Stolt-Nielsen Limited

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00:01 Good afternoon, good morning. Thank you very much for joining our Third Quarter's Earnings Results.

Together with me, as always, is Jens Gruner-Hegge, but we also have Lucas Vos, the President of Stolt Tankers, who’s joining us from Holland. I will be on my presentation.

And as always, we will open up for questions which you can submit through the chat box in the function, and we will go through as many as possible. 00:30 The agenda, I will go summary of Stolt-Nielsen, then we will go through each of the businesses.

Jens will take you through the financials, and then we'll open up and read the questions. I think hopefully, I can call in.

00:48 Moving to the highlights for the third quarter. As we announced, growth in our earnings release, it's primarily driven by very good results from Tank Containers and Stolt Sea Farm.

The operating revenue came in at almost five hundred and eighty one million dollars and that's up from five hundred and twenty six. Operating profit up from forty one up to seventy nine million.

01:12 EBITDA, one hundred and forty seven point eight, and that's up from one hundred and sixteen. And net profit came in at thirty three point five million, up from seven point eight million.

And the free cash flow that we generated in the quarter was one hundred and five million dollars, one hundred and six million dollars. And our net debt-to-EBITDA even though it's not a covenant ended the quarter at four point seven times our EBITDA.

01:37 The EBITDA was -- the higher EBITDA was mainly driven by the higher transportation rates that we saw in Tank Containers. And also the increase in demurrage revenue, while we were able to keep our cost, and the cost that we pay for the movement of our containers were stable for the quarter.

02:00 At Stolt Sea Farm, we saw strong seasonal demand like we did in the summer. But that was also combined with less wild-catch and as a result, we got higher prices and higher sales volumes.

Higher utilization and throughput, most of our terminals in Stolthaven Terminals. And in Stolt Tankers, we didn't see a recovery in the spot rates, but we saw a recovery in the COA nominations, which Lucas will go into in more details later.

Improved free cash flow as businesses operating cash flow improved, and we ended the quarter at -- with four hundred and fifty million dollars available liquidity at the end of the quarter. 02:43 Moving then to the slide five, net profit, which is positive trends in all businesses.

So we reported a net profit in the second quarter of twenty one of seven point eight million dollars. We had higher operating profit of eleven point five in Tankers, slightly higher one point five million in Terminal division, twelve point two million dollars in Stolt Tank containers and thirty four point four million dollars operating profit, a high operating profit in Stolt Sea Farm.

Okay. That's also includes the fair value adjustment and slightly higher in SN Gas.

03:25 Higher corporate cost that's primarily a money we put aside for profit sharing and bonuses. Net lower financing expenses, Jens is managing that well, as this was primarily result of lower debt.

And then we have the higher losses on FX, the dollar weakening against the other currency in which we operate in. And higher income tax that's normal.

We have higher profits. We also have higher taxes, ending the quarter at thirty three point five million dollars net profit.

04:02 Moving to page six. ESG, our sustainability is becoming a part of our everyday life and it is really for us to succeed, we need to do it sustainably and more sustainably than what we're doing today.

So we have set a clear target, as we have announced earlier, and we will be measuring them once we get enough data, we will be reporting the progress that we make towards those targets. Stolt Tankers which is really the biggest emitter of carbon and Lucas will show you, but we put a reduction of at least fifty percent carbon intensity by twenty fifty -- by twenty thirty, starting at two thousand eight levels.

We will strive for being to be the carbon neutral by twenty fifty. 04:59 In Stolthaven Terminals, primary activities to be CO2 neutral by twenty forty.

In Tank Containers, fifty percent of the energy and utilities consumed in our depots will come from renewable energy sources, and then we will reduce our carbon footprint or we’ll try to reduce our carbon footprint with our logistic partners because we buy our services from the container lines and our trucking companies by forty percent by being actively targeting and working with like-minded suppliers. 05:29 And in Sea Farm, by twenty thirty, zero percent waste to landfill, taking recycling and energy recovery as the options for the long term.

And also very importantly, reduce -- reduction of fish oil and fish meal in the feed that we use, sixty five percent reduction for sole and a fifty percent reduction for turbot is the target. 05:56 Then I will hand it over to Lucas.

And then, Lucas you -- when you're finished, hand it over back to London. Thank you.

06:05 Will do. Thank you very much, Niels for that.

And I would like to take you through the quarter three performance of Stolt Tankers. And, of course, I'll start with some of the figures.

But I would like to take some special time to talk about what we see on the bunker site, then I will take the market highlights, little bit forward-looking and as Niels just concluded with sustainability, I will do that as well, before handing back. 06:35 So if I look at the quarter three for Stolt Tankers, overall, we saw quite an improvement compared to quarter two in twenty one.

As you can see, our operating profit went from twelve point six percent to twenty four point one percent. However, if I compare it to a -- the same quarter in twenty twenty, it's still a little bit lower and that is a reflection of actually the sort of uncertain and volatile markets that we see primarily in relationship to what's happening in the energy markets.

07:10 If I look, however, at the increasing operating profit from quarter-on-quarter, it's very much driven by higher trading results, so four point eight percent higher freight rates. It's a reflection of the good contract negotiations that were done in the beginning of the year.

And it also is a reflection of the fact that spot prices have gone up, but not enough to cover the additional bunker cost. So that's why we say, it's still a depressed spot market.

07:40 You also see that our operating days are going up quite significantly, and that is very much driven by the Tufton J19 ships, of which six has been included in this quarter already. And even with that capacity coming in, you can see that our utilization has also gone up with one point eight percent.

So overall, I think on our normal performance, we're doing well. 08:05 If I look a little bit at the cost site, we have this multi-year program of Springboards ongoing and you can see here some of the cost advantages coming in when it comes to lower owning expenses, for instance, but also some already on the lower A&G side.

08:26 The big thing that we are deal -- sorry, I have to say, one more thing, one special item is that we sold the Stolt Selje for a book profit because steel prices are relatively high right now, you can generally see increased scrapping in our industry, which is a good sign when we come to supply and demand in twenty twenty two, and also we benefited from that with the sale of the Stolt Selje. 08:51 The big thing that is sort of hampering our performance right now as you can see is the higher bunker costs.

So if I can take the next slide for that one. And here you can see that from quarter three twenty twenty two to quarter three twenty twenty one, the bunker costs continue to increase.

That is, of course, a reflection of what's happening in the global market and you can see underneath that the consumed prices that we have onboard will continue to increase. 09:24 A lot of it is covered by our bunker clauses about two-thirds of our exposures, so that is great, but due to the timing, it kicks in a bit later.

And that is when you see rebate, it means that it's actually something that we've been giving back to our customers, because of the timing differential. But when the prices will go down and hopefully, they will go down again in the future, then actually that advantage goes back to us.

09:52 I would like to draw your attention, though, to the fact that you see the number of operating days as well in this slide, which is the yellow line. And you can actually see that the cost developments is very much in line with the rise in our operating days.

But that also means is that the cost increase, the price increases that actually that we are absorbing with the biggest part of our cost reduction program, which is called Springboard. 10:24 We have taken many measures on our fuel consumption, primarily by centralizing our operations and by taking tight control in the center of which routes ships are supposed to take, how the trim of the ship should be, what the average speeds should be, et cetera, et cetera.

Overall, that gives us sort of a consumption reduction of six percent to ten percent. That is great.

That is structural. It now disappears a bit because of the increasing bunker prices but when that comes down, again you will see that coming back into our results.

So overall, I'm very happy with what we are doing on the bunker consumption. 11:05 On the right hand, you can see our SIR per operating day so that is our revenue minus the operating expenses and then you can see, it's also going up slightly, which is good.

And you see that the dead weight of our fleet is coming down. And again, that is the reflection of the Tufton ships coming in.

The fact that the SIR is going up is also taking in mind that we had in quarter one, but also still in quarter two, the Houston freeze that has overall cost us around five million dollar, and that impact you see going away. 11:43 If I then turn to the markets, which is on the next slide.

I think overall, we see that the U.S. exports are not as strong as they used to be or as I would like them to be.

And it's very much driven by the fact that the U.S. economy is doing, actually quite well.

So a lot of the chemicals produced instead of being exported to other places is now being used for internal consumption. So we see that having an impact on our trade out to Europe and out to Asia and you see that coming back into the spot rates as well.

12:20 We do have excess capacity out there in Houston Gulf and that's basically because the trade, on the other side is actually going quite well. So from Asia inbound into the U.S.

or Europe into U.S. is stronger than anticipated, as well as Arabian Gulf to Europe.

12:40 In Asia, we are living quite some difficult circumstances with -- on our network. It's not that stable because of COVID, and there is lot of ports shutting down primarily on some of the Chinese rivers because of COVID cases and of course, we also just had the typhoon season.

However, we see that the fundamentals are strong and are in place, and particularly on the adjacent markets is where we now -- we need to see the improvements coming, but if I look at the fundamentals of our own trade, it seems to be good. The chemicals are moving, and that sort of underpinning the GDP, which is coming back to normal.

13:24 Take a little bit time to talk about our intra-regionals and the SNIES or our Intra-European trade. As you know, we've combined our fleet with Essberger at the beginning of the year, and we see that we are very happy with that cooperation, it is really paying off.

The results are above expectations. And it's primarily driven by the synergies.

We found out that we actually have quite a few ships that were passing each other empty, and so we could take those moved out, and that, of course, is hitting our bottom line immediately. So we're very happy with that cooperation.

14:02 Also very happy with our Rhine barge surface, given solid profits and outlook for quarter four is sort of similar and the same is valid for Asia Pacific. There we are able to push out the rates because of the congestion that I earlier mentioned, particularly on the -- from the Chinese site.

So, also on the regionals, I'm very confident that the quarter three is good, but also the quarter four will be okay. 14:30 Then I would start looking a little bit forward, I think that the fundamentals are in place for a good twenty twenty two, in quarter four on deep-sea will still be hit by some of that -- the issues that I mentioned before.

But in twenty twenty two, we think, we are well positioned. The supply and demand is still in our favor.

Actually, we see increased scrapping going on because steel prices are very high. So that takes a little bit more capacity out.

We are confident, let's say, the consensus of the analysts and the banks around the recovery of the global GDP is in our favor. As I said, chemical production is good and it's slowing and we hopefully see now some movement on the OpEx side, meaning that there will be more production, and that particularly the MR segment will move away from the chemicals again and go into what they're supposed to do, basically, also driven by the fact that the oil storage right now is at a historical low.

So, I feel confident on twenty twenty two, particularly when I look at the spot markets. 15:51 I also had a question already and, if you allow me to take that one, now as Niels wish is that the question is, how much of the tanker fleet is covered by COA and do you have the intention to do a similar thing in twenty twenty two?

Where we are right now is sort of around the seventy percent, seven zero, which is high, which is also a reflection of our high fixed cost, so in a way that makes sense. But I want to be optimally prepared for the uptick in the market in twenty twenty two.

So we are considering to have a lower COA going forward and as I said to really benefit from that. 16:30 So clearly, that will give us some strong negotiations with the some of the customers, but either, we need to see some good increases on those COA contracts or we will go a longer on the spot end markets.

And so, I'm very confident about the twenty twenty two markets. The way I look at it right now.

16:51 If I can do that, last but not least, outline you a bit our ambition on the decarbonization. And we have said the fifty percent carbon intensity reduction compared to the two thousand and eight levels.

We are using the AER ratio for that because that's becoming more and more the standard in shipping. We have gone as far back as we could with collecting the data because it's finding the data in the past that makes this one may be more difficult.

17:27 So what we did over and above is, we validated the data and the process with which we gathered it with DNV, and they confirm our figures that so far had compared to two thousand and eight, we have already taken twenty seven percent out, which is great. And it means that we're still twenty three percent shy of our target.

17:48 Now underneath, you will see there is a lot of initiatives that we take and we can take still to reduce that target is the optimization of our -- and the way that we operate our ships. Its technical changes that we can make to our systems, but it’s also gathering more data that we understand better on how we can do things and we will also clearly have some -- not so well performing ships be phasing out of our fleet in coming years.

18:17 On top of that, that is not enough. So on top of that we have joined the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping, quite a mouthful.

And it's right now the leading partnership in shipping that has one thing in mind and this is how we can get to carbon shipping as quickly as we can. 18:37 So all the leading shipping companies, engine manufacturers, but also our oil and gas producers are part of that partnership where we look into R&D.

We look at the future fuels. We look at the supply chain.

But we'll also look how we can get financing community, the regulatory communities and primarily also our customers along in this journey. And we already have some good discussions with customers who voiced interest in, let's say, not let us pick up the build by ourselves, but do that in a jointly basis.

19:16 So Niels said, what I would like to give the audience when it comes to Stolt Tankers.

19:24 Thank you. Thank you, Lucas.

Then we will move on to Stolthaven Terminals, on page fourteen, you can see that the operating revenue went up from sixty point six to sixty two point nine. EBITDA with a slight increase up to thirty five point four.

Operating profit at nineteen point eight. And utilization rose from ninety to ninety two point three.

19:52 If you look at the operating profit variance between the second quarter and the third quarter, we had higher revenue of two point three, slightly lower operating expenses, slightly higher depreciation, lower equity income from our joint ventures and slightly higher A&G bringing into nineteen point eight very steady. The improved utilization and throughput volume resulted in an increase of operating profit compared to prior quarters.

20:21 The impact from Hurricane Ida was limited to zero point six million dollar due to good preparation by local team and the flood wall which we had in New Orleans, which was really the first time we properly tried out worked very well and kept the water outside of the terminal, so limited damage, it was more wind damage than anything else. 20:43 The joint venture equity income decreased due to a reversal of -- in the second quarter of zero point nine million dollar tax charge at the terminal in South Korea.

And that was partly offset by the third quarter tax incentive at our Belgian joint venture in recognition of energy saving and the investments that we did. 21:03 Moving on to the fifteen, you see steady performance from the Terminal division.

What I can say is that we are seeing that the pickup in utilization in most terminal and what usually follows when there is high utilization, subsequently you always, when the contract comes up for renewal, we are then able and also push up the rates that we charge for our services, our terminal. So nice recovery, most of our terminals are resulting in high utilization and I expect rates will also follow.

21:46 Moving to Stolt Tank Containers, this is really been a phenomenal quarter for Stolt Tank Containers. They were lower shipments, but at higher rates.

So if you just do the variance first, the operating profit for the second quarter was twelve point five. We had higher transportation revenue of seven point six, that's the revenue that we charge to our customers.

22:14 High demurrage of nine point one, slightly higher move-related expenses, that's what we paid to the container lines and our trucking companies. So we were able to charge and pass on previous cost and get the rates up to our customers and we’re able then -- the move-related expenses that were held at similar levels as we had in the second quarter.

We had lower repositioning costs, approximately the same of three hundred thousand and lower repositioning expenses from previous quarter and we had higher other operating expenses in A&G. 22:57 The operating environment is still very challenging, because it is very difficult to get space on the container lines, and very often when we want -- when we do get the space on the container lines, you get bumped off or move to the next sailing and all the paperwork has.

So there's a lot of work that needs to be done to do on shipment. 23:18 And as I said, shipments hire was actually down in the third quarter that doesn't really reflect the market.

The market is very strong and there is a huge demand for containers, but since there is so much congestion in the ports amongst the container lines, each shipment takes a long time. So that's why the number of shipments were down.

23:39 Transportation revenue was up seven point six million dollar driven by a twelve point six percent increase in transportation rates and that was, as I said, offset by a decrease in number of shipment of five point six, again it doesn't reflect underlying market, it just reflects that it is -- each shipment takes a longer time. 24:00 Demurrage revenue increased substantially as a result of customer holding onto tanks coupled with increased volume.

And ocean freight cost continued to rise during the quarter, caused by carrier constraints which are passed on to our customers. Move-related expenses increased by eight point two, unfortunately, that was lower than the transportation increase that we achieved.

24:22 The lower repositioning cost, as I said and also increase in ancillary charges due to carrier delays, port congestion, capacity constraints and a lack of truck drivers drove increase of other operating expenses. Demand remained strong across all markets and sectors and to meet that demand, we -- on a continuous basis, we order -- we purchased, we ordered new tank containers, but we also lease additional tank containers and in the last quarter, we ordered an additional thousand tank containers.

24:57 We are seeing that customers are considering alternative option to move cargoes as port congestion and containership capacity constraints continue but no significant change has occurred due to the cost of the change. So what we are saying, what we have said in the previous years is that, the tank container market is actually cannibalizing from tankers, but we are now seeing more and more inquiries actually customers considering because one thing is the cost, but it's also the unreliability of the timing because of the delays in the container lines, we are seeing inquiries, both for our terminals where customers want to see if they can lease tanks, so that they can ship in back in containers, in our chemical carriers.

But we have -- so we have seen inquiries, we have seen some cases but not a lot yet, not that much again, not that much driven by what they pay for it, but it's all more than reliability and it's very important for the customers to receive the container or the product on time. 26:04 If you look at the bottom side, this is the percentage movement per quarter.

What we see in the revenue per shipment and the transportation cost per shipment and you can see in the last two quarters, the second quarter and the third quarter, we were able to -- we saw a bigger increase in revenue per shipment that we -- again what we charge our customers compared to the change that we see in the transportation cost per shipment. We've always said there is a lag and it was -- it will be a lag on the way up and it will be a lag on the way down.

26:36 Market outlook, I think the container market -- the tank container market will remain strong for this foreseeable future. And we are seeing an increase – again, the growth in demand for shipment in tank containers continue then more products being produced and more location being shipped to more destinations.

With the port congestions for the container ships, it takes longer to ship each shipment, which then causes a squeeze on the available both dry boxes for the container line, but also for us. So I expect that this market that we're explaining today to continue in similar fashion as we are seeing for the container lines.

27:39 And if you look at the order book for the container lines, they're saying that the big part of the new deliveries will be in twenty twenty three. So I do expect both the remainder of twenty one and twenty two to be very strong or as a strong market for Stolt Tank Containers.

27:56 Opportunities is obvious that tank container costs have been rising and demurrage has remained low. So, high demurrage rates will be expected, which we're passing on or we're pushing through.

And then we are going to reduce the number of free days as this will expect to increase incentive for a faster turnaround by our customers using our container, so we can free up the container more quickly. 28:24 Demand cost is moving away from unsustainable flexibag -- flexibags to tanker bags due to the global dry box shortage and focus on sustainable supply chain.

I mean, the flexibags is basically one huge plastic bag, you put into a dry container. And once that container has that -- that move has ended, that plastic bag, that enormous plastic bag is thrown away.

And we are arguing that is not a very sustainable way of doing it and pushing it to those customers to move into tank containers. 28:57 Sustainability in the supply chain, STC has established its own sustainability goals, which I showed you earlier.

Leadership in digitalization, we will continue. So we are now riding a fantastic wave in this market, which we expect to last for the next couple of two years, but we haven't lost focus on the long term trend that this business is becoming more and more competitive.

So the innovation and the drive towards digitalization and direct integration with our customers and vendors will continue even in this strong market. 29:31 Moving to Stolt Sea Farm.

Again, that's a picture of our turbot farm and sole farm in Cervo, Spain. The upper part of the picture is the turbot farm.

The lower part of the picture, on the middle part of picture, where you see the solar panels, that's the new recirculation farm that we've been talking about. That farm was the first one has been operation, almost a year and a half now.

It is producing -- we're looking -- the growth on that farm is higher than we expected. We expected the two hundred -- no three hundred – three hundred and fifty and it looks like we are up at four hundred tons that's again a recirculation farm.

So production is higher than expected, which means the production cost is lower than expected. So it's moving along very nicely.

30:34 If you look at page twenty one, we had a negative operating profit in the third quarter, but if you look -- sorry, that's the second quarter. In the second quarter, we had higher turbot sales of ten point four, higher sole sales of one point seven, higher operating expenses of seven point four.

That is not our own operating expenses, that's the cost of the fish that we sell on behalf of our partner. So we have a sales agreement with another farm and that's basically the cost of that fish, we take part of the sales commission on that scale.

31:11 Lower A&G, fair value adjustment of eight point five, as a result of the higher prices – the fish prices bringing in the operating profit to twelve point eight. The turbot sales increased by ten point four, due to higher price by twenty one point nine percent and sales volume by thirty six point four percent.

Operating expenses per kilo increased four point five percent, well below price increases. 31:45 Sole sales increased one point seven million dollar with a higher production volume coming from the new farm, the Cervo farm.

Prices improved by twenty two point three percent, while operating expenses per kilo decreased by five point six. The fair value adjustment of the biomass was a gain of nine point three compared to again a zero point eight million in the prior quarter.

This is a reflection again of the recovery in the prices and the growth in the biomass. And we had lower A&G expenses because in the second quarter, we paid for this IPO attempt that we did earlier in the year.

32:22 Delivering on the growth plan. So, in the -- early in the year, we went out and explore the appetite to see if we considered to explore the opportunity to do an IPO.

And we presented to the market, the growth plan that we have had in place. So in twenty twenty one is just on the sole side and we are using sole as an example, based on the technology that we have now developed.

32:52 In twenty twenty one, we will produce approximately a thousand tons of sole. We will reach one thousand five hundred tons of sole, next -- at the end of next year and that again is based on the current capacity -- the current building, the current infrastructure that we have.

And then, we have plans and applications in place to build additional modules at existing plant – farms, basically where we already have provision in place but we need to do the preparation to drawing and the permits. 33:29 We have to decide a place just to add additional module at existing farms and that's basically organic growth, which will bring an additional one point – one thousand two hundred tons by twenty twenty five, which brings the total up to two thousand seven hundred, then when we have done that, we have definitely proven the RAS land-based sole technology and then we will then more aggressively when we feel confident go out and build more of these farms in the market and the target for twenty thirty five is up to eleven thousand four hundred tons of sole.

34:13 And just to give you an example, where we are today with RAS module cost us twelve million dollars that's excluding the subsidies because the subsidies actually brings the cost down to nine million dollars. And what we are now seeing today based on what we're achieving today, we're getting it -- out of that twelve million dollar investment, we're getting a two point four million dollar EBITDA.

34:36 But if you really look at the learnings that we have in husbandry and farming practices and breeding, if you apply what we learned in turbot over the years and apply that to the sole, which is expected and we are actually achieving better growth than we expected. I think that that twelve million dollar will more likely bring that EBITDA up to three, three point five per farm.

So I think, we have now cracked the code and we just want to run conservatively, really proved ourselves that these modules can deliver and then roll it out as fast as possible. 35:26 Moving over to Stolt-Nielsen Gas and let's talk a little about Avenir.

Where we are today, we have mentioned on several occasions that we have ordered six ships and we have built one terminal. So today, where we stand is that three of those ships will be going, two are already on time charter or bareboats and one additional, when it gets delivered is -- we are negotiating to the one more time charter or bareboat.

That's not really our strategy, our strategy is to be a supplier of small scale LNG to stranded demand. But these ships that we order on, you can say on spec because we didn't have off-take or we didn't have work for it, so the three first -- the three ships we will take on time charter while we build up supply business.

36:26 And those three time charter, we can’t finance the company and give us the cash flow, we're taking advantage of the relatively strong LNG shipping market. So three ships out of the six will go on some sort of time charter/bareboat, two of them already are generating cash flow from it.

And then we are working on two deals where we are contributing our ship at basically today's market rate for those ships. But also -- we are also getting an equity stake in companies that are involved in supplying and selling LNG.

37:07 The deals have been announced. I don't want to go too much into detail, but those are supplied deals and we're using those excellent positions that we have to participate also on the supply side of the business.

And the final ship, the sixth ship, actually that’s the ship that is being delivered today or this week, will be used for our own supply deal, which is towards high gas in Sardinia. Sardinia is up and running, it received its first cargo.

We are selling LNG to the local market and that is growing actually faster. Taking into consideration, we've gone through the pandemic or at the end of the pandemic, plus the extremely high LNG prices that we’re seeing.

There is still growing demand for the LNG and the LNG is being sold. So that the -- one of the ships or two of the ships, we're going to use in joint ventures in developing supply deals.

And once ship we're going to use ourselves towards supplying LNG to the end user in Sardinia. 38:18 If you look at based on what we have on the table today, the EBITDA based on that business conservatively, will -- as the business rolls out, will reach forty million dollar EBITDA.

But I would say that's quite conservative, because we want to free up the ships on time charter, by the time those top three ships that are on time charter will be released from, we will then look at further sales deal -- the supply deals for those ship. So, conservatively, that's kind of the EBITDA evolution we see based on the contracts that we currently looking at over the huge upside potential depending on how much of these joint ventures will -- how fast these joint ventures will develop.

39:16 The company is fully funded, though, needing more equity with the EBITDA that's coming out of the business, it's fine. But of course, as new opportunity comes along, there might be other investment opportunities coming our way and we will find the funding for that.

39:36 That completes the business presentations. Now I’m give the word to Jens for the financials.

39:43 Thank you very much, Niels. As normal, I will take you through a few further items on the income statement, as well as talk you through some balance sheet items.

Also, want to remind you that our fiscal year is a little skewed running from December one through November thirty. So this quarter that we're talking about now runs from June one through August thirty one.

40:10 If you look at the income statement, starting with the top line, the revenue line. You see for this quarter, it was a significant increase that Niels has talked through already.

But also year-to-date, we have seen a good growth in the revenue line, increasing about one hundred and fourteen million dollars and a bulk of this has been driven by Stolt Tank Containers, the underlying freight rates that ocean liner freight rates that Niels talked about, but also then captured by our ability to recover those increasing costs through our charges onto our customers, that makes up about eighteen billion of it. 40:48 In addition, as you will recall last year, Stolt Sea Farm had a difficult year with significant impact from COVID and they have therefore seen a recovery of some seventeen million year-to-date over last year.

And finally, Stolt Tankers with the additional operating days related to the CTG ships has also seen a good increase. 41:11 Moving down, you will see that the share of profit of joint ventures and associates, this quarter was up about two million and that is driven really by three ships that were in the prior quarter tied up in drydock and having them now come out means that we increased the operating days and got some additional joint venture profits in tanker joint ventures.

41:41 Also year-to-date, over last year, you see there's an increase of seven million dollars and that's tied to improvements in our terminal joint ventures, as well as some improvement in gas as they have now operating assets on the water. 41:58 Moving to administrative and general expenses.

You see there is a significant increase this quarter and last quarter over the third quarter of twenty twenty. Because of the COVID impact last year, we quickly put in place cost controlling measures and put in place a higher increase and that was a big driver of the increase this year, once that was released as we came into catch up mode, but also FX has moved against us since last year and that has also driven some of the increase in administrative and general expenses.

42:40 Going then down to the operating profit line, you’ll see we have a good increase from the prior quarter from forty one point four million up to seventy six point five million before one-offs and the one-off that we have is the gain on sale of asset as already been discussed. 42:57 And moving then below the operating profit line, you see that net interest expense has come down steadily from the prior quarter and compared to the same quarter last year, we done about five million dollars and year-to-date, it's about a nine million dollars reduction.

This is driven by lower debt levels and lower interest rates. So it is really a good trend that we're on in terms of driving through the cost reduction there.

43:32 FX gain -- this FX loss, I should say, this quarter is due to loss on hedges predominantly. And then moving to the income tax expense that reflects two items predominantly.

One is the improved operating results that we've seen very much in Stolt Sea Farm, but also to some extent terminals and tank containers. And also, for those of you that follow the UK taxes, the government has improved -- approved an increase in the corporate income tax rate in the UK, and that has caused us to increase the deferred tax liabilities at our Dagenham terminal by one million dollars.

That brings us to a net profit from continuing operations of thirty three point five million and up as Niels has mentioned from seven point eight million dollars. 44:28 Moving to the next page, this is a pictorial view of the balance sheet.

If we start with the top two quadrants to the left and right, those are bank covenants that we have in our -- most of our loan agreements. And you see the top left, the debt to tangible net worth is driven by -- on one hand, our debt levels, which at the third quarter ended at just over two point five billion dollars and on the other hand, the tangible network, which was at one point sixty seven billion dollars.

That has resulted in a debt to tangible net worth of one point five zero that's down from one point five nine in the previous quarter, and we would like to see this trend continue as we go forward. 45:20 Top right is the EBITDA to interest expense.

EBITDA plays an important role here, but this quarter, we have seen both the reduction in interest expense and an improvement -- slight improvement in the EBITDA, and therefore the ratio has gone up from three point seven to three point nine times. 45:40 Now, if we look at the bottom right, I mentioned the EBITDA development.

We are -- we did have a very good quarter. Typically, the covenants are run on a four quarters rolling basis.

So, we had a significant quarter, the third quarter twenty twenty drop off from the covenant calculations, but an even strong quarter this quarter. So that's why we're able to bring through the improvements.

Our run rate for EBITDA has now been relatively steady hovering around the five hundred million dollar mark for the last four to five quarters. So that's positive to see and this is even though we haven't seen a significant improvement in any way from tanker ship, which is the biggest division.

46:27 So then going to the bottom left, net debt-to-EBITDA, you can see the net debt difference from the top left is really our cash position of one hundred forty six million dollars, so net debt is down at two point thirty seven billion dollars against the EBITDA puts the ratio at four point times. 46:48 Moving on to capital expenditures.

The first three quarters are the actuals year-to-date, which total was about one hundred and seventy two million dollar. The third quarter was not very significant in terms of capital expenditures.

We have on paper that we're going to spend some sixty three million dollar in the fourth quarter. Typically, we do see a little bit of that move over to subset through the next fiscal year.

If we are able to do it all, then we will end up having spent two hundred thirty five million dollars this year, and that’s really predominantly between a terminals that postponed a lot of capital expenditures from last year to this year, as well as the three CTG ships that bought in the first quarter. And then next year, we expect to see this drop down two hundred and forty four million dollar and that includes a significant jetty rebuild at our Dagenham terminal in the UK.

47:45 Moving on to our cash flow and our liquidity position. You see on the top line, there's just good improvement in our -- the cash generated by operating activities.

We started the year very slow, but the third quarter saw this accelerate. We're still trailing year-to-date last year versus year-to-date this year a little bit, but we are on a good momentum.

Interest paid is down, as you see about twelve -- thirteen million dollars. But I need to remind you that typically the big interest payment quarters are the second and fourth quarters, as some of the loan facilities -- we are on six month interest -- six monthly interest payments.

48:38 Going down to the net cash then generated by operating activities is an improvement of seventy five million dollars mostly driven by operating activities some of it related to reduction in working capital. Then you can see, we had a low month on capital expenditures thirty point two million dollars this quarter, the difference from what I showed you on the previous slide of twenty seven million dollars is related to dry docking of ships.

So in total, we spent then thirty million dollars. We also had the proceeds from the sale of the assets of ten point two million brings our net investing -- cash spent on investing activities to a negative -- sort of twenty million dollars that's down from thirty one point five million dollars.

So not a significant drain on our operating cash flow. 49:29 Then there was a very quiet month from a refinancing perspective, as we didn't take out any new financings this quarter and ended up seeing a reduction in debt of some seventy six million dollars from a cash perspective.

And that's -- our net of FX brings us to an ending cash balance of one hundred and forty five point eight million dollars at the end of the quarter, up from one hundred and twenty two point three million dollars last quarter. 50:04 And if you look to the bottom right, we have some [indiscernible] liquidity available, and you will see that now for -- as we ended the third quarter, we were about four hundred fifty million dollars or just shy thereof this quarter up from the previous quarter.

50:23 Moving to the next slide, you see our maturity profile and this is what is keeping our corporate finance team led by Julian Villar very busy, as they continuously keep on putting in better loan agreements in place. The next big maturity that we have is really not until the second quarter of twenty twenty two, which is a Japanese operating lease maturing secured by Tank Containers and further similar transaction maturing in the fourth quarter.

And in between those two and the third quarter of twenty twenty two, we have our fixed rate dollar bond of one hundred and seventy four million dollars maturing. 51:09 Our plan for refinancing this is going to be through operating cash flow, through refinancing those Japanese operating leases and if needed, we will also put in place further secured financings.

We are following the bond markets. We are interested in keeping our presence in the bond market.

We would like to perhaps bring that presence down a little bit, but we are, of course, keeping an eye on that and we can see that also has now alternative. 51:43 In the bottom right, you have our average cost of debt and I see this has come down steadily, as we have renewed our loans, as we have also seen interest rates drop, but also because we have reduced our dependency on the bond market, which tends to be a little bit pricier.

Mind you, this excludes the leases that as part of IFRS-16 have become part of the balance sheet. So this is really a more traditional financing, but it does include the Japanese operating leases, it does include the sale leaseback deals that we’ve done on ships.

So it's been a very good trend. And if you look at what that means in terms of annual savings, it's about eleven million dollars in annual cash savings.

52:40 And with that, if I could [Technical Difficulty].

52:49 Thank you, Jens. Yes.

We made a slide highlighting the returns that we're trying to provide to the shareholders. Look at the last twenty year or since two thousand, this company has cumulative dividends return to the shareholders since thousand has been around one billion dollars.

We have consistently paid dividends every year since two thousand and five. The last five months -- the last twelve months, the dividend yield that's been five point six percent.

53:22 On the bottom right, you can see the last twenty years, the dividend yield, if you were sitting on the Stolt-Nielsen chairs, was four point five percent. Our dividend policy, and we already received a question in regards to what dividends we can expect going forward?

53:45 Our dividend policy and the way the Board looks at it is that we look at the current earnings and the future prospect looking at the market conditions and also the capital structure and the CapEx commitments that being able to continue to grow the company and maintain our market share or market position, all of that takes into consideration how much dividend we can pay out to the shareholders. But we keep on reminding ourselves that the reason that we are here is actually to provide a return to the shareholder and we are doing that quite steadily.

54:28 As a shipping company that might have been – had we only been a shipping company that might have been difficult, but because of the conglomerate structure where we enrolled in terminals, tank containers, fish and tankers, we have been very stable and we're very consistent with our dividends. Historically, the last twenty years, we have been paying a dollar dividend per share per year, and that is our intention to go back to that as soon as possible.

So we'll see how the year ends, but I wouldn’t be surprised that we will go back to a normal dividend of one dollar per share. The last two years, I don’t know, twenty twenty -- last two years, we are giving zero point five zero dollars per share.

55:21 Then going to key messages. To wrap it up, we’re seeing improved profitability and the quarter was driven by Stolthaven, STC and Sea Farm.

The chemical tanker market remains challenging, though, good progress have been made in the underlying efficiency, as Lucas mentioned. The building blocks of the tanker market recovery and early signs within the crude and CPP market is with us.

It looks favorable. 55:46 However, our short term market uncertainties remain, the supply chain challenge and the easing of the COVID restrictions are still uncertain, how quickly the market will go back to – when it will back to normal.

Stolt-Nielsen, as I said its committed to delivering competitive cash to shareholders. And we are operating strong underlying market fundamentals across all our businesses and our conglomerate structure and stable capital structure position us well to capture the upcycle.

That completes our presentation. 56:23 And now, we will be going to questions.

56:28 And I can start by reading some of the questions. I think you are also able to call in.

So, I think, Jens, can you talk a little bit about the announcement in regard to the cancellation of the treasury shares? Yes.

56:50 Yes. The treasury shares are shares that are owned by SNL.

It owns its own shares. These are shares that do not have voting rights nor do have economic rights and we had up to reach it to ten point six million treasury shares in place.

If you look at the overall capital structure, just to put in perspective, Stolt-Nielsen has sixty five million common shares as authorized shared capital. We had issued sixty four point one million shares, an outstanding number of shares were about forty three point five million shares.

The difference between the sixty four point one and fifty three point five are those ten point six treasury shares, common shares that were held in treasury. 57:41 We have previously used these for various funding activities.

We felt now that with the outlook in the markets and with our financial position, that we could cancel a good portion of those. We're leaving five million common shares as treasury shares in cases there should be some interesting opportunities that come around.

But in effect, what this means is, when we have our AGM, it will still be at fifty three point five million common shares that are eligible to vote at the AGM. So, there's no change to that.

When we calculate our earnings per share that will still be based on the fifty three point five million shares, so there's no change in that, but what it does change is the number of shares overhang, if you like, that are held in treasury that we can quickly turn around and issue back into the market. So as such, it's a good thing, I think for the existing shareholders and that you really reduce that overhang.

58:44 Thank you, Jens. There's another question here, which is towards tankers.

Within Stolt tankers, is it correct that the higher trading results versus the second quarter of U.S. Stolt eight point six, is the result of higher rates under the COA contracts that has been renegotiated in previous quarters and not by higher spot rates.

59:07 Shall I.

59:07 Yeah. Go ahead, Lucas.

59:09 Yeah. I'll take that.

Yes, that is correct. So I did say that the spot rates were higher than previous quarter and that is the fact, but they are not compensating for the higher bunker costs.

So the improvements that we see are driven by higher volumes that we have in general, but also by the higher contracts that have been negotiated in previous months. So, yes, it’s correct.

59:35And there is also another question in regards to emissions, Lucas. Emissions from shipping to be included in the EU ETS from January next year.

Have you made any reflections of what impact this might have on Stolt Tankers' contracts and earnings?

59:48 Yes. So this refers to the proposal from the commission, which is called Fit for fifty five, which includes shipping and some other sectors as well into the ETS regulation.

And it's not January next year, but it should come into effect January twenty twenty three. And the build -- sort of a staggered build up until twenty twenty six when it will be in full effect.

As I said, it's still a proposal it's not yet approved by the European parliament or by the national governments. And that still has to be done, but we also still then have to see what it means for the different shipping segments.

If it stands right now, the way it stands right now, it could penalize our -- the chemical tanker business more than some of the other shipping companies because we use some of the fuel as well for the complicated ships that we have. It's not only the propulsion, which is for many of the ships that we use it clearly also to operate the complex machinery that we have.

61:00 The impact for Stolt Tankers really will depend clearly on the level of the carbon price. And right now, it stands at sort of sixty dollars per ton.

And that would mean that as of twenty twenty three, it will ramp up cost wise for us something around twenty five million dollars or so, which is a lot of money. But if you compare to our revenue, it is – well, it doesn’t matter it's still a lot of money.

So, we are starting the discussions with our customers to see how we can absorb this together into the supply chain. 61:42 What we will be doing even though it doesn't come into effect in twenty twenty two, but only in twenty twenty three.

We will already now put into our contracts, clauses around CO2 taxation. Why is because the expectation is that it's not only going to be Europe, but that the U.S.

will follow and China will follow. And so, yeah, this will leads to a good dialogue that we need to have within the industry and certainly with our customers.

62:13 One more question to tankers, Lucas. Can you say anything on expectation and recent developments in COA rates?

Further approximately how much of the COA portfolio is due for renewal in the coming quarters?

62:28 Yes. It's always a heavy contract season, when you get to the end of the year, so around fifty percent to sixty percent of the contracts are coming up.

As I said that we are quite bullish on twenty twenty two. So that's also how we will approach the contract markets.

And as I stated in the presentation, right now, we have a coverage ratio of seventy percent but that's not a sacred number. I wouldn't mind to be a little lower meaning that we can better benefit from the stock rate increases in twenty twenty two.

But as I said, a big chunk of the contracts are up for negotiations in the coming six to eight weeks.

63:17 Thank you. Then I have a question in terms of Tank Containers, demurrage revenue was high in the third quarter.

Can we expect this to remain at the current levels into Q4? And -- or do you expect it to come down toward normal level?

63:32 As I mentioned in the slide, I actually think that it might even go up because we will be charging higher demurrage rates because of -- just trying to incentivize our customers to turn the tanks around as quickly as possible.

63:43 Revenue per shipment per container was up quarter-on-quarter, can we expect this level to remain high or will it fluctuate with the container market rates also going forward?

63:53 High level activity and high container rates have driven the revenue per shipment in third quarter. We expect the higher container rates to persist in twenty twenty two, when then to be supported to the revenue per shipment.

64:10 Let's see, do we have other questions. Is there anybody that is on the – is it possible to dial in to?

Anybody here online that would like to ask any questions or any questions that we haven't covered?

64:30 I have one here. Sorry.

It say any meaningful progression on finding strategic partners, for Stolt Tankers and/or Stolt Sea Farm? Any progression on finding strategic partners?

64:44 Well, let's just talk about Stolt Tankers. I've said it on several occasions that I think that a step towards a sustainable, industry in the chemical tanker segment is further consolidation.

And that's why we are looking at doing an IPO. We would like to separate our Stolt Tankers at the right time.

As you can see from our balance sheet, we don't have to do anything. We are in a very flexible situation, but it is our wish and it is our intention at the right time to do an IPO of Stolt Tankers, so that way we can pursue further consolidation opportunities where then Stolt-Nielsen doesn't have to pay cash but we can use Stolt Tanker's own balance sheet to pursue such deals and making that a more transparent stand-alone company.

65:29 For Stolt Sea Farm, we're not really looking for -- we did -- and I would like to remind the market, the reason that we went and explored the opportunity to do IPO of Stolt Sea Farm its not because we want to sell the company. We think that this company has the biggest growth potential amongst our businesses, but we felt that if the market is willing to pay or price or value land-based recirculation farms like they were late in twenty twenty and early into twenty twenty one, it is our obligation to see interest kind of make the underlying value of Stolt-Nielsen more transparent.

We explored, we didn't feel that the valuation that we were given us an indication that we weren't able to achieve. So we decided to stop the process.

It doesn't mean that we won't try again, but I think it's only helpful for us that we continue to deliver on what we said that we would deliver and prove to the market the potential both for land-based sole and turbot. So we -- for the time being, it's put on hold, but we will keep an open mind and maybe pursue at a later stage.

66:45 I just told the -- this is a tough one, Lucas. How sensitive are the twenty twenty two tanker rates to recovery to the MR rates?

Good luck.

67:00 Well, it's not necessarily tough one, but because there is a strong correlation between the MR rates and what's happening in our tanker -- in our tanker segment. So then you would have to look at how confident are we about in recovery in the MR market?

Again, there they have the same dynamics on demand and supply, which is very favorable for that segment. So also, there is an increased scrapping ongoing because of the higher steel prices, so that bodes well.

But it will all come down to the fact if -- on two things basically that OpEx starts to ramp up its production and it's feeling a lot of pressure from the different world economies right now. 67:52 And the second thing is that the COVID regulations will be scale down even for, particularly the fact that from the jet fuel needs to move again.

So when we will fly again and jet fuel will go, that will help us this – that segment to go out of our market. So, yes, there is a big correlation between our rates and the MR rates, but we also think that the underlying fundamentals are okay in the MR markets with the big question mark around the COVID regulations.

68:26 Got in a new question, which I think applies partly to Stolt Tankers and partly to Stolt Tank Containers. Can you address the issue of marine transportation delays in terms of the impact of shipments, specifically of liquid chemical?

What kind of delays is Stolt experiencing? How long can the situation with regard a transport that -- in regard to port congestion continue?

68:50 I don't think we are seeing any pickup in the port congestion for chemical tankers. And the reason why we are seeing inquiries of our tank container customers coming back, first, they need to find the storage tank at our terminals and then see if they can ship that product in our chemical tanks.

The reason for that is the port congestion caused by the container lines. And that is very much driven -- well, we've always had historic congestion amongst the major ports, especially on the West Coast of America, but it's very much driven by the pandemic where there is -- and you can imagine there is -- there hasn't been a lot of investment in container port capacity, but at the same time, because of the pandemic, if one dock worker test positive, the whole shift has to go into isolation and that reduces the capacity.

69:51 The other part is also, of course, the shortage of lorry drivers or truck drivers. That is not only an issue in the UK, which we are currently experiencing here, but it's actually an issue in all of Europe and all of North America where it's become -- it's been difficult to attract enough people to pursue a career as a lorry driver or a truck driver.

So those combined issues where you have less capacity due to the constraint because of the pandemic in the ports, plus truck drivers, I foresee that this will continue for some time. So, until all COVID restrictions are lifted, I think that we will continue to see port congestions.

70:40 And that -- Lucas, a new question, how will the new IMO regulation impact Stolt Tankers and the chemical tanker fleet in general, both with regard to EEXI and CII, please?

71:01 Yeah. I think it's a bit similar to the previous question.

EEXI is, of course, is about the fleet currently in the water. And improvements we would need to make that to make sure that they are allowed to remain in the water.

As we have a slightly -- fleet that is in average age that is little higher, it will have some impact, but we are putting already the measures in place to make sure that we can still continue with those ships. In general, I think IMO, I wouldn't mind if they take a little bit more leadership on this issue.

We feel that somehow they are being passed by -- by the different national and higher regulator bodies like the EU. And I'm not alone in this by voicing to say that the IMO should really take on -- take back leadership when it comes to the sustainability development of shipping in general.

Yeah.

72:05 All right. Thank you very much.

We have answered I believe all questions. Thank you very much for participating and listening in.

And hopefully, we'll join us again in -- on the fourth quarter earnings release. That completes our presentation.

Thank you very much.

72:21 Thank you.