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Tsakos Energy Navigation: Digging into Its 2Q17 Results

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Part 5
Tsakos Energy Navigation: Digging into Its 2Q17 Results PART 5 OF 6

Tsakos Energy Navigation’s Cost and EBITDA Performance in 2Q17

Expenses in 2Q17

Tsakos Energy Navigation’s (TNP) vessel operating expenses rose to $43 million in 2Q17—compared to $36 million in 1Q17. The rise in costs was mainly due to an increase in the company’s fleet.

Tsakos Energy Navigation&#8217;s Cost and EBITDA Performance in 2Q17

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What are vessel operating expenses?

Regardless of whether crude tanker companies operate their vessels in the spot market or time charter market, they incur vessel operating expenses. The expenses include crewing, repair and maintenance, insurance, storage, and communications.

The company achieved a 3% reduction in daily vessel operating expenses to $7,729 for 1H17.

General and administrative costs were $6.6 million in 2Q17—$0.9 million less than the costs in 2Q17. The costs were mainly lower due to a reduced incentive award and savings in office costs.

EBITDA

In 2Q17, Tsakos Energy Navigation’s EBITDA (earnings before interest, tax, depreciation, and amortization) was $53.6 million—13.6% lower than the previous quarter’s EBITDA of $62.04 million. The company’s 2Q17 EBITDA is 4.7% higher year-over-year.

Why is the EBITDA important?

The EBITDA indicates a company’s financial performance. It shows a company’s operating profit. Shipping companies are very capital intensive. They have high non-cash costs—primarily depreciation. As a result, it’s important to assess the companies’ performance based on the EBITDA.

EBITDA margins

Tsakos Energy Navigation has an EBITDA margin of 51.5% for 2Q17. The following are the EBITDA margins for its peers in 2Q17.

  • Nordic American Tankers (NAT) – 38.8%
  • Teekay Tankers (TNK) – 29.3%
  • Euronav (EURN) – 34.4%
  • DHT Holdings (DHT) – 61.6%.
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