a strong level seen over the past three years and well above long term average levels. An increase in global oil supply due to the unwinding of OPEC supply cuts and rising production in the Atlantic Basin led to a sharp increase in global seaborne crude trade volumes during September to the highest level since early 2020. Rates were further boosted by an increase in long haul crude oil movements between the Atlantic and Pacific basins, particularly in the Suezmax and VLCC segments as shown by the chart on the right of the slide. Spot tanker rates have strengthened further at the start of the fourth quarter with rates in

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

October near the top of the five-year range. Turning to slide five, we look at the growth in global crude oil production and exports, which is underpinning the recent strength in spot tanker rates. Global oil production has been rising throughout the year due to increases from both OPEC and non-OPEC sources. The OPEC group began unwinding some of the voluntary supply cuts, which had been in place since 2023, at the start of April. By September, it had completed the unwind of the first round of cuts totaling 2.2 million barrels per day. The group is now in the process of unwinding the next round of cuts, totaling 1.65 million barrels per day at a rate of 137,000 barrels per day every

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

month over the next year. Oil production has also been boosted by new supply coming online from non-OPEC countries, particularly in South America, where new offshore production in Brazil and Guyana is in the process of ramping up. The increase has been particularly evident during the third quarter, with supply growing by 1.6 million barrels per day compared to Q2 levels. The net result of the higher oil production has been a sharp increase in seaborne crude oil trade volumes, most notably since September as more Middle East crude has been made available for export following the end of the summer direct crude burn season. In fact, if we exclude the period

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

in early 2020, when Saudi Arabia and Russia flooded the market with oil during the brief oil price war, global seaborne crude oil trade volumes are currently at a record high. With OPEC expected to continue to unwind supply cuts in the coming months, we expect global seaborne trade volumes to increase further during the fourth quarter. Turning to Slide 6, we look at some of the near term oil market fundamentals which we believe will support spot tanker demand in the coming months. One of the consequences of higher oil production this year has been a decrease in crude oil prices, as shown by the chart on the left of the slide. For countries outside the United States, a

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

weaker US. dollar has led to an even steeper drop in real oil prices. Lower oil prices are generally positive for tankers as it spurs oil consumption and lowers bunker fuel prices, which is our largest operating cost. Low oil prices also stimulate demand for stockpiling both for commercial and strategic purposes. Given that global oil inventories are below long term average levels, we believe that there is enough spare capacity to absorb a prolonged period of excess oil supply. Should global oil supply growth continue to exceed demand in the coming months, as many analysts predict, then we could even see a contango oil price structure emerge which could further stimulate tanker

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

demand. Turning to Slide 7, we look at the geopolitical events which are creating trade inefficiencies and adding further volatility to what is already a firm underlying tanker market. In recent weeks we've seen a number of announcements with regards to sanctions and port fees which are serving to create uncertainty and inefficiency in the tanker market. It's positive that the U.S.-China Trade Agreement announced earlier today includes a postponement of the announced port and shipping fees by at least a year as it relates to sanctions. We've seen an escalation of efforts to curb Russia's profits from oil sales via a series of new sanctions by both the EU and the

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

United States, most notably the recent actions to sanction Rosneft and Lukoil, who together control around 50% of Russian oil production and exports. While this is a fast evolving situation, it is reported that some refiners in India and China are backing off from Russian imports and looking to alternative suppliers in the Middle East and Atlantic Basin. This is positive for the tanker market as these volumes will need to be transported via the fleet of compliant tankers rather than the fleet of shadow tankers currently transport the majority of Russian crude oil to India and China. We believe that these factors, coupled with the strong crude oil trade volumes described earlier, as well as

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

normal winter seasonal factors, will help drive a firm spot tanker market in the coming months. Turning to slide 8, we review the key drivers for the medium term outlook. Global oil demand is projected to increase by 1.1 million barrels per day in 2026, as per the average forecast from the three major oil agencies, which is in line with average growth level since the end of the COVID pandemic. Global oil supply is also set to rise with more production due to common line from non-OPEC countries. It remains to be seen how OPEC will respond should oil inventories continue to fill and oil prices come under further pressure. However, we believe that there is still plenty of room for inventories to

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

build in 2026, particularly in China, where the government is reportedly looking to add 169 million barrels of new strategic storage by the end of the year. The fleet supply side continues to look balanced, with the order book size stable in recent months at around 16% of the existing fleet. A continued lack of tanker scrapping means that the fleet continues to age, with the average age of the global tanker fleet now at its highest point since the 1990s. In the mid-sized tanker fleet, 344 vessels, or 20% of the total fleet, is now aged 20 years or older, most of which are sanctioned vessels engaged in shadow trades. We believe that these older tankers will not return to conventional

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

trading even in the event that sanctions are lifted. While the medium-term tanker market outlook appears well balanced, there are a number of geopolitical uncertainties which could influence the direction of the tanker market depending on how they unfold. These include the outcome of the war in Ukraine and the fate of the shadow fleet serving Russian trade, developments in the Middle East and disruptions to Red Sea transits, the impact of tariffs and trade barriers on the global economy, and OPEC production policy. Turning to Slide 9, we highlight Teekay Tankers Ltd.'s value proposition. First, our operating leverage remains significant and the company is well positioned to

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

generate substantial cash flows in nearly any tanker market. With the three new out charters and no debt, we have lowered our fleet's free cash flow breakeven from $13,000 per day to $11,300 per day. With this low free cash flow breakeven, every $5,000 per day increase in spot rates above the threshold produces $1.66 per share of annual free cash flow or nearly 3% on a free cash flow yield basis. Second, Teekay Tankers Ltd. has a strong balance sheet with no debt and a $775 million cash position, which provides capacity for disciplined, accretive fleet growth. Third, we continue to return capital to shareholders in a disciplined manner through our quarterly dividend. Lastly, the

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

company's performance is underpinned by our integrated platform. We believe our in-house commercial and technical management is a competitive advantage. Combined with our 50 years of operating experience in the tanker industry, we provide superior service to our customers and transparency through the value chain, which drives shareholder returns. In summary, the company's strategy over the last several years has been to maximize shareholder value through our exposure to the strong spot market. This year we began taking measured action to renew our fleet by making incremental investments in more modern vessels, while at the same time selling some of

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

our oldest tonnage. As we look ahead, our best-in-class operating platform and strong financial footing positions the company well to continue renewing our fleet, earning cash flow, and building intrinsic value. With that, operator, we are now available to take questions.

[Operator]

Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing STAR 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press STAR 1 to ask a question. We will go first to Omar Nokta with Jefferies.

[Omar Nokta, Managing Director at Jefferies]

Thank you. Hi Kenneth, thank you for the update. Just wanted to ask, maybe I had a couple questions, maybe first just on the market and kind of where things sit right now. Clearly things have gotten much stronger, and when we think, I think a lot of times when we sort of talk about or think about rising OPEC production, we think a lot about the VLCC, and certainly those rates have shot towards past $100,000 a day. We're also seeing some real strength in the Suezmax and Aframax segments, which are, you know, your bread and butter. Can you just talk a little bit about how these segments maybe interact with each other or maybe move together, and what's really been driving some of the strength we've seen in the mid-sized segments here recently?

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

Yeah, thanks. Thanks, Omar. You are absolutely right. I mean, I think when we look at this year, the second half of the year has definitely been one going from strength to strength, and I would argue maybe even stronger than most of us expected. What we've seen just over the last week is that strength just continues to pick up. The week is finishing stronger both in the VLCC, the Suezmax, and the Aframax segments as well as the LR2s. Right. It is really moving up in all of the categories. If you look back over the last, well, since April 2022, what we had was that we had a period where the Aframaxes absolutely outperformed all sectors, as you know.

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

I think what we've kind of reverted to is more the traditional dynamics where the largest ships lead the way, they pull up the Suezmaxes, and that pulls up the Aframaxes. Underlying that, of course, is that we have a very strong product trade as well. That's happening. So everything is really working in all of the different segments where maybe it's more a matter of that in the last three years the Aframax were really the outliers because we really outperformed everything. Now we're kind of back to what you say would be the normal dynamics in a strong tanker market where everything is balanced. I think what we're seeing now is that we have, as we say a record number of barrels being transported on the water. Of course, most of these barrels in a traditional sense always go on the most efficient vessels,

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

which are VLCCs. When there's this much oil and this tighter supply, it just pulls up the whole market. I think in all simplicity what we're seeing here.

[Omar Nokta, Managing Director at Jefferies]

Yeah, yeah. Thank you for that helpful color. I guess maybe just kind of thinking about, you know, where Teekay stands. You know, clearly you guys have been in a very strong financial position for the past several quarters, perhaps several years, cash is building. You know, you've reiterated several times, be patient, be patient, which makes a whole lot of sense given all the unknowns as we kind of think about where you're headed. I think it was last quarter or maybe the quarter before you had talked, you know, when it came time to maybe reinvest or add more exposure, you were kind of looking to scale more perhaps into the MR segment, into product. Is that still the case?

[Omar Nokta, Managing Director at Jefferies]

If you kind of think about where you stand, if you wanted to deploy more capital or more net capital, would you want to go into products more deeply or do you feel you'd want to either scale up into the VLCCs or perhaps maybe just stay within your, you know, your, back to using the term bread and butter, but the Suezmax, Aframax segments.

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

Yeah, that's a great question. Just to be very clear, our core business is absolutely the medium sized tankers. We constantly look for where we can find incremental value both in our core but also the adjacent sectors. I think when we had this call almost a year ago, we talked about the MR, which looked interesting at the time relative to some of the other sectors. I think as we're sitting here today, we're one year further down the road here and looking at how we've renewed the fleet or have taken action on some of our older tankers started to renew our core fleet. Our focus is our number one priority right now is investing in our core franchise. I wouldn't say that there never would be an opportunity in MR, but relatively speaking,

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

now we actually think that the better value for us is to allocate capital towards our core segments, which are Aframax and Suezmax.

[Omar Nokta, Managing Director at Jefferies]

Okay, that's very clear. I appreciate that. Thank you. I'll pass it back.

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

Thanks.

[Operator]

We'll go next to Ken Hoexter with Bank of America Merrill Lynch.

[Tim Chang, Analyst at Bank of America Merrill Lynch]

Hi, this is Tim Chang on for Ken Hoexter. Thanks for taking my question to kind of extend on Omar's question. You've sold 11 vessels year to date, and while sales kind of outpaced purchases thus far, you mentioned last quarter you're focusing on an accelerating pace of fleet renewal going forward. Do you feel you're close to the minimum fleet size now, and do you perhaps aim for purchases of new core Aframax and Suezmax to offset any following sales?

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

I think the short answer is yes.

[Tim Chang, Analyst at Bank of America Merrill Lynch]

Got it. I saw your new time charter-out agreement with three vessels locking in very favorable rates. Do you expect to engage in more of those given elevated rates near term in 2026?

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

Yeah, that's a good question. I mean, we look at every deal opportunistically. There's always a timing, and we consider what is the outlook, and it's very dynamic. We think it's prudent when you see strong time charter rates to lock it in, especially if it's with good customers. It's an ongoing dialogue. It's not a state of strategy. We need to have X% of our fleet. We're happy to have spot exposure, but these levels we know in historical terms are very strong levels, so we can log it in. As we pointed out in our prepared remarks, every time we do that.

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

We lower our free cash flow breakeven further. As you can see, it's a very, very strong position that we're in in terms of generating cash flows in the spot market. At the same time, even if we did another couple of these at these levels, of course our free cash flow breakeven would go down even further. So we look at it as a portfolio and on a deal-by-deal basis.

[Tim Chang, Analyst at Bank of America Merrill Lynch]

Thanks. Appreciate all the insight.

[Kenneth Hvid, President and CEO at Teekay Corporation and Teekay Tankers Ltd]

Thanks for the questions.

[Operator]

We'll go next to Frode Mørkedal with Clarkson Securities.

[Frode Mørkedal, Analyst at Clarkson Securities]

Thank you. Hi guys. My first question is on this new China-U.S. deal. I guess the aforementioned under the previous USTR regulation was not exempt. Right. Now with the USTR port fees being suspended for a year, does that improve the aforementioned opportunities for you guys? Maybe they'll, you know, of course the export out of the U.S. Gulf, but also maybe lightering opportunities. Any call you have on that, please?

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

Yeah, obviously the deal is very, very, very new. I think the position we took first when the USTR came in and recently also the China port fees is that with the way that our fleet is composed. We don't have massive exposure to either sector. Therefore, I think the outcome of this agreement overall is positive for the industry. I don't think it has any significant impact on Teekay Tankers per se in the same way as the port fees didn't have a significant impact on us either. Overall, I think it's a positive as it was clearly driving some inefficiencies, which I don't think serves the industry well over the long term. Let's see, I mean, so far it's only one year. We know that's been agreed.

[Frode Mørkedal, Analyst at Clarkson Securities]

Yeah, sure. Makes sense. Next question, I guess more generally speaking, you've clearly proven that you have high total shareholder returns, right? TSR, which doesn't really require a high payout model. You know, how confident are you that the stock market would appreciate that approach today, and given that there's still a slight discount to NAV, what might close the remaining valuation gap in your view?

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

Yeah, I think over the past seven years we have been very, very clear on that. We first focus on value before we focus on valuation, and valuation follows. I think to your point, I think that is what we're happy to see that's actually being recognized by the market. When we look at it through a five-year lens, you're absolutely right. I think that that model is right. Companies should always focus on value creation, and that's what we're focused on here. I think in any business in shipping, it is about that we continue to have a strong balance sheet, that we can act at times when we see good buying opportunities, that we can act when we see good selling opportunities, and that we have a strong operating platform with low cash flow breakeven.

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

That's the fortunate position that we, after many years of hard work, have put Teekay Tankers Ltd. in, and operating with that model delivers value every day. We think we're in a very strong position to continue to build intrinsic value, and we fundamentally believe that that will always be recognized by the markets ultimately.

[Frode Mørkedal, Analyst at Clarkson Securities]

Yeah, I agree. Thank you very much.

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

Thank you for the questions.

[Operator]

Thank you. With no additional questions holding, I'll now turn the conference back to the company for any additional or closing remarks.

[Christian Waldegrave, Director of Research at Teekay Tankers Ltd]

Thank you for listening in to our call today. We look forward to reporting back to you next year.

[Operator]

Thank you, ladies and gentlemen. That will conclude today's call. We thank you for your participation. You may disconnect at this time.

Participants

Executives

• Kenneth Hvid, President and CEO
• Christian Waldegrave, Director of Research

Analysts

• Tim Chang, Analyst at Bank of America Merrill Lynch
• Frode Mørkedal, Analyst at Clarkson Securities
• Omar Nokta, Managing Director at Jefferies
• Edward Lee, General Counsel at Teekay Corporation