Q4 2023 Tsakos Energy Navigation Ltd Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to <unk> Energy Navigation Conference call on the fourth quarter 2023 financial results.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Tsakos Energy Navigation Conference Call on the fourth quarter 2023 financial results. We have with us Mr. Takis Arapaglou, Chairman of the Board, Dr. Nikolas Tsakos, Finder and CEO, Mr. Paul Durham, Chief Financial Officer, and Mr. George Saroglou, Chief Operating Officer of the company. At this time, all participants are in a listen
We have with US Mr. Tankers are right Bucklew chairman of the board Dr. Nicholas Backups, founder and CEO, Mr. Paul Durham, Chief Financial Officer, and Mr. George <unk>, Chief operating officer of the company at this time all participants are in a listen only mode. There will be a presentation followed by a question and answer session at which time there.
Operator: There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded, and now I will pass the floor to Mr. Nikolas Bornozis, President of Capital Link. Please go ahead, sir.
If you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced I must advise you that this conference is being recorded and now I will pass the Florida, Mr. Nicholas for Gnosis President of capital Link. Please go ahead Sir.
Nicholas: Thank you very much and good morning to all of our participants.
Nicolas Bornozis: Thank you very much and good morning to all of our participants. I am Nikolas Bornozis of Capital Link, an Investor Reliance Advisor to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the fourth quarter and year ended December 31st, 2023. In case we do not have a copy of today's earnings release, please call us at 212-661-7566 or email us at 10ten.com, and we will have a copy for you emailed right away.
Nicholas: I am Nicholas ball knowledge capital link Investor Relations advisor to Tsakos energy navigation.
Nicholas: This morning, the company publicly released its financial results for the fourth quarter and year ended December 31st 2023.
Speaker Change: In case, we do look up a copy of today's earnings release, please call us at 212.
Speaker Change: 617566, or email us I E.
Speaker Change: E N a capital M Dot com and we will have a call before you even made it right away.
Speaker Change: Please note that parallel to today's conference call. There is also a live audio and slide webcast.
Nicolas Bornozis: Please note that parallel to today's conference call, there is also a live audio and slide webcast, which can be accessed on the company's website on the front page at www.climent.com. TENN.GR. The conference call will follow the presentation slides, so please we urge you to access the slides on the company's website. Please note that the slides of the webcast presentation will be available in archives on the website after the conference call. Also, please note that the slides of the webcast presentation are user controlled, which means that by clicking on the proper button, you can move to the next or to the previous slide on your own.
Speaker Change: Can be accessed on the company's website on the front page at Www adult.
Speaker Change: P E and M Dot G R.
Speaker Change: The conference call will follow the presentation slides. So please we urge you to access the slides on the company's website.
Speaker Change: Please note that the slides of the webcast presentation will be available at an archive on the website. After the conference call also please note that the slides of the webcast presentation I use are controlled and that means that by clicking on the proper button you can move to the next or to the previous slide on your own.
Nicolas Bornozis: And at this time, I would like to read the Safe Harbor Statement. This conference call and slide presentation of the webcast contain certain forward-looking statements within the meaning of the Safe Harbor Provision of the Private Security Litigation Reform Act of 1995. Investors are cautioned that fast-forward-looking statements involve risks and uncertainties which may affect future business prospects and results of operations. And with that, at this moment, I would like to pass the floor to Mr. Arapoglou, the Chairman of Tsakos Energy Rehabilitation. Mr. Arapoglou, please go ahead, sir. Thank you, Nicolas. Good morning, everyone.
Speaker Change: And at this time I would like to read the Safe Harbor statement. This conference call and slide presentation of the webcast contains certain forward looking statements within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Speaker Change: Investors are cautioned.
Speaker Change: The forward looking statements involve risks and uncertainties, which may affect ten's business prospects and results of operations and with that at this moment I would like to pass the floor to Mr. Arapahoe, the sermon checklist energy or we get beside how about no. Please go ahead Sir.
Arapahoe: Thank you Nicolas.
Arapahoe: Good morning, everyone. Thank you for joining.
Takis Arapoglou: Thank you for joining our call today. Then, it continues to deliver very strong financial performance, based on very positive market fundamentals and also best in class. Unknown Attendee, Climent Molins, Nikolas Tsakos, Nicolas Bornozis, Tsakos Energ. At the same time, the company keeps renewing its fleet, selling all the tonnage at today's high prices, and acquiring eco-friendly Unknown Attendee, Climent Molins, Nicolas Bornozis, Tsakos Energ, and it also reinforces its leading position as a very successful operator of Specialized Modern Dynamically Positioned Tankers, are highly accretive acquisitions. The results of which..., are not included in today's results but will definitely contribute very positively going forward, which would allow us to continue our strong growth, as we have demonstrated Unknown Attendee, Climent Molins, Nikolas Tsakos, Nicolas Bornozis, Tsakos Energ, We're also using this current positive market to increase the number of vessels on time charter, but at the same time, we keep enough vessels to benefit from the very attractive current returns of the spot market and the Profit Sharing Orange, driven by the otherwise quite unfortunate geopolitical development.
Arapahoe: Joining our call today.
Arapahoe: 10 continues to deliver very strong financial performance based on a very positive market fundamentals and also best in class.
Arapahoe: Our operational performance.
Arapahoe: At the same time the company keeps a renew its fleet.
Arapahoe: All in all the tonnage at today's high prices.
Arapahoe: And acquiring our eco friendly vessels.
Arapahoe: Increasing its a great footprint.
Arapahoe: And it's also.
Arapahoe: Reinforces.
Arapahoe: Its leading position as well.
Arapahoe: It's very successful operator.
Arapahoe: Oh, but specialized modern.
Arapahoe: Dynamically positioned tankers all of these.
Arapahoe: Our highly accretive acquisitions.
Arapahoe: The results of which are not included in in in today's results.
Arapahoe: But we'll definitely come contribute very positively going forward.
Arapahoe: Which would allow us to continue our strong growth.
Arapahoe: Loan growth as we have demonstrated quarter after quarter.
Arapahoe:
Arapahoe: We're also using this.
Arapahoe: The current positive market to increase the number of vessels under time charter.
Arapahoe: But at the same time, we keep enough vessels to benefit from the very attractive current returns of the spot market.
Arapahoe: And the profit sharing arrangements driven by the otherwise quite unfortunate geopolitical developments.
Arapahoe: In doing so we continue to maintain a very healthy.
Takis Arapoglou: In doing so, we continue to maintain a very healthy cash balance, which allows us to be flexible and capitalise on a track, acquisition opportunities as they arise, and to continue uninterruptedly to pay. Unknown Attendee, Climent Molins, Paul Durham, Nicolas Bornozis, Tsakos Energy, semi-annual installment 60 cents. So, on behalf of the board, I wish to once again congratulate Nikos Tsakos and his team for the excellent performance and wish them continuous success going forward. So, thank you from me and on behalf of the board to Nikos Tsakos.
Arapahoe: Cash balance.
Arapahoe: Which allows us to be flexible and capitalize on attractive acquisition opportunities as they arise.
Arapahoe: And to continue uninterrupted me to pay side.
Arapahoe: Sizable dividend to reward the shareholders we're proposing.
Arapahoe: As a first step.
Arapahoe: M. Your annual installments 60 cents.
Board Member: So on behalf of the board I wish to once again congratulate Niko tsakos and his team for the excellent performance and wish them continued success going forward.
Speaker Change: So thank you for me.
Nikolas P. Tsakos: Over to Niko Tsakos.
Nikolas P. Tsakos: [noise] chairman. Thank you very much into first of all we would like to.
Nikolas P. Tsakos: Chairman, thank you very much. And first of all, we would like to express our support to the victims and all affected by the tragic events in Delaware, and we hope that very soon things will go back to normal with a minimum loss of life. As for 10, we concluded our 30th year, a milestone with another record year, and we are looking forward to continuing the trend. And I think, as our chairman said, the growth that has been embedded is not yet there, is not portrayed in these results, but hopefully, it will be portrayed in the remaining of 2024. Since we will be taking a significant amount, we will grow our fleet almost by 10% by the time the middle of the coming year.
Nikolas P. Tsakos: Express our support to the victims and all affected by the.
Nikolas P. Tsakos: Tragic events are in Delaware.
Nikolas P. Tsakos: And we hope that very soon.
Nikolas P. Tsakos: Things will go back to normal with a minimum.
Nikolas P. Tsakos: All four of life.
Nikolas P. Tsakos: As for 10.
Nikolas P. Tsakos: We concluded.
Nikolas P. Tsakos: Where do you see here.
Nikolas P. Tsakos: Milestone with another record year.
Nikolas P. Tsakos: We are looking forward to continue the trend and I think as our chairman said the growth.
Nikolas P. Tsakos: Has been Oh, well that has been embedded is not forget there are it's not portrayed in these results, but hopefully it will portrayed in our in the remaining of 2024 since we wouldn't be taking a significant amount would've grown overall fleet almost like 10%.
Nikolas P. Tsakos: By the time.
Nikolas P. Tsakos: But by the middle of <unk>.
Nikolas P. Tsakos: They're coming they're coming here.
Nikolas P. Tsakos: In the meantime, all the fundamentals of.
Nikolas P. Tsakos: All of the industry the long term fundamentals.
Nikolas P. Tsakos: Still look very positive.
And they look positive not only because of the geopolitical events and the delays in closures in our in the in.
Nikolas P. Tsakos: In the panel.
Nikolas P. Tsakos: But I.
Nikolas P. Tsakos: I think long term, we are still seeing it.
Nikolas P. Tsakos: Very small replacement of their fleet with less than 7% and in some categories much less than that like the like the larger ships the vlccs and on top of that of course.
Nikolas P. Tsakos: In the meantime, our fundamentals for the industry, the long-term fundamentals, still look very positive, the VLCCs. And on top of that, of course, you have a very aging fleet and the shadow fleet, which is close to 20 percent in the major, in some of the major categories. So, you know, without trying to, you know, foresee the future, we are trying to... I think it is the largest growth in our history, which shows that we are already 30 years old. We are not; we have not aged yet.
Nikolas P. Tsakos: You have a very aging fleet and the Shadow fleet, which is close to 20% in the major it in some of the major categories.
Nikolas P. Tsakos: So without trying to foresee the future we are trying to.
Nikolas P. Tsakos: We believe that 'twenty 'twenty four will be at least at least as good for us.
Nikolas P. Tsakos: Yeah.
Nikolas P. Tsakos: We are enjoying.
So this is.
Nikolas P. Tsakos: Ooh.
Nikolas P. Tsakos: And where we are.
Nikolas P. Tsakos: At this moment as it has been I think for us a springboard year a milestone year.
Nikolas P. Tsakos: We weren't able to.
Nikolas P. Tsakos: Renew our fleet.
Nikolas P. Tsakos: Very drastic I think it is the largest growth.
Nikolas P. Tsakos: In our history when shows that already weird 30 years old we are not we have not aged.
Nikolas P. Tsakos: Yes.
Nikolas P. Tsakos: And as our chairman said... This year has seen us sell nine vessels with an average age of 18 and a half years, and add 18 vessels with an average age of 1.3 years, of which 8 of them will be contributed immediately to our bottom line very soon. And on top of that, we are adding 1.5 million dead weight tons to our fleet's earning capacity and carrying capacity. So this has been really our 30th year and has been the springboard for very significant growth, and we have been able to continue this growth at the same time that we have been reducing our debt, increasing our dividend, as the chairman kindly said, by doubling the dividend at least for the first six months of the year, growing the fleet, modernizing the fleet, and, in some surprising ways that Paul and his team will tell us, maintaining very strong cash reserves.
Speaker Change: And that was it.
Speaker Change: As our chairman said.
Speaker Change: This year has seen us sell nine vessels.
Speaker Change: Four nine vessels with an average age of 18 and a half years.
Speaker Change: And adding a team of vessels with an average age of 1.3 years, all of which eight of them will be contributing immediately to our bottom line very soon and then top of that we are adding one and a half million deadweight.
Speaker Change: Yeah.
Speaker Change: In our in our fleet, earning capacity and scarring and got in capacity.
Speaker Change: So this has been a really in our third day of the year.
Speaker Change: It has been the springboard off of a very significant growth and we have been able to continues he says grow this growth at the same time that we have been reducing our debt.
Speaker Change: Increasing our dividend as a.
Chairman Guy: Chairman Guy and he said by doubling the dividend at least for the first six months or over the year.
Chairman Guy: And they're growing the fleet modernizing the fleet and with some surprising the way that Paul and his team will tell us maintain very strong gas cash reserves.
Speaker Change: So with that as an introduction.
Nikolas P. Tsakos: So, with that as an introduction, we would like to thank everyone for their support over the last 30 years. And although this has been our second consecutive record year, we expect, or we hope that next year we will maintain the same momentum with the new acquisitions and, as the chairman said, the very accretive transactions that we have secured with the company. And I will now give the floor to our president, Mr. George Saroglou, well done George, and to give us a little bit more of the picture and the nitty-gritty of what's happening out there. Thank you, Nikos, and thank you to the whole team.
Speaker Change: We would like our two cents.
Speaker Change: For their support for 30 years and although this has been a second consecutive record year, we'd expect or we hope that next year will remain we will maintain the same momentum with the new acquisitions and as the chairman said, they're very accretive transactions that we have a secure.
Speaker Change: With the company and I won't give now to do a precedent.
Speaker Change: Mr. George her own well done George and to give us a little bit more of the picture and then integrate it with what's happening out there.
George: Thank you Nicolas and thank you for the whole team.
George V. Saroglou: Good morning to all of you joining our earnings call today. 2023 has been a banner year for TEN; we celebrated our 30th anniversary as a public company and posted another record year, the second record year in a row after 2022. Key takeaways for TEN during the fourth quarter and 2023. We took delivery of the company's first two dual-fuel LNG-powered Afromax tankers in a series of four new buildings of high-spec EcoDesign vessels built against long-term employment to a major oil concern. During the early part of January 24, we took delivery of the remaining two.
George: Good morning to all of you joining our earnings call today.
George: 2023 has been a banner year for thin, we celebrated our third fifth anniversary as a public company and posted another record year. The second record year in a row after 2022.
George: Key takeaways for 10 during the fourth quarter in 2023.
George: We took delivery of the company's first two dual fuel LNG powered aframax tankers in a series of four new buildings.
George: High spec eco design vessels built against long term employment to a major oil concern.
George: During the early part of January 24, we took delivery of the remaining two.
George: The delivery of these four vessels mark stents entrance to greener vessels.
George V. Saroglou: The delivery of these four vessels marks a tense entrance to greener vessels. We continued the sale of older, first-generation vessels. During 2023, we tens-hulled tankers built between 2005 and 2007. On January 24, we announced the sale of a 2005 Bill Truesmax tank.
George: We continue to sale of older first generation vessels.
George: During 2023 central the tankage built between 2005 and 2007.
George: In January 24, we announced the sale of a 2005 built suezmax tanker.
George V. Saroglou: The 9 tankers that we sold since January 1st, 2023 had an average age of 18.5 years. At the same time, we continue to grow the company and replace these first-generation vessels with new building orders that fit existing transportation requirements of short-term company clients. We announce today in the press release the signing of a new building contract for one more shuttle tanker, the third new building under construction, against a long-term charter with a major energy concern.
Nine tankers that we sold since January 1st 2023 had an average age of 18.5 years at the same time, we continue to grow the company and replace these first generation vessels with new building orders that fish feed existing transportation requirements.
George: Their company clients.
George: We announced today in the press release, the signing of a new building contract for one more shuttle tanker the first new building under construction against as long time charter with a major energy concern.
George: This brings our current new building order book to seven vessels.
George V. Saroglou: This brings our current new building order book to seven vessels. In addition, we recently announced the acquisition of a high-spec environmentally friendly five-vessel fleet from Vikent. The vacant acquisitions include two 2003-built dual fuel LNG powered LR2 Aframax tankers, one 2019-built SuperEco SuezMaxx and two 1A Ice Class Scrubber Fitted AfraMaxx tankers built in 2018 and 2019, respectively. We took delivery of the first vessel, the DF Montmartre, yesterday. We expect to take delivery of the remaining four from April until June of this year.
In addition, we recently announced the acquisition of a high spec environmentally friendly five vessel fleet from weekend.
George: Can acquisition includes two 2000 to three bills dual fuel LNG power and go after.
Speaker Change: Thanks, Yes.
Speaker Change: One 2019 build ship at Echo Suezmax in two <unk> ice class scrubber fitted aframax tankers building built in 2018 and 2019, respectively.
We took delivery of the first vessel the D. F. One Marc yesterday, we expect to take delivery of the remaining four from April until June of this year.
George V. Saroglou: All five vessels are chartered to a major European energy concern. The freight market was strong last year and remains strong as we speak. We continue to renew time charters at higher time charter rates, and oil majors continue to fix vessels forward, which is a testament to a market that is expected to sustain current freight levels. The order book continues to be low due to the uncertainty of the availability and affordability of alternative fuels other than biofuels and LNG currently in use. We continue to experience the largest change in trade flows, ongoing crude and oil product movements as a result of Western sanctions on Russian seaborne oil, and more recently on changes in the currency of the Red Sea as a result of the Houthis' attacks on merchant vessels. A lot of charterers send vessels through the Cape of Good Hope instead of the shorter distance through the Red Sea and the Suez Canal to avoid being attacked.
Speaker Change: All five vessels on charter to a major European energy concern.
Speaker Change: The freight market was strong last year and remains strong as we speak we continue to renew time charters at higher time charter rates oil majors continue to fix vessels for work, which is a testament to a market that is expected to sustain current rate levels.
Speaker Change: The order book continues to be low due to the uncertainty of availability and affordability of alternative fuels other than biofuel and LNG currently.
Speaker Change: We continue to experience the largest change in trade flows one growing crude and oil product movements as a result of western sanctions on Russia, and seaborne oil and more recently on changes in the pool.
Speaker Change: As a result of the coatings attacks on merchant vessels.
Speaker Change: A lot of charterers sent vessels or the Cape of good hope instead of the shorter distance through that I see in the Suez Canal to avoid being attacked.
Speaker Change: As we said in previous calls most of these changes appear to be permanent before the war in Ukraine.
George V. Saroglou: As we said in previous calls, most of 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 has been replaced with oil from the United States, West Africa, Guyana, Brazil, and the Middle East, creating a positive ton-mile multiplier effect for tanker demand and freight rates. At the same time, global oil demand continues to grow post-Covid. 2024 is expected to be another record year for global oil demand, reaching on average 1.3.2 million barrels per day versus approximately 1.1.8 million barrels per day in 2023. Of course, there are global headwinds that we have acknowledged and are on our radar screens for quite some time now, like inflation, which might be coming down, but we could end up with higher interest rates for longer, the war in Ukraine and in Gaza, OPEC, plus production cuts and voluntary cuts by Saudi Arabia and Russia, which have been extended at least until the end of the second quarter of 2024, if not more probably until the end of the year.
Speaker Change: Europe was the biggest client or fresh and noise, but that's the word continuous rational has been replaced with oil from the United States West Africa, where Yana, Brazil, and the middle East, creating a positive ton mile multiplier effect for tanker demand and freight rates.
Speaker Change: At the same time global oil demand continues to grow post Covid 'twenty 'twenty four is expected to be another record year for global oil demand.
Speaker Change: On average 1.32 million barrels per day.
Speaker Change: Approximately 1.1 point 8 million barrels per day and 2023.
Speaker Change: Of course, there are global headwinds that we have been that we have acknowledged and are in our radar screen for quite some time now like inflation, which might be coming down, but we could end up with higher interest rates for longer the wall.
Speaker Change: In Ukraine and in Gaza.
Speaker Change: Okay.
Speaker Change: The last production cuts and voluntary cuts by Saturday Arabia, and Russia, which have been extended at least until the end of the second quarter of 2024, if not most probably until the end of the year. However, we have a global economy that continues to grow and international Monetary fund in its most recent report.
George V. Saroglou: However, we have a global economy that continues to grow, and the International Monetary Fund, in its most recent report, anticipates that the global economy will grow by 3.1% in 2024 and by 3.2% in 2025. And as mentioned above, oil demand is expected to grow another 1.3 million barrels per day higher in 2024 than in 2023. However, strong non-OPEC growth coming out of the United States of America, Canada, Guyana, and Brazil will counter for now any OPEC production cuts, and tanker fundamentals continue to favor a strong market for the next two to three years. Let's now move to the slides of our presentation.
Speaker Change: [noise] anticipates 2020 for the global economy to grow with three 1% and three 2% in 2025 and as mentioned above oil demand is expected to grow another one 3 million barrels per day higher in 2024 and 2023.
Speaker Change: Strong non opex growth.
Out of the United States of America, Canada, we are not Brazil will counter for now any OPEC plus production cuts and tanker fundamentals continue to favor a strong market for the next two to three years.
Speaker Change: Let's now move to the slides of our presentation.
George V. Saroglou: Starting with slide three, we see that since inception in 1993, we have faced five major crises, and each time, the company came out stronger, thanks to its operating model. The average company growth is 21% in terms of total fleet deadweight tons. In the next slides, we see the company's growth and capital market axis since inception. We raised capital for growth, not at the top of the market, but at times when asset prices were usually low.
Speaker Change: Starting with slide three we see that since inception in 1993, we have faced five major crisis and each time the company came out stronger thanks to its operating model.
The average company growth is 21% in terms of total fleet deadweight ton.
Speaker Change: In the next slides, we see the company's fleet growth and capital market access since inception.
Speaker Change: <unk> capital for growth not at the top of the market, but at times when asset prices were usually low.
George V. Saroglou: In the slide, the numbers in the blue boxes represent the company's common share offerings, and in red, the series of preferred share offerings since the company's New York Stock Exchange listing. The first three preferred series totaling $188 million of par value, the series B, C, and D, plus a private place preferred instrument of 35 million initial par value, have been fully redeemed, saving the company in excess of $18 million per year in coupon payments for all retired preferred shares. In slide 5, we see the fleet and its current fleet employment, including the vacant fleet that we acquired with the first of the 5 tankers in operations already for 10 since yesterday. We have a pro forma operational fleet of 66 tankers.
Speaker Change: In the slides the numbers in the blue boxes represent the company's common share offerings and in Red The series a preferred shares offering since the company's New York stock exchange listing.
The first three preferred for preferred shares totaling 188 million.
A lot of value the series B C and D.
Speaker Change: As a private place preferred instrument of 35 million initial part of value have been fully redeemed saving the company and et cetera for $18 million per year in coupon payments for all retired preferred shares.
Speaker Change: Yeah.
Speaker Change: In slide five we see the fleet and its current fleet employment, including this weekend fleet that we acquired with the first of the five tankers.
<unk> already for 10 since yesterday, we have a pro forma operational fleet 66 tankers.
Speaker Change: 34 out of the 66 vessels or 52% of the fleet in the water has market exposure.
George V. Saroglou: 34 out of the 66 vessels, or 52% of the fleet in the water, has market exposure, a combination of spot, contract of assurance, and time charter with profit sharing. 51 out of the 66 vessels, or 77%, are in secure contract, fixed time charters, and time charters with profit sharing. This means that TEN is well positioned to continue capturing the positive tanker market fundamentals. Slide 6 presents 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, and commodity traders, with Equinor currently topping the list as our largest charter. The left side of slide 7 presents the all-in breakeven cost for the various vessel types we operate in TEN. Our operating model is simple.
Speaker Change: Nation or spot contract of affreightment and think charter with profit sharing.
Speaker Change: 51 out of the 66 vessels or 77% are in secured contracts.
Speaker Change: Fixed time charters and time charters with profit sharing.
This means that <unk> is well positioned to continue capturing the positive tanker market fundamentals.
Speaker Change: Slide six presents the Companys current and long term clients as you see we have a blue chip customer base.
Speaker Change: Systems of all major global energy companies refineries commodity traders. We think we know currently topping the list is our largest charter.
Speaker Change: Okay.
Speaker Change: The left side of slide seven presents the all in breakeven cost for the various vessel types, we operating thing.
Speaker Change: Our operating model is simple we try to have our time chartered out vessels generate revenue to cover the company's cash expenses.
Speaker Change: For the vessel operating expenses finance expenses overheads chartering cost and commissions.
George V. Saroglou: We try to have our time-charter vessels generate revenue to cover the company's cash expenses, paying for the vessel operating expenses, finance expenses, overheads, chartering costs, and commissions, and let revenue from the spot trading vessels contribute to the profitability of the company. This year fleet utilization climbed to 96.3% from 94.7% the prior year. Both numbers are very strong utilization numbers. And thanks to the profit-sharing elements, for every $1,000 per day increase in spot rates, we have a positive 18 cents impact on annual EPS, based on the number of 10 vessels that currently have exposure to spot rates. Spot debt reduction is an integral part of the company's capital allocation strategy.
And let revenue from the spot trading vessels contribute to the profitability of the company.
Speaker Change: This year fleet utilization climbed to 96, 3% from 94, 7%. The prior year. Both numbers are very strong utilization numbers and thanks to the profit sharing elements for every $1000 per day increase in spot rates will have a positive.
Speaker Change: And since <unk> impact in annual EPS based on the number of 10 vessels that currently have exposure to spot rates.
Speaker Change: Corporate debt reduction is an integral part of the company's capital allocation strategy.
Speaker Change: The company's debt in December of 2016.
Speaker Change: Since then we have repaid.
Speaker Change: $349 million of debt and redeemed $211 million and three series of preferred shares.
Speaker Change: <unk> a privately placed placed preferred instrument.
Speaker Change: Slide nine sale and purchase activity is a cornerstone of 10 strategy.
George V. Saroglou: The company's death took place in December of 2016. Since then, we have repaid... 349 million of debt and redeemed 211 million in three series of preferred shares plus a privately placed preferred insurance. Slide 9, Sale and Purchase Activity is a cornerstone of TEN's strategy, and this, the resulting fleet modernity, is a key element for our operating model. The left side of the slide shows the divestments in tankers since the start of 2023. We sold 9 vessels, 6 2005-built MRs, 2 2006-built handisized product tankers, and 1 2005-built Suez Maxx tanker. 560,000 dead weight tons, with an average age of the vessels that we sold of 18.5 years. Looking at the right side of the slide, under growth, we have the number of vessels we are currently building and acquiring since the same period, the 1st of January 2023.
Speaker Change: And this the resulting fleet modernity is a key element for our operating model.
Speaker Change: Left side of the slide shows the divestments in tankers since the start of 2023.
Speaker Change: We sold nine vessels six 2005 built in March two 2006 built besides product tankers, and one 2005 built suezmax tanker totaling.
Speaker Change: 560000 deadweight ton <unk>, having another its age of the vessels that we sold 18.5 years looking at the right side of the slide under growth. We have the number of vessels. We are currently building and acquired since the same period the first.
Speaker Change: The first of January 2023.
Speaker Change: 16 vessels in total ankle frankly, bringing their vessels. We have currently new building program of seven <unk> tankers, which consists of three shuttle tankers for delivery in 2025 and in 'twenty to 'twenty six two eco friendly scrubber fit the truest matches for delivery also in 2025 and two scrubber.
Speaker Change: Fifth at the March for delivery Natalie 'twenty six.
Speaker Change: Except for the two Suezmax is that will be the live there after two years and the two of them are tankers. The rest of the company's new buildings have been fixed for worked against medium to long term time charters.
Speaker Change: In addition to the firm orders the company has options for three vessels. The second shuttle tanker for delivery during the first half the second half of 'twenty six and options for two LR tankers for delivery also during the second half of 'twenty six.
George V. Saroglou: 16 vessels in total, eco-friendly, greener vessels. We have a currently new building program of seven firm tankers, which consists of three shuttle tankers for delivery in 2025 and in 2026, two eco-friendly scrubber-fitted Suez Maxes for delivery also in 2025, and two scrubber-fitted MRs for delivery in early 2026. Except for the two Suez Maxes that will be delivered after two years and the two MR tankers, the rest of the company's new ships have been fixed forward against medium to long-term time charts. In addition to the firm orders, the company has options for three vessels, a second shuttle tanker for delivery during the second half of 2026, and options for two LR tankers for delivery also during the second half of 2026. As you see, the vessels that we have acquired have an average age of 1.2 years, and in dead weight capacity, they are four times the vessels that we sold, plus you have to consider the quality characteristics, the eco-friendly, and the more environmentally friendly trades they have.
Speaker Change: As you see the vessels that we have acquired have an average age of four two years and it is and in deadweight capacity at four times. The vessels that we sold plus you have to consider as a quality characteristics.
Speaker Change: Then the airports the eco friendly into the more environmentally friendly friendly the traits that they've had and of course that they will become the spring board of the company is growth going forward.
Speaker Change: In addition to paying down debt dividend continuity is important for our common shareholders and management has also paid a dividend irrespective of markets over the market cycle.
Speaker Change: Our dividend policy is semiannual last year, we paid a dividend of circumstance in June 2023, especial dividend of 40 cents in October.
Speaker Change: And the second semiannual dividend of 40% in December 2023.
This year, we announced 60 cents per share for the June 2024 distribution, which is double the amount distributed in June 2023.
Speaker Change: My husband intends to distribute our second semiannual dividend to holders of common shares in December 2024.
Speaker Change: Overall and since our listing in the New York Stock Exchange. The company has distributed 546 million to its common shareholders. Since the New York listing in 'twenty in 2002, or an average of about $25 million per year.
Speaker Change: If we add the dividends paid to the holders of the company's preferred shares since 2003. The year. The first series B was issued then then has return in excess of 823 million to both common and preferred shareholders.
George V. Saroglou: And of course, they will become the springboard of the company's growth going forward. In addition to paying down debt, dividend continuity is important for common shareholders and managers. TEN has also paid a dividend irrespective of the market cycle.
Speaker Change: Global oil demand continues to grow despite financial and geopolitical headwinds the international Energy agency expects global oil demand to grow by approximately one 3 million barrels to a total of 1.32 in 2020 for.
George V. Saroglou: Our dividend policy is semi-annual. Last year, we paid a dividend of $0.30 in June 2023, a special dividend of $0.40 in October, and the second semiannual dividend of 30 cents in December 2023. This year, we announced $0.60 per share for the June 2024 distribution, which is double the amount distributed in June 2023. Management intends to distribute a second semiannual dividend to holders of its common shares in December 2024.
Speaker Change: It's going to be another record year. After last year. Most of the growth is coming again from Asia Pacific, mainly China and India.
Speaker Change: On the supply side most of the growth. This year is coming again from non OPEC countries like Brazil, the United States, Rihanna, Canada, Mexico and Norway.
Speaker Change: As global demand continues to grow lets look at the forecast for the supply of tankers.
Speaker Change: The order book as of February 24.
Speaker Change: <unk> stands at less than 8%.
Speaker Change: 453 tankers or for the over the next three years.
Speaker Change: This figure represents a low number going back when you're building statistics for the last 30 years.
Speaker Change: At the same time, a big part of the fleet.
George V. Saroglou: Overall, and since our listing on the New York Stock Exchange, the company has distributed $546 million to its common shareholders since the New York Stock Exchange listing in 2002, or an average of about $25 million per year. If we add the dividends paid to the holders of the company's preferred shares since 2003, the year the first Series B was issued, then TEN has returned in excess of $823 million to both common and preferred shareholders. Global oil demand continues to grow, and despite financial and geopolitical headwinds, the International Energy Agency expects global oil demand to grow by approximately 1.3 million barrels to a total of 1.3.2 million barrels in 2024. It's going to be another record year after last year.
Speaker Change: 202002 hundred 93 vessels or 40 or 40% is over 15 years.
Speaker Change: And almost 830 vessels or <unk>.
Speaker Change: <unk> 14, 6% over the current tanker fleet is over 20 years.
Speaker Change: The next slide shows the scrapping activity since 2018 looking at the statistics it seems that 2023.
Speaker Change: The bottom for scrapping, we believe scrapping activity will pick up as the global fleet is getting older and older tankers are getting out of favor for a long term business by major charters and with that I will ask Paul to walk you through the financial highlights of the fourth quarter and the year.
Yeah.
Paul: [noise] excuse me.
Paul: Oh.
Paul: Thank you George.
Paul: Yeah.
Paul: Just a few remarks.
Paul: 10 achieved net income in the year amounted.
Paul: Amounted to $300 million.
Paul: Okay.
Paul: And on top of this.
Paul: There was a further 500 million coming from it would be done.
And altogether editing to the company's considerable cash reserves.
George V. Saroglou: Most of the growth is coming again from Asia-Pacific, mainly China and India. On the supply side, most of the growth this year is coming again from non-OPEC countries like Brazil, the United States, Guyana, Canada, Mexico, and Norway. As global oil demand continues to grow, let's look at the forecast for the supply of tanks. The order book as of February 24, stands at less than 8%, or 453 tankers for the next three years. This figure represents a low number going back to new building statistics for the last 30 years.
Paul: Yeah.
Paul: Revenue in the fourth quarter totaled $220 million, while total revenues in the year amount.
Paul: [noise] amounted to almost $900 million, the three 4% increase over the prior year.
Paul: It's generated about.
Paul: $540 million.
Of which $72 million related to profit share.
Paul: Total operating income in the year amounted to almost $319 million, a significant increase by 53% over the previous year.
Paul: Our average daily TCE for the year amounted to $37000 on average.
George V. Saroglou: At the same time, a big part of the fleet... 2,293 vessels, or 40% of the current tanker fleet is over 15 years old, and almost 830 vessels, or... 14.6% of the current tanker fleet is over 20 years old. The next slide shows the scrapping activity since 2018. Looking at the statistics, it seems that in 2023 we will reach the bottom for scrapping.
Paul: In a market that effectively operated with almost full employment for our vessels.
Paul: In the year eight vessels undertook dry dry dock.
Paul: In the fourth quarter vessel operating expenses.
Paul: By 2%, while voyage expenses decreased by 21%.
Paul: Oh, a new vessel buildings are expected to achieve the delivery dates soon and vessel financing.
Paul Durham: We believe scrapping activity will pick up as the global fleet is getting older and older tankers are getting out of favor for long-term business by major charters. And with that, I will ask Paul to walk you through the financial highlights of the fourth quarter and the year. Oh. Thank you, George. Just a few remarks. Ten achieved net income in the year amounted to $300 million.
Paul: <unk> been mostly covered we believe the new buildings are expected to generate strong rewards over the years.
Paul: In the meantime, the company will continue as always to ensure perfect debt service.
Paul: Yeah.
Paul: Given our cash availability.
Paul: Use of funds will remain for us as a priority.
Paul Durham: And on top of this, there was a further 500 million coming from EBITDA, altogether adding to the company's considerable cash reserve. Revenue in the fourth quarter totaled $220 million, while total revenues in the year amounted to almost $900 million, a 3.4% increase over the prior year. Time-lapse revenue is generated about 540 million dollars, of which $72 million related to profit share. Total operating income in the year amounted to almost $390 million, a significant increase of 53% over the previous year. Our average daily TCE for the year amounted to $37,000 on average, in a market that effectively operated with almost full employment for our vessels. In the year, eight vessels undertook dry dock, and in the fourth quarter, vessel operating expenses increased by 2% while voyage expenses decreased by 21%.
Paul: And in this respect we are acquiring 11, new excellent vessels and preparing plans accordingly regarding the company's future.
Paul: Finally, we believe that the production cuts that hit the demand in the latter part of the last year with temporary.
Paul: And that cargo group has already begun to swell again.
Paul: Part of this year.
Speaker Change: And that's really all I have.
Speaker Change: Yeah.
Speaker Change: Thank you Paul.
Paul: Good news and not have to come in many words.
Thank you very much.
For this and I think as we have seen it has been a very very.
Paul: Yeah.
Paul: Dr.
Paul: Year setting the base of the company's future.
Paul: And we're looking I know that many people since we announce every year a record here believe that are at some stage we have reached the limit.
Paul: Of Oh, well our profitability, we hope that this is not the case in these.
Paul: By sending.
Paul: The new ships and I think George if you can put this slide on nothing.
George: All of the future growth.
Paul Durham: Our new vessel buildings are expected to achieve their delivery dates soon, and vessel financing has now been mostly covered. We believe the new vessels are expected to generate strong rewards over the years. In the meantime, the company will continue, as always, to ensure perfect debt service. Given our cash availability..., use of funds will remain for us as a priority, and in this respect, we are acquiring 11 new excellent vessels and preparing plans accordingly regarding the company's future. Finally, we believe that the production cuts that hit demand in the latter part of the last year were temporary, and that cargo growth has already begun to swell again in the early part of this year.
George: The one who does it.
George: That's the one.
George: And we might be we might be including a couple of new acquisitions and opportunities our new building Department here. Mr. Baber you use.
George: He is nodding his head.
George: This list that we're very close.
George: During the well.
George: Additional.
Speaker Change: Barry I couldn't even turned up transactions to the six week 16 vessels that are out there, but hopefully we can announce something.
After the within within April on that and with this we would like to open the floor.
Speaker Change: Before any comments or questions. Thank you.
Speaker Change: Thank you so much we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Nikolas P. Tsakos: And that's really all I have. Good news does not have to come in many words, so thank you very much for this, and I think, as we have seen, it has been a very, very, productive year, setting the foundation for the company's future. And we are looking, I know that many people, since we announce every year a record year, believe that at some stage, we have reached the peak of our profitability. We hope that this is not the case and this by setting [inaudible] is nodding his head in this list. We're very close to securing additional, very accretive transactions to the 16 versions that are out there, but hopefully, we can announce something within April on that
Speaker Change: Confirmation tone will indicate your line is in the question queue.
Speaker Change: Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker Change: One moment, please while we poll for your questions.
Speaker Change: Okay.
Climent Molins: Our first questions come from the line of climate Marlins with value Investor's edge. Please proceed with your question.
Climent Molins: Yeah.
Climent Molins: Good morning, Thank you for taking my questions.
Climent Molins: I wanted to start by asking you about your fleet positioning you already provided some commentary uni, but over the past couple of years, you've pursued quite an aggressive plan to renew the fleet.
Climent Molins: And the recent peak in acquisition further improve the age profile you mentioned youre working on several additional opportunities with new builds.
Climent Molins: I was wondering should we expect should we expect the size of the fleet.
Operator: And with that, we would like to open the floor to any comments or questions. Thank you. Thank you so much.
Climent Molins: Sure.
Climent Molins: Or we lose the other side of the fleet be sold in conjunction with additional acquisitions.
Climent Molins: What we are looking at this is an ongoing a growing concern.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Climent Molins: Company However.
Climent Molins: In the strong market environment, we are looking Oh, we have a lot of oh vessels approaching graduation glad.
Operator: You may press star two if you would like to remove your questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for your question.
Climent Molins: Graduation of years from the time Academy, and we would wish them and they will be very profitable graduating for the rest of the fleet.
Climent Molins: We were able by selling the nine vessels last year last year and part of this year.
Climent Molins: Our first questions come from the line of Climent Molins with Value Investors Edge. Please proceed with your question. Good morning.
Climent Molins: We added a 160 million.
Climent Molins: Net.
Climent Molins: Two our casket this which we have used to further grow the fleet and I think the growth is significant selling nine vessels and are actually replacing them with double that.
Nikolas P. Tsakos: Thank you for taking my questions. I wanted to start by asking about your fleet positioning. You've already provided some commentary on it, but over the past couple of years, you've pursued quite an aggressive plan to renew your fleet, and the recent beacon acquisition further improved the H-profile. You mentioned you're working on several additional opportunities with new builds. And I was wondering, should we expect the size of the fleet to grow further? Or will the other side of the fleet be sold in conjunction with additional acquisitions?
Climent Molins: The answer is there will be growth, but there will be also this investment over the first generation vessels.
Speaker Change: Thanks for the color I also wanted to ask about the new energy. We supposedly came off contract in February could you talk a bit about the prospects for the vessel.
Speaker Change: But then there has been a one off or like is vessels. Since she was built on February seven 2000 and server.
Nikolas P. Tsakos: Well, we are looking this is an ongoing growing concern as a company. However, in the strong market environment we are looking into, we have a lot of vessels approaching graduation. George Saroglou, Nikolas Tsakos, Nicolas Bornozis, Paul Durham, Nicolas Bornozis, Tsakos Energy, to our caskettes, which we have used to further grow the fleet. And I think the growth is significant, selling nine vessels and actually replacing them with double that. So the answer is there will be growth, but there will also be disinvestment in the first generation vessels.
Speaker Change: She has always been in that I think is here to last month, one of our highest the time charters for a year and a half in excess of $115000 a day.
Speaker Change: And we believe that Oh, she will maintain that to be one of our like yours restaurants are and who you will hear an announcement soon.
Speaker Change: Yeah.
Speaker Change: Makes sense. Thanks for the color and final question from me on the dividend side. You mentioned do you expect these to be another dividend later this year could you provide some commentary on the amount you expect these to you.
Speaker Change: Yeah.
Nikolas P. Tsakos: Thanks for the color. I also wanted to ask about the new energy, which supposedly came off the contract in February. Could you talk a bit about the prospects for the vessel? The Neo Energy has been one of our most popular vessels since it was built on February 7, 2007, as it has always been. And I think she earned up to last month, one of our highest time charters for a year and a half in excess of $115,000 a day, and we believe that she will continue to be one of our luckyiest vessels, and you will hear an announcement soon.
Speaker Change: Well I think our you know our chairman who's is responsible for the dividend.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Well we are in the.
Speaker Change: Broker in the middle of the year.
Uh huh.
Speaker Change: We felt that 60.
Speaker Change: 60 cents you.
Speaker Change: You know represents what our outperformance last year and Uh huh.
Speaker Change: How things are looking right now are the second the second installment of the dividend depends on you know the rest of the year and we cannot really make any predictions.
Speaker Change: So because we're not allowed but we're confident that the that the outperformance will continue to be strong.
Nikolas P. Tsakos: Makes sense. Thanks for the call. And final question from me. On the dividend side, you mentioned you expect to distribute another dividend later this year. Could you provide some commentary on the amount you expect to distribute? Well, I think, you know, our chairman, who is responsible for the dividend, Taki. Well, we are in the, approaching the middle of the year. We felt that 60...
Speaker Change: Thanks for the color that's all for me. Thank you for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Yeah.
Speaker Change: I am showing no further questions in the queue I would like to pass the call back over to management for any closing remarks.
Speaker Change: Yeah.
Speaker Change: Well from from from outside our we would like to take the opportunity.
Speaker Change: And things.
Nikolas P. Tsakos: Unknown Attendee, Climent Molins, Nikolas Tsakos, Nicolas Bornozis, Tsakos Energy, So, because we're not allowed, but we are confident that our performance will continue to be strong. Thanks for the call. That's all from me. Thank you for taking the time to answer my questions. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. I am showing no further questions in the queue. I would like to pass the call back over to management for any closing remarks. Well, from our side, we would like to take this opportunity.
Speaker Change: Shareholders.
Speaker Change: For their support to the management being the main shareholders working parrot pursuit to achieve the results.
Speaker Change: For all of Us.
Speaker Change: Regardless of the geopolitical situation that we are facing are just oh my.
Speaker Change: The fundamentals, we're seeing the market, which is under building its maintain English.
Speaker Change: 7% of the fleet is on order and on top of that an agent flipped and MSR do fleet, which we do not expect to see yeah within them within the normal trading routes.
Speaker Change: Oh, we can or we can consider them with people, who can say that we're looking for another couple of years of pretty good.
Speaker Change: Second growth in memorial, placing the company to take advantage of that.
Nikolas P. Tsakos: From our side, we would like again to pass our support to all the victims of the Delaware tragic incident and wish everybody a happy and peaceful Easter going forward. Thank you very much. Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
Speaker Change: From our side, we would like.
Speaker Change: Again, our two bus our support too.
Speaker Change: All the victims of the Delaware a tragic incident.
Speaker Change: And wish everybody happy and peaceful Easter going forward.
Speaker Change: Thank you very much.
Speaker Change: Thank you that does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Uh huh.
Speaker Change: [music].