SOURCE: Tsakos Energy Navigation

Tsakos Energy Navigation

November 30, 2017 08:00 ET

Ten Ltd. Reports Nine Months and Third Quarter 2017 Results and Declares Dividend of $0.05 Per Common Share

Expected 30% increase in revenues from completion of growth program

New charters bring fleet's long term contracts to 78% - $1.3 billion in minimum revenue backlog

ATHENS, GREECE--(Marketwired - Nov 30, 2017) - TEN, Ltd. (TEN) (NYSE: TNP) (the "Company") today reported results (unaudited) for the nine months and third quarter ended September 30, 2017.

NINE MONTHS 2017 RESULTS
TEN's net income in the first nine months of 2017 was $17.7 million. Operating income was $60.3 million.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $163.3 million. All the vessels generated positive EBITDA in the nine months apart from two aframaxes which underwent dry-docking in the second quarter.

The daily time charter equivalent rate per vessel for the Company's diversified fleet was $19,141 and fleet utilization was at 96.4%.

TEN and its technical managers maintained costs under control with average daily operating expenses per vessel at $7,640, a 2.5% reduction compared to the equivalent nine months of 2016. Vessel overhead costs per ship per day also experienced significant reductions. From $1,357 in the 2016 nine-month period to $1,126 in the same period 2017, a 17.0% reduction.

The addition of nine new vessels since September 30, 2016 increased depreciation and dry-docking amortization costs to $102.5 million compared to $81.7 million for the same period of 2016.

Interest and finance costs reached $43.1 million, mainly due to the increased size of fleet relating to the new vessels and to general rate of interest increases, while capitalized interest fell as the newbuilding program approached its end.

"With 9-month profits and an improving fourth quarter, we expect TEN to record another positive year in its 24-year long history," Mr. George Saroglou, Chief Operating Officer of TEN stated. "With 30.0% fleet expansion concluded in the last 18 months and now the whole fleet in full force, TEN is strategically positioned to take advantage of the improving environment and be a prime beneficiary going forward," Mr. Saroglou concluded.

THIRD QUARTER 2017 RESULTS
Operating income amounted to $11.3 million, a 6.2% increase over the third quarter of 2016, mainly due to the additional vessels in the fleet. The sustained softness in the spot markets during the summer months, the costs associated with the new deliveries and the bringing forward of three drydockings, in order to secure the vessels availability for the seasonally stronger fourth quarter, led to TEN incurring net losses of $3.4 million.

Market conditions in general remained difficult throughout the third quarter, primarily due to a concentrated period of global vessel deliveries in an otherwise light tanker orderbook, seasonal refinery outages, high oil inventories and to an extent OPEC production cuts. Nevertheless, TEN's fleet operated at 95.5% utilization in the third quarter of 2017, during which TEN operated on average a fleet of 63.7 vessels. With such high utilization rates, underscoring the quality of both vessels and TEN's operational ability together with the benefit of having all fully employed 15 newbuildings contributing to the bottom line unlike prior quarters, the upcoming periods should reflect such positivity. With these 15 vessels expected to increase the Company's revenues by 30.0%, TEN cash build-up and dividend payments will be further solidified.

Revenues, net of voyage expenses (bunker, port expenses and commissions), amounted to $96.9 million, an 18.4% increase from the third quarter of 2016 due mainly to the nine newbuilding vessels delivered to TEN since the end of the 2016 third quarter.

Operating costs per day per vessel declined nearly 2.0% to $7,474 with savings on repair spares, insurance costs, lubricants, sundry expenses and general economies of scale associated to the increase of the fleet.

Vessels on time charter accounted for 70.0% of third quarter 2017 operating days compared to 59% in the 2016 third quarter and generated enough gross revenue to cover virtually all of the voyage, operating, overhead and net financial costs of the whole fleet, including vessels on spot.

EBITDA amounted to $48.0 million in the third quarter of 2017, an 18.4% increase over the 2016 third quarter.

The newbuilding aframax Stavanger TS was delivered in the third quarter and the last vessel in the 15-vessel newbuilding program, the aframax Bergen TS, was delivered in October. These vessels, with their long-term industrial contracts, will provide new sources of revenue in the fourth quarter and beyond, contributing to an expected improvement in overall revenues resulting from the increases in freight rates already being witnessed.

Depreciation and dry-docking amortization costs were approximately $35.9 million, an increase mainly as a result of the new vessels delivered to the fleet during the twelve months prior to September 30, 2017.

Daily overhead costs per vessel fell to $1,085, a 13.1% decrease from the 2016 third quarter.

Although lower from the 2017 second quarter, interest and finance costs amounted to $15.4 million, an increase from the previous 2016 third quarter due to the necessary financing raised for the new vessels and rising global interest rates.

Cash balance as of September 30, 2017 was $225.9 million. With the newbuilding program having now been completed, no new debt is expected to be drawn in the foreseeable future. Therefore, it is expected that debt levels and finance costs will decline further. Net debt to capital at the end of the third quarter was at comfortable 51.5%.

Dividend - Common Shares
The Company will pay a dividend of $0.05 per common share on December 29 2017, to shareholders of record as of December 21, 2017. Inclusive of this distribution, TEN will have distributed $10.61 per share in uninterrupted dividends to its common shareholders since the Company's listing on the NYSE in March 2002.

Since the beginning of 2017, the Company has sold 2,488,717 common shares from Treasury Stock and 24,803 Series D preferred shares.

Operational Highlights
Staring at the end of November 2017, the Company fixed one suezmax and one handymax product tanker for one year and three years respectively, the former with profit sharing provisions, to significant end users. Prior to these charters, both vessels were operating in the spot market. As a result of these contracts and further underlining the Company's strategy to safeguard cash flow generation and visibility, with a footing on the upside, the fleet under secured contracts increased to 78.0% with $1.3 billion in minimum revenues.

Corporate Strategy
With the completion of the largest growth program in TEN's 24-year history, management continues to position the Company to take advantage of healthier markets as the current rate of newbuilding deliveries should be abating over the coming few months. Primary focus has been placed on contracts with profit sharing provisions that, on the one hand, cover vessel expenses while on the other secure a notable participation in market upturns. As a result, the number of days in the 2017 third quarter that vessels operated on such flexible contracts increased by over 72.0% when compared to last year's third quarter. The prevalence of such contracts as well as long charters to solid oil concerns, highlights TEN's emphasis on strengthening the industrial nature of its operations in order to smooth out the inevitable cyclicality of the industry while providing its investors with cash flow visibility, security and upside potential.

Top line aside, management, in close cooperation with the technical managers for the fleet, continue to implement cost effective measures to address all issues arising from vessel operations so to continue creating savings that positively impact the Company's bottom line.

With 30% revenue expansion expected in 2018 just from the full operations of the new vessels and tangible signs of market improvements, TEN remains well positioned to comfortably navigate the upcoming quarters and take advantage of opportunities as they appear.

Conference Call:
As previously announced, today, Thursday, November 30, 2017 at 9:00 a.m Eastern Time, TEN will host a conference call to review the results as well as management's outlook for the business. The call, which will be hosted by TEN's senior management, may contain information beyond that which is included in the earnings press release.

Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (US Toll Free Dial In), 0800 953 0329 (UK Toll Free Dial In) or +44 (0)1452 542 301 (Standard International Dial In). Please quote "Tsakos" to the operator.

A telephonic replay of the conference call will be available until Thursday, December 7, 2017 by dialling 1 866 247 4222 (US Toll Free Dial In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0)1452 550 000 (Standard International Dial In). Access Code: 90295809#

Simultaneous Slides and Audio Webcast:
There will also be a simultaneous live, and then archived, slides webcast of the conference call, available through TEN's website (www.tenn.gr). The slides webcast will also provide details related to fleet composition and deployment and other related company information. This presentation will be available on the Company's corporate website reception page at www.tenn.gr. Participants for the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

ABOUT TEN
TEN, founded in 1993, is one of the first and most established public shipping companies in the world today. TEN's fleet consists of 65 double-hull vessels, constituting a mix of crude tankers, product tankers and LNG carriers, totaling 7.2 million dwt. Of these, 47 vessels trade in crude, 13 in products, three are shuttle tankers and two are LNG carriers.

COMPANY'S GROWTH TIME-TABLE

                         
#   Vessel Name   Type   Dwt   Delivery   Status   LT Contracts
1   Ulysses   VLCC   300,000   May 2016   Delivered   Yes
2   Elias Tsakos   Aframax   112,700   June 2016   Delivered   Yes
3   Thomas Zafiras   Aframax   112,700   Aug 2016   Delivered   Yes
4   Leontios H   Aframax   112,700   Oct 2016   Delivered   Yes
5   Parthenon TS   Aframax   112,700   Nov 2016   Delivered   Yes
6   Sunray   Panamax LR1   74,200   Aug 2016   Delivered   Yes
7   Sunrise   Panamax LR1   74,200   Sep 2016   Delivered   Yes
8   Maria Energy   LNG   93,616   Oct 2016   Delivered   Yes
9   Hercules I   VLCC   300,000   Jan 2017   Delivered   Yes
10   Marathon TS   Aframax   112,700   Feb 2017   Delivered   Yes
11   Lisboa   DP2 Shuttle   157,000   Mar 2017   Delivered   Yes
12   Sola TS   Aframax   112,700   Apr 2017   Delivered   Yes
13   Oslo TS   Aframax   112,700   May 2017   Delivered   Yes
14   Stavanger TS   Aframax   112,700   July 2017   Delivered   Yes
15   Bergen TS   Aframax   112,700   Oct 2017   Delivered   Yes
                         

LT: Long-Term

ABOUT FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. TEN undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

   
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES  
Selected Consolidated Financial and Other Data  
(In Thousands of U.S. Dollars, except share, per share and fleet data)  
                             
  Three months ended       Nine months ended  
      September 30 (unaudited)       September 30 (unaudited)  
STATEMENT OF OPERATIONS DATA     2017       2016       2017       2016  
                             
Voyage revenues   $ 124,244     $ 109,183     $ 394,665     $ 351,126  
                                 
Voyage expenses     27,327       27,345       85,531       74,818  
Vessel operating expenses     43,380       36,491       127,285       107,587  
Depreciation and amortization     35,914       28,639       102,502       81,682  
General and administrative expenses     6,357       6,095       19,024       18,985  
Total expenses     112,978       98,570       334,342       283,072  
                                 
  Operating income     11,266       10,613       60,323       68,054  
                                 
Interest and finance costs, net     (15,409 )     (9,845 )     (43,147 )     (25,804 )
Interest income     382       183       813       444  
Other, net     812       1,327       866       1,309  
Total other expenses, net     (14,215 )     (8,335 )     (41,468 )     (24,051 )
  Net (loss)/income     (2,949 )     2,278       18,855       44,003  
                                 
  Less: Net (income) attributable to the noncontrolling interest     (409 )     (268 )     (1,160 )     (154 )
Net (loss)/income attributable to Tsakos Energy Navigation Limited   $ (3,358 )   $ 2,010     $ 17,695     $ 43,849  
                                 
Effect of preferred dividends     (6,642 )     (3,969 )     (17,134 )     (11,906 )
Net (loss)/income attributable to common stockholders of Tsakos Energy Navigation Limited   $ (10,000 )   $ (1,959 )     561       31,943  
                                 
Earnings per share, basic and diluted   $ (0.12 )   $ (0.02 )   $ 0.01     $ 0.37  
                                 
Weighted average number of common shares, basic and diluted     84,698,376       83,781,640       84,319,077       85,302,696  
                                 
                             
BALANCE SHEET DATA     September 30       December 31                  
      2017       2016                  
Cash     225,885       197,773                  
Other assets     169,998       186,210                  
Vessels, net     3,026,434       2,677,061                  
Advances for vessels under construction     27,312       216,531                  
  Total assets   $ 3,449,629     $ 3,277,575                  
                                 
Debt, net of deferred finance costs     1,811,135       1,753,855                  
Other liabilities     117,470       106,270                  
Stockholders' equity     1,521,024       1,417,450                  
  Total liabilities and stockholders' equity   $ 3,449,629     $ 3,277,575                  
                                 
                             
  Three months ended       Nine months ended  
OTHER FINANCIAL DATA     September 30       September 30  
      2017       2016       2017       2016  
Net cash from operating activities   $ 28,662     $ 44,889     $ 139,569     $ 138,151  
Net cash used in investing activities   $ (36,100 )   $ (95,792 )   $ (257,320 )   $ (351,916 )
Net cash (used in)/provided by financing activities   $ (37,217 )   $ 17,026     $ 135,727     $ 144,139  
                                 
TCE per ship per day   $ 17,430     $ 17,608     $ 19,141     $ 20,773  
                                 
Operating expenses per ship per day   $ 7,474     $ 7,620     $ 7,640     $ 7,840  
Vessel overhead costs per ship per day   $ 1,085     $ 1,249     $ 1,126     $ 1,357  
      8,559       8,869       8,766       9,197  
                                 
FLEET DATA                                
                                 
Average number of vessels during period     63.7       53.1       61.9       51.1  
Number of vessels at end of period     64.0       55.0       64.0       55.0  
Average age of fleet at end of period   Years 7.6       8.1       7.6       8.1  
Dwt at end of period (in thousands)     7,125       5,896       7,125       5,896  
                                 
Time charter employment - fixed rate   Days 2,258       1,805       6,610       5,124  
Time charter employment - variable rate   Days 1,670       970       4,547       2,617  
Period employment (coa) at market rates   Days 276       224       817       676  
Spot voyage employment at market rates   Days 1,396       1,701       4,307       5,016  
  Total operating days         5,600       4,700       16,281       13,433  
  Total available days         5,861       4,881       16,896       13,994  
  Utilization         95.5%       96.3%       96.4%       96.0%  
 
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP measures used within the financial community may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods as well as comparisons between the performance of Shipping Companies. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. We are using the following Non-GAAP measures:
 
(i) TCE which represents voyage revenues less voyage expenses divided by the number of operating days.
(ii) Vessel overhead costs are General & Administrative expenses, which also include Management fees, Stock compensation expense and Management incentive award.
(iii) Operating expenses per ship per day which exclude Management fees, General & Administrative expenses, Stock compensation expense and Management incentive award.
Non-GAAP financial measures should be viewed in addition to and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
 
The Company does not incur corporation tax.

Contact Information

  • For further information please contact:
    Company
    Tsakos Energy Navigation Ltd.
    George Saroglou
    COO
    +30210 94 07 710
    gsaroglou@tenn.gr

    Investor Relations / Media
    Capital Link, Inc.
    Nicolas Bornozis
    Paul Lampoutis
    +212 661 7566
    ten@capitallink.com