Okeanis Eco Tankers Corp.ECONYSE
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Operator: Welcome to OET's Fourth Quarter 2025 Financial Results Presentation. We will begin shortly. 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 would like to advise you that this session is being recorded. Aristidis will begin the presentation now.
Aristidis Alafouzos: Thank you. Since August of last year, the large crude tanker market entered the freight cycle that we've been waiting for and prepared for all these years. This is a unique opportunity to have exposure to a fleet that is on the water and able to capitalize today. For a shipping investor, on the water exposure is critical in the current circumstances. As our conviction strengthened after the summer, we executed 2 opportunistic transactions and acquired 4 resale Suezmax newbuildings from Korea. The first 2 have already delivered, one has loaded her first cargo and the other one is about to load, while the remaining 2 will be delivered in the next 2, 3 months. We have already had a structurally strong freight market with strong asset values. But we added the Venezuelan barrels coming back to normal fleet and the new trade flows that creates, India materially reducing Russian imports, the Iranian question looming, and likely, most importantly, Synacor consolidating the VLCC market in a manner that has not been done before. They are currently owning and operating and waiting to be delivered a fleet of around 150 VLCCs. As a result, our NAV has been consistently and rapidly increasing and our NAV premium attempting to continue to catch up, but it has somewhat compressed, especially given these absolutely unique fundamentals in our market. We currently have no additional opportunistic transactions in play. Our focus is clear, disciplined outperformance and maximizing shareholder returns through both dividends and sustainable share price appreciation. We will catch up later, and I'll hand you over to Ira right now.
Iraklis Sbarounis: Thanks, Aristidis. Let's dive into it. Starting on Slide 4 and the executive summary. I'm pleased to present the highlights of the fourth quarter of 2025. We achieved fleet-wide time charter equivalent of about $77,000 per vessel per day. Our VLCCs were at $92,000 and our Suezmaxes at $53,000. We report adjusted EBITDA of $79 million, adjusted net profit of $60 million and adjusted EPS of $1.78. This is basis our average share count for the quarter. Continuing to deliver on our commitment to distribute value to our shareholders, our Board declared a 15th consecutive quarterly distribution in the form of a dividend of $1.55 per share. With visibility on very strong Q1 fixtures and our outlook on the market, that figure represents 102% of our net income, i.e. on our current fully diluted share count post our recent equity transactions. Total distributions over the last 4 quarters stand at $3.32 per share or approximately 95% of our reported net income for the period. In November, we executed a successful and accretive equity raise of $115 million in gross proceeds against the acquisition of the Nissos Piperi and Nissos Serifopoula that were delivered by the yard in early January. This quarter, we did another similar transaction, bringing the total amount of gross proceeds raised to $245 million, acquiring at the same time, another 2 recent Suezmaxes, which are expected to be delivered to us in the second quarter. Moving on to Slide 5. Since our IPO in Oslo, we have distributed over 2x our initial market cap with over $461 million in dividends paid. Since we have had a fully delivered fleet in 2022, we have paid out 92% of our reported net income, clearly demonstrating our commitment to distributing value to our shareholders. On Slide 6, we show the detail of our income statement for the quarter and the full year 2025. TCE revenue for the year stood at $265.4 million. EBITDA was almost $204 million and reported net income was about $130 million or $3.77 per share. Moving on to Slide 7 and our balance sheet. We ended the year with $122.5 million of cash. That included a portion of the equity earmarked for the acquisition of the Nissos Piperi and Nissos Serifopoula a couple of weeks after. We also had at the end of the year, approximately $85 million in trade receivables. Our balance sheet debt was $605 million, and we subsequently drew $90 million for the 2 Suezmaxes. Our book leverage stands at 46%, while our market adjusted net LTV basis latest broker values and pro forma for the acquisition and recent transactions is around 35% . Slide 8, looking at our fleet. I'm pleased to show the addition of 4 modern and high-spec vessels. We have a total of 16 vessels on the water, 8 Suezmaxes and 8 VLCCs with an average age of only 6 years, which will further improve once we get delivered in Q2 of our 2 Suezmax resales currently under construction in South Korea. With the initial sequence of seeking of dry docks out of the way in Q4 of last year, our only dry dock for 2026 is that of the Milos 10-year survey. Slide 9, moving on to our capital structure. I have been very pleased with how our capital structure has been shaping up with the recent refinancings and new financings for the recently acquired vessels. Our margin has improved by about 140 basis points with meaningful further reduction expected once we decide how to refinance the Nissos Rhenia and Nissos Despotiko. The Piperi and Serifopoula were financed by the Greek market at record terms at 130 basis points over SOFR for 7- and 8-year terms, respectively. The debt financing market continues to be open and extremely competitive for us as we're exploring our options for the 4 vessels in the second quarter. Slide 10. We wanted to spend some time going through the 2 transactions we executed since our last quarterly update. In November, we raised $115 million at $35.5 per share, priced at roughly 1.25x our NAV at the time. In January, we followed with $130 million at $36 per share, priced at approximately 1.2x our NAV at the time. Both transactions were heavily oversubscribed executed a significant premium to NAV and were completed with third-party vessels locked on [indiscernible]. That combination is extremely rare. Very few companies, particularly in shipping, have been able to raise equity at a significant premium to NAV, secure modern tonnage, execute cleanly and immediately create value for shareholders, and we managed all 4. And here's the most important one. Since those 2 raises, shareholders have generated more than 20% return plus dividends. That is not theoretical accretion, that is realized value. We view it as a very strong statement of our shareholder aligned capital allocation discipline. We do not raise equity to grow for growth's sake. We decided to raise equity when it is accretive. It lowers breakeven, it strengthens the balance sheet. It enhances per share value and increase company share trading liquidity. Both transactions met such parameters. Slide 11, walking through the mechanics for the first transaction, vessel acquisition price was $97 million each. Imputed price taking into account the NAV arbitrage on the equity portion of the funding of the transaction implies $85.5 million. On the second transaction in January, vessel acquisition price $99.3 million. Imputed price after the NAV arbitrage implies $88.5 million. We effectively acquired recent vessels with [ promt ] delivery at the cost of a newbuild as a pure capital markets arbitrage. Above NAV [indiscernible] funded asset purchases at or below NAV, resulting in immediate NAV accretion. But it didn't stop there. And as I briefly mentioned before, the raise has also increased free float and liquidity, expanded and diversified the shareholder base, strengthened capital markets credibility and reduced fleet-wide breakeven levels. And importantly, we executed while asset values were rising. So not only did we have -- did we buy accretively, we bought ahead of further appreciation. We consider this a textbook example of shareholder-friendly execution. Growth only makes sense when it improves per share economics, and that is the filter we apply. I will now pass over the presentation back to Aristidis for the commercial market update.
Aristidis Alafouzos: Thank you, Iraklis. Again, we had another great quarter. Q4 was a fantastic quarter with a consistent strong freight market and appreciating asset values. We positioned our fleet to take advantage of the seasonal strong quarter, and this year, it worked out for us quite well. The market dipped aggressively right after Christmas on the VLCCs, but we're lucky to have limited exposure during this brief window. Fleet-wide TCE came in around $76,700 per day with $92,000 on our VLCCs and 53,100 on the Suezmaxes. And we achieved 100% utilization across the fleet. Q4 looked like it would be a strong quarter since August when rates in the spot market and future started moving in a period that is usually quiet. On the Suezmaxes, as usual, we tried to minimize waiting time, fix shorter voyages as the market was going up through the quarter and triangulate as best as possible. We were penalized by dry docking our 2 2020-built Suezmaxes in China. The freight rates to move out East were actually at a discount to the local Western voyages, while the backhauls were also below round trip economics. We have a Suezmax requiring dry dock this year, and we are strongly considering putting her into dry dock in Turkey, which is slightly more expensive as a dry dock cost, but we'll be able to earn a lot more as we do not have to position her and reposition her outside of our preferred trading areas. On the VLCCs, we were quite pragmatic. On our Western positions, we fixed long voyages to go east and capture the front haul economics. And on the vessels in the East, we minimize waiting time to optimize time -- TCE, time charter equivalent, while also fixing a couple of backhauls when we're able to find the cargo offer dates and achieve a triangulated outperformance over the equivalent round voyage. The Nissos Rhenia was lucky to fix a voyage loading in the AG and discharging in the U.S. Gulf. Her next voyage had no ballast passage. This was the first quarter where our VLCCs outperformed our Suezmaxes since Q2 2024. Q1 started with a bang. We already had an excellent structural setup in crude tankers. Then as the New Year's gift and Christmas gift as well, 2 developments reinforced the market. Venezuelan barrels returned exclusively to the compliant fleet and Synacor aggressively consolidating the VLCC market, controlling over 90 ships and now operating roughly 150 vessels. We will elaborate on both shortly. We think that our Q1 guidance is strong. We have very strong fixtures from Q4 flowing into Q1 and even stronger fixtures getting concluded in Q1. We fixed a 12-month charter at $91,140 on the Nissos Nikouria. While I strongly believe our spot vessels will outperform this over this year, we still have another 15 to 17 spot ships, and we deemed it prudent. In addition, the previous batch of fixtures in the mid-70s were quite low, and we took the opportunity to set the bar higher, which has now been set even higher with multiple fixtures done at $100,000 per day for 12 months. At the moment, we do not have any interest to fix further ships on TCE. But with the volatility and rapidly appreciating market, this could change, even though we really like and want to continue our current spot exposure. As of today, we have 67% of our VLCC spot days fixed at $104,200 per day and 64% of our Suezmax days fixed at $84,600 per day, giving us a fleet-wide average about $94,800 per day on the fixed portion, roughly 2/3 of the quarter. On the VLCCs, we fixed a combination of longer and shorter voyages in order to structure their next fixing -- cargo fixing windows. The Suezmaxes have also been performing wonderfully with many opportunities for them to earn over $100,000 a day. Take note that our Q1 guidance also includes repositioning our 2 newbuild vessels from South Korea into the West where we like to trade our ships. We secured crude cargoes on both vessels from West Africa, where now they're going to move up into our preferred areas. CPC Black Sea volumes have resumed at full force as the SPM that was damaged earlier is back in use. This is a great support on the Suezmax market as we see around 40 cargoes a month from that port alone. While recently, we have seen these barrels also getting sold into the East, which has not been the case for months. This is very supportive ton miles as a vast majority of the flows usually go into Europe. Another large factor in the strength of the market and our earnings has been the Venezuela being back in the open market. But again, we'll talk about this signed for and sanctions in the following slides. We were able to capitalize on many opportunities in this quarter and look to do so going forward. On Slide 15, apologies for the repetitive slide, and I'll keep this one brief. Since Q4 '19, we've generated approximately $235 million of cumulative outperformance versus our peers. So this is a 22% outperformance on RVs and 39% outperformance on our Suezmaxes over a 5.5-year period. This reflects consistent commercial execution, not just one strong quarter. On the following slide, we look a little bit at the order book and the fleet structure. The order book has grown on the VLCCs since our Q4 report, but context matters. If we consider the 20-year mark is the end of the useful life of a normal fleet vessel, the fleet is declining year-by-year. We saw an interesting development of how a change in sanctions affects oil flows and shipping flows with Venezuela. Oil sanctions are lifted, flows resume in the normal market. The world's best traders and oil managers get involved in the trading and production. What else do we see? That the ships that were sanctioned or engaged in this dark trade remain isolated. They will not be coming back to compete against us. As we look on the next weeks to Iran, is this how it plays out there. Eventually, when the Ukrainian conflict comes to an end, is that again the same pattern? I strongly believe that sanctioned and dark fleet tainted ships do not come back to the normal market. The only window potentially for some to return are those owned by national oil companies, whether it's the National Iranian Tanker Company or [indiscernible]. But this is a very small number in the overall dark fleet. And looking at our fleet, we are sitting exactly where investors want to be. We have a young eco-designed, fully scrubber-fitted fleet and most importantly, in the water, earning today. In our opinion, what does the shipping investor want? Exposure and returns today. This is what OET delivers. And now for the more exciting slides, we have over 20% of the fleet of large tankers sanctioned and even more engaged in the trade tainted but not yet sanctioned. Against all oil analysts and traders predictions, we do not have a massive oil blood in the market. What we see instead is an inability for sanctioned barrels to find a buyer and a lot of floating sanctioned cargoes. This inability has stretched the dark fleet, increased freight rates for them and forces them to absorb more tonnage, which further restricts the size of the normal fleet. The result is simple, fewer ships available for the compliant market. That is structurally bullish. Against this, we have 3 main noncompliant trades, Venezuela, Iran and the non-price capped Russian business. Today, Venezuela is gone. The oil exporting from Venezuela is only on the normal fleet. Every single barrel from Venezuela is a cargo that wasn't around in 2025. This is extremely positive for tanker ton-mile demand as the market settles and the trade grows, it will become even more pronounced. Another sign on the tightening enforcement of sanctions, which many respected oil and political analysts gathered was Trump's ability to impact oil flows, but he succeeded and India has materially decreased their purchases of Russian crude. So instead, we are seeing constant market quotes from the Arabian Gulf, from West Africa, from Brazil, from the U.S. Gulf and even flows from Venezuela. Again, every cargo from these places is a new cargo from the compliant fleet that's replacing the Russian crude. And the final and most bullish part of our 3-slide tanker dream section is the massive unprecedented consolidation in the VLCC sector by a privately owned non-trader. Synacor has or will take control of over 85 ships since Christmas. Their total fleet footprint should be around 156 ships. This is just unbelievable. They control 17% of the total fleet, while almost 40% of the smaller part of the pie of the fleet which we actually compete with in the spot market. They have been very effective at pushing up the market. Hats off and congratulations to Synacor for this. They have done the heavy lifting and let the rest of the market reap the rewards. The market must understand that this is a seismic shift and the biggest owner-operator of tonnage is not a charter or a state oil company. They are not trying to protect their own oil trading P&L. They're only trying to maximize freight for themselves. Looking at utilization on Slide 22. When I started my career, a good friend and a highly respected broker, Chuck Monson, always told me that as you move forward -- as you move toward the high end of the utilization curve, rates don't increase linearly. They move exponentially. And that's exactly what this slide illustrates. When the market tightens at these levels, even a small shift in utilization can translate into a very meaningful move in earnings. With how fast the market has moved recently, I suspect that as we give this presentation, we are most likely out of the light blue box and perhaps one click to the right. This is precisely where modern, fully spot exposed fleets like ours benefit the most. And if this trajectory continues, I look forward to making our Q1 presentation even more exciting. Thank you for joining us today.
Operator: [Operator Instructions] Your first question comes from the line of Even Kolsgaard with Clarksons Securities.
Even Kolsgaard: So you mentioned it yourself as well, but I'm interested in your take on the VLCC market versus the Suezmaxes because I think the market today is mostly focused on the VLCCs. The rates are good and you have the Synacor event. But as you mentioned, the VLCC market has finally begun to outperform the Suezmaxes reversing basically trend we've seen for the last few years. So how do you think about the Suezmax versus VLCC market going forward, both for earnings and values?
Aristidis Alafouzos: Even, thanks for your question. I mean, even in Q4 and potentially look -- I mean, at least through our guidance in Q1, on a dollar per metric ton or on a relative basis, the Suezmax is still outperforming the VLCC. So I mean, obviously, it's a cheaper ship, but the delta between price and earnings isn't still justified. So we think that the Suezmax is a really attractive asset. And as the VLCC market continues to tighten, and charters do their best to find ways to reduce the cost of transporting the oil from A to B. We think that the Suezmax will become a very versatile asset in order to do it. So we could -- I mean, there are some trades which will never make sense on the Suez instead of the VLCC or rarely. And this is like the really long-haul business, U.S. Gulf to China or a lot of the AG business to China. But a lot of the voyages WAF med or backhauls and the shorter runs, Suezmaxes can easily jump in and find a lot of opportunities to do backhauls or nontraditional Suezmax cargoes, which we would consider like a triangulated bonus over the normal Suezmax market. So for this reason, we think that the strength in VLCCs will be equally beneficial to the Suezmaxes and for savvy owners can give them even more opportunities to creatively trade their ships in this market.
Even Kolsgaard: Got it. And just a follow-up. I guess you said you don't want to get take on any more time charter contracts at these rates. So you're pretty bullish towards the market. But when it comes to Synacor, it seems like they're bidding for VLCCs from basically every owner. Have you been tempted to sell some of your ships to Synacor?
Aristidis Alafouzos: In [indiscernible] And my personal view is that Synacor will be successful in what he's trying to achieve. So I think that the exposure to the spot market and in the future, potentially TCE market or sales market is what we want to have today. Now going forwards, once things continue to reprice higher, I can't tell you what's the best choice for us to do. But I think right now, there's a lot of upside left in what's happening in the market. And right now, we've seen rates move up 20 points, a little bit more this week. And I still feel like that's just the beginning of the current spike that we're entering. So at the moment, no, we haven't seriously considered selling our Okeanis vessels to Synacor.
Operator: Your next question comes from the line of Liam Burke with B. Riley.
Liam Burke: You're generating a lot of cash at this level. You've got a nice hefty cash balance to support the acquisition of the 2 new Suezmaxes. Is your capital allocation strategy going to change from how it has been in the past? It's here.
Iraklis Sbarounis: Liam, it's Iraklis here. I don't think it has changed. I mean it has been for some time, a key priority for us to distribute as much value as possible to shareholders. The transactions that we did were structured in a way where that was not jeopardized by any means. And this quarter and the distribution we're giving is indicative of such strategy. So not really, we're trying to give out as much as possible, and we're just focusing on extracting as much possible -- as much value as possible from the market to deliver that to shareholders.
Liam Burke: Okay. Just a follow-on, on the market. In the prepared comments, the spot market is still continuing to move, I mean, exponentially at this point. But is there any thought to taking some money off the table and moving some vessel or more vessels to term charters?
Aristidis Alafouzos: Liam, we answered that during the presentation as well. At the moment, the answer is no. I think what we want is to have a vast majority of the fleet in the spot market, especially as we feel that there's a lot more upside to spot rates and to the charters and owners' expectations of spot rates over the next considerable period. So I think for now, we need to keep our ships in the spot market, so we have all the optionality we need. And then in a few months, we look at it again. But for the time being, the answer is clear no.
Operator: Your next question comes from the line of Fredrik Dybwad with Fearnley.
Fredrik Dybwad: Congratulations with the strong results and strong bookings. I was just trying to circle a bit back to Synacor. I was a bit interested in hearing your take on how -- can you guys hear me?
Aristidis Alafouzos: Yes, you got cut off right when you're asking the question.
Fredrik Dybwad: Okay. Okay. Yes, I was just circling back to the Synacor stuff. How -- interested in hearing your take about how in practical terms, how is he going to be able to corner the market as we know, he hasn't fixed that many ships yet, has fixed a couple. And then lastly, how long do you think that can last if he's successful?
Aristidis Alafouzos: I think that's a better question for Synacor then or [indiscernible]. I do see that his ships have been fixing. And I mean, I think that he has -- the company has stated where they think the market should be, and they will fix at those levels, and they've been very consistent with that. So I assume once rates get to the levels that they want, they'll fix some ships, they'll assess where the market is, and they'll continue to raise their expectations and put the rates higher and continue pushing this market higher. So I don't know. Again, the specific strategy of the company, and it's a question for Synacor.
Operator: Your next question comes from the line of Clement Moll with Value Investors Edge.
Climent Molins: First of all, congratulations on the 2 accretive offerings you pursued in recent months. I wanted to start by asking about where you see your maximum fleet size, say, on VLCCs and on Suezmaxes, where you can still capture this kind of premium you've been able to realize in recent years?
Aristidis Alafouzos: Thank you for the question and being on the call. I think we answered it on a previous call as well that we would be comfortable for the fleet to continue to -- on a theoretical level, we'd be comfortable if the VLCC or Suezmax fleet was slightly larger, and we could still capture the same earnings. But what I can tell you for sure is that the fleet is the right size today for us to continue doing so. So it's not just about fleet size. It's also about the team and personnel and the technical manager. So it's -- there's many facets to how we hope -- how we have and hope to continue outperforming. But I can tell you that currently, our fleet size is perfect for us to keep doing so.
Climent Molins: Makes sense. And this one is a bit more on the modeling side, but you mentioned you were thinking about potentially doing a dry docking in Turkey. Could you talk a bit about the delta between doing that in Turkey versus, say, in China?
Aristidis Alafouzos: Yes. I mean I think that depending on the type of paint specification you want and maybe you have an expectation of like $0.25 million to $0.5 million more expensive [indiscernible]. But in a strong market, you save way more of that by being able to keep your earnings higher and not repositioning all the way out there and all the way back. Some owners prefer to trade in the East. Historically, as a company, we've always -- we started off on smaller ships as well like before we were public on Aframaxes and our strongest relationships are in the West and with the more Western-based oil companies and traders. So we really feel that this is the area that we can outperform. And if we have a ship that goes in the East for dry docking or she gets, a Suezmax gets an option declared out there, we never think, okay, let's trade in the East. It's always about bringing her back home into the West. And by dry docking in Turkey, we can avoid the whole positioning out there and repositioning her back. Now I think at times, this can be easier. So let's say now like CPC Korea is $9.5 million in freight to go around the cape. So those are great earnings to position your ship out there. But the CPC volumes that I mentioned during our call aren't always flowing east. Sometimes they flow only into Europe. Now I assume that with Venezuela and all the knock-on effects of the Venezuelan oil and what places what and down the line, perhaps that has something to do with why we see more CPC going east. But it's not something consistent. And then you also have the issue of the backhaul. And before the war started -- before the war in Gaza started, the Suezmaxes would be easy to go through the Suez Canal as well. And that was a way to have a backhaul that it was always at a discount to the front haul, but because you're going through the Suez Canal, it wasn't such a long voyage. Now being forced to go around the cape both ways, it becomes an extremely long voyage. So you kind of -- you lengthen those lower rate economics, which is something that we don't prefer for the next dry dock.
Climent Molins: Yes. Makes sense. The opportunity cost is simply too high.
Operator: There are no further questions at this time. I will now turn the call back to Iraklis for closing remarks.
Iraklis Sbarounis: Thanks, everyone, for attending this call. We look forward to touching base in May for our first quarter update.
Aristidis Alafouzos: Bye, everyone.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.