Okeanis Eco Tankers Corp. Q3 FY2025 earnings call

Dividends: Board declared a 14th consecutive dividend of $0.75 per share. Total distributions over the last 4 quarters stand at $2.12 per share or approximately 90% of a certain metric. ### Fleet: The company has 14 vessels with an average age of only 6 years, the youngest fleet among listed crude tanker peers. All vessels are built in South Korea and Japan, scrubber-fitted, and eco-designed. ### Financials: Adjusted EBITDA for the quarter was $45.2 million, adjusted net profit was $24.7 million, and adjusted EPS was $0.77. For the 9-month period, TCE revenue was $172.5 million, EBITDA was almost $125 million, and reported net income was over $63.5 million. ### Balance Sheet: Ended the quarter with $58 million of cash and approximately $51 million of trade receivables. Balance sheet debt was $617 million, book leverage at 57%, and market adjusted net LTV around 40%. ### Commercial: Fleet-wide TCE came in at $46,600 per day with VLCCs at $45,500 and Suezmaxes at $48,200; strong Q4 bookings and Q1 already covered; fleet outperforms peers consistently; young, eco and scrubber-fitted fleet is optimized for current market dynamics.

The company's fleet includes 6 Suezmaxes and 8 VLCCs. Fleet-wide time charter equivalent (TCE) was about $47,000 per vessel per day, with VLCCs at almost $46,000 and Suezmaxes at $48,000. For the 9-month period ending September 2025, TCE revenue stood at $172.5 million. Adjusted EBITDA was $45.2 million, adjusted net profit was $24.7 million, and adjusted EPS was $0.77. Reported net income for the 9-month period was over $63.5 million or almost $2 per share.

Q4: Shaping up to be fantastic with rates strengthening. 80% of VLCC spot days fixed at $88,100 per day and 48% of Suezmax days at $60,800 per day, fleet-wide fixed portion at $80,700 per day. ### Q1: Expected to be strong, with VLCC earnings above 2022 highs and Suezmax rates firming. Eco and scrubber-fitted vessels command a clear premium.

Sanctions: Approximately 16% of the global fleet is under sanctions, mainstream crude fleet shrinking; Iranian and Russian exports in floating storage, older shadow tonnage unlikely to return to compliant trade. ### Market Volatility: Rates can fluctuate, need to manage fleet positioning carefully to avoid overlaps that could lead to suboptimum cargo choices.

Q: How do you see time charter opportunities now? What's the duration? What type of levels can you achieve? And what type of -- what do you need to see to change out of being fully spot?

A: Frode, thank you for your question. I think that the strength of the market really caught off guard most of the charters. And the rates that makes sense for owners have adjusted so materially since the summer that charters are still trying to reassess and get comfortable paying these levels. At the moment, I think these past few months, especially on the Suezmax have been very busy in that 1- to 2-year segment. We've seen some 3-year deals. The VLCC as well. You're not seeing very much longer period deals than this. But also a lot of the oil majors have really reduced their time charter size of their fleet, and they will have to grow that in the near future. And time charter -- oil majors are a lot more selective on who they want to do long-term business with, and they look to established owners rather than funds owning ships or more speculative setups. So I would say that if you wanted fixed time charters, you definitely can. But when you're earning like on a west position of VLCC that we have is earning $145,000 to go to U.S. Gulf, China and back to Singapore for 80, 90 days. The TCE rates of the charters need to increase a little bit more. And I think that in Okeanis' perspective, given our outlook for the next 6 to 12 months, it's so attractive that the TCE rates have to be materially higher than where they're being quoted today.

Q: Can we talk more broadly on your strategy today? I guess you mentioned your IPO a few years ago. At that time, I think you're more like an asset play and growth. Of course, that was a different time and a different point in the cycle, right? Now you've clearly been more in the harvest mode and just paying out dividends. But things are changing, I guess, again. And so where do you see investment or buying ships in today's market? It seems like if I look at the broad peer group, equities are trading above NAV again, and then that might be more tempting again. I don't know, what's your view on investments?

A: So, I think for Okeanis, the most important thing for our shareholders is for us to continue paying dividends. So as we've said over multiple calls, the main focus will be being able to pay out dividends to shareholders at levels similar to that we do today. In terms of investments, I think the most attractive investments are assets that you can have delivered quickly. I mean I think purchasing something that delivers in 3 or 4 years is too far out and it's too much capital committed for a company like us at the moment. But overall, as an organic shareholder, I think that we continue to buy dividends, dividends and more dividends.

Q: You traded one vessel clean this quarter. Do you plan on continue trading clean? Or is the market on the crude side so good that you'll flip it back into the crude fleet?

A: Thanks for your question, Liam. We've mentioned previously, as hard as we tried, we've never been able to trade a crude carrier for a consecutive voyage in the clean market. So we were able to get to clean her up, load in the Arabian Gulf, come to Europe and discharge. We've tried to do some transatlantic voyages, and we weren't able to get fixed on that to go load in the U.S. and come back to Europe. So the plan is that once we've discharged all the gas well we have on board, we go over to the U.S. Gulf for Guyana or Brazil and load a front haul East and make $145,000 a day for 75-plus days.

Q: You talked about evaluating the capital structure. You've got taken care of some low-hanging fruit by buying your vessels out of sale leaseback. Where else along the capital structure do you see opportunity?

A: Liam, let me take this one. Yes, the low-hanging fruit have actually provided quite a significant amount of value, both in terms of pricing, in terms of extending maturities, in terms of improved amortization profile. All of that effectively adds to the bottom line. So we look at it more from the perspective of how we can structure anything that's accretive. So, so far, we have taken advantage of an extremely competitive financing market with relationships that we have already in the banking segment as well as new markets that we have been developing and are achieving really, really good rates. So long as we continue to do that, I think it's an easy and good strategy to improve and increase value. So now that we have indeed declared the purchase options for the 2 remaining leases, we have a bit of time. Those come in, in May and June. This is obviously still an option for us to go down that path. And so long as we continue to see the very competitive rates, I think there's a lot of value to be extracted there. The next maturities that come in line, I think we still have time. And given where the average cost of our capital structure will be, hopefully, post June. I don't think that there's going to be anything imminent that we would need to be working on. But we have options and we continue to explore them all the time.

Q: Aframaxes have been consistently outperforming LR2s for a couple of months, and the delta has been quite significant at times. Could you talk a bit about the factors that have kept the dirty over clean premium so wide?

A: Climent, thank you for your question. Look, I mean, I just -- Aframax has been overperforming LR2s. So obviously, the LR2 has had an order book that's been delivering. And I think that a lot of the LR2s have been more traditional Aframax owners. So perhaps the first voyage, you see them trade clean to come west where the preferred location for a modern Aframax and then they dirty up. But as you've seen that crude exports have increased, the compliant trade has increased overall, and it services the Turks, the Indians and the Chinese as they replace some of the Russian and the Venezuelan that they're struggling and the Iranian that they're struggling to import. It creates more opportunities for the dirty Aframaxes. I think historically, the dirty Aframaxes have also been much more volatile. They have a lot more regional trades. So you have the Cross Med, which is a 15-day voyage. You have the U.S. Gulf TA. You have a lot more shorter runs where you can see like more local volatility than the LR2. And I guess it's quite fluid. I mean, as we've shown that we can clean up an uncoated ship in now in about 15 days and the VLCC, which is 3x an Afra, I think you'll see a lot more flexibility on LR2s, which are coated. So it's even easier trading between clean and dirty. And you'll see the swapping between whichever market is stronger. So I guess, over time, we should see rates between the 2 find balances. And then they'll fall out of balance, and then you'll see one or other class clean up or dirty again and find balance and so on and so forth.

Q: You've had several dry dockings throughout 2025, but it seems you only have Suezmax to dry dock in 2026. Would you tell us when you expect to conduct it?

A: The Milos, which is the ship we'll dry dock in 2026, we're looking at second half, most likely. We have a bit of flexibility. So definitely not in Q1, but we can push it around a bit. We'll try to time it when the market is a bit weaker.