TEN, Ltd reported results (unaudited) for the six months and second quarter ended June 30, 2022.
SIX MONTHS 2022 SUMMARY RESULTS
As global oil demand seems to be recovering from the Covid-19 pandemic, the severe and largely unexpected geopolitical events that unfolded in the first quarter of the year, led to dislocations in global trading patterns that boosted all regional and international tanker trades and created a long-term energy shift.
During the first half of 2022, TEN generated voyage revenues of $366 million, $91 million more than in the same period of 2021. Operating income reached $67 million, a seven-fold improvement.
This resulted to a net income of $51.7 million, an increase of 311% from the 2021 first half.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the first six months of 2022 was at $133.3 million, double the 2021 first half period, reflecting favorable market conditions.
Depreciation and amortization combined were 4.7% lower from the 2021 six-month period.
Voyage expenses (mainly fuel and port expenses) increased by $16 million as more vessels remained in the spot market to take advantage of strong rates.
Fleet utilization during the first half of 2022 was at 93.4% despite nine vessels undergoing dry docking, four of which were ahead of schedule in preparation for the anticipated market upturn.
Total vessel operating expenses stood at $89.8 million reflecting pro-active cost controls. Average daily operating expenses per vessel were very competitive at $8,056, not much higher than the 2021 first half levels.
G&A expenses fell by 2.0% compared to the first half of 2021.
In line with the Company’s debt reduction strategy, total bank debt fell by a further $70 million in the six months ended June 30, 2022. Net debt to capital at June 30, 2022 was 48.8%, while our overall cost of debt remained very competitive at 2.5%, reflecting the quality of the fleet and 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 $450 million in addition to $100 million of preferred shares redemptions.
Finance costs in the first six months of 2022 fell by 2.0%, due to the reduction in outstanding loans and benefits resulting from the bunker hedges.
Cash and cash equivalent levels, despite newbuilding installments in addition to loan repayments during the first six months of 2022, stood at a healthy $172 million.
Q2 2022 SUMMARY RESULTS
TEN being a beneficiary of the new trading patterns that developed in the second quarter of 2022, generated voyage revenues of $217 million, $80.3 million higher than the equivalent 2021 period. Operating income of $57.4 million in the second quarter of 2022 a 545% improvement with an almost similar fleet to the one in the same period of 2021.
Net income reached $46.2 million in the second quarter of 2022, a 335% improvement.
Adjusted EBITDA for the second quarter of 2022 reached $91.1 million, a threefold increase from the 2021 equivalent quarter.
Fleet utilization, despite a number of scheduled dry-dockings, remained high at 93.6%. Daily average TCE per vessel increased to $29,278 from $17,239, 70% higher from the 2021 second quarter. Our spot vessels, benefitting from the aforementioned factors, added $119.5 million of gross revenues.
On a daily average per vessel basis, operating expenses for the 2022 second quarter were at $8,367, while G&A expenses fell by 3.0% from the same 2021 quarter.
DIVIDEND – COMMON SHARES
The Company continues the uninterrupted payments of common stock dividends with a new distribution of $0.15 per common share scheduled for December 2022. This reflects the second payment for 2022 which is in line with the TEN’s semi-annual dividend policy and represents a 50% increase from the prior base of $0.10 paid in July 2022. Inclusive of this upcoming distribution, TEN has paid common shareholders half a billion dollars in dividends, equating to about $25 million per annum since its 2002 NYSE listing.
During the second quarter of 2022, the Company issued, through its ATM program, 460,569 common shares generating $4.8 million.
SUBSEQUENT EVENTS
In June 2022 TEN acquired a 2020-built scrubber fitted South Korean-built VLCC which will be delivered to the Company by November of 2022.
In July 2022, following the timely delivery of the LNG Tenergy in January 2021, the Company took delivery of the DP2 Shuttle Tanker Porto with an up to 11 years employment to a major end user. The gross proceeds of this fixture, over its minimum duration, is expected to exceed $80 million.
In August 2022, the Company sold the 2003-built panamax tanker Inca to third party entities. From this sale and after the repayment of related debt, TEN generated $8.5 million of free cash.
CORPORATE STRATEGY & OUTLOOK
As we had predicted in our recent communications, the strong market as a result of the world exiting the global pandemic and historical low levels of orderbook, was on the horizon. However, geopolitical events and the international sanctions have increased rates beyond our forecast and are expected to be maintained for the foreseeable future. Recently it has also positively impacted the crude carrier sector with the strength experienced in product carriers.
TEN, with its timely acquisition and green ship initiative has prepared the ground to take advantage of the ever-changing energy map.
"With a solid balance sheet and market fundamentals, TEN will continue to identify opportunities for growing its presence in the specialized areas it operates, namely shuttle tankers, LNG and dual-fuel vessels, in order to further enhance shareholder value. Bank debt reduction will continue along with the preservation of the Company’s cash reserves in line with management’s prudent growth aspirations," said George Saroglou, COO of TEN.