Teekay LNG Partners Reports Second Quarter 2021 Results

Highlights

• GAAP net income attributable to the partners and preferred unitholders of $53.3 million and GAAP net income per common unit of $0.53 in the second quarter of 2021.
• Adjusted net income⁽¹⁾ attributable to the partners and preferred unitholders of $57.0 million and adjusted net income per common unit of $0.57 in the second quarter of 2021 (excluding other items listed in Appendix A to this release).
• Total adjusted EBITDA⁽¹⁾ of $183.5 million in the second quarter of 2021.
• The Partnership's LNG fleet is 98 percent fixed for the remainder of 2021, and 89 percent fixed for 2022.
• Current strong LNG shipping fundamentals expected to persist into 2022.

HAMILTON, Bermuda, Aug. 05, 2021 (GLOBE NEWSWIRE) -- Teekay GP L.L.C., the general partner (the General Partner) of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) TGP, today reported the Partnership's results for the quarter ended June 30, 2021.

Consolidated Financial Summary

Second Quarter of 2021 Compared to First Quarter of 2021

GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders were reduced for the three months ended June 30, 2021, compared to the three months ended March 31, 2021, primarily due to an increase in scheduled dry dockings during the second quarter of 2021, and the timing of planned repairs and maintenance activities.

GAAP net income attributable to the partners and preferred unitholders for the three months ended June 30, 2021 was also negatively impacted by changes in unrealized gains and losses on non-designated derivative instruments in the second quarter of 2021 compared to the first quarter of 2021.

Second Quarter of 2021 Compared to Second Quarter of 2020

GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders for the three months ended June 30, 2021, compared to the same quarter of the prior year, were impacted primarily by an increase in scheduled dry dockings during the second quarter of 2021, the redeployment of an LNG carrier under a market-linked contract in March 2021, and the timing of vessel operating expenditures for certain of the Partnership's LNG carriers. These decreases were partially offset by a decrease in operational claims under certain of the Partnership's charter contracts and lower net interest expense during the second quarter of 2021.

GAAP net income attributable to the partners and preferred unitholders was also positively impacted by changes in unrealized gains and losses on non-designated derivative instruments and foreign currency exchange in the second quarter of 2021 compared to the second quarter of 2020.

CEO Commentary

"Teekay LNG reported another quarter of strong results today, with second quarter of 2021 adjusted net income⁽¹⁾ of $0.57 per common unit and over $183.5 million of total adjusted EBITDA⁽¹⁾," commented Mark Kremin, President and Chief Executive Officer of Teekay Gas Group Ltd. "As expected, our results in the second quarter reflect a heavier than normal drydock schedule. Looking ahead, our third quarter 2021 results are also expected to be impacted by a heavy drydock schedule; however, for the fourth quarter of 2021, we are expecting a bounce back as a result of a substantially reduced number of drydock days across the fleet."

Mr. Kremin continued, "The spot and term charter market for LNG carriers has been counter-seasonally strong over the past six months, and LNG supply and demand fundamentals are pointing to continued strength through the rest of 2021 and into 2022. This should benefit the Creole Spirit, which is on a market-linked contract until mid-February 2022."   Mr. Kremin continued, "We believe this market strength could also be a tailwind for Teekay LNG next year as we have a few LNG carriers expected to roll-off of their current contracts during the first half of next year.   We do, however, continue to have nearly all of our 2021 and the vast majority of our 2022 revenue days already secured on fixed-rate charters and generating consistent cash flow."

Operating Results

The following table highlights certain financial information for Teekay LNG's segments: the Liquefied Natural Gas Segment and the Liquefied Petroleum Gas Segment (please refer to the "Teekay LNG's Fleet" section of this release below and Appendices D and E for further details).

Liquefied Natural Gas Segment

Income from vessel operations and consolidated adjusted EBITDA⁽¹⁾ for the LNG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, decreased primarily due to scheduled dry dockings during the second quarter of 2021, the redeployment of an LNG carrier under a market-linked contract in March 2021 and the timing of vessel operating expenditures for certain of the Partnership's LNG carriers. These decreases were partially offset by reduced operational claims on certain of the Partnership's LNG carriers during the second quarter of 2021.

Equity income and adjusted EBITDA from equity-accounted vessels⁽¹⁾ for the LNG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, decreased primarily due to lower earnings from the Partnership's 52 percent-owned joint venture with Marubeni Corporation (the MALT Joint Venture) as a result of lower charter rates earned upon redeployment of the Marib Spirit, Arwa Spirit and Methane Spirit between May 2020 and April 2021, and an increase in off-hire days for scheduled dry dockings and unscheduled repairs in certain of the Partnership's joint ventures during the second quarter of 2021.

Liquefied Petroleum Gas Segment

Loss from vessel operations increased and consolidated adjusted EBITDA⁽¹⁾ decreased for the LPG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, primarily due to the scheduled dry docking of one of the Partnership's LPG carriers during the second quarter of 2021. This decrease was partially offset by higher spot LPG rates earned during the second quarter of 2021.

Equity income and adjusted EBITDA from equity-accounted vessels⁽¹⁾ for the LPG segment for the three months ended June 30, 2021, compared to the same quarter of the prior year, decreased primarily due to the scheduled dry docking of one of the LPG carriers in the Partnership's 50 percent-owned LPG joint venture with Exmar NV (the Exmar LPG Joint Venture). This decrease was partially offset by higher spot LPG rates earned during the second quarter of 2021.

Teekay LNG's Fleet

The following table summarizes the Partnership's fleet as of August 1, 2021. In addition, the Partnership owns a 30 percent interest in an LNG regasification terminal in Bahrain.

Liquidity

As of June 30, 2021, the Partnership had total liquidity of $381.9 million (comprised of $144.2 million in cash and cash equivalents and $237.7 million in undrawn credit facilities) compared to $406.2 million as of March 31, 2021.

Conference Call

The Partnership plans to host a conference call on Thursday, August 5, 2021 at 1:00 p.m. (ET) to discuss the results for the second quarter of 2021. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

• By dialing 1 (800) 430-8332 or 1 (647) 792-1240, if outside North America, and quoting conference ID code 4740273.
• By accessing the webcast, which will be available on Teekay LNG's website at www.teekay.com (the archive will remain on the website for a period of one year).

An accompanying Second Quarter 2021 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.

About Teekay LNG Partners L.P.

Teekay LNG Partners is one of the world's largest independent owners and operators of LNG carriers, providing LNG and LPG services primarily under long-term, fee-based charter contracts through its interests in 47 LNG carriers, 23 mid-size LPG carriers, and seven multi-gas carriers. The Partnership's ownership interests in these vessels range from 20 to 100 percent. In addition, the Partnership owns a 30 percent interest in an LNG regasification terminal. Teekay LNG Partners is a publicly-traded master limited partnership formed by Teekay Corporation TK as part of its strategy to expand its operations in the LNG and LPG shipping sectors.

Teekay LNG Partners' common units and preferred units trade on the New York Stock Exchange under the symbols "TGP", "TGP PR A" and "TGP PR B", respectively.

For Investor Relations enquiries contact:

Ryan Hamilton

Tel: +1 (604) 609-2963
Website: www.teekay.com

Definitions and Non-GAAP Financial Measures

This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the SEC. These non-GAAP financial measures which include Adjusted Net Income Attributable to the Partners and Preferred Unitholders, Distributable Cash Flow and Adjusted EBITDA, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings across companies, and may not be comparable to similar measures presented by other companies. These non-GAAP measures are used by management, and the Partnership believes that these supplementary metrics assist investors and other users of its financial reports in comparing financial and operating performance of the Partnership across reporting periods and with other companies.

Non-GAAP Financial Measures

Adjusted EBITDA represents net income before interest, taxes, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include unrealized credit loss provisions, unrealized gains or losses on non-designated derivative instruments, write-downs of vessels, gains or losses on sales of vessels, foreign currency exchange gains or losses, adjustments for direct financing and sales-type leases to a cash basis, and certain other income or expenses. Adjusted EBITDA also excludes realized gains or losses on interest rate swaps as management, in assessing the Partnership's performance, views these gains or losses as an element of interest expense and realized gains or losses on derivative instruments resulting from amendments or terminations of the underlying instruments. Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Partnership's financial statements. Adjusted EBITDA from Equity-Accounted Vessels represents the Partnership's proportionate share of Adjusted EBITDA from its equity-accounted vessels. The Partnership does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Partnership holds the equity-accounted investments or distributed to the Partnership and other owners. In addition, the Partnership does not control the timing of any such distributions to the Partnership and other owners. Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Please refer to Appendices C and E of this release for reconciliations of Adjusted EBITDA to net income and equity income, respectively, which are the most directly comparable GAAP measures reflected in the Partnership's consolidated financial statements.

Adjusted Net Income Attributable to the Partners and Preferred Unitholders excludes items of income or loss from GAAP net income that are typically excluded by securities analysts in their published estimates of the Partnership's financial results. The Partnership believes that certain investors use this information to evaluate the Partnership's financial performance, as does management. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to net income, and refer to footnote (2) of the Consolidated Statements of Income for a reconciliation of adjusted equity income to equity income, the most directly comparable GAAP measure reflected in the Partnership's consolidated financial statements.

Distributable Cash Flow (DCF) represents GAAP net income adjusted for depreciation and amortization expense, deferred income tax and other non-cash items, estimated maintenance capital expenditures, unrealized gains and losses from non-designated derivative instruments, realized losses on interest rate swap termination, unrealized credit loss provisions, distributions relating to preferred units, adjustments for direct financing and sales-type leases to a cash basis, unrealized foreign currency exchange gains or losses, write-downs of vessels, gains or losses on sales of vessels, and the Partnership's proportionate share of such items in its equity-accounted for investments. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. DCF is a quantitative standard used in the publicly-traded partnership investment community and by management to assist in evaluating financial performance. Please refer to Appendix B of this release for a reconciliation of this non-GAAP financial measure to net income, the most directly comparable GAAP measure reflected in the Partnership's consolidated financial statements.

Teekay LNG Partners L.P.
Consolidated Statements of Income
(in thousands of U.S. Dollars, except unit and per unit data)

Teekay LNG Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. Dollars)

Teekay LNG Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. Dollars)

Teekay LNG Partners L.P.
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income
(in thousands of U.S. Dollars)

Teekay LNG Partners L.P.
Appendix B - Reconciliation of Non-GAAP Financial Measures
Distributable Cash Flow (DCF)
(in thousands of U.S. Dollars, except units outstanding and per unit data)

Teekay LNG Partners L.P.
Appendix C - Reconciliation of Non-GAAP Financial Measures
Total Adjusted EBITDA
(in thousands of U.S. Dollars)

Teekay LNG Partners L.P.
Appendix D - Reconciliation of Non-GAAP Financial Measures
Consolidated Adjusted EBITDA by Segment
(in thousands of U.S. Dollars)

Teekay LNG Partners L.P.
Appendix E - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA from Equity-Accounted Vessels
(in thousands of U.S. Dollars)

Teekay LNG Partners L.P.
Appendix F - Summarized Financial Information of Equity-Accounted Joint Ventures
(in thousands of U.S. Dollars)

Forward-Looking Statements

This release 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 continue to generate strong earnings and cash flows despite market volatility and cyclicality; expected upcoming decreases in the overall number of drydocks for the Partnership's vessels and the anticipated financial benefits to the Partnership from such drydock reductions; the counter-seasonal strength in LNG shipping rates, including the expected supply and demand fundamentals in the near-term charter market for LNG carriers and the potential positive impact these tailwinds may have on the Creole Spirit and the Partnership's other vessels rolling off contract in 2022; the Partnership's ability to derive benefits from any upside in market strength; the ability of the Partnership to fully utilize certain of its vessels; the ability of the Partnership to execute on its balanced capital allocation strategy including delevering of its balance sheet and returning capital to unitholders, while pursuing growth, including expected increases in financial flexibility as a result of implementing such strategy; fixed charter coverage for the Partnership's LNG fleet for the remainder of 2021 and 2022; the ability of the Partnership to realize and receive the full benefits from its contractual backlog of revenue under its long-term charter contracts; the ability to continue to pay increased distributions on its common units; and the expected cash flows from, and the continued performance of, the Partnership's and its joint ventures' charter contracts.

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 charter contracts of existing vessels in the Partnership's fleet; higher than expected costs and expenses, including as a result of off-hire days or drydocking requirements (both scheduled and unscheduled); delays in the Partnership's ability to successfully and timely complete drydockings; the potential for the COVID-19 pandemic to impact the Partnership's drydock activities, or operations in general; general market conditions and trends, including spot, multi-month and multi-year charter rates; the potential for the COVID-19 pandemic to impact global demand for LNG and LPG and the associated impact on LNG and LPG charter rates; inability of customers of the Partnership or any of its joint ventures to make future payments under contracts; potential further delays to the formal commencement of commercial operations of the Bahrain Regasification Terminal; the inability of the Partnership to renew or replace charter contracts on existing vessels; potential lack of cash flow to reduce balance sheet leverage or of excess capital available to allocate towards returning capital to unitholders; potential lack of cash flow to continue paying distributions on the Partnership's common units and other securities; and other factors discussed in Teekay LNG's filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2020. 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.