Tsakos Energy Navigation Limited Price & Performance (TNP)

Please note that parallel to today's conference call, there is also a live audio and slide webcast which can be accessed on the company's website on the front page at www.tenngr. The conference call will follow the presentation slides, so please, we urge you to access the presentation slides on the company's website. Please note that the slides of the webcast presentation will be available and archived on the website of the company after the conference call. Also, note that the slides of the webcast presentation are user controlled and that means that by clicking on the proper button, you can go to the next or to the previous slide on your own. At this time, I would like to read the Safe Harbor statement. This conference call and slide presentation of of the webcast contains certain forward looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainties which may affect TEN's business prospects and results of operations. Before passing the floor to the Chairman, I would like to congratulate the company for the transformation milestone transaction to build nine shuttle tankers with secured fifteen year employment.

This transaction solidifies TEN's profitability and growth for many years ahead. And by the way, it also proves how Tenz prudent capital allocation has enabled the company not only to move fast to close the transaction, but also to finance the equity portion required at this stage with your own funds without stretching the company's balance sheet. And now at this moment, I would like to pass the floor to Mr. Tsakosarapoglou Chairman of Tsakos Energy Navigation. Please, Mr. Arapoglou, go ahead. Thank you. Thank you, Nicolas. Good morning and good afternoon to everyone. And thank you all for joining our call today for the fourth quarter twenty twenty four and full year 2024 results. As you've seen, excellent results from a market that continues to demonstrate strong fundamentals. A record 21 vessel expansion that will result in a fleet pro form a of 82 vessels. And $4,000,000,000 of contracted revenues confirming the unique and robust industrial model of TENS. The milestone nine DP2 shuttle tanker deal [indiscernible] $1,300,000,000 with Transfetro. Firmly establishes then among a very select group of leaders in the shuttle tanker business. And demonstrates once more the commitment we have in servicing the needs of our customers Fully justifies our strategy of maintaining ample liquidity And it also shows that it allows us to comfortably enter into such accretive mega sized transactions.

The sale of one of one more of our oldest vessels generates again, cash for the company. And the S and P activity of 10 in this front will continue in order to maintain a young fleet and generate additional cash. All this, I think, confirms the textbook nature of TEN's management that allows it to continue paying dividends uninterruptedly since inception oblivious, I would say, to the cyclical nature of the market. So once again, congratulations to Nikos Tsakos and the team for this excellent performance, no doubt will continue keeping them in the forefront of the energy transportation business. Going forward. So thank you. And over to Nikolas Tsakos. Thanks. [indiscernible] Good afternoon and good morning to everybody. Thank you for your good words. The recent period has been a milestone period as you mentioned for the company. It's one of those periods where we leap up to our next stage. And we've done that back in 02/2007 when we became the largest ice class operating fleet in the world. A few years later, in 2014, we began the largest operator for Equinor and one of the most prestigious and demanding end users in the world. Last year, we became the largest dual fuel vessel operator just helping our green greener side of moving our vessels and keeping our environmental footprint in line and that was by the acquisition of a large fleet of modern dual fuel vessels.

And the Brazilian transaction as we call it, big in Brazil, is a transaction that [indiscernible] for sure the most mobile view the most modern [indiscernible] shuttle tanker [indiscernible] [indiscernible] and it complements our existing fleet, which we started in 2012. With four vessels already in the water, three being delivered very early next month. So we have April, July, [indiscernible] all the vessels are being built, I would say, in the most superior [indiscernible] we have to compete [indiscernible] has been fewer or lower rates, more competitive rates than us, but they were bringing ships in other yards in the Far East, including China, where expertise was not there. So our experience our long term commitment to the segment, our training center, which is the only one that produces seafarers with the quotation from the nautical academy of the UK. Has given us the chance to successful in achieving a positive result. [indiscernible] in the meantime, we're still running business. Always looking at extending with extended twenty twenty one new businesses with our major rail companies. As you may know, about 70% of our business is held by the 6% or seven very prestigious end users who try to avoid employing our ships to operators or traders.

We do sometimes in the spot market, but long term we focus on the people who need to know and appreciate our services. Also, we have been active and we will still be active in the S and P and sales in pesos market. Just yesterday, we delivered one of our 2,009 beautiful Suezmaxes for the capital gain after so many years since 02/2009. And freeing 14,000,000 million $30,000,000 of cash We're also in the market for two more similar transactions from now up to the end of the second quarter. So in the meantime, we do not lose track of the day to day business. And the fundamentals are very positive. We are a company that has perhaps right now the largest [indiscernible] a very specialized 21 vessel program. All of our program is is financed and there's significant competition from banks to finance. So one thing I have to make clear we do not always criticize for keeping enough cash, but when transactions like these are there, we can achieve those transactions much better than any of our peers of our peer group [indiscernible] putting strain on our balance sheet or ever having to use to raise equity.

So this mega transaction is fully financed by certain equity and bank debt, which is competing at very attractive terms for our business. [indiscernible] I have to say I'm very proud about our team. It has been a very international global transaction that we were able to achieve. What we are still disappointed is that our share price is of what it was a year ago when I was here in The United States. But our company was much smaller Our company has much less prospects right now. With 21 vessels at 36% dynamic expansion 82 vessels in the water very soon, [indiscernible] our medium to long term receivables from $2,000,000,000 to 4,000,000,000 within the last two months with these transactions. Well, we hope as the major shareholders here who know the value of our company but very soon our share price will be very cheap I mean, our book value is in excess of $3,000,000,000 However, [indiscernible] Our market value is even higher than that and our net debt is 1.5 So if you divide this by 30, you should see that the corporate level where our share price should be closer to $50 than $16 so But again, we know the value of our company and hopefully, others will identify that it is thirty two years of continued dividend as a shareholder.

Plays the role for at least another thirty two And with that, I would ask Mr. Tsakos Matos or George to please give us Mr. Tsakos our President to give us his detailed report. Thank you. Thank you very much, Nikos. We are very pleased to report today another profitable quarter and profitable year. There is a slide presentation that we will try to follow. You can look at it later on as well. Let's go straight to Slide number four. Which shows the growth of the company since inception in 1993 in terms of deadweight tons As you can see here, we have turned every major crisis the world has faced. Into a growth opportunity for TEN. Thanks to our operating model. We have a counter cyclical approach in investing in fleet growth by raising equity when we need it which is usually at the bottom of the tanker market. And not usually when our share price is at the top in order to fund growth projects This is what Slide five shows. The strategy has served us very well so far. In blue, you see the equity offerings in common shares since 1993. In red, the offerings we've had in preferred shares.

And as you can see since 2015, we have issued six series of preferred shares.

And we have already redeemed as we speak four of them at par. But those that we the four that we have redeemed have a par value of approximately $225,000,000 We have announced today a major transaction in the cyber tanker sector.

And this is a milestone deal with Transpetro Petrobras in Brazil. We are building nine state of the art PP2 shuttle tankers that we complement the four that are already in operation and three that we are building for a total pro form a shuttle fleet of 16 tankers. This is a landmark transaction that makes TEN one of the largest shuttle tanker operators in the world today. And all 16 vessels are fixed [indiscernible] to major energy companies, including of course, Transcator in Brazil. Since in the last two years, since 01/01/2023, we have upgraded the quality of the fleet by divesting from our first generation conventional tankers replacing them with more energy efficient new builds new buildings and modern secondhand tankers including dual fuel vessels and we are very proud to have today one of the largest being one of the largest owners of PureFuel LNG powered Aframax tankers with six vessels in the water. Slide six lists the conventional pro form a fleet divided between crude and product tankers.

Spreading from large VLCCs to the smaller Handysize tankers. We have nine new buildings that we expect to take delivery from the second quarter of this year until the third quarter of twenty twenty eight. And you see various colors in this slide, the red color denotes the new building vessels, but also the vessels that we operate today in the spot market With dark blue, we list the vessels under fixed time charters and with light blue, the vessels with time charters with profit sharing.

In the next slide, which has the pro form a specialized fleet we leased the 16 shuttle tankers And on top of that slide, we listed the company's two LNG carriers. If we combine the two slides and account only for the current operating fleet of 61 vessels, 29 vessels or 48% of the operating fleet has market exposure through spot and time charter with profit sharing by 5184% of the fleet is in secured revenue contracts, which means time charters and time charters with profit sharing. Our biggest clients for both conventional and specialized segment of the fleet are the names you see in slide eight. These are blue chip names with whom we do repeat long term business. The largest client of all today is ExxonMobil, [indiscernible] of the deal that we announced with Petrobras in Brazil. The left side of the next slide shows you the all in breakeven cost for the type of vessels we operate. We have a simple operating model. We try to have our time charter vessels generate revenue to cover the company's cash expenses, which means paying for the vessel operating expenses, finance expenses overheads chartering costs and commissions, and we left the revenue for the spot trading vessels contribute to the profitability of the company.

Thanks to the profit sharing element, every $1,000 per day increase in spot rates has a positive impact of $0.12 in the annual earnings per share based on the number of 10 vessels that currently operate in the spot market. And with that, I will pass the floor to Carlos Corvatos will walk us through the financial performance of the quarter and the year. Harri? Thank you, George. Thanks. On behalf of our CFO, Paul Dowling and myself, hello and welcome to our call. During 2024, Tern's fleet averaged a approximately two vessels more compared to 2023. Reaching 62 vessels in the water. As a result of the divestment of five older tankers, two Suezmaxes, two Aframaxes and one LNG carrier, and the acquisition and or delivery of nine vessels, namely five modern tankers from Norway's Beacon crude the repurchase and termination of two Shell and Instant involved in two Suezmaxes and the delivery of two dual fuel LNG Aframaxes. Despite this fleet increase during the year, 15 vessels underwent scheduled drydockings. While three performed repositioning voyages, all of which led to average fleet utilization for the year to settle at 92.5% from 96.3% in 2023 a still healthy level nonetheless.

Resulting from the above and combined with a somewhat softening in tanker market, TENS Steel generated $8.00 $4,000,000 in gross revenues and $279,000,000 in operating income. The latter after $49,000,000 in capital gains from the sale of mentioned above. TCE per ship per day during the twelve month period which was naturally impacted by the dry dolphins, settled at a still healthy 32,550 Thanks to a large extent to the number of operating days on long term secure revenue contracts corresponding to the long term needs of our clients. 82% in 2024 compared to 77% in 2023. As a result, net income for 2024 was at $176,000,000 equating to $5.03 per common share and adjusted EBITDA for the year at $400,000,000 dollars Fleet operating expenses of $198,000,000 modestly increased in line with the larger number and size of vessels of the fleet after the various acquisitions and divestments during the year.

Operating expenses per seat per day, however, were about 3% lower from the 2023 levels. At 9,350 Thanks again to efficient management performed by TENS Tech experts onshore and onboard the vessels.

Total debt and other financial liabilities at the end of the year were at 1,800,000,000.0 which compares favorably to both the book and fair value of the fleet. Dollars 3,000,000,000 and just about $4,000,000,000 at the end of the year respectively. At the same time, net debt to capital remained at a comfortable 45%. Interest and finance costs for 2024 and reflecting the larger fleet size, both in terms of vessels and vessel types, as well as continuing elevated global interest rates despite recent cuts was at $112,000,000 from $100,000,000 in 2023 a manageable increase. However, this inevitable and controlled cost increase was nullified by more as a result of the $4,000,000 in reduced preferred coupon payments from amounts paid during 2023, dollars 5,000,000 savings in forward variable higher from the repurchase of two Suezmax on leasing contracts in the summer of twenty twenty four and $50,000,000 in interest income. Cassel Bank as of 12/31/2024 was at just under $3.03 50,000,000 a very healthy level despite having paid $258,000,000 for common preferred dividends growth projects and the exercise of the above leasing. Repurchase options. Results for the fourth quarter of twenty twenty four were equally attractive considering that four of the 15 vessels that underwent drydocking during that year happened in this quarter.

A fleet of 62 vessels as opposed to about in the fourth quarter of twenty twenty three generated gross revenues of $188,000,000 and operating income of 42,000,000 compared to $220,000,000 and $57,000,000 in the quarter of twenty twenty three, respectively. Unlike the twenty twenty three fourth quarter, no impairment charges were recorded during this twenty twenty four fourth quarter. Field operating expenses for the fourth quarter of twenty twenty four and the despite the four bright options mentioned above in the larger fleet size were at $51,000,000 just $1,300,000 higher than twenty twenty three fourth quarter level.

However, operating expenses per ship per day were marginally lower from the twenty twenty three fourth quarter at $9,480 TCE per ship per day closed the quarter three 3.2x higher than the above OpEx number at 30,107 The resulting net income for the fourth quarter of twenty twenty four was up 19,300,000.0 producing EPS of $0.42 reflecting the somewhat softer market driven by lower Asian oil imports, lower fleet utilization compared to twenty twenty three fourth quarter, and the $4,000,000 increase in depreciation and amortization charges the larger fleet entailed. Adjusted EBITDA finished the quarter at 85,000,000 Supported by the aforementioned results, TEN is in line in line with its semiannual dividend policy we'll pay a common stock dividend of $0.60 in July 2025, identical to the level paid in July 2024. In ending, is pertinent to highlight what George mentioned earlier.

The plant today is facing is undergoing its largest growth phase in its history with 21 vessels on order. Nine of which the DP2 shuttle tankers on fifty year contracts with Transpetrope Petrobras. [indiscernible] Which in the run rate contributing double intense minimum revenue backlog from $2,000,000,000 to 4,000,000,000 while turning us into one of the largest shuttle tanker owners in the world. And with this, I turn it back to Nikos for the closing remarks.

Thank you.

Thank you, Harry, for [indiscernible] [indiscernible] putting some numbers on the board. And as we said, it is a very significant period of growth. We are starting the delivery and yesterday was the very successful ship trials. And I don't know if you guys have a picture it was received overnight from South Korea. From the Athens two thousand and four the first of the two total energy vessels to be delivered on the April 20 followed by the next in the on the June 20, which will be the Paris twenty twenty twenty four. So we're keeping our Olympian Names For Those State Of The Art Ships. And Those Ships Will Be Identical Sister Vessels To The Ones That We Are Going To Build In South Korea which might have a a significant higher cost than other yards between 2015% to 20% But there are ships that are going to be with us for a very, very long time. [indiscernible] yesterday, it was another sanction vessel which from 02/2009 and the new buyers were very impressed with okay condition. And then the next is the [indiscernible] [indiscernible] she was named, and she will be delivered in 2026. And as soon as those ships will be in the water, 2027 and 2028, identical sister vessels, upgraded versions, environmentally friendly ones are going to follow.

So it's going to be a very exciting period. Very accretive transactions that will add at least will almost double our EBITDA when the company will be in full force. As I said, we are we a company we are the company lowest or I would say, let's put it positive with the highest concentration of Japanese and Korean vessels, more than 90% of our vessels are [indiscernible] it is up to 95%. We have always been believers that quality has a cost and so that's why we have these results. As we speak. And with that, I would like to open the floor for any questions. Thank you.

Thanks. At this time, we'll be conducting a question and answer session. Our first question comes from Poe Fratt with Alliance Global Partners. Please proceed with your question. I had a congratulations on the shuttle tanker deal, getting all nine done.

I had a question about the structure of the how they're going to be operated. My understanding is that Transpetro is going to be providing the crews and operating the shuttle tankers under a bareboat charter Is this the first time they've done this? And do you think that what's their capacity to be able to provide the crews for those? And then is there a potential where you would if they can't provide the crews by 2027, would you be able to step in and and do the crewing on those shuttle tankers?

Well, I have to say that a very, very correct and to the point operational [indiscernible] They have been operating As I said, currently, we have four vessels working for in Brazilian waters, which we also train in our Greek and Rio. Facilities, Brazilian crew. The lack of of highly educated or trained seafarers is a global phenomenon, it's not just in Brazil, And that's why companies like us, we have our own we run our own academy, so we take the we young men and women, quite a big number of women, which is would say, [indiscernible] of suppliers just less than 5% of the world's shippers are women. And we paid them from 2018 up to when they enter service. So there's a very good probability that we will closely cooperate with Transpetro. And I would say one of the reasons that we will award this To some surprise initially, but for many surprise, all nine vessels is our reputation and capacity to mount and run those ships. So I'll be visiting very often in that part of the world. With our team and our aim is to closely cooperate in actually running those ships which will be a pleasure for us and it will be very prudent for us because we will be able also to maintain our investment in the quality that we would like to.

So the short answer is to your question is yes.

Okay, great. And then on the asset sales front, it looks like you sold the pentathlon Suezmax at 02/02/2019 I'm sorry, thousand and nine vintage. You had four older Suezmaxes that are older than 02/2009 You talked about two potentially pending transactions. You give us some flavor on what assets might be under contract right to be sold in the second quarter? Yes. I mean, you are correct. Some of our older ships however, they have chartered long term to the major rail companies like Exxon and BP because of their ice class features. They get a significant premium for almost twenty years we operate them. Candidates age wise, although they're in excellent condition. And then we have the our first generation [indiscernible] the 02/2007 and two eight ones. And we expect to be able to net close to 130,000,000 including the recent sale of OPKO of net proceeds for the sale.

So that's why I said the mega transaction because of our strong liquidity and the sales of ships that are running would not affect our balance sheet It's fully funded. There is no requirement for raising equity And so we will still maintain a very, very strong liquidity. Going through that. Will be looking for the first generation MAXs and Suezmax going forward.

Great. Thank you.

Thank you very much.

Our next question comes from Clement Mullens with Value Investor's Edge. Please proceed with your question. [indiscernible] you for taking my questions. I wanted to start by following up on both on selling the other side of the fleet. You mentioned decision only to make space for new eco friendly vessels. And I was wondering, generally speaking, does it refer to the vessels you have already ordered? Or are you looking into adding additional tonnage over the coming months? I mean, we are always looking at strategic opportunities, but I was referring to the 21 vessels that we have ordered currently. And I think we are in the we have currently the largest renewal program for many of our field [indiscernible] going forward.

That's helpful. Thank you. And shifting toward the recent shuttle tanker orders, is there any appetite to hedge the interest rate risk on the financing you secure for the shuttle tanker?

Yes, that's a very good point. And we have a desk of of two very stingy gentlemen sitting in our bedroom in the looking on a daily basis to find ways to make refinancing even cheaper. So yes, we are looking on a daily basis They proposing to me and to our CFO volume structures that could cut interest rate uplift Yes, I mean, we're very, very focused on that on that part of the business.

Makes sense. Thank you. The Maria Energy is coming off contract in May. Could you talk a bit about how you plan to employ the vessel going forward? Are you willing to lock in a term contract despite the mediocre rates offered for LNG carriers? And secondly, is the sale of the vessel potentially in the cards?

Well, what was your last point about the cards?

Whether you could consider selling the Maria Energy?

Perhaps, yes, just to [indiscernible] [indiscernible] the name of my late sister is one of our largest ships. The vessel is fixed forward from May 2026 for twelve to fifteen years at a very, very, very accretive rate. To a major end user. So what we have to do from May until the next May is to cover a year of your operational before it's going to be delivered to a very, very long employment that actually will take it to the end July earning a humongously high double digit IRR and return of ity that when we ship the ship, we never calculated it will be as big as that. So perhaps you have not communicated that yet to the market or perhaps we did it long time ago, but CIES started from 2026 to 02/1940, I think I'll be over my retirement. Age, but I'll be following develops. That's very interesting and helpful. Thank you. And final question from me. I wanted to ask about the dividend. You reiterated last year's €0.6 semiannual distribution. And I was wondering, should the market improve going forward? Would there be any appetite to potentially raise the second semiannual payment? [indiscernible] [indiscernible] have the first dividend is a result of the of the year we just had.

The year we just reported.

And it was [indiscernible] exactly $0.60 for the July semi annual dividend if you recall last year in December, we lapped it because the market was very, very strong too. 90. Hopefully, we can do the same having such a big backlog of employment and at least have the same dividend So that's what we do. We have our strategy meeting in October. By that time, we have a good review of the nine first nine months of the year. And as we did last year, we hope that we can do [indiscernible] or even more. Let's so that's how we operate.

Makes sense.

That's everything from me. Thank you for taking my questions. Thank you.

Our next question comes from Poe Fratt with Alliance Global Partners. Please proceed with your question.

Just two quick ones about operating the operating stats. Think Eric mentioned you had 15 drydocks in the 02/2004 time frame. How many do you expect in 2025 And then also, it looks like your G and A expenses were up in the second half of the year. Think because of incentive comp. Can you give us sort of an idea of how the 2025 gs and A expense line looks? [indiscernible] [indiscernible] Which considering that we operate a fleet in the water of 60 vessels, that's what you would expect. Generally, it's a five year cycle, Sometimes when the ships are built, I mean, it is kind of not hard for someone to figure it out because it's every five years since the the vessels So if the vessel is built in 2010, so we'll have fifteen, twenty and thirty five special surveys. And as far as we expect the G and A to drop significantly. We've had the pleasure to distribute big number or a significant number of shares to our personnel. On the ships and in our offices last year. And I think that has created a good team for them. So they're all now trying to make sure we get the share price but above $30 which it should be.

Great. Thank you.

We have reached the end of the question and answer session. I'd now like to turn the call back over to Mr. Nicholas Tsakos.

Well, again, thank you for listening in.

It has been a very exciting and one of those game changers [indiscernible] maritime and financial press has pulled out transactions going forward. We tend to do this every now and then to put the company in this next phase. But we will do prudently and without putting the house for sale. So we are the company is very well funded. The company can even do a similar transaction going forward without having to raise extra equity. And we are in an environment that the underlying day to day market is growing is maintaining strength. Right now, the Aframaxes I have my son he is 22 and he is planning to be a broker and one of the famous broker charges. So for him it's very exciting to see that the win of this week are the Aframaxes. So Aframaxes today are in the 70,000 range. So the ones we have in profit sharing was our new spot. I really enjoyed that. Suezmax is not far behind in the 50,000 lane. Flat with the VLs were in the 50 shops. So it's a very, very [indiscernible] and strong market with rates being very accretive mainly for companies like that. That have a low cost and a low breakeven.

So we're looking at a well balanced market. The geopolitical the geopolitical events around the world starting with the the hook is attacking [indiscernible] And I think the very good defense of The United States and Greece and all the allies that are protecting our CPRs going to open up further hopefully our oceans. And of course, the increased part of the presence of the decaying grade fleet and we've seen two incidents in the last month of grade ships actually being abandoned and creating putting environmental danger in the market. [indiscernible] [indiscernible] shipping companies like ourselves to enjoy [indiscernible] going forward. And again, just to reiterate that 60% of our business is done by Hextron, our largest client, followed by Equinor, followed by Chevron Total Petrobras, of course, and BP. So we are in a sense of the floating pipelines of very, very demanding end users. And we are getting rewarded for that and hopefully we will see this reward move to our share price like it was last year. And with that, I would like to thank all of you for listening in. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.