Tsakos Energy Navigation Reports Earnings of $0.20 Per Share for the First Quarter of 2011
News Release
Tsakos Energy Navigation Ltd.
May 12, 2011
Four newbuilding suezmaxes (including two shuttle tankers) chartered for a combined
53 years with minimum total revenues of $720 million
Fleet utilization at 99%
FIRST QUARTER HIGHLIGHTS
? Voyage revenues of $99.2 million
? Net income of $9.3 million
? Earnings per share (diluted) of $0.20
? Average daily operating expenses per vessel decreased by 11.1% to $7,482
? Sale of aframax tanker with a gain of $5.8 million
? Fleet utilization of 99%
? Quarterly dividend of $0.15 per share, paid February 1, 2011, and a further quarterly
dividend declared of $0.15 per share (paid April 28, 2011)
? Contracts signed for construction of two suezmax DP2 shuttle tankers
? Entered eighteenth year in the public markets – profitable since inception
Athens, Greece--May 11, 2011--Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) (the
“Company”) today reported results (unaudited) for the first quarter ended March 31, 2011.
TEN attained net income of $9.3 million (including a $5.8 million gain on the sale of a vessel)
for the first quarter of 2011 compared to $19.5 million (including $14.3 million gains on the
sale of vessels) for the first quarter of 2010. Diluted EPS this first quarter were $0.20.
Revenues, net of commissions and voyage expenses amounted to $72.3 million in the first
quarter of 2011 as compared to $81.3 million in the first quarter of 2010. TEN operated an
average of 47.9 vessels in the first quarter of 2011 compared to 46.6 in the first quarter of 2010.
The average daily time charter equivalent (TCE) rate (voyage revenue less voyage expenses) was
$17,964 versus $20,708 in the first quarter 2010 due to a market which saw some unusually
depressed freight rates for crude carriers, brought about primarily by over-capacity in the global
Visit our company website at: http://www.tenn.gr
2
fleet. Despite the over-supply of vessels, oil demand remained buoyant and our fleet achieved
utilization of 99%. Our fleet benefited from extra profit share earned by the three ice-class LR2
aframaxes operating in the Baltic, a short spike in aframax freight rates operating in the
Mediterranean at the beginning of the Libya crisis and the gradual increase in product carrier
rates which is continuing strongly in the second quarter. However, the aframaxes and product
carriers operating in the spot market were hard hit by increasing oil prices, raising bunker costs
by as much as 30% over first quarter, 2010. A part of these costs, however, was recouped
through our bunker hedges.
Total operating expenses amounted to $31.6 million in the first quarter of 2011, compared to
$34.5 million in the first quarter of 2010. Vessel operating expenses per ship per day decreased
by 11.1% to $7,482 compared to $8,414 in the first quarter of 2010. The decrease in vessel
operating expenses is partly attributable to the increased purchasing power of our new technical
managers, Tsakos Columbia ShipManagement Ltd. (“TCM”), which took over the technical
management of TEN’s fleet on July 1, 2010. Despite rising oil prices, expenditure on lubricants
was down due to increased efficiencies in pricing and vessel supply. There was also reduced
repair activity in the quarter compared to the previous year’s first quarter. Crew expenses also
were held down as a result of actions taken over the past eighteen months in respect of crew
composition.
Depreciation and dry-docking amortization costs were $25.3 million in the first quarter of 2011
versus $22.9 million in the first quarter of 2010. The increase was primarily due to the addition
of six new vessels since the beginning of 2010 (the five vessels that were sold in 2010 were
accounted for as held-for sale during the first quarter of 2010 and bore no depreciation in that
quarter). Management fees in the first quarter of 2011 were $3.9 million versus $3.3 million in
the first quarter of 2010, arising primarily from one extra vessel in the fleet and an increase in
monthly fees since the prior-year’s first quarter. General and administrative expenses in the first
quarter amounted to $1.1 million, just over $0.1 million higher than in the first quarter of 2010.
A gain of $5.8 million was achieved in the first quarter on the sale of the aframax tanker Opal
Queen. This sale had been arranged in the latter part of 2010 and the vessel was accounted for as
held-for-sale at the end of 2010. It was delivered to its buyers on March 23, 2011. After a
prepayment of outstanding debt of $15.6 million, free cash from this sale amounted to $17.2
million.
Interest and finance costs fell to $6.4 million compared to $14.0 million in the first quarter of
2010 due primarily to positive valuations of $3.5 million on non-hedging interest rate and $2.6
million on bunker swaps, while in the previous year there were negative movements on swap
valuations. Total loan and swap interest payable, less capitalized interest, was approximately
$13.1 million in both first quarters.
“We are very pleased that net income in the first quarter of 2011 again exceeded our initial
expectations, given the very difficult environment that confronted the tanker market” observed
Mr. D. John Stavropoulos, Tsakos Energy Navigation’s Chairman of the Board. He added,
“Management continues to control costs effectively, and achieve gains and the release of cash
through strategic sale of assets, while maintaining virtually full employment of the fleet, thus
remaining in a position to reward its shareholders with a generous dividend”.
Subsequent Events
Visit our company website at: http://www.tenn.gr
3
On March 4, 2011, the Company declared a quarterly dividend of $0.15 per share which was
paid to shareholders on April 28, 2011. TEN has paid a dividend every year since its listing on
the New York Stock Exchange in March 2002. Since then, TEN has distributed a total of
$8.775 per share in dividends against a listing price at that time of $7.50 per share, accounting
for the 2-1 share split of November 14, 2007.
On May 9, 2011, the Company announced the long term charters of suezmax newbuildings
Spyros K and Dimitris P to a major Far Eastern entity. The contracts, of eleven and twelve years
duration respectively, are expected to generate minimum gross revenues of $200 million over
the periods of their employment.
Strategy & Outlook
In an overall market weakened primarily by the introduction of new vessels in an already full
fleet, certain sectors in the first quarter displayed dynamism akin to those of booming markets.
The drivers ranged from natural disasters to geopolitical concerns in key areas for oil
transportation. In particular, in February VLCCs experienced a rally in the AG-East routes due
to reduced supply of tonnage in that particular area, in March ice-class aframaxes went through
one of their best periods in recent memory due to the severe arctic conditions in the Baltic
while product tankers at the same time moved away from the doldrums and into healthier
territories driven partly by the cataclysmic events in Japan. Utilization of LNG tonnage may
increase as a result of the devastation of nuclear facilities, power grids and other power
generating and storage assets. It is still early to assess the long term impact of Japan in the oil
tanker markets, but irrespectively, all pray for this proud nation to overcome this tragedy,
particularly on the human scale, with the minimum possible pain.
TEN’s strategy of a balanced and flexible employment proved itself once more as many vessels,
particularly those with profit sharing charters, benefited from the confluence of events. In
particular, TEN’s aframax product tankers and certain of the MRs did trade in harsh ice
environments and earned rates at significant premiums to conventional product markets.
During this period, TEN proceeded with its announced expansion in the developing shuttle
tanker market by placing an order for two suezmax DP2 shuttle tankers in South Korea, with
deliveries in Q4 2012 and Q1 2013 that will immediately enter 15-year contracts at delivery.
TEN will continue to explore opportunities in all tanker-related sectors as well as to optimize
its LNG investment due to the growing favorable conditions in that sector. Irrespective of
investment, TEN will continue to evaluate projects based on revenue visibility and
sustainability based on a project’s long term impact on the Company’s balance sheet.
Looking ahead, the dominant features for the rest of 2011 remain the large crude tanker
orderbook on the one hand and on the other, the continuous demand of developing nations
for oil, with the added possibility of increases in OPEC oil production. These conflicting
factors could sway the markets in either direction and should be watched closely as our
operating strategy may need to be fine-tuned accordingly.
In such an environment, TEN’s management continues to believe that by focusing on a
balanced and flexible chartering policy coupled with improved operating efficiencies through
the deployment of sister vessels and the high officer and crew retention rate, the negative
implications of any uncertainty could be diluted. The high fleet utilization achieved once more
in this quarter at 99% is a testament to that.
Visit our company website at: http://www.tenn.gr
4
Cash preservation will continue in order to maintain our ability to move quickly when
opportunities arise and to allow us to address our dividend obligations in any challenging
environment. Such cash cushions will not only be sourced by the operating performance of the
fleet, but also by efficiently utilizing the second hand market. We will continue to explore ways
to extract the true value of our fleet without, however, destabilizing the core structure of our
operations. Such activity has not only allowed us to maintain the young profile of the fleet but
has also proved to be a rich source of capital gains over the years.
The sale and purchase of vessels will remain integral to operations as it is considered by
management a fundamental constituent in the healthy running of a shipping company with long
term aspirations. To highlight the recurring element of this, since the 2002 NYSE listing the
Company has generated an average $35 million of capital gains per year from vessel sales, or
close to $280 million in total, against an accumulated net income of over $1 billion.
Overall, we remain cautiously optimistic for the long-term nature of the oil tanker markets and
hence the positioning of the Company to benefit from a sustainable upturn when it occurs. We
will continue to work diligently in further controlling the fleet’s operating expenses, without
jeopardizing crew and vessel safety. The work and results of the recently established ship
management company, Tsakos Columbia ShipManagement, gives us confidence that the
savings achieved in our vessel operating expense will be sustained, if not improved further.
“The tanker markets in the first quarter put to test again the operational model of our fleet and
once again the results were satisfactory, given the market climate,” Mr. Nikolas P. Tsakos,
President and CEO of TEN stated. “Flexibility in the terms of vessel employment has become
the cornerstone of our strategy and once again many of our vessels benefited from the various
spikes created during the quarter. We will continue to monitor developments and strategically
employ vessels to safeguard stable streams of revenues without though missing on market
upturns. Continuous fleet revitalization through the efficient exploitation of the sale and
purchase market, especially in markets under pressure, will remain a priority as the challenging
environment of the next quarters may create interesting opportunities. Overall, the
maintenance of our strong balance sheet as we seek further growth, remains our goal
particularly as we strive to breach the gap between the true value of our firm with the one
ascribed by the equity markets,” Mr. Tsakos concluded.
Conference Call
As previously announced, today, Wednesday, May 11, 2011 at 10:00 a.m. Eastern Time, TEN
will host a conference call to review these 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 this press release.
To participate in the call please 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 May 18, 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#
Visit our company website at: http://www.tenn.gr
5
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 51 double-hull vessels of 5.5 million dwt that
includes four suezmax tankers currently under construction totaling 630,000. The first of the
four, the Spyros K is expected to join the fleet on May 14, 2011. TEN’s balanced fleet profile is
reflected in 24 crude tankers ranging from VLCCs to aframaxes and 26 product carriers ranging
from aframaxes to handysize and one LNG carrier.
TEN’s current newbuilding program:
Suezmax DWT Hull Type / Design Expected Delivery
1. Spyros K 158,000 DH May 14, 2011
2. Dimitris P 158,000 DH July 2011
3. Suezmax DP2 157,000 DH Q4 2012
4. Suezmax DP2 157,000 DH Q1 2013
DH: Double Hull
Employment of operating fleet at May 14, 2011, after delivery of suezmax Spyros K:
Type of Employment Vessels
Period Employment – Fixed, fixed w/profit share & min max 29
CoA – market related 2
Pool – market related 6
Spot – market related 11
53 years with minimum total revenues of $720 million
Fleet utilization at 99%
FIRST QUARTER HIGHLIGHTS
? Voyage revenues of $99.2 million
? Net income of $9.3 million
? Earnings per share (diluted) of $0.20
? Average daily operating expenses per vessel decreased by 11.1% to $7,482
? Sale of aframax tanker with a gain of $5.8 million
? Fleet utilization of 99%
? Quarterly dividend of $0.15 per share, paid February 1, 2011, and a further quarterly
dividend declared of $0.15 per share (paid April 28, 2011)
? Contracts signed for construction of two suezmax DP2 shuttle tankers
? Entered eighteenth year in the public markets – profitable since inception
Athens, Greece--May 11, 2011--Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) (the
“Company”) today reported results (unaudited) for the first quarter ended March 31, 2011.
TEN attained net income of $9.3 million (including a $5.8 million gain on the sale of a vessel)
for the first quarter of 2011 compared to $19.5 million (including $14.3 million gains on the
sale of vessels) for the first quarter of 2010. Diluted EPS this first quarter were $0.20.
Revenues, net of commissions and voyage expenses amounted to $72.3 million in the first
quarter of 2011 as compared to $81.3 million in the first quarter of 2010. TEN operated an
average of 47.9 vessels in the first quarter of 2011 compared to 46.6 in the first quarter of 2010.
The average daily time charter equivalent (TCE) rate (voyage revenue less voyage expenses) was
$17,964 versus $20,708 in the first quarter 2010 due to a market which saw some unusually
depressed freight rates for crude carriers, brought about primarily by over-capacity in the global
Visit our company website at: http://www.tenn.gr
2
fleet. Despite the over-supply of vessels, oil demand remained buoyant and our fleet achieved
utilization of 99%. Our fleet benefited from extra profit share earned by the three ice-class LR2
aframaxes operating in the Baltic, a short spike in aframax freight rates operating in the
Mediterranean at the beginning of the Libya crisis and the gradual increase in product carrier
rates which is continuing strongly in the second quarter. However, the aframaxes and product
carriers operating in the spot market were hard hit by increasing oil prices, raising bunker costs
by as much as 30% over first quarter, 2010. A part of these costs, however, was recouped
through our bunker hedges.
Total operating expenses amounted to $31.6 million in the first quarter of 2011, compared to
$34.5 million in the first quarter of 2010. Vessel operating expenses per ship per day decreased
by 11.1% to $7,482 compared to $8,414 in the first quarter of 2010. The decrease in vessel
operating expenses is partly attributable to the increased purchasing power of our new technical
managers, Tsakos Columbia ShipManagement Ltd. (“TCM”), which took over the technical
management of TEN’s fleet on July 1, 2010. Despite rising oil prices, expenditure on lubricants
was down due to increased efficiencies in pricing and vessel supply. There was also reduced
repair activity in the quarter compared to the previous year’s first quarter. Crew expenses also
were held down as a result of actions taken over the past eighteen months in respect of crew
composition.
Depreciation and dry-docking amortization costs were $25.3 million in the first quarter of 2011
versus $22.9 million in the first quarter of 2010. The increase was primarily due to the addition
of six new vessels since the beginning of 2010 (the five vessels that were sold in 2010 were
accounted for as held-for sale during the first quarter of 2010 and bore no depreciation in that
quarter). Management fees in the first quarter of 2011 were $3.9 million versus $3.3 million in
the first quarter of 2010, arising primarily from one extra vessel in the fleet and an increase in
monthly fees since the prior-year’s first quarter. General and administrative expenses in the first
quarter amounted to $1.1 million, just over $0.1 million higher than in the first quarter of 2010.
A gain of $5.8 million was achieved in the first quarter on the sale of the aframax tanker Opal
Queen. This sale had been arranged in the latter part of 2010 and the vessel was accounted for as
held-for-sale at the end of 2010. It was delivered to its buyers on March 23, 2011. After a
prepayment of outstanding debt of $15.6 million, free cash from this sale amounted to $17.2
million.
Interest and finance costs fell to $6.4 million compared to $14.0 million in the first quarter of
2010 due primarily to positive valuations of $3.5 million on non-hedging interest rate and $2.6
million on bunker swaps, while in the previous year there were negative movements on swap
valuations. Total loan and swap interest payable, less capitalized interest, was approximately
$13.1 million in both first quarters.
“We are very pleased that net income in the first quarter of 2011 again exceeded our initial
expectations, given the very difficult environment that confronted the tanker market” observed
Mr. D. John Stavropoulos, Tsakos Energy Navigation’s Chairman of the Board. He added,
“Management continues to control costs effectively, and achieve gains and the release of cash
through strategic sale of assets, while maintaining virtually full employment of the fleet, thus
remaining in a position to reward its shareholders with a generous dividend”.
Subsequent Events
Visit our company website at: http://www.tenn.gr
3
On March 4, 2011, the Company declared a quarterly dividend of $0.15 per share which was
paid to shareholders on April 28, 2011. TEN has paid a dividend every year since its listing on
the New York Stock Exchange in March 2002. Since then, TEN has distributed a total of
$8.775 per share in dividends against a listing price at that time of $7.50 per share, accounting
for the 2-1 share split of November 14, 2007.
On May 9, 2011, the Company announced the long term charters of suezmax newbuildings
Spyros K and Dimitris P to a major Far Eastern entity. The contracts, of eleven and twelve years
duration respectively, are expected to generate minimum gross revenues of $200 million over
the periods of their employment.
Strategy & Outlook
In an overall market weakened primarily by the introduction of new vessels in an already full
fleet, certain sectors in the first quarter displayed dynamism akin to those of booming markets.
The drivers ranged from natural disasters to geopolitical concerns in key areas for oil
transportation. In particular, in February VLCCs experienced a rally in the AG-East routes due
to reduced supply of tonnage in that particular area, in March ice-class aframaxes went through
one of their best periods in recent memory due to the severe arctic conditions in the Baltic
while product tankers at the same time moved away from the doldrums and into healthier
territories driven partly by the cataclysmic events in Japan. Utilization of LNG tonnage may
increase as a result of the devastation of nuclear facilities, power grids and other power
generating and storage assets. It is still early to assess the long term impact of Japan in the oil
tanker markets, but irrespectively, all pray for this proud nation to overcome this tragedy,
particularly on the human scale, with the minimum possible pain.
TEN’s strategy of a balanced and flexible employment proved itself once more as many vessels,
particularly those with profit sharing charters, benefited from the confluence of events. In
particular, TEN’s aframax product tankers and certain of the MRs did trade in harsh ice
environments and earned rates at significant premiums to conventional product markets.
During this period, TEN proceeded with its announced expansion in the developing shuttle
tanker market by placing an order for two suezmax DP2 shuttle tankers in South Korea, with
deliveries in Q4 2012 and Q1 2013 that will immediately enter 15-year contracts at delivery.
TEN will continue to explore opportunities in all tanker-related sectors as well as to optimize
its LNG investment due to the growing favorable conditions in that sector. Irrespective of
investment, TEN will continue to evaluate projects based on revenue visibility and
sustainability based on a project’s long term impact on the Company’s balance sheet.
Looking ahead, the dominant features for the rest of 2011 remain the large crude tanker
orderbook on the one hand and on the other, the continuous demand of developing nations
for oil, with the added possibility of increases in OPEC oil production. These conflicting
factors could sway the markets in either direction and should be watched closely as our
operating strategy may need to be fine-tuned accordingly.
In such an environment, TEN’s management continues to believe that by focusing on a
balanced and flexible chartering policy coupled with improved operating efficiencies through
the deployment of sister vessels and the high officer and crew retention rate, the negative
implications of any uncertainty could be diluted. The high fleet utilization achieved once more
in this quarter at 99% is a testament to that.
Visit our company website at: http://www.tenn.gr
4
Cash preservation will continue in order to maintain our ability to move quickly when
opportunities arise and to allow us to address our dividend obligations in any challenging
environment. Such cash cushions will not only be sourced by the operating performance of the
fleet, but also by efficiently utilizing the second hand market. We will continue to explore ways
to extract the true value of our fleet without, however, destabilizing the core structure of our
operations. Such activity has not only allowed us to maintain the young profile of the fleet but
has also proved to be a rich source of capital gains over the years.
The sale and purchase of vessels will remain integral to operations as it is considered by
management a fundamental constituent in the healthy running of a shipping company with long
term aspirations. To highlight the recurring element of this, since the 2002 NYSE listing the
Company has generated an average $35 million of capital gains per year from vessel sales, or
close to $280 million in total, against an accumulated net income of over $1 billion.
Overall, we remain cautiously optimistic for the long-term nature of the oil tanker markets and
hence the positioning of the Company to benefit from a sustainable upturn when it occurs. We
will continue to work diligently in further controlling the fleet’s operating expenses, without
jeopardizing crew and vessel safety. The work and results of the recently established ship
management company, Tsakos Columbia ShipManagement, gives us confidence that the
savings achieved in our vessel operating expense will be sustained, if not improved further.
“The tanker markets in the first quarter put to test again the operational model of our fleet and
once again the results were satisfactory, given the market climate,” Mr. Nikolas P. Tsakos,
President and CEO of TEN stated. “Flexibility in the terms of vessel employment has become
the cornerstone of our strategy and once again many of our vessels benefited from the various
spikes created during the quarter. We will continue to monitor developments and strategically
employ vessels to safeguard stable streams of revenues without though missing on market
upturns. Continuous fleet revitalization through the efficient exploitation of the sale and
purchase market, especially in markets under pressure, will remain a priority as the challenging
environment of the next quarters may create interesting opportunities. Overall, the
maintenance of our strong balance sheet as we seek further growth, remains our goal
particularly as we strive to breach the gap between the true value of our firm with the one
ascribed by the equity markets,” Mr. Tsakos concluded.
Conference Call
As previously announced, today, Wednesday, May 11, 2011 at 10:00 a.m. Eastern Time, TEN
will host a conference call to review these 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 this press release.
To participate in the call please 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 May 18, 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#
Visit our company website at: http://www.tenn.gr
5
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 51 double-hull vessels of 5.5 million dwt that
includes four suezmax tankers currently under construction totaling 630,000. The first of the
four, the Spyros K is expected to join the fleet on May 14, 2011. TEN’s balanced fleet profile is
reflected in 24 crude tankers ranging from VLCCs to aframaxes and 26 product carriers ranging
from aframaxes to handysize and one LNG carrier.
TEN’s current newbuilding program:
Suezmax DWT Hull Type / Design Expected Delivery
1. Spyros K 158,000 DH May 14, 2011
2. Dimitris P 158,000 DH July 2011
3. Suezmax DP2 157,000 DH Q4 2012
4. Suezmax DP2 157,000 DH Q1 2013
DH: Double Hull
Employment of operating fleet at May 14, 2011, after delivery of suezmax Spyros K:
Type of Employment Vessels
Period Employment – Fixed, fixed w/profit share & min max 29
CoA – market related 2
Pool – market related 6
Spot – market related 11