Okeanis Eco Tankers Corp.

Hello and welcome to OET's fourth quarter 2024 financial results presentation. We'll begin shortly. Aristidis Alassizos, CEO and Iraklis Sparounis, CFO of Okeanos 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. Iraklis will begin the presentation now.

Welcome to the presentation of the results for the fourth quarter of 2024. We will discuss matters 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 in the executive summary, I'm pleased to present the highlights of the fourth quarter of 2024. While Q4 fell short of the market's expectations a few months back, It closes a year of very healthy commercial and financial results. We achieved fleet-wide time-chartered equivalent of about $39,000 per vessel per day. Our VFCCs were at $38,500, and our Suez maxes at $39,500. We report adjusted EBITDA of $37 million, adjusted net profit of $13 million, and adjusted earnings per share of $0.41. Continuing to deliver on our commitment to distribute value to our shareholders, our board declared an 11th consecutive distribution in the form of a dividend of $0.35 per share. Total distributions over the last four quarters stood at $3 per share, or 89% of our earnings for the year. In November, we successfully completed the five-year drive-up for the Nasus Danusa, concluding our six-vested 2024 VHCC's drive-up project. We look into 2028 with only our two 2020 build series maxes, which will undergo the five-year dry dock sometime in the second or third quarter. So on slide five, we show the detail of our income statement for the quarter and full year. For the year in 2024, our TCE revenues stood at $262 million, with daily fleet-wide TCE of $53,000 per day, 56 on the VLCCs and 49 in the suites. EBITDA was approximately $204 million, and net income was just shy of $109 million, or $3.38 per share. Moving on to slide six and our balance sheet, we ended the quarter with $54 million of cash. Our balance sheet debt continues to amortize by approximately $12 million every quarter, now standing at $646 million as of year-end. On slide seven, we recap our main driver behind our operational and commercial success, and one of our key competitive advantages, our fleet. Our 14 vessels, all built at first-class yards in Korea and Japan, have an average age of 5.4 years. That is the youngest crude oil tanker fleet amongst recent years. We're also the only pure, eco, and fully scrubber-fitted fleet. These elements allow us to set a benchmark above the spot market established by conventional or mixed yields. Slide eight, moving on to our capital structure. After a busy 12 months, we're now in a position to reap the benefits of the improved pricing achieved by refinancing most of our vessels. Having improved our margins by 130 basis points across 12 vessels, our interest expense starts to show material improvement in Q4 and going forward. We have successfully set our balance sheet with added flexibility and extended maturity. Our book leverage stands at 59%, while our market-adjusted net LTV is approximately 40%. Our financings are a mix of traditional mortgage-backed banking loans, as well as sale and lease bets, and our financiers are balanced with both traditional European shipping banks, as well as Asian banks and leasing houses. We are particularly happy to have relationships in all these markets. This gives us flexibility in the future and allows us to develop and strengthen relations. We look forward to next year when we will have the opportunity to refinance the last outliers within our capital structure, the Nisros Vinyas and Nisros Despotikos, a massive opportunity for further improvement over break-even costs. In the meantime, while we're not actively in pursuit of further deals, we're always on the lookout for creative opportunities. If one arises in this competitive financing market and it makes sense, we will not hesitate to take advantage of it. I will now pass the presentation to Aristides for the commercial market output.

Thank you, Dr. Lee. Let me start by saying that Q4 was less interesting than we expected, but at least Q1 of 2025 began on a different note. In early Q1, the Biden administration significantly expanded the sanctions framework, which impacted more vessels, Russian banks, and charters. Almost immediately, the market rebounded quickly and significantly, a topic we will discuss in more detail later on. However, Q4 ended relatively weakly, with crude markets lacking their usual seasonality. During Q4, and specifically in November, as Herakles mentioned earlier, we successfully completed the five-year dry dock for Nisos Danousa, marking the conclusion of our six-vessel VLCC dry dock project. Given the crude market weakness, we took the opportunity to clean up one more VLCC, and repositioned her in the west. Again, this captured a higher earning spot voyage for a backhaul that we like doing to bring our ships to the west. We also continued to strategically position our vessels in the west with selective Suez Max voyages to the east to maximize the earnings potential. As a result, our Suez Maxes outperformed our BLTCs in the fourth quarter. Despite the continued seasonal weakness from Q3, we achieved a fleet-wide PC rate of $39,000 per operating day for the fourth quarter and $52,900 per operating day for the full year of 2024, while utilization stood at 98% in Q4 and 97% for the full year, demonstrating efficient vessel deployment. If we compare our earnings with peers that have already reported Q4 results, Our outperformance for the year stood at 19% for the VLCCs and 29% for the Suez Maxims. Now going into Q1, and as mentioned earlier, the expanded sanctions framework has significantly improved the market. The Chinese, Indians, and Turkish buyers became wary of using sanctioned SIPs and more specifically of buying Russian and Iranian crude oil in general. As a result, they started sourcing alternative crews, leading with India and China actively importing from West Africa, the Middle East, and the US Gulf, and Brazil. This shift had notably improved market rates and sentiment. In addition to the above, continued growth in a Brazilian crew production is boosting demand for long haul voyages. As far as our fleet is concerned, fleet triangulation remains a priority. ensuring we maximize laden legs and optimize vessel deployment. We've also repositioned one of our Suez Maxes to the clean product trade, allowing us to capture premium earnings while repositioning her to the west after her front haul voyage to the east we fixed in Q4. Given these developments, so far in Q1 of 2025, we have fixed 81% of VLCC spot days at 39,100 per day. and 77% of Suezmax spot phase at 33,400 per day. With the ongoing OPEC Plus production policies and the new U.S. sanctions on Russia and Iran, we see further upside potential for ton-mile demand in the near term. Today, we are earning around $50,000 per day on the VLTCs and $45,000 to $50,000 on the Suezmaxes. Many of the stronger fixtures we concluded after mid-January when the market firms will reflect in the last part of our Q1 earnings, as well as in our Q2. Similarly to the full year 2024 results, and based on peers that have reported earnings, our Q1 performance on fixed day stands at 7% outperformance for the VLCCs and 39% for the Swiss masks. As we now move to slide 12, OAT remains the only publicly listed pure play echo scrubber fitted tanker platform. enabling us to consistently outperform the market. Our VLCC and Tudor Max fleets have delivered higher TCs than our peer group for multiple years, reinforcing our competitive advantage. In 2024, OET's VLCC significantly outperformed peers, demonstrating the earnings, power of our modern fleet, and the strong performance of our commercial fleet. It is important to note that for Q4 2024, we have used guidance figures for peers that have not reported yet. We believe the gap will widen even further once actual rates are published. All in all, our charting team, fuel efficient vessels, scrubber advantage, and strategic training patterns continue to differentiate OET in a volatile market. Now let's discuss the market outlook and the latest market dynamics. On slide 13, we see the crude tanker market is experiencing a structural supply imbalance, driven by an aging fleet and low new building orders. By 2028, over 700 VLTCs and Suez Maxis will be more than 20 years old, while only around 200 vessels are scheduled for delivery in the same period, indicating a further tightening of supply. Notably, this calculation does not even account for vessels over the age of 15 years old, which will be less efficient and by 2028 will represent 40-50% of boat seconds. The expanded sanction list now includes almost 10% of both VLCC and Suezmax fleets. While 20% of the total VLCC and Suezmax fleets operate in the dark grey fleets and with limited yard availability and rising shipbuilding costs, fleet expansion remains significantly constrained. Also, if sanction enforcement continues, the sanction fleet can double as we calculate 10% of the fleet is engaged in OFAC-sanctionable activity. especially involved in Iranian and Venezuelan business, which is almost exclusively reliant on the OTCs. Against this backdrop, OET's modern fleet and eco positions us well to capitalize on this supply constraint that's coming. Now moving on to slide 14, crude demand is expected to outpace supply in 2025, driving increased time miles and higher fleet utilization. Key agencies forecast a continued recovery in oil demand, particularly from Asia. China had positive data with strong traveling around the Lunar New Year and a new record corporate borrowing in January. Refinery alignments, realignments and new sourcing routes are leading to longer voyages and greater tanker utilization. Geopolitical factors, sanctions and shifting trade routes are further strengthening demand for modern compliant fleets like OEPs. We expect these factors to support higher fleet utilization and firmer rates in the coming quarters. From slide 15 to 18, we aim to illustrate the significance of sanctions-exposed trades and its potential impact on the conventional fleet in light of the latest wave of sanctions. The shadow fleet has expanded due to sanctions on Russia and Iran and Venezuela. Approximately 20% of the global banker fleet is now engaged in sanctioned trades, with 10% already being on the olfactory. effectively reducing the supply of vessels available in the conventional market. As compliance measures tighten, compliance fleets will be more positioned to capture premium rates driven by higher utilization. We believe the market divide between compliance and non-compliance fleets will continue to widen, favoring modern, efficient, and transparent operators. As mentioned earlier, India, China, and Turkey are increasingly moving away from sanctions-exposed trade, seeking compliant crude from alternative routes. This shift both ton mile demand and the utilization of the conventional fleet. Slide 16 focused on Iran. And given the new administration in the US, a potential decrease in Iranian exports levels seen during the previous Trump administration could push conventional VLCC fleet utilization above 90%, which has historically led to very strong tanker market rates. To conclude the presentation, a reduction in Russian and Iranian exports could generate a significant increase in demand for modern, compliant VLCCs. If all Russian and Iranian barrels are lost and replaced by long-haul VLCC voyages, we estimate a need for an additional 20 to 60 VLCCs. The current fleet size, order book, and utilization of close to 88% do not support such an increase, reinforcing the bullish outlook for compliant modern fleet. OAT is optimally positioned to capitalize on these shifts and generate strong cash flows for shareholders. During the Q4 softness, OET delivered a strong full-year performance and remains well positioned for 2025. Market fundamentals remain supportive with tight supply, increasing ton miles, and geopolitical shifts working in our favor. We will continue to optimize our fleet, maximize utilization, and capitalize on strategic advantages. With that, we thank you for your time and happy to take any questions.