Stolt-Nielsen Ltd

OSE:SNI

Earnings Call Transcript 2021-Q1

[Niels G. Stolt-Nielsen]

Good afternoon, good morning, thank you for joining us for our Stolt-Nielsen's First Quarter 2021 Earnings Release. My name is Niels Stolt-Nielsen, I'm the CEO of Stolt-Nielsen Limited. And together with me, as always, is Jens Gruner-Hegge, our CFO. [Operator Instructions] This presentation will also be recorded. So if we then can move to next slide and the next one. So the agenda, I'll take you through the highlights of Stolt-Nielsen. I'll take you through our ESG reporting. I'll take you through each of the businesses. Jens will take you through the financials, and then we will open up for questions. Can you then go to the next slide, please? So the first quarter, the seasonal weakness, but our EBITDA actually was up $20 million from the same quarter last year. We came in at a net profit of $2.5 million. The decrease of the EBITDA was mainly driven -- compared to the fourth quarter was mainly driven by lower volumes in Stolt Tankers, slightly lower volume or utilization at our Terminal division. High activities in Stolt Tank Containers, but the margin was impacted by the higher move-related expenses. Stolt Sea Farm results continues to improve. The first quarter, it includes December, which is the Christmas sales. And we also see that the prices continue to recover every month. We had a negative free cash flow as a result of the $74 million acquisition of the 3 CTG ships. Available liquidity at the end of the quarter was $431 million, but that is before we repay the March 18 -- the March bond of $154 million. We paid out a dividend of $0.25, an interim dividend of $0.25 on December 20th. And with the Board has also announced a final dividend, which will be hopefully be approved at the upcoming AGM on the April 15. If you look at the operating revenue, slightly down compared to previous quarter. EBITDA down $20 million, operating profit down $13.2 million and net profit at $2.5 million, down from approximately $11 million. And free cash flow, negative $47.6 million, and that is down $106 million from previous quarter. Tangible net worth, slightly up, coming in at $1.6 billion. Next slide, please. Operational highlights for each of the business. We took delivery of the 5 CTG ships during the quarter. That increases our total fleet by 130,000 tonne deadweight. And all these ships, all the 5 ships were financed between February and March, very favorable terms, which I think Jens will touch up on. We increased our tank container fleet by 2,000 tank containers. We also expanded and got online 16,000 cubic meter of additional storage capacity at our terminal in New Orleans. And in Stolt Sea Farm, we've harvested our first sole at our new recirculation farm in Cervo, Spain. And the second farm of the recirculation sole farms in Portugal, we started -- populated with juveniles in the first quarter. The growth of biomass at both of these locations exceeds expectations and at lower cost than we originally expected. And as I announced earlier this year, we're also exploring the opportunities or possibilities of doing an IPO of Stolt Sea Farm. Next slide, please. So, if we take the net profit variance from the fourth quarter of '20 to the first quarter of 2021, we came in at a net profit of $13.4 million in the fourth quarter of last year. We had an impairment in the fourth quarter in Stolthaven of $8.8 million, which we did. So normalized net profit would have been $22.2 million, but we had a lower operating profit of $19 million from tankers, slightly lower operating profit from terminals, lower operating profit from STC, or Stolt Tank Containers, close to $6 million and slightly lower operating profit of Sea Farm of $0.3 million. Better performance from Stolt-Nielsen Gas, that's primarily Avenir due to the employment of the first ship and also then the second ship subsequently came on charter. Corporate and others of a positive $1.3 million and the Stolt Sea Farm, that loss from discontinued operation, which we had in the fourth quarter which we don't have this quarter, bringing the net profit for the first quarter of '21 at $2.5 million. If we then move to the next slide, please. Sustainability lies at the heart of our operations. As we committed to, we will be reporting more in detail each quarter earnings release. So we set our target for each of the businesses. For Tankers, it's a reduction of at least 50% carbon intensity reduction relative to 2008 by 2030. In Stolthaven terminals, we have primary activities to be carbon neutral by 2040. And in Stolt Tank Containers, a 50% energy and utilities consuming our depots will come from renewable energy sources. 50% of that will come from renewable energy sources. We also signed up with the Clean Cargo, a leading buyer/supplier forum for sustainability in the cargo shipping industry and, of course, focusing on carbon -- our carbon footprint reduction, both by ourselves, but also the supplier that we use to move our tank container. In Sea Farm, we have a 0 -- a target of a 0% waste to landfill. And also, we are targeting to reduce the fish meal and the fish oil that we use in our feed by 65% in sole and 50% in turbot. Also during the quarter, I'm proud to announce that we received certain awards, both at Moerdijk and the Vado depot. We achieved the highest SQAS, that's a Safety and Quality Assessment for Sustainability in Europe, and that is -- that puts these terminals in the top 10% of the Europe's tank cleaning stations. Stolthaven Singapore. Our terminal in Singapore, we won an award from our very important customer, Dow. We were awarded in the terminal category and Dow makes this award each year to its leading vendors based on safety, sustainability, service and social criteria. So I'm very pleased to announce that they won that award from Dow, Dow Chemicals. Stolt Tankers retained silver sustainability rating from EcoVadis. Our sustainability performance continues to improve year-on-year, and I challenge Lucas and his team to get a gold medal next time. If we can move to next slide, please. Looking on the Stolt Tankers side, really, obviously, the highest emitter of greenhouse gas in our business. You can see compared '19 -- 2019 and 2020, our carbon emission came down by 6.2%. Our emission intensity came down by 6%. Sulphur oxide, of course, because switching to low sulphur fuel came down 77.1%. Nitrogen oxide emissions down 6.4%. And waste to landfill from our shipping business, down 3.3%. We will continue to provide these measures, these KPIs on a quarterly basis, and they will also be posted on our website. Moving on to the next slide, please. Stolt Tankers going more into detail. Next slide, please. So the operating profit came in at -- sorry, operating revenue came in at $20.6 million (sic) [ $260.8 million ] that's down from $272 million last quarter. EBITDA also down to $56 million, down from $72.6 million (sic) [ $76.2 million ]. Operating profit came in at $12.9 million, down from $31.9 million. And operating days were actually up from 5,975 up to 6,026. If we could do the operating profit variance analysis. The operating profit for the fourth quarter of '20 was $31.9 million. Lower trading results, mainly driven by lower COA volume and decrease in freight rates of 0.4%, a total of combined both contract and spot during the quarter. We had slightly lower bunker costs, higher owning expenses. Those expenses were the only expenses for us, because of the reimbursement of an insurance premium reimbursement that we had in the fourth quarter, which we don't have this quarter, but also a slightly higher manning cost of $1 million for the quarter. Lower depreciation of $1.5 million. Lower equity income from our joint ventures of $2 million, slightly higher A&G and lower losses on the sale of assets and others of $1.2 million, bringing you in to $12.9 million for the quarter. Next slide, please. The bunker -- our total bunker cost was actually down even though the bunker prices was up. That's because of our bunker clauses, we didn't have to give back the surcharge based on the reference price in our bunker clause. The index, as you see on the right-hand side, a pretty picture. It, of course, was impacted by both the volume, but also the issues that we had in the U.S. Gulf during the quarter. Next slide, please. So during the quarter, the COA coverage was 71%, and that is down from 72% in the previous quarter. The contract rates were up 0.7%. So even though the contracts that we renewed during COVID was up 0.3%. The contract rates that we carried -- the average contract rate under the COAs was up 0.7%, while the spot rates were down 3.3% during the quarter. The cold snap that we saw the extreme cold weather that we saw in Texas, going from plus 15 degrees down to minus 15 degrees over a couple of days, caused a big disruption in the industry. And we estimate that the loss that we've had in the first quarter was around $1 million. And we do expect a further impact of around $4 million in the second quarter due to the delay cost by this closedown of the various customers' facilities. And the Suez Canal closure is expected to have minimal impact in the second quarter, we estimate less than $1 million. The SNIES, as we call the Stolt-Nielsen Inter-European Service, the market was actually strong in the first quarter as we saw both the freight rates and volume increasing. We have, as we announced earlier, now a joint venture as the operating company, a joint venture between Stolt and Essberger, we started operation on the 1st of January 2021. SNITS, the Stolt-Nielsen Inland Tanker Service, our COA coverage remained stable at around 85%. The -- I believe it should both the CPP (sic) [ CCP ] market and chemical spot market continuously weak, but signs of improvement. The SNICS, Stolt-Nielsen Inter-Caribbean Service, the ships that trade within the Caribbs, COA volumes at 94%, and that's higher than usual, but they were also impacted by the adverse weather that we saw in the U.S. Gulf. SNIAS, the Stolt-Nielsen Inter-Asia Pacific Service -- it's an Asia Pacific Service, SNAPS, as we call, lower results in the first quarter due to Chinese New Year and adverse weather that we see at this time of the year. And also there was a closure of the Yangtze River in China for a week. However, volumes improving in Asia and we expect that to continue in the second quarter. If you look at the various reports that this is the Clarkson/Platou report, you can see that we've seen increase in activity from the Middle East to Europe. The Transatlantic market, not a lot of movement. The challenge has really been in the U.S. Gulf to the Far East, that what we call Transpacific, that's where we see a weakening of the market, which we saw in the first quarter. Next slide, please. A challenging first half, improving second half. So the story line remains the same. Just again, we have positioned ourselves well. We took delivery of the 5 ships that we bought, the secondhand ships that we bought. And I also like to kind of remind our investors that we have gone through an extensive newbuilding program. We took delivery of 6 newbuildings from Hudong in '17 and '18. We also got 8 newbuildings from the acquisition of Jo. And in addition, we have -- and they were also delivered in '17, '18. And we also then took delivery of these ships, which are relatively newest, delivered in '16 and '17. So we have had an extensive addition of new ships coming into our fleet. Stolt Tankers has also commissioned -- has been commissioned by one of our big customers, BASF, to help design and build an innovative new barge that can operate on extremely low water levels on the Rhine. And we are -- we have a 15-year contract, I think, with option for additional years to make certain that they can continue to ship their products from their manufacturing plant, even at low waters, which we are now seeing more regularly on the line. And the Essberger Stolt joint venture. It began in January and will provide enhanced reliability, logistical flexibility and significant cost saving after combining both fleets. So after a challenging start to the year, our view, my view, hasn't really changed. I believe that with the rollout of the vaccine, I wish everybody could be as good as U.K., but with the rollout of the vaccine, hopefully, the pandemic will soon be behind us, and we will go back to normality. And we expect then that the economic activity will continue to pick up. And with the supply as it stands now at 3.9%, I think there's just a matter of time before we would see a strong improvement in our segment. I'm quite bullish. And if you look at the stimulus, you look at the savings that has occurred during the lockdown, if you look at the pent-up demand, I think it's just a matter of time. And we're well positioned with the expanded fleet that we have. I think that we are very well positioned to benefit from that market. Next slide, please. Stolthaven Terminals. So the fourth quarter '20 operating profit came in at $8 million. But as I said earlier, we had a one-off impairment on our terminal in Australia and also a positive impairment actually in China. Brought the normalized operating profit to $16.8 million with higher revenue in the quarter of $0.6 million, lower operating expense of $0.1 million, slightly higher depreciation, slightly lower equity income and higher A&G and others, that was primarily driven by one-offs -- positive one-offs that we had in the fourth quarter, which we didn't have this quarter, brings the operating profit up to 15.7% (sic) [ $15.7 million ]. Utilization is slightly down from previous quarter. If you could go to the next slide, please. You can see that the utilization is here. Just a general comment about the terminal market. As you know, it's a pretty steady business, long-term contracts. We are -- I think I mentioned this in the previous quarter, but we are starting to see a pickup in throughput at our various terminals, always a good sign. We're also seeing a pickup in inquiries. I also said last time that there are -- because of the uncertainty of the pandemic, there are -- it takes a longer time to -- for our customers to really commit to a long-term storage deal, but we are seeing more and more inquiries and we're seeing utilization actually picking up in Singapore where we were down in the 50s. I think that by the end of next quarter, we will be in the high 60s, maybe even into the 70s in Singapore. So steady as she goes. With the economic activity picking up, I think that we will see utilization, even where we have low utilization come back to in 90s, mid-90s for most of our terminals. And next slide, please. Stolt Tank Containers. So this is -- this has been an extremely interesting quarter for Stolt Tank Containers. Just going through the numbers first. The operating revenue is $138.9 million, that's up from $130.6 million. EBITDA actually down, even though the operating revenue was up. EBITDA down to $18.5 million, down from $23.7 million. Operating profit, $8 million, down from $13.9 million. Utilization, 67.7% up to 69.7% in this quarter. So if you look at the operating profit variance analysis, the fourth quarter was at $13.9 million. The higher transportation revenue of $8.1 million. Higher demurrage and others of $0.2 million. But however, it was offset by the higher move-related expenses of $9.5 million, higher repositioning expenses of $1.3 million, higher other and operating expenses of $2.7 million. That $2.7 billion is also driven by the catch-up in maintenance and repair at our depots. Lower joint venture equity income of $0.8 million, bringing in the operating profit to $8 million for the quarter. Next slide, please. So just let me talk a little about about Tank Containers because first quarter in Tank Container usually is a slow season, driven by Christmas and Chinese New Years. But this year, we saw, as you saw from the numbers, the shipments are up significantly. And actually, they're going gangbusters. It's a huge activity in STC. The challenge has been, of course, as you read in newspapers, the container lines are full. So it's been a battle in winning space, securing space on these container vessels. Now what is causing this enormous pickup in demand for space on the container vessels, I think based on reading reports and doing some reasoning, I believe, in the first half of 2020, people were kind of sitting back and seeing -- saving and being careful. And then on the second half of 2020 when the governments had secured liquidity, had subsidized people to stay at home so that they felt secure even though they were at home, the savings went up and then people started feeling safer so they started spending. But the spending was not driven towards the services sector, it was driven towards the goods sector. People were buying yoga mats and bicycle machines and rowing machines and computers and whatever you buy. And that has, of course, created a huge pickup, and most of these products are being produced in the Far East. So that has caused a tremendous pickup in demand for the movement of containers. At the same time, these container lines have experienced enormous congestions in all the major ports. And I can explain that, that is probably driven by if one shore worker is tested positive, the whole shift needs to isolate, which has then caused delays in the port. So all of this pickup in demand on the container side and pick up in -- has caused this pickup in demand for the shipments of containers. And that has impacted us because they had -- we're fighting to retain space. And at the same time, they're also jacking up the price, which is understandable. So it's -- the reason that you're seeing a low -- even though the shipments are up, you're seeing a lower EBITDA, and that is because there is a lag for us to be able to pass that additional cost on to our customers. But we are doing that now and we're pushing it over as quickly as we can. And I think that we as one of the operators are good at carrying space. So the increased amount of shipments that we are seeing is not necessarily increased demand for the shipment in containers, but it's a shipment -- increased demand of shipping will stop because we are being able to secure space at -- to a larger extent than some of the smaller operators of tank containers. But the challenge has been to be able to pass on these additional costs, passed quickly. And that's what we're doing now. And basically, customers are calling, they're not, to that extent, anymore asking about cost and saying, can you get my product from A to B? And we're saying, yes, we can. And we pass on the cost. And therefore, I'm not seeing any slowdown at all. We are not seeing any slowdown. And we are able to pass on the additional cost from our truckers and from our -- the ocean freight increased that we are seeing. So I think that the second and third -- or actually the remainder of the year will be quite healthy for STC going forward. I'm actually very bullish with the performance of STC going forward. If we move to the next slide, please. Stolt Sea Farm. So just quickly going through the numbers. The operating revenue up $22 million -- came in at $22.5 million, that's up from $19.7 million. I remind you the first quarter includes the Christmas sale. So EBITDA, $3 million versus $3.1 million. Operating profit, $1 million versus $1.2 million. The volume that we saw is 2,188 and that's up from 1,903. And the higher turbot volume is due to the higher volume sold during Christmas season. Sole sales number also up, but prices were slightly down due to the competition from the wild catch, which is seasonal. Operating expenses increased in line with higher sales volumes of turbot compared to prior quarter. And the fair value adjustment of biomass was a gain of $1.3 million compared to a gain of $1.5 million in the prior quarter. This is a reflection of the recovery in prices and the growth in the biomass. And we had higher A&G expenses, and that is because we are putting a lot of resources into developing and expanding new markets for our products. Next slide, please. Just talk about our recirculation. We have 2 recirculation -- new recirculation plants, purpose-built recirculation plants, 1 in Cervo and 1 is in Tocha. The first one is up and running and we are harvesting. That's the one in Cervo. We have now a sole capacity of 1,570 tonnes. And these are designed by ourselves, which will, I believe, shortly take the sole business, which has been -- which we have spent 20 years on developing will become shortly -- will become profitable. The harvest of the Cervo plant started in January of this year, 1 month ahead of schedule with excellent average weights. After more than 12 months in operation, all KPIs are better than expected and beyond those of our best-performing sites. The Tocha site is basically identical. The first sole juveniles received in December 2020 and we expect to be harvesting in October of '21. And again, same as in Cervo, performance is ahead of what our expectations are. And if you then look at the Anglet, which is partly recirculation but also flow through, you can see that the average weight is 8% higher than expected. The percentage of growth per week is 32%. And the feed conversion rate is extremely favorable, 21% better. So we are very excited by these modules that we are commissioning and we are planning on expanding beyond the 2 existing ones, but -- and then looking at growing that business, those modules closer to the consumer going forward. Very, very excited. Now just let me give you a couple of comments in regard to the IPO. We announced early in the year that we are considering or doing a potential IPO of Stolt Sea Farm, and we explained that the reason for that is to make the value of Stolt Sea Farm more transparent within the Stolt-Nielsen structure. Now it is not really to raise funds because this company is generating its own EBITDA and very much can finance itself, but -- and whatever additional -- if there are further investments needed, they will be supported by Stolt-Nielsen. So the real purpose of this exercise is to -- I felt when we compared it to other land-based or other agriculture companies, we felt that it was important to make it standout and the underlying value more reflect -- easy to identify. So we started the process of talking to potential cornerstone investors. And we have had positive feedback, but it's important for us that we find the right investors. We don't want to have people that kind of are short term. This is a long-term project. And it's important for us to make certain that they understand and have the time to understand the value that we have created, both on our turbot and also able to see the sole and the potential in sole. So we are using our time to find the right cornerstone investors to join us. I think it's only fair that we are -- I mean it's important also, for us, to -- we are -- we get a fair price for what we have created. And we will continue to work doing that. I think time really works -- so time works in our favor. We -- the longer time that goes, the better -- more production data these new modules will provide. Of course, we try to do a -- we've been going through the pandemic, which is, of course, impacting the results. Even though we say you have to look beyond or before the pandemic or post-pandemic, the further away we get from the pandemic and also the more we see coming out of Cervo and Tocha and Stolt Sea Farm, I think time will work in our favor. So we'll continue. We're not really in a rush, but we will continue. And I think it's more important to find quality long-term investors that are willing to see the value that what we're trying to -- what we have created. Next slide, please. Avenir. Very excited. We really have turned the corner. So the first ship was delivered in October of 2020. The second ship was delivered in March. So we have now 2 ships on charter. So the company is generating an EBITDA at favorable terms. We have 4 additional ships under construction at SOE in Nantong yard, and they will be delivered in the second half of '21. The Sardinia terminal will be starting commercial operation in May of this year. And it's interesting, we will actually be using one of the second ship to come with the first cargo to our Sardinia terminal. It actually will -- the first ship will bunker from the -- the second ship will bunker from the first ship and the second ship will provide the first LNG cargo to Sardinia. So we're really up and running there. And we will, yes, start getting some nice revenue coming out of that business. We have loan facility of $53 million in place for the first 2 ships, and we have financing term sheet for the remaining ships in place. So that's in order. Avenir is already providing LNG via truck to Sardinia customers, but that will then switch over from trucks to ships coming in -- discharging into our terminal than a truck bringing it to the end user. The commercial pipeline has actually started moving where we are seeing much more activity now. We have 6 integrated LNG supply projects to our own fast tracks. So we don't want to be a shipping company, we want to be a supplier of LNG. So we have 2 that are on fast-track right now where we actually will source, we will ship, we will store and we will sell LNG, which is very exciting. And also, we are looking at -- because of the timing of these ships that we have in order, we're looking at 10 chartering opportunities we -- against 3 of the ships that we have opened. So there are a lot of opportunities that are coming our way. The timing of these ships are very favorable. And the chartering, even though that's not our strategy, the chartering will finance the development of the supply projects that we're working on. And Avenir is expected to be cash flow positive for the first time in 2021 based on the contracts that we have already secured. I believe that completes my part. Jens, I'll give you the word over to you.

[Jens F. Gruner-Hegge]

Thank you very much, Niels. Good afternoon, and good morning to those of you in the United States. I would like to remind you that we have today posted the earnings release, the interim financials as well as this presentation on the company's website, which is www.stolt-nielsen.com. Also, as a reminder that the first quarter runs from December 1 of 2020, through February 28 of this year. And finally, those in U.S., our reporting is based on IFRS. Next slide, please. Now as Niels mentioned, the first quarter is typically our weakest -- seasonally weakest quarter, particularly for Tankers and Tank Containers. And that's driven by the winter weather that we have in the Northern Hemisphere as well as the Christmas and Lunar New Year -- Chinese New Year holidays. And consistent with that, we did see a drop in results this quarter compared with the same quarter 1 year ago with operating profit before one-offs for the first quarter of '21 of $35.9 million, and that compares with $58.1 million in the fourth quarter. And Niels has gone through -- talked about those in details so I won't go into that. But if you compare it to the first quarter last year, where both quarters were equally impacted by the seasonality, it's worth noting that there is an improvement in operating profits before one-offs of $18.8 million. That's predominantly driven by the improvements in tankers where the prior year was marred by scheduling issues and the high bunker cost and where Stolt Sea Farm was impacted by the write down of biomass because the COVID-19 pandemic has just hit the market. Moving to the interest expense. This was marginally up from the fourth quarter. That's driven by the increase in debt related to the acquisition of the 3 ships -- the CTG ships that we took on our balance sheet. The FX gain of $1.2 million is partly related to FX paper hedges and partly due to translation adjustments. And also, as you will see, the income tax expense increased from $0.9 million in the fourth quarter to $2.2 million in the first quarter, and that's mainly reflecting the improved results in Stolt Sea Farm as well as in Terminals due to the $12.4 million impairment that we took in the fourth quarter. So consequently, the net profit from our continuing operations came in at $2.5 million for the first quarter, that's down from the $15.6 million in the prior quarter, but it's up from a loss of $20.3 million in the first quarter of last year. So a good improvement year-on-year. EBITDA was $108 million, that was down from $128 million in the fourth quarter, but up from $100 million in the first quarter last year. And note that the EBITDA that we show here is before the fair value of biological assets, insurance reimbursements and other one-time noncash items. Next slide, please. This is a view of our balance sheet from a covenant perspective. And I just want to remind that despite the recent acquisition of the 5 CTG ships, which we did because of a very advantageous price, we continue to focus on reducing debt and on maintaining a strong liquidity position. Now we have 3 main financial covenants in our loan agreements. The one is debt to tangible net worth, where we need to maintain at no more 2.25, so we should be below 2.25. EBITDA to interest expense should be at a minimum of 2.1 or above preferably. And then there's minimum tangible net worth of $600 million, where we're currently at $1.6 billion, so we're well above that. The EBITDA covenants are based on the EBITDA for the most recent 4 quarters, which you see in the bottom right quadrant, exceeded. If you look at the yellow line, it exceeded $0.5 billion for the first time, and that's quite exciting, while it was helped somewhat by IFRS 16. If you look on the top left quadrant, you will see that we ended the quarter with gross debt at $2.58 billion. That is up from $2.50 billion, about $81 million increase, and that's related to capital expenditures of $115 million during the quarter. The tangible net worth increased marginally by $2 million, so not much there other than it really reflects the net profit. And as a consequence, the debt to tangible net worth covenant increased from 1.53 in the prior quarter to 1.58, driven by this -- the capital expenditures that we did. I'll talk more about the capital expenditures in detail on the next slide. But also note that in the first quarter, we paid an interim dividend of $13.4 million or that's $0.25 per share. If you look at the top right quadrant, you will see the EBITDA to interest expense ratio for the quarter that improved from 3.55 in the prior quarter to 3.69. And as this is an EBITDA-driven comment more than anything else, it's driven by the improvement in our EBITDA, very much because of weak first quarter 2020 dropped off and we added a stronger first quarter '21 to that 4-quarter due. Our average interest rate was 4.6% in the first quarter. This is down from about 5.05% the same quarter a year ago. Now interest rates have come down quite a bit in that same period, but we are currently fixed at about 80% of our debt and expect with the repayment of the bond that was done on March 18 to continue to see a reduction in that average interest rate. If you look at the bottom left quadrant, although it's not a net -- not a covenant, the net debt-to-EBITDA ratio is an important measure of our debt service capability. That has increased slightly from 4.68 -- from 4.68 to 4.78 due to the added debt mentioned above, but our target remains to reduce this to below 4. Next slide, please. Talking about capital expenditures. Fourth quarter, as a reminder, in the fourth quarter, we spent $20 million. And that increased to $115 million this quarter, and that's driven predominantly by 2 things, of course, the CTG ships that we talked about a lot as well as our contributions to Avenir, as you will see under Stolt-Nielsen Gas of $16 million. So between those two, that's been driving the most of the increase. There is also some additional expenditures for Stolthaven Terminals, some in Stolt Sea Farm related to the new farms and also in Tank Containers relating to depots. Note that the capital expenditures I show here for Tankers, that excludes drydocking expenses. And if you want to have an estimate of that, driving expense -- drydocking expenses are typically around just shy of $20 million, and so also estimated to be just below $20 million for 2021. For the full year '21, we expect to spend a further $136 million. The increase really reflects a significant increase in terminals. This reflects expenditures that were postponed from 2020. As you will recall, we will -- we're cutting back significantly on capital expenditures and we're catching up on some of that now in 2020, and we're also adding some new projects, including a jetty construction at Dagenham in the U.K. Next slide, please. Now if you look at the cash generated from operating activities was $94.4 million, and that was down from $120 million, reflecting the underlying performance of the businesses. You also see that the line below as interest paid was down significantly from the prior quarter. And that's because some of our loan agreements, we pay interest every 6 months. Others, we pay quarterly. So you have every other quarter, you will have a jump up in interest payments. If you go down and you see net cash generated by operating activities was, therefore, $72 million this year, was slightly down from the prior quarter's $79 million. Niels mentioned in the opening -- on opening slides that our free cash flow was down about $100 million from the prior quarter. And if you look at the capital expenditures line of $103.8 million, that was up from $24 million. That explains the biggest part of it. And in addition, we had net investments in JVs and repayments of advances from JVs of about $13.9 million as well as some purchase of Golar shares of $3 million. And finally, also that we had some dividend payments, and that were items that were impacting or causing the drop in the free cash flow. During the quarter, we raised $65 million of debt. That's long-term financing, that's secured by our Dagenham and Moerdijk terminal. We also drew down on a short-term bank loan of $20 million during the quarter, and this has subsequently been repaid. And we repaid some $30 million on long-term debt and paid net lease payments of $10 million. So that means net cash provided by our financing activities was $31.8 million. And as a result, the net cash flow for the quarter ending up at negative $14.7 million, resulting in cash and cash equivalents at the end of the quarter of $173 million. And this comes on top of availability under our revolving credit line as of February 28 of $258 million. So in total, about $431 million of available liquidity at quarter end. And that was, of course, because we had, subsequent to quarter end, the repayment of the bond. And if you can move to the next slide, please. You will see here that bond highlighted the $154 million. So if you look at the overall maturity profile, we differentiate between what we consider regular principal payments that's the black box; you have the bond repayments, which are the light blue ones; and then we have balloon payments, which are the gray ones. And the bond that was repaid on March 18, the $154 million, is now settled. It leaves us with 3 outstanding bonds. The next one being due in September of 2022. So we have about 18 months to go until that. And then we have the 2 bonds that we raised during 2020 and maturing in 2023 and 2024. But that also leaves us with only $153 million in regular principal payments for the remainder of the year, so it puts us in a good position. Now subsequent to the quarter end, we also completed all the conditions precedent on a new $100 million revolving credit line that I mentioned in the previous earnings release. So this is now available to us, and that comes on top of the $431 million that I mentioned. And also, as Niels pointed out, we have closed on the financing relating to the 5 ships that we took over, where 2 of the ships have gone into NYK Stolt Tankers and been 100% financed in that joint venture on a nonrecourse basis to Stolt-Nielsen. And then the 3 ships that we took on our own balance sheet, we have financed with $77 million sale-leaseback, very favorable terms on that one as well, long term, with a very long-term profile. So it's a cash flow advantageous. So with that, I would like to pass it back to you, Niels.

[Niels G. Stolt-Nielsen]

Thank you. I'm just trying to turn on my camera. Okay, here we go.Key messages. The Stolt-Nielsen Board has pledged its commitment to sustainability, supporting enhanced ESG reporting with improved focus on tracking and reporting our KPIs. Businesses are well positioned -- all of our businesses are well positioned for the upturn that we expect that are coming. Stolt Tankers has taken the delivery of the secondhand ships, the 5 modern secondhand ships that we just bought in addition to our newbuilding program. Stolthaven Terminals has completed expansion program. STC's fleet has grown by 2,000, amidst a very active market. And Sea Farm has doubled its sole farming capacity with 2 new recirculation facilities in Cervo, Spain and Tocha, Portugal. And as Jens showed you, our balance sheet and the liquidity position is strong and focus remains on debt reduction. So that means that we will go over to questions, and I will be reading them and publish them.

[Niels G. Stolt-Nielsen]

First question is from anonymous. What is the purpose with Golar investment? And is it a financial investment only? The reason behind the Golar investment is we wish to explore opportunities to apply our knowledge within logistics, in ship terminals and containers and see if we can apply it to other segments and being able to join Golar, and I'm sitting on the Golar Board, really has put us in a position to participate in what we believe is an area where we can apply our expertise within logistics. One of the products that came also out of this is the Avenir, so that is the purpose of that investment. Next question is also anonymous. Could it be an option to sell Stolt Sea Farm division outright? No. I mean, I know we've been asked many times what is this fish doing with the tankers terminals and tank containers. It's been part of the company since '73. We have announced that we would consider separating it out, but through an IPO, and that's something that we are exploring. But it's our intention to be part of it in the long run. If there's one business that we are involved and that has a huge growth potential, it is Stolt Sea Farm, and I think we are good owners with the right mindset of long-term thinking and value development. Next question is from James East. In Tank Containers, EBITDA issues have been blamed on higher transportation costs for, at least, 7 quarters in a row. When will Stolt actually recover these higher expenses with higher rates or transportation or transportation clauses? So the way it works is that you're not able to recover the transportation -- the additional transportation costs on the shipments that you've had. But in your next shipment, you are able then to increase the cost. In some cases, we are also able to post the fixture, pass on additional cost, additional -- it depends on the contract that you have. So I would say that there will always be a lag. And when the market is on its way up, so as long as the container lines keep on pushing the rates up, which they would have -- they have been doing since the alliances were formed and since we have seen the pickup in their market, there will always be a lag, but we are passing this cost on as fast as we can. And there will be a lag, of course, when it comes down again. I think we are living under extreme circumstances in that market right now. So I think we will see some sort of normalcy. But you will already see it now in the next quarter that we are able then to quickly or more rapidly be able to pass on these additional costs. The reduction in EBITDA is not only for the additional transportation cost, but it's also higher repositioning costs, which we had because of the quickly -- the rapid change in demand and trading patterns we had -- in the last 2 quarters, actually had quite a high repositioning costs. Next question comes from Anders at Danske Bank. What is the reason for the mentioned low utilization of the terminal in Singapore? And why this suggested rapid improvement? Well, the Singapore, it's partly demand, partly supply. So Singapore, there was quite a bit of expansion going on in the market. So there was a high supply. But also during the outbreak of the pandemic, there's also -- the uncertainty has caused some customers to cancel their storage contracts. Now what we are seeing now, so we have had high utilization. And the reason why I believe in the rapid improvement is that we are already now working on deals. We have closed deals, additional business for our Singapore terminal, which will start, I think, in May. So I'm quite certain that the -- we know that utilization will go up because of the contracts that we have won. And we are also working on additional inquiries. So I'm quite certain that we will see the utilization go up in Singapore. The second part of Anders' question. COA renewals, are we at the end of the recent positive trend of increased rates compared to the last one? Or is the small increase in Q1 a one-off? As you know, we renew COAs every quarter. And when the spot rates are under pressure, of course -- even though the long-term trend of supply/demand is now in our favor, of course, if the spot rates are low, it has influence on the COA renewals and also -- so that's why I believe we are seeing -- we saw a relatively low renewal increase in the first quarter. We also took on additional COA business from a strategic customer, which we wanted to secure regardless. So we won large volume, which then was compromised slightly with -- on the rates. So I believe it's a one-off. I think that as we see economic activity picking up with the stimulus, with the rollout of the vaccine, with the pent-up demand, I am quite bullish and believe that both the spot market and consequently, the COA market, will pick up significantly. And the last -- there's one further -- will you add further container beyond what we saw in this quarter? In case, yes, about how many? As many of our competitors are listening in, I'm not going to tell you how many containers we're going to order or lease, but we will continue to grow. Especially with the high activity, we will continue to grow by acquiring or leasing tank containers. This one is from Lukas Daul at ABG. Regarding tankers, your total loan carried was significantly down, and STJ Index dropped off significantly, too, the Q1. Can you provide some more color on the drivers behind these developments? I think I mentioned it is that the volumes carried were down in the first quarter because COA volume was down and there was a slow spot market. One of the reasons that COA volumes were down is that we -- a big part of our business is acid -- phosphoric acid to India, which is used as a fertilizer. And every year, the Indians negotiate, the associations are in negotiations. So volumes under those acid contracts were low, which has impacted our results. So I think that we're already now starting to see a pickup in COA volumes and nominations. So I'm quite certain that this will, as I said earlier, continue as we see market improvement. Dag Holmstad, ShippingWatch. What are your 2021 expectation for the tank pool collaboration with Essberger Tankers, E&S Tankers, with John Essberger in terms of earnings and revenue? It's difficult to say. It depends on how the market develops. But what we can say with certainty that there are significant operational savings, which we are very much focusing on delivering. So on the operational savings side, we see -- as we go and the more we work together and work on driving out those synergies, we will see improvements from our earnings from our SNIES fleet. How the market will develop, it's difficult to say, but it started off quite nicely. Next one is Jonas Shum at Swedbank. You have now completed several initiatives to renew the tank fleet. When do you believe you will need to engage in a newbuilding program?At a shipping company, that's the biggest investment decision that they do, and it's the toughest one. So we have grown our fleet by -- through acquisitions, through newbuildings and through secondhand acquisitions. So we are very well positioned as we are. I'm not worried about the age profile of our fleet. I think that actually could be advantageous at this stage. So we're well positioned for a market recovery. But of course, as an industrial shipping company, we need to continuously renew our fleet. So yes, we will always look at -- we will always have a newbuilding program. The time that we are spending now is to consider the various propulsion systems that we will use when we order next stage of newbuilding. If it's now or in the future, that's really where we are focusing. And the realistic alternatives, as we see it right now, is -- it's the conventional engines that we are currently using, of course, with the fuel-efficient haul design and new engines, et cetera. But the other alternative that is really only available right now is the dual fuel with LNG. And then you can -- we are involved in methanol project, in ammonia project and hydrogen project, but it's not there yet. So -- but we are part of various study groups and are closely involved. But as I stand right now, we do not have a newbuilding order as such. Petter Haugen at Kepler. In March and the start of April, the chemical tanker spot rates looks to have flatten out or even increased somewhat while crude and product tanker rates are still very weak. How do you expect chemical spot rates to develop in the short term? It's tough to say. But again, the -- remember, we are focusing on the COAs. We're focusing on parcel business, the smaller end of the parcel size. And on the supply/demand side there, it's in our favor, and it's about time because we have had a horrible market the last, I may say, 20 years. So I think our time is coming. So short term, it's difficult to predict. We have secured our COAs. We are fairly confident of -- we have this 70% contract portfolio. What we have done is that we have -- unless it's strategic or unless it's already high-paying business, we kind of -- we are limiting the duration of the COAs that we're willing to commit to because we know that the market is going to improve. So that we are -- for us, because we are -- we have 70% contract, it is -- when the market turns, yes, we have the 30% of spot capability, we will be able to capture the market right away with that capacity. But it will take time to -- we renew contracts every month, every quarter. So once the market recovers, it will take time for that to be negotiated into our contract portfolio. So the balances should be change the 70-30 relation -- ratio. But short-term spot rates -- when it comes, it will come quickly. If it's in the second quarter or the third quarter, it's difficult to say, but I feel very confident that it will be coming soon. And then that was Petter Haugen, and the last question that we have so far is from Eirik Haavaldsen. Terminal CapEx increase, can you elaborate a little on how much of that is maintenance CapEx put on hold last year and how much is for new jetty, et cetera, or expansion? Jens, maybe you can help me on that one. How much of the capital expenditure that we did in this first quarter was maintenance and how much was expansion?

[Jens F. Gruner-Hegge]

Yes. Now that we have completed the New Orleans expansion, $16 million, that really completes the expansion program that we have ongoing. So going forward, what we have is, as I mentioned, the upgrading of the jetty at one of our Dagenham facilities, that is regular maintenance and repairs, and it is also modernizing the term loans that we have, which is a continuous process. If you want to look at the full CapEx for the year, about 2/3 of that amount relates to maintenance and modernization, if you like.

[Niels G. Stolt-Nielsen]

We're spending a lot of resources on modernizing and automating our terminals as we have talked about earlier. Thank you very much. Unless there's anybody that will be sending in any additional questions, I can't see any. That completes our earnings presentation. Hopefully, next time, we'll meet in person. If not, we will see you again on the video conference. Thank you for participating in our first quarter 2021 earnings release. Thank you.