TEN: Half-year revenues of $275 million despite challenging market


TEN reported results (unaudited) for the six months and second quarter ended June 30, 2021.

During the first half of 2021 TEN continued its countercyclical growth strategy, taking advantage of the weak markets created by the pandemic.

In addition, and as a result of its balanced strategy with 60% of vessels under secured employment, TEN weathered the impact of market pressures and managed to contain its net loss to $18.7 million, before a non-cash loss of $5.8 million on the sale of three vessels.

The sale related to the disposal of two suezmax crude tankers, a transaction that generated $44.7 million in proceeds and released $16.6 million of cash after related loan prepayments. In addition, a product carrier was transferred in May to our joint venture partners that released a further $4.4 million.

Despite the prolonged weak market, gross revenues in the first half of 2021 amounted to $275.4 million and the daily time charter equivalent rate per vessel, for the same period, averaged $17,701. An overall positive rate, in most cases well above market spot rates per vessel category during this period, highlighting the contribution of our time charters in weak markets.

Fleet utilization during the first half of 2021 was at 92.3% as a total of eight vessels underwent dry docking, four of which ahead of schedule in preparation for the anticipated market upturn.

Total vessel operating expenses, reflecting pro-active cost controls, declined from the first half of 2020 and stood at $87.7 million. Average daily opex per vessel were very competitive at $7,834.

G&A expenses fell by 5% compared to the first half of 2020.

Depreciation and amortization exhibited slight but anticipated increases, due to the larger number of vessels in the fleet and the aforementioned dry-dockings.

Operating losses, excluding those on vessel sales, were contained to $4.9 million.

In line with the Company’s debt reduction strategy, total debt fell by a further $87 million in the six months ended June 30, 2021. Net debt to capital at June 30, 2021 was 50%, while our overall cost of debt remained at a very competitive 2%, reflecting the quality of the fleet and the Company’s long-standing track record in the tanker and debt markets. From the peak of 2016, the Company has reduced its debt by close to $340 million in addition to $100 million of preferred shares redemptions.

Finance costs in the first six months of 2021 fell by $32.9 million or over 69%, due to the reduction in outstanding loans and benefits resulting from the bunker hedges in place.

Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) for the first six months of 2021 was at $66.8 million, reflecting market conditions.

Cash and cash equivalent levels, despite newbuilding installments in addition to loan repayments during the first six months of 2021, stood at a healthy $140 million.

The second quarter of the year mostly followed the first six months in terms of activity and market rates, leading to a loss of $13.8 million before non-cash losses of $5.8 million.

Voyage revenues totaled $136 million with utilization at 93%. Daily average TCE per vessel stood at $17,239, an overall positive rate, again well in excess of spot market rates per category of vessel.

Operating expenses increased by a manageable $3.5 million due mainly to the impact of the heightened number of dry-dockings as four vessels were brought forward from their scheduled due date. On an average daily per vessel basis, operating expenses per ship per day reached $8,241, an increase that seems likely to reverse over the coming months as conditions normalize.

G&A expenses were again lower when compared to the 2020 second quarter.

Interest and Finance costs declined by 46% to $7.5 million due to the $87 million reduction in total debt since the end of 2020, and positive bunker hedge valuations, cash gains and decreases in margins on certain loans.

Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) for the second quarter of 2021 reached $29.5 million.

Following the successful delivery of four vessels with long term charters to a US oil major, in September of 2021 the Company signed newbuilding contracts for the construction of four to up to six dual-fueled LNG powered aframax tankers against long-term employment to a major oil concern. Assuming all six are built, the expected gross revenues from these contracts could be approximately $350 million.

The Company paid a semi-annual dividend of $0.10 per common share on July 20, 2021, despite the challenging market environment. Inclusive of this payment, TEN has paid common shareholders approximately half a billion dollars in dividends, equating to about $26 million per annum since its 2002 NYSE listing.

The Company’s ATM program for both preferred shares and common shares has netted $19.6 million during the second quarter of 2021 and $15.7 million from the beginning of the third quarter to date.

With the pandemic gradually waning, the anticipated alignment of the tanker markets to those of the container and dry bulk sectors is beginning to take shape. The long-awaited resumption of air travel and overall economic activity is setting the foundations for a tanker lift-off. In view of this, we are seeing increased activity from major end-users and in particular long-term business. Such appetite is evidenced across all tanker segments and should result in firmer rates as we move into the winter months. Asset prices seem to have turned the corner as well with inquiries for second-hand tonnage on the rise.

The basic favorable fundamentals that should help propel the sector remain firmly in place. In particular, the low orderbook, the advanced age of the global fleet, the high scrapping prices in the context of increases in oil supplies and the building of new refineries in distant locations. As Covid restrictions are lifted around the globe, the pent-up consumer demand of prior months raises hopes that oil demand could surpass 100 million barrels per day, helped, as in prior years, by Chinese and Indian imports, especially for their strategic petroleum reserves. There are also signs that product trade carriage is beginning to revive.

As we have frequently indicated, our long-term strategy is to always seek opportunities to maintain a young and modern fleet profile, so we continue to dispose of older vessels and replace them with new generation tankers with long-term charters to first-class charterers.

“In the first months of 2021, we experienced the worst tanker market in recent memory. However, the tried and tested balanced employment policy of the Company assisted to somewhat absorb the pressure. Capitalizing on our strong cash balance and access to capital, management continued the countercyclical investment strategy with the ordering of a minimum four up to six new technology dual fuel LNG powered tankers for our top tier clients, the first such investment in our Company’s history. These newbuildings are expected to enhance the Company’s revenue and profit generation capacity and reinforce the Company’s environmental footprint.”

Mr. George Saroglou, COO of TEN commented. “With the majority of the vessels able to capture the anticipated upside, TEN is poised to be a primary beneficiary of the tanker upturn and continue to offer investors a mix of secured income, upside potential and dividend payments,” Mr. Saroglou concluded.