Earnings call: Stolt-Nielsen sees record net profit, plans fleet expansion

Stolt-Nielsen Limited (SNlo), a leading liquid logistics provider, reported a record high net profit in its first quarter, underpinned by strong performance across its tankers, terminals, and sea farm segments. The company announced a 6-8% expected increase in Time Charter Equivalent (TCE) for the second quarter and a final dividend recommendation of $1.50 per share.

Despite a 7% decline in operating profit compared to the first quarter of 2023 and a decrease in free cash flow due to higher investments, Stolt-Nielsen’s strategic executions, including a joint venture and stake increase in Odfjell Class A shares, signal robust growth prospects. The company’s EBITDA stood at $212 million, with group equity surpassing $2 billion for the first time.

Key Takeaways

  • Stolt-Nielsen’s net profit hits a new high, with positive contributions from tankers, terminals, and sea farm segments.
  • The company expects a 6-8% rise in TCE rates for Q2.
  • A final dividend of $1.50 per share has been recommended.
  • Operating profit declined by 7% from Q1 2023, and free cash flow decreased due to investments in new builds and shares.
  • The group’s equity exceeded $2 billion, a first in the company’s history.
  • Debt to tangible net worth improved, and the EBITDA to interest expense ratio is close to 6x.
  • New joint venture and increased stake in Odfjell Class A shares announced.
  • Capital Market Day scheduled for June 12 to discuss the company’s outlook and performance.

Company Outlook

  • Stolt-Nielsen remains focused on executing its strategy and delivering strong results.
  • The company’s KPIs reflect a strong financial position, with an EBITDA to interest expense ratio close to 6x.
  • Stolt-Nielsen is confident in the firm rates continuing in the tanker market.

Bearish Highlights

  • Operating profit has seen a 7% decline compared to the same quarter in the previous year.
  • Free cash flow has been impacted by higher investments, including new builds and share acquisitions.

Bullish Highlights

  • Stolt Tankers expects a 6-8% increase in TCE for Q2.
  • Stolthaven Terminals experienced steady revenues and an increase in operating profit.
  • Stolt Tank Containers achieved strong volume growth.
  • Stolt Sea Farm reported increased revenues and strong production levels.

Misses

  • Stolthaven Terminals saw softer utilization in Q1 but managed to deliver steady revenues.

Q&A Highlights

  • The company is proud of the maintenance efforts and the condition of their ships, some of which have been approved for a life extension of over 30 years.
  • Twelve new builds are planned to replace older ships in the coming years, with deliveries scheduled from 2026 to 2028.

In conclusion, Stolt-Nielsen’s first-quarter results reflect a strong strategic position and promising growth trajectory, despite some challenges. The company’s focus on its liquid logistics provider strategy, coupled with strategic investments and a robust capital structure, positions it well for future success. Investors and stakeholders can look forward to further details on the company’s performance and plans during the upcoming Capital Market Day.

Full transcript – Stolt-Nielsen Ltd (STlo) Q1 2024:

Operator: Good afternoon and welcome to Stolt-Nielsen’s First Quarter Results. As always, the earnings release and related materials are available on our website. We will also be recording this session and it will be available from tomorrow. Included in this presentation are various forward-looking statements. Such forward-looking statements are subject to risks and uncertainties. I will refer you to our latest annual report for further details. I am Alex Ng, Vice President of Corporate Development and Strategy. Joining me today are Udo Lange, CEO and Jens Gruner-Hegge, CFO. At the end of the presentation, there will be a Q&A session where we’ll be taking questions online. [Operator Instructions] Thank you and over to you, Udo.

Udo Lange: Well, thanks, Alex, and good day to everyone joining us online. Today, I will begin with a review of the group’s results for the first quarter. Jens will then cover the financial highlights before handing back to me for segment highlights, market outlook and a few closing remarks. I would like to begin today’s presentation by thanking our team members. We continue to face a volatile macro backdrop, particularly, with continued disruption caused by the restrictive transits through the Panama and Suez canals. I would like to commend our people for their outstanding commitment to safety and delivering best-in-class service for our customers. I would also like to thank our loyal customers without whom these great results would not be possible. We started the year on a high note, continuing to execute our strategy as a leading liquid logistics provider and maintaining momentum from 2023 to record our best ever first quarter net profit. At Stolt Tankers, we have had a strong start to the year and expect a 6% to 8% increase in TCE for Q2. We are continuing to navigate the complexities of the Panama and Suez transit restrictions and have seen spot rates continue to firm as supply remains stretched. During the quarter, we made several important announcements relating to investment and growth initiatives. First, our joint venture with NYK Line announced the signing of a new building order for six 38,000 ton stainless steel chemical tankers. These new builds will replace retiring ships and will serve as sister ships to our November order bringing our deep sea order book to 12. Second, Stolthaven Dagenham completed its two year jetty upgrade. This represents a major milestone for our UK terminal, providing new upgraded infrastructure for our customers. And third, we increased our stake in Odfjell Class A shares to 13.6%. We are also pleased to have concluded the MSC Flaminia legal claim within the provisions previously taken. Final payment was settled this week, enabling us to focus cash flows on future growth. Our balance sheet remains strong with more than $515 million in liquidity remaining after the settlement. Lastly, we recommend the final dividend of a $1.50 per share, taking our total dividend for 2023 to $2.50 per share subject to AGM approval. EBITDA for the group came in at a strong $212 million with impressive growth in tankers, terminals and sea farm offsetting a decline in tank containers as market conditions and this segment continue to stabilize. Operating profit declined by 7%, compared to the first quarter of 2023, driven by higher operating expenses due to the restrictive transits through the Panama and Suez canals. Net profit improved profit versus previous periods partially due to a decrease in tax expense for the quarter. Free cash flow declined to $57.7 million, driven by a higher pace of investments, principally, the down payment on the six new builds from Wuhu Shipyard and the recent acquisition of the Odfjell shares. Moving on to our main performance drivers, I’m really excited about the solid execution across our businesses by our wonderful team. At Stolt Tankers, the business continued to deliver strong results with a 3% increase in TCE per day compared to 2023. We saw spot rates increase during the first quarter. However, we typically see a lag before change in rates is reflected in our earnings. We therefore expect to see a positive impact on our Q2 results. At Stolthaven, utilization was slightly down compared to the same period last year, as we continue our program to replace lower margin business with opportunities at higher rates. We expect utilization to rebound towards the end of the year driving profitability higher. Turning to Stolt Tank Containers. Congratulations to Hans and his team for hitting a record number of more than 40,000 shipments in this quarter. This amazing achievement demonstrates the scalability of our platform. Finally, strong demand for turbot and sole saw Stolt Sea Farm achieved its best ever Christmas sales volume. Strong operating performance was supported by the strong volumes and firm prices. That’s all from me. Now, so I’ll hand over to Jens to take you through our financial highlights. Jens, over to you.

Jens Gruner-Hegge: Thank you, Udo. Good afternoon, everyone and good morning to those of you listening in from the United States. As a reminder, our first quarter runs from December 1, 2023 through February 29 this year. And also, we’re happy to share with you that the annual report for 2023, which was released on March 18, is now available and for download from our website at www.stolt-nielsen.com/investors and I encourage you to go and take a look at that beautiful product. Please note that in this comparison and I think that’s similar to what we did last quarter as well, I will focus on comparing the first quarter of 2024 with the first quarter of 2023, sort of year-on-year comparison. Revenue was pretty much flat year-on-year, but looking in further detail, you can see that a decrease in transportation revenue at STC of about $37 million as offset by higher revenue at Stolt Tankers, Terminals and Stolt Sea Farm. As Stolt Tankers, the increase was a result of the establishment, of SNAPS/ENEOS pool in Asia Pacific, resulting in revenue being consolidated. The increase end spot freight rates that we have recently seen reported by brokers, they have not yet made it through to our financial results. There’s a lag effect that Udo will touch on a bit later. Terminals revenue increased as higher storage rates are taking effects at multiple locations and the higher Stolt Sea Farm revenue driven by higher prices and volumes sold. The higher time charter and bunker cost components of the operating expense are mostly driven by the consolidation of the SNAPS/ENEOS pool, partly offset by lower ocean freight expense at STC. Depreciation was up by $3.2 million, driven by purchases of secondhand ships during the year and capitalization of tank container purchases and software. And then equity income from our joint ventures was up and that was mostly driven by the improvement that we’ve seen in the terminal JV results. Administrative and general expense was down due to lower personnel expense. So consequently, operating profit came in at $132 million for the quarter, down from a $142 million in the first quarter of 2023. Net interest expense was down and this was mostly due to interest income on the insurance proceeds and cash held on account for the part settlement of the Flaminia claim. And other non-operating income was up as we received $5.9 million in dividends on our various equity investments. Income tax expense was down $6.3 million, driven by the profit mix. As Tankers profit increases due to the tonnage tax regime, the tax and profits do not necessarily get materially higher whereas the drop in profit that we have seen in STC has diminished the tax due. Net profit for the quarter ended up at a record first quarter of $104 million with EBITDA of $210.3 million, as Udo mentioned. Moving over to the cash flow and liquidity position. Net cash generated from operations decreased by $1.4 million. This is caused by a $10.6 million lower income generated through normal operations and $0.8 million higher interest payments, which was partly offset by $7 million working capital inflows, $1.7 million higher interest receipts and $1 million lower income taxes paid. Capital expenditures increased mostly due to the deposit paid on the new buildings order from the Wuhu Shipyard in China as Udo mentioned. Otherwise, we spent $3.2 million on tankers CapEx, $5.9 million on dry docking or ships, $15.6 million on terminal projects and $10.4 million on STC purchase of tank containers and finally the construction at STC depots. And also, as Udo mentioned, during the quarter, we spent $35.6 million on the purchase of further Odfjell Class A shares, bringing our total shareholding now up to 13.6%. Proceeds from sale of assets increased by $4 million pertaining to asset retirements in STC. So net cash used in investing activities was $115.4 million which was up from $43.7 million a year ago. Proceeds from issuance of long-term debt includes new loans obtained for $30.5 million that was the tap issue on the NOK bond that expires in 2028 and $37.5 million for a new facility secured by two 15,000 deadweight ton ships that we purchased in the spring of last year. During the quarter, we repaid $116.8 million in debt, including the balance outstanding on the SNI08 loan. And in December, we paid the interim dividend declared in November of $1 per share for a total of $53.6 million. Our liquidity position was strong at the end of the quarter but this also reflects the $133 million Flaminia insurance proceeds. And you can see at the graph at the bottom right, the dark blue bar, shows that even after paying off the Flaminia claim our liquidity position remained strong due to significant amounts available under our various revolving credit lines with available liquidity of $515 million. Our debt maturity profile is flat over the next four quarters followed by then the maturity of the U.S. private placement in the second quarter of 2025 for $245 million. This will be refinanced well ahead of time. And during the quarter, we also concluded a new revolving credit facility secured by Stolt Sea Farm — our share in Stolt Sea Farm and this is a dual currency facility allowing us to draw in both dollars and euros for a total of $150 million. During the quarter, our debt was slightly down with the average interest rates increasing, slightly reflecting the higher interest rate on the new bond deposition. Moving over to capital expenditures. First quarter capital expenditures were $73 million, the tanker CapEx for 1Q ’24 related to initial progress payments for the new buildings with further progress payments coming later in ’24 and 2025 onwards up until delivery late ’26 and ’27, ’28. Not included in the table is an equity injection into our tanker joint venture, NYK Stolt Tankers and that’s to part fund the six new buildings ordered by the joint venture as announced earlier. Stolthaven’s CapEx predominantly relates to the expenses our Houston and New Orleans terminals, this is for organic growth. The STC projects relate to depot refurbishment, while still Sea Farms future CapEx is for the sole capacity expansion that we have previously announced. And finally, the CapEx on the corporate most relates to a number of different IT projects. Finally, the continued strong performance of the company has trade — translated into a good performance on our various KPIs. The top two are, quadrants in this graph are bank covenants. The top left showing our debt to tangible network, which has been on a steadily improving trend and ended the first quarter at $0.93 million, which also means that the tangible net worth is higher than our debt level. In addition to that, this quarter is the first time that the group equity exceeds $2 billion. At the bottom right is our EBITDA with another quarter, as you can see above $200 million with expectations of continued strong performance. And then because we measure our covenants on the 12 month rolling basis, the second quarter of ’23 will fall off next time we measure. We should see the 12 month EBITDA run rate increase to above $800 million. At the top right and bottom left, you can see that this strong EBITDA has translated into consistently strong ratios with the EBITDA to interest expense covering close to 6x and the net debt to EBITDA ratio of 2.54x. To note is that the net debt to EBITDA excludes the $133 million of cash related to MSC Flaminia provision that we held in account. And with that Udo, I would like to hand it back to you.

Udo Lange: Well, thank you so much, Jens for this very exciting update. As always, I will begin with Stolt Tankers on the segment details, and I really would like to thank Lucas and his team for delivering a strong start to the year in spite of the restrictions and the transit through the Panama and Suez canals. We saw revenues up 6.8% versus the first quarter of 2023, mainly due to the consolidation of the SNAPS regional Asia Pacific pool. Restrictions in transits through the Panama and Suez canals have positively impacted rates, but negatively impacted volumes as voyage lengths increased by some 12%. COA volumes were also impacted by a reduction in asset shipments due to temporary plant maintenance and lower operating days due to vessel redelivery offset by the addition of three 26,000 ton CMV ships. We also saw higher demurrage and other revenues due to improved contract terms and conditions and recovery of additional costs related to rerouting. We now receive full pass through of costs from both Red Sea deviations and the EU ETS carbon tax. EBITDA increased 5.9% year-on-year due to higher revenues, partially offset by lower joint venture income and owning expenses mainly due to an insurance claim provision and some higher salary cost. However, compared to the first quarter of 2023, EBITDA was down slightly due to higher trading and manning expenses. During the quarter, the average renewal rate of COA contracts increased by 4%. The positive impact of these renewals will be most received in the full 2024 performance. As you can see from the Clarkson’s Chemical Index, spot rates firm towards the end of 2023 in response to stretch supply caused by the ongoing situation in the Panama and Suez canals. So far in 2024, we have seen an increase in rates that is close to historical highs. As a reminder, we typically fix cargo bookings 30 days in advance of a voyage, which results in an approximately 90 to 100 day lag between changes in rates and the impact on our earnings. TCE rates for Stolt Tankers were $29,944 per operating day in the first quarter. This was flat versus our last quarter. Based on our current Q2 performance, the rate environment and the market outlook, we expect the TCE rate for the second quarter to be 6% to 8% higher, which if achieved will be a record level. We remain confident that firm rates will continue for the foreseeable future. When looking at this graph, I would like to remind you that a $1,000 per day increase in the TCE rates equates to around a $5.5 million change in net income per quarter. Moving on to Stolthaven Terminals. As discussed during our last earnings presentation, we saw softer utilization in Q1 driven by the release of lower paying business for contracts at business for contracts at higher rates. Thanks to Guy and his team for our record operating profit. The terminals business continued to deliver steady revenues during the quarter despite the release of existing tank capacity. Revenue was $76.8 million identical to the fourth quarter but at 3.3% lower utilization, reflecting the positive impact of our strategy on contract rates. The first quarter operating profit of $28.5 million was up 9.6% compared to the fourth quarter and up 13.6% versus Q1 last year. This was mainly due to higher rates coupled with improved results from our joint ventures. Going forward, we expect performance to improve even further as utilization returns to the typical 95% by end 2024 positively impacting earnings. Now to Stolt Tank Containers. As we saw previously, the tank container market has returned to a more competitive operating environment. Transportation rates have now stabilized across most regions despite a temporary increase in spot rates due to the disruption in the Panama and Suez canals. During the first quarter, we saw strong volume growth, achieving our first ever quarter above 40,000 shipments, a really fantastic achievement from Hans and our STC colleagues. STC’s driver volumes have been aided by customer inventory management due to the restricted transits with the Panama and Suez canals and an extra calendar day in February. We continue to expect shipment growth throughout 2024, but perhaps not at the same rate as we have seen in Q1. Operating revenue 19.5% year-on-year and up 4.1% versus the previous quarter. Although as anticipated, we have seen softer demerge revenue in Q1, partially impacted by customers returning tanks. We continue to see pressure on margins due to the competitive market with lower carrier rates as well as reduced emerge. Margins are at around pre-COVID levels but appear to have leveled off. These factors together have led to a $40.69 million decline in EBITDA year-on-year and the decline of 10.3% versus the previous quarter. While the market remains competitive, bookings are healthy and we continue to see strong demand, particularly out of America and Southeast Asia. Our short-term focus is on getting volumes to areas of demand, reducing cost and improving efficiency. Finally, let’s take a look at Stolt Sea Farm. We reported first quarter revenues of $30.6 million, a significant increase from $25.2 million in the same period last year. This growth was driven by high prices for turbot and sole up around 30% year-on-year and strong Christmas demand for both spaces. Sales volumes were up 7.4% compared to Q1 last year. Thank you to Jordi and his team for these excellent results. Production remains strong at all farms as our sole and our RAS facilities performing particularly well. Higher production levels have enabled us to maintain margins which continue to be impacted by high energy and feed cost. As a result, our EBITDA excluding the fair value adjustment reached $9.1 million, up 26.4% versus the first quarter of 2023. Operating profit also improved. The inventory situation remains favorable as we see the wild catch season drawing to a close. Strong production coupled with sales growth in new markets supports prices and volumes as we head into the key summer months. And that completes the deep dive into each of our businesses, so now let’s turn to the outlook. We continue to see favorable long-term market fundamentals across our businesses. We expect to see a growth in ton mile chemical demand of around 2.9% in 2024, particularly as inflation cools and the historic linkage between GDP grows and chemical demand reemerges. Supply side dynamics remain favorable. The order book remains historically low, although it has increased slightly to 8.8%. We continue to see a shortage of yard capacity across shipping segments, which should limit fleet growth. As a result of these factors, we expect to see muted net supply growth continue for at least the next two to three years. Adjacent market dynamics remain favorable as the rally in MR rates continues. This dynamic is expected to keep swim tonnage out of our segment. Combining the favorable market fundamentals with restricted transit through the Panama and Suez canals, we remain confident that firm rates will continue for the foreseeable future. Volumes are expected to remain largely flat with some signs of chemical production growth globally. However, due to the restricted transits with the Panama and Suez canals, we see voyage distances increasing and are working closely with customers to minimize any negative impact on their supply chains. Together with a low order book and firm product tanker market, we have a very solid foundation for favorable chemical tanker market to continue for the foreseeable future. Before we move on to the Q&A, I would like to leave you with a few final remarks. As you’ve heard today, our first quarter results reflect the exceptional efforts across each of our businesses to capitalize on the market while continuing to execute our strategy as a leading liquid logistics provider. Our outlook for 2024 remains positive. We are confident that firm rates in the tanker market will continue for the foreseeable future and expect record TCE rates for Q2. And our other businesses, we are continuing to deliver on our strategies having announced several major growth initiatives as well as in the past couple of years. Our balance sheet remains strong and is reassuring to have concluded the MSC Flaminia legal claim this month. And finally, I’m pleased to share that we will hosting a Capital Markets Day on June 12 in London. More details to follow, but I’m looking forward to the opportunity to share more about our great business and what we have in store for the future. Thank you for your attention, and I will now pass you back to Alex as we open up for questions.

A – Alex Ng: Thank you, Udo. And that completes our presentation and we’ll now begin the Q&A. [Operator Instructions]. The first question is for Jens and it relates to TCE. So are the 6% to 8% TCE guidance meant for a quarter-on-quarter or year-on-year?

Jens Gruner-Hegge: It’s a quarter-on-quarter. It is what we are seeing, happening in the Q2 over the Q1 of 2024.

Alex Ng: Thank you. Next question is for you, Udo. How is ship life extension going? How do you see the need to scrap older vessels at the moment?

Udo Lange: So overall, I think I’m really proud of what our team has done in terms of maintenance. And, I would say the Stolt Tanker ship management team is probably leading in the world in the segments. Over all the years, we have never cut short on maintenance and our ships are in outstanding condition. And as such, we are even in conversation and we have recently got some ships approved for life extension over 30 years. So we are looking at ships not so much in the terms of how old is a ship, but rather in how well is a ship maintained. Because you have never cut short on maintenance and then maybe your ship is already in a bad condition much shorter. So, of course, once we feel that ships are not anymore in a good condition, we will scrap them. And that’s the reason why we really invested in our 12 new builds because we know over the coming years, there will come the point in time where we’ll have to scrap some ships and the 12 new builds are really replacement of these ships that then will be taken out of service. But overall, I’m very confident that we will be able to continue to extend some ships on their life, thanks to the excellent condition. And, again, a big thanks to Maren Schroeder and her team for doing such an excellent job in this field.

Alex Ng: And the final question which we have at the moment is one for you, Jens. It’s relating to chemical tanker volumes. Chemical tanker volumes shifted more towards the regional fleet in Q1. How should we think about this going forward? Is this shift due to disruptions or more sticky? And is there any meaningful difference in earnings and freight rates for this segment?

Jens Gruner-Hegge: That’s quite an astute question. So, what we had happened during the first quarter was, of course, the restricted transits that we saw through the Panama and Suez canals and as Udo mentioned, that had a negative impact on volume, because of an extended transit time which had the impact of increasing the ton miles, if you like. So that pushed the deep sea volume slightly down, but earnings kept up because, of course, we get the higher revenue from that extra transit time. Then we also talked about the creation of the SNAPS/ENEOS pool. And with that creation, the revenue and the voyage related expenses, as well as the volume lifted was all consolidated in with was now reflected as part of the regional volume. And that had the impact of driving up the volumes that we show in the yardstick at the back of the presentation by — lifted by the SNAPS/ENEOS pool. So that is a permanent that you will see going forward as we continue to report that pool on a consolidated basis. In terms of how this will impact the overall earnings, when we report on the time charter equivalent earnings, we do not include the regional fleets that’s focused purely on the deep sea at Stolt Tankers joint service. So, you will not see any impact from this on that. That will purely be driven by the deep sea market. Also, our number of ships that are in the joint venture have currently not changed. It’s just that we have increased our footprint in the fastest growing Asia Pacific markets by establishing this pool and working together with local energy supplier in order to have access to more tonnage in this growing market.

Alex Ng: Thank you, Jens. We have two more questions that have come in. So, the next question goes to you, Udo. Based on your experience with the group so far and your engagement with customers, how do you see the ambition to offer integrated solutions?

Udo Lange: I think that’s an excellent question and let’s look at that from both angles, so our company angle and then the customer angle. So, let’s start with our company first. So, if you look at our business, we hold leading market positions in our segments around shipping, terminals and tank containers. And that’s very important because these are three separate segments. But then on the other hand, we can also deliver more value through our — for our customers as an integrated player or like a department store for logistics. What is very important for that is that our team members understand the services that the other divisions provide and also collaborate in a really, particular way. And I have to say, I’m so excited about this leadership team because we are really collaborating for success, which is one of our core values across these businesses. And my whole leadership team is excited about winning in their segments, but also working together, as one team. What is also exciting to see that we have several leaders in our businesses, even deep in the organization, which have worked not only in one division, but in several divisions. And that, of course, then brings the capability to really build these services but also send them towards the customer. So that’s our internal position. So we are in a great shape there and we will further improve to make our offerings even stronger and, particularly, of course, on the digital side and with our sustainability efforts as one group. Now, let’s look at the customers. The customers, let me share just a recent feedback from a customer where myself and the leadership team really was sitting together with the Chief Supply Chain Officer, and we listened to the strategy of the customer and then what is our liquid logistics provider strategy there. And the customer after the meeting said, this is the best meeting with Stolt-Nielsen’s have we ever had. And I’ve heard this in customer meetings again and again and what is exciting is that this is not only happening for large customers, but also for medium customers, which maybe have less build out logistics departments and so we propose large and small and medium are seen more and more as a strategic partner helping them to navigate through their logistics challenges and we really make their complex supply chains simpler. So, I think it’s very exciting and to just give you an idea, if you take our top 20 customers, 70% of them are buying actually already today for more than one of our liquid logistics divisions, which just is a nice fact to underpin what we are doing here.

Alex Ng: Thank you, Udo. Next question is for you, Jens. Could you again state the CapEx schedule for the 12 new builds and how much is for Stolt-Nielsen?

Jens Gruner-Hegge: Absolutely. Some of this is, of course, covered under by confidential clauses in the contracts. But so we replaced two orders. One, with Wuhu Shipyard for 638,000, deadweight ton ships all stainless steel, they are a 100% for us, for the Stolt Tankers. And these will be delivered starting end of 2026 into 2028. And we’ve made a progress payment, as was noted earlier, in the first quarter of about $40 plus million and there will be scheduled progress payments until there’s a final balloon payment on delivery of each individual ship, which, of course, will be happening from end ‘26 through ‘20 — until the last ship in that series is delivered in 2028. Then we had a second new building order that came a little bit later. This is placed through our tankers joint venture with NYK called NYK Stolt Tankers. Here, the progress payments will be made by the joint venture and both NYK and us have each contributed equity capital to the joint venture so that they are in a position to do so to make their progress payments. Again, these ships also have a very favorable, delivery window, starting end of ’26 and through into 2028. And if you take a look at our fleet profile, you will see that this delivery schedule actually matches very well with eventual potential phase out of older ships, as we get towards the end of this decade. So this is really an order more focused on fleet replacement and maintenance of the fleet capacity than anything else.

Alex Ng: Thank you, Jens. And a final question today, one more clarification on operating days. So on tankers, how should we think about the number of vessels and operating days in Q2 versus Q1 on both deep sea and regional gains?

Jens Gruner-Hegge: So, there was a change from the first quarter last year to first quarter this year because we had a number of tonnage events. That’s not the case as we go into the second quarter, excuse me, other than sort of regular dry dockings. So you should not expect significant fluctuations either up or down in our fleet or in our tonnage. What, you will see in terms of volume impact is, of course, the deviation around the horn due to the transit restrictions going through the canal. That, of course, comes with as a part driver of the increasing freight rates, where we have expressed that you will see that increase in this time charter equivalent revenue as we get into the Q2 because of that factor. But from a pure operating day perspective, you should not expect any significant changes.

Alex Ng: That completes our Q&A session. I will post the recording of the call on our website tomorrow. Udo, back to you.

Udo Lange: Thank you for joining us today. We’re really excited about the strong results and our strategy of being the leading logistics provider — liquid logistics provider in the world. And of course, this wonderful outlook that we that we shared with you as well. And I’m really excited about our Capital Market Day on June 12 and I hope to see many of you in London. And we of course will double click then on our equity story around our strong execution in supported by strong fundamentals and, of course, our strategy as a leading liquid logistics provider then having a positive impact on the multiples as well. With that, I’ll leave you for today and thank you so much and wish you a wonderful week.

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