Euronav : Q3 2020 presentation

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.

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CONTENT

1. Q3 2020 HIGHLIGHTS
2. FINANCIAL REVIEW
3. CURRENT THEMES
4. 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

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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

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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

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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

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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

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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
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Q&A

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