Tsakos Energy Navigation Limited

Good morning to all. Thank you for standing by, ladies and gentlemen, and welcome to SACWAS Energy Navigation Conference Call on the fourth quarter of 2024 financial results. We have with us today Mr. Takis Arapoglou, Chairman of the Board, Mr. Nicholas SACWAS, Founder and CEO, Mr. Paul Durham, Chief Financial Officer, Mr. George Saraglou, President and Chief Operating Officer, and Mr. Harries Kosmatos, CO CFO of the company. At this time all participants are on a listen-only mode. 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 one on your telephone keypad and wait for your name to be announced. I must advise that this conference is being recorded today. And now I'd like to pass the floor over to your host, Mr. Nicholas Bournosis, President of CapitalLink and Investor Relations Advisor to SACWAS Energy Navigation. Please go ahead.

Thank you very much and good morning to all of our participants. I'm Nicholas Bournosis, President of CapitalLink and Investor Relations Advisor to SACWAS Energy Navigation 210. This morning the company publicly released its financial results for the 12 months and fourth quarter ended December 31st, 2024. In case we do not have a copy of today's earnings release, please call us at -661-7566 or email us at 10 at CapitalLink.com and we'll have a copy sent to you, emailed to you right away. Please note that parallel to today's conference call there's also a live audio and slides which can be accessed on the company's website on the front page at .TENN.GR. The conference call will follow the presentation slides so please we urge you to access the presentation slides on the company's website. Please note that the slides of the workshop presentation will be available and archived on the website of the company after the conference call. Also please note that the slides of the webcast presentation are user 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. 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 provision of the Private Security Litigation Reform Act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainties which may affect TEN's business prospects and results of operations. So before passing the floor to the Chairman I would like to congratulate the company for the transformational milestone transaction to build nine subtle tankers with secured 15-year employment. The transaction solidifies TEN's profitability and growth for many years ahead. And by the way it also proves how TEN's prudent capital allocation has enabled the company not only to move fast to close the transaction but also to finance the equity portion required at this stage with your own funds without stretching the company's balance sheet. And now at this moment I would like to pass the floor to Mr. Takis Arapoglou, Chairman of XACOS Energy Navigation. Please Mr. Arapoglou go ahead.

Thank you. Thank you Nicholas. Good morning and good afternoon to everyone. And thank you all for joining our call today for the fourth quarter 2024 and full year 2024 results. As you've seen excellent results from a market that continues to demonstrate strong fundamentals. A record 21 vessel expansion that will result in a fleet pro forma of 82 vessels. And 4 billion of contracted fixture revenues confirming the unique and robust industrial model of TEN. The milestone nine DP2 shuttle tanker deal worth 1.3 billion dollars with Transfetro. Firmly establishes then among a very select group of leaders in the shuttle tanker business and demonstrates once more the commitment we have in servicing the needs of our customers. Fully justifies our strategy of maintaining ample liquidity and it also shows that it allows us to comfortably enter into such a creative mega size transactions. The sale of one of one more of our oldest vessels generates again cash for the company and the S&P activity of TEN in this front will continue in order to maintain a young fleet and generate additional cash. All this I think confirms the textbook nature of TEN's management that allows it to continue paying dividends uninterruptedly since inception oblivious I would say to the cyclical nature of the market. So once again congratulations to Nikos Sarkos and the team for this excellent performance which no doubt will continue keeping TEN in the forefront of the energy transportation business going forward. So thank you and over to Nikos Sarkos. Thanks.

Yes good afternoon and good morning to everybody. Thank you for your good words. The recent period has been a milestone period as you mentioned for the company. It's one of those periods where we leap up to our next stage and we've done that back in 2007 when we became the largest ice class operating fleet in the world. A few years later in 2014 we became the largest operator for Equinox, one of the most prestigious and demanding end users in the world. Last year we became the largest dual fuel vessel operator just helping our greener side of moving our vessels and keeping our environmental footprint in line and that was by the acquisition of a large fleet of modern dual fuel vessels. And the Brazilian transaction as we call it big in Brazil is a transaction that makes TEN for sure the most modern, the most modern deep circle tanker operator, DP2 operator with any compliments of existing fleet which we started in 2012 with four vessels already in the water, three being delivered very early next month so we have April, July and then in 26. All the vessels are being built I would say in the most superior subtle tanker South Korean yard. We had to compete with parties who had inferior or lower rate, more competitive rates than us but they were building ships in other yards in the Far East including China where the expertise was not there so our experience, our long-term commitment to the segment, our training center which is the only one that produces ship errors with the accretation from the Nautical Academy of the UK has given us the chance to be successful in achieving a positive result. Well but in the meantime we're still running business always looking at extending with 21 new businesses with our major oil companies. As you may know about 70% of our business is held by the six or seven very prestigious end users. We try to avoid employing our ships to operators or traders. We do it sometimes on the spot market but long term we focus on the people who need to know and appreciate our services. Also we have been active and we will still be active in the S&P market. Just yesterday we delivered one of our 2009 beautiful Swiss Maxis for the capital gain after so many years since 2009 and bring $30 million of cuts. We're also in the market for two more similar transactions from now up to the end of the second quarter. So in the meantime we do not lose track of the -to-day business and the fundamentals are very positive. We are a company that has perhaps right now the largest new building program from any of our peer group. A very specialized 21-versus program. All of our program is financed and there's significant competition from banks to finance. So one thing I have to make clear we've been always criticized for keeping enough cash but when transactions like this are there we can achieve those transactions much better than any of our peer group without really putting strain on our balance sheet or ever having to use to raise equity. So this mega transaction is fully financed by internal equity and bank debt which is competing at very attractive terms for our business. Still one of the, I have to say I'm very proud about our team. It has been a very very successful international global transaction that we were able to achieve. What we're still disappointed is that our share price is half of what it was a year ago when I was here in the United States. Our company was much smaller. Our company had much less prospects right now with 21 vessels, a 36 percent dynamic expansion, 82 vessels in the water very soon and we have doubled our medium to long-term receivables from 2 billion to 4 billion within the last two months with these transactions. Well we hope as the major shareholders here who know the value of our company that very soon our share price will be where it should be. I mean our book value it's in excess of 3 billion dollars however not including the new transactions. Our market value is even higher than that and our net debt is 1.5. So if you divide this by 30 you should see that the comfort level where share price should be should be closer to 50 dollars than 16 or 17. But again we know the value of our company and hopefully others will identify that this 32 years of continuous dividend as the chairman said is going to go for at least another 32 years. And with that I would ask Mr. Koukosmatos, George to please give us Mr. Tsaroublou, our president to give us his detailed report. Thank you.

Thank you very much Nikos. We are very pleased to report today another profitable quarter and profitable year. There is a slight presentation that we will try to follow. You can look at it later on as well. Let's go straight to slide number four which shows the growth of the company since inception in 1993 in terms of deadweight taunts. As you can see here we have turned every major crisis the world has faced into a growth opportunity thanks to our operating model. We have a counter cyclical approach in investing in fleet growth by raising equity when we need it which is usually at the bottom of the tanker market and not usually in our share price is at the top in order to fund growth projects. This is what slide five shows. The strategy has served us very well so far. In blue you see the offerings in common shares since 1993. In red the offerings in preferred shares and as you can see since 2013 we have issued six series of preferred shares and we have already redeemed as we speak four of them at par. The four that we have redeemed have a par value of approximately 225 million. We have announced today a major transaction in the subtle tanker sector and this is a milestone deal with Transpetro Bras in Brazil. We are building nine -the-art DP2 subtle tankers that we can complement the four that are already in operation and three that we are building for a total pro forma subtle fleet of 16 tankers. This is a landmark transaction that makes 10 one of the largest subtle tanker operators in the world today and all 16 vessels are fixed on long employment to major energy companies including of course Transpetro in Brazil. Since in the last two years since January 1st of 2023 we have upgraded the quality of the fleet by divesting from our first generation conventional tankers replacing them with more energy efficient new builds new buildings and modern second-hand tankers including dual fuel vessels and we are very proud to have today one of the large being one of the largest owners of fuel fuel LNG powered Aframax tankers with six vessels in the water. Slide six lists the conventional pro forma fleet divided between crew and product tankers spreading from large VLCCs to the smaller hand-sized tankers. We have nine new buildings that we expect to take delivery from the second quarter of this year until the third quarter of 2028 and you see various colors in this slide. The red color denotes the new building vessels but also the vessels that we operate today in the spot market. With dark blue we list the vessels under fixed time charters and with light blue the vessels with time charters with profit sharing. In the next slide which has the pro forma specialized fleet we list the 16 subtle tankers and on top of that slide we list the companies to LNG carriers. If we combine the two slides and account only for the current operating fleet of 61 vessels 29 vessels or 48 percent of the operating fleet has market exposure through spot and time charter with profit sharing while 51 percent or 84 percent of the fleet is in secured revenue contracts which means tank charters and tank charters with profit sharing. Our biggest clients for both conventional and the specialized segment of the fleet are the names you see in slide eight. These are blue chip names with whom we do repeat long-term business. The largest client of all today is Exxon Mobil without yet accounting of the deal that we announced with Petrobras in Brazil. The left side of the next slide shows you the all-in break-even cost for the type of vessels we operate. We have a simple operating model we try to have our time charter vessels generate revenue to cover the company's cash expenses which means paying for the vessel operating expenses, finance expenses, overheads, chartering costs and commissions and we let the spot trading vessels contribute to the profitability of the company. Thanks to the profit sharing element every one thousand dollars per day increase in spot trade has a positive impact of 12 cents in the annual earnings per share based on the number of 10 vessels that currently operate in the spot market and with that I will pass the floor to Harry Skosmatos who will walk us through performance of the quarter in a year. Harry?

Thank you George, thanks. On behalf of our CFO Paul Daron and myself hello and welcome to our call. During 2024 10th fleet averaged approximately two vessels more compared to 2023 reaching 62 vessels in the water as a result of the divestment of five older tankers two Swiss Maxis two Afro Maxis and one LMZ carrier and the acquisition or delivery of nine vessels namely five modern tankers from Norway's Viking crew the repurchase and termination of two sailing eastbound transaxes involved in two Swiss Maxis and the delivery of two dual fuel LMZ Afro Maxis. Despite this fleet increase during the year 15 vessels underwent scheduled ride options while three performed repositioning voyages all of which led to average fleet utilization for the year to settle at 92.5 percent from 96.3 percent in 2023 a still healthy level nonetheless. Resulting from the above and combined with a somewhat softening tanker market 10th field generated 804 million dollars in gross revenues and 279 million dollars in operating income the latter after 49 million in capital gains from the sales mentioned above. DCE per se per day during the 12-month period which was naturally impacted by the dry dockings settled at the still healthy 32,550 thanks to a large extent to the number of operating days on long-term secure revenue contracts corresponding to the long-term needs of our clients 82 percent in 2024 compared to 77 percent in 2023. As a result net income for 2024 was at 176 million equating to five dollars three cents per commissar and adjusted EBITDA for the year at 400 million. Fleet operating expenses of 198 million modestly increased in line with the larger number and size of vessels in the fleet after the various acquisitions and investments during the year. Operating expenses per se per day however were about three percent lower from the 2023 levels at 9350 thanks again to efficient management performed by 10 technical experts on shore and on board the vessels. Total debt and other financial liabilities at the end of the year were at 1.8 billion which compares favorably to both the book and fair value of the fleet three billion and just about four billion at the end of the year respectively. At the same time net debt to capital remained at a comfortable 45 percent. Interest and finance cost for 2024 and reflecting the larger fleet size both in terms of vessels and vessel types as well as continuing elevated global interest rates despite recent cuts was at 112 million from 100 million in 2023 a manageable increase. However this inevitable and control cost increase was nullified the more as a result of the four million in reduced preferred coupon payments from amounts paid during 2023 five million savings in forward variable hire from the repurchase of two Suez mattress unleashing contracts in the summer of 24 and 15 million dollars in interest income. Gasset bank as of December 31st 2024 was at just under 350 million a very healthy level despite having paid 258 million for common and preferred dividends growth projects and the exercise of the above leasing repurchase options. Results for the fourth quarter of 2024 were equally attractive considering that four of the 15 vessels that underwent dry locking during that year happened in this quarter. A fleet of 62 vessels as opposed to about 60 in the fourth quarter of 2023 generated gross revenues of 188 million and operating income of 42 million compared to 220 million and 57 million in the fourth quarter of 2023 respectively. Unlike the 2023 fourth quarter no impairment charges were recorded during this 2024 fourth quarter. Fleet operating expenses for the fourth quarter of 2024 and despite the four dry docks mentioned above in the larger fleet size were at 51 million just 1.3 million higher the 2023 fourth quarter level. However operating expenses per se per day were marginally lower from the 2023 fourth quarter at 9,480. TCE per se per day closed the quarter 3.2 times higher the above OPEC number at 30,107. The result in net income for the fourth quarter of 2024 was at 19.3 million producing EPS of 42 cents reflecting the somewhat softer market driven by lower Asian oil imports, lower fleet utilization compared to 2023 fourth quarter and the 4 million increase in depreciation number of EPS in charges the larger fleet entailed. Adjusted dividend finished the quarter at 85 million. Supported by the aforementioned results 10 is in line and in line with the semi-annual dividend policy will pay a common stock dividend of 60 cents in July 2025 identical to the level paid in July 2024. In ending it is pertinent to highlight what George mentioned earlier that 10 today is facing is undergoing its largest growth phase in its history with 21 vessels on order, nine of which the DP2 shuttle tankers on 50-year contracts with Transpetro Petrobras as recently announced which in their own right contribute in double intense minimum revenue backlog from 2 billion to 4 billion while turning us into one of the largest shuttle tanker owners in the world. And with this I turn back to Nick or for the closing remarks. Thank you.

Well thank you Harry and George for putting the details on and some putting some numbers on the bones and as we said it is a very significant period of growth. We are starting the delivery and yesterday was the very successful ship trials and I don't know if you guys have a picture. It was received overnight from South Korea from the Athens 2004. The first of the two total energy vessels to be delivered on the 28th of April followed by the next one on the 28th of June which will be the Paris 2024. So we're keeping Olympian names for those state of the art ships and those ships will be identical sister vessels to the ones that we are going to be in South Korea which might have a significant higher cost than other yards between 20-15 to 20 percent but there are ships that are going to be with us for very very long time. The Pentathlon which she was just shown yesterday she was another assumption vessel which from 2009 and the new buyers were very impressed with her condition. And then the next is the Anfield. It seems we had the big Liverpool fan crowd when she was named and she will be delivered in 2026 and as soon as those ships will be in the water 2027 and 2028 identical sister vessels upgraded versions environmentally friendly ones are going to follow. So it's going to be a very exciting period very creative transactions that will add at least will almost double when the company will be in full force. As I said we are a company we are the company with the lowest or I would say let's put it positive with the highest concentration of Japanese and Korean vessels more than 90 percent of our vessels are Korean and Japanese and if you put it on deadweight don't in deadweight don'ts it is up to at 95 percent. We have always been believers that quality has a cost so that's why we have we have these results as we speak and with that I would like to open the floor for any questions. Thank you.

Thanks at this time we'll be conducting a question and answer session. 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. One moment please while we poll for questions. Our first question comes from Po Fratt with Alliance Global Partners. Please proceed with your question.

Good afternoon. I had a congratulations on the shuttle tanker deal getting all nine done. I had a question about the structure of the how they're going to be operated. My understanding is that TransPetro is going to be you know providing the crews and operating the shuttle tankers under a bare boat charter. Is this the first time they've done this and you know do you think that what's their capacity to be able to provide the crews for those and then is there a potential where you would you know if they can't provide the crews by 2027 would you be able to step in and do the crewing on those special on those shuttle tankers?

Well I have to say that a very very correct and to the point operational question and I think yes you're very right. They have been operating as I said currently we have four vessels working for in Brazilian waters in which we also train in our Greek and Rio facilities Brazilian crew. The lack of highly educated or trained seafarers is a global phenomenon it's not just in Brazil and that's why companies like us we have our own we run our own academy so we take the young men and women quite a big number of women which is I would say an untapped short of seafarers just less than five percent of the world's seafarers are women and we train them from 18 up to when they enter into the end of service. So there's a very good probability that we will closely cooperate with trans-petrol and I would say one of the reasons that we would award them to some to our surprise initially but for many surprise all nine vessels is our reputation and capacity to man and run those ships so I'll be visiting very often that part of the world with our team and our aim is to closely cooperate in actually running those ships which will be a pleasure for us and it will be very prudent for us because we will be able also to maintain our investment in the quality that we would like to. So the short answer is your question yes.

Okay great and then on the asset sales front it looks like you sold the you know the pentathlon Suezmax 2009 vintage. You have four older Suezmaxes that are you know older than 2009 you talked about two potentially pending transactions can you give us some you know flavor on you know what assets might be you know might be under contract right now to be sold in the second quarter?

Yes I mean you are correct some of our older ships however they are chartered long term to the major oil companies like Exxon and BP because of their ice class features they get their significant premium for almost 20 years we operate them and but they could be candidates age-wise although they're in excellent condition and then we have the our first generation Afromox and the 2007 and 8 ones and we expect to be able to net close to 130 million including the recent offer of net for the same so you know that's why I said the mega transaction because of our strong liquidity and the sense of ships that are coming would not affect our balance ship it's fully funded there is no requirement for raising equity and we will still maintain a very very strong liquidity going through that. We will be looking for the first generation Afromoxes and Suezmax going forward

Great thank

you thank you very much

As a reminder if you'd like to ask a question please press star one on your telephone keypad one moment please while we poll for questions our next question comes from Clement Mullins with Value Investors Edge please proceed with your question.

Hi thank you for taking my questions I wanted to start by following up on both questions on selling the other side of the fleet you mentioned this is generally to make space for new eco-friendly vessels and I was wondering generally speaking does it refer to the vessels you have already ordered or are you looking into adding additional tonnage over the coming months? I mean

we are always looking at strategic opportunities but I was referring to the 21 vessels that we have ordered currently and I think we are the we have currently the largest renewal program for many of our peers going forward.

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

Yes that's a very good point and we have a desk of two very stingy gentlemen sitting in our department looking on a daily basis to find ways to make the financing even cheaper so yes we are looking on a daily basis they are proposing to me and to our CFO value structures that you know could cap interest rate uplift or yeah I mean we're very very focused on that part of the business.

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

What would you look for in the cards?

Yes. Whether you could consider selling the Maria Energy?

Perhaps perhaps yeah just to repress the Maria Energy by the name of my late sister is one of our likest ships. The vessel is uh fixed forward from May 2026 for 12 to 15 years at a very very very accretive rate to a major end user so what we have to do from May until the next May is to cover a year of care operational before she's going to be delivered to a very very long employment that actually will take her to the end of her life earning a humongously high double digit IRR and return of equity that when we build the ship we never calculated it would be as big as that so perhaps you perhaps we have not communicated that that yet to the market perhaps we did it long time ago but she started from 2026 to 2040 I think that's the over my retirement age but I'll be following developments.

That's very interesting and helpful thank you and final question from me I wanted to ask about the you reiterated last year's 60 cent semiannual distribution and I was wondering should the market improve going forward would there be any appetite to potentially raise the second semiannual payment?

Yeah I mean that's what we've been doing we always have the first dividend is the result of the year we just had the year we just reported and it was 60 cents last year we maintained exactly 60 cents for the July semiannual dividend and if you recall last year in December we upped it because the market was very very strong to 90. Hopefully we can do the same having such a big backlog of employment and at least have the same dividend so that's what we do we have our strategy meeting in October by that time we have a good view of the first nine months of the year and as we did last year we hopefully we can do another 90 cents or even more but let's speak let's let's so that's how we operate.

Makes sense that's everything from me thank you for taking my questions. Thank you.

As a reminder if you'd like to ask a question please press star one on your telephone keypad one moment please while we poll for questions. Our next question comes from Po Fratt with Alliance Global Partners please proceed with your question.

Just two quick ones about operating you know the operating stats I think Harris mentioned you had 15 dry docs in the 2024 time frame how many did you expect in 2025 and then also your looks like your gna expenses were up in the second half of the year I think because of incentive comp can you give us sort of an idea of how the 2025 gna expense line looks.

Yes we are looking almost at the at the dry document which considering that we operate a fleet of in the water of 60 vessels that's what you would expect you know it's a five-year cycle sometimes when the ships are built I mean it is kind of not hard for someone to figure it out because it's every five years since the vessel so you know if the vessel is built in 2010 she will have your 15 20 and 25 are her special surveys and as far as we expect the gna to drop significantly we had the pleasure to distribute the big number of or a significant number of to our personnel on the ships and in our offices last year and I think that has created a good team feeling for them so they're all all now are trying to make sure we get the share price back to about $30 which it should be.

Thank you.

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

Well again thank you for listening in it has been a very exciting and one of those game changers as a lot of the international maritime and financial press has called on transactions going forward we tend to do this every now and then to put the company to its next phase but we always do it prudently and without putting the house for sale so we are the company is very well funded the company can even do a similar transaction going forward without having to raise extra equity and we are in an environment that the underlying -to-day market is going is maintaining strength right now the afromax is you know my son he is 22 and he's training to be a broker in one of the famous brokerage houses so for him it's very exciting to see that the winner of this week are the afromaxes so afromaxes today are in the 70,000 range so the ones we have in profit sharing the one that's out on the spot are really enjoying that which is not far behind in the 50,000 range last week the VLs were in the 50 so it's a very very lively and strong market with the rates being very accreted mainly for companies like that that have a low cost and a low break even so we're looking at a well balanced market the geopolitical security flux the geopolitical events around the world starting with the with the hoot is attacking the world's fleet and i think the very good defense of the united states and greece and all the allies that are protecting our seafarers are going to open up further hopefully our oceans and of course the increased part of the presence of a decaying gray fleet and we've seen two incidents in the last month of gray ships actually being abandoned and creating putting environmental danger in the market allows you know shipping companies like ourselves to to enjoy healthy rates going forward and again just to reiterate that 60 of our business is done by external largest clients followed by ephelon followed by several total petrographs of course and and so we are in a sense the the floating pipelines of very very demanding end users and then we are getting

rewarded

for us and hopefully we will see this reward move to our share price like it was last year and and with that i would like to thank to thank all of you for listening in thank you very much

this concludes today's conference you may disconnect your lines at this time and we thank you for your participation