Stolt-Nielsen Ltd Ord

Good afternoon and welcome to Stolt Nilsson's Earning Call for the first quarter of 2026. 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'll 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'll be a Q&A session where we'll 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.

Thank you, Alex. Good afternoon, everyone, and thank you for joining us today for our first quarter 2026 results. The presentation will follow our usual format. I will begin with an overview of the group's results for the first quarter and share some key highlights. Jens will then take us through the financial detail before handing back to me to cover the performance of each of our divisions, our view of the market outlook, and some concluding remarks. Let's get started. In a backdrop of elevated market disruption and considerable global uncertainty, I'm pleased to report that Stolt Nielsen has delivered a solid first quarter, achieving group EBITDA of just over 180 million. This result reflects the strength of our diversified business model and the resilience it brings to our earnings. Our non-tanker portfolio contributed 40% of Group EBITDA in the quarter, a clear demonstration that Stolz Nielsen is not simply a shipping company. In fact, our Stolzhafen terminals business had its second highest ever quarter in terms of operating profit achieved. We are a global liquid logistics business and our diversification continues to support earnings through periods of market dislocation. We are of course closely monitoring the conflict in the Middle East and in particular the effect on transit through the Strait of Hormuz. This introduces new complexities to global energy and chemical supply chains, which we are working through with our customers to keep products moving. We are thankful that our people remain safe, that none of our vessels are currently stuck in the Irving Gulf and that our assets are not impacted so far as our network continues to adapt to a rapidly changing situation. Our priorities at this time are to keep our people safe, leverage our global logistics network to best support our customers through the disruption and to maintain strict cost discipline and capital allocation for flexibility and long-term value creation while maintaining robust liquidity management. We have limited visibility on how the conflict in the Middle East will play out and a range of outcomes are possible, which makes giving meaningful EBITDA guidance very challenging. Hence, we have withdrawn our previously issued EBITDA guidance for 2026. I would also like to highlight a number of strategic developments during the quarter. In Taiwan, our Stolthofen Terminals joint venture in Koryang commenced operations, adding more than 60,000 cubic meters of new storage capacity. And we recently announced the planned sale of a 50% equity stake in Avenir LNG, which would be achieved through a strategic joint venture with Japanese shipping company NYK Line. consistent with our strategy of building the avenir business for the future by preserving our own balance sheet flexibility from a financial standpoint we maintain robust liquidity of 546 million and our net debt to ebitda ratio stands at 3.02 times and in february the board recommended a final Dividends for 2025 of $1 per share bring the total for the full year to $2 per share, subject to shareholder approval at the AGM later this month. Let us now turn to our financial highlights. I am satisfied with the results the company has achieved in the quarter against a complex and challenging market backdrop. Looking across the key metrics. Operating revenue for the quarter was $717 million, up 6% compared to the same period last year, predominantly driven by the inclusion of Suttons. EBITDA before the fair value adjustment came in at just over $180 million. This represents a modest decline of 4% year-over-year, driven principally by weaker freight rates in store tankers, lower margins within STC, and additional costs associated with integrating Suttons. Operating profit was 82 million, down 24% versus last year, mainly due to the performance installed tankers and installed tank containers, plus additional depreciation from lower residual values and the consolidation of the Hessel 4 ships, Avenir and Suttons. Net profit was 47.5 million, driven by the same factors as well as higher interest expense due to the consolidation of Avenir and Hessel's shipping force debt. Free cash flow was nearly 120 million this quarter, which was significantly higher than the same period last year, which included the cash outflows for Avenir and Hassle Shipping 4. And our net debt to Avidari issue has improved slightly from 3.12 last quarter to 3.02 times. These results demonstrate the underlying resilience of our business, even as we navigate a period of heightened market complexity. Over the page, we look at some of the key drivers of performance. Stolthamkers enjoyed increased volumes this quarter, but due to ongoing weaker freight rates, the average UCTCE revenue for the quarter was approximately $23,600 per operating day, a decline of 14.5% year on year. At Stoltham terminals, performance has been strong and steady. Utilization was stable at 91.2% in the first quarter versus 91.9% in the same period last year. And we saw some positive impact from storage rate increases. At Stoll Tank Containers, gross profit per shipment declined by 33% year over year. Stoll Tank Containers is navigating a very challenging market environment where margins are squeezed and is focused on integrating Suttons. That is all from me now. Jens, I will hand over to you for the financials.

Thank you, Udo. Good afternoon, everyone, and good morning to those of you joining us from the US. I will compare the first quarter of 26 against the first quarter of 2025. And as a reminder, our first quarter runs from December 1st through February 28th. And as such, the Cloak Beta Hormuz did not impact the first quarter results. Also, the company recently published its annual report for 2025. And this year, including the CSRD environmental report for the first time. And you can find this on the company's website, www.stolt-nielsen.com forward slash investors. Let's dive into the financials. Revenue for the quarter was up 41.2 million over the same quarter last year due to the following main factors. This is the first full quarter which Sutton's included, and they contributed $38 million in revenue this quarter. SMG saw a $16 million increase over the first quarter last year due to the acquisition of 100% of Avenir at the end of January 2025. And Stoltz Seafarm had a $10 million increase in revenue on the back of firm prices. This was partly offset by lower revenue in Stoltz tankers, which declined by $22.5 million, mostly due to lower freight rates, lower demurrage revenue, and lower bunker surcharge revenue due to falling bunker prices. However, volume was up by 20%. but mostly due to somewhat shorter voyages and higher share of commodity chemicals versus specialty chemicals. Moving to operating expense, this increased by $33 million, mainly due to the additional sudden shipments and related expenses, as well as the consolidation of Veneer and added ship-owning expenses due to a larger wholly-owned fleet, partly offset by lower time charge expenses and lower bunker costs. Depreciation and amortization expense was $17 million higher than the same quarter last year. And this was due to a reduction in the residual value of ships following a fall in steel prices, requiring us to increase depreciation of ships. Also, the 100% acquisition of the two businesses towards the end of the first quarter last year, as well as the acquisition of the Sutton's assets in November, increased our asset base and hence also increased our depreciation. JV equity income was lower in part due to the purchase and consolidation of 100% of Hustle Shipping 4 last year and the weaker tanker markets in general, partly offset by a lower loss in high gas, our LNG terminal in Sardinia, Italy. So, as a consequence, operating profit for the quarter was 81.8 million, down from 107.9 million in the fourth quarter last year. The finance expense was up $6 million compared to the first quarter of 2025, and that's due to the additional debt related to the acquisition and consolidation of Hussle Shipping 4, Avenir, as well as Sutton's. And as such, the net profit for the quarter was $47.5 million, with EBITDA of $180.8 million. Net profit is down from 151.4 million in the same quarter last year, but please note that in the first quarter of 25, we had a one-off gain on the step-up in value related to the acquisition of Avenir and Hustle Shipping 4 of $75 million. And also, as EBITDA excludes the impact of interest and depreciation, both of which increased year over year, the swing in EBITDA is significantly less than the swing in net profit. Let's have a look at the cash flow statement. Net cash from operations was down this last quarter, predominantly reflecting $50 million in weaker earnings and working capital outflows, $7 million lower dividends from joint ventures, $3.8 million higher interest payments and $2.4 million lower interest receipts, partly offset by lower tax payments. Net cash used in investing activities was significantly down at 44.1 million from 232 million due to last year's business acquisitions. In the current year, cash spent on capital expenditures related mostly to tankers and terminal investments. The sales proceeds of 11 million that you can see there as well relate to the sale of a ship during the quarter. And then net cash used in financing activities of 66.1 million reflects the dividends paid in December 2025, while the debt proceeds and repayments reflect refinancings concluded during the quarter. As such, total cash flow for the quarter was a positive $10.1 million. And if you look at the graph on the bottom right, you can see we ended the fourth quarter with $546 million in available liquidity, as Udo has pointed out. So let's go over and look at the capital expenditures. Capital expenditures during the quarter totaled $42 million, with mostly spent on tankers' progress payments for new buildings, as well as terminals and Stolze Farm expansion capex. Overall, for 2026, we expect to spend around $300 million, significantly down from the $511 million we spent on CapEx in 2025. And this is to a large part driven by the sale of 50% of our veneer, removing CapEx of $112 million across 2026 and 2027, related to two new LNG carriers. And in 2027, we expect to see capital expenditures increase again due to the significant progress and delivery payments on the new building program for tankers. We intend to continue to invest strategically in our businesses, but we also need to focus on integrating our added capacity into our operations for maximized long-term benefit for our customers and our shareholders. And with the current geopolitical uncertainties, we will be cautious with committing to further capex until we see the full effect of the current unrest. So this is our debt maturity profile, which is relatively smooth over the five-year horizon shown here. The debt profile reflects the recently refinanced debt for Hustle Shipping 4 and the deconsolidation of Avenir's debt. The gray boxes represent normal repayments, while the black and orange boxes reflect balloon payments on bank loans and bonds, respectively. If you look at the bottom left graph, gross debt reduced in the first quarter due to Avenir being accounted for as held for sale. So $120 million in Avenir debt is no longer included in this overview. And our average long-term interest rate in the fourth quarter was 5.65%, an increase from the previous quarter driven by temporary drawdowns on more expensive revolving credit facilities and the full quarter of the bond issued in October 2025. This shows our financial KPIs and the continued steady performance of the company has supported our covenants. The decrease in debt during the first quarter supported a decrease in net debt to tangible net worth on the top left quadrant and net debt to EBITDA on the bottom left quadrant. Debt to tangible net worth is now at 0.98, as well below our covenant limit of 2.25. For the lower EBITDA for the quarter, the last 12 months, EBITDA fell slightly to $777 million. EBITDA to interest expense in the top right quadrant was down to 5.31, whilst the net debt to EBITDA decreased from 3.12 to 3.02, as Udo mentioned. So overall, we are well within compliance on all covenants. And finally, before handing back to Udo, let me finish up with a snapshot of our main sustainability metric, the annual efficiency rating for Stoltankers, which finished 2025 at 9.34, just over 40% reduction from 2008. Also in 2025, we held gold ratings from Ecovavis for our three logistics businesses. And just to inform you, a gold rating indicates that a business is in the top 5% of companies in the industry. And then again, to point out that the recently issued annual report for 2025 contains our first CSRD report, in case you want to read more about the company's ESG performance, and you can find the report on our website, as I mentioned. And with that, I would like to pass it back to you, Rudolf.