TORM (NasdaqGS:TRMD) Q4 2025 Earnings call February 26, 2026 10:00 AM ET Company ParticipantsCliment Molins - Head of Shipping ResearchJacob Meldgaard - CEOKim Balle - CFOConference Call ParticipantsFrode Mørkedal - Senior Equity Research AnalystOperatorHello, welcome to the TORM Full Year 2025 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, press star o ...

TORM (NasdaqGS:TRMD) Q4 2025 Earnings call February 26, 2026 10:00 AM ET Company ParticipantsCliment Molins - Head of Shipping ResearchJacob Meldgaard - CEOKim Balle - CFOConference Call ParticipantsFrode Mørkedal - Senior Equity Research AnalystOperatorHello, welcome to the TORM full year 2025 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, press star o ...

TORM (NasdaqGS:TRMD) Q4 2025 Earnings call February 26, 2026 10:00 AM ET Speaker4Hello, welcome to the TORM Full Year 2025 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, press star one on your telephone keypad. I would now like to turn the conference over to Jacob Meldgaard, CEO. You may begin.Speaker2Thank you, and welcome to everyone joining us here t ...

FULL-YEAR RESULTS 2025 26 FEBRUARY 2026 Safe Harbor Statement as to the Future Matters discussed in this presentation material may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements ...

Financial Performance and Projections - In 2024, the company realized time charter equivalent (TCE) rates of $36,061 per day, which are expected to decrease to $28,783 per day in 2025[25]. - Revenues are substantially derived from a single segment, the product tanker segment, exposing the company to adverse developments in this market[36]. - The company faces significant risks from macroeconomic conditions, including rising oil prices, high interest rates, and supply chain constraints, which could adversely affect financial performance[29]. - A substantial portion of revenues is generated from a limited number of customers, and the loss of any key customer could result in significant revenue loss[26]. - The company has significant financial debt, which limits funds available for other corporate purposes and may affect operational flexibility[26]. - The value of the product tanker fleet decreased by approximately 13.3% in 2025, excluding vessels sold or acquired during the year[37]. - Seasonal fluctuations in demand typically result in stronger revenues in the fiscal quarters ending December 31 and March 31[39]. - The company’s product tanker fleet value decreased by approximately 13.3% in 2025, excluding vessels sold or acquired, which could adversely affect future performance and financial position[84]. - The company may need to procure additional funding in the future if cash flows from operations are insufficient, which could result in dilution of existing shareholders[137]. - As of December 31, 2025, TORM had available liquidity of $562.3 million, including cash and cash equivalents of $163.5 million and undrawn committed credit facilities of $398.8 million[136]. Market and Operational Risks - The product tanker sector is cyclical and volatile, leading to potential reductions in charter rates, vessel values, and overall operational results[25]. - The aging product tanker fleet may lead to increased operating costs and decreased competitiveness, affecting earnings negatively[26]. - The company is dependent on spot charters, and any decrease in spot charter rates may adversely affect earnings[23]. - The global economy faces challenges such as geopolitical tensions and potential disruptions in shipping routes, which could impact business operations[30]. - An oversupply of product tankers has led to increased volatility in charter hire rates, affecting profitability and cash flows[38]. - The company faces unpredictable and potentially substantial dry-docking repair costs, which could materially decrease earnings during repair periods[89]. - Labor interruptions, if unresolved, could adversely affect the company's operations, cash flows, and financial position[90]. - Global operations expose the company to risks from political instability, economic sanctions, and public health concerns, potentially impacting business performance[91]. - Geopolitical instability may disrupt key tanker routes, affecting shipping demand and operational efficiency[93]. - The ongoing conflict in Ukraine and related sanctions could adversely affect the company's financial condition and operating results[95]. Regulatory and Compliance Challenges - The company is subject to complex laws and regulations, including environmental laws, which can adversely impact financial results[22]. - Compliance with complex environmental laws and regulations may require costly operational changes, impacting financial performance[54]. - The European Waste Shipment Regulation mandates that non-EU flagged ships departing from EU ports be recycled only in OECD member countries, which may negatively impact revenue from residual values of vessels[65]. - The EU's Emissions Trading System will require shipowners to purchase emission allowances, with compliance phases set at 40% for 2024, 70% for 2025, and 100% for 2026, leading to increased compliance and administration costs[70]. - The FuelEU Maritime regulation, effective January 2025, requires shipping companies to gradually lower GHG intensity in fuels, necessitating the purchase of more expensive biofuels[72]. - The company is subject to various security and customs inspections that can result in cargo seizure, delays, and additional financial obligations, potentially impacting future performance and cash flows[88]. - The company is subject to significant legal and financial compliance costs due to being a U.S.-listed public company, which may divert management's attention from strategic initiatives[146]. - The implementation of the updated United Kingdom Corporate Governance Code will require enhanced board-level monitoring and could increase compliance costs[150]. - The company is subject to the UK Bribery Act, the U.S. Foreign Corrupt Practices Act, and other anti-corruption laws, which could lead to civil or criminal penalties if not complied with[212]. Environmental and Technological Factors - The International Energy Agency (IEA) forecasts that the rapid uptake of electric vehicles could avoid 6 million barrels per day of oil demand by 2030 and over 10 million barrels per day by 2035[44]. - The growth of electric vehicles, which accounted for over 20% of new car sales globally in 2024, may decrease the demand for crude oil and petroleum products[44]. - The company has installed hybrid-prepared open-loop scrubbers on all vessels, which can be refitted into hybrid scrubbers, but increasing restrictions on open-loop scrubbers may lead to higher operational costs due to reliance on low-sulfur fuels[67][68]. - Technological advancements and changing supply chain dynamics may reduce demand for maritime services, impacting overall shipping activity[114]. Financial Liabilities and Shareholder Concerns - As of December 31, 2025, the company had interest-bearing debt totaling $1,011.9 million and cash and cash equivalents of $163.5 million, resulting in a net debt of $848.4 million[181]. - The company may incur additional debt in the future, which could limit its ability to obtain financing for working capital or capital expenditures on favorable terms[182]. - The company has a minimum cash requirement per vessel fixed at $1.8 million since September 30, 2022, which impacts its ability to distribute dividends[197]. - The company may issue additional securities without shareholder approval, which could dilute existing shareholders' ownership interests[201]. - The market price of the company's Class A common shares has historically fluctuated significantly, which may continue to affect trading volatility[203]. - The company faces risks related to interest rate fluctuations under its financing agreements, which could negatively impact profitability and cash flow[190]. - A change of control could trigger mandatory repayment provisions in the company's debt facilities, potentially leading to foreclosure on its vessels[193]. - The company’s ability to pay dividends may be affected by statutory and contractual limitations under current or future debt arrangements[200]. Investor and Market Perception - Increasing scrutiny from investors regarding ESG policies may impose additional costs and risks, affecting the company's reputation and access to capital[78][80]. - Investigations into potential violations of anti-corruption laws could materially affect the company's reputation and future performance[216]. - U.S. investors may face difficulties in enforcing civil liabilities against the company and its directors due to its incorporation under the laws of England and Wales[217]. - The enforceability of U.S. court judgments in England is uncertain, particularly regarding civil liabilities based on U.S. federal securities laws[218].

Core Insights - TORM plc demonstrated strong financial performance in 2025, with a focus on operational excellence and resilience amid geopolitical challenges, positioning itself favorably for 2026 [1][2] Financial Results - TORM generated time charter equivalent (TCE) earnings of USD 910 million in 2025, down from USD 1,135 million in 2024 [1] - Adjusted EBITDA for 2025 totaled USD 578 million, compared to USD 844 million in 2024, reflecting unrealized losses on financial instruments [1] - The net profit for 2025 was USD 286 million, a decrease from USD 612 million in 2024 [1] - TCE fleet-wide rates averaged USD/day 28,783 in 2025, down from USD/day 36,061 in 2024 [1] Market Environment - The year 2025 was influenced by geopolitical factors, including US tariffs, Houthi attacks, and sanctions on Russia, Iran, and Venezuela, which affected global trade and shipping routes [1] - TORM's operational agility allowed it to navigate these challenges effectively, maintaining a competitive edge in the product tanker industry [1] Vessel Transactions - TORM executed a disciplined fleet renewal strategy, acquiring eight product tankers in Q4 2025 and divesting one older LR2 tanker [1] - Throughout 2025, TORM acquired nine second-hand vessels and transitioned 14 leaseback vessels to full ownership, enhancing fleet quality and operational flexibility [1] Dividend Distribution - The Board of Directors approved an interim dividend of USD 0.70 per share for Q4 2025, amounting to a total payment of USD 70.9 million, reflecting 82% of net profit [1] Financial Outlook for 2026 - TORM expects TCE earnings for 2026 to range between USD 850 million and USD 1,250 million, with EBITDA projected between USD 500 million and USD 900 million [2] - As of February 17, 2026, TORM had covered 70% of Q1 2026 earning days at an average rate of USD/day 34,926, with 77% of full-year 2026 earning days still subject to change [2]

Core Viewpoint - TORM plc (TRMD) is considered a compelling buy based on previous analysis, indicating a positive outlook for the company's stock performance [1]. Company Analysis - TORM plc has been previously covered with a detailed investment thesis highlighting its potential for significant returns [1]. - The company operates in the shipping industry, which is influenced by cyclical economic trends, making it a target for investment during recovery periods [1]. Investment Strategy - The investment strategy focuses on cyclical industries while maintaining a diversified portfolio that includes bonds, commodities, and forex [1]. - The emphasis on cyclical sectors is due to their potential for high returns during economic growth phases [1].

Core Viewpoint - TORM plc has completed the acquisition of shares from Oaktree Capital Management by Hafnia Limited, resulting in a change in the ownership structure and board composition of TORM [1][2]. Ownership Changes - Oaktree and its affiliates have reduced their ownership stake below one-third of the issued shares, leading to the extinguishment of the B-Director position [2][3]. - The threshold date for this change has been set as January 6, 2026, marking a significant shift in TORM's governance [2]. Board Composition - David Weinstein, the Deputy Chairman and Senior Independent Director, will leave the Board effective immediately due to the change in ownership, but will continue to serve as a Special Advisor [3]. - The Board expressed gratitude for Mr. Weinstein's contributions since 2015, highlighting his invaluable experience [3][4]. Share Structure - Following the redemption and cancellation of B- and C-shares, TORM's share capital will be USD 1,013,327.07, consisting of 101,332,707 A-shares [5][6]. - The voting rights will now consist of 101,332,707 A-shares and one B-share, with the C-share voting rights ceasing as of the threshold date [5].

Core Viewpoint - High dividend yields, such as 10% or more, can attract income-focused investors but often indicate significant underlying risks associated with the company's financial health [1][2]. Group 1: High-Yield Dividend Stocks - A list of high-yield dividend stocks includes FS KKR Capital Corp. (17.39%), Dynex Capital, Inc. (14.77%), and AGNC Investment Corp. (13.36%) among others, with market caps of at least $2 billion [4][6]. - The dividend yield is calculated as annual dividend divided by stock price, meaning a stock's yield can appear attractive if its price has significantly dropped [5][7]. Group 2: Risks Associated with High-Yield Stocks - A payout ratio exceeding 100% indicates that a company is using its capital to maintain dividends, which is unsustainable and may lead to dividend cuts [5]. - Companies in cyclical sectors may rely on debt to fund dividends during downturns, increasing the risk of bankruptcy [5]. - Investors should assess a company's free cash flow (FCF) to ensure it can sustain high dividend payments, as insufficient cash generation is a red flag [7][8]. Group 3: Tax Considerations - Many high-yield stocks, such as REITs and BDCs, pay non-qualified dividends, which are taxed at higher marginal income tax rates compared to qualified dividends from established companies [9][10]. - It is advisable for investors seeking high yields to consider holding non-qualified stocks in tax-advantaged accounts to mitigate tax liabilities [9].

Core Viewpoint - TORM plc has completed the acquisition of shares by Hafnia Limited from Oaktree Capital Management, which impacts the ownership structure of TORM plc [1][2]. Group 1: Acquisition Details - The acquisition was finalized on December 22, 2025, with Oaktree holding 26,425,059 A shares and Hafnia holding 14,156,061 A shares out of a total of 101,332,707 A shares [2]. - The completion of this acquisition triggers a review process by TORM's board of directors to determine if Oaktree and its affiliates have ceased to beneficially own at least one third of the issued shares, as defined in TORM's articles of association [3]. Group 2: Implications of the Acquisition - Once the threshold date is established, certain rights and limitations associated with the B and C shares will cease to be effective, leading to the redemption and cancellation of these shares [4]. - Further announcements will be made following the conclusion of the necessary processes related to the acquisition [4]. Group 3: Company Overview - TORM is recognized as one of the leading carriers of refined oil products globally, operating a fleet of product tanker vessels with a strong commitment to safety and environmental responsibility [5]. - The company was founded in 1889 and is publicly listed on Nasdaq in Copenhagen and New York [5].