Thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation Conference Call on the Third Quarter 2023 Financial Results. We have with us Mr. Takis Arapoglou, Chairman of the Board; Dr. Nikolas Tsakos, President and CEO; Mr. Paul Durham, Chief Financial Officer; and Mr. George Saroglou, 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. [Operator Instructions]. I must advise you that this conference call is being recorded today. I will now pass the floor to Mr. Nicolas Bornozis, President of Capital Link, Investor Relations Advisor of Tsakos Energy Navigation. Please go ahead, sir.

Thank you very much, and good morning to all of our participants. I am Nicolas Bornozis of Capital Link, Investor Relations Advisor to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the nine months and third quarter ended September 30, 2023. In case you do not have a copy of today's earnings release, please call us at (212) 661-7566 or e-mail at ten, T-E-N, @capitallink.com, and we will have a copy for you e-mailed 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.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 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 Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve with 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. Mr. Arapoglou, please go ahead, sir.

Thank you, Nicolas. Good morning, and good afternoon to all, and thank you for joining our third quarter results call today. Congratulations once again to Nikolas Tsakos and management for yet another set of excellent results. TEN is once again perfectly positioned to benefit from a buoyant market, a very strong market, despite a short slowdown earlier on. Typically, you have seen us gearing up, raising capital in weak markets in a countercyclical way to invest and position ourselves for better markets. And when better markets arrive, we generate healthy equity deleverage, sell all the tonnage, repay obligations and invest for sustained growth in best-in-class state-of-the-art vessels. This model successfully tested several times now coupled with superior operating performance and efficiencies, which you are familiar with, allows us to be able to maintain our unbroken record of paying dividends to reward our investors and to grow in a balanced and sustainable way. So once again, congratulations to Nikos Tsakos and his team. That's it for me for now, and I pass the floor to our CEO, Nikos Tsakos. Thank you.

Thank you, Chairman, and good morning to all of you and good afternoon to others on this side of the globe. The nine months 2023 has been a very, I would say, interesting year for our business, a year of development, a year of also growth and renewing our fleet. Looking at our results for the nine months, they are very strong, very impressive. We have been able to produce so far and the [year is not over for] (ph) in excess of $8.20 per share of net income. And I think we must be one of the few companies that will be trading at twice net income. If we continue this way, hopefully, we will be able to have a much better multiple very soon. The traditional third quarter, the traditional weaker third quarter was exactly the same this year. And we had the -- if you take -- if you exclude the all eight vessels, which we renewed our fleet with earlier in the year, we have the exact same results as we had a year ago, with a time charter average growth for the third quarter of '22 and both -- and this year of approximately averaging over the nine-month period and the third quarter period, around $31,000 per day mark. So I think the reduction in actual net income from quarter-to-quarter is actually the eight vessels missing. And I would say as Paul will come, an increase of interest rates that we are seeing in the market. However, soon after the end of the third quarter, the market has turned in a stronger-than-expected way, we are seeing the -- right now, spot market rates for every type of ship. This is the first time that every single type of vessel is earning approximately between $60,000 and…

Thank you, Nikos. Good morning to all of you joining our earnings call today. 2023, as you know, is the year we celebrate our 30th anniversary as a public company. This morning, we report the unaudited financial results for the third quarter and nine months of 2023. We have experienced, as Mr. Tsakos said, the usual seasonal summer lull, but since September, the market rebounded. And as we speak, we continue to enjoy a strong freight market as a result of robust global oil demand growth, positive tanker market fundamentals and changes in trade routes and growth in ton-mile demand. What started last year, we continue to see it. We experienced the largest change in trade flows, to ongoing crude and oil product movements as a result of western sanctions on Russian seaborne oil. And as these changes appear to be permanent because before the war in Ukraine, Europe was the biggest client of Russian oil. But as the world continues, Russia was replaced with oil from the United States of America, from West Africa, Guyana, Brazil and the Middle East, creating positive ton-mile multiplier effect for tanker demand and freight rates. At the same time, tanker new buildings continue to enjoy low single-digit growth numbers with new orders being less than 7% of the existing fleet. Many yards report availability from 2026 onwards. Global oil demand continues to grow, boosted by the post-COVID global recovery and more recently, by strong summer air travel and increased oil used in power generation and surging petrochemical activity, mainly in China. The latest November forecast from the International Energy Agency has revised global oil demand growth for 2023 from 2.2 million to 2.4 million barrels per day. And as we are 1.5 months before the end of the year, this demand growth figures…

Thank you, George. I'll just add a few words relating to the nine months ending in September in a year that has enjoyed considerable success for TEN and which continues to enjoy strong rates as the new year approaches. Net income for the nine-month period amounted to $272 million. While operating income for the nine years increased by 160%. EBITDA amounted to approximately $370 million adjusted, a significant increase by 90%. The average daily TCE for the nine months was over $37,000, up from $27,000 in the prior nine-month period, a substantial increase compared to the prior year period, helped by profit share arrangements, providing nearly $60 million in nine months and with almost every vessel fully employed apart from 7 in dry dock. Voyage revenues amounted to nearly $700 million. A 13% increase over the prior year. Our overhead expenses per day per vessel continue to remain stable at only $1.6 million. Total finance costs in the nine-month period amounted to $73 million, an aberration due to interest rate hikes and to inflationary causes. Finally, our debt to capital was about 49%. A comfortable ratio partially helped by scheduled loan repayments of $140 million and redeemed preferred shares totaling over $100 million. Our new buildings are on target to meet delivery and related financing has now been covered. Our current optimism relates partly to the forthcoming months and is supported by our significant cash reserves and a promising global decline in inflation. And now I'll give the phone back to Nikos.

Paul, thank you for your good news, and it's good that everything is adding up in a positive way. I think as it was mentioned from our President and our CFO, the current market -- the spot market is, I would say, at all-time strong high in all segments. So it's a surprising situation where both the smaller clean trade investments together with anything between Suezmax with Aframax lower earning between $60,000 to $80,000 a day on the spot. And of course, this gives us a lot of comfort with our profit arrangements and our 50% spot exposure. So having right now, 35 vessels in spot related markets, as George said, it's almost $0.20 per every $1,000, it's $0.20 to our bottom line. The result up to now of $8.18, I think is very, very positive. And very soon, this will be reflecting to our share price. And of course, it will give us more confidence to continue our dividend distributions. Looking back this year, we have already other than the $30 million of dividend that will be paid in excess of $100 million, $108 million has been paid back to our preferred -- buying back our preferred shares. And that immediately brings to a bottom line a saving of $9 million for next year. So overall we have returned more than -- in this period of time of more than $140 million back to our preferred and common shareholders. And of course, we maintain a very strong balance sheet that allows us to look at possibilities of expanding our fleet with more than tonnage. We sold eight vessels, we have eight vessels coming already took delivery of two -- two out of our 10 environmental-friendly newbuilding. The prospects going forward as our President said, we have a very low order book, increasing demand and growing great fleet that goes anywhere between 250 to 300 vessels that are not participating in the day-to-day market with the major oil companies. New legislation that is coming up that is making slow steaming and restrictions on traveling of -- or navigation positive and increase in ton miles. And of course, natural limitations like Panama Canal restrictions that are making many owners taking more ton miles and trading around the Cape. So in view for sure, I think the fourth quarter this year is going to be -- our 30th year is going to be another record year, but like last year was. And the prospects, at least for the next couple of years, considering the limited newbuilding supply are positive. And with that, I would like to open the floor in case anybody I would like to ask some specific questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question is from Sherif Elmaghrabi with BTIG. Please proceed with your question.

The first question, earlier this week, we saw some VLCCs go on multiyear time charters at above historical average rates. And obviously, you've been active in the charter market. So I'm wondering if you're seeing much interest from charters for three-year plus contracts? Or is the opportunity there pretty thin?

I would say, as we are speaking, my phone actually is ringing with charters getting messages from our charter in the department from our London office, in Singapore getting offers of this sort There is a lot of appetite right now for three to five years on modern tonnage, as we have our two Suezmax's that are being built there for next year, they are big contenders of a very strong interest for those ships. So yes, you're right, there is an appetite, there is an expectation for major oil companies that we're going to be seeing stronger rates. And I think what happened as the seasonal third quarter which is the weakest quarter, came to an end. As George said, we have seen a very strong market demand in all categories of ships. Usually, I mean the clean started going about a month ago, the clean markets started getting strong. And I think now the dirty market, when I say, the larger ships, are following up in a big way. So yes, you are right, there is a lot of demand for three to five-year employment for good quality operators and relatively modern tonnage.

And then on the clean side, a few Middle Eastern refineries have been ramping capacity are going to start ramping capacity this year and next. Has that started to shift trade flows for product tankers or are you not seeing a shift in volumes there yet?

Yeah. I mean we are seeing the larger capacity Middle East -- sorry, Far Eastern refineries filling those gaps. And that's why perhaps you have seen the LR tools which are not usually Far Eastern traders earning very healthy rates, bringing refineries to either to Europe or even to refineries in the Middle East.

That’s helpful. Thanks for taking my questions.

Thank you.

Thank you. Our next question is from Omar Nokta with Jefferies. Please proceed with your question.

Thank you. Just a couple for me. Perhaps just as a follow-up to the initial discussion on the time charters. I wanted to just sort of ask about fleet deployment from here. I know in the release, you mentioned charters being more active, looking for long-term charters, which Nik, you just highlighted again. But clearly, there's a -- with long-term contracts, there's a sign of conviction that this market is going to be elevated for time. And so in terms of how you deploy your fleet from here, you mentioned having the 35 ships on the spot market. But I guess as you think about this as we move into '24 and onwards, how do you want to deploy the fleet? Do you want to stay at spot exposed as you are currently. Do you want to shift more towards index-linked or do you prefer perhaps to secure long-term charters at fixed rates -- at elevated fixed rates?

Well, it has to do with case by case by the quality if we have a new charter or very quality with whom we do not have a very long relationship we might consider doing a longer employment. But currently, we are existing long-term business on our existing fleet because, as you said, the market is quite good. And I think we have a very good buffer on the ships that we have right now, the 33 ships that are on time charter. And I mean we're always looking at pooling and profit-sharing arrangements, which we encourage.

Okay. Thank you. And then just perhaps maybe a little bit more random, but just looking at your fleet list, there's the Lisboa, Suezmax. And if I recall, that's a shuttle tanker it rolls off charter in the first half of '25. So it's still a bit away, call it, say, a year or year plus. But I just want to know in terms of how you think about that vessel in particular. Do you think that, that ship will continue operating under shuttle tanker or do you see it penetrating as a conventional Suezmax once that contract is over?

Well, as we speak today, and we have a big team of our -- a big part of our team looking at the markets, the South American markets are not only -- I think there's a big appetite for shuttle tankers to continue their business as shuttle tankers. However, the ships we have built and operate perhaps to as efficiently as much profitably as Suezmax. But I believe that the ship will continue trading at this very demanding shuttle market that are growing right now.

Okay. Good. And then just final one for me is that, of the two MRs that you ordered recently, those delivered in 2026 for the Schedule 2. I just wanted to ask, do you have options that came with those orders. And then is there any detail you can give in terms of when you need to exercise those? Or what type -- what delivery time frames we would be looking at if you did exercise them?

Yeah. I mean we have options of our ships, and we have options for -- in the first half of next year, of dual-fuel versions of those ships also. So this is what we're -- a technical department is analyzing together with our clients.

Okay. And delivery time frame, because if I recall, you placed those orders, it was a pretty attractive delivery slot in the early part of '26. But do you still get deliveries in '26?

Later part of '26, if someone is interested for a later part of '26 vessels.

Well, thank you sir. That’s it for me. I’ll turn it over.

Thank you.

Thank you. Our next question is from Climent Molins with Value Investor's Edge. Please proceed with your question.

Good morning or afternoon. Thanks for taking my questions. I wanted to start by asking about your fleet renewal efforts. You have been clear on your intention to continue to sell older vessels and reinvest proceeds on modern tonnage. However, there haven't been many transactions on the eco side of the fleet. Do you expect liquidity to increase going forward? And secondly, how do you think about the trade-off between high asset pricing and need to renew the fleet?

So that's a very, very good question because what you usually see in shipping is that you should not be selling at the same time that you are buying. So I think your point is very well timed. However, we are a client-driven organization, we are a -- we're more of an industrial play owner. We have sold at least eight vessels since the beginning of the year at very healthy prices. And then we decided, instead of buying vessels in the spot market, to order our future with a very modern ship. So I mean as long as we are able to have good employment cover for the vessels that we will be buying that will have very good returns going forward and amortize those ships. We will still continue with this model selling all the vessel at this market and looking at good quality, perhaps dual-fuel or other vessels with solid employment that will, first of all, reduce significantly our rate profile which is already young and reduce our footprint.

That's helpful. Thank you. I also wanted to ask about operating expenses on a per day basis, which increased quite a bit quarter-over-quarter. As we think about the run rate going forward, should we expect them to trend to closer to $9,000 or $9,500 per day? And secondly, could you give us some comment on what were the biggest drivers behind the increase?

Yes. And Paul can take you more into details, but I will give you the basic ideas. First of all, is that we are right now running a fleet of much larger vessels. So I mean, that has the last year's fleet. We had our vessels were -- eight vessels of the Handysize that brought our daily operating expenses lower. This year, we had the dry docking of our larger ships in Portugal. And of course, we are having a fleet of much larger vessels. So the average naturally will go higher, but it will normalize, I think, within the year.

Makes sense. That's all from me. Thank you for taking my questions.

Thank you.

Thank you. There are no further questions at this time. I will hand the floor back over to Dr. Nikolas Tsakos for any closing comments.

First of all, thank you very much for asking. I know you're all very, very busy wrapping up for a very exciting and hopefully peaceful family Thanksgiving, and thank you for taking the time to be with us today. We're looking forward to report even better results and a very exciting full year in sometime early in the first quarter. We will be -- we are happy to have Christmas holiday dividend for everybody in December that our President has said on the 20th of December. And with that, I will ask also our Chairman, Takis, for your closing remarks, and I wish everybody a very happy Thanksgiving.

Thank you, Nikos. As you said, in view of the continued buoyant market, we expect to have very strong results for the year and equally strong results going forward. I hope that all these good prospects described today will soon be reflected in our stock price. And best wishes for a happy Thanksgiving to all. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.