Stolt-Nielsen Limited (Oslo Børs: SNI), a leading global provider of integrated transportation and storage solutions for specialty and bulk liquid chemicals and gases, announced its third-quarter financial results for 2024, showcasing significant year-over-year growth. The company reported a near-record EBITDA of $209.4 million, marking a 4% increase from the previous year, and a net profit of $99.2 million.
Stolt-Nielsen's operating revenue increased by 5.5%, with operating profit surging over 9% compared to the same quarter in 2023. A notable achievement during the quarter was the record TCE per day achieved by Stolt Tankers, reaching $33,400, a substantial 70% increase from the previous year.
Key Takeaways
- EBITDA reached $209.4 million, up 4% year-over-year.
- Net profit stood at $99.2 million.
- Operating revenue and profit increased by 5.5% and over 9%, respectively.
- Free cash flow was reported at $212 million.
- Stolt Tankers recorded a record TCE per day of $33,400.
- Stolthaven Terminals and Stolt Sea Farm showed strong performance.
- Avenir LNG is focusing on LNG shipping, with potential listing plans on Euronext Growth.
- Net debt decreased to $1.9 billion, with a net debt to EBITDA ratio of 2.25.
- Capital expenditures were $58 million in Q3, expected to rise to $100 million in Q4.
Company Outlook
- The company expects to deliver strong overall earnings for the full year.
- Investment in fleet optimization continues with the addition of four deep-sea vessels and one regional vessel.
- Stolt-Nielsen maintains a conservative balance sheet, with $770 million in available liquidity.
- Stolt Tankers anticipates elevated TCE levels despite some market softening.
Bearish Highlights
- Challenges in the Red Sea impacted cargo volume for Stolt Tankers.
- Tank Containers faced challenges, resulting in a 16.6 million decline in operating profit.
- TCE is expected to decline by 7% to 11% in Q4.
- The impact of U.S. port strike actions on the tank container business remains a concern.
Bullish Highlights
- Stolt Tankers achieved a 70% increase in TCE per day year-over-year.
- Stolthaven Terminals’ EBITDA rose, reflecting strong storage rates and a 3% increase in revenue.
- Stolt Sea Farm posted record results with an 8% increase in operating revenue.
- The company is optimistic about stable market fundamentals.
Misses
- A 1.2% decline in deep-sea revenue due to reduced operating days was reported.
Q&A Highlights
- No plans for an IPO for Stolt Tankers due to satisfactory earnings and unfavorable market conditions.
- Strategic repositioning of Avenir LNG, focusing on LNG bunkering business and potential future listing.
- Discussions with customers to deepen relationships and contingency plans for U.S. port strike actions.
Stolt-Nielsen's robust financial results for Q3 2024 reflect the company's effective cost management and strategic investments, positioning it for future growth amidst a challenging global market. The company's diverse business segments, including Stolt Tankers, Stolthaven Terminals, Stolt Sea Farm, and Avenir LNG, have contributed to its strong performance.
With a focus on maintaining a conservative balance sheet and a strategic approach to investment and customer relations, Stolt-Nielsen is poised to navigate potential market fluctuations and continue its growth trajectory.
Full transcript - Stolt-Nielsen (SNI) Q3 2024:
Alex Ng: Good afternoon, and welcome to Stolt-Nielsen's Third Quarter 2024 Results. As always, the earnings release and related materials are available on our website. We will also be recording this session and it will be available from tomorrow. Included in this presentation are various forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, and we refer you to our latest Annual Report for further details. I'm Alex Ng, Vice President of Corporate Development and Strategy. Joining me today are Udo Lange and Jens Grüner-Hegge, CFO. At the end of the presentation, there will be a Q&A session, where we will be taking questions online. To ask a question, simply type into the Q&A function on your screen. Thank you and over to you, Udo.
Udo Lange: Yeah, thanks Alex and hello to everyone here in Oslo and as well joining us online. We are really pleased to present our Q3 results to you today and to be able to share this with the international participants online as well. I will begin our presentation with an overview of the group's results for the third quarter and share some key highlights. Jens will then cover the financial results before handing back for me to me for the segmental analysis of our business, our view of the market outlook, and a few closing remarks. You might remember from the Capital Markets Day in June that at Stolt-Nielsen and we aspire to be simply the best for our shareholders, customers, and people. And I want to thank the shareholders for the support, our customers for the loyalty, and our people for the strong focus on safety, their passion and their dedication to delivering excellence every day. This focus on delivery is again reflected in the strong results presented today. Overall, we have achieved near record levels of EBITDA for the second consecutive quarter. I am pleased to report that our liquid logistics operations are performing at a high level supported by strong supply and demand fundamentals. We continue to invest in our business, optimizing our fleet with the addition of four modern deep sea vessels, one regional vessel, and the retirement of two older ships as we continue to proactively manage our fleet profile and enhance operational efficiency. We also continue to develop our investment pipeline. In July, Stolthaven and our partner GES won a tender to develop and operate a green ammonia terminal further broadening our strong pipeline of growth investments in both our core markets and the energy transition. In addition, we are happy to announce that Avenir LNG plans to refocus as a pure play LNG shipping company. As a leader in small-scale LNG bunkering, Avenir is ideally placed to capitalize on a market where the number of LNG fuel ships is increasing. Avenir is growing its fleet and exploring a capital race and potential listing on the Euronext growth. We continue to be focused on our conservative balance sheet supporting the quarter with the successful $450 million private placement, resulting in a strong liquidity position, enabling future distributions and investments. Let's turn the page to review our key performance drivers at a more granular level. Overall, we have delivered another positive performance with revenue and profit up on the year and strong balance sheet metrics. Results have been pleasing across our business units and we will dive into the performance of our three liquid logistics businesses and Stolt Sea Farm later. Operating revenue was 5.5% overall up and you can see operating profit up more than 9% on the top right. This shows that our focus on margin and discipline on cost is rewarded. EBITDA was up 4% on the prior year and at over 200 million is at near record levels for a second consecutive quarter. Free cash flow for the quarter was at 212 million, slightly up versus Q3 2023. This is a result of strong cash flow from operations and proceeds from the sale of two ships partially offset by working capital and higher investment. We also have significant financial flexibility as the net debt to EBITDA ratio of 2.25 and strong liquidity. As a reminder, our liquid logistics operations are supply chain solutions across our tankers, terminals and tank container businesses. These have performed well in the quarter. Stolt Tankers has delivered a second quarter of record high TCE per day of $33,400. This is growth of 70% on the same quarter last year and up 1.5% on Q2 2024, our previous record high. Events in the Red Sea continue to impact the shipping markets as longer voyages consume additional capacity supporting freight rates and margins despite a lower total cargo volume. The ongoing situation in the Red Sea continues to impact the shipping markets as longer voyages pushing freight rates and ton miles up. At Stolthaven, performance is being driven by strong storage rates and here we are seeing margin improvements as a result of our ongoing optimization strategy. While its utilization was down 7% on the same quarter last year, Stolthaven have delivered EBITDA up 3.5%. In STC, our strong focus on balancing margins and volumes has paid off. We saw year-on-year volume growth and quarter-on-quarter our gross margin increased. Elsewhere, Stolt Sea Farm had our record quarterly performance on both operating profit and EBITDA, excluding the fair value adjustment due to higher prices at good volumes. That's all from me now. Jens, over to you to take us through the financial highlights.
Jens F. Grüner-Hegge: Thank you very much, Udo. Good afternoon to everyone here in Europe and good morning to those of you following us from the United States. So as normal, I will compare this quarter with the same quarter last year and as a reminder, the third quarter for us goes from June 1st through August 31st. To really iterate, reiterate what Udo talked about, basis the favorite position of our businesses and the position they enjoy in their markets and the outstanding performance within the markets, the company is in a very strong position. In addition, with the recent refinancing of debt, we have a strong balance sheet with a smooth debt maturity profile and strong earnings allows for a very strong liquidity position. But let's dive into the numbers. So first of all, in the last quarter there were some confusion, if you like, around our OPEX. People saw that this had been increasing quite rapidly and I want to just demystify this. If you look at the top highlighted bullet, like for like OPEX is flat. And the increase is really driven by an accounting exercise or accounting rule. To take you back in late 2023, we announced the establishment of the SNAPS/ENEOS pool and that was for the regional trade within Asia and accounting rules require us to consolidate the revenue and the OPEX of this business onto SNL's financials. And that is what drove the increase of 32.6 million in revenue, this quarter versus last quarter, and an increase of about 31.5 million in OPEX this quarter versus same quarter last year. So this is not a cost creep that has come into our business, it is purely an accounting effect. So on a like-to-like basis, as I said, revenue is mostly flat, except for a few items as follows. So due to the transit restriction that we have in the Red Sea, as well as the reduction in operating days, freight volume is slightly down, and that's partly offset by an increase in both COA rates and spot rates. So if you net that effect, deep-sea revenue was down about 4.2 million. However, this was more than offset by a reduction in deep-sea OPEX, which was down 12.1 million due to lower port charges and canal transit fees. So net-to-net an improvement. Terminals and Stolt Sea Farm revenue were both up slightly, while STC remained mostly flat and depreciation was up by 1.8 million driven by capitalization of tank container purchases and additional lease assets. Equity income from joint ventures was up, driven by improved Tanker JV results on the back of the strong tanker market and improved results at Avenir, albeit Avenir still at the loss. A&G expense was up due to $1.4 million higher profit sharing accruals, and a $2 million in annual inflation adjustments taken effect on January 1st every year. Without this, A&G was mostly flat year-on-year. And then during the quarter, as Udo mentioned, we also sold two ships for a gain of $6.7 million. So after all of that, operating profit came in at the strong $139.3 million for the quarter and that was up from $127.5 million in the third quarter of 2023. Net interest expense was up, partly reflecting increased average interest rates and lower interest income on cash health and account. And also, income tax expense was at $11.7 million, up from $9.3 million due to tax accruals partly offset by tax credits and the fair value, the tax impact of the fair value also at Stolt Sea Farm. So with that, we ended up -- ended the quarter with a net profit of $99.2 million and with an EBITDA, as Udo mentioned, of $209.4 million. So let us, with that, go over to the cash flow. This was, as Udo mentioned, another strong cash generating quarter with a reduction from the same quarter last year really due to the negative swings in working capital offset by improved earnings. Net cash generated from operations was down from $240 million, but still a respectable $200 million due to those variables. Capital expenditures were $58 million, that includes also dry docking of ships and that was predominant driven by terminals and SDC. During the quarter, we sold two ships for total of $33.2 million in proceeds so if we look at net cash used in investing activities, this was only $22 million for the quarter. We also had proceeds from the issuance of long-term debt that was $349.6 million and that represents the $450 million U.S. private placement that we issued and closed on in July less $100 million approximately that we repaid on revolving credit lines. We also made repayments on long-term debt of $292 million that was the repayment of the old U.S. private placement of about $230 million plus regular repayments of debt to regular principal payments. And we also made $15 million repayments on these obligations. So net proceeds from debt issuance was $41.6 million. So total cash loss for the quarter was therefore $221 million and with that, we ended the quarter with cash and cash equivalents of $336.7 million and available credit lines of $431 million, so about $770 million of available liquidity. Now, this liquidity is not going to stay just at the balance sheet. Our intended use for this liquidity position is continued investments, as you will see later, so that we continue to grow our businesses and grow our underlying cash generating capacity. It is for debt reduction and it's of course also for distribution to shareholders. So moving over to our debt maturity profile, having talked about the USPP and other debt repayments. By repaying that old USPP, we actually took away a big chunk of debt balloon payments that were looming in 2025 and we have now a much flatter profile, hovering sort of just at or below 300 million per year over the next number of years until we get to 2028 when we need to repay the outstanding bond that we issued in September and December last year. If you look at the bottom left graph, across gross debt during the quarter was slightly up due to the new U.S. private placement facility where you also see later -- in the later slide that net debt is down due to the cash on hand. Average interest rates were slightly up from 5.58% to 5.65%. Going forward we don't really expect any major volatility in the interest rates. Yes, the dollar interest rate is looking to come down but it will take time before that shines through in our financials. Also as an aside you can now find our bond is listed on the Oslo stock exchange under the ticker symbol SNI10. Looking at the capital expenditures, third quarter capital expenditures were a modest $50 million. That excluded the dry docking so if we compare with the $58 million mentioned in the cash flow that's the difference and this was driven predominantly by Stolthaven Terminals and STC. We expect this to increase in the fourth quarter to about $100 million give and take as we are going to buy four small ships for regional trade. We're going to take delivery of further Tank Containers during the quarter and we're going to continue our organic growth both Stolthaven Terminals and Stolt Sea Farm with ongoing projects that are on the development. Some of this may move over to the 2025 but we're working hard to make sure that we get this money put to work. The continued strong performance of the company has really translated into a good performance on all our various KPIs. The top two are bank covenants. The top left shows our debt to tangible net worth which has remained on the one to one for now a number of quarters in a row. The third quarter is slightly up at 0.98 and that's because of the increase in debt and this is not net debt it is gross debt but you will also see that on the bottom left net debt was down from 1.97 billion to 1.9 billion. At the bottom right is our EBITDA with our another quarter above $200 million and that translates into strengthening strong performance on the EBITDA to interest expense as well as strong performance on the net debt to EBITDA which is now down to 2.25. It's not a goal in itself to keep it at that level but we have communicated before we want to keep this ratio below 3.5 to 1 but it's not necessarily an ambition to bring it all the way down either because we need to put capital to work to grow the businesses. And with this I would like to hand it back to Udo for the segment analysis of our businesses, our view of the market outlook and a few closing remarks.
Udo Lange: Yeah, thank you so much Jens. As usual I will begin with Stolt Tankers. We saw operating revenue increase 8% versus the third quarter of 2023 mainly due to the establishment of the SNAPS Regional Asia Pacific Pool (NASDAQ:POOL) which changes the accounting treatment of the revenue and related expenses as outlined by Jens. Deep sea revenue was down 1.2% reflecting fewer operating days and lower volumes due to transit restrictions in the Red Sea. These lower volumes were partly offset by an increase in average freight rates of 23% compared to the same quarter last year. Operating profit came in above 100 million with the decrease in deep sea revenue more than offset by a reduction in port charges again as a result of the Red Sea situation. The establishment of the SNAPS Pool also means we show a related increase in operating expenses a result of accounting treatment on a like for like accounting basis operating expenses would have declined by 4.7%. Overall operating profit increased an impressive 23% year-on-year and given operating days are down 7% this is a particularly strong achievement. So many thanks to Stolt Tankers President Maren and the whole team at Stolt Tankers for delivering this excellent result. As I mentioned at the start Stolt Tankers also sold two ships for a gain of 5 million positively impacting this quarter's results. We are very pleased to have achieved a TCE per operating day of $33,400 this quarter up 17.3% year-on-year, and a second consecutive quarter of a record TCE. This is due to an excellent focus and execution of our Stolt Tankers team, and was enabled by increasing average COA rates supported by the ongoing transit restrictions in the Red Sea, maintaining spot rates at firm levels. However, going forward, it appears that we have now entered a phase with higher volatility that makes providing TCE guidance more challenging. As a reminder, we typically fix cargo bookings 30 days in advance of the start of a voyage, with voyages being renewed on a rolling basis, which results in a lag effect of around 90 to 120 days between changes in rates and the full impact on earnings. You can see, for example, on the chart that both TCE peaks lagged versus the related spot index rates. Assuming this correlation continues, it is then expected that TCE for quarter four will be weaker in line with the Q3 rate decline in the spot index rates basis. Basis what we see today, we expect the TCE for Q4 to be lower by between 7% to 11%. Following the overall industry sentiment, the product [ph] tankers expect a stronger winter, continuing to keep swing tonnage out of the chemical tanker segment, TCE should then increase again beginning of 2025 because of the explained lag effect. However, it should be emphasized that due to this increased volatility and the uncertain geopolitical backdrop and prediction basis today's information can quickly change as the markets evolve. Finally, as a reminder, a $1,000 swing in TCE impacts quarterly net profit by approximately 6 million. Despite this volatility, TCE continues to stay at a high level. We have talked about rates being at a new plateau and we believe that the favorable supply demand fundamentals remain, and expect rates will continue to stand firm for the foreseeable future, notwithstanding the potential geopolitical headwinds. Moving on to Stolthaven Terminals. Overall, EBITDA came in at 43.5 million, up 3.5% year-on-year. Year-on-year performance across both revenue and operating profit has been strong, with revenue up 3% and operating profit up 5% as storage rates have increased and our ongoing margin optimization strategy bears fruit. Partly offsetting the strong revenue generation was lower utilization levels. As a reminder, we are focusing on replacing lower margin contracts to optimize our portfolio. Utilization in the quarter was at 90%, a similar level as in Q2 and based on our contract discussions we expect to progress back towards the level seen in the prior year through 2025 with a corresponding flow through into earnings. Thanks to Guy and his team for the strong focus on margin improvement and discipline on cost control. While A&G increased slightly due to annual cost increases, operating expenses at wholly owned terminals were flat year-on-year. Moving on to Tank Containers. The Tank Container market continues to be challenging, and this is reflected in our earnings. I'm proud of the way that Hans and the STC team are navigating these markets and continuing to deliver. Revenues were flat year-on-year due to higher volumes and freight costs to Europe by space constraints with carriers, particularly out of Asia. The competitive trading environment and reduced demurrage revenues have resulted in lower gross profit per shipment. This meant that operating profit was down 16.6 million compared to the third quarter last year. Looking on a quarter-by-quarter basis, we have seen an uptick of post transportation margins and demurrage revenues, and whilst volumes were lower versus Q2 profitability was slightly up. Looking ahead, we expect margins out of Europe and spot freights out of Asia to soften in the near term as we balance margins and volumes. The International Longshoreman’s Association strike has closed container ports on the East Coast of USA and U.S. Gulf this week. This is a fluid situation that the STC team are monitoring closely. Our focus is on working with our customers to manage their disruption and to support them in the safe and most timely delivery of their products. The financial impact isn't clear as of yet. Transportation revenue and demurrage will be impacted to an extent, but the key variable is the length of the strike and the time taken to clear the backlogs at ports. Finally turning to Stolt Sea Farm, Jordi and the team here have delivered record results on both operating profit and EBITDA. Operating revenue came in at 33.6 million, up 8% versus the same period last year with continued strong prices for both Turbot and Sole. We also saw a 6% increase in volume demand for Sole, so Turbot sales volume decreased by 6%. Production costs were impacted by inflation on energy and feed costs, but improved production offset the OPEX increase. Operating profit, excluding fair value adjustment was therefore strong at 8.7 million, which is an increase of 43% on the year. EBITDA, excluding the fair value adjustment was 11 million up 18% versus Q3 last year. Q4 is usually a very good period for fish growth so our focus will be to maintain a good level of sales, prepare our customers for the seasonal peak demand of the Christmas period and are balancing prices and volume through Q4. Looking forward, we believe that favorable market fundamentals are expected to remain across our businesses. Industry analysts continue to expect the seaborne chemical trade to continue to grow 3% in 2024 benefiting our liquid logistics operation. As a leading operator of chemical tankers, a global provider of safe storage services for bulk liquids, and the leading provider of Tank Containers, we think we are well positioned to respond to this growth. From a supply perspective, we see limited impact from swing tonnage in our markets. While there has been a recent drop in MR rates during the summer, a sustained softening of MR rates would be required for MRs to swing back significantly into our market. Commentary from product players suggest that they expect a firming of rates into the winter season, and it is too early to see any meaningful impact of the supply of tonnage in our markets. We continue to monitor this. Although we have seen an increase in new build orderings during recent quarters, many of these orders will only be delivered from 2027 onwards. New build prices continue to be at an elevated level, and with the uncertainty on propulsion, this continues to be complex. We continue to expect muted net supply growth for at least the next few years, which aligns with demand growth. Let's now turn to our closing remarks. In summary, our strong Q3 results reflect the strength of our constituent businesses and our commitment to deliver our simply the best strategy. At Stolt Tankers, we expect TCE to remain at elevated levels despite a softening. At Stolthaven Terminals, ongoing margins -- margin gains will support earnings and will continue to seek utilization improvements which will benefit 2025. We will also continue to balance volume and margin improvements at STC as we navigate the uncertainty in the market due to the strike action in the U.S. ports. And on the back of the record performance at Stolt Sea Farm, we expect stable year-over-year volumes at firm pricing levels. As a result, we expect to deliver a strong overall earnings result for the full year. As laid out in our Capital Markets Day, we have an attractive pipeline of investment opportunities, and have the balance sheet strengths to execute for sustainable earnings growth and shareholder returns. Thank you for your attention, and we will now pass you back to Alex as we open up for questions.
A - Alex Ng: Thank you Udo. That completes our presentation, and we will now begin the Q&A. [Operator Instructions]. Yes, I'll repeat it once.
Unidentified Analyst: So in the capital markets, there, you were very clear that you wanted to deepen your interaction with the customers on the transportation side, using your terminals, your time periods and your time content is more as one offering. Do you want to update those in any way?
Udo Lange: Yeah, so I think we shared at the Capital Market Day how customers are really looking at us, really as a liquid logistics provider. And just to give you examples of what happened recently, for example, one large chemical provider actually reached out and said, well, we classify your overall as a company as a strategic supplier, and as such you need to pass also our cyber security assessment. So that tells you that we are not just seen as a tactical provider in their supply chain, you're really seen as a strategic supplier. We had also since then, several strategic workshops with our customers where we really show well, these are the capabilities that we have. And on the other side, the customers are sharing their strategies. Again, the idea is not to sell an integrated service in one contract. The idea is to work with our customers, understand their supply chain as a deeper level, and from there on, really see where can we add the most value. And I think that's progressing quite nicely.
Alex Ng: Any more questions in the room?
Unidentified Analyst: I think there should be two. So the last couple of days have been very dramatic. I mean, the Red Sea you mentioned several times, that's a situation that's probably fueled by the stuff that's happened in the past two days. Have you seen and some of the type of stocks have reacted very sharply to what's been happening, have you seen anything in the market, has your chartering people, your operations people felt any heightened tension from customers, from business partners in that region, any spots or update on that.
Alex Ng: Just for the further webcast, it is a question related to the current situation in the Middle East?
Udo Lange: Yeah, so of course, as a company our number one priority is safety of our seafarers. And so with that, we of course monitor this very, very closely, and we also work really closely with security agencies. So on that side, so far, we have no indications that there's a risk. But of course, we need to monitor this very carefully and see how the situation develops. But so far, no impact yet.
Alex Ng: Okay, any further questions in the room? If not, then I will pass over to the web stream. So first question is, how do you specifically see the ILA strikes affecting your container business?
Udo Lange: So of course, the ILA strike right now, if you think about import and exports into U.S. on the U.S. East Coast as well as Gulf ports, that's more than 50% of the total import export volume. So of course, this is significant for the container trade in the United States. So going through our business, it has no impact for our Terminal business, and there's no impact for our Tanker business. However, it is highly relevant for our Tank Container business. So there of course we have worked since many, many weeks with our customers on contingency plans. And what we are doing now is really enacting those contingency plans with our customers so that we ensure the best service delivery for them. Strategically, we have an advantage here because, as you know, we operate our own depots in several markets. So what that does for us is that the customer actually can continue their production output, and we store the containers at interim in our depots, and then when the supply chain disruption hopefully resolves, then we basically can continue the shipping. Of course, that solution only holds so long as you have space in the depot. So it then really depends how long the strike will last.
Alex Ng: Thank you. Next question,
Unidentified Analyst: we have a couple of questions related to TCE guidance for the fourth quarter. If you could provide a bit more detail at all, and also how that combines with expectations around the COA spots contract mix?
Udo Lange: So let me start first with the COA spot mix. As mentioned in the past, we don't have a target where we are like saying we need to be at this COA rate or at this spot rate. That is really a consequence of how we negotiate and what we think is the right approach in the market. If you look at the past performance, where we have now in the tankers business, delivered several months of record earnings. I think the team has done really an excellent job in finding the right balance between COA and spot, and that's what we are going to continue to do. If you then look at the guidance as I laid out, of course, what you need to always understand for our business is that we have this 90 to 120 day lag. So if you go into all the product tankers, and they may have reported before a slower summer period, then we have not seen this right now here. As we have shown today, we have actually record earnings in this quarter, but you have this lag effect, which means the summer effect moves into the next quarter. But then, on the other hand, in addition, right now, everybody expects that the winter again is going to be strong. So you don't see that in our Q4 numbers, but you will then should expect an increase again in Q4 and so that's this volatility that we are seeing right now, and that's why we guided in the way that we did.
Unidentified Analyst: Next question is to our CFO, are there any goals or financial targets for Q4 and or 2020 [ph]?
Jens F. Grüner-Hegge: We talked about the balance sheet goal, and we want to maintain the net debt to EBITDA below the 3.5 level, very much, because that gives us the flexibility between the cash flow we generate, between our debt service. We still have this ample capacity available then for continued capital expenditures to grow our businesses, and also having cash over for dividends for our shareholders. Other than that, it is really balancing out the capital allocation between the different businesses to make sure that we grow as per their strategic ambitions, that we allocate the money to where we see the returns opportunities are, and that we also balance it a bit against certain investments taking a long time to realize, whereas other investments are realized faster, and having a good mix or good balance, if you like, of those.
Alex Ng: Thanks Jens.
Unidentified Analyst: Strategic question for you Udo, considering spinning off spot tankers and to highlight the value of the company and potentially focus the remaining assets as a logistics company?
Udo Lange: As mentioned in previous earnings calls so right now, we do not intend to do an IPO at Stolt Tankers. And as always, also mentioned previously, this is always a function of we are the earnings and on the other hand, we are the IPO market. We are very satisfied right now with the earnings that we achieve, and on the other hand, the IPO market is not in a way that we would say this makes a lot of sense at this point in time.
Unidentified Analyst: Jens, can you give the specific adjustments in consolidated EBITDA as reported in the press release?
Jens F. Grüner-Hegge: Let’s make sure I understand the question, specific adjustments to the EBITDA. So if you look, the main one is really the fair value of CFR biomass, which normally when we reported we reported excluding that. That's because the fair value tends to be quite volatile, go up and down. Whereas we think it's more interesting for the markets, for investors to really see the underlying performance development of the group and of Stolt Sea Farm as this becomes more periodic noise. Other than that, we don't really have any significant adjustments to the EBITDA.
Unidentified Analyst: Okay, thank you. And a final question I have right now for you, Udo, can you talk a bit more about the strategy -- of our strategy into Avenir, is it something you're able -- do you plan to divest or more strategic long term in nature?
Udo Lange: So as you remember [indiscernible] my first earnings call, I talked at the time that we're looking at a strategic repositioning of Avenir, and we had great discussions with the other shareholders, and I think we have found a great path forward, because what we now do is we really focus our businesses. On the one end, we take the gas terminal in Sardinia and have that as one business, and then on the other hand, we look at the LNG bunkering business, and they are really lean and stronger and consider now the listing as well. And we are really excited about the opportunity that we have in that business, and think it's a great next chapter that Johnny and the team have in front of them. But Alex, you are super close to this transaction, so maybe you can share more of the excitement.
Alex Ng: Yeah, I guess we talked in the Capital Markets Day about that excitement, about the supply, demand dynamics that exist -- that we believe existed within Avenir, how the LNG fuel fleet is growing from 400 to over 1000 by 2027-2028. But there's not enough assets there to do energy bunkering. This is an interesting dynamic that we want to explore, and from a Stolt perspective, we are helping support that business and the future capital raise as they continue providing an underwrite in the capital raising that they are looking at and announced yesterday. Okay with that, that's the last question that we have. So thank you very much. Just a reminder, we'll post the recording of the call on our web page tomorrow. Udo, back to you.
Udo Lange: Yeah. Thank you so much for joining us today, and I look forward to talking to you again when we present our results for the third quarter of 2024 -- first quarter of 2024. Again thank you, and I wish you all a good day.
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