Q2 2020 Teekay LNG Partners LP Earnings Call

Welcome to de Teekay LNG Partners' second quarter 2020 earnings results conference call. During the call all participants will be any listen only mode. Afterwards, she will be invited to participate in a question and answer session.

That time, if you'd have a question participants will be asked you press star one to register for a question for assistance during the call. Please press Star zero on your Touchtone phone as a reminder, this call is being recorded now for opening remarks, and introduction I'd like to turn the call ever to the company. Please go ahead.

Before Mr. current begins I would like to direct all participants to our website at www Dot Teekay LNG dot com, where you'll find a copy of the second quarter of 2020 earnings presentation will review this presentation during today's conference call. Please.

Please allow me to remind you that our discussion today contains forward looking statements actual results may differ materially from results projected by those forward looking statements additional information concerning factors that could cause actual results to materially differ from those and afford or your segments is contained in the second quarter 2020 earnings release and earnings presentation available on our website.

Now I'll turn the call over to mark to be yeah.

Thank you Scott.

Good morning, everyone and thank you for joining us on our second quarter of 2020 <unk> earnings Conference call for Teekay LNG partners, We hope that you and your families are all seats unhealthy.

I'm joined today by Scott Keaton Teekay gas group CFO.

Before getting into our results.

We'll take a moment to thank all our seafarers and shore based staff for their continued dedication to maintain business continuity and bringing energy to the world, but she case spirit.

Well Cobot 19 is having an unprecedented impact on the world and it's clearly a major focus for us.

Our long term contract cover with our high quality customers has ensured it has had a minimal impact on teekay LNG is operations and cash flows.

We are truly proud.

Our onshore colleagues and especially our seafarers have continued to respond to cobot 19, while maintaining consistently safe and efficient operations for our customers.

We have a number of slots to get through this quarter each of which we believe is important for current and future investors to consider when evaluating Teekay LNG.

Therefore, we will only briefly touch on each slide which will provide more time for Q in a at the end.

Turning to slide three of the presentation.

Review several teekay LNG is recent highlights as well as a few key takeaways.

Our second quarter adjusted net income increased it increased to a record $62.6 million and our total adjusted EBITDA also reached a new record level $192.3 million.

Eighth consecutive quarterly increase owing primarily to the delivery of our Newbuilding program, which was completed late last year.

Three of our 52% owned LNG carriers recently commenced new charters ranging from eight to 12 months.

Fees or LNG fleet is 99% or essentially 100% fixed for 2020 at attractive rates.

As we will discuss the current spot LNG carrier market is weak with brokers assessing rates at 35 to $40000 per day, which does not account for utilization.

On a utilization, we're time charter equivalent or Tc basis spot fixtures today are earning on or earning onerous closer to $30000 per day, all in compared to our average expected LNG Tc rate of over $80500 per day for all of 2020.

Our strategy of maximizing utilization and does the revenues of our LNG fleet is set to continue with 94% fixed rate LNG coverage and 2021.

Importantly.

It should the contracts within our portfolio of long term charter contracts is backed by high quality customers and each has been operating as expected.

Because of this we're able to reaffirm our previously provided 2020 financial guidance.

We have recalibrated, our earnings per unit or U.P., you guidance slightly to account for the precise timing of units issued to settle the IDR buyout completed in May.

As a result, we expect you to be in the range of $2.40 to $2.90 per unit 2020.

Further details can be found in the appendix slide presentation.

We believe we have a strong financial fight foundation as our leverage continues to decrease.

We have no remaining gross capex no debt maturities in 2020.

And those maturing in 2021, we believe are well in hand.

Lastly, we have been ex actively returning capital to investors in a sustainable manner, which is included distribution increases of over 30% each of the last two years and opportunistic buybacks.

Our current distribution is well covered with the DCF coverage ratio of over four times and representing only 35% to 40% for our adjusted 2020 net income guidance range.

We will finish this slide by acknowledging the excellent work of our short and see base HR professionals, who have made significant progress through leaving a substantial portion of arm of our colleagues at sea.

This is no small feat given the logistical challenges the cobot has brought to worldwide travel.

We still have work to do and we will not stop until everyone has been relieved and returned to their families.

But this must be done safely as it has been completed to date with no current for past cases of cope it reported onboard.

Looking to slide four [noise].

We mentioned upfront that this was another record quarter for Teekay LNG.

What's the delivery of our three and a half billion dollar growth program in December of last year.

We're now beginning to recognize the associated cash flow and earnings.

This is leading to year over year and quarter over quarter growth, which is continued for the past two years as you can see in each of these graphs.

We took delivery of six LNG carriers, and the Bahrain Regas terminal over the past year and we have enjoyed higher mid size LPG rates in our 50% on JD was exmar.

All of which contributed to increased earnings and cash flow.

Please note that we are expecting higher than normal repairs and maintenance and scheduled drydocking activity in Q3, which we expect will impact earnings next quarter.

However, we expect us to be temporary entities into and we expect finished the year strong.

This impacts the impacts of this activity can be seen an appendix on slide 18.

We had been including slides five and six in our presentations for many quarters now.

Perhaps this quarter more than any previous quarters. These slides set us apart from nearly everyone in our universe.

Our take or pay contracts have no unilateral provisions for change in the terms were charter rates.

I will review in a moment.

We have witnessed a number of cargo cancellations, but as expected we continue to receive revenue per the terms of our charters.

As stated last quarter, we do not foresee that any of our fixed rate contracts, which are detailed on slide.

In jeopardy of being canceled despite the uncertainty in today's energy environment.

Slide six details the LNG vessel names are ownership percentage former propulsion customers fixed contract lengths of our LNG fleet, which is held within joint ventures, We we where we have shared control and thus are accounted for using the equity method.

Combining this fleet and our consolidated fleet detailed on slide five all told we're now essentially 100% fixed for the remainder of 2020 and 94% fixed for 2021 [noise].

Although our exposure to the spot LNG carrier market is extremely small for the rest of 2020 and into 2021, we thought it might be interesting to provide our views on the current weakness in the spot markets on slide seven and eight and the possible Green shoots we maybe witnessing on slide nine.

Turning to slide seven.

This is a graph of current spot LNG carrier rates as quoted by brokers.

As mentioned earlier this is not necessarily what the vessels are earning on a full utilization basis, which is generally less.

2020 started seasonally similar to 2019 with a strong, albeit short went to spike.

Led by relatively robust demand for LNG before declining interest into the spring.

In February March of this year, the impact of warmer than anticipated winter combined with the global slowdown as cobot really took hold resulted in anemic demand for LNG that is still working to recover.

As a result spot LNG rates have not materially moved off the lows the better part of the past six months.

Looking now to slide eight.

The weakness in rates discussed in the previous slide is particularly evident when looking at actual LNG trade flows as measured by the number of daily LNG cargoes into four major Asian, and South Asian, LNG demand centers, namely, Japan, South Korea, China and India.

The number of daily cargoes and see these nations in 2018, and 2019, followed fairly similar seasonal patterns, increasing in anticipation of colder winters and reducing during the summer months.

However, once cold it really took hold in Asia in late later January and February the number of daily LNG cargoes decrease substantially and in Japan, South Korea in India below 2018, and 2019 levels.

There have been a few bright spots in the far east and India over the past few months as buyers of look to take advantage of cheap LNG prices.

But significant uncertainty still remains as some lockdowns had been reinstated and businesses have reopened sporadically.

And while these graphs are only highlighting the experienced in Asia European natural gas consumption down 7% year on year.

During the first five months of this year, creating cratering gas prices in that region that it's become a balancing point for the LNG trade.

On slide nine.

There were a number of U.S. LNG cargo cancellations in June July and August.

However, so far they are projecting 40% fewer cancellations for September.

Before we move on to discuss the rest of this slide as a reminder, card cancellations have no impact on our revenues if our ship is ready to load and the customer cancels. The cargo we continue to be paid.

We believe the very recent slight uptick in the price of LNG.

As shown in the grafted left may lead to an uptick in chartering left activity levels for spot LNG carriers.

Very recently, we've seen reopening of the re are the arbitrage window.

As graph to the top right assuming delivery into Japan in October or as shown at the bottom right into Europe.

Whereby traders have been able to make a small operating profit on this contango, which may be behind the recent uptick in chartering activity market has experienced.

It's still too early to predict how this year's winter spot LNG market will develop and while we do not have exposure until this December at the earliest and even then for only half a ship. We hope that these early signs do in fact become green shoots greater LNG shipping activity and rates.

We haven't presented slide 10 for awhile.

And we've updated it to June 32020.

Our forward fee based revenues of which LNG base revenue make up 99% of Teekay LNG is total amount to $9.3 billion.

Importantly, most of this transfer translates directly to cash flow with an EBITDA margin of 75% or $7 billion afford EBITDA.

This level of EBITDA compares favorably to our current total adjusted net debt balances of $4.5 billion, which includes our proportionate net debt of our channel joint ventures.

Importantly on average our LNG has remaining fix contract life in excess of 11 years and these contracts are servicing the needs of what we would refer to as blue chip customers, whether they be household energy names like shell BP in Shinier to name a few.

Government backed projects like our investments and ships, which serves the needs of Qatar and brain.

And projects, which are strong and strong commercially in technology technologically like are you mall Icebreaking LNG carriers.

I'll now turn over to Scott, who will discuss the next two slides before we conclude.

Thank you Mark.

Turning to slide 11, we have discussed are balanced capital allocation plan in the past and it's been about nine months since reviewing it at our Investor day, So we'd like to take a moment to discuss the progress made on each initiative since November of last year.

As we ever be reviewed with you in the past and as I will do on the next slide we're making good progress with our de levering efforts, we've reduced our total adjusted net debt by 428 million or nearly 10% since the end of 2019, which helps keep us on track to be within our targeted leverage range in 20 to 21.

We have been returning capital to investors in multiple sustainable ways, we've increased distributions by over 30% in each of the last two years. However, as Mark mentioned earlier, our current distribution of one dollar per unit is still many times covered by both stable earnings and cash flow and we have repurchased nearly 45 million of our own LP units.

At attractive prices, however, with a continued uncertainty in the broader financial markets I expect additional unit repurchases will remain on hold of this time.

And the last pillar of our balanced capital allocation plan is the potential for disciplined growth. We completed our growth program in late 2019, and with most project tenders delayed six to 12 months due to cobot any future newbuilding deliveries has been pushed out to 2025.

Yes, what to do just fine because we have lots of options to continue executing on the first two pillars in the meantime.

Turning to slide 12, and looking at the graph to the top of the slide our leverage continues to decrease looking at the Blue line, our leverage as measured by net debt to total adjusted EBITDA on a proportionate basis continues to produce we have moved from an annualized 6.7 times one year ago to 5.9 time.

As of the end of Q2 2020 on annualized basis.

We expect our de levering efforts will continue into the future due to scheduled amortization.

This delevering benefits investors by building financial flexibility through a higher equity base entered interest expense savings.

While the significant portion of our interest rate exposure has been hedged should interest rates remain low the interest cost on our floating rate debt will also decline as indicated in the appendix were and we expect Q3 consolidated net interest expense to decline by an estimated $3 million or nearly 8% compared with consolidated adjusted net interest expense in Q2.

2020.

Looking at the chart to the bottom right. We also believe that our financial foundation to strong because of our very manageable debt repayment profile.

We have current liquidity of over 305 million and no further debt maturities in 2020.

We have to commercial debt facilities, and why Norwegian bond that mature and 2021 and.

And we have now agreed terms with the existing bags and are expecting to refinance both 2021 bank debt maturities over the next few months.

And as for the Nok bond it doesn't mature until October 21, So we have time before needing to address this maturity. However, I know what the U.S. high yield bond market is currently very strong with attractive pricing and we are hopeful that the Norwegian market reopens. After summer holidays next week it will be equally constructive.

In summary, we have strong liquidity balance a very manageable debt profile and a strong bank group and therefore, we believe Teekay LNG has a strong financial foundation, which benefits all stakeholders stakeholders I will now turn the call back to Mark to conclude.

Thank you Scott.

Before we open up the call for questions, we would like to close out today by recognizing the continued volatility and uncertainty has occurred in the natural gas and LNG markets, both from demand supply and pricing points of view and the impact. This has had on short term LNG shipping rates and the longer term outlook for new projects.

As economies reopened and hopefully returned to the same level enormously.

All become clear to us.

However, during these uncertain times, we take comfort in our robust business model with a fully fixed out LNG fleet strong financial Foundation, and dedicated staff and seafarers, who keep everyone sees as we plan to reorient around the new normal.

Thanks for your time today, operator, we're now able to take questions.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Using a speakerphone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Again press Star one to ask a question.

For just a moment to allow everyone an opportunity to signal for questions.

Well take our first question from Randy Gibian's with Jefferies.

Oh, the gentleman has gone.

Good morning, Randy.

Right.

See I looking I guess, it slide 12, not much do or nothing do relates to the remainder of 2020 I guess what are your plans for those kind of larger repayments to the balloons in 2021 looking to refine those or possibly even we pay celmer, most with kind of cash on hand.

And then I know you mentioned unlikely to repurchase common units any appetite for the preferred unit.

Hi, Randy's Sky here, so yeah for the 21 maturities, we've got the Norwegian bond, which we will continue to monitor.

We do have time on that one but as I noted in my remarks that Mark today, I think is going to open up strong next week, and we'll see a number of issuances, which will.

Give us some flexibility to to look at that market.

For the both of the 21 maturities one of them is in our Exmar joint venture and I would say that one is in the final stages. We're just getting one bank over the hump and then we expect to have a fully committed.

Well, there so work through documentation and that should be done within the next few months and then on the Tangoe deal that is a long term charter backed by BP goes out till 2009 I believe.

And our lead bank has already committed and we've agreed terms and so again I expect that wanted to be tackled in the next.

Few months here, so we're feeling pretty good about all of our 21 maturities and then as for up paying some of it now with cash.

I, we have 147 million remaining on the Norwegian bond and 21 and as I've said in previous remarks, I do expect to that will be renewed, albeit at a smaller level. So we will actually be de levering when we do a luxury from S. Alan.

Got it okay.

And then I guess, just looking at long term charters and kind of possible expansion. You know you stayed away from making any offers for the recent 14 LNG newbuildings with shell.

Is that just because you're not looking at expansion at all right now or did you just not like the terms either the rate to the duration of those newbuilding contracts.

Well, there's a few things or any one is shell is a great credit, but they're also already our largest customer so we'd like to keep a four portfolio around 20 around 20% revenues per customer.

Shell already exceeds that so again, a good investment grade credit, but youve got a fair amount of them charters that we have are similar to once the being offered the relatively short term six seven years or so or maybe even five in this case and we are in the future hoping to get longer term contracts. So that's another thing.

Finally in and we mentioned in a few times schools gotten myself over the quarters.

Delevering is a focus so that's number one thing and we're going to we've been taking a pause for the last year. So because we want to get that net leverage down before we before we order again. These are relatively near term deliveries and you can see that there's good headway on the on on the deal Delevering.

We're not we're not route we didn't take advantage of those we opted out of Mozambique, we opted out of arc too. So we have opted out of things that doesn't mean that in the future as we see this fairly a certain de levering path, we wouldn't be taking a look growth as part of our capital allocation program.

Got it right thanks to the color and congrats again on a another record quarter.

Thanks, Randy take care.

Well take our next question from Ben Nolan Stifel.

Yeah, Thanks, Hey, Mark Scott I, my sort of goes or that is a bigger picture sort of evolution.

Type question.

It it seems like the LNG market is shifting smaller and smaller scale. I. Appreciate you guys had two relatively smaller vessels, but as you look out.

End of the future and eventually growing are doing whatever do you you still anticipate being primarily a.

In asset provider on the basis of long term contracts to big clients or is there are some thinking that you know maybe.

The business evolving maybe you can be in smaller businesses are smaller yeah, I don't know.

Small scale delivery or or or any of the other areas in which the LNG market is maybe a little bit less commoditized, but but but also growing quite a lot.

I certainly those I think this small scale and is within the LNG adjacent see wheel house, we would look at just to kind of so we have a conventional business. It's primarily standard size ships as you know when it's against long term contracts, it's not too far field for us to eventually look at things like.

Efforts or use or small scale.

If you look at as small scale in particular right now we do have two small scale LNG carriers and hope to markets listening because we're already always quietly marketing know some 12000 cubic meters each.

And even now we look at today, we look at small scale opportunities for those which are we already have you're right. There threats see the problem with the small scale right now I think it's a growing business, but and if it is and we certainly hope to be part of it with the ships. We have they can also trade ethylene Fortunately.

But it does take a while to it's taking a while to develop the market and its relatively relatively small investments compared to if you look at it you mall ship, which costs around $350 billion for one which we have a joint venture partner on that we could become you know obvious.

I see the thousand pound gorilla small scale for that amount invested in small scale and in terms of moving moving the needle for TGP small skills interesting the profits could be better but right now it's taking a while to develop and now it's probably just take one step further stay the same thing about if its or use it's certainly not the kind of rocket science that maybe.

Yes on the GE is we can do they are fed sorry use but you'd have to find a REIT entry point, yet entry point have to make the market <unk> make sure that market's mature for you and so no not not really now at any type of growth, but and not another those but I'm not sure right. Now is it is is it time to ER to getting any deeper than that we already are.

Okay.

And then and then switching a little bit as it relates to your your LPG business, specifically around the joint venture that you have with Exmar I know they really good operators although.

We have recently fallen on some hard times with the there their own LNG unit I'm, having some challenges but.

Hey, how do you see that relationship evolving and is there you know any possibility that you might would want to buy in the entire position on those LPD assets or is it just status quo.

Well, we like that French as it's been a good one for us over the years spend a good investment we've made good money on that so make long way that continue so we're not no no we're not necessarily looking <unk> as you said if they if they have some they have an issue right now with the why P.S. they need to sort perhaps come on board.

Our expectation and our hope and as Scott mentioned in terms of financing going with the LPG I'm coming along pretty well is that long made his continue they're good operators and and and it's not something where I'm at this point, we feel the need to a two to two do anymore in but just want to continue that that.

Good business that is is there is a bit difference and you didnt mention it but we will always said at the the ethylene fleet is noncore. So that's a much smaller investment to us and and and that's that's more something that is we look at some time to time as a potential divestment no exmar I I hope and I expect them to.

Two.

To to get back I'm honored feet from this this current dispute they have.

Okay, and then lastly from me again, the past and even now you kinda have.

Given guidance with respect to distribution growth as you're looking into next year I know, it's early and I'm not asking for anything official but.

Just maybe update us on sort of how you're thinking about the 2021.

Distribution.

It's to be seen we review this with our board every quarter as you can imagine I'm just a lot of uncertainty due to cope with right now as Scott mentioned, we've been returning capital in various ways. We've we've we've bought back almost $45 million with Oh.

Of common and as I've just mentioned you know, there's a potential if growth looks better than a higher distribution. If we can get those those.

Selective growth and maybe that's an alternatives. So we really are we haven't made a decision yet and won't be doing so well meet again, if the board and continue to keep you guys posted on that.

Okay I appreciate it thanks.

Once again, if he would like to ask a question. Please signal by pressing star one well take our next question from Jae Min smile with value investors edge.

Hi, Good morning, gentlemen, congrats on a fantastic results during tough times tough market times.

Thank you very much.

Yes, I think picking up from Ben Nolan had some good questions on your LPG fleet I Exmar of course tighter on tighter on equity capital for their own reasons I did see they had to be ltcs. A large ships ordered via Exmar is that part of your joint venture can can you confirm that and if so what sort of capital commitments.

Those until.

It's not part of our our joint venture they are fully refrigerated and.

Which he is our joint venture so our joint venture typically covers all fully were fully refrigerated ships. So obviously, we we specialize we focus on mid size, but they do have the two vehicles as you know on order you just mentioned.

The.

Getting too much details they haven't delivered yet and they will deliver next year. Those two they do go onto charters against Ecuador, I think to some financing to be done still.

It's the kind of what I mentioned, you know potential growth. That's the kind of thing we could possibly look at its not in our joint venture, but it is closely aligned to how they operate.

And as you've probably seen Shipset, Jang nang or anywhere else pretty much Korea, typically get a via like that which is a burns LPG is typically a they order book prices around 75, or so million dollars just to give you an indication.

I guess, the nice thing about I'm not trying to pitched east, but the nice thing about our JV in general is that it's one of those places where we can look at an alternative fuel the JV and Exmar, maybe one of the places where we look at an eight LPG burning ship.

For fuel earlier than we might do outside of the the Teekay group and so that's hopefully that some color on that Jay.

Yeah that makes sense I looking also here you fixed cover as you've always had these mid size ships at least more recently on sort of short term charters is there any opportunity in the market to fix some of those on longer terms or is it just still a challenging environment that doesn't really lend itself to that.

We're seeing time charters for cities you know even today that typically the time charters are holding up for mgcs there around the seven hundreds thousands per calendar month, I don't know why LPG Dscone Martha as you know that's what they do and so yeah. We will that the JV will continue to look at those but in gen.

Rule as you say, you're not going to see more than three or so years under time charter for LPG. The v. else GE GE sees it exmar hasn't order little unusual in that there are five years, even so we don't expect to see five seven or longer years on on LPG very much.

Yeah, just just makes sense I mean, you look at like Slide 10 for instance, and you can see that LNG is clearly I mean, it's 99% right. If your backlog, even though it's 93% of your invested capital right. So just a different type of business and and wondering if there's any ways to split the difference on those looking at your leverage in it you have this 4.5 to 5.5 balancing.

You've had it out there for awhile and it looks like you're going to Atlanta, there in 2021.

I know, there's a lot of questions last few quarters and looking at growth right and what you're sort of hurdle rate as and I know, we've previously talked about your share valuations as well what is sort of the way to look at your equity what's the correct way to look at your equity hurdle rate is it some sort of like DCF yield or is it just like a net income yield or because I I mean as you can see your D.

Field is and 30% range right. So like that's a huge equity hurdle right. So so at what point or what sort of metrics do you guys look out internally.

Yeah, Hey, Jay as Scott here.

I think there will obviously put everything in all of the various parts of our balanced capital allocation plan that we've talked about and and trying to analyze the returns of each of which one is going to tick up liquidity, which is can you.

Helped to other grow the franchise or grow shareholder value.

I don't know that we have any one particular metric that we can talk about here. It does the point, depending a little bit where we are to as a point in time.

And what the future market is going to look like and what our coverages and there's just so many things that go into that decision.

But I think for the next at least for this year and while we're still living in fairly on certain financial times I don't like Teekay LNG is uncertain, but I can the financial markets, there's uncertainty and and really cash is king and we've been doing a number of investor calls. These last couple of days.

One of the conferences and time and time and time again, what we're hearing is just just that that leverages just got to keep coming down and and this is something that we're here across the energy space. So that is our focus we've done buybacks in the past and.

We know how to turn those on very quickly if we need to.

But right now I think it's really just going to be on that leverage.

Can I just had one thing it's a little under its got but if you look at you mentioned gross and leverage if you look at our big are most likely are bigger potential for growth at sea LNG just to kind of reiterate I know you know this jay but for other investors, who maybe on the call. If you look at the probably the only tender that's going to come out in the near term is Qatar and I probably wouldn't it.

Expect them to have a commercial offer require me even this year, but next year certainly I would think they will and if you. If you if someone would order is shipped next year that ship earliest is probably a for an LNG carrier gets a long term contract problem, you're not going to deliver the 2025 earliest and so by that time, you can see a de levering path for us.

Which is clearly a clearly lower even below the range that were that we're.

Talking about now.

Yeah that definitely makes sense as a reminder, that even if you talk about growth say next year, there's actually still four years left of de leveraging and potential shareholder returns.

Sort of last question there on the financial balance of things with the interest rates coming down significantly across the board. We're seeing a lot of companies of course, increasing their hedges right. There LIBOR swaps I can you remind us what's the current kind of balance of whats free floating still and whats hedged I know you had about half the hedge last year I is there any potential for more.

Pictures of the swaps or are you pretty much maxed out on that was already.

Yeah, we're actually upwards of 75% to 80% hedged and so there isn't a time more room I think we've got one more vessel in the mall joint venture, which could be hedged and obviously that's been good to have a weighted.

But it is something that we're discussing with our joint venture partners, there, but I would say that we're probably at.

Pretty close to our limit maybe once thought leadership is to.

Makes sense got I lied quick quick one we'll sneak it in there.

On your repurchase I know you have the common authorized but youve caused it to be conservative for the cobiz environment and all that.

My understanding is that the preferred are not part of that initial authorization is that correct and if so is there any way to add those onto that authorization. So that if we see some sort of weird Dan or crashing. This refers that you can take advantage of getting rid of that high cost instrument.

Yeah. Thank you I realize I answered only half of Randy's question. After a we've moved on so Randy this one's a little bit for you as well but.

It is something that we look at we could add it on a very quickly or else.

Adding another authorization that what did you give us the approval to buyback A's and B's and and you're right.

I think thats as part of what you're hearing from losses that we need to make sure that the balance sheet strong liquidity position as good a and then maybe we wait for opportunities we saw some unbelievable volatility.

In a common in our prefs in or bonds everything obviously, you got thrown out the window in that March time period, and not that we ever wish to go through that again, but if it does then and we've got the cushion and we've got the cash balance I think you'll you'll see us at least trying to make some summit inroads there to reduce some of those higher cost items. So.

No. It's on the table, but we just need to make sure we're taking care of.

That balance sheet net cash position first and make sure. It's super strong can get through anything and then we can be a little more opportunistic.

Excellent great here, Scott and thanks for your time, Mark is well congrats again on an excellent results.

Thank you very much.

Thank you. This concludes the question answer session I will now turn it back to the company for any additional remarks.

Well I just like to thank all the investors and analysts for their support and we looked forward to updating you next quarter and just to kind of say one more time. Thanks, so much to the seafarers that's it thanks.

Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.

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