EARNINGS CALL Q3 2020
1
FORWARD LOOKING STATEMENTS
Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company's current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions future operating results of the Company's vessels, capital expenditures, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their obligations to us, the strength of the world economies and currencies, general market conditions, including changes in tanker vessel charter hire rates and vessel values, changes in demand for tankers, changes in our vessel operating expenses, including dry-docking, crewing and insurance costs, or actions taken by regulatory authorities, ability of customers of our pools to perform their obligations under charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. We undertake no obligation to publicly update or revise any forward looking statement contained in this presentation, whether as a result of new information, future events or otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements.
2
CONTENT
- Q3 2020 HIGHLIGHTS
- FINANCIAL REVIEW
- CURRENT THEMES
- Q&A
3
HIGHLIGHTS Q3 2020
• Challenging winter market conditions due to OPEC+ cuts, slower demand recovery due to COVID-19 and increasing vessel capacity
• Q3 Dividend: USD 18.5 million or USD 9c per share | USD/day | ||
Q3 Share buyback: USD 18.5 million | |||
• FSO contract extended by 10 years to 2032 | |||
• Outlook - Q4 so far VLCC 50% fixed at around 22.5k per day | |||
Q4 so far Suezmax 45% fixed at around 11.5k per day | |||
In USD per day | Q3 2020 | Q3 2019 | |
VLCC | |||
Average spot rate (in TI | 42,000 | 25,250 | |
pool)* | |||
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
30000
25000
VLCC
Q3
20
P&L
B/E
Suezmax
P&L
Q3
19
Average time charter rate** | 48,750 | 33,000 | |
USD/day | |||
SUEZMAX | |||
Average spot rate*** | 23,500 | 17,250 | |
Average time charter rate** | 29,500 | 30,000 | |
*Euronav owned ships in TI Pool **Including profit share where applicable *** Excluding technical offhire days
20000
15000
10000
5000
0
B/E
Q3
20
Q3
19
4
CAPITAL ALLOCATION - EURONAV Q3 2020
Debt | Cash | Buy Backs | Fleet | |||
Repayment | Dividends | Equity & Bonds | Growth/Renewal | |||
Mandatory debt repayment FY20 Term Loan
repayment
=$62m motivated by profit
opportunity from Reduction of
contango price Revolving
structure
Facilities =$263m
YTD Dividend | Equity | Outstanding | |||
$1.57 per share | YTD$100m buy | capex $236m of | |||
back delivered | which >$220m | ||||
YTD Dividend | from bank | ||||
Yield | or | Q3repurchase | of | financing | |
involuntary | forced | part | logistical chain | ||
21%* | intention $18.5m | crude oil supply | |||
storage due to Covid- | in | ||||
19 | Delivery of 4x | ||||
Bonds | VLCC nowQ1 | ||||
Q3 | |||||
Restrictions, congestion, | |||||
Dividend USD 9c | YTD$1m bought | 2021 | |||
supply chain issues | |||||
per share | back | ||||
5
* Based on Euronav share price NYSE $7.52
FINANCIAL HIGHLIGHTS - INCOME
(in $ million) | Third quarter | Year-to-date | ||||||||
2020 | 2020 | Year-to-date 2019 | ||||||||
Revenue | 241.0 | 1,092.3 | 577.2 | |||||||
Other operating income | 1.9 | 4.6 | ||||||||
7.9 | ||||||||||
Voyage expenses and commissions | (35.5) | (98.6) | (109.8) | |||||||
Vessel operating expenses | (52.9) | (158.3) | ||||||||
(157.9) | ||||||||||
Charter hire expenses | (1.3) | (7.3) | - | |||||||
General and administrative expenses | (15.2) | (51.3) | ||||||||
(47.1) | ||||||||||
Net gain (loss) on disposal of tangible assets | - | 22.7 | 14.8 | |||||||
Depreciation | (80.1) | (241.9) | (253.1) | |||||||
Net finance expenses | (15.7) | (52.9) | (78.3) | |||||||
Share of profit (loss) of equity accounted investees | 4.4 | 11.8 | ||||||||
15.7 | ||||||||||
Result before taxation | 46.4 | 532.9 | (42.5) | |||||||
Tax benefit (expense) | (0.2) | (1.5) | 0.6 | |||||||
Profit (loss) for the period | 46.2 | 531.4 | (41.9) | |||||||
Attributable to: Owners of the company | 46.2 | 531.4 | (41.9) | |||||||
KEY KPI's Q3
- Revenues : 241 M$
- EBITDA : 145 M$
- Net income : 46.2 M$
P&L Breakeven
- VLCC : 28.9 $/day
- Suezmax : 26.4 $/day
Continuous focused cost control compared to YTD Q3 2019
- Shipping expenses
- G&A
- Financing expenses
6
FINANCIAL HIGHLIGHTS - BALANCE SHEET
HIGHLIGHTS
(in $ million) | Sep-20 | Dec-19 |
Cash | 161.6 | 297.0 |
Restricted cash | 0.0 | 0.0 |
Other current assets | 371.0 | 505.3 |
Long term assets: | ||
Newbuildings | 130.6 | 0.0 |
Vessels | 2,919.8 | 3,177.3 |
Other long term assets | 163.4 | 185.3 |
Total assets | 3,746.4 | 4,164.8 |
Current liabilities | 271.4 | 316.1 |
Long term debt | 1,053.5 | 1,523.7 |
Other long term liabilities | 15.3 | 13.1 |
Equity | 2,406.2 | 2,311.9 |
Total liabilities and stockholders' equity | 3,746.4 | 4,164.8 |
1 Leverage
35.8% leverage to book value
2 Liquidity
$1.2bn of available liquidity of cash and committed revolving credit facilities
6
FINANCING - ESG IN ACTION
Ship Financing - traditional model | Green Ship Financing model | |||
Emission targets > IMO | All banks to agree | |||
$469m | ||||
revolver | ||||
First sustainable linked | $713m | |||
loan signed in | sustainable | |||
September 2020 | linked loan | |||
$244m | ||||
term loan |
Independent measurement | Beat target = lower cost |
Source: Euronav
8
RECYCLING
WHEN VLCC RATES GO BELOW P&L BREAK EVEN = ON AVERAGE 5% FLEET DEPARTS
5% of current fleet = 41 VLCC
9% | ||||||||||||||||
8% | 8% | 8% | 8% | |||||||||||||
year | 7% | 7% | ||||||||||||||
during | ||||||||||||||||
6% | 6% | |||||||||||||||
recycled | 5% | 5% | 5% | 4% | 5% | |||||||||||
5% | ||||||||||||||||
fleet | 4% | |||||||||||||||
3% | 3% | |||||||||||||||
VLCC | 3% | |||||||||||||||
of | 2% | 2% | ||||||||||||||
% | ||||||||||||||||
1% | ||||||||||||||||
0% | ||||||||||||||||
1992 | 1993 | 1994 | 1995 | 1996 | 1999 | 2002 | 2009 | 2011 | 2012 | 2013 | 2017 | 2018 | ||||
% fleet recycled | VLCC rate for year | |||||||||||||||
Source: Clarksons
30,000
25,000
20,000
15,000
10,000
5,000
0
VLCC freight rate for Year
9
NOT ALL TANKERS ARE EQUAL…
"Market" VLCC
15 Year Old VLCC "Eco" VLCC
Freight | Fuel |
TCE |
Freight | Fuel |
TCE |
Freight | Fuel |
x80% | TCE |
Consumption | 60 tonnes | |
Utilisation | 100% | |
Opex + DD | $10,095 | |
$15,000 | ||
TCE rate | ||
70 tonnes | ||
54 tonnes | ||
80% | 100% | |
$11,740 | $9,800 | |
$9,600 | $16,800 | |
Costs | OPEX +DD | DD costs inc BWTS 15 yr old = $3m or $2740 p/d |
LSFO $300 p/ton | 10 yr old $10,095 p/d | |
Opex $9,800 p/d | 15 yr old $11,740 p/d | DD costs inc BWTS 10 yr old = $2.5m or $1095 p/d |
…AND MANY OF THESE FACE SPECIAL SURVEY OVER THE NEXT 3 QUARTERS
25 | |
or older | 20 |
SS4 (17.5 yrs) | |
15 | |
to go through | 10 |
required | |
VLCCofNo | 5 |
0 |
20
19
18 | 18 |
Q4 20 | Q1 21 | Q2 20 | Q3 20 |
FSO - 10 YEAR EXTENSION TO 2032
- 10 year contract extension starting Q3 2022
- $645m additional Revenue for JV over 10 years
- Debt free by Q3 2022
- 100% uptime since original contract 2010
- NO additional capex required
FSO+ : More than storage…
OUTLOOK
TANKER MARKET REMAINS IN TRANSITION PHASE
Demand for | Supply | Ton miles | Vessel | Euronav |
Balance | ||||
Oil | of Oil | Supply | ||
sheet | ||||
Change from Q2 20
Covid 19 restrictions | OPEC+ driving | US export growth | Orderbook to fleet | Liquidity of $1bn |
lowering demand but | supply cuts but oil | to ameliorate but | ratios at | + share buyback |
recovery unclear | >$40 adds bbls | offset elsewhere | 20 year lows | for LT value |
No Change | No Change | No Change | No Change | No Change |
13 |
Q&A
14
Attachments
- Original document
- Permalink
Disclaimer
Euronav NV published this content on 05 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 November 2020 08:21:04 UTC