TEN, Ltd. (TEN) reports results (unaudited) for the fourth quarter and the year ended December 31, 2022.
FINANCIAL RESULTS FOR THE YEAR 2022
Positive market fundamentals and the ongoing geopolitical events have maintained a strong market throughout 2022 and have resulted in TEN’s fleet generating $860 million of voyage revenues or $314 million higher than in 2021. With total expenses at just 4% higher from the 2021 level, the resulting operating income for 2022 was $256 million or $290 million better than the prior year level.
In line with the above trend, net income climbed to $204.2 million or $6.02 per share.
With an almost identical average number of vessels as in 2021, roughly 66, the average daily Time Charter Equivalent (TCE) per vessel for 2022 averaged $30,399, 78% higher than the 2021 average of $17,037.
Fleet operating expenses experienced inflation related pressures, primarily in crew, insurances and lubricant costs amounting to about 10%, which were absorbed by the positive cash flow generated by revenues and by other sources of cash, including redemption of interest rate swaps.
Daily operating expenses per vessel remained competitive at $8,467.
Voyage expenses in 2022 increased correspondingly as a significant number of vessels continued to operate in the spot market, in order to benefit from the strong rates at a cost of higher global bunker prices.
Depreciation and amortization were somewhat lower compared to 2021 at $141 million. There were no material non-cash impairment charges in 2022, unlike 2021 where such charges amounted to $86.4 million.
Interest and finance costs increased by about $19million as a result of global interest rates increases necessary to tackle the impact of inflation.
Adjusted EBITDA in the year amounted to about $396 million, resulting in a 240% increase compared to the $115 million Adjusted EBIDTA of 2021.
FINANCIAL RESULTS FOR THE FOURTH QUARTER OF 2022
In the 2022 fourth quarter, with essentially the same number of vessels as the 2021 fourth quarter, TEN generated voyage revenues of $270 million, almost doubling the revenues generated in the 2021 fourth quarter.
Operating income in the fourth quarter of 2022 amounted to $122.4 million, compared to an operating loss of $6.5 million in the fourth quarter of 2021, which excludes an impairment charge of $86.4 million in the 2021 period.
Net income attributable to TEN in the fourth quarter of 2022 amounted to $101.1 million, or $3.17 per share, the company’s best quarter since its inception in 1993.
Adjusted EBITDA for the fourth quarter 2022 was $159.4 million, nearly an increase of 450% from the comparable quarter in 2021, assisting in the considerable accumulation of free cash on the balance sheet.
Interest and finance costs increased by about $12.2 million principally due to the rally in global interest rates and the new debt raised towards the end of 2022 for the acquisition of the 2020-built scrubber-fitted VLCC Dias I.
The average daily Time Charter Equivalent (TCE) rate per vessel in the fleet reached $39,776 a 135% increase over the 2021 fourth quarter which stood at $16,891.
DIVIDEND – CORPORATE AFFAIRS
The Company will pay an annual dividend of $0.60 per common share, 50% of which will be paid in June 2023 and 50% in December 2023. This will bring the total dividend amount paid since the NYSE listing in 2002 to over $500 million.
During the fourth quarter of 2022, the Company issued 569,207 common shares through its ATM program for net proceeds of $10.4 million. As of December 31, 2022, there were outstanding 29,505,603 common shares and 15,010,155 NYSE-listed preferred shares.
SUBSEQUENT EVENTS
In the first quarter of 2023, TEN sold six 2005-built MR and two 2007-built Handysize tankers on an en-bloc basis to third party interests and generated $117 million of free cash after repaying related debt. A capital gain of $80.4 million from these sales will be recorded in the first quarter of 2023.
In February 2023, TEN repurchased two 2005-built Suezmax tankers that were under sale-and-leaseback agreements, the Eurochampion 2004 and Euronike, for a price that is today well under their fair market value. Currently these vessels operate in the strong spot market and management is actively exploring opportunities.
In December 2022 and January 2023, the Company placed orders for the construction of two scrubber-fitted environmentally designed Suezmax tankers in South Korea with expected delivery in 2025. Management is in discussions with various high-end charterers to employ the vessels on long-term contracts upon delivery.
In March 2023, the 2016-built LNG carrier Maria Energy was fixed for a minimum of 12-years to a leading Asian natural gas operator at a rate reflective of current market conditions in the LNG sector. The vessel is expected to be delivered to her new charterer upon completion of the existing contract in April 2026 and is expected to generate a minimum of $350 million in gross revenues.
STRATEGY & OUTLOOK
In what has been TEN’s 20th anniversary year on NYSE, ie. TEN@20, long-term market fundamentals and geopolitical events have resulted in very strong rates for our diversified fleet. This has resulted to a record year and positive forward-looking prospects for 2023.
The first quarter of 2023 has been the most active sales & purchase period since the Company’s inception in 1993 and proves that TEN moves swiftly when opportunities arise in order to maintain the modernity of its fleet. Following the sale of eight vessels, with an average age of 17 years, the Company is renewing its fleet with an active newbuilding program in South Korean yards with four dual-fuel LNG Aframaxes, two DP2 shuttle tankers and two Suezmaxes for deliveries starting in the third quarter of 2023.
With Chinese oil imports anticipated to reach and possibly surpass the pre-Covid levels of 10.8mbpd and oil consumption expected by many analysts to expand significantly in 2023, the strength of the current oil market, enhanced by geopolitical events and additional ton miles, seems to be on solid foundations going forward. The tanker sector is set to be a prime beneficiary of this trend as the orderbook stands at just 4% of the existing global fleet, of which 35% is over 15 years of age making these vessels less attractive to high-end oil concerns particularly for longer-term contracts.
In this market environment, TEN continues its proven model of a diversified fleet with spot and profit-sharing arrangements serving first class clients, that has secured its successful growth and uninterrupted dividend distributions since inception.
Healthy cash reserves will remain an important element of the Company’s strategy going forward and management will assess ways to reward shareholders by efficiently utilizing its strong and healthy liquidity.
“Having a record year on our 20th anniversary on the New York Stock Exchange, we look forward for even better days as we celebrate TEN@30, thirty years since our establishment back in 1993”, Mr George Saroglou, Chief Operating Officer of TEN commented.
