Stolt-Nielsen Ltd Ord

Good afternoon and welcome to Stolt Nielsen's first quarter 2025 results. As always, the earnings release and related materials are available on our website. We will also be recording this session and playback will be available on the website from tomorrow. Included in this presentation are various forward looking statements. Such forward looking statements are subject to risks and uncertainties. and we refer you to our latest annual report for further details. I'm Alex Ung, Vice President of Corporate Development and Strategy. Joining me today are Udo Lange, CEO, and Jens Brunnerheger, CFO. At the end of the presentation, there will be a Q&A session where you will be able to take questions online. To ask a question, simply type into the Q&A function on your screen. Thank you. And over to you, Udo.

Thanks, Alex. Welcome, everyone, and thanks for joining us for our Q1 results today. The presentation will follow the usual format. I will begin with an overview of the group's results for the first quarter of 2025 and share some key highlights. Then Jens will cover the financial before handing back to me to run through the performance of our divisions, our view of the market outlook, and a few concluding remarks. I start by saying I'm proud of the whole Stolt Nielsen team across our global footprint for the commitment to navigating the volatility in the markets, their dedication to pursuing our strategy and their stead focused focus on safety and protecting the environment. We all aspire to be simply the best for people, customers and shareholders. And that comes through in all that we do. In the first quarter, we have achieved a solid performance with EBITDA over $190 million. We have been facing significant uncertainty and volatility in our operating environments through early 2025, driven in the main by geopolitics. The USTR's proposed tariffs and port fees on maritime transport operations would directly impact the global chemical supply chain, and so we're seeing our customers delaying supply chain decisions. This directly impacted volumes at Stoll Tankers. Our other business lines performed well, providing stability to our group performance with non-shipping EBITDA up 6% overall, to an extent balancing the 70% decline in Tankers EBITDA to deliver an overall performance of minus 9%. Stolthaven Terminals has seen improved utilization at ongoing strong margin versus the previous quarter. STC has also delivered an improved margin and Seafarm enjoyed an excellent Christmas season with sustained strong pricing. The diversification we have within our portfolio across both liquid logistics and agriculture therefore creates some resilience to shocks in the shipping sector. As a reminder, nearly 70% of our top 100 customers buy more than one liquid logistics service from us. And for Q1, the contribution to EBITDA from our non-shipping businesses was around 40%. This is really the key takeaway from today's earnings call. Stolt Nielsen is not a shipping business. We have a diversified portfolio consisting in the main of our differentiated liquid logistics department store and leading land-based aquaculture. The company is and will continue to be more resilient in challenging times like these. We strongly believe this and it underpins our announcement this morning of a relange of our share buyback program as an effective use of funds for shareholder distributions. To facilitate future growth and further diversification, we continue to invest in our businesses. We completed the acquisitions of the remaining 50% of Hassel's four joint ventures and of small-scale LNG carrier Avenir, which not only created a one-off gain this quarter, but in aggregate should also deliver a positive contribution to EBITDA of around $50 million per year. We have also seen recently that we announced a series of ongoing investments to expand and enhance our operations across the US. Since 2019, Stolthaven Terminals has invested more than $200 million in upgrading and expanding terminal assets, and we have further committed projects underway which will increase investment in the U.S. by a further $200 million in the coming years. We continue to focus on the balance sheet to fund these investments, which will facilitate our future growth as well as meet debt service obligations and provide dividends with ample headroom. The final dividend of $1.25 per share was announced recently, subject to shareholder approval at the AGM. As you probably know, yesterday there were a number of US trade policy announcements And last week, we also saw public hearings on proposed US port fees. These are likely to have an impact on global trade, but it is too early to know the full implications. We are working through these with our customers. Let's now turn the page to review our financial highlights. I said up front that the operating environment has been challenging, and this has been reflected in this quarter's results. Moving along to the top array. Operating revenue was down nearly 5% or $31 million, predominantly driven by the lower volumes installed tankers. We achieved an EBITDA of $192 million, which is down from where we were last year, but a solid result nonetheless, given the operating environment. The impact of the volume decline is also felt in operating profit, which was $108 million down $24 million. And this is similarly reflected in the net profit on the bottom left. Free cash flow reflects the significant investments we made into hassle four and are we near in the quarter as per the previous page. Net debt to EBITDA has increased to 2.8 times again as a result of our investments during the period, And significant headroom remains here. Over the page, we look at some of the key drivers of our performance. Average TCE revenue for the quarter was $27,620 per operating day, down nearly 8% compared to Q1 last year. This was mainly driven by lower volumes as customer sentiment was impacted by geopolitical uncertainty. At STOHL Heaven terminals, utilization is trending upwards quarter over quarter, returning closer to the prior year's level. We expect utilization to continue to gradually trend up at healthy margin levels over the coming quarters, delivering running scores. Balancing of volumes and rates have driven growth profit per shipment higher, allowing STOHL tank containers to deliver an improved operating profit performance And this is despite the decline in shipment volumes, as tank container business pursues higher margin business. And finally, performance at Stealth Seafarm has been excellent, where the team have carried momentum from a seasonally strong sales period into a strong quarter. As you can see here, sales volumes were up. This reflecting strong demand for our turbo and sole, whilst also recording high pricing, which drove profit performance for the quarter. That's all from me now. Jens, over to you for the financials.

Thank you, Udo. Good afternoon everyone and good morning to those of you joining us from the United States. Just as a reminder, our first quarter runs from December 1st, 24th through February 28th, 2025. And I will compare the first quarter this year with the first quarter last year. So to reiterate what Udo has talked about, that the first quarter was filled with uncertainty and volatility impacting sentiment in the tanker markets. And against this backdrop, the performance for the quarter was strong with EBITDA of $192 million, and the company finished the quarter with a strong balance sheet. So let's dive into the numbers. As mentioned, overall performance remains resilient. The drop in revenue was driven by the lower tanker revenue reflecting reduced volume. This also caused a reduction in operating expense as the time charter hire expense was down in line with the lower tanker pool results. Revenue in terminals was flat as utilization was slightly down due to the margin optimization initiative, while rates and margins improved. Stole tank containers revenue was marginally down due to a decrease in shipments. albeit at higher margins compared to the same quarter last year. At Stoll Seafarm, we saw further improvements driven by higher prices. The quarter also included a $6 million increase in revenue from the consolidation of Avenir. Moving to depreciation, this was up by $6.2 million, driven by the capitalization of additional time charter ships as per IFRS 16, and the consolidation of Avenir and Hustle Shipping IV. Equity income from joint ventures was down compared to the same quarter last year, as both Avenir and Hustle Shipping IV transitioned from equity accounting to consolidation during the quarter. AMG expense was up compared to last quarter, mostly reflecting the annual inflation impact on salaries. And then operating profit for the quarter was $107.9 million, down from $132.1 million, driven by the lower tanker results, with the other businesses being flat to slightly up. The acquisition of Avenir and Hustle Shipping 4 had a minimal impact on this quarter. Our expectation is that these two businesses will contribute an annualized EBITDA of approximately $50 million combined, and that is, of course, subject to market conditions. Net interest expense was up $4 million due to an increase in debt following the acquisition, as well as lower interest income. Note also the $75.2 million gain on the step-up acquisition of Avenir and Hustle Shipping IV. This is a non-cash gain and reflecting the step up of values in the two companies on our original investment. Other non-operating income was $8.2 million and that reflects $7 million in dividends received on our investments in Oddfield and Golar. And therefore net profit for the quarter ended up at $151.4 million with EBITDA of $192 million and excluding the one-off gains, the net profit was $76.2 million, as mentioned by Udo. So let's move over to the cash flow. Cash generated from operations was up $17 million, as you see on the top line, reflecting a variable change in working capital movement of about $30 million, partly offset by lower operating results. Interest paid was up $11 million, reflecting the increase in debt, whilst interest received was down $2.3 million following the use of cash on acquisitions, capex, and other payments. With the increase in taxes paid, the net tax generated from variations was mostly flat. Capital expenditures were up substantially. $158 million was spent on the acquisition of HS4 and Avenir, net of cash received on consolidation. In addition, we spent $36 million on terminal capex for organic growth, almost $16 million on the purchase of tank containers, and $6 million on dry dockings. We also had some debt movements during the quarter as we repaid $103 million on a facility secured by ships and refinanced another facility, resulting in a reduction in margins. We also drew down $150 million on our revolving credit facilities. to support the capital expenditures. And finally, we paid $1.25 per share in interim dividends in early December, resulting in a net cash used in financing activities of $93 million versus $119 million same quarter last year. Consequently, our net cash flow was negative $178 million, resulting in cash and cash equivalents reducing from $334 million to $156 million. Just drawing attention to the graph on the bottom right, you can see our total liquidity position, which at the end of the first quarter was $454 million. Moving over to capital expenditures, The first quarter capital expenditures, excluding drive-up payments, were $226 million, a significant increase from the $87 million we spent in the fourth quarter of 2024. And that, of course, reflects the acquisitions we talked about. Remaining for the year, we have just over $300 million. $69 million for tankers, reflecting progress payments on new buildings. $135 million for Stalthaven terminals, reflecting additional organic growth and maintenance capex. $24 million in STC on the purchase of additional tanks and growth capex at Stull Seafarm. And finally, progress payments made on Avenir's new building program. Looking at the debt maturity profile on the next slide, the maturity profile now includes the consolidated debt for both Hustle Shipping 4 and Avenir, adding in total $324 million. This increased the balloon maturities in 2027 and 2028. In addition, we have the $140 million maturity in 2027 under the revolving credit facility drawn during the first quarter to fund the acquisitions. If you look at the bottom left graph, the increase in gross debt in the first quarter reflects the consolidation of the Avenir and Hustle Shipping IV debt. The $140 million draw on the revolving credit facility, less repayments made during the quarter. Pointing to the last bullet under the highlights, the $90 million in new debt agreed that we will draw on in the second quarter will be used to partly repay the $140 million draw on the revolving credit facility, thereby extending our maturity profile as we have extended the maturity of this facility out to 2031. Overall, the average interest rate remains flat. And we don't expect any material swings in the average interest rate over the next quarters as the bulk of our debt is fixed. And finally, moving to our financial KPIs. The continued steady performance of the company supports our confidence, but this quarter the impact came from the acquisitions. The increase in net debt pushed our debt-to-target net worth marginally above 1, but still well below our current limit of 2.25. At the bottom right, you can see the dip in EBITDA to $192 million for the quarter. That was a slight reduction in our EBITDA to interest expense at the top right. And at the bottom left, you can see that the net debt to EBITDA increased from 2.2 to 2.82. This is driven by a reduction in cash and increase in debt related to the acquisitions, as well as a slight drop in EBITDA. So overall, we are in compliance with all our debt covenants and have a strong liquidity and balance sheet position. And with this, I would like to hand it back to Udo for the segmental analysis of our businesses, our review of the market outlook and a few closing remarks. Thank you.