Tsakos Energy Navigation (NYSE:TEN), a prominent player in the energy transportation market, has reported a strong financial performance for the first nine months of 2024. The company's strategic positioning and robust business model have led to significant revenue and income growth, alongside a substantial dividend increase.
Key Takeaways
- TEN generated $606 million in gross revenues, with an operating income of $236 million.
- Net income stood at $157 million, translating to earnings per share of $4.62.
- The company announced an increased dividend of $1.50 per common share, yielding approximately 7.5%.
- TEN's fleet consists of 74 vessels, with a high utilization rate of 92.2%.
- Long-term employment and profit-sharing arrangements contribute to 60-70% of the company's income.
- Key clients include major industry players such as ExxonMobil (NYSE:XOM), Equinor, Shell (LON:SHEL), Chevron (NYSE:CVX), Total Energies (EPA:TTEF), and BP (NYSE:BP).
- The company has a cash balance of $386 million as of September 2024.
Company Outlook
- TEN is committed to fleet renewal and modernization, ensuring operational excellence.
- The company is exploring opportunities in potential reconstruction markets.
- A non-deal roadshow is planned in the United States for early December to maintain shareholder value.
Bearish Highlights
- No bearish financial highlights were reported for this period.
Bullish Highlights
- TEN's focus on becoming a leading dual-fuel operator is underscored by the addition of 6 LNG-powered Aframax vessels.
- Secured forward contracted revenues amount to approximately $1.8 billion.
Misses
- The earnings call transcript summary did not indicate any misses.
Q&A Highlights
- CEO Nikos Tsakos emphasized the company's long-term vision, likening TEN's legacy to that of Patek Philippe watches, suggesting a focus on generational sustainability.
- Tsakos also highlighted the importance of peace for the shipping industry, indicating that stability is beneficial for business.
In summary, Tsakos Energy Navigation (TEN) has demonstrated a strong financial performance in the first three quarters of 2024, with a focus on fleet diversification and strategic client relationships. The company's emphasis on dual-fuel technology and long-term contracts has positioned it well within the energy transportation sector, and its financial health is evidenced by a significant dividend increase and a solid cash balance. Looking ahead, TEN is set to continue its growth trajectory while exploring new market opportunities and prioritizing shareholder value.
Full transcript - Triple Energy Ltd (TNP) Q3 2024:
Conference Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Tsakos Energy Navigation Conference Call on the Q3 2024 Financial Results. We have with us Mr. Saki Zaropoglou, Chairman of the Board Mr. Nicholas Fakos, Founder and CEO Mr. Paul Durham, Chief Financial Officer Mr.
George Sarogou, President and Chief Operating Officer and Mr. Harris Kosmatos, Co CFO 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. I must advise that this conference is being recorded today.
And now I pass the floor to Mr. Nicholas Bornosas, President of Capital Link and Investor Relations Advisor for Tsakos Energy Navigation Limited. Please go ahead, sir.
Nicolas Bornoides, President of Capital Link, Investor Relations Advisor, Capital Link: Thank you very much, and good morning to all of our participants. I am Nicolas Bornoides, President of Capital Link and Investor Relations Advisor to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the 9 months in the Q3 ended September 30, 2024. In case you do not have a copy of today's earnings release, please call us at 212 661-7566 or email us at 10capitallink.com and we will have a copy for you emailed 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 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 also the 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 risks and uncertainties, which may affect Penn's business prospects and results of operations. Before passing the floor over to Mr.
Ara Pompano, the Chairman of Tsakos Energy Navigation, I'd like to congratulate the company for being awarded tanker operator of the year after the inauguration of the first private naval academy in Greece that shows the efficiency of the company's operation and also its focus on the welfare of the crews. And with this, I would like to pass the floor to Mr. Ara Pohu, the Chairman of Tsakos Energy Navigation. Please go ahead, sir.
Ara Pohu, Chairman, Tsakos Energy Navigation: Thank you, Nicholas. Good morning and good afternoon to all. Thank you for joining our call today. In a market admittedly off its earlier peak, yet still with firm business and geopolitical fundamentals, TEN continues to be sustainably profitable, steadily generating equity, maintaining its healthy cash position, increasing its dividends by 50%, offering a substantial dividend yield on today's price and continuously renewing and increasing its fleet with state of the art vessels. The company's industrial model characterized by nearly $2,000,000,000 of forward contracted accretive revenue and proven operational excellence ensures the continuation of its stable sustainably profitable performance and the rewarding of its shareholders handling market cyclicality in an efficient way.
So congratulations are again once again in order to Nikos Tsakos and his management team on this performance and best wishes for more successes going forward. And with this, thank you and over to Mr. Nikos Tsakos.
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Thank you, Chairman, and good morning and good afternoon to all our listeners. It has been a positive 9 months, and I think it has been a 9 month milestone growth period for the company. We have been given the ability to reallocate some of our older assets, monetize them and move forward with state of the art new vessels, a 21 new vessel program, acquiring 5 vessel company earlier in the year, taking delivery of dual fuel vessels. And we're still with 12 vessels to be taking delivery starting from April 25. We're going to be taking over 3 or 4 vessels within 2025.
So it's a very active period for the company, and we've been able to be active, increase liquidity, significantly pay down debt, continue and increase our dividend policy, both for the common and for the preferreds. And we are facing an environment where there is a huge appetite for our services by our major clients. About 60% of our business is being provided by 6 major energy companies. I think Action (WA:ACT) is in the forefront, followed by Equinor, Total, BP and Shell, all of them first class names to we were very proud to be partners in energy transportation going forward. There is a big appetite for good quality ships.
We are at the crossroads of technology change in our business. And the prospects, the medium or long term prospects of the business are positive, I think, as we have stated in our press release. However, the we as a company, as the Chairman said, we have been trying to take the edges out of cyclicality, and I think we have been successful for the 1st 31 years so far, never stopping paying dividends through difficult even through difficult markets. And I think our President is going to take us through all the cycles we've been through, but always coming out stronger as a company in every respect. However, our share price, which peaked sometime in the summer, there has been quite a lot of profit taking from that, which I think we're very positive to see PPE because we have been a company that back in 2019, together with the whole industry, we're trading in single digits.
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: So we're almost tenfolded.
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: There's a lot of profit trading, but we still believe that we're trading not more than 2 or 3 times earnings, where all our clients to whom we represent have an average of at least 10 times earnings. So we do not expect to immediately trade at 10x earnings, but that means double of where we are today. I think it's a fair valuation, and we are aiming to achieve this by explaining the different model, the industrial model of 10, which we are actually an industrial mover of energy for the major oil companies. As I said, milestone 2024 so far, big growth, very exciting prospects going forward. The business at least close to $2,000,000,000 of new business coming in.
We have significantly increased our rates from all the 30 vessels we renewed with the chartering department. And with that, I will ask our President to give us a quick overview of what's going on with the company. Thank you, George.
George Sarogou, President and Chief Operating Officer, Tsakos Energy Navigation: Thank you, Nikos, and good morning to all of you joining us for our earnings call today. 2024 continues to be a good year for tankers and for TEN for the same reasons that played out for the last two and a half years. We have one of the largest and most established energy transporters worldwide. We had transported 460,000,000 barrels per day in 2023 safely.
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: That's a slight number of reasons. Slide number
George Sarogou, President and Chief Operating Officer, Tsakos Energy Navigation: 3, yes. That's about 23 days of U. S. Consumption or 5% of global oil consumption. We have celebrated 31 years in the public markets.
And since our listing in 2,002 in the New York Stock Exchange, we have paid uninterrupted dividends to our common shareholders. We have built a big modern diversified fleet. We have developed an industrial shipping model. And we have one of the highest repeat caliber clients with ExxonMobil leading the way with 22% of the revenue, followed by Equinor, Shell, Chevron, Total Energies, BP and Orens. We have as we have embarked in our decarbonization journey and started our green energy program, we have we find ourselves in 2024 as one of the largest dual fuel operators with vessels in the water.
We have 6 LNG Aframax powered vessels. And being the carrier of choice of energy majors for their transportation requirements. We continue to fix vessels whose charter expires or book new business. And currently, the backlog that we have is $1,800,000,000 This is minimum secured revenues as some. The majority of these fixtures have also some profit sharing element, and these charters have an average duration of 2 years.
Thanks to the fleet to our fleet modernity and the efficiency of our and the efficiency of our technical managers and their purchasing power, the economies of scale, we have one of the high very high fleet utilization in excess of 92%. And we have a company built with very solid balance sheet. Our fleet fair market value is around 4,000,000,000 dollars We have low debt of 1.8 and we have 30,000,000 common shares outstanding and the Tracos family and the management of the company are strong supporters with 30% plus of the shares outstanding in them. Despite being a top of class operator, we have the valuation of the company is low, very low. 2023, the earnings per share returned $9.04 And so we trade at 2x and a bit over 2x earnings when our major clients trade at least 10x earnings.
Moving on to the next slide. We have been TEN was created in the aftermath of OFA-nineteen, which is the regulation for the double hull for the introduction of double hull vessels. Since then, we have faced 6 major crisis, and we managed every time to come out of its crisis stronger and bigger. If we look at the fleet that we have built today in Slide number 5, you see a very diversified fleet that caters to the needs of our clients, spanning from crude carriers to product tankers, LNGs and shuttle tankers. Today, we have a pro form a fleet of 74 vessels, 62 operating in the water and 12 new buildings under constructions.
The red and the blue colored vessels in the slides denote vessels trading in the spot and period market with profit sharing, while the black colored vessels on fixed time charter. As you can see at the bottom of the slide, 31 out of 62 vessels in the water have market exposure, that's 50%. This is spot and vessels with profit sharing arrangements. And 49 out of the 62 vessels in the water or 79% are in secured employment at time charters and time charters with profit sharing. The next slide basically shows our access to our capital markets.
We have grown the company since you see in blue the capital the common capital raising that we have and the red is with through the preferred shares. We have retired 4 series of preferred shares for 223,000,000 dollars And we have used the capital markets as a growth engine for our fleet renewal. We have built an industrial model in Slide 7, as you can see, with the list of our charters. As you can see, this is a blue chip client base with the biggest client being Exxon, followed by Equinor, Shell, Chevron and Total. We have on Slide 8, the left side of the slide shows you the all in breakeven cost for the vessels on a net income basis.
Basically, the time charter vessels serve to cover the expenses, the operating expenses, the finance expenses and all the other overheads that we have, while the spot trading vessels basically serve for the upside and the dividend distributions to our shareholders. For every $1,000 increase in spot rates, this has a positive impact of $0.16 in annual EPS based on the current vessels in the spot market as of 9 months of 2023. Margin debt is an integral part of the company's strategy and capital allocation. We have grown the fleet significantly with larger, more specialized vessels. The debt levels have remained more or less at a level that is very manageable.
The net debt to cap currently starts at 44%. This shows the fuel the next slide, Slide 10 shows the fleet renewal and greenship growth since January 1, 2023. We have sold 13 vessels with an average age of 17.5 years and 1,000,000 total deadweight ton and have replaced them with 21 vessels with an average age of 1 year and 2,300,000 deadweight ton. This doubling in quality and the size of the fleet will help the company springboard the next growth phase. How this thing translate financially?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Harry?
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: So I guess I'll take you over the financials on the Thank you, George. Thank you, George. I'll take you over the financials of the 9 month and the 3 month results. So during the 1st 9 months of 2024, 10 operated 62 vessels, 3 more the equivalent 2023 period, of which 11 underwent the scheduled dry docking. As a result, the correspondent fleet utilization for the 2024 9 months was at 92.2% from 95.6% during the same 2023 period.
As Energy Major's appetite for term employment increased, emphasis was placed on attaining such secure revenue contracts to take advantage of the elevated rates offered and as a result, the mix between secure revenue and spot related charters was revised. 82% 45% fixed versus spot for the 2024 9 months as opposed to 77% 54% for the 2023 equivalent period. In this backdrop and in a somewhat well in Chinese oil imports environment, something which lately seems to be reversing, TEN in the 1st 9 months of 2024 generated gross revenues of $606,000,000 and operating income of $236,000,000 which included about $49,000,000 of capital gains. Fleet operating expenses of $170,000,000 dollars 147,000,000 increased in line with the larger number and size of vessels in the fleet after the various acquisitions and divestments during the 9 month period. Operating expenses per ship per day, however, was 3.3% lower from the 2023 9 months at 9,306, thanks again to efficient management performed by TENS technical experts onshore and on board the vessels.
Time charge equivalent per ship per day during this period impacted by the aforementioned dry dockings and less days in market related contracts settled at a still healthy 33,390, 3.6 times higher the above daily vessel operating expense rate. Reflecting all the above, a net income of $157,000,000 was recorded for the 1st 9 months of 2027, generating EPS of $4.62 Adjusted EBITDA for the 2024 9 months was at $314,000,000 Interest and finance costs of $87,400,000 during the 2024 9 months reflected the new loans for vessel acquisitions and new building deliveries as well as continuing elevated global interest rates. Despite the material drop in spreads, TEM has achieved due to its pristine track record on its debt obligations. However, this inevitable and controlled cost increase was to a large extent mitigated by about $4,000,000 in reduced coupon payments on outstanding preferreds from the amount paid during the equivalent 2023 9 months and $5,000,000 savings in forward bareboat hire from the repurchase of 2 Suezmaxes on leasing contracts in the summer of 2024. CashCall Bank at the end of September 2024 was at $386,000,000 $9,500,000 higher from the December 2023 level.
And that is after having paid $258,000,000 for common and preferred dividends for growth projects and the exercise of the above lease and repurchase options. Now the results for the Q3 of 2024 were equally attractive, considering that 3 out of the 11 vessels that underwent drydocking happened during this quarter. A fleet of 62 vessels as opposed to 58 in the Q3 of 2023 generated gross revenues of 200,000,000 and operating income of $57,000,000 compared to $187,000,000 $53,000,000 for the Q3 of 2023, respectively. Neither of these two comparable quarters have gains or losses from vessel sales. Fleet operating expenses of $49,000,000 for the Q3 of 2024 were $1,600,000 lower from the 2023 Q3 level, despite the 3 drydock as mentioned above and the larger fleet size both in terms of numbers and deadweight.
Operating expenses per ship per day were at $9,188 almost $1,000 lower than 2023 Q3 number. Time charge equivalent per ship per day closed a quarter 3.5 times above the OpEx number at $32,539, about $1200 higher compared to last year's Q3. The resulting net income of $26,500,000 producing earnings per share of $0.06 $7 reflected the $5,000,000 increase in depreciation and amortization costs the larger fleet entailed. Adjusted EBITDA finished the quarter at $100,000,000 $8,500,000 above the level of the 2023 Q3. As of September 30, 2024, the fleet's fair market value was about $4,000,000,000 and total debt, dollars 1,800,000,000 dollars corresponding to the higher fleet size as a result of 4 dual fuel LNG powered Aframax newbuildings and 5 more than secondhand vessels entering the fleet.
At the same time, net debt to capital remained at a very comfortable 44%. In ending and supported by the aforementioned results, TEN will pay a second semiannual common stock dividend of $0.90 on December 20, 2024, bringing the total distribution for 20.20 to $1.50 per common share, 50% higher than 2023 amount, yielding approximately 7.5% on today's price. And with this, I'll turn it back to Nikos for the closing remarks.
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Thank you, and thank you for describing a very busy period in a very efficient and timely way. I think what is important is that we are maintaining
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: our industrial
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: energy transportation model. We try to take enough advantage of the upside where the market is, but we always and I think what is important of our long and continuous dividend payment, if you go back to the expenses side, and I think this gives a very good description of last year. This is Slide number 8. I mean, the way we have been able to go on for the last 31 years, we make sure that our 1st class charters, who are more than I think 60% or 70% of our income comes from long term employments and profit sharing arrangements, they cover all. And when I say all our obligations, including depreciation, our interest, paying down depreciation and debt repayment for us is very similar because of the modernity of the ships that we have.
So that's how we refer. I mean, we might not be the most exciting shipping company out there, but we are an industrial company. We want to keep 10 for the next generation, a bit like the Patek Philippe advertisement. You never own one, you keep it for the next generation. And that's what we are here to do.
And that has kept us going for 30 years, been able to pay dividends for 30 years. Our peer group, which is 1st 1st class companies out there, which we are proud to be associated and operate in the same environment,
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: all of them
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: have a different strategy. And we're all for diversity, otherwise it would have been a very, very boring peer group if we all did the same. You have companies, most of the companies out there, they focus in one segment of the energy transportation. And although it's a very fragmented industry, they play a significant role. Companies are in the VLCCs, other companies are Suezmaxes, other companies are just product carriers.
We are for diversity. We are what they call it sounds corny, one stop shipping, but we are. I mean, we have everything from VLCCs down to up to LNGs and up even higher to shucketankers and smaller product carriers. So we do what our client is wants us to operate. We have a huge operating capacity, I think the biggest from the whole peer group.
I mean, we actually we train and our own crew in our academies. We are on hands management to this. We are on hands management also on the commercial side with offices around the world. We have academies in the Philippines. I mean, we take shipping seriously.
And that's why we are able to have these results through the cycle. I was very happy to see that our operating expenses in an inflationary environment with bigger ships had a 10% increase. And I think that is a decrease and our income hadn't increased. That is very complementary in difficult times. So I believe we should be looking at closer to industrial or infrastructure company valuations rather than just shipping valuations.
I mean, we tend to go up and down together with our peer group, whether we have been able to or we're trying to do it, we have been proven to be able to take out the edges of a cyclical market as much as possible. I'm sure there's better even better to do, but we always try to do better every day. So with that, I would like to open the floor, and all of us are here to answer any questions that you might have. Thank you.
Conference Operator: Thank Our first question comes from the line of Poe Fratt with Alliance Global Partners (NYSE:GLP). Please proceed with your question.
Poe Fratt, Analyst, Alliance Global Partners: Hi, greetings. If I could if we can just sort of focus on the macro initially, can you just sort of give me an idea of sort of how you're thinking about with the U. S. Elections, the potential for tighter sanctions on Russia, Iran and potentially Venezuela?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Sure. Well, I have to be chosen as Secretary of State to be able to answer this, but I'm just a poor Greek ship owner. But I mean, as long as it affects us. I think we are in general, shipping would flourishes when we have open borders, open seas, and there are no sanctions. However, we are in a situation where 25% of the world fleet, I mean, that's a huge world tanker fleet, is what we call a gray fleet, which means that we have not the remaining of us, the 75% that, of course, do not participate in any sanctioned business, are able to take advantage of the 1st class business without the competition of order undercutting the market.
So I think sanctions right now are working for the benefit of 1st class companies and our peer group because we do not have I mean, the average age of what they call the gray fleet is above or close to 20 years. So we don't want to have those ships again in the Med or in the Caribs or in the Far East, undercutting good quality responsible shipping operators. So in a sense, it has a positive. If and on top of that, of course, we are not navigating. We never put our seafarers at risk.
And our charterers has never, never insisted. I mean, the quality of the charterers we operate never insisted for us to ever cross the Red Sea if we didn't feel or our captains do not feel safe and they do not feel safe. And I think I respect that's why we're doing business with the top tier clients. I know other colleagues of ours that have been that actually charterships to lesser concerns are continuously pushed to cut corners and try and put their seafarers in danger and cross the regime. We had incidents that could have been environmental disasters and also with human loss.
But this is something Penn does not do. Now if with a magic stick one day we can put the world in peace, I think that will be even better for shipping. We would have gotten rid of a big number of older ships that are really run down, so they could not charter to major energy companies again. And we will have more places to there will be huge reconstruction hopefully of in the Black Sea of Ukraine and Russia. And if there is peace in the Middle East, which there is room of the risk, there will be huge reconstruction there.
So, yes, a peaceful world is a much better world for shipping. Sorry for the long answer.
Poe Fratt, Analyst, Alliance Global Partners: No problem, Secretary of State. When you look at it, Nikos, would the potential tighter sanctions, if they did restrict the flow of oil out of Iran especially, does the dark fleet get or the darker gray fleet, as you say, do you think they get pushed into retirement? Or is there potential for some of those to get cleaned up and move into the unsanctioned fleet?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Well, I think a big part of it will not be able to reenter the majority of those ships will not be able to reenter the competitive market. I mean, energy shipping and LNG and tanker and LPG and of course, oil are very, very under tight environmental concerns from our clients. I mean, every ship has to be inspected every 6 months in order to and if it's not in a perfect state, it will not be touched. So I think those ships will take a very long time to be in a perfect state and it won't be worth for it because there will not be a reason. So I think we will see increase of scrapping of all the tonnage.
Poe Fratt, Analyst, Alliance Global Partners: Okay, great. And then can we just talk about the new build program? I think in your 6 ks, you indicated that you had about $110,000,000 to spend in CapEx for the second half of the year in 2024. Can you give me an idea how much was spent in the Q3 and then how much will be spent on the newbuild program in the Q4?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: No, no. How is the spending? I do the earnings.
Poe Fratt, Analyst, Alliance Global Partners: Okay.
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: So the total program was just over or approximately $950,000,000 The remaining for this year, so to give you kind of more updated figures because from the 6 ks, things have changed in terms of new loans acquired and with installments paid. So, we still have for the remainder of the year to pay $21,500,000 of which about 2 thirds of that will be bank debt and the rest, call it $8,000,000 $9,000,000 of equity. The remaining, we're still discussing with various banks in raising commercial financing today on the 12 vessels we have kind of agreed signed on 3 and we are very close on signing debt arrangements for the majority of the others. So as you can imagine, the payments would alter. But to give you kind of a high level answer, so as I said, approximately $21,500,000 remaining for in the 4th quarter.
And for 2025, we assume we expect I'm assuming those bank loans will come forth. We're very close in agreeing approximately just over $100,000,000 of equity payments that we expect assume to come from our own coffers, if you like, for 2025. So it all depends on the various installments that we need to pay and sometimes they flip into the next quarter or the year following.
Poe Fratt, Analyst, Alliance Global Partners: Yes. I was trying to focus on what the total installments were irrespective of how you financed them. So Harry, could you how much did you spend in the Q3 in installments? Okay. Maybe we could do a call later this week, that would be helpful.
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: Yes, because I have each vessel has a different kind of pattern. So we can have it offline just to give you kind of a general and down to the dollar detail on impact number.
Poe Fratt, Analyst, Alliance Global Partners: Okay. And then in the second quarter, there was a little bit of twist that's on the financials as far as now you have time deposits. Can you do you have a time deposit figure for the 3rd quarter?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: We try to keep the majority of our cash rolling and earning interest every on a daily basis. So we have an average interest income of more than 4%,
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: and we're 5% of the 4%. So we always have time deposits and our money the money, the $400,000,000 or the $380,000,000 we
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: have is earning to the 4% to 5% interest on a daily basis, regardless if it's time deposit or not. So the majority of it, you can consider it, but it is on time deposits.
Poe Fratt, Analyst, Alliance Global Partners: Understood. Okay, great. Thank you so much.
Clement Mullens, Analyst, Value Investor's Edge: Thank you, Paul.
Conference Operator: Thank you. Our next question comes from the line of Clement Mullens with Value Investor's
Poe Fratt, Analyst, Alliance Global Partners: Edge.
Clement Mullens, Analyst, Value Investor's Edge: I wanted to start by asking about your 2 Suezmax newbuilds to be delivered throughout 2025. It seems you recently secured a contract for the second one. Could you talk a bit about the duration and the terms of the contracts on these two vessels?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Yes. I mean, these are 3 5 year contracts for those ships to one of our biggest clients. We're not supposed to spill all the bins here over the fall. And at very, very accretive, the minimum, if you look on Page 8, where we have our all in breakevens, I think our minimum rate for the next 3 to 5 years is almost twice our breakeven. So that's a very it's going to add a significant amount of net income, cash flow and for us who are big shareholders, dividend going forward.
Clement Mullens, Analyst, Value Investor's Edge: That's helpful. Thank you. I also wanted to ask about dry docking days during the quarter because that weighed on utilization. But on top of that, there was also some commercial off hire. Could you talk a bit about your dry docking schedule going forward, both for Q4 and for 2025?
And secondly, we are now 2 months into the Q4. Do you expect to incur in commercial off hires while during the quarter?
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: Okay. So in terms of drydocking days, I mean, it's we usually assume anywhere between, let's say, on average about 30 days, 35 days. And we expect in the Q4 to have 3 to 4 vessels undergoing scheduled drydockings.
Clement Mullens, Analyst, Value Investor's Edge: That's helpful. And for 2025, how many vessels?
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: It's plus 1 because 1, we'll have to go dry dock by the vessels on the bareboat, so we will not incur that cost. So 3 or 4 vessels that will pass, you know, there are special survey that we will incur the cost and one it will not have any bearing on us. Sorry, and your next is your other question?
George Sarogou, President and Chief Operating Officer, Tsakos Energy Navigation: For next year?
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: And for 2025? Next (LON:NXT) year, yes. 2025, it is estimated approximately 10 vessels will have to undergo special survey dry docking.
Clement Mullens, Analyst, Value Investor's Edge: Makes sense. And then on the commercial of hire for Q4? Sorry? On commercial of hire for Q4, do you expect to incur in any off hire days on top of the off hire for drydocking?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: I think we will be in the same utilization period.
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: Yes. I mean, considering that we have like 92% because of all this drydocking, so we would expect that in the Q4, utilization will be higher than that. So no additional off hire days because of our piece of vessel operations, we do not envisage any surprises.
Clement Mullens, Analyst, Value Investor's Edge: Makes sense. Final question from me. This one is more on the modeling side. General and administrative expenses increased substantially both quarter over quarter year over year. Could you talk a bit about the drivers behind this and whether we should think about it as a one off or not?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Yes. This is a one off because we have, as I think you have seen, an incentive plan, share incentive plan for our personnel. So that is taking so it's really not a cash. It's not really a cash increase. It's just an increase that we have to take in consideration for the incentive plan.
So it is a one off.
Clement Mullens, Analyst, Value Investor's Edge: So for Q4, we should expect G and A to revert to lower then?
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Yes, yes.
Clement Mullens, Analyst, Value Investor's Edge: Makes sense. That's all for me. Thank you for taking my questions.
Harry Kosmatos, Co CFO, Tsakos Energy Navigation: Thank you.
Conference Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Stakos for any final comments.
Nikos Tsakos, Founder and CEO, Tsakos Energy Navigation: Well, thank you for listening in. I hope that our revamp presentation keeps you all a bit more animated with the slides. And I think that the slides are going to be on, so you can study a bit more the company. We still believe that we are a very good opportunity, a buy opportunity. We as management personally, whenever we're allowed, we're buying our shares.
We've never sold 1. I know that the share price has moved from single digits up to 30, so many people are taking profits. But I think there is a significant upside and the company is trading at a very I mean, we are actually trading at a multiple that predicts that we're going to be out of business in the next 6 months. We hope with $1,800,000,000 forward and a lot of new ships coming, this would not be the case. So looking forward to be able to get the share price make the share price great again, as someone said, and move up forward, the team will be in the United States early December doing a non deal roadshow.
So we would love to be able to see you either face to face or Zoom (NASDAQ:ZM) call on your side for those that are in the United States. And with that, I would like to thank you and wish you a very happy Thanksgiving to everybody. And I hope our CFO is present of a big dividend, would help Thanksgiving and would not steal Christmas. Thank you very much. Thank
Conference Operator: you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for
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