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spk04: Thank you for standing by, ladies and gentlemen, and welcome to SACOS Energy Navigation Conference Call on the fourth quarter 2022 financial results. We have with us Mr. Takis Arapoglou, Chairman of the Board, Dr. Nicholas SACOS, President and CEO, Mr. Paul Durham, Chief Financial Officer, and Mr. George Saraglou. Chief Operating Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you would like to ask a question, please press star one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. And now I will pass the floor to Mr. Nicholas Bournosis, President of Capital Link, Investor Relations Advisor of Socos Energy Navigation. Please go ahead, sir.
spk02: Thank you very much, and good morning to all of our participants. I'm Nicolas Bernards of Capitalink, investor relations advisor to Chakos Energy Navigation. This morning, the company publicly released its financial results for the fourth quarter and year-ended December 31st, 2022. 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's 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 contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Security Litigation Reform Act of 1995. Investors are concerned that such forward-looking statements involve risks and uncertainties which may affect terms, business, prospects, and results of operations. And before passing the floor to Mr. Arapoglou, I would like to... We're looking forward to having Dr. Tsakos with us at the Catalink Forum in New York next Monday, and I would like to congratulate him for being recognized as the Person of the Year by the Hellenic American Chamber of Commerce next Friday in New York, recognizing and honoring his contribution to global shipping to Greece, and also recognizing the fact that 10... is the longest-listed Greek company on the New York Stock Exchange. And this recognition coincides with record profitability, a record year for 10. So with that, I will pass the floor to Mr. Arapoglou, the chairman of Tricos Energy Navigation. Please go ahead, Mr. Chairman.
spk05: Thank you, Nicholas. Good morning and good afternoon to everyone. Thank you for attending our call today. Please excuse my voice, which is due to a type of cold that can't be managed. We have passed a quarter and full year. The record resides in books since inception, celebrating with a very healthy dividend increase. I need to remind everyone of the PEN model, which mitigates negative results in bad markets and allows the company to benefit from strong markets. Indeed, this model has allowed PEN to pay an interrupted dividend since inception, and at an average over the year's payout ratio of over 22% of earnings, I will show you the cycle a few minutes later. The main driver of these stellar results, apart from, of course, the otherwise very unfortunate geopolitical events, are the market fundamentals we were all expecting to gain in quite some time now. So, congratulations are in order. Once again, we meet with Sarkozy and the management team, which, apart from operational excellence, is dynamically pursuing the P2 mode, producing debt, and keeping a tight course to benefit from what seems to be a sustained strong market despite a recessionary expectation. All this potential has been firmly recognized by the market and is reflected in our stock's performance in recent months. So again, well done to all, and we look forward to the continuation of Tim's possible journey going forward. Thank you, Erlan and Revit. Over to Nikos Akos.
spk06: Thank you. Thank you, Chairman, and good morning to everybody, or good afternoon if you're on this side. And we would like to welcome you on our 2022 year and call. As the chairman said, Nick, thank you very much for reminding us that we are the oldest and the greatest here of the Greek companies on the New York Stock Exchange. But I think that's a great privilege and great honor, and we're looking to be able to celebrate with you quite soon the event. And it coincides with a very good year, a record year. But I think whenever we talk about a record year, people get a bit worried, thinking that we have really reached a peak. This is something that we hope, as we can see from the fundamentals and the actual market conditions that we're facing right now, that 2023 has started as an even stronger year than 22 has done so. By coincidence, we will be celebrating 30 years as a public company, started on the Oslo Stock Exchange in 1993. So we hope, as our CEO has said, that we can see the share above the $30 within our 30th anniversary. And looking at where we are today, TEN has maintained this model of being able to grow, thrive, and prepare the grounds during difficult markets, because the time you want to be investing in assets is when nobody wants to invest. And we have been able to achieve this with following our model and luck, of course, and then to thrive during the good times. Ten has never stopped paying a dividend, has never stopped reducing debt, had never had to reconstruct any of its loans. And, of course, this gives a lot of confidence to our clients, and that's why we are a client of choice in good and bad times. This is actually...we are going through our fifth... through our fifth crisis, which started with the Far East in the 9-11 crisis, the credit crisis of 2008, which I hope we're not touching again. COVID hit us back in 2020, and then the invasion of Ukraine. But through all this crisis, the company has been able to maintain a dividend and invest at the low points of the cycle, and then be able to take advantage of and be able to monetize part of it. That's what we have been doing. The beginning of 2023 has been a very busy year. I think we have never seen so many sales and purchase transactions in buying and selling ships. I think we have already done 18 of those transactions in less than three months, of which... eight vessels were sold and ten vessels were ordered and bought. So I think quite busy and this prepares the company for an exciting first quarter. It seems that this first quarter is as strong as the fourth quarter to say the least. Big appetite by clients to renew even vessels, seasoned vessels from good stables like ourselves. And I would ask Paul who would like to give us a little bit of the numbers, and then George to give us how the year went?
spk00: Yeah, by all means. Sure. So, the fourth quarter of 2022 resulted in net income of over $100 million, bringing our net income for the year to over $204 million, a new record for the company since 2008. EBITDA increased to almost $160 million in the quarter, adding to our cash reserves for the year end, reaching a staggering amount of over $300 million by the end of the recent year, due mainly to the impact of the events in Eastern Europe through most of 2022. And since the end of the year, our cash reserves have continued to increase, taking into account sale of vessels. Revenue in quarter four totaled over $270 million, a 94% increase over the prior year. Time charters generated about $460 million in the year, while total revenues in the year amounted to $860 million, of which $55 million related to profit share. Total operating income in the quarter amounted to $122 million compared to a loss in the prior fourth quarter. In 2022, operating income reached $256 million compared with a loss of $120 million in the prior year. With 66 vessels operating our average daily time charter equivalent, in the quarter was almost $40,000 in a market that effectively operated with full employment for our vessels at 97%. Only two of our vessels were in dry dock in the quarter, but in the year, 16 vessels undertook dry dock. While certain expenses had increased due in part to the new vessels that incur higher operating expenses and to various other price increases, However, our time charter revenue alone was able to cover all our expenses and still leave significant amounts of free funds. All our new vessels and orders are financed, except to the latest orders, and all new buildings are expected to generate strong rewards over the forthcoming years. In the meantime, the company will continue, as always, to ensure perfect debt service. Given our cash availability, use of funds will be high on management's financial priorities. And in this respect, we are already preparing plans accordingly regarding the company's future. And those are my basic comments. Please note that we shall be filing our 20F shortly, in which there will, of course, be substantial information included. Thank you, Paul. Good morning to all of you joining our earnings call today.
spk01: Last year we had experienced the largest change in trade flows to ongoing crude and oil product movements due to a political action, the war in Ukraine, and the sanctions that followed on Russian seaborne barrels. creating a positive ton-mile multiplier effect for tanker demand and rates. At the same time, tanker new buildings are at an all-time low, 30-year low. And global oil demand is coming back after the COVID pandemic. In fact, despite the ongoing energy transition to renewables, the world understands that its reliance on oil and LNG will last longer, possibly at least until 2050. especially despite global stronger thanks to its operating model. This time is no exception. We manage the COVID pandemic without any serious effects for both fleet and offshore operations, and we are currently navigating the challenges created by the war in Ukraine and the inflationary pressures on costs. The market fundamentals, record low water book, and an aging fleet, even without avoid distance and length. When we listed the company, We should note here that Maria Energia's 2016 built LNG is fixed to a minimum 12-year time charter to a leading Asian natural gas operator at a rate reflecting of current market conditions in the LNG sector. The vessel is expected to be delivered to her new charter upon completion of the existing time charter in 2026. Split modernity is a key element of our operating model. During 2022, we sold and took delivery of three modern vessels. Two new new buildings in January of 2020 On the new building front, we announced today Thank you. low-cost base. We have a simple operating model. We try to have our time-chartered vessel generate revenue to cover the company's cash expenses, paying for the vessel operating expenses, finance expenses, overheads, chartering costs and commissions, and let revenue from the spot-trading vessels opportunistically contribute to the profitability of the company. Despite the prevailing inflationary is an integral part of the company's capital allocation strategy. The company's debt peaked in December of 2016. Since then, we have repaid 360 million of debt and repurchased 100 million in two series of step-up preferred shares that we had outstanding. In addition to in 2002. Global oil demand continues to recover as the world emerges from the COVID pandemic. China recently changed their strict zero-COVID policy. This policy change should have a very positive impact on Chinese and global oil demand in 2023. Despite financial and geopolitical headwinds, As global demand continues to grow, let's look at We have upcoming regulations, an industry with decarbonization initiatives, and almost 10 percent of the fleet being over 20. We think that all these factors point to a balanced tanker supply market for the years ahead. And with that, I will return the call back to Nikos for the Q&A. Thank you.
spk06: Thank you, George, for giving us a full picture of quite an exciting year. And a lot of excitement, as I say, has begun with 2023, where market fundamentals are remaining strong. There is a weakness in the price of oil. It is, I think, a welcomed and positive for the tanker industry. And I've been saying this for as long as Mr. Bornozzi said. We've been on the New York Stock Exchange and all stock exchanges. that there is always a correlation, a reverse correlation with tanker rates and the price of oil. So I think what we are seeing in the recent weeks, the normalization of the price of oil. We are in a low inventory environment. The world has suffered from high oil prices in the last at least four quarters. So we see that the correction and the price of oil becoming to more affordable levels for the world is going to drive more business for ourselves. And we see this in the demand from every single oil major for long-term businesses that I don't think we'll ever see again. I mean, as you know, we do most of our business on profit-sharing arrangements, but today every LCC could easily go for a year close to $70,000, as well as max about $50,000 to $60,000. And these are also for a couple of years. So there is positive environment for where we're going forward. And that's why we took the opportunity to order vessels of new generation that will be able to fulfill the requirement of the major oil companies. I think right now we are having a balanced profit-sharing and sport environment. Our LNGs, one of our LNGs is opening in the next couple of months, and she's going to be earning a significant... I think she will add at least... another by itself and close to a dollar a year of net income by her new charter. So that's a very positive situation going forward. And we will be welcoming our new vessels as of October of 2023, the first of our dual-fuel We took the opportunity to sell our ordered product, thank you, at prices that we did not expect to ever see again, not far from the original purchase values some time ago. So we are renewing that part of the business going forward. Looking back and in view of our presentation next week, we have seen that 10 percent of through the years, including this year, has made a net income over the last 20 years on the stock exchange of $2.3 billion U.S. dollars in a very cyclical market, and has paid dividends of in excess of half a billion dollars, as our CEO said. And we are looking at this trend. We hope that this trend to continue, at least for the foreseeable future for us and, of I would like to thank all of you for your support over the last 20 years. It has been an enjoyable ride. And looking forward for a few more years of excitement. And I would like to open the floor for any questions.
spk04: 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. The 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 key. One moment, please, while we poll for questions. Thank you. Our first question is from Clement Mullins with Value Investors. Please proceed with your question. Clement Mullins, Value Investors.
spk03: Good morning. Thank you for taking my questions. I wanted to start by asking about the dividend you announced today. How should we think about it? Because on the Capital Link event in January, you mentioned that TMP really intends to distribute between 25% and 50% of net income during the mood times. Is that still the board's intention?
spk06: Yes, I mean, this has always been... Thanks for... Good morning to you, and thanks for your question. If you look... But the historical figures I announced, out of 2.3 billion of net income, we have already distributed to be accurate 570. So that's about 20, close to 30, between 25 and 30 percent. And yes, we will maintain the same policy and always build up cash. I believe that we... If things continue, we will be close to half a billion dollars of liquidity within this year, which I think will give us a lot of security going forward and a lot of ammunition to invest in new and more environmentally friendly vessels.
spk03: And further, during the quarter, you issued 570,000 shares for 10.4 million. Could you provide some insight on the reasoning behind that decision? And looking ahead, should we expect additional ATM usage?
spk06: That was a program that we had to complete within the year. That was a decision taken in the early parts of 2022. And it was completed with the liquidity that the company is building up on a daily basis. I don't foresee any similar transactions now that this program has been completed.
spk03: That's helpful. Thank you. And final question from me. You mentioned the new contract on the Neo Energy will add at least another dollar in net income by itself. Could you provide some additional commentary on the terms of the new contract, for example, the TCE or the contract duration?
spk06: We are looking at yearly contracts in excess of $100,000 a day. But that's about 36 million. Or if we decide to do a two-year contract, about $85,000 a day. So, you know, that's how we come to the figure I mentioned to you. Makes sense. So it's not fixed yet, right?
spk03: Exactly. All right. Thank you for taking my questions and congratulations for the quarter. Thank you very much.
spk04: As a reminder, if you would like to ask a question, please press on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Dr. for any closing comments.
spk06: Well, first of all, thank you for supporting the company over this year. We are actually looking at this, and I know whenever someone talks about a very strong quarter, you have people thinking that the market has picked. The solid fundamentals that I think our CEO presented, and I think you are all familiar with the market, shows that we are in the tankers in a situation... because of the lack of knowledge of what actually compulsion engines or vessels should be designed or built with, there's the lowest replacement program or new building program since I've been in business in 30 years. I think the whole industry, the whole tanker industry is close to 4 percent, and I think segments, the big segments close This is unprecedented. And without any growth in trades, that would signal a very strong market going forward, because, as you know, it takes at least three years to build the ship if someone decides to do so. So we are in for a healthy period going forward without the need of any geopolitical circumstances that create the requirement for more ton miles. So whereas we are always preparing the company to be able to absorb any shocks that might arrive, and we have proven that we're very proud of that record, I think we will be able to harvest everything that we have planted. the eight new ships, plus two vessels that have been added in our fleet in the recent couple of weeks, to grow the earnings in the first quarter and going forward. And we are the major shareholders in the company, and we feel very correct and very right to be able to reward our shareholders with a very dramatic and significant increase of our dividend. And if the market continues, hopefully we can have another increase later in the year. And with that, I would ask Mr. Arapoglou to wrap up.
spk05: Thank you, Nicole. The message is that it is not a flash in the pan. The market continues as strong as it used to be at the end of last year. And Penn is ideally positioned to capture all the benefits going forward. So with that, thank you all for attending today's meeting. And all the best. Thank you.
spk06: Thank you, and see you next week in New York. Thank you very much.
spk04: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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