Tsakos Energy Navigation (NYSE:TNP), also known as TEN, delivered robust financial results for Q3 2023, with a net income of over $8.20 per share. The company's performance was bolstered by a vibrant tanker market, with spot market rates for all types of vessels seeing a significant increase. The company is optimistic about the market environment for the remainder of the year and into 2024.
Key takeaways from the earnings call:
- TEN reported strong Q3 2023 results, with net income exceeding $8.20 per share.
- The company has benefited from a buoyant tanker market, with spot market rates for vessels ranging between $60,000 and $80,000 per day.
- TEN's fleet is strategically positioned, with approximately 50% of vessels on the spot market and 50% on high fixed employment.
- The company expects positive market conditions to persist, driven by factors such as a low tanker order book, an aging fleet, and geopolitical disruptions.
- TEN has taken delivery of its first two dual-fuel Aframax tankers and has a newbuilding program of eight tankers in place.
- The company has redeemed preferred shares, saving $18 million per year in coupon payments.
- TEN boasts a strong financial performance, with a net income of $272 million for the nine-month period and increased EBITDA of $370 million.
- The company anticipates a record year for 2023 and plans to continue dividend distributions.
The positive market conditions in the tanker industry are attributed to factors such as a low tanker order book, an aging fleet, and disruptions caused by the war in Ukraine. The redirection of Russian oil volumes to India and China due to Western sanctions and import restrictions, coupled with increased US crude oil exports, have further buoyed the market.
TEN's fleet comprises 60 vessels, with 52% having market exposure and 77% secured in contracts. The company's newbuilding program includes a variety of tankers, catering to the needs of its blue-chip customer base. TEN aims to cover cash expenses through time charter vessels, while spot trading vessels contribute to profitability.
During the earnings call, CEO Nikolas Tsakos discussed the company's increase in liquidity and the balance between high asset pricing and fleet renewal. He revealed that the company sold eight vessels at favorable prices and opted to order modern ships instead of buying in the spot market. Tsakos underscored the importance of securing good employment cover for the new vessels to ensure healthy returns.
In response to an analyst's query about rising operating expenses, Tsakos explained that the increase resulted from operating a fleet of larger vessels and dry docking activities in Portugal. He anticipates these expenses to normalize over time.
The call concluded with Tsakos and Chairman Takis Arapoglou expressing confidence in the company's strong results and optimistic outlook for the future.
Full transcript - Tsakos Energy Navigation Ltd (TNP) Q3 2023:
Operator: 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.
Nicolas Bornozis: 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.
Takis Arapoglou: 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.
Nikolas Tsakos: 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 $80,000 a day on the spot market. And we are very well diversified and position our fleet. We have, I would say, almost 50% vessels on the spot or spot related and 50% vessels at very high fixed employment. We took advantage of the strong market in the beginning of the year, and we either rechartered or renewed or agreed new charters on 26 of our vessels with an average 2.5 years, all of them at, in excess of 50% higher than the previous earnings in that respect. So looking forward, we expect that the remaining of the year is going to be strong. And that's why we have also, at the same time, increased our dividend. And hopefully, being the major shareholders here, we will have a very similar situation going forward for the remaining of the year and for 2024. The prospects in the market are good. Still a very small newbuilding order book, one of the smallest I've seen in my career over 30 years. And on top of that, a lot of challenges in our business that make the environmental issues that are coming ahead, will require a lot of, perhaps, slow speed changes of routes going forward. At the same time, we're seeing issues that we don't, other than the geopolitical issues, we're seeing global warming taking its toll in the Panama Canal and restrictions being placed, more vessels choosing to rather navigate to around the Cape's rather than using the Panama Canal, which further increases the ton miles. So in general, we are expecting a positive environment for the near future. And with that, I would like to ask Mr. Saroglou to give us a little bit more details.
George Saroglou: 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 suggest that we will reach an all-time high for global oil demand in 2023 of 102 million barrels per day. There are also global headwinds like the high inflation, the tightening of global financial conditions, we might end up with higher interest rates for longer. The war in Ukraine, the war in Gaza and the OPEC+ production cuts and voluntary cuts by Saudi Arabia on top of the initial production cuts, the voluntary cuts by Saudi Arabia and Russia until the end of the year and possibly into the first quarter of next year. However, the global economy is expected to continue growing in 2023. The forecast is for 3% growth and 2.9% in 2024, and oil demand is expected to continue growing in 2024 next year. This view is served by both OPEC and the international energy agency, two main oil market prognosticators. Venezuela got a six-month relaxation of US sanctions and could be on a slow comeback road to increase production in international oil markets, while Latin America, Guyana, Brazil and Suriname expand their oil production as they continue to develop offshore oilfields. And having growth in the Atlantic Basin is very good because most of this oil is not just going to Europe but also to Asia, and this has a multiplying effect on ton-mile growth. And as we said, also tanker fundamentals continue to favor a strong tanker market for the next two to three years. The company took delivery in September and recently in October of the company's first two dual-fuel Aframax tankers that opened a new chapter for TEN, being the first two LNG-powered conventional tankers in a newbuilding order of four that TEN operates for a significant European oil concern against long-term charters. If we move to the slides of the presentation, starting with Slide 3, we see that since inception, we have faced five major prices and each time the company came out stronger, thanks to its operating model. Recently, we came out of the COVID pandemic, and we continue to navigate the challenges created by the geopolitical war in Ukraine and elsewhere. The fundamentals, very low tanker order book, the aging fleet and post-COVID all demand recovery, even without the tragic wars were positive for the tanker industry. The Western sanction and price cap import on Russian seabourne oil as a result of the war, served as an additional catalyst to propel freight rates higher, as long established trade routes were disrupted and voyage distances elongated. Almost all of the Russian volumes are now flowing long haul to India and China. At the same time, US crude oil exports have gone up from averaging about 3.8 million barrels per day last year to about 4.8 million barrels per day now. In Slide 4, we see the company's fleet growth and capital market access since inception. We raised capital for growth, not at the top of the market, but at times when asset prices are usually low. In the slide -- in this slide, the numbers in the blue boxes present the company's common share offerings and in red, the series of preferred sales offerings since the company's New York Stock Exchange listing. The first three preferred series have totaling $188 million of par value, the Series B, C and D plus a privately placed preferred instrument of 35 million initial par value have been fully redeemed as we speak saving the company in excess of the of $18 million per year of coupon payments for all these retired preferred series. In the next slide, we see the fleet and its current fleet employment. We have operational fleet of 60 vessels, 31 out of the 60 vessels or 52% of the fleet in the water has market exposure, a combination of spot and time charter with profit sharings, 46 out of the 60 vessels or 77% are in secured contracts, fixed time charters and time charter with profit sharing. This means that TEN is well positioned to continue capturing the positive tanker market fundamentals. Any divestment of early generation vessels, as we have done in the first quarter of the year, with the six, 2005 build MRs and the two, 2006 built Handysize product tankers will be replaced and have been replaced with modern eco-friendly greener vessel. TEN has currently a newbuilding program of eight tankers consisting of two shuttle tankers for delivery during 2025, two remaining dual LNG-powered aframaxes for delivery during the first quarter of 2024, two eco-friendly scrubber-fitted suezmaxes for delivery also in 2025 and two scrubber-fitted MR tankers for delivery in early 2026. Except of the two Suezmax's that will be delivered after two years and the two MR tankers, the rest of the company new buildings have been fixed forward against medium to long-term time charters. Slide 6 presents the company's current and long-term clients. As you see, we have a blue-chip customer base consisting of all major global energy companies, refineries, commodity traders with Equinor currently topping the list as our largest charter with 11 vessels and new two building -- and two new buildings all on long-term time charters. The left side of the Slide 7 presents the all-in breakeven cost for the various vessel types we operate in TEN. Our operating model is simple. We'd like to have our time charter vessels generate revenue to cover the company's cash expenses, paying for the vessel operating expenses, finance expenses, overheads, chartering costs and commissions, and we let revenue from the spot trading vessels contribute to the profitability of the company. Fleet utilization for the nine months amounted to 95.6%, which is a very strong number. And thanks to the profit-sharing element for every $1,000 per day increase in spot rates, it has a positive $0.18 impact in annual EPS based on the number of TEN vessels that currently have exposure of the spot rates. Debt reduction is an integral part of the company's capital allocation strategy. The company debt peaked in December of 2016. Since then, we have repaid $355 million of debt and redeemed $211 million in three series of preferred shares plus a privately placed preferred instrument. In Slide number 9, we see a historical performance of the company since 2004. I would like to highlight the revenue growth as the fleet increased during this period. The changes in EBITDA as the company navigated the ups and downs of the shipping market in this 20-year period, the bottom line profitability and the strong cash reserves that we have maintained. Last year was a record year for the financial performance of TEN. We expect an equally strong performance for 2023. In addition to paying down debt, dividend continuity is important for common shareholders and management. TEN has always paid a dividend irrespective of the market cycle. Our dividend policy is semiannual. Following the June 2023 and October 2023 payments, the latter being a special dividend, as we previously announced, we will pay a dividend of $0.30 per common share on December 20 to holders of record as of December 14, 2023. This distribution reflects the second regular semiannual payment in '23, in line with TEN's semiannual dividend policy. Overall, for '23, the total dividend distribution of $1 per common share is four times the $0.25 per common share distributed to the company's shareholder in 2022. Following this year's last dividend payment in December, the company would have distributed in excess of $528 million to its common shareholders since the New York Stock Exchange listing in 2002. And if we had the dividends paid to the holders of the company's preferred shares since 2013, the year the first Series B was issued, then TEN has returned in excess of $800 million to both common and preferred shareholders of the company. Global oil demand continues to grow. Despite financial and geopolitical headwinds, the International Energy Agency expects global oil demand to grow by approximately 2.4 million barrels per day, reaching 102 million barrels per day, a record number in 2023. Most of the growth is coming from the Asia Pacific region, mainly China. On the supply side, most of the growth this year is coming from non-OPEC+ countries, Brazil, the United States of America, Guyana, Canada, Mexico, Norway. As global oil demand continues to grow, let's look at the forecast for the supply of tankers. The order book as of October 23 stands at 356 tankers over the next three years, or 6.7%, which is one of the lowest numbers in the last 20 years. At the same time, a big part of the fleet, almost 40% is over for 15 years. And 661 tankers or 12.4% is currently over 20 years. The next slide shows the scrapping activity since 2018. For this year, scrapping is low but with upcoming regulations and industry in the first phases of decarbonization and more than 12.4% of the fleet over 20 years, we believe that scrapping is going to pick up. Overall, all these factors point to a very balanced tanker supply market for the next few years. And with that, I will ask Paul to walk you through the financial highlights of the nine months of the year. Paul?
Paul Durham: 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.
Nicolas Bornozis: 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.
Operator: 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.
Sherif Elmaghrabi: 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?
Nikolas Tsakos: 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.
Sherif Elmaghrabi: 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?
Nikolas Tsakos: 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.
Sherif Elmaghrabi: That’s helpful. Thanks for taking my questions.
Nikolas Tsakos: Thank you.
Operator: Thank you. Our next question is from Omar Nokta with Jefferies. Please proceed with your question.
Omar Nokta: 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?
Nikolas Tsakos: 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.
Omar Nokta: 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?
Nikolas Tsakos: 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.
Omar Nokta: 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?
Nikolas Tsakos: 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.
Omar Nokta: 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?
Nikolas Tsakos: Later part of '26, if someone is interested for a later part of '26 vessels.
Omar Nokta: Well, thank you sir. That’s it for me. I’ll turn it over.
Nikolas Tsakos: Thank you.
Operator: Thank you. Our next question is from Climent Molins with Value Investor's Edge. Please proceed with your question.
Climent Molins: 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?
Nikolas Tsakos: 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.
Climent Molins: 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?
Nikolas Tsakos: 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.
Climent Molins: Makes sense. That's all from me. Thank you for taking my questions.
Nikolas Tsakos: Thank you.
Operator: 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.
Nikolas Tsakos: 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.
Takis Arapoglou: 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.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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