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Seapeak LLC 20-F Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Seapeak LLC 8.50% Series B Fixe

Filing date:

03/14/2025

TLDR:

ELI5:

Seapeak, a shipping company, had a tough year because the value of some of its ships went down. Even though they made about the same money as last year, they ended up losing money overall. They’re trying to grow their business but face some risks like unstable markets and world events.

Accession #:

0001628280-25-012765

Published on

Analyst Summary

  • Seapeak LLC reported a net loss of $95.8 million in 2024, a significant downturn from the $317.7 million net income in 2023, primarily due to a substantial write-down of LNG vessels.
  • Voyage revenues remained relatively stable at $710.7 million, slightly down from $726.8 million in the previous year.
  • EBITDA decreased sharply from $649.7 million in 2023 to $208.7 million in 2024, reflecting the impact of the vessel write-down and operational challenges.
  • Total debt increased to $2,787.1 million, potentially limiting financial flexibility.
  • Management is focused on expanding its LNG and NGL business globally and exploring opportunities in adjacent markets, while also emphasizing safety and environmental standards.
  • Gross Profit Margin increased from 97.05% in 2023 to 98.37% in 2024, indicating efficient cost management in direct voyage activities.
  • Operating Profit Margin decreased significantly from 43.38% in 2023 to -13.29% in 2024, indicating operational challenges or significant one-time expenses.
  • Net Profit Margin decreased significantly from 43.71% in 2023 to -13.48% in 2024, suggesting significant financial distress.
  • Return on Assets (ROA) decreased significantly from 5.61% in 2023 to -1.78% in 2024, indicating inefficient asset utilization.
  • Return on Equity (ROE) decreased significantly from 11.87% in 2023 to -4.15% in 2024, suggesting the company is not effectively using equity to generate profits.
  • Earnings Per Share (EPS) decreased significantly from 2.80 in 2023 to -0.93 in 2024.
  • Current Ratio decreased from 0.70 in 2023 to 0.61 in 2024, indicating potential liquidity issues.
  • Quick Ratio decreased from 0.65 in 2023 to 0.61 in 2024, suggesting difficulty meeting short-term obligations without selling assets.
  • Cash Ratio decreased from 0.39 in 2023 to 0.34 in 2024, indicating limited immediate liquidity.
  • Debt-to-Equity Ratio increased from 1.02 in 2023 to 1.21 in 2024, indicating a moderate level of leverage.
  • Debt-to-Assets Ratio increased from 0.48 in 2023 to 0.52 in 2024, suggesting a moderate reliance on debt financing.
  • Interest Coverage Ratio decreased significantly from 2.75 in 2023 to 0.45 in 2024, indicating difficulty covering interest expenses with current earnings.
  • Asset Turnover remained constant at 0.13 in 2023 and 2024, suggesting relatively low efficiency in generating revenue from its assets.
  • Revenue Growth decreased by -2.2%.
  • Net Income Growth decreased by -130%.
  • EPS Growth decreased by -133%.

Opportunities and Risks

  • Market Volatility: Fluctuations in LNG and NGL prices and demand could negatively impact charter rates and profitability.
  • Geopolitical Risks: Ongoing conflicts and sanctions could disrupt operations and affect customer relationships.
  • Debt Burden: High debt levels may limit financial flexibility and increase vulnerability to economic downturns.
  • Technological Obsolescence: Newer, more efficient vessels could reduce the competitiveness of Seapeak’s existing fleet.
  • Global Expansion: Growing demand for LNG and NGL in emerging markets presents opportunities for fleet expansion and new charters.
  • Strategic Acquisitions: Selective acquisitions of vessels or businesses could enhance market position and diversify revenue streams.
  • ESG Initiatives: Focus on sustainability and emissions reduction could attract environmentally conscious investors and customers.

SEC Filing Report: Seapeak LLC 20-F (2024)

Executive Summary

This report analyzes Seapeak LLC’s 20-F filing for the fiscal year ended December 31, 2024. Key findings include a significant write-down of LNG vessels, impacting net income, and ongoing exposure to market risks. The overall assessment is cautiously neutral, pending further observation of the company’s ability to navigate market volatility and redeploy assets effectively. Recommendations include close monitoring of LNG market dynamics and debt management strategies.

Company Overview

Seapeak LLC is a leading provider of marine transportation services, specializing in LNG and NGL. The company operates a fleet of LNG and NGL carriers, primarily under long-term, fixed-rate charters. Recent developments include the acquisition of the Marvel Swan LNG carrier and the sale of several NGL carriers. The company is influenced by the global LNG and NGL markets, geopolitical events, and regulatory changes.

Financial Statement Analysis

Key Financial Data

Metric 2024 (USD Thousands) 2023 (USD Thousands) Change
Voyage Revenues 710,744 726,791 (16,047)
Net Income (Loss) (95,821) 317,716 (413,537)
Total Assets 5,378,721 5,661,601 (282,880)
Total Debt 2,787,092 2,730,014 57,078
EBITDA 208,673 649,749 (441,076)

Analysis

  • Revenue Decline: Voyage revenues decreased slightly, indicating potential challenges in securing new charters or maintaining existing rates.
  • Significant Net Loss: The shift from net income to a net loss is primarily attributed to a substantial write-down of LNG vessels, suggesting a re-evaluation of asset values in light of market conditions.
  • Debt Management: Total debt increased, potentially limiting financial flexibility.
  • EBITDA Decrease: The sharp decline in EBITDA reflects the impact of the vessel write-down and operational challenges.

Management’s Discussion and Analysis (MD&A) Insights

  • Management acknowledges the impact of geopolitical events, such as the Russia-Ukraine war, on the energy markets.
  • The company is focused on expanding its LNG and NGL business globally and exploring opportunities in adjacent markets.
  • Emphasis is placed on maintaining high safety, environmental, and quality standards.

Risk & Opportunity Assessment

Key Risks

  • Market Volatility: Fluctuations in LNG and NGL prices and demand could negatively impact charter rates and profitability.
  • Geopolitical Risks: Ongoing conflicts and sanctions could disrupt operations and affect customer relationships.
  • Debt Burden: High debt levels may limit financial flexibility and increase vulnerability to economic downturns.
  • Technological Obsolescence: Newer, more efficient vessels could reduce the competitiveness of Seapeak’s existing fleet.

Opportunities

  • Global Expansion: Growing demand for LNG and NGL in emerging markets presents opportunities for fleet expansion and new charters.
  • Strategic Acquisitions: Selective acquisitions of vessels or businesses could enhance market position and diversify revenue streams.
  • ESG Initiatives: Focus on sustainability and emissions reduction could attract environmentally conscious investors and customers.

Conclusion & Actionable Insights

Seapeak LLC faces challenges related to market volatility and asset valuation. However, the company’s strategic focus on long-term charters and global expansion provides a foundation for future growth.

Recommendations

  • Monitor Market Dynamics: Closely track LNG and NGL market trends to optimize chartering strategies and asset deployment.
  • Manage Debt Levels: Prioritize debt reduction and refinancing to improve financial flexibility.
  • Invest in Modernization: Explore opportunities to upgrade or replace older vessels to enhance competitiveness.
  • Enhance ESG Reporting: Improve transparency and disclosure of ESG initiatives to attract investors and customers.

Commentary

Seapeak LLC experienced a challenging year in 2024, marked by a net loss of $95.8 million compared to a net income of $317.7 million in 2023. This downturn was primarily driven by a significant write-down on vessel sales, which overshadowed positive equity income. While voyage revenues remained relatively stable, increased operating expenses and depreciation further contributed to the reduced profitability. Despite the net loss, the company maintained a strong balance sheet with substantial investments in vessels and equipment, as well as equity-accounted joint ventures.

Financial Ratio and Metric Analysis

Profitability

  • Metric: Gross Profit Margin

    • Metric: Calculated as (Voyage Revenues – Voyage Expenses) / Voyage Revenues. 2024: (710,744 – 11,594) / 710,744 = 98.37%. 2023: (726,791 – 21,440) / 726,791 = 97.05%.
    • Trend: Increased from 97.05% in 2023 to 98.37% in 2024.
    • Industry: The industry average gross profit margin for marine transportation companies typically ranges from 30% to 60%. Seapeak’s margin is significantly higher, indicating efficient cost management in direct voyage activities.
  • Metric: Operating Profit Margin

    • Metric: Calculated as (Loss) Income from Vessel Operations / Voyage Revenues. 2024: (-94,505) / 710,744 = -13.29%. 2023: 315,266 / 726,791 = 43.38%.
    • Trend: Decreased significantly from 43.38% in 2023 to -13.29% in 2024.
    • Industry: A healthy operating profit margin for marine transportation is typically between 10% and 20%. Seapeak’s negative margin in 2024 indicates operational challenges or significant one-time expenses.
  • Metric: Net Profit Margin

    • Metric: Calculated as Net (Loss) Income / Voyage Revenues. 2024: (-95,821) / 710,744 = -13.48%. 2023: 317,716 / 726,791 = 43.71%.
    • Trend: Decreased significantly from 43.71% in 2023 to -13.48% in 2024.
    • Industry: The average net profit margin in the marine transportation sector is around 5% to 10%. Seapeak’s negative margin in 2024 suggests significant financial distress.
  • Metric: Return on Assets (ROA)

    • Metric: Calculated as Net (Loss) Income / Total Assets. 2024: (-95,821) / 5,378,721 = -1.78%. 2023: 317,716 / 5,661,601 = 5.61%.
    • Trend: Decreased significantly from 5.61% in 2023 to -1.78% in 2024.
    • Industry: An ROA of 2% to 3% is considered average for capital-intensive industries like marine transportation. Seapeak’s negative ROA indicates inefficient asset utilization.
  • Metric: Return on Equity (ROE)

    • Metric: Calculated as Net (Loss) Income / Total Equity. 2024: (-95,821) / 2,306,694 = -4.15%. 2023: 317,716 / 2,677,079 = 11.87%.
    • Trend: Decreased significantly from 11.87% in 2023 to -4.15% in 2024.
    • Industry: An ROE of 10% to 15% is generally considered good. Seapeak’s negative ROE suggests the company is not effectively using equity to generate profits.
  • Metric: Earnings Per Share (EPS) – Basic and Diluted

    • Metric: Calculated as Common unitholder’s / Limited partner’s interest in net (loss) income / Common units outstanding. 2024: (-93,223) / 99,900 = -0.93. 2023: 279,601 / 99,900 = 2.80.
    • Trend: Decreased significantly from 2.80 in 2023 to -0.93 in 2024.
    • Industry: N/A

Liquidity

  • Metric: Current Ratio

    • Metric: Calculated as Total Current Assets / Total Current Liabilities. 2024: 290,066 / 477,401 = 0.61. 2023: 307,210 / 440,116 = 0.70.
    • Trend: Decreased from 0.70 in 2023 to 0.61 in 2024.
    • Industry: A current ratio of 1.5 to 2 is generally considered healthy. Seapeak’s ratio below 1 indicates potential liquidity issues.
  • Metric: Quick Ratio (Acid-Test Ratio)

    • Metric: Calculated as (Total Current Assets – Inventory) / Total Current Liabilities. Assuming Vessels held for sale is inventory: (290,066 – 0) / 477,401 = 0.61. 2023: (307,210 – 22,323) / 440,116 = 0.65.
    • Trend: Decreased from 0.65 in 2023 to 0.61 in 2024.
    • Industry: A quick ratio of 1 or higher is desirable. Seapeak’s ratio suggests difficulty meeting short-term obligations without selling assets.
  • Metric: Cash Ratio

    • Metric: Calculated as (Cash and Cash Equivalents + Restricted Cash – Current) / Total Current Liabilities. 2024: (153,726 + 9,210) / 477,401 = 0.34. 2023: (168,409 + 2,910) / 440,116 = 0.39.
    • Trend: Decreased from 0.39 in 2023 to 0.34 in 2024.
    • Industry: A cash ratio of 0.5 to 1 is considered adequate. Seapeak’s ratio indicates limited immediate liquidity.

Solvency/Leverage

  • Metric: Debt-to-Equity Ratio

    • Metric: Calculated as Total Debt / Total Equity. 2024: 2,787,092 / 2,306,694 = 1.21. 2023: 2,730,014 / 2,677,079 = 1.02.
    • Trend: Increased from 1.02 in 2023 to 1.21 in 2024.
    • Industry: A debt-to-equity ratio between 1 and 1.5 is typical for the marine transportation industry. Seapeak’s ratio indicates a moderate level of leverage.
  • Metric: Debt-to-Assets Ratio

    • Metric: Calculated as Total Debt / Total Assets. 2024: 2,787,092 / 5,378,721 = 0.52. 2023: 2,730,014 / 5,661,601 = 0.48.
    • Trend: Increased from 0.48 in 2023 to 0.52 in 2024.
    • Industry: A debt-to-assets ratio of 0.5 or lower is generally considered healthy. Seapeak’s ratio suggests a moderate reliance on debt financing.
  • Metric: Interest Coverage Ratio (Times Interest Earned)

    • Metric: Calculated as Earnings Before Interest and Taxes (EBIT) / Interest Expense. EBIT = Net (Loss) Income + Interest Expense + Income Tax (Recovery) Expense = -95,821 + 178,417 – 2,486 = 80,110. Interest Coverage Ratio = 80,110 / 178,417 = 0.45. 2023: EBIT = 317,716 + 187,506 + 10,211 = 515,433. Interest Coverage Ratio = 515,433 / 187,506 = 2.75.
    • Trend: Decreased significantly from 2.75 in 2023 to 0.45 in 2024.
    • Industry: A ratio of 1.5 or higher is generally considered safe. Seapeak’s ratio indicates difficulty covering interest expenses with current earnings.

Activity/Efficiency

  • Metric: Asset Turnover

    • Metric: Calculated as Voyage Revenues / Total Assets. 2024: 710,744 / 5,378,721 = 0.13. 2023: 726,791 / 5,661,601 = 0.13.
    • Trend: Remained constant at 0.13 in 2023 and 2024.
    • Industry: An asset turnover ratio of 0.2 to 0.4 is typical. Seapeak’s ratio suggests relatively low efficiency in generating revenue from its assets.

Valuation

  • Metric: Price-to-Earnings Ratio (P/E)

    • Metric: Market Cap not provided.
    • Trend: N/A
    • Industry: N/A
  • Metric: Price-to-Book Ratio (P/B)

    • Metric: Market Cap not provided.
    • Trend: N/A
    • Industry: N/A
  • Metric: Price-to-Sales Ratio (P/S)

    • Metric: Market Cap not provided.
    • Trend: N/A
    • Industry: N/A
  • Metric: Enterprise Value to EBITDA (EV/EBITDA)

    • Metric: Market Cap not provided. EBITDA for 2024 is 208,673.
    • Trend: N/A
    • Industry: N/A

Growth Rates

  • Metric: Revenue Growth

    • Metric: (2024 Voyage Revenues – 2023 Voyage Revenues) / 2023 Voyage Revenues. (710,744 – 726,791) / 726,791 = -0.022 or -2.2%.
    • Trend: Decreased by -2.2%
    • Industry: N/A
  • Metric: Net Income Growth

    • Metric: (2024 Net Income – 2023 Net Income) / 2023 Net Income. (-95,821 – 317,716) / 317,716 = -1.30 or -130%.
    • Trend: Decreased by -130%
    • Industry: N/A
  • Metric: EPS Growth

    • Metric: (2024 EPS – 2023 EPS) / 2023 EPS. (-0.93 – 2.80) / 2.80 = -1.33 or -133%.
    • Trend: Decreased by -133%
    • Industry: N/A

Other Relevant Metrics

  • EBITDA:

    • Metric: EBITDA decreased from $649.7 million in 2023 to $208.7 million in 2024. EBITDA is a non-GAAP measure used by the company to assess its operating performance. It is calculated by adding back depreciation and amortization, interest expense, and income tax expense to net income.
    • Trend: The significant decrease in EBITDA reflects the company’s reduced profitability in 2024.
    • Industry: While EBITDA can be useful, it is important to consider that it excludes significant expenses such as interest and depreciation, which are relevant for a capital-intensive business like Seapeak.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️