TEN expects strong market to continue in 2020 and beyond


TEN reported results (unaudited) for the quarter and nine months ended September 30, 2019.


TEN earned gross revenues of $422.1 million, 12.2% higher than in the equivalent nine-month period of 2018 and achieved a net income of $2.0 million in the nine months of 2019 compared to a loss of $36.1 million in the nine months of 2018, a positive swing of $38.1 million between the two nine-month periods.

Operating income totaled $58.5 million, a five-fold increase over the equivalent 2018 nine-month period, while adjusted EBITDA reached $167.1 million, 34% more than in the 2018 nine-month period.

The daily time charter equivalent rate per vessel neared $20,000 in the nine months of 2019, a 16% increase over the equivalent 2018 period, due to achieving better results in the spot market, earning higher profit share and arranging new time charters with substantially higher rates.

Average daily operating expenses per vessel remained at competitive levels, decreasing to $7,679 in the 2019 nine-month period from $7,755 in the 2018 nine-month period, despite seven scheduled dry-dockings during the 2019 nine-month period.

General and administrative expenses for the nine-month period of 2019, which include management fees (the management fee per vessel being unchanged for over 10 years) and office expenses, remained at effectively the same level as in the nine-month period of 2018. Average daily overhead cost per vessel also remained at a low level of $1,166.

Finance costs, net of interest income, increased by $8.8 million in the nine-month period of 2019 as compared to the respective period in 2018, mainly due to a reduction of bunker hedge cash receipts by $7.2 million and a decrease in bunker hedge valuations by $2.7 million. However, interest payable on our loans remained stable. Since the end of September 2018, the Company has reduced outstanding indebtedness by $94 million. Overall, over the last 12 months and including the full repayment of the Series B Preferred Shares, TEN reduced its overall credit obligations by $144 million and maintained strong liquidity of $177 million. In addition, several loans were refinanced since the beginning of 2019 with substantially lower margins, which will continue to result in reduced interest expenses going forward.

In line with its stated policy, TEN expanded its strategic alliance with a major oil concern by ordering four new tankers against long term employment, built to the most up-to-date specifications. Of these four, the first was recently delivered and immediately commenced its long-term charter, with the rest scheduled for delivery within 2020. TEN also added two of its vessels to its existing joint venture with a major South American state entity.


With the same number of vessels as in the 2018 third quarter, TEN earned higher revenues when compared to that third quarter. $131.0 million in the 2019 third quarter versus $126.5 million, or a 3.6% increase. Average daily TCE rates reached $18,837 from $16,547 in the same quarter of 2018, a 13.8% increase.

Operating income amounted to $11.7 million for the third quarter of 2019, a six-fold increase over the operating income of the third quarter of 2018. EBITDA increased to $47.1 million, 16.6% higher than in the third quarter of 2018, with cash holdings at September 30, 2019 amounting to $177.0 million.

In preparation of the IMO January 1st, 2020 Sulphur deadline and to take advantage of the traditional slower third quarter, TEN purposely brought forward five dry dockings resulting in a lower utilization and a net loss of $9.5 million which was still a significant improvement from the $14.6 million net loss of 2018 third quarter. This was mainly due to adverse seasonal factors that affected all companies operating in the tanker space, and especially those, unlike TEN, without adequate time-charter security.

TEN’s revenue generated by time charter contracts (including $3.6 million in profit share) alone amounted to over $88.7 million in the third quarter of 2019, 9.7% higher than in the third quarter of 2018, while pure spot charters contributed $42.3 million, a sizable proportion of the total gross revenue, before voyage expenses. The two LNG carriers, which both enjoyed significant increases in rates in 2019, together provided over $10.1 million of revenue in this third quarter of 2019 compared to $5.8 million in the third quarter of 2018.

Although spot days decreased by 18.8%, revenue generated by this type of employment was over $40 million. This is partly attributed to our smaller product carriers, which achieved higher TCE results compared to the 2018 third quarter.

Operating expenses remained at almost the same levels compared to the 2018 third quarter, despite the pre-mentioned dry dockings.  Average daily costs per vessel was at $7,603 per day.

Finance costs increased by $4.3 million, impacted by a $3.0 million decrease in bunker hedge cash receipts. Negative movements of bunker hedge valuations of $2.3 million were partially offset by $1.5 million reductions in loan interest as a result of reduced average outstanding debt and lower average margins.


In the summer of 2019, TEN ordered one-option-one 174,000cbm LNG carrier from Hyundai Heavy Industries in South Korea with expected delivery, the first, in the second half of 2021 and the second, in the first half of 2022. With this order, if the option is exercised, the Company’s LNG proforma fleet increases to four vessels, two of which are currently employed on time-chartered contracts with major international natural gas production and trading entities.

TEN continues its stated policy of maintaining a diversified energy fleet with a focus on LNG as an area of growth. Management intends to explore accretive investments in the sector as it develops.


The Company will pay a dividend of $0.05 per common share on December 18, 2019, to shareholders of record as of December 12, 2019.

In July 2019, TEN fully repaid, at par, its 8.0% $50 million Series B Preferred Shares and reduced its Preferred shares exposure by the equivalent amount.


With the end of the third quarter, the freight market, initially for crude carriers and followed by products, exhibited a strength unseen for years signaling what every commentator of the tanker industry was expecting, namely, the beginning of the strongest upcycle in decades.

With US crude exports consistently above three million barrels per day, from close to one million just two years back, and on an upward trajectory, with the IMO 2020 rules days away before implementation and the low orderbook, there are elements of sustainability that were missing in previous upturns. Certain geopolitical incidents surrounding temporary events like sanctions may impact the crude tanker freight environment in a positive manner. However, they should not be relied on for long term investments in the sector.

In the backdrop of this positive environment, TEN remains firmly positioned to take advantage of the strengthening freight market by virtue of its significant number of vessels in spot trades and vessels on time charter contracts with profit sharing provisions. In addition, 23 vessels will be up for re-charter during 2020 bringing the fleet with capacity to capture this upside to about 75%. The vessels on fixed revenue time charter contracts provide solid cash flow generation that covers the entire fleet’s expenses and protect the company from prolonged downturns as in the recent past.

In terms of growth, management remains focused on expanding its presence in the specialized sectors it currently engages in, LNG and shuttle tankers, while in parallel exploring opportunities in the conventional tanker space which will continue to form the backbone of the enterprise. Concurrently with growth, certain vessel divestment opportunities, particularly for prior generation tankers, are being explored in order to maintain the young age profile and modernity of the fleet, characteristics TEN has always been known for.

“TEN has used the slow period of the third quarter to prepare the fleet for the IMO 2020 regulations and avoid downtime in the firm rate environment that we are currently experiencing. Due to favorable fundamentals, we expect the strong market to continue in 2020 and beyond,” Mr. George Saroglou, COO of TEN commented. “With a modern fleet, steady income streams, strong cash balances and appetite for responsible growth coupled with 23 vessels that open up for charter renewals in what should be a strong 2020, we expect TEN to be a major beneficiary in the strong freight market we are witnessing,” Mr. Saroglou concluded.




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