Teekay LNG Partners Q4-2019 Earnings Presentation February 27, 2020
Forward Looking Statement This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements, among other things, regarding: the Partnership’s ability to be insulated from the near-term weakness in the spot LNG shipping market or international LNG markets; the Partnership’s expected 2020 financial results and the ability to achieve previously disclosed guidance figures; expectations on future allocation of capital towards balance sheet deleveraging and returning capital to unitholders; and the ability to pay increased distributions on its common units in 2020 and beyond. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts of existing vessels in the Partnership's fleet; higher than expected costs and expenses; general market conditions and trends, including spot, multi-month and multi-year charter rates; inability of customers of the Partnership or any of its joint ventures to make future payments under our contracts; the inability of the Partnership to renew or replace long-term contracts on existing vessels; the Partnership’s or the Partnership’s joint ventures’ ability to secure or draw on financings for its vessels; potential lack of cash flow to reduce balance sheet leverage or of excess capital available to allocate towards returning capital to unitholders; and other factors discussed in Teekay LNG Partners’ filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2018. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based. 2
Actual Actual Increased 2019 Result Q4-2019 Fiscal 2019 Guidance Range Recent Highlights Total Adjusted EBITDA (1) $184m $685m $685m - 695m Within range Strong Q4-19 and Fiscal 2019 Adjusted net income (1) $50m $169m $165m - 175m Within range Financial Results 2019 adjusted net income per Adjusted earnings per unit (1) $0.56 $1.79 $1.75 - 1.85 Within range unit up 136% over 2018 • All newbuilds and growth projects now delivered 2020 adjusted net income per unit expected to be 45% to • Final two Yamal ARC7 vessels delivered in Nov. and Dec. 2019 73% higher than 2019 • Bahrain Regasification Terminal achieved construction completion in Jan. 2020 and concurrently began receiving payments under terminal use agreement • 2020 guidance ranges maintained • Fixed LNG coverage of 97% for Fiscal 2020 provides earnings stability • Awilco fulfilled obligation to repurchase two LNG carriers from Teekay LNG in early- Jan. 2020 and repay deferred hire in full plus interest • Provided $260 million of delevering while building liquidity by +$100 million • Returning capital to unitholders • Distributions to increase by 32%, to $1.00 per unit per annum, effective Q1-20 • Opportunistically repurchasing common units at attractive prices • Since Investor Day in Nov. 2019, repurchased 563,700 units for a total cost of $7.4 million at an average price of $13.15 per unit 3 These are non- GAAP financial measures. Please see Teekay LNG’s Q4 -19 earnings release for definitions and reconciliations to the comparable GAAP measures. 1)
Adjusted Net Income (1) Adjusted EBITDA (1) 300 2019 Actual Results 800 Within Guidance 250 +48% 700 Range; 2020 Results 600 $ millions Guidance Maintained 200 500 Total (Prop. Consol.) $ millions +92% 2020 results expected to 150 400 increase significantly over 2019 as earnings from 300 Consolidated 100 newbuild deliveries and strong 200 period charters are fully 50 recognized 100 0 0 2018A 2019A LP Yield = 8.6% based on 2020E 2018A 2019A 2020E expected 2020 distribution of Current Trading 4.1x 2020 Current Trading 8.1x 2020 $1.00 per unit per annum and EPU (1)(2) Total Adj. EBITDA (1)(2) $11.68 unit price (as of Feb. 25, Multiple Multiple 2020) 2020 Guidance Ranges EPU (1)(3) Adjusted Net Consol. adj. Total adj. Income (1) EBITDA (1) EBITDA (1) Range – high $270m $3.10/unit $430m $780m Range – low $230m $2.60/unit $410m $750m 4 Midpoint $250m $2.85/unit $420m $765m % change from 2019 Actual results (1) 48% 59% (5%) 12% These are non-GAAP financial measures. Please see Teekay LNG’s Q4 -19 earnings release for definitions and reconciliations to the comparable GAAP measures. (1) 4 Based on unit price of $11.68 per unit as of Feb. 25, 2020 and mid-point of 2020 guidance range. See Appendix for calculation and references. (2) Assumes 77.5 million LP units remain outstanding throughout the year and excludes the impact of any future repurchases (3)
Long-Term Contract Coverage With High Quality Customers Current Charter Terms – Consolidated Fleet Average Total Fleet Age: 9 years (1) Ownership Propulsion Charterer 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Teekay LNG’s fixed -rate Creole Spirit 100% MEGI contracts: Oak Spirit 100% MEGI MEGI • ‘Take -or- pay’ (e.g. customer Torben Spirit 100% Polar Spirit 100% Steam pays full-hire to Teekay Arctic Spirit 100% Steam LNG irrespective of their Hispania Spirit 100% Steam usage of the vessel) Catalunya Spirit 100% Steam Macoma 100% MEGI • Not impacted by LNG Murex 100% MEGI prices Myrina 100% MEGI Madrid Spirit 100% Steam • Not impacted by structural 100% MEGI Magdala or global imbalances of MEGI Megara 100% LNG MEGI Sean Spirit 100% Steam Al Marrouna 70% Steam Al Areesh 70% Steam Al Daayen 70% Tangguh Hiri 70% DFDE Firm period end date in 2029 DFDE Firm period end date in 2029 Tangguh Sago 70% Steam Firm period end date in 2029 Galicia Spirit 100% Yamal Spirit 100% MEGI Firm period end date in 2033 Firm period end date in 2038 Bahrain Spirit 100% MEGI Firm Period Option Periods Available (1) Average fleet age on January 1, 2020 5
Joint Venture LNG Fleet Current Charter Terms – Joint Venture Fleet Average Total Fleet Age: 9 years Ownership Propulsion Charterer 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 LNG fleet revenues 97% and 92% fixed for 2020 and 2021, Methane Spirit 52% TFDE Marib Spirit (1) 52% DFDE respectively Arwa Spirit (1) 52% DFDE • 2020 net 1.5 vessel Excalibur 50% Steam exposure from mid-May Magellan Spirit 52% TFDE (in-charter) and early / mid-June Woodside Donaldson 52% TFDE Firm period end date in 2045 Meridian Spirit 52% TFDE Firm period end date in 2030 Firm period end date in 2038 • Each $10,000 per day Soyo 33% TFDE Firm period end date in 2031 change in short-term rates Malanje 33% TFDE Firm period end date in 2031 = $3.3 million, or 1.3% Lobito 33% TFDE Firm period end date in 2031 Firm period end date in 2038 Cubal 33% TFDE Firm period end date in 2032 impact on 2020 adjusted net income (2) and 0.4% on Al Huwaila 40% SSD (3) Firm period end date in 2033 Al Kharsaah 40% SSD (3) Firm period end date in 2033 Firm period end date in 2038 2020 total adjusted Al Shamal 40% SSD (3) Firm period end date in 2033 EBITDA (2) Firm period end date in 2045 Al Khuwair 40% SSD (3) Firm period end date in 2033 Pan Asia 30% TFDE Firm period end date in 2037 Pan Americas 30% TFDE Firm period end date in 2038 Pan Europe 20% TFDE Firm period end date in 2038 Pan Africa 20% TFDE Firm period end date in 2039 ARC7 Eduard Toll 50% Firm period end date in 2045 Rudolf Samoylovich 50% ARC7 Firm period end date in 2045 Nikolay Yevgenov Firm period end date in 2045 50% ARC7 Firm period end date in 2045 Firm Period Vladimir Voronin 50% ARC7 Firm period end date in 2045 Georgiy Ushakov 50% ARC7 Option Periods Yakov Gakkel 50% ARC7 Firm period end date in 2045 Regas Terminal 30% Terminal Firm period end date in 2039 Available Trading in short- term market as a result of the temporary closing of YLNG’s LNG plant in Yemen in 2015 due to the conflict situa tion. 3-year suspension agreement signed in May 2019. (1) 6 These are non- GAAP financial measures. Please see Teekay LNG’s Q4 -19 earnings release for definitions and reconciliations to the comparable GAAP measures. Percentages based in mid-point of 2020 guidance. (2) SSD = Slow Steam Diesel (3)
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