TNP Tsakos Energy Navigation Ltd

TEN, Ltd. (TEN) (NYSE: TNP) (the “Company”) reports results (unaudited) for the fourth quarter and the year ended December 31, 2019.

2019 YEAR RESULTSIn 2019, TEN produced profits of $42.7 million before non-cash impairment charges and positive net income of $15.1 million, a $76 million turnaround from 2018.  Such improvement in profitability was primarily due to the very strong freight market that arose in the fourth quarter of the year, and still the case today, and resulted in voyage revenues reaching $597.5 million.

Operating income reached $113.5 million compared to $37.8 million in 2018, both before non-cash impairment charges, a threefold increase.

Adjusted EBITDA totaled $257 million in 2019, $66.2 million more than in 2018, a 35% increase.

The average daily time charter equivalent rate per vessel climbed to almost $21,400 with fleet utilization again at a high 96.2% as a result of the Company’s time-charter policy and the continued excellent relationship with our first-class clients, with many of the contracts renewed in the year on attractive terms. 

Excluding impairment charges, in nearly all expense categories, the numbers were almost the same as in 2018, except for depreciation which decreased due to the sale of vessels and impairments at the end of 2018. Average daily operating expenses remained stable at about $7,700. Vessel overhead costs per ship per day averaged $1,182, similar to 2018.

The outstanding loan balance decreased to $1.545 billion from $1.607 billion at the end of 2018, resulting to a $2.0 million interest and financing savings in 2019. 

FOURTH QUARTER 2019 RESULTSIn the fourth quarter of 2019, TEN Ltd. generated profits of $40.7 million, before non-cash impairment charges, compared to $2.8 million before non-cash impairment charges for the equivalent quarter in 2018. Net income for the fourth quarter of 2019 was at $13.1 million compared to a net loss of $63.1 million in the same quarter of 2018.

Operating income in the fourth quarter, before non-cash impairment charges, amounted to $55.0 million, more than double the operating income generated in the 2018 fourth quarter, before non-cash impairment charges.

Adjusted EBITDA increased by 36% to $90 million and total cash balances by the end of the quarter (and year) neared $200 million.

This substantial and material improvement in fourth quarter net income results was mostly due to gross revenues increasing by $21.6 million, 14.1% up from the 2018 fourth quarter with an almost identical number of vessels in the fleet,  elevating total voyage revenues to $175.4 million for the quarter.

The increase in revenue was due to a greatly improved crude tanker market during the quarter, in which 16 vessels operating in spot trades enjoyed the strongest rates seen in the last five years, as oil demand strengthened and oil supplies increased, especially from the U.S, while growth of the global fleet continued its downward trend. Moreover, vessels on time charter with profit sharing provisions began to see significant income over and above their applicable minimum rates helping the average daily TCE per vessel in the fleet to reach $25,576, a 19.3% increase from the fourth quarter of 2018.

In addition, the two LNG carriers Neo Energy and Maria Energy, again earned higher rates in the fourth quarter of 2019 than in the 2018 fourth quarter, by 45% and 58% respectively.

Our fleet of 65 operating vessels achieved again high utilization rates, averaging 98.4%, with only one vessel in dry-dock for just part of the quarter.

Expenses incurred by the Company in the fourth quarter were relatively stable in all categories compared to the 2018 fourth quarter. Voyage expenses, however, experienced a 22% reduction much due to lower bunker costs. Total operating costs remained almost the same at $46.0 million, while daily average operating costs per vessel stayed at approximately $7,800.

G&A expenses remained at $7.3 million and depreciation and amortization charges were somewhat lower due to vessels held for sale that no longer incurred depreciation.

Interest and finance costs were down by nearly half that of the 2018 fourth quarter, falling to $13.7 million from $26.2 million, mainly due to bunker hedge positive valuation movements.

Dividend (Common Shares) and Stock BuybackThe Company will pay a dividend of $0.05 per common share in June 2020 and has received authorization from the Company’s Board of Directors to commence an up to $50 million common and preferred stock buyback.

Corporate Strategy& OutlookIn hindsight, 2019 looks now a very normal year regardless of its rollercoaster market changes. In today’s turbulent environment, TEN maintains its steady course navigating unprecedented challenges with success. With oil prices collapsing the demand for inventory build-up and transportation services is booming. TEN with its flexible employment model is taking advantage of that to the full. The increasing floating storage of oil and the developing contango following the precipitous decline in the price of crude, has led to a reduction in fleet capacity which should assist in maintaining the strong rates currently in evidence.

“As the impact of the coronavirus is being felt around the globe, TEN’s business model is able not only to sustain such shocks, but also profit from them as well. Our long-established strategy of providing downside protection and upside potential is working well and we remain confident that we will continue taking advantage of the strong freight environment while offering investors healthy returns,” Mr. George Saroglou, COO of TEN commented. “With significant cash flow visibility, a healthy balance sheet and favorable industry fundamentals, like the continuously low orderbook, we remain confident that once the panic selling stops TEN will be ascribed a valuation that it merits and deserves. In the meantime, management top priority is to maintain the good health of its seafarers and onshore employees and wishes all good health in these challenging times,” Mr. Saroglou concluded.

CONFERENCE CALL As previously announced, today, Tuesday, March 24, 2020 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 55 39962 (US Toll Free Dial In), 0808 2380 669 (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 Tuesday, March 31, 2020 by dialing 1 866 331 1332 (US Toll Free Dial In), 0808 2380 667 (UK Toll Free Dial In) or +44 (0)3333 00 9785 (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.

TEN’s Growth Program
#	Name	Type	Delivery	Status	Employment
1	HN8041	Suezmax	Q3 2020	Under Construction	Yes
2	HN8042	Suezmax	Q4 2020	Under Construction	Yes
3	HN3157	LNG	Q4 2021	Under Construction	Under Discussion

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 27 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 suezmax tankers and one LNG carrier under construction, constituting a mix of crude tankers, product tankers and LNG carriers, totaling 7.4 million dwt.

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		2019						2018				2019					2018
Voyage revenues	$	175,386					$	153,755			$	597,452				$	529,879
Voyage expenses		28,914						34,790				125,802					125,350
Charter hire expense		2,728						2,719				10,822					10,822
Vessel operating expenses		46,070						45,428				180,233					181,693
Depreciation and amortization		35,359						37,225				139,424					146,798
General and administrative expenses		7,321						7,261				27,696					27,032
Loss on sale of vessels		-						-				-					364
Impairment charges		27,613						65,965				27,613					65,965
Total expenses		148,005						193,388				511,590					558,024
Operating income (loss)		27,381						(39,633	)			85,862					(28,145	)
Interest and finance costs, net		(13,735	)					(26,226	)			(74,723	)				(76,809	)
Interest income		456						832				3,694					2,507
Other, net		(791	)					1,730				(825	)				1,405
Total other expenses, net		(14,070	)					(23,664	)			(71,854	)				(72,897	)
Net income (loss)		13,311						(63,297	)			14,008					(101,042	)
Less: Net (income) loss attributable to the noncontrolling interest		(194	)					148				1,118					1,839
Net income (loss) attributable to Tsakos Energy Navigation Limited	$	13,117					$	(63,149	)		$	15,126				$	(99,203	)
Effect of preferred dividends		(9,788	)					(10,204	)			(40,400	)				(33,763	)
Deemed dividend on Series B preferred shares		-						-				(2,750	)				-
Net income (loss) attributable to common stockholders of Tsakos Energy Navigation Limited	$	3,329					$	(73,353	)		$	(28,024	)			$	(132,966	)
Earnings (Loss) per share, basic and diluted	$	0.04					$	(0.84	)		$	(0.32	)			$	(1.53	)
Weighted average number of common shares, basic and diluted		90,510,341						87,604,645				88,757,923					87,111,636
BALANCE SHEET DATA		December 31						December 31
		2019						2018
Cash		197,770						220,526
Other assets		261,607						138,924
Vessels, net		2,633,251						2,829,447
Advances for vessels under construction		61,475						16,161
Total assets	$	3,154,103					$	3,205,058
Debt, net of deferred finance costs		1,534,296						1,595,601
Other liabilities		147,488						102,680
Stockholders' equity		1,472,319						1,506,777
Total liabilities and stockholders' equity	$	3,154,103					$	3,205,058
		Three months ended										Year ended
OTHER FINANCIAL DATA		December 31										December 31
		2019						2018				2019					2018
Net cash from operating activities	$	62,976					$	39,000			$	184,349				$	73,945
Net cash used in investing activities	$	(41,908	)				$	(5,552	)		$	(102,205	)			$	(179	)
Net cash used in financing activities	$	(302	)				$	(45,490	)		$	(104,900	)			$	(55,913	)
TCE per ship per day	$	25,576					$	21,439			$	21,378				$	18,226
Operating expenses per ship per day	$	7,828					$	7,715			$	7,716				$	7,745
Vessel overhead costs per ship per day	$	1,228					$	1,233			$	1,182				$	1,152
		9,056						8,948				8,898					8,897
FLEET DATA
Average number of vessels during period		64.8						64.0				64.2					64.3
Number of vessels at end of period		65.0						64.0				65.0					64.0
Average age of fleet at end of period	Years	9.1						8.2				9.1					8.2
Dwt at end of period (in thousands)		7,051						6,936				7,051					6,936
Time charter employment - fixed rate	Days	2,647						2,660				9,737					9,600
Time charter employment - variable rate	Days	1,733						1,288				6,550					6,464
Period employment (coa) at market rates	Days	169						224				799					1,215
Spot voyage employment at market rates	Days	1,313						1,501				5,456					5,294
Total operating days		5,862						5,673				22,542					22,573
Total available days		5,960						5,888				23,432					23,460
Utilization		98.4	%					96.3	%			96.2	%				96.2	%
Non-GAAP Measures
Reconciliation of Net income (loss) to Adjusted EBITDA
		Three months ended										Year ended
		December 31										December 31
		2019						2018				2019					2018
Net income (loss) attributable to Tsakos Energy Navigation Limited		13,117						(63,149	)			15,126					(99,203	)
Depreciation and amortization		35,359						37,225				139,424					146,798
Interest Expense		13,735						26,226				74,723					76,809
Loss on sale of vessel		-						-				-					364
Impairment charges		27,613						65,965				27,613					65,965
Adjusted EBITDA	$	89,824					$	66,267			$	256,886				$	190,733
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 revenue less voyage expenses is divided by the number of operating days less 107 days lost for the fourth quarter of 2019 and 446 for the year of 2019 as a result of calculating revenue on a loading to discharge basis, compared to 124 for the fourth quarter of 2018 and 378 for the year 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.