Tsakos Energy Navigation Limited Q2 FY2025 earnings call

• Tanker markets have remained healthy, with energy majors approaching for time charter business. Total fleet contracted revenue backlog is approximately $3.7 billion.
• The company has a pro forma fleet of 82 vessels, with a focus on fleet renewal, having sold older vessels and ordered new state-of-the-art ships. They ordered 3 new VLCCs with scrubbers to rebalance the portfolio.
• Fleet utilization increased from 91.9% in the first half of 2024 to 96.9% in the first half of 2025, with a shift to more secured revenue contracts. Spot contracts declined while time charter and profit-sharing contracts increased.
• The company paid its first dividend in July and plans to announce the next dividend in November. It is a preferred carrier to energy majors due to its fleet, operational/safety record, disciplined financial approach, and strong balance sheet.

In the first half of 2025, Tsakos Energy Navigation's fleet of 62 vessels generated $390 million in gross revenues, averaging $30,754 per ship per day. During the second quarter of 2025, the fleet generated $193 million in gross revenues, averaging $30,767 per vessel per day. The company sold 17 vessels with an average age of 17.3 years and capacity of 1.4 million deadweight ton and replaced them with 33 contracted and modern acquired vessels. In the first half of 2025, net income was $64.5 million or $1.70 per share, and in the second quarter, net income was $26.8 million or $0.67 per share. The fleet has a solid balance sheet with strong cash reserves, fair market value of the fleet at $3.8 billion against $1.8 billion debt, and net debt to cap around 42%.

• The Board is expected to opt for a healthy dividend, looking at the healthy market conditions.
• Optimistic about the VLCC market with appetite for their vessels, and expecting solid results moving forward, with actions from the US administration supporting shipping potentially being beneficial.

• Market uncertainties due to sanctions, tariffs, wars, and geopolitical events affecting the tanker market.
• Volatility in the spot market, though the company has limited exposure but continues to manage accordingly.

Q: Can we talk about the new build orders for the VLCCs? As you mentioned on the last quarterly call, you previewed -- it seemed to preview that. Can you talk about how you decided to go forward with new builds versus acquiring assets in the open market?

A: We are always looking for good quality vessels in the open market but found it better to build new ones as the secondhand market was pricey. We have experienced new building site offices in Korea and Japan and are building environmentally friendly vessels in first-class Korean yards.

Q: Could you clarify whether you exercise the option that you had when you first announced the VLCC new builds? And then secondly, typically, you -- when you have a newbuild, you typically have a contract or a time charter set up in advance of delivery. Do you currently have a time charter in place? Or when do you anticipate securing a time charter for the Vs?

A: We opted for the option and have an extra option for another couple of months. The VLCC market is hot, we have existing VLs opening in the next 6 months with appetite, and we are in the process of renewing existing VLs, but it's early to decide on time charters for new orders.

Q: Could you preview -- I know that you talked about declaring the second half dividend in the November time frame. Can you preview it at this point in time? Or is it just too early?

A: It is early, but we are looking at a healthy market and expecting the Board to opt for a healthy dividend.

Q: On the last call, you talked about potentially given the current valuation in the equity market, you talked about potentially restructuring the company or looking at alternatives maybe splitting the company into a company that has twofold: 1 with long-term time charters in place, especially on the -- when you look at the shuttle tankers versus assets that have shorter-term time charters. Any progress or any comments on that type of move?

A: We are not restructuring the company. We are thinking of ways to make it more efficient for shareholders, but there's nothing imminent for the next 4 quarters.