Tsakos Energy Navigation reports profits for the first quarter of 2013 and dividend declaration
Tenfold increase in operating income to $9.7 million - Net income of $1.0 million
30.0% increase in EBITDA to $34.1 million from Q1 2012
7.4% reduction in daily operating expenses
TEN celebrates 20 years in the capital markets
First quarter and recent highlights
• Fleet consists of 28 product tankers,
19 crude carriers and two LNG vessels
• $9.7 million in operating income agai
nst $1.0 million in
first quarter 2012
• Net income of $1.0 million
against a loss of $8.8 m
illion in first quarter 2012
• 44 out of 47 vessels wi
th positive EBITDA
• EBITDA totals $34.1 million, a 30%
increase from first quarter 2012
• Strong liquidity maintained at
$139 million at end of quarter
• $50.0 million preferred stock offeri
ng in May 2013 adds to liquidity
• New charters for nine of our product ta
nkers since January 1, 2013 with future
minimum gross revenues of $117 million
over their respective fixtures
•
Total minimum contracted coverage exceeds $1
billion with average duration 3.2 years
•
Time charter equivalent at $18,176 per
day versus $17,129 in first quarter 2012
•
Daily operating expenses at $7,692 per
day versus $8,308 in first quarter 2012
•
Fleet utilization of 98%
•
Quarterly dividend of $0.05 per share, de
clared for payment on
September 12, 2013
•
Delivery of first DP
2 shuttle tankers,
Rio 2016
and
Brasil 2014
•
One 174,000 m LNG carrier under construction
with option for a second one
•
Company celebrates 20 years in the public markets
The first quarter of 2013 ended with net income of $1.0 million and represents a considerable turnaround and improvement over the 2012 first quarter for which we reported a net loss of $8.8 million. The results are mainly due to increases in product carrier rates, and our ability to capitalize on our significant presence in this sector and to the impact of the LNG carrier Neo Energy . Significant savings in voyage expenses, operating costs, depreciation and interest, as detailed below, also provided important contributions. Revenues, net of commissions and voyage expens es amounted to $69.4 million in the first quarter of 2013, a 4.8% improvement over the fi rst quarter of 2012, despite the reduction of the fleet by two vessels, the VLCCs La Prudencia and La Madrina, which were sold at the end of last year. TEN operated an average of 46.2 vessels in the firs t quarter of 2013 following the sale of the VLCCs. The fleet utilization was 98%, which represents a very high level of employment irrespective of market conditions.
The average daily time charter equivalent (TCE) rate (voyage revenue less voyage expenses) was $18,176, a 6% improvement over the fourth qu arter of 2012 ($17,197) and over the previous first quarter ($17,129). Apart from better rates achieved by our product carriers that reflected market sentiment for that particul ar sector, up 25.0% from the first quarter of 2012, vessels that operated on spot charters al so enjoyed some respite.
Helped by our products and LNG exposure, EBIT DA amounted to $34.1 million in the first quarter of 2013, nearly 30% higher than in th e previous year first quarter. All the vessels generated positive EBITDA in th e first quarter of 2013 with th e exception of a suezmax which underwent a dry-docking and two other crude carriers wh ich were employed on spot voyages. Total operating expenses amounted to $31.3 million in the first quarter of 2013 compared to $35.5 million in the first quarte r of 2012. The sale of the tw o VLCCs in the fourth quarter contributed to the reduction, together with ot her savings in running costs which lowered the daily operating costs per vessel from $8,308 to $7,692, a 7.4% reduction. In addition, there was only one dry-docking in the first quarter of 2013, compared to fo ur in the previous year’s first quarter which had higher repair and maintenance costs. Operating income achieved was $9.7 million compared to $2.9 million in the fourth quarter of 2012, excluding the fourth quarter impairment loss, and $1.0 million in the first quarter of 2012, close to a ten-fold increase over a period of 12 months.
Interest and finance costs were $9.6 million, 6.5% down from the 2012 first quarter. The significant savings in interest rate swap charges were partly offset by increases in loan margins. Positive valuation movements on bunker and interest rate swaps were sma ller than the first quarter of 2012.
Total cash and liquid investments amounted to $ 139 million at the end of the first quarter 2013, which has been supplemented, in May, by a preferre d stock offering described in the Subsequent Events section. Total indebtedne ss at March 31, 2013 was $78 million lower compared to March 31, 2012 at $1,437 million, even after taking account of new debt of $46 million in relation to the de livery of the first of the two suezmax DP2 shuttle tankers, Rio 2016.
A similar amount was received in April of this ye ar relating to the delivery of the second shuttle tanker, Brasil 2014.
Quarterly Dividend
The Company’s Board of Direct ors declared a quarterly divi dend of $0.05 per share of common stock outstanding to be paid on September 12, 2013 to shareholders of record as of September 9, 2013. Inclusive of th is distribution, TEN will have distributed in total $9.675 per share in dividends to its shareholders since th e Company was listed on the NYSE in March of 2002. The listing price wa s $7.50/share taking into account th e 2-1 share split of November 14, 2007.
Subsequent Events
On May 10, 2013 TEN successfully raised gross pr oceeds of $50 million from the sale of two million 8.00% Series B Cumulative Redeemable Perpetual Preferred Shares under its effective shelf registration statement at $25.00 per share. TEN intends to use the net proceeds from the offering for general corporate pu rposes, which may include making vessel acquisitions or other related investments.
On May 18, shuttle tanker Rio 2016 arrived in Brazil and commenc ed its 15-year charter which is expected to generate approximately $255.0 m illion in gross revenues. Second shuttle tanker Brasil 2014 is en route to Brazil for delivery to ch arterers and commencem ent of similar, in terms of duration and rate, employment. Strategy & Outlook With the improvements in product tanker rates continuing and the crude sector demonstrating signs of recovery our fleet this quarter, and primarily assisted by our large and modern product tankers exposure, generated a substantial increa se in profits compared to last year’s quarter.
This improvement was primarily dri ven by a 6% increase in the average time charter rate per vessel and a significant drop in the fleet’s overall expenses. In particular, daily operating expenses, on a per ship ba sis, decreased by 7.4% from last ye ar’s first quarter while the fleet’s total voyage expens es were 24.1% lower than in the 2012 first quarter. Once again the fleet achieved a high utilization rate of 98% vers us 97% in the first quarter of 2012. True to our policy of ha ving a good portion of the fleet’s in flexib le charters, approximately two thirds of available days this first quarter were capable of capturing such upticks and achieved rates that are reflected in our results.
To further improve the fleet’s ca sh generating capabilities, ma nagement will strive to place more vessels under short to medi um term contracts, id eally with profit sh aring provisions, once such market improvements show signs of stability, somethin g that slowly seems to be happening. An example of such activity has been the fixture of nine of our product tankers that have been concluded so far this year, with minimum gross revenu es of $117.0 million over an average period of 2.5 years. Cash generation and preservation has and will cont inue to be our guiding principle in taking the Company forward. As at th e end of the first quarter 2013 our cash balances were at a healthy $139 million and have increased substantiall y by our recent placement of $50.0 million Cumulative Redeemable Perp etual Preferred Shares. In terms of growth and beyond the Company’s customary and dominant presence in product tankers and crude carriers, management will re main focused on LNG and shuttle tankers for accretive expansion.
“TEN’s return to profitability, is a result of our modern fleet composition, our flexible long- term employment strategy , our cost containment policy and our ability to maintain and build relationships with high quality charterers arou nd the world,” stated Mr. Nikolas P. Tsakos, President & Chief Executive Offi cer of TEN. “We do believe that both product and crude markets have turned the corner and our fleet, in both of these sectors is well positioned to take advantage of current and expect ed market improvements. Also, our exposure in the high-end LNG and shuttle tanker markets provides furt her growth to our bott om line,” Mr. Tsakos concluded.
About Tsakos Energy Navigation
To date, TEN's fleet, including an LNG carrier under construction, cons ists of 49 double-hull vessels, a mix of product tankers, crude tankers and LNG carriers, totaling 4.9 million dwt. Of these, 19 are crude tankers ranging from VLCCs to aframaxes, 28 are product carriers ranging from shuttle suezmaxes to handys ize and two are LNG carriers.
Tsakos Energy Navigation press release
