TEN, Ltd. reported results (unaudited) for the quarter ended March 31, 2019.
Q1 2019 Summary Results
Following the strong fourth quarter of 2018, TEN continues to enjoy positive results in the first quarter of 2019 with a net income of $11.2 million as a result of improved rate conditions, following the healthy market recovery experienced at the end of 2018.
Gross revenues totaled $147.0 million, 17.0% higher than in the 2018 first quarter due to improved rates, full employment at 97% and the positioning of suezmax and aframax tankers in the spot market that generated an additional $18.4 million in revenue over that achieved, by the same vessels, in the first quarter of 2018.
As market conditions improved, profit share arrangements were activated and generated a further $4.3 million in revenue. In addition, the two LNG carriers produced almost $3.0 million more in revenues compared to the first quarter of 2018 due to the significant rise in their long-term employment rates.
TEN’s fleet averaged $21,054 per day in time charter equivalent earnings compared to $17,771 per day in the first quarter of 2018, an 18.5% increase.
During the first quarter of 2019, 73% of the fleet was employed on secured revenue contracts, again generating enough cash to cover operating expenses, charter-in costs, overhead and finance expenses for all the vessels in the fleet.
Operating Income was at $27.8 million, five times greater than in the 2018 first quarter and EBITDA (Earnings before interest, taxes, depreciation and amortization) was $64.1 million, nearly 53% higher over the same period.
Overall, vessel expenses fell significantly by $4.2 million, a 9% drop, while daily operating expenses per vessel also fell by 7% to $7,522, due to savings on stores and repairs, in line with the Company’s proactive management practices, as well as the strengthening of the US dollar. G&A costs also experienced a reduction by 6%.
Interest and finance costs were reduced by 2% to $17.6 million from the 2018 first quarter. Although global interest rates have increased over the preceding twelve months, the average outstanding debt over that period has fallen by $150 million, keeping overall loan interest at similar levels from the 2018 first quarter.
Total cash balances amounted to $192 million with net debt to capital at March 31, 2019 at a healthy 47.9%. TEN is servicing its debt impeccably while sustaining a healthy dividend.
Dividend – Common Shares
Following the $0.05 per share dividend paid on May 30, 2019, the Company’s Board of Directors approved the reintroduction of semi-annual dividend payments to be made on the second and fourth quarter of each calendar year. The Company’s existing dividend payout policy will remain unchanged.
Corporate Strategy & Outlook
TEN’s employment strategy aims to outperform the market at high and low cycles. In 2018, the Company’s average time-charter revenues exceeded the spot market by 40% and in the first quarter of 2019 already by 5%. At the same time, immense attention is being paid in maintaining costs under control with a further 9% decrease of operating expenses in the first quarter of 2019.
Debt reduction remains on the forefront of TEN’s priorities. Compared to the first quarter of 2018, total debt has been reduced by $150 million, equivalent to $2 per share value creation.
TEN is in the final stages of its 19-vessel growth program undertaken at competitive levels during the low levels of the cycle. Of these, 15 ships have been successfully delivered, financed and employed on long-term accretive charters to first class end-users. Within this year and 2020, the remaining four vessels, all fully financed and chartered to major oil concerns for a minimum of five years, will complete the Company’s current expansion and secure revenues going forward.
Concurrently with the above, our strong balance sheet allows management to explore further accretive opportunities in the LNG and Shuttle tanker sector.
The market prospects going forward due to the declining orderbook and IMO 2020 disruptions, places TEN in an ideal position to take advantage of the positive environment that is shaping up.
“With cash flow generation clearly better compared to the 2018 first quarter and market dynamics shaping favorably, TEN’s ability to capture the expected market upside remains strong,” Mr. George Saroglou, COO of TEN commented. “TEN’s employment strategy resulting to almost full fleet utilization coupled with the second phase of our fully financed fully employed organic growth, allow us to remain confident for the future and to continue rewarding our shareholders with attractive dividends,” Mr. Saroglou concluded.