SOURCE: Tsakos Energy Navigation Ltd.

Tsakos Energy Navigation Ltd.

November 23, 2010 08:11 ET

Tsakos Energy Navigation Reports Nine Month and Third Quarter Financial Results for the Period Ended September 30, 2010

Nine Month Earnings at $0.59 per Share; Proceeds From Recent Offering to Finance Accretive Long-Term Employment Transaction

ATHENS, GREECE--(Marketwire - November 23, 2010) - TSAKOS ENERGY NAVIGATION LIMITED (NYSE: TNP)

2010 NINE-MONTH HIGHLIGHTS
 --  Voyage revenues of $313.0 million.
 --  Operating income of $71.7 million.
 --  Net income of $22.4 million.
 --  EPS of $0.59 per share (diluted).
 --  Vessel average daily operating expenses decreased by 10.2% to $7,774
     from $8,655 for the 2009 corresponding period.
 --  Fleet utilization of 97.7%
 --  Delivery and charter of two aframax newbuildings and acquisition with
     charter of four 2009-built panamax product tankers
 --  Sale of five tankers with net gains of $19.7 million.
 --  Quarterly dividend of $0.15 paid in October 26, 2010. Total dividends
     paid in 2010 $0.60.

2010 THIRD QUARTER HIGHLIGHTS
 --  Voyage revenues of $95.5 million.
 --  Operating income of $8.6 million.
 --  Net loss of $5.5 million.
 --  Vessel average daily operating expenses decreased by 7.0% to $7,555
     from $8,121 for the 2009 corresponding period.
 --  Fleet utilization of 96.0%.
 --  Sale of 1990-built panamax Victory III.
 --  Repositioning and charter of LNG carrier Neo Energy

TSAKOS ENERGY NAVIGATION LIMITED ("TEN" and "the Company") (NYSE: TNP) today reported financial results (unaudited) for the nine months and third quarter ended September 30, 2010.

IN MEMORIAM

The Board of Directors and management of TEN are deeply sorrowed by the death of Maria P. Tsakos. Her untimely departure has left a huge vacuum. Maria was a great friend and inspiration to all of us. May her loving spirit be with us forever.

NINE MONTH RESULTS

Revenues, net of voyage expenses and commissions, were $234.0 million in the first nine months of 2010 from $277.5 million in the same period in 2009. TEN operated an average of 45.7 ships as compared with 46.3 in 2009. Time charter equivalent per ship, per day was $20,360 compared to $23,819 while operating expenses per ship per day fell to $7,774 from $8,655, a 10.2% reduction as a result of cost savings on the purchase of lubricants, stores and spares and the impact of a stronger dollar on crew costs. Depreciation and dry-docking amortization costs fell to $71.4 million from $75.7 million as a result of fleet vessel sales. General and administrative expenses were reduced to $2.7 million from $3.2 million mainly due to reduced promotional and printing expenses. Technical and corporate management fees rose in line with contractual fee increases to $10.3 million from $9.9 million. Stock compensation expense increased to $1.3 million from $0.7 million in the nine-month period of 2009, due to further issuance of stock grants.

Operating income for the first nine-months of 2010 was $71.7 million (including $19.7 million in net gains on the sale of vessels) compared to $80.7 million in the equivalent nine-month period of 2009 (no sale of vessels), the reduction being primarily due to lower freight rates.

Interest and finance costs, net of interest income, increased to $48.2 million from $34.0 million in 2009. This was mainly due to negative interest rate swap valuations offset by the impact of lower interest rates and bunker swap gains.

Net income in the first nine months of 2010 was $22.4 million compared to $45.3 million in the 2010 period. Diluted EPS for the first nine months of 2009 were $0.59, while that for the first nine months of 2009 was $1.22.

THIRD QUARTER RESULTS

Revenues, net of voyage expenses and commissions were $69.4 million in the third quarter of 2010 compared to $82.8 million in the third quarter of 2009. The fall in revenue was primarily due to the lower freight rate market and to a slightly smaller fleet compared to the previous year's third quarter. The time charter equivalent per ship per day was $18,315 in the third quarter of 2010 versus $21,116 in the third quarter of 2009. In particular, the LNG carrier was re-chartered for one year at a lower rate and incurred high repositioning expenses. TEN operated an average number of 45.7 vessels in the third quarter of 2010 compared to 47.0 vessels in the same period of last year. Despite the poor market, caused by seasonal factors and global supply and demand imbalance of vessels, our fleet utilization was 96.0% compared to 95.7% in the previous year's third quarter.

Operating expenses per ship per day decreased to $7,555 from $8,121 in the third quarter of 2009, a 7.0% reduction due to the better pricing achieved by the new technical managers, Tsakos Columbia ShipManagement which resulted in reduced expenditure on stores, spares and lubricants, and a 10% stronger dollar in the third quarter 2010 compared to the previous year's third quarter which impacted crew costs. Repair expenses, however, increased as we took advantage of the poor market to dry-dock vessels and incurred higher non-deferrable maintenance costs.

Depreciation and dry-docking amortization costs were $25.0 million compared to $25.9 million in the same quarter of 2009. Depreciation expenses were approximately the same as in the prior year's third quarter, but dry-docking amortization fell by $0.7 million due in part to the sale of vessels compared to the previous year's third quarter. Management fees increased by $0.4 million to $3.7 million from $3.3 million over the previous year's third quarter. G&A expenses were modestly up by $0.1 million to $0.9 million from $0.8 million as a result mainly of investor relation expenses, and stock compensation remained at similar levels to those of the same quarter of last year at $0.5m. The stronger dollar and certain timely currency conversions resulted in foreign currency gains of approximately $0.9 million in the third quarter of 2010 in contrast to $0.2 million losses in the previous year's third quarter.

TEN sold the panamax Victory III during the third quarter at a gross price slightly higher than book value, but incurred cost of sale expenses, including fuel costs, that resulted in a final loss on the sale of approximately $0.5 million.

Operating income for the third quarter of 2010 was $8.6 million compared to $17.7 million in the third quarter of 2009, the reduction being primarily due to lower freight rates offset by reduced expenditure.

Interest and finance costs net of interest income was $13.9 million in the third quarter of 2010 compared to $15.3 million in the third quarter of 2009. The total of average outstanding loans during the respective quarters was approximately the same at $1.5 billion, but loan interest was reduced by $2.7 million due to reduced interest rates. However, interest paid on interest rate swaps was $2.4 million higher than the previous third quarter. Charges relating to the valuation of interest rate swaps were $0.4 million lower than the previous third quarter while bunker swap cash and non-cash gains in total together were $0.6 million higher than in the third quarter of 2009.

TEN incurred a net loss of $5.5 million (including a $0.5 million loss on the sale of a vessel) for the third quarter of 2010 as compared to a net income of $2.1 million for the third quarter of 2009 (no sale of vessel). Diluted EPS this quarter were $0.14 negative ($0.13 negative without the loss on sale of vessel) compared to $0.06 positive in the same quarter last year.

SUBSEQUENT EVENTS

The Company has reached an agreement with a national oil major to charter, at an accretive rate, for 15 years each two high-spec crude tankers that the Company will purposely build for an industrial project. To finance the construction of these vessels the Company will use cash, derived from the recent $85.0 million follow-on offering completed at the end of October, and bank debt. Management has already commenced discussions with banks and is confident that a competitive financing package, both in terms of leverage and applicable interest, will be agreed. Management expects to release more details on this attractive project, in a separate press release, before the end of this year.

QUARTERLY DIVIDEND

The next dividend is expected to be announced and paid in January 2011.

FLEET STRATEGY & OUTLOOK

In today's uncertain and volatile market environment, TEN has remained committed to the implementation of its business strategy which aims to generate consistent results over the various shipping cycles. The cornerstone of this strategy is reflected in TEN's constant drive to modernize its fleet, strengthen its critical mass and solidify its balance sheet and overall cash balances. The recent equity offering contributed to that objective, while assisting in expanding the Company's strategic relations and alliances with major international end-users. The transaction announced above is representative of that. Overall, the Company's ability to agree significant transactions with internationally renowned end-users, at attractive levels, while leveraging its long established relations with Far Eastern yards, are testament to the Company's operational performance.

The overall performance of the Company's fleet is what management believes to be a major competitive advantage of TEN. It is also the foundation that safeguards not only the continued growth of the fleet but also the returns to the Company's shareholders.

The foundation of this underlying confidence is again generated by the flexible and balanced structure of our fleet employment policy which allows us to not only secure commendable results in times of market weakness, but to also participate in market rallies when they occur. With 64% and 33% of available days for 2011 and 2012 already secured translating to minimum revenues of $252 million from these fixtures over this two year period, we feel that TEN will sustain growth and earnings visibility.

The Company due to the strength of its balance sheet believes that it remains well positioned to take advantage of market opportunities as they arise and continue to operate with the highest efficiency and safety standards. This strategy has enabled the Company to enjoy significant competitive advantages over its peers as it is translated in annual profitability since inception in 1993. This consistency and strength is not currently reflected in the pricing of TEN shares. In time, management trusts that the Company's long tested balanced and flexible fleet employment policy, its profitable operations and track record of timely sale and purchase of vessels will eventually be reflected in the valuation of TEN's shares.

ABOUT TSAKOS ENERGY NAVIGATION

To date, TEN's pro forma fleet consists of 50 double-hull vessels of 5.1 million dwt that includes two suezmax tankers currently under construction totalling 316,000 dwt. TEN's balanced fleet profile is reflected in 23 crude tankers ranging from VLCCs to aframaxes and 26 product carriers ranging from aframaxes to handysize and one LNG carrier.

TEN's employment profile (operating fleet):
-------------------------------------------------------------------------
Type of Employment                                              Vessels
-------------------------------------------------------------------------
Period Employment - Fixed, fixed w/profit share & min max         30
-------------------------------------------------------------------------
CoA - market related                                               2
-------------------------------------------------------------------------
Pool - market related                                              6
-------------------------------------------------------------------------
Spot - market related                                             10
-------------------------------------------------------------------------


TEN's current newbuilding program:
Suezmax                       DWT    Hull Type / Design   Delivery
-------------------------------------------------------------------
1. S2034 (tbn Spyros K)     158,000        DH            April 2011
-------------------------------------------------------------------
2. S2035                    158,000        DH            July 2011
-------------------------------------------------------------------
DH: Double Hull

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 (Unaudited)
            (In Thousands of U.S. Dollars, except share and per share data)


                              Three months ended      Nine months ended
                                September  30           September  30
                            ----------------------  ----------------------
STATEMENT OF INCOME DATA       2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

Voyage revenues             $   95,519  $  106,202  $  313,040  $  346,694
                            ----------  ----------  ----------  ----------
Commissions                      3,536       3,677      11,591      13,009
Voyage expenses                 22,576      19,743      67,500      56,165
Charter hire expense                 -           -       1,905           -
Vessel operating expenses       31,072      34,381      95,001     107,162
Depreciation                    23,953      24,116      67,851      70,389
Amortization of deferred
 dry-docking costs               1,082       1,787       3,532       5,360
Management fees                  3,721       3,345      10,318       9,892
General and administrative
 expenses                          913         796       2,704       3,152
Stock compensation expense         480         467       1,273         660
Foreign currency (gains)/
 losses                           (920)        189        (707)        245
Loss/ (Gains) on sale of
 vessels                           520           -     (19,670)          -
                            ----------  ----------  ----------  ----------
Total expenses                  86,933      88,501     241,298     266,034
                            ----------  ----------  ----------  ----------

                            ----------  ----------  ----------  ----------
     Operating income            8,586      17,701      71,742      80,660
                            ----------  ----------  ----------  ----------

Interest and finance costs,
 net                           (14,591)    (15,985)    (50,184)    (37,136)
Interest income                    687         642       2,015       3,106
Other, net                         (25)       (107)        (85)         80
                            ----------  ----------  ----------  ----------
Total other expenses, net      (13,929)    (15,450)    (48,254)    (33,950)
                            ----------  ----------  ----------  ----------
     Net (loss) income          (5,343)      2,251      23,488      46,710

       Less: Net income
        attributable to the
        noncontrolling
        interest                  (173)       (140)     (1,083)     (1,374)
                            ----------  ----------  ----------  ----------
Net (loss) income
 attributable to Tsakos
 Energy Navigation Limited  $   (5,516) $    2,111  $   22,405  $   45,336
                            ==========  ==========  ==========  ==========


(Loss) / Earnings per
 share, basic               $    (0.14) $     0.06  $     0.59  $     1.23
(Loss) / Earnings per
 share, diluted             $    (0.14) $     0.06  $     0.59  $     1.22
Weighted average number of
 shares outstanding
     Basic                  38,183,569  36,904,366  37,885,747  36,953,082
     Diluted                38,504,704  37,163,512  38,219,013  37,192,689




BALANCE SHEET DATA         September 30 December 31 September 30
                               2010        2009        2009
                            ----------  ----------  ----------
Cash and cash equivalents      249,631     296,181     270,348
                            ----------  ----------  ----------
Current assets, including
 cash                          313,926     471,647     334,678
Investments                      1,000       1,000       1,000
Financial instruments, net
 of current portion              1,020       3,112       1,933
Advances for vessels  under
 construction                   70,111      49,213      42,366
                            ----------  ----------  ----------
  Vessels                    2,573,022   2,335,031   2,597,914
  Accumulated Depreciation    (392,917)   (325,066)   (383,372)
                            ----------  ----------  ----------
Vessels' Net Book Value      2,180,105   2,009,965   2,214,542
Deferred charges, net           16,234      14,783      18,588
                            ----------  ----------  ----------
     Total assets           $2,582,396  $2,549,720  $2,613,107
                            ==========  ==========  ==========

Current portion of
 long-term debt                114,127     172,668     107,128
                            ----------  ----------  ----------
Current liabilities,
 including current portion
 of long-term debt             212,400     264,231     214,997
Long-term debt, net of
 current portion             1,393,674   1,329,906   1,423,804
Financial instruments, net
 of current portion             49,408      41,256      49,541
Total stockholders' equity     926,914     914,327     924,765
                            ----------  ----------  ----------
     Total liabilities and
      stockholders' equity  $2,582,396  $2,549,720  $2,613,107
                            ==========  ==========  ==========


                              Three months ended      Nine months ended
OTHER FINANCIAL DATA             September 30            September 30
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
Net cash from
 operating activities       $   23,006  $   20,284  $   67,504  $   93,900
Net cash used in
 investing activities       $ (114,909) $ (114,164) $ (118,340) $ (118,092)
Net cash from/(used
 in) financing
 activities                 $   35,935  $   55,564  $    4,286  $  (17,629)

TCE per ship per day        $   18,315  $   21,116  $   20,360  $   23,819

Operating expenses
 per ship per day           $    7,555  $    8,121  $    7,774  $    8,655
Vessel overhead costs
 per ship per day           $    1,217  $    1,066  $    1,145  $    1,083
                            ----------  ----------  ----------  ----------
                                 8,772       9,187       8,919       9,738

FLEET DATA

Average number of
 vessels during period            45.7        47.0        45.7        46.3
Number of vessels at
 end of period                    46.0        48.0        46.0        48.0
Average age of fleet
 at end of period     Years        6.7         6.6         6.7         6.6
Dwt at end of period
 (in thousands)                4,813.0     5,133.0     4,813.0     5,133.0

Time charter
 employment - fixed
 rate                  Days        719       1,121       2,257       3,224
Time charter
 employment -
 variable rate         Days      1,817       1,639       5,605       5,496
Period employment
 (pool and coa) at
 market rates          Days        644         610       2,424       1,404
Spot voyage
 employment at market
 rates                 Days        853         768       1,908       2,188
                            ----------  ----------  ----------  ----------
     Total operating
      days                       4,033       4,138      12,194      12,312
     Total available
      days                       4,203       4,324      12,487      12,650
      Utilization                 96.0%       95.7%       97.7%       97.3%


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
    Ramnique Grewal
    +212 661 7566
    ten@capitallink.com

    Communications Advisor
    Cubitt Jacobs & Prosek Communications
    Thomas J. Rozycki, Jr.
    +212 279 3115 (x208)
    trozycki@cjpcom.com