Tsakos Energy Navigation Limited

Thank you for standing by, ladies and gentlemen, and welcome to Thakos Energy Navigation Conference Call on the third quarter 2025 financial results. We have with us Mr. Thakis Arapoglou, Chairman of the Board, Dr. Nicholas Thakos, Founder and CEO, Mr. George Soroglu, President and Chief Operating Officer, and Mr. Harris Cosmatos, Co-CFO 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, 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 that this conference is being recorded today. And now I pass the floor to Mr. Nicholas Bournosis, President of Capitalink and Investor Relations Advisor to Tsakos Energy Navigation Limited. Please go ahead, sir.

Thank you very much, and good morning to all of our participants. As you mentioned, I'm Nicholas Bournosis, President of Capitalink and Investor Relations Advisor to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the nine months and third quarter ended September 30, 2025. In case you do not have a copy of today's earnings release, please call us at 212-661-7566 or email us at 10TEN at CapitalLink.com and we will have a copy for you emailed right away. Please note that prior 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.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 webcast 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 Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, which may affect tense business prospects and results of operations. And before turning the call over to Mr. Arapoglou, let me take the opportunity to congratulate Dr. Tsakros for your recent recognition in New York by the Philoptical Society of the Greek Orthodox Cathedral, paying tribute to your personal and the group's contribution to the global maritime industry, to philanthropy, education, and community welfare. Congratulations. And at this moment, I would like to pass the floor to Mr. Arapoglou, the chairman of Xarcos Energy Navigation. Please go ahead, sir.

Thank you, Nicolas. Good morning and good afternoon to all. Thank you for joining us today for the announcement of the nine-month and third-quarter results of 2025. No surprises. Our business model continues producing sustainable profits, beating estimates, as you saw, while at the same time building up a solid stream of $4 billion of accretive future contracted revenue. This provides stability and more predictability in our results going forward. As we explained many times in the past, and mitigates volatility in the stock price while maintaining a very solid cash position of nearly $300 million. These results are a product of high fleet utilization, best-in-class operating efficiency, by now a trademark for 10. We're reminding the market of our record 20-vessel new building program, with deliveries starting Q1 2026. until Q4 2028, ten of which the shuttle tankers, with long-term accretive employment. The program includes, of course, three VLCCs, materially growing our presence in the sector, in this sector of the market. At the same time, and as mentioned earlier in earlier communications, we are focusing our older tonnage in order to continue maintaining a young and very modern fleet. Lastly, as mentioned in our press release, after the $0.60 per share interim dividend in July, we declare payment of an additional $1 per share dividend. This will be paid in two equal tranches of $0.50 each, one in December 19, 2025, and one February 19, in order to, going forward, gradually align dividend dates with the timing of audited results, as Nikos Tsarkos will explain later. At today's top price, the total dividend of $1.60 per share for the year represents a very attractive yield of over 4%. So congratulations once again to Nikos Tsarkos and his team. They have proven track record and business model in a market with stronger tanker fundamentals and turbulent geopolitics, this ensures continued success. Thank you very much. And over to you, Nikos.

Chairman, and welcome everybody to our 32nd year nine month call. First of all, I would like to I congratulate Cleo Hadjim-Harris for becoming a full Cesar lawyer. She has kept us out of trouble for all these years, so we're very happy for her to join the main board of the company and looking to spend much more time, productive time. Well, in September, when we reported our six-month results, I think we were all satisfied. They were good results. We did not expect the market to become even better. even stronger. And that's where we are today. I think we're perhaps more than 50% higher on the spot market than we were back in September, which we were very satisfied having gone through the typical seasonal period and being with a lot of profitability. We had a couple of months of lull waiting for the developments of the IMO saga, I would say. I think rightly so, the postponement has been achieved, and that allows the ship owners and the So Russia is going forward. So I think we welcome this development. Since that development has put the world at peace, the end of too much tariffing each other has also been achieved, and the market has gone from strength to strength. We are seeing a market which has limited supply of tonnage. And all our vessels right now are in very high demand. I was glad that we, of course, were way ahead of our estimates. And we're looking forward because I think the quarter we're going through now is also going to be a very strong quarter. We just concluded our fourth long-term profit-sharing almost arrangement today on our VLCCs. with a very accretive minimum rate, minimum rate that we would be happy to have as fixed rates many years before, and that would be a minimum rate, and then with unlimited upside for the company. And with this part of good news, I would ask George Tarognou, our president, to give us a quick update of what has happened in the last nine months. Thanks.

Thank you, Nikos. We are pleased to report today on another profitable quarter. Timecare markets have remained healthy during the course of the year. And as Nikos mentioned, energy majors continue to approach our company for time charter business. Since the start of the year, we have 40 new time charter fixtures and extension of time charters. And today we have a backlog of approximately 4 billion as minimum fleet contracted revenue. We have a 32-year history as a public company, from four vessels in 1993 Then as the world was exiting COVID and we were trying to go back to normal, we've had the war in Ukraine in 2022, which resulted in major disruption in energy trading. Then in late 2023, we had the attack of Hamas in Israel and the ensuing war. most of the shipping people decided not to cross the Red Sea anymore, the turmoil in the whole of Middle East, the unwinding of globalization, the introduction of tariffs in 2025, trade wars between the United States and China and the rest of the world, and the decarbonization effort of many global industries, including shipping. This, as you know, has the lowest carbon footprint when we compare, while at the same time is the most efficient way to transport different large-scale cargoes around the world. So a lot to do in such a short time. So far we have managed to navigate the 10th ship safely through these challenges, thanks to the company's crisis-resistant model. Let's hope we go back to more peaceful and normal times for all very soon. And today TEN is one of the largest energy transporters in the world, with a young, diversified, The red color shows the vessels that trade in the spot market, and we have seven as we speak, and our new buildings under construction. With light blue, we have the vessels that are on time charter with profit sharing, 16 vessels. And with dark blue, the vessels that are on fixed rate time charters, 39 vessels. In the next slide, we list the pro forma diversified vessel shuttle tanker fleet. We are one of the largest shuttle tanker operators in the world, with very young and technologically advanced vessels, following the tender we won earlier in the year in Brazil, building the Samsung shipyard in South Korea, nine shuttle tankers for Transpetro. We have six shuttle tankers in full operation. If we combine the two slides and account only for the current operating fleet of 62 vessels, 23 vessels, Our clients, with whom we do business through the years, are the blue chip list of our world. ExxonMobil is the largest revenue client, followed by Equinor, Shell, Chevron, Total, and BP. record, the disciplined financial approach, and the strong balance sheet and financial performance. The left side of slide 7 presents the all-in break-even cost for the various vessel types we operate in 10. Our operating model is simple. We try to have our time charter vessels generate revenue to cover the company's cash expenses, paying for the vessel operating and finance expenses. for overheads, shuttering costs and commissions, and let the revenue from the spot and profit-sharing trade investments contribute to the profitability of the company. And thanks to the profit-sharing element, for every $1,000 23 vessels. We have a solid balance sheet with strong cash reserves. The fair market value of the operating fleet is approximately 4 billion, against 1.9 billion debt, and the net debt to cap is around 47 percent. Fleet renewal and investing in eco-friendly, greener tankers has been key to our operating model. Since January 1, 2023, we have further upgraded the quality of the fleet. but by divesting from our first-generation conventional tanker, replacing them with more energy-efficient new buildings and modern second-hand tankers, including dual-fuel vessels. In summary, we have sold 17 vessels with an average age of 17.3 years and capacity of 1.4 million deadweight tons, tankers with an average age of 0.6 years and 3.4 times the deadweight capacity of the vessels we sold. We continue to transition our fleet to greener and dual-fuel vessels. We are currently one of the largest owners of dual-fuel LNG-powered Aframax tankers with six vessels in the world. Global oil demand continues to grow year after year. But wars, economic sanctions, sanctions-listed tankers, and geopolitical events positively affect the tanker market and tanker freight rates. While the tanker order book remains at very healthy levels, as a big part of the global tanker fleet is over 20 years, as we speak almost 50 percent

Thank you, George, and welcome everyone to our call. So I'll start with the nine-month highlights. So as the tanker markets continue their upward trajectory propelled by the crude sector, and VLCCs in particular, available term rates for crude vessels merited a shift to To this effect, and in line with the company's tried and tested employment model, bar some occasional aberrations for opportunistically capturing short-term peaks, reverted to the norm and operated most of the fleet during the first nine months of the year in secure revenue contracts. In particular, with a fleet of almost 62 vessels in the water, similar to the corresponding 2024 nine-month period, we find 10's commitment to maintaining a meaningful presence in the steel lucrative spot market. Today, 23 vessels in the fleet, seven on spot and 16 on profit shares, do provide 10 with such operational latitude. As a result of this employment recalibration, for the nine months of 2025, 10 generated $577 million in gross revenues an operating income of $171 million, which incorporated $12.5 million of capital gains from the sale of four older vessels. Capital gains during the equivalent 2024 period were at $49 million from the sale of five vessels, highlighting tense policy to continue the strategic recycling of the fleet with newer, more eco-friendly vessels, new builders in the majority. In line with the above employment pattern and fewer vessels on dry dock compared to the 2024 nine months, nine now from 11 last year, fleet utilization increased from 92.2% to 96.2% during the 2025 nine months. The fleet's time charter equivalent rate for the first nine months of 2025 settled at a healthy $30,703.00. During the nine-month period, and in line with the reduction of the fleet's spot exposure expendable, Voyage's expenses declined from $118 million in the 2024 nine months to $95 million now, at $23 million betterment. Solider hull expenses also decreased by $4.6 million, whilst vessel operating expenses increased by just over $7 million from the 2024 same period to settle at $155 million. As a result, operating expenses per seat per day for the 2025 nine months averaged a still competitive $9,797, just a third of the time shorter equivalent rate mentioned above. Depreciation and amortization came in at $126 million for the nine months of 2025, from $118 million in the 2024 nine months, reflecting the introduction of three new building vessels General and administrative expenses were at $32 million, reflecting the amortization of stock compensation awarded in July 2024 and scheduled to fully invest by July 2026. On the other hand, significant improvements were made in our interest costs as a result of declining global interest rates and despite a $126 million increase in the company's debt obligations from the 2024 nine months due to new loans for 10th new building program. $72.7 million of interest costs now compared to $87.4 million in the 2024 nine months, a near $15 million saving. At the end of the 2025 nine-month period, with 61.2 vessels on average in the water and a 20-vessel new building program, our total debt obligations were at $1.9 billion, while net debt to COP stood at a comfortable 47.3%. Ten's loan-to-value for the 2025 nine-month period was at a conservative 50%. Interest income came in at $7.7 million, a meaningful contribution. As a result of the above, the company, during the first nine months of 2025, generated a health net income of $103 million, which translates to $2.75 in earnings per share. Adjusted EBITDA for the 2025 nine months was at about $290 million, while cash at hand, as at the end of September 2035, stood at a healthy $264 million. After having paid $135 million in scheduled principal payments, $178 million in yard food delivery installments and capitalized costs, percent in last year's third quarter to 94.8 percent during this year's third quarter, despite four vessels undergoing scheduled dry docking during the period, compared to three vessels in the 2024 third quarter. With vessels in the water slightly under the levels of the 2024 third quarter, the FLIP generated $186 million of gross revenues and $60.5 included 8.9 million, call it 9 million, of capital gains from the sale of three older vessels, and not the similar performance from last year's third quarter, which did not incorporate any gains or losses from vessel sales. The resulting time charge equivalent per ship a day was at $30,601, in line with the focus of diminishing our presence in the spot markets. Naturally, Voyager's expenses during the year's third quarter were lower compared to last year's third quarter, experiencing a $7.7 million decline to settle at $27.4 million. Operating expenses, on the other hand, increased in line with the introduction of three larger vessels and settled at $52 million. The result in operating expenses per ship per day for the third quarter of 2025 came in at $9,904. management performed by 10 technical managers. Depreciation and amortization were a touch higher from the 2024 third quarter levels at 42.4 million, again reflecting the new vessel introductions and the two Swiss markets repurchased from sale and leaseback agreements. General and administrative expenses were 5 million lower from last year's third quarter at 9.2 million. Interest costs, again, following the downward trend in interest rates, came in at $23.7 million from $32.2 million during last year's third quarter. In other words, savings of $8.5 million. On top of that, another $2.1 million in cash gains was realized through the interest income generated during the 2025 third quarter. As a result of all the above, 10 during the third quarter of 2025 reported $38.3 million of net income, or $1.05 in earnings per share. The adjusted EBITDA in the third quarter of 2025 settled at about $96 million, reflecting the shift towards longer-term secured revenue contracts to meet our clients' increasing long-term demands. And with this, I pass it back to Nikos. Thank you. Good.

Thank you, Harris. The figures are good. We didn't talk about them a lot. But as I said, I think we had good results in the first six months. The market had a long period, really expecting the developments of the net zero period. discussions at the IMO, and after the extension of the discussions, the market has taken off again, and we are looking at the business coming very strong in the spot market and a lot of employment. As we said today, one of our VLCCs has been extended for another two years, and there's a huge appetite for business There's an increasing presence of the grey fleet, a lot of breakdowns on those ships. And, of course, we are going through, again, more than expected geopolitical challenges with hijackings of vessels, like the recent one from Iran, and the Somalia piracy on both Greek vessels outside, quite outside, 500 miles away from the Somalia. So there's a lot of interference, and in the meantime, this has created a nervousness in the market going forward, which we are able to take advantage with our chartering strategy, as described, with 40 new ships totaling $4 billion of extended business over the next five years. And with that, we would like to open the floor. to any questions.

Thank you. As a reminder, if you'd 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. 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. One moment, please, while we pull for questions. Our first question comes from the line of Clement Mullins with Value Investor's Edge. Please proceed with your question.

Hi. Good afternoon, and thank you for taking my questions. I wanted to start by asking about the 12 VLCCs coming open throughout this month. You mentioned in the press release that the employment on the DS-1 has been extended for two years. Could you clarify at what terms? And secondly, based on your data kit, the Ulysses should also come open this month. How do you plan to employ this vessel? Is there any appetite to trade it on spot?

Yes, thank you. Thank you for your questions. We are trying right now to protect our ships from... oil companies. But joking apart, I think we are seeing a significant increase, a 20 percent increase from our profit-sharing arrangements of the past, from our minimum profit-sharing arrangements. So there is a significant appetite for the vessels out there. I cannot, perhaps if you, next week when you see Harris in the States, he can give you more details on that, but of course it's quite a positive situation.

Makes sense, I'll reach out. I also wanted to ask about the Maria Energy. It is fixed until February of next year, but the long-term contract you signed a while ago doesn't start until May, if I remember correctly. Do you plan to trade the vessel on spot once it comes off its current contract and before it starts the next one?

The vessel is actually fixed back to back to her 15-year employment. So there won't be any downtime between that other than the survey that she would have will have to go before the delivery of this in April. So the vessel has been chartered back to back until she goes to her new charter.

So there won't be any downtime. Perfect. Thanks for the call. And final question from me. You have a couple of MR new builds delivering in early 26. Should we expect those to be fixed on long-term contracts before delivery? And should that be the case, what kind of duration are you looking at?

We're contemplating. As I said, there's a big appetite. We're here with our chartering team. They have, I think, five or six major oil companies looking for those ships. As you know, we're a big participant in the Kargil and Mersk pool. We're very happy with that. performance of that pool and I've been saying that for us the best method or the only method of consolidation in our industry is through commercial pooling because Whoever has a fleet of our size or smaller or, you know, or a rounder or bigger does not really, you do not gain any economies of scale of just ordering more and more and more ships and running more ships, because the ships are always there. So we are supporting boots, and the pull has performed quite well. And we might be considering also pulling. Pulling gives you the upside of, gives you full utilization.

Yeah, makes sense. I'll turn it over. Thank you for taking my questions. Thank you.

Thank you. Our next question comes from the line of Poe Fratt with Alliance Global Partners. Please proceed with your question.

Yeah, good afternoon. Some of the questions were covered already, but when you look at your new build program, you know, close to 20 major commitment, What are you looking at as far as the fleet renewal side? You've been active selling assets. Asset values are fairly firm in my mind. So, you know, what should we anticipate over the next, call it, year or so as far as on the asset sales side?

Our, I say we are closer to negotiating $5 billion. And so if you put it in a 12-month, if you take it 12 months forward, I think that would be, you know, perhaps double that, 10 vessels. We're looking to the transactions we have in mind. We'll release close to $250 million of net cash, which is more than enough of what we need for our new building program.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Dr. Tsakos for any final comments.

Thank you. Well, I hope, first of all, thank you for listening in. The market is getting firmer and firmer. And from what I understand from my kids that are studying on the East Coast, the weather is not yet. So we're looking for further cold. We're looking forward to continue with this positive market. Right now we're taking advantage as much as possible with the team. And I would like to wish everybody a happy Thanksgiving next week. And don't forget that the 10th surprise is right now on Black Friday prices. So before next Black Friday, before next Black Friday, you buy some more of that. And I would ask our chairman to have a final word. Thank you.

Happy Thanksgiving from me, too. I think that we're looking forward to beating all estimates next time around, touch wood. And, again, congratulations to Nicosacos team for excellent performance.

Thank you. Happy Thanksgiving. Thank you. Thank you. Bye.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.