Q4 2019 Earnings Call
Please continue just standby.
Thank you for your patience.
I would now like to turn the call over to Hugh Baker, Chief Financial Officer. Please go ahead Sir.
Thank you operator, thank you all for joining US today welcome to the Scorpio Bulkers fourth quarter 2019 earnings call.
Nicole with me or my mother allowed ROE Chairman and Chief Executive Officer, Robert Bugbee, President and James Doyle Senior financial analyst.
Earlier today, we issued our fourth quarter earnings press release, which is available on our website. The information discussed on this call is based on information as of today generally the 27th 2020 and may contain forward looking statements that involve risk and uncertainty.
Actual results may differ materially from those set forth in such statements.
For a discussion of these risks and uncertainties you should review the forward looking statement disclosure in the earnings press release that we issued today as well as Scorpio Bulkers actually see filings, which are available at www Dot Scorpio Bulkers Dot com.
For Www Dot FCC Dot Gov cool participants are advised to the audio this conference call is being broadcast live on the Internet and is also being recorded for buyback pumps is an archive of the web cost will be made available in the event section of the Investor Relations page.
Our website for approximately 14 days after this call.
There's also a supplemental presentation, which has been uploaded to our website that is complementary to the earnings press release.
Now I'd like to introduce him I'm one of the lateral.
That started in early September when the media I was speaking at levels exceeding 2005 underperforming.
While the correction was expected and seasonal.
The extent to which these correction as county was greater than expected for several factors.
Yes, again geopolitical factors have impacted our markets in a meaningful way.
The Corona virus is the latest development, which raises uncertainty and concern.
Like the rest of the World we are looking at how these situation we've done.
The impact all I'm old 2020 , he's starting to become a pattern.
Specifically defeat experience the near 100% increase in future calls.
Turning to switch from high sulfur fuel oil to comply and fuel.
Great that's been unable to reply.
To the new fuel set top.
Rising questions as to walk market balance we are presently experiencing.
Welcome to Belamant somebody's effect is the bifurcation in the fleet.
And the relative advantage, but I wouldn't modern eco tonnage.
You can only in the longer hold right.
Aside from the but older macro impact we remain hopeful well the improvement in the outlook for the 40 billion dollar a year, China U.S. agricultural exports sector.
Which would be a welcome boost to our to meet Sally segment dry cargo markets.
As far as what we can control goes we continued our oxy balance sheet management, making opportunistic sales of tonnage, which we hope to be able to conclude and announced in the next few weeks.
Even the current share price, we believe these to be value enhancing to shareholders.
I want to scrubber program is proceeding with paid back says that thought a mouse cropper installed and working.
He is currently being retrofitted that present that the yards.
And the expectation is to get to 28 vessels installed before the end of the second quarter.
We remain confident in our investment in sync and we will continue to look for ways to Shadow. These returns with our shareholders going forward.
The freight environment testing, our markets again, but even our strong position in the market. We are confident in our ability to benefit from improvements in the dry cargo markets going forward.
With these I would like to turn the call Robert.
Hi, Good morning, everybody I, probably said this morning everyone's going to.
Some other unfortunately stuff going on in the World are we going into the question just really like to sort of.
So I was thinking at the moment I think we're quite pleased with the earnings guidance, we give them for the Q1, so far showing that certainly in a smaller sizes.
We're doing much better than the then the Cape market and that's no as a result, a new exposed fall more to the general World economy, and Melty cargos as opposed to one we do as a materials says expect later in the yet to get some benefit to pick up of the try and trade agreements.
But for the time being is we.
Finish off the balance of this first quarter, and we and we deal with that situation is happening in China at the moment.
We're going to take it very conservative view to our own potential cash flows and manage that balance sheet and cash flow accordingly. So.
You know we would we would let say you expect.
There would be a weaker environment for the next you know for the balance of the revenue booked in this quarter. Despite the fact.
Good for stop now.
Rather not expect but we would budget for that so yeah, we would suggest that you.
You know analysts and investors do the same place safe until further notice some with that I'd like to pass it over to Q.
Thank you, Rob, but I'd like also to refer you all to the supplemental presentation, which has been uploaded this is complementary to our earnings press release.
In the fourth quarter the company made a net profit of $15.1 million.
We made a profit per share of 21 cents per share. This primarily includes again and dividends totaling 46 point sixmillion, well 66 cents per share.
<unk>, primarily related to the Scorpio tankers investment.
It also involves a write down of assets held for sale of 25.2 million or 36 cents per share related to the four vessels, which we are classified as held for sale.
In the fourth quarter, we made earnings before interest taxes, depreciation and amortization EBIT EBITDA of 66.7 million and cash flow from operations was 11.2 million.
During the quarter, our Ultramax vessels have time charter equivalent earnings of $11244 per day, and I'll Kamsarmax vessels had time charter equivalent earnings of $11934 per day.
Earnings in the in the first quarter show Ultramax vessels, I think $10505 per day for 49% of the days to date and all kamsarmax vessels, earning $12242 per day for 57% of the dice to date.
As mentioned earlier by men Wiley, we've installed eight scrubbers on our ships to date and we expect to install 20 have 28 vessels installed with scrubbers by the end of the second quarter.
As of today January 24th the company had $65.9 million in cash we have no restricted cash in the cashes freely available.
And as of today, the company's board of directors declared a dividend of two cents per share.
As of today.
With that I think we can open the call up for questions.
Thank you, ladies and gentlemen, if you like to ask a question. Please press Star then one on your touched on telephone.
Oh your question press the pound key.
Standby will be compiled acumen any roster.
Our first question comes from M. <unk> with Deutsche Bank. Your line is now open.
Hey, Good morning, this is Chris I dropped from it.
So you know you guys kind of laid out there's obviously been a bunch of headwinds facing drybulk market.
No I was getting the seasonal headwinds of the lunar new year and now the virus outbreak, but has the higher you know the moves to higher cost fuel and thus the higher cost of Transferees protection is that really been the big driver.
Yes, it did feel like the market kind of accelerated downward in about mid December when you know what I imagine that the market shifting over to the low sulfur fuel.
I think that you know the marketed it shifted down for those reasons I think general.
Sentimental. So I think you had an early a full because Chinese new year was set early in the calendar. This year. So you know it was likely that the market started to weaken across the whole the dry cargo space.
Earlier results to the early a Chinese new year.
So like a double combination.
Okay fair enough that make sense and then have you guys notice.
Any slowdown in the global fleet over the last couple of weeks just in response to obviously charter rates started very low level and then fuel costs or you know have gone up a lot. I think you guys said in the prepared remarks or dropped 100% year on year at least as you guys are paying it. So you know has has there been to slow down just to kind of try to rebalance the fleet.
It's it.
Well I mean, all ships are old you know sort of very very modest an eco ships. So you can see from our rate structures that we booked a so far we wouldn't have.
Slowed them down, but you certainly at that point, especially if we look at the Cape market and we look at older vessels in.
Our markets, where I would I would imagine although I don't have a speak of against right in front of me that they wouldn't be starting to slow down.
Okay, and then maybe just one last one if I could I think the bookings came in at.
Healthier level I think that most would've guessed I'm just kind of given what we're seeing a in the broader market could you I know you I think you only said eight of the vessels have scrubbers today, but could you maybe provide any color on you know kind of how those bookings breakout between scrubber and non scrubber vessel. Just so we can kind of you know go to feel for the premium because obviously you know throughout the year. The whole market you know is moving.
Towards that higher yeah, I I think I think that really too early at the moment I mean, partly because.
It's not actually that helpful. Right now we would see in doing it because.
Your oil earnings in this first part that we've reported Oh.
You know a little bit messed up between yes. The vessel was crop as the when that its dog when did other vessels how long would they allow to use the high sulfur fuel on board compared to different positions and other vessels that were going to dry dock.
And Offhire fourth scrubber installation this quite a met so it's not really useful you're not going to see the full effect of scrap of differentials across any of the shipping markets.
Until they really start seeing the.
The second half of the 50% to the quotas book because remember the earnings that we report now so much of it was related to.
What a ship was doing in December [noise] right to win the see about 2020 came into effect on December 31.
Oh, Yeah, a lot of moving parts for sure I. Appreciate the time does for me. Thank you.
Thank you.
Thank you enter next question comes from Omar knocked out Mccarthy with Clarksons Platou Securities. Your line is now open.
Hi, Thank you yeah, maybe just onto that they are that last question just regarding the outperformance obviously too early to tell you know regarding scrubbers and there's a lot of noise, but maybe could you give us some perspective on how you were able to achieve that outperformance isn't a vessel positioning or I think I'll take that.
I think the back so position, hey, I mean, it wouldn't be adverse it being a headwind to our outperformance because we would have been on the margin.
Positioning vessel to have scrubland switches inefficient in itself, what we know when youre, creating youre, creating deviation. All you have chartering apartments that are having to take voyages. They may not naturally take commercially because they're trying to feed it into the technical side. So I would put the.
Outperformance just.
Fundamentally down to solid chartering the didn't make many areas, but I would put it really down too.
The fuel efficiency of the vessels themselves being new in a very high priced bunker environment. So regardless of whether you have scrubber spreads or not the actual totaled bunkers, whether you weve using high sell for all low self.
We're just much higher than they've been before so this is really being the first quarter that you've ever seen the actually matters that you've had eco ships to start with.
I think that you're going to start to see this is gonna be the difficulty of your job as analysts is it, especially as the scrubber differentials open because you're going to have for different types of vessel you're going to have.
Vessels that a modern eco vessels with scrubbers.
You're gonna have Martin Eco vessels, then you're going to have older vessels with scrubbers, and then you're going to have older vessels on all floral those will have different returns.
Exactly the same market point.
Yes.
Yeah, Indeed, yeah, that's not a lot of differentiation becoming more apparent.
Yeah, maybe just then just another question I have as you know obviously you you disclose the available for sale on the on the floor Ultramaxes. No. This follows last year selling to cancers and also to Altrus kind of any any updated thoughts are reasoning. Why are you guys have made the decision to sell the a the four ships.
Sure because we are very you know we've taken a view that we believe that the.
No that Nick the dry cargo marketing general and the smallest ships I think.
Our market probably little bit ahead, and then the bigger markets and that's but they're in a recovery point, we need a little bit of the menu appointed to continued balancing in the supply side.
We getting that you know order book is has been declining deliveries is slowing down but in the meantime.
The recovery in the dry cargo market. It market is still work in progress, whereas the product tanker market. The the Scorpio Bulkers is you know talk shareholder and is.
Is you know in full time, it's already turned to a bull market.
And it's doing very well, so we would expect that.
As we've said we would get a continuing strong returns from the investments itself is made in this thing.
But at the same time, we're very cognizant that we're still in a market in dry cargo.
That is is.
One to be careful with so therefore, it's important to maintain.
Balance sheet strength, so we would given the opportunity you can see from all cash on hand, we're not desperate to sell and we have $60 million cash on hand, but we would given the the up.
The opportunity to.
Sell these vessels.
And you don't see continued strategy from the last 15 months.
Yep and it's just a final final thing on the on those would this have scrubbers are just sold out right.
No that know about like those trials growth.
Yeah, you know when it gets linkages that's gives us lots of positions I mean, when you're trading.
You know you're trading very low below a navy in a in a basic marketed brought cargo that but not really you know we didn't expect to go anywhere for little a little period.
So keep strong.
Yep.
Okay, Yeah. Thanks, Robert Thanks, guys.
Thank you and our next question comes Randy Givens with Jefferies. Your line is now open.
Howdy gentlemen, good morning.
Right.
Looking at your scope installations that seems like some have slipped from the fourth quarter to the first quarter and beyond you know now into 2021. So what's the main reason for this and what does your average number of off hire days per scrubber retrofit.
That's a good question Randy I'm unaware that here.
The average a retrofit they purchased Cropper peas 25 days. These he's deep worth talking about a technical from a technical standpoint only.
Unfortunately, the industry is experiencing a massive retrofit, which doesn't only go or involves properties, but also ballast water treatment systems and in addition to that agrees that normal scheduled drydockings for the fleets that meets those requirements and then.
This has impacted negatively the delays at which the yards mainly in Asia Hot accommodating the bookings for companies like ours, which has three boots that spaces to retrofit that its crabbers so from that whilst from a technical standpoint.
We have not experiencing he shoes or Elaine.
Turns out that the all five yeah, that's oh.
Yeah average of fire of the fleet.
Scorpio Bulkers he's closer to the 40 day Mark.
Or ascribed retrofitting as I said.
25 of which are a technical stoppage and 15 are spread around.
Waiting time ought to be legs to get out of the yards or nor Oh, no adult normal topic I'd say so.
So this is unfortunately, what we are experiencing.
Sure seems like that trend across the industry I'm not just you but.
I guess in Iraq Neely.
Okay.
Sure.
All right and then I guess for Robert since you bought up salts top investment being thing shares any updated thoughts on your ownership of those shares is the plan to continue distributing them as special dividends and if so would that be an annual especially dividend or could there be kind of additional distributions in the coming months or quarters.
We haven't got anything further to add on that we're not going to do it for the time being I mean, we think that.
Well first these thing is to to significantly undervalued and we don't see you know we don't even want to put the thought of.
You know add any pressure to Sting says by you know the thought of some of the comments last time, we distributed shed so.
We're not going to do anything at this particular or point.
It is there some kind of a formula or timing for when you would or is it just kind of AD hoc see how the market does.
There is no formula no food no timing a tool.
There was a very nice thing would to.
Share some of the gain is that with all shareholders and we don't think the do you know the it's appropriate to to do that well this quarter. When you know one it is a very very weak quarter in the dry cargo market and the this and the this particular point.
You have a very short you have a short time trading weakness to a thing so you're not really getting value in either way to do it at the moment.
Okay, that's fair well thanks, so much.
Thank you.
Thank you. Our next question comes in Greg Lewis with BTI G. Your line is now open.
Yeah. Thank you and good morning, good afternoon, everybody I guess I had a question around phase one of the other China trade deal and kind of.
I mean like what you're hearing in the market, obviously, it might still be too early to see noticeable impact from this but just kind of you know how maybe as how we should be thinking about that just given the time in and yeah, and any kind of color and that would be helpful.
Well I don't think we've seen I mean, you annualize. This plays we have nothing we've seen any benefit at the moment you know when a little bit off season to do that I think that the you know the main benefit in management is the you know we are.
The money alluded to the introduction that we do think there was a more stable demand environment in the future, which makes us very hopeful.
You know as the supply side is getting more and more constructive it it makes us very hopeful.
In the future that we hit we will have a demand side that is going to.
Normalized will benefit from a better trade environment, and especially in the agricultural side of trade between the U.S. in China.
And that will be one of the smaller vessels will be one of the most immediate beneficiaries of that.
Okay, Great and then just one on.
Yeah. It obviously terrible news about the Corona buyers it seems like it's gaining momentum.
Is there any has there been any impact yet and from a shipping perspective around that is is there any kind of.
Things, we need to be thinking about or is it kind of still too early to tell and really no impact I guess I would wonder you know in previous epidemics like this as well has there been has there been a noticeable impact or something that is kind of been managed or through the by the industry.
Well I think all these things a different you know China itself is a different set up to what it was when.
You know the last big one and saws, but.
I think it's fairly clear to say the what's going on right now is not a positive.
No the positive thing for.
Imports of a.
Dry cargo commodities into China rule that area.
So as we said on the I'd say I set out in introduction I think can tell fairly further notice the company itself is going to manage and budget in a in a more conservative way.
And the than let's say the guidance we've given.
For the book days of the quota.
Would it would indicate where the market is so I think it will be prudent thing to even though we've had no effect, we see no change in the market, it's way too early to tell.
The easiest thing to do is too you know is it's prepare for the west and hope for the best.
Our perfect. Thank you everyone for the time.
Okay.
Thank you. Our next question comes from Jonathan Chappelle with Evercore ISI. Your line is now open.
Thank you good morning, Robert I want to follow up on that.
Last question as well clearly it's too early to say what the impact is gonna be but as it relates to your operations. How many of your ships or what percentage are fleet and I know what changes in your very flexible assets, but.
To a rough extent, how many sure operations kind of flow through the Chinese ports, and maybe a part b to it to importantly, as it as it relates to your scrubber schedule do you foresee any potential delays or issues with the yards that are installing scrubbers in China, pushing those those schedules back meaningfully.
Well I think the great questions fit all I'll try one at a man who could you not good go for two of them in a number one is.
Look we do we are more diverse.
And you know what we're saying it in a very you know.
So.
<unk> com pragmatic way, obviously, the smaller vessels are not.
As dependent upon China trade.
As the Capesize vessel is <unk>.
Nevertheless.
You know in China is still a very very important part of that equation and dry cargo confidence, but generally what happens if there's a a crisis of oh potential concern of economic demand just as we've seen now in many ways not a crisis, but every time you go.
Go into Chinese new year, the dry cargo in general whether or not you've got capes, all kinds of Max's or ultramaxes.
Gets weaker now it's got we kept between December and and on November and this first quarter.
You know sizes.
But not as weak as Kate so that's how I would describe you know that's why I've described the previous comments that.
You know, we should we should do.
We should just be a little bit.
Little bit conservative and walk through what is going on out there until we get some profit data.
Related to what this virus really is going to entail.
And then you'll any impact on the scrubber schedule as you see right now.
Okay.
Impact due to sorry, John .
Do any potential closures.
The facilities are actually buying.
<unk>.
Sorry, we're taking a measure is and we are now actually.
Establishing which measures to take we have nots.
We have not come up with the Salon.
Definitive plan, yet that's over the weekend.
We started planning on which measures should be taken in accordance with the local authorities. We try to really the ones that are guiding us in order for us not to.
Either be overly conservative for even worse over permissive portfolio than about it. So we started taking contacts and making sure that the teams that we have locally our wed look softer and supervise and make sure that Oh, we don't take any risks.
Now so far John this is not impacted.
Anything that the yards I can say he led.
The workloads and the work force is.
Proceeding as normal however, whether this would be the case, if the outbreak gets worse who knows.
Yeah I completely understand.
Yeah.
I'm sorry to be thought we're sorry, just general to be so.
[noise] go [laughter], so sort of let's say unclear and this is but we really clear that fit the best but best thing to do whether you're estimating are running a company here is to be little bit prudent because.
Your job I don't know right.
So what happens is.
Yep completely agree a and then Tonight.
Hey, as the DNA or you know, we would be conservative, especially facing these measures rather than mills.
And when he talked about has and what he is about lives that you would expect our group to be or you know definitely more overly cautious rather than pulled in the open about right.
That's a perfect segue to my second question, you know who spent a lot of time in 2016 really getting the balance sheet an order during the last real deep downturn in the industry and that puts you in a position of strength to the first half of last year, when they're somewhat anomalous factors that were really punishing the drybulk market, but as you go into this period of uncertainty with maybe.
You know anomalous, but also maybe some cyclical or secular headwinds facing the drybulk market you've already identified the four ships you planning to sell.
But what do we expect you to maybe take some other proactive measures to shore up the capital structure, whether it be straight asset sales or a sale leaseback transactions.
John John Let me answer that.
I'll I'll I'll say on the balance sheet side.
You know we continue to be proactive on the asset sale side I'll, let them when they come in.
No I I I'm you know I was just saying I think thats first of all we had a very different company today than what we were in 2010 and 15 beginning 16.
I think that we have plenty of leveraged to pull in order to remain.
And to maintain a strong balance sheets.
That back at that time, we had to be it is a strong balance sheet, the Siamese about months and making sure. We maintain it. So you know it's no coincidence that we announced we have four ships out for sale and.
Where just cautiously.
Making sure that.
You know we are ready for any.
Sort of sonata and.
We have a big investment in saying we have a.
A modern fleet we cheese.
Supposedly easy to sell.
You know because the she our beside the sheets that everybody wants to buy these studies are interesting.
In dry cargo. So you know we are fairly rely even though we are actively monitoring the situation. That's the way we described.
Yeah I would also look at a you know they generally to add to them and he was saying is look we have cash on the balance sheet. We pre empted. We spent a long time in ensuring that the balance sheet is being strong and strong too.
You know, we didn't expect to two to deal with a.
Let's say a virus, but certainly you built it to deal with it any sort of financial meltdown all currency crisis. You you have not just the cash on the balance sheet, but every share in staying is.
You know is on leveraged in pool accounts so.
You know that there is.
Definitely span liquidity capacity in the company without doing resorting to ship sales or stock sales.
So you know we've got a long way to go and where we're prepared so we're not saying.
What we're saying today in any form of warning all or trying to sort of panic people would just saying what do you just have to be sensibly doing here is that yes in the long term, we break constructive in the supply side and what's happening in demand in the factor you hopefully does the new really new fleet out there.
We'll have scrub if it did and that's fantastic.
But we're also conscious that we just don't think is the right thing to rely on the fact that that Fausto. Good start the many of you and we give thanks to that have credits is with.
In the first 40% to the quota.
You should rely on that going forward for the balance of the quota that's really what we're saying.
It's completely understood and I'm, sorry to ask one more follow up I think it's important so just given everything we just talked about that background on the uncertainty yes, maybe two months ago. If you were to sell these ultramaxes he would say well our stocks trading at a 30, 40% discount any b. We're monetizing these assets, we're buying back our stock because that's a good investment.
Because of the uncertainty today in the market do you say, we take these proceeds we pay down the debt associated those four ships and then we build the cash balance to be conservative.
Yeah, I think you've got to you know I think that.
I think you've got to respect today for sure, let's see what the virus screen exactly next week.
That today today for sure. That's what you do you don't start to buyback on on hopped on said market, even though it may be a great investment because the stock is down more than 10% alongside a lot of that but I cargo stocks today, you're just wait and see you don't want to be.
You know a hero next week, you want to be prudent and be the buy and bill to maintain the balance.
Yeah, I think that's.
All right. Thank you very much for your time.
Thank you.
Thank you in our next question comes from Penn Nolan with Stifel. Your line is now open.
Hi, guys.
A couple of things one I was just trying to back into the math maybe you.
The total scrubber investment is still about a 120 million is that right or two and half million dollars a copy.
Right.
Ballpark sorry, yet.
Yes, that's correct.
Okay.
And and I know that you had mentioned that there for ultramaxes, they were selling or not scarfed.
Scrubber fit it we have seen no I think.
Appears anyway that at some of the tankers or that have been sold have been scrubber.
What seems to be a pretty fast scrubber premium.
Well in excess of the cost of discover.
Is it.
Something that you would maybe kick around or.
Back that the fuel savings.
Far exceed sort of that.
The right to the market's willing to pay for us.
If you were just maybe look at selling one of them.
That's a great question Ben him on weather here, I think that you're absolutely right in what you're referring to but.
The tankers, you're referring to what a bigger tankers in terms of deadweight.
Compared to the Ultramaxes or comes Remoxy ER. So you you've seen premiums paid and the market willing to pay premiums for the bigger ships in.
In a more buyers willing to be premium for for the bigger ships fitted we probably if you look at.
Dry cargo and if you look at.
You know the 60000 Toners all that Supramax ultramax.
Segment. There are only very few companies that have opted for its crop is so intrinsically the buyers. This I'm looking for these ships, which are that's cropper pizza Dod less and the willingness for that you average owner to pay a premium for us crop there on a $58 64000 voluntary.
Very different from but the willingness to pay it down to $320000 or on a case for instance, so we just don't see that many buyers willing to pay premium for subscribers on on Ultramaxes on the comes in boxes. There are few.
But as you see the four ships that are held for sale are out of the smaller ones. So.
Okay, No that's very clear appreciate that.
And then.
My follow up really sort of I guess to what John was asking about and I. Appreciate that right now things are pretty chaotic in the market.
Best to just be prudent, but maybe as you look out over the course of the year.
Do you expect that there is the possibility just in the Drybulk market in general for there to be a much in a way of M&A activity or or much trading of hands.
Yeah, and large scale or and if so is that something that you would see yourselves participating in and one direction or the other either either as a buyer or seller.
Curious, how how you're thinking kind of a the market settles over of course.
I think in general we.
You know, we're pretty agnostic on on the way, we look at our sets participating in opportunities.
And teams they reopen attunitys presented to us whether we are on that buying side or the selling side, it's difficult to 10, whether we think that the M&A activity or all the sale and purchase activity is gonna be ahead.
I don't know it's difficult to say you know when when when the three so much uncertainty usually.
And the accident bee transactions dry yet so I wouldn't expect.
You know he uncertainty with the Corona virus.
Hey, or increases I wouldn't expect the number of transactions we increase in deliveries.
An inflection point or stability that can be read.
The news flow will then turn into your opportunity you see cars and the first movers to trigger a directionally right.
Okay, Alright very helpful. I appreciate it thank you.
Thank you.
Thank you enter next question comes from Liam Burke with B. Riley FBR. Your line is now open it yes. Thank you good morning.
As you roll out the scrubber fitted vessels.
And I know this is early in the deployment, but do you anticipate any shortages of high sulfur fuel and any the ports.
Well, that's actually a question Liam.
Oh He's go ahead.
Okay, we given our scale of the thought the fleet and the pool, we've secured contracts with oil majors in refiners at a barge ports and small upwards to load high sulfur fuel. So at the moment, we are not having any issues and per occurring.
Hi, so for sure.
Okay, James it somehow actually <unk>. The the question I really want to focusing on is Oh. The smaller ports. There has been some discussion about possible scarcity of high sulfur fuel as it rolls along a you don't anticipate that being a problem.
I'm not with our current contracts in place we've always been under the impression that while there are other uses such as running high sulfur fuel out through secondary units like cokers or for power generation de surplus HSS or will still be large enough, where we should not have issues.
Great. Thank you.
[noise] [noise], thank you and I'm showing no further questions in the queue at this time I'd like to turn the call back to Hugh Baker for any closing remarks.
Thank you operator.
We have no closing remarks, so we'd like to thank everyone for participating in the cool. Thank you very much.
[noise], ladies and gentlemen, thank you for your participation on today's conference. This does conclude your programming you may now disconnect.