ATHENS, GREECE--(Marketwire - May 11, 2011) - Tsakos Energy Navigation Limited (NYSE: TNP)
FIRST QUARTER HIGHLIGHTS
-- Voyage revenues of $99.2 million
-- Net income of $9.3 million
-- Earnings per share (diluted) of $0.20
-- Average daily operating expenses per vessel decreased by 11.1% to
$7,482
-- Sale of aframax tanker with a gain of $5.8 million
-- Fleet utilization of 99%
-- Quarterly dividend of $0.15 per share, paid February 1, 2011, and a
further quarterly dividend declared of $0.15 per share (paid
April 28, 2011)
-- Contracts signed for construction of two suezmax DP2 shuttle tankers
-- Entered eighteenth year in the public markets -- profitable since
inception
Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) (the "Company") today reported results (unaudited) for the first quarter ended March 31, 2011.
TEN attained net income of $9.3 million (including a $5.8 million gain on the sale of a vessel) for the first quarter of 2011 compared to $19.5 million (including $14.3 million gains on the sale of vessels) for the first quarter of 2010. Diluted EPS this first quarter were $0.20.
Revenues, net of commissions and voyage expenses amounted to $72.3 million in the first quarter of 2011 as compared to $81.3 million in the first quarter of 2010. TEN operated an average of 47.9 vessels in the first quarter of 2011 compared to 46.6 in the first quarter of 2010. The average daily time charter equivalent (TCE) rate (voyage revenue less voyage expenses) was $17,964 versus $20,708 in the first quarter 2010 due to a market which saw some unusually depressed freight rates for crude carriers, brought about primarily by over-capacity in the global fleet. Despite the over-supply of vessels, oil demand remained buoyant and our fleet achieved utilization of 99%. Our fleet benefited from extra profit share earned by the three ice-class LR2 aframaxes operating in the Baltic, a short spike in aframax freight rates operating in the Mediterranean at the beginning of the Libya crisis and the gradual increase in product carrier rates which is continuing strongly in the second quarter. However, the aframaxes and product carriers operating in the spot market were hard hit by increasing oil prices, raising bunker costs by as much as 30% over first quarter, 2010. A part of these costs, however, was recouped through our bunker hedges.
Total operating expenses amounted to $31.6 million in the first quarter of 2011, compared to $34.5 million in the first quarter of 2010. Vessel operating expenses per ship per day decreased by 11.1% to $7,482 compared to $8,414 in the first quarter of 2010. The decrease in vessel operating expenses is partly attributable to the increased purchasing power of our new technical managers, Tsakos Columbia ShipManagement Ltd. ("TCM"), which took over the technical management of TEN's fleet on July 1, 2010. Despite rising oil prices, expenditure on lubricants was down due to increased efficiencies in pricing and vessel supply. There was also reduced repair activity in the quarter compared to the previous year's first quarter. Crew expenses also were held down as a result of actions taken over the past eighteen months in respect of crew composition.
Depreciation and dry-docking amortization costs were $25.3 million in the first quarter of 2011 versus $22.9 million in the first quarter of 2010. The increase was primarily due to the addition of six new vessels since the beginning of 2010 (the five vessels that were sold in 2010 were accounted for as held-for sale during the first quarter of 2010 and bore no depreciation in that quarter). Management fees in the first quarter of 2011 were $3.9 million versus $3.3 million in the first quarter of 2010, arising primarily from one extra vessel in the fleet and an increase in monthly fees since the prior-year's first quarter. General and administrative expenses in the first quarter amounted to $1.1 million, just over $0.1 million higher than in the first quarter of 2010.
A gain of $5.8 million was achieved in the first quarter on the sale of the aframax tanker Opal Queen. This sale had been arranged in the latter part of 2010 and the vessel was accounted for as held-for-sale at the end of 2010. It was delivered to its buyers on March 23, 2011. After a prepayment of outstanding debt of $15.6 million, free cash from this sale amounted to $17.2 million.
Interest and finance costs fell to $6.4 million compared to $14.0 million in the first quarter of 2010 due primarily to positive valuations of $3.5 million on non-hedging interest rate and $2.6 million on bunker swaps, while in the previous year there were negative movements on swap valuations. Total loan and swap interest payable, less capitalized interest, was approximately $13.1 million in both first quarters.
"We are very pleased that net income in the first quarter of 2011 again exceeded our initial expectations, given the very difficult environment that confronted the tanker market," observed Mr. D. John Stavropoulos, Tsakos Energy Navigation's Chairman of the Board. He added, "Management continues to control costs effectively, and achieve gains and the release of cash through strategic sale of assets, while maintaining virtually full employment of the fleet, thus remaining in a position to reward its shareholders with a generous dividend."
Subsequent Events
On March 4, 2011, the Company declared a quarterly dividend of $0.15 per share which was paid to shareholders on April 28, 2011. TEN has paid a dividend every year since its listing on the New York Stock Exchange in March 2002. Since then, TEN has distributed a total of $8.775 per share in dividends against a listing price at that time of $7.50 per share, accounting for the 2-1 share split of November 14, 2007.
On May 9, 2011, the Company announced the long-term charters of suezmax newbuildings Spyros K and Dimitris P to a major Far Eastern entity. The contracts, of eleven and twelve years duration respectively, are expected to generate minimum gross revenues of $200 million over the periods of their employment.
Strategy & Outlook
In an overall market weakened primarily by the introduction of new vessels in an already full fleet, certain sectors in the first quarter displayed dynamism akin to those of booming markets. The drivers ranged from natural disasters to geopolitical concerns in key areas for oil transportation. In particular, in February VLCCs experienced a rally in the AG-East routes due to reduced supply of tonnage in that particular area, in March ice-class aframaxes went through one of their best periods in recent memory due to the severe arctic conditions in the Baltic while product tankers at the same time moved away from the doldrums and into healthier territories driven partly by the cataclysmic events in Japan. Utilization of LNG tonnage may increase as a result of the devastation of nuclear facilities, power grids and other power generating and storage assets. It is still early to assess the long-term impact of Japan in the oil tanker markets, but irrespectively, all pray for this proud nation to overcome this tragedy, particularly on the human scale, with the minimum possible pain.
TEN's strategy of a balanced and flexible employment proved itself once more as many vessels, particularly those with profit sharing charters, benefited from the confluence of events. In particular, TEN's aframax product tankers and certain of the MRs did trade in harsh ice environments and earned rates at significant premiums to conventional product markets.
During this period, TEN proceeded with its announced expansion in the developing shuttle tanker market by placing an order for two suezmax DP2 shuttle tankers in South Korea, with deliveries in Q4 2012 and Q1 2013 that will immediately enter 15-year contracts at delivery. TEN will continue to explore opportunities in all tanker-related sectors as well as to optimize its LNG investment due to the growing favorable conditions in that sector. Irrespective of investment, TEN will continue to evaluate projects based on revenue visibility and sustainability based on a project's long-term impact on the Company's balance sheet.
Looking ahead, the dominant features for the rest of 2011 remain the large crude tanker orderbook on the one hand and on the other, the continuous demand of developing nations for oil, with the added possibility of increases in OPEC oil production. These conflicting factors could sway the markets in either direction and should be watched closely as our operating strategy may need to be fine-tuned accordingly.
In such an environment, TEN's management continues to believe that by focusing on a balanced and flexible chartering policy coupled with improved operating efficiencies through the deployment of sister vessels and the high officer and crew retention rate, the negative implications of any uncertainty could be diluted. The high fleet utilization achieved once more in this quarter at 99% is a testament to that.
Cash preservation will continue in order to maintain our ability to move quickly when opportunities arise and to allow us to address our dividend obligations in any challenging environment. Such cash cushions will not only be sourced by the operating performance of the fleet, but also by efficiently utilizing the second hand market. We will continue to explore ways to extract the true value of our fleet without, however, destabilizing the core structure of our operations. Such activity has not only allowed us to maintain the young profile of the fleet but has also proved to be a rich source of capital gains over the years.
The sale and purchase of vessels will remain integral to operations as it is considered by management a fundamental constituent in the healthy running of a shipping company with long-term aspirations. To highlight the recurring element of this, since the 2002 NYSE listing the Company has generated an average $35 million of capital gains per year from vessel sales, or close to $280 million in total, against an accumulated net income of over $1 billion.
Overall, we remain cautiously optimistic for the long-term nature of the oil tanker markets and hence the positioning of the Company to benefit from a sustainable upturn when it occurs. We will continue to work diligently in further controlling the fleet's operating expenses, without jeopardizing crew and vessel safety. The work and results of the recently established ship management company, Tsakos Columbia ShipManagement, gives us confidence that the savings achieved in our vessel operating expense will be sustained, if not improved further.
"The tanker markets in the first quarter put to test again the operational model of our fleet and once again the results were satisfactory, given the market climate," Mr. Nikolas P. Tsakos, President and CEO of TEN stated. "Flexibility in the terms of vessel employment has become the cornerstone of our strategy and once again many of our vessels benefited from the various spikes created during the quarter. We will continue to monitor developments and strategically employ vessels to safeguard stable streams of revenues without though missing on market upturns. Continuous fleet revitalization through the efficient exploitation of the sale and purchase market, especially in markets under pressure, will remain a priority as the challenging environment of the next quarters may create interesting opportunities. Overall, the maintenance of our strong balance sheet as we seek further growth, remains our goal particularly as we strive to breach the gap between the true value of our firm with the one ascribed by the equity markets," Mr. Tsakos concluded.
Conference Call
As previously announced, today, Wednesday, May 11, 2011 at 10:00 a.m. Eastern Time, TEN will host a conference call to review these 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 what is included in this press release.
To participate in the call please 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 May 18, 2011 by dialing 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' 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 TSAKOS ENERGY NAVIGATION
To date, TEN's pro forma fleet consists of 51 double-hull vessels of 5.5 million dwt that includes four suezmax tankers currently under construction totaling 630,000. The first of the four, the Spyros K is expected to join the fleet on May 14, 2011. TEN's balanced fleet profile is reflected in 24 crude tankers ranging from VLCCs to aframaxes and 26 product carriers ranging from aframaxes to handysize and one LNG carrier.
TEN's current newbuilding program:
Hull Type / Expected
Suezmax DWT Design Delivery
-------------- ------------ ------------ ------------
1. Spyros K 158,000 DH May 14, 2011
------------- ------------ ------------ ------------
2. Dimitris P 158,000 DH July 2011
------------- ------------ ------------ ------------
3. Suezmax DP2 157,000 DH Q4 2012
-------------- ------------ ------------ ------------
4. Suezmax DP2 157,000 DH Q1 2013
-------------- ------------ ------------ ------------
DH: Double Hull
Employment of operating fleet at May 14, 2011, after delivery of suezmax
Spyros K:
Type of Employment Vessels
------------------ -------
Period Employment - Fixed, fixed w/profit share & min max 29
CoA - market related 2
Pool - market related 6
Spot - market related 11
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 and per share data)
Three months ended
March 31
------------------------
STATEMENT OF INCOME DATA 2011 2010
----------- -----------
Voyage revenues $ 99,196 $ 104,673
----------- -----------
Commissions 3,356 3,952
Voyage expenses 23,533 19,448
Charter hire expense - 516
Vessel operating expenses 31,596 34,542
Depreciation 24,235 21,575
Amortization of deferred dry-docking costs 1,108 1,353
Management fees 3,885 3,348
General and administrative expenses 1,139 1,002
Stock compensation expense 371 426
Foreign currency losses /(gains) 397 (188)
Gain on sale of vessels (5,802) (14,346)
----------- -----------
Total expenses 83,818 71,628
----------- -----------
----------- -----------
Operating income 15,378 33,045
----------- -----------
Interest and finance costs, net (6,425) (14,045)
Interest income 590 645
Other, net (121) 12
----------- -----------
Total other expenses, net (5,956) (13,388)
----------- -----------
Net income 9,422 19,657
Less: Net income attributable to the
noncontrolling interest (136) (203)
----------- -----------
Net income attributable to Tsakos Energy
Navigation Limited $ 9,286 $ 19,454
=========== ===========
Earnings per share, basic $ 0.20 $ 0.52
Earnings per share, diluted $ 0.20 $ 0.52
Weighted average number of shares outstanding
Basic 46,081,487 37,439,531
Diluted 46,172,417 37,750,765
BALANCE SHEET DATA March 31 December 31 March 31
2011 2010 2010
----------- ----------- -----------
Cash and cash equivalents 259,626 276,637 323,551
----------- ----------- -----------
Current assets, including cash 337,523 367,453 429,226
Investments 1,000 1,000 1,000
Financial instruments, net of
current portion 1,396 498 2,480
Advances for vessels under
construction 104,925 81,882 88,498
----------- ----------- -----------
Vessels 2,628,327 2,638,550 2,335,142
Accumulated Depreciation (427,677) (403,485) (346,641)
----------- ----------- -----------
Vessels' Net Book Value 2,200,650 2,235,065 1,988,501
Deferred charges, net 15,115 16,362 13,624
----------- ----------- -----------
Total assets $ 2,660,609 $ 2,702,260 $ 2,523,329
=========== =========== ===========
Current portion of long-term debt 125,057 133,819 144,944
----------- ----------- -----------
Current liabilities, including
current portion of long-term debt 221,962 217,244 248,655
Long-term debt, net of current
portion 1,393,170 1,428,648 1,306,440
Financial instruments, net of
current portion 27,520 36,438 40,134
Total stockholders' equity 1,017,957 1,019,930 928,100
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 2,660,609 $ 2,702,260 $ 2,523,329
=========== =========== ===========
Three months ended
OTHER FINANCIAL DATA March 31
2011 2010
----------- -----------
Net cash from operating activities $ 27,718 $ 19,992
Net cash from investing activities $ 6,921 $ 50,018
Net cash used in financing activities $ (51,650) $ (42,640)
TCE per ship per day $ 17,964 $ 20,708
Operating expenses per ship per day $ 7,482 $ 8,414
Vessel overhead costs per ship per day $ 1,251 $ 1,139
----------- -----------
8,733 9,553
FLEET DATA
Average number of vessels during period 47.9 46.6
Number of vessels at end of period 47.0 46.0
Average age of fleet at end of period Years 7.0 7.1
Dwt at end of period (in thousands) 4,854 4,861
Time charter employment - fixed rate Days 799 873
Time charter employment - variable rate Days 1,841 1,965
Period employment (pool and coa) at market rates Days 720 940
Spot voyage employment at market rates Days 902 381
----------- -----------
Total operating days 4,262 4,159
Total available days 4,311 4,193
Utilization 98.9% 99.2%
TCE represents voyage revenue less voyage expenses. Commission is not
deducted.
Operating expenses per ship per day exclude the vessel bare-boat chartered
out.
Vessel overhead costs include Management fees, General & Administrative
expenses and Stock compensation expense.
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
Biraj Gyawali
+212 661 7566
ten@capitallink.com