Top Ships, Inc.

•    Fleet with an average age of just 4.1 years, ensuring operational efficiency and low maintenance costs

•    Eco-friendly design and features: all vessels are fitted with Ballast Water Treatment Systems and Scrubbers

•    Strong partnerships with renowned charterers, ensuring consistent business

•    Experienced management team with a combined 110 years of shipping experience and proven track record

•    Secure revenue visibility due to time charters with high-quality charterers, representing contracted future revenue of $356 million*

•    Listed on NYSE, providing access to robust capital markets for growth opportunities

* as of June 30, 2024, excluding optional periods and including 50% of our JV vessels, extended to include a 7-year time charter extension entered into in July 2024

Top Ships' vessels, among the newest in the shipping industry, are environmentally friendly and energy efficient. This means that the company pays less for maintenance and repairs and enjoys the benefits of using less fuel to deliver its customers' cargo.

Incorporating various features in an oil tanker can bring several benefits, enhancing its performance, efficiency, environmental sustainability, and compliance with regulations. Here is a brief synopsis of the advantages associated with each feature:

• Energy Saving Devices (Hi-PSD, Hi-FIN, Hi-Rudder Bulb, Mewis Duct): The ESDs are devices attached to the tanker's hull, propeller, or rudder that optimize water flow around the vessel's appendices, reducing drag and improving fuel efficiency. These devices enhance the tanker's maneuverability, reduce fuel consumption, and lower greenhouse gas emissions.

• Larger Propeller: A larger propeller allows for more efficient propulsion, enabling the tanker to achieve speeds with less power and less fuel consumption. This feature enhances the vessel's overall performance, fuel efficiency, and operational flexibility.

• Electronic Two-stroke Main Engines: The electronic controller two-stroke main engine is a technologically advanced, fuel-efficient marine propulsion system. It offers precise combustion and fuel injection control, optimized fuel consumption, reduced emissions, and enhanced overall performance, resulting in improved fuel efficiency and lower operating costs for the oil tanker.

• Eco Autopilot: The eco autopilot is an advanced navigation system that optimizes the vessel's route planning, considering fuel efficiency, weather conditions, and traffic patterns. By optimizing the tanker's course, the eco autopilot reduces fuel consumption, enhances safety, and improves voyage efficiency.

• Scrubbers: All Top Ships vessels are equipped with Scrubbers or Exhaust Gas Cleaning Systems (EGCS). These systems are used in pollution control. Scrubbers remove particulate matter and harmful components, such as sulfur oxides (SOx) and nitrogen oxides (NOx), from the exhaust gasses generated as a result of combustion processes in marine engines. Exhaust gas streams are passed inside the scrubber, where an alkaline scrubbing material is present to neutralize the acidic nature of the exhaust gasses and remove any particulate matter from the exhaust.

• Hyundai Integrated Smart Ship Solution (ISS): is a sophisticated system that collects and analyzes real-time data on various operational parameters of the oil tanker, such as fuel consumption, engine performance, and emissions. ISS helps to reduce operating costs during voyages. It estimates the optimal voyage considering weather forecasting, operational condition, voyage schedule, etc. The company’s vessels can make better decisions by comparing the current status of their voyage and the optimal voyage recommended by ISS. This feature enables proactive monitoring, performance optimization, and predictive maintenance, improving operational efficiency and reducing downtime.

• Ballast Water Treatment: Ballast water treatment systems ensure that ballast water, taken onboard to stabilize the tanker is treated to prevent the spread of harmful aquatic organisms and pathogens. This feature helps protect marine ecosystems, comply with international regulations, and minimize the ecological impact of ballast water discharge.

• EEDI Certification: The Energy Efficiency Design Index (EEDI) certification demonstrates that the oil tanker meets international standards for energy efficiency. EEDI certification signifies that the vessel has been designed and built with features and technologies that reduce fuel consumption and greenhouse gas emissions, making it an environmentally responsible choice.

• Reduced Hydrodynamic Resistance Antifouling Paint: A reduced hydrodynamic resistance antifouling paint refers to specialized self-polishing coatings applied to the tanker's hull, designed to minimize frictional resistance between the vessel and the water. This feature improves fuel efficiency by reducing drag and increasing the vessel's speed while consuming less energy.

• Enviro Class Notation: Enviro class notation is a classification given to tankers that meet strict environmental standards set by classification societies. This notation signifies that the vessel complies with specific emissions, waste management, and environmental performance criteria, distinguishing it as an environmentally friendly and responsible tanker.

• Green Passport Class Rotation: The green passport class rotation refers to systematically replacing hazardous materials on board the tanker with environmentally friendly alternatives. This feature ensures compliance with international regulations, promotes safer operations, and demonstrates the vessel's commitment to environmental sustainability.

• Reduced CO2 Emissions: The implementation of eco-friendly technologies, such as the electronic G50ME main engine, larger propeller, ESDs, and reduced hydrodynamic resistance painting, helps to minimize the oil tanker's carbon dioxide (CO2) emissions. These features optimize fuel efficiency, reduce drag, and enhance propulsion, resulting in lower fuel consumption and reduced CO2 emissions. By achieving improved energy efficiency, the tanker can significantly contribute to mitigating climate change impacts.

• Reduced NOx Emissions (Tier III standards compliance): NOx emissions, harmful nitrogen oxide gases, can be effectively controlled using advanced emission control systems. NOx emissions can be reduced by equipping the vessel with selective catalytic reduction (SCR) or exhaust gas recirculation (EGR) technologies. These systems, introduced in Top Ships' latest vessels, reduce the formation and release of NOx into the atmosphere, enhancing air quality and minimizing the environmental impact of the tanker's exhaust gases.

• No Halon or Asbestos Onboard: Ensuring the absence of halon and asbestos onboard an oil tanker is crucial for the safety and well-being of crew members and the environment. Halon is a fire suppression agent known to have ozone-depleting properties, and its usage has been phased out due to environmental concerns. Similarly, asbestos, a hazardous material known for its health risks, has been prohibited due to its harmful effects on human health. By strictly adhering to regulations and guidelines, an oil tanker can maintain a safe and environmentally friendly working environment, protecting crew members and the ecosystem.

In summary, incorporating these features in an oil tanker offers numerous advantages, including improved fuel efficiency, enhanced performance, compliance with environmental regulations, reduced emissions, optimized maintenance, and minimized ecological impact. These features collectively contribute to a more sustainable, efficient, and responsible operation of the oil tanker.

Source: Company Documents

Top Ships has one of the industry's youngest fleets of tankers, providing many competitive advantages.

The company's vessels are equipped with the latest technologies, making them more fuel-efficient and cost-effective. This is a critical factor in a business where fuel costs account for significant operational expenses.

Tankers are available in various sizes, each purposefully designed to accommodate specific applications, as follows: (See image below.)

Small or Intermediate Tankers (10,000 - 60,000 DwT): These tankers, which include the General Purpose (GP) and Medium Range (MR) tankers, are commonly used for shorter regional voyages, often in coastal areas. They transport refined petroleum products such as gasoline, jet fuel, or diesel.

Panamax (60,000 - 80,000 DwT) and Aframax (80,000 - 120,000 DwT): These tankers are typically engaged in the regional transportation of crude oil, dirty petroleum products, and occasionally refined petroleum products. Panamax tankers are so named because they are the largest ships that can pass through the Panama Canal fully laden. Aframax vessels, on the other hand, are often used in the North Sea region.

Suezmax (120,000 - 200,000 DwT): These larger tankers are used primarily for long-haul crude oil transportation from regions such as West Africa and the Persian Gulf to markets in Europe, Asia, and the East Coast of the United States. They are named after the Suez Canal, as they are the largest vessels that can navigate through it when fully loaded.

Very Large Crude Carriers (VLCCs) (200,000 - 319,999 DwT): Predominantly used for long-distance, large-volume transportation of crude oil, VLCCs are commonly employed on trade routes from Middle Eastern countries to Asian markets, the United States, and Europe.

Ultra Large Crude Carriers (ULCCs) (320,000 - 500,000 DwT): These colossal vessels primarily transport crude oil on long-haul routes, but due to their immense size, they are limited to a few deep-water ports worldwide.

It's important to remember that while these categories are commonly used, the specific applications can vary based on market conditions, specific regional infrastructure, and contractual arrangements.

The company's vessels are designed with advanced emission control technologies and more efficient engines and are built to comply with stricter environmental regulations. In this way, Top Ships can reduce the risk of non-compliance penalties while enhancing the company's reputation for environmental responsibility.

The younger tankers also require far less maintenance than older models, resulting in lower costs and higher vessel utilization (i.e., fewer days the vessel suffers from damages equates to more days on charter).

Moreover, Top Ships can charge higher charter rates because its tankers are more efficient, more environmentally friendly, and safer. In addition, some jurisdictions have stringent environmental and safety regulations, meaning that aged vessels may only be allowed to operate in such locations with costly vessel upgrades and improvements. For these reasons, a young fleet can access a broader range of business opportunities. 

The diverse fleet of Top Ships comprises an assortment of tanker sizes, varying from the smaller MR2 Product Tankers with a deadweight tonnage (DwT) of 50,000 to the mid-range Suezmax tankers with a DwT of 157,000 and scaling up to the large-scale VLCC tankers with a whopping DwT of 300,000. This broad spectrum of vessel capacities enables the company to cater effectively to the diverse requirements of a wide customer base.

100% of the company's fleet is built in the Hyundai shipyards in South Korea, including Hyundai Mipo, Hyundai Samho, and Hyundai Heavy Industries (HHI). (See table below.) Within the shipping industry, Hyundai's shipyards are widely regarded as one of the world's top three premier shipbuilding facilities.

Source: Company Documents and Public Sources

Top Ships benefits from having established long-time relationships with some of the world's biggest charterers, evidenced by its current portfolio of long-term charter contracts. Among the advantages are:

1) Financial stability. The companies with which Top Ships does business are extremely solvent and stable, which ensures regular income and a very low risk of late payments.

2) Long-Term Contracts. Several of the company's reliable charterers have willingly entered into long-term contracts, extending up to five years.

3) Reputation. Top Ships' reputation is greatly enhanced through its association with major charterers.

4) Better Treatment of Vessels. All of Top Ships' charterers adhere to best practices in operating vessels, resulting in less wear and tear, lower maintenance costs, and ultimately an extended lifespan for its vessels. 

Source: Company Documents

Top Ships' Fleet Manager is a member of the Automated Mutual Assistance Vessel Rescue (AMVER), which is a worldwide voluntary ship reporting system operated by the United States Coast Guard. The organization's aim is to promote the safety of life and property at sea.

Top Ships' vessels are enrolled in the AMVER System. Furthermore, its fleet manager has been awarded a Certificate of Commendation for the successful rescue by one of its vessels of a man and his dog from a distressed yacht while sailing in the Atlantic Ocean from the Marshall Islands Flag Authority.

Top Ships fleet and charter coverage currently operate at 100% capacity. In addition, the company has booked 69% capacity through 2027 and has contracts extending through 2037. (See below.)

As a result, Top Ships has stable and highly predictable sources of revenue, which are beneficial in planning and managing growth.

Even though the oil industry is known for its volatility due to fluctuating oil prices, as a preferred shipping company Top Ships is largely insulated against market conditions due to locked-in long-term rates.

All of the vessels in their fleet are employed on time charters with fixed terms.

Source: Company Documents

Timely and opportunistic acquisitions

        •    Top Ships plans to grow the fleet through well-timed and selective acquisitions of modern, fuel-efficient vessels.

Their focus is on high specification ECO modern tonnage & Scrubbers.

        •    All of their vessels are built with the latest generation fuel-efficient designs and specifications. All their vessels are scrubber-fitted.

Top Ships is positioned to capitalize on relationships with high-quality customers

        •    The company will continue to cultivate relationships with major international oil companies and other well-known charterers in order to minimize counter party risk.

Act Opportunistically 

        •    Top Ships plans to invest in assets that are in line with their vessel owning and operating history.

According to the market research firm Global Market Insights, the oil tanker market is estimated at $247.5 billion in 2023, growing at a CAGR of 4.2% between 2023 and 2030. Another firm, Statista, estimates that approximately 8,900 oil tankers are operating globally, growing steadily at about 1% each year.

Source: Statista

One of the significant challenges to rapid growth lies in the considerable expense and lengthy construction time associated with these massive vessels. Moreover, constructing such behemoths is slow; building a tanker can take more than two years, and with the current bottleneck in shipyards around the globe, that can be extended to even four years. This extended timeframe and high costs render the industry relatively inelastic, resisting rapid expansion even amidst surges in demand.

According to Clarkson's, the industry's largest shipbroker, the tanker order book (i.e., the tankers currently under construction around the world) stands at only 4.6% of the current tanker fleet, since both owners and shipyards have lately been focusing on building LNG carriers and Containerships. Furthermore, according to Statista, 49% of tankers are aged more than 15 years, with 34% of tankers aged over 20 years. Given the age profile of the tanker fleet, a low order book, together with construction lead times of up to four years, replenishing the current fleet will likely prove difficult, even as oil transportation needs may increase in the future.

The long-term growth prospect for companies like Top Ships is bolstered by an intriguing factor: the average age of operational tankers currently hovers around the 12.5-year mark. The aging fleet of tankers poses heightened safety risks and increased risks of environmental accidents and necessitates significant maintenance and refurbishment to prolong their service life. However, tankers are deemed obsolete by the industry at 25 years of age, and high-profile charterers and oil majors' practice has been so far not to favor tankers older than 15 years. 

As these vessels inch close to obsolescence, the tanker supply may decrease, even when oil transportation needs escalate. Consequently, with their comparatively young and technologically advanced fleet, companies like Top Ships seem well-placed to retain and expand their market share.

“Eco-modern tonnage” refers to technologically advanced, environmentally friendly vessels equipped with features that reduce their carbon footprint and environmental impact.

“Scrubbers” are exhaust gas cleaning systems installed on ships to reduce sulfur emissions, allowing vessels to use higher sulfur fuel while still maintaining compliance with sulfur emission regulations.

The company's shipping fleet prioritizes eco-modern tonnage and scrubbers. Top Ships takes a proactive stance towards environmental responsibility and sustainability, aligning with global efforts to combat climate change.

The Top Ships fleet of advanced vessels offers operational and financial advantages, including improved fuel efficiency and cost savings, while ensuring preparedness for future environmental regulatory changes.

Top Ships, by using these advanced technologies and compliance measures, positions itself at the forefront of sustainable shipping practices, securing its long-term viability in an evolving regulatory landscape.

Environmental
The operation of the company’s vessels is affected by the requirements set forth in the United Nations’ International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code.

The ISM Code requires ship owners, ship managers, and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. 

Social
Top Ships has initiatives in place to improve diversity, inclusion, and equity within our organization. The company also places a high priority on a positive, safe, and healthy working environment for all employees.

Top Ships’ comprehensive Code of Ethics forms the cornerstone of its corporate culture. This code unequivocally asserts their commitment to fostering an inclusive environment. The company embraces diversity in all its forms, and ensures that no individual will be treated differently or less favorably based on their gender, race, ethnicity, age, religious beliefs, sexual orientation, marital status, nationality, physical abilities, ancestry, or political views. In their company, every voice matters, every contribution is valued, and every individual is respected.

Top Ships is proud of its Fleet Manager’s active membership in the Automated Mutual Assistance Vessel Rescue (AMVER) system, a U.S. Coast Guard-operated global initiative committed to sea safety. Not only are its vessels enrolled in AMVER, but their dedication to this cause has also been recognized with a Certificate of Commendation from the Marshall Islands Flag Authority, awarded following a successful rescue of a man and his dog from a distressed yacht in the Atlantic Ocean by one of its ships.

Governance
The company currently has an audit committee composed of three independent members, who are responsible for reviewing its accounting controls and recommending to its Board of Directors, the engagement of its outside auditors. Konstantinos Karelas, Paolo Javarone, and Stavros Emmanuel (Chairman), whose biographical details are included in Item 6 of the 2023 Annual Report, are the members of the audit committee, and the company’s Board of Directors has determined that they are independent under the NYSE corporate governance rules.

This communication is neither an offer to sell nor a solicitation of an offer to buy, nor a recommendation of any securities of the company mentioned herein.

Top Ships (the “Company”) has reviewed the content of this page as well as the accompanying presentation (“Company Presentation”) displayed on this page. To the best of its knowledge, the Company does not believe this content to be misleading or inaccurate in any material respect, nor does it believe there are any material omissions with respect to such content. The Company does not believe the contents of the page or the Company Presentation to contain any non-public material information.

Information and opinions presented in the Company Presentation are provided by the Company, and B2i Digital makes no representation as to their accuracy or completeness. The information contained on this page is not intended to constitute any form of advice, and the information provided is not intended to provide a sufficient basis on which to make an investment decision. It is not investment research, nor does it constitute a research recommendation, as it does not constitute substantive research or analysis. This information is not to be relied upon in substitution for the exercise of independent judgment. 

Information, opinions and estimates contained on this page or in the Company Presentation reflect judgments by the Company as of the original date of publication by the Company and are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied is made regarding future performance.

A complete description of the risks and uncertainties relating to the Company and its securities can be found in the company's filings with the U.S. Securities and Exchange Commission available for free at www.sec.gov.

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This communication includes forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “hopes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. The Company’s forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements due to risks, uncertainties and other factors. The Company urges readers to consider specifically the various risk factors identified in its most recent Form 10-K, and any risk factors or cautionary statements included in any subsequent Form 10-Q or Form 8-K, filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communion. Except as required by law, the Company does not undertake any responsibility to update any forward-looking statements to take into account events or circumstances that occur after the date of this communication.