Stolt-Nielsen Ltd Ord

Good afternoon and welcome to Stolt Nielsen's earnings call for the second quarter of 2025. 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 Ng, Vice President of Corporate Development and Strategy. Joining me today are Udo Lange, CEO, and Jens Grunerheger, CFO. At the end of the presentation, there will be a Q&A session where we will be taking 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 Q2 results today. The presentation will follow the usual format. I will begin with an overview of the group's results for the second quarter of 2025 and share some key highlights. Then Jens will cover the financials before handing back to me to run through the performance of our divisions, our view of the market outlook and a few concluding remarks. Firstly, I want to thank our 7,000 people around the world. Every day they pursue our collective ambition to be simply the best for our shareholders, customers and people. Working through new macroeconomic challenges in their markets is positivity and creativity. There is no doubt that our operating environment continues to be marked by uncertainty and volatility. But our purpose is to move today's products for tomorrow's possibilities. And we are all laser focused on the quality, reliability and flexibility which our customers need in order to navigate global supply chain complexities. In this challenging environment, the company has delivered a strong performance. with EBITDA of 210 million, 2 million higher than the same period last year. Tanker markets continue to be impacted by shifting geopolitical factors, while the ongoing uncertainty around tariff has also impacted trade flows, creating challenging conditions for Stoll tankers. This quarter, Stoll tankers EBITDA fell 16%. However, Overall EBITDA was flat year over year, demonstrating the resilience in our diversified business model. Our liquid logistics solutions across tankers, terminals and tank containers is the cornerstone of our portfolio. Overall, around 50% of our asset base and 42% of our EBITDA this quarter derives from non-stole tankers business. Utilization continues to trend upwards at Stelthorven terminals, with operating profit achieving a record quarterly level. SDC was somehow impacted by volatility in the tank container market, but remains focused on optimizing margin and volume. Seafarm had been able to sustain relatively higher pricing and protect biomass positioning them well ahead of the summer peak. These strong results show that the company is clearly more than a chemical tanker business. We are a liquid logistics solution provider with a diversified portfolio. Last time we met, I spoke about the potential impact of Section 301 from the USTR, which was contemplating port fees on Chinese-operated and Chinese-built vessels. Through our trade bodies, port relationships and customers, we work to make the case for protecting the chemical industry in and out of the U.S. The preliminary outcome announced by the USTR in April allows for an exemption to any port fees for chemical tankers, both on ship type and on dead weight. There's another hearing period underway ending on July 7th, but if this ground is held, this would be a favorable outcome for our customers. As you know, we're aiming to simply the best for our shareholders. We have also communicated at our Capital Market Day that we are not a shipping business, but a logistics business. And we are now taking the next logical step and are sharpening how we communicate our earnings potential by better aligning our guidance approach with our business model and strategy. To simplify our story for the market, we are introducing EBITDA guidance for the full year 2025, which is expected to be in a range of $740 to $810 million. This reflects the scope of our operations and clearly shows that at the core, we are a logistics business. Of course, this range is based on what we know today, assumes no substantial geopolitical changes, and is subject to a number of uncertainties in a highly volatile operating environment. As you know, we have recently completed our shared private program. Overall, the company purchased a total of 403,000 shares for 8.8 million, which of the market pricing available was truly an effective use of funds for shareholder distributions. We continue to seek opportunities to invest in our businesses for future growth. This quarter, we announced an agreed partnership to develop a new terminal in Turkey. We have a strong balance sheet to fund these investments, as well as meet debt service obligations and provide dividends with ample headroom. The final dividend of $1.25 per share was approved by shareholders at the AGM in April and paid in May, taking the full dividend to $2.50 per share. Let's now turn the page to review our financial highlights. I've already said we have achieved a strong result in what has been a difficult operating environment. Moving along to the top row. Operating revenue was down nearly 4% or $28 million, predominantly driven by lower spot freight rates in store tankers. Despite this, we achieved an EBITDA of $210 million level year-over-year as we are now consolidating HS4 and Avenir. This also drives most of the improvements versus Q1 EBITDA. Operating profit was down year-over-year by 23 million, partly due to the additional depreciation applicable to the HS4 ships and Avenir. Again, versus Q1 operating profit improved by around 6 million. Net profit went down year over year driven by the same factors as well as higher interest expenses due to the consolidation of acquisition debt. Free cash flow reflects higher capital expenditures during the quarter as well as an increase in working capital partly offset by lower advance to affiliates. Net debt to EBITDA has increased to 2.96 times as a result of the increase in capital expenditures and the payment of the dividend in May. And over the page, we look at some of the key drivers of performance. We continue to navigate successfully in volatile markets. Average deep sea TCE revenue for the quarter was $26,220 per operating day, significantly down versus last year. This was mainly driven by lower spot rates as customer sentiment continued to be impacted by geopolitical uncertainty. Utilization continues to trend upwards at Stolthofen terminals, now up 2% on the prior year. We expect utilization to continue to gradually improve over the coming quarters, and with very controlled costs, we should see ongoing healthy margin levels. Gross power per shipment further improved at STC, as weaker volumes have been offset by increased spot rates on certain routes. And finally, Volumes at Stoll Seafarm dipped as inventories were tight coming out of a strong Christmas sales period, and strong pricing was maintained through Q2 to protect biomass ahead of the summer. That's all from me now. Jens, over to you for the financials.

Thank you, Judo. Good afternoon, everyone, and good morning to those of you joining us from the United States. I will compare the second quarter of 2025 with the second quarter of 2024. And as a reminder, our second quarter begins March 1st and ends May 31st every year. To reiterate what Udo has talked about, the company's performance is resilient and with investments in Avenir and Hustle Shipping Port, we were able to maintain a strong EBITDA of $210 million for the quarter. Let's dive into the numbers for this quarter. As mentioned, our overall performance remains resilient. The drop down in revenue was driven by the lower tanker revenue reflecting lower spot rates, and this also caused a reduction in operating expenses with times that are higher down in line with the lower tanker pool results. Revenue in terminals was up by 2.7 million due to higher storage space and improved utilization. while STC's revenue was marginally down due to a decrease in shipments, albeit at higher margins compared to the same quarter last year, and helped by an increase in demerit revenue. As for Seafarm, we saw a slight decrease due to lower sales volume but at higher prices, as focus was on building up the biomass ahead of the normally seasonally stronger summer seasons. Depreciation was up by $13 million, mostly driven by the consolidation of Avenir and Hustle Shipping 4, as well as by the capitalization of additional time charter ships as per IFRS 16. Equity income from joint ventures was down compared to the same quarter last year, reflecting the consolidation of Avenir and Hustle Shipping 4, as well as lower earnings in tanker JVs. AMG expense was down compared to last year, mostly reflecting reduced accruals in line with the lower profits. Operating profit for the quarter was $113.7 million, down from $136.8 million, driven by the weaker tanker results, with the other businesses being mostly flat. The net interest expense was up 9.3 million due to an increase in debt following the consolidation from the two acquisitions, as well as lower interest income due to an average less cash on hand held through the quarter. FX gain on hedges were significantly up due to the weakening of the US dollar. An income tax was up, reflecting the improved earnings in Stolzhaven terminals. Consequently, net profit for the quarter ended up at 75.2 million with EBITDA of 210 million. Net profit is down from the same period last year, but in line with the prior quarter net profit when excluding the one-off gains. So let's move to the next slide and have a look at the cash flow. The significant increase in cash generated from operations from the same quarter last year was due to prior year, including the settlement payment for the Charminia claim. Excluding that, cash from operations compared to last year's quarter was down 69 million, reflecting the weaker operating results, as well as an increase in working capital. The swing in interest paid is due to the change in the composition of a debt, which includes the impact of the $450 million U.S. private placement concluded last summer, offset by the repayment of $103 million in, say, leaseback debt. Taxes paid increased substantially, reflecting improved results in Stoltenham Terminal and Stolseafarm, as well as the timing of tax settlements. The net cash generated from operations therefore ended at $100 million. Capital expenditures were up substantially compared to last year, and I will touch on that a bit further on the next slide. This was partially offset by an increase in advances to joint ventures related to new building progress payments. We had some debt movements during the quarter as we raised $100 million in new debt and repaid $48 million in regular principal payments, resulting in an increase of just over $50 million in debt. And during the quarter, we paid a final dividend for 2024 of $1.25 per share, resulting in a full-year dividend of $2.50 per share and a dividend yield of about 10% basis yesterday's closing price. During the second quarter, we also completed our $8.8 million shared buyback program. And overall, net cash flow was negative $26 million for the quarter, resulting in cash and cash equivalents at the end of the quarter of $130 million, up from last year's $150 million, but down from last quarter's $156 million. At the bottom right, you see our total liquidity position, which at the end of the second quarter was $445 million, in line with last quarter and the same quarter last year, and putting us in a very good liquidity position as we go forward. Moving over to the capital expenditures. During the quarter, they totaled $71 million, excluding dry dock payments. A significant reduction from the previous quarter, Remaining for the year, we have approximately $166 million, with $46 million for tankers, reflecting progress payments on new buildings. $64 million for Stolthaven terminals, reflecting additional organic growth and maintenance capacity. $11 million in STC for the purchase of additional tanks and expansion of depot capacity. And $34 million in growth capex at Skull Seafarm. And finally, progress payments on Avanir's new building program reflected on their SNL corporate and other. Overall for 2025, we now expect to spend around $460 million in capex, and that's down from what we estimated at the previous earnings lease of about $500 million. Moving to the debt maturity profile, this now includes the consolidated debts for Hustle Shipping 4 and Avenir, adding in a total of $324 million to what we had prior to the acquisition. This increased the balloon maturities in 27 and 28, as you will see with those two peak pillars. In addition, we have a $110 million maturity in 27 under the ACF facility drawn during the first quarter, to help with the acquisitions. Work is now underway to refinance maturing debt and reduce the majority peak that we have in 27 and 28, so as to extend our maturities. Looking at the bottom left graph, the increase in gross debt in the first quarter reflects the consolidation of the Avenir and Hussle shipping for debt, while the slight further increase in the second quarter interest is due to the additional capital expenditures. During the second quarter, we concluded a $90 million increase in a long-standing debt facility with Danish ship finance, which we have had in place now for over 30 years. The top-up financing allowed us to extend the maturity profile further whilst the proceeds were used to partly repay our main revolving credit facility. The average interest rate remains flat. We don't expect any material swings in the average interest rates over the next quarter as the bulk of our debt is fixed. Moving to the debt covenants then. You can see at the bottom right our EBITDA development, and with the last quarter at 210 million, that brings our last 12 months EBITDA to $825 million. On the top left, you can see our debt to tangible net worth. It reflects the increase in debt that we had over the quarter, but also the strong performance that has allowed us to maintain our tangible net worth. But that brought the ratio up to 1.05, slightly above the last quarter. And the strong EBITDA has allowed us to almost maintain this EBITDA to interest expense, which is slightly down from 651 to 613. And at the bottom left, you can see our net debt to EBITDA, where the increase in debt, increasing the ratio slightly from 282 to 296. And at this level, it has now seemingly started to stabilize. And with that, I would like to hand it over to you, Rudolf.