Q4 2020 Tsakos Energy Navigation Ltd Earnings Call
Please note that the slides of the webcast presentation will be available on our side on the website of the company after the conference calls.
Also, please note of the Flies of the webcast presentation. I use are controlled and that means that by clicking on the proper button. You can move to the next one to the previous slide on Thursday at this time. I would like to read the Safe Harbor statement this conference calling slide presentation the webcast contain certain forward-looking statements within a meeting of the Safe Harbor provision of the private Securities litigation Reform Act of 1995 investors are cautioned that forward-looking statements involve wage. So I have six business office results of operates at this moment. I would like to talk to the floor to make a m b seven of sort of energy navigation Mister, please go ahead.
Thank you.
Nicholas good morning, and good afternoon to all and thank you for joining us today.
I hope you you are all staying safe and healthy despite the the challenging market conditions 2020 proved to be a year of strong operating profitability for 10.
This allowed us to continue paying dividends repairing yet another issue of preferred stock reduced Bank debt and meet all our other obligations. In addition. We sold all the damage to maintain a young Fleet and were able to take non-cash corrective action on certain vessels in essence nothing new or different from what I've done 10 has been consistently doing every year since Inception today with a substantial cash position accelerated special surveys to Bess July's bull market conditions and have the fleet on spot then is perfectly positioned to benefit from the anticipated recovery in the global economy. And the exulting release of pent-up demand for oil and oil products the board joins me in congratulating Nicholas tacos and his team phone number.
Grand a year of best-in-class performance which fully validates our strategy and with this I pass the floor to Nicola Sacco. Thank you chairman a good morning to all of you on the other side of the Atlantic and good afternoon to you here in Europe and thank you for joining our call. It's it was exactly a year ago to the date where our chief operating officer said the exact same date for our call when we were talking back on the 24th of March of 2020. We were in the beginning of of this pandemic and everything looked very very new very strange and we were all at the Lowe's a lot has gone under the bridge since then unfortunately, huge loss of life world. Yep.
So it is a really different world than we entered the exactly a year ago our call today. However, as the chairman said we were able to navigate these difficult times maintaining as hard as it was a steady hand or on the wheel and we are coming out of what life has been a very trouble and. In very choppy Waters or Stormy Waters to say the least in in in calmer Waters helped a lot with the vaccinations that are happening all over the world.
in my last
Colin November when we announced the nine months results. I was hoping that we would not have hit a third or fourth of the number is New Wave of of lockdowns around the world. Unfortunately, it has happened. It's still happening in some parts of Western World things are becoming more difficult as far as the pandemic. However at the end of the of the tunnel, we have the last eight of the vaccines big percentage of the population. Hopefully, we will be vaccine by the end of of this and the next quarter.
This miracle this medical miracle that happened in a very short period of time has given the world a new go around and this is something we often think in in the rates as of the beginning of the year 2020 was a roller coaster here. However,
well things are looking more positive than natural supply and demand right back with Librium right now. He's very tight and we we show it even last night and this morning when the Suez Canal and this was not April Fool's Day event. It was the real closer and it's still partially closed of the Swiss Canal that has put the market through the roof mainly in in Futures rate. So we have been a renew affiliate as Mister chairman. We sold seven vessels. We got new environmentally-friendly for vessels Thursday. And in the meantime are the two new buildings all of the six new vessels that we have already delivered all will be delivered are charted with long accretive rates in birth.
And in the last quarter, a lot of attention has been made to recharge nine vessels three of them being a religious. So in a different Market environment, I am very proud that they're the LNG and all our tankers keep on thinking without a loss add a loss and that has been a really remarkable achievement from the medicine and technical side and I would like to thank them going forward. We are seeing significant signs or that we are much closer to home stronger rates. We're seeing the the pier markets dry cargo containers skyrocketing and in a at levels that we have not seen them at least twelve years back in 2007 and 2008 and we expect that the Visa tanker rate recovery is not far. We we have Cath.
our vessels
Significantly in the spot Market. We have 31 ships ready to take immediate advantage of that turn around and another twelve vessels with profit sharing Arrangement took the company is maintaining its profitability is maintaining its dividend policy during very very difficult times. It's reducing debt off significantly and we're looking at the picture by by the next quarter. And with this I will ask. May I see ol Mister George Soros blue to give us a little bit more details of what we have been seeing and what we are facing as we speak and I will be there for answers if you need anything. Thank you. Thank you very much nickels and good morning to all of you joining our niece calls. We reported a profitable year for the 2020. Yep.
In fact a 40% increase in profitability from 2019-2020 has been a roller-coaster year for the tanker industry and the world because of the fact COVID-19 pandemic and its economic social and health related repercussions. We continue to successfully navigate the logistic and Regulatory challenges of COVID-19 with no impact to our operations so far. This has been the biggest challenge of the last twelve months and continues to be the number one priority.
Because of the pandemic the lockdowns Border closures and reduce their line capacity, the shipping industry has experienced significant challenges with timely crude changes home. We continue to safely perform crude changes but problems with restrictions and Logistics remain as different parts of the world open and close their borders their borders with a synchronously following virus developments. We want to take the opportunity to thank one more time all RC fires and the onshore Personnel for their hard work patience dedication and professionalism during this unprecedented time.
We will continue to work hard to normalize crew changes and bring you safely back home to their families without disrupting the operational Readiness and efficiency of the fleet. This has been and will continue to be the number one priority until crew changes and crew return to the pre COVID-19 normality. Let us go to the slides presentation in slide three. We see that since tens inceptions in 1993 the effaced for major crisis, but it's time the company thanks to its operating model which is built to be crisis resistant has come out of has come out stronger.
from 4
Golden vessels in nineteen ninety three to a pro forma Fleet of 70 vessels for an average 15% annual growth in terms of that way tones in there for decades we operate.
This time has not been an exception last year. We sold seven tankers with an average age of fourteen years and replaced them with for Echo design and environmentally friendly new buildings down South Korea to suezmax and two aframax tankers that were Charter to an oil major on minimum five-year contracts with options that go up to ten years off. The last of the 4 series order has been delivered Charters last quarter the company continues the current growth program with construction of two vessels in the specialized factors namely the DP to shuttle tankers and LNG that both have already been fixed with long-term employment.
You know slide for we see the pro forma Fleet and the current and its current flip profile employment profile. We have a combination of vessels in fixed time job and flexible employment contracts time started with profit-sharing cos and Spa trading that capture the market subside all dark blue color vessels 23,000 lights fixed rate time Charters while the light blue and red color vessels or more than two-thirds of the fleet currently in the water have exposure in the market subside wage means that 10 is well positioned to capture the positive tanker get fundamentals and the expected recovery of freight rates that we expect to be seeing from the second half of this year off.
The left side presents on the next slide that one slide five the next the left side presents the Olin Break Even cost of the various vessel types. We operate as you see the cost base is low. And in addition to the low shipbuilding course must highlight the purchasing power of tsakos Columbia shipmanagement The Continuous cost control efforts by management maintain a low parading expense average for the fleet and the low General and administrative expenses while keeping a very high flip utilization rate quarter after quarter. We almost 95% utilization for the year after bringing forward the special survey of nine vessels to take advantage of a weaker Market.
And thanks for the profit-sharing element. That is a big part of our Fleet. We enjoy the benefits When the market conditions are strong like the freight markets that we have witnessed took the first half of the year as demand for oil continues to recover from the loss of last year and oil inventories continue to fall we expect the Freight Market to recover from current levels off and for every $1,000 increase in Spa trades. We have a positive impact of $0.60 in annual EPS based on the number of 10 vessels that currently have exposure to spot rates wage. That's a reduction in slide six is an integral part of the company's Capital allocation strategy during last year. We have repaid hundred and sixty million of debt and repurchase with the successful fifty million preferred shares and so our net debt-to-capital ratio is currently below 50% in addition to paying down debt growing the company's name.
timely sale and purchase a new building acquisition
We have continued to reward our shareholders with dividend payments. We announced today at ten cents per share dividend for common shareholders that will be paid in June seems hard lifting the New York Stock Exchange in 2002. We have rewarded the company's shareholders with almost half a billion in dividend payments and 113 million incer black box. So besides debt repayments cash dividends and buyback of common and preferred cells which are the three main pillars of the company's Capital allocation Fleet growth and renewal remains is the fourth pillar as far as the market is concerned has been an unprecedented here for Global oil demand last year because of the COVID-19 but then Panthers and the measures to contain it 2020 was the first year of negative growth since the period of the Great Recession in 2008 and 2009 your end game.
Was down by approximately 8.8 million barrels per day from the year-end 2019 numbers or approximately 8% of demand. Most of the loss as are in jet aviation fuel the expectations for 20 21 are for oil demand to grow back by five point five million barrels per day wage growth trajectory for all demands and full recovery to the prequel levels depends more or less and how quickly Global jet fuel demand will return to the procope RICO with levels. And of course on how quickly and how well the world will manage the vaccine rollovers and the latest virus mutations nearly all demands reductions are found in the oecd countries wage while non oecd countries. They Hunan always the world continues to have strong demand growth and the International Energy agency continues off.
To increase the demand expectation for China and India as the economy recovers and demand continues to grow non-oecd countries continue to be the growth engine for oil Demand on the supply side. OPEC plus producers are gradually easing unprecedented production Cuts. There is an additional seven point seven million barrels per day of shutting production that affect plants Peg + plans to gradually restore over the course of the next year compliance with dispatch has to be very high oil inventories University countries continue to draw the expect the demand growth of five point five million barrels per day of this year and OPEC plus schedule oil production increases should be very positive for tanker demand and tanker rate belongs demand continues to grow. Let us look at the forecast for the supply ma'am.
tankers the order book as a February stands at around three hundred fifty-three tankers or 7.5% of
The fleet is expected to be delivered over the next year, which is the lowest that we have seen in almost thirty years. However, we should notice that we have all part of the fleet that is over fifteen years. We're talking about 1410 vegetables and almost 8% of the fleet are currently wage at or above twenty years with the upcoming environmental regulations. We expect to see a push for more tankers approaching or above twenty years to go for scrapping off. The 1018 was the highest crapping year of Records last year was lower as expected. And so we expect to see a pickup.
Thanks to you know, the big part of the fleet that continues to be over sixteen years with expect a big camping scrapping from this year as more environmental regulations are on the horizon and a weak Market Pub or the last nine months creates an unfavorable trading environment for those vessels that approach or are currently are above 20 years in summary on the oil demands the recovery continues to be strong and the strong recovery is going to be translated into five point five million barrels per day growth in 2021 on the supply of oil production increases wuss out on the Horizon by both OPEC plus and other non-opec producers on the vessel Supply the order book to the current literature, which is at historical low levels, which implies at minimum balance market for the next eighteen to twenty-four months regarding 10th balance sheet. We have a crisis resistant proven operating model. We have a modern Fleet. Well positioned to capture the flag.
What is the market development which we expect from the second half of 2021? We have a strong balance sheet and strong banking relationships that will allow the company to take advantage of the opportunities as they would be presented with the expectation of better days ahead. We conclude the operational part of the presentation Paul will walk through the financial highlights for the fourth quarter and full-year dead dead and charges and parents house 2645 homes for ten. Now I go to the store biography. We had 95% utilisation and twenty20. Yep.
Mha, the same thing Porter for which are good signs given that we had my entire doctors in the air has 24600. May I speak to Ranch Market lights in the back windows of the emblems was in the end. Despite V. This is preferred stock.
Frontier Dodge compared to the prior quarter for an account of the market in order to part of the year and contributing to a quarter of a million dollars.
Hi, I have conversations with have successfully avoided potentially significant losses.
Charter is to provide the cash to cover all costs provide a further twelve or nine days to cover the shell shock cost for those categories and quota despite trying dockings choice for the content up to $7,800 off the interest. My interest rates may change that valuations by four million dollars. Wow.
And dollars and prepared 54 million days of Bones try out for $10 of cash for the sides to consider a ATS job is to date and how about a way to print out my financing terms for the ships that have characters that were negative cash flow from her name?
mark down payment at a later date by Hanson
Breanne entitled to 1.5 1 billion dollars with not my main at 48% off. How can you please give us a call to expect at 10 p.m. All right. I'll talk to be positive from 6:00 to 1 and this concludes my comments and I'll pass a call back.
Thank you for calling for your detailed analysis of the results and that we sure did we are.
Happy to have this is going to be our next year is going to be our twentieth year as a public company on the New York Stock Exchange and we hope we will maintain our our continuous Thursday within payment and profitability with as we have always done and it seems that the prospects going forward are quite positive very strong recovery similar to what we are seeing in other segments of the industry and usually the tankers followed by cargo and may contain a market and this is happening as we speak or we see and presented high levels for demand as infrastructure building is going back and it's happening the same thing is evident a lot on the product carriers a lot of refineries or something down in the western world and more demand phone number.
Nexus is required around the world. A lot of coal mines are been reduced in places like China and and that helps our LNG and and fuel Imports in this vast markets India. The same time is important more and more from the west or at least from places like West Africa home and not it's not so dependent any more on the Middle East increasing turn miles as we speak as we go forward and the normal life like like Libya who has been a big participant of the Mediterranean Market has increased since our last presentation in November another 16% of its out everything helps and more and more importantly than anything else is the supply very small single-digit birth.
Supply coming in over the next two years as we speak. So I think we are looking at at a significant super cycle happening here sooner rather than later at the same time. We are seeing with large conglomerates like equinor, which is one of our largest also clients Thursday. It's coming in and starting to work on what they say is the largest so far field oil field in the North Sea the front field office, which is another sign then that the product is going to be there for the foreseeable future for the limited amount of vessels that are also low inventories as well as we speak people have been burning the the chip inventories and I think they will need the significant uplift as we go forward and with yep.
Since then hopefully safety for everybody will be seeing better times. We we have not lost a single day in our renewal program. I think as Palmer we replace the seven vessels are taking in six brand new vessels for already earning accretive rates for us to our already Charter and fixed or Shuttle tanker and our LNG. So we have tried to keep a tight ship the security of our first over seafarers comes first their mental health the physical health, but we had you know within 3000 seafarers around the world. We had I would say less than 1% covered cases. We have been waged a successful in in containing those it is a struggle every day. It is starting to make sure that our people are safe on both then we're not creating a COVID-19.
This is very important. I think for all the authorities around the world to make sure that seafarers are considered first line receivers of Life over the vaccines it we have people having to wait for a month to get their vaccines before they go on on board and they should not be the case. They should be able to go on board provides service the global call me without having to to be penalized or put themselves or their colleagues at risk. It's it's a very big issue and we're trying to suck. Why do you show these and and governments to make sure that this will go on and it will make our life and the life of our seafarers much much easier healthier any tools. Give me a freaking operating expenses because in order for us to be able to report rate many times or
Oh, what a long-serving offenders. We have to navigate the vessels physically into places like South Africa or or the Philippines where there are open borders wage. They are received in the Humane in a Humane Manner and with this I would like to open the floor for any questions. Thank you very much.
Thank you. Ladies and gentlemen, as a reminder. If you wish to ask a question, please press star one on your telephone. I'll wait for your name to be announced. If you wish to cancel your request, please press start to you. Once again, please press star and one if you wish to ask a question, your first question today comes from Randy giveans from Jefferies, please go ahead to line is open Monday Hello Dolly right away looking very forward to see you face to face one day soon with or without the mask. That is why it's a one-time charge and Tire.
Yes, I think we are we have renewed for over over product carriers for another three years to that existing Charter with a major State oil company based on our typical a creative minimum and and profit sharing arrangements. Then of course we have taken we have used this period of time to Charter out and I was very happy to make sure that we started out in this from anywhere between from from 2 up to ten years at without directly either from the junkyard or from the last from the last
delivery
The call so that that as you know an LNG it could if you have a vessel on the spot, it could cost millions and millions to your bottom line and we're happy that we do not have to spend money for that exactly the opposite the ships are ending immediately after their current three deliveries are currently rates and and on top of that Thursday. We have a conventional shreds Max and aframax on on a yearly Charters extension of of Charters and our shuttle tanker for a long period of time. So I think that's that's the a very quick.
Run down of the nine vessels that we have renewed in the first quarter because we have seen the signs of the Tartarus looking to take cover off wage. Okay. I'm sorry. We you know try to do this bird. You cannot try to ten cents a shower and finger. Well, as you know, we're in a very, you know, we are very much David Choi as in as an organization or the management and and the Family Stones.
Orange, you know a very large part of the stock so dividend for us is very very important. And so we're always predicted and I try not to miss any of our dividend payments. We believe this is the best way to reward nothing as George mentioned in in the twenty years of them being twenty years next year on the stock exchange. We we have paid hopefully by then in excess of half a billion dollars in dividend check. If you are another hundred and sixty million dollars of bibox, we will have returned between dividends and BuyBacks more than 650 million dollars to the service rep.
TJ Fitzpatrick, are those packages and Strikes?
I have I have to say I think we spoke together in November and I mentioned that we are hoping to see a much better first half depending of off any additional lockdowns. So in one hand unfortunately in places like Europe, we are seeing a severe lockdowns happening again. I am putting a delay to the full recovery of of our trades on the other hand. We have the positive Miracle of the vaccines that off. I think I came out in a very timely manner a big percentage of the population are being vaccinated. We are hoping to have at least an open summer found Europe and I'm sure the United States the case is the same we are glad that the majority of the Far East that has been able to control the values the virus and yep.
couple of quarters much much better
So I I although we are facing another hopefully the last uphill battle with the with the with the lockdown. I think we we could turn the corner as early as next quarter, which is next in a couple of weeks. And we saw this we saw this happening with all the all the all this happening today with and I have to say we did not organized for the closure of birth canal just because it was our call. It was an incident with his not it will have some delays but we saw how the Futures and the spot Market am just in that to the market is well-balanced april-may for sure by by June when our annual meeting is in the hopefully we will see you two face. We will be celebrating in a bath.
Open market environment.
Thank you. Thank you ladies and gentlemen as a reminder. If you'd like to ask a question, please press star and one on your telephone keypad. One to ask a question.
Nathan Johnson, and once again, if you'd like to ask a question, please, press * 1. What if there are no more questions. I will ask our chairman to give his wife someday. I will close after that no wise words Nico. Thank you. Thank you all again for joining and we all look forward to 2021 being a great years well for the company and the stock. Thanks again.
And from my side I would like to wish everybody very healthy safe and prosperous 20-21 all of us going back to school and you know with all the lessons that we were taught as I said exactly here ago our CEO gathered here for for last year's end-of-the-year results exactly a year ago things were very very different. We have all grown through this we navigated a steady ship and Waters we have maintained and I'm very proud of our our renewal program with with the new ships sold on time. The the seven assets package delivered for already without losing almost a day in a very difficult environment Ghostbusters have already been learning accretive rates, which you see to the bottom line right now.
More vessels are being built for us. Hopefully they will be delivered within this year one.
I'm Twenty-One and the next one in twenty two both of them on long-term Charters, and we're also looking at the opportunities out there. I would like to thank all all in the truck was group home or keeping a Flawless operation regarding the safety oversea Furs, and I think this is a priority for us everybody in the group is just to make sure that we have we wake up every morning with on a healthy on a healthy Sip and without the looking forward to speak to you next next quarter cup in in a very very much better environment or all all the best from all of us here in Greece and happy Easter holidays. Thank you very much.
Thank you that does conclude our conference today. Thank you for participating you may all disconnect.
You need to close. Yes.
This conference has been completed please disconnect now. Thank you.
TJ
TJ Maxx
TJ this month, please disconnect now. Thank you.