News Content
Tsakos Energy Navigation Reports Nine Month and Third Quarter Financial Results
Tsakos Energy navigation Limited yesterday 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.
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.
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