Tsakos Energy Navigation (TEN), an owner of about 60 tankers and LNG carriers in the water, said it has ordered two more newbuildings that bring the total size of its orderbook to 10 tankers.
The company also made good on a promise earlier this year to consider a special dividend to common shareholders, announcing it will pay shareholders an extra $0.4 per share.
Together with regular dividend payments it has already announced earlier this year, this will bring TEN’s total dividend spent throughout 2023 to $1 per share.
These announcements come against the backdrop of a fivefold year-on-year increase in first-half net income reported by the company on Thursday.
TEN posted net income of $237.2m for the period, against $53.2m in the same period last year.
Most of that profit, however, was earned in the first quarter, when TEN notched up a second consecutive quarterly profit record at $176.7m. That performance, however, was flattered by $81.2m in gains from the sale of eight older MR and handysize product tankers, as the company renews its fleet.
Net income in the second quarter came in at a more modest $60.6m — still up 31% year-on-year.
The company “has reinvested the proceeds for new and environmentally friendly vessels, common share dividend distributions and a significant reduction of its preferred shares,” its president and chief operating officer George Saroglou said in an earnings statement.
A rush for MRs
The newly disclosed newbuildings will be scrubber-fitted MR tankers that TEN signed in August and which it is scheduled to take delivery of in the first quarter of 2026.
Nikolas Tsakos-led TEN, which is known to be ordering newbuildings against secured employment from charterers, said that the employment of the said vessels was “under discussion”.
The yard at which it ordered the newbuildings has also not been revealed.
TEN’s other eight tanker newbuildings, scheduled for delivery between the third quarter of 2023 and the fourth quarter of 2025, have been bigger ships — from aframaxes to DP2 shuttle tankers to suezmaxes.
TEN’s ordering of MRs comes after US-listed Greek peer Navios Maritime Partners concluded orders for four such vessels over the past few months at undisclosed Japanese yards.
The management is maintaining a sanguine outlook.
“The recent appetite from our major clients for accretive long-term business, particularly in the LNG and tanker segments, has given us the comfort to secure over $1.5bn in forward revenues and ensure continuity in providing healthy returns and increased dividends to our shareholders,” Saroglou added.
On top of paying the extra dividend, TEN also said it made progress in a previously announced plan to redeem preferred dividends in order to simplify its balance sheet.
The company spent $107.4m in the third quarter to buy back all of its $88m of 8.75% “Series D” paper, as well as $19.4m on a “privately placed perpetual preferred instrument” that was carrying a coupon of 7.50%.
Cost savings
Annual cost savings for the company from these financial moves amounted to more than $9m, it said.
On the other hand, TEN said that its authority to issue common stock under its last At-The-Market (ATM) programme has expired and that it is no longer available for use.
TEN stock in New York rose slightly to $19.72 apiece on Wednesday, giving the company a market capitalisation of $582m. This is far below the $2.54bn it estimated its vessels were worth at the end of June.
Even though TEN has been uninterruptedly paying dividends and has had no debt restructurings throughout its history, it has found it equally hard as other shipping companies to become more popular with shareholders.
Entities controlled by the Tsakos family own about 38% of TEN’s common shares, according to the company’s last annual filing in April.
