Q4 2019 Earnings Call
Welcome to Teekay LNG Partners' fourth quarter fiscal 2019 earnings results Conference call.
During the call all participants will be and they listen only mode.
Afterward, you won't be invited to participate in a question and answer session.
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Our systems during the call. Please press star zero on your touched on felt.
As a reminder, it's called is being recorded now for opening remarks, an introduction I'd like to turn the call over to management. Please begin.
[music].
Thank you.
Former circling begins I'd like to direct all participants to our website at www Dot Teekay LNG Dot com.
Are you will find a copy of the fourth quarter fiscal 2019 earnings presentation.
We will review this presentation during today's conference call.
We 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 numbers. David is contained in the fourth quarter fiscal 2019 earnings release and earnings presentation available on our website.
Now I'll turn the call over to Mark together.
Thank you Scott.
Good morning, everyone and thank you for joining us on our fourth quarter and fiscal 2019 earnings call for Teekay LNG partners.
I'm joined today by Scott gave me she can't gas group CFO.
Turning to slide three of the presentation, we will review somewhat she can't when she's recent and fiscal 2019 highlights.
Similar to the past few quarters, we continue to improve on our year over year and quarter on quarter results.
In fact, our 2019 adjusted net income per unit $1.79 cents is up over 135% from the 76 cents per unit recorded in 2018.
You can see the key results metrics for the fourth quarter and fiscal 2019 in the table at the top of this slide.
Importantly, each of these metrics is within the earnings guidance ranges that as a reminder, well revised higher at our Investor day event in November of last year.
The strengthened our earnings and cash flows can primarily be attributed to the recent completion of our 3.5 billion dollar growth program.
Our final two yamal Arcseven LNG carriers deliberate in November and December of 2019.
And the Bahrain Regasification terminal in which we own 30% achieve construction completion. This past January and our JV is now receiving revenue.
Since the Middle 2019, our LNG fleet has been 100% fixed on fixed rate contracts.
Importantly have no exposure to floating spot LNG rates.
All told our LNG fleet averaged just under $80000 per day in the fourth quarter.
Our LNG fleet will remain 100% fixed it's what least me for one ship in June for the other two ships.
Which points these 352% owned or the equivalent of one and a half ships will roll off of their fixed rate contracts.
We hope to fix these ships away on short to medium term contracts, thereby maximizing utilization.
As we will discuss in a moment.
Spot LNG market is currently volatiles, and thus providing <unk> precise details on where we can expect to see this 60 ships when their contracts and it's difficult.
However, since or LNG fleet is over 97% six for fiscal 2000 fix this just sorry fiscal 2020.
The earnings impact from these vessels is limited.
To about 1% to 1.3% for $10000 per day change in LNG rates on our adjusted net income guidance base of $250 million at the midpoint.
Because of this earning stability we remain comfortable with the 2020 guidance numbers, we released in November despite this rate volatility.
In early January 2020, Wilco, so still their commitment to repurchase the will force and we'll pride LNG carriers from us and paid the deferred higher in full plus interest.
As Scott will detail in a moment this was significant because it allowed us to de lever our balance sheet by over $260 million and increased our liquidity balance by over $100 million.
Which provides us with the flexibility to repay are not upcoming Nok bond maturity in may with cash should we saw choose.
We do not believe that our strong sorry, we do we do not believe that are strong.
Project execution and earnings growth is appropriately reflected in our current unit price.
As previously announced will be increasing distributions this quarter by 32% to one dollar per unit per annum, resulting in a pro forma fourth quarter coverage ratio of 3.7 times.
Or put another way or one dollar per unit distribution represents only 35% of our expected 2020 net income.
And does it is well covered and secure a rarity amongst our LNG an MLP years. These days.
And while de levering remains our top priority, we have recently repurchased over five.
Hundred 63 700 units.
Average price of $13.15 per unit.
For a total cost $7.4 million.
On slide four.
Our 2019 actual results came within the ranges, which were raised which were raised in November.
Because of the fixed rate nature of our portfolio, we're able to provide 2020 earnings and cash flow guidance, which we'll see earnings per unit increased by 59% and total adjusted EBITDA increased by 12% over 2019.
As you can see the charts piece, we're already up substantially up over 2000 2018 actual results.
After the recent sell off Teekay LNG is now trading at an earnings per unit multiple of 4.1 times, an easy to total adjusted EBITDA multiple of 8.1 times, which we don't believe represents the earnings or cash flow power of the portfolio of LNG contracts at Teekay LNG.
Looking at slide five.
We would like to take a moment to discuss our fixed rate contracts and the composition of our fleet.
Slide five includes just the LNG vessels that are consolidated on our balance sheet and slide six includes our off balance sheet or equity accounted LNG sleep.
Together, we have roughly $10 billion sports fix forward fee based revenues that haven't average on average over 10 years of contract length remain.
The fixed rate contracts for all of our LNG contract carriers on and off balance sheet, our take or pay which means we get paid by the customer irrespective of whether or how they are utilizing the vessel.
There's been talk in the market about buyers of LNG canceling cargos by reason to force mature or making cancellation payments.
What do these cargos, a cancelled or not as Matt does not matter to us we continue to get paid under a contracts.
Similarly, why did the commodity price for natural gas or LNG is low.
<unk> has no bearing has no bearing on our contracts we continue to get paid.
And lastly, if there are logistical issues loading or unloading LNG cargo, we continue to get paid under our contracts.
On this slide and as you can see turning to slide six we've also detailed portion of our LNG vessels.
Our first steam vessel to roll off contract is the 50% owned Excalibur, which will not roll off contract until December 2021.
With an average fleet age of nine years, we feel good about the continued earnings power of our modern fleet.
As you can see at the top of this chart on slide six and as we mentioned earlier, we have only 352% owned LNG carriers or a net one and a half vessels rolling off their contracts in the middle of this year.
Put another way.
Over 90% of our LNG fleet is booked for fiscal 2020, 92%, it's fixed for 2021.
Two left of the chart. We have included a sensitivity analysis that details the impact these vessels could have on our consolidated earnings and cash flow.
For each $10000 per day change and the underlying spot we're term rate Teekay LNG adjusted net income will only be impacted by approximately 1.3% or approximately <unk>, 0.4% on our total adjusted EBITDA base $765 million at the midpoint.
Before we discuss a little of what we were seen in the market. We would also like to point you to slide seven which provides details of the contract sleep and debt makeup of our joint venture partner sort sorry joint ventures.
We continue believed a significant portion of our overall fleet represent hidden value given the disconnect between U.S. GAAP presentation, and the actual size and stability of our fleet, which as we detailed November is more sizeable and profitable than many of our publicly traded peers.
Our joint venture book represents nearly $340 million to $350 million of adjusted EBITDA and it has annual dividend capacity to Teekay LNG of roughly $100 million.
Scott will detail why we believe this fleet represents hidden value in a moment.
Looking at slide eight.
We have included the graph of spot LNG rates over the past two years.
As can be seen LNG rates have decreased inline with present previous seasonal cycles.
Of course this year's spot LNG rates are also being impacted by other factors such as the Corona virus, which is impacting end user demand and thus, reducing LNG pricing, which reduces arbitrage trading opportunities.
With all this uncertainty it is difficult it's difficult for us to predict where spot LNG rates will go in the near to medium term.
However, as mentioned previously Teekay LNG is exposure to this market is very limited.
On a fiscal and full ownership equivalent basis Teekay LNG is exposure to the spot LNG market and 2020 amounts to about three fourths of one LNG carrier.
We will earn in LNG time charter equivalent or TCV of just under $80000 per day per ship on average and 2020, if we were secure the 352% own LNG carriers at todays broker headline charter rate of $45000 per day.
I will now turn Scott overt turn the call over to Scott to run through the next two slides before we conclude [noise].
Thank you Mark.
We presented a version of slide nine.
November's Investor day, and we have recreate is a similar slot here.
You can see calculating a cash flow multiple using just the gap or consolidated figures does not tell the whole story.
Because our sizable joint venture profit portfolio CES off balance sheet. The calculation of enterprise value includes over $1 billion relating to our investment in our equity accounted jvs.
However, the denominator does not include any of the joint ventures EBITDA.
Looking at the table the first calling calculates easy to EBITDA based on just our consolidated financial statements and leads to an easy to EBITDA of 9.4 times using the closing unit price on Tuesday.
However, if we bring our joint ventures on balance sheet looking at the calling to the far right. The multiple dropped 8.4 times. We believe this calculation method fully encompasses our business portfolio and provides investors with a better metric that is aligned with what they are actually investing in what TGP.
I'd also like to point out that should our entire vessel and contract portfolio valued at 9.4 times like just our consolidated portfolio is our unit price would be over $21.
On slide 10 were presented a graph of our net debt to annualized quarterly adjusted EBITDA leverage ratio.
As depicted by the Blue line.
Our liquidity balance craft, along it acts access as grey bars.
The shaded in Blue bar represents our total liquidity balance pro forma for the completion of the Wilco transaction, which closed in early January.
What's the final two you more vessels delivered in November and December substantially all of our growth Capex was kind of concluded prior to the end of the year and a small amount of capex that was going by us at December 31st on the bar and terminal was almost entirely offset by dedicated debt facility.
We have already made good progress with our de levering efforts, having reduced leverage from 8.8 times in the middle of 28 team on a quarterly annualized basis down to 6.4 times at the end of 29 team pro forma for the Wilco transaction importantly, we expect this trend to continue as we increased cash flow in 20 Twond.
And continue to reduce debt through amortization.
This de levering profile is important to today's unit holders because not only does debt pay down accrete directly to the equity value, but it also provides us with greater financial flexibility.
I'll turn the call over to Mark to conclude.
Thank you Scott.
We have slightly amended slide seven which we presented at Investor day in November and the life loops 11, we laid out a few of the key priorities. We aim to complete in 2019 through to 2000 2020, sorry 2021.
And to the right and dark rate, we have detailed a few of the steps we've taken since the start of last year to achieve these calls.
One of our key priorities is to always maintain a high utilization of our fleet and we're happy that we locked away 100% of our LNG fleet mid last year in the high Seventys too low $80000 per day.
With only net one and half of vessels were less than 5% of our fleet rolling off contract in the middle of last year, we feel comfortable we will be able to mean to meet the earnings guidance presented on slide four.
We continue to believe reducing leverage is good for all stakeholders and we've made good progress on that over the past year, reducing our net debt to total adjusted EBITDA on a quarterly annualized basis by one 4.1 0.4 times over the past four quarters.
We have continued to de risk teekay LNG through the successful delivery of our three and a half billion dollar would've book.
And in part because we expect a new expect new LNG shipping tenders will likely be delayed we don't see teekay LNG ordering new growth vessels sometime to come.
However.
When tenders are issued we will look at them Opportunistically and ensure they meet our conservative hurdle rates Entercom complimentary to our current strong business mix.
And we have continued to return capital to unit holders since two since late 2018 with a combined 79% increase in our distributions from 56 cents per unit paid in 2018 to one dollar per unit per year, starting with the first quarter 2020 distribution to be paid in may.
And since late 2018, we have purchased repurchased three and a half a percent of our outstanding LP units and intend to continue repurchasing units on an opportunistic basis.
Lastly, we continue believe to believe that eliminating the IDR structure and possibly converting to a C Corp makes sense for us in a for our investors and we will evaluate the best way for us to achieve this school.
Thank you for your time today and operator, we are Mount now available to take questions.
Yes, sorry.
This time he would like to ask a question. Please press star one on your telephone keypad. If you are using speakerphone. Please make sure that your mute function is turned off to allow your signaled to reach I, Let me.
Again that is star one last quick question.
And we'll pause momentarily to allow everyone an opportunity to hit another question.
Alright, I first question will come from Randy given think Jeffrey.
Oh, the German how's it going.
Good morning ready.
Good morning, So in your Threeq you 19 financials, you showed about 26 million and unit repurchases same number shown in the for Q 19, a full year cash flow and you say you repurchased about 560000 units at 7.4. So we're all those purchases in the last I guess seven eight weeks and then.
With that kind of looking ahead, obviously substantial cash balance conclusion. The wilco sale, you know basically remaining capex, Saudi balance that debt repayment with additional unit purchases in the coming quarters. You know for example, real quick repaying that Nok bond with cash or maybe rolling that Nok bond in purchasing units.
You know that kind of yielding 7.7% would that cash.
Yeah. Thanks, Randy Good morning, So you're correct that are all of our repurchases were a do have said that took place in the the 2020 time period.
Well I would say on it I go for basis, and how we really look at repurchases and then maybe touching on and off on for a minute.
As you said, we had been active Oh the buybacks. We've also been paying out dividends. If those are gonna be increasing this quarter and we do think that actually represents a fairly compelling yield right now for investors.
But with all that said, we've been very clear for the last year more the de levering really remains our key priority or and I think this will remain our key priority over the next couple of years.
But what that said, we we haven't buying at levels.
Above where we were trading around now and these last couple of days and so I think you can assume that we will be continuing with our repurchases on a modest basis.
And then maybe looking at the knock on for a moment our credit worthiness is increasing really day by day here as we have shown and we expect that to continue on so I think what that will do is continue to lower our borrowing costs and obviously the base rates are coming down as well.
So we do evaluate what we're going to do with that maturity in May and I think what we said at our Investor event was.
That we may look to renew it we could pay it off of cash, but if we do anyway.
I think that it would be a smaller size than the current gross of around 135 million today. So we're still evaluating that market were over there earlier this year and we think we had quite a supportive investor group I don't think that there would be any problem. If we decided to roll it but right now I think that remains to be saying.
Sure.
All right.
Good answers there I'm, obviously, not an unlimited amount of cash to go around so balancing the debt repayment unit repurchases will be tricky, but obviously both accretive now in terms of growth you mentioned that briefly there mark at the end how do you kind of look at growth opportunities again with de levering being the main priority and then with any growth.
Via Newbuildings on long term charters with you know Arctic two or shall Exxon, Mozambique, whomever or you open to Uncontracted second hand.
No Randy it would come as you say probably through new builds hopefully a against well certainly against long term contracts, but longer the better the the contracts. The F.I.D.'s. We do believe had been pushed back just slightly at least this year, even qatar seems to be a little slower than than somebody that.
Dissipated I think it's still coming so that's the kind of contract that we would like to see and again, hopefully the long and a better other other projects it might come out our train seven for Nigeria. There's if there's a few that that they will hopefully be built to suit picking up second hand might be a possibility for us if this market continues to.
To bear out like it is and we are as Weve been preaching on this call today pretty fixed out and hopefully in a relatively good shape. There may be an opportunistic possibilities for us over the next couple of years or so but I don't think that's are up our our priority and this leads to the other question you asked about the Delevering.
In our number one priority.
We look about when we look at ordering new builds for instance, as early as possibly this year. So those wouldn't deliver until maybe 2024 or so if we did that by which time as Scott has has showed you in this slide to show you. We will have de lever to go out beyond our target range. If that's it that's what you want to.
So ordering new builds against long term contracts when effectively the yard as warehousing those those big final installments plays much better into de Levering story, then for us to go out and ordered more spot ships today from <unk> second and even if it's the even if it's an opportunistic glut.
Got it okay that makes sense, yeah. I know there are few uncontracted second hands out there or maybe looking for buyer, but I will turn it over I'm sure. There's other question. So I'll hop back in the queue. Thanks.
Thanks Ray.
Thank you. Our next question comes from Ben Nolan.
Yes, Hi, this is actually a Frank go onto the on for Ben How's It going on.
Hi.
So it's kinda follow up on Randy's last question.
You'd mentioned you want to.
Focus on doing Newbuilds with long term contracts [laughter]. However, the blast I guess yard or two years I don't think we've seen many substantially long term contracts.
Can you kind of talk about the availability I know you said, maybe Nigeria train seven.
Hmm and a couple of other projects.
Reaching if a dean in the near term, but it doesn't seem like.
Projects are willing to sign up seven plus year deals anymore I'm, what would would you still go ahead with the new build on a seven year deal.
Okay.
Or a at my misinformed and there are actually 10 15, plus your long deals that you'd be able to.
To participate in.
So we agree with you haven't seen a lot of these there's been one or two I think chair did a long term contract there haven't been a lot. So then the question is is that going to change.
No a lot of our peers are going to be able to continue to two or to do what was done before which is to order spec simply and then ultimately put them against seven year charters are five year charters or what ever might be available I.
I think we're coming to the <unk> point, perhaps where if you're a charter in your if you need a significant amount of ships you might actually have to bank on providing longer term charters. So you're you're sure to have that tonnage you've seen where the MLP markets are today I don't think it to riskier back now to go had an order a bunch of ships and even against a seven year.
Sure a seven year charter so to some extent we are hoping that the market will return to normalcy and we can may not be the 25 or or in that case of Arctic to for us even longer charters that we then 25 years that we've had but hopefully we can return to a a a longer a longer charter.
And for that you know the whole industry and when I said the industry. It's really ship owners have to sort of work together and it's always going to be pockets, where they're going to do a shorter charters, but we're hopeful that as an industry. The industry is going to its going to want.
Longer charters again, so as a result, we may be more selective we may be more conservative we will not have the same probably the same growth CAGR. Our as we've had in the past, but I still think we're going to get some some good long term charters. That's that's our hope.
Okay got it actually makes no sense that helpful.
So you kind of.
Looking into the future a little bit.
Right you look out two three years the focus is on de leveraging maybe buying back some shares.
But it almost seems like the inevitability.
For the partnership is to turn into some type of C Corp, and I know the one of my slides <unk>, that's a consideration.
But with kind of the MLP shipping market being pretty weak generally for last several years now a is that.
Something that since the <unk> serious consideration where are you.
The partnership is expected to kind of stand on its own a from a capital perspective from replacing assets.
Can you just kinda talk a little bit about.
What that world might look like in a couple years from now with <unk> with a potentially move into a C Corp.
Well it to your point to the partnership has been standing on its own from a capital perspective for some time, we haven't I can't recall actually the last time that we took a dropdown over funded at the G.P. level. So all orders have been made at the LP in all acquisitions and investments for for some time without guarantee from a.
Okay. So in a sense, we already have been moving toward that model for three years do we continue on and go into the C Corp models, because not only have we've been we've been funding from the daughters level, but also it looks like yields are blown out yeah. It's a real possibility for us to go to can we are seriously considering.
C Corp, or other type of up moves in a in the animal out of the MLP space. It obviously involves interaction inappropriate cooperation with the parent and so it's something both parents in the daughter are looking at.
Okay. That's helpful. That's all I had thanks very much.
Alright, thank you.
Our next question comes from Greg, let the Koski Weber restriction advisory.
Hey, good afternoon, guys how are you.
Good morning, Greg.
Oh, so just wanted to start with.
Commercial startup that Bahrain, just to clarify an early she said the commercial startup is his upcoming one is that expected to begin and from TGP standpoint since since the JV dirty collecting terminal fees in January does that leave it doesn't matter.
It doesn't matter no so.
<unk> to kind of reiterate and we've made it was spent a lot of news media, but let's just simplify it all again tgps been receiving full higher for its Fs you since 2000 of 18 and now it's also as part of its joint venture receiving full revenue on the terminal in terms of a commercial start it's available at the customers.
Discretion, a that customer will start commercial operations whenever it makes sense now obviously, it's set up a floating regas terminal for a reason or middle east as we know a seasonal seasonal and to some extent its cyclical like everywhere else in the world and so we have a floating unit out there, which is probably more uh huh.
Sufficient for trading as any other ship on the water. So they might actually end up using that that ship are trading at during this period of time, but it is commercially available to them to run the terminal when it makes sense typically that's in the summer is in the middle East when you need air conditioning, but I'm, not even suggesting that that it might happen. This summer that that's entirely up to the.
The downstream customer, but due to reiterate yes. The the terminal is ready for commercial use if that's what the downstream customer wants.
Okay, and then do you see TGP they get in terms of gross do you see you looking.
More towards this area more of a downstream or a small scale LNG focus.
Yeah outside the box did you see that happening in the next couple of years.
It's it remains to be seen what we do perhaps end up looking at as nice projects. Various types. So if you look at a couple of knees projects, where we have we have the Arctic seven the ice breakers that the ships and you mall and because they're not be cookie cutter seven years, you know type of two stroke project.
You do earn an outsized return similar with a with Bahrain, which is a has de be regas terminal and element. In addition to the ordinary efforts you carrier. So we will continue I think two to look at nish projects. If as we just discussed if we if this if the market can't move back to.
If it's going to get stuck on on seven year contracts for new builds we're going to continue to look at at other types of a affiliated sectors.
Okay helpful and then shifting gears just.
Where do you think period returns are right now for new business.
Cash and cash basis.
Somewhere around 8% would you say.
Ah So term business you're talking if we were awarded to order new build today and put it on seven your charter I don't think it's it yes.
No.
Okay.
Where do you where do you think it is just if you could provide range.
Well that's enough range, probably for now, but it's less I think it's less than eight.
Okay Fair enough alright, thanks for the time, guys I'll turn it over.
Thank you. Our next question comes from Mike Webber.
Research and advisory.
Hey, good morning, guys who area.
Good morning, Mike.
Got it didn't tag team today by a buyer group I just wanted to follow up on non <unk> when clarified the ranges not age but the.
In terms of the the C Corp conversion and does it seems like there's.
I know you mentioned it seems like there's a lot of inertia kind of in that direction.
And there's a kind of.
There was an kind of a menu of things you guys could do to kind of to simplify the structure kind of making a bit and a bit more friendly. In addition to work is already done, but the notion of actually converting it to a C Corp. I'm, just curious around what comps or what the benefit would be in that regard in terms of removing the IDR as would be one thing.
But in terms of where would you comp yourself on a marine C Corps basis, where there's a you know in terms of looking at some sort of valuation uplift.
Beyond the L.P. space, and then kind of in the secondary basis, you know with so many large sequel immersions at the <unk>.
In a large scale space or from Lps, you think about index rebalancing is it worth.
Reconfiguring the IDR as the main staying in L.P. I'm digging a bit of an uplift in terms of no a presence in the Alerian indoor Ah you know kind of a bigger relative presence with the universe.
Oh sure Mike <unk>, what we'll do this is mark obviously, but let me try us a stab at this and then I'm also going hand, it over to Scott Hill had his views as well.
Just to kind of the universe of things that we've done that we could do let's just note that we've already done some things already so we've we've moved to a 20 999 filer from the K. One we've obviously have a very defensible coverage ratio going forward. So we've already making very positive steps to be in that that that.
Neighborhood already have the C Corp, Usher in terms of the the reasoning to go further we have seen and it's it's a little bit difficult to find the exact metrics, but it does seem to be a much wider universe of investors for see corp.'s exactly what the metric will be or how the multiples will be is.
Little bit more difficult to say you know do we get into a transportation motor utility mode or something else I, It which is definitely rating better than energy MLP is right now I'm not sure, but Scott do you have any what are your thoughts on this yeah. Thanks, Mark I think like another couple of things I'd point to is that we also can see what's been happening in the midstream space.
Phase, where you've seen a number of.
A large MLP use have moved from an L.P. into a C corp structure and on average a lot of them have noticed devaluation uplift sometimes as much as a couple of terms on cash flow and then I think the other thing that we look at is really the valuation metrics that get used you know bikes people like yourselves and the analyst community and you can look at other LNG appears though we have.
And you can look at the way that analysts would look at the valuation out for example, a goal our gaslog corporate level.
Versus their L.P. level and oftentimes, it's on more of an earnings or a cash flow on the C Corp, and more of a dividend yield on the downstairs MLP and I think given the makeup of our fleet or the way that our earnings are growing.
I think that we wish that we would have more Ah you know more people valuing us in line with those C Corp metrics and then lastly, you talked about having the various indexes and I think you're right that you know in some ways, we're becoming a bigger fish in Oh, probably a shrinking pond in the MLP space and I guess I would look at it as Mark said that the.
The non MLP type investor or it's just growing by leaps and bounds and so I think that we would would look over the fence and say well is there a possibility of us getting quoted and whether it be transportation indexes are shipping indexes or you know you name it or that we probably don't have access to today and probably the best we can how far is to be included on.
Okay, MLP type index, and overall that that seems to be just a a shrinking on as I said.
Yeah, and I don't want to venture into commentary versus a question, but you know I I covered the C Corp, you're referencing and they're not included in transportation or utility indices right and we do look at those on the some of the parts basis, maybe thinking about where cash based metrics really exist within the marine space are actually in the LP Yelp piece faced by all the all that mean.
No not to certainly to refute the steps you guys have taken last year too because those are all very valid and.
Stock certainly in a much stronger position, but it's just that that last mile of actually transitioning away from an LP I just wonder whether it's kind of a grasses greener scenario, where I don't know what kind of success stories, where you've seen them you know, there's still going to be marine comps on the C. Corp side that are you know goal or from a valuation perspective should not be the comp you'd be angling for right.
Or.
Or flex or anything else is going be trading below NAV anyway, just to do more with the full conversion I'm, just just kind of caught my ear, but the I'm certainly kind of trending in the right direction.
You just just a follow up on Greg's question on the the Unlevered returns and whether they're sitting at or around age.
There's new because you know new business kind of coming out of the Arctic slowly you mentioned you mentioned, Nigeria, Mozambique are you noticing any geographical differences in terms of you know.
Where you can make the math work and where are you can't and then I think you've touched on this a bit earlier, but when you are kind of at least running the math on new business.
Even though it would be delivering a couple of years now when you when you would be at a lower leverage level or are you running that with 50% or less gearing or you are you actually running that hurdle math on an hourly basis with you know with 70, 80%.
Oh, just kind of turning first to the I guess, we'll touch first on the first question, which is the geographical.
Do we see a premium some places and and and the answer is sometimes yes, and sometimes no. So we certainly saw it in and you mall by mall has a risk return you know premium because of where it's located and that's been that's been great for us but.
Obviously with all these projects, we're not going to do we're not doing Arctic too because we already have enough concentration and you mall when we look to other areas for instance, a in Africa, where are you would might have you might expect a a risk reward premium we haven't seen it.
So so so sometimes we see it and and and sometimes frankly, we don't it's that simple answers as Mike.
Oh I have you had another question yeah, no market, what's actually going to follow up <unk> point that that might cause making and we're having our conversation.
I think mark pointed to slide number four.
Where are we look at where we're trading on a multiple of earnings were sitting here.
4.1 times and and that type of valuation metric is you know, it's probably unfathomable. If you look at it in the broader C Corp space, but even just started MLP space you would never see any type of MLP investor MLP analyst, even look at earnings as a a potential valuation metric and so I think that well.
Talk about moving to a C Corp, you're right. It is very tough to see in today's market that everybody is trading with some level of dislocation, but if we try and put our normalized sunglasses on Ah I think the C Corp investors, who are used to some of these fundamental valuation metrics would look at that and say wait a minute. You've got tenure contracts are over a $10 billion revenue book.
Are trading at a four times earnings multiple like what am I missing and so I think that that's really what we're trying to to highlight and also maybe try and go after some of those new type investors, who are looking to start way.
Okay Fair enough. It just then finally just last one of my question in terms of when you're running your math on new business from a return hurdle perspective are you are you under leverage that new business are you still running up at 78%.
Yeah, we're still in that same 70% to 80% range on a project basis.
All right [noise].
Hi, guys since the time.
[noise] tell me that with our last question now I'd like to turn the call back over.
My name for it.
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Well just a quick thanks for everyone for their support and have a great day. Thanks Bye.
Thank you, ladies and gentlemen conclude todays teleconference. You may now disconnect you enjoy the rest of your dad.
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Oh.
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