Q1 2024 TORM PLC Earnings Call
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the TORM First Quarter 2024 Results Conference Call. All lines have been placed on mute to prevent any background noise.
Ladies and gentlemen, thank you for standing by and welcome to the <unk> first quarter 2024 results conference call.
Operator: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by 1. As a reminder, today's call is being recorded. I will now hand today's call over to Michael Larson. Please go ahead.
Michael Larson: If you would like to withdraw your question Press Star followed by one.
Michael Larson: As a reminder, today's call is being recorded.
Michael Larson: I'll now hand todays call over to Michael Larsen. Please go ahead.
Michael Larson: Thank you for joining us today and welcome to the Torum first quarter of 2024 earnings conference call. On the call with me today are, as usual, Jacob Meldgaard, our CEO and Executive Director, and Kim Balle, our CFO. This morning we released our company announcement for our results for the first part of the year. The information discussed in this call is based on information as of today and may include forward-looking statements that involve risk and uncertainty.
Michael Larson: Thank you for joining us today and welcome to the first quarter of 2020 earnings Conference call.
Michael Larson: On the call with me today are as usual Jacob mogul.
Speaker Change: Hello, and executive duration and King our CFO.
Michael Larson: This morning, we released our company announcements for our results for the first part of the information.
Michael Larson: Information discussed in this call is based on information as of today and May include forward looking statements.
Michael Larson: Risks and uncertainties.
Michael Larson: Thus, as always, I would like to draw your attention to the safe harbor statement on slide 2. Today's call will be recorded and available for replay later at our website, trauma.org. As usual, we will start with a short presentation followed by a Q&A session, where we will be happy to answer any questions that you may have for us. And now, I'd like to introduce our CEO, Jacob Meldgaard, who will start on slide four.
Michael Larson: As always I would like to draw your attention to the Safe Harbor statement on slide two.
Michael Larson: Today's call will be recorded and available for replay later at our website.
Jacob Balslev Meldgaard: As usual, we will start with a short presentation, followed by Q&A session, maybe we'll be happy to answer any questions that you may have for us.
Jacob Balslev Meldgaard: And now I'd like to introduce our CEO Jacob Medical once you go on slide four.
Jacob Balslev Meldgaard: Well, thank you, Michael. And, of course, thank you, everybody, for joining us on our call today. I am pleased to report that, again, this quarter, Tome achieved a strong financial performance with TCE of US$331 million and an EBITDA of US$266 million. The fundamentals that have been supporting the positive rate environment for some time now do remain intact, and thus, we continue to see increased global demand for transportation of refined oil products and, Similarly, only limited figures.
Jacob Balslev Meldgaard: Well, thank you Michael and thank you everybody for joining us on our close date.
Speaker Change: I am pleased.
Jacob Balslev Meldgaard: I can report that again this quarter. So all of them achieve strong financial performance with TCE of USD 300.
Jacob Balslev Meldgaard: $1 million and an EBITDA.
Jacob Balslev Meldgaard: U S dollar 266 million.
Jacob Balslev Meldgaard: The fundamentals that have been supporting the positive rate environment for some time now.
Jacob Balslev Meldgaard: It does remain in check and thus we continue to see increased global demand for transportation of refined oil products and.
Jacob Balslev Meldgaard: Similarly, only limited sequels.
Jacob Balslev Meldgaard: In addition, attacks in the Red Sea have led to rerouting of vessels and thereby added further to the tonnemile demand. Over the course of the previous quarters, we have both acquired additional second-hand vessels and divested some of our oldest vessels, thereby both renewing and adding to our total fleet capacity. In the first quarter, we divested one of our older MR vessels, and after delivering this to the new owners, we will have a fleet size of 89 vessels.
Jacob Balslev Meldgaard: In addition attacks in the Red Sea have led to rerouting, the vessels and thereby adding.
Jacob Balslev Meldgaard: So the ton mile demand.
Jacob Balslev Meldgaard: Well one of the cause of that.
Jacob Balslev Meldgaard: This quarter as well.
Jacob Balslev Meldgaard: We had both acquire additional secondhand vessels.
Jacob Balslev Meldgaard: <unk> divested some of our oldest vessels and thereby both renewing and adding to our total seat capacity.
Jacob Balslev Meldgaard: In the first quarter, we had divested one of our older M. On it. So it's an odd suddenly ring. This to the new owners, we will have a fleet size of 89 vessels.
Jacob Balslev Meldgaard: Thus, we have increased the size of our fleet compared to the same quarter last year, and on top of this, we have increased our exposure to the long haul segment. Furthermore, on a separate note, I would like to draw your attention to the strength of the current market. Here in April, we obtained a three-year time charter for a 2012-built MR, and we have divested a 2006-built MR for US$22 million.
Jacob Balslev Meldgaard: Thus, we have increased the size of our fleet compared to the same quarter last year and on top of this we have increased our exposure to the long haul segment.
Jacob Balslev Meldgaard: On a separate note I would like to draw your attention to the strength of the current market. Yeah. In April we have obtained a three year time charter at 34.
Jacob Balslev Meldgaard: Or a 2012 build a mall and we have divested a 2006 built for 22 million U S. Dollar both transactions underline that there is a strong demand in the market.
Jacob Balslev Meldgaard: Both transactions underline that there is strong demand in the market. Ultimately, we believe this will put us in a strong position for further adding to our value creation over the coming years. And not forgetting our shareholders, based on profit and a very strong cash generation from our business. We have today declared a dividend for the quarter of USD 1.50 per share, thus adding to the positive dividend flow seen over the recent quarter. Again, I believe that we have found the right balance between investing in growth and rewarding our shareholders. So, kindly turn to slide five.
Jacob Balslev Meldgaard: Ultimately, we believe this will put us in a strong position for further adding to our value creation for the coming years.
Jacob Balslev Meldgaard: And not forgetting our shareholders based on the profit and the very strong cash generation from our business. We have to date is that the dividend for the quarter.
Jacob Balslev Meldgaard: 150 per share thus, adding to the positive dividend so seen over the recent quarters again.
Jacob Balslev Meldgaard: I believe that we have found the right balance between investing in growth and rewarding our shareholders.
Jacob Balslev Meldgaard: Kindly turn to slide five.
Jacob Balslev Meldgaard: So, in the past two years, the product and the market have seen great volatility, mainly driven by geopolitical tensions in Europe and the Middle East. On top of supporting fundamental market drivers, these geopolitical factors have increased product taker rates to new, higher average levels. Please turn to slide 6, and Ines. The geopolitical tensions that we have seen in the past two years, first in Europe and lately in the Middle East, have reshaped product-tanker trade flows towards longer distances.
Jacob Balslev Meldgaard: So in the past two years the product tanker market has seen great volatility mainly driven by can you. Please locations in Europe and the middle East.
Jacob Balslev Meldgaard: On top of supporting fundamental market drivers. These scale political factors have increased product tanker rates to new higher average lives.
Jacob Balslev Meldgaard: Please turn to slide six.
Jacob Balslev Meldgaard: And in essence, the geopolitical tensions that we have seen in the past two years first in Europe and lately in the middle East have.
Jacob Balslev Meldgaard: Reshape product tanker trade flows towards longer distances.
Jacob Balslev Meldgaard: All while all trade volumes have risen, supported by increasing oil demand and changes in refinery land. The sanctions against Russia that were officially introduced in early 2023 led to a trade rerouting towards longer-haul trade for both European imports but also for Russian exports. And lately, we have witnessed an increased willingness in the EU to up the game on sanctions on Russia, including on Russian oil and potentially gas exports. This year, the product market has been strongly affected by the Huthi attacks against commercial vessels in the Bab el-Mandeh Strait.
Jacob Balslev Meldgaard: All while all trade volumes have risen.
Jacob Balslev Meldgaard: Supported by increasing oil demand and changes in refinery landscape.
Jacob Balslev Meldgaard: The sanctions against Russia that were officially introduced in early 2023 led to a trade rerouting towards longer haul trade for both European imports, but also for Russian exports and lately, we have witnessed an increased willingness in the.
Jacob Balslev Meldgaard: You took up the game on sanctions in Russia, including on Russia oil and potentially gas exports.
Jacob Balslev Meldgaard: The attacks have similarly led to trade being redirected towards longer trading distances. Recent geopolitical events have shown that disruptions in the product-tanker market can be longer-lived than initially thought, and it may take a longer time before the Red Sea is deemed safe for transit. While the Red Sea situation is very dynamic, the escalation of the conflict between Iran and Israel suggests that the timeline for disruption continues to be drawn out.
Jacob Balslev Meldgaard: This year the part.
Jacob Balslev Meldgaard: To take the market has been strongly affected by the wuxi attacks against commercial vessels at the biofuel mandate straight the attacks have seemingly led to trade being redirected towards longer trading distances.
Jacob Balslev Meldgaard: Recent geopolitical events have shown that the disruptions in the product tanker market can be longer than initially thought and it may take longer time before the red Sea is deemed safe for transit.
Jacob Balslev Meldgaard: While the <unk> situation is very dynamic de escalation of the conflict between Iran, and Israel suggests that the timeline for disruption continues to be drawn out.
Jacob Balslev Meldgaard: Now, please turn to slide 7 for a closer look at the market developments here in the first quarter of 2024. In the first quarter of this year, trade volumes of refined oil products increased by 4% compared to the same quarter last year, supported by strong market fundamentals. On top of generally higher trade volumes, also trading distances have become longer. The share of global clean petroleum product trade transiting the Suez Canal declined from 12% to only 4%, meaning 8% of the global trade has been redirected, with the majority of this going a longer route around the Cape of Good Hope instead.
Jacob Balslev Meldgaard: Now the central slide seven for a closer look at the market developments.
Jacob Balslev Meldgaard: In the first quarter of 2024.
Jacob Balslev Meldgaard: In the first quarter of this year trade volumes with refined oil products have increased by 4% compared to the same quarter last year supported by strong market fundamentals.
Jacob Balslev Meldgaard: On top of generally higher trade volumes also trading distances have become longer.
Jacob Balslev Meldgaard: This year of <unk>.
Jacob Balslev Meldgaard: Global clean petroleum products Retranslating, the Suez Canal has declined from 12% to only 4%, meaning 8% of the global trade has been redirected with majority of this going a longer route Iraq.
Jacob Balslev Meldgaard: Cape of good hope instead.
Jacob Balslev Meldgaard: This has led to an overall increase in tonne-mile demand for products. So far, in the second quarter of the year, trade volumes have followed a seasonally weaker trend, yet volumes continue to travel longer. For the rest of this year, Tormek expects both seasonality and volatility with continued market disruptions, keeping trade distances long. Now, I'll kindly ask you to turn to the next slide, to slide eight.
Jacob Balslev Meldgaard: It led to an overall increase in ton mile demand for product tankers.
Jacob Balslev Meldgaard: So far here in the second quarter of the year trade Williams have followed a seasonally weaker trend yet volumes continued to favor longer.
Jacob Balslev Meldgaard: But the rest of this year tolling mix baked both seasonality and volatility with continued market disruption keeping trade distance is longer.
Jacob Balslev Meldgaard: And now here I'll call you ask you to turn to the next slide to slide eight please.
Jacob Balslev Meldgaard: Let me also touch upon the more fundamental marketplace. In recent years, new refining capacity has been added in net exporting regions such as the Middle East. On the other hand, a number of refineries have been closed for net importing. This has led to higher trade volumes and higher demand for products. Some of this effect is yet to come. A good example here is new refineries in the Middle East, where their full impact on the region's refinery runs is first expected in the second half of this year.
Speaker Change: Let me also touch upon the more fundamental market drivers in recent years, new refining capacity has been added in net exporting regions such as the middle East on the other hand, a number of refineries have been closed in net importing regions.
Jacob Balslev Meldgaard: Is it led to higher trade volumes and high demand for product tankers.
Jacob Balslev Meldgaard: Some of this effect is yet to come a good example, here is new refineries in the middle East where full impact on the region's refined neurons is first expected in the second half of this year.
Jacob Balslev Meldgaard: This will boost the region's export, with a portion of this likely to travel around the Cape of Good Hope, supporting further tonnemile development. An exception to this positive refinery dislocation story is the Dangoda refinery in Nigeria, which will potentially replace the country's gasoline import with domestic supply. After some delays, the refinery has started its initial run.
Jacob Balslev Meldgaard: This will boost the region's exports with a portion of this likely to travel around the group capable supporting to the ton mile development.
Jacob Balslev Meldgaard: An exception to this positive refinery dislocation story is the contango to refinery in Nigeria, which will potentially replace the country's gasoline imports with domestic supply.
Jacob Balslev Meldgaard: So some delays the refinery has started initial runs.
Jacob Balslev Meldgaard: And contrary to expectations, we have seen in this ramp-up phase emerging exports of NAFTA and gas oil from the refinery going to Europe, the Far East, and Brazil. We nevertheless expect some time before the refiner reaches full capacity. Future gasoline production is set to stay in the domestic market while a fair share of its distillate supply may cater for the shortages in the wider West African region. If we look further into the future, we believe that the refinery dislocation story might not be over yet.
Jacob Balslev Meldgaard: And to the contrary of expectations, we have seen in this ramp up phase emerging exports of NASA and Gaslog from the refinery go into Europe far east in Brazil.
Jacob Balslev Meldgaard: We nevertheless export.
Jacob Balslev Meldgaard: We expect some time before the refinery reaches full capacity.
Jacob Balslev Meldgaard: Future gasoline production is set to state in the domestic market, while our fast yet of his distillate supply makes CAGR for the shortages in the wider with the African region.
Jacob Balslev Meldgaard: Yeah.
Jacob Balslev Meldgaard: If we look further into the future we believe that the refinery dislocation story might not be over yet the risk of refinery closures in some of the main importing regions is still quite high.
Jacob Balslev Meldgaard: The risk of refinery closures in some of the main important regions is still quite high. As already mentioned, the Angora refinery, for example, is likely to put further pressure on the European refinery sector, as West Africa is today one of the main markets for European gasoline. Any potential capacity rationalization in Europe could, in turn, increase the need for diesel imports. Please turn to slide 9 for an update on the supply drivers.
Jacob Balslev Meldgaard: Already mentioned.
Jacob Balslev Meldgaard: Thank God refinery for example is likely to put further pressure on the European refinery sector. As this Africa is today one of the main markets for European gasoline.
Jacob Balslev Meldgaard: Any potential capacity rationalization in Europe.
Jacob Balslev Meldgaard: <unk> increased the need for diesel imports.
Jacob Balslev Meldgaard: Please turn to slide nine for an update.
Jacob Balslev Meldgaard: On the supply drive us and after years of subdued new building activity part of tanker ordering at shipyards has picked up and currently the order book stands at 15% of the fleet.
Jacob Balslev Meldgaard: And here, after years of subdued new building activity, product banker ordering at shipyards has picked up, and currently, the order book stands at 15%, which is up three percentage points since last quarter.
Jacob Balslev Meldgaard: This is up three percentage points since last quarter.
Jacob Balslev Meldgaard: However, what is important to mention here is that the current order book is spread across four years, translating into a three to four percent growth rate on an annualized basis. However, despite increased ordering, our long-term view on tonnage supply remains unchanged. If we look at the share of the fleet at above 20 years old, which are the candidates for scrapping within the next five years, we see that feed growth will be relatively better. The 18% defeat means that the net feed growth could even turn negative in the second half of this decade.
Jacob Balslev Meldgaard: However, what is important to mention here is that the current order book is spread across four years translating into a 3% to 4% growth rate on an annualized basis.
Jacob Balslev Meldgaard: Despite increased ordering our long term view on the tonnage supply remains unchanged.
Jacob Balslev Meldgaard: Look at the share of feet at above 20 years old which are the candidates for scrapping within the next five years, we see that the fee growth will be relatively balanced.
Jacob Balslev Meldgaard: Barton it means that the net fee growth could even turn negative in the second half of this decade.
Jacob Balslev Meldgaard: Should a strong freight market result in less-than-expected scrapping activity, we still expect oil vessels to leave the mainstream market and go into sanctioned or capitalized trades. As we have pointed out earlier, new building activity has largely concentrated around the LR2 segment, but given the versatility of the LR2 feed, which can trade both clean and dirty products, the LR2 order book should be seen in connection with the dirty AFROMAX order book.
Jacob Balslev Meldgaard: Sure the strong freight market result in less unexpected scrapping activity, we still expect older vessels to leave the mainstream market and go into sanctioned or into <unk>.
Jacob Balslev Meldgaard: As we have pointed to earlier new building activity has largely concentrated around the electrical segment.
Jacob Balslev Meldgaard: But.
Jacob Balslev Meldgaard: Given the versatility of the <unk> feet, which can trade, both clean and dirty products.
Jacob Balslev Meldgaard: Two order book should be seen in connection with the Dirty Aframax order book.
Jacob Balslev Meldgaard: The combined order book is currently at 14%, which compares with 16% of the combined fleet being candidates for retirement. To conclude these remarks on product and demand, we expect the main demand and supply drivers on the product and demand to continue to be supported. The global product tanker demand in terms of tonne-mile increased last year by 8%, mainly driven by trade recalibration due to sanctions against Russia. We estimate that the Red Sea disruption can add a further 5% to tonne-mile with an additional upside from potentially longer balance patterns via the cable. On the other hand, net recourse is much more limited.
Jacob Balslev Meldgaard: The combined order book is currently at 14%, which compares with 16% of the combined fleet being candidates for recycling.
Jacob Balslev Meldgaard: Now please turn to the next slide please turn to slide 10.
Jacob Balslev Meldgaard: And.
Jacob Balslev Meldgaard: To conclude these remarks on the product tanker market, we expect the main demand and supply drivers on the product tanker market to continue to be supported.
Jacob Balslev Meldgaard: Global product tanker demand in terms of ton miles increased last year by 8%, mainly driven by trade recalibration due to sanctions against Russia.
Jacob Balslev Meldgaard: We estimate that the Red sea disruption.
Jacob Balslev Meldgaard: A further 5% to ton mile with an additional upside.
Jacob Balslev Meldgaard: From potentially longer balanced patterns, whereby the Cape.
Jacob Balslev Meldgaard: Yeah.
Jacob Balslev Meldgaard: On the other hand net fleet growth is much more limited last year, we saw a large number of pillar two vessels moving into the dirty market.
Jacob Balslev Meldgaard: Last year, we saw a large number of LR2 vessels moving into the Dirty Mark. So far this year, we've seen an increased number of LR2s cleaning up, but even in the case of a potential large-scale net migration back to the clean trade, our calculations show that the product-tanker demand-supply balance will remain at a much firmer footing than before the geopolitical tension started. Now, with these commas, I'll now conclude my part of the presentation. I'll hand it over to my colleague Kim, who will walk us through the finances.
Kim: So far this year, we've seen an increased number of electrodes cleaning up but even in case of a potential large scale migration back to the teams right. Our calculations show that the product tanker demand supply balance will remain at a much firmer footing than before the Q politically.
Kim: You can start.
Jacob Balslev Meldgaard: Now.
Kim: With these Thomas.
Kim: I'll now conclude my part of the presentation and I'll hand, it over to my colleague, Ken who will walk us through the financials.
Kim Balle: Thank you, Jacob. Please turn to slide 11 for the financial highlights. In the first quarter of the year, our TCE increased to US $331 million, and based on this, we generated $266 million in EBDA and $209 million in net profit. Subtracting profit from sailor vessels of 17 million US dollars, we derived a satisfactory adjusted net profit of US $192 million, i.e., up 25% relative to last year, driven by both the strong rate environment and our increased fleet.
Kim: Thank you Jacob please turn to slide 11 for the financial highlights.
Kim Balle: The first part of the year, our TCE increased to U S dollars 331 billion.
Kim Balle: And based on this we generated 360 ish million EBITDA in dollar to one 9 million of net profit subtracting profit from sale of vessels up 17 billion U S. Dollars, we derived unsatisfactory adjusted net profit of USD $192 million I up to.
Kim Balle: 25% ready to relative to last year, driven by both the strong rate environment and our increased fleet that have added to operating days.
Kim Balle: That has added to our earnings data. TORM achieved TCE rates of more than $43,000 per day, with LI2s above $54,000 a day, LI1s above $48,000 a day, and AMRs around $39,000 a day, driven by a very high level of rates in the first part of the quarter, followed by summary tracking towards the end of the quarter. Our fleet had a total of 17,698 earning days, i.e., markedly higher than the 6732 days we had in the same quarter last year, as we took delivery of more vests.
Kim Balle: <unk> achieved TCE rates of more than $43000 per day with villa choose above 54000.
Kim Balle: Once about $48000 a day in a mass around $39000 day, driven by a very high level of rates in the first part of the quarter followed by summary.
Kim Balle: Pricing towards the end of the quarter.
Kim Balle: <unk> had a total of 7698, earning days I E Mazda markedly higher than the 6732 days, we had in the same quarter last year as we took delivery of more basis. We believe these are strong numbers and add it together they reflect a very strong performance, enabling us to increase TCE rates.
Kim Balle: We believe these are strong numbers and added together, they reflect a very strong performance, enabling us to increase TGE rates per day by $1,400 compared to Q1 2023, while maintaining operating expenses unchanged just below $7,300 per day. Also, our continuous focus on capital management and balance sheet structure is reflected in a stable loan-to-value ratio in the range of 25 to 30 percent. As seen in previous quarters, we have achieved a stable level whilst increasing our operational level, as we are using our shares as part of the consideration in connection with the acquisition of investors and, at the same time, allowing us to return a significant part of our earnings to our shareholders. Please turn to slide 12.
Kim Balle: Per day by $1400 compared to Q1 2023, while Mitch.
Kim Balle: Maintaining operating expenses unchanged just below $7300 per day.
Kim Balle: Also our continuous focus on capital management and balance sheet structure is reflected in the stable onshore value ratio in the range of 25% to 30% <unk>.
Kim Balle: As seen in previous quarters, we have achieved this stable level, whilst increasing our operational level.
Kim Balle: As we are using our shares as part of the consideration in connection with acquisition of business and at the same time, allowing us to return a significant part of our earnings to our shareholders.
Kim Balle: Please turn to slide 12.
Kim Balle: The chart in the upper left illustrates how Bessel values have developed over the previous quarters leading to a total value of 3.5 billion US dollars at the end of Q1 2024 and with net asset values showing a similar progression. On the chart in the lower left, we have adjusted the net interest-bearing debt for the dividend for Q4 2023, i.e., the dividend distributed this April, and thus getting to $885 million.
Kim Balle: The chart in the upper left illustrates how vessel values have developed over the previous quarters, leading to a total value of $3 5 billion U S dollars at the end of Q1, 2024, and with net asset value is showing a similar compression.
Kim Balle: On the chart in the lower left we have adjusted the net interest bearing debt.
Kim Balle: Dividend for Q4, 2023, I E. The dividend distributed in this April and thus getting to 885 million in English to us in.
Kim Balle: In total, we have like-for-like increased the net interest-bearing debt by $238 million over the course of the year, while vested values have increased around $600 million. This gets us to a net loan-to-value ratio of 25.6%. Now, please turn to slide 13.
Kim Balle: So when we have like for like increase the net interest bearing debt.
Kim Balle: $238 million over the course of the year rising by vessel values have increased around 600 million U S. Dollars. This gets us to the net loan to value ratio of 25, 6%.
Kim Balle: Now please turn to slide 13.
Kim Balle: I have already touched upon our strong cash return to shareholders, so this slide is just to sum it up. Our net profit for the quarter amounted to $209 million, whereas $17 million stems from the profit from the sale of business, i.e. Adjusted profit for the quarter amounts to $192 million. Based on our distribution Policy that states our intention to pay out excess liquidity above a threshold cash level, the Board of Directors has declared a dividend for Q1 2024 of $1.5 per share, i.e.
Kim Balle: I have already touched upon our strong cash returns to shareholders. So this slide is just to sum it up our net profit for the quarter amounted to $209 million were up 17 million stemmed from the profit from the business I E. Adjusted profit for the year for the quarter amounted to $192 million.
Kim Balle: Based upon our distribution policy that face our central paid payout excess liquidity above a threshold cash level. The board of directors have declared at <unk>.
Kim Balle: adding to the string of attractive cash distributions we made in the previous quarter. This adds up to just around 141 million US dollars, corresponding to 73% of our adjusted profit. And as such, it reflects the transparent cash flow from operations less installments on debt. And now, please turn to slide 15 for the outline. Based on the very satisfactory results we have published today and our coverage, we have updated our guidance range for the second quarter of 2024 to TTE earnings in the range of 1.1 to 1.35 billion US dollars and EBDA in the range of 800 million to 1 billion and 50 US dollars. Thus, we have increased the lower end of our range by US$100 million and thereby narrowed the guidance range compared to two months ago, thus adding further comfort to our full-year guidance.
Kim Balle: And for Q1, 2024 dollar $1 five per share, adding to the strength of attractive cash distributions. We have made in the previous quarters. This adds up to just around 141 billion U S dollars corresponding to 73% of our adjusted profit and as such it reflects the transparent cash.
Kim Balle: Flow from operations less installments on debt.
Kim Balle: And now please turn to slide 15 for the outlook.
Kim Balle: Based on the very satisfactory results, we have published today in our coverage we have for the second quarter of 2024.
Kim Balle: Updated our guidance range to TCE earnings in the range of one one to 135 billion U S dollars.
Kim Balle: D E in the range of 800 million to $1 billion in 15.
Kim Balle: The U S dollars.
Kim Balle: Thus, we have increased the lower end of our range by $100 million and thereby narrowed the guidance range compared to two months ago, thus, adding further comfort to our full year guidance.
Kim Balle: As you might expect, we have planned for standard maintenance to be done over the summer months. Those dry doggings, and therefore, the number of off-hire days will be a little higher in Q2 and Q3 compared to Q1. Thus, in the second quarter of 2024, we expect to have 7,763 earning days, and for the full year, we would expect to have 31,225 earning days. Based on our rates and our coverage as of 6 May 2024, we have fixed a total of 42% of our earning days at $43,189 per day for the full year across the, And this concludes my part of the presentation. So I will now hand it back to the operator, who will take care of the Q&A session. Thank you very much.
Kim Balle: As you might expect we have planned for standard maintenance to be done over the summer months, thus dry dockings.
Kim Balle: And therefore, the number of off hire days will be a little higher in Q2, and Q3 compared to Q1, but also in the second quarter of 2024, we have we expect to have 7763, earning days and for the full year, we would expect to have 31225 billing days.
Kim Balle: Based on our rates and our coverage of some states may 2024, we have fixed at all a 42% of our early days at $43189 per day for the full year across the fleet.
Kim Balle: And this concludes my part of the presentation. So I'll now hand, it back to the operator, who wants it casts a Q&A session. Thank you very much.
Operator: Thank you. At this time, if you would like to ask a question, press star 1 on your telephone keypad. If your question has been answered and you would like to remove yourself from the queue, press star 1 again. Your first question is from the line of John Chappell with Evancor.
Speaker Change: Thank you at this time, if you'd like to ask a question press star one on your telephone keypad.
Jonathan B. Chappell: <unk> has been answered and you would like to remove yourself from the queue Press Star one again.
Jonathan B. Chappell: Your first question is from the line of Jon Chapell with Evercore.
Jonathan B. Chappell: Thank you. Good afternoon.
Jonathan B. Chappell: Thank you good afternoon.
Jonathan B. Chappell: Just wanted to ask two questions as it relates to strategy and basically just quarterly updates and things we've spoken about in the past first as it relates to fleet, obviously, you've absorbed a fair amount of secondhand vessels over the last 12 months to 18 months and asset values keep pushing higher you've also been divesting some of your older vessels, where do you kind of see you.
Jonathan B. Chappell: I just want to ask two questions as it relates to strategy and basically just quarterly updates on things we've spoken about in the past. First, as it relates to the fleet. Obviously, you've absorbed a fair amount of secondhand vessels over the last 12 to 18 months, and asset values keep pushing higher. You've also been divesting some of your older vessels. Where do you kind of see yourself on additions versus subtractions going forward in the current, not just rate, but asset value backdrop?
Jonathan B. Chappell: Yourself on additions versus Subtractions going forward in the current.
Jonathan B. Chappell: Not just rate backdrop, but asset value backdrop.
Jacob Balslev Meldgaard: Yeah, so it's, of course, thanks, Jonathan Jacob here. It's a dynamic world. I mean, as you point out, we were relatively active last year. Last year, we saw quite a number of opportunities that we felt were compelling to enter into, especially for larger ships, LR2, LR1s. Prices have kept pushing up even after those transactions.
Jacob: Yeah as always of course, and thanks, Jonathan Jacob here.
Jacob Balslev Meldgaard: Dynamic World I mean, so as you point to we were relatively active.
Jacob Balslev Meldgaard: Last year, we sold.
Jacob Balslev Meldgaard: Okay.
Jacob Balslev Meldgaard: Quite a number of opportunities that we felt were compelling.
Jacob Balslev Meldgaard: Two to enter into is basically for larger ships.
Jacob Balslev Meldgaard: Ones.
Jacob Balslev Meldgaard: Prices have kept.
Jacob Balslev Meldgaard: Pushing up even after those transactions.
Jacob Balslev Meldgaard: So I think we've been a little in a pause moment, to be honest. You can also see this year so far, we've added one vessel to our fleet, and we're taking one out. So it's been relatively stable.
Speaker Change: Yeah, we've been literally in a in a pause a moment to be honest.
Jacob Balslev Meldgaard: You can also teu this year, so far we've added one vessel to our fleet and we will take one out. So it's it's been relatively stable, having said that we are constantly scouting for a while we would with the message as good capital employment with a good risk reward.
Jacob Balslev Meldgaard: Having said that, we are constantly scouting for what we would deem as good capital employment with a good risk reward. But I don't have anything on the table right now, Jonathan, where I could say that's compelling. But surely, how can I say, an organization that is keen to still deliver even more value and not rest on its laurels? We are certainly chopping away at the opportunities. But there's nothing I could say that makes sense. But I'm hopeful that we'll do something. Right now, I'm very comfortable with the pieces we have.
Jacob Balslev Meldgaard: But I don't have anything on the table right now John the way I could say, that's compelling, but but surely.
Jacob Balslev Meldgaard: With with.
Jacob Balslev Meldgaard: An organization that is keen to still deliver even more value and not rest on the laurels, we're suddenly chopping away on the opportunities, but there's nothing that I could say that makes sense, but I'm hopeful that we will do something.
Jacob Balslev Meldgaard: Right now, they're not household with it we have to be honest.
Jonathan B. Chappell: Great, that's good to hear. You noted in your initial comments, which I didn't see in print anywhere, that you did a three-year contract. As we think about this order book as it continues to build, and you know, a lot of the wind at your back from a demand and geopolitical perspective, have you thought, now with that fleet of 89 vessels that you're comfortable with, of maybe getting a little bit more coverage, you know, for some duration of three years? And I guess the follow-up to that would also be, was this deal that you were able to sign somewhat of a one-off, or is there increasing liquidity in that market?
Jacob Balslev Meldgaard: Great.
Jonathan: That's good to hear.
Jonathan B. Chappell: You noted in your initial comments, which I didn't see in print anywhere you did a three year contract.
Jonathan B. Chappell: As we think about this order book because it continues to build in a lot of the wind at your back from a demand and geopolitical perspective.
Jonathan B. Chappell: Have you thought now with a fleet of 89 vessels that you're comfortable with.
Jonathan B. Chappell: Be getting a little bit more coverage.
Jonathan B. Chappell: Some duration of three years and I guess the follow up to that would also be was this that you were able to sign somewhat of a one off or is there increasing liquidity in that market.
Jacob Balslev Meldgaard: Okay, so let's start from the back end. I do think that given that we are now in effect, if we look at our own numbers, we are two years into strong earnings. I think it's also clear that the geopolitical environment that I discussed before, obviously, we don't know the future, but it looks as if it is supportive of longer-term models for transportation. We'll find out.
Speaker Change: Alright, so let's start from the back and I do think that given that we are now.
Jacob Balslev Meldgaard: In effect, if we look at our numbers. We are we are two years into.
Jacob Balslev Meldgaard: The strong earnings.
Speaker Change: Thank you yeah. It's also clear that the geopolitical environment that I discussed before.
Jacob Balslev Meldgaard: We don't know the future put it looks as if it is supportive of longer.
Jacob Balslev Meldgaard: Ton model for transportation, and we'll find out I think they are starting to be signs of that that some of our clients hours. The thing that maybe they should help themselves against.
Jacob Balslev Meldgaard: I think there are starting to be signs of that, that some of our clients, I also think that maybe they should hedge themselves against a continued very, very strong market. And obviously, if we do longer-dated contracts, I mean, I just mentioned $30,000 on an MR, that dwarfs when we are doing more than $40,000 on a quarterly basis right now. So my answer to the latter part of your question would be, I do think there are more people looking at whether it makes sense now to start to de-risk if you are long on freight and not long on ships.
Jacob Balslev Meldgaard: A continued very very strong market and obviously, if we do longer dated contracts I mean, I just mentioned 30000 on an EMR that drops off when we are doing more than 40000 on a quarterly basis right. Now. So I think my my answer to the latter part of your question would be I do think there is more people.
Jacob Balslev Meldgaard: Looking at would it make sense now to start to Derisk. If you are.
Jacob Balslev Meldgaard: Long on.
Jacob Balslev Meldgaard: And we will constantly, of course, look for that type of opportunity with the right clients. And yeah, we are seeing that we are in more dialogue on that today than I experienced, let's say, a couple of quarters ago.
Jacob Balslev Meldgaard: Freight and not long on ships and we will constantly of course comp for that type of order issues opportunity with the right clients and yes. We are seeing we are in more dialogue on that to date and what I experienced let's say.
Jacob Balslev Meldgaard: A couple of quarters ago.
Jonathan B. Chappell: Got it. Great. Thank you, Jacob.
Speaker Change: Got it great. Thank you Jacob.
Operator: Thanks. Thanks for your questions. As a reminder to everyone,
Jacob: Thanks, Thanks for your questions.
Operator: As a reminder to ask a question, press star 1 on your telephone keypad. At this time, there are no further audio questions. I will now hand the call back over to the presenters for any closing remarks.
Operator: As a reminder to ask a question press star one on your telephone keypad.
Operator: At this time there are no further audio questions I'll now hand, the call back over to presenters for any closing remarks.
Jacob Balslev Meldgaard: Well, thank you very much for joining us today, and have a great day. This concludes today's call. Thank you for joining us. You may now disconnect your line.
Speaker Change: Well. Thank you very much for joining us today has must have a great day.
Jacob Balslev Meldgaard: This concludes today's call. Thank you for joining you may now disconnect your lines.
Operator: Thanks for watching!
Jacob Balslev Meldgaard: [music].
Operator: Okay.
Operator: Okay.
Operator: [music].
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Speaker Change: Thank you.
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