Tsakos Energy Navigation Limited

Thank you for standing by, ladies and gentlemen, and welcome to the SACOS Energy Navigation Conference Call on the First Quarter 2026 Financial Results. We have with us Mr. Takis Arapoglou, Chairman of the Board, Mr. Nicholas SACOS, Founder and CEO, Mr. George Saroglou, President and Chief Operating Officer, and Mr. Harris Cosmotos, 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 over to Mr. Nicholas Fornosas, President of Capital Link and Investor Relations Advisor for Tacos Energy Navigation Limited. Please go ahead, sir.

Thank you very much, and good morning to all of our participants. I am Nicolas Bornozis, President of Capitalink and Investor Relations Advisor to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the three months ended March 31, 2026. 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 at CapitalLink.com, and we will have a copy for you emailed right away. 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.capitallink.com. 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 TEN's business prospects and results of operations. And at this moment, I would like to pass the floor to Mr. Arapoglou, the chairman of Tsakos Energy Navigation. Please go ahead, Mr. Arapoglou.

Thank you, Nicholas. Good morning, good afternoon to everyone. It's even another time when the TEN model has proved It works in good and in bad markets. That's the way it's structured. It's been run as a portfolio of vessels rather than a number of individual vessels. This has led to sustainable profitability throughout the years, while continuously increasing dividends. It was just highlighted to me that the total dividend per share paid since inception to every preferred or common share of 10 is $1 every year. So while at the same time renewing fleets and always maintaining a cash buffer of well above 350, although this number increases as the quarters roll out. This number is not a static number. It's a number that rolls over through the sale and purchase situation. So it's not because we want to have 360 steady there. You know, that's not the policy. It's the policy to be able to have either a buffer or the ability to make acquisitions. At the moment, this model has booked upfront revenues for the next two years of $3.6 billion. of all kinds, profit sharing and time charges, which is part of the thing that we have. And all this is benefiting, allow me to say in a way ironically, from strong market fundamentals. The result is continued strong business growth as evidenced by the steadily increasing stock price, which I'm sure you have noticed. Thank you all. I now wish to once again congratulate Nikos Tsakous and his team for the excellent performance on all fronts. So Nikos, the floor is yours.

Chairman, thank you very much and good morning and good afternoon to everybody. It's with great pleasure that we announce another successful and very productive quarter. However, the first quarter, as I said, or as it was said in our press release, reflects market conditions, market fundamentals, and has a small effect in its latter part on geopolitics. However, the quarter that we are actually into now, and we're more than halfway into the second quarter, is a quarter that when we will report, we will have the very strong market effects. So it's going to be, or it looks like it's going to be a much stronger quarter either than this record quarter because of geopolitical effects. And of course, the company is placed in a way over the last 33 years that it can sustain growth. prolonged periods of crisis and also grow at the same time, modernize at the same time, and distribute significant dividends to its shareholders, having the, I would say, the management being the largest shareholder since inception of this company and continuing growing its shareholding. And I think the statistic our chairman mentioned is that through thick and thin, since we've been 24 years public on the New York Stock Exchange and 33 years public all over, is a period that we have been able to pay an average of a dollar a share to our shareholders, both to our $30 million shares outstanding shares of the common stock and the 10 or 10 plus million of our preferred. So, as I said, the year started with events in Venezuela that created, again, dislocation but opened new ton miles and new barriers. And then, of course, more than halfway in the first quarter, we have had the Ormuz Strait, which, as we speak right now, has really isolated more than 20,000 seafarers who are trapped for the last three months. So we have a very important issue for our seafarers, a grave situation. And of course, we are in a situation where almost 5% of the world's tonnage is being blocked. And this is a big number. But even more than that, more than 10% of the world's VLCCs, which are the vessels that usually trade the Hormuz trades, are being blocked. So it's a time of dislocation that has created opportunities. We, as many say, we prefer... for us to earn a living when the seas are open, when there are no tariffs, there's no sanctions, but we have to navigate things the way we are. And with that, George, would you like to give us a bit more detailed developments of what has happened? It's been, as I said, operationally, emotionally, because of the human factor, a roller coaster. of a quarter, and we had to think more than once outside the box to be able to navigate and maintain the efficient change of supply of energy for our clients.

Thank you, Nikos. We are pleased to report today on another profitable quarter. We maintain a steady course in the most turbulent geopolitical environment in recent memory. The year started with a political development in Venezuela, and escalated with the war in the Middle East and the closure of the Strait of Hormuz. Even before geopolitics took center stage at the end of February, tanker market fundamentals were strong. 2026 was forecasted to be another year with growth in global oil demand, with each passing year after 2022 establishing a new record for oil demand. While at the same time, tonnage supply remained very balanced. Since March and so far, for the most part of the second quarter, geopolitical events have significantly added to the market strength. Ten's diversified fleet, with its new charter renewal, together with the spot fleet and the profit-sharing market exposure, will continue to further benefit from this unprecedented market dislocation. We have a 33-year history as a public company. From four vessels back in 1993, we have turned every crisis the world and shipping has faced through the years into a growth opportunity. Today, N is one of the largest energy transporters in the world with a young, diversified, versatile pro forma fleet of 83 vessels. In slide four, we list the pro forma fleet for conventional tankers, both crew and product carriers. The red color shows the vessels that trade in the spot market, and we have currently 11 tankers, and our new buildings under construction. With light blue, we have the vessels that are on time charter with profit sharing, 12 vessels, and with dark blue, the vessels that are on fixed rate time charters, 40 vessels. In the next slide, we list the pro forma diversified fleet which consists of three LNG vessels plus one LNG new building option and our 16 vessel shuttle tanker fleet. We are one of the largest shuttle tanker operators in the world with very young and technologically advanced vessels. We have six shuttle tankers in full operation after we took delivery of both Athens 04 and Paris 24 last year, which immediately commenced long-time charters to an energy measure. If we combine the two slides together and account only for the current operating fleet of 63 vessels, 23 vessels, or 37 percent of the operating fleet, has market exposure, that is spot and time charter with profit sharing. while 55 vessels, or 83% of the fleet, is in secured revenue contracts, that is, time charters and time charters with profit sharing. In the next slide, we list our clients with whom we do repeat business through the years, thanks to our industrial model. ExxonMobil is the largest revenue client, followed by Equinor, Shell, Chevron, Total Energies, and BP. We believe that over the years, we have become the carrier of choice to energy majors thanks to the fleet that we have built, the operational and safety record, the disciplined financial approach, the strong balance sheet, and the strong financial performance. Slide seven presents the all-in-break given course for the various vessel types we operate in the company. We have a very simple operating model. We try to have our time-chartered vessels generate enough revenue to cover for the company's cash expenses, that is paying for vessel operating and finance expenses, for overheads, chartering costs, commissions, and we let the revenue from the spot and profit-sharing trading vessels make contributions to the profitability of the company. Thanks to the profit-sharing element, every $1,000 per day increase in spot rates has a positive 13 cents impact on the annual earnings per share based on the number of 10 vessels that currently have exposure to the spot rates, 23 vessels. We have a solid balance sheet with strong cash reserves. The fair market value of the operating fleet exceeds 4.6 billion against 2.1 billion of debt, and net debt to cap is around 48.4%. Fleet renewal and investing in eco-friendly, greener vessel has been key to our operating model. Since January 1st, 2023, we have further upgraded the quality of the fleet by divesting from my first-generation conventional tankers, replacing them with more energy-efficient new buildings and modern second-hand tankers, including dual-fuel vessels. In summary, we sold 18 vessels with an average age of 17 years and capacity of 1.7 million deadweight ton, and replaced with 34 contracted and modern acquired tankers with an average age of 0.5 years and 4.7 million deadweight capacity. We announced today the sale and delivery to her new owners of a 10-year-old VLCC and tense agreement to buy until the end of July two in-the-money 2007 Bill Shrewsmax tankers currently operating under a sale and lease back agreement. 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 water. Tanker market fundamentals remain positive, with the global order book still at a level equal to about one-third of the number of vessels over 15 years of age. Shipyards are operating at full capacity, scrapping activity is increasing, and global oil demand is at record levels. The recent war in Iran, which resulted in the closure of the Strait of Hormuz, has provided further support to an already robust tanker market. And with that, I will pass the floor to Harith Matos, who will walk us through the financial performance of the first quarter. Harith.

Thank you. Thank you, George. Well, as both Nikos and George mentioned, 2026 started on a high note for the tanker markets, as the event in Venezuela allowed for more barrels to be transported on non-sanctioned vessels, adding to global tonnage, already at high levels as a result of the war in Ukraine and the ongoing sanctions of Russian exports. On top of that, the war in Iran, which has led to over 5% of the global tanker fleet to be stranded within the Persian Gulf, has made countries like China and India to seek barrels from alternative sources, primarily from the Atlantic Basin, adding further miles to global seaboard transportation. Against this backdrop, which spurred major oil companies to secure reliable tonnage for their long-term needs, TEN, with its modern fleet and operational expertise, was a prime beneficiary, which resulted in fleet utilization almost touching, but practically unattainable, the perfect 100%. 98.3% compared to 97.2% in the 2025 first quarter, quarters where each had just two vessels undergoing scheduled dry dockings. These, combined with a fleet slightly larger than the one of the 2025 first quarter, both in terms of vessels and deadweight tons, and vessels under secure revenue contracts, that is, fixed time charters or time charters with profit sharing provisions, were 15% higher than the 2025 first quarter, assisted by and assisted tend to generate voyaged revenues of $253 million, 56 million higher from the first quarter of 2025. The resulting time charter equivalent rate perceived per day, reflecting the continuous robustness of the tanker markets, reached almost $41,000 per day from about $31,000 per day in the 2025 first quarter, a 33% increase. The significant reduction of vessels operating in the spot trades, 48% lower from the 2025 first quarter, resulted in a $6.2 million drop in voyages expenses to settle at $29.8 million. Vessel operating expenses during the 2026 first quarter were at $53.3 million from $49.6 million in the 2025 corresponding quarter, a modest increase as a result of a bigger fleet in terms of vessels and deadweight tons. The resulting operating expenses per seat per day came in at a still competitive 9,952, about one-fourth of the TCE rate mentioned above, a very comfortable level. Depreciation amortization expenses, reflecting the increase in vessel sizes since the end of the 2035 first quarter, came in at 44.1 million from 41.1 million in last year's same quarter. General and administrative expenses were at $12.4 million from $10 million in the 2025 first quarter, a still competitive level in a fleet of over 63 vessels. As a result of all the above, 10 for the first quarter of 2026 generated an operating income of just about $110 million without having any gains or losses from vessel sales, from $57 million in last year's first quarter, net of a $3.5 million capital gain. In other words, a 53 billion increase or 93% higher from the levels of the 2025 first quarter. Despite an increase in our overall loans to correspond to the growth of the fleet, 2.1 billion this quarter from 1.9 billion at the end of the 2025 first quarter, interest costs fell by 3.2 million. The result of a lower interest rate environment and lower spreads. Interest income remained more or less the same as last year. last year's quarter at 2.2 million. Reflecting the above performance, both in terms of commercial and operational efficiencies and positive tanker market fundamentals, the resulting net income reached one of the highest levels over the last 10 years, 89 million from 37.7 million in the 2025 first quarter, a 136% increase, or in dollar terms, a $51 million betterment. In terms of earnings per share, $2.72, this time from $1.04 in last year's first quarter, with an almost similar share count. Adjusted EBITDA for the quarter was higher by almost $55 million from the 2025 first quarter, at $154 million, a 55% increase. These results have enabled the company to reward common shareholders with a handsome dividend. $1 per common share to be paid within July of this year, which is 67% higher, the level paid at the same time last year. Or if we are to include the February 50 cent payment, which we should, 36% higher from the total distributions made during 2035. From $1.10 in 2025 to $1.50 today. A very healthy 45 million distribution. And on this happy note, I'll pass it back to Nikos. Thank you.

Thank you. Thank you, Harry, and I hope you keep on bringing happy news in the quarters that follow. Again, I think as we said, it's been a period that we have not seen before. In general, the last six years, have been years of continuous turmoil. We started, for all of us, we remember we started with the pandemic, with COVID. All of a sudden, we had the world pausing for a while. And then we had the events in Ukraine followed immediately, almost by October 24, and then followed by the events in the more recent events. So it's been, geopolitics have been driving part of the market, but even looking under those effects, the market still has legs, has good fundamentals, and we believe that in a peaceful, normalized, open border world, the market will continue to be healthy. And with that, As I said, we would open the floor for any questions.

Thank you. 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. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Omar Noctow with Clarkson Securities. Please receive your question.

Thank you. Hi, guys. Good afternoon. Good morning. Hi, Omar. Hi. Just a couple of questions. And maybe just first, perhaps maybe a big picture on the shuttle tankers. You know, that segment provides a good amount of revenue visibility for and also built-in earnings growth. And that's obviously being built out quite a bit here over the next couple of years as you take delivery of those new buildings. How do you envision that business looking forward after those shifts deliver? Do you kind of think that they coexist within the broader conventional tanker business? Does it stay within 10, or do you consider carving that out as its own separate vehicle?

Well, we are open to suggestions from people of your experience and not only, but I mean, we are working as exactly one entity right now. Our new building department is busy making sure that sea trials are happening and the ships are being delivered. So the focus right now is the operational focus. We're not planning to do the first, well, the third delivery of the serious ship. is at the end of July. I think sea trials are taking part in Samsung, and the ships are state-of-the-art, very modern vessels at one of the best yards in the world. But I think we have time to take this decision. No decision has been taken, but right now they are an integral part of 10.

Thank you, Nick. And then A follow-up just on the LNG business. You recently ordered that new building plus one option. What does it look like in terms of employment opportunities now? I know there's been this, you know, interesting kind of stunted LNG market where there was concern for this year that we were oversupplied, but that as you looked out towards 28, 29, as that vessel delivers or those two would deliver, there's a lot more, it's much more constructive. What does the charter market look like, or what does interest look like for securing that ship today on a long-term contract?

Well, I mean, the market right now is in turmoil because, you know better than me, part of the fleet and part of the production is being trapped or kind of damaged. So I wouldn't say that today really reflects things going forward. The market is still... I think you can see fixtures which I don't consider something that would be interested starting, you know, for five or seven years in the 80s. We are following this market closely. We have been initially one of the first movers in this market back in 2007 when we took delivery of our first steam turbine, the Neo Energy. But being a diversified fleet, we have the luxury that we do not have to run under every single low-digit, mid-digit business that is out there, like most of the companies that just specialize in gas. So we have another 78 vessels at least. to carry forward. And for us, it's a market which is very interesting operationally. We believe there is a future, but it's not a market that we are depending on. And that's why we're taking smaller steps, all of them depending on developments of technology.

And if I may add, there is very strong energy demand throughout the world. Demand is going up. And there are no indications that this demand will dry up anytime soon. You're very right.

Our chairman says, you know, we have very strong indication for energy demand, including gas, from all our clients. I mean, today we could charter all our uncharted new buildings, including our later delivery VLs, which we ordered, thank God, at a very timely manner six months ago. But, you know, we have the luxury to have more than $3.5 billion of backlog and waiting for the right trade and the right opportunities with the right client going forward.

Thank you. Okay, that's clear. And then maybe just one final one, and I'll hop off the queue. Do you mind just maybe mentioning... You know, the Asahi Princess that you referenced in the release, loading up the Afromax cargo using road trucks. Can you just talk about what that is in terms of is that a means to bypass the Black Sea? And how do you see this application being used in other areas?

I think, Omar, it's closer to your parts of the world. It's bypassing the Red Sea. and, of course, the Ormuz trade. This was one of our big mid-list clients wanting to load from these parts of the world, but we felt that it was too risky for our seafarers and for the crew and for the vessel and for the cargo, and so we gave them the idea and, you know, They came with it to load from Eastern Mediterranean on product that was carried by 7,800 trucks. Actually, the loading took about two weeks. But we had to try and think out of the box. It was successful. We were able to maintain it. Everybody who was thirsty for crude was able not to have to shut down. And, you know, we are just... We're just the messengers. We just carry the stuff. So we try to do the most we can do safely to make sure that the energy chain continues.

Okay. Well, thank you. That's very interesting. I'll pass it back.

Our next question comes from the line of Poe Fratt with Alliance Global Partners. Please proceed with your questions. I apologize.

Hello. I have a couple questions. The first of which is, can you just talk about the knock-on impact of cargo switching to the Atlantic? I've heard on another call that there's a squeeze on transits through the Panama Canal. Can you confirm that and then sort of discuss what sort of the impact is on the overall flows would be?

Yes. Again, good morning to you. It goes back to the new routings, and that's another imaginative way. We've been seeing increasing calls from to the Far East, this time through the Panama Canal. And of course, this really triples the ton mile distance and more activity in the Atlantic, but it's actually through passage through the canal. So you do West Africa through Panama Canal to the Far East, which is really something that we would have never thought of six months ago. This way you avoid having... Yep.

And are transits starting to become an issue there, Nikos? Or is that sort of a minor issue in the scheme of the global trade?

I think the way we see it, if things do not normalize in the next three months, we will be seeing more delays also happening on that side, on this canal.

Okay, great. And then, Harry, in the last conference call, you talked about the impact of profit sharing on the fourth quarter operating results. Do you have a number on the impact for the first quarter results from profit sharing agreements?

Sir, hypo. Well, let me answer this differently. I mean, last year, in the last quarter, when we spoke last time, we made 27 million from profit-sharing. And for the entire year, for the entire 2025, profit-sharing revenue came in at 45 million. So far this year, in the first quarter alone, profit-sharing revenues are in excess of 40 million. So as you can imagine, we are very comfortable that this trajectory will... That's a good number.

That's a good number.

So we're already at the number that we made last year in just the first quarter.

Yeah. That's really helpful. And then can you just talk about your operating expenses looking forward? And it looked like there was a... a one-time impact to G&A, about 3.5 million, just due to the exchange rate changes last year. Can you just talk about G&A levels going forward, too?

Well, we believe that we will be able to maintain them. However, the dollar has weakened on us, and our major expenses are, I would say, the euro. So, yeah, this is an effect we might have. But again, it's a marginal cost in comparison to where we are. And I think what we're also very focused on is to maintain our daily running expenses in this demanding environment steady. We were able to be under $10,000 on an average very diversified fleet, which includes anything from... LNGs to shuttle tankers down to DMRs. So, yes, I mean, the euro is – I mean, it's not the euro. The weak dollar has an effect on our balance.

Okay, great. And then looking into July, it looks like you're going to buy into, say, leasebacks. Can you quantify the amount you're going to spend there?

We cannot give all the secrets, but anyway, I will... Harris comes up with imaginative ways of describing things, but being from Corfu, but I would say that we are buying assets that have been working for us, that we have built on a list back, at less than 50% their current market value. Less than 50% their current market value. So it's going to be a good situation.

Great. Thanks for your help.

Thank you.

Thank you, Paul.

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Clement Mollins with Values Investor's Edge. Please proceed with your question.

Hi, good afternoon, and thank you for taking my questions. I wanted to start by following up on Omar's question on the LNG site. Could you clarify until when is the option you hold for a second new build exercisable, and how are you currently thinking about that?

No, no, no. Well, we have, as you I'm sure know or you've seen, we have our AGM nicely timed next week, just before the Posidonia events here in Greece. And I think that's when we will be discussing with our board the option.

of going forward so it won't be that long i think we'll have in the next couple of weeks within this quarter we will have we will take a decision okay makes sense and you sold your leases at very solid pricing as you think about your fleet positioning is there let's say any appetite to pursue additional sales over the coming months you have several sweat max that for max slr tools and even some smaller vessels built per 2010. How do you balance the free cash flow the air queen is generating in the market versus a potential sale?

This is a very good point. I mean, this is what we try to do is to balance. As I said, our aim is to part with our first generation vessels. And I think the market conditions today are giving us a lot of chances to do so. So we will be seeing... I would say a maximum of half a dozen sales. Don't forget we have a new building program of 26 vessels. It's the largest new building program than any of our peer group by far, thanks to our new building department here. And we have taken delivery of four of those vessels so far, two late last year and two early this year. So we still have a very, very big modernization program. So I think we will be selling at today's strong prices at least half a dozen ships from now to the end of the year.

Thanks for the call, Robert. And final question from me, which is more on the modeling side. So, Harry, this one may be for you. Could you confirm that the increase in net income attributable to non-controlling interest is attributable to the undies where you hold a 51% stake?

Sorry, can you repeat? Because you were cutting off.

Yeah, I was asking about the increase in net income attributable to non-controlling interest and whether that's attributable to the two undies.

Correct, yes.

Okay, perfect. That's everything from me. I'll turn it over. Thank you for taking my questions.

Thank you. Thank you, Mel.

We have no further questions at this time. Mr. Sackos, I'd like to turn the floor back over to you for closing comments.

Again, thank you very much for attending our first quarter results. If anybody is in Greece for the Poshyvidonia, we are having an annual meeting during that time, and we would love to host you so you could see the operation also. They have been very challenging times. We have to be continuously alert and take action, and this is what we do. We want to thank our men and women on the ships. And those that are going through difficult times, we're here to support them. And we're looking forward to announce, knocking on wood, even better results and hopefully in a peaceful environment for the second quarter. And with that, thank you very much. Enjoy the dividend. And we will also, too. Thank you.

Ladies and gentlemen this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.