Okeanis Eco Tankers Corp. (OET) Earnings Call Transcript

Welcome to OETs Third Quarter 2026 Financial Results Presentation. Aristidis Alafouzos, CEO; and Iraklis Sbarounis, CFO of Okeanis Eco Tankers will take you through the presentation. They will be pleased to address any questions raised at the end of the call. Matters that are forward-looking in nature will be discussed and actual results may differ from the expectations reflected in such forward-looking statements. Please read through the relevant disclaimer on Slide 2. I'd like to advise you that this session is being recorded. Aristidis will begin the presentation now.

Good afternoon, and thank you for taking the time to join our call for our Q3 2026 earnings. I'm going to start on Slide 4 instead of as usual because it is like we wanted to prepare for a long time, but I did not expect to show it this quickly. On our last call, I had said that I hope by the end of the year, we would have returned over $1 billion to our shareholders since our inception. With the dividend we announced yesterday, we did it by Q3. When we listed in 2018, the investor community was hesitant about another greeting company. Together with our initial investors who show trust in us, 3 of whom are still on our board today we have established a track record to be proud of. I would like to think investors now see OET as a consistent and reliable steward of their capital and driven to outperformance competition. We listed in 2018 with a market cap of $225 million. Since then, we have paid out more than 4.4x that in dividends. More than half of that -- more than half of that $1 billion has come this year alone. Q3 was the strongest quarter in our history, and it's the third record quarter in a row. Adjusted EPS was $7.67 for the quarter and $15.98 for the 9 months. The Board declared a dividend of $7 per share. It is our 18th consecutive distribution and 91% of reported net income. To put that in context, that one dividend is about $273 million, which is more than the coal company is worth when we list. 2026 has not been an easy year to operate tankers. Our crews and our technical magic at Clovis have kept the ships working through all of it with many challenges, and I wanted to thank them before we get into the numbers. Part of OET's ability to outperform is the quality of our technical manager. -- whether in the Atlantic, the Black Sea or in the Middle East, or cruise of service argenprofessionalism and dedication has to be admired. Iraklis will take you through the financials, and then I'll come back to the commercial and market update. Iraklis over to you.

Thank you, Aristidis. I'm pleased to go through our third quarter earnings a quarter that has another record in our history. We achieved fleet-wide time that equivalent of about $209,000 per vessel per day. That's $269,000 per day on our spot and 260,000 on operating DCCs and $167,000 on our Suezmax operating days old bingo. We report time charter equivalent revenue of $338 million, adjusted EBITDA of $320 million adjusted profit of $299 million and adjusted EPS of $7.67. Our Board declared an 18th consecutive quarterly dividend of $7 per share. This represents more than 91% of our reported and adjusted net income. Including this one, over the last 4 quarters, we have distributed $15.80 per share. Backward looking, that's close to 10% yield against our current share price on top of the share price appreciation over the same period. On Slide 6, we show the detail of our income statement for the quarter and 9-month period. TCE revenue through September stood at almost $740 million, EBITDA was over $680 million, and net income was almost $620 million or $16 per share. Moving on to Slide 7 and our balance sheet. At quarter end, we had $233 million of cash. Our restricted cash figure as of September 30 includes an amount of approximately $67 million. We have deposited on short-term and the certain of our loan facilities will have the features that reduce the interest paid, providing a better return than what we could achieve placing those fans and there our time deposit fees for that amount at that time. We may roll forward as part characterized as restricted or a different amount on a short-term basis, depending on our cash flow is an applicable rates. Our balance sheet was $754 million, reflecting the drawdown for the acquisition of the Nissos Vous in early July. Our book leverage stands at 35%, while our market adjusted net TV basis market estimates on our assets and end of quarter cash balance is now below 20%. Slide 8, looking at our fleet. With the addition of the Nissos Vous in early July, we have a fully delivered fleet of 8 VXCs and 10 Suezmaxes with an average rate of 5.8 years. From a CapEx perspective, the Miller successfully underwent its 10-year survey at the end of the third quarter, beginning of the fourth quarter. Slide 9 move on to our capital structure. With the delivery of the use the nice move, our full financing and refinancing cycle has been effective since the beginning of the quarter. The benefits are clearly visible every quarter with the improvement of our interest expense figures. On the VisosKisnos, we have agreed with our finance year that effective December of this year and through the maturity of the loan in 2030, longer margin of 115 basis points, continued improvement in our cost constructure with a weighted that is in to disclose pro forma for that adjustment having been reduced to 146 basis points overshot. On Slide 10, we show this exercise only for the Nissos Serifopoula last quarter. I was expecting to run the excesses again in a few months. Having the Nissos Nikouria and Nissos Serifopoula with at least a couple of quarters under their trading vote. But the numbers are simply extraordinary. So I was tempted to update the slide this quarter. The Nissos Nikouria and the Nissos Serifopoula were delivered to us in January the Nissos Tigani in May and the mix both in July. So with, on average, call it, a little over 0.5 year of operations before vessels, the value creation now exceeds $0.5 billion. The asset value increased teller, the third 1 of the graphs, which we exited forward, both these vessels are between $97 million and $99 million. These are not valued at over $170 million, unrealized, but with a direct impact on our NAV and subsequently on our stock parts. It's an 8% uplift on an enterprise value basis and close to 150% uplift against the equity put of the vessels. But what's more interesting in my view is the second pillar. Within on average half a year, they have each generated between $20 million and $60 million of free cash flow or $160 million in aggregate. The nominal equity that was put in these vessels was a little over $ 210 million. Remember, we put $45 million of bank debt on H1. On that basis, over 3/4 of the equity has already been returned back. Once you add the NAV benefit, that's first pillar on graft due to the arbitrage of raising accretive stock to fund this transaction, almost the entire equity put into these vessels, and this is realized value has been paid down. Timing was obviously more than opportune, but we have set up a platform in a way that gives us the ability to precisely take advantage of such opportunities and generate results. I will now turn it back to Aristidis Alafouzos for the commercial market.

Thank you, Iraklis. And about the previous slide, by the end of the year, I assume that all the equity be in time and came back on those 4 ships. So we're pretty happy with that. Now looking at Slide 12 on the commercial performance in Q3. Our fleet-wide TCE for the quarter was $209,000 per day. Our spot VLCCs earned $270,000 per day, and our Suezmax earned $166,000 per day. Including the time charter days, total VLCC earnings were $260,000 per day, and fleet utilization was 98%. Q3 is normally the weakest quarter of the year. This one bet Q2, which was already a record. When we spoke in August, we had fixed 48% of our VLCC spot days at about $207,000, and 42% of our Suezmax days at $133,000. We initiated a $269,000 and $166,000 a day. So everything we fixed after that call was done well above those levels. The market kept climbing through August and September, and we had the days open to catch higher ed. In August of Q3, we converted some spot voyages on the VLCCs into short time charters that will last until February of 2027 at a blended rate of $450,000 a day. This material helped our Q3 numbers and rate was far above this spot market, but then slightly underperformed in Q4 as rates were okay higher. Today's spot rates are around $350,000 for VLCC while Suezmax between $150,000 and $200,000 a day. Suezmax utilization was 97%. And as we announced is seedness was hit by a drone in July -- on July 30, while loading and CBC terminal loading Kazakhi crude. Most importantly, no lineal Board has heard the incident at the cargo lines, cargo cranes and electrical cabling. The repair took over a month, but the vessel had loss of higher insurance to cover the lost time as well as the normal insurance to cover the dot interest. Moving to Slide 13 and our guidance for Q4. I have looked at these numbers many times and I still find them hard to believe. On the VLCCs, we have fixed 48% of our available spot days at $688,000 per day. We also have 509 time charter days at an average of $388,000 per day. That is 75% of our VLCC days for the quarter. On the Suezmaxes, we have fixed 60% of our spot base at $410,000 per day. Across the fleet, that is 627 spot days at an average of $44,700 per day. 71% of our fleet for Q4 are covered at an average of $420,000 per day. That is roughly $480 million on the days already covered with 29% of the quarter still open, our TCE revenue for the whole quarter of Q3 was $338 million, and Q3 was a record. Suezmaxes are at 99% utilization, while VLCC has guided at 93%, which is 53 days off hire. One line on what that is, Nissos Serifopoula engine damage while late in near South Africa. She limped slowly to Oman where we tried to cargo and the vessel will begin repairs there and be completed by the end of December. A word of caution on the open days. Rates have come off the peak. We saw it earlier in October, and I would not take the fixed spot numbers and multiple them across the rest of the quarter. I do expect the market to rebound as we go deeper into Q4 though, we have 458 days still to face, and we will fix them in them can we find. That can work for us or against us as we have seen more than once this year. Over the past weeks, the markets have had a huge correction, but we are still earning historically high earnings after such a steep sell off. Last year, the market also sold off late in Q4 and roared back in January. The market is volatile, but the underlying inefficiencies remain. I believe the bottom has been found on crude tanker freight and with good cargo inquiry, we'll see rates push back up. Moving on to Slide 14. This is a slide that we use every quarter, and I like it more every time. This was a market that was available to every one. Based on the peers who have reported so far, our sporting in Q3 were about 70% above the peer average on VLCCs and 60% above the Suezmaxes. Let that sink in, again, 70% on the VLCCs and 60% on Suezmaxes. On the Q4 days, we fixed so far, we're about 30% higher on the VLCCs and close to 50% on Suezmaxes. If we look at the blended earnings profile across Q3 and Q4, including both spot and time charter, the outperformance is even more pronounced. Based on peers that have reported so far, our VLCC rates were approximately 84% above the peer average in Q3 and around 61% on Q4 days fixed to date. On Suezmaxes, we're approximately 68% above the peer average in and around 49% above in Q4. Taken together across Q3 and Q4, our blended earnings are more than 1.5x the peer average in both asset classes. At these rate levels, the percentage matters less than the dollars. Since Q4, 2019 generated about $450 million of outperformance against the average of our peers. Three months ago, that number was $341 million. So we added about $117 million in 1 quarter alone. If our fleet had earned the peer average in Q3, our EPS would have been about $3 lower. To give that some scale, $450 million is twice the market cap we listed, and that is the only difference between us and the average. It is split fairly evenly about $247 million have come from the VLCCs and about $205 million from the Suezmaxes. That is close to $17,500 a day above the peer average on every VLCC and Suezmax for 7 years. It is the same ships and the same people every quarter, a modern Eco-scrubber-fitted fleet, a chartering team that is prepared to think of you and a technical manager that keeps the ships approved and available when the cargo is there other than the enough. On Slide 15 -- the order I'm not going to pretend it small. The VLCC order book is 32 -- over 32% of the fleet and the Suezmax order book is around 30%, which is about -- of which about 3 points of shuttle tankers that do not compete with us. And those are big numbers, and they're a real issue for the back end of the decade. But look, when the ships arrive for the rest of '26, it is 0.5% of the VLCC and 1% of the Suezmax lead -- next year, it is around 7% for both. The heavy years are '28 and '29 at 9% and 11% a year. Now look at the top half of the page. Today, 22% of the VLCC fleet is over 20 years old and 48% is over 15 years old. By 2028, those numbers are 29%, 56%. And by 2030, they are 41% and 61%. The Suezmax picture is also the same. I will be straight about one thing. In a market like this, nobody scraps a ship. The old ships are trading and earnings, albeit inefficiently, but a 20-year-old VLCC does not get approved for almost all the cargoes we like to carry A lot of them are in sanctioned trades, and they likely to never -- do not come back to our market. Right now, in my view, that inefficiency in the system is absorbing more capacity than the yards will deliver over the next years. So our view has not changed. The order book is a real consideration to look into for '28 and after. For the next months, the deliveries are manageable, the fleet keeps getting older and we have an average age in our fleet of under 6 years. But what we need to be careful is a rapid return to an efficient market, while the heavy order book is delivering. This could change balance abruptly the inefficiencies caused by the war in Ukraine, Iran, plus the Red Sea divisions. Create significant ton miles and today. Moving on to Slide 16 is a new slide we created, and it is to days, not ton miles. Ton miles tell us how far the cargo travels. While tonne days tell us how long a ship is tied up caring. And that is what decides how many ships are free. The dark blue line is this year. You can see March when Hormuz shut in the AG cargoes disappeared overnight. You can see the recovery in the summer, and you can see where we are now at the highest point of the chart, well above last year and well above the range of the 6 years before that. Year-to-date, crude tanker days are up 6% -- Suezmaxes are up 6%. VLCCs are down 2%, which does not sound please remember that for most of the spring and summer, the biggest VLCC loading area in the world was largely shut. Since September, the VLCC line is back where it was last year. And last year's fourth quarter was a strong market. The reason is that every barrel now takes longer to deliver. Cargoes out of the Gulf are shuttled through the street and transferred ship to ship. So 1 cargo can tie up 1, 2, or even 3 ships and cause them to wait. It is not only Hormuz as a part of the Saudi crude loading in the red sea for Asia is going the long way around the cape or was earlier this year. The Atlantic ran out of VLCCs early or in the quarter, forcing the market to look at Suezmax and Aframaxes. This created further inefficiencies as it displaces the normal balances of the fleet. In the Black Sea, ships loading at CPC have been attacked, including monobores, like I mentioned a res are willing to go there. None of this shows up in an order book table. The ships exist. They are just taking longer to do the work per month than they did a year ago. The last slide puts the cargo can side next to that. It shows global crude loadings week by week this year and compared with December 2025 before any of this started. The dark blue bars are loading inside the Hormuz. For the middle of March, they were down 10 million to 12 million barrels a day and they stay there in this summer. The bars above the line are the barrels that replace them, Saudi crude out of the Red Sea, Fujaira, the U.S. Gulf, South Africa, West Africa. The line is net. At the worst point, the world was loading about 10 million barrels a day less than in December. Now look at the right-hand side. Since August, the volumes from inside the Gulf have been coming back and since the end of the September, the net line has been at or around December levels. So the cargoes are back, but the fleet is carrying them is far less efficient than it was in December for all the reasons on the previous slide. Recovered volumes on a fleet they cannot move them the way they used to. This is what creates to where they were in October and is why they are still where they are today. What happens next? If the Strait reopens properly, the shuttles and transfers go away over time, the fleet becomes more efficient and rates come down from these levels. We said in May that a reopening would be supported, but with the reset, and I still think that is right. Against that, inventories were run down for most of the year and have to be rebuilt. The long-haul barrels do not disappear overnight and the fleet is a year older. If it does not open properly though, what you see on these 2 slides continues. My personal view is the status quo remains. The U.S. continues to provide escort services to shovel crude while blockading uranium exports. I do not believe the U.S. can abandon the Strait of Hormuz and allow Iran to decide who transits. This would be a catastrophical feat and strategically weak in the U.S. nor do I expect the Iranians to accept that the Strait of Hormuz passage is free for all. And we haven't even touched on other issues like block funds, reparations, nuclear and regional proxies. I will now hand it back to the moderator for the Q&A.

[Operator Instructions] Your first question comes from the line of Eirik Haavaldsen from Pareto.

Is just referring to your comments on the market. I mean, it does seem like the exports through Holmes has been getting a little bit more efficient recently, and that's maybe causing this decline in rates. Do you have any additional color there? What are you actually seeing now in terms of the ship-to-ship transfer activity? And how do you expect that to develop over the coming months or so?

Thank you for the question and for being on the call. I think it's a really challenging area to track because it's become a train that everyone turns off their identification systems. And it's very difficult to understand what's actually moving through my personal view is that since the summer, exports have slowly gone up as the selling has become more effective. I think towards the end of the summer and beginning of September, to constraints on STS equipment and tug boats and tendering. So you're seeing some delays in that, which added 1 or 2 days to the voyage, which I think largely have dropped. But I don't think that the shuttling of entering, loading and exiting is becoming more efficient. So I would say my view is that volumes have probably increased that maybe the shuttling has become slightly more efficient just due to the STS delays. But overall, nothing significant in increased efficiency.

Okay. And just on 1 then on the 5 Cs you have on the short-term deals to mid-17s what you're saying -- and that is the $4,050,000 a day approximate rate we should use them. And then you have 1 vessel still on the 1-year time factor. .

Yes. We have that VLCC fixed the at $90,000 a day, which is sad, it hurts us. And then we have the 450,000 blended average that goes until mid-end February on the other VLCCs, like I mentioned earlier.

And right now, with what's going on in the SSA market is the time charter market completely drying up? And secondly, what do you see in terms of transactions, there was a related party Virena yesterday, is that coatiwhere the market would be at the moment, you think.

I'll answer the FX question first. For sure, the SFA the time charter business that was available a month ago, and the rates that were being discussed are no longer there and charge would obviously be keen to fix quite a bit lower. I would say that at the peak of the strong market, Suezmax for 12 months was $200,000 a day. And today, we're around 150 to $140 -- so it's still a fantastic rate, even though it's a lot lower than where it was. What I find quite interesting though is that the SFA market is actually pricing lower earnings than where charters are willing to price time charters. So that shows some confidence in the time charter in the traders, oil companies. views on the market that they're willing to pay higher than where they could potentially hedge on FFAs today and related in terms of the VLCC sale that was done, -- it's hard to -- it's really hard to price a ship today. I mean you saw that ships that were worth a 16-, 17-year-old VLCC that was worth $80 million in June was worth -- is worth $150 or was worth $150 a couple of weeks ago. So there's been a huge appreciation in values. But the new building is it's the resale is a hard 1 to price. So I can't really give any more comments on that.

Your next question comes from Liam Burke with B. Riley Securities.

There was talk that the VLCC rates were so high that shippers are starting to split cargoes on the sucesand then even down to the Aframaxes. I know the Aframaxes don't matter to you, but the split cargoes on Suezmaxes cannibalize your VLCC business? Or is it a net neutral to you?

Liam, thank you for your question. No. I mean we have both VLCCs and Suezmaxes. So whenever we see cargoes because 1 asset class is too expensive, pushing up or breaking down to another, we find it as a positive because it's it helps increase the rates on the other one, and it creates more inefficiencies. What happened specifically in October was that there were -- I think the West basically ran out VLCC so they were looking at Suezmaxes and the Aframaxes. It's extremely inefficient in dollars per barrel to move Aframax cargoes from the U.S. Gulf to the east. . But that's something we saw when the VLCC and the SUs run out -- but it's something that's happened in West Africa Sorry, I think you asked a new question about the past as well. For many for a couple of years now, whenever the Suezmaxes have been quite strong and because of the Ukraine war, Suezmakes have until this year have performed better than VLCCs. We were able to compete with Suezmax cargoes on our VLCCs and find ways to try and dig by blasting our VLCCs from Asia, loading East Africa, coming up to Europe and then fixing U.S. Gulf for Brazil East. So I think these types of inefficiencies give opportunities to savvy, chartering teams, and we hope they continue.

Iraklis, you do have a higher debt load now on the delivery of vessels. Clearly, the capital allocation priority is for dividend payout. Is there any need to allocate more towards debt reduction? Or are you just having to amortize it the way you have it laid out.

No, I think we continue the course. No change in our allocation strategy, we're comfortable with our leverage we continue to amortize the base. I think the 4 Suezmax acquisitions and the debt that we put into them was a good indication of where we feel comfortable at no chance to accelerate debt repayment either. We're happy with the moving forward we are.