Welcome to the TK Group Third Quarter 2026 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At this time, if you have a question, participants will be asked to press star 1 to register for a question. For assistance during the call, Please press star zero on your touchtone phone. As a reminder, this call is being recorded. Now, for opening remarks and introductions, I would like to turn the call over to the company. Please go ahead.

Before we begin, I would like to direct all participants to our website at www.tk.com where you will find a copy of the TK Group's third quarter 2026 earnings presentation. Kenneth will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the third quarter 2026 TK Group earnings presentation available on our website. I will now turn the call over to Kenneth Hvid, TK Corporations, and TK Tankers, President and CEO, to begin.

Thank you, Ed. Hello, everyone, and thank you very much for joining us today for the TK Group's Third Quarter 2026 Earnings Conference Call. Joining me on the call today for the Q&A session are Brody Speers, TK Corporations and TK Tankers CFO, Ryan Hamilton, our VP, Finance and Corporate Development, and Christian Waldegrave, our Director of Research. Starting on slide three of the presentation, we'll cover TK Tango's recent highlights. TK Tango's delivered another exceptionally strong quarter, reporting third quarter 2026 gap net income of $195 million or $5.60 per share and adjusted net income of $176 million or $5.04 per share. To further highlight the strength in our results so far this year, For the first three quarters of 2026, TK Tango's adjusted net income was nearly half a billion dollars, which is in line with our record-setting full-year result set back in 2023. Our exceptional results were underpinned by our significant operating leverage to the strong spot market and strong operating performance. Spot tanker rates during the third quarter averaged $106,400 per day and $67,600 per day for our Suezmax and AfriMax LR2 fleets, respectively. Combined with a low free cash flow breakeven, TK tankers generated approximately and many more. and Afromax LR2 fleets, respectively, with approximately 63% and 53% of spot days booked. This puts TK Tankers on track to report record earnings for the fourth quarter and full year. I'll go over the market in more detail in the following slides. We continue to execute on our fleet renewal strategy through measured acquisitions. Since reporting last quarter's results, we have entered into new-build contracts for two Chinese-built LR2 vessels and two Korean-built Suezmax tankers, with options for two more Suezmaxs, all for delivery in 2030. Along with our previously announced Suezmax tanker new buildings, TK Tankers now has a total of six vessels on order, delivering in mid-2027 through 2030. In addition, TK Tankers has acquired one 2020-built MR tanker for approximately $49 million, which expands our footprint into an adjacent sector where we have an ownership history and where we can leverage our integrated model. Lastly, TK Tankers has declared its regular fixed quarterly dividend of 25 cents per share for the third quarter. Over the past several years, TK Tankers has supplemented its fixed quarterly dividend with annual special dividends that have been announced as part of the first quarter earnings in May of each year. For the 2026 year, the TK Tanger's Board of Directors expects to consider a special dividend in conjunction with the announcement of our fourth quarter and annual results of 2026, which are expected to be released in February of 2027. Moving to slide 4, we look at recent developments in the spot tanker market. Spot tanker rates in the third quarter of 2026 were near the record levels experienced in the second quarter, with TK tankers achieving average mid-sized tanker rates of around $87,000 per day. However, rates surged in the early part of the fourth quarter to new record highs, with mid-sized tanker rates averaging well over $200,000 per day quarter to date. These record rates have been driven by combination of elevated refinery margins, resilient global oil demand, low refined product inventories and ongoing geopolitical disruptions that have increased transportation requirements. Turning to slide five, we highlight the supportive oil market dynamics, which have helped facilitate record high spot tanker rates. A combination of rising crude oil exports from the Atlantic basin since the start of the year, coupled with more recent recovery in supply of the Middle East Gulf, has pushed global crude oil trade volumes back above pre-war levels in recent weeks, boosting crude oil tanker demand. In contrast, refined product export volumes remain below pre-war levels, due to a combination of Ukrainian attacks on Russian refineries and a slow recovery in CPP volumes out of the Middle East Gulf compared to crude. This has led to tight product market and unprecedented crack spreads which have incentivized refiners to maximize throughput, supporting crude trade volumes and sustaining demand for tanker transportation despite higher freight costs. However, we should note that refining margins over the past month have decreased from record levels, which is one of the reasons why freight rates have now moderated from the very high level seen in September and October, though they remain at historically high levels. Looking ahead, tanker demand in the medium term will largely depend on how the geopolitical factors currently impacting crude oil trade patterns develop in the coming quarters, particularly regarding the conflict between the US and Iran. However, we believe that the need to rebuild depleted oil inventories should support tanker demand once oil supply normalizes. Turning to slide six, we provide an update on the Strait of Hormuz and Red Sea disruptions and their impacts on voyage distances and trade efficiency. The recovery in crude oil exports from the Middle East Gulf, which has relied on increased use of ship-to-ship transfer operations and alternative routes that bypass the Strait of Hormuz, as shown on the slide, has extended voyage durations and reduced effective vessel availability since the start of Q3. In addition, an increase in attacks on ships transporting Saudi Arabian crude oil in the Red Sea has led to the redirection of oil flows from the port of Yanbu northbound via the Suez Canal and Sumat pipeline rather than flowing south via the Bab el-Mandab Strait, which stretches the fleet as it adds about 30 days to the voyage length. These changes have benefited the VLCC market the most, but there's been spillover into the mid-sized segments as charters have increasingly used smaller tanker classes to move cargoes long haul, as shown by the chart on the right of the slide. At the same time, growing crude oil movements from the Atlantic to the Pacific and strong arbitrage economics have increased ton-mile demand across multiple tanker segments. While freight markets have started to moderate from recent peak levels, as vessel positioning normalizes and supply chains adjust. We believe that underlying market conditions will continue to be supported by seasonal factors, ongoing trade inefficiencies, and geopolitical uncertainty, although perhaps not at the extreme levels of September and October. Turning to slide seven, we look at medium-term tanker supply fundamentals. Tanker deliveries are projected to accelerate over the next three years as the current tanker order book delivers. However, the order book, which is currently equivalent to around 25% of the fleet in the midsize segments, is largely offset by an aging fleet with 22% of the fleet already older than 20 years of age and a further 20% reaching age 20 by 2030. We believe the eventual removal of these older vessels should help in reducing the impact of rising tanker deliveries in the coming years. Net fleet supply may also be impacted by developments in the shadow fleet of tankers and whether these vessels will be permanently excluded from non-sanctioned trades or will return to regular trading. We believe that the scope for shadow vessels returning to the legitimate fleet is very limited, particularly for older vessels with around 70% of the tanker fleet over 20 years of age. These vessels have been operating outside of mainstream channels for many years with little regulatory oversight and will therefore have very high barriers to clear in terms of maintenance and vetting before they could be brought back into regular trading and with no guarantee that they would be accepted by charters and terminals. Turning to slide eight, we continue to create value and have significant financial strength and optionality. This includes first, Our ability to generate significant free cash flow with a low free cash flow breakeven. With the majority of our vessels trading in the spot market, we generated nearly $15 of free cash flow per share for the first nine months of 2026. Further, with weighted average fourth quarter to date rates booked and others. We have sold 236,000 dollars per day, more than 30 times our free cash flow breakeven. We are positioned to generate exceptional cash flow in what is shaping up to be a record quarter and year for the company. Second, we are executing on our fleet renewal strategy by selling older vessels in today's high asset price environment and recycling that capital to acquire more modern vessels in a disciplined manner. Since the beginning of the year, we have sold four vessels for $211 million with combined gains of $78 million and acquired or committed to 10 modern vessels for approximately $716 million, which includes six new buildings delivering in mid-2027 through 2030. These transactions have lowered our average fleet age while maintaining significant operating leverage to the strong tank. Third, we have significant investment capacity even after our remaining committed new build payments. This allows us to incrementally progress our fleet renewal requirements while being patient for larger transactions in the future at more attractive entry points. The tanker shipping industry is capital intensive, cyclical and increasingly dynamic and we believe having significant investment capacity provides financial flexibility to pursue opportunities swiftly when the timing is right. While the near-term tanker market will remain sensitive to geopolitical developments, TK Tankers enters the fourth quarter from a position of exceptional strength. With record rates booked to date, a low cash flow breakeven, a debt-free balance sheet, and significant investment capacity, we're well positioned to deliver record results in 2026, continue renewing our fleet, and create long-term value for our shareholders. With that operator, we're now available to take questions.

Thank you. And if you're dialed in via the telephone and would like to ask the question, Please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star 1 to ask a question. We will now go to your first question, coming from the line of John Chappelle with Evercore ISI.

Thank you. Good morning. Kenneth, this is slide eight. The strategic fleet renewal is exactly where I wanted to start, and you laid it out pretty nicely here. Sold four vessels, obviously older, for 2011 and acquired four extra new buildings for less than that. So it seems like there's still this incredible opportunity in a market like this for obvious reasons. You still have 20 plus vessels, I think, that were built 2011 or before. So how do you balance taking advantage of this, again, I hate to use the same words, incredible arbitrage opportunity to monetize older assets that may not last versus generating cash with those assets in this market?

Yeah, I think that's exactly the right question to ask any tanker company, certainly those of us with the feed profile that we have today, John. Clearly, that factors into exactly all of the decisions we're making at the moment. As you point out, you could today probably sell an 18-year-old Suez MAX Tango and go out and buy a brand new one delivering in four years, right? So that's the incredible art that you're talking about. What we're also seeing is that we have the strongest front end of the curve that we've ever experienced in the Tango history. of course that's what you're factoring in and what we're seeing is on some of these very high prompt values is of course it's about having the ship in the right position for the right voyage where you can clip a couple of voyages at and generate extremely high cash flows and that's what you're seeing when we see some of the reported numbers on the second hand value so it will always be a balancing act between trying to cash convert if you wish some of the Thank you very much. Thank you. and many others.

You mentioned the four-year timeframe for delivery and you have these new 2030 deliveries that you just announced today. Should we take that as an indication that you'll continue to recycle potentially some of the olders to eventually be offset with those new builds or those kind of viewed completely independent transactions?

No, I think that's right. When we look at our fleet profile, we have a number of our ships that will reach the age of 20. We don't have any current plans of trading them beyond 20, and they're going to reach that over the next two or three years. So we know that we will be selling ships. We're just trying to pick the best time to do that. Some of that capital will obviously be recycled into renewing the fleet. and the pace of it, we can kind of slow down and speed up on that depending on what our market view is. But we will for sure be selling more ships in the coming 12 months. I'll be very surprised if we don't do that. So it's going to be very active, right? Buying and selling and spot charring out and we may be looking at time charters at some point as well. I think it's the whole playbook that's being brought in for the next number of quarters here.

Okay. Final one. Feel forgive me. I missed the last call, so I get a bonus one today. The MR, obviously it's just one, and you had MRs in your recent past, but it is a little bit outside of the core knitting and scale that you have with the midsize crude carriers. Was that just a one-off opportunity that was kind of too good to pass up? Or could we expect some of this cash recycling and potential asset value ARB to be focused more on Product Anchor going forward?

Yeah, first of all, I think it's a good ship. We bought at a good price, which we're happy with. We think we can create some value around it. Secondly, I think as we've talked about a little bit in the past, if we were to expand the sandbox, the adjacencies here, What are they? Where do we feel that we as a company can add the most value with our integrated model? And I think we've certainly, we've always viewed it that way, that MRs being more operationally intensive is probably the segment that lends itself the best to our operating model. I think having a larger sandbox that we can play in on, especially as it comes to acquiring ships on the water, I think That's where we saw a relatively better value, to be honest, on an underwater MR compared to underwater afromaxes or suismaxes for the time being. That can change, but the reason why we bought this one, I think, was more to build back the capability to really operate MRs again. I mean, when you don't do it, you don't have your DOC in place. And now we're putting that in place. We get seafarers on board. And that means that if we see opportunities in the product space in the future, we'll be able to act on them more swiftly. So I think it's more an option we're creating. It's more starting to exercise a muscle that we haven't exercised for a decade here. I wouldn't read more into it for now. We have no stated plans of building a big position in AMRs, but if we see the right opportunity, we'll go for it.

Great.

All right. Thank you for the time, Kenneth.

I appreciate it.

Thanks, John.

Your next question will come from the line of Omar Natta with Clarkson Securities.

Thank you. Hi, Kenneth. Thanks for the update. I just wanted to maybe follow up just to touch on your latest comments regarding the MRs in response to John's question. Yeah, just thinking about it, you know, it's been 10 years since you've had an MR. You've got this one. And I guess just kind of thinking about your comments about looking to recycle some of the older Steward Maxes and After Maxes and potentially redeploy them in new buildings, I guess it's a thought as you think about TK from here, it's recycling your core business and just modernizing it. but then this MR potential and expanding in that product segment. As you get your feet wet, as you were kind of maybe highlighting and just building it out, was it thought maybe to use your existing cash, you know, balance sheet overall and maybe invest in that segment for growth? Or would you see yourself, you know, scaling out of the midsize vessels that are older and maybe redeploying those proceeds into the MRs?

No, first of all, I would say our Afromax, Suezmax sectors are still absolute core for us. So I would say this is more a reflection of that we have a larger balance sheet. We're keen on continuing to try and find assets where we feel we can generate the most return. And we believe that by having Three strings to play on here. We increase that optionality and in terms of finding opportunities. So it's more that and I think it's a reflection of that. I think we've said in previous calls that our total fleet size today is probably at the lower end of where we want it to be as an integrated company. So this gives us flexibility to rebuild the scale of the fleet and at the same time, Thank you very much. Thank you. We're obviously very excited about having basically a larger market to play in.

Yeah, certainly. And I guess maybe as you think of, you know, it is just one MR, and so to kind of rebuild that expertise per se, do you think kind of in the interim as you look to acquire assets along the way, is in-chartering going to be something more substantial in this segment as we look ahead here for the next couple of quarters as you perhaps expand your footprint and product?

I don't think so. At the moment, as we look at the markets, historically, we've been in charters, out charters. We've kind of done have done it all. But at the moment, I don't think our focus would be on in-chartering tons. We're probably more looking for opportunities where we can buy good assets and maybe out-charter them. We haven't exactly decided how you're going to operate. Obviously, it's not a big spot fleet to have one tanker, so we may be looking for time-charter opportunities there as we go along and until we get a bit more scale. But again, we are We're doing this because it's a capability we want to build and we want to create the optionality.

Thank you. Yeah, makes sense. And the final one, then I'll pass it back. Maybe just on the special dividend you highlighted in the presentation, the board's going to evaluate in February after 2026 results. Is this something, as we think of it, is this sort of a, you know, because you normally declare it in May following one key result, should we view this as just the and many more.

We discussed it with the board. It makes more sense to tie it to the full year result as opposed to coming out with it after Q1 in our view. And so we're just moving it forward. So there's nothing more to it than that. Okay.

All right. Well, thank you, Kenneth. I'll turn it over.

Your next question comes from the line of Ken Hexter with Bank of America.

Hi, this is Adam Ruszkowski on for Ken Hexter. Thanks for taking our questions. So maybe just one on geopolitical thoughts and U.S.-Iran conflict. If there is a move towards resolution, how are you thinking about the net impact of tanker demand from rebuilding inventories versus the kind of ton-mile impact of shorter routes from that standpoint? Any thoughts there? Thanks.

Yeah, I'll let Christian speak to that.

Yeah, I think Obviously, first of all, it's still a very volatile situation. We're still seeing attacks daily in the Hormuz region and we're still seeing attacks from the Houthis on Saudi oil infrastructure. So I think we're a ways away from a resolution to the U.S.-Iran situation. But if there was a peace deal, you know, there's two sides to it. On one hand, you wouldn't need to be doing the sort of shuttle movements out of Hormuz anymore. The oil could flow more freely. So it would be a bit of a more efficient system. But at the same time, I think there's quite a big desire to get both crude oil and refined products out of the Middle East if the war was to be resolved. And so I think you would get OPEC producers pretty quickly ramping up production on top of the expected non-OPEC volumes that are coming on next year. And like you said, I think if that creates a bit of a softer oil price environment, there is a a big need to replenish oil inventories as well, which have been depleted through the course of the year. So I think you would lose a bit of the inefficiency that's been propping up the market the last little while, but you would probably gain more volume. And like I said, I think that need to replenish oil inventories could be quite a nice tailwind once the situation is resolved in the Middle East.

And I guess just WTI falling about 20 bucks over this past couple of weeks. Are you seeing any of that? kind of replenishment need happening now. And just thoughts on maybe damage done to refinery capacity in the Middle East and maybe longer term, near term ramifications from that standpoint.

Yeah, in terms of the fall in oil prices, I don't think we're seeing it yet translate into a lot of stock building. What I would say is Chinese crude oil imports have gone back above 10 million barrels a day or close to 10 million barrels a day as of last month. So I think that's a sign The Chinese especially are quite price sensitive, so I think it's a positive sign that they're starting to import more oil again. And certainly if oil falls more, I think you'll see an acceleration of different countries and refiners looking to replenish those inventories. In terms of the refinery damage in the Middle East, yeah, I think that's one reason why the product exports out of the Middle East have lagged the crude. I think there is progress on that front. I read recently the Citra refiner in Bahrain is on the verge of getting back up to 100%. So it'll be a little bit of a slower climb back for the refined products out of the Middle East than it is for the crude. But my understanding is that those repairs are underway. And as those volumes come back, it's going to really help the product market, especially given that a lot of ships have migrated over to the dirty trades during the course of the year. So I I think that product market could be well set up once those volumes from the Middle East return.

Got it. Thank you.

And it appears there are no additional questions at this time. I'll turn it back to the company for your closing remarks.

Thank you very much to everyone who dialed in today. We look forward to reporting back to you on our full year 2026 results when we report in February. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.