Positive Operating Income in a
Challenging Environment
TEN, Ltd. (TEN) (NYSE: TNP) (the “Company”) reports results
(unaudited) for third quarter and the nine months ended September
30, 2018.
NINE MONTHS 2018
RESULTSIn the first nine months of 2018, TEN
generated positive operating income of $11.5 million and an
adjusted EBITDA of $124.5 million. As a result of seven vessels
purposely undergoing early dry dockings, as well as programmed
vessel repairs and the very weak tanker market, the Company
recorded a net loss of $36.1 million. However, with the
anticipated market recovery already upon us, the last quarter of
the year should reflect the strength currently exhibited in spot
rates. In particular, VLCCs in the first nine months of the year
averaged about $12,615 per day while today they are at over
$56,000. Suezmaxes, during the same period, were at about $8,000
per day and now at $44,000. Similarly, Aframaxes from just over
$9,000 per day during the first nine months of 2018 are today over
$28,000.
The daily time charter equivalent rate per
vessel for the Company’s fleet was $17,155 with utilization again
at a high 96.2% because of the Company’s diversified tonnage and
chartering strategy. TEN outperformed the spot market by over 60%
in the first nine months of 2018.
TEN and its technical managers were successful
in keeping costs under control with average daily operating
expenses per vessel at a still healthy $7,755 after bringing
forward certain supplies and repairs in order to increase the
number of vessel days for the expected market upturn. Vessel
overhead costs (mainly G&A expenses and management fees) per
ship per day were at $1,125, similar to that of the first nine
months of 2017.
The addition of two new vessels, built against
long term employment, since September 30, 2017 modestly increased
depreciation and dry-docking amortization costs to $109.6 million
compared to $102.5 million for the same period of 2017.
Interest and finance costs totaled $50.6
million, due to the loans associated with the newly delivered
vessels and to rising short-term US dollar interest rates.
Strong liquidity maintained with $232.6 million
in cash on the balance sheet at September 30, 2018.
Net debt to capital at the end of the third
quarter 2018 was 46.9% with bank debt at September 30, 2018
totaling $1.63 billion, about $190 million lower (approximately
$2.0 per share) from September 30, 2017 and about $50 million less
from June 30, 2018. TEN’s diversified fleet, with the optionality
it offers combined with its flexible chartering strategy ensures
that the Company continues to maintain an impeccable debt service
record, never failing to meet its obligations irrespective of
market conditions.
THIRD QUARTER 2018 RESULTSIn the third quarter
of 2018, TEN Ltd. generated positive operating income of $2.0
million and adjusted EBITDA of $40.4 million. The repositioning of
two panamax product tankers to the Far East for their upcoming
special survey in order to install, in a timely manner, Water
Ballast Treatment systems, high oil prices that added over $5.0
million to voyage costs, as well as the prolonged weakness
particularly in the products market, resulted to the Company
incurring a net loss of $14.6 million. However, TEN’s fleet
is already taking advantage of the much firmer rates seen in the
fourth quarter.
TEN’s diversified fleet, in the third quarter of
2018, continued to operate at high utilization levels of 96.2% as a
result of a majority of our vessels trading crude. During the
quarter, TEN operated, on average, a fleet of 64.0 vessels, 13 of
which were in product trades.
Fleet revenues, net of voyage expenses (bunker,
port expenses and commissions), amounted to $92.6 million, a
relatively modest reduction from the third quarter of 2017 due to
higher expenses that stemmed from vessels operating primarily in
the products spot market as increased bunker costs, owing to higher
oil prices, added over $5.0 million to voyage costs.
Vessels on time charter accounted for approximately 68.0% of
operating days in the third quarter of 2018 again generating enough
gross revenue to cover all the voyage, operating and overhead
expenses of the whole fleet, including vessels on spot.
Depreciation and dry-docking amortization were
$37.1 million, mainly due to new vessel deliveries since the 2017
third quarter.
Operating costs were relatively stable at $7,568
per day per vessel despite the bringing forward of supplies and an
earlier than scheduled dry docking in order for the vessels to be
available for the expected market recovery. Sound housekeeping also
led to daily overhead costs (office G&A, management fees) to
fall by 4% to an average of $1,041 per day per vessel.
Dividend – Common SharesThe Company will to pay
a dividend of $0.05 per common share on December 6, 2018. During
the third quarter of 2018, the Company issued 268,192 common shares
using Treasury Stock.
Operational HighlightsThe Company recently
concluded the 24th charter of the year thus far, the majority of on
contracts with upward rate optionality. With an average charter
period of two years, these charters combined will generate
additional cash income of at least $250 million bringing the amount
of contracted revenue, without incorporating expected proceeds from
profit sharing contracts which are now fully in force, to a minimum
of $1.15 billion. In addition, and in the backdrop of an improving
market environment, management is negotiating new employment,
focusing on upside potential, for 10 vessels with contracts
expiring in the near future.
Corporate StrategyAs we approach the end of
2018, the signs that the worst is behind are becoming increasingly
evident. Global oil demand is continuing its upward trajectory, US
crude exports are soaring and finding new destinations in China and
India and the global tanker fleet where most of that oil will be
shipped is tightening. As scrapping outpaces new deliveries and the
much-discussed IMO 2020 sulphur regulations will create supply
distortions, the outlook for tankers looks more positive, than over
the past three quarters.
In view of this upturn, management will keep a close eye on
developments and refine its employment approach accordingly in
order to maximize returns to shareholders, but still maintain a
strong complement of vessels on long-term secured contracts to
cover the whole fleet’s expenses. Moreover, cash generation and
preservation will remain high on the agenda and therefore
efficient, effective and safe vessel management will continue to be
pursued vigorously, something the Company has taken pride in since
inception.
As asset prices are expected to recover from the recent
weakness, management will consider divesting some of its early
generation tankers while looking for replacement tonnage.
On the growth front, the LNG and shuttle tanker space remain of
firm interest and management is actively exploring industrial
opportunities to grow without endangering the healthy balance sheet
of the corporation. TEN’s two LNG carriers are employed on
contracts that reflect the strong tailwinds currently in existence
in that market.
“With three difficult quarters of 2018 now behind us, TEN is
already taking advantage of the strong rates available in the
fourth quarter. With market fundamentals such as stronger oil
demand, lower vessel capacity and adequate oil supplies,
particularly from the US, positively affecting tanker trades, this
current upturn seems sustainable,” Mr. George Saroglou, Chief
Operating Officer of TEN stated. “In addition, with the positive,
for owners with young tonnage, disruptions the IMO 2020 rules would
create in the vessel supply and demand balance, TEN will be well
poised to take advantage of the strong freight environment. The
number of vessels in the spot market, those on profit-share
arrangements and the 10 ships that will be available for re-charter
after expiration of current term employment reinforces this
optimism,” Mr. Saroglou concluded.
CONFERENCE CALLAs previously
announced, today, Friday, November 30, 2018 at 9:00 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
that which is included in the earnings press release.
Participants should dial into the call 10
minutes before the scheduled time using the following numbers: 1
(877) 553-9962 (US Toll Free Dial In), 0(808) 238- 0669 (UK Toll
Free Dial In) or +44 (0) 2071 928592 (Standard International Dial
In). Please quote "Tsakos" to the operator.
A telephonic replay of the conference call will
be available until December 7, 2018, by dialling 1(866) 331-1332
(US Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial In) or
+44 (0) 3333 009785 (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 NAVIGATIONTEN, founded in
1993 and celebrating this year 25 years as a public company, is one
of the first and most established public shipping companies in the
world today. TEN’s diversified energy fleet currently consists of
66 double-hull vessels, including two aframax tankers under
construction, constituting a mix of crude tankers, product tankers
and LNG carriers, totalling 7.2 million dwt. Of the fleet today, 48
vessels trade in crude, 13 in products, three are shuttle tankers
and two are LNG carriers.
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.
For further information please contact:
CompanyTsakos Energy Navigation
Ltd.George Saroglou COO+30210 94 07 710gsaroglou@tenn.gr
Investor Relations / Media
Capital Link, Inc. Nicolas BornozisPaul Lampoutis +212 661
7566ten@capitallink.com
|
|
TSAKOS ENERGY NAVIGATION LIMITED AND
SUBSIDIARIES |
Selected Consolidated Financial and Other
Data |
(In Thousands of U.S. Dollars, except share, per share
and fleet data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
September 30 (unaudited) |
|
|
September 30 (unaudited) |
STATEMENT OF
OPERATIONS DATA |
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage
revenues |
$ |
126,473 |
|
|
|
$ |
124,244 |
|
|
$ |
376,124 |
|
|
|
$ |
394,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses |
|
33,877 |
|
|
|
|
27,327 |
|
|
|
90,560 |
|
|
|
|
85,531 |
|
Charter hire
expense |
|
2,728 |
|
|
|
|
- |
|
|
|
8,102 |
|
|
|
|
- |
|
Vessel operating
expenses |
|
44,562 |
|
|
|
|
43,380 |
|
|
|
136,266 |
|
|
|
|
127,285 |
|
Depreciation and
amortization |
|
37,141 |
|
|
|
|
35,914 |
|
|
|
109,573 |
|
|
|
|
102,502 |
|
General and
administrative expenses |
|
6,128 |
|
|
|
|
6,357 |
|
|
|
19,770 |
|
|
|
|
19,024 |
|
Loss on sale of
vessel |
|
- |
|
|
|
|
- |
|
|
|
364 |
|
|
|
|
- |
|
Total expenses |
|
124,436 |
|
|
|
|
112,978 |
|
|
|
364,635 |
|
|
|
|
334,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
2,037 |
|
|
|
|
11,266 |
|
|
|
11,489 |
|
|
|
|
60,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and finance
costs, net |
|
(17,855 |
) |
|
|
|
(15,409 |
) |
|
|
(50,583 |
) |
|
|
|
(43,147 |
) |
Interest income |
|
964 |
|
|
|
|
382 |
|
|
|
1,675 |
|
|
|
|
813 |
|
Other, net |
|
8 |
|
|
|
|
812 |
|
|
|
(325 |
) |
|
|
|
866 |
|
Total
other expenses, net |
|
(16,883 |
) |
|
|
|
(14,215 |
) |
|
|
(49,233 |
) |
|
|
|
(41,468 |
) |
Net
(loss) income |
|
(14,846 |
) |
|
|
|
(2,949 |
) |
|
|
(37,744 |
) |
|
|
|
18,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net
loss (income) attributable to the noncontrolling interest |
|
258 |
|
|
|
|
(409 |
) |
|
|
1,691 |
|
|
|
|
(1,160 |
) |
Net (loss) income
attributable to Tsakos Energy Navigation Limited |
$ |
(14,588 |
) |
|
|
$ |
(3,358 |
) |
|
$ |
(36,053 |
) |
|
|
$ |
17,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of preferred
dividends |
|
(10,204 |
) |
|
|
|
(6,642 |
) |
|
|
(23,559 |
) |
|
|
|
(17,134 |
) |
Net (loss) income
attributable to common stockholders of Tsakos Energy Navigation
Limited |
$ |
(24,792 |
) |
|
|
$ |
(10,000 |
) |
|
$ |
(59,612 |
) |
|
|
$ |
561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings per
share, basic and diluted |
$ |
(0.28 |
) |
|
|
$ |
(0.12 |
) |
|
$ |
(0.69 |
) |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares, basic and diluted |
|
87,556,541 |
|
|
|
|
84,698,376 |
|
|
|
86,945,494 |
|
|
|
|
84,319,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET
DATA |
|
September 30 |
|
|
|
December 31 |
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
Cash |
|
232,568 |
|
|
|
|
202,673 |
|
|
|
|
|
|
|
|
Other assets |
|
143,898 |
|
|
|
|
140,909 |
|
|
|
|
|
|
|
|
Vessels, net |
|
2,927,106 |
|
|
|
|
3,028,404 |
|
|
|
|
|
|
|
|
Advances for
vessels under construction |
|
12,376 |
|
|
|
|
1,650 |
|
|
|
|
|
|
|
|
Total assets |
$ |
3,315,948 |
|
|
|
$ |
3,373,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of deferred
finance costs |
|
1,623,515 |
|
|
|
|
1,751,869 |
|
|
|
|
|
|
|
|
Other liabilities |
|
104,149 |
|
|
|
|
113,629 |
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
1,588,284 |
|
|
|
|
1,508,138 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
equity |
$ |
3,315,948 |
|
|
|
$ |
3,373,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
OTHER FINANCIAL
DATA |
|
September 30 |
|
|
September
30 |
|
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
|
2017 |
Net cash (used in )
from operating activities |
$ |
(3,746 |
) |
|
|
$ |
28,662 |
|
|
$ |
34,945 |
|
|
|
$ |
139,569 |
|
Net cash (used in)
provided by investing activities |
$ |
(1,046 |
) |
|
|
$ |
(36,100 |
) |
|
$ |
5,372 |
|
|
|
$ |
(257,320 |
) |
Net cash (used in)
provided by financing activities |
$ |
(45,066 |
) |
|
|
$ |
(37,217 |
) |
|
$ |
(10,423 |
) |
|
|
$ |
135,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TCE per ship per
day |
$ |
16,547 |
|
|
|
$ |
17,430 |
|
|
$ |
17,155 |
|
|
|
$ |
19,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses per
ship per day |
$ |
7,568 |
|
|
|
$ |
7,474 |
|
|
$ |
7,755 |
|
|
|
$ |
7,640 |
|
Vessel overhead costs
per ship per day |
$ |
1,041 |
|
|
|
$ |
1,085 |
|
|
$ |
1,125 |
|
|
|
$ |
1,126 |
|
|
|
8,609 |
|
|
|
|
8,559 |
|
|
|
8,880 |
|
|
|
|
8,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLEET
DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
vessels during period |
|
64.0 |
|
|
|
|
63.7 |
|
|
|
64.4 |
|
|
|
|
61.9 |
|
Number of vessels at
end of period |
|
64.0 |
|
|
|
|
64.0 |
|
|
|
64.0 |
|
|
|
|
64.0 |
|
Average age of fleet at
end of period |
Years |
8.0 |
|
|
|
|
7.6 |
|
|
|
8.0 |
|
|
|
|
7.6 |
|
Dwt at end of period
(in thousands) |
|
6,936 |
|
|
|
|
7,125 |
|
|
|
6,936 |
|
|
|
|
7,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time charter employment
- fixed rate |
Days |
1,987 |
|
|
|
|
2,258 |
|
|
|
6,940 |
|
|
|
|
6,610 |
|
Time charter employment
- variable rate |
Days |
1,869 |
|
|
|
|
1,670 |
|
|
|
5,176 |
|
|
|
|
4,547 |
|
Period employment (coa)
at market rates |
Days |
276 |
|
|
|
|
276 |
|
|
|
991 |
|
|
|
|
817 |
|
Spot voyage employment
at market rates |
Days |
1,530 |
|
|
|
|
1,396 |
|
|
|
3,793 |
|
|
|
|
4,307 |
|
Total operating days |
|
5,662 |
|
|
|
|
5,600 |
|
|
|
16,900 |
|
|
|
|
16,281 |
|
Total available days |
|
5,888 |
|
|
|
|
5,861 |
|
|
|
17,572 |
|
|
|
|
16,896 |
|
Utilization |
|
96.2 |
% |
|
|
|
95.5 |
% |
|
|
96.2 |
% |
|
|
|
96.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures |
Reconciliation of Net (loss) income to
Adjusted EBITDA |
|
|
Three months ended |
|
|
Nine months ended |
|
|
September 30 |
|
|
September 30 |
|
|
2018 |
|
|
|
2017 |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Tsakos Energy Navigation Limited |
|
(14,588 |
) |
|
|
|
(3,358 |
) |
|
|
(36,053 |
) |
|
|
|
17,695 |
|
Depreciation and
amortization |
|
37,141 |
|
|
|
|
35,914 |
|
|
|
109,573 |
|
|
|
|
102,502 |
|
Interest Expense |
|
17,855 |
|
|
|
|
15,409 |
|
|
|
50,583 |
|
|
|
|
43,147 |
|
Loss on sale of
vessel |
|
- |
|
|
|
|
- |
|
|
|
364 |
|
|
|
|
- |
|
Adjusted EBITDA |
$ |
40,408 |
|
|
|
$ |
47,965 |
|
|
$ |
124,467 |
|
|
|
$ |
163,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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: |
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(i) TCE
which represents voyage revenues less voyage expenses divided by
the number of operating days less 254 days lost as a result of
calculating revenue on a loading to discharge basis for the first
nine months half of 2018 and 66 days for the third quarter of
2018. |
(ii)
Vessel overhead costs are General & Administrative expenses,
which also include Management fees, Stock compensation expense and
Management incentive award. |
(iii) Operating expenses per ship per day which exclude
Management fees, General & Administrative expenses, Stock
compensation expense and Management incentive award. |
(iv) EBITDA. See above for reconciliation to net (loss)
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. |
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The
Company does not incur corporation tax. |
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Tsakos Energy Navigation (NYSE:TNP)
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