TRMD - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by and welcome to TORM’s First Quarter Results. 2021 Conference Call. Currently all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Mr. would to conference I speaker your Instructions] like the to over [Operator Morten Agdrup

Morten Agdrup

of My all and Corporate conference results welcome you Finance to quarter Thank for TORM’s call dialing and Strategy; regarding Head Morten Agdrup, name in IR@torm. here first of XXXX. the

we slide for end usual, presentation, of As as we will two. questions. speak and will to refer along we up Please the to turn and slides open the go at the

draw your statement. CFO, to and to our The Before for hand Harbor like commencing, Meldgaard; will Kim Director attention usual Safe will Jacob. now by over Slide results and I’d I CEO, Jacob Executive please. the three, Balle. you be call will today presented to

Jacob Meldgaard

for to LR of and XXXX we pleased all. I'm our this in. announced published We morning to quite be acquisition today. of for afternoon the three quarter happy results have because two course vessels. also Good Thanks first here I'm of dialing the

first for The pandemic, global was the continued the lowered which the by demand downturn impacted and products. market COVID-XX of all quarter XXXX

For tax lost of million. EBITDA quarter with $XX before million $XX ended TORM. of The and an

on of was part. invested we at X.X%, negative which consequence a As course turn satisfactory on is capital

were Our below $XX,XXX average the rates part segment, $XX,XXX Tanker in TCE feed per realized almost day. just per MR achieved an the And rate of largest the day. segment,

days at secured now into into with in $XX,XXX looking all first a realized Now than bookings day. of almost result the And XX% covered. the we've quarter, are earning stronger second per we looking here already quarter

consideration as feed three $XXX share transaction LRX million. today the increase we and vessels total and adding of of announced, previously the eight party this we based [indiscernible] a purchase in we've announced for to modern a During purchased quarter,

vessel. we older the also after quarter sold Lastly, MR have ended one

will elaborate are strategy over following the last on S&P I slide. transactions that of here our these the So year all pursued we've and on S&P part coverage and

tankers to divided the The a pandemic five. you half the turn flattering product first and into impacted by XXXX so at was also freight for the not ended rate downs. loss-making brilliant to levels. a please is and global half market close So have slide second product in special year related

the continued As I mentioned, XXXX the half downturn second from so into of have XXXX. here far

our this managed market exposure. During we have period, actually

So the market sold followed. the first exposure and purchase that during market, downturn we the This our Salem through vessels. quarter of older in capitalized market strong decreased market XXXX second seven the

the we've additional months to recent vessels. downturn, this of three MR LRX total the these the on the during quarter and exposure second take of eight during decided vessels XXXX. market third all will most be The delivered vessels Over through purchase and XX of recently,

the increased versus coverage support number for we and the have the XX% the employments exposure. We of quarter. coverage today, and to add especially operational leverage XX take remaining employment covered additional Similarly through activities our will fourth the future which covered both of as from anticipation And also almost remaining of quarter entire in And coverage, to delivery done in days XXXX. around the strategy the XX% XX% for XX% spot our here off the quarter. the year third in for the was Now, second conducted We of cover. the the increased a quarter, in the runs fourth first of MR terms of to cover of and coverage a to of for gradually will decided onwards. XX% we quarter. for The This XXXX quarter, half freight feed the market users TimeStar second second and performance. The downturn. over down here in we've derivatives, of third vessels, of reduce

Now, let to and turn six. underlying the here, me and co-market, in turn of please drivers slide product the some to

as to the tanker into Europe, started a please, Asia indeed, market transmissible gets but in more the especially year a affected virus as with Now really point and be for inflection in has people of and with will is whole. end on in timing, that different regions to will lag drawing immunity a the the Europe and while U.S., challenges of the of macro-economic the I also of phase recent moments rates, a emergence once COVID-XX progress and reached to presentation, developing this It This with the a market pre emphasizing concerned more temporary well likely in little the and I'll local rate once large nevertheless, estimate is difficult operational man will have virus. developments of for the seeing is show the countries in cold reversal United current the that the extremely up assume most with look explainable well we the but get ends. extent health year U the progress as The wider summer mode to here. expected to in products product likely leading by COVID-XX leading temporarily in vaccination open the seen we're reopen lockdowns. now, market, most of that demand. be stock industry been turn exact over towards Since a market recovery tanker tank, later as the It's reached benchmarks a of gains Ella hard the we've how global Nevertheless, for mentioned, COVID-XX has are the the resulted especially the half might will very above vaccination the effected in a already due developments vaccinated, oil demand. countries renewed dramatic quarter inflection now, oil beginning in already weather reopened by us point in has seen for COVID-XX continues but India, Please many S a slide can several causing back our started in touch to $XX,XXX product reach effected together as the demand the can weak the by difference third lockdowns, significant recent resulted pre the colleagues on made market strong and each all stockpiles we oil cases to show demand. the to stripping is started cannibalization indicators last and progress Unfortunately, in has year, cases control turn improvements upon vaccine new months, parts than second with hit LRX spot which which negatively day. the and breakout if aggravated seven, at already all good vaccinations shown demand we which flows countries on levels. increase the which and much And was Europe India, the fast, wave India compared all breakouts the Europe increased oil year demand increasingly recovery in in to in product the to end long some last lockdowns time recovery cover recently further where that seen we’ve improvements figures China, levels, countries in together demand the be have latest again activity eight, have slide in more and well. momentum. COVID-XX strengthened in all rate the these remain as transatlantic we to variants as as and behind in rollers, think headwinds Slide regions short-term all in of in of some course renewed cleanups. and was a to there nine. and Since demand has the as please, seen product United the States, demand then and This global and the to at recovery States, year. declining in But the per where be the confident levels pandemic, crude crude the accelerating of as with above sort vessel’s, increase of

country's we have Indian very India also chief that in consequence, a willing dramatic shifts COVID-XX recently have cases to concerning development imposed challenges, operators The in countries the our a ports. portholes And in have is operational India. some longer restrictions call as as made population. colleagues However, on in a situation to no toll several is seen are which causing as increase as the well indeed respect in India, with country,

for increasing on months. taking product from Please and be the oil the monitoring XX able factor status me From the will turn fuels surplus country States. are potentially do significant restrictions flows trait regions will development, export, We in the operations. effect but not will period. we negative judging be carefully the products of here slide to back and maintaining a demand come several pulling of indicators, through Also the transport let likely of country India's situation the from course, current a account new United as see to this expect difficult mobility in country's the coming net into we a to in India perspective, product have

has the significant COVID-XX above products, the the I along actually of seen all vaccinations improvements with has since think of improvements and have adult the significant it's seasonal commenced a a population that already demand country as We've with country of demand it's where core demand diesel diesel a, year U S vaccinations in shown shown gasoline the progress. almost an pre beginning example indicators XX% in levels. for such fact

levels of year well has five, the start but below XXXX still demand fuel jet pre here, around XXXX is flat improvements. figures X% demand at below from the gasoline currently the show even level significant to levels, below climbed While COVID-XX traveler XX% the

to the normal is seen less latest we If coast coast or improvements refinery the down colonial global we higher slide consider near-term on-shore data, turn summer. peak a the seeing summer of have that back attack to floating States an stores signs are removals XX. into the of East since season. and taking And level on demand already Please account get the we pipeline recent likely region can extra excess these inventory from we to flooring inventory recent years, see and needs imports cyber come the ahead S capacity import at what look to and last United With are in U level boost. East the on-shore more to with the stores product in driving

less with demand the to February March. connection result cold seasonal of a refinery there tanker stocks in us, of weather part that the of Once in This outages gains levels even extremely in slide momentum the most below drawing Please the in fell recovery As stock behind turn of XX. headwinds suggests the for to market. meaning normal the Gulf U.S. part is here

next of capacity closing refined filled down, demand West in and already are coast at of more look sole scheduled of side, Two of world's which capacity is to remained and pace as Australia, having order per book such The accelerated products. the At for few sometime another a the market medium regions these online, in for in Both the Africa. the even in refinery Middle the down The coincides closed New XX% the three Zealand notably is New which drivers. segment only XX, the high ratio coast, COVID-XX product million remaining The exporters capacity level. building of million of years. tanker projects less to has diesel low is be all the the refining to new and barrels and for is also trade with supply Europe, You world. of container are last for million the are mile supportive in scale than already COVID-XX positive oil a closing East more South outlook in U.S. closure. refinery shipyards positive are Nigeria. years. refinery refinery total To day trade, with with in to in X most importing has XX the per refiners next at historically for figures large importers East please. largest two in capacity positive the quite located Europe, the to more this new of per difficult reason four day significance order Zealand, the made and which of five for for flows growth has U.S. West The mainly U.S. record are at as is up mentioned X of of are refining well. more at the product The barrels X Australia risk fleet tankers down East and most capacity Zealand. developments product risk now, to the closed the out large allow regions, Slide that day, the New illustrate the most potentially Most same X% Australia per time, likely gold further closures ordering XXXX, coast, to come significant. delivery barrel and the which it and down pandemic approximately long-term years today case X% products, for refineries or XX% the of closures, capacity post of U.S. and before account ton supporting fleet three region, of coast the is in China, modest tankers There

on three its product in activity. we growth consequence, in to and on markets the tanker the pace a expects short-term conclude the year the remarks a TORM only related years and economic the market fleet five at market, COVID-XX around X% oil To next half global the volatility our to two, past As seen in see the impact years the expect in

to as the we effects, Aside as, drivers product a provide term. underlying see years next that positive, key will such order number which support the and refinery over three market book, for of the the the to five COVID-XX remain from mentioned longer tenders dislocation low

the that just strong opportunities I in low outperformed dynamics these In the coming our structure. at potential slight believe a given potential leverage being through quarter. platform. at general, TORM actually day. look This looking the XXXX earnings group we for I to market TORM’s the operation factor average the I'm in vessels of XX, pleased focus XX, first of by average. design $XX the west $XX,XXX in we, capital levels at similar with largest Slide believe highest again any very integrated compared market to had maneuver operational of into relative the utilize continued competitive well-positioned the I'm to driven the of $XX,XXX MRs day, In satisfied above-average first basins platform TORM's our please. the environment we're that of to per positioning delivering A XXXX, additional segment, in is Slide have earning well TCE of we the million. when at market turn time. deliver current translates quarter In performance. we on our and is weight continues utilized strengths key the our with a rates market commercial this peer below Following first over peer TCE quarter here to Please our basins further form through our earnings. full per Suez achieved across general positioned quarter, main

Now dependency. and Kim, hand over leverage, further the the Kim? for elaboration least I'll on it our structure not you, cost a operational to

Kim Balle

With TORM product in our significant increase rates. spot XX. to turn has tanker utilize an leverage Slide Thank you, underlying Please Jacob. to based profile, the

numbers, Adding X,XXX As in of published will LRX earning in XX,XXX and annualized with purchases earning XX,XXX XXXX basis. on to our, just increase we an XXXX, days around earning had days about March XX, open these the almost just open XXXX. days

XX% Jacob over the increased we has as market. per in coverage have, $XX,XXX XX. quarter, to term, a the taking anticipation year Slide For deliberately for last however, mentioned, turn covered in continued the Please almost you second downturn of nearer the And at day. have

XXXX. These and XXXX advantage and freight As rate precise entering we in of physical part the to derivatives timing and the coverage of use throughout contracts. relation quarter providing size first strategy, of our a freight combination of of flexibility derivatives have coverage

total use of from have $XX.X derivatives with the amount We of benefited million. a realized

and our review to such is the X% quarter Vessel seen and $X.X metrics, time March, TORM the value freight during towards key like with purchases derivatives new now into value of element including end dollars. net XX. in I by debt XXst committed market derivatives. the vessels had by value million, position driven positive and TORM’s million XXXX, to then would second a round in by unrealized by booked TCE, market quarter. the as the negative million per The resulting have increased a quarter, gross of impact amounted asset positive quarter. Please terms was our us values the the loan end To of was of as unrealized value around Outstanding of of these to turn then $X.X have The $X slightly April decreased a XXXX. first in element end April. we value in during financial result However, billion the just TORM’s development booked our TCE in $XXX buildings of momentum during which changes and March, Slide in over value. fluctuations the amplify as of of to of secondhand the

to Finally, non-cash program of million. includes CapEx building had of March $XXX and new XX, as $XX This XXXX, MR per related million an we purchase. committed our outstanding vessel element

call, this the The position before total secondhand to as per below with DKKXX.X net balance increase just corresponds flexibility has XXXX. TORM’s past or per XX, pleased at March over was share. cash estimated million asset a And month was the $XXX sheet our $XX.XX this million. of XX our to our And us commencing vessel $XXX provided So is with trading strategic strong share I'm at purchases. that fleet DKKXX. just value

insights position, and commitments On the give following our our some debt CapEx Slide slides, XX. profile. I'll liquidity into turn to Please,

share-based to of to liquidity of pro XXXX. commitments XX, funded And $XXX of and three LRXs, undrawn CapEx million. related million. manageable. And expected we very March TORM the payment available of refinancing March cash purchase to eliminated having as at to which vessel until $XXX XX, million, turn with major million. and our have As The provide After million XX. million CapEx related the commitments XXXX, excludes the the totaled including to the leaseback Slide new enhancing and in committed buildings fully $XXX including had last $XXX relating Total had strategic the are financial was us MRs purchase, Please the stands secondhand market. all credit facilities commitment the MR were strongly available the profile. sale purchase. forma two pro the refinancing finalized The and flexibility CapEx total opportunities total purchases liquidity Cash with we $XXX This agreements. liquidity forma value additional per LRX pursue year, and financing $XXX XXXX, some the

As that, do up open repayments displayed, after will the we With not have questions. operator XXXX. any let major until I for

Operator

the Jon Our [Operator line first question Chappell from comes Instructions] Evercore. from of

now is open. line Your

Jon Chappell

start with There's seems liquidity Good I no afternoon everyone. Kim, could debt coming you, up. situation fantastic. amortization big if the

LRX a sale do maybe the optimistic definition. you've there the you it the financing from market. more situation? are need? ships this do of made, and Is market leasebacks, given the sale It's available view to just size financing trying understand. and the debt that to purchases the liquidity Is you're existing I difference thing I'm continuing for seem have all and leasebacks by to a then there. getting would but the you're reason outlook for not you still your bank necessary adding the, one fleet two understand from on be which I'm higher the You why just very that to third buying, for curious be just cost debt and what that the

Kim Balle

Thank you, very good it question. is Jon, for question, the

as different institutions, We financing as of leasing have a banks, group well partners. relationship

our as such, diversified platform. very trying to we funding establishing also using partnerships, are but make So a –

So as then financed see, you the leaseback further DSF with have and sale and scheme. we LRXs via can through a

to different of basically with diverse up So and funding a pros it of those. there the platform is each cons build on sources

Jon Chappell

And me and the adding sale as just third leaseback you're more correct LRX. of for but I'm wrong, two if the ships part

Kim Balle

had yes, a then, add all, And We and to of we correct. to – two sort – – balance that's opportunity basically vessels. we to opportunity conservative. a liquidity perspective, of further balance sheet to Yes, good and first like sheet pretty liquidity had be a on terms to on the the from commercial the

I just So added as terms. decent we having opportunity, said on those that quite also

Jon Chappell

when second see LRX ask for freight clarifying the to little And covered, quarter, Okay. like bit. ahead are the start second XXX% and then thing about, days we I for you'd would scratch something thanks derivatives, the a

on in far Just despite the your mean, rest choppiness, half for roll-off a nimbleness have market, them quarter. second the will view the the, curious optimistic like and of the of that. flexibility it year, maybe some the you I where around about of more the majority sounds second

step really a may market may quarter of whatever and trough be. timed those If optimally kind those you case you the to to was to for for of mid-June, delayed, Do ability of may of the June, early this think or have the be you re-up those delayed up when be derivatives part kind two recovery kind opportunity another the get and has or on passed. at the

Jacob Meldgaard

Yes.

be is So, I it is will on later. so think it the to there a – recovery, in too your delay if point expected then that

course we second as you coincide, of right late all is take exact that's pay could going thoughts be probably of reopening if half. product now. Clearly than, point rollout later the mentioned as new we to our second And And the ago. and for The but we market X. timing I of It's base and So willing fundamental the case to we, not vaccinations societies be of at end had that too July positions, you is risk the the about the recovery large. with we'll that I are positions June in you that have the would stood to some – now time take this, think obviously. that

Jon Chappell

sense. Jacob. Thanks Yes, right. that All makes Kim. you, Thank

Jacob Meldgaard

Thanks question. for the

Operator

Okay.

Bak Our SEB. next Ulrik comes of question from from the line

now is line Your open.

Ulrik Bak

few Kim, side. and my a from also questions Jacob Hi,

Firstly, in internally of additional to your three eight and do how terms Because how balance you March acquiring now capital in allocation, evaluate debt onto have take and much how you been vessels sheet? your vessels many now.

So what is the, yes, the capital allocation strategy.

Kim Balle

Okay.

Just thank to – really you Team the question the the partly a eight, transaction clarify, really for and first Tanker’s purchase Those we perhaps, need that to based did share we transaction liquidity Ulrik. XX/XX. When those. didn't were any

well-structured quite quite, is we those kinds of and like really found that structures So certainly. nice transaction, we

no of scenario in financing where liquidity have with this and with we needed, course, we’ve So the LRXs for different displayed. a and we liquidity needed that that some as in case three put place

the on it into. structure specific that are looking course of we depends So

Ulrik Bak

purchase you would is, still additional fleet as to Okay. enough the recovery But or big for tonnage what or you your the upcoming alluded to? in be market is have do

Jacob Meldgaard

think the it as I depend pointed, Kim So on deal. will

One Team our were now there's, basically of this we've different So neutral year, Tankers and course the with with where in-line came LTV, where type the the cash over two own done LTV. of this structures. that

different really that's with have the when debt, deal you announced moving aggregate shares. have basis on It's XX% today. the an of So we not needle issuance XX%

up, you cash. Here you utilizing are are levering

it more well, new we, could funded, not if to you at would have are the year we were project, cash And more would say, at structure be evaluate if you recovery. that the away least or deal next fully to to has. of a And taking have what we type next I a i.e. so lean less until would into towards look

Ulrik Bak

Thank clear. you much. so very That's

Operator

moment. Instructions] questions Okay, No at sir. the [Operator Please continue. further Okay.

Jacob Meldgaard

Thank have the Okay. questions from any web don't We you. either.

the conference Thank Thank call. hereby a listening good have you in So you. we all end for and day.

Operator

for today. participating. you That our Okay. for conference Thank conclude does

You may all disconnect.

TORM (TRMD) 12 May 212021 Q1 Earnings call transcript