TEN, Ltd (TEN) reported results (unaudited) for the nine months and third quarter ended September 30, 2024.
NINE MONTHS 2024 SUMMARY RESULTS
In the first nine months of 2024, with 11 vessels undergoing scheduled dry docking and three performing repositioning voyages, TEN’s fleet generated healthy gross revenues and operating income of $615.8 million and $236.1 million respectively, including $48.7 million in gains from vessel sales. This resulted in net income, for the first nine months of 2024, of $157.0 million, equating to $4.62 per common share.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the 2024 nine months reached $314.1 million, a $100.1 million increase from the 2024 six-month level.
Fleet utilization, reflecting the fleet’s increased dry dockings and repositioning activity over the first nine months of 2024, was at 92.2% making the average TCE per ship per day settling at $33,390, a healthy and accretive level.
Vessel operating expenses were at $147.4 million for the nine months ended September 30, 2024, corresponding to the increase of the fleet, both in terms of the number of vessels and vessel sizes since September 30, 2023, however, due to efficient management and enhanced fleet modernity, vessel operating expenses on a per ship per day basis experienced a 3.3% decline from the 2023 nine-month level and settled at $9,306.
Depreciation and amortization combined experienced a slight increase, commensurate to both the higher number and larger size of vessels in the fleet and reached $118.4 million from $106.7 million in the 2023 same nine-months period.
During the first nine months of 2024, debt repayments amounted to $155.9 million while total debt and other financial liabilities reached $1.8 billion, in line with the growth the fleet experienced from the same nine-month period in 2023, against a book value of $3 billion.
Total finance costs for the first nine months of 2024 amounted to $87.4 million, mostly due to the continuing higher global interest rates and increased loans to support growth, compared to the 2023 equivalent period.
Cash reserves remained solid at $386 million as of September 30, 2024, $9.2 million higher from the December 31, 2023, level, after payments of $258 million for common and preferred dividends, growth capital and the repurchase of two vessel lease options.
Q3 2024 SUMMARY RESULTS
During the summer months of 2024, lower oil prices steered an upsurge in Chinese oil imports that facilitated stockpiling and acted as a catalyst for the recovery of tanker spot rates. This resurgence also reinvigorated demand for secondhand tonnage, reinforcing market dynamics and bolstering overall sector performance.
To this effect, TEN’s fleet, 43% of which operated under market-related contracts, generated over $200 million in revenue and achieved an operating income of $56.9 million in the third quarter of 2024, compared to $186.7 million and $53.0 million respectively for the same period in 2023.
The resulting net income of $26.5 million or $0.67 per common share largely reflected the higher depreciation costs assumed during the quarter due to the higher number and larger size of vessels in the fleet when compared to the 2023 third quarter.
Adjusted EBITDA in the 2024 third quarter amounted to $100.1 million, from $91.6 million in the 2023 third quarter.
Depreciation and amortization combined were at $41.3 million, $5.0 million higher than the 2023 level, due to the increased size of fleet and number of vessels.
With three vessels undergoing scheduled dry dockings during this quarter, fleet utilization settled at 92.8%, which resulted in an average TCE per ship per day of $32,539, 3.8% higher the 2023 third quarter level.
Vessel operating expenses for the third quarter of 2024 were $49.1 million, $1.6 million lower than in the same period of 2023. On a per ship per day basis, these expenses experienced a 10% drop compared to the 2023 equivalent third quarter and settled at $9,188.
Interest and finance costs were $32.2 million during the third quarter of 2024 after new loans for vessel acquisitions and still elevated global interest rates.
DIVIDEND – COMMON SHARES
In line with the Company’s semi-annual dividend policy to holders of its common stock and following the July 2024 payment of $0.60, TEN, will pay a dividend of $0.90 per common share on December 20, 2024, to holders of record as of December 16, 2024, increasing the total payments made for fiscal 2024 to $1.50, 50% higher than the 2023 distribution. Since its listing on NYSE, TEN maintains an uninterrupted dividend distribution for both common and preferred shares, totaling $870 million.
STRATEGY & OUTLOOK
In an environment where new vessel supply is at its lowest point for 30 years, tanker market prospects look promising for the near future. This, in a backdrop of increasing global energy demand, allows companies with modern diversified fleets and versatile employment structures to capitalize on the increasing appetite of energy majors for long-term contracts at healthy and accretive rates. The absence of a clear direction on future environmental engine propulsion, coupled with longer ton miles, due to geopolitical events, add to the positive environment.
Our well-tested industrial shipping model places the Company in the forefront of those demands. With a strong balance sheet and ample liquidity, TEN offers environmentally friendly vessels to its client’s long-term requirements. The increased presence in the high-end dual-fuel LNG powered tanker sector is a testament to that.
With 21 new vessels, three of which DP2 shuttle tankers under construction on long-term contracts to significant energy users, TEN’s long-standing presence in this high barrier to entry sector, is further enhanced. Management continues to actively explore strategic opportunities, across all sectors in which it operates.
In view of the above, and in line with our commitment to always maintaining a modern fleet, TEN will also explore divestment opportunities for its earlier generation vessels and in that way monetize the full value of the assets the current market environment is providing for.
Vessel employment strategies will continue to be flexible and versatile to safeguard the cash generating ability of the fleet while maintaining earnings visibility going forward.
“With a fleet of 74 vessels, 11 of which underwent scheduled dry dockings this year, thus far, the fleet performed well, setting high standards for operational excellence, fleet growth and shareholders rewards. The $1.50 per common share total dividend for 2024 is proof to that,” Mr. George Saroglou, President of TEN commented. “With healthy cash balances and committed growth, we remain confident that TEN will be at the forefront of growth and value investors going forward,” Mr. Saroglou concluded.
Source: TEN Ltd.
