Exhibit 99.1
TSAKOS ENERGY NAVIGATION LIMITED (TEN) 367 Syngrou Avenue, 175 64 P. Faliro, Hellas Tel: 30 210 94 07 710-3,Fax: 30 210 94 07 716,e-mail:ten@tenn.gr Website: http://www.tenn.gr |
Press Release
August 1, 2008
TSAKOS ENERGY NAVIGATION REPORTS
RECORD EARNINGS UP 85% FOR SECOND QUARTER 2008
Earnings per share of $1.82 versus $0.98 in Q2 2007
SECOND QUARTER 2008 HIGHLIGHTS
• | Net income of $69.20 million versus $37.52 million in Q2 2007, an 84.5% increase |
• | Net revenues, of $146.64 million versus $107.22 million in Q2 2007, a 36.8% increase |
• | EPS of $1.82 per share (diluted) versus $0.98 in Q2 2007 |
• | TCE (Time charter equivalent) of $39,512 per day per ship as compared to $30,021 in Q2 2007 |
• | Semi-annual dividend of $0.90 per share paid in April 2008 (bringing the total for fiscal 2007 to $1.725) |
• | Two-year time charter extensions with profit share for 2006-built Aframax product tankers Proteas and Propontis |
• | Acquired and retired 126,800 shares for an average price of $31.33, a $4.0 million investment |
FIRST HALF 2008 HIGHLIGHTS
• | Net revenues of $262.31 million versus $203.71 million in the first half of 2007, a 28.8% increase |
• | Net income of $134.34 million versus $80.99 million in the 2007 period, a 65.9% increase |
• | EPS of $3.52 per share (diluted) versus $2.12 in the first half of 2007 |
• | TCE of $35,354 per ship per day versus $30,770 for the first half of 2007 |
• | Delivery and charter of two newbuilding panamaxes, the Selecao and Socrates and sale of 1999-built aframax Olympia for a gain of $34.57 million |
• | Acquired and retired 392,400 shares for an average price of $31.18, a $12.23 million investment |
Athens, Greece – August 1, 2008 – Tsakos Energy Navigation Limited (TEN or the “Company”) (NYSE: TNP) reported today results (unaudited) for the second quarter and first half of 2008.
SECOND QUARTER RESULTS
Revenues, net of voyage expenses and commissions, were $146.64 million in the second quarter of 2008 up from $107.22 million in the 2007 period. TEN deployed on average 44.0 vessels versus 42.3 vessels in the previous year quarter. Fleet utilization was 97.4% as compared with 97.6% in the second quarter of 2007. TCE per day, per ship rose to $39,512 from $30,021. Vessel operating costs were $9,898 per ship, per day, up from $7,266 primarily due to higher crew costs, non recurring expenses for vessels under repair and the impact of further dollar weakness.
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Depreciation and dry-docking amortization costs rose to $22.03 million from $21.65 million. Management fees increased as a reflection of the increased number of ships and fee increases while office overheads remained at the same level but expenses relating to the stock compensation program increased in line with the share price.
Interest and finance costs net of interest income fell to $9.08 million from $12.54 million reflecting the reduction in interest rates and positive movements in interest rate swap valuations. Total average indebtness remained at the same level as last year’s second quarter.
Net income in the 2008 period was $69.21 million versus $37.52 million in the second quarter of 2007. Diluted earnings per share were $1.82 versus $0.98 in the second quarter of 2007. There were no vessel sales in either the second quarter 2008 or 2007.
FIRST HALF RESULTS
Revenues, net of voyage expenses and commissions, were $262.31 million in the first six months of 2008, up from $203.71 million in the 2007 period. TEN operated on average 43.6 ships as compared with 40.0 a year earlier. TCE per ship, per day increased to $35,354 from $30,770 while operating expenses increased to $9,439 from $7,278. General and administrative expenses were $2.11 million, up from $1.89 million in the same period last year. Management fees rose in line with fleet expansion and contractual fee increases.
Interest and finance costs, net of interest income, rose to $30.73 million from $22.08 million from the impact of increased borrowings to fund fleet expansion, negative interest rate valuations and a reduction in interest and investment income and capitalized interest. However, the benefits of lower interest rates reduced the impact. Depreciation and drydocking amortization costs rose to $44.01 million from $40.52 million as a result of fleet expansion.
Net income in the first half of 2008, enhanced by capital gains of $34.57 million, reached $134.34 million compared to net income in the 2007 period of $80.99 million with capital gains of $6.40 million from the sale of the 1989-built panamax tanker Bregen. Earnings per share diluted for the first half of 2008 were $3.52, while the first six months of 2007 had diluted earnings per share of $2.12.
D. John Stavropoulos, Chairman of the Board observed. “Unseasonal strength in the charter market was a major boon for the tanker industry and TEN. The radar is focused on expense control reflecting much higher crew costs and general inflation.” He continued, “TEN’s management is sensitive to these challenges and ever alert for opportunities of efficiencies although safety and quality services are paramount. The record results reported for the second quarter and first half are testimony to TEN’s strategies and management execution.”
SUBSEQUENT EVENTS
2006-built aframax product tanker Promitheas on July 2008 entered the spot market upon expiration of two-year time charter to Neste Oil. As a result, TEN’s market related exposure now consists of 31 vessels out of an operational fleet of 44. Of these, 23 are in profit-sharing arrangements and eight in spot related contracts (Contracts of Afreightment and pure spot).
The Maria Princess and Nikkon Princess, two DNA-aframax tankers currently under construction and expected to be delivered in October and November of this year have been fixed at very attractive repositioning time-charter to a major international oil trader. Upon expiration of these short-term charters the vessels will enter the spot market.
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MARKET UPDATE
The global economy is caught between slowing demand in many advanced nations and rising inflation in both emerging and developing economies. Global growth is expected to decelerate considerably in the second half of 2008 before gradually recovering in 2009. Financial market conditions remain challenging and fragile amid concerns about losses in the context of a slowing world economy. At the same time, the much needed bank recapitalization process continues unabated and extension of new credit will be constrained first and foremost by the need to repair the balance sheets of major financial institutions.
Despite systematic downward revisions in the 2008 global oil demand, the International Energy Agency (IEA) expects overall positive growth in line with previous years; 0.9% (890 kb/d) to 87.7 mb/d in 2009 a shade below the growth expected for this year, 1.1% (900 kb/d). High oil prices, despite the recent welcomed retreat, contributed to the contraction in OECD oil product demand which was offset by robust growth in emerging economies.
The spot and period freight rate environment continues to be very strong with average tanker rates this quarter at levels not seen since the 1970’s. In the past nine months OPEC has pushed output well ahead of previous year levels with June supply standing at 1.8 mb/d higher than June 2007. This trend is expected to continue, at least for the near term. The strong demand for crude oil and oil products in emerging economies and Asia in particular, and the meager OECD second quarter stock built-up which according to IEA was around +100 kb/d, is well below the five-year average for the second quarter build-up of 900 kb/d.
FLEET STRATEGY & OUTLOOK
Since the beginning of the second quarter, 2007, TEN has continued to solidify its presence in the crude and products markets with the introduction of five crude carrier newbuildings, one suezmax, two aframaxes and two panamaxes and three product carrier newbuildings, all of handysize design. In addition, the company maintained its focus on strategic divestments with the sale of three 1998-99 built aframax vessels for a $96.0 million capital gain. Compared to the second quarter of last year, TEN has experienced an increase in its fleet, from 42.3 vessels average to 44.0 vessels.
This growth was accompanied by a more substantial increase in vessel employment under flexible rate agreements. Even though the fleet’s employment under fixed rate charters increased by 7.7%, the Company placed significant emphasis on variable-rate employment with a 25.6% increase in such contracts over the corresponding quarter in 2007. In addition, the fleet experienced a 19.8% increase in spot-related fixtures (including vessels operating under contracts of afreightment) over the same period. This blend of charters enabled the company to not only weather some rate turbulence in the autumn months of 2007, but to take advantage of market peaks when they occurred. As a result, and with an almost equal fleet utilization in both quarters, TEN’s fleet generated 36.8% higher revenues than those in the second quarter of 2007.
This shift towards rate flexibility and the ability to take advantage of market rallies was evidenced recently with the extension of two Neste Oil profit-share charters. Two 2006-built aframax product tankers, the Proteas and Propontis, were chartered for an additional two year period, and a third sister vessel, the Promitheas, was placed in the pure spot market (from July 2008). This will increase the fleet’s pure spot exposure from three vessels to four, comprised of three suezmaxes and one aframax.
Today 40 vessels out of an operational fleet of 44, operate in fixed duration employments and provide significant earnings visibility. In particular, 13 are under fixed rate charters, 23 under profit sharing arrangements and four in contracts of afreightment. As a result 87% of available second half days for this year have been fixed guaranteeing at least $174 million in gross revenues (profit sharing vessels assumed at only the minimum pre-agreed rate) and 70% of 2009 days and $282 million in revenues. These vessels under profit sharing agreements and those under contracts of afreightment, coupled with those in the spot market, all-in-all 31 vessels out of 44, have the ability to participate in market peaks and further supplement the Company’s bottom line.
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In line with the Company’s pre-stated policy to pursue growth opportunities, TEN, during this quarter, evaluated various prospects in the sale & purchase and mergers and acquisitions markets as well as potential opportunities in the newbuilding front, for contract resales from owners with low resistances to the so called “credit-crunch” or from those who wished to capitalize on their investment. In addition, the Company, on its constant quest for modernization, continued and will continue to evaluate vessel sales as long as these sales do not upset the core structure of the fleet, do not disrupt chartering relationships and provide material capital gains in the process.
TEN’s future remains bright and the recent short-term fixtures, prior to delivery, of two DNA-aframax newbuildings, the Maria Princess and the Nikkon Princess, for a rate more than twice the vessels all-in break even levels, signifies a healthy market ahead. These two vessels which will be placed in the spot market once this ex-yard employment concludes will further increase the Company’s presence in the spot trades and allow the Company to further benefit from freight upswings. The remaining four of these six DNA newbuldings currently under construction will be delivered in the next seven quarters and provide a safety net in fleet expansion should other growth opportunities not materialize.
Going forward TEN will continue to evaluate growth opportunities as they arise and determine ways to enhance shareholder value. These opportunities could be secondhand vessels or newbuilding contract acquisitions as long as they do not place an unreasonable burden on the Company’s healthy balance sheet and as long as they fit the energy transportation profile of TEN . The balanced employment structure that has so successfully served the Company through ups and downs over the years will be maintained and fine tuned according to circumstances. The spot element however could increase somewhat as the current size of the fleet affords added flexibility to dedicate more vessels to spot trades. Evidence of this is the recent placement of the DNA-aframax Promitheas in the spot market and the eventual spot operations upon completion of the short-term repositioning charters of the newbuildings Maria Princess and Nikkon Princess.
“The size, quality and employment structure of our fleet has allowed us to extract great benefits from the extremely buoyant market we are currently navigating,” stated Mr. Nikolas P. Tsakos, President & Chief Operating Officer of TEN. “Looking ahead, we will continue to strive to enhance shareholder value by adding additional tonnage to our fleet, maintaining our growing dividend payout and continuing our share buyback program. With six more newbuildings to join our fleet, strong chartering and banking relationships and a healthy balance sheet, our Company is on a very healthy footing,” Mr. Tsakos concluded.
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 630,000 dwt.
The strategy of a balanced diverse fleet is reflected in 25 crude tankers ranging from VLCCs to aframaxes and 24 product carriers ranging from aframaxes to handysize; complemented by one LNG.
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TEN’s balanced employment profile:
Type of Employment | Vessels | |
Market Related with Period Employment | 27 | |
Market Spot | 4 | |
Fixed Time Charter Employment | 13 |
TEN’s current newbuilding program:
Aframax | DWT | Hull Type / Design | Delivery | |||
1. Maria Princess | 105,000 | DH / DNA | October 21, 2008 | |||
2. Nikkon Princess | 105,000 | DH / DNA | November 15, 2008 | |||
3. Ise Princess | 105,000 | DH / DNA | Q3 2009 | |||
4. Asahi Princess | 105,000 | DH / DNA | Q4 2009 | |||
5. Saporo Princess | 105,000 | DH / DNA | Q4 2009 | |||
6. Uraga Princess | 105,000 | DH / DNA | Q1 2010 |
DH: Double Hull
DNA: Design New Aframax
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:
Tsakos Energy Navigation, Ltd. | Cubitt Jacobs & Prosek Communications | |
George Saroglou, COO | Thomas J. Rozycki, Jr., Investor Relations | |
Tel: +30210 94 07 710 | Tel: +212 279 3115 x208 | |
ten@tenn.gr | trozycki@cjpcom.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 June 30 | Six months ended June 30 | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
STATEMENT OF INCOME DATA | ||||||||||||||||
Voyage revenues | $ | 171,409 | $ | 131,847 | $ | 308,153 | $ | 247,129 | ||||||||
Commissions | 6,506 | 4,717 | 11,016 | 8,794 | ||||||||||||
Voyage expenses | 18,262 | 19,906 | 34,824 | 34,623 | ||||||||||||
Charter hire expense | 4,141 | 4,141 | 8,281 | 8,596 | ||||||||||||
Vessel operating expenses | 37,036 | 26,057 | 69,829 | 48,766 | ||||||||||||
Depreciation | 21,023 | 20,546 | 41,350 | 38,688 | ||||||||||||
Amortization of deferred dry-docking costs | 1,005 | 1,104 | 2,662 | 1,829 | ||||||||||||
Management fees | 2,988 | 2,485 | 5,900 | 4,690 | ||||||||||||
General and administrative expenses | 1,113 | 1,071 | 2,105 | 1,886 | ||||||||||||
Stock compensation expense | 1,745 | 1,321 | 3,089 | 2,284 | ||||||||||||
Foreign currency losses | 318 | 116 | 749 | 148 | ||||||||||||
Amortization of deferred gain on sale of vessels | (792 | ) | (792 | ) | (1,584 | ) | (1,584 | ) | ||||||||
Gain on sale of vessels | — | — | (34,565 | ) | (6,397 | ) | ||||||||||
Total expenses | 93,345 | 80,672 | 143,656 | 142,323 | ||||||||||||
Operating income | 78,064 | 51,175 | 164,497 | 104,806 | ||||||||||||
Interest and finance costs, net | (10,906 | ) | (14,817 | ) | (34,744 | ) | (30,352 | ) | ||||||||
Interest and investment income | 1,823 | 2,277 | 4,012 | 8,269 | ||||||||||||
Other, net | (48 | ) | 23 | 101 | (75 | ) | ||||||||||
Total other income (expenses), net | (9,131 | ) | (12,517 | ) | (30,631 | ) | (22,158 | ) | ||||||||
Minority interest | 273 | (1,139 | ) | 469 | (1,658 | ) | ||||||||||
Net income | $ | 69,206 | $ | 37,519 | $ | 134,335 | $ | 80,990 | ||||||||
Earnings per share, basic | $ | 1.84 | $ | 0.99 | $ | 3.55 | $ | 2.13 | ||||||||
Earnings per share, diluted | $ | 1.82 | $ | 0.98 | $ | 3.52 | $ | 2.12 | ||||||||
Weighted average number of shares outstanding | ||||||||||||||||
Basic | 37,686,262 | 38,079,742 | 37,808,488 | 38,079,742 | ||||||||||||
Diluted | 38,018,386 | 38,290,872 | 38,120,119 | 38,209,560 | ||||||||||||
June 30 2008 | December 31 2007 | June 30 2007 | ||||||||||||||
BALANCE SHEET DATA | ||||||||||||||||
Cash and cash equivalents | 304,296 | 181,447 | 143,749 | |||||||||||||
Current assets, including cash | 375,855 | 276,053 | 268,447 | |||||||||||||
Investments | 1,000 | 1,000 | 0 | |||||||||||||
Advances for vessels | 80,837 | 169,739 | 154,580 | |||||||||||||
Vessels at cost | 2,246,908 | 2,127,704 | 2,100,429 | |||||||||||||
Accumulated Depreciation | (268,871) | (227,521) | (185,614) | |||||||||||||
Vessels' Net Book Value | 1,978,037 | 1,900,183 | 1,914,815 | |||||||||||||
Deferred charges | 17,274 | 15,801 | 13,085 | |||||||||||||
Total assets | $ | 2,453,003 | $ | 2,362,776 | $ | 2,350,927 | ||||||||||
Current portion of long-term debt | 59,885 | 44,363 | 73,787 | |||||||||||||
Current liabilities, including current portion of long-term debt | 173,681 | 159,265 | 167,879 | |||||||||||||
Long-term debt, net of current portion | 1,332,778 | 1,345,580 | 1,371,609 | |||||||||||||
Deferred income, net of current portion | 0 | 0 | 1,042 | |||||||||||||
Minority interest | 2,922 | 3,391 | 1,660 | |||||||||||||
Total stockholders’ equity | 943,622 | 854,540 | 808,737 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 2,453,003 | $ | 2,362,776 | $ | 2,350,927 | ||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
OTHER FINANCIAL DATA | ||||||||||||||||
Net cash from operating activities | $ | 65,599 | $ | 45,275 | $ | 134,483 | $ | 114,343 | ||||||||
Net cash (used in)/from investing activities | $ | (2,991 | ) | $ | (177,470 | ) | $ | 31,798 | $ | (425,223 | ) | |||||
Net cash (used in)/from financing activities | $ | (50,414 | ) | $ | 81,999 | $ | (43,432 | ) | $ | 280,062 | ||||||
TCE per ship per day | $ | 39,512 | $ | 30,021 | $ | 35,354 | $ | 30,770 | ||||||||
Operating expenses per ship per day | $ | 9,898 | $ | 7,266 | $ | 9,439 | $ | 7,278 | ||||||||
Vessel overhead costs per ship per day | $ | 1,460 | $ | 1,266 | $ | 1,400 | $ | 1,222 | ||||||||
11,358 | 8,532 | 10,839 | 8,500 | |||||||||||||
FLEET DATA | ||||||||||||||||
Average number of vessels during period | 44.0 | 42.3 | 43.6 | 40.0 | ||||||||||||
Number of vessels at end of period | 44.0 | 44.0 | 44.0 | 44.0 | ||||||||||||
Average age of fleet at end of period | 5.8 | 5.3 | 5.8 | 5.3 | ||||||||||||
Dwt at end of period (in thousands) | 4,711.0 | 4,846.0 | 4,711.0 | 4,846.0 | ||||||||||||
Time charter employment—fixed rate | 1,136 | 1,058 | 2,195 | 1,966 | ||||||||||||
Time charter employment—variable rate | 2,163 | 1,722 | 4,291 | 3,222 | ||||||||||||
Period employment (pool and coa) at market rates | 327 | 273 | 691 | 554 | ||||||||||||
Spot voyage employment at market rates | 273 | 706 | 580 | 1,223 | ||||||||||||
Total operating days | 3,899 | 3,759 | 7,757 | 6,965 | ||||||||||||
Total available days | 4,004 | 3,851 | 7,927 | 7,248 | ||||||||||||
Utilization | 97.4 | % | 97.6 | % | 97.9 | % | 96.1 | % |
TCE represents voyage revenue less voyage expenses. Commission is not deducted.
Operating expenses per ship per day exclude the two chartered-in vessels and the vessel bare-boat chartered out.
Vessel overhead costs include Management fees, General & Administrative expenses and Staff compensation expense.
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