Tsakos Energy Navigation Limited Q1 FY2025 earnings call

• Strong financial results driven by operating track record and market fundamentals, with $3.7 billion of future committed income from long-term charters.
• Fleet renewal with 21 new buildings, 2 delivered last week; 29 vessels extended or new business in first 6 months, half the fleet under long-term contracts.
• Diversified fleet includes shuttle tankers and LNG vessels, with a recent deal for 9 high-specification shuttle tankers in Brazil.
• High fleet utilization of 97.2% due to scheduled dry docking and increased secured revenue contracts, resulting in net income of $37.7 million.

In the first quarter of 2025, Tsakos Energy Navigation operated ~62 vessels. Gross revenues were $197.1 million, slightly down from $201.5 million in Q1 2024. The average time charter equivalent per ship per day was $30,741. Voyage expenses were $36 million, vessel operating expenses $49.6 million, and depreciation/amortization expenses $41 million. Net income was $37.7 million, resulting in earnings per share of $1.04. The company declared a first semiannual dividend of $0.60 per share. The fleet includes conventional tankers, diversified fleet with LNG and shuttle tankers, where 46% of the operating fleet has market exposure and 83% is in secured revenue contracts.

• Expect to sell at least half a dozen ships by the end of 2025, releasing approximately $100 million in cash.
• Aim to maintain or increase the dividend, with the second half dividend expected to be similar to the first half.
• Discussions on potential spinoff of the LNG and shuttle tanker fleet, which has a significant cash flow over the next 12.5 years, to enhance valuation.

• Geopolitical uncertainties impacting shipping operations and market conditions.
• Volatility in the spot market despite strong fundamentals affecting revenue.
• Market conditions affecting new build costs and financing for fleet renewal.

Q: Can you just highlight what the second quarter new build costs will be?

A: For Q2 2025, one DP2 vessel has a holding cost under $130 million, with ~$17 million remaining to be paid out of equity. There's a $67 million second installment on 9 new built DP2 shuttle tankers due in July.

Q: How would you characterize the bid ask in the S&P market for VLCC's?

A: Looking for good quality Korean or Japanese vessels; newbuild prices from top yards have reduced, and we're seeking such opportunities.

Q: What's the fleet strategy regarding selling older assets?

A: We're looking to sell at least half a dozen ships by the end of 2025, releasing close to $100 million in net cash flow.

Q: What's the outlook for the second half dividend?

A: Hoping to have at least a similar dividend to the first half, though it's still under discussion.

Q: Any corporate actions to close the price to NAV gap?

A: Discussions on spinoff of LNG and shuttle tanker fleet with significant cash flow, buyback not feasible due to share structure; focus on EBITDA multiples rather than net asset value for valuation.