Q2 2024 Tsakos Energy Navigation Ltd Earnings Call
[inaudible]
Speaker Change: Thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation Conference call on the second quarter of 2024 financial results.
Speaker Change: We have with us, Mr. Takis, our Polglu Chairman of the Board, Mr. Nicholas Takos, founder and CEO, Mr. George Saroglou.
Speaker Change: President and Chief Operating Officer of the Company, Mr. Paul Durham, Chief Financial Officer, and Mr. Harris, Clos Matos, Co-Chief Financial Officer of the Company. At this time, all participants are not listening only mode. There will be a presentation followed by a question and answer session.
Speaker Change: 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.
Nicholas Bornozis: I must advise that this conference is being recorded today, and now I pass the floor to Mr. Nicholas Bornozis, President of Capital Link, and Investor Relations Advisor to Zakos Energy Navigation Limited. Please go ahead, sir.
Nicholas Bornozis: Thank you very much, and good day to all of our participants. I am Nicolas Bornozis President of Capitalink and the University of Nations at Valzer to Tsakos Energy Navigation to 10 Limited.
Speaker Change: This morning, the company publicly released its financial results for the second quarter and six months in the June 30, 2024.
Speaker Change: In Gainesville, we do not have a copy of today's earnings release, please call us at the plus 1, 2, 1, 2, 6, 6, 1, 7, 5, 6, 6, 6, or email us at 10.
Speaker Change: at capitalink.com and we will have a copy for you emailed right away.
Speaker Change: Please note that parallel to today's conference call there is also a live audio and slide webcast.
Speaker Change: Kuch can be accessed on the company's website on the front page at www.tean.gr The conference call will follow the presentation slides, so please we urge you to access the presentation slides on the company's website
Speaker Change: Please note that the slides of the web presentation will be available in our guide on the website of the company after the conference call. Also, please note that the slides of the webcasters in addition are user-controlled.
Speaker Change: and that means that by clicking on the proper button you can move to the next or to the previous slide on your own.
Speaker Change: At this crime, I would like to read the safe carbo statement.
Speaker Change: This conference call and slide presentation of the webcast contains certain forward-looking statements within the meaning of the South Harbor provision of the private security litigation reform act of 1995.
Speaker Change: Investors are co-found that starts forward-looking statements involve risks and uncertainties which may affect tense, business prospects and results of operations.
Speaker Change: In this moment, I would like to pass the floor to Mr. Takusara Poglu, the chairman of the Takus Energy Navigation. Please go ahead, sir.
Speaker Change: Good morning everyone and thank you for joining us today.
Speaker Change: and our goal for our Q2 first half, 2020 for adults.
Speaker Change: The financial results, activity and strategic initiatives presented today, represent a master class in running a best in class shipping company. This contains among others.
Speaker Change: Continued solid profitability and operation on excellence.
Speaker Change: Both systemic and opportunistic fleet renewal with state-of-the-art vessels, timely and and both dry docking program.
Speaker Change: Balans, Sport, Stroke Time Chart, the strategy allowing tend to capture the increased demand for longer-term fixings, resulting in continuous increase in the minimum contract of the future in time.
Speaker Change: and lastly, the profitable and winding of policing contracts and the continued excellent relationships with our banking partners.
Speaker Change: All of the above.
Speaker Change: Allow them to continue servicing the needs of its blue chip clients in the best possible way.
Speaker Change: While maintaining a healthy cash position to fund a creative future growth.
Speaker Change: Equality, it allows them to be able to continue with this uninterrupted dividend payments in this section.
Nikolas Saroglou's: Increasing its dividend payment this year by 50% compared to 2023. So, on behalf of the board of directors of 10 congratulations once again to Nikolas Saroglou's
Nikolas Saroglou's: and we all look forward to their continuous success in what looks to be a continued solid tank market.
Speaker Change: Thank you.
German: Thank you, German and the...
Speaker Change: First of all, from all of us here in Athens, Greece, our fortune, heartfelt wishes to all our American friends on this solemn anniversary today of 9.11. With this, thank you, Paul.
Paul Durham: You're kind words German, it has been another very dynamic and fruitful year for Ted and the industry. We are taking as much advantage of the positive circumstances.
Speaker Change: to continue growing our fleet, to modernize our fleet. It has been a very large operation.
Speaker Change: Infrastructure
Speaker Change: In order to take the delivery of our dual vessels, we have the largest concentration of dual fuel vessels from in our peer group.
Speaker Change: and right now all of them are in the water operating as they should reducing emissions and aiming for our 2030.
Speaker Change: I miss you.
Speaker Change: Significant Reduction Goldsch.
Speaker Change: For those of you that are old enough to remember ten started back in 1993.
Speaker Change: After the OPA-19, with the name to have a double-flit, way before the regulation deadline, and this was something that was achieved back then with a gigantic new building program.
Speaker Change: that has right now exceeded 100 ships over the mess.
Speaker Change: 30 years in an investment in excess of 8 billion US dollars. Every vessel, being a much more environmentally friendly and innovative…
Speaker Change: The product.
Speaker Change: from the last person. We have been able to do this and make profits at the time, keep a significant cut and also reward our shareholders with an uninterrupted dividend. We are proud today to be able to announce.
Speaker Change: A 50% increase on an already significant dividend and I think this would be one of the highest yields or in common dividend and I hope the market will appreciate this.
Speaker Change: We're as the Chairman said, the fundamental reason we're doing this is first of all because we have a question of at least.
Speaker Change: 2 billion US dollars of contracted business at the minimum, as you know our company, that's most of its business on the profit.
Speaker Change: Selling arrangement with the major oil companies, and this is the minimum we expect from them. It could be another third on top of that, in case we had the profit sharing, which we expect to have profit sharing going forward in the days to come.
Speaker Change: As a result, we are starting our business with all the major companies, it's progressing and increasing and I have a feeling it will further increase as we go forward.
Speaker Change: And I think a very important part happened last week on the island of Hios.
Speaker Change: We have the first ever private.
Speaker Change: Academy, Naval Academy, to produce men and women.
Speaker Change: As captains and engineers, naval architects with huge know-how for our fleet. I think this puts us in a significant competitive advantage to all our peer group because we're going to think our superiors after.
Speaker Change: They finish their education but be with them since inception and I think we want to congratulate the Tarkoship in group
Speaker Change: for taking such a bold step.
Mr Saroglou: and producing the future of seping, because we can be here spending billions of billions of dollars in state of the artships, but as long as we do not have the right people to mando, the vessels are useless. So we see things as a milestone in going forward. And without the well-askar president Mr Saroglou, to give us a quick and to the point presentation of where we have been and where we're going so far in 2024.
Mr Saroglou: Thank you, Nicolas, good morning to all of you joining our earnings calls today. 2020-24 continues to be a good year for tankers and ten, for the same reasons that played out for the last two and a half years.
Speaker Change: We have an aging fleet and lower their book. We have changes in trade flows. One going through the noiled product movements as a result of Western sanctions on Russian, Siebon Oil, that had a multiplying effect on tanker Tonmaid growth.
Speaker Change: and we have continued geopolitical tensions, like more recently the avoidance of crossing the Red Sea as a result of footage attacks on Merson vessels.
Speaker Change: Let's go to the slides of our presentation. The first slide is...
Speaker Change: We see the growth of the company since inception.
Speaker Change: Despite the major five major crisis that we faced since 1993, it's time we came out stronger, thanks to our operating model.
Speaker Change: and the cumulatively in the period since 1993, the company posted an average growth of 21% in terms of total fleet dead weight tones.
Speaker Change: The next slide we have built as you see a very diversified fleet catering to the needs of our clients, spanning from crude carriers to product tankers, LNGs and subtle tankers. Today we have a Proforma fleet of 74 vessels, 62 operating in the water and 12 new buildings under construction.
Speaker Change: The red and blue colored vessels in the slides, the note vessels trading in the sports, the red and period market with profit sharing, the blue while black colored vessels, the note vessels that are fixed on time charters.
Speaker Change: 28 out of the 62 vessels in the water.
Speaker Change: or 45% of the fleet has market exposure.
Speaker Change: Sport and Profit Shading, which is good in today's environment.
Speaker Change: While 52% of the 62 vessels in the water, or 84% of the fleet are insecure, the employment, time charters and time charters with profit sharing, which means that the propellers are spinning 24-7
Speaker Change: Insulate 5, we see the company split growth and capital market access since inception.
Speaker Change: Diploboxis, the note.
Speaker Change: Comun shares offering while the red offering is in preferred shares, the first three preferred shares totaling 188 million of par value.
Speaker Change: have been already redeemed, together with a private replaced the preferred instrument of 35 million. Creating savings for the company in excess of 18 million per year on coupon payments.
Speaker Change: Next slide presents the company's current and long-term clients, as you can see we have a blue shift customer base consisting of four major global energy companies, refineries, commodity detraders
Speaker Change: with Equiner currently topping the list as a larger charter with 13 vessels, all along them time-sharp.
Speaker Change: Slide 7 presents the only break even cost for the various vessel types we operate in our company.
Speaker Change: Our operating model is very simple, we try to have our time-shutter vessels generate revenue to cover the companies, cars expenses, and let revenue from spot rating vessels to make a contribution to the profitability of the company.
Philippe: Philippe Utilization for the six months of the year was 92%. Still a high number, despite having eight vessels under going schedule repairs, and four vessels zero mark for sale and barking in the repository for new voyages.
Philippe: and thanks to the profit sharing element in the fleet for every one dollar per day increase in 4 rates. This has a positive 12 cents impact in annual earnings per serve based on the number of vessels that currently has exposure on 4 rates.
Speaker Change: Managing that is an integral part of the company strategy and capital allocation, since the end of 2016, the corporate fleet grew by more than 40% in terms of dead weight on, while at the same time, total bank dead came down by almost 7%.
Speaker Change: One must consider also that in addition to the reduction in the total bank debt, the company also redeemed 111 million in 3 series of preferred sales, plus a private-placed preferred instrument.
Speaker Change: and so today the net debt to capital ratio is currently at 42.4% which is considered to be low.
Speaker Change: Fleet moderity is the key element of our operating model.
Speaker Change: This light rose, glittering yoll and green ship growth since January 1, 2023, as we transition 10 for its next growth phase. We contracted an acquired 21 vessels in total with another stage of 1 year and 2.3 million dead weight on.
Speaker Change: Nine vessels are already in the water and in mind for the company, while 12 vessels are in you building.
Speaker Change: that were purpose-built to serve the transportation requirements of the company's long-term clients. We have more than double the cargo capacity of the fleet with new, more environmentally friendly, greener echo-built tankers.
Speaker Change: This lights highlight the company's financial performance since 2004.
Speaker Change: As the flute grew, so did the company's key financial indicators, where was maintained, strong cast reserves, to monitor the ups and downs of the sipping cycle.
Speaker Change: We had manageable debt levels and traded mostly profitable through the 20-plus years with the last two years generating consecutive record profit years.
Speaker Change: The first six months of 2024 have given 10 of the opportunity to sell her upgrade the quality and earnings power of the fleet. We expect the new additions to contribute positively in the overall financial performance of 10 going forward.
Speaker Change: In addition to paying down debt, dividend continuity is important for common shareholders and management. 10 has always paid the dividend irrespective of the market cycle.
Speaker Change: Our dividend policy is semi-angle. Last year we paid the total dividend of $1 per share. This year we announced the total dividend of $1.15, a 50% increase in the distribution. We have already paid six cents on July 18th.
Speaker Change: We are now today the payment of 90 cents with payment to be determined in our upcoming BOD strategy meeting in October.
Speaker Change: Inclusive of this upcoming dividend, 10 has distributed over 827 million of common and preferred dividend with 573 million.
Speaker Change: To come on shareholders, since the company's 2002 New York Stock Exchange since listing.
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 1 million barrels per day this year.
Speaker Change: It's going to be another record year after last year with most of the growth coming again from Asian and the Asia Pacific region.
Speaker Change: On the supply side, most of the growth is coming from non-opec blast countries Brazil, the United States of America, Guiana and Canada.
Speaker Change: The majority of the additional supply is the Atlantic Basin, while demand growth continues to be concentrated in the Pacific, boosting long-haul tanker demand.
Speaker Change: As Glob always demand continues to grow, let's look at the forecas for the supply of tankers.
Speaker Change: The Order Group was of August Stance Arts.
Speaker Change: 766 tankers, a little over 13% over the next 3 years. This figure still represents a low number of new buildings. At the same time, a big part of the fleet.
Speaker Change: Over 2360 vessels are 44% is over 15 years and 865 dentures or 6% of the current tanker fleet are currently over 20 years.
Speaker Change: So, this order book that we have is quite manageable.
Speaker Change: The last slide shows the scrapping activities since 2018, we believe scrapping activity will pick up as the global fleet gets older and all the tankers are getting out of favor.
Paul Durham: for long-term business by major startups and with that I will pass I will ask Paul and Harris to work you through the financial highlights of the first half and second quarter of 2024. Paul.
Paul Durham: Well, thank you, George. Great job for the rest from you. Over the past months, the company has taken advantage of utilizing in-house resources.
Speaker Change: to restructure much of its organization and to develop the company.
Speaker Change: and New Directions in the remaining months of the year.
Speaker Change: Therefore this will continue to be a major focus for management.
Speaker Change: Tanker, the tanker market fundamentals continue to remain firm and
Speaker Change: Assisted by the various geopolitical events around the globe, we are confident that 10 will continue to be a main beneficiary.
Speaker Change: and these were just a few issues of confidence in our company.
Speaker Change: So, let's try to increase that confidence by going over some details on the numbers, so let's take it over from here. Thank you, Paul
Speaker Change: So, with the fleet average in about 62 vessels in the water, eight of which going through schedule dry dockings and three performing repositionary voyages, fleet utilization for the first half of 2024, settled up 92 percent, slide drop from the 2022 Equivalent period.
Speaker Change: In this buck drop, 10 in the first half of 2024, generated gross revenues of 460 million, an operating income of 179 million, which included 49 million of capital gains.
Speaker Change: Fleet Operating Expenses of 98, of 98, a million increased in line the larger number and size of vessels in the fleet.
Speaker Change: Operate next time for Super Day, however, remained almost identical to the 2020-23 first half, at 9,367. Thanks again to efficient management performed by 10 technical experts on shore and onboard the west.
Speaker Change: [inaudible]
Speaker Change: TCE Perceper Day, Times Roger Grievous in Dates, for the 2024 first half, was at a healthy 30,830, even though impacted by repositioning voyages, dry-dalking and sport-marking softening. Grievous by Chinese reduction of oil imports, something, however, that is expected to be temporary.
Speaker Change: Alas, it did be the half of the 2024.
Speaker Change: Six months was at the 244 million.
Speaker Change: and Netteen come up on the 30 million was recorded for the first half of 2024, generating earned spursure of $3.96.
Speaker Change: Of interest, dividend payments for the company's pulse starting preferred during the 2024-36 months were 4.6 million lower the amount paid during the 2023-first half.
Speaker Change: Results for the second quarter of 2024 were equally attractive.
Speaker Change: A fleet of 62 vessels generated plus revenues of 214 million, an operating income of 103 million, which includes 32.5 million of couple of gains.
Speaker Change: Fleet Operating Expenses for the second quarter of 2024, impacted by three dried organs and repositionary voyages, in a fleet larger than the one in the second fourth of 2023, were at 49.7 million.
Speaker Change: Only 3 Billion Higher than the second quarter of 2010 to three levels.
Speaker Change: Zakos.
Speaker Change: Operating Expenses Perceper Day, where however, $150 lower than the 2020-23 second quarter at 9,347.
Speaker Change: with TCE Proceper Day, closing the quarter 3.7 times higher that Opus level, a 34,235.
Speaker Change: Adjassidi Bida, finished a quarter at 113 million due to a season of softened and sport rates and vessel repositionings.
Speaker Change: The result in the team comes up 7 to 6.4 million, produced $2.36 in EPS.
Speaker Change: Again, preferred coupon payments during the quarter of 2024 were approximately 2 million lower than 2023's second quarter amount.
Speaker Change: As of June 30th, 2024, and that increased to 1.8 billion.
Speaker Change: corresponding to a higher fleet size as five vessels acquired earlier in the year from the region concerns, begun entering the fleet, and two dual-field affermact new buildings were delivered during the first quarter of the year.
Nikolas Tsakos: At the same time, Nikolas Tsakos was at a very comfortable 42.4%.
Nikolas Tsakos: and with this I turned back to Nicolas for the closing remarks.
Nikolas Tsakos: Energy.
Nicolas Bornozis: Thank you both, thank you, Howard
Speaker Change: We're putting those things that I've numbers behind the Air Food Jawollar.
Speaker Change: Men and women on board their ships and our onshore personnel and the team here.
Nicolas Bornozis: It's been an exciting first six months and I think we're looking for a very interesting period for the remaining of the year. It's a year of, I think this is a milestone to 2024 has been a milestone period of growth for the company.
Nicolas Bornozis: As George said, we tend to grow always in difficult times, but I think this is an intriguing time.
George: where we depend on our clients, the major oil companies and their vast appetite for first-class operators to continue growing and servicing their needs.
Speaker Change: And with this, I would like to open the floor for any questions. Thank you.
Speaker Change: Thank you. At this time, we'll begin Dr. Noquestion in the answer session. If you'd like to ask for a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You may press star 2 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. When moment please, will we pull for questions?
Donald Trump: Donald Trump.
Donald Trump: [inaudible]
Pope Rat: Thank you. Our first question comes from the line of Pope Rat with a line's global partner. Please proceed with your question.
Pope Rat: Good day.
Pope Rat: Could you help me understand whether the dividend the 90 cent dividend will be paid this year or will it be paid next year?
Speaker Change: Well, the dividend we will pay this year, last year we will announce the date after our strategy meeting, which is October, the end of October.
Speaker Change: Okay, great. And, you know, increasing the dividend is great. Your stock price is in a little volatile, it's fallen back from its high in the 30s, low 30s. Where do you start by back to fit in your capital allocation strategy?
Speaker Change: Well, our stock buyback is not in the forefront of our financial strategy, and the reason is, as you know, we still have a quite an illiquid stock, and we are not, we are not in having a very strong concentration of 40% from the insideers.
Speaker Change: We rather reward serholders for staying, rather we paying them to live, so we are, this has been a strategy, I mean we used to do.
Speaker Change: Some bye-bye-back in the day because we've been around for a long time, we've done everything.
Speaker Change: But I think from experience with rather pay our shareholders to stay, then send them home with a check. So this is for the time being, and the company has also growth prospects where we're taking part in significant.
Speaker Change: New Contracts with a very good returns and a critical returns. So I think a good deal with them growth is number one.
Speaker Change: [inaudible] the order to 5 L or 1.
Speaker Change: What is the rough total amount that you'll spend on those is 350 million total?
Speaker Change: Appropriate and then secondly, have you paid a down payment or deposit on those five L.R.1s? And if not, what did you anticipate paying a down payment?
Speaker Change: We have made the pay of the first down payment, so yeah, you are approaching this very high, how do you why don't you go through the numbers?
Speaker Change: [inaudible]
Speaker Change: and as the order progresses, then equal amounts are expected to be paid for the other four.
Speaker Change: So they're proud, I don't want our...
Speaker Change: We do not give exact price because we do want most of our competition to come and do the same, but I think our 350 is an approximate correct number.
Speaker Change: Okay, I can follow up on offline on that, but as far as the investment in the quarter, you had a net.
Speaker Change: Investment of about 105 million. I calculate during the quarter that you sold about 158 million of assets with the Neil Energy Euro Nike and then the Zumo Princess.
Speaker Change: Is that accurate and then how much did you spend on acquisitions in the quarter and then did you make a new bill payments?
Speaker Change: For the thing I've got, he said, we have, since the first quarter, of course we have increased.
Speaker Change: Our payments, because that refers to the June 30th. Since then, on top of the payments that Harry said, we have made the down payments for the other four that are remaining four.
Speaker Change: The LR1 Vesios.
Speaker Change: and his name is Thomas.
Speaker Change: in addition to the five million that we paid for the first.
Speaker Change: for the first down payment.
Speaker Change: Our most of this detail will be recorded the 6k, which we expect to publish at the end of the month. But if you wanted the sooner, then obviously we're often to discuss it offline. Sounds good. Thank you.
Speaker Change: Thank you. Ladies and gentlemen, as a reminder, it's a star one to join the question cube. We'll pause a moment to allow for other questions.
Speaker Change: [inaudible]
Speaker Change: Yippee!
Speaker Change: I'm not seeing any other questions at this time. I'll turn the floor back to you for any closing comments.
Speaker Change: Thank you very much.
Polar: Polar, I think my decision, it has been...
Speaker Change: A very productive period of growth, but I think what goes on show is the continuous appetite and chartering of our ships to the major oil companies.
Speaker Change: are shuttle tankers set out for long periods of time, sir, and 5 to 7 to 10 years to major oil companies.
Speaker Change: and the same goes for the majority of our showets, Maxis and the vessels that are coming are investment in the LR1s, is the segment of the market with this lowest order book.
Speaker Change: and we believe that there is still a future and appetite for vessels like this and that's why we're renewing our fleet there.
Speaker Change: and we're very proud for the operational show for excellence over dual fuel versions.
Speaker Change: and on top of that, as I said, the milestone.
Speaker Change: For the company has been...
Speaker Change: our technical management, inauguration of an on-hands.
Speaker Change: Non-profit.
Speaker Change: Naval.
Speaker Change: Private Academy to produce and educate our people for the next future in technology and innovation for our vessels. Looking forward for reporting next significant strong quarter also going forward.
Speaker Change: and wishing everybody for all the best on this difficult day for our American friends. Thank you very much.
Speaker Change: Thank you. This concludes today's conference. Call you me disconnect your lines at this time. Thank you for your participation.
Speaker Change: [inaudible]