SECOND QUARTER 2010 HIGHLIGHTS
-- Voyage revenues of $112.8 million
-- Operating income of $30.1 million
-- Net income of $8.5 million
-- EPS, diluted, of $0.22 per share
-- Vessel average daily operating expenses decreased by 14% to $7,342
-- Delivery of a new building aframax and sale of one aframax and one
panamax tanker with total gains of $5.8 million
-- Semi-annual dividend of $0.30 per share paid in April 2010 (bringing
the total for fiscal 2009 to $0.60)
-- Quarterly dividend declared of $0.15 with first payment in July, 2010
FIRST HALF 2010 HIGHLIGHTS
-- Voyage revenues of $217.5 million
-- Operating income of $63.2 million
-- Net income of $27.9 million
-- EPS, diluted, of $0.73 per share
-- Sale of four tankers and delivery of new building aframax reducing
fleet's average age to 6.5 years with total gains of $20.2 million
-- Quarterly dividend policy announced
SECOND QUARTER RESULTS
Revenues, net of voyage expenses and commissions, were $83.3 million in the
second quarter of 2010 compared to $88.6 million in the second quarter of
2009 primarily reflecting a slightly smaller fleet. Despite improved rates
for crude carriers, the Company's product carriers achieved lower rates
than in the second quarter of 2009, as did its LNG carrier.
On average, TEN deployed 45.0 vessels versus 46.0 vessels in the prior year
quarter. Fleet utilization remained high at 97.8%, the same level as in the
second quarter of 2009. The average daily time charter equivalent rate per
vessel was $22,059 down from $22,890 in the 2009 second quarter. Vessel
operating costs were $7,342 per ship, per day, down nearly 14% from $8,514
in the previous second quarter in part to a stronger US dollar against the
Euro that positively impacted crew costs, reduced insurance costs, and
decreased repair costs. In addition, the increased cooperation between our
technical managers and Columbia ShipManagement S.A., even prior to the
launch of the joint-venture Tsakos Columbia ShipManagement Ltd., achieved
price reductions for spares, provisions, stores and lubricants. On July 1,
this joint-venture formally assumed the technical management of the vast
majority of the Company's vessels.
Depreciation and dry-docking amortization costs fell to $23.4 million from
$25.1 million in the second quarter of 2009, mainly due to the sale of
vessels and reduced dry-docking costs over the past year. Management fees
were $3.2 million, in line with the slightly smaller fleet and a modest
increase in fees in January. G&A expenses were down 12%, as a result of
cost cutting, primarily on promotional costs. In the second quarter of
2010, operating income was $30.1 million, which included gains on the sale
of vessels amounting to $5.8 million, compared to operating income of $24.1
million (with no gains on the sale of vessels) in the second quarter of
2009. The gains on sale of vessels in the second quarter of 2010 relate to
the aframax tanker Marathon and the panamax tanker Hesnes. These vessels
were delivered to their new owners in April 2010. At year end 2009, both
vessels had been accounted for as
held-for-sale. The Victory III commenced a voyage in the second quarter,
which completed in the Far East where she was eventually delivered to her
new owners in early August.
Interest and finance costs rose sharply in the second quarter to $21.5
million from $6.1 million in the previous year's second quarter. While
actual loan interest fell by almost $5 million between the two quarters,
reflecting the reduction in average interest rates, interest paid on
interest rate swaps rose by nearly $7 million. There were non-cash negative
movements of $4.5 million in interest rate swap valuations, compared to
positive movements of $4 million in the second quarter of 2009, and a $2.5
million non-cash negative movement in the bunker related swap valuations
compared to a positive $3 million in the second quarter of 2009. Cash
received on bunker swaps was $0.5 million higher than in last year's second
quarter. Interest income was $0.7 million in the quarter compared to $1.1
million in the prior year second quarter.
Net income in the 2010 second quarter was $8.5 million (including gains on
the sale of vessels of $5.8 million) versus $18.8 million in the second
quarter of 2009, primarily reflecting the negative impact of swap
valuations. Diluted earnings per share were $0.22 versus $0.51 in the
second quarter of 2009.
Cash flow from net income before depreciation, amortization and finance
costs improved to $53.4 million compared to $49.9 million in the second
quarter of 2009.
Net proceeds from the sale of vessels contributed a further $44.7 million
in the second quarter of 2010 from which $34.5 million was used to prepay
debt on the sold vessels. A further $7 million was raised in the second
quarter of 2010 from the sale of stock under the ATM program, which has not
been used since May 2, 2010. Subject to market conditions, the Company
intends to sell, from time to time, a final 500,000 of its common shares
under this program.
FIRST HALF RESULTS
Voyage revenues were $217.5 million in the first six months of 2010, down
from $240.5 million in the 2010 period reflecting primarily the lower rates
achieved, mainly on product carriers. TEN operated, on average, 45.8
vessels as compared with 46.0, a year earlier. The average daily time
charter equivalent rate per vessel decreased to $21,371 from $25,187 while
operating expenses declined to $7,885 from $8,932, a 12% reduction. General
and administrative expenses decreased to $1.8 million from $2.4 million in
the same period last year. Management fees were approximately the same.
Depreciation and dry-docking amortization costs fell to $46.3 million from
$49.8 million in the first half of 2009 mainly due to the sale of vessels.
In the first half of 2010, operating income was $63.2 million which
included gains on the sale of vessels amounting to $20.2 million, compared
to operating income of $63 million (with no gains on the sale of vessels)
in the first six months of 2009.
Interest and finance costs were raised in the first half to $35.6 million
from $21.2 million. Actual loan interest fell by almost $14 million,
reflecting the reduction in average interest rates, but interest paid on
interest rate swaps rose by nearly $12 million. In addition, there was a
non-cash negative movement of $5 million in interest rate swap valuations
compared to a positive $5 million movement in the first half year of 2009
and a $3 million non-cash negative movement in the bunker related swap
valuations compared to a nearly $4 million positive movement in the first
half of 2009. Cash received on bunker swaps was $1.3 million higher than in
the first half of 2009. Interest income was $1.3 million in the half-year
compared to $2.5 million in the prior year first half.
Net income in the six months of 2010 was $27.9 million, including gains on
the sale of vessels of $20.2 million, compared to net income of $43.2
million, with no gains on the sale of vessels. Diluted earnings per share
for the first half of 2010 were $0.73, while diluted earnings per share for
the first six months of 2009 were $1.16.
"A strong relative performance in a temporarily depressed environment is a
strong testament to the efficacy of TEN's basic business strategy and
management's execution," stated D. John Stavropoulos, Chairman of the Board
of TEN. He concluded, "There are signs that the worst of the economic
tsunami have passed. The renewed growth of the world's oil consumption
driven by the dynamic expansion of the emerging economies is the foundation
of our optimism. Meantime, the ability to operate profitably whereby
sustained dividends, fleet growth and a strong financial position are
fundamental to building shareholder value."
QUARTERLY DIVIDEND
As already announced on June 8, 2010, the Company decided to revise its
dividend policy from semi-annual to quarterly payments. The first such
quarterly dividend of $0.15 per share was paid on July 15, 2010 to
shareholders of record on July 12, 2010. Including this distribution, TEN
has distributed in total $8.325 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 for the 2-1 share split of
November 14th, 2007.
The basis of dividends will continue to target a payout ratio of 25% to 50%
of net income subject to maintaining an appropriate level of liquidity as a
function of a prudent and strong financial position. Each April, the Board
of Directors will give consideration to the declaration of a supplementary
dividend.
SUBSEQUENT EVENTS
On July 2, TEN took delivery of the Uraga Princess, the last DNA-design
aframax tanker in a series of eight from Sumitomo Heavy Industries in
Japan. Upon delivery, the vessel entered an up to two month redelivery
voyage charter to the Mid-Atlantic basin.
In July, the Company's 2007-built LNG carrier Neo Energy entered a 12-month
time charter with a major European gas company.
In July, TEN entered into an agreement to acquire four fully coated 2009
Korean built panamax tankers from affiliated companies, sister vessels to
the Selecao and Socrates already in the fleet. The first two vessels are on
time charters to a major South American state affiliated oil entity at a
minimum base rate with 100% upside for the Company. The charters expire in
April and June 2011, respectively. The remaining two panamaxes currently
operate in a spot pool and management will consider employment options upon
delivery depending on prevailing market conditions. The first vessel, the
World Harmony, was delivered to the Company on July 23, the second, the
Chantal, is expected to be delivered on August 10 while the last two,
Selini and Salamis, in the fourth quarter of this year.
In early August, the 1990-built panamax tanker Victory III was delivered to
her third-party buyers at approximately book value.
FLEET STRATEGY & OUTLOOK
The turnaround in world oil demand and the continuation of contango, albeit
at lower levels from the beginning of the year, lead to an improvement in
freight rates for the larger crude carriers. Such improvements, for the
more optimistic, signified the end of the crude tanker recession while for
others it was a cautious statement for things to come should the rebound in
world economies stay largely intact. TEN falls in the latter category and
remains committed to its policy of a diversified fleet with flexible
employment and upside options. The cyclicality of the markets, particularly
at this juncture of world recovery, merits caution and calls for prudence
in both employment and growth. Cash preservation continues to be the
cornerstone of TEN's strategy as was evident in the Company's
non-restricted cash reserves this past quarter which stood at $306 million.
Looking ahead, it is becoming more evident that charterers continue to
reevaluate the attractiveness of longer term charters and TEN will continue
to explore all available options for the chartering of its vessels. Options
that are consistent with the flexible elements that have so far enabled our
fleet to perform successfully irrespective of market cycles. At the
beginning of the third quarter 2010, 76% of remaining employable days are
under secured revenue employment and 58% for 2011. Without taking into
consideration the potential additional revenues from profit-sharing
arrangements in place and assuming only the minimum rates for the remaining
operating days in 2010, TEN expects to earn at least $114 million in gross
revenues. For 2011, based on the same assumptions, the minimum gross
revenue already secured is estimated at $145 million.
"Once again, the Company maintained its momentum at a time where markets
did not display a stable sense of direction. Our vessels exhibited high
utilization levels, 98.5% for the first half of the year, as demand from
charterers for term employment increased," Mr. Mr. Nikolas P. Tsakos,
President and CEO of TEN stated. "With an improvement in world oil demand,
an acceleration in scrapping and a disciplined newbuilding approach, our
modern, versatile fleet will remain well positioned to take advantage of
market upturns. Our objective remains to operate the fleet at the highest
utilization levels possible, to vigorously monitor cost elements (as
confirmed by the 14% quarter-over-quarter drop in operating expenses) to
continue the quest of modernization and to explore sale & purchase
opportunities for the benefit of both the Company and our shareholders,"
Mr. Tsakos concluded.
Conference Call and Webcast
Today, Thursday, August 5, 2010, at 10:00 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 what 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 +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
12, 2010 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 +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
TEN's pro forma fleet (including the recently acquired Panamaxes) consists
of 50 vessels of 5.3 million dwt. TEN's operational fleet consists of 46
vessels all of double-hull design of which 21 are ice-class. TEN's
remaining newbuilding program includes two suezmax tankers totaling 316,000
dwt.
TEN's balanced operational fleet profile is reflected in 21 crude tankers
ranging from VLCCs to aframaxes and 24 product carriers ranging from
aframaxes to handysize; complemented by one LNG.
TEN's current employment profile: Type of Employment Vessels Period Employment - Fixed and fixed with profit share 29 CoA - market related 3 Pool - market related 4 Spot - market related 10 TEN's current newbuilding program: Suezmax DWT Hull Type/ Design Delivery 1. S2034 158,000 DH Q2 2011 2. S2035 158,000 DH Q3 2011 DH: Double HullFORWARD-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 Six months ended
June 30 June 30
---------------------- ----------------------
STATEMENT OF INCOME DATA 2010 2009 2010 2009
---------- ---------- ---------- ----------
Voyage revenues $ 112,847 $ 114,180 $ 217,521 $ 240,491
---------- ---------- ---------- ----------
Commissions 4,103 4,245 8,055 9,332
Voyage expenses 25,475 21,334 44,924 36,422
Charter hire expense 1,389 - 1,905 -
Vessel operating expenses 29,387 34,879 63,929 72,780
Depreciation 22,323 23,272 43,898 46,273
Amortization of deferred
dry-docking costs 1,097 1,789 2,450 3,573
Management fees 3,249 3,274 6,597 6,547
General and administrative
expenses 790 896 1,791 2,356
Stock compensation expense 367 147 793 193
Foreign currency losses 402 257 213 56
Gain on sale of vessels (5,844) - (20,190) -
---------- ---------- ---------- ----------
Total expenses 82,738 90,093 154,365 177,532
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Operating income 30,109 24,087 63,156 62,959
---------- ---------- ---------- ----------
Interest and finance costs,
net (21,548) (6,045) (35,593) (21,151)
Interest income 683 1,133 1,328 2,464
Other, net (71) 79 (59) 187
---------- ---------- ---------- ----------
Total other expenses, net (20,936) (4,833) (34,324) (18,500)
---------- ---------- ---------- ----------
Net income 9,173 19,254 28,832 44,459
Less: Net income
attributable to the
noncontrolling
interest (707) (482) (911) (1,234)
---------- ---------- ---------- ----------
Net Income attributable to
Tsakos Energy Navigation
Limited $ 8,466 $ 18,772 $ 27,921 $ 43,225
========== ========== ========== ==========
Earnings per share, basic $ 0.22 $ 0.51 $ 0.74 $ 1.17
Earnings per share, diluted $ 0.22 $ 0.51 $ 0.73 $ 1.16
Weighted average number of
shares outstanding
Basic 38,018,711 36,908,326 37,734,368 36,977,844
Diluted 38,299,288 37,152,243 38,068,876 37,217,103
BALANCE SHEET DATA June 30 December 31 June 30
2010 2009 2009
---------- ---------- ----------
Cash and cash equivalents 305,599 296,181 308,664
---------- ---------- ----------
Current assets, including
cash 375,789 471,647 371,065
Investments 1,000 1,000 1,000
Financial instruments, net
of current portion 994 3,112 2,217
Advances for vessels under
construction 122,386 49,213 56,114
---------- ---------- ----------
Vessels 2,399,400 2,335,031 2,470,002
Accumulated Depreciation (368,964) (325,066) (359,256)
---------- ---------- ----------
Vessels' Net Book Value 2,030,436 2,009,965 2,110,746
Deferred charges, net 15,253 14,783 17,790
---------- ---------- ----------
Total assets $2,545,858 $2,549,720 $2,558,932
========== ========== ==========
Current portion of
long-term debt 115,496 172,668 99,745
---------- ---------- ----------
Current liabilities,
including current portion
of long-term debt 206,568 264,231 194,180
Long-term debt, net of
current portion 1,351,533 1,329,906 1,376,727
Financial instruments, net
of current portion 47,209 41,256 48,751
Total stockholders' equity 940,548 914,327 939,274
---------- ---------- ----------
Total liabilities and
stockholders' equity $2,545,858 $2,549,720 $2,558,932
========== ========== ==========
Three months ended Six months ended
OTHER FINANCIAL DATA June 30 June 30
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net cash from operating
activities $ 24,506 $ 22,420 $ 44,498 $ 73,616
Net cash used in investing
activities $ (53,449) $ (2,355) $ (3,431) $ (3,928)
Net cash from/(used in)
financing activities $ 10,991 $ (49,373) $ (31,649) $ (73,193)
TCE per ship per day $ 22,059 $ 22,890 $ 21,371 $ 25,187
Operating expenses per ship
per day $ 7,342 $ 8,514 $ 7,885 $ 8,932
Vessel overhead costs per
ship per day $ 1,077 $ 1,031 $ 1,108 $ 1,092
---------- ---------- ---------- ----------
8,419 9,545 8,993 10,024
FLEET DATA
Average number of vessels
during period 45.0 46.0 45.8 46.0
Number of vessels at end of
period 44.0 46.0 44.0 46.0
Average age of fleet at end
of period Years 6.9 6.6 6.9 6.6
Dwt at end of period (in
thousands) 4,628.0 4,922.0 4,628.0 4,922.0
Time charter employment -
fixed rate Days 665 1,001 1,538 2,103
Time charter employment -
variable rate Days 1,823 1,788 3,788 3,857
Period employment (pool and
coa) at market rates Days 840 463 1,780 794
Spot voyage employment at
market rates Days 674 844 1,055 1,420
---------- ---------- ---------- ----------
Total operating days 4,002 4,096 8,161 8,174
Total available days 4,091 4,186 8,284 8,326
Utilization 97.8% 97.8% 98.5% 98.2%
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 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