Operating Expenses Declined by 10.1%. Fleet Utilization Increased to 99.2%
Total Net Income Since 2002 NYSE Listing Reaching $1 Billion
FIRST QUARTER HIGHLIGHTS
- Voyage revenues of $104.7 million
- Operating income of $33.0 million (including gains on the sale of vessels of $14.3 million)
- Net income of $19.5 million -- Total net income since 2002 listing reaching $1 billion
- Earnings per share (diluted) of $0.52
- Average operating expenses per vessel per day decreased by 10.1% to $8,414
- Sale of one suezmax and one aframax tanker with a total gain of $14.3 million -- Total capital gains since listing of $255 million
- Fleet utilization increased to 99.2%
- Cash position enhanced by 9.2% from year-end 2009 to $323.5 million
- Semi-annual dividend of $0.30 per share, paid April 29, 2010, bringing the dividend for 2009 operations to $0.60 per share
- Entered seventeenth year in the public markets
ATHENS, Greece, May 18, 2010 (GLOBE NEWSWIRE) -- Tsakos Energy Navigation Limited (TEN) (NYSE:TNP) (the "Company") today reported results (unaudited) for the first quarter ended March 31, 2010. Net revenues (voyage revenues net of commissions and voyage expenses) was $81.3 million in the first quarter of 2010 as compared with $106.1 million in the same quarter of 2009. TEN deployed an average of 46.6 vessels in the first quarter of 2010 versus 46.0 in the first quarter of 2009. The average daily time charter equivalent (TCE) rate (voyage revenue less voyage expenses) was $20,708 versus $27,495 in the first quarter 2009 due to a softer market.
Fleet utilization was 99.2% compared to 98.5% in the first quarter of 2009. Vessel operating expenses per ship per day decreased to $8,414 compared to $9,355 in the first quarter of 2009. The decrease in vessel operating expenses was primarily driven by reduced repairs and spares and lubricant costs, despite a weaker US dollar in the first quarter of 2010 compared to the first quarter of 2009. In addition, the reduction in costs is partly attributable to the new synergies between our technical managers and Columbia ShipManagement S.A. ("Columbia"). Tsakos interests and the owners of Columbia are currently preparing to launch a jointly-owned ship management company, Tsakos Columbia ShipManagement Ltd, which will take over the technical management of TEN's fleet by the beginning of the third quarter of 2010. This is expected to result in substantial benefits for TEN in the form of price reductions, cost controls and efficiencies of operation.
Depreciation and dry-docking amortization costs were $22.9 million in the first quarter of 2010 versus $24.8 million in the first quarter of 2009. The reduction arose from vessels either being treated as "held for sale" or actually sold during the first quarter of 2010, and from the reduced depreciable value of those vessels that incurred an impairment charge at the end of 2009. Management fees in the first quarter of 2010 were $3.4 million versus $3.3 million in the same quarter of 2009, arising primarily from just a 1.0% increase in monthly fees since the prior-year first quarter. General and administrative expenses fell to $1.0 million, a 31.4% reduction when compared to the first quarter of 2009.
In the first quarter of 2010, operating income was $33.0 million which included gains on the sale of vessels amounting to $14.3 million, compared to operating income of $38.9 million (with no gains on the sale of vessels) in the first quarter of 2009. The gains on sale of vessels in the first quarter of 2010 relate to the aframax tanker Parthenon and the suezmax tanker Decathlon. These sales had been arranged in the latter part of 2009 and the vessels were delivered to their new buyers in February and March 2010 respectively. At year end 2009, both vessels had been accounted for as held-for-sale, together with the Marathon and Hesnes, which were delivered to their buyers in April 2010 with approximate gains of $6.0 million, and the Victory III, which the Company expects to sell during the second quarter of this year.
Interest and finance costs fell to $14.0 million compared to $15.1 million in the first quarter of 2009 due primarily to a decrease in interest rates from the prior-year first quarter, offset partially by non-cash negative valuations on non-hedging interest rate and bunker swaps. Interest income was $0.6 million this first quarter versus $1.3 million in the first quarter of 2009.
Net income in the first quarter of 2010 was $19.5 million (including gains on the sale of vessels) compared to $24.5 million (with no gains on the sale of vessels) in the first quarter of 2009. Diluted earnings per share were $0.52 compared to $0.66 in the first quarter of 2009. Cash flow from net income before depreciation, amortization and finance costs, and excluding capital gains, in the first quarter of 2010 amounted to $56.4 million compared to $64.3 million in the first quarter of 2009. Net proceeds from vessel sales contributed a further $89.4 million in the first quarter 2010 from which $28.5 million was used to repay debt on one of the sold vessels. A further $11.4 million was raised in the first quarter 2010 from the sale of stock under the ATM program.
"Net Income in the first quarter of 2010 exceeded our initial expectations. We are most pleased with the results even though earnings were lower than the first quarter of 2009," observed Mr. D. John Stavropoulos, Tsakos Energy Navigation's Chairman of the Board. He added, "Management success in cost containment; the Company's chartering strategy; and the continued success in realizing gains as an integral part of the fleet renewal program have combined to produce these returns which compare very favorably with those of TEN's peers."
Subsequent Events
The Company has recently taken delivery of the DNA-designed aframax Sapporo Princess, which immediately entered into a voyage charter which will bring the vessel to Europe. A similar voyage has also been arranged for early July for the Uraga Princess, the last of the series of eight DNA-designed aframaxes to be delivered. The DNA-designed aframaxes built at the Sumitomo yard in Japan, which have previously joined our fleet, have already proven themselves to be attractive vessels within the global chartering community and their income generating ability from delivery onwards is a proof to that. The Sapporo Princess was partly financed by a new term loan and we have recently agreed terms regarding the financing of its sister vessel to be provided on delivery of the vessel on July 2, 2010.
On April 29, 2010, the Company paid a semi-annual dividend of $0.30 per share to shareholders of record on April 23, 2010. This raised the total distribution for 2009 to $0.60 per share. 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 $8.175 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 14th, 2007.
In April, TEN delivered to its new buyers, in both cases independent third party concerns, the 1990-built panamax tanker Hesnes and the 2003-built aframax tanker Marathon for a combined capital gain of $6.0 million. These sales, together with the sale of the Marathon and the Hesnes which were delivered to their new buyers in April 2010, were in line with the Company's pre-stated sale and purchase policy which, since its listing on the New York Stock Exchange in March 2002, have generated gains of approximately $261 million.
Strategy & Outlook
Despite a softening in the tanker market that started in the latter part of 2008 and affected the whole of 2009, TEN's results in the first quarter of this year displayed encouraging signs that the industry has turned the corner. Charterer interest for longer-term contracts is stronger, asset values, primarily on the crude sector, have stabilized and the sale and purchase market for second-hand tonnage is showing signs of activity after a period of limited or no action. In addition, the oil market is currently back in a state of contango with a large portion of the existing capacity of the world tanker fleet performing storage operations. As a result, toward the end of the quarter, freight rates began to climb and moved to levels that operators with effective cost controls could realize satisfactory profits.
On this point, TEN expects that the recent joint-venture formed between Tsakos interests and Columbia will provide additional cost-saving opportunities relating to TEN's vessel operating expenses that could potentially enhance further the Company's profit margins.
The quality of TEN's vessels was again reflected in the very high utilization levels achieved this first quarter, 99.2% versus 98.5% in the first quarter of 2009. Equally important and in line with management's objective, TEN's cash reserves increased by 9.2 percent to $323.5 million from $296.2 in the beginning of the year.
As stated in the past, prudent cash management, a balanced and flexible vessel employment policy and a well-diversified fleet continue to support TEN's long-term objectives: providing shareholder value regardless of market conditions. Such value was reflected in TEN's final dividend for 2009 operations ($0.30 per share), which brought the total dividend for fiscal year 2009 to $0.60.
On the chartering front, management remains optimistic that demand for its vessels from major oil entities will not wane. The recent ex-yard charter for the DNA-aframax Uraga Princess, expected to be delivered from the Sumitomo yard in Japan on July 2, 2010, is a testament to that. As of the end of the first quarter, 70% of remaining 2010 and 50% of 2011 available days have secured fixed employment contracts in excess of $265 million, excluding any potential income to be generated from profit-sharing and assuming only minimum agreed revenues.
Going forward, TEN will continue its trademark blend of charters, not only to maintain security of employment and downside protection, but also to allow the Company the flexibility to capture rate upturns should they occur. The strategy of fleet growth and modernization will continue in tandem with client needs and market sentiments, while the Company's older vessels will remain candidates for sale. This sales practice has been beneficial to the Company over the years and is expected to continue as the trading policy of strategic divestment of vessels—irrespective of age—as long as it does not upset existing relationships and contracts. Since the Company's New York Stock Exchange listing in 2002, and including the sale of the Marathon and Hesnes in April 2010, TEN has generated approximately $261 million in such gains against an accumulated net income of about $1 billion. With banks reducing the availability of credit, management believes that opportunities in the secondhand and newbuilding markets could present themselves over the course of the year. TEN's balance sheet and access to capital will enable the Company to give serious consideration to such opportunities.
"The latter parts of the first quarter of this year showed signs that the markets are beginning to rebound. The quality, size, employment and capital structure of our company is sound enough to not only withstand prolonged market downturns, but also enable us to capitalize on opportunities weak markets offer," stated Mr. Nikolas Tsakos, President & Chief Executive Officer of TEN. "TEN remains committed to its strategy of using the sale and purchase market as an integral part of operations. Our fleet's strong cash generation ability assures the sustainability of our dividend program, and combined with our strong cash position, provides us with the ability to take advantage of growth opportunities that may transpire," Mr. Tsakos concluded.
Conference Call
As previously announced, today, Tuesday, May 18, 2010 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 from the United States or Canada, please dial +1.888.694.4702. To participate in the call outside the United States or Canada, please dial +1.973.582.2741. The Conference ID is 7322 9902.
Two hours after the completion of the conference call, a digital recording of the call will be available for seven days, and can be accessed by dialing +1.800.642.1687 from inside the United States or Canada and +1.706.645.9291 from outside the United States or Canada and entering the Conference ID 7322 9902.
The call, which will be simultaneously broadcast live over the Internet, can be accessed at: http://www.videonewswire.com/event.asp?id=69015. The online archive of the broadcast will be available within one hour of the live call at the same web address.
Slide Presentation
Concurrent with the live broadcast, the Company will post a supplemental slide presentation providing details related to fleet composition and deployment and other related company information. This presentation will be available on the Company's website home page at www.tenn.gr.
ABOUT TSAKOS ENERGY NAVIGATION
TEN's pro forma fleet consists of 48 vessels of 5.2 million dwt. TEN's operational fleet consists of 45 vessels all of double-hull design. TEN's remaining newbuilding program includes one DNA-aframax crude carrier of 105,000 dwt and two suezmaxes of 158,000 dwt each.
TEN's balanced fleet profile is reflected in 24 crude tankers ranging from VLCCs to aframaxes and 23 product carriers ranging from aframaxes to handysize; complemented by one LNG.
TEN's current employment profile:
| Type of Employment | Vessels |
| Time-charter and bareboat (fixed employment) | 10 |
| Time-charter with profit share (fixed and market related) | 18 |
| Other period employment (market related) – contract of affreightment and pool | 7 |
| Spot (market related) | 10 |
TEN's current newbuilding program:
| Aframax | DWT | Hull Type / Design | Delivery |
| 1. Uraga Princess | 105,000 | DNA - DH | July 2010 |
| 2. S2034 | 158,000 | DH | Q2 2011 |
| 3. S2035 | 158,000 | DH | Q3 2011 |
| Total: | 421,000 |
DH: Double Hull
DNA: Design New Aframax
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 | ||||
| March 31 | ||||
| STATEMENT OF INCOME DATA | 2010 | 2009 | ||
| Voyage revenues | $104,673 | $126,311 | ||
| Commissions | 3,952 | 5,086 | ||
| Voyage expenses | 19,448 | 15,088 | ||
| Charter hire expense | 516 | -- | ||
| Vessel operating expenses | 34,542 | 37,901 | ||
| Depreciation | 21,575 | 23,001 | ||
| Amortization of deferred dry-docking costs | 1,353 | 1,784 | ||
| Management fees | 3,348 | 3,274 | ||
| General and administrative expenses | 1,002 | 1,460 | ||
| Stock compensation expense | 426 | 46 | ||
| Foreign currency gains | (188) | (199) | ||
| Gain on sale of vessels | (14,346) | -- | ||
| Total expenses | 71,628 | 87,441 | ||
| Operating income | 33,045 | 38,870 | ||
| Interest and finance costs, net | (14,045) | (15,106) | ||
| Interest income | 645 | 1,331 | ||
| Other, net | 12 | 108 | ||
| Total other expenses, net | (13,388) | (13,667) | ||
| Net income | 19,657 | 25,203 | ||
| Less: Net income attributable to the noncontrolling interest | (203) | (751) | ||
| Net Income attributable to Tsakos Energy Navigation Limited | $19,454 | $24,452 | ||
| Earnings per share, basic | $0.52 | $0.66 | ||
| Earnings per share, diluted | $0.52 | $0.66 | ||
| Weighted average number of shares outstanding | ||||
| Basic | 37,439,531 | 37,048,134 | ||
| Diluted | 37,750,765 | 37,320,168 | ||
| BALANCE SHEET DATA | March 31 | December 31 | March 31 | |
| 2010 | 2009 | 2009 | ||
| Cash and cash equivalents | 323,551 | 296,181 | 337,972 | |
| Current assets, including cash | 429,226 | 471,647 | 396,349 | |
| Investments | 1,000 | 1,000 | 1,000 | |
| Financial instruments, net of current portion | 2,480 | 3,112 | 590 | |
| Advances for vessels under construction | 88,498 | 49,213 | 54,670 | |
| Vessels | 2,335,142 | 2,335,031 | 2,469,090 | |
| Accumulated Depreciation | (346,641) | (325,066) | (335,984) | |
| Vessels' Net Book Value | 1,988,501 | 2,009,965 | 2,133,106 | |
| Deferred charges, net | 13,624 | 14,783 | 19,380 | |
| Total assets | $2,523,329 | $2,549,720 | $2,605,095 | |
| Current portion of long-term debt | 143,170 | 172,668 | 91,805 | |
| Current liabilities, including current portion of long-term debt | 246,881 | 264,231 | 231,650 | |
| Long-term debt, net of current portion | 1,308,214 | 1,329,906 | 1,400,534 | |
| Financial instruments, net of current portion | 40,134 | 41,256 | 64,202 | |
| Total stockholders' equity | 928,100 | 914,327 | 908,709 | |
| Total liabilities and stockholders' equity | $2,523,329 | $2,549,720 | $2,605,095 | |
| Three months ended | ||||
| OTHER FINANCIAL DATA | March 31 | |||
| 2010 | 2009 | |||
| Net cash from operating activities | $20,581 | $51,196 | ||
| Net cash from/(used in) investing activities | $50,018 | $(1,573) | ||
| Net cash used in financing activities | $(43,229) | $(23,820) | ||
| TCE per ship per day | $20,708 | $27,495 | ||
| Operating expenses per ship per day | $8,414 | $9,355 | ||
| Vessel overhead costs per ship per day | $1,139 | $1,155 | ||
| 9,553 | 10,510 | |||
| FLEET DATA | ||||
| Average number of vessels during period | 46.6 | 46.0 | ||
| Number of vessels at end of period | 46.0 | 46.0 | ||
| Average age of fleet at end of period | Years | 7.1 | 6.3 | |
| Dwt at end of period (in thousands) | 4,861.0 | 4,922.0 | ||
| Time charter employment - fixed rate | Days | 873 | 1,102 | |
| Time charter employment - variable rate | Days | 1,965 | 2,069 | |
| Period employment (pool and coa) at market rates | Days | 940 | 331 | |
| Spot voyage employment at market rates | Days | 381 | 576 | |
| Total operating days | 4,159 | 4,078 | ||
| Total available days | 4,193 | 4,140 | ||
| Utilization | 99.2% | 98.5% | ||
| 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. | ||||