Q1 2020 Earnings Call
[music].
Welcome to the Atlas <unk> conference call to discuss the financial results for the quarter ended March 31st Twentytwenty I would like to remind everyone that this conference call. It's being recorded today make did twentytwenty at 838 PM Eastern time and will be available for replaced.
Already today at 11, 38 am eastern time hosting the call today are being Kid, President and Chief Executive Officer, Atlas, Peter Curtis Executive Vice President and Chief commercial and Technical Officer, Seaspan and right, Yeah of course, and Chief Financial Officer Atlas.
We will open the call for questions. After the presentation from management at which point, David Sokol Chairman.
Lists add Thorsten Peterson executive Vice President of Seaspan ship management will also be available for questions I'll now turn the call over <unk> of course there.
Good morning, everyone and thank you for joining us to discuss outlets is first quarter earnings. This is our first earnings call since the closing as he's been holding company reorganization and our first quarter reporting combined outlets he's been in a PR financials weird cut interest.
Share a recent developments and financial results for the quarter.
This morning prior to the call we issued a press release announcing outlets. This first quarter results for the period ended March 30, Onest 2020.
The relief as well as the accompanying presentation for this conference call are available in the Investor Relations section of our website.
If you'd please turn to slide three.
I would like to remind you that are discussion today contains forward looking statements actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factor section of our annual report filed with the ITC on form 20-F for the year ended December.
31st 2019.
Our risk factors may be updated from time to time in our filings with yes.
Please note that we assume no obligation to update any forward looking statements.
I would also like to note that the acquisition of Hbr was completed on February 28, 2020, and as such outlets financial results for the first quarter of 2020 include a PR is financial performance for the period starting on February 29, 2020, and ending on March 30, Onest 2020.
With that I'll now pass the call over to Mr. being shut.
Thank you Ryan please turn to slide four.
Since the beginning it has been our vision to transform she spent into a global diversified asset owner, operator, now that our Atlas structures in place. We've had further work towards our vision of sustainable growth and value creation.
And your 20 have so far proven to be a turbulent and uncertain time, thus far however, as our chairman David Socal mentioned at our last Investor Day Atlas business is not about booms and busts, we have built a robust platform to succeed through market cycles and I'm not surprised.
How resilient, both our leading operating platforms seaspan and <unk> have proven to be.
This quarter marks the first time, combining seaspan and a PR together our performance in the first quarter along with the month of April reflects our focus on operational excellence the strength of our business model backed by long term contract cash flow and our robust liquidity position. Despite the extreme cold at 19 environment.
Okay.
Before going to the detail I would like to briefly highlight what we have achieved in twentytwenty.
Despite this unprecedented pandemic, we have immediately taken proactive measures to ensure our customers are well served.
In parallel we act.
Robust business continuity plan across Seaspan and <unk> as a result, we have experienced no disruptions to our customers no tower cells.
I want to thank our customers for their trusted long term partnership our employees, especially our seafarers for their dedication and hard work and all of their families for their support and sacrifice.
Our consistently best in class customer services, and the safety of hardware see fair and corporate staff.
Our highest priority we continue to maintain safety measures as outlined by respective authorities.
Atlas delivered a record Q1 revenue of 308 and $8.4 million, while we announced our first dividend. It is the 59 consecutive distribution since Seaspans IPO.
We are proud of our consistent track record as it is a reflection of our commitment to thoughtful capital allocation and creating long term value for our shareholders.
In terms of Seaspan over March and April at the height of Cobot 19, we took delivery of five vessels and deployed them all on long term charters with global leading liners for the full recently acquired 12000 Teu vessels, we closed a $340 million flexible financing facility.
And ended the quarter with a liquidity position of $393.7 million.
We're increasing our full year Twentytwenty revenue guidelines guidance up $15 million on the bottom end to one point, when a $5 billion and up $30 million on the top end to $1.2 billion to $5 billion for Seaspan.
In terms of a PR, although we have only consolidated results for one month, we have already made meaningful improvements compete in the $285 million refinancing of debt and announced new contracts. We're excited to continue to expand this business, which I will discuss later.
Please turn to slide five.
We are laser focused on building a platform for sustainable growth and value creation and this starts with our five key priorities along with our people processes structures and systems. During this quarter. We have made significant progress and I will provide a brief overview as they relate to Atlas Seaspan and.
<unk>.
As a leading global asset owner and operator, we continually focused on operational excellence and the providing full integrated best in class services.
This crisis has demonstrated at more than ever how operational excellence is the foundation of our robust business model.
As the news of Cobot 19 was announced in late January we took immediate measures to mitigate potential impacts.
Throughout these difficult times, we continually finding efficiencies within our daily operations and invest it the savings back into improving our customer services.
Especially we invested our resources and capital in technologies services and crew capabilities to ensure that our customers remain best serviced and the well protected.
At the heart of our business are the 4600 global Seaspan employees and 680 employees, whose efforts ensure we continue to exceed at the high standards and expectations. So again. Thank you all very much.
In both the global Maritime and power sectors Atlas is focused on building creative customer partnership and structuring mutually beneficial solutions. Our strong customer base includes the leading global liners for Seaspan and government backed utilities for.
The formation of Atlas and the acquisition of a PR enhances our financial strength and stability to support our future growth.
Our committed shareholders of Washington Group, and Fairfax Fairfax Financial Holdings.
Our strategic partnership with long term capital partners as well as our innovative financings have positioned us to continue to lead.
Lists provides the organizational structure for us to pursue in long term value accretive growth opportunities, while allocating capital attractive investments such as our recent vessel acquisitions.
The Atlas structure allows both seaspan and to optimize its respective capital structures and growth objectives, while creating synergies through shared services.
Please turn to slide six where I will provide an overview of financial highlights for the quarter and Orion will further elaborate on this.
An atlas demonstrated resiliency delivering strong financial performance for the quarter, while maintaining a strong liquidity position of $393.7 million.
We are confident in our long term contract cash flow and increasing our seaspan revenue guidance.
Twentytwenty revenue is not expect to be between 1.1, a $5 billion and $1.2 billion to $5 billion. The bottom and has been revised upwards by $15 million and the top and has been revised upwards by $30 million.
Atlas recorded a record quarterly revenue of $308.4 million operating earnings were $127.5 billion and our cash flow from operations was $130.7 million.
EPS per diluted shares was 15 cents for the first quarter of Twentytwenty loss on derivatives instruments contributed a 10 cents per share loss for the quarter.
See Spence vessel utilization was strong at 97.9% a slight decline from the first quarter of 2019, primarily due to an increase in drydocking rather than unscheduled off hire days.
Containership leasing revenue for the quarter was $292.5 million an improvement over Q1 2019 revenue of $285.3 million.
As of today, all 123 vessels in our global fleet have secured charters in place.
Appias power fleet utilization for the quarter was 63.6%, which is calculated by the weighted a number of megawatts contracted over the total fleet capacity.
In April contracts for eight turbine have been signed for deployment in Mexico, which will improve this utilization rate to 82.3%.
Given the mobile nature of Us fleet of gas turbine there will be downtime as asset mobilized to new project sites.
Yes gas turbine utilization was near 100% at the end of third quarter of 2019, and the commercial team has done a great job of putting these turbines back to work.
Please turn to slide seven as Seaspan continues to execute on transformative improvements and growth we remain focused on delivering quality customer service and solid financial performance.
For Seaspan corporate developments.
Spent closed its holding company reorganization on February 20, Eightth to create outlets Corp.
Let's begin trading on New York stock exchange under the ticker symbol AGTC old and both Seaspan and become wholly owned subsidiaries of Atlas.
During the quarter and throughout April we continue to grow our fleet and sign long term charters as a testament of our long term customer partnership.
Oh, and long term financing with a 10 or off 10 years.
This is achievement in addition to adding $100 million of new commitments on the <unk> portfolio financing program demonstrates c-span's financial strength.
<unk> and access to capital markets, despite a challenging market.
As previous mentioned C-span's business has been minimally affected by covert 19. After the results of our teams proactive and effective mitigation actions.
For commercial and operational developments, we also finalize a mutually beneficial charter modification with a key liner for six of our vessels extending the bareboat charter from four years to 10 years.
Operationally despite delays at shipyards, we completed three of the 10 announced scrubber retrofits and expect to complete the rest within two 220 or 20.
C-span's L.T.I.S. decrease 5% from December 2019, two 0.76, and we are working achieve our I.S.O. One four 001 certification by two 220 20.
C-span's future committed revenue stands at a robust $4.3 billion.
Please turn to slide eight.
Will continue to integrate a P.R. business, we have already made strides in improving the business commercially operationally and financially.
For a P.R. corporate development.
Concurrent with the closing of the acquisition, we successfully completed the refinancing of Apiarist debt with a $285 million of senior secured financing program, consisting of a $135 million to the term loan $50 million a river over $100 million to institutional private place.
<unk> funded by Black rock.
This financing optimize is a P.R.S. cap capital structure and positions the company for future growth.
For commercial and operational developments in April a P.R. signed contracts for 260 65 megawatts in Mexicali.
In addition to supporting high demand during the peak hours. The eight mobile gas turbine will help you sure grits stability ask the region adjust to rescind decrease in power imports.
We expect the turbines to be operational in a second quarter. Upon your 20.
With these mexicali contracts that brings the apiarist powerfully utilization to approximately 82% pro forma in a second quarter.
We continue to execute an hour business strategy with strong commitment to E.S.G.
Investing idol diesel generators, and making operational improvements to highlight during two one <unk> availability was maintained at over 99%.
So in summary, I'm extremely proud of the Atlas teams for consistently driving operational excellence, while delivering high quality customer services under these extreme circumstances.
I'm confident that we will emerge from this crisis stronger and the well position to succeed with that I will now hand over to Peter who would discuss the content and shove industry developments.
Thank you being.
Please turn to sliding on well, we'll discuss recent developments in the container shipping industry.
There'd been significant impacts on the content to industry in the first quarter. This has been understandably, primarily driven by the developing country contraction and global trade as a result of code with 19 and the associated look downs in China.
Followed by kept getting to other nations as the pandemic has spread.
However, as being mentioned these changing industry dynamics, which review as being over relatively temporary nature or to go to bars C-span's business model of long term contracts with cash flows.
But the leading global line accompanies.
<unk>, Oh sod with an overview or what we see in terms of global container shipping supply and demand dynamics.
And then I'll show also some comments on their effect on C. span.
In terms of global trade.
Well much remains uncertain the decline on world trade volumes, you're in your 2019 to 2020.
Expected to be in the range of 5% to 10% in terms of T.U. volumes.
Well, we have seen positive signs of recovery from China. Many third party research reports until spurt global trade Liberals recovering by the end of 2020.
Oh I Miss has recently provide the projection.
2021 should see a global G.D.P. growth.
Of some 5.3%.
As for the presumed Buddha impact of code with 19 on global trade remains with uncertainties due to evolving cause it affects outside of data.
<unk> and the main markets of North America, Europe and Africa.
We have <unk> recently seen the significance slowed down of demand from Europe, and North America.
Which is reflected in the full cost of demands <unk>.
<unk> of.
Europe, and North America, each comprise about 13% of global annual T.U. moves while indirect comprises about 30% of global Moose.
Lines are managing fret dreads, but extracting capacity three blanking sailings.
And holding tonnage idle for full round voyages.
We are cautiously optimistic about a volume recovery merging endless second half of 2020.
And we have seen those before during the past 2000 period.
If that happens we expect continued robust growth in tried volumes 2021 onwards.
The world recovers from those things are jungle shock and the likelihood of catch up demand and volumes emerge.
Moving on to the Bible fleet.
It's not surprising that those continues to grow as a result of declining global trade due to the cover to affect compounding the previous trade war impacts the Chinese new year seasonality and Q1.
The Idol fleet, there's still mostly made up of size segments less than 3000 T.U.
We now see small numbers distributed through the size ranges up to 9000, T. you as well as larger vessels withdrawn by means of line blank sailings.
In addition to these are my knees up the Idol fleet includes vessels undergoing scrubber retrofitting through 2020, representing about 2.5% capacity.
And where the vessels are typically 10000 to you and above and <unk>.
We do you anticipate the increase of the Idol fleet will cause adverse pressure on charter it's for vessels.
As a result wheel focused on actively managing a fleet of short term vessels, which makes up approximately 12% of our fleet in terms of T. youth or about 5% in terms of revenue to ensure continued employment <unk> affect the period.
Given those period of uncertainty.
Seeing customers five a larger and stronger tonnage providers, which was a benefit to c. span.
The order book remains with the historically low levels and we expect a meaningful slow down of deliveries through construction deferrals due to current conditions.
The line those have shown continued ordering discipline.
Partly as a result of the lines partnerships, which has benefit the the supply slot.
We expect the current code that situation to cause extraordinary cushion of line the companies.
Considering any new tonnage requirements unlikely the deferral of decisions to execute on additional both contracts.
The natural effect on charts of tonnage providers is a dog is the adoption of a similar discipline.
Hi, like that a portion of the order book is made up of options.
Which are potentially not to be declared in this current environment.
And to be either foregone or differed too light to that that's such we expect the order book to decline further.
Overruled blind the companies have been most impacted by the declines in global trade with their revenues being dependent on T.U. moves.
C-span is relatively independent of actual trade volumes.
While we expect meaningful impacts to our customers bottom line for 2020.
C-span's diversified customer mix, consisting of the leading global line accompanies <unk> customers during this difficult period.
Finals are currently benefiting from the low fuel price environment.
So during that bunkers make up some meaningful portion of the costs.
So you spend does not pay for fuel, but we see this as a benefit in terms of supporting the line us financial positions.
My final point to mention is that scrubber richer footing program continues on track with all our vehicles expect to be completed by July.
We continue to execute on discipline growth, taking delivery or for 12000 T.U. vehicles on five you're charges and one 9600 T. this'll on a three a charter since the beginning of the.
We continue to work very closely with our customers through those interesting period in developing and evaluating meaningful transactions.
Oh, well now hand, the cool over to run to discuss the financial results for the quarter.
Thank you Peter if we could please turn dislike then I will provide a summary of our financial results for the first quarter.
[noise] as previously mentioned the acquisition of A.B.R. was completed on February 22020.
Such outlet financial results for the first quarter of 2020 include need yours financial performance for the period starting from February 29.
<unk> on March 31st 2020.
A.B.R. is a strong addiction to the hours portfolio and we are decided to reintroduce the business to the public you know to hear more about the company and how we think about the business in the upcoming quarters.
Moving onto the key performance metrics.
Utilization continues to be you drive <unk>, he's been any P.R. business.
These bands utilization for the border with a strong 97.9%.
Decrease from 19 point to present in the first quarter of 2019 with a decrease primarily due to higher schedule Drydocking days.
Did you did 9.4% you waited utilization for the first quarter of 2020.
Eight P.R.S. bleep consist of mobile gas turbine, which are the current bogus.
The total powerful utilization for the quarter was 64%.
This will increase is eight of the companies.
Turbines or process of being transported in mobile.
The power projects in Mexico.
For these projects.
Yards utilization will be approximately 82%.
I'd been mentioned do the nature of a parent's contract and time associated with mobile is mobilization, which is moving the assets to the project location and he mobilization, which is the removal the assets from the project location, we expect eight yards utilization fluctuating period, where new contract again.
On the revenue side revenue increase 80% to $308 million for the quarter <unk>.
Maybe our revenue contributed $16 million with the remaining increase driven by the conventions. These bands operating sleep.
On the operating expense side, we saw an increase in 4% $60 million for the first quarter.
A.B.R. contributed 3 million of this and it was partially offset by lower if he's been operating costs per ownership day.
You know increase 18% $10 million increases primarily due to the inclusion of H.E.R. for the consolidation period.
Operating earnings net earnings were at 127.5, and $35.1 million, respectively for the quarter.
The decrease compared to the primary or was primarily due to the 227 million dollar one time gain recognized in the first quarter of 2019 <unk>.
Game. This bosses to gain was offset by stronger operating performance from C. span in the contribution of 80 are.
Yeah diluted U.P.S. for the quarter was 15 cents the loss on derivative then determines how negative 10 cent impact for the humidity P.S. calculation for the quarter.
Cash flow from operations reporter was $130 million compared to $129.3 million in the same quarter of the prior year.
Moving onto the balance sheet.
Cash balance at the end of the first quarter, including short term investments with $213.7 million.
We brought this with a robust liquidity position of $394 million, which also included under on revolvers.
We have demonstrated the ability to maintain a strong liquidity position, while growing the businesses DAPL capital allocation and access to global capital markets.
Over borrowings or point $2 billion as of March 31st.
Are up from $4.0 billion at March 31st 2019, due to the acquisition of E.P.R., an additional data to finance the acquisitions of vessels described by being.
Air holders equity was $3.6 billion as of March 31st 2020, and increase from $3.2 billion as a March 31st you does 19, primarily related to the shares issued as part of the acquisition of eight P.R.
We could please turn to slide 11, we will discuss developments in our capital structure and financial position.
We continue to effectively manage our liquidity with a strong liquidity position of $394 million.
We have maintained this liquidity position, while growing are we in improving our maturity profile.
One of the topics I continually discusses the competitive advantage is or access to the global capital markets.
Despite the challenging market environment, we were able to complete the 285 million dollar refinancing evade cares that increase our portfolio financing program at C. span by an incremental $100 million and clothes on an innovative 340 million dollar a flexible financing facility for for the recently acquired vessels.
Fairfax also contributed in an additional hundred million dollars per by 0.5% ventures maturing in 2027.
We were able to complete all of these financing <unk>, including pricing in 10 or improvements to diversify and improve arbitrary profile, while increasing flexibility across the Atlas Corporation portfolio.
This is a reflection of our global credit relationships and the trust they have in the stability of C. span in a P.R.'s business model or piece of Atlas's strategy is establishing an optimal capital structure at each of its business segments and we've made significant process in this respect.
We continue to focus on improving our credit profile, maintaining our net debt equity ratio at 1.1 over the last year while.
Right.
<unk>.
<unk>.
Really leverage business and as well positioned to grow in the near term.
[laughter].
[laughter].
For 30 for 2020.
For Seaspan, we are increasing our revenue and operating expense guidance, while maintaining our previously provided gionee administrative expense operating lease guidance.
As being mentioned this demonstrates the confidence we have in our resilient business model and success of our recent growth initiatives.
For 2020, and ours consolidated performance, we expect revenue to be in the range of $190 million to $220 million.
Operating lease operating expense is expected to be within the range of 40 and $54 million.
<unk> expense is expected to be within a range of 38 and $40 million and finally operating lease expense is expected to be in a range between three and $4 million.
We thank you for your time today and with that I will pass the call backs, the operator, who will open the call for questions.
Ladies and gentlemen, if you would like to ask your question. Please press Star then the number one all your telephone keypad well pause for just a moment to compile the Q when a roster.
You have questions of the line of Chris Wetherbee with Citi.
Hi, guys just on for Chris Good morning, I, just wanted to touch on.
If any customers have contacted you about potential charter restructures and if you anticipate any is coming across the balance the here and what they might look like just kind of one to get some color and some of the conversations you're having with customers broadly.
Yeah. Good morning, Chris This is Spain.
As you know that it is normal course of our business to working very closely with our customers.
Yes.
Looking at what their needs off.
So in terms of did the payments as what are you referring to give you may recall at the same quarter last year, we actually had to lease contract rewrite, whereas what the Ryan just mentioned that result in $227 million of.
Additional.
Income for the last sheet last quarter. So in general we are working very closely with our customers to provide into value through our expertise in whether it's a technology, whether it's a commercial operations or financing to find the win win solutions.
As for both our customers and ourselves. So this is included in the easy time as well as in a difficult time right. Now so we're very confident and we're actually working very closely with our customers on a daily basis in developing any kind of solutions. So in so far to this.
Here other than the six vessels, we actually.
Extended.
From four years to 10 years as we previously mentioned there's no other major material rewrite of the contracts so far but we are closing with our closely working with our customers.
Got it.
[music].
Just touching on guidance as well you increased it was that.
The rewrite of those bareboat charters the driver behind the guidance uptick just trying to understand sort of what drove that relative to what in your own the fourth quarter call.
Thanks, James from the increase in guidance as it relates to Seaspan.
That's a combination of a number of changes within the portfolio, but.
Primarily driven by the increase of the new vessels, we added to the portfolio in the first quarter.
Got it and then touching on if you're focused on utilization, obviously and you ever you're running at this at the pro forma.
82%, but just thinking about whats going over the past.
For months and sort of in the conversations you're having with customers there like how should we think about 82% across the balance of the to be relatively stable or should it rich sort of slowly going down.
Yes, we don't we don't particularly given the guidance on the utilization but.
What do you correctly pointed out in terms of what we we were going to be achieving in terms of the pro forma of the utilization is a good reference due to the nature of the mobile power we have to move the turbines from project to project so that will inevitably.
Cause some downtime. However, those are the downtimes will be effectively take into consideration when we're looking at each projects of return. So that you need to look at both in terms of utilization and also the project return and that's how we mentioned the business.
Specifically I think that given the current circumstances I think.
Given the nature of HCR business, which is a critical infrastructure by nature. So the demand actually it's quite stable and I think our team actually are working very actively on several opportunities and one.
Those opportunities actually it's in the final stage and at that will become if we will be complete that transaction that will be material. So we are quite the we're quite optimistic and also as as I said that you know both seaspan business as well as a PR business are critical infrastructure.
<unk> is in transportation. The other one is in power solutions. So they are rather I would say.
Immune to in terms of the demand.
And as I said, the the in terms of the HCR business specifically.
I think a we're working on quite a few opportunities.
Got it and then also is pure I notice that there was a man.
You should change just wanted to touch on if that was part of the initial plan.
Acquisition, and if there's any plans for replacement in the near term.
What the plant yeah lately.
Yeah, well, we're happy with the decision that chap makes and we will be finding their replacement in due time to lead the HCR to the next level.
Yeah I'll leave it there. Thank you for your time.
Thank you.
Your next question comes from the line of Sanjay Ramaswami with Bank of America.
Hey, guys. Thanks, a lot for the color.
On on IPO is putting that out.
In this without.
Help me understand.
Plus lets talked about the about $4.8 billion those of long term cash flows. It. So how do you think about that.
Into in terms of timeframe in terms of relevance.
This versus say spans $4 billion in long term contracted cash flows buying tuition that this businesses.
He is going to grow substantially from here or what kind of timeframe to machine for that so those cash flows.
Hey sounds great. Thanks, its Ryan.
From the $4.3 billion of long term contracted revenue that we talk about.
That is a function of the the entire fleet profile that we haven't seaspan.
If you wear to work through our disclosures you'd be able to think about the the roll off of of how that.
Cash flow profile looks over a period of time, it's one of the key performance indicators as it relates to our management team and how we think about engaging with our customers as well as structuring the platform for our business and so.
I think what begin would echo here is that we're focused on maintaining that long term contracted revenue profile because it helps support not only the stability of our business, but also the liabilities associated with it.
And the out.
And so just coming to IPO, then how do we think about that the timeframe. So those cash flows.
Oh from an HCR perspective.
On a forward looking basis, what you have right now is through the if your guidance that we've provided there will be incremental disclosures and in a similar manner for the larger contracts, we have an HR once we get our 6K out.
And you'll be able to see the same contacts from.
Cash flow profile rollout.
That's helpful.
I mean, maybe moving to the the 2020 revenue got it.
Just help me understand does incorporate any potential impact of coded 19, I mean, I know the press release toll.
What about the.
The potential impact in terms of the other line a cost effective in in terms of the demand.
[music].
Of these charters in the pricing, but this is actually incorporate anything from that.
How do we think about that.
It's a good question when we put our guidance we try to be a thoughtful as we can about the current macro environment as well as the micro engagements that we have with our customers. We feel confident in the guidance that we put out as it relates didnt.
Looking on a full year basis throughout 2020.
Coated and Noncovered related factors and so.
This.
This guidance does encapsulate, how we think about the current environment in our gauge wins with our customers.
Sure Okay.
And maybe just want to pay down I mean, I paid a total of about this in his remarks, but.
Just going more towards those conversations have line of customers.
And the potential worst case scenario. It if there was a potential bankruptcy in the space or.
A significant kind of material event with one of your line of customers. How do you got to think about that risking.
And the potential kind of for the carbon notching invited to deteriorate further from here, so Matt from a demand and pricing perspective.
Yes, Thanks, very interesting question I.
I think fundamentally it comes down to how do we.
How do you think about the effect of covered on our customers.
Oh of course, we as being a said we worked very closely with our customers.
In all cases.
They do have reduced volumes.
Yes.
Something that is quite plainly claim to be seeing.
However in terms of the longevity of the overall situation.
In our in general market discussions.
So the opinion is that we've actually bottomed up now and that this would likely sustained through through the rest of my.
And the expectations offer increased.
Into into June and onwards.
That said the.
Good discipline effected by the by the line as working by themselves and then also the coordination through the alliances.
You probably noticed flip the freight rates have not.
Dropped significantly unless those.
Through the discipline of withdrawing tonnage avoiding overcapacity.
On the trades.
Ill add to that the extremely low.
Cost, so fuel, which was a significant element and I.
Liner companies cost basis.
<unk> has been quite advantageous.
To these companies at the moment.
But gives you some color.
Yes, so Jay this is Spain, I, just add to what Pete as talk about for Seaspan, specifically first of all we.
Only work with the top seven of the top 10 customers. So in terms of the customers there there the top customers within a with the liners.
Business Secondly, we have a diversified portfolio a months these top seven customers.
Certainly I think that.
The aligners today, a much different than 2008, or you know 510 years ago. As you know that the do they have gone through a quite a significant consolidations together with the alliance in structure in place I think it today, if you're looking at the freight rates for example, they actually hold.
Right well, although the volume comes down but the freight rate has not came down and then as Peter mentioned earlier with the reduction of the with a decrease of the fuel price I think there I'm plus on top of that you have the government's assistance. So from all those aspects I think we are pretty.
Cautiously optimistic about the situation with Aligners and it today I think that they are much more disciplined.
They are much better positioned in dealing with such an unprecedented a crisis.
Okay, that's really helpful being Ana.
Thanks for that so for me.
Thank you.
Ladies and gentlemen, if you would like to ask your question. Please press star one on your telephone keypad.
Once again that is Don Juan.
On your telephone keypad.
I would now like to turn the call back over to being Chen for closing remarks.
Well, thank you everyone for taking the time and.
We appreciate your participation and wish everyone stay healthy and safe and we look forward to stay in touch and see you are in the next quarter. Thank you all very much.
Ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
Yes.
We can use the zoom Graham you like that's one thing.
Okay.
Should we switch over to the zoom them.
Yes.
Okay.
[music].
[music].
[music].