[Q1 2025 Performance Highlights](index=2&type=section&id=Highlights) This section summarizes TORM's Q1 2025 financial, market, and operational results, highlighting key performance indicators and forward coverage [Financial Performance](index=2&type=section&id=Financial%20Performance) TORM's Q1 2025 net profit and TCE earnings declined significantly from the prior year due to lower freight rates Q1 2025 vs Q1 2024 Financial Results | Metric | Q1 2025 (USDm) | Q1 2024 (USDm) | | :--- | :--- | :--- | | TCE Earnings | 214.0 | 330.7 | | Adjusted EBITDA | 137.7 | 267.2 | | Net Profit | 62.9 | 209.2 | Q1 2025 Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average TCE Rate | USD 26,807/day | USD 43,152/day | | Return on Invested Capital | 10.3% | 33.8% | | Basic EPS | USD 0.64 | USD 2.34 | [Market and Operational Highlights](index=2&type=section&id=Market%20and%20Operational%20Highlights) Geopolitical factors influenced market conditions while the company divested three older vessels, adjusting its fleet size - Trade volumes on routes affected by the Red Sea disruption **declined by about one-third** by early 2025, negating distance-driven gains, though a rebound began in March 2025[4](index=4&type=chunk) - Potential market influences include the reopening of the Red Sea, easing of Russian sanctions, and tighter U.S. sanctions on Iran and Venezuela, which could redirect trade and **reduce crude tanker cannibalization** of the clean petroleum products (CPP) market[5](index=5&type=chunk)[6](index=6&type=chunk) - TORM sold three MR vessels (TORM Ragnhild, TORM Resilience, TORM Thames) during Q1 2025, resulting in a **current fleet size of 91 vessels**[11](index=11&type=chunk) Fleet Valuation (as of 31 March 2025) | Metric | Value (USDm) | | :--- | :--- | | Fleet Market Value | 3,112.4 | | Net Asset Value (NAV) | 2,511.1 | [Forward Coverage](index=2&type=section&id=Coverage) The company has secured substantial charter coverage for Q2 and the full year 2025, providing earnings visibility - As of May 5, 2025, **57% of Q2 2025 earning days were covered** at an average rate of USD 28,026/day[9](index=9&type=chunk) - For the full year 2025, **43% of earning days have been fixed** at an average rate of USD 27,829/day[10](index=10&type=chunk) [Key Financial Figures](index=3&type=section&id=Key%20Figures) This section presents a detailed breakdown of TORM's consolidated financial data and key performance ratios for Q1 2025 [Consolidated Financial Data](index=3&type=section&id=Consolidated%20Financial%20Data) Key financial metrics for Q1 2025 are presented, showing a decline in profitability compared to the prior-year period Key Financial Data (USDm) | Metric | Q1 2025 | Q1 2024 | FY 2024 | | :--- | :--- | :--- | :--- | | **Income Statement** | | | | | Revenue | 329.1 | 444.1 | 1,559.2 | | TCE Earnings | 214.0 | 330.7 | 1,134.8 | | Adjusted EBITDA | 137.7 | 267.2 | 844.2 | | Net Profit | 62.9 | 209.2 | 611.5 | | **Balance Sheet** | | | | | Total Assets | 3,486.7 | 3,507.8 | 3,469.6 | | Equity | 2,142.2 | 2,065.0 | 2,074.8 | | Net Interest-Bearing Debt | 831.7 | 757.9 | 947.6 | Key Financial Ratios and Share Data | Metric | Q1 2025 | Q1 2024 | FY 2024 | | :--- | :--- | :--- | :--- | | Return on Equity (ROE) | 11.9% | 44.9% | 32.7% | | Return on Invested Capital (ROIC) | 10.3% | 33.8% | 24.3% | | TCE per day (USD) | 26,807 | 43,152 | 36,061 | | OPEX per day (USD) | 7,891 | 7,260 | 7,477 | | Loan-to-value (LTV) ratio | 27.0% | 21.6% | 26.8% | | Basic EPS (USD) | 0.64 | 2.34 | 6.54 | | Dividend per share (USD) | 0.40 | 1.50 | 5.10 | | NAV per share (USD) | 25.7 | 34.5 | 29.3 | [Financial Review](index=4&type=section&id=Financial%20Review) This section provides an in-depth analysis of TORM's Q1 2025 performance, balance sheet, cash flow, and dividend distribution [Performance Analysis](index=4&type=section&id=Performance%20Analysis) Financial performance declined in Q1 2025, driven primarily by a significant drop in daily Time Charter Equivalent rates - The **TCE rate per day decreased by 38%** to USD 26,807 in Q1 2025 from USD 43,152 in Q1 2024[18](index=18&type=chunk) - **Revenue decreased by 26%** (USD 115.0m) to USD 329.1m, mainly because freight rates in Q1 2025 were below the exceptionally high levels of Q1 2024, which were boosted by Houthi attacks and rerouting around the Cape of Good Hope[19](index=19&type=chunk) [Balance Sheet and Liquidity](index=4&type=section&id=Balance%20Sheet%20and%20Liquidity) The company maintained a robust balance sheet with increased equity and a strong liquidity position of USD 679.3 million - **Total assets increased by USD 17.1m** to USD 3,486.7m as of March 31, 2025, mainly due to a USD 71.1m increase in cash, offset by a USD 57.4m reduction in the carrying amount of vessels[21](index=21&type=chunk) - The market value of TORM's fleet was USD 3,112.4m, which is **12% above its carrying value**[23](index=23&type=chunk) - **Total liquidity as of March 31, 2025 was USD 679.3m**, including USD 317.0m in undrawn credit facilities[23](index=23&type=chunk) - **Equity increased by USD 67.4m** to USD 2,142.2m, primarily from the net profit of USD 62.9m for the period[24](index=24&type=chunk) - Total liabilities decreased, mainly driven by a **USD 44.0m reduction in borrowings** from ordinary debt repayments and repayments related to divested vessels[25](index=25&type=chunk) [Cash Flow Statement](index=4&type=section&id=Cash%20Flow%20Statement) Operating cash flow decreased due to lower profit, while investing activities generated a net inflow from vessel sales Net Cash Flow Summary (USDm) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Activities | 83.1 | 186.6 | | Investing Activities | 43.4 | -160.9 | | Financing Activities | -47.3 | 252.8 | [Dividend Distribution](index=5&type=section&id=Distribution) The Board of Directors approved a Q1 2025 interim dividend in line with the company's distribution policy - An **interim dividend of USD 0.40 per share** was approved for Q1 2025, totaling an expected payment of USD 39.1m[30](index=30&type=chunk) - The dividend represents **62% of the net profit** and will be paid on June 4, 2025[30](index=30&type=chunk) [Market Analysis](index=6&type=section&id=The%20Product%20Tanker%20Market) This section examines product tanker market developments in Q1 2025 and provides an outlook on key future drivers [Product Tanker Market Developments Q1 2025](index=6&type=section&id=Market%20Developments%20in%20Q1%202025) The Q1 2025 product tanker market saw lower trade volumes and rates compared to the prior year amid geopolitical shifts - Clean petroleum product **trade volumes fell 4% YoY** in Q1 2025, neutralizing the positive ton-mile effect from the Red Sea disruption[33](index=33&type=chunk) - Product flows on Middle East/India to Europe routes, affected by the Red Sea situation, **remained 11% below YoY levels** despite climbing from Q4 2024 lows[34](index=34&type=chunk) - US product exports were impacted by refinery maintenance but saw **strong gains towards the end of the quarter**[35](index=35&type=chunk) - Competition from new crude tankers carrying clean products ('crude cannibalization') increased during the quarter but **stayed below the peak levels of Q3 2024**[35](index=35&type=chunk) [Market Outlook](index=6&type=section&id=Market%20Outlook) The market outlook is shaped by geopolitical uncertainty, European refinery closures, and potential US policy changes - The closure of three refineries in Northwest Europe is expected to create a **higher diesel deficit**, likely leading to increased imports and ton-miles[36](index=36&type=chunk) - Geopolitical factors, including the new US administration's policies on trade and sanctions, are expected to **continue driving market uncertainty** and could have indirect effects on the product tanker market[36](index=36&type=chunk)[37](index=37&type=chunk) [Full Year 2025 Outlook](index=7&type=section&id=Outlook%20for%202025) This section details TORM's narrowed financial guidance and charter coverage for the full year 2025 [Financial Guidance](index=7&type=section&id=Financial%20Outlook%202025) TORM has narrowed its full-year 2025 guidance for TCE earnings and EBITDA based on year-to-date performance Full-Year 2025 Guidance | Metric | 2025 Guidance (USDm) | 2024 Actual (USDm) | | :--- | :--- | :--- | | TCE Earnings | 700 - 900 | 1,135 | | EBITDA | 400 - 600 | 851 | - Key macroeconomic factors affecting the outlook include geopolitical conflicts, global economic growth, refinery activities, oil price development, and global fleet growth[44](index=44&type=chunk) [2025 Coverage Details](index=8&type=section&id=Coverage%202025) A detailed breakdown of fixed earning days and rates for 2025 shows 43% of total earning days are covered 2025 Coverage as of 05 May 2025 | Vessel Class | Q2 2025 Coverage | Q2 2025 Rate (USD/day) | FY 2025 Coverage | FY 2025 Rate (USD/day) | | :--- | :--- | :--- | :--- | :--- | | LR2 | 64% | 36,831 | 51% | 35,535 | | LR1 | 46% | 29,714 | 36% | 26,079 | | MR | 57% | 24,150 | 41% | 24,665 | | **Total** | **57%** | **28,026** | **43%** | **27,829** | [Operational Performance](index=9&type=section&id=Operational%20Performance) This section reviews detailed earnings data by vessel segment and outlines recent fleet development activities [Detailed Earnings Data by Segment](index=9&type=section&id=Earnings%20Data) Operational metrics show a year-over-year decrease in spot rates across all vessel classes alongside rising operating expenses Tanker Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Available earning days | 8,061 | 7,697 | +5% | | Spot rates (USD/day) | 25,519 | 44,274 | -42% | | TCE per earning day (USD/day) | 26,807 | 43,152 | -38% | | Operating expenses per day (USD/day) | 7,891 | 7,260 | +9% | [Fleet Development](index=10&type=section&id=TORM%20Fleet%20Development) The company continued its fleet management strategy by divesting three older MR vessels, reducing the total fleet to 91 - TORM's fleet management strategy involves regularly divesting older vessels and acquiring high-quality second-hand vessels to maintain a **stable and attractive average fleet age**[52](index=52&type=chunk) Fleet Composition Change (Q4 2024 to Q1 2025) | Fleet Type | Q4 2024 | Changes | Q1 2025 | | :--- | :--- | :--- | :--- | | Owned Vessels | 70 | -3 | 67 | | Leaseback Vessels | 24 | 0 | 24 | | **Total Fleet** | **94** | **-3** | **91** | [Condensed Consolidated Financial Statements](index=13&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited Q1 2025 financial statements, including segment reporting and explanatory notes [Financial Statements Overview](index=13&type=section&id=Financial%20Statements%20Overview) The core unaudited financial statements for Q1 2025 are presented, including income, balance sheet, and cash flow - The Income Statement shows a **net profit of USD 62.9m** for Q1 2025, down from USD 209.2m in Q1 2024[65](index=65&type=chunk) - The Balance Sheet as of March 31, 2025, reports **total assets of USD 3,486.7m** and total equity of USD 2,142.2m[69](index=69&type=chunk) - The Cash Flow Statement indicates a **net cash flow from operating activities of USD 83.1m** for Q1 2025[74](index=74&type=chunk) - Segment reporting reveals that the **Tanker segment generated an operating profit (EBIT) of USD 79.1m**, while the Marine Engineering segment contributed USD 4.1m in Q1 2025[76](index=76&type=chunk) [Notes to the Financial Statements](index=22&type=section&id=Notes%20to%20the%20Financial%20Statements) Key disclosures provide context on the going concern basis, vessel sales, debt covenants, and subsequent events - The financial statements are prepared on a **going concern basis**, with the Board confident in the company's ability to operate and meet covenants until at least June 30, 2026[87](index=87&type=chunk) - During Q1 2025, TORM **sold and delivered three vessels for USD 44.9m**, resulting in a profit of USD 9.4m[98](index=98&type=chunk) - As of March 31, 2025, TORM was in **compliance with all financial covenants** related to its borrowings[103](index=103&type=chunk) - Subsequent to Q1 2025, TORM sold a 2008-built LR2 vessel and the Board declared the **Q1 2025 dividend of USD 0.40 per share**[113](index=113&type=chunk)[114](index=114&type=chunk) [Glossary and Alternative Performance Measures (APMs)](index=26&type=section&id=Glossary) This section defines key terms and non-IFRS financial metrics used in the report, providing reconciliations for clarity [Definitions and Reconciliations](index=26&type=section&id=Definitions%20and%20Reconciliations) Key financial figures and Alternative Performance Measures are defined and reconciled to their comparable IFRS figures - **Time Charter Equivalent (TCE) earnings** are defined as revenue less port expenses, bunkers, and commissions and is a standard industry metric to compare performance irrespective of charter type[141](index=141&type=chunk) - **EBITDA** is defined as earnings before financial income and expenses, depreciation, impairment, amortization, and taxes, while Adjusted EBITDA further removes unrealized gains/losses on derivatives[125](index=125&type=chunk)[128](index=128&type=chunk) - **Net Asset Value (NAV)** is calculated using broker valuations for vessels and is used to measure the development of assets and liabilities; as of March 31, 2025, NAV per share was USD 25.7[137](index=137&type=chunk) [Disclaimers and Statements](index=11&type=section&id=Disclaimers%20and%20Statements) This section contains the management responsibility statement and a safe harbor statement regarding forward-looking information [Responsibility and Safe Harbor Statements](index=11&type=section&id=Responsibility%20and%20Safe%20Harbor%20Statements) Management confirms the accuracy of the financial statements and provides a safe harbor caution for forward-looking statements - The Responsibility Statement confirms that the interim report gives a **true and fair view** of the Group's financial position and performance, prepared in accordance with IAS 34[56](index=56&type=chunk)[59](index=59&type=chunk) - The Safe Harbor Statement warns that **forward-looking statements are subject to risks** that could cause actual results to differ materially, including market fluctuations, geopolitical events, and regulatory changes[60](index=60&type=chunk)[62](index=62&type=chunk)

分组1 - TORM PLC reported quarterly earnings of $0.62 per share, missing the Zacks Consensus Estimate of $0.64 per share, and down from $2.26 per share a year ago, representing an earnings surprise of -3.12% [1] - The company posted revenues of $218.7 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.26%, but down from $444.1 million year-over-year [2] - TORM has surpassed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates three times as well [2] 分组2 - TORM shares have lost about 15.1% since the beginning of the year, compared to the S&P 500's decline of -4.3% [3] - The current consensus EPS estimate for the coming quarter is $0.58 on revenues of $205.2 million, and for the current fiscal year, it is $3.01 on revenues of $887.5 million [7] - The Transportation - Shipping industry, to which TORM belongs, is currently in the bottom 11% of the Zacks industry rankings, indicating potential underperformance compared to higher-ranked industries [8]

Group 1 - The shipping industry has been significantly impacted by the ongoing trade war initiated by the US, leading to a decline in shipping stocks [1] - Many shipping stocks are experiencing a normalization of Time Charter Equivalent (TCE) rates, indicating a shift in market dynamics [1]

Core Points - TORM plc has increased its share capital by 262,294 A-shares, resulting from the exercise of Restricted Share Units, with a nominal value of USD 2,622.94 [1] - The new shares are issued at DKK 0.08 per A-share and are expected to be listed on Nasdaq Copenhagen [1][3] - After the capital increase, TORM's total share capital is USD 982,518.10, consisting of 98,251,808 A-shares, one B-share, and one C-share [4] Company Overview - TORM is a leading carrier of refined oil products, operating a fleet of product tanker vessels with a focus on safety, environmental responsibility, and customer service [5] - The company was founded in 1889 and conducts business globally, with shares listed on Nasdaq Copenhagen and Nasdaq New York [5]

Core Insights - TORM plc reported earnings for the quarter ended December 31, 2024, showing satisfactory results with revenue and earnings per share (EPS) exceeding expectations [1] Financial Performance - The earnings release indicated a beat on both revenue and EPS, although many metrics experienced a decline [1]

Financial Data and Key Metrics Changes - TORM reported TCE earnings of $1.135 billion for the full year 2024, achieving a net profit of $612 million and a return on invested capital of 24.3% [6][24][25] - In Q4 2024, TCE amounted to $215 million, with EBITDA of $142 million and net profit of $77 million [23][24] - Fleet-wide rates decreased to $25,775 per day in Q4, down from $39,626 per day in the first three quarters [5][30] Business Line Data and Key Metrics Changes - Clean product tanker ton miles increased by 9% in 2024, but due to crude clean-ups, product tankers benefited from only two-thirds of that increase [11][12] - Fleet-wide rates declined by about 40% from Q1 to Q4, while TCE saw a smaller decline of 35% [30] Market Data and Key Metrics Changes - European diesel imports are down by 30%, affecting trade volumes on routes impacted by the Red Sea disruption [13] - The average age of the fleet is the highest in two decades, with 50% of the fleet being more than 20 years old [18] Company Strategy and Development Direction - The company remains focused on fleet efficiency, disciplined cost management, and a well-executed commercial strategy despite geopolitical risks [7][8] - TORM plans to maintain its fleet strategy, selling older vessels and ensuring the average age aligns with the global product tanker fleet [52][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that geopolitical developments and trade flow shifts will shape market conditions, impacting freight rates and fleet utilization [8][20] - For 2025, TORM forecasts TCE earnings of $650 million to $950 million and EBITDA of $350 million to $650 million, reflecting expectations of lower freight rates year-on-year [45] Other Important Information - The Board of Directors declared a dividend of $0.60 per share for Q4 2024, maintaining a payout ratio of 75% [28][39] - TORM has made significant strides in sustainability reporting, aiming for a 45% reduction in carbon intensity by 2030 and net zero CO2 emissions by 2050 [40][43] Q&A Session Summary Question: How does TORM's strategy change with the current market uncertainty? - Management confirmed that there will be no change in strategy regarding operations, fleet evolution, or capital structure, emphasizing agility and preparedness for various scenarios [49][54] Question: What is the current state of crude cannibalization on traditional product trades? - Management indicated that currently, 3% of CPP on water is on VLs and Suezmaxes, down from 8% at the peak last year, suggesting a return to normalized levels [65] Question: How does TORM view seasonality in the current market? - Management acknowledged that while seasonality exists, geopolitical factors are currently more impactful, and they do not have a specific view on how it will play out this year [71][72] Question: Has the U.S. proposal of taxing Chinese tonnage affected TORM's operations? - Management stated that TORM has no new builds and a relatively low percentage of Chinese-built vessels, indicating no immediate plans to change operations due to the proposal [76][79] Question: What is TORM's outlook on fleet renewal and market activity? - Management expects an uptick in transactions as the market recalibrates to new price levels, indicating that liquidity will return as earning potential stabilizes [85][86]

FULL-YEAR RESULTS 2024 06 MARCH 2025 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 con ...

Financial Performance - Revenue for 2024 reached $1,559 million, a 2.6% increase from $1,520 million in 2023[15] - EBITDA for 2024 was $851 million, compared to $848 million in 2023, reflecting a slight increase[15] - Net profit for the year was $612 million, a decrease from $648 million in 2023[15] - Return on Equity (ROE) decreased to 32.7% from 40.9% in 2023[15] - Adjusted Return on Invested Capital (ROIC) was 22.2%, down from 27.6% in 2023[15] - The company declared a dividend of $5.10 per share, down from $5.78 in 2023[15] - TORM achieved a net profit of USD 611.5 million in 2024, driven by high freight rates[41] - TORM reported time charter equivalent (TCE) earnings of USD 1,134.8 million and Group EBITDA of USD 850.8 million for 2024, meeting recent market guidance[152] - Net profit for the year was USD 614.1 million, a decrease of USD 34.8 million compared to 2023[159] Operational Metrics - Time charter equivalent earnings (TCE) per day was $36,061, down 2.9% from $37,124 in 2023[15] - Gross profit margin remained stable at 57.4%, slightly down from 57.5% in 2023[15] - The average fleet-wide TCE rates fluctuated from USD 43,152 per day in Q1 to USD 25,775 per day in Q4, reflecting volatile freight rates throughout the year[152] - Operating expenses (OPEX) rose by USD 29.2 million to USD 245.6 million in 2024, driven by 2,250 additional operating days and a 5.8% increase in expenses per day[167] - Administrative expenses increased by USD 11.4 million to USD 87.9 million in 2024, primarily due to a retention program for employees[169] Fleet and Assets - Total assets increased to $3,470 million from $2,870 million in 2023[15] - TORM's fleet was modernized with the delivery of 19 vessels and the divestment of 7 older vessels, bringing the total fleet to 94 vessels[40] - Total assets for the Tanker segment increased by USD 602.6 million to USD 3,456.0 million as of December 31, 2024, mainly due to increased vessel acquisitions[174] - Total liabilities for the Tanker segment rose by USD 191.0 million to USD 1,383.1 million, primarily due to increased borrowings for vessel acquisitions[181] Environmental and Social Responsibility - The company achieved a 40% reduction in carbon intensity compared to 2008, surpassing the IMO 2030 target ahead of schedule[42] - TORM's absolute Scope 1 GHG emissions were reported at 1,594,793 metric tons, with a target to reduce to ≤1,500,000 metric tons[24] - The company aims for net-zero Scope 2 GHG emissions by reducing them from 832 metric tons to ≤600 metric tons[24] - TORM achieved a 40% reduction in CO2 intensity by 2025 compared to 2008, one year ahead of its target, with a future goal of 45% reduction by 2030 and net-zero emissions by 2050[85][86] - TORM's employee engagement score was reported at 8.7, exceeding the target of ≥8.2[29] - The company has set a target of 40% underrepresented gender in the Board of Directors by 2030, up from the current 20%[29] Market Outlook and Strategy - The company expects robust tanker earnings in 2025, supported by steady capacity utilization and balanced market fundamentals[44] - The average freight rate level is expected to remain strong, despite increased volatility in the freight market due to geopolitical events[123] - TORM focuses on maintaining a high-quality fleet and actively manages fleet deployment between spot and time charters[190] - TORM's strategy includes capturing increased profit margins during favorable market conditions through spot market operations[195] Risk Management - TORM's risk management framework includes an annual Enterprise Risk Management process to identify and mitigate principal and emerging risks[108] - TORM's risk assessment for 2024 concluded an appropriate balance between risk tolerance and net severity for top risks, including severe vessel accidents[130] - TORM's operational risks related to oil major approvals are low, with a focus on efficient controls to prevent environmental disasters[124] - The company has temporarily halted transit through the Bab-el-Mandeb Strait due to piracy and terrorism risks, while other regions have seen reduced risks[126] Cash Flow and Financing - Net cash flow from operating activities was USD 826.8 million, an increase from USD 805.0 million in 2023, driven by higher TCE[185] - Net cash flow from investing activities was USD -442.1m in 2024, compared to USD -370.6m in 2023, reflecting a decrease of USD 71.5m[188] - Net cash flow from financing activities improved to USD -378.3m in 2024 from USD -489.4m in 2023, an increase of USD 111.1m[188] - Total available liquidity as of December 31, 2024, was USD 615m, including a cash position of USD 291m[200] - Net interest-bearing debt stood at USD 948m, with a net debt loan-to-value ratio of 26.8% for the tanker segment[200]

Financial Performance - In 2023, the company realized Time Charter Equivalent (TCE) rates of $37,124/day, with a projected TCE rate of $36,061/day for 2024[33]. - The average spot TCE earnings for the product tanker fleet in 2024 were $36,061 per day[136]. - The average age of the company's vessels is 11 years as of December 31, 2024, which may impact competitiveness against newer, more efficient vessels[130]. - The company is heavily dependent on spot charters, with fluctuations in spot charter rates significantly affecting earnings[135]. - In 2024, 20 customers accounted for approximately 69% of the company's revenue, indicating a high dependency on a limited customer base[150]. Market Conditions - The product tanker market is cyclical, with freight rates declining from a high of $26,458/day in mid-2008 to an average of approximately $14,200/day from 2009 to 2014[33]. - The product tanker sector is characterized by volatility, which may lead to reductions in charter rates and vessel values[29]. - Seasonal fluctuations in demand for product tankers may result in quarter-to-quarter volatility in revenues, with typically stronger performance in fall and winter months[56]. - The oversupply of product tankers may lead to reduced charter hire rates and profitability, impacting future performance and cash flows[54]. - The demand for product tankers is influenced by external factors such as global economic conditions and changes in energy consumption patterns[39]. Regulatory and Compliance Risks - The company is subject to complex laws and regulations, including environmental regulations, which can adversely affect its financial position[30]. - The company is subject to various international and U.S. environmental regulations, including the U.S. Oil Pollution Act of 1990 and the International Maritime Organization's regulations, which could lead to significant penalties and operational disruptions if not complied with[73][74][77]. - Compliance with complex environmental regulations may require costly operational changes, affecting the company's financial position[71]. - The European Commission's Emission Trading Scheme (ETS) will require shipowners to purchase emission allowances starting in 2024, with compliance costs expected to increase over the following years[88]. - The FuelEU Maritime regulation, effective January 2025, mandates shipping companies to gradually lower the GHG intensity of fuels consumed on voyages involving EU ports, potentially increasing operational costs[90]. Financial Risks - The company has a significant amount of financial debt, which limits funds available for other corporate purposes and may restrict operational flexibility[34]. - As of December 31, 2024, the company had interest-bearing debt totaling $1,238.8 million and cash and cash equivalents of $291.2 million, resulting in a net debt of $947.6 million[198]. - The company may experience difficulties obtaining financing in the future due to changes in lending practices and economic conditions[44]. - The company may incur additional debt in the future, which could adversely affect its ability to obtain financing on favorable terms[199]. - The company is subject to financial covenants that restrict its operational flexibility, including maintaining specified minimum liquidity and equity requirements[205]. Operational Risks - The company faces risks related to international operations, including political instability and economic sanctions, which could adversely affect its business[30]. - The company faces risks from geopolitical conflicts, including political instability in the Middle East and Ukraine, which may adversely affect its operations[110]. - The ongoing conflict in Ukraine could lead to further economic sanctions, impacting the company's business and financial condition[114]. - Labor interruptions could have a material adverse effect on the company's operations and financial position if not resolved timely[109]. - The company may experience unexpected costs and delays due to operational risks inherent in the product tanker industry[104]. Customer and Counterparty Risks - A substantial portion of the company's revenues is derived from a limited number of customers, making it vulnerable to revenue loss if any of these customers are lost[30]. - The company is exposed to counterparty risks that could lead to significant losses if counterparties fail to meet their obligations[140]. - The company has received two cargo claims related to a customer's inability to honor indemnification obligations, which could adversely affect business[143]. - The company may face reputational damage and regulatory claims if contraband is found on its vessels[133]. Environmental and ESG Considerations - A shift in consumer demand away from oil products towards renewable energy sources may adversely affect the demand for product tankers[60]. - The company faces risks related to compliance with evolving Environmental, Social, and Governance (ESG) standards, which may impact its reputation and access to capital if not adequately addressed[97][98]. - Unfavorable ESG ratings could lead to negative investor sentiment and impact the company's access to capital[101]. - The company may incur additional costs and require resources to comply with ESG requirements, which could adversely affect its financial condition[1]. Tax and Legal Risks - The company is subject to a 4% U.S. federal income tax on gross shipping income attributable to transportation that begins or ends in the U.S., unless exempt under Section 883 of the U.S. Internal Revenue Code[175]. - As of December 31, 2024, the company estimates a non-current tax liability of $45.2 million related to held over gains if it abandons participation in the tonnage tax scheme[178]. - Changes in tax laws or tonnage tax regimes could materially affect the company's future performance and financial position[179]. Cybersecurity and Fraud Risks - Cybersecurity incidents could negatively impact the company's operations and financial position, despite the implementation of a 24/7 Security Operations Center for monitoring[194]. - The company has established internal controls to mitigate fraud risks, but there is no assurance that these measures will be sufficient to prevent future fraudulent behavior[192]. Shareholder and Governance Risks - The majority of Class A common shares are held by a limited number of shareholders, including Njord Luxco, which holds approximately 41.49% of the shares, potentially leading to conflicts of interest[214]. - The company cannot guarantee the declaration of dividends, as the Board of Directors has discretion over dividend payments based on available funds[221].

Group 1 - The global tanker market is experiencing key crosscurrents, with a lack of increased volume in the Red Sea despite an Israeli ceasefire [1] - There is a potential for lower tanker rates in the market, indicating a shift in demand dynamics [1]