Teekay LNG Partners nearly quadrupled its earnings amid delivery of nine new LNG carriers over a year with plans to boost investor return, sending its stock skyward.
The Mark Kremin-led owner earned $0.55 adjusted earnings per share (EPS) for the third quarter, beating analyst consensus of $0.49 and up from $0.16 a year earlier.
Shares, which trade under ticker symbol TPG, jumped 13.8% to $16.13 on the New York Stock Exchange by early afternoon, in line with analyst expectations.
"With all committed capex winding down in the next month, there appears to be a clear runway for free cash flows and we believe TGP is a low risk way to play the LNG theme," Stifel analyst Ben Nolan wrote in a client note.
"We expect with the beat and the distribution increase the partnership will trade up in the morning."
The Bermuda-based company has a "strong path ahead" for 2020 as a result of share buybacks and Cosco Group removing partially owned China LNG Shipping (CLNG) from under a sanctioned Cosco subsidiary, according to Fearnleys Securities.
Fearnleys noted that shareholders will get 7% dividend yield and five-fold earnings from Teekay LNG thanks to a fleet that is on a LNG fleet that is 95% employed for next year and 90% booked for 2021.
"That is unmatched within our LNG coverage space," analyst Espen Landmark Fjermestad wrote in a client note.
Nine new vessels
Teekay LNG took deliveries of three ARC7 LNG carrier newbuilds from September 2018 to August through a half-owned Yamal LNG joint venture.
It also took in two LNG carrier newbuilds from July 2018 to January through a 20%-owned joint venture with CLNG, CETS Investment Management and BW LNG Investments.
Lastly, the New York-listed Teekay Group subsidiary accepted four wholly-owned LNG carrier newbuilds from July 2018 to January.
“During the third quarter of 2019, Teekay LNG recorded its highest ever quarterly results with adjusted earnings per common unit up almost 3.5x from the same period of the previous year,” Teekay Gas Group chief executive Mark Kremin said.
He said Teekay LNG expects its bottom line will continue to grow, so it plans to raise its dividend 32% for next year's first quarter to $1.
The third-quarter improvement in EPS is based on a $50.4m in adjusted profit compared to $19.1m in adjusted earnings for the year-ago period.
Voyage revenue came in at $150m versus $123m.
