ATHENS, GREECE--(Marketwire - Mar 16, 2012) - Tsakos Energy Navigation Limited (
2011 HIGHLIGHTS
- Voyage revenues of $395.2 million
- Combined adjusted EBITDA and vessel sales proceeds at $146.9 million
- Daily operating costs per vessel further reduced in 2011
- $1.7 million in operating income (adjusted to exclude impairment charges)
- Impairment charges of $39.4 million relating to two VLCCs considered as held-for-sale
- Net loss $89.5 million after impairment of $39.4 million
- Delivery and long term charter for 11 and 12 years with profit-share for two new building suezmaxes
- 15-year contracts and construction of two suezmax DP2 shuttle tankers
- Accretive LNG re-charter and new LNG opportunities pursued
- 16 new charters with major end-users
- Significant outperformance of 2011 spot market indices due to Company's T/C strategy
- 37 vessels out of a pro-forma fleet of 50 under secured employment
- Maintained strong liquidity of $185 million
- Constant quarterly dividend payments. Total dividends paid since 2002 NYSE listing of $9.225 per share (approx. $354 million distributed)
- Fleet utilization of 97%
- Sale of two tankers for a total net gain of $5.0 million
- Fleet average age 7.0 years
Tsakos Energy Navigation Limited (TEN or the "Company") (
FULL YEAR 2011 RESULTS
Revenues, net of voyage expenses and commissions, in 2011, totaled $253.7 million in a very difficult market environment. In the same period, TEN operated an average of 47.8 vessels. The average daily time charter equivalent rate per vessel was $16,047. Daily operating expenses per vessel were $7,606, a decrease of 0.5% from 2011.
The combined daily operating expenses and overhead expenses (mainly management fees and general and administrative expenses) per vessel have effectively remained stable over the past year due to cost reduction efforts and disposal of older vessels.
Interest and finance costs fell significantly in 2011 to $53.6 million, due to favorable non-hedging interest rate swap valuations and cash received on bunker swaps amounting to $6.4 million. Total interest paid on all interest rate swaps amounted to $34.8 million. Over half these swaps are due to expire in the second half of 2012.
Within the year, 16 new charters (including profit sharing) were concluded with minimum gross revenues of $1.1 billion and average duration of 3.1 years. Two vessels, the 1991 and 2001 built aframaxes Vergina II and Opal Queen were sold for a capital gain of $5.0 million which released $18.2 million cash after debt repayment. Savings from the sale of the Vergina II have been estimated at $4 million in operational, financing and (scheduled) dry-docking costs during 2011.
The VLCCs La Madrina (1993-built) and La Prudencia (1994-built), after a long period of profitable fixed employment incurred combined losses of approximately $21 million (before the impairment charge) in 2011, much due to lengthy repositioning voyages in the year. Due to the continuous poor market and lack of economically viable opportunities for the foreseeable future for older VLCCs, it was decided that these two vessels should be sold and action has been taken accordingly from December. As a consequence, the vessels have incurred impairment charges amounting to $39.4 million in total. The vessels are accounted for as held-for-sale in the balance-sheet.
In 2011, an adjusted net loss before impairment of $50.1 million, or $1.09 per diluted share was incurred. Much of this loss may be accountable to the trading performance of the two VLCCs and to the interest rate swap interest paid in the year. The disposal of these vessels and the expiration of these swaps starting in the latter part of the year will contribute significantly to a restoration of positive results. Including the impairment, a net loss of $89.5 million was incurred, or $1.94 per diluted share.
Cash flow from earnings before depreciation, amortization and finance costs and before gains on vessel sales and impairment ("Adjusted EBITDA") was $104.4 million (see attached Selected Financial and Other Data). Net proceeds before debt repayment from two vessels sold in the period totaled $42.5 million, bringing the combined total of EBITDA and vessel sales proceeds to $146.9 million for the year.
FOURTH QUARTER RESULTS
Revenues, net of voyage expenses and commissions, were $61.9 million in the fourth quarter of 2011. The freight market remained difficult despite some short-lived increases in suezmax and aframax rates in the Mediterranean, which at least contributed to better results than achieved in the third quarter of 2011. Tanker oversupply and high bunker costs for spot vessels continued to dampen the overall market.
On average, TEN's fleet had 48.0 vessels during the quarter. Fleet utilization remained relatively high at nearly 96%. The average daily time charter equivalent rate per vessel was $15,749. Rates for all sectors suffered decreases compared to rates achieved in the fourth quarter of 2010 except for the smaller product carriers and the LNG carrier which enjoyed an increase in August in its hire rate. The quarterly results were again affected by the underemployment of the two VLCCs mentioned above as well as the poor Aframax market (apart from the Mediterranean area).
Average daily operating costs per vessel were $7,438, slightly down from the third quarter of 2011. G&A expenses increased mainly due to one-off expenditure on new systems applications and projects. There was no management incentive award announced at the end of the quarter.
Interest and finance costs in the fourth quarter amounted to $14.7 million, net of cash received on bunker swaps of $1.7 million.
The fourth quarter of 2011 ended in a net loss before impairment of $17.2 million or $0.37 per share. Including impairment, the net loss was $56.6 million or $1.23 per share.
TEN's liquidity at the end of the fourth quarter remained strong. Total cash and liquid investments amounted to $184 million. Total indebtedness, despite new debt relating to the delivery of two new vessels (Spyros K and Dimitris P), fell by $47 million during 2011. Towards the end of the year debt finance (including pre-delivery finance) was arranged for the first of the two suezmax DP2 shuttle tankers to be delivered in early 2013. Despite the poor results generated in this most difficult market, apart from the two VLCCs mentioned above only three aframaxes did not generate positive EBITDA. Given our strong cash reserves and supported by our long standing chartering and banking relationships, we remain able to consider any attractive opportunity that might arise in the challenging conditions the tanker sector faces currently.
QUARTERLY DIVIDEND
As announced on January 25, 2012, the Company's Board of Directors declared a quarterly dividend of $0.15 per share of common stock outstanding paid on February 14, to shareholders of record as of February 9, 2012. Inclusive of this distribution, TEN has distributed in total $9.225 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 of November 14, 2007.
SUBSEQUENT EVENTS
Secured charters for one aframax and one handy product carrier to first class international end users for one and two years respectively with profit-sharing provisions for the aframax vessel. Total gross revenue from these charters is expected to be a minimum of $15 million over the corresponding charter periods.
FLEET STRATEGY & OUTLOOK
2011 continued to be a challenging year for tanker companies and in particular those with significant crude capacity as the supply of tonnage out-weighted demand and notable improvements in worldwide oil consumption were not reflected in rates across the relevant sectors. The vessel supply glut put the brakes on the various charter market spikes that occurred and prevented a sustainable positive run that would have otherwise occurred. Improvements in product trades on the other hand were more evident throughout the year, primarily due to smoother supply-demand fundamentals and refinery cuts in the United States that provided some cushion to owners with product tankers.
In this environment TEN maintained positive operations for the majority of its young fleet. The main reasons for suffering a loss have been the repositioning of the two VLCCs and interest rate swaps. Both these factors will be substantially mitigated going forward with the disposal of the impaired vessels and the expiration of a large number of swaps in 2012.
Throughout the year TEN continued to secure attractive employment for its vessels and took advantage of various opportunities that were available from its international chartering clientele. TEN was successful in fixing 16 vessels (nine crude, six products and one LNG) bringing the total number of vessels under contract, including profit sharing and pools, to 37. In addition, in June of 2011 the Company took advantage of the strength of the LNG market and fixed its 2007-built Neo Energy for four years at a rate more than double its all-in breakeven. In total, TEN's chartering activity in 2011 is expected to add gross TCE revenues at least to $490 million over their corresponding charter periods, bringing close to $1.1 billion the total fixed revenue taken into account the charters of the two most recent aframax and handy charters as well as the 15-year fixtures of the two shuttle tankers under construction.
Overall, vessel operations, excluding two of the eldest VLCCs, had a respectable performance during this very challenging year compared to fleets operating primarily in the spot market. The performance of these two VLCCs, together with interest paid on those interest rate swap agreements that the Company had entered into in the past, were significant contributors to the net losses experienced in 2011. The prompt disposal of these vessels and the scheduled expiry of half the interest rate swaps in the latter part of the year are expected to have a beneficial impact on the Company's future results.
Going forward, TEN will continue to seek attractive period charters for its vessels and take advantage of increased charterers' appetite for longer fixtures for quality tonnage. Time charters with profit-share continues to be a favorite option as the Company remains optimistic of market improvements over the medium to long term.
Cost control and efficient vessel management was, and remains, at the forefront of the Company's agenda with special attention on vessel operating expenses without however jeopardizing the safety of crew and vessels. Due to this policy, and again largely thanks to the efforts of Tsakos Columbia ShipManagement ("TCM"), year-on-year vessel operating expenses experienced a marginal decline while vessel utilization again exceeded the 97.0% mark.
In terms of growth, TEN will continue to seek opportunities in all sectors it operates so as to maintain the young and modern profile of its fleet while at the same time solidifying its presence in all major tanker sectors across the globe. Management believes that this weak market acts in favor of healthy cash-rich companies like TEN as distress situations are recently becoming more apparent and could enable owners, with longer term aspirations, to accumulate tonnage to further enhance their stronghold in the market.
An area that TEN has identified as one of immediate attention is LNG, as the supply-demand fundamentals are well placed to facilitate a robust involvement for the foreseeable future. Having the benefit of an early mover advantage coupled with the experience gained by operating our LNG carrier with high quality clients worldwide, management believes that it is well suited to expand in this high-end demanding and promising sector. TEN is actively investigating opportunities and ways to leverage its exposure and is in talks with both yards, charterers and others to gauge interest for enhanced collaborations and structures that would augment TEN's presence in this lucrative sector without adding strains on the Company's balance sheet. Should such exploratory discussions advance, management hopes to be in position to inform its shareholders by the end of the second quarter on potential strategic initiatives that could compliment its current LNG exposure.
Another area of interest was and remains the Shuttle tanker market. Management intends to pursue opportunities in this developing sector while leveraging its long established presence in one of the more active areas for such tonnage of late, that of Brazil. In addition, the Company will continue to examine various other opportunities that may become available in the wider offshore sector and will determine on a case-by-case-basis on whether such opportunities merit consideration and fit the Company's profile as an all-round energy provider.
Mr. Nikolas P. Tsakos, President and CEO of TEN stated, "TEN is weathering the storm with a sound base, efficient operations, healthy balance sheet as well as a flexible employment structure that lessens the impact of market gyrations while providing significant uplift should rates firm. We believe our preemptive actions to sell older vessels, tight cost control coupled with a dynamic LNG market, an area where we attained a first mover advantage and plan to expand, will make TEN stronger and provide further support for the continuation of a healthy dividend policy."
ABOUT TSAKOS ENERGY NAVIGATION
To date, TEN's pro forma fleet consists of 50 double-hull vessels of 5.4 million dwt that includes two DP2 suezmax shuttle tankers currently under construction totaling 314,000 dwt. TEN's balanced fleet profile is reflected in 23 crude tankers ranging from VLCCs to aframaxes and 26 product carriers ranging from aframaxes to handysize and one LNG carrier.
TEN's employment profile - Operating fleet (as of March 15, 2012):
| Type of Employment | Vessels |
| Period Employment - Fixed, fixed w/profit share & min max (*) | 29 |
| Pool - market related | 6 |
| Spot - market related | 13 |
(*) Excluding the two shuttle tanker newbuildings that will enter 15 year charters at delivery
TEN's current newbuilding program:
| Suezmax | DWT | Hull Type / Design | Expected Delivery |
| 1. Suezmax DP2 | 157,000 | DH | Q1 2013 |
| 2. Suezmax DP2 | 157,000 | DH | Q2 2013 |
| DH: Double Hull |
CONFERENCE CALL AND WEBCAST
Today, 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 (Standard International Dial In). Please quote "Tsakos" to the operator.
A telephonic replay of the conference call will be available until March 23, 2012 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' 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.
| 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 | Year ended | ||||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| STATEMENT OF INCOME DATA | 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Voyage revenues | $ | 100,795 | $ | 94,966 | $ | 395,162 | $ | 408,006 | |||||||||
| Commissions | 3,817 | 2,246 | 14,290 | 13,837 | |||||||||||||
| Voyage expenses | 35,066 | 18,313 | 127,156 | 85,813 | |||||||||||||
| Charter hire expense | - | - | - | 1,905 | |||||||||||||
| Vessel operating expenses | 32,172 | 31,021 | 129,884 | 126,022 | |||||||||||||
| Depreciation | 26,105 | 25,037 | 101,050 | 92,889 | |||||||||||||
| Amortization of deferred dry-docking costs | 1,305 | 1,021 | 4,878 | 4,553 | |||||||||||||
| Management fees | 3,900 | 3,825 | 15,598 | 14,143 | |||||||||||||
| General and administrative expenses | 1,288 | 923 | 4,292 | 3,627 | |||||||||||||
| Management incentive award | - | 425 | - | 425 | |||||||||||||
| Stock compensation expense | 47 | (206 | ) | 820 | 1,068 | ||||||||||||
| Foreign currency (gains)/losses | (42 | ) | 328 | 458 | (378 | ) | |||||||||||
| Net gain on sale of vessels | - | - | (5,001 | ) | (19,670 | ) | |||||||||||
| 103,658 | 82,933 | 393,425 | 324,234 | ||||||||||||||
| (2,863 | ) | 12,033 | 1,737 | 83,772 | |||||||||||||
| Vessel impairment charge | (39,434 | ) | (3,077 | ) | (39,434 | ) | (3,077 | ) | |||||||||
| Interest and finance costs, net | (14,699 | ) | (12,099 | ) | (53,571 | ) | (62,283 | ) | |||||||||
| Interest income | 749 | 611 | 2,715 | 2,626 | |||||||||||||
| Other, net | (193 | ) | 81 | (397 | ) | (3 | ) | ||||||||||
| Total other expenses, net | (14,143 | ) | (11,407 | ) | (51,253 | ) | (59,660 | ) | |||||||||
| Net (loss)/income | (56,440 | ) | (2,451 | ) | (88,950 | ) | 21,035 | ||||||||||
| Less: Net income attributable to the noncontrolling interest | (151 | ) | (184 | ) | (546 | ) | (1,267 | ) | |||||||||
| Net (loss)/income attributable to Tsakos Energy Navigation Limited | $ | (56,591 | ) | $ | (2,635 | ) | $ | (89,496 | ) | $ | 19,768 | ||||||
| (Loss)/Earnings per share, basic | $ | (1.23 | ) | $ | (0.06 | ) | $ | (1.94 | ) | $ | 0.50 | ||||||
| (Loss)/Earnings per share, diluted | $ | (1.23 | ) | $ | (0.06 | ) | $ | (1.94 | ) | $ | 0.50 | ||||||
| Weighted average number of shares outstanding | |||||||||||||||||
| Basic | 46,155,177 | 43,241,145 | 46,118,534 | 39,235,601 | |||||||||||||
| Diluted | 46,155,177 | 43,241,145 | 46,118,534 | 39,601,678 | |||||||||||||
| BALANCE SHEET DATA | December 31 | December 31 | |||||||
| 2011 | 2010 | ||||||||
| Cash and cash equivalents | 175,708 | 276,637 | |||||||
| Current assets, including cash | 287,633 | 367,453 | |||||||
| Investments | 1,000 | 1,000 | |||||||
| Financial instruments, net of current portion | - | 498 | |||||||
| Advances for vessels under construction | 37,937 | 81,882 | |||||||
| Vessels | 2,642,773 | 2,638,550 | |||||||
| Accumulated Depreciation | (445,689 | ) | (403,485 | ) | |||||
| Vessels' Net Book Value | 2,197,084 | 2,235,065 | |||||||
| Deferred charges, net | 14,708 | 16,362 | |||||||
| Total assets | $ | 2,538,362 | $ | 2,702,260 | |||||
| Current portion of long-term debt | 188,087 | 133,819 | |||||||
| Current liabilities, including current portion of long-term debt | 270,803 | 217,244 | |||||||
| Long-term debt, net of current portion | 1,327,576 | 1,428,648 | |||||||
| Financial instruments, net of current portion | 17,800 | 36,438 | |||||||
| Total stockholders' equity | 922,183 | 1,019,930 | |||||||
| Total liabilities and stockholders' equity | $ | 2,538,362 | $ | 2,702,260 | |||||
| Three months ended | Year ended | ||||||||||||||||||
| OTHER FINANCIAL DATA | December 31 | December 31 | |||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
| Net cash from operating activities | $ | 4,938 | $ | 15,824 | $ | 45,587 | $ | 83,327 | |||||||||||
| Net cash used in investing activities | $ | (19,653 | ) | $ | (121,775 | ) | $ | (69,187 | ) | $ | (240,115 | ) | |||||||
| Net cash (used in)/from financing activities | $ | (40,619 | ) | $ | 132,957 | $ | (77,329 | ) | $ | 137,244 | |||||||||
| TCE per ship per day | $ | 15,749 | $ | 18,287 | $ | 16,047 | $ | 19,825 | |||||||||||
| Operating expenses per ship per day | $ | 7,438 | $ | 7,284 | $ | 7,606 | $ | 7,647 | |||||||||||
| Vessel overhead costs per ship per day | $ | 1,185 | $ | 1,142 | $ | 1,188 | $ | 1,144 | |||||||||||
| 8,623 | 8,426 | 8,794 | 8,791 | ||||||||||||||||
| FLEET DATA | |||||||||||||||||||
| Average number of vessels during period | 48.0 | 47.3 | 47.8 | 46.1 | |||||||||||||||
| Number of vessels at end of period | 48.0 | 48.0 | 48.0 | 48.0 | |||||||||||||||
| Average age of fleet at end of period | Years | 7.0 | 6.8 | 7.0 | 6.8 | ||||||||||||||
| Dwt at end of period (in thousands) | 5,073 | 4,962 | 5,073 | 4,962 | |||||||||||||||
| Time charter employment - fixed rate | Days | 1,126 | 826 | 3,666 | 3,083 | ||||||||||||||
| Time charter employment - variable rate | Days | 1,384 | 1,858 | 6,576 | 7,463 | ||||||||||||||
| Period employment (pool and coa) at market rates | Days | 505 | 700 | 2,497 | 3,124 | ||||||||||||||
| Spot voyage employment at market rates | Days | 1,217 | 858 | 4,190 | 2,766 | ||||||||||||||
| Total operating days | 4,232 | 4,242 | 16,929 | 16,436 | |||||||||||||||
| Total available days | 4,416 | 4,349 | 17,431 | 16,836 | |||||||||||||||
| Utilization | 95.8 | % | 97.5 | % | 97.1 | % | 97.6 | % | |||||||||||
| 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, Management incentive award and Stock compensation expense. |
| Adjusted EBITDA (earnings before interest, taxes, impairment, net gain on sale of vessels, depreciation and amortization) is a non-GAAP metric used within the financial community for evaluating and comparing the performance of companies. |
| The Company does not incur corporation tax for the purposes of calculating Adjusted EBITDA. |
Contact Information:
Investor Relations / Media
Capital Link, Inc.
Nicolas Bornozis
+212 661 7566
ten@capitallink.com