Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Guy that actually shipping first quarter 2820 conference call. At this time all pitches in China lifting only mode. After the speakers I can he should never be a question and answers fashion. You asked the question Jamie fashion, you want me to price or one on your telephone P.
<unk> today's conference is being recorded.
If you require any free basic since piece PRASK started you know I think now they stay in the conferences Richie speaker today Mr. breaks even finished CEO of game and I. Thank you. Please go ahead.
Good morning, and welcome to dominance is first quarter 2020 earnings call. Thanks for dialing in this morning before we begin we'd like to draw your attention to our forward looking statements disclaimer.
The making certain statements about future events that may or may not happen in a way in which we described please read page two of its in its entirety for our disclaimer about forward looking statements.
Please turn to slide four to review our operating performance.
In the first quarter of 2020, we earned approximately $46725 per day.
Our crude fleet on the spot market.
About $16425, a day and the products spot market, which includes our MSR tankers at $16600 per day.
All in TC was $42900 per day and $16000 a day in both the crude fleet and the productively respectively.
Hi, Domino's, we look at operating earnings in our fleet, which we calculate GC less up Exelis DNA, because we think it's important to highlight given the various ways. These expenses get classified in our industry.
The crude Philly generated $34000 a day, an operating earnings while the productively, which includes our handysize vessel.
Right about $8200 per day.
Our reported net income was $45 million or.
As of a dollar in 13 cents per share EBITDA was approximately $85 million.
And we purchased $1.4 million worth of our shares.
Which approximately equates to 137000 shares.
For our blackout period ended in the quarter.
Below you can see the spot earnings volatility during the year and corresponding periods in 2019 as well as the 10 year range.
So far this second quarter, we booked approximately 54% of the spot revenue days at an average rate of $48700 today in the crude fleet and approximately 50% as a product fleet spot revenue days at approximately $20400 today, which includes spot in.
Bars at $20700 per day.
So far in the second quarter, including our long term charters total revenue days of the critics later approximately 63% fixed.
At an average rate of approximately $41800 per day and in the productively approximately 60% is fixed at an average rate of approximately $18500 per day.
[noise] on slide five.
We all know oil is facing significant demand destruction as a result at the impacts of the spread of coven 90.
Six months ago oil demand was predicted to be slightly over 100 million barrels a day.
And today the latest estimate displayed on the left hand chart biopic is roughly 10% decline from there.
Coupled with the demand destruction days forward demand of inventory has spiked to nearly 73 days, which is about 13 days over the 10 year average.
OPEC plus is officially cutting production to try to manage these levels and the U.S. is expected to follow suit, though declining economics.
As a result leasing refinery throughput processing levels at well below capacity in the United States throughput levels or at the lowest they've been since 2008, roughly 65% of utilization.
On the graph on the right hand side, we can see onshore storage it is at or near its limits and excess oil is being stored and vessels since the contango spread is large enough to support the trade.
This is a key driver and absorbing tanker supply and increasing tanker rates in the near term.
The decline in oil prices has also caused a drop in bunker prices, which is the largest cost to spot vessels in the fleet.
Well certainly positive for the industry, we expect the factors to be short term in nature as demand recovers the trade will unwind, which will have a negative impact on rates. We are managing against this possibility and remain focused on maintaining a healthy balance sheet.
Turning to slide six.
Our positive long term outlook is intact. Despite the high level of uncertainty in global economic landscape tanker demand is likely to come under pressure in 2020 is inventories begin to draw the supply side of the tanker space continues to be supported by low order book and an aging fleet.
In the top half of the page you can see the tanker supply remains tighter than historical averages since the number of vessel on order is about the same as the number of vessels that have the potential to be scrapped.
We believe supply remains constrained, notably due to the growing age of the fleet.
But also due to the near term oil demand and underlying uncertainty of regulations and technology on Newbuilding tonnage.
On the bottom half of the slide we can say that tanker demand growth has been further modified to account for the demand destruction in the oil markets and we look forward to win those oil markets recover.
We still expect that the tanker markets will improve from 2020 as regional end balances of crude oil in product inventories or corrected to normalized levels on slide seven.
We show the graph of asset values relative to 10 year average both for Suezmax.
And the EMR fleet, we believe that this there continues to be disparity in values of older tonnage, particularly on the crude oil side, which provides upside potential for dominance and our shareholders.
We expect that a large fleet of older vessels can generate better cash flows than a smaller younger fleet, especially when considering the amount of capital having to be employed to purchase assets at today's prices.
This effect is amplified by the lower bunker prices as well.
At this point I'd like to turn over the presentation to Kevin our CFO to go through the financials. Thanks Craig.
The first quarter of 2020 represented the second consecutive quarter record financial results for Diamond Us with our large fleet spot market orientation, we're well positioned to deliver significant cash flow and robust akamai.
The unit leverage or 66 vessel fleet is substantial.
The first quarter saw adjusted net income approximately 45 million, which equates to $1.13 cents per share.
Spot crude fleet aren't 46700 per day, and the spot product fleet produced TC approximately 16400 stronger rates on both fleets than we saw in the fourth quarter 2019, and significantly stronger rates than the comparable period last year.
Time charters booked in prior periods at lower rates, but brought the quarterly Tc ease.
Down on both fleets.
Greg mentioned, the overall numbers booked for the second quarter, but I'd like to provide a little more detail on the pure spot figures for product fleet RMR fleet is approximately 51% booked at $21000 a day and our spot Handy fleet is 46% booked at 18000, a day for the second quarter.
On our crude fleet, our suezmaxes are 54% booked at approximately $49000 a day for the second quarter.
Number on the crude spot fleet is been dramatically impacted by the fact that about 25% of the spot fleet is on so called stranded voyages. These a spot fixtures that were signed in the weaker environment of February and March divestments were supposed to discharge in March and April but have been unable to do so because of the.
Logistical constraints, including refinery closures and lack of on store short storage. Some of these vessels are still laden today.
Currently there, earning the demurrage rates agreed and initial voyage, which unfortunately for us we're at significantly lower rates than have prevailed for most of the quarter. We've been unable to fix these vessels to take advantage of the strong market conditions.
The company produced 85 billion of adjusted EBITDA in Q1 up from 70 million last quarter.
Cash flow generation over all of a strong theres very little capex in the quarter, there's a small amount of activity on our share buyback program with $1.4 million used to purchase shares at an average price just above $10 per share.
Moving on slide 10, a an overview of the balance sheet shows that de emphasized continues to de lever at a good pace as scheduled debt repayments and a small pay down on our revolving loans for the largest use of cash in the quarter.
Net leverage on the fleet is now approximately 43% based on broker valuations liquidity situation at quarter end was healthy with approximately 81 million in free liquidity available to the company after restricted cash and bank required minimum cash.
I will mention again that we are entirely debt financed at with low cost senior secured ship loans from major international shipping backs.
After quarter end, we entered into interest rate swaps for approximately 25% for future floating LIBOR exposure at a fixed rate of 54 basis points effectively locking in a cost of debt of just above 3% on that portion of the debt.
Despite the tamale cash breakevens on the fleet have remained steady as an increase in opex that will discuss in a moment has been offset by a decline in estimated future interest expenses were able to maintain some of the industry, leading breakevens on our vessels.
Continuing to slide 11 on Capex that forward cap ex outlook is a fairly similar to what we presented in the last call no dry docks were completed in the first quarter for the rest of 2020, we have five products planned to ballast water treatment installations and three scrubber installations.
The timing in 2020 has shifted a bit as some of the work we had scheduled for the second third quarters has bled into the fourth.
The long term capex outlook remains consistent and timing and amounts with a modest year in 2021, followed by heavier outlays in 2022 in 2023.
Despite the fluid environment, we're maintaining our guidance on estimated cost for Yardwork as we believe we can continue to execute these projects at our prior projection.
Finally on the next slide touching a little bit on the pure financial impacts of the pandemic you know the biggest concern for us in the intermediate term as Craig discussed is the demand destruction created by the drastically reduced global consumption of petroleum products.
The thirst for floating storage given the sharp contangos in both the oil in petroleum products markets have insulated tankers from this demand destruction in the short term when the inventory cycle reverses the billion dollar question for our industry is how fast as demand recover to burn through the elevated global inventories.
In addition to revenue uncertainty the pandemic is also increasing our cost the entire industry struggling with crude changes getting adequate stores and supplies delivered to vessels.
How does this translates to guidance change we've increased annual opex expenses due to these difficulties, but we believe we will be able to maintain most of the other cost items at similar levels to the previous guidance provided last November.
One final note for me on Scrubbers, we're proceeding with our scrubber installations on three vessels, we expect to complete one install in each of the second third and fourth quarters of 2020 that I would like to turn it back over to Craig for the summary.
Thanks, Kevin before we open it up to Q and a we clearly expect some challenges in 2020 is the tanker market begins to field the impacts of the overall macro economic environment.
However, we do believe that the company's position well with moderate leverage and industry, leading breakeven levels to support the downturn and prepare for when the market does return.
With the natural limitations on fleet supply and a need for tankers due to the regional imbalances of oil we expect the tanker market to return to fundamental supply and demand.
Once we work off the excess inventory build dominates remains exposed to the volatility on the spot market and we'll continue to utilize our disciplined capital allocation in order to maximize our return to shareholders, while maintaining a healthy balance sheet.
With that I'd like to open the call up for questions operator.
Thank you.
I reminded you asked a question you want me to press Star one on your telephone to withdraw your question press the pound or hash key please standby only compiled the culinary roster.
Your first question comes from the line up and Nolan with Stifel. Please go ahead. Your line is open.
Thanks, and good quarter guys.
I have a I've a couple of questions. The first sort of relates to a little bit about what you're talking about the in there Craig you at least down a little bit more apprehensive about 2020 in the near term and maybe some of your peers have been Im curious.
Well first of all how does that impact your your capital allocation.
Yeah, the buyback program, you do a little bit.
Ill walk close to all is still almost the whole thing is available.
Do you sure if you are a little bit more cautious in the near term.
You maybe pull back on that or is this.
Do you feel like there is ample liquidity and then more broadly how you. How if you do think that this could be a little bit more challenging for a little while would would proactively are you doing sort of prepared for that.
Yeah, I mean that that's a question today.
What is near term I think I think if near term. If you just focused on the rest of the second quarter of that that's that's right around the corner and I think everyone feels good about that I.
I think I think in our mind, it's it's.
Show me, what the third and fourth quarter really look like and and quite frankly in the first quarter and right. When we were starting to do our buyback.
[music].
It got.
Increasingly more opaque as to what we saw in the third and fourth quarter and so.
As you have all the ships going into floating storage.
Not understanding or not having a strong point of view about how that unwinds.
It it could be not so bad.
Or it could be it could be much worse and so until we feel that we have a a better.
Idea as to how that sort of plays out I think we are cautious so we stopped purchasing shares back.
It's still an incredibly attractive price.
But you just need to be sure that you can weather the storm.
Right.
And and anything else.
That you can do proactively.
You are sort of battening down hatches a little bit.
Look yard you know, we're trying to do exactly what everybody else is to the extent that you can you can lockup good rates on short term time charters I mean, the vast majority of time charters are probably six months.
The customer sees the same thing that what we're just talking about.
And so I would say to that.
[noise], where we're trying to maximize what the market gives you today and to the extent that you somebody can give you a decent rate on a on a a short term time charter or oral long term John charter you certainly would look at that.
Okay, we're still very much believers in the long term tankers story and I think if anything this uncertainty will help keep a damper on the supply side, maybe even longer and more than we had hoped six months ago. So I think in the long term. We're we're still very excited about where it's going but you know.
We can see a trough coming with record inventories in demand destruction, we will be in a trough earnings position sometime in the future and how long it lasts and how bad. It gets is the probably billion dollar question for our industry.
Sure sure no.
Understood.
My next question relates to again, something that Oh, I forget, which who you're talking about the the fact that you have ships that are scheduled to finish their their voyages, but they can't discharge you're being paid into marriage, but even that demurrage has a finite.
Contracted duration from what I understand.
Do you have any leverage to maybe get market level rates or something like that instead emerged here, if you're still unable to discharge at the end of the director.
I don't if it's a very gray legal situation and you know I don't think we're the only.
Owner impacted by this I think were somewhat disproportionately impacted just the percentage of our crude vessels that ended up stranded is pretty high relative to our spot fleet. We are trying.
And I think after a certain length of time, our position gets better.
But just to give you a sense of what the impact is on that part of the fleet. The so called stranded we've been earning about $33000. A day average demurrage on those ships, obviously, an environment for much of the quarter, which was much much higher so that it continues to be an issue we have a couple of them that.
Look like they are going to discharge soon but there is still.
Uncertainty around several vessels.
All right I'll give I'll give you a great example, in so yet you fix a ship in March and they give you spot ship my view sponsorship and they tell you you have discharge orders in July.
And and so you know what they're doing.
In.
The reality is you look at it legally but you know what theyre doing their comparing that against the storage rate and the storage rate is a lot higher than you demurrage right.
And.
It's a it's a it's a tough call we've looked at it very very closely.
I'm not sure. There's a lot we can do is the short answer that.
Okay, all right well I appreciate and again.
Mmm pretty impressive results are going.
Thank you so much I said.
Your next question is like Omar Nokta with Claxton crack to Securities. Please go ahead. Your line is open.
Hi, Craig and Kevin.
Yes, Mark Mize quarterly update Yeah, hi, guys ill, just going to say, Matt Nice quarterly update always good to see big cash build and sizable debt repayment.
And it looks like we're set for repeated that here in the second quarter.
I did want to just how to a couple of follow ups.
And obviously on that last the last points regarding the Suezmaxes.
You know well there.
When we think about those what were those vessels booked basically just a normal spot wage to go from eight to be and then they've just been stranded or were they the type where we've heard about increasingly wear that's harder request a.
A spot vessel and then once options for storage call. It thereafter is that what this is really the vicious actually stranded.
Just just stranded just normal voyage I mean in fact, we had a swing back on the West coast that was booked out was supposed to be a five day lightering wage just lightering of the LCC off the U.S. West Coast, and then because the refinery shutdown.
A five day boys turned into so far do an Apple Johnson County, Yeah.
Oh, I mean, you got all kinds of things that depending on where you are you going to file your bottom you're going to you're going to do all sorts of things that you would normally calculate as part of Oh storage option and you did right and so it.
It's a it doesn't make you feel to it.
Yes.
And just another example, you know the west coast, what we're supposed to be five days, but every hour of that vessel just sitting or is the target moving it somewhere else.
Ah that particular vessel is one of the that we have finally gotten discharge I think it's supposed to discharge next week.
So there is some light at the tail end of the tunnel on on that one.
Okay, and and don't want to kind of belabor the the topic more of it.
You did mention is a sizable piece of the of the spot fleet do you have a perspective on what number of Shipset is that maybe five six ships Ria along those lines.
It was a in terms of stranded voyages. It was about five ships in terms of day count of that ER that 33000, a day number that those those vessels were earning that was about 25% of the spot days or in our estimate.
Okay.
Alright, and then.
You mentioned, Craig the TC demand as Theres been a lot of six month activity and.
When we think about with Diamond US has been doing you've obviously got a lot of spot exposure and yet you do have a lot of tcs from prior quarter.
Yeah.
Yeah, I mean, we I mean.
So we did a couple of short term deals we put a number of ships on subs to do longer term deals. They all failed.
Quite frankly, I think theres, a tremendous amount of voyages that were put on subs in the industry that.
You know you are put on subs they see if they can put another ship on on subs cheaper and they will fail, you and and declare the other guy.
And so.
Uh huh.
Having said that.
I think I think most of this short term time charters are all about that first voyage, if they can make a big number on the first voyage you got lifted.
If they can.
And again they can't.
Close that out lock that up.
As a good chance you failed and so.
There's a there's a little there's a lot of interest in those short term time charters.
I think I.
I think most people probably prefer going longer today, if they could I know I know for instance, a lot of Vo number of people had deals that they could get longer term deals with I think largely on the suezmax a vast majority were about six months.
Okay that's interesting.
Craig because some of your VLCC appears earlier, we can discuss that the thing about fixing and sailing.
And bus exaggerating what the you know the index averages are for Tc rates and so it is what you're talking about obviously most people would have the VLCC thing with maybe some impact and the other asset classes is this something that is prevalent basically in the in the suezmax as well as in the product.
Market as well.
I mean, I think I think that's the sort of a hidden story and we normally you see a contango market in is largely crude oil and.
But the contango market is alive and well in products in an in a giant way and and so we've seen a lot of interest we've seen some interest on short short term time charters on on on products as well even on smaller ships even on.
50000, Tyler MRF and Weve.
We basically done some of those and.
And so.
All of those things both crude and the products. Both are our tightened as a result of floating storage Omar to another short answer to your question is yeah, absolutely look the abuse of putting a vessel on subjects, which has turned into essentially free 24 to 48 hour option at a fixed rate is.
Absolutely happening in every asset class correct.
Oh, that's interesting and maybe.
I know been carrying on here just have one more maybe kind of a bigger picture view on the product. The no obviously the product suite looks to be when the drivers to today with where rates are the breadth of really broken out there's a number of logistical challenges.
As you guys have mentioned better keeping supply generally tight for the product fleet really globally.
And when you think about where diamond us as with the product fleets you had sold some shifts back in the summer fall of last year.
And it really just kind of held onto the fleet as it is now any any changes in how you're viewing.
Your your product positioning do you look to.
Want to maintain your current footprint, which is fairly sizable it that's it.
Look so we've got a.
[music].
Sorry, I didnt quite hear all that Omar.
Oh, sorry, I don't know if I cut out than I was just simply asking if.
Do you would you when you think of that you're positioning in the product suite do you like to just campaign, where you are.
Yeah look and so our product fleet, we have 50 ships 44 in bars and six or Handys.
The Handys are absolutely cash cows today.
So they're generating.
True tremendous amount of cash relative to their real value today.
And so we think we think value should edge up at the same time of those those handys or 2006 built and and so.
And they are relatively high on that if a 10 year average if you turn to page for Craig went through the Acidize on page seven and just the right side of the this page being more relevant to our existing fleet you can pretty clearly see that.
The second hand product tonnage is really toffee in terms of historical values. So I think would we look to.
Self vessels, it's pretty obvious that it's.
More likely going to be in the product fleet that negatively.
[noise], Okay. Thank you I appreciate that.
Thanks, a lot guys when looking forward to next quarter.
Yeah. Thanks Omar. Thank you. Your next question is I try and be Kevin's from Jefferies. Please go ahead. Your line is open.
Hi, gentlemen has gone.
I read it really good.
Hey, good I too have 10 question, so get right and I was getting.
Yeah.
[laughter] Little thing there for only a congrats yeah, obviously on a record quarter are looking ahead to the second quarter. Your your forward guidance is a little below your peers, you know, but it sounds like much of that is due to that demurrage and the vessels being tied up on prior voyage wins, but with that what kind of rate to you booking this week right pursue.
[music] as maxis for M. ours, just trying to get a sense for kind of rest of the quarter guidance.
Yeah, I mean, right now I would say the Suezmax markets about 40 a day.
On a round trip voyage.
Products or or or sort of broken down into east and west I think the east market is still very very strong I think the us Gulf is.
It is much much weaker but strengthening.
And.
And so you know there's a lot of interest all all over the place.
But I will I would say it's around.
Low twentys on the products out of the business.
Yeah, Let me just in general.
Looking at our estimates and the positions of vessels right now the suit the rest the unfixed part portion on the Suezmax fleet, it's probably a little weaker than what's in the book and the more fleet, probably a little stronger I will give the extreme caveat that a changes so rapidly that if I had given this answer.
A couple of weeks ago, it might have been completely different.
Yep.
We're seeing same anthem reports here.
All right and then with that kind of more toned down per se outlook for later this year have you recently signed are looking to sign some time charters to cover six 912 months.
[noise] Yeah in general I think we see ourselves as a spot operator and that 80 20 spot time charter balance is kind of where we want to be in a long term I think we would over rate overweight time charters given the rate environment I'm as Craig said, we would have liked to have done a couple.
More on the on the crude fleet.
And that by a couple more we actually have done as he said a fair amount of six month deals. We include those in the spot fleet because really for Suezmax. That's two to three voyages and it's really a spot decision based on the position.
But we're talking about time charters of a year or longer if we could.
Source, if you at numbers that makes sense for us we would take advantage of that opportunity right.
Go or no I want to 10 by ask a third offer the scrubber installations, how flexible are you in the in the timing of these going forward I know you said right now it's one per quarter.
Yes, so we've got one being installed right now so that one's going on we've got another one that's that's highly likely to go on.
In the near term a the third one which is now looking to be a fourth quarter event is.
Is one that the vessels currently on one of these short term time charters.
We have more flexibility around it.
And our the if there was a decision point on the remaining three it would be on on that one as we get closer to year end.
Go well Hey, that's it for me Thanks again.
Thank you.
Next question is from Liam Burke with B. Riley. Please go ahead. Your line is open.
Hi, Good morning, Greg Good morning, Kevin.
Oh, Hey.
Craig.
What I'm looking at the storage cycle with crude probably being shorter how do you look at the duration of the demand for storage on the product side.
Yeah.
On the product side I mean, that's I mean, we're pretty well in a unusual territorial now is what I, what I would say okay.
How many times do you see him ours and floating storage.
You just don't see yeah, Liam I see in you know, we're obviously keenly interested in this and I think I've seen for presentations from from oil market experts analysts and researchers and each one of them has a different projection and many of them give multiple projections.
From very very rapid.
You have decline of inventories to a more prolonged cycle that that doesnt have demand reaching.
Free pandemic equilibrium for you know over a year. So it's it's really incredibly uncertain, yes, I'll tell you I'll take the other point early on that that's an interesting point and so when you talk to the.
To the customer side of the business they'll tell you that you basically are at rock bottom on utilization and so you get down to US I think we're at 6700, 65% today in the United States. When you go beyond that you basically go from that to shutdown the refinery right and so it's.
Probably not going to have declined anymore and so the real question.
The real question is are is that 65% utilization.
Rolling off more than you can store [laughter] more than you can use and it looks like the answer is yes, and so you could you could actually make an argument that.
On the product side compared to the crude they're actually might be more more more relative.
Floating storage on the products then then on the crude.
Okay.
So when I'm looking at your Ah you mentioned your target of 80 20 split on a on spot versus time charter.
With the different markets for both crude and on the product side is there any thought too.
The weighting more heavily time versus spot as you look at the Uh huh.
The runoff of inventory on floating storage.
Yes, I mean, and so weve edged up beyond the 80 20, I think I think we're closer to 30 today.
And and that's in light of you know the the world that we're living with today and so.
Third fourth quarter is going to be exciting times I don't think.
Everyone wants to have that that answered and no. One has the answer to that and so we'll just have to see how the world recovers.
Great.
Thank you Greg Thanks, Kevin.
Thank you.
And again, if you like to ask a question. Please press star one on your telephone keypad.
Your next question comes from the line as Jay mentioned my here, we're seeking Alpha. Please go ahead. Your line is open.
Good morning, Craig and Kevin Congrats on a quarter.
Yeah, good morning Ajay.
Yes, I think we had pretty good discussion across the board there with some of the storage and and demurrage issues I definitely striking and more I guess conservative Cowen I've seen some of your peers are the interesting to see how these things pulled out I would like to review your repurchase program. Because I know you just launched a 50 million dollar one I know you said, you're being a little markets.
Third if today can you speak to us about how.
What the constraints that are I think it's 50% of net income is that correct is that just for the next quarter or as their ability to kind of extend that ability to repurchase further on a year.
Yeah, So Jay it is.
Correct. So when we talk about this restriction it is in our two main senior credit agreement. So does that is a bank imposed covenant, it's 50% of the net income of the previous quarter is available for share buybacks in the current quarter. So the bucket.
For this quarter is based on the earnings that we delivered the market. This morning, and bucket does reset every quarter. So it's it is a use it or is it.
Calculation.
Okay that makes sense, because I'm tracking roughly about 22 million as the bucket that you would have available to utilize in the coming quarter, I guess out and I know that it would ending July or how that's exactly the day or whatever but so can you speak to us I guess, what is your target leverage and sort of cash balance because I know you said your conservative on the Mark.
But at the same time your any the right now is about $21 a share and by the end of the quarter. It's probably 23 to 25 a share so enormous discount. So could you. Please kind of discuss what sort of leverage on what sort of cash you would want before you'd be willing to repurchase.
Yeah, it's not you know.
In general leverage target I think we'd like to see if we are roughly 50%.
LTV today, we would like to see that trending towards 40%.
By the ended the year and hopefully fleet values hanging in there we get there relatively organically through.
Our debt repayments are scheduled debt repayments, which are which are rather large.
To us it's not about.
It's not really about the target for cash balances today, it's about the uncertainty and you know shipping usually gets into trouble factors usually get into trouble because cycles are unpredictable and use the industry does not really see it turning into a prolonged downturn or worry.
A sharp downturn until we're already in the midst of it we feel that this next trough well hopefully short and an isolated.
Impact from the pandemic.
We feel it's very very visible.
So I think we're being more conservative today than we certainly would have been and we certainly had hoped to be when we put the share buyback program in place in March.
So it's a little hard to give you precise targets until we see a little more visibility as to what the sort of intermediate term bolt.
Okay very very interesting there and then final question I think Youve mentioned, it's a little bit on your previous questions with floating storage and product.
If you had to pick yeah.
You had to pick a sector for sort of the near term call. It six to 12 months and then the long term.
Call. It three years, what do you think is more favorable are you more favorable on the Amar product side or are you more favorable on the Suezmax side, both I guess short term and then longer term.
Yeah tough call you know it if it changes pretty damn fast I mean.
If you ask me six months ago, I would've said the crude side of the business probably feels better.
I think I think certainly.
I think in the near term the products out of the business is going to do really well so.
I mean that I know that's not much of an answer [laughter] I really we do think they're pretty closely linked in the long term and given the interplay in switching at the margin the whole tacker chain is pretty interconnected and you won't see one side of it disconnected for long from the other side.
Correct one of the reasons why we like having the mixed fleet.
Yes, Thanks, Craig Thanks, Kevin Congrats on good quarter, and hopefully you'll find it in your pocket Steve by some of these shares if they stay at 50% and maybe thanks guys.
Yeah, well, we hope so to exit.
[noise], we have no further audio questions at this time, they know tenant back I think you presented for any closing remarks.
Yeah, it's very interesting times.
Like a lot of companies.
Your.
First and foremost were interested in the safety of our.
Of our crews of our shore side personnel and and trying to deal with the things quite frankly, no one is ever dealt with before and.
And so we're doing our best to to manage the business through this time. So we appreciate your support and fingers crossed on on the next quarter's earnings. Thank you.
Thanks.
Thank you. This concludes today's conference call you may now disconnect.
[music].