Teekay Tankers NYSE: TNK reported sharply higher first-quarter 2026 results as spot tanker rates approached record levels and the company continued to shift its fleet toward newer vessels while maintaining a debt-free balance sheet.
Kenneth Hvid, president and CEO of Teekay Corporation and Teekay Tankers, said on the Teekay Group earnings call that Teekay Tankers posted GAAP net income of $154 million, or $4.42 per share, and adjusted net income of $128 million, or $3.69 per share, for the quarter. Hvid said those results were more than $30 million better than the prior quarter and two to three times the level reported in the same period a year earlier.
Spot tanker rates averaged about $61,000 per day across the company’s mid-sized tanker fleet during the first quarter, which Hvid described as near record highs for a first quarter. He said the company’s spot exposure and low free cash flow breakeven helped generate about $143 million in free cash flow from operations, lifting Teekay Tankers’ cash position to just under $1 billion at quarter-end, with no debt.
The company declared its regular fixed quarterly dividend of $0.25 per share and a special dividend of $1 per share, which Hvid said was based on the prior year’s financial results.
Fleet renewal continues with vessel purchases and sales
Hvid said Teekay Tankers is continuing to execute its fleet renewal strategy by buying modern vessels and selling older ships. The company entered into agreements to acquire two Korean resale Suezmax newbuildings for a total of $190 million, with expected delivery in 2027.
Teekay Tankers also sold one 2009-built Suezmax for $53.5 million, which is expected to produce a $32.5 million gain on sale in the second quarter of 2026. In the first quarter, the company completed the previously announced sales of two Suezmax tankers for total proceeds of $73 million and recorded gains on sale of $22.7 million.
Hvid said that so far this year, Teekay Tankers has acquired or agreed to acquire five modern vessels for a total commitment of $332 million, while selling or agreeing to sell four vessels for $211 million. Looking back 12 months, he said the company has sold or agreed to sell 11 vessels for $432 million, with combined gains of $139 million, and acquired or agreed to acquire eight vessels for $490 million.
The company also locked in time charter opportunities in the strong market. Hvid said Teekay Tankers outchartered one Suezmax for $80,000 per day for 10 to 12 months and, in the past week, outchartered one Aframax vessel for $60,000 per day for 12 months.
Second-quarter rates expected to be stronger
Hvid said Teekay Tankers expects even better results in the second quarter, with tanker rates reaching record levels. As of the call, the company had secured second-quarter spot rates of $141,800 per day for its VLCC fleet, $121,800 per day for its Suezmax fleet and $98,000 per day for its Aframax/LR2 fleet.
Approximately 71% of VLCC spot days had been booked, while around 57% of Suezmax and Aframax/LR2 spot days had been booked on average, Hvid said. During the question-and-answer session, CFO Brody Speers said the company expected 75 operating days for its VLCC in the second quarter before delivery to buyers, with the remaining days unavailable.
Asked by Evercore ISI analyst Jonathan Chappell about why reported Aframax rates may not fully reflect some higher headline market fixtures, Hvid said the company’s rate reporting includes positioning voyages back to the next cargo. He also said rates varied widely by region and timing in the volatile market.
Middle East disruption cited as key market driver
Hvid said tanker rates were firm even before the recent U.S.-Iran conflict, supported by rising seaborne oil trade volumes, tighter sanctions against Russia, Iran and Venezuela, and fleet consolidation in the VLCC sector.
He said mid-sized tanker rates continued to rise at the start of the second quarter following events in the Middle East, reaching record highs of more than $120,000 per day during April.
According to Hvid, the effective closure of the Strait of Hormuz has created an unprecedented oil supply disruption. He said attacks involving the United States, Israel and Iran, followed by a U.S. blockade aimed at preventing ships from entering or leaving Iranian ports, led to a significant drop in vessel traffic through the Strait of Hormuz and a sharp decline in Middle East oil production and exports.
Hvid said crude oil exports from the region have fallen by about 10 million barrels per day compared with pre-war levels. He added that crude exports from the Atlantic Basin and the West Coast of the Americas have increased by about 4.5 million barrels per day since the start of the war, including record U.S. Gulf crude exports of 5 million barrels per day in April 2026, boosted by releases from the U.S. Strategic Petroleum Reserve.
The company said the disruption has created several trade inefficiencies supporting tanker demand, including vessels trapped west of Hormuz, ships waiting near the strait or off western India, and longer-haul voyages from the Atlantic Basin to Asia.
Management points to low breakeven and balance sheet strength
Hvid said Teekay Tankers generated $386 million, or $11.14 per share, in free cash flow over the last four quarters. He said the company’s current free cash flow breakeven has fallen to about $8,200 per day for the next 12 months, reflecting new outcharters and the absence of debt.
He said every $5,000 per day increase in spot tanker rates above the company’s breakeven is expected to produce about $53 million, or $1.53 per share, in annual free cash flow.
During the Q&A, Clarksons Securities analyst Omar Nokta asked whether Teekay Tankers would continue pairing acquisitions with vessel sales or become a net seller. Hvid said there was “not a plan to be a net seller,” adding that the company wants to preserve scale, relevance and earnings capacity. He said more than 80% of the fleet remains in the spot market.
Hvid said the company is moving more slowly on acquisitions than it would have hoped because asset prices remain high. However, he said Teekay Tankers is trying to remain opportunistic while positioning the company for long-term shareholder value.
Asked by Bank of America analyst Ken Hoexter about dividend policy and the company’s growing cash position, Hvid said management has been consistent over the past three years in how it handles dividends. He said the tanker industry is capital-intensive and cyclical, and that a larger cash position gives Teekay Tankers greater capacity to act when opportunities arise.
“You can do a lot more with $1 billion than you can do with half a billion dollars,” Hvid said, adding that the company may revisit the question of additional cash returns next year.
About Teekay Tankers NYSE: TNK
Teekay Tankers 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.
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