Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tsakos Energy Navigation Ltd (TEN, Financial) increased its dividends by 50%, offering a substantial dividend yield.
- The company has a strong cash position and has significantly paid down debt.
- TEN has secured nearly $2 billion in forward contracted revenue, ensuring stable future income.
- The company is expanding its fleet with state-of-the-art vessels, including dual fuel vessels, enhancing its operational capabilities.
- TEN has a diversified and high-quality client base, including major energy companies like ExxonMobil, Equinor, and Shell.
Negative Points
- The company's share price has experienced significant profit-taking, impacting its market valuation.
- TEN's fleet utilization decreased to 92.2% due to scheduled dry dockings, affecting operational efficiency.
- Interest and finance costs increased due to new loans and elevated global interest rates.
- The company faces challenges from geopolitical uncertainties, such as potential sanctions affecting global oil flows.
- General and administrative expenses increased substantially, attributed to a one-off share incentive plan.
Q & A Highlights
Q: Can you provide insights on how potential tighter sanctions on Russia, Iran, and Venezuela might impact your operations?
A: Nikolas Tsakos, CEO, explained that while shipping thrives with open borders, current sanctions benefit first-class companies by reducing competition from older, less compliant vessels. He noted that a significant portion of the global fleet is a "gray fleet," which does not compete with high-quality operators like TEN. Sanctions, therefore, have a positive impact by limiting competition from these older ships.
Q: Regarding your new build program, how much capital expenditure is expected for the remainder of 2024 and into 2025?
A: Harrys Kosmatos, Co-CFO, stated that approximately $21.5 million is expected for the fourth quarter of 2024, with about two-thirds financed through bank debt. For 2025, around $100 million in equity payments is anticipated, contingent on bank loans.
Q: Could you discuss the contracts for the two Suezmax newbuilds scheduled for delivery in 2025?
A: Efstratios Arapoglou, Chairman, mentioned that these vessels have secured three to five-year contracts with a major client. The contracts are highly accretive, with rates nearly double the breakeven cost, promising significant income and cash flow.
Q: What is the outlook for dry docking and commercial off-hire days in the fourth quarter and 2025?
A: Harrys Kosmatos, Co-CFO, indicated that three to four vessels are scheduled for dry docking in Q4 2024, with similar utilization expected as in previous quarters. For 2025, approximately 10 vessels will undergo dry docking, with no anticipated surprises in commercial off-hire days.
Q: There was a notable increase in general and administrative expenses. Is this a one-off, or should it be expected to continue?
A: Nikolas Tsakos, CEO, clarified that the increase was due to a share incentive plan for personnel, making it a one-off expense. G&A expenses are expected to revert lower in the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
