Q4 2019 Earnings Call

Estimated bookings and tce rates in the first quarter of 2020 or other periods estimated Capital expenditures and twenty twenty or other periods projected scheduled drydock and all fire days off the company's consideration of strategic Alternatives the company's ability to achieve its financing and other objectives and other economic political and Regulatory developments around the world.

Hey.

Such forward-looking statements take into account various assumptions made by management based on a number of factors including management experience and perception of historical Trends current conditions expected in future developments off. Another factor is that management believes are appropriate to consider in the circumstances.

Forward-looking statements are subject to risks uncertainties and assumptions many of which are beyond the company's control which could cause actual results to differ materially from those implied or expressed by those statements Factory risks and uncertainties that could cause International cos actual results to differ from expectations include those described in its in report on form 10-K for 2019. And in other filings that we have met or the future may make with the US Securities and Exchange Commission.

Now with that out of the way, I would like to turn the call over to our president and chief executive officer. This loads of Rocky Louis. Thank you very much, June. Good morning, everyone. Thank you for joining International see wage earnings call to discuss our fourth-quarter and full-year 2019 results. If you would please turn to slide for we review our fourth quarter highlights and our recent accomplishment as we kick off our fourth year as a publicly traded company C wave has maintained an unwavering commitment to enhancing our earnings power and our financial strength unlocking value for our shareholders and implementing are disciplined and accretive capital allocation strategy be significant progress. We have made in achieving each of these important objectives with evident in our strong 2019 and our year today 2020 results.

moving to the

Bullet sea wave implemented important initiatives to optimize shareholder values following are six hundred million dollar investments in modern vessels at the bottom of the cycle the monetization of our non-core LNG joint venture, 123 million dollars and our success. We do think our cost of capital gains remain focused on effectively allocating Capital throughout the tanker cycle.

Taking into consideration our strong cash and our liquidity position and are compelling long-term prospects. We have worked with our board to shift our Capital allocation priorities beginning the return of capital to shareholders.

Or initiative which will initially consist of a fixed quarterly dividend of $0.06 per share.

Also provides us the flexibility to continue to allocate Capital to best serve our shareholders.

Based on our stock valuation relative to rnav We Believe are $30 a share repurchase program currently provides an attractive opportunity for C ways to further unlock value for shareholders.

Complementing the $0.06 quarterly dividend going forward. We will continuously evaluate Capital allocation decisions based upon where we are in the pack cycle and where we believe we can create values. This includes dividends share BuyBacks and vessel purchases.

We intend to remain opportunistic as we did in the fourth quarter.

In the fourth quarter to further strengthen our earnings power. We purchased an l r y the seaways Guayaquil fittingly named for a lighthouse in Ecuador.

This ship would trade in our panamax International joint venture with slow peck of Ecuador and Ultra tank of Chilly. This joint venture has consistently outperform the market.

Moving to the next bullet the notable success we have had in 2019 and 2020 year-to-date has enabled us to transform seaways capital structure off and to ensure that we are ready for future value creation.

With both the prepayment of $110 of high-cost debt and 2019 and the refinancing of 380 million dollars of high-cost debt in January 2020. We lowered our margin on the refinance debt by 350 basis points.

Reducing our annual interest expense by a total of $25 million dollars.

The refinancing position. With one of the lowest leverage profiles in the industry.

A pro forma net asset value of our conventional tanker Fleet. It's 41% post refinancing.

The closing of our new senior secured credit facilities. We are proud to have become the first publicly-listed tanker company to include a sustainability linked pricing mechanism needs a new credit facilities.

International Speedway has always been committed to environmental initiatives and to minimizing risk of all forms of pollution and waste streams through this sustainability link tracking mechanism. We have created an Innovative partnership with our leading banking group and sustainalytics a leading firm in ESG and corporate governance package that further advances our commitment to sustainability initiatives.

We will continue to focus on our footprint and align our sustainability goals with our broad group of stakeholders.

Moving to the final bullet. We are pleased to have returned to profitability in the front core excluding items related to asset sales and debt repayment. Net income off $39 or $1.32 per share.

Quarter adjusted ebitda with 72 million dollars representing a year-over-year increase of twenty six million dollars and a full year adjusted ebitda of $165,000 are strong results in the fourth quarter highlight our Fleet earning power and significant operating leverage enabling us to end the year $150 in cash and $200 million dollars in total liquidity.

Now turning to slide five you provide an update on demand as can be seen from the chart in the top right corner of the slide. The coronavirus has negatively impacted soils a man while China and the world seek to continue to be Coronavirus.

In terms of Chinese crude throughput for 20 20 in the first quarter. The iea has cut its Expectations by an estimated 1.1 million month as a result Global crude. Demand is now expected to temporarily decline by over 400,000 barrels-per-day in the first quarter.

Lower demand and the negative sentiment around the coronavirus have contributed to rates coming off recent highs and results it and what we believe to be a temporary pause and the tanker Market remains even so we believe the increased rates are sizeable Fleet of product and crew tankers earned in the fourth quarter and through our birthdays the beginning of the first quarter demonstrate are strong prospects in a robust Market while timing is uncertain and we continue to closely monitor developments. Once the name is contained oil demand is forecasted to rebound and support a strengthening rate environment.

Other developments that bode well for increasing tanker eats include the China trade deal which eliminates tariffs on us oil imports and forward Brent trending toward Tango resulting from lower demand and reduced oil prices.

contango

Lead to an increase in demand for vessels for floating storage and we continue to monitor this development.

Finally, we see I am old 2020 resulting in incremental tanker demand similar to what we experience in the first half of January our expectation remains that we find jobs will continue to produce more very low sulfur fuel oils and middle distillates increase overall crew volume and seaborne transportation of petroleum products off due to changes in trading patterns and slide 6, we provide an oil supply update during a time when OPEC continues to restrict production wage Western non-opec Supply has increased and as a result Global oil supply is unchanged on a year-over-year basis.

It's highlighted on the chart at the bottom of the slide. The West has made up for OPEC production limits with oil demand growth being concentrated in Asia.

and oil supply growth being concentrated in the west importantly this represents a positive for ton-miles of man and is supportive of a strengthening our environment Georgia Productions that has come online also bodes well for increased demand, for example, the first tanker shipment from new oil fields in Guyana took place in February 8th on a to as Max

Phase one production is expected to Peak soon at 120,000 barrels per day and grow to seven hundred fifty thousand barrels per day by 2025 Edition Norway's new Johan sverdrup oil field is up and running currently producing 350,000 barrels of oil per day.

Moving to slide seven. We take a look at shift's Supply the overall tanker order book remains at historical lows with only one DLC pack the ordered to date and 20/20. We believe that year-to-date ordering has been tempered due to the uncertainty surrounding decarbonisation and suitable propulsion system current vessel Supply also continues to be constrained driven by scrubber installation being extended and Chinese new billing deliveries facing delays due to the yards being understaffed.

moving to the chart

the bottom right of the slide

the vlcc fleet continues to age with over 30% of the existing vlcc Fleet now fifteen years old.

We had pointed out in the past. Once that's was reach fifteen years of age. They are more expensive to operate with significant Investments required to continue trading Beyond fifteen years and then every 2 and 1/2 years thereafter.

In addition once ships reached ballast water treatment deadlines even greater Capital expenditures are required to the vessels to keep Trading.

Due to the recovering Market in late 2019 and early 2020 scrapping activity has been limited. So we believe the potential for scrapping is building based off aging TLC plates with IMO 20/20 low-sulphur regulations going into effect. I wanted to provide a brief update on our successful transition first focusing on the ships burning very low sulfur fuels prior proper planning has paid off. We have not faced any significant issues in our transition to a new fuel we continue to actively manage that program and ensure that we are booking our bunker orders. Well in advance to secure good quality supplies at competitive prices for life forever program. We have three ships on the water trading two are in the yard and five are in the queue.

the two of the

Have been impacted by coronavirus with reduced workforces and logistic challenges. But these issues are now easing of the five remaining. We took an early proactive decision to offer additional voyages on three of them and postpone the installations by 60 days this avoids any additional ship delays as a result of waiting as a virus impact on manage down. We expected all ten ships will be trading before the end of the second quarter now turn the call over to Joe to provide additional detail on our fourth quarter Financial results.

Thanks Lois and good morning, everyone reviewing our fourth-quarter results. I'd like to discuss our newly implemented dividend which is part of our broader Capital allocation strategy following our success capitalizing on asset value on hasn't vessels at the bottom of the cycle redeployed capital for the modernization of rlg joint venture to pay down debt and convenient way to reduce our cost of capital to a recent refinancing. The company is now positioned to return Capital to shareholders beginning with this quarter with a $0.06 per share of fixed quarterly dividend our Capital allocation philosophy is flexible and will be continually evaluated based on where we are the tanker cycle and where we believe we can best create value which includes dividends Chef BuyBacks. That's what purchases as well as the levers.

you know near term based on the

Tax valuation relatives nav We Believe are currently authorized Thirty million dollars a share repurchase program provides just highly attractive opportunity to unlock additional value for shareholders money. Now, I would I will review the fourth quarter results in more detail. Let me quickly summarize our Consolidated results in the fourth quarter. We achieved adjusted ebitda 72 months our highest even in any quarter since we became a public company net income for the fourth quarter was 15.9 million or $0.54 per diluted share compared to compared to a net income of 7 million or 24 cents a share in the fourth quarter of 2018, including the impact of certain one-time items including a $300 cash gain on the sale of the joint venture the release of the company share of unrealized losses associated with the interest rate swaps held by the allergies like that you're dead.

221.6 something dollars.

Into earnings from accumulated other comprehensive loss all of which is otherwise known as unwinding a swop and a zero point three billion dollar loss on sailing vessels a 3.54 can actually cost and finally a one point one point lost when the establishment of debt that in, in the fourth quarter with $39 million or a dollar $3 off per share. Now if I could ask you to turn to slide 9, I'll first discuss the results of our business segments beginning with the crew tanker segment TCS for the crude tanker said $9,300 for the quarter compared to 72 million dollars in the fourth quarter of last year this increased primarily resulting from the impact of higher average Blended rates and the vlcc to its Max after Max had a Mac sectors.

I'm trying to the product carrier segment TCU revenues were $25 for the quarter compared to $21 in the fourth quarter of last year. It's increased also primarily result of impact of higher average salary pleasure rates earned by the lr1, LR2 and Mr. Fleets.

We're all as reflected in charge on top left Consolidated t t revenues for the fourth quarter of 2019 or $118 compared to $90 in fourth quarter 2018 off. The increase is this increases Presley driven by substantially higher average daily rates and across the crude and product carrier fleets this quarter compared to last year's fourth quarter.

Looking at the chart of the top right of the page adjusted ebitda was $72 for the quarter compared to forty six million dollars in the same period of 2018 and again this increases principle by higher daily rates and the bottom half of the page. We look at the results. Sequentially, I quarter-to-quarter Consolidated revenues and adjusted ebitda for the fourth quarter up from the third quarter wage increasing by 53 million and 48 respectively.

Now turning to slide ten be provided for review and q1 discuss are earning bookings for coupons as far which are significantly higher relative or fourth quarter based on the strong rate environment particularly at the beginning of January. We have booked 74% of available Q one spot days for vlccs and an average guy that a day was great also does reflect some positioning voyages for a scrubber fitted shifts as soon as Max 71% at the life of an average of approximately $57,700 per day 66% of our available days are fixed for after Max and LR2 at approximately 32878 percentage of panamax spot days to fix it approximately $40,000 a day.

on the

Car side we have booked 70% of our first quarter spot days in an average of approximately $19,000 per day. We expect a full quarter numbers will be lower based on a snippy lower current spot Market demands on the Coronavirus.

I'm trying to page eleven.

Cash cost ECT break even for 12:31 2019 Illustrated on this slide International see what his overall Break Even rate was $20,400 per day for the month of months at a December 31st. These rates are they all end daily rates are owned vessels must learn to cover operating costs dry-docking G&A expenses and debt service costs, which means scheduled interests with principled authorization as well as principal of amortization as well as interesting aspects of note-taking the consideration distributions from our end. So jav the overall break-even rate for the company drops to $18,500 per day.

We've included on the far right side of the bar.

Cardiology only Break Even cost for the for 12 months ending December 31st 31st, 2020. We expect our overall break-even rate to be $20,500 a day essentially unchanged from 2019. But note that the debt service is changing such that we are advertising more and paying a lower amount of Interest.

Going forward I also like to provide cost guidance for 2020 consistent with what we have provided to you previously. So for 2020 we expect regular daily office which includes all running costs charge management fees and other similar and related expenses for our various classes the as follows for vlccs 8400 per day for suezmax. 7704 Apple Max with 8104 panamax. 7904 Mrs. $7,500 per day for their guidance for 2020. We expect drydock and can tax expenses to be $27 and $40 respectively. It's more details than is provided in appendix messages deck to go with these expenses. We would give you the guidance that we expect of following out of service days. If you got 20 vlccs 622 days mainly in q1 and Q2 a higher than previously expected memory primarily due to age

rubber installation coupled with delays

Do the coronavirus 10 days for sales Max Fleet, perhaps Max and LR2 29 days for the year. And for the panamax other one Fleet 390 days off days and finally for him and updated schedule by quarter is provided in the appendix.

Can you with cost guidance for your modeling we expect 2020 interest expense will be thirty-seven million dollars total of which portly thirty-five million is cash and a balance of 3 million is amortization of on Advertising discounts and for fees, which are of course non-cash items. Additionally Our Deck calls for $11 is scheduled principal repayments in the first quarter and twenty million dollars off a future cords for 2020 G and a we expect to be in the region of $28 all in which includes non-cash charges in the amount of $5,000. So $23 cash to finally expect about $500 in equity income and $19 for depreciation and amortization per quarter.

May I have a good time?

H 12 or a cash bridge moving from left to right? We began the fourth quarter with total cash and liquidity of $174 during the quarter. We generated $6 of adjusted ebitda. This amount includes five million dollars in equity income for the JB's which is not cash. So therefore we deducted to reach a cash figure but then add back cash distributions for the month which were $300 for the episode JV. We expended thirty-three million dollars and dry-docking and capex cash interest and principal paid in our debt was $25 excluding a 2017 Term Loan prepayment, which total another one hundred million dollars proceeds from the sale of the LG joint venture 123 million dollars. So the net result of the various cash movements was wrong with approximately one hundred fifty billion dollars of cash and if it's a million-dollar revolver yielding totally clearly of two hundred million dollars.

Dial trying to slide 13 for a quick look at the balance sheet for a detail the steps. We have taken to transform our capital structure of following a recent financing. I'd like to briefly highlight a number of a bouncy specifics as of the end of the year at December 31st. 2019. We had one point eight billion dollars an asset compared to the five hundred million. Ninety $100 of Walking Dead Edition has matching. We had a $51 revolving credit facility. That was uncalled as of December 31st, but now it's like 14 lowest mentioned earlier in January. We close. It's $390 refinancing that will reduce annual interest expense by approximately $15 by lowering the companies average interest rates on your birth, of course of the debt by 350 basis points for 3.5% and the overall average interest rate for the company by two hundred basis points or 2%

specifically

Two credit facilities consists of a 5 year $300 core facility a 5 year $40 core revolver of which twenty million dollars has been drawn and a 2.5 year 50 million dollar transition facility borrowings are the corporate building and Decor revolver initially very interested Library plus to 260 basis points or 2.6% or borrowing says it should facility bear interest at Libor plus $300 charges on the two buildings made just like twenty basis points based on whether the company needs certain leverage ratios company currently anticipates the margin these facilities there for decrease to 2.4% by the third quarter of 2020.

The proceeds from the facilities were used to refinance $300 or adjusting high-cost secured and unsecured debt of the company and subsidiaries. This included repaying the cup 2017 Term Loan facility and Senior secured credit agreement with ABN Amro as well as your purchasing the company's outstanding 10 and three quarters percent subordinated notes. We very much appreciate the ongoing support of our leading banking Group, which now includes seven major shipping Banks and raising these attractive new credit facilities, which reflects our strong execution over the past four years and compelling long-term prospects off.

As you can see at the Box.

I'm writing this slide are total debt. The capital now stands at 34% or a net loan devalues Santa just 41% are the clarity position post refinancing remain strong and approximately $100,000 in cash and $21 of undrawn revolver. Essentially the refinancing.

Party of eight $40 to leveraging and $430 of higher-cost debt and to be able to revolver was placed with we had $90 of of the bank debt in Revolt.

Turning to slide fifteen now like to highlight the sustainability link pricing mechanism included in the new loan facility, which lowest mentioned earlier on the call. This is the first-of-its-kind for a publicly-listed tank router and it's been certified by an independent leading firm in the corporate governance research ensuring that it meets sustainability length know impressed with the adjustment and pricing will be linked to the carbon efficiency of the nsw three as it relates to CO2 emissions year-over-year such that it aligns with the international Maritime organization, 50% wage reduction Target and greenhouse gas emissions by Twenty the target emission reductions follow that trajectory outlined in the presiding principles, the global framework used by financial institutions to assuage the climate alignment of their ship Finance portfolio.

Yeah, really pleased to be work.

With a a bank group that supports those goals in ours at the same time. If we need to Target, the future years will receive a modest discount or pay a modest increase if we do not

trying to fly 16 wheel straight to strong earnings power of our Fleet in order to demonstrate the impact of the rising rate environment. We present two scenarios. The first is mid-cycle by which you mean 15 year average rate. The second is the recent Peak represented by 2015 average rates. You can see the based on the mid-cycle average rates are currently with generate annualized adjust. 243 million dollars and also $4.10 per share of UPS. If rates return to the 2015 levels that would represent for forty 1 million dollars a day and $5.88 earnings per share.

I'd like to highlight that are passed success and planning our Fleet roads and monetization strategy had significantly enhanced or outside conventional capitalizing on a marketable product includes anchored continue to maintain significant operating level as a reminder every $5,000 increase in spot rates and every vessel class would result in increases $700 and cash flow with them mm forty six percent and earnings per share program now, I'd like to turn the call back to Lois for her clothing, Thank you very much Jeff in summary. Please turn to slide eight our 2019 and year-to-date twenty-twenty results underscore the significant progress that we have made enhancing our earnings power and our financial strength am talking value for shareholders and implementing our discipline and a creative Capital allocation strategy first. We continue to implement initiatives to optimize shareholder value. Which over the past three years.

has concluded

Seaway's capitalizing on attractive asset values at the bottom of the cycle and monetizing a non-kosher asset to prepay debt and reduce our cost of capital with the goal of continuing to effectively allocate Capital through the tank or cycle we have once again shifted the priority of our disciplined Capital allocation strategy and are pleased to have worked with our board to establish a place to begin to return Capital to shareholders.

Respect the program which will initially consist of a fixed quarterly dividend of $0.06 per share.

To create long-term shareholder value. Well providing us the flexibility to continue to allocate Capital to best serve shareholders in terms of attractable attractive opportunities in the near-term in addition to the dividend. We believe a 30 million dollars share repurchase program can further unlock value for our shareholders based on our stocks current valuation relative to math in future quarters. We will continue to evaluate how to best allocate Capital balancing dividends share BuyBacks conceptual purchases based on the existing conditions second. We transformed our capital structure through a combination of paying down expensive debt and completing a $380 refinancing this enable us to reduce our cost of capital and insured an appropriate capital structure for the future.

Well maintained.

One of the lowest leverage profiles in the industry.

Finally are significant operating leverage and our earnings power. We're also evident in 2019. We capitalized on the strong Market in the fourth quarter returning to profitability off of the year was over $150 in cash and two hundred million dollars into it looked like well, the tanker Market recovery has paused due to the sentiment around the coronavirus. The increase wage rates are sizeable Fleet of product and crude tankers learned in the fourth quarter and at the beginning of the first quarter demonstrates, he weighs strong prospects in a robust Market wage as we progressed throughout the year. We believe that supply and demand fundamentals remain supportive of a strengthening Market. Once the coronavirus has been contained. In fact, she weighs continues to be well positioned to capitalize on the tanker Market strong long-term prospects based on our sides will spot exposure. Our operating Leverage is substantial.

with every $5,000 per

They increase in rates corresponding to 72 million dollars and even us and 62 cents per share in quarterly earnings. We will now open up the call to questions operation. We will now begin the question-and-answer session to ask you a question you pay in press * then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.

The first question comes from Dunnellon with stifel please. Go ahead.

Hey, good morning Lois Jeff. So I have a couple maybe actually so the first is just from a capital structure perspective am fantastic. You guys been able to pay down the debt that you have and are now substantially less leverage. Do you have a Target in mind? I mean is this, you know your lower than average but you know you'd argue maybe the the group was higher than it needed to be if they're they're a sweet spot for you.

Hey morning been.

Well, we've we've often said that that are targeted leverage that we allow ourselves to go up to which we did during the terrible. We're buying vessels was off around 50% loan-to-value. So obviously we're both that we don't have a set Target to get down to we just like the idea of Allegheny average first before returned as we have now to beginning to return Capital to shareholders, you know, we have with this new I guess. It's importantly I'd say we just new balance sheet, you know, uh, I'm a debt that has naturally more amortization built into it. So we'll be naturally do everything that a pretty healthy clip about equal to the depreciation, which I think is it's really good. So I'm sort of meeting you leveraging goals. And so we don't feel the need to to push through more than that. But on the other things I'd say is that that the wonderful thing about whoever else

optionality, you know then

That's a really great ship purchase or something like that. We we by being lower than appears. We have the option to to temporarily lever up to to allocate Capital that way if if if that kind of opportunity presents itself.

Right, right and then and then my second too short of relate to the market, but just getting a sense of what you're seeing and I'll try them together. The first is, are you seeing any changes as it relates to this rotten of sanctioning stuff? And the second is I believe that the the heavy fuel oil Carriage ban went to place on Monday. If I'm not mistaken. It's obviously just a few days in but is there is there been any changes as it relates to bunkering or fueling or anything that you're seeing is a function of that errors ban in addition to the the IMO 2026 Mercury implementation. Then I would take the carriage man in question. For our Fleet, you know, we're in a good position. So it's it's really not affecting us but we are seeing in the bunker markets. There are some vessels that hath.

high sulfur fuel oil on

Ford that, you know may need to lighter that off and that is something that is I don't think

predominant in the market but there are a few individuals ships that are experiencing those issues. And then what was your other question? I'm sorry about about Isabella. Yes. We're we're starting to see India came out and I believe the majority of those barrels were being moved from Venezuela off to India. And India is now winding down the over 300,000 barrels a day that they were receiving from Venezuela. So I we see that that's going to cause them to the idol that have been engaged in that trade and we should see India start to Source barrels from other areas Brazil other areas in the world as opposed to Venezuela.

Right. I appreciate it. Thanks a lot.

The next question comes from Randy Gibbons with Jeffries, please. Go ahead. Hey howdy lowest Jeff David. How are you? Good. How are you? Nice to see the newly instituted dividend. So congrats on that but looking at that. How did you determine that dividend amount of I guess six cents a share per quarter equates to about seven million a year off, you know coincidentally matches the the 10-year treasury yield of 1.1% here. And then as you mentioned, you know with your balance sheet and I guess a hundred and thirty million in Pro for more cash shares trading a massive discount to nav. Do you expect share repurchases to be meaningful in the near-term or is it going to be pretty conservative with coronavirus and what not?

So I'll start Randy and I'll let Jeff finish it essentially the $0.06 per quarter. We feel is long-term very sustainable and we thought a lot about averages and and what the market looks like out there and then on top of that I will let Jeff talk about it. Yeah, I mean, we we definitely had a look at this for a while back. Well before any effects of the coronavirus Etc, but you know that came and we said, you know, that's just actually a good test case. You know, we're we're comfortable with where our balance she did wear a break evens. Is that something like this, you know is sustainable and you might say it's small but thank you at least something we thought about it. It wasn't the the tenure to go, you know a month ago, but but it is running around that it's you know, I'm not that far off of the S&P 500 or or what the Russell 2000 pays, you know, it's in this day and age a number that is you know, it's helpful to invest her to have some return that wage.

feel that that as

I said in my comments that you know where our Shares are trading today. Yeah, we find our our share price to be a very compelling acquisition. So, you know, I think we're saying we have a thirty billion dollar share repurchase program in place we have for a while. I would also note that we're super pleased that the steps we've taken, you know going back to selling the LG which drugs represent enable us to get complete the the refinance of a balance sheet in a way that really happy with gives us flexibility to approach this kind of returning cash to shareholders, you know in different ways, you know, I I think you're seemed to fix part and you're you're likely to see us at these prices to the the actively involved with using our share repurchase program.

Right. Yeah, I think a great use of cash there now digging deeper into the coronavirus. You know, it's one of the few tanker owners with exposure to trying I guess in three different ways. Can you get further color on crude imports into China currently products exports out of China and then the ongoing delays for scrubber retrofits in the Chinese yards.

Yeah, so that's a very comprehensive Randy. So the first part of the the equation when we look at the vlcc deadly and what the liftings have been the fixtures have been pretty consistent, but we have seen vessels get revised orders where that's perhaps was originally charged with the intention to discharge China given revised discharged orders for India. We've seen vessels with discharge orders for China then get revised or dead Storage off of Singapore. So it is a very Dynamic situation and we are seeing fewer barrels actually discharged into China, but the market is still lifting the Cargoes and you're you're observing.

ships with alternate

Towards sport as far as products coming out of China because of the refineries are are definitely running as reduced pace. You're seeing fewer product exports out of China at this time. And then finally on the scrubber front it is the coronavirus has definitely impacted life scrubber installations for ourselves particularly on the two vessels that are in the yard.

We are seeing workers being repatriated to the yards and the team's you know working through this so that progress is being made on our vehicles that we have there, but we could definitely been impacted by that on the and then the final point that I would make is that the these are the category that has been most impacted and I would say the most resilient part of the fleet has been after Max's panamax S&M ours where we are still seeing in the second half of the first quarter off quite strong rates being posted.

Okay. Yeah Conference of question with an even more comprehensive answer so nicely done. That's it for me. Thanks again. Thanks. Thanks, right.

Our next question comes from Oman aktu with Clarkson's Securities, please go ahead. Thank you and Jeff just had a couple questions maybe first. Just wanted to make sure you don't get a sense of you know the cats.