SOURCE: Tsakos Energy Navigation

Tsakos Energy Navigation

August 04, 2014 09:00 ET

Tsakos Energy Navigation Reports Six Month and Second Quarter Financial Results for the Period Ended June 30, 2014 and New Dividend Declaration

80% Increase in Six-Month Operating Income From First Half 2013; Strong Half-Year Net Income and Second Quarter Positive Net Results; 100% of Operating Fleet With Positive EBITDA

ATHENS, GREECE--(Marketwired - Aug 4, 2014) -  Tsakos Energy Navigation Limited (NYSE: TNP)

 SIX MONTHS AND RECENT HIGHLIGHTS

  • Pro-forma fleet of 60 vessels, totaling 6.2m dwt, consisting of 44 tankers operating in the crude space, including two modern shuttle tankers, with nine aframaxes under construction, 14 tankers carrying products and 2 LNG vessels, including one tri-fuel 174,000m3 LNG carrier under construction
  • Operating income of $33.0 million for first six months 2014, an 80% increase over first half 2013
  • Major improvement in net results; $14.8 million in first six months 2014 compared to $(0.5) million in 2013 first six months. $0.2 million for Q2 2014, compared to $(1.5) million in Q2 2013.
  • Strong liquidity maintained at $238 million at end of first half 2014
  • Total contracted coverage exceeds $0.8 billion with average charter duration of 2.2 years
  • Strategic alliance with Statoil of Norway for nine newbuilding aframax crude carriers with potential gross revenues of approximately $1 billion
  • Acquisition of two modern suezmax crude carriers, delivered mid-June and early July
  • Average daily time charter equivalent per ship in first six months at $20,418 compared to $18,090 in first half 2013, a 12.9% increase 
  • Fleet utilization of 98%
  • Next payable dividends of $0.05 per common share on August 14, 2014 and $0.05 per common share on November 25, 2014

Tsakos Energy Navigation Limited (TEN or the "Company") (NYSE: TNP) today reported results (unaudited) for the second quarter and first six months of 2014.

SIX MONTH RESULTS
TEN achieved net income of $14.8 million in the first six months of 2014, a significant improvement over the first half of 2013. Operating income for the same period of 2014 was $33.0 million compared to $18.3 million in the 2013 first six month period, an 80% increase. This improvement was primarily due to the increase in crude tanker rates in the first quarter 2014. The full participation of the two shuttle tankers also contributed to increased revenue. The average daily time charter equivalent rate per vessel increased by 12.9% to $20,418, compared to $18,090 in the first six months of 2013.

Vessel operating expenses for the first six months of 2014 amounted to $71.4 million, an increase over the previous year's first six months, much of which was due to the addition of the two new shuttle tankers.

Depreciation and dry-docking amortization costs were $50.2 million, the increase from the first half of 2013 was due to the addition of the shuttle tankers and the recent suezmax acquisition. General and administrative expenses totaled $2.3 million from $2.1 million in the first half of 2013.

Interest and finance costs decreased in the first half of 2014 to $18.1 million compared to $20.0 million in the first six months of 2013, mainly due to the expiry of interest rate swaps. 

SECOND QUARTER RESULTS
Revenues, net of voyage expenses and commissions, were $73.6 million in the second quarter of 2014, an increase of 2.9% over the second quarter of 2013. The vibrant crude transportation market of the first quarter of this year, which contributed to the best quarter in revenues since early 2010, subsided during much of the second quarter 2014, before reviving in the last weeks to provide renewed confidence for the third quarter.

TEN's fleet continued to operate at almost full utilization at 98%, the same as in the similar period of last year. TEN operated a fleet of 48.2 vessels on average in this year's second quarter compared to 47.8 vessels in the second quarter of 2013, the additions being primarily due to the two newly delivered suezmax DP2 shuttle tankers which started their long-term charters in May and June 2013.

Second quarter 2014 average daily operating costs per vessel amounted to $7,971 compared to $7,728 in the second quarter of 2013, the increase being mostly due to the addition of the two new shuttle tankers, which have higher operating costs than conventional vessels, and to a 5% fall in the US dollar against the Euro which impacted crew costs negatively.

Depreciation and dry-docking amortization costs combined totaled $25.3 million in the second quarter of 2014. This was almost the same as the combined depreciation and amortization cost for the previous year's second quarter. G&A costs were $0.9 million, compared to $1.0 million in last year's second quarter.

Operating income of $8.5 million for the second quarter was slightly down from the previous second quarter, despite the improvement in revenue, because of the increase in operating expenses.

Interest and finance costs in the second quarter of 2014 were $8.6 million, compared to $10.4 million, a 17.5% reduction from the second quarter of 2013, the decrease being primarily due to lower interest payable on interest rate swaps following the expiry of three such swaps since the prior second quarter.

The second quarter of 2014 ended in a small net profit of $0.2 million compared to a $1.5 million net loss in the previous second quarter.

TEN's liquidity at June 30, 2014 remained, and continues to remain, strong. Total cash on June 30, 2014 was $238 million compared to $172 million at the end of 2013. Total indebtedness at June 30, 2014 amounted to $1.36 billion, $17.8 million less than at the end of 2013, after a new loan of $42 million relating to the acquisition of the suezmax Eurovision in June 2014 and scheduled repayments of $59.8 million since the beginning of the year. As a result of the improved liquidity and profitability, together with higher vessel values due to an improved market, our leverage as adjusted for the fair market value of the vessels has fallen to 56.6%. Our net debt to capital is 48.9% at the end of the second quarter 2014. Cash flow for the quarter from net income before depreciation, amortization and finance costs "EBITDA" was $34.1 million, similar to EBITDA for the second quarter of 2013. For the first six months 2014, EBITDA was $83.0 million compared to $68.1 million in the first six-months of 2013. All the vessels generated positive EBITDA in the first six months of 2014.

"The first six months result reinforced our strategy of focusing our versatile and diversified fleet in the crude sector. The well timed acquisitions of the modern suezmax crude tankers Euro and Eurovision, together with our decision to trade our product carriers in the dirty and crude markets will continue to add value to our bottom line," stated Mr. Nikolas P. Tsakos, President & Chief Executive Officer of TEN. "Having used the storm of the last years to our advantage, we emerged a much larger and stronger company. We are optimistic that our positive results will enable us to continue with our dividend policy and will also be reflected in our share price going forward," Mr. Tsakos concluded.

DIVIDEND - COMMON SHARES
As previously announced, the Company will pay a dividend of $0.05 per share of common stock outstanding on August 14, 2014 to shareholders of record as of August 11, 2014.

The Company's Board of Directors has also declared a dividend of $0.05 per share of common stock outstanding to be paid on November 25, 2014 to shareholders of record as of November 21, 2014. Inclusive of this distribution, the Company will have distributed, in total, $9.875 per share in dividends to its shareholders since the Company was listed on the NYSE in March of 2002. The listing price was $7.50 per share taking into account the 2-1 share split on November 14, 2007. 

FLEET STRATEGY & OUTLOOK
Over the first six months of the year, the crude sector has led the tanker market recovery with elements of sustainability attached to it. The LNG sector remained in a state of flux but with every indication that the medium-to-long term outlook will flourish.

With rates for the crude market, during most of the first quarter and the last few weeks of the second quarter at levels that most could describe as "booming" coupled with a relatively low orderbook, the decrease in new vessel introductions, the potential development of a sustained contango in oil prices, that could see oil companies and traders use more vessels for floating storage, provides a potential platform for what could lie ahead, particularly as all of these factors are taking place in what is considered to be the slow period of the year. The on-going geopolitical issues in the Ukraine and the Middle East undoubtedly instill some nervousness in the markets, but so far these tensions, no matter how disturbing they are in their own right, have supplemented the uplift in crude rates and could potentially lead to further rate increases in the foreseeable future. The geopolitical shifts of late, could give rise to the creation of new longer routes which could aid the ton-mile demand dynamics.

TEN, with 33 vessels today operating in crude trades, twenty-three of which on spot and flexible crude contracts, is well placed to benefit from the recent market turnaround. With 58%, 39% and 22% of remaining 2014, 2015 and 2016 operating days fixed to this day, excluding the nine Statoil aframaxes that will commence entering the fleet from early 2016 onwards, TEN is solidifying its earnings capabilities while creating a base to utilize to the fullest, the relationships it has built and cultivated with major oil concerns over the years. The quality and experience in oil tanker operations that TEN is renowned for, paid dividends not only with Statoil but also with other major oil companies and end users proposing similar transformational projects. Management is evaluating all proposals and based on sector attractiveness, required returns, strategic objectives and impact on balance sheet, will judge and act accordingly.

Cash generation and preservation along with the divestment of assets will continue to remain an integral part of our philosophy and operations and if an attractive price can be achieved for an opportunistic transaction and without negatively impacting TEN's footprint in the sectors it operates, management will seriously consider selective vessel divestments.

On the capital markets front, management remains in touch with what could be on offer and how such opportunities could positively impact TEN's balance sheet and overall valuation, over a long term horizon. The Company's strong cash position, stellar record and excellent banking relationships affords management the time and luxury to evaluate any opportunity on its own accord and decide accordingly. The potential formation of an MLP still remains on the agenda as an alternative structure that merits consideration.

"It is with great excitement that I commence my tenure as Chairman of the Board of TEN at a time that the Company exhibited once again positive net results, higher EBITDA and set the platform for future growth," stated Mr. Takis Arapoglou, Chairman of the Board. "TEN, under the capable foresight of its management and its prior chairman, Mr. Stavropoulos, became one of the largest and most recognized tanker companies in the world and a leader in the sectors it operates. However, this has yet to be reflected in the value the public markets ascribe to the enterprise. We have renewed confidence that in light of TEN's performance, positioning in the industry and market fundamentals, we can expect a convergence between real value and share value," Mr. Arapoglou concluded.

Conference Call
As previously announced, today, Monday, August 4, 2014, at 10:00 a.m. Eastern Time, TEN will host a conference call to review second quarter 2014 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.

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 August 11, 2014 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'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 TSAKOS ENERGY NAVIGATION
To date, TEN's fleet, including the LNG carrier Maria Energy and nine Aframax crude oil tankers under construction, consists of 60 double-hull vessels, a mix of crude tankers, product tankers and LNG carriers, totaling 6.2 million dwt. Of these, 30 are crude carriers ranging from VLCCs to Aframaxes, 28 are coated tankers ranging from DP2 shuttle suezmaxes to handysize, 16 of which, including the shuttle takers, are currently carrying crude cargoes, and two are LNG carriers. The average age of the operational fleet is 7.2 years.

The Company's newbuilding program consists of:

Vessel Dwt Built
1. LNG Maria Energy 174,000 cbm 1Q2016
2. Aframax H/N 5010 112,700 dwt 2Q2016
3. Aframax H/N 5011 112,700 dwt 2Q2016
4. Aframax H/N 5012 112,700 dwt 3Q2016
5. Aframax H/N 5013 112,700 dwt 4Q2016
6. Aframax H/N 5014 112,700 dwt 1Q2017
7. Aframax H/N 5015 112,700 dwt 1Q2017
8. Aframax H/N 5016 112,700 dwt 2Q2017
9. Aframax H/N 5017 112,700 dwt 2Q2017
10. Aframax H/N 5018 112,700 dwt 3Q2017

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 and per share data)  
                         
    Three months ended     Six months ended  
    June 30     June 30  
STATEMENT OF OPERATIONS DATA   2014     2013     2014     2013  
                                 
Voyage revenues   $ 112,396     $ 108,091     $ 242,684     $ 205,785  
                                 
Commissions     4,097       4,088       9,096       7,852  
Voyage expenses     34,669       32,417       68,678       56,944  
Vessel operating expenses     34,929       32,907       71,374       64,232  
Depreciation     23,944       23,925       47,537       46,196  
Amortization of deferred dry-docking costs     1,370       1,220       2,632       2,410  
Management fees     4,043       3,886       8,073       7,826  
General and administrative expenses     871       964       2,268       2,101  
Foreign currency (gains)/losses     (7 )     35       47       (123 )
Total expenses     103,916       99,442       209,705       187,438  
                                 
  Operating income     8,480       8,649       32,979       18,347  
                                 
Interest and finance costs, net     (8,570 )     (10,394 )     (18,095 )     (20,019 )
Interest income     69       73       114       158  
Other income/(expenses), net     270       (698 )     (251 )     303  
Total other expenses, net     (8,231 )     (11,019 )     (18,232 )     (19,558 )
  Net Income/(loss)     249       (2,370 )     14,747       (1,211 )
                                 
  Less: Net (income)/loss attributable to the noncontrolling interest     (50 )     845       19       706  
Net income/(loss) attributable to Tsakos Energy Navigation Limited   $ 199     $ (1,525 )   $ 14,766     $ (505 )
                                 
Effect of preferred dividends     (2,109 )     (567 )     (4,219 )     (567 )
Net income/(loss) attributable to common stockholders of Tsakos Energy Navigation Limited   $ (1,910 )   $ (2,092 )     10,547       (1,072 )
                                 
Earnings/(loss) per share, basic and diluted   $ (0.02 )   $ (0.04 )   $ 0.14     $ (0.02 )
                                 
Weighted average number of common shares, basic and diluted     80,135,152       56,443,237       73,427,149       56,443,237  
                                 
                                 
                                 
BALANCE SHEET DATA   June 30   December 31          
    2014   2013          
Cash     237,875     171,764              
Other assets     85,700     80,546              
Vessels, net     2,187,940     2,173,068              
Advances for vessels under construction     106,978     58,521              
  Total assets   $ 2,618,493   $ 2,483,899              
                           
Debt     1,362,460     1,380,298              
Other liabilities     82,105     105,938              
Stockholders' equity     1,173,928     997,663              
  Total liabilities and stockholders' equity   $ 2,618,493   $ 2,483,899              
                           
                           
    Three months ended   Six months ended  
OTHER FINANCIAL DATA   June 30   June 30  
    2014   2013   2014   2013  
Net cash from operating activities   $ 8,108   $ 32,751   $ 26,870   $ 72,561  
Net cash used in investing activities   $ (63,175 ) $ (69,022 ) $ (110,789 ) $ (127,200 )
Net cash from financing activities   $ 88,463   $ 44,908   $ 151,409   $ 51,461  
                           
TCE per ship per day   $ 18,118   $ 18,007   $ 20,418   $ 18,090  
                           
Operating expenses per ship per day   $ 7,971   $ 7,728   $ 8,202   $ 7,710  
Vessel overhead costs per ship per day   $ 1,121   $ 1,116   $ 1,188   $ 1,167  
      9,092     8,844     9,390     8,877  
                           
FLEET DATA                          
                           
Average number of vessels during period     48.2     47.8     48.1     47.0  
Number of vessels at end of period     49.0     48.0     49.0     48.0  
Average age of fleet at end of period Years   7.4     6.6     7.4     6.6  
Dwt at end of period (in thousands)     4,944     4,785     4,944     4,785  
                           
Time charter employment - fixed rate Days   1,794     1,554     3,557     3,029  
Time charter employment - variable rate Days   818     967     1,608     2,103  
Period employment (pool and coa) at market rates Days   292     91     576     275  
Spot voyage employment at market rates Days   1,386     1,641     2,781     2,921  
  Total operating days     4,290     4,253     8,522     8,328  
  Total available days     4,382     4,346     8,702     8,507  
  Utilization     97.9 %   97.9 %   97.9 %   97.9 %
                             
                             
                             
Non-GAAP Measures  
Reconciliation of Net Income to EBITDA  
   
    Three months ended     Six months ended  
    June 30     June 30  
    2014   2013     2014   2013  
                             
Net Income/(loss) attributable to Tsakos Energy Navigation Limited     199     (1,525 )     14,766     (505 )
Depreciation     23,944     23,925       47,537     46,196  
Amortization of deferred special survey & drydocking costs     1,370     1,220       2,632     2,410  
Interest Expense     8,570     10,394       18,095     20,019  
EBITDA   $ 34,083   $ 34,014     $ 83,030   $ 68,120  
                             
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. Commission is not deducted.
(ii) Vessel overhead costs which include Management fees and General & Administrative expenses.
(iii) Operating expenses per ship per day which exclude Management fees and General & Administrative expenses.
(iv) EBITDA. See in the table above for reconciliation to net income.
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

  • Contact:

    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