Okeanis Eco Tankers(ECO) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, the fleet-wide time charter equivalent (TCE) was approximately $39,000 per vessel per day, with VLCCs at$ 38,500 and Suezmax at $39,500 [4][5] - Adjusted EBITDA for Q4 was$ 37 million, with an adjusted net profit of $13 million and adjusted earnings per share of$ 0.41 [5] - For the full year 2024, TCE revenues grew to $262 million, with daily fleet-wide TCE of$ 53,000, EBITDA of approximately $204 million, and net income just shy of$ 109 million or $3.38 per share [7][8] Business Line Data and Key Metrics Changes - The Suezmax segment outperformed VLCCs in Q4, achieving a fleet-wide TCE rate of$ 39,000 per operating day for Q4 and $52,900 per operating day for the full year 2024 [18] - Utilization rates stood at 98% in Q4 and 97% for the full year, indicating efficient vessel deployment [18] Market Data and Key Metrics Changes - The crude tanker market is experiencing a structural supply imbalance, with over 700 VLCCs and Suezmaxes expected to be over 20 years old by 2028, while only around 200 vessels are scheduled for delivery [25] - The expanded sanctions framework now includes almost 10% of both VLCC and Suezmax fleets, further constraining fleet expansion [26] Company Strategy and Development Direction - The company aims to capitalize on supply constraints with its modern fleet and eco-friendly positioning, which allows it to consistently outperform the market [23][27] - Fleet triangulation remains a priority to maximize laden legs and optimize vessel deployment [20] Management Comments on Operating Environment and Future Outlook - Management noted that Q4 ended weakly due to crude market conditions, but Q1 of 2025 began positively with improved market rates following expanded sanctions [15][19] - The company expects further upside potential for ton-mile demand due to ongoing OPEC+ production policies and new U.S. sanctions on Russia and Iran [21][22] Other Important Information - The company declared an 11th consecutive dividend distribution of$ 0.35 per share, totaling $3 per share over the last four quarters, representing 89% of earnings for the year [5][6] - The company has successfully improved its margins by 130 basis points across 12 vessels, with interest expenses showing material improvement in Q4 [11][12] Q&A Session Summary Question: What are the positive pressures on Suezmax capacity going forward? - Management indicated that further sanctioning of the Russian trading fleet will tighten Suezmax supply, and the aging profile of the fleet adds to this pressure [36][38] Question: What is driving rate momentum into the second quarter? - Management explained that fixtures fixed after January 15 have improved significantly, and the impact of Q4 fixtures may carry into Q1 and Q2 due to the nature of voyage planning [42][46] Question: Is the Suezmax currently cleaned and how easy is it to switch back to clean trade? - Management confirmed that one Suezmax is currently cleaned, and while switching back to clean trade is possible, the cleaning process remains similar in time and cost [51][54] Question: How would reopening the Red Sea transit impact the Suezmax and VLCC markets? - Management believes reopening the Red Sea would positively impact Suezmax markets by restoring trade routes that had been priced out, while the impact on VLCCs would be less significant [62][65] Question: What is the outlook for VLCC and Suezmax valuations? - Management expressed confidence in VLCC values remaining firm due to a limited pool of sellers, while Suezmax values may face some downside due to a larger order book [70][71]