TORM (NASDAQ:TRMD) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.

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Summary

TORM reported a strong first quarter for 2026, with TCE revenue of $286 million and a net profit of $122 million, benefiting from firm freight rates and operational efficiencies.

The company increased its full-year guidance to TCE of $1.15 to $1.45 billion, driven by positive market conditions and solid earnings visibility.

TORM continued its fleet renewal strategy by acquiring six MR resale vessels, enhancing fleet flexibility and future earnings capacity.

Management highlighted the impact of geopolitical factors, including the closure of the Strait of Hormuz, which significantly disrupted global energy flows and elevated tanker rates.

The company declared a dividend payout ratio of 58%, impacted by a working capital build-up due to increased freight rates and bunker prices.

Full Transcript

Angela (Conference Operator)

thank you for standing by. My name is Angela and I will be your conference operator today. At this time I would like to welcome everyone to the TORM first quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, please simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press STAR one again. Thank you. I would now like to turn the call over to Mr. Jacob Melgard, CEO. You may begin.

Jacob Melgard (CEO)

Thank you and welcome to everyone joining us today. We started 2026 with a very strong first quarter, delivering results that demonstrate both the earnings power of our platform and the strength of our execution in a supportive freight market. This morning we released our Q1 2026 results and we are pleased with the performance. However, before I go into the details of the quarter, I would like to take a step back and briefly talk about TORM and the foundation that underpins these results then continues to differentiate us in the market. Again, our performance was driven by a combination of strong freight rates, disciplined execution and a one TORM platform. While we remain attentive to global developments, we continue to align ourselves with market changes and believe we have a unique ability to react quickly to movements in spot prices. This is something we are often asked about. The answer is that it represents a quantifiable advantage over our peers. What we refer to as the one TOM advantage. It is now embedded in the way we operate and is a capability our competitors would undoubtedly like to replicate. Importantly, this advantage is the result of a journey over many years journey that continues to evolve. We are able to track this across a range of performance indicators. For example, over a three year period, our MR Fleet generated TCE revenue that exceeded the peer average by approximately US$200million, reflecting the strength and efficiency of our operating model through higher utilization, disciplined cost control and strong commercial execution. This culture of operational excellence is supported by our centralized management platform that coordinates and accelerates our decision making. This is good news for our investors because it means we are now extremely well placed for the complex landscape ahead and we remain confident that the shifting sense of geopolitical uncertainty continue to to present opportunities for us. Thus, it's no surprise to us that TORM Share are currently in focus among the investment community as a route to unlock value from this uncertainty. And now please to slide number four. As always, I'll start with the key financial outcomes for the quarter to give you a clear picture of how the business is developing. During the first quarter we delivered TCE of US$286million, representing a clear continuation of the positive earnings trajectory seen over recent quarters. This was significantly higher than the same quarter last year, driven by consistently firm freight rates throughout the period, which strengthened further towards quarter end. These conditions reflect a value chain currently characterized by abnormal trade flows and structural inefficiencies, resulting in elevated margins not only for tanker companies like us, but also for our customers who are capturing strong profitability across the trading and refining segments. That such dynamic performance translated into an EBITDA of US$201million and a net profit of US$1,122 million, reflecting both the strength of the market environment and our ability to convert rates into earnings through disciplined commercial execution and operational leverage, supported by the continued strength we see across our markets and the solid momentum entering the remainder of the year. We are therefore increasing our full year guidance to US$1.15 to 1.45 billion, underscoring our confidence in sustaining profitable growth. Also, we continued active fleet renewal, adding younger secondhand vessels and committing further acquisitions while divesting older tonnage after quarter end. And we also agreed to acquire 6 MR Resales with expected delivery of 4 in 2027 and 2 in 2028. These acquisitions further enhance fleet flexibility and earnings capacity while preserving a prudent age profile. As of quarter end, our fleet consisted of 95 vessels. Once all the before mentioned transactions are completed, the fleet will increase to 103 vessels on a fully delivered basis. Please turn to slide 5 before moving to the broader market, let me briefly address our current operating status. Safety remains our highest priority. We currently have one vessel inside the Persian Gulf and I'm pleased to say that the crew are doing well, morale is high and provisions are not an issue. As we will describe on this call, the market impact has been significant, tightening effective supply and contributing to the sharp increase in freight rates. Bunker prices have also moved higher. Although availability remains secure throughout this period, our approach has been clear and unchanged. We take a safety first approach in all operating decisions. Please turn to Slide 7. Following a strong close to 2025, product tanker markets entered the first quarter of 2026 with rates stabilizing at levels well above historical averages. This strength was supported by broader momentum in the crude tanker market which benefited from record volumes of cargo underwater as well as a return of Venezuelan exports to the compliant fleet and generally more cautious use of sanctioned vessels globally. And on top of this, the development was further Supported by the consolidation of the ownership in the VLCC segment, the outbreak of the U S. Israel Iran war in late February and the subsequent closure of the Strait of Hormuz marked a further and unprecedented escalation in tangle rates. This is clearly reflected in our commercial performance with Q2 average bookings to date above 70,000 USD per day across vessel sizes. Taken together, these dynamics have created one of the strongest cross segment market environments we've seen in several years, underpinned by both structural and event driven factors and kindly turn to the next slide. Turn to slide 8 please. The closure of the Strait of Hormuz had an immediate and profound impact on global energy flows. Approximately 14% of global clean petroleum product volumes and around 30% of crude oil movements that would normally transit the Strait was certainly constrained. Combined, this correspond to approximately 20% of global daily oil production consumption. In scale and immediacy, this represents the largest oil supply disruption the market has ever experienced. On the clean product side, the impact was uneven. naphtha and jet fuel were disproportionately affected, reflecting the Persian Gulf's central role in global exports, accounting for 37% of global naphtha exports and 21% of jet fuel. Under normal conditions, diesel and gasoline were relatively less exposed. As the next slide will show, only a fraction of these lost volumes have been replaced so far, underscoring how structural this shock has been. Please turn to slide 9. In crude markets, part of the lost Persian Gulf supply has been mitigated through pipeline redirection from Saudi Arabia and the UAE alongside increased flows from the Atlantic basin. However, reduced crude availability at Asian refineries has forced meaningful run costs, which in turn has sharply reduced clean petroleum product exports from the region. By the end of April, global clean petroleum product trade was down by roughly 16% as incremental supply from Western markets booked insufficient to offset the loss of Middle Eastern and Asian export crude oil trades saw a decline of similar magnitude. Despite this contraction in traded volumes, product tanker rates remained elevated. Some of this reflects longer replacement voyages and urgency premiums. But the more important explanation lies on the tonnage supply side, which I'll address on the next slide. And here please turn to the next slide to slide 10. The closure of the Strait of Hormuz caused significant vessel dislocation, with more than 200 crude and product centers stranded inside the Persian Gulf. This equates to roughly 3% of the global product Sancter fleet and 6% of the crude fleet. As vessels were rerouted toward regions where with replacement volumes, we saw higher ballast Ratios and materially increased inefficiencies. In simple terms, ships spending more time sailing empty to reach the next Cargo in the Mr. Segment increased east to west balloting was partially offset by stronger west to east cargo flows as Asian product supply tightened. At the same time, we saw an unprecedented shift of LR2 vessels into crude trading, the so called dirty ops. By the end of April, the number of LR2s trading clean products had fallen by more than 50 vessels compared with the start of the year despite the delivery of 27 new buildings. As a result, effective CPP trading fee capacity declined by around 4% even before accounting for the vessels stranded in the Gulf. Please turn to slide 11. It is however important to recognize that this migration of LR2s into crude trading began well before the Strait of Hormuz closure. Since 2025, the Aframax and LR2 segments have faced extensive vessel sanctioning largely linked to Russian crude trades. In 2025 alone, more than 200 Aframax and other two vessels were sanctioned. This has created a growing disconnect between new building deliveries and effective fleet growth. Since the start of 2025, nominal product tanker capacity is up 8%. Yet the capacity actually trading clean today is around 4% lower. The scale of sanctions is noticeable. One in four vessels in the combined airframe max LR2 segment is currently under US, EU or UK sanctions. This comes on top of an already balanced order book due to the high share of older vessels. With 60% of the sanction fleet older than 20 years. The prospect of these ships returning to the mainstream clean market even if sanctions were lifted appears increasingly limited. And now turn to slide 12. Let me frame this slide with one central point. What we are facing is not a return to normal, but a structural market reset. First on timing. The duration and persistence of the closure of this Strait of Hormuz remain uncertain despite recent diplomatic attempts to end the conflict. Currently three tango transit through the Strait of Hormuz remain more than 95% below the pre conflict levels. We don't know when transit will resume. We're not speculating on the timing. That uncertainty is real and we are managing the business responsibly with that reality in mind. What is equally important however, is what happens after reopening. When transits resume, the market does not simply switch back to where it was. There will be tarnished dislocation and significant vessel repositioning as assets re enter trade lanes that have been disrupted for an extended period. That creates friction, inefficiency and volatility. Conditions where agile operators outperform. At the same time, depleted strategic and commercial inventories will need to be rebuilt. A multi year process that supports sustained activity rather than a temporary outlet. The UAE's recent exit from OPEC enables higher production, which is likely to accelerate the replenishment of global oil stocks. It's also important to remember that tanker market strength was already evident before the Strait of Hormuz closure. Those fundamentals were paused, not erased. From our perspective, the key is readiness. We have deliberately built an agile business platform that allows us to react immediately so when the trade opens, we are well positioned to benefit from the market. Reset Please turn to Slide 13 now to conclude on the market the tanker industry today is operating in an environment shaped by an unusually large and growing number of geopolitical factors. Trade routes, cargo flows, sanctions, regimes and security considerations are all contributing to greater market inefficiency. Importantly, it's not new, but it has intensified. Since 2022. The number of geopolitical variables we are navigating has increased significantly, adding friction and complexity to global energy transportation. For the industry, inefficiency translates into longer voyages, dislocated turns and volatility. For well positioned operators like us, it also creates opportunity, provided you have the scale, agility and discipline to navigate it effectively. And with that, I'll now hand it over to Kim who will walk us through the numbers. Thank you Jacob.

Kim

Now Please turn to Slide 15 and let me walk you through some of the drivers behind our performance. The product tanker market entered 2026 on a strong footing and this momentum was sustained throughout the first quarter, supporting another solid set of results. For the first quarter we delivered TCE of US$286million, translating into EBITDA of US$201million and a net profit of US$122million. These results reflect firm freight markets across the quarter and our continued ability to consistently capture this across the field. On a feed wide basis, average TCE was US$34937 per day and by segment LR2 earnings exceeded US$41000 per day. MR has earned just under 33,000 per day, while LR1s came in around US$35000 per day. That is up significantly compared to the freight rates we had a year ago. Our TCE earnings were affected by timing issues relating to IFRS 15. Under IFRS 15, we recognize freight revenue from when cargo is loaded until it is discharged, not from when the voyage is agreed and hence influenced by changes in balance patterns. It does not impact our underlying cash earnings or the economic performance of the vessels. Again, the realized earnings level highlight the continued strength of the underlying market, supported in part by very firm crude tanker rates, which again influenced product tanker dynamics positively. With that overview in place, let me turn to slide 16 where we break down earnings down in more detail and walk through the underlying drivers. This slide illustrates our quarterly earnings development since the first quarter of 2025 and what stands out very clearly is the step up we see in the most recent quarter. While the Q1 results we delivered a meaningful uplift in earnings, continuing and accelerating the positive trajectory we have seen over recent quarters. This reflects the strength of the freight market and confirms that the supportive market conditions are translating directly into financial performance. For the quarter we generated CCE of $286 million and EBITDA of US$211, making this our strongest quarterly result since the second quarter of 2024. It is a clear validation of both the market environment and our ability to capitalize on it. The primary driver was firm freight rates, supported by strong spillover from the crude tanker sector and continued geopolitical disruptions in the Middle east which have introduced additional inefficiencies into the market. Importantly, given the inherent operational leverage in our business model, incremental rate improvements translate efficiently into higher earnings. This sets out a solid foundation as we move through the remainder of the year. Please turn to Slide 17. On this slide, we show the quarterly development net profit alongside earnings and dividends per share. Starting with earnings, net profit increased to US$122million, corresponding to earnings per share of US$1.21. Turning to free cash flow generation and capital return, it is important to note that a combination of high freight rates and elevated bundle prices resulted in a net working capital increase of around 30 million during the quarter. Against this backdrop, the Board has declared a dividend of US$4.7 per share, equivalent to a payout ratio of 58%. This reflects the free cash flow generated after accounting for the working capital build. Absent to this effect, the implied payout ratio would have been in the range of 80 to 85%. We believe this once again demonstrates that our capital return framework strikes the right balance, remaining clear and disciplined while being firmly anchored in strong sustainable underlying cash earnings generation. And now please turn to slide 18. As shown on this slide, broker valuations for our fleet stood at 3.6 billion at the end of the quarter. This reflects a continued positive sentiment across the tanker asset market and results in an increase in our net asset value to US$3.1 billion. Importantly, average broker valuations for the fleet increased by 9.7% during the first quarter, with particularly strong appreciation seen in the LR2 and LR1 segments. This development is an acceleration of what we observed the previous quarter and further underlies both the improving market backdrop and the quality of our asset base. Turning to the center chart you you can see our net interest payment debt which now stands at 894 million and this corresponds to a net loan to value ratio of 25.1%, keeping us comfortably within the range we have maintained for many quarters. This highlights the strength of our conservative capital structure. Maintaining stable leverage at these levels provide us with significant financial flexibility allowing us to pursue value accretive opportunities as we have demonstrated this quarter, while at the same time preserving balance sheet resilience through market cycles. Finally, on the right side you see our debt maturity profile. We have US$287million in borrowings maturing over the next 12 months and beyond that, maturities are modest and well distributed across the subsequent years. Overall, our solid balance sheet positions us well to navigate current market conditions with confidence while preserving the ability to act decisively on attractive opportunities as they emerge. And now Please turn to slide 19 where I will walk you through our outlook for 2026. Based on the strong start to the year and the earnings visibility we now have in the near term, we are upgrading our full year 2026 guidance. For the full year we now expect TCE of US$1.15 to 1.45 billion, up from our previous guidance range from US$850 to 1,250 million. At the same time, we upgrade our ebitda guidance to US$800million to 1.1 billion compared with the previous US$500 to 900 million. Market conditions have reached exceptionally strong levels in the second quarter supported by tight tonnage balance and continued trade dislocations. As a result, we have already secured 57% of our earning days in Q2 at a feed wide average of TCE US$71,494 per day. A significant share of this quarter is therefore fixed at very attractive rate levels, providing a high degree of near term earnings visibility. This strong coverage gives us a very solid foundation for the year and reflects the positive traction we have seen across all metal segments. Thus, this upgrade reflects two main factors. First, the strong earnings performance delivered in the first quarter and second, the very strong coverage we have secured for the second quarter at rate levels that are unprecedented for the product tanker market. For the uncovered base. We have, as usual, used the forward derivatives market as a reference and as always, the updated guidance remains subject to market volatility, geopolitical developments and potential changes in trade patterns, particularly as we move into the second half of the year. That said, we believe our upgraded guidance properly reflects both the strengths of the current market backdrop and the visibility we have today. And with this, I will hand it back to the operator.

OPERATOR

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you are called upon to ask your question and are listening by a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute. When and asking your question and your first question comes from the line of John Chappell with Evercore isi. Your line is now open.

Kim

Thank you. Good afternoon, Kim, I want to go back to the dividend slide. You mentioned it briefly, the 58% payout ratio, but would have been 83.5%. Can you remind us what that difference was? And then if it's associated with the new builds, how do we think about the payout ratio going forward? Is it closer to this 58 which was the lowest payout ratio since 3Q22, or does it return something to that 80 percentage range that it's been for much of the last three years? Hi John, thank you very much for that question. What I tried to communicate was that when we saw the market rate increase during during March, we will have days sales outstanding freight days outstanding of around, let's say 45 to 50 days. So meaning so we book the cargo the fixing, but we will get the liquidity those days later. So it means that we will not get liquidity in the same month of March, we will get that booking in April as an example. So in that sense we build up a networking capital and if you add the increase in bunker prices, that is the effect on our bunker inventory, that in itself, those two in itself equated to around US$30 million. And that was why I added it to the earning or sorry to the dividend we paid out and if you add that you will get to the 80 to 85%. So it has nothing to do per se with the resales that we bought. It is just a reflection of the networking capital buildup. When markets react as it did over one month and then over a Quarter end where we report, does it make sense?

John Chappell (Equity Analyst)

So does that mean that there's a catch up, so to speak, in the second quarter, assuming rates stabilize or maybe even pull back a little bit from the highs, is that net working capital then work in your favor? Whereas the second quarter or maybe some quarter in the second half, the ratio is well over the 80% to kind of make that timing even out.

Kim

Yeah, exactly. I think you used to think about it. So say that things were steady now throughout the next quarter. You would get it back. Would it increase for, would rating rates increase further? You would probably tie a bit more networking capital. Would it decrease, you would get it even more released. So that, that's, yeah, think about it.

John Chappell (Equity Analyst)

That's super important. Thank you for the clarification. And then Jacob, kind of strategic outlook, you talked about the opportunities that you have. You know, if there is a normalization. Also just thinking about the strategy, you obviously bought the resales. There's been a lot of time charter activity, especially in the bigger ships, LR2s. Are you still kind of fully exposed to the spot market or do you think there's some opportunities at some of these elevated levels and maybe some charters and traders reaching out for some term to get some fixed cash flows for one to five years?

Jacob Melgard (CEO)

Yeah, so we had done a few chatter outs one year, three year, we've done some forward cover for next year on derivatives when markets were, were a little hard here. That's an efficient way of us to sort of capture value, protect the level, but still have let's say the operational flexibility on our assets. So we've been doing, we've been doing that the way you describe it, of course, it's a trade off between as you can see, the elevated rate environment that we have currently and then, and then the forward projection. But, but we like to do a little of, of all in this, in this environment. So some a little shorter one year, some a little longer three years and some somewhat forward, you know, 2020, covering 2027 already now on some derivatives trades.

John Chappell (Equity Analyst)

Okay, one last one for me. Sorry if this is too many. Obviously the resales make sense in the framework of modernizing the fleet. You've been pretty active in some older vessels sales. And given the fact that older asset prices, at least on paper seem to be even higher, it was maybe a little surprising that some of those resales weren't offset with older vessel disposition. So is that just a function of trying to maintain as much leverage to the market as possible or is the liquidity in the second Hand market for older vessels. Maybe not as robust as it's been recently?

Jacob Melgard (CEO)

Oh, I think definitely it's robust. But we've simply just done. Yeah. Done simple math. We feel that our balance sheet is in pristine shape, as Kim alluded to. So I think we are. We are of the opinion that the asset base we have have longevity and optionality and also the way the market behaves with quite high volatility, it means that there can be attractive earnings in many scenarios that we look at going forward. I think it's going to be volatile and chubby. You know, in many ways we've seen that here over the first and second quarter. I think that will continue. But fundamentally we believe that this is offering a lot of opportunity for our platform. But we do evaluate exactly as you described, John. You know, what is the better sort of net present value that we will get selling an asset or keeping it with the rate environment that we predict.

John Chappell (Equity Analyst)

Understood. Thanks, Jacob. Thanks, Kim. But thank you. Yeah.

OPERATOR

Your next question comes from the line of road mortal with Clarkson Securities. Your line is now open.

Rod Mortel

Thank you. Hey guys, I wanted to follow up on the acquisition of the 6Mrs. I'm not sure if you talked about the price. You know, maybe you could talk about the price level versus let's say older ships. Right. That's probably how you thought about it. Resale value in 27 versus somewhat older and. Yeah, that's it.

Jacob Melgard (CEO)

The way that we have come to the decision of the purchase of the six resale Mrs. Is exactly as you point to that we evaluate what is the earning that we will be having on various assets, you know, in various age profiles in the coming years. We then also compare it. Basically you could say that three buckets that you could. That you could invest in if you are looking to make an investment. It would be existing ships on the water with, you know, whatever age profile that you would, you could dream up. It would be resales with relatively early delivery or it would be that you go to a shipyard and to complete new contracts. So new building contracts. And right now what we found was that we did find kind of a gap where we saw the market being attractive. From the pricing and timing of the delivery of these resales being better than paying, let's say, the same price for a deferred Delivery out in 3 years out compared to having a resale 3/4 out was just simply a better, more attractive solution for us. And also better than identifying vessels underwater where prices as also Jonathan pointed to have been creeping up as of late. So it's simple math that has driven us to that. This price point and delivery point is in our opinion the better of the three choices if you are looking at it. And we found that this one also meet our return criteria for making the. The risk adjusted return that we are looking for in any of our investments. Yeah, interesting. What kind of risk adjusted returns are you talking about? I mean, I understand it on your comments here. You basically are acquiring these ships, let's say probably less than 50 million. Right. Per ship. And then a five year old ship today is probably a similar level. Right. So you're arguing that you get more modern, better ships at the same price. Something like that. Right, yeah. And maybe you could tie it into the required Mr. Rate to get like a decent return on it. Sure, yeah. So I mean we don't disclose our forward thinking, but the way we model it exactly the way you more or less describe it, we would of course put in let's say financing our operating cost, etc. And at the end of the day we would then compare with our earning potential. And I think to say that in our modeling we probably look at about five years out and then we'll look at sort of a residual risk basis. Exactly what you also described what would be a five year old residual sort of market value at that point in time. And what I then described is that in the hurdle on that return on that invested capital is of course internal for us, but this way of making the investment exceeds our sort of hurdle for believing that that's a good investment. So we think it's a good investment for our shareholders and that is an asset that would be appreciated obviously by our customers at the time.

Rod Mortel

Yeah, understood. Yeah. You probably have a $60 million investment. You probably only need like 23,000 per day over time to get like a 10 to 12 return or something like that. Right. Anyway, shifting gears on the market, I wanted to hear your thoughts on the drivers here. Okay. Has been very, very strong start to Q2. Right. Maybe you could talk a little bit about the trade flow adjustments. Right. So you've seen refineries closing down obviously in the Middle east, but also in Asia. And now US Gulf has come up and ramped up exports and clearly adding to ton miles. But then again at the same time you've seen freight rates come off the boil, so to speak, recently. Maybe you can talk a bit about how you think rates will develop now in the short term. Do you think like there's more normalization the rates or could it final about them now?

Jacob Melgard (CEO)

Yeah. Okay. So as you point to then this sort of dislocation of the sourcing for many buyers had led to longer term. We've already discussed that. That also translated into higher margins for our customers. It translated into higher freight rates for ourselves and the ecosystem of transportation. And just recently we've seen that. I think our freight rates is driven by our customers and basically by how the arbitrages work. And you had a period where the arbitrage was tweaked, was wide open obviously leading to that when the Arab is open that customers in, let's say in Asia, Australia, East Africa, you know these areas that would normally be looking towards the Middle east for their supply, they were beating up cargoes that were available in the Western hemisphere. This has come off a little bit right now. There's been a period where our understanding is that the end users have been a little more reluctant. I think they've been looking at the situation in the straight of a movement sort of valuing, hey, you know, if we get cargo out there it's going to come faster and it's going to come cheaper. So maybe let's just cool the jets a little. So margins have come in less attractive and of course then volumes come down because the sellers of the product will then have also competing areas, more local areas that will also make a call on exactly the same chunks of products. Let's see what I think one or two would happen in the near term. Either the trade off moves actually opens and cargo volumes will increase and flow through this rate due to that. If it doesn't, I think the call on products from the western hemisphere to the Eastern hemisphere will yet again increase. Margins will widen again and you'll see that trade that. That is how I think that's the most likely that one of these two scenarios play out the current where there's no, let's say cold on products from either straight over most because it's impossible or from the west because the margins are not, how they say, sufficiently high. I don't think that is a long term trend.

Rod Mortel

Okay, interesting. Thanks for the good color. That's it for me.

OPERATOR

Thank you very much. Good to speak for your next question comes from the line of Bendig Folden from Dansk Bank. Your line is now open.

Bendig Folden

Yes, thank you. I'll just turn to your guidance for the second quarter. Obviously extremely strong, but I want to know if there's any effects we should be aware of here. Sort of unpaid balance days, anything like

Kim

that that might sort of mess up or modeling on the blocker. Yeah, we Use the methodology here. So we take Q1 and we take the coverage that we have for Q2 and then we have the as I said to the forward market to to take that as the benchmark. So you should not sort of see it necessarily as this is how we foresee the markets month by month we very much use it on the the four freight markets see that we observe the market of course we have the Q2 but then the onto stages based on. I hope that clarifies it so so it's a guidance that we are obliged to present and update and we have defined this methodology and perhaps I should add that we do that and then we stress it with a plus minus TC around that for this quarter it's plus minus 7500. It's very methodology of mathematically easy to explain and understand but that's how we do it. So plainly similar model for that. Oh it makes sense. And for the second quarter specifically utilization wise has it been like some unpaid ballasting or something like that? Yes, there's nothing that distracts the numbers as you point to Bennett. So the numbers for Q2 includes ballast when and if a vessel has had to have a longer ballast prior to the employment. So all of our numbers include the previous ballast leg included in the daily. Thank you. Welcome.

OPERATOR

There are no further questions. I will now turn the call back over to Jacob for closing remarks.

Jacob Melgard (CEO)

Well, thank you very much. There have been very good questions. Thanks for listening in. And this ends the Q1 2026 report for TORM. Thank you.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.