Teekay Corporation Ltd.

Welcome to the TK Group's second quarter 2025 earnings results conference call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At that time, if you have a question, participants will be asked to press star 1 to register for a question. For assistance during the call, please press star 0. on your touch-tone phone. As a reminder, this call is being recorded now. For opening remarks and introductions, I would like to turn it over to the company. Please go ahead.

Before we begin, I would like to direct all participants to our website at www.tk.com, where you will find a copy of the TK Group's second quarter 2025 earnings presentation. Kenneth will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the second quarter of 2025 TK Group earnings presentation available on our website. I'll now turn the call over to Ken Fitt, TK Corporation and TK Tankers President and CEO to begin.

Thank you, Ed. Hello, everyone, and thank you very much for joining us today for the TK Group's second quarter 2025 earnings conference call. Joining me on the call today for the Q&A session is Brody Spears, TK Corporations and TK Tango CFO, Ryan Hamilton, our VP, Finance and Corporate Development, and Christian Waldegrave, our Director of Research. Starting on slide three of the presentation, we will cover TK Tango's recent highlights. TK Tango's reported gap net income of $62.6 million, or $1.81 per share, and adjusted net income of $48.7 million, or $1.41 per share, in the second quarter. Second quarter spot rates were counter-seasonally strong, with rates outperforming the last two quarters and above long-term averages for second quarter. Further, with spot rates well above our free cash flow break-even levels, the company generated approximately $62.8 million in free cash flow from operations, and at the end of the quarter had a cash and short-term investment position of $712 million and no debt. With strong free cash flow generation and cash position, TK Tankers is well-positioned to continue actively executing on our fleet renewal strategy. This includes reducing our exposure to 18- to 19-year-old vessels, as well as opportunistically selling some 2009-built Suez Maxes in today's historically higher asset price environment, as well as making incremental purchases of modern vessels. In July, we acquired one modern Suez Max, and we agreed to acquire the remaining 50% ownership interest in the Hong Kong Spirit VLCC from our joint venture partner. This VLTC acquisition was opportunistic based on relative market values and our belief in the near-term strength of the tanker market. In addition, the company agreed to sell four source maxes and one LR2, which will be delivered to their new owners in the third and fourth quarters for a combined total of $158.5 million, which we expect to result in an estimated book gain on sale of approximately $46 million. So far in 2025, we have sold or agreed to sell 11 vessels for total gross proceeds of $340 million and estimated book gains on sale of approximately $100 million. Although our sales have outpaced our purchases so far this year, the plan is to gradually change the pace of buying as we remain focused on renewing and growing our fleet in an accretive manner to future earnings. Looking at our third quarter, per day and $28,200 per day for our Suezmax and Afromax LR2 fleets, respectively, with approximately 43% of our stock days booked. We believe there are potential tailwinds for the tanker markets towards the end of the year and that the fundamentals for the medium term remain balanced, but with more uncertainty due to the complex geopolitical landscape. We'll discuss the drivers of the market in the next few slides. Lastly, TK Tango has declared its regular quarterly fixed dividend of 25 cents per share.