Okeanis Eco Tankers Corp.

Welcome to OET's third quarter 2024 financial results presentation. We will begin shortly. Aristides Alaphoussos, the CEO, and Araclis Barounis, CFO of Okeanis EcoTankers, will take you through the presentation. They will be pleased to address any questions raised at the end of the call. I would like to advise you that this session is being recorded. Araclis will begin the presentation now.

Thank you. Hi, everyone. Welcome to the presentation of Okeanese EcoTankers results for the third quarter of 2024. We will discuss models that are forward-looking in nature and actual results may differ from the expectations reflected in such forward-looking statements. Please read through the relevant disclaimer on slide two. So starting on slide four and the executive summary. I'm pleased to present the highlights of the third quarter of 2024. We continue on the track of very healthy commercial and financial results. We achieved fleet-wide time-chartered equivalent of about $44,000 per vessel per day. Our VMCCs were at 43,000, and our sewage maxes at 45,000. We report adjusted EBITDA of 37.9 million, adjusted net profit of 14.5 million, and adjusted EPS of 45 cents. Continuing to deliver on our commitment to distribute value to our shareholders, our board declared the 10th consecutive capital distribution of $0.45 per share. That is the full payout of our EPS for the quarter. On a four-quarter rolling basis, we have distributed $3.31 per share, or 94% of our adjusted net income. During the quarter, we have successfully completed our five-year dry dock for the Nisos Kithnos, the Nisos Rinya, and the Nisos Anafi. With five or six planned drive dogs this year behind us, we look forward to completing the Nisus Donoussa later this month. On slide five, we show the detail of our income statement for the quarter and the first nine months of the year. PCE revenue for the nine-month period stood at over $212 million. EBITDA was approximately $167 million, and net income was over $95 million, or $2.97 per share. Moving on to slide six and our balance sheet, we ended the quarter with 56 million of cash. We also had a working capital increase with a trade receivable standing at $44 million, and our balance sheet debt stood at 658 million. On slide seven, we illustrate our most important competitive advantage, our fleet. This is the main driver behind our operational and commercial success. Our 14 vessels, all built at first-class yards in Korea and Japan, have an average age of five years. That is the youngest crude oil tanker fleet amongst listed tiers. And we are also the only pure, eco, and fully scrubber-fitted fleet. These elements allow us to set a benchmark about the spot market established by conventional or mixed fields. Slide eight. Moving on to our capital structure. Post the recent refinancing exercise, we have successfully set a robust balance Our book leverage stands at 59%, while our market-adjusted net LTV is 40%. Our financings are a mix of traditional mortgage-backed banking loans, as well as sane and lease debts, and our financiers are balanced with both traditional European shipping banks, as well as Asian banks and leasing houses. We're particularly happy to have relationships in all these markets, which will give us flexibility in the future. Flipping over to slide 9, we walked in detail through the refis back in August. Since we did not have the need for more capital, we were able to source funding with relatively low LTVs, and we focused on adding flexibility, improved pricing. We have estimated that we're saving $7.5 million in our first year, and extended maturities. And our current maturity tower is well-balanced. Out of the two legacy leases in the Ring and the Spoticol, whose purchase options kick in the first half of 2026. All other maturities are staggered between 2028 and 2031. We have plenty of time to focus on the ring and the spotty coat, but we look forward to the opportunity of further optimizing our structure then. In the meantime, while we're not actively seeking further funding, we're always on the lookout for opportunities that could further add value in an accretive way to our shareholders. I'm now passing over the presentation to our attendees for the commercial market update.

Thank you. This may be one of the quarters where your part is more interesting than mine, actually. Q3 was a weak quarter, with consistent weakening beginning in June and with one period of brief strength in late July on the VLCT. The market was hampered by weak refining margins, poor Chinese demand, and refinery turnarounds. We completed three drydoxers plants and repositioned four ships to the west. On three of these ships, we took advantage of the strength of the clean market to clean them up and refuel from the Arabian Gulf to Europe. On one of our western vessels, we found a favorable cargo to fix these that earned a big premium to staying west. The Suez Max market was more stable in Q3 and tailed off towards the end of the quarter. We traded our Suez primarily in the west, fixing cargoes from the Mediterranean or West Africa. And on two of our ships, we found attractive front haul voyages from the west to the east that outperformed the local voyages by a big margin, and we took those. Given that we have a Western focus on how we chaired our fleet, we immediately found backhauls on these ships and brought them back into home territory. It overall was an underwhelming quarter that required a lot of hard work and optimization to produce this result. Despite the seasonal weakness prevailing in both segments, Towards the end of the quarter, we achieved a fleet-wide TCE of $43,900 per operating day. Our VLTCs generated $43,100 per day in the spot market. That's a 14% outperformance relative to all our tanker peers who have reported Q3 earnings. Our Suezmax generated $44,800 per spot day, a 27% outperformance relative to our tanker peers who have reported Q3 earnings. And these numbers reflect our actual book TCE revenue within the quarter as per our accounting standards. We flip over to slide 12 for a dry dock update. As we mentioned in previous quarters, we planned our dry docks in order for the ships to be available for an unexpected and wonderful Q4. We executed our plan almost perfectly, but the market isn't yet doing its part. We completed dry dock on five of our six VLTCs, which have their required special survey this year. Nisa Zanusa is the final VLTC to go into dry dock, and she will begin her survey shortly. In terms of budget, the dry docks were completed about 10% below our internal budget at around $2 million per vessel, all inclusive. $600,000 of this was allocated to using high-spec paint that will improve performance. It takes time for our performance departments to gather sample data to compare the current consumption to when the vessel was in a similar condition previously. But the results we have so far are very encouraging. We are currently projecting a 10% consumption benefit over a five-year period, with an annual saving for this year only of $1 million. We also decided to use a new graphene propeller coating on the propeller, which will reduce marine growth and also contribute to better propeller performance. The total average off-hire time of 29 days includes preparation for dry dock entry after completing the previous voyage. The average duration at the yard was closer to 20 days. Moving on to Q4, guidance on slide 15. So far, Q4 has materially underperformed our expectations. Many factors such as poor arms keeping Atlantic cargoes in the West, low exports in the U.S. due to hurricanes, weak Chinese demand, terrible refining margins have met together to keep pressure on the freight market. Even winter temperatures and weather delays have not creeped in yet. Right now in Athens it's 20 degrees and sunny. I do believe we will see winter volatility at some point this winter, and this will allow us to lock in some good fixtures. But we need to be patient and remain positioned to grab these when they come. In Q4, we have so far fixed another backhaul on a BLTC that we cleaned up and turned into an LR4 again. The rate we achieved on this voyage outperformed the dirty market backhaul earnings and due to the longer duration, because the voyage is longer, we could open later in the quarter and hopefully stronger market will be built. is on maintaining positions to fix attractive front-haul business when rates firm. But we're not fixated on this, and we take opportunities to fix long-haul business east when we find good opportunities and it materially outperforms the local voices. So far in Q4, we have fixed 66% of our fleet-wide days at $43,800 per day. And that breaks down to 63,000 I'm sorry, 63% of our VLCC spot days at $46,900 per day, a 26% outperformance. And 70% of our SWMAC days at $40,200 per day, a 23% outperformance. And both of these figures are relative to our anchor peers who have reported their Q4 fixtures. Continuing on to the next slide. As we do every quarter, we emphasize our consistent outperformance relative to our peers. On slide 13, we highlight how our ability to adapt and capitalize on market opportunities has resulted in sustained success regardless of market fluctuations. We are dedicated to maintaining this level of consistency moving forward. And as we will discuss in the following slides, the outlook for the next year is highly promising. Our ability to outperform is even more pronounced in strong market conditions. Now let's look at the market outlook. Although, as alluded to already, the market has been somewhat below expectations, it's still profitable, with strong fundamentals, especially on the supply side for the crude sector. Starting with supply side dynamics in the VOC and Suezmax segments, we see an encouraging outlook supported by controlled order books and an aging fleet composition. Nearly 35% of the fleet is over 15 years old and will likely face pressure as it nears retirement or recycling. Currently, 17% of the fleet and Suez Max fleet, 17% of the Suez Max and BLTC fleet are over 20 years old, making them primary candidates for recycling in the near term. 2028, we anticipate the number of over 20 year old ships in the Suez and BLTC segments to be 30% or higher. That's the big figure. In addition to above, In both asset classes, approximately 25% of non-ECO vessels are expected to face challenges in meeting regulatory requirements for the EXI and CII compliance. These vessels may be forced into slow steaming in order to comply with these regulations. When we compare this aging fleet with an order book of only 8% on the BLTCs and 16% on the SUAD Maxis, it is clear that the inflow of new tonnage is controlled and potentially still undersupplied. The supply picture becomes favorable when we consider yard capacity. As shown in slide 16, we're entering a new era for bed supply, with two major challenges, an aging fleet and a significant reduction in yard capacity. Since 2010, global yard capacity has nearly halved, representing a 58% reduction. This decline in yard capacity is significant. It limits replacement potential and increases competition for new-build plots. especially as yards prioritize higher margin projects like LNG carriers and containers. As mentioned on the previous slide, we have substantial replacement need in the tanker market. By 2030, the number of tankers over 20 years old will double the current order book. This creates a potential supply freeze as vessels leave the market faster than new ones are filled. Even if the order book accelerates, the current well into the 28th for meaningful orders it's hard to envision an over-supplied market. In summary, the combination of shrinking yard capacity and an aging fleet creates more competitive supply environments. With limited new-build capacity, we anticipate that the fleet renewal will struggle to keep pace with retirement camps in both states. The demand sign is less straightforward and compared to the supply equation. We expect steady growth, albeit at a slower pace. However, one positive factor is the time-mile effect. Currently, most crude oil supply originates from the West, while most demand comes from the East, resulting in longer shipping distances. This imbalance supports higher 10-mile demand, as supply must be sourced from more distant regions to meet global consumption needs. Additionally, demand acts as a driver of volatility, and we believe that even minor positive signs could have a substantial impact on rates. As traders, we appreciate volatility, and our history shows that we tend to outperform during volatile periods. To sum up, we believe there is a short-term volatility. However, medium-term fundamentals are very favorable for this segment. Handing back to you, operators. Thank you.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from Liam Burke with B Reilly. Your line is open. Please go ahead.

Yes, thank you. I was curious to hear, in terms of directionally, I know that the quarter got off to a tough start on the partial fixtures. Directionally, could you give us any sense on how the quote is progressing, or are we still seeing weakness as we finish the year?

Hello. Thanks for your question. You can always look at the indexes that are printed to roughly guide where the market is. But given that we like the triangular vessels, we can consistently outperform these indexes. I would say that in the last week, we've seen rates bottom out from the AG and from the West on the VLCC. Today, the sentiment is a bit stronger. you know, we've seen rates push up a couple points from the AG on the TD3 run. On the smaller segments, like Suez Maxis and Afro Maxis, it still needs a little bit of cargo push to see rates pick up. But for the moment, today's picture is, you know, rates continue at similar levels to where we've reported our earnings so far. But hopefully in the next two, three weeks, you know, we'll see whether it's whether it created delays or more cargo coming into the market, and we can see rates rallying further.

Leon, did you have any other follow-up? I do. I'm sorry. You've always expressed that you're very happy with the size of your capacity and the formation of the fleet. If asset value started backing off enough, would there be any consideration to grow the fleet?

Look, we've talked about this in the past. One of the difficulties in answering a question like that is that we focus on a very specific subsegment of the business. Our scope is very, very narrow in terms of the toners that we would look at, modern, scrubber fitted, eco. So the opportunities haven't been there in general to pursue transactions that make sense. Now, having said that, yes, we are perfectly happy with our size. But if we were able to source an opportunity that does fit within the scope and we could structure it Leopold- The right way I created two shareholders and without jeopardizing the dividend capacity, we would we will look at it, but you know, we have been disciplined, we will continue to be disciplined in the future, and we just focus on maximizing returns.

Great Thank you very much.

Thanks.

As a reminder, if you'd like to ask a question, please press star one on your keyboard now. This concludes our Q&A. I'm going to hand back to Herakles Barounis for any final remarks.

Perfect. Thanks. Thanks, everyone, for listening in. I guess we'll speak again in February. Thank you very much.

Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.