Q2 2023 Tsakos Energy Navigation Ltd Earnings Call
Speaker 1: like that and that was from a major oil charter. So the prospects are good. As Nick Bernosius kindly said, we've been around for 30 years and we're planning to be around for a few more years.
As a newborn nursery Skype you said, we've been around for 30 years, and we're planning to be around.
Therefore, there are a few more years.
Speaker 1: The Trapper's group is the major shareholder in this and we are driving the boat hopefully to safer and wealthier harbours as we go forward.
The job was group is a major shareholder.
These are the way we are driving the ball to hopefully to safer and wealthier.
Wealthier cardboard as we go forward.
It's been or the first six months, we took advantage of the timely sale of our first generation vessels, we are replacing them now with green in our 10 ship Green initiative.
Speaker 1: It's been the first six months we took advantage of the timely sale of our first generation vessels. We are replacing the now with green in our 10-ship green initiative.
Speaker 1: I would hopefully be flying at the end of this month to Korea to start taking delivery over dual fuel vessels since it can burn not only fuel oil but also gas and methanol and other combinations.
I I would hopefully be flying at the end of this month to Korea to start taking delivery of or do you on a few other vessel. So it seems that the gun burden.
Not only a few annoying.
But also guys and and and and methanol and other combinations.
Speaker 1: This is the ships that we are looking to design and take advantage going forward with our clients.
The ships that we are looking to design and take advantage going forward with our with our guidance.
Speaker 1: We are keeping a very conservative balance as always. Ten has never stopped paying a dividend in our 30 year tenor. Twenty years now we have been on the new stock exchange. I think we have made profits in the two and a half billion.
We're keeping a very conservative balance sheet.
Otherwise then has never stopped paying a dividend in a therapy here.
10, or 20 years now we've been on the new stock exchange. So I think we have made.
<unk> profits.
Two and a half million.
The dollars and distributed.
Speaker 1: and distributed 530 million in dividends, in common dividends, and on top of a close to 800 including our preferred dividends.
530 million in dividends in common dividends and on top of close to 800 are in are in it including our preferred dividends.
Speaker 1: We are the prospects for next year seem to be healthy.
We are are the prospects for next year seems to be healthy.
Speaker 1: As I said, the supply and demand and the appetite of our clients looks positive.
As I said the supply and demand.
The appetite of our over our clients looks are positive and we're looking to navigate.
Speaker 1: and we're looking to navigate our aim is now hopefully, and we believe that our share price is still very undervalued. And I think our aim here, and I think as very nicely, Nick, thank you very much for your wishes.
Oh, what Amin just now hopefully we believe that they can surprise is very undervalued and I think our aim here and I think that's a very nicely Nick. Thank you very much for your wishes.
Speaker 1: on having to pay for two college tuition at the Naval League University. I have to work harder and be in New York more often to get the supplies higher.
Oh on having to pay for it to do.
College tuition at the Navy League University I have to work harder and be in New York more often to get the share price high enough.
Speaker 1: And with that, I will ask George to give us a little bit of the background of how we have come and then we can answer questions together and Paul will give us the finance.
And without a well ask Oh, George to give us a little bit of the background of what are we how we've come in then we can answer the questions together in Florida.
Give us a financier.
Speaker 2: Thank you, Nikos. Good morning to all of you joining our earnings call today.
Thank you Nicolas and good morning.
To all of you joining our earnings call today.
2023 is a year, we celebrate our fifth anniversary as a public company.
Speaker 2: 2023 is a year we celebrate our 30th anniversary as a public company.
We reported this morning, the unaudited financial results for the second quarter and first half of 'twenty to 'twenty three.
Speaker 2: We reported this morning the unaudited financial results for the second quarter and first half of 2023.
Speaker 2: Assuming no change in the market conditions during the second part of the year most probably 2023 is going to be as good if not better than 2022 which was the best year since the company's inception.
Assuming no change in the market conditions during the second part of the year, probably 2023 is going to be as good if not better from 'twenty to 'twenty, two which was the best year since the company's inception.
Speaker 2: Some keep takeaways. We continue to experience the largest change in trade flows. Do not go include an oil product movement as a result of Western sanctions on Russian seaboard oil.
Some key takeaways, we continue to experience the largest change in trade flows to ongoing crude and oil product movements.
Out of Western sanctions on Russia, and seaborne point.
These changes appear to be permanent before the warning Ukraine Europe was the biggest clients are fresh and oil, but I think more continuous Russian oil was replaced with oil from the United States West Africa.
Speaker 2: These changes appear to be permanent. Before the war in Ukraine, Europe was the biggest client of Russian oil. But as the war continues, Russian oil was replaced with oil from the United States, West Africa.
Speaker 2: Guiana, South America and the Middle East, creating a positive, toned mile multiplier effect for tanker demand and freight rates. At the same time, tanker new buildings are at an all-time low, with new orders being less than 6% of the existing fleet. Many yards are now reporting availability from 2026.
South America, and the middle East, creating a positive ton mile multiplier effect for tanker demand and freight rates.
At the same time tanker new buildings are at an all time low with new orders being less than 6% of the existing fleet. Many yards have now reporting availability from 'twenty to 'twenty six.
Speaker 2: And global oil demand continues to grow, boosted by the post-COVID global recovery, and more recently by strong summer air travel, increased oil use in power generation, and surging petrochemical activity in China.
And global oil demand continues to grow boosted by the post COVID-19 recovery and more recently by strong summer Air travel increased oil using power generation and surging petrochemical activity in China.
Speaker 2: The latest POMOS forecast from the International Energy Agency continue to have global oil demand growing by 2.2 million barrels per day this year to a figure of 102.2 million barrels per day in 2023. Every allies, it's...
The latest forecast from the International Energy Agency continue to have global oil demand growing by 2.2 million barrels per day. This year to a figure of 102.2 million barrels per day in 2023.
Even realize it will be an all time record.
Speaker 2: Their global headwinds as well, like persistent inflation, tightening global financial conditions, the growing Ukraine, and the OPEC-plus production cuts until the end of the year. However, the global economy is expected to continue growing in 2023 by approximately 3%, and by the same rate next year, oil demand is growing, and tanker fundamentals continue to favor a strong tanker market for the next two to three years. Let's go to the slides.
They are global headwinds as well like persistent inflation tightening global financial condition. They wanted in Ukraine.
The OPEC plus production cuts until the end of the year. However.
However, if the global economy is expected to continue growing in 2023 by approximately 3%.
And by the same rate next year.
Demand is growing and tanker fundamentals continue to favor to favor a strong tanker market for the next two to three years.
Let's go to the slides of our presentation.
Speaker 2: Starting with slide three, we see that since inception in 1993, we have faced five major prices and it's time the company came out stronger thanks to its operating model. Recently, we came out of the COVID pandemic and we continue to navigate the challenges created by the war in Ukraine.
Starting with slide three we see that since inception in 1993, we have faith five major crisis and each time the company came out stronger thanks suites operating model.
Recently, we came out of the Covid pandemic and we continue to navigate the challenges created by the war in Ukraine.
Speaker 2: the fundamentals, record low tanker order book, an aging fleet, and post-COVID oil demand recovery, even without the tragic war, were positive for our industry.
The fundamentals record low tanker order book and aging fleet enforce coffee total demand recovery, even without the tragic war were positive for our industry.
Speaker 2: The Western sanctions and price cap imposed on Russian cybernoil as a result of the war served as an additional catalyst to propel freight rates higher as long as established freight routes were disrupted and voyaged distances were elongated.
The Westin sanctions and price cap imposed in Russia in seaborne oil as a result of the war served as an additional catalyst to propel freight rates higher.
As long as families trade routes were disrupted and voyage distances, whether elongate almost all of the Russian volumes are now flowing long haul to India and China are.
Speaker 2: Almost all of the Russian volumes are now flowing long haul to Indian China. At the same time, US crude oil exports have gone up from averaging about 3.3 million barrels per day last year to about 4.1 million barrels per day now.
At the same time U S crude oil exports have gone up from averaging about three 3 million barrels per day last year to about $4 1 million barrels per day now.
Speaker 2: Slide number four, we see the company's fleet growth and capital market access in St.
And slide number four we see the company's fleet growth and capital market boxes since inception.
Speaker 2: We raised capital for growth, not at the top of the market, but at times when asset prices were usually low.
<unk> capital for growth not at the top of the market, but at times when asset prices were usually low.
Speaker 2: In this slide, the numbers in the blue boxes present the company's common shares offerings and in red, the series of preferred shares offerings since the company in New York Stock Exchange.
In this slide the numbers in the blue boxes present, the company's common share offerings and in Red The series of preferred shares offering since the company New York Stock exchange listing.
Speaker 2: The first 3 preferred series, totaling 188 million of power value. The series B, C and B.
The first three preferred series totaling 188 million of par value the series B C and D.
Speaker 2: Plus, a privately placed preferred instrument of 35 million initial power value have been fully redeemed, as we speak, saving the company in excess of 18 million per year of coupon payments.
Plus it privately placed preferred instrument of 35 million initial part of value have been fully redeemed as we speak saving the company in excess of 18 million per year of coupon payments.
Speaker 2: Slide number five, we see the fleet and its current fleet employments.
Slide number five we see the fleet and it's gotten sleep employment, we have an operational fleet of 58 vessels. We have 31 out of the 58 or 53% of the fleet in the water with market exposure and combination of sports contracts of affreightment and time charters with.
Speaker 2: We have an operational fleet of 58 vessels. We have 31 out of the 58 tankers or 53 percent of the fleet in the water with market exposure and combination of spots, contract of affraignments and time-charter with profit series.
Perfect settings, 44 out of the 68 vessels or 76% out and secure contracts.
Speaker 2: 44 out of the 58 vessels, or 76%, are in secure contract, fixed-time charters, and timed charters with profit sharing. This means that TEN is well-positioned to continue capturing the positive tanker market fundamentals.
Fixed time charters and time charters with profit savings this means.
Dan is well positioned to continue capturing the positive tanker market fundamentals.
Speaker 2: Any divestment of earlier generation vessels, as we have done in the first quarter of this year, with the 6, 2005 build MRS and the 2, 2006 build handi size product tankers, will be replaced with modern eco-friendly greener vessels.
Andy divestment of earlier generation vessels as we have done in the first quarter of this year with the six 2005 built a modest and the to 2006 built on besides product tankers will be replaced with modern eco friendly greener vessels.
Speaker 2: 10 has currently a new bidding program of 10 tankers consisting of two subtle tankers for delivery during 2025 for dual fuel Afra-Maxes for delivery starting from the second half of these years. In fact, the first one will be delivered to us later this month. Two eco-friendly scrubber-feet at Suez-Maxes for delivery also in 2025. And as announced today, two scrubber-feet at MR tankers for delivery in early 2020.
Ken has currently new building program skin tankers course, consisting of two shuttle tankers for delivery during 2025.
For dual fuel offer them access for delivery starting from the second half of this year. In fact, the first one will be delivered to US later this month to eco friendly scrubber fitted suezmax is for delivery of ultra in 2025.
And as announced today prescribe it if he could M. Our tankers for delivery in early 2026.
Speaker 2: except for the two shrews matches that will be delivered after two years and the two M-Rs, the rest of the company new buildings have been six forward against medium to long term time charts.
Except for the two Suezmax is that will be delivered after three years and the twitch.
And Morris and I don't know if the company new buildings have been fixed forward against medium to long term. Thanks.
And the next slide.
Speaker 2: we see the company's current and long-term clients. As you see, we have a blue-chip customer base consisting of all major global energy companies, refineries, commodity traders, with Equinor currently topping the list as our largest charterer with nine vessels and four new buildings, all on a long-term charter.
We see the company's current and long term clients.
Do you see you have blue chip cost Blue chip customer base, consisting of four major global energy companies refineries commodity traders with equinox currently topping the list is our largest charter with nine vessels and four new buildings all on long time charters.
Speaker 2: In slide 7, the left side presents the Olin brake even course for the various vessel types we operate in 10.
In slide seven the left side presents the all in breakeven cost for the various vessel types, we operating thing.
Speaker 2: Our operating model is simple, we try to have our time charter vessels generate revenue to cover the company's cost expenses, which means paying for the vessel operating expenses, finance costs, overheads, charting costs and commissions, and let revenue from the spot trading vessels contribute to the profitability of the company.
Our operating model is simple we try to have our time charter vessels generate revenue to cover the company's cost expenses, which means paying for the vessel operating expenses finance cost overheads, chartering cost and commissions and less revenue from the spot trading vessels.
Contributing to the profitability of the company.
Please see utilization in the first half of the year amounted to 95, 3%, which is a very strong number.
Speaker 2: fluid utilization in the first half of the year amounted to 95.3% which is a very strong number.
Speaker 2: And thanks to the profit-sharing element, for every $1,000 increase in spot rates, the impact in annual EPS is plus 17 cents, based on the number of 10 vessels that currently have exposure to spot rates.
And thanks to the profit sharing element, where every $1000 increase in spot rates.
Impact in annual EPS of 17 is plus 17 cents based on the number of 10 vessels that currently have exposure to spot rates.
That reduction in slide eight is an integral part of the company's capital allocation. The company debt peaked in December of 2016. Since then we have repaid $378 million of debt and redeemed $211 million in three series of preferred public preferred shares.
Speaker 2: Debt reduction in Slide 8 is an integral part of the company's capital allocation. The company debts peaked in December of 2016. Since then, we have repaid $378 million of debt and redeemed $211 million in three series of public preferred shares, plus a privately placed preferred insurance.
Lastly, privately placed.
Yeah.
Slide nine has a snapshot of the company's financial performance. Since 2004, we would like to highlight that revenue growth has the fleet increased during this period.
Speaker 2: Slide 9 has a snapshot of the company's financial performance since 2004. We would like to highlight the revenue growth as the fleet increased during this period. The changes in EBITDA as the company navigated the ups and downs of the shipping market in this 20-year period, the bottom line profitability and the strong cash reserves that we have maintained throughout.
The changes in EBITDA as the company navigate the ups and downs on the shipping market. In this 20 year period, the bottom line profitability and strong cash reserves that we have maintained throughout.
In addition to pay down debts in slide 10, we see the dividend continuity is important for common shareholders and former management.
Speaker 2: In addition to paying down debt in slide 10, we see that dividend continuity is important for common shareholders and for managers.
Speaker 2: 10 has always paid a dividend in the respective of the market side.
Dan has always paid the dividend irrespective of the market cycle.
Speaker 2: Our dividend policy is semi-annual. We announced today that the total dividend for the year will be $1 per share. That's 5% yield-based is the closing of share price last night.
Our dividend policy each semiannual.
We announced today that the total dividend for the year will be one dollar per share.
That's 5% yield basis, the closing of share price last night.
Speaker 2: To break this $1 down, we have already paid 30 cents on June 15.
At least $1 down we have already paid 30 cents on June 15.
Speaker 2: Another 40 cents, which is a special top-up, will be paid on October 26th to shareholders of record as of October 20th. And the final 30 cents will be paid in December at a date that will be announced later in the year and closer to the December December . The one dollar that will be paid this year is four times the 25 cents we paid in total last year.
Another 40 cents, which is a special top up will be paid on October 26 to shareholders of record as of October 20, and another in the finals sense will be paid in December .
That will be announced later in the year and closer to the December distributions.
They want.
Hey, one dollar that will be paid this year is four times. The 25, we paid in total last year.
For like following this year's last dividend paid in December the company would have distributors in excess of 528 million to its shareholders. Since the initial listing in 2002.
Speaker 2: Following this year's last dividend payment in December , the company would have distributed in excess of $528 million to its shareholders since the initial listing in 2002, or on average about $25 million per year.
But on average about $25 million per year.
In slides 11 global oil demand continues to grow.
Speaker 2: In slides 11, global oil demand continues to grow.
Despite financial and geopolitical headwinds International Energy agency expects global oil demand to grow by approximately $2 2 million barrels per day.
Speaker 2: despite financial and geopolitical headwinds, international energy agency expects global oil demand to grow by approximately 2.2 million barrels per day.
Speaker 2: this year to 102.2 in 2023. It's going to be a record year with most of the growth coming from the Asia-Pacific region and mainly China. On the supply side, most of the growth in 2023 is expected to come from non-OPEC countries like Brazil, the United States, Guiana, Canada, Mexico and Norway.
This year, two with 202 <unk> to two <unk> in 2023, it's going to be a record year with most of the growth coming from the Asia Pacific region, mainly China.
Supply side most of the growth in 2023 is expected to come from non OPEC countries like Brazil, the United States, We honor, Canada, Mexico and Norway.
Yes.
Speaker 2: in slide 12 as global oil demand continues. Bro, let's look at the forecast for the supply of time.
Slides in slide 12, as global oil demand continues.
Well, let's look at the forecast for the supply of tankers.
Speaker 2: The order book as a focused stands at less than 6% or 338 tankers over the next three years. This is the lowest the order book has been in more than 30 years.
Order book has a focused stance at less than 6% or 300 358 tankers over the next three years. This is the lowest the order book has been in more than 30 years at the same time, a big part of the fleet.
Speaker 2: At the same time, the big panel of the fleet approximately almost 2,100 vessels or 37% is over 15 years.
Approximately almost 2100 vessels or 57% is probably 15 years.
Speaker 2: 712 tankers, or almost 13% of the fleet, are currently over 20 years. The next slide shows the scrapping...
712, tankage or almost 17% of the fleet.
Currently over 20 years.
The next slide shows the scrapping activity since 2018 for this years scrapping is low, but we have upcoming regulations and industry with decarbonization initiatives and more than 12% more almost 70% of the fleet being over 20 years, we believe scrapping is going to pick up overall always.
Speaker 2: For this year's scrapping is low, but we have upcoming regulations and industry with decarbonization initiatives and more than almost 30% of the fleet being over 20 years. We believe scrapping is going to pick up. Overall, all these factors point to a balanced, tanker supply market for the next few years. And with that, I will ask Paul to walk us through the financial highlights for the second quarter and first half of the year. Paul.
Factors point to a balanced tanker supply and market for the next few years and with that I will ask Paul to walk us through the financial highlights for the second quarter and first half of the year Paul.
Thank you George.
Speaker 3: So, I'm looking today at a six-month period and a four-month period.
Sure.
We're looking today at a six month period.
12 month period.
So in the six month of June .
Speaker 3: company earned net income of $240 million.
Company earned net income of 214.
Yes.
An increase.
Yes.
Okay.
Speaker 3: an increase of $106 million from the prior six months.
An increase of $106 million from the prior six months.
Speaker 3: revenues totaled $483 million, a 32% increase over the prior half year.
Revenues totaled $483 million.
32% increase over the prior year.
Speaker 3: with voyage expenses falling 24% and vessel operating expenses showing a decrease compared to last year's six months. iPhone X
Voyage expenses, falling, 24% and vessel operating expenses sharing a decrease compared to last years six months.
In the six months EBITDA increased.
Speaker 3: $356 million, adding to the company's cash reserve.
Two $356 million.
Going to the company's cash reserves.
In the three months of June the company gained net income of $61 million helped by a stronger U S economy.
Speaker 3: In the three months of June , the company gained net income of $61 million. Help by a stronger U.S. economy, paying early How's the tax on freight affordance in a heart
And then earlier months.
Speaker 3: revenues in the three months amounted to $220 million, a 2% increase with operating expenses at a similar level as before.
Revenues in the three months amounted to $220 million, a 2% increase with operating expenses at a similar level as before.
Time charter revenue in the three months amounted to $137 million.
Speaker 3: Time chart a revenue in the three months amounted to $137 million.
Speaker 3: while total spot revenue amounted to $84 million. Our profit share also contributed $24 million.
Total spot revenue amounted to $84 million.
Our profit share also contributed $24 million in the quarter.
Speaker 3: In the three months, vessel voyage expenses fell by 40% due to the prior three months period as expense decreased due to lower punker costs.
In the three months and vessel voyage expenses fell by 40% due to the prior three months period expenses.
Creased due to lower.
Bunker costs.
Total vessel operating expenses stayed at the same levels as did the previous years three months depreciation and amortization.
Speaker 3: Total vessel operating expenses stayed at the same levels as did the previous year's three months depreciation and amortisation.
Speaker 3: recent months. We have been successful in redeeming large amounts of preferred stocks totaling over $107 million, which has already resulted in a generous benefit to our bottom line that will continue over the future.
In recent months.
<unk> been successful in redeeming large amounts of preferred stocks totaling over $107 million, which has already resulted in a generous benefit to our bottom line that will continue over the future.
Speaker 3: Over the past months, apart from building new vessels and redeeming preferred shares, the company has taken advantage of utilizing in-house resources to restructure much of its organization and to develop the company in new direction.
Over the past months apart from building new vessels and redeeming preferred shares. The company has taken advantage of utilizing in house resources to restructure much of each organization and to develop the company in new directions.
Speaker 3: In the remaining months of the year, therefore, this will continue to be a major focus for men.
And the remaining months of the year. Therefore, this will continue to be a major focus for management.
And finally in order to provide more detail to our financials relating to the three months and to the six months there will be an S.
Speaker 3: And finally, in order to provide more detail to our financials relating to the three months and to the six months, there will be an SAC filing shortly that will provide considerable extra detail for our shareholders and auditors.
C filing shortly that will provide considerable extra detail for our shareholders and audited.
No.
To.
Nicholas <unk>.
Nichols the floor is yours.
Yeah.
Operator.
No I'm here.
Speaker 1: No, I'm here. I was actually on mute listening to polls achievements. So I'm back on, I'm back on and you know, Paul keep on pumping up the numbers. I think the g-stow to what we have said is that we made in six months 240 million. Hopefully, you know, it will increase significantly for the year.
I was actually.
On mute listening to Polish achievements.
On back on them by Gordon.
Pawlenty born.
The numbers I think that the juice out of what we have said is that.
We made in six months 240 million hopefully it will increase significantly for the year.
Speaker 1: and out of which 135 or more million has been
And out of which 135 or more million has been.
Speaker 1: distributed in one way.
Distributed in one way.
Yeah.
Speaker 1: 30 of it into common share dividends, and the remaining...
It into common share dividend and the remaining buying back expensive preferreds that were very useful 10 years ago. When the company was growing in that when everybody else was facing a very difficult times and we were growing using this.
Speaker 1: buying back expensive prefers that were very useful 10 years ago When the company was growing in when everybody else was facing a very difficult times and we were growing using
Expensive.
Because we cannot afford to redeem them and plan for a very very safe for future above if we had actually you know dividend out.
Speaker 1: We can afford to redeem them and plan for a very very safe future But if we had actually, you know, dividend out
Speaker 1: everything to common shareholders, that would be an unprecedented dividend of $4.50 a share.
Everything to common shareholders that would be and I'm pleased that the dividend of $4 50 a share.
Speaker 1: on a $20 very cheap chips. But I think we are here for the long term. If we had done that and we maintain the obligations of our preferred very soon, we would be in the problems that a lot of our peer group has been facing over the years.
Oh, the 'twenty on a 20 dollar are very very cheap cheap.
Sure.
But I think we're out of here for the long term. If we had done that then we maintained the obligations of our preferreds very soon and we wouldn't be in the problems that a lot of our peer group has been facing over the over the years. So our aim is to always keep our head above water literally.
Speaker 1: So our aim is to always keep our head above water, literally, and navigate safely and profitably going forward. I'm very happy that we took these decisions. And then another $100 million of our net income has gone into green, double-fueled vessels, and I think that's...
Unknown Executive: and that was from a major oil charter. The prospects are good.
That'd be good.
Navigate safely and profitably going forward I'm very happy that we took this decision and then in and then in another hundred million over our net income has gone into Green Dot I believe you will do the vessels and I think as George described very very demanding access.
Nikolas Tsakos: As Nik Bornozis kindly said, we've been around for 30 years and we're planning to be around for a few more years. The Tsakos group is the major shareholder in this and we are driving the boat, hopefully to safer and wealthier harbors as we go forward. It's been the first six months we took advantage of the timely sale of our first generation vessels. We are replacing them now with green, in our Tenship Green Initiative.
Speaker 1: George described very very demanding, exciting, new building program going forward.
I think our new building program going forward. So I mean, we we we bought our you know our my mom, our money where our mouth is.
Speaker 4: So, I mean, we put, you know, our money, where our mouth is. This is the...
Okay.
Speaker 4: And we're going forward. Now with a much more simple and easy to navigate, balance it, we will be able, I think, to increase our dividends for common shareholders also going forward. It has been since we...
And and were going forward now with a much more simple.
Needed to navigate balance sheet, we will be able I think to do.
Nikolas Tsakos: I would hopefully be flying at the end of this month to Korea to start taking delivery of our dual fuel vessels, ships that can burn not only fuel oil, but also gas and methanol and other combinations. These are the ships that we are looking to design and take advantage going forward with our clients. We are keeping a very conservative balance as always. Ten has never stopped paying a dividend in our 30-year tenor.
To increase our dividend for common shareholders also going forward.
And it has been seen since we.
Now since the end of June we took advantage of the strong market, we have increased our business.
Speaker 1: Since the end of June , we took advantage of the strong market. We have increased our business. We have made eight new charters. We have extended that, surprisingly, for many.
We have made eight new charters, we have extended that.
Surprising for me.
Speaker 1: Very high levels on RLNG.
A very high level, so one on <unk>.
Lenses, we're looking at six one daily six.
Speaker 1: We're looking at six daily six figure daily highs on those ships.
Finger daily highs.
Nikolas Tsakos: Twenty years now, we've been on the new stock exchange. I think we have made profits in $2.5 billion and distributed 530 million in dividends in common dividends and on top of close to 800 in including our preferred dividends. The prospects for next year seem to be healthy. As I said, the supply and demand and the appetite of our clients looks positive and we're looking to navigate our aim. Hopefully we believe that our surprise is still very undervalued and our aim here. I think that's a very nicely nick.
On those ships. So we you know we will be pleasantly hopefully surprise going forward for the nine months and in the year and I think this would it be.
Speaker 1: So we will be pleasantly hopefully surprised going forward for the nine months and the year. And I think this would be for sure another record year. And hopefully 2024, if the predictions are right.
Fortunately another record year, and hopefully 'twenty to 'twenty four.
Predictions are right.
Could be even a better year, but.
Speaker 4: could be even a better year. But anyway, I think we are in much safer waters. And with that, I would like to open the floor for any questions. Thank you.
Anyway, I think we added might say for waters and with that I would like to open the floor for any questions. Thank you.
Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker 5: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two. If you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.
Speaker 5: Our first question comes from the line of Omar Nocta with Jefferies. Please proceed with your question.
Our first question comes from the line of Omar knocked out with Jefferies. Please proceed with your question.
Nikolas Tsakos: Thank you very much for your wishes on having to pay for two college tuition at the New York University. I have to work harder and be in New York more often to get the surprise higher up.
Thank you Hey, guys. Good morning, good afternoon.
Speaker 6: Thank you. Hey guys, good morning, good afternoon. Always a fun and exciting update from the 10th.
I thought it was a fun and exciting updates from the <unk> team.
Unknown Executive: With that, we'll ask George to give us a little bit of the background of how we have come and then we can answer questions together and Paul will give us the financials. Thank you, Nikos.
Speaker 6: I wanted to ask about your fleet makeup as it is and how it could be going forward. Recently, your crude tanker exposure has risen as a result of selling some of the older product tankers that also take into delivery of your more modern crude vessels. You just placed the orders for two scrubber fitted MRs. Just the beginning of an expansion cycle, we've for 10 to maybe bring the fleet back into balance of this and crude product.
I wanted to ask about your fleet makeup as it is and how it could be going forward. You know recently your crude tanker exposure has risen.
As a result of selling some of the older product tankers, but also taking delivery of your more modern crude vessels.
George Saroglou: Good morning to all of you joining our earnings call today. 2023 is a year we celebrate our 30th anniversary as a public company. We reported this morning the another financial results for the second quarter and first half of 2023. Assuming no change in the market conditions during the second part of the year, more probably 2023 is going to be as good if not better than 2022 which was the best year since the company's inception.
Just place the orders for two scrubber fitted <unk> is just the beginning of an expansion cycle.
Ken.
And maybe bring the fleet back into balance between crude and product.
Yes. Thank you. Thank you very much anymore, yes, I mean, we we we took a timely decision.
Speaker 1: Yes, thank you very much, Omar. Yes, I mean, we took the timely decision for an unblock sale of a large number of our first generation vessels that served us.
And block sale of a large number of our first generation vessels et cetera.
Unknown Executive: Some keep takeaways. We continue to experience the largest change in trade flows to ongoing crude and oil product movements as a result of western sanctions on Russian seaboard oil. These changes appear to be permanent. Before the war in Ukraine, Europe was the biggest client of Russian oil but as the war continues, Russian oil was replaced with oil from the United States, West Africa. Guiana, South America, and the Middle East, creating a positive, tone-mile multiplier effect for tanker demand and freight rates.
Speaker 4: Amazing well, when we did those deals back in the 15 years ago when we bought
Amazing well know when we did those deals.
Yeah, you know 15 years ago, when we bought it.
Build those ships.
Speaker 1: We were the largest ice class operator, we took advantage of that period, and those ships really were sold almost at the same price.
We're the largest ice class operator, we took advantage of that period and those ships really.
They were sold.
We're almost at the same price.
Speaker 4: as we bought them 15 years ago, and I'm talking about the eight vessels that we sold in the first six months of the year. And naturally, we do not want to take ourselves out of this market. So we are building now either dual fuel and environmentally much, much, much better.
We bought them 15 years ago, and I'm talking about the eight vessels that we sold in the first six months of the year and naturally we do not want to take our ourselves out of this market. So we are building now.
Unknown Executive: At the same time, tanker new buildings are at an all-time low, with new orders being less than 6% of the existing fleet. Many yards are now reporting availability from 2026. And global oil demand continues to grow, boosted by post-COVID global recovery, and more recently by strong summer air travel, increased oil use in power generation, and surging petrochemical activity in China. The latest powermost forecast from the International Energy Agency continue to have global oil demand growing by 2.2 million barrels per day this year, to a figure of 102.2 million barrels per day in 2023.
Neither do our fuel and environmentally much much much.
Speaker 1: more friendly, similar vessels to replace.
More friendly similar vessels are to replace them. So we are not we will not spend every single penny.
Speaker 1: So we are not, you know, we will not spend every single penny on building the fleet, but we will continue and I think we will see the fleet coming back on that side too.
In the fleet.
But we will continue and I think we want to see the fleet coming back on on that side too.
Okay. Thank you and then you mentioned the dual fuel when you bought the you have the Aframax dual fuel LNG carriers and you mentioned in your opening remarks looking at alternative fuels as well.
Speaker 6: Okay, thank you. And then, yeah, you mentioned the dual fuel and you've got the, you have the Aframax dual fuel LNG carriers, and you mentioned in your opening remarks looking at alternative fuels as well. What's your appetite for methanol when it comes to the product tankers? And then, would you order ammonia-ready ships or would you wait until the ammonia becomes maybe more viable or truly dual?
What's your appetite for methanol.
In the countries, where the product tankers, and then would you order ammonia ready.
Ships or would you wait until the ammonia becomes maybe more viable are truly tool.
Unknown Executive: Every allies, it will be an all-time record. Their global headwinds as well, like persistent inflation, tightening global financial conditions, the war in Ukraine, and the OPEC-plus production cuts until the end of the year. However, the global economy is expected to continue growing in 2023 by approximately 3% and by the same rate next year, oil demand is growing and tanker fundamentals continue to favor a strong tanker market for the next two to three years.
During the construction process.
Speaker 6: during the construction process. Well, this is the billion dollar question that we are, you know, it reminds me of the vaccines for the COVID. You never knew if we should do Pfizer or if we should do Johnson and Johnson or more than. So thank God we do not have any disease. But I mean, we follow the lead of our clients. I.
Well.
This is really the billion dollar question that were.
Got it.
It reminds me of Oh.
The vaccines for the Covid.
Never knew if all we shouldn't do Pfizer Johnson.
Sure.
Well, thank God, we do not have any disease, but.
I mean, we follow the lead of all our clients.
Unknown Executive: Let's go to the slides of our presentation. Starting with slide three, we see that since inception in 1993, we have faced five major prices and each time the company came out stronger thanks to its operating model. Recently, we came out of the COVID pandemic and we continue to navigate the challenges created by the war in Ukraine. The fundamentals record low, tanker order book, an aging fleet, and post-COVID oil demand recovery, even without the tragic war were posted for our industry.
I do.
Speaker 1: An ammonia-ready vessel is really, you know, it's a million dollar investment, so we might do it, but I'm not convinced that ammonia is the future mainly because of the hazard that can be for the cifers and the problems we can have ourselves, not wanting to put our cifers without risk. And of course, the cifers unions, I think are not looking at ammonia as a happy alternative.
And in ammonia that the vessel is.
So really.
It's a million dollar investment so we might do it but I'm not convinced that the ammonia.
Unknown Executive: The Western sanctions and price cap imposed on Russian cyber-noil as a result of the war served as an additional catalyst to propel freight rates higher as long as public trade routes were disrupted and voyage distances were elongated. Almost all of the Russian volumes are now flowing long haul to India and China. At the same time, US crude oil exports have gone up from averaging about 3.3 million barrels per day last year to about 4.1 million barrels per day now.
Is the future mainly because of the hazard that can be for the seafarers and the problems that we can have.
Ourselves not wanting to put our competitors without risk and of course this you've heard us Union.
I'm not looking at ammonia.
Happy alternative.
Speaker 1: On the other hand, a methanol, which is somewhere between...
On the other hand the methanol.
As somewhere somewhere in between.
Speaker 1: and today's fuels is something that I would take a chance on and we're discussing on actually doing also taking methodals as an optionality.
And then today as a few others are something that though I would take a time zone and we're discussing one actually.
They're doing also taken methanol.
As a as an optionality.
I don't know if this is answering your question, but as I said I've said to our new building Department glass supply and so we are looking very closely to the alternatives.
Speaker 1: I don't know if this is answered your question, but I said I said our new building department plus our clients, we are looking very closely to the alternatives of going forward.
Going forward.
Unknown Executive: In slide number four, we see the company's fleet growth and capital market access since inception. We raised capital for growth not at the top of the market but at times when asset prices were usually low. In this slide, the numbers in the blue boxes present the company's common-served offerings and in red, the series of preferred search offerings since the company New York Stock Exchange listing. The first three preferred series totaling 188 million of per-value, the series B, C and B, plus a privately-placed preferred instrument of 35 million initial per-value, had been fully redeemed as we speak, saving the company in excess of 18 million per year of coupon payments.
Thank you definitely Nick that's helpful and maybe just one final one for me just on the two of them are new building.
Speaker 6: Thank you, definitely, Nick, that's helpful. And maybe just one final one for me, just on the 2MR new building, what's the idea in terms of deploying those ships, are you already in discussions with the customer to put those on term charters ahead of delivery, or are these more opportunistic and you intend to take delivery of them and then if you put them on contract, great, you keep them on the spot, great. Just wanted to get a sense of how you're, how these ships are looking in terms of.
The idea in terms of deploying those ships that are already in discussions with it with the customer to put those on term charters ahead of delivery or these more opportunistic and do you intend to take delivery of them and then if you put them on contract rate and keep them on the spot great. Just wanted to get a sense of how you are.
How these shifts are looking in terms of.
Speaker 1: Well, if you look at our, you know, currently we have 10 vessels being built, and I mean you will see that out of the 10 vessels, 6 are already...
Well if you if you look at our at our Yeah, well currently we have 10 vessels being built.
And you will see that the.
All out over the 10 vessels six already.
Speaker 4: They are with long chartes and profiteers and very accretive transactions.
With long charters and profit shares and they're very accretive transactions. Then we have the the suezmax, it which I'm very excited about.
Unknown Executive: In slide number five, we see the fleet and its current fleet employments. We have an operational fleet of 58 vessels. We have 31 out of the 58 tankers or 53 percent of the fleet in the water with market exposure and combination of spots, contract of affraignments and time-charter with profit serings. 44 out of these 58 vessels or 76 percent are in secure contract, 6 time-charters and time-charter with profit serings. This means that 10 is well-positioned to continue capturing the positive tanker market fundamentals.
Speaker 4: Then we have the Swiss Marxists which are very excited about and of course the Amar. We are keeping those ships to pay with the market. We might, there is pressure mainly to charter a couple of those ships long with profit-telling arrangements, which we will do against our clients. Very good names, but we will keep also a spot exposure.
And and of course the March so we are keeping those ships are too.
I would say to play with the market, we might we might.
There is pressure mainly to charter a couple of those ships along with profit sharing arrangements, which we will do against our client is a very good names, but we will keep also spot exposure.
Got it okay well. Thank you. Thanks, Nick Thanks, Steve I'll pass it over thank you.
Speaker 6: Got it. Okay. Well, thank you. Thanks, Nick. Thanks, team. I'll pass it over. Thank you.
Unknown Executive: Any divestment of earlier generation vessels, as we have done in the first quarter of this year, with the 6,2005 build emars and the 2,2006 build handi-size product tankers, will be replaced with modern eco-friendly greener vessels. 10 has currently a new building program of 10 tankers consisting of two subtle tankers for delivery during 2025, for dual fuel affra mixes for delivery starting from the second half of these years. In fact, the first one will be delivered to us later this month, two eco-friendly scrubber-feet that shrews mixes for delivery also in 2025, and as announced today, two scrubber-feet that MR tankers for delivery in early 2026, except for the two shrews mixes that will be delivered after two years and the two MRs, the rest of the company new building have been fixed forward against medium to long-term time-charter.
Thank you. Our next question comes from the line of climate <unk> with value Investor's edge. Please proceed with your question.
Speaker 5: Thank you. Our next question comes from the line of Clement Mollens with Value Investors Edge. Please proceed with your question.
Good morning, Thank you for taking my question.
Speaker 7: I want to start by asking about DNA, which increasingly quarterly, quarter over quarter. Could you provide some commentary on the drivers behind the increase? And how should we think about DNA going forward? Should we expect it to return to 7, 8 million range?
Okay.
About G&A, which increased significantly quarter over quarter could you provide some commentary on the drivers behind the increase and how should we think about G&A going forward should we expect it to return to seven 8 million range.
Yeah.
Speaker 4: Well, our DNA, if you look at it historically, is one of the lowest in the industry. I think...
Yeah, well, Oh Gee I may if you look at it historically was one of the lowest.
In the industry.
I think this year it has gone up because of all the issues that I think Paul Oh discussed about.
Speaker 4: This year it has gone up because of all the issues that I think Paul discussed about the organizing a huge part of our organization against cyber attacks.
Oh organize Inc.
Huge part of what our organization against cyber attacks are having a new.
Unknown Executive: In the next slide, we see the company's current and long-term clients. As you see, we have blue chip customer base consisting of all major global energy companies, refineries, commodity traders, with equinoir currently topping the list as our largest charterer with nine vessels and four new buildings pulled on long time-charters.
Speaker 4: having a new state of the art control room. So yes, the short is I think we will be going back to where we were after this initial very significant protection investment going forward
State of the art control, Oh, I'm sorry, yes.
The shortage I think we would be going back to <unk>.
Where we went after this initial are very significant.
Texts and investment going forward.
Thanks for the color.
Speaker 7: And regarding the dividend, you've declared a special $0.40 distribution. How should we think about dividends going forward? Do you plan to maintain the regular dividend and use special distributions to complement them? Or what's the overall strategy?
And regarding the dividend you've declared the special <unk> distribution, how should we be seeing about dividends going forward do you plan to maintain the regular dividend and special distributions to complement them or what's the overall strategy.
Unknown Executive: In slide 7, the last side presents the oil and break even course for the various vessel types we operate in 10. Our operating model is simple. We try to have our time-sharter vessels generate revenue to cover the company's cast expenses, which means paying for the vessel of the heating expenses, finance costs, overheads, chartering costs and commissions, and let revenue from the spot-trading vessels contributes to the profitability of the company. Fleet utilization in the first half of the year amounted to 95.3%, which is a very strong number.
Speaker 4: Yeah, this has always been our strategy. We pay something in June . We pay, you know, June and December are the spread individence and in occasions like now when we have...
This has always been our strategy would pay something in June we paid.
June and December .
Are they spending dividends and in occasions like now when we have.
Speaker 4: You know very good earnings we will be topping the top in the top in the top in the top so And this has been if you look I think George Mr. Saroglo has done a slide That's also what we've been doing this through thick and thin even at times that we made very little money We still maintain our dividend policy Because it's very important for shareholders to have this stability
You know very good earnings we wouldnt, we wouldnt be topping the topping out.
So and this has been a if you look I think Georgia, Mr. Sullivan, who has done this slide.
Unknown Executive: And thanks to the profit sharing element, for every $1,000 increase in spot rates, the impact in annual EPS is 17, is plus 17 cents based on the number of 10 vessels that currently have exposure to spot rates.
We've been doing this through thick and thin even at times that we made very little money, we still maintained our dividend policy.
Because it's very important for shareholders to have this stability.
Unknown Executive: That reduction in slide 8 is an integral part of the company's card allocation. The company debt picked in December of 2016. Since then, we have repaid 378 million of debt, and redeemed 211 million in three series of public preferred shares, plus a privacy-placed preferred engine.
Yeah.
Speaker 7: Makes sense. And final question from me. You did not renew the ATM, which makes a lot of sense given the significant discount your shares are trading at. Is there any appetite to potentially repurchase shares?
And final question from me you did not renew the ATM, which makes a lot of sense given the significant discount your shares are trading at.
Is there any appetite to potentially repurchase shares.
Speaker 4: We will, we will, as it is not on the top of the list, and I think we refer it, we refer to it in our press release, our priority is of course to reduce our debt.
We will we will odds are it is not on the top of the list and I think we referred we referred to it into our press release, our priority is of course to reduce our debt.
Unknown Executive: Slide 9 has a snapshot of the company's financial performance since 2004. We would like to highlight the revenue growth as the fleet increased during this period, the changes in EBITDA as the company navigated the ups and downs of the shipping market in this 20-year period, the bottom line profitability and the strong cash reserves that we have maintained throughout.
Speaker 4: Then our perpetual preference is another priority to reduce and of course our main issues to replace the fleet.
Then our perpetual preferreds is another priority.
To reduce and of course, our main issues to replace the fleet and to increase the dividend and after that we might consider but as you know we only have 30 million shares outstanding.
Speaker 4: and to increase the dividend and after that we might consider, but as you know we only have 30 million shares outstanding, the management and the Tsakos family
Unknown Executive: In addition to paying down debt in slide 10, we see that dividend continuity is important for common shareholders and for management. Then has always paid the dividend in the respective of the market cycle. Our dividend policy is semi-annual. We announced today that the total dividend for the year will be $1 per share. That's 5% yield-based is the closing of share price last night. To break this $1 down, we have already paid 30 cents on June 15th.
The the management and the telcos romley.
Speaker 1: close to 40% of that, would you not want to reduce liquidity? We feel much more comfortable rewarding shareholders by dividends rather than paying shareholders to leave us.
You know all know close to 40% of that so we do not want to reduce.
Unknown Executive: Another 40 cents, which is a special top-up, will be paid on October 26th to shareholders of record as of October 20th. And the final 30 cents will be paid in December at a date that will be announced later in the year and closer to the December distribution. The $1 dollar that will be paid this year is 4 times the 25 cents we paid in total last year. Following this year's last dividend paid in December, the company would have distributed in excess of 500 and 28 million to its shareholders since the initial listing in 2002 or on average about 25 million per year.
Liquidity, we feel much more comfortable.
Rewarding shareholders by dividend rather than paying shareholders to leave us.
Makes sense that's all for me. Thank you for taking my questions.
Speaker 7: That's all from you. Thank you for taking my questions. Thank you.
Thank you.
Yes.
Speaker 5: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Dr. Thakos for any final comments.
Ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Dr. Doug Ross for any final comments.
Yes.
Well.
Speaker 4: Well, thank you very much. It has been a pleasure announcing another record.
Thank you very much it has been a pleasure announcing.
Another record.
Speaker 1: profit period, it is always and we are looking forward to maintain.
Profit period, it is always and we're looking forward to maintain.
Speaker 4: and enhance our results. I was happy to say that we didn't talk about it. A lot of people mentioned it, our CFO , but we do not only have a positive income, but we are also maintaining control on our expense.
And in an hour.
Our Oh, well results capital also to say that the.
We didn't talk about it a lot Paul mentioned it.
Therefore that will not we do not only.
Have a positive.
Unknown Executive: In slight 11 global oil demand continues to grow. Despite financial and geopolitical headwinds, international energy agency expects global oil demand to grow by approximately 2.2 million barrels per day this year to 102.2 in 2023. It's going to be a record year with most of the growth coming from the Asia-Pacific region and mainly China. On the supply side, most of the growth in 2023 is expected to come from non-OPEC countries like Brazil, the United States, Guiana, Canada, Mexico and Norway.
Income, but we are also maintaining control on our expenses because I think this is very important.
Speaker 4: because I think this is very important. Many times in a good market people forget the expenses and that bites them on things turns out. So I think that is also a good sign from us.
Many times in a good market people forget the expenses in that bites them when things turn sour so I think that.
That is also a good sign from us.
Speaker 4: We are there to our aim now, I think, is to get our share price to the levels it should be.
We are there to Oh.
Our aim now I think is to get our share price.
To the levels it should be.
And I think Oh, it has a long way to go from where we are today and we would not a we're not one quarter minded company. So we will not do things just to make investors happy for the next quarter and the surprise them on the following one we're looking at things so more longer term and what we want to.
Speaker 4: It has a long way to go from where we are today. We will not, we're not one-quarter-minded company, so we will not do things just to make investors happy for the next quarter, and then surprise them on the following one. We'll look at things more longer term. And we want to thank you for your support. As Nick Bornozzi said, we will be celebrating.
Unknown Executive: Slides in slight 12, as global oil demand continues to grow, let's look at the forecast for the supply of tankers. The order book, as of August, stands at less than 6% or 338 tankers over the next 3 years. This is the lowest the order book has been in more than 30 years. At the same time, the big panel of the fleet, approximately almost 2,100 vessels or 37% is over 15 years. 712 tankers, or almost 13% of the fleet, are currently over 20 years.
Two for all your support.
Nic Board knows who said we wouldn't be celebrating.
Speaker 4: are actually 30 years since we entered the Oslo Stock Exchange back in October of 1993. And we would have a presentation of the companies doing in London next week for that and in New York on the actual date. And of course later in the month also back in Europe .
Are actually 30 years since we entered the Osbornes topic say this back in October .
October of 1993.
And we were having a we will have a presentation of the company's.
Doing well.
In London next week for that and then in New York on the actual on the actual date and of course later in the month also but in Europe . So thank you very much.
Unknown Executive: The next slide shows the scrapping activity since 2018. For this year, scrapping is low, but we have upcoming regulations and industry with decarbonization initiatives and more than 12%, almost 30% of the fleet being over 20 years. We believe scrapping is going to pick up. Overall, all these factors point to a balanced tanker supply market for the next few years.
Speaker 1: So thank you very much, and looking forward to meet a few of you and help you appreciate the value of our share.
Looking forward to meet the.
If you are viewing the.
Help you appreciate the value of our Sir.
Thank you. This concludes today's conference call you may disconnect your lines at this time.
Speaker 5: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Thank you for your participation.
Unknown Executive: And with that, I will ask Paul to walk us through the financial highlights for the second quarter and first half of the year. Paul?
Paul Durham: Thank you, George. So, we're looking today at a six-month period in the form. So in this six month of June, the company earned net income of $240 million. An increase of $106 million from the prior six months. Revenue's total $483 million, a 32 percent increase over the prior half year. With voyage expenses falling 24 percent and vessel operating expenses showing a decrease compared to last year's six months. In the six months, EBITDA increased to $356 million, adding to the company's cash reserves.
Paul Durham: In the three months of June, the company gained net income of $61 million, helped by a stronger U.S, economy to earn in the earlier months. Revenue's in the three months amounted to $220 million, a 2 percent increase with operating expenses at a similar level as before. Time chart of revenue in the three months amounted to $137 million, while total spot revenue amounted to $84 million. Our profit share also contributed $24 million in the quarter.
Paul Durham: In the three months, vessel voyage expenses fell by 40 percent due to the prior three months period as expenses decreased due to lower funcocosts. Total vessel operating expenses stayed at the same levels as did the previous year's three months depreciation and amortization.
Paul Durham: In recent months, we have been successful in redeeming large amounts of preferred stocks totaling over $107 million, which has already resulted in a generous benefit to our bottom line that will continue over the future. Over the past months, apart from building new vessels and redeeming preferred shares, the company has taken advantage of utilizing in-house resources to restructure much of its organization and to develop the company in new directions. In the remaining months of the year, therefore, this will continue to be a major focus for management.
Paul Durham: And finally, in order to provide more detail to our financials relating to the three months and to the six months, there will be an SAC filing shortly that will provide considerable extra detail for our shareholders and auditors.
Nikolas Tsakos: on to Nikos.
Nikolas Tsakos: Nikolas.
Nikolas Tsakos: Nikolas, the floor is yours. Operator? No, I'm here. I was actually on mute listening to Paul's achievements on back on, I'm back on and Paul keep on pumping up the numbers. I think the g-stone of what we have said is that we made in six months 240 million, hopefully it will increase significantly for the year and out of which 135 or more million has been distributed in one way. 30 of it into commonservative and the remaining buying back expensive prefers that were very useful 10 years ago when the company was growing when everybody else was facing a very difficult time and we were growing using this expensive vehicles.
Nikolas Tsakos: We can afford to redeem them and plan for a very very safe future. But if we had actually dividend out everything to commonser holders, that would be an unprecedented dividend of $4.50 a year on a $20 very cheap but I think we are here for the long term. If we had done that and we maintained the obligations of our preferred very soon we would be in the problems that a lot of our peer group has been facing over over the years. So our aim is to always keep our head above water literally and navigate safely and profitable going forward.
Nikolas Tsakos: I'm very happy that we took these decisions and then another hundred million of our net income has gone into green double fuel vessels and I think George described very demanding, exciting new building program going forward. So we put our money where our mouth is. This is the expression. And we are going forward. Now with a much more simple and easy to navigate balance it, we will be able I think to increase our dividends for commonser holders also going forward.
Nikolas Tsakos: It has been since we, since the end of June, we took advantage of the strong market. We have increased our business. We have made eight new charters. We have extended that surprisingly for many very high levels on our LNGs. We are looking at six on daily six figure daily highs on those ships. So we will be pleasantly hopefully surprised going forward for the nine months and the year. And I think this would be for sure another record year. And hopefully 2024, if the predictions are right, it could be even a better year. But anyway, I think we are in much safer waters.
Nikolas Tsakos: And with that, I would like to open the floor for any questions. Thank you.
Operator: If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Omar Nokta: Our first question comes from the line of Omar Nokta with Jeffreys.
Nikolas Tsakos: Please always a fun and exciting update from the 10 teams. I wanted to ask about your fleet makeup as it is and how it could be going forward. Recently your crew tanker exposure has risen. As a result of selling some of the older product tankers that also take into the library of your modern crew vessels, you just placed the orders for two scrubber fitted MRs. Just the beginning of an expansion cycle, we pretend to maybe bring the fleet back into balance of its inclusion product.
Nikolas Tsakos: Thank you very much. We took the timely decision for an unblock sale of a large number of our first generation vessels that served as amazing well when we did those deals back in the you know 15 years ago when we both built those ships. We got the largest ice class operator. We took advantage of that period and those ships really were sold almost at the same price as we bought them 15 years ago.
Nikolas Tsakos: I'm talking about the eight vessels that we showed in the first six months of the year. And naturally we do not want to take ourselves out of this market. So we are building now either dual fuel and environmentally much much much more friendly similar vessels to replace them. So we are not you know we will not spend every single penny on building the fleet but we will continue and I think we will see the fleet coming back on that side too.
Nikolas Tsakos: Okay thank you and then you mentioned the dual fuel and you have the Aframax dual fuel energy carriers and you mentioned in your opening remarks looking at alternative fuels as well. What's your appetite for methanol when it comes to the product tankers and then would you order ammonia ready ships or would you wait until the ammonia becomes maybe more viable or truly do during the construction process. Well this is the billion dollar question that we are you know it reminds me of the vaccines for the COVID you know you never knew if we should do Pfizer or if we should do Johnson and Johnson or more then.
Nikolas Tsakos: So thank God we do not have any disease but I mean we follow the lead of our clients. I an ammonia ready vessel is really you know it's a million dollar investment so we might do it but I'm not convinced that ammonia is the future mainly because of the hazard that can be for the cifers and the problems we can have you know ourselves not wanting to put our cifers without risk and of course the cifers unions I think are not looking at ammonia as a happier alternative.
Nikolas Tsakos: On the other hand methanol which is somewhere somewhere between gas and and today fuels is something that I would take a chance on and we're discussing on actually doing also taking methanol as an optionality. I don't know if this is answered your question, but I said I said our new building department plus our clients, we are looking very closely to the alternatives of going forward. Thank you. Now definitely, Nik, that's helpful.
Nikolas Tsakos: I maybe just want one final one for me, just on the 2MR new building. Now what's the idea in terms of deploying those ships? Are you in already in discussions with a customer to put those on term chargers ahead of delivery or are these more opportunistic and you intend to take delivery of them? And then if you put them on contract grade, if you keep them on the spot grade, just wanted to get a sense of how these ships are looking in terms of... Well, if you look at our...
Nikolas Tsakos: Currently we have 10 vessels being built. And I mean, you will see that out of the 10 vessels six are already with long charters and profiteers and very accretive transactions. Then we have the Swiss Maxis, which I'm very excited about. And of course, we are keeping those ships, I would say, to play with the market. We might... There is pressure mainly to charter a couple of those ships along with profiteering arrangements, which we will do against our clients, very good names, but we will keep also a spot exposure. Got it. Okay. Well, thank you. Thanks, Nik. Thanks, team. I'll pass it over. Thank you.
Clement Mullins: Our next question comes from the line of Clement Mullins with Value Investors Edge. Please proceed with your question. Thank you for taking my question.
Nikolas Tsakos: I will discuss by asking about DNA, which increasingly quarterly, quarter over quarter. Could you provide some commentary on the drivers behind the increase? And how should we think about DNA going forward? Should we expect it to return to 7-8 million range? Well, our DNA, if you look at it historically, is one of the lowest in the industry. I think this year it has gone up because of all the issues that I think Paul discussed about the organizing a huge part of our organization against cyberattacks having a new state of the art control room. So, yes, the short piece, I think we will be going back to where we were after this initial very significant protection investment going forward.
Nikolas Tsakos: Thanks for the caller. And regarding the dividend, you've declared a special 40 cents distribution. How should we think about the events going forward? Do you plan to maintain the regular dividend and use special distributions to complement them? Or what's the overall strategy? Yeah, this has always been our strategy. We pay something in June. We pay June and December are the expected dividends. And the occasions like now when we have... You know, very good earnings, we will be topping that up.
Nikolas Tsakos: So, and this has been, if you look, I think George, Mr. Saroglou has done a slide, that shows that we've been doing this through thick and thin, even at times that we made very little money, we still maintained our dividend policy, because it's very important for shareholders to have this stability.
Unknown Executive: Excellent.
Nikolas Tsakos: And final question from me, you did not renew the ATM, which makes a lot of sense, given the significant discount your shares are trading at. Is there any appetite to potentially repair shares? We will, it is not on the top of the list, and I think we refer, we refer to it into our price release, our priority is of course to reduce our debt. Then our perpetual preference is another priority to reduce.
Nikolas Tsakos: And of course, our main issue is to replace the fleet and to increase the dividend. And after that, we might consider, but as you know, we only have 30 million shares outstanding, the management and the Chakos family, you know, close to 40% of that, we do not want to reduce liquidity. We feel much more comfortable rewarding shareholders by dividends, rather than paying shareholders to leave us.
Unknown Executive: That's all from me. Thank you for taking my questions. Thank you.
Unknown Executive: Thank you, ladies and gentlemen, that concludes our question and intercession.
Nikolas Tsakos: I'll turn the floor back to Dr. Tachos for any final comment. Well, thank you very much. It has been a pleasure announcing another record profit period. It is always and was looking forward to maintain and enhance our results. I was happy to also to say that we didn't talk about it a lot. Paul mentioned it, our CFO, but we do not only have a positive income, but we are also maintaining control on our expenses.
Nikolas Tsakos: Because I think this is very important. Many times in a good market people forget the expenses and that bites them on things turns out. So I think that is also a good sign from us. We are there to our aim now, I think, is to get our share price to the levels it should be. And I think it has a long way to go from where we are today. We will not we're not to one quarter-minded companies. We will not do things just to make you invest or happy for the next quarter and the surprise them on the following one.
Nikolas Tsakos: We're looking at things more longer term. And we want to thank you for your support, are actually 30 years since we entered the Oslo Stock Exchange, back in October of 1993. And we will have a presentation of the companies doing in London next week for that and in New York on the actual date and of course later in the month also back in Europe. So thank you very much and looking forward to meet a few of you and to help you appreciate the value of our share.
Unknown Executive: Thank you.
Operator: This concludes the next conference call. You may disconnect your lines. At this time, thank you for your participation.