Caesars Entertainment misses Q2 earnings expectations, shares edge lower
Hoegh Autoliners ASA, with a market capitalization of $1.41 billion, reported its Q1 2025 earnings, revealing robust financial performance and strategic advancements. The company’s operational strength and strategic initiatives led to a 4.19% increase in its stock price, closing at 80.49 USD. Investors responded positively to the company’s strong EBITDA of $652.2 million and net profit figures, alongside the declaration of a significant dividend yielding 24.31%. According to InvestingPro analysis, the company appears undervalued based on its Fair Value estimates.
Key Takeaways
- Q1 EBITDA reached 155 million USD, aligning with company expectations.
- The net profit was positively influenced by a vessel sale, totaling 155 million USD.
- A dividend of 158 million USD was declared.
- Operational updates included the activation of four new Aurora vessels and energy efficiency improvements.
Company Performance
Hoegh Autoliners ASA demonstrated solid performance in Q1 2025, with its EBITDA and net profit figures showing strength. The company maintained a strong equity ratio of 59% and robust cash reserves of 448 million USD, underscoring its financial health. InvestingPro data reveals impressive gross profit margins of 52.17% and a notably low P/E ratio of 2.22, suggesting attractive valuation metrics. The operational efficiency was highlighted by the activation of new vessels and ongoing sustainability efforts. For deeper insights into Hoegh’s financial health, which InvestingPro rates as "GREAT" with a score of 3.59, subscribers can access the comprehensive Pro Research Report.
Financial Highlights
- Q1 EBITDA: 155 million USD
- Net Profit: 155 million USD
- Dividend: 158 million USD declared
- Equity Ratio: 59%
- Cash and Liquidity Reserves: 448 million USD
Market Reaction
Hoegh Autoliners’ stock rose by 4.19% in response to the earnings call, reflecting investor confidence in the company’s strategic direction and financial health. The stock’s movement within its 52-week range suggests a positive market sentiment, buoyed by the company’s operational and financial achievements.
Outlook & Guidance
Looking ahead, Hoegh Autoliners anticipates Q2 EBITDA to remain in line with Q1, despite potential uncertainties from US tariffs and port fees. The company estimates a possible impact of 60-70 million USD in port fees but remains committed to its decarbonization and sustainability goals. InvestingPro has identified multiple positive indicators, including strong cash flows covering interest payments and liquid assets exceeding short-term obligations. Subscribers can access 12 additional ProTips and detailed financial metrics through the Pro Research Report.
Executive Commentary
CEO Andreas Enger emphasized the company’s resilience and customer-centric approach, stating, "We have demonstrated that we have both the flexibility in our network and an organizational capability to deal with those types of disruptions." He also highlighted the company’s direct relationships with large OEMs as a strength.
Risks and Challenges
- Potential US tariffs and port fees could impact financial performance.
- Slight dilution in net rates due to increased car contracts.
- The global economic environment and market growth remain moderate.
Hoegh Autoliners ASA’s Q1 2025 earnings call highlighted the company’s strong financial and operational performance, setting a positive tone for the coming quarters despite external challenges.
Full transcript - Hoegh Autoliners ASA (HAUTO) Q1 2025:
Mylene Wu, Head of Investor Relations, HUC Autoliner: Good morning and welcome to HUC Autoliner First Quarter Presentation. My name is Mylene Wu, Head of Investor Relations. And with me today, we have our CEO, Andreas Enger and our CFO, S. Ben Stuebrug. As usual, we will walk through the business and financial performance of the last quarter we will answer your question at the Q and A session in the end.
So with that, I will hand over the stage to you, Andreas.
Andreas Enger, CEO, HUC Autoliner: Thank you, Maileen. And yes, welcome to our first quarter twenty twenty five presentation. We are pleased to announce and present another good quarter in a somewhat turbulent world, starting off with this very nice picture of Hoegh Sunlight, our new build number four on its during its naming ceremony in Shanghai earlier this year. The quarter in figures, we have an EBITDA of $155,000,000 in line with plans where we have previously reported that we took on significant additional contract volumes to create a more robust and stable backlog at slightly lower rates, now down at roughly $95 per cubic meter gross. We have a net profit also of 155,000,000, positively influenced by gain on sale of an older vessel.
We are in line with our dividend policy, declaring hundred and 58,000,000 US dollars of dividends for the quarter. We have declared an option on our last bareboat leasing vessel, Hoegh Copenhagen, is a strategic long term vessel in our fleet that has been on a bareboat lease and we’ve executed an attractive purchase option on that vessel. And we have retained a strong equity ratio of 59%. So in our view, a strong result totally in line with strategy and reflecting the robustness of our business model and our customer backlog. Going into the main topics starting with a bit on the market and commercial side, we have had strong volume development out of Asia, slightly lower volumes in what we would call the return trades ex Atlantic.
We have a somewhat lower share of break bulk high and heavy, maybe not by desire, but the fact a consequence of the fact that we’ve chosen to expand our contract portfolio and to serve our clients, it has implied a somewhat higher share of cars in our portfolio. And then net rates going down as previously announced as we have extended duration and robustness and scale of our contract portfolio and running this quarter with a very, very high contract share ratio. Little drop into the contracts. We have, as I said, a very robust contract portfolio both for 2025 and 2026. For the quarter, the contract rate the share of our cargo rate is now up to 82%.
Remaining average duration is still three point three years, and we have very few contracts to be renewed in 2025, so we have a very stable picture on the contract side. On the rate agreements, they’re typically shorter and can be adjusted, and there’s a different set of clients, a lot of forwarders and used vehicle shippers, but it is also long standing relations and stable structures around our rate agreement portfolio. And 2024, If you look at the spot, we have had some some discussions and some confusion around, you know, the spot versus contract mix. And I think the easiest way to explain it, which we’ve done several times before, is that, you know, most of the cargo we are carrying are under some kind of agreements. And our distinctions into contract and spot when we do the simply some sort of the simplified description is that contracts are, you know, agreements of longer duration with some commitments on rates and volumes while we have grouped into spot all the kind of also contracts that does not include volume and price.
They might include price agreements, but the prices can be changed and the customers have no obligation of delivering cargo. We’ve chosen for simplicity to call that spot although there is an agreement beyond it. It’s important then also to note that that cargo segment that we call spot is not kind of the typical spot shipping cargo that fluctuates widely with markets. It’s a different type of category. It’s freight forwarders, it’s much more high and heavy, it’s much more project cargo.
And if you look at over the full cycle, it has a sustained premium to contracts. So I think it’s important in sort of measuring the contract spot, how that actually works. It also means that our decision to take on larger contracts on new cars and running a higher contract ratio is slightly diluting to rates because we are giving up opportunity to take the more opportunistic and better priced through the cycle spot cargo including then the freight forwarder business and the used cars. The shipping structure and flows are quite stable. The growth of exports from China is continuing and growth of both EVs and actually larger growth now of hybrids in the export share from China, but still a growth across segments out of China and sort of moderate growth in the market in total.
Same with with with with with and heavy, we basically see that after after some reductions the last few years on a slowly increasing trend. We consider the high and heavy market to be robust. There are substantial cargo opportunities and we will obviously continue to serve and focus on taking back cargo shares in that segment as well. Again, it’s also a business that is driven by growth out of China. Maybe the biggest event of this quarter is really not reflected neither in our results nor in our current business operations, The US tariffs and The US port fees that has been announced.
Is quite substantial amounts. There are 25% tariffs now implemented on foreign made vehicles and a range of car parts. It is 10% to 145% import tariffs announced. The 145% is maybe less relevant for our business in the sense that our business in The U. S.
Is not very much driven
Mylene Wu, Head of Investor Relations, HUC Autoliner: by Chinese exports, but tariffs as such obviously longer term bad for business even though it hasn’t really yet
Andreas Enger, CEO, HUC Autoliner: affected the trade flows very much. Port fees is also a different one. It’s now announced a scheme that that is a hundred and $50 per c u capacity for each entry to US waters, meaning not per port call as previously. It is as if it will be a significant cost addition. It will not come into effect before October, And I don’t think we will speculate on what may or may not happen in negotiations and discussions between now and then.
But it is an uncertainty both on the effect of the tariffs on our customers and the trade flows and obviously, the risk of additional costs coming out of the port fees. Just in that spirit, we’ve chosen to add an additional slide this quarter just describing our diversified range of load and discharge destinations. And if you look at The US, it is a significant, but clearly not the dominant part of our business portfolio. It is an attractive and good market for us. We have fairly balanced flows in the sense that our exports from The US corresponds fairly well with the import volumes.
We have very strong customers that we really like to serve. And as I said, we are waiting results. We’re going remaining in very close contact with our US based customers. Several of those would include some of the companies that are expected to invest billions of dollars in building manufacturing capacity in The U. S.
And in our dialogue to them, our clear impression is that our service both into and out of The U. S. Is critical to their strategy of developing their U. S. Business and we’ll just have to wait and see how that to what extent that may impact the structures.
But there is substantial uncertainty obviously from these tariffs that is hitting
Mylene Wu, Head of Investor Relations, HUC Autoliner: an
Andreas Enger, CEO, HUC Autoliner: important market segment for us both in terms of import to The US and exports from The US. In that range of uncertainty, and I have said in a couple of other settings that in the in the five years I’ve been with this company, we’ve had a financial crisis or a very sort of from a very weak and oversupplied market. We’ve had a pandemic. We’ve had some fire incidents. We’ve had a bridge falling down.
We have had both the Panama and Suez Canal being heavily disrupted and for Suez even closed for a long period of time. And and I think we have demonstrated that we have both the flexibility in our network and an organizational capability to to deal with those types of disruptions, and we are building on a flexible network, diverse cargo access, which actually we have substantially strengthened during last year as we said with the customer backlog. We are customer centric in the sense that we are dealing directly with the large OEMs and we have close contacts with all of them. So we are not operating in a broker and trader market, but are integrated parts of the value chain, distribution chain, logistic chain of some of the largest automotive equipment companies in the world. And we have a pure play strategy that allows us to put all our intention into to optimizing that system and that has, you know, served us well.
Just for information, I mean, this is not a prediction or an estimate or any kind, but the full impact of the proposed port fees on our operating patterns is in the range of 60,000,000 to $70,000,000. We will obviously do a range of measures to try to reduce the exposure by consolidating loads by having customers taking share in the payments and so on and so forth, but just to sort of given that it is a big issue, It’s a large number, but it’s a number we can work for six months to find good solutions together with our customers to reduce, and it’s a number that we are actually fully financially capable of carrying if the worst scenario should happen just to get that in perspective. Then a little touch into sustainability. It’s obviously come a bit out of focus with so many other events, but I’m also pleased to say that I have visited lots of customers across segments in in Asia, in Europe, and in The US during the last six weeks, And despite a need obviously to address other disruptions, we have strong and good ongoing discussions with our customers on on how to deal with the decarbonization needs and the decarbonization pressure that we still expect will remain.
And in that spirit, I’m pleased that this quarter does include a significant drop in our carbon intensity. It comes from a very extensive dry docking schedule and we create class renewal on vessels last year and towards the end of last year, adding somewhat to the the the the CapEx, but obviously then having a lower schedule for for the next the following years. And all of them including substantial programs to include to improve the energy efficiency on on on the vessels through different types of modifications. And we’ve also bunkered 2,200 tons of sustainable biofuel, 100% biofuel in the first quarter. So we are continuing taking delivery of the most energy efficient and carbon efficient vessels in the world.
We are continuing to offer biofuel solutions, and we’re continuing to to upgrade and and execute sort of energy efficiency improvements on on our existing fleet that in some is, delivering on our strategy of reducing our carbon intensity and the carbon footprint. And with that, I think I’ll leave to Espen that will take you a little further through capacity and the financials.
S. Ben Stuebrug, CFO, HUC Autoliner: Thank you, Andreas. Turning to the capacity side, the one year time charter rates have come down from very, very high levels. As Andreas have been said for quite some time, we’ve been very cautious in using the capacity market over the last period because of very high levels. But we had the plan to come into 2025 being long on cargo, also anticipating that the capacity market will normalize. And as a consequence, we have chartered two large vessels so far this year.
One was operational in January and the other one is operational during April. We’ve also chartered one trip charter in the quarter and done a few smaller space charters as this market is opening up and normalizing. Turning to the financials. Our volumes were moving flat quarter on quarter. The first quarter is normally the weakest quarter in our industry.
Typically, January is a bit slow after production has been reduced or been limited during the holidays. So to see some idling of vessels into loading position in January is normal. Having said that, we’ve been absolutely sold out with more cargo than we can carry out to Asia in the quarter, but we saw somewhat lower volumes out of The Atlantic than what we expected, particularly as I said in January and in early in the quarter. As already Andres talked to, we’ve taken on more car contracts, which is changing our cargo mix with more cars carried, which has negatively impacted net rate by 7% quarter on quarter, somewhat limiting, as Andreas said, our ability to load better paying cargoes in shorter period. The first quarter EBITDA came in at SEK 155,000,000, and the reduction is related to the reduced revenue of 9%, but also SEK 9,000,000 in extra cost from the increased activity on the charter side.
I think because of the somewhat lower volumes in the return trade early in the year, volumes came in a bit lower than expected, because we have more capacity on the water. So we have a somewhat lower network efficiency in the first quarter, causing more ballasting of ships from the Atlantic back to Asia, which is reflected in EBITDA. And but it also means that with four Aurora newbuilds now on the water and two new charter vessels operational, we have a potential to load more cargo going forward. Net profit up 11% quarter on quarter on the back of the book gain of the sale of Hoegh New York. Looking at the EBITDA bridge quarter on quarter, we can see the reduction in revenue, mainly as mentioned from the reduction in net rate, somewhat offset by lower voyage expenses in the quarter, but we had SEK 9,000,000 extra in charter expenses as mentioned.
We have a strong balance sheet. Net debt to EBITDA still below one, equity ratio around 60% and we have cash and liquidity reserves of $448,000,000 at the end of the quarter. Cash generation during the quarter also strong on the back of particularly the net sales proceeds from Hug New York. We had SEK 121,000,000 in cash flow from operating activities, somewhat negatively impacted by changes in working capital in the quarter. Then we had dry dock and other CapEx of $14,000,000 and we paid $20,000,000 in yard installments for newbuild number five and six.
Those vessels will be delivered to us in May and June. We had the 61,000,000 mentioned from net proceeds from Selinghug New York, and we had normal debt and lease payments and paid dividend of $90 during the quarter, meaning we ended with cash of SEK233 million at the end of the quarter. We are pleased to pay out SEK158 million in dividend for the first quarter. The dividend is the free cash flow in the first quarter, plus adjustments to working capital related to withholding tax and yard installments. It marks the twelfth consecutive quarter of paying out dividend.
We paid out almost NOK 1,400,000,000.0 or NOK 77 per share.
Andreas Enger, CEO, HUC Autoliner: Yes. That leaves us with the outlook. And I must say before we go into that that this is obviously an exceptionally difficult quarter to provide a meaningful output on every or outlook on everything that has to do with geopolitics. But but I I I would want to say that, you know, in our business, we we do have we do have a robust run rate and and we have sort of good traction into the quarter. I also want to emphasize that, you know, the reason that we are also fully comfortable continuing our dividend policy of paying out cash is that, you know, we did fundamentally delever the company before we started paying out dividends.
We have an exceptionally strong balance sheet. We have a fully financed fleet renewal program that is is satisfying our fleet renewal need for this cycle without any additional future capital expenditures. So so we are comfortable of having, you know, a very strong balance sheet, a a fully financed, you know, renewal program, and a very robust sort of underlying structure going into whatever might come of disturbances. And when you look at the disturbances, clearly, tariffs and port fees are on the top of this. It is, as I said, not really affecting business yet, but it is clear that, you know, without negotiated solutions, which we will believe there will be some of, but we can’t really predict, it will impact trade flows into The United States.
And obviously, as we talked about specifically, the port fees might end up as an economic burden fully implemented and depending on the level of how we manage to, together with our customers, develop mitigating solutions. So that is something we’re clearly following and is probably the is definitely the biggest uncertainty on on our horizon. Coming to the traditional ones with with Red Sea, I think there is no real change. We don’t foresee a a near term opening, but obviously, we are following that one as well. And in general, we expect the Q2 EBITDA to be in line with Q1.
So that ends our presentation and I think we’re ready to move on to any questions that may be from the audience. Maileen?
Mylene Wu, Head of Investor Relations, HUC Autoliner: Yes. Thank you, Andreas. We have received a few questions from our audience during the presentations. Yes. And the first question is asked by a few investors.
So given the increasing uncertainties, how is the risk with the long term contracts? Can we comment anything about that?
Andreas Enger, CEO, HUC Autoliner: No. I I I don’t I think I don’t think we will can say much more than what we have done previously, and that is that I think we said that in the last quarter as well, that we have we have good experiences with customers sort of fulfilling contracts, and we do have increased sort of commitments in these contracts. We have so we have improved the structure of this. We did emphasize last quarter, and I think that maybe comes more to the surface. The biggest risk is clearly when volumes stop flowing because our our when when volume is not flowing in the in the right, you have to come to some kind of agreement with the customer and and and and figuring out, and you you are enter definitely entering into a negotiation situation.
And and and The US situation might might create that risk for for certain certain volumes. But we believe that our decision to go long cargo, our decision to expand our contract portfolio with substantial large new contracts is making us fundamentally stronger into this uncertainty that comes. And I think that is the important part for us. Huge disruptions in trade flows will trigger, obviously, trigger negotiations and but we’ll have to we’ll have to wait and see. I think our objective is and our our our expectation is to is to work with customers to try to reduce the impact of this to the greatest extent possible.
And we generally believe that the trades we have in and out of The US is important to rebuilding also the manufacturing base in The US and let’s see how that plays out.
Mylene Wu, Head of Investor Relations, HUC Autoliner: Thank you, Andres. And I think the next question is for Esven. What should we and this is a question coming from the analyst, Oliver and John from SEB. So how should we think about the charter expense going forward? Because I see that there has been an increase in charter expense from last year compared to this year.
So could you?
S. Ben Stuebrug, CFO, HUC Autoliner: I as mentioned, we plan to be long on cargo. We had more cargo than we could carry coming into the year. We anticipated that the capacity would normalize for the past few years. If you had to if you wanted to charter a ship, you have to charter a ship for five year. That has changed.
Now we have chartered two vessels for nine and twelve months, respectively. We can also get shorter charters moving forward. So I think we want to be more active in that market. Pricing is normalizing. Also, as I mentioned, on trip charters and space charges.
So I think it’s a benefit for us to be able to optimize earnings and our network by using that market to somewhat higher degree. But for now, think we’re it’s more about using smaller space chargers, maybe chip chargers to optimize rather than taking in more ships.
Mylene Wu, Head of Investor Relations, HUC Autoliner: Thank you, Svendt. And the next question is coming from our analyst Peter Hougen from ABG. We have a slide where we shows the premium between the spot market and the contract rates. And could we comment anything about the premium between the spot market and contract rates in the previous boom between 02/2005 and 02/2008? Probably something you want to comment about, Aswin?
S. Ben Stuebrug, CFO, HUC Autoliner: I don’t think I have that from the top of my head. I think we’ve shown a fifteen year period, and the point is that even in much weaker market, there’s a premium, consistent premium over the full period, both in weaker markets and in stronger markets and around $20 for the past fifteen years.
Andreas Enger, CEO, HUC Autoliner: And maybe the difference, if you just say something, but it wasn’t a dominant factor. But during extreme tightness, you can see a spot market for cars that normally doesn’t exist when you know market is there, which is basically stranded cars getting to markets, but those were, I think, exceptions during the period of a substantial capacity shortage. And I think it’s a while ago that most OEM, the big OEMs had actually balanced that out and was not operating in that market.
Mylene Wu, Head of Investor Relations, HUC Autoliner: Thank you. And the next questions, we mentioned the gross estimated around 60,000,000 impact from the port fees, potential port fees or current proposed port fees in The US. And the question is, the next question is coming from the analyst Christopher Skager from Arctic. Is there any room for us to seek compensations for these port fees?
Andreas Enger, CEO, HUC Autoliner: Yes, and I mean, I think I start by we do not estimate a cost of port fees of 6,000,000 to $70,000,000 We are disclosing that the full impact with no mitigating actions would be that. So it’s basically a worst case scenario, that’s the gross effect. And yes, there will be discussions of compensations. Yes, there will be adjustments on schedules and operating patterns to minimize the effects, but we do not want to speculate in the outcome of that at this point.
Mylene Wu, Head of Investor Relations, HUC Autoliner: Thank you. Yes. And I think the next questions we can go for about the Should we expect the short term change in the working capital to reverse in Q2? And how should I expect the dividend capacity for the quarter?
S. Ben Stuebrug, CFO, HUC Autoliner: I think in terms of short term effects on the working capital, yes, I think that we expect those are short term changes to withholding taxes and receivables, somewhat higher bunker inventory. So I think the short answer is yes. Those are short term effects.
Mylene Wu, Head of Investor Relations, HUC Autoliner: Thank you. I think that brings us to the last question of the Q and A sessions. And of course, you have any more questions, feel free to send an email to our Investor Relations mailbox at iarhub dot com and we can get back to you. Thank you so much for watching and we look forward to seeing you next time.
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