Exhibit 99.1
TSAKOS ENERGY NAVIGATION LIMITED (TEN) 367 Syngrou Avenue, 175 64 P. Faliro, Hellas Tel: 30210 94 07 710-3,Fax: 30210 94 07 716,e-mail:ten@tenn.gr Website: http://www.tenn.gr
FINAL- FOR RELEASE 5 May 2005 | ||
TSAKOS ENERGY NAVIGATION REPORTS
RECORD PROFITS FOR FIRST QUARTER 2005
FIRST QUARTER HIGHLIGHTS
• | Net income rose 19.4% to $39.85 million. |
• | EPS (basic) of $1.98 versus $1.94 in first quarter of 2004. |
• | Delivery and time charter of the Didimon, a handysize product carrier. |
• | Sale of Panos G, a single-hull aframax at a gain of $5.20 million. |
• | Semi-annual dividend of $0.95 per share declared, paid April 26, 2005. |
ATHENS, GREECE – May 5, 2005 – Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) reported results (unaudited) for the first quarter of 2005.
Revenues, net of voyage expenses and commissions, were $66.75 million in the first quarter of 2005 versus $68.57 million in the like period of 2004. Income before depreciation charges was $48.41 for the first quarter of 2005 up from $42.08 in the first quarter of 2004. Net income rose to $39.85 million from $33.39 million. Net income in the first quarter of 2005 included a gain of $5.20 million from the sale of the Panos G.
Basic earnings per share based on average number of shares outstanding was $1.98 in the first quarter of 2005 versus $1.94 in the same quarter of 2004.
Revenues, net of voyage expenses and commissions, were $66.75 million in the first quarter of 2005 versus $68.57 million in the first quarter of 2004 reflecting the deployment of 26.8 ships this year compared with 27.7 vessels in the same period last year. The average time charter equivalent (TCE) rate per vessel was $30,608 in the recent quarter, virtually unchanged from the first quarter of 2004 which produced an average TCE of $30,029. Four of the five classes of vessels in our fleet (VLCC, Suezmax, Panamax, and Handysize) enjoyed higher rates in the 2005 quarter while the Aframaxes experienced lower charter rates. Fleet productivity remained high at 96.0% in the 2005 period as compared with 96.4% in the first quarter of 2004. Both years’ quarters absorbed significant off-hire periods arising from dry dockings of two vessels in each quarter.
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Vessel operating expenses per ship per day rose from $6,263 for the first quarter of 2004 to $6,653 for the quarter ended March 31st, 2005. The principal factors for the increased costs were crew expense, insurance premiums, repairs, and the pressures of a weak dollar. The average value of the dollar against the Euro was 4.9% lower in the first quarter of 2005 compared with the year earlier quarter. Approximately 25% of TEN’s operating costs are denominated in Euros.
Depreciation and dry-docking amortization costs were $10.29 million versus $11.07 million in the 2004 quarter. Management fees rose to $1.40 million from $1.25 million while general and administrative expenses were $0.50 million compared to $0.57 million. Interest and finance costs, net of interest income, declined from $3.07 million to $0.90 million, reflecting much lower borrowings and the benefits of hedging swaps.
“Net income in the first quarter 2005 exceeded the outstanding results realized in the first quarter of 2004,” observed Mr. D. John Stavropoulos, Tsakos Energy Navigation’s Chairman of the Board. The principal contributors to the success in the first quarter of 2005 included a balanced employment strategy for the diversified fleet, high fleet productivity arising from emphasis on term employment, expense containment despite rising cost pressures, lower finance costs resulting from lower borrowings and effective hedging, and the realization of a capital gain from the timely disposal of an older single-hull aframax.”. Mr. Stavropoulos further stated, “The strong financial position of TEN combined with the growth profile of its ongoing newbuilding program provide a solid foundation for enhancing shareholder value through selective asset additions, share repurchases, and dividend payments.”
FLEET STRATEGY
Since 1997, TEN has aggressively expanded and modernized its fleet. The Company has added 19 newbuildings, and one second-hand VLCC. An additional 13 vessels are scheduled for delivery in 2005, 2006, and 2007. TEN sold three vessels in 2004 including one single-hull ship. An additional single-hull vessel was sold in February 2005 and the sale of two single/double hull product tankers has been arranged for the second quarter of 2005. Furthermore, a new building contract for the delivery of an aframax in June 2005, has been sold. Simultaneously, a new building contract (H/N 1334) was arranged for an additional aframax, sistership to H/N 1328, with scheduled delivery in August 2007. “The structure of our expansion program has allowed us to identify and respond to the evolving needs of our clients,” stated Mr. Nikolas P. Tsakos, President and CEO of Tsakos Energy Navigation. “The timing of our orders has resulted in favorable contract prices contributing to both current and future profits. The emphasis of our newbuilding deliveries is on ice-class vessels designed to serve the rapidly expanding ice-bound shipping needs of Russia, Canada, and Alaska. The balance includes two sistership aframaxes designed to serve niche South American markets and the LNG carrier which provides entry to this rapidly expanding sector. Mr. Tsakos continued, “Considerable progress had been made toward our goal of an all double-hull fleet. The strong resale market for tankers has enabled TEN to execute its fleet renewal programs on a highly favorable basis. The Panos G, a single-hull aframax was disposed of at a gain of $5.2 million. Last week TEN announced the sale of two single/double handysize product carriers, the Dion
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and the Pella, at a gain of $8.0 million to be realized in the second quarter of 2005. Additionally, TEN has sold the contract for an aframax newbuilding (H/N 1224) for a gain of $10.5 million, which will be recorded in the second quarter of 2005. Simultaneously, we ordered a newbuilding aframax to be delivered in August 2007, at a contract price that is approximately $11 million less than the proceeds from the sale of H/N 1224.” Mr. Tsakos concluded, “Timely purchases and sales of vessels are essential to the long term success of a business and an integral part of our operations. We have engaged in such activity in the past and will continue to do so as long as upcoming opportunities enhance shareholders’ value.”
Since the beginning of 2004 TEN has disposed of seven vessels totaling 486,000 dwt contributing $45.0 million in capital gains and has taken delivery of three vessels and placed a further ten newbuilding orders with a 1.39 million dwt combined capacity. The ten orders were placed in addition to the five newbuildings that were ordered in 2003.
The following table presents the newbuilding vessels currently on order:
VESSEL | DWT | Expected Delivery | Design | |||
SUEZMAX | ||||||
M/T Euroniki | 164,000 | September 2005 | 1C Ice Class | |||
M/T Archangel | 162,400 | January 2006 | 1A Ice Class | |||
M/T Alaska | 162,400 | March 2006 | 1A Ice Class | |||
M/T Arctic | 162,400 | February 2007 | 1A Ice Class | |||
M/T Antarctic | 162,400 | April 2007 | 1A Ice Class | |||
AFRAMAX | ||||||
H/N 1328 | 105,000 | May 2007 | DNA Design | |||
H/N 1334 | 105,000 | August 2007 | DNA Design | |||
HANDYSIZE | ||||||
M/T Dionisos | 37,000 | June 2005 | — | |||
M/T Antares | 36,660 | June 2006 | 1A Ice Class | |||
M/T Arion | 36,660 | October 2006 | 1A Ice Class | |||
M/T Andromeda | 36,660 | February 2007 | 1A Ice Class | |||
M/T Aegeas | 36,660 | May 2007 | 1A Ice Class | |||
LNG | ||||||
LNG TBN | 150,000 m³ | February 2007 | Membrane |
Assuming no interim retirements of vessels (exclusive of the Aframax Yerotsakos and the Product Carriers Dion and Pella which have been sold for delivery in the second quarter of 2005) the following table outlines the composition of TEN’s fleet after delivery of the orders citied above:
TYPE | Double Hull | Double/Single Hull | Single Hull | Total | ||||
VLCC | 2 | 2 | ||||||
Suezmax | 10 | 10 | ||||||
Aframax | 8 | 2 | 10 | |||||
Panamax | 7 | 7 | ||||||
Handysize | 6 | 2 | 8 | |||||
LNG | 1 | 1 | ||||||
TOTAL | 34 | 2 | 2 | 38 |
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TANKER INDUSTRY
Worldwide oil demand expanded at the fastest pace in decades in 2004. The rate of growth in 2005 is expected to decelerate from 3.4% last year to about 2.1%. The tanker industry operated at virtual capacity through much of 2004. Modern tonnage under quality management was in tight supply. The demand drivers have been the import appetites of the world’s largest oil consumers, namely the U.S.A. and China. India and the Pacific Rim (except Japan) have also accelerated their import needs. These destinations, with the exception of India, are distant from the sources of oil. Domestic production in these fast growing economies is near or past the peak, thus they are increasingly reliant on imports.
Last year tanker capacity expanded approximately 5.4% which proved to be less than the growth in tonnage demand. This year the combination of a larger new delivery schedule and fewer fleet removals should result in more rapid capacity expansion resulting in a somewhat less tight supply/demand equation. Nevertheless, the demand for modern tonnage with quality management should result in very acceptable charter rates, as fleet utilization should remain well above historical levels.
Longer term prospects are also favorable for continued supply/demand balance. Assuming the advanced economies avoid recession and the developing countries continue to enjoy strong export markets and growing domestic consumption, oil demand in the major import markets will continue to grow. New and reopened pipelines should moderate demand for tankers, but the overall transport needs will result in healthy growth of seaborne requirements. Shipyard capacity limitations and significant scrappage dictated by regulatory requirements over the next five years should result in a satisfactory supply/demand relationship.
As noted earlier, conditions in 2005 should result in good fleet utilization and solid charter rates. However, offsets to these desirable conditions include significantly higher interest rates, elevated bunker prices, higher insurance premiums, rising personnel expenses, expanded regulatory procedures on ships and onshore, growing corporate governance fees, and the ever rising burden of a weak dollar. Nevertheless, the tanker industry should enjoy the third consecutive year of general prosperity.
OUTLOOK FOR TEN
The momentum of 2003/2004 continued in the first quarter of 2005 although charter rates were less robust in the closing weeks. The anticipated continuation of high or even increasing OPEC production during the remainder of the year should sustain strong transport needs. TEN is on track for another year of high fleet utilization, with 75% of employable days for the year having been booked or under contract for the fleet now in operation. TEN will take delivery of two newbuildings in June and September and management is optimistic regarding employment opportunities. Overall prospects for income from fleet operations and contract sales are also very promising. Finance costs, net of interest income, should provide favorable comparisons reflecting lower borrowings, benefits of interest rate swaps, and greater interest income. Management anticipates that 2005 will record another year of strong profitability.
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ABOUT TSAKOS ENERGY NAVIGATION
TEN expects to operate a fleet of 38 vessels of 4.1 million dwt by mid-2007. Currently it operates a fleet of 25 vessels (including three chartered-in, one Aframax and two Suezmaxes vessels) of approximately 2.8 million dwt with an average age of 6.5 years compared to 12 years of the world average. Its newbuilding program today consists of 13 vessels (5 Suezmax, 2 Aframax, 5 Handysize, 1 LNG) of 1.3 million dwt.
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.
CONTACTS:
George V. Saroglou, COO
Tsakos Energy Navigation Ltd.
Tel: 30 210 94 07 710-3
ten@tenn.gr
Parag Dave
GCI Group for Tsakos Energy Navigation Ltd.
212-537-8026
pdave@gcigroup.com
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TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
Selected Consolidated Financial and Other Data (Unaudited)
(In Thousands of U.S. Dollars, except share, per day and fleet data)
Three months ended March 31 | ||||||||
2005 | 2004 | |||||||
STATEMENT OF INCOME DATA | ||||||||
Voyage revenues | $ | 76,874 | $ | 83,023 | ||||
Commissions | 3,151 | 3,499 | ||||||
Voyage expenses | 6,978 | 10,954 | ||||||
Charter hire expense | 6,035 | 6,063 | ||||||
Vessel operating expenses | 13,726 | 13,667 | ||||||
Depreciation | 8,560 | 8,692 | ||||||
Amortization of deferred drydocking charges | 1,730 | 2,374 | ||||||
Provision for doubtful receivables | — | 244 | ||||||
Management fees | 1,395 | 1,245 | ||||||
General & Administrative expenses | 499 | 570 | ||||||
Foreign currency losses | 29 | 45 | ||||||
Amortization of deferred gain on sale of vessels | (792 | ) | (792 | ) | ||||
Gain on sale of vessels | (5,203 | ) | — | |||||
Operating income | 40,767 | 36,462 | ||||||
Interest and finance costs, net | (1,586 | ) | (3,154 | ) | ||||
Interest income | 687 | 81 | ||||||
Other income/(expense) | (16 | ) | — | |||||
Net income | $ | 39,851 | $ | 33,389 | ||||
Earnings per share, basic | $ | 1.98 | $ | 1.94 | ||||
Earnings per share, diluted | $ | 1.97 | $ | 1.93 | ||||
Weighted average number of shares outstanding | ||||||||
Basic | 20,174,624 | 17,195,173 | ||||||
Diluted | 20,194,589 | 17,272,003 | ||||||
March 31 2005 | December 31 2004 | |||||||
BALANCE SHEET DATA | ||||||||
Cash and cash equivalents | 144,508 | 116,922 | ||||||
Current assets, including cash | 177,015 | 155,270 | ||||||
Investments | 14,859 | 10,000 | ||||||
Advances for vessels | 131,449 | 121,260 | ||||||
Vessels at cost | 829,744 | 805,148 | ||||||
Accumulated Depreciation | (177,435 | ) | (168,874 | ) | ||||
Vessels’ Net Book Value | 652,309 | 636,274 | ||||||
Deferred charges | 14,833 | 15,184 | ||||||
Total assets | $ | 990,465 | $ | 927,988 | ||||
Current portion of long-term debt | 40,333 | 39,693 | ||||||
Current liabilities, including current portion of long-term debt | 99,144 | 80,544 | ||||||
Long-term debt, net of current portion | 338,726 | 325,471 | ||||||
Deferred income, net of current portion | 11,451 | 12,452 | ||||||
Total stockholders’ equity | 541,144 | 519,521 | ||||||
Total liabilities and stockholders’ equity | $ | 990,465 | $ | 937,988 | ||||
Three months ended March 31 | ||||||||
2005 | 2004 | |||||||
OTHER FINANCIAL DATA | ||||||||
Net cash from operating activities | $ | 46,900 | $ | 43,507 | ||||
Net cash from/(used in) investing activities | $ | (32,492 | ) | $ | (83,799 | ) | ||
Net cash from/(used in) financing activities | $ | 13,178 | $ | 32,970 | ||||
FLEET DATA | ||||||||
Vessel overhead costs per ship per day | $ | 786 | $ | 720 | ||||
Average number of vessels during period | 26.8 | 27.7 | ||||||
Number of vessels at end of period | 26.0 | 28.0 | ||||||
Average age of fleet at end of period | Years | 7.2 | 7.1 | |||||
Dwt at end of period (in thousands)
| 2,762.7
| 2,981.3
| ||||||
Time charter employment - fixed rate | Days | 1,057 | 936 | |||||
Time charter employment - variable rate | Days | 444 | 253 | |||||
Period employment (pool and coa) at market rates | Days | 505 | 582 | |||||
Spot voyage employment at market rates | Days | 307 | 660 | |||||
Total operating days | 2,313 | 2,431 | ||||||
Total available days | 2,410 | 2,521 | ||||||
TCE per ship per day | $ | 30,608 | $ | 30,029 | ||||
Operating expenses per ship per day | $ | 6,653 | $ | 6,263 |
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
FINANCIAL AND OTHER DATA BY FLEET (Unaudited)
Three Months Ended March 31, 2005
Vessel Type | VLCC | Suezmax | Aframax | Panamax | Product carriers | |||||||||||
Average number of vessels | 2.0 | 4.0 | 8.9 | 7.0 | 4.9 | |||||||||||
Number of vessels at end of period | 2.0 | 4.0 | 8.0 | 7.0 | 5.0 | |||||||||||
Dwt at end of period (in thousands) | Dwt | 600.9 | 657.2 | 826.5 | 478.2 | 199.9 | ||||||||||
Percentage of total fleet | 21.8 | % | 23.8 | % | 29.9 | % | 17.3 | % | 7.2 | % | ||||||
Average age at end of period | Years | 8.9 | 2.5 | 7.5 | 7.5 | 15.5 | ||||||||||
TCE per ship per day | $ | 53,827 | 29,152 | 28,539 | 35,531 | 19,795 | ||||||||||
Operating expenses per ship per day | $ | 12,361 | 6,616 | 6,894 | 5,663 | 6,533 |
Three Months Ended March 31, 2005
Newbuildings | La Madrina | Acquired (pre-1997) | Combined | |||||||||||||
Average number of vessels | 15.9 | 1.0 | 9.8 | 26.8 | ||||||||||||
Percentage of total fleet in dwt at end of period | 69.2 | % | 10.7 | % | 19.9 | % | 100 | % | ||||||||
Average age at end of period (years) | 3.7 | 11.2 | 17.0 | 7.2 | ||||||||||||
Utilization in period | 99.2 | % | 100.0 | % | 90.4 | % | 96.0 | % | ||||||||
Average TCE per ship per day | $ | 33,802 | $ | 72,154 | $ | 20,269 | $ | 30,608 | ||||||||
Average operating expenses per ship per day | $ | 6,673 | $ | 12,361 | $ | 6,728 | $ | 6,653 | ||||||||
Voyage Revenue, net of commission ($ thousand) | $ | 52,804 | $ | 7,528 | $ | 17,527 | $ | 73,723 | ||||||||
Net income, excluding gain on sale - ($ thousand) | $ | 26,189 | $ | 3,721 | $ | 4,817 | $ | 34,728 | ||||||||
Gain on sale of vessels | 5,203 | |||||||||||||||
Holding and dormant companies | (79 | ) | ||||||||||||||
Total net income | 39,851 | |||||||||||||||
Newbuildings include all vessels specifically constructed for TEN. These represent all additions to the fleet since 1997, except for the VLCC La Madrina.
TCE represents voyage revenue less voyage expenses. Commission is not deducted.
TCE rate given for the the VLCC Millennium, which is chartered out on a bare-boat basis, takes into account a notional operating cost per day.
Average operating costs per day excludes the three chartered-in vessels and the vessel bare-boat chartered out.