Good morning, everyone, and welcome to the First Quarter 2025 Results Presentation for Stainless Tankers ASA. I'm here as usual with Irene. I'll go through some summary items, and the market, and Irene will take us through financials. Please excuse my appearance. I've had a little bit of shoulder reconstruction over the last week. I can assure you it is not impacting anything from the shoulder upwards. The brain is still working perfectly well to help us through this tricky patch in the markets. As usual, there is a Q&A, ask a question, button on your screen. I can't tell you exactly where it is because apparently under this new system there are different formats for your screen. If you have got a question, find the ask a question box, ask your question, and we will endeavor, we will endeavor to answer it.
On the agenda today, we've got the highlights, the rates and outlook, financial review, Q&A, and there's a typo here at the bottom. It says appendix Q4 2024 statements, but it's actually first quarter 2025 statements. We'll turn straight to the highlights, and the NAV performance. NAV as at quarter end, first quarter 2025, is $90 million, which equates to just under NOK 69 per share after us having paid the cumulative dividends of just over NOK 16.5 per share. Total return, NAV return, since inception, including the dividends, is now at 68%. The results for the quarter were slightly disappointing. We had an EBITDA of $8.2 million, net income of $4.4 million, on net revenues of just under $12 million.
The main reason is weaker first quarter pool results coming in at $17,000 a day, and we will come to that in a little bit more detail as we actually go through the presentation. We are still expecting a recovery in the rates. We have seen improvements since the course of the first quarter with a slow recovery into April, which appears to be continuing into May at the moment. The fundamentals remain strong. We have got an average annual fleet growth of just under 3.5% over the next two and a half years, therefore suggesting a balanced market with roundabout 4% trend growth in demand. The company has declared this morning maintenance of its regular dividend of $0.275 per share, which represents an annualized yield of 22% on the invested equity. Following the sale of the Monax and Marmotas , we are also paying a special dividend of $0.225 per share.
Both amounts will be payable on or around the 2nd of June. Since IPO, the company has now returned a total of just over $2 per share, representing over 40% of IPO sales proceeds. I think as will be on most of your minds at the moment with regard to the outlook, for 2025 and indeed beyond, is what's happening in the geopolitical world. We've got a slide on this specifically, which we'll come to, but I think in summary, it's fair to say that we have to remain cautious. There is a lot more risk in the world of geopolitics today than we have ever had before, and that will definitely have implications on the pool earnings.
In addition to that, we have over half of the current fleet coming up for major third special survey dry dockings this year, and that itself has many cost risk implications, which we need to be cognizant of and make sure that we have appropriate liquidity as we approach these uncertainties. Just moving on to a little bit more detail, the chart on the left we've shown you before is looking at the book value per share in the light blue bars, which, as you'll see, has remained relatively constant over the last year plus, and in the dark blue bars, the NAV per share, so market value per share.
As the freight rates have fallen during the first quarter, we have also seen a fall off in the vessel valuations, bringing this NAV per share down slightly from the previous reported numbers. The total return is shown by the line on an index basis. The 68% that I mentioned earlier on is represented on the right-hand scale line at 168 as the index. The bridge chart shows how we have moved from the IPO proceeds of $4.73 per share to $6.67 per share as at the end of March, with reasonably comparable operating profit and increase in vessel values, offset by the dividends bringing us through that movement. The cumulative dividend paid prior to the Q1 dividend that we declared this morning was $21.4 million.
This will increase to just over $28 million when the dividend and the special dividend that I mentioned earlier are paid at the beginning of June. Just a note there, the vessel values fell during the quarter. We have also moved from using purely vessel values, estimates of valuation, to actually now using an average between vessel value and broker valuations to try and put a little bit more stability into the valuation metric, where VV in times of changing freight markets tend to have a lot of volatility in their pricing, which is not necessarily seen in the market. We are now looking at an average of broker valuations and VV.
On the rate front, we can see clearly in the chart here the fall off in rates since the end of the year, where the one-year TC as well as the Womar pool actuals have decreased fairly significantly during the first quarter. As mentioned, we remain optimistic. The forecast is remaining upwards to $20,000 a day, as we move into the latter parts of this year. It will bring us to an average for the year somewhere around about $19,000 a day.
I think what's important when we look at this chart here, and we're just looking here at a segment, over the last three or four years, but if you go back longer term on this for the decade prior to Russia's invasion of Ukraine, the average time charter equivalent to the figures we're showing you in the chart here was round about $13,500 a day, with a minimum level of round about $12,500 and a maximum of $16,000. Since the spring of 2022, we have seen really a new norm, which is what you see on the chart at the moment, where we've got average rates of $19,000 a day, with the low being down at the $13,000 level and the high being up at the $22,000-$23,000 a day level.
I think the important point here is that whilst we might be projecting remainder of the year average for the year coming in at $19,000 a day being lower than where we were in the peak of the summer, last year, this is still a significant improvement on where we were in the decade prior to 2022. I think it's important to see that. It's important to be able to see that in context. We have had a higher level of deliveries in 2025 than we, or there is going to be a higher level of deliveries in 2025 of up at 5% of the fleet. Against that, I think we're already seeing some positive impacts of reversal of OPEC cuts, increasing refinery runs, hopefully absorbing more tanker capacity.
Moving on, we will just go into the, we'll come back to the geopolitics bits in a minute. Oh, I'm sorry, I put the wrong slide there, Irene. Sorry, we'll go on to the geopolitics bit now. Right. This is, I think, a subject that we could take all day on if we actually wanted to. I mean, clearly what has been going on in Russia, Ukraine, what has been going on with the Suez and the Houthis, it has had and continues to have significant implications on our marketplace.
Since the new president in the U.S. has come into power, we have just seen so much uncertainty in the markets with one announcement after another, be it on sanctions, be it on tariffs, be it on the USTR port charges. This has created a phenomenal amount of uncertainty in the markets. I think trying to rationalize it, the first thing looking at tariffs, the main tariffs that are now being discussed, and I appreciate this is changing every day, are tariffs which are going to impact predominantly container ships, cars, and in our view, various gas trades. The impact on vessels controlled by Stainless is relatively small.
You can see on the chart on the left, we've actually noted there the percentage of total global tons transported by segment, which are subject to U.S. and in turn Chinese, Chinese retaliatory, tariffs. You'll see there that the oil products and the chemicals, which is the side that we're, the area that we're interested in here, is actually minimal when it comes to looking at the more finished goods and energy dependent gas trades. I think that's the first message to get across is that there is a lot of talk going on here. There is not a massive implication for our trades.
With regard to the Houthis and Gaza, we seem to be getting completely conflicting views on this coming out of the U.S. administration and coming out of the region itself. We view at the moment a reopening of the Red Sea may be slightly positive to the chemical trades because it would allow easier passage of ships from the Atlantic basin to the Pacific basin. That free access between those two basins historically has acted as a good balancing act between the two basins whether there are favorable rates or less favorable rates in one to the other. It is relatively easy to move with cargo through Suez. With Suez being closed, it tends to restrict vessels to the basins that they are currently in, and at the moment that potentially has some detrimental effects.
I think the lifting of the issues in Gaza, with regard, if it impacts on the Houthis and Yemen and Suez would be marginally positive to us. Russia, Ukraine, I think we've said before, we still feel it's gonna take a lot of time for a peace deal to be done, and we don't believe that there will be dramatic trade changes immediately after that 'cause we don't see Europe becoming energy dependent on Russia again, despite a resolution to the issues in Ukraine.
The main thing that has been impacting shipping with regard to the U.S. administration over the last couple of months has been this USTR proposals where the initial paper that came out was talking about imposing significant port charges on any ships that had Chinese content in any way, be it the owner being Chinese, a ship being built in China, the owner owning ships that were also built in China, even though they were not the ships calling, et cetera, et cetera. Those issues have now been very much watered down with the main thrust of the changes being that they do not now apply to U.S. exports or indeed to Chinese, to vessels below 55,000 deadweight ton. Incidentally, all of our ships are well below 55,000 deadweight ton.
Equally, now they only relate to vessels which are built in China or owned by Chinese entities. From Stainless's point of view, we have Japanese built vessels, we are not a Chinese controlled company, and we have vessels which are under 55,000 deadweight ton. By no means of any stretch of imagination at the moment will Stainless be caught by the USTR issues. I think that one thankfully is off the cards. The important thing though is that there is a phenomenal amount of uncertainty that remains. I think as we've seen, not just in shipping, but as in many, many other areas, the U.S. administration can make an announcement one day which completely upsets the markets. I think that going forward we see a lot of variability in the freight rates. We see a lot of risk in our outlook.
Given that together with the fact, as I mentioned before, that we have four of our seven remaining ships coming up for docking during the remainder of 2025, I think we have to keep very robust, liquid reserves. That has been very much in the board's thinking in declaring the dividend and the special dividend that we have announced this morning. Just coming onto the remainder of the market outlook and just reverting now to the fundamentals, if you like, we still see this from the supply side as positive. Five vessels were delivered in the first quarter. There has not been much movement in the remainder of our estimate for deliveries in 2025, which should not be surprising, because the order books are relatively full.
Deliveries for 2026 are now slightly up, and we're now seeing more vessels being booked into delivery in 2027. Eight vessels are expected to be removed from the fleet aging during 2025, and we see a forecast annual fleet growth of just under 3.5% through to 2027. I think from a fundamental point of view, we are still seeing a favorable, favorable market, and we remain with our convictions that we are in a new rate environment in this $18,000-$22,000 a day, albeit that during Q1 we've definitely been at the lower end of that expectation, but we do not see a return to the lower rate environment that we'd experienced in the decade prior to 2022 and therefore remain very positive on the outlook going forward.
I think with that being said, I will pass over to Irene to take us through some more detail of the numbers, and then we'll come back to your questions towards the end. Thank you very much.
Thanks, Randy. Moving on to our first quarter financial performance. All our vessels were trading in the Womar pool during the quarter. We've noted that utilization has decreased to 92.1%, and this was mainly impacted by the 62 of higher days during the quarter, 39 related to the dry docking of Lavraki, whereas the remaining related to unplanned operational incidents. Lavraki completed its fourth intermediate survey on March 26 at a cost of $1.4 million in line with the budget. While in dry dock, and after inspection, damages were observed on the main engine bearings, which required repairs.
Currently these repairs are in progress and estimated to be completed by mid of May. Moving on, as we announced in December, the company entered into a sale agreement for Marmotas and Monax. Marmotas was delivered on 7 March, and a gain of $3.1 million was realized from the sale of the vessels, whereas Monax was delivered after the quarter, on 23rd, 23rd of April. Our Q1 revenue was at $11.9 million. As mentioned earlier, this was mainly impacted by the lower pool earnings as the market weakened, in addition to the higher days incurred during the quarter. Net income at $4.4 million, up from $3.8 million in the fourth quarter. As mentioned, impacted by the lower revenue and offset by the gain on the disposal.
At the end of the quarter, free cash balance at $3.6 million, excluding all restricted cash balances and excluding any cash reserve accounts. Our fleet book value, slightly below $120 million, whereas fleet market value at $142 million, bringing NAV at $90 million, or $0.667 per share, equivalent to NOK 68.6 per share. Based on these fleet market values, LTV decreased to 42.8%, compared to the previous quarter, which was at 44.2%. Lastly, and restating what Andrew mentioned before, the company's board of directors result, a quarterly dividend for the first quarter of $0.275 per share, constant with the previous quarter dividend, and a special dividend following the sale of Marmotas and Monax of $0.225 per share, both payable on or about June 2nd. Now we can move on to questions.
Okay.
There's a question about the settlement of the warrants that appear in the annual accounts. I think firstly, the question's actually when does the group expect to cash settle them? It's actually not Stainless's call as to when these are settled. It's a call actually of the Tufton Group who actually hold the warrants as to when they intend to do so. No notice has been received by Stainless at the moment of that. The company, Stainless, has the option to cash settle these warrants or to settle them in shares. Both of those options remain available to the company. I think the essence of the question that is actually getting at is will this impact the ability to service dividends in the future? The answer to that is no.
The company sets its dividend at a level that we believe to be sustainable in all eventualities, or at least that's what we endeavor to do. It is not the company's intention to lower the dividend at all, irrespective of the settlement of the warrants. As might be expected, we've got a number of questions asking about sale of vessels in the future. Yes, we are constantly looking at that, looking at the valuation market and doing wholesale analyses on the vessels. Given that we've got a lot of vessels coming up for docking this year and those that aren't, we've got a couple that just, one that's just been done, and then we've got some more falling next year.
Clearly looking at the timing of this, the timing of the docking, whether or not we might sell ships pre-docking or post-docking, is a major consideration. I think that, we're not saying anything at the moment as to what we will or will not do other than to say that we are constantly looking at that. We are very aware of the mandate, of the company, you know, in that we will sell the vessels when we believe the time is right over the coming years, but we're not making any announcements at the moment. I think I've mentioned the Red Sea already. Somebody has asked the question of how will that impact cargo rates. I think I've answered that by saying that we see that to be marginally positive.
It will have a negative supply implication because of shorter routings, but it will allow freedom of movement between the two basins, which we see to be marginally positive. Question on the supply of new product tankers and some insight as to how much of that will be able to carry the same cargoes as our ships. Clearly the product tanker fleet is growing. It is growing slightly faster than the chemical tanker fleet. We have always claimed that there is about a 15% crossover between the higher end products and the lower end chemicals. I do not see any reason why that is changing. I think the answer to the question would be that it is around 15% of anything new that is coming in.
I think having said that, we need to look quite carefully at the moment at the crude and product markets. We've seen production increase announcements out of OPEC, and we've seen the crude market now, doing very well. I see Fearnleys yesterday, issuing research analysis, giving the product tanker sector as a whole a buy recommendation. We're starting to see stronger rates in the product tanker sector as we are seeing more crude oil coming to refining. This generally will be positive in the longer term for the chemical tanker trade. As if the product tanker rates are maintained or are higher than current, we will not see the transgression of higher end product tankers into the chemical trades. Future sale of ships. Again, I think I've already answered that.
Scrapping, I think we mentioned the scrapping. Eight vessels are expected to be removed during 2025, and we are looking at around 13 vessels being removed in the period 2026-2027. I mean, the fleet is aging. There is an age bulge coming up over the next three to four years. We would expect scrapping to increase. Somebody's asking about the extraordinary dividend on the smaller side. I think I've answered that question indirectly in that I think the uncertainties that we've got at the moment in the geopolitical areas and the cost risk in the dockings that we've got coming up, the board have decided to act prudently in maintaining robust liquidity reserves. We think that that is correct.
There's a question on cash. There's a question on cash break-even. I'll have to send it to him in the day in December. It still remains round about the same level as it does prior to the sale of the ships. If anything, it is slightly lower because the debt and the debt service on the two ships that we sold, Monax and Marmotas, is higher than the remainder of the fleet. So the cash break-even will have decreased slightly following the sale of Monax and Marmotas. I think that's all of the questions that we've got at the moment.
Thanks for those questions 'cause I think they are very pertinent questions and actually, hitting to the main issues that we spent a lot of time yesterday at the board meeting discussing. The right questions, I hope we'd address those as well anyway. We do not use FFA. There is a question about FFAs. Would you put vessels on period or spot focus? I mean, we've addressed this question in the past that the pool, the Womar pool, has a relatively strong COA coverage. Now the COAs, it's not the same as a time charter, but it gives you a target volume of movement at a fixed price over a fixed period. It may be 12 months, it may be 18 months, et cetera.
The actual amount of cargo to be moved may be slightly variable. There is about 1/3 of the fleet that operates under those COA contracts that are retained through the Womar pool. They are retained not with trading companies. They are part of the logistics chain of end user companies. That gives us a fixed, a relatively fixed, portion of income within the pool, approximating to about 1/3 of the total pool income. That in itself provides us with a hedge that could otherwise be provided by putting the vessels in the period market. The trade itself is really a spot focused trade, but we are covering about a third of it through the COAs. That is how, if you like, we conduct the hedging for the company, by being a member of the Womar pool.
That, we believe, is the best and correct way to do it, to meet the objectives of the company. Unless there are any other questions, and as I say, thank you for all those that we've had, I think we will call that a day and look forward to talking to you again next quarter. If you've got any questions in the interim, very happy to address them to Irene or myself, and we will get to them as soon as we can. Thank you all very much for your time and attention. Good day.