TSAKOS ENERGY NAVIGATION (TEN) INCREASES 2007 DIVIDEND BY 25% AND REPORTS EPS OF $4.81 FOR FULL YEAR 2007 AND $1.37 FOR FOURTH QUARTER 2007
18 March 2008
- TEN cash dividends with respect to 2007 operations total $1.725 per share -
2007 HIGHLIGHTS
1. Voyage revenues $500.6 million versus $427.7 million in 2006
2. Net income of $183.2 million versus $196.4 million in 2006
3. Per share earnings of $4.81 (basic) as compared with $5.15 (basic) in 2006
4. Sale of three vessels with capital gains of $68.9 million
5. Delivery of nine newbuildings, including first LNG carrier
6. Contracts for two newbuildings for delivery in 2009 and 2010
7. 25% year over year increase in dividend payment
8. Two-for-one stock split
2007 FOURTH QUARTER HIGHLIGHTS
1. Net income of $52.2 million versus $77.1 million in the fourth quarter 2006
2. Per share earnings of $1.37 (basic) as compared with $2.02 (basic) in 2006
3. TCE per vessel per day increased to $29,935 from $29,796 in the fourth quarter of 2006
4. Sale of one vessel with capital gain of $30.8 million
5. Payment of first dividend of $0.825 per share with respect to 2007
6. 57 continuous profitable quarters since inception
ATHENS, GREECE – March 18, 2008 – TSAKOS ENERGY NAVIGATION LIMITED (TEN) (NYSE: TNP) today reported results for the full year and fourth quarter ended December 31, 2007.
Net income was $183.2 million for 2007 as compared with $196.4 million for 2006. Basic earnings per share based on weighted average number of shares outstanding was $4.81 versus earnings per share of $5.15 in 2006. Net revenues (voyage revenues net of commissions and voyage expenses) were $410.57 million in 2007 as compared with $343.15 million in 2006. Net income before depreciation was $264.74 million in 2007 versus $255.46 million a year earlier.
Revenues from voyages were 17% higher than the prior year, while the average number of vessels increased from 33.8 in 2006 to 41.7 in 2007. The average rate earned per vessel (voyage revenues less voyage expenses) fell only slightly given the similar market conditions that existed in the prior year, from $30,154 per day in 2006 to $29,421 per day in 2007. TEN’s continued policy towards fixed employment with guaranteed minimum rates and profit sharing agreements enabled the company to exploit the higher rates of the spot market while ensuring continuous employment and guaranteed rates in market downturns. In 2007, 76% of total operating days were under time charter with either a fixed rate or profit sharing, compared to 54% in 2006. However, the number of days employed on time charter with profit sharing almost doubled between 2006 and 2007. Utilization of the fleet was 96.6% in 2007 compared with 97.4% in the prior year, due to higher dry-docking activity in 2007.
Operating expenses per vessel per day increased by approximately 10% from $6,979 to $7,669 primarily reflecting increases in crew wages as a result of a further decline of the US dollar against the Euro compared to 2006 and crew compensation increases, a reflection of the growing shortage of skilled seafarers. Overhead expenses increased from $1,162 per vessel per day in 2006 to $1,565 in 2007 mainly due to the issuance of restricted stock units and the related amortization of their fair value.
Interest and finance costs increased from $42.5 million in 2006 to $77.4 million in 2007 due to the increase in loans to finance new vessels and negative fluctuations in the value of interest rate swaps.
Capital gains from vessel sales were $68.9 million in 2007 compared to capital gains of $63.3 million in 2006 from the sale of vessels and the sale of shares in subsidiaries, reflecting the Company’s continued policy of fleet renewal and opportunistic divestments.
Fourth Quarter 2007
Net income in the fourth quarter of 2007 was $52.18 million versus $77.11 million in the same quarter of 2006. Earnings per share (basic) based on weighted average number of shares outstanding were $1.37 in the 2007 fourth quarter versus $2.02 in the same period one year earlier. Net revenues (voyage revenues net of commissions and voyage expenses) were $109.68 million in the fourth quarter of 2007 in comparison with $93.73 million in the prior year’s fourth quarter.
The size of the fleet increased from an average of 37.0 vessels in the fourth quarter of 2006 to 43.0 vessels in the same period of 2007. Average TCE revenues rose from $29,796 in the last quarter of 2006 to $29,935 in fourth quarter of 2007. The market in the fourth quarter of 2007 bore similarities to that of 2006, starting relatively soft, but regaining significant momentum by December.
Operating expenses per vessel per day increased from $7,811 to $8,542, or 9%, due to increases in crew wages, as described above, and increased repair costs incurred during the dry-docking of vessels. The continuous weakening of the dollar and the introduction of the LNG carrier Neo Energy also contributed to this increase.
Interest and finance costs increased from $14.8 million in 2006 fourth quarter to $23.5 million in the fourth quarter of 2007 due to the increase of average loan balances and negative movements in interest rate swaps valuations.
In the fourth quarter of 2007 the Company sold the aframax tanker Athens 2004 recognizing a capital gain of $30.8 million whereas in the fourth quarter of 2006 the Company recognized total capital gains of $50.0 million.
D. John Stavropoulos, Chairman of the Board, observed, "2007 was a very challenging year. The industry dealt with extreme volatility in spot market rates; trade route disruptions arising from geopolitical events; intensified inflation affecting wages, bunkers, lubricants and general maintenance; insurance premiums reflecting rising casualties in many sectors; and the added punch from a very weak US dollar which on a daily average basis continued to decline versus the Euro." He continued, "TEN's performance in this harsh environment was exceptional. The broad strategy of a diversified fleet and balanced employment was tested and verified. Management's execution of the business plan was excellent. The resulting profits and over 24.2% return on beginning net worth was indeed noteworthy."
Fleet Strategy
2007 was a key year for TEN. The Company entered the LNG market with the delivery and charter of its first LNG carrier, the Neo Energy. Additionally, the Company took delivery of nine newbuildings, eight of which entered attractive medium to long-term charters and one strategically placed in the spot market. Further, TEN sold three Aframaxes, the Maria Tsakos, the Athens 2004 and the Olympia at rates considerably above the vessels’ book value and delivered the Panamax Bregen to its new owners as per the sale agreement of November 2006. All-in-all 2007 was a year where TEN’s net fleet expanded by 490,000 dwt and a year in which the fleet’s average age was further reduced from 5.9 years to 5.6 years, half the industry’s average.
In 2007, TEN invested over $580 million in nine newbuilding vessels, six of which were of ice-class design, and recognized $68.9 million in capital gains from the sale of the two Aframaxes (the third was delivered in the first quarter of 2008) and the one Panamax.
TEN’s continued growth enabled the Company to solidify and expand its relationships with major international oil and gas entities, resulting in the enhancement of the future earnings visibility of the fleet. Including the introduction of the two Panamax newbuildings Selecao and Socrates, which entered the fleet in February and March of 2008, TEN’s 39 vessels with fixed employment have secured 80% of 2008 and 62% of 2009 employable days guaranteeing at least $564 million of gross revenues over that period (assuming only the minimum rates for those under profit sharing agreements).
About Tsakos Energy Navigation
TEN’s proforma fleet consists of 50 vessels of 5.3 million dwt. TEN’s operational fleet consists of 44 vessels all of double-hull design. TEN’s newbuilding program of six vessels includes six DNA-aframax crude carriers representing 630,000dwt.
The strategy of a balanced diverse fleet is reflected in 25 crude transporters ranging from VLCCs to aframaxes and 24 product carriers ranging from aframaxes to handysize; complemented by one LNG.
Tsakos Energy Navigation press release
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