2010 HIGHLIGHTS -- Voyage revenues of $408.0 million. -- Operating income of $80.7 million, after vessel impairment charge of $3.1 million. -- Net income of $19.8 million, after vessel impairment charge of $3.1 million. -- EPS (diluted) of $0.50 ($0.58 per share excluding impairment charge). -- Average daily operating expenses per vessel decreased by 11.9% to $7,647. -- Fleet utilization of 97.6%. -- Sale of five tankers with a net gain of $19.7 million. -- Delivery of two newbuilding aframax tankers and acquisition of four panamax product carriers with employment. -- Change from twice yearly to quarterly dividends. Total dividends paid in 2010 of $0.60. -- $105 million raised in equity offerings. -- Approximately $1.0 billion in net income since NYSE listing.
2010 FOURTH QUARTER HIGHLIGHTS -- Voyage revenues of $95.0 million. -- Operating income of $9.0 million, after impairment charge of $3.1 million. -- Income $0.5 million, before impairment charge of $3.1 million. Net loss of $2.6 million, after impairment charge. -- EPS (diluted) of $0.01, excluding impairment charge, or $(0.06) after vessel impairment charge. -- Average daily operating expenses per vessel decreased by 16.7% to $7,284. -- Agreement to sell one aframax tanker with delivery in the first quarter of 2011. -- Payment of second quarterly dividend of $0.15 per share with respect to 2010 operations. -- Agreed 15-year charters for two suezmax shuttle tankers to South American oil major.FULL YEAR 2010 RESULTS Net income for the year ended December 31, 2010 amounted to $19.8 million (after an impairment charge of $3.1 million) compared to the net income of $28.7 million (after an impairment charge of $19.1 million) achieved in 2009. The decrease is primarily attributable to the weaker freight market in 2010 compared to 2009 and increased non-cash finance costs. The net gain on the sales of five vessels during 2010 amounted to $19.7 million compared to a net gain of $5.1 million on the sale of one vessel in 2009. The poor freight market in the fourth quarter of 2010 and increasing discrimination against older vessels resulted in the requirement for a further impairment charge of $3.1 million relating to the 1991 built aframax tanker Vergina II. This vessel was one of the three vessels that incurred impairment charges totaling $19.1 million in 2009. Diluted EPS based on weighted average number of shares outstanding was $0.50 versus diluted EPS of $0.77 achieved in 2009. Voyage revenues, net of commissions and voyage expenses, totaled $308.4 million in 2010 compared to $351.6 million in 2009. The average number of vessels in the fleet decreased to 46.1 in 2010 from 46.6 in 2009, five vessels having been sold mostly in the earlier part of 2010 and six new vessels acquired mainly in the latter part of the year. The average time- charter equivalent (TCE) rate earned per vessel (voyage revenues less voyage expenses) decreased to $19,825 per day in 2010 from $22,329 per day in 2009. Utilization of the fleet was 97.6% during this difficult year compared with 97.7% in 2009. Depreciation and dry-docking amortization costs fell to $97.4 million from $101.5 million mainly as a result of vessel sales. Operating expenses per vessel per day decreased to $7,647 from $8,677 in 2009, an 11.9% decrease as a result of reduced costs on crew expenses, stores, spares, insurance and lubricants. This was primarily due to the increased purchasing power of Tsakos Columbia ShipManagement S.A. (TCM), which took over the fleet's technical management in July, 2010. In addition, since 2009, the Company's technical managers, on the Company's instructions, took specific measures to reduce crew costs, which also benefited from an appreciation of the U.S. Dollar against the Euro. Insurance costs were also down due to a reduction in P&I Club back calls. Overhead expenses increased to $1,144 per vessel per day in 2010 from $1,083 in 2009, due to increased management fees and an incentive award of $0.4 million, offset by reduced G&A expenditure and reduced stock compensation expense. Interest and finance costs increased to $62.3 million in 2010 from $45.9 million in 2009, due mainly to negative non-cash movements in the valuations of non-hedging interest-rate and bunker swaps. Net gains from vessel sales amounted to $19.7 million in 2010 relating mainly to the sale of the suezmax tanker Decathlon and aframax tankers Marathon and Parthenon. Two aged panamax tankers, which incurred impairment charges in 2009, were also sold, but at prices approximating book value. The sales reflected the Company's continued policy of fleet renewal and opportunistic divestments. FOURTH QUARTER 2010 RESULTS TEN attained income of almost $0.5 million for the fourth quarter of 2010, before incurring the impairment charge of $3.1 million on one vessel. Including the impairment charge, the net loss was $2.6 million. In the fourth quarter of 2009, income was $2.4 million, before $19.1 million impairment charges on three vessels (a net loss of $16.7 million after the impairment charges). The fourth quarter 2009 results included a $5.1 million gain on the sale of one vessel (no vessel sales in the fourth quarter 2010). Revenues, net of voyage expenses and commissions, were approximately the same in both quarters, operating expenses were considerably reduced and finance costs were higher. Diluted EPS this fourth quarter were $0.06 negative (but $0.01 positive without the impairment charge) compared to $0.45 negative in the same quarter last year ($0.07 negative without the impairment charge and sale of vessel gain). Revenues, net of voyage expenses and commissions were $74.4 million in the fourth quarter of 2010 compared to $74.1 million in the fourth quarter of 2009. The time charter equivalent per ship per day was $18,287 in the fourth quarter of 2010 versus $18,081 in the fourth quarter of 2009. An increase in crude carrier rates in December provided welcome relief to an otherwise unusually challenging period. TEN operated an average number of 47.3 vessels in the fourth quarter of 2010 compared to 47.5 vessels in the same period of last year. Despite the poor market, caused mainly by the global supply and demand imbalance of tankers, our fleet utilization was still 97.5% compared to 98.8% in the previous year's fourth quarter. Daily operating expenses per ship fell 16.7% to $7,284 from $8,743 in the fourth quarter of 2009, due to better pricing achieved by the new technical managers, TCM, which resulted in reduced expenditure on stores, spares and lubricants and action taken to reduce crew costs. An 8% stronger dollar in the fourth quarter 2010, further positively impacted crew costs. Reduced P&I Club back call obligations helped keep insurance costs down. Depreciation and amortization costs were $26.1 million compared to $25.8 million in the fourth quarter of 2009. Management fees increased by $0.4 million to $3.8 million. G&A expenses were approximately the same at $0.9 million, and stock compensation expense was a credit of $0.2 million compared to a $0.4 million charge, due to the fall in share price. An incentive award of $0.4 million was granted to management (there was no award in 2009). Interest and finance costs net of interest income was $12.1 million in the fourth quarter of 2010 compared to $8.7 million in the fourth quarter of 2009. The total of average outstanding loans during the respective quarters was approximately the same at $1.5 billion. Interest paid on interest rate swaps was $1.8 million higher than in the fourth quarter of 2009. Charges relating to the valuation of interest rate swaps were $0.9 million lower than the previous fourth quarter. There was no significant movement on the bunker swap valuations in fourth quarter, whereas there was a positive movement of $2.6 million in the previous fourth quarter. The Company raised $85 million in an equity offering that closed on November 1, 2010. The proceeds from the equity offering will be used primarily to expand our fleet. The Company's balance sheet remained strong with cash balances of $277 million at the year-end, a healthy leverage level of 56% net debt to capital and continued compliance with loan covenants. STRATEGY AND OUTLOOK 2010 was a year of transition and house-keeping for the Company as constrained shipping markets characterized by the lack of sustainable improvements never really provided opportunities for acquisitions. As a result, TEN opted to take advantage of some pockets that intermittently appeared in the sale and purchase markets and proceeded with calculated disposition and acquisition of selective tonnage. Specifically, in 2010 management sold five older vessels, a suezmax, two aframaxes and two older panamax product tankers and acquired four 2009-built panamax tankers and took delivery of two DNA-design newbuilding aframaxes. From the sale of the five vessels the Company generated a net capital gain of $19.7 million and free cash of $72 million. In addition, the Company successfully took advantage of openings in the equity capital markets and raised a total of $105 million. On top of this sale and purchase activity, an integral part of operations that has generated close to $280 million in capital gains (including the Opal Queen), the Company ventured into the ever evolving shuttle tanker business by securing two 15-year charters by a national South American oil major for two DP2 suezmax shuttle tankers that TEN will build in South Korea with expected delivery in Q3 and Q4 2012. This two-vessel venture is expected to generate gross revenues of at least $520 million and provide the Company with a strong competitive position in this dynamic and growing segment of the industry. All this activity in 2010 enabled the Company to fine-tune its crude fleet, renew and strengthen its product exposure with a view of further improvements in that sector in the future and expand into new but related fields of operations. Such fine-tuning was executed for the long term benefit of the fleet without however placing an undue burden on the Company's balance sheet. Cash reserves, the cornerstone of our strategy to navigate the shipping cycles with the most comfort, have remained at very healthy levels and stood at $276.6 million at the end of 2010. Going forward, we remain committed to prudent cash management to enable the Company not only to execute its growth policy, but also to maintain ample cushion to meet both its creditor and shareholder obligations in the form of timely repayments of debt and interest and healthy dividend payments going forward. In 2010, the newly formed joint venture ship management company Tsakos Columbia ShipManagement Ltd. was established with an immediate positive impact on TEN's vessel operating expenses. Leveraging the size and footprint of Columbia ShipManagement S.A in maritime procurement services along with that already in place by our prior ship managers, Tsakos Shipping and Trading S.A., we achieved noticeable price reductions in various spares, provisions, stores and lubricants. The level of reduction of expenses in 2010 compared to 2009 was approximately 12%. We expect the reduced level of operating expenses to be maintained and hopefully to continue in the same direction. In terms of vessel employment, the fleet again exhibited high levels of utilization, 97.6% in 2010 versus 97.7% in 2009 with a world tanker average utilization well below the 90% levels. Management will endeavor to continue its policy of balanced employment with flexible options for the future and place about three quarters of the fleet in various forms of fixed charters. A spot presence will be maintained, either directly or through pooling arrangements in order to have vessels available to take advantage of future increases in rates. Without taking into consideration potential revenues from profit-sharing arrangements and assuming only minimum agreed rates for vessels under such contracts, TEN expects to earn at least $230 million in gross time-charter revenues over the duration of the current employment contracts. With a strong balance sheet, a tried and tested management team, a diversified and long established client base and proven access to capital, TEN is well positioned to take advantage of growth opportunities as they unfold. Despite not seeing an abundance of such opportunities in the recent past, we remain confident that attractive projects, either in the secondhand market or newbuilding front will appear. Growth, fleet modernity, employment flexibility and timely strategic sales will remain as TEN's top priorities that along with sustainable dividend payments should assist in bridging the gap between the Company's net asset value and the value the market ascribes to TEN's shares. "We are proud of the performance of our Company on the operational front both in terms of finding attractive employment for our vessels and for achieving attractive valuations in the secondhand market. Values that the capital markets, based on the discount our shares trade to our net asset value, do not appear to recognize," Mr. George V. Saroglou, Chief Operating Officer of TEN stated. "2010 was a challenging year for all involved in tanker transportation and 2011 could be the year to kick-start the industry back in motion. We at TEN look back on 2010 as the year that all of us had to demonstrate our mettle both on professional and personal terms and look forward to a future with confidence. Our Company, our people, our fleet and our balance sheet provide us with such confidence." CONFERENCE CALL AND WEBCAST Today, Monday March 14, 2011 at 10:00 a.m. Eastern Time, TEN will also 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. 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 21, 2011 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. ABOUT TSAKOS ENERGY NAVIGATION To date, TEN's pro forma fleet consists of 52 double-hull vessels (including the Opal Queen agreed to be sold) of 5.6 million dwt that includes two suezmax tankers currently under construction to be delivered in April and July 2011 and two suezmax DP2 shuttle tankers for expected delivery in 2012 totalling 646,000 dwt. TEN's balanced fleet profile is reflected in 25 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): --------------------------------------------------------------------------- Type of Employment Vessels Period Employment - Fixed, fixed w/profit share & min max 30 CoA - market related 2 Pool - market related 6 Spot - market related 10 TEN's current newbuilding program: --------------------------------------------------------------------------- Suezmax DWT HullType / Design Expected Delivery 1. S2034 (tbn Spyros K) 158,000 DH April 2011 2. S2035 158,000 DH July 2011 3. Suezmax DP2 157,000 DH Q3 2012 4. Suezmax DP2 157,000 DH Q4 2012 DH: Double HullFORWARD-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.
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 2010 2009 2010 2009
---------- ---------- ---------- ----------
Voyage revenues $ 94,966 $ 98,232 $ 408,006 $ 444,926
---------- ---------- ---------- ----------
Commissions 2,246 3,077 13,837 16,086
Voyage expenses 18,313 21,059 85,813 77,224
Charter hire expense - - 1,905 -
Vessel operating expenses 31,021 37,424 126,022 144,586
Depreciation 25,037 23,890 92,889 94,279
Amortization of deferred
dry-docking costs 1,021 1,883 4,553 7,243
Management fees 3,825 3,380 14,143 13,273
General and administrative
expenses 923 918 3,627 4,069
Management incentive award 425 - 425 -
Stock compensation expense (206) 427 1,068 1,087
Foreign currency losses
/(gains) 328 485 (378) 730
Net gain on sale of vessels - (5,122) (19,670) (5,122)
Vessel impairment charge 3,077 19,066 3,077 19,066
---------- ---------- ---------- ----------
Total expenses 86,010 106,487 327,311 372,521
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Operating income 8,956 (8,255) 80,695 72,405
---------- ---------- ---------- ----------
Interest and finance costs,
net (12,099) (8,743) (62,283) (45,877)
Interest income 611 466 2,626 3,572
Other, net 81 (4) (3) 75
---------- ---------- ---------- ----------
Total other expenses, net (11,407) (8,281) (59,660) (42,230)
---------- ---------- ---------- ----------
Net (loss) income (2,451) (16,536) 21,035 30,175
Less: Net income
attributable to the
noncontrolling interest (184) (115) (1,267) (1,490)
---------- ---------- ---------- ----------
Net (loss) income
attributable to Tsakos
Energy Navigation Limited $ (2,635) $ (16,651) $ 19,768 $ 28,685
========== ========== ========== ==========
(Loss) / Earnings per
share, basic $ (0.06) $ (0.45) $ 0.50 $ 0.78
(Loss) / Earnings per
share, diluted $ (0.06) $ (0.45) $ 0.50 $ 0.77
Weighted average number of
shares outstanding
Basic 43,241,145 36,901,967 39,235,601 36,940,198
Diluted 43,619,735 37,194,855 39,601,678 37,200,187
BALANCE SHEET DATA December 31 December 31
2010 2009
----------- -----------
Cash and cash equivalents 276,637 296,181
----------- -----------
Current assets, including cash 367,453 471,647
Investments 1,000 1,000
Financial instruments, net of current portion 498 3,112
Advances for vessels under construction 81,882 49,213
----------- -----------
Vessels 2,638,550 2,335,031
Accumulated Depreciation (403,485) (325,066)
----------- -----------
Vessels' Net Book Value 2,235,065 2,009,965
Deferred charges, net 16,362 14,783
----------- -----------
Total assets $ 2,702,260 $ 2,549,720
=========== ===========
Current portion of long-term debt 133,819 172,668
Current liabilities, including current portion of
long-term debt 222,989 264,231
Long-term debt, net of current portion 1,428,648 1,329,906
Financial instruments, net of current portion 37,605 41,256
Total stockholders' equity 1,013,018 914,327
----------- -----------
Total liabilities and stockholders' equity $ 2,702,260 $ 2,549,720
=========== ===========
Three months ended Year ended
OTHER FINANCIAL DATA December 31 December 31
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net cash from operating
activities $ 15,824 $ 23,259 $ 83,327 $ 117,161
Net cash (used in)/from
investing activities $ (121,775) $ 42,526 $ (240,115) $ (75,568)
Net cash from/(used in)
financing activities $ 132,957 $ (39,952) $ 137,244 $ (57,581)
TCE per ship per day $ 18,287 $ 18,081 $ 19,825 $ 22,329
Operating expenses per
ship per day $ 7,284 $ 8,743 $ 7,647 $ 8,677
Vessel overhead costs
per ship per day $ 1,142 $ 1,081 $ 1,144 $ 1,083
----------- ----------- ----------- -----------
8,426 9,824 8,791 9,760
FLEET DATA
Average number of
vessels during period 47.3 47.5 46.1 46.6
Number of vessels at
end of period 48.0 47.0 48.0 47.0
Average age of fleet at
end of period Years 6.8 6.8 6.8 6.8
Dwt at end of period
(in thousands) 4,962.0 4,968.0 4,962.0 4,968.0
Time charter employment
- fixed rate Days 826 945 3,083 4,169
Time charter employment
- variable rate Days 1,858 1,743 7,463 7,239
Period employment (pool
and coa) at market
rates Days 700 1,098 3,124 2,502
Spot voyage employment
at market rates Days 858 533 2,766 2,721
----------- ----------- ----------- -----------
Total operating days 4,242 4,319 16,436 16,631
Total available days 4,349 4,371 16,836 17,021
Utilization 97.5% 98.8% 97.6% 97.7%
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.
Contact Information: For further information, please contact: Company Tsakos Energy Navigation Ltd. George Saroglou, COO +30210 94 07 710 gsaroglou@tenn.gr Investor Relations / Media Capital Link, Inc. Nicolas Bornozis Biraj Gyawali +212 661 7566 ten@capitallink.com