Okeanis Eco Tankers(ECO) - 2025 Q2 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from expectations Risks and Uncertainties This section highlights that forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from expectations - Forward-looking statements are subject to significant uncertainties and contingencies that are difficult or impossible to predict, potentially causing actual results to differ materially[1][2] - Key risk factors include ability to maintain customer relationships, future operating and financial results, vessel acquisitions/sales, financial condition and liquidity, oil tanker industry trends, dependence on technical manager, vessel aging, operational hazards, regulatory changes, geopolitical conditions (e.g., Russia-Ukraine, Israel-Hamas, Houthi crisis), and changes in oil demand[3][5] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and operational results, including key factors, accounting policies, and liquidity Principal Factors Affecting Our Business The company's financial performance is primarily influenced by fleet size, charter rates, charter duration, operating costs, maintenance, vessel age, and financing decisions - Principal factors affecting the business include the number of vessels, various charter rates (voyage, time trip, period), nature and duration of charters, vessel repositioning, operating and voyage costs, maintenance, vessel age/condition, share issuance, debt obligations, and financing costs[9][10] - Period time charters offer predictable cash flows but potentially lower profit margins, while spot charters are less predictable but can yield higher margins in favorable market conditions, though they expose owners to declining rates and rising fuel costs[9][11] Material Accounting Policies and Critical Accounting Estimates The company refers to its 2024 Annual Report for detailed accounting policies and estimates, confirming no material changes for the six months ended June 30, 2025 - No material changes have occurred in critical accounting judgments and key sources of estimation uncertainty since the 2024 Annual Report[12] Important Financial and Operational Terms and Concepts This section defines key financial and operational terms like revenue components, expense categories, and performance metrics such as Daily Time Charter Equivalent (TCE) Rate and Daily Vessel Operating Expenses (Opex) - Revenues are primarily from time and voyage charters, affected by hire rates, operating days, and the mix of business, with voyage charters being more volatile due to market rates[13] - Key expense categories include commissions (up to 3.75% of charter hire), voyage expenses (port, canal, bunker costs for voyage charters), vessel operating expenses (crewing, insurance, repairs), drydocking costs, general and administrative expenses, and management fees ($900 per vessel/day)[15][16][17][18][20][21] - Inflation impacts vessel operating expenses and corporate overheads, with insurance and crew costs expected to rise, and interest on SOFR-based loans can increase with central bank rate hikes[22] - Key performance indicators include Calendar days (total days in possession), Operating days (revenue-generating days), Off-hire (non-chartered/non-performing days), Fleet utilization (operating days / calendar days), Daily TCE Rate (TCE revenue / operating days), and Daily Opex (vessel operating expenses + technical management fees / calendar days)[25][26][27][28][29][30] Main Components of Business Management and Profitability Drivers Business management encompasses financial administration, reporting, compliance, and relationship management, while profitability is driven by charter rates, utilization, costs, depreciation, and financing - Business management components include financial resource administration, accounting and reporting, legal and regulatory compliance, and managing relationships with service providers and customers[31] - Profitability drivers are charter rates and periods, vessel utilization, operating and drydocking costs, depreciation and amortization, financing costs, and foreign exchange rate fluctuations[31] Results of Operations For the six months ended June 30, 2025, the company experienced a significant decrease in revenue and operating profit compared to the prior year, primarily due to a lower fleetwide Daily TCE Rate Condensed Statement of Profit or Loss (Six months ended June 30) | USD | 2025 | 2024 | Change Amount | | :--- | :--- | :--- | :--- | | Revenue | $174,094,786 | $223,110,983 | $(49,016,197) | | Voyage expenses (incl. commissions) | $(61,525,511) | $(62,643,977) | $1,118,466 | | Vessel operating expenses (incl. Mgmt. fees) | $(24,326,471) | $(23,692,085) | $(634,386) | | Depreciation and amortization | $(20,565,522) | $(20,331,446) | $(234,076) | | General and administrative expenses | $(8,463,067) | $(7,669,010) | $(794,057) | | Operating profit | $59,214,215 | $108,774,465 | $(49,560,250) | | Interest income | $815,603 | $1,974,382 | $(1,158,779) | | Interest expense and other finance costs | $(24,164,014) | $(28,683,315) | $4,519,301 | | Gain/ (loss), net on derivatives | $2,863,108 | $(481,924) | $3,345,032 | | Foreign exchange gain/ (loss) | $713,930 | $(461,320) | $1,175,250 | | Total comprehensive income for the period | $39,442,842 | $81,122,288 | $(41,679,446) | Performance Indicators Key performance indicators reveal a 21.97% revenue decrease and a 30.7% drop in Daily TCE Rate for H1 2025, leading to a 51.4% decline in net profit - Revenue decreased by $49.0 million (21.97%) to $174.1 million in H1 2025 from $223.1 million in H1 2024, primarily due to a decrease in fleetwide Daily TCE Rate[34] - Daily TCE Rate decreased by 30.7% to $44,529 in H1 2025 from $64,254 in H1 2024[34][39] - Net profit for H1 2025 was $39.4 million ($1.23 EPS), a 51.4% decrease from $81.1 million ($2.52 EPS) in H1 2024, mainly due to lower revenues[34] Key Performance Indicators (Six months ended June 30) | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $174,094,786 | $223,110,983 | $(49,016,197) | | Daily TCE Rate | $44,529 | $64,254 | $(19,725) | | Voyage expenses | $(59,517,139) | $(60,238,825) | $721,686 | | Commissions | $(2,008,372) | $(2,405,152) | $396,780 | | Vessel operating expenses | $22,045,871 | $21,398,885 | $646,986 | | Management fees | $2,280,600 | $2,293,200 | $(12,600) | | General and administrative expenses | $8,463,067 | $7,669,010 | $794,057 | | Interest and finance costs | $24,164,014 | $28,683,315 | $(4,519,301) | | Net Profit | $39,442,842 | $81,122,288 | $(41,679,446) | | Basic & Diluted EPS | $1.23 | $2.52 | $(1.29) | | Operating days | 2,528 | 2,497 | 31 | | Daily Opex | $9,600 | $9,298 | $302 | Liquidity and Capital Resources The company's liquidity, funded by equity, debt, and operating cash flow, supports capital expenditures and debt servicing, with total indebtedness decreasing and working capital improving Cash Flows (Six months ended June 30) | USD | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $49,287,325 | $125,339,642 | $(76,052,317) | | Net cash used in investing activities | $(1,892,675) | $(1,299,918) | $(592,757) | | Net cash used in financing activities | $(38,073,473) | $(80,712,029) | $42,638,556 | | Net change in cash and cash equivalents | $9,321,177 | $43,327,695 | $(34,006,518) | | Cash and cash equivalents at end of period | $59,753,419 | $92,798,770 | $(33,045,351) | - Decrease in net cash from operating activities was mainly due to a $49.0 million decrease in revenues and movements in working capital[52] - Net cash used in financing activities decreased due to lower distributions paid to shareholders ($21.6 million in 2025 vs. $56.7 million in 2024) and lower net debt outflows[52][53] Total Debt Obligations (as of June 30, 2025) | Metric | Amount (USD) | | :--- | :--- | | Outstanding Balance | $636,009,067 | | Unamortized Deferred Financing Fees | $5,182,480 | | Net of Loan Financing Fees | $630,826,587 | | Other Finance-lease liabilities | $70,959 | | Total Net Debt | $630,897,546 | | Interest Rate (SOFR+Margin) | S+2.27% | - Repurchased Milos in February 2024 and Poliegos in July 2024, ending their respective sale and leaseback agreements[64][65] - Repurchased Nissos Nikouria and Nissos Kea in June 2025, ending their sale and leaseback arrangement[68] - Entered into new secured credit facilities in 2025 to finance the repurchase of Nissos Kea ($65.0 million) and Nissos Nikouria and Nissos Anafi ($130.0 million)[72][73] - The company prepaid the $58.0 million secured term loan facility for Nissos Anafi in February 2024 and repaid the $35.1 million unsecured sponsor loan in March and May 2024[58][70] - The $125.7 million secured term loan facility for Nissos Kythnos was repaid on May 24, 2024, and the margin for Nissos Donoussa was reduced to 165 basis points over Term SOFR[54][55] - The company was in compliance with all financial covenants as of June 30, 2025[116] Fleet As of June 30, 2025, the company operated a fleet of 14 vessels, with an average age of 5.9 years and a total capacity of approximately 3.5 million deadweight tons - As of June 30, 2025, the fleet comprised 14 vessels with an average age of 5.9 years and 3.5 million deadweight tons capacity[74] - The fleet consists of six Suezmax vessels (average age 6.8 years) and eight VLCC vessels (average age 5.2 years)[77] Dividend Policy Dividend declaration is discretionary, based on financial performance, market conditions, capital needs, and loan restrictions, with no assurance of future payments - Dividend declaration is discretionary, based on earnings, financial condition, market prospects, capital expenditures, loan restrictions, and Marshall Islands law[74] - The company intends to pay dividends based on net profits, adjusted for non-recurring items, working capital needs, and capital structure[74] - No assurance that dividends will be paid in the future, and amounts may vary significantly[75] Interim Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited interim consolidated financial statements, including statements of profit or loss, financial position, changes in equity, and cash flows, along with explanatory notes Unaudited Condensed Consolidated Statements of Profit or Loss (Six months ended June 30) | USD | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $174,094,786 | $223,110,983 | | Total operating expenses | $(114,880,571) | $(114,336,518) | | Operating profit | $59,214,215 | $108,774,465 | | Total other expenses, net | $(19,771,373) | $(27,652,177) | | Profit for the period | $39,442,842 | $81,122,288 | | Earnings per share - basic & diluted | $1.23 | $2.52 | Unaudited Condensed Consolidated Statements of Financial Position (as of) | USD | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total non-current assets | $946,286,937 | $963,187,726 | | Total current assets | $136,833,282 | $118,911,883 | | TOTAL ASSETS | $1,083,120,219 | $1,082,099,609 | | Total shareholders' equity | $428,299,706 | $410,426,916 | | Total non-current liabilities | $585,029,821 | $599,002,128 | | Total current liabilities | $69,790,692 | $72,670,565 | | TOTAL LIABILITIES | $654,820,513 | $671,672,693 | - Vessels, net decreased from $958.6 million (Dec 31, 2024) to $938.7 million (June 30, 2025)[80] - Cash & cash equivalents increased from $49.3 million (Dec 31, 2024) to $59.8 million (June 30, 2025)[80] - Long-term borrowings, net of current portion, decreased from $599.0 million (Dec 31, 2024) to $583.9 million (June 30, 2025)[80] Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity (Six months ended June 30) | USD | Balance - Jan 1, 2025 | Profit for the period | Dividends paid | Balance - June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Total shareholders' equity | $410,426,916 | $39,442,842 | $(21,570,052) | $428,299,706 | | | | | | | | USD | Balance - Jan 1, 2024 | Profit for the period | Capital distribution | Balance - June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total shareholders' equity | $408,132,148 | $81,122,288 | $(56,661,629) | $432,592,807 | Unaudited Condensed Consolidated Statements of Cash Flows (Six months ended June 30) | USD | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $49,287,325 | $125,339,642 | | Net cash used in investing activities | $(1,892,675) | $(1,299,918) | | Net cash used in financing activities | $(38,073,473) | $(80,712,029) | | Net change in cash and cash equivalents | $9,321,177 | $43,327,695 | | Cash and cash equivalents at end of period | $59,753,419 | $92,798,770 | Notes to Unaudited Interim Condensed Consolidated Financial Statements These notes provide detailed information on the company's incorporation, accounting policies, financial risk factors, vessel assets, long-term borrowings, derivative instruments, related party transactions, share capital, earnings per share, revenue breakdown, commitments, contingencies, and significant subsequent events 1. Incorporation and General Information OET was incorporated in the Marshall Islands in 2018, with controlling interests held by Glafki Marine Corp. and Hospitality Assets Corp., and its shares trade on the NYSE and Oslo Stock Exchange - OET was incorporated on April 30, 2018, in the Republic of the Marshall Islands[83] - Glafki Marine Corp. and Hospitality Assets Corp. (controlled by Ioannis and Themistoklis Alafouzos) collectively hold a controlling interest in OET, owning 34.2% and 20.6% of outstanding common shares, respectively[83][84] - The company's common shares began primarily trading on the NYSE on December 11, 2023, with a secondary listing on the Oslo Stock Exchange[86] 2. General Accounting Principles Financial statements are prepared under IAS 34 in USD, with no material changes to accounting policies since the 2024 Annual Report, though new IFRS standards are pending adoption - Financial statements prepared in accordance with IAS 34 Interim Financial Reporting and expressed in USD[88][89] - No material changes to accounting policies since the 2024 Annual Report[91] - New IFRS standards (IFRS 18, amendments to IFRS 9 and IFRS 7, Annual Improvements to IFRS Accounting Standards — Volume 11) are in issue but not yet adopted, with IFRS 18 expected to have a disclosure impact[93][94][95] Financial Risk Factors The Group is exposed to various financial risks including credit, market, currency, interest, and liquidity risks, with no significant changes in risk management policies since December 31, 2024 - The Group is exposed to credit risk, market risk, currency risk, interest risk, and liquidity risk[97] - No significant changes in risk management policies since December 31, 2024[98] Vessels, Net (Cost and Accumulated Depreciation) | USD | Jan 1, 2024 | Dec 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Vessels' cost | $1,138,221,805 | $1,138,221,805 | $1,138,221,805 | | Dry-docking and special survey costs (Cost) | $16,215,323 | $21,843,553 | $22,468,662 | | Total Cost | $1,154,437,128 | $1,160,065,358 | $1,160,690,467 | | Accumulated Depreciation (Vessels) | $(158,183,343) | $(195,677,625) | $(214,073,693) | | Accumulated Depreciation (Dry-docking) | $(8,185,605) | $(5,790,213) | $(7,948,730) | | Total Accumulated Depreciation | $(166,368,948) | $(201,467,838) | $(222,022,423) | | Net Book Value | $988,068,180 | $958,597,520 | $938,668,044 | - The charter-free market value of all vessels exceeded their carrying value as of June 30, 2025, negating the need for a recoverable amount test[100] Long-Term Borrowings Summary | USD | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Outstanding loan balance | $636,009,067 | $651,628,487 | | Loan financing fees | $(5,182,480) | $(6,062,278) | | Total (Net of financing fees) | $630,826,587 | $645,566,209 | | Current portion of long-term borrowings | $48,102,448 | $47,942,084 | | Long-term borrowings, net of current portion | $587,906,619 | $603,686,403 | - New $65.0 million secured credit facility for Nissos Kea (SOFR + 1.35%) and $130.0 million facility for Nissos Nikouria and Nissos Anafi (SOFR + 1.40%) were drawn in May/June 2025 to finance repurchases[110][111] - The company recognized a $1.8 million modification gain in H1 2024 from amendments to bareboat charter agreements and a $1.1 million loss on debt extinguishment in H1 2025 due to refinancing[113] Derivative Financial Instruments Fair Values (as of June 30, 2025) | Instrument | Financial Position | Fair Value (USD) | | :--- | :--- | :--- | | FXSs | Current asset portion | $1,744,055 | | FXSs | Non-Current asset portion | $868,052 | | FFAs | Current Liability Portion | $(208,667) | | Total | | $2,403,440 | Effect of Derivatives on Profit or Loss (Six months ended June 30) | Type | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Total unrealized gain/ (loss), net on derivatives | $2,465,940 | $(443,334) | | Total realized gain/ (loss), net on derivatives | $397,168 | $(38,590) | Related Party Balances (Kyklades Maritime Corporation) | USD | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Balance due from/ (to) KMC | $623,462 | $(530,030) | - KMC provides technical management services for a daily fee of $900 per vessel[122] Related Party Transactions (Six months ended June 30) | Transaction | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Management fees to KMC | $2,280,600 | $2,293,200 | | Directors' fees | $262,007 | $225,000 | | Key management personnel remuneration | $4,129,718 | $3,973,613 | - A revised compensation policy for directors became effective June 1, 2025, adjusting the annual base fee to $45,000 and introducing committee fees[127] 7. Share Capital and Additional Paid-in Capital and Dividends The company distributed $21.6 million in dividends during H1 2025, with 32,194,108 shares outstanding as of August 12, 2025 - Distributed $11.3 million ($0.35 per share) in dividends in March 2025[132] - Distributed $10.3 million ($0.32 per share) in dividends in June 2025[132] - As of August 12, 2025, 32,194,108 shares were outstanding[132] Earnings Per Share (Six months ended June 30) | USD per Share | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the period attributable to Owners | $39,442,842 | $81,122,288 | | Weighted average number of shares outstanding | 32,194,108 | 32,194,108 | | Earnings per share, basic and diluted | $1.23 | $2.52 | Revenue Analysis by Charter Type (Six months ended June 30) | USD | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Voyage charter | $172,125,286 | $204,468,964 | $(32,343,678) | | Time charter | $1,969,500 | $18,642,019 | $(16,672,519) | | Total Revenue | $174,094,786 | $223,110,983 | $(49,016,197) | Revenue by Continent (Six months ended June 30) | USD | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Europe | $92,258,864 | $109,045,145 | $(16,786,281) | | Asia | $64,445,219 | $71,397,326 | $(6,952,107) | | North America | $13,625,121 | $30,690,207 | $(17,065,086) | | South America | $3,765,582 | $11,978,305 | $(8,212,723) | | Total | $174,094,786 | $223,110,983 | $(49,016,197) | 10. Commitments and Contingencies The company faces various claims and suits in the ordinary course of business but is not aware of any material contingent liabilities requiring disclosure - Various claims and suits arise in the ordinary course of shipping business, including those involving government regulations, charterer disputes, environmental claims, and supplier issues[139] - Management is not aware of any material claims or contingent liabilities requiring disclosure as of the reporting date[139] 11. Subsequent Events A dividend of $0.70 per common share was declared, payable on September 5, 2025, to shareholders of record as of August 22, 2025 - A dividend of $0.70 per common share was declared, payable on September 5, 2025, to shareholders of record as of August 22, 2025[140]