$66m EBITDA in Profitable Fourth Quarter
Before Non-Cash Impairment
TEN, Ltd. (TEN) (NYSE: TNP) (the “Company”) reports results
(unaudited) for the fourth quarter and year ended December 31,
2018.
FOURTH QUARTER 2018
RESULTSIn the fourth quarter of 2018, TEN Ltd.
generated positive operating income of $26.3 million and net income
of $2.8 million, before non-cash impairment charges, and including
a $10.8 million non-cash bunker hedging charge that has already
reversed as described below.
Total gross revenues increased by 14.3% to
$153.8 million compared to the fourth quarter of 2017 due to a
much-improved crude tanker market as global oil demand continued to
strengthen and oil supplies, especially from the U.S., increased
while the additions of new vessels to the global fleet slowed
down.
As a result, 33 tankers operating on
spot-related charters during the quarter, including vessels on
profit-sharing contracts, were able to generate increased freight
income. In particular, eight suezmaxes on such profit-sharing
charters earned twice the amount of the agreed minimum hire-rate.
These factors helped increase the average daily TCE per vessel in
the fleet by 17% to $21,439 in the quarter.
In addition, the two LNG carriers also earned
higher rates in the fourth quarter of 2018 than in the 2017 fourth
quarter. Since the beginning of 2019, the hire-rates for our LNG
vessels have increased substantially.
Adjusted EBITDA amounted to $66.3 million, 25.3%
higher than the 2017 fourth quarter, with almost all vessels
generating positive adjusted EBITDA. Compared to the third quarter
of 2018, the fleet generated close to $26 million more adjusted
EBITDA, a 64% increase.
In line with the Company’s operating model,
vessels on fixed term time charters alone continued to generate
enough gross revenue to cover the entire fleet’s operating,
overhead and cash finance expenses while the spot vessels added a
further $22 million revenue, net of voyage expenses.
Depreciation and amortization costs were at
$37.2 million, a small increase over the fourth quarter of 2017
mainly due to higher dry-docking amortization.
Fleet operating expenses, despite a larger
number of vessels during the quarter, fell by 2.5% compared with
the fourth quarter of 2017 assisted by tight cost controls, lower
insurance and lubricant expenses and a strengthening of the U.S.
dollar. On a per vessel basis, such expenses translate to $7,715
per day, a decrease from the fourth quarter of 2017.
Finance and interest costs were at $26.2
million, partly as a result of a $10.8 million non-cash decrease in
valuations of bunker hedges due to a sudden decline in oil prices
at the very end of the year, offsetting on the bottom line the
actual cash gains of about $10.0 million earned in 2018 on these
hedges. In addition, interest rates increased in the year, but were
offset to an extent by the impact of a rapidly declining
outstanding debt.
2018 YEAR
RESULTSIn 2018, TEN produced total voyage
revenues of $529.9 million, slightly higher than in 2017. The first
three quarters of the year saw a difficult market with healthier
rates evident only in the fourth quarter, as the market at last
benefited from a positive turn-around instigated by a fast
declining orderbook, increased scrapping and a surge in US oil
exports which in large part nullified the renewed production cuts
by OPEC.
In this challenging and unpredictable
environment and as a result of TEN’s solid employment strategy, the
Company generated $38.2 million in operating income, before
non-cash charges, and adjusted EBITDA of $190.7 million.
The average daily time charter equivalent rate
per vessel per day was $18,226 with fleet utilization again at a
high 96.2% as a result of the Company’s time-charter policy and the
excellent and long-standing relationship with many high-end
charterers across the globe.
Average daily operating expenses per vessel in
2018 remained at about the same level as in 2017 at $7,745 per day.
Vessel overhead costs (mainly G&A expenses and management fees)
per ship per day averaged $1,152, similar to that of 2017 despite
the higher number of vessels in the fleet.
Interest and finance costs increased to $76.8
million due to higher interest rates and a decline in non-cash
bunker hedge valuations of $10.8 million that have since been
reversed.
TEN continues to retain strong cash liquidity
with $220.5 million on the balance sheet at December 31, 2018.
Net debt to capital at the end of 2018 was at a
healthy 47.9%. In 2018, total debt was reduced by $156 million, the
equivalent of $2.0 extra value per share.
Dividend – Common SharesThe
Company will pay a dividend of $0.05 per common share on May 30,
2019 to shareholders of record as of May 24, 2019. Inclusive of
this payment, TEN has paid $10.81 in total dividends since its
listing on the NYSE in 2002.
Corporate StrategyThe Company
continues its long-term repeat employment model having concluded
its 30th time charter in the last 15 months. Inclusive of the two
recently announced LNG fixtures, which are expected to generate
cash inflows of about $60 million, the minimum contracted revenue
backlog of TEN currently stands at $1.2 billion. The nine vessels
with time charters that expire in 2019 are already in negotiations
for extensions at higher rates, reflecting today’s improved market
prospects.
Five vessels, the Silia T, the Bosporos, the
Byzantion, the Salamina and the Selini have incurred non-cash
impairment charges totaling $66 million as they have become
potential candidates for sale. This impairment will reduce by $1.0
million TEN’s future quarterly depreciation charges.
In addition to replacement tonnage, management
continues to actively explore investments in the LNG and shuttle
tanker space aiming, as always, at industrial opportunities with
long accretive charters. In 2019 four such contracts for aframax
and suezmax tankers to major end-users have been concluded.
“With global oil consumption on the rise, driven
by Chinese and Indian demand, and the US becoming a leading force
in global crude oil exports, freight rates should maintain their
upward trajectory by the second half of 2019 and beyond. The low
orderbook and the high scrapping levels spurred, to a large extent
by the upcoming IMO 2020 regulations, will further support the
market to attain higher profitability. As a result, vessels in spot
and profit-sharing charters are expected to capture the firming
freight market and solidify further the Company’s bottom line,” Mr.
George Saroglou, COO of TEN, commented. “The increased appetite of
major oil companies for long-term charters in the crude and product
sectors, is a strong indicator of a sustainable improvement in
market conditions going forward,” Mr Saroglou concluded.
TEN’s Growth Program
# |
Name |
Type |
Delivery |
Status |
Employment |
1 |
HN5033 |
Aframax |
2019 |
Under Construction |
Yes |
2 |
HN5036 |
Aframax |
2020 |
Under Construction |
Yes |
3 |
HN8041 |
Suezmax |
2020 |
Under Construction |
Yes |
4 |
HN8042 |
Suezmax |
2020 |
Under Construction |
Yes |
|
|
|
|
|
|
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.
ABOUT TSAKOS ENERGY
NAVIGATIONTEN, founded in 1993 and celebrating this year
26 years as a public company, is one of the first and most
established public shipping companies in the world. TEN’s
diversified energy fleet currently consists of 68 double-hull
vessels, including two aframax and two suezmax tankers under
construction, constituting a mix of crude tankers, product tankers
and LNG carriers, totaling 7.5 million dwt. Of the proforma fleet
today, 48 vessels trade in crude, 15 in products, three are shuttle
tankers and two are LNG carriers.
For further information please contact:
CompanyTsakos Energy Navigation Ltd. George
Saroglou, COO+30210 94 07 710gsaroglou@tenn.gr
Investor Relations / MediaCapital Link,
Inc.Nicolas Bornozis Markella Kara+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 |
|
|
Year ended |
|
|
December 31 (unaudited) |
|
|
December 31 (unaudited) |
STATEMENT OF
OPERATIONS DATA |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Voyage
revenues |
$ |
153,755 |
|
|
$ |
134,517 |
|
|
$ |
529,879 |
|
|
$ |
529,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses |
|
34,790 |
|
|
|
27,873 |
|
|
|
125,350 |
|
|
|
113,403 |
|
Charter hire
expense |
|
2,719 |
|
|
|
311 |
|
|
|
10,822 |
|
|
|
311 |
|
Vessel operating
expenses |
|
45,428 |
|
|
|
46,579 |
|
|
|
181,693 |
|
|
|
173,864 |
|
Depreciation and
amortization |
|
37,225 |
|
|
|
36,518 |
|
|
|
146,798 |
|
|
|
139,020 |
|
General and
administrative expenses |
|
7,261 |
|
|
|
7,300 |
|
|
|
27,032 |
|
|
|
26,324 |
|
Total expenses |
|
127,423 |
|
|
|
118,581 |
|
|
|
491,695 |
|
|
|
452,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
26,332 |
|
|
|
15,936 |
|
|
|
38,184 |
|
|
|
76,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and finance
costs, net |
|
(26,226 |
) |
|
|
(13,693 |
) |
|
|
(76,809 |
) |
|
|
(56,839 |
) |
Interest income |
|
832 |
|
|
|
268 |
|
|
|
2,507 |
|
|
|
1,082 |
|
Other, net |
|
1,730 |
|
|
|
598 |
|
|
|
1,405 |
|
|
|
1,464 |
|
Total other expenses,
net |
|
(23,664 |
) |
|
|
(12,827 |
) |
|
|
(72,897 |
) |
|
|
(54,293 |
) |
Net income (loss) |
|
2,668 |
|
|
|
3,109 |
|
|
|
(34,713 |
) |
|
|
21,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net
loss (income) attributable to the noncontrolling interest |
|
148 |
|
|
|
(413 |
) |
|
|
1,839 |
|
|
|
(1,573 |
) |
Net income
(loss) attributable to Tsakos Energy Navigation
Limited |
$ |
2,816 |
|
|
|
2,696 |
|
|
$ |
(32,874 |
) |
|
$ |
20,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of
vessels |
|
- |
|
|
|
(3,860 |
) |
|
|
(364 |
) |
|
|
(3,860 |
) |
Vessel impairment
charge |
|
(65,965 |
) |
|
|
(8,922 |
) |
|
|
(65,965 |
) |
|
|
(8,922 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Effect of preferred
dividends |
|
(10,204 |
) |
|
|
(6,642 |
) |
|
|
(33,763 |
) |
|
|
(23,776 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to common stockholders of Tsakos Energy Navigation
Limited |
$ |
(73,353 |
) |
|
$ |
(16,728 |
) |
|
$ |
(132,966 |
) |
|
$ |
(16,164 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic
and diluted |
$ |
(0.84 |
) |
|
$ |
(0.19 |
) |
|
$ |
(1.53 |
) |
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares, basic and diluted |
|
87,604,645 |
|
|
|
85,884,192 |
|
|
|
87,111,636 |
|
|
|
84,713,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET
DATA |
|
December 31 |
|
|
December 31 |
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
Cash |
|
220,526 |
|
|
|
202,673 |
|
|
|
|
|
|
|
Other assets |
|
138,924 |
|
|
|
140,909 |
|
|
|
|
|
|
|
Vessels, net |
|
2,829,447 |
|
|
|
3,028,404 |
|
|
|
|
|
|
|
Advances for vessels
under construction |
|
16,161 |
|
|
|
1,650 |
|
|
|
|
|
|
|
Total assets |
$ |
3,205,058 |
|
|
$ |
3,373,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of deferred
finance costs |
|
1,595,601 |
|
|
|
1,751,869 |
|
|
|
|
|
|
|
Other liabilities |
|
102,680 |
|
|
|
113,629 |
|
|
|
|
|
|
|
Stockholders'
equity |
|
1,506,777 |
|
|
|
1,508,138 |
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
3,205,058 |
|
|
$ |
3,373,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Year ended |
OTHER FINANCIAL
DATA |
|
December 31 |
|
|
December 31 |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
Net cash from operating
activities |
$ |
39,000 |
|
|
$ |
31,259 |
|
|
$ |
73,945 |
|
|
$ |
170,827 |
|
Net cash (used in)
provided by investing activities |
$ |
(5,552 |
) |
|
$ |
15,522 |
|
|
$ |
(179 |
) |
|
$ |
(241,797 |
) |
Net cash (used in)
provided by financing activities |
$ |
(45,490 |
) |
|
$ |
(69,993 |
) |
|
$ |
(55,913 |
) |
|
$ |
75,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TCE per ship per
day |
$ |
21,439 |
|
|
$ |
18,343 |
|
|
$ |
18,226 |
|
|
$ |
18,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses per
ship per day |
$ |
7,715 |
|
|
$ |
7,823 |
|
|
$ |
7,745 |
|
|
$ |
7,688 |
|
Vessel overhead costs
per ship per day |
$ |
1,233 |
|
|
$ |
1,226 |
|
|
$ |
1,152 |
|
|
$ |
1,152 |
|
|
|
8,948 |
|
|
|
9,049 |
|
|
|
8,897 |
|
|
|
8,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FLEET
DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
vessels during period |
|
64.0 |
|
|
|
62.7 |
|
|
|
64.3 |
|
|
|
62.6 |
|
Number of vessels at
end of period |
|
64.0 |
|
|
|
65.0 |
|
|
|
64.0 |
|
|
|
65.0 |
|
Average age of fleet at
end of period |
Years |
8.2 |
|
|
|
7.7 |
|
|
|
8.2 |
|
|
|
7.7 |
|
Dwt at end of period
(in thousands) |
|
6,936 |
|
|
|
7,237 |
|
|
|
6,936 |
|
|
|
7,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Time charter employment
- fixed rate |
Days |
2,660 |
|
|
|
2,499 |
|
|
|
9,600 |
|
|
|
9,109 |
|
Time charter employment
- variable rate |
Days |
1,288 |
|
|
|
1,810 |
|
|
|
6,464 |
|
|
|
6,357 |
|
Period employment (coa)
at market rates |
Days |
224 |
|
|
|
276 |
|
|
|
1,215 |
|
|
|
1,093 |
|
Spot voyage employment
at market rates |
Days |
1,501 |
|
|
|
1,229 |
|
|
|
5,294 |
|
|
|
5,536 |
|
Total
operating days |
|
5,673 |
|
|
|
5,814 |
|
|
|
22,573 |
|
|
|
22,095 |
|
Total
available days |
|
5,888 |
|
|
|
5,954 |
|
|
|
23,460 |
|
|
|
22,850 |
|
Utilization |
|
96.3 |
% |
|
|
97.6 |
% |
|
|
96.2 |
% |
|
|
96.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures |
Reconciliation of Net income (loss) to
Adjusted EBITDA |
|
|
|
|
|
|
|
|
Three months ended |
|
|
Year ended |
|
|
December 31 |
|
|
December 31 |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Tsakos Energy Navigation Limited |
|
2,816 |
|
|
|
2,696 |
|
|
|
(32,874 |
) |
|
|
20,394 |
|
Depreciation and
amortization |
|
37,225 |
|
|
|
36,518 |
|
|
|
146,798 |
|
|
|
139,020 |
|
Interest Expense |
|
26,226 |
|
|
|
13,693 |
|
|
|
76,809 |
|
|
|
56,839 |
|
Adjusted EBITDA |
$ |
66,267 |
|
|
$ |
52,907 |
|
|
$ |
190,733 |
|
|
$ |
216,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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: |
|
(i) TCE
which represents voyage revenues less voyage expenses divided by
the number of operating days less 378 days lost as a result of
calculating revenue on a loading to discharge basis for the year
ended December 31, 2018 and 124 days for the fourth 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 income
(loss). |
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. |
|
The
Company does not incur corporation tax. |
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