Q3 2020 Safe Bulkers Inc Earnings Call
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Please continue to standby feel confident will begin shortly.
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Thank you for standing by ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the third quarter trends just trying to <unk> financial results today, we have.
With us from Safe Bulkers, Chairman and Chief Executive Officer, Mr. Poly Sion Yano, President Dr. Lucas bomb Paris.
Financial Officer, Mr. Kum stalling, the I know Adam polled who's our Chief operating officer, Mr. Ioannis for Tony.
At this time all participants are in a listen only mode. There.
A presentation followed by a question and answer session at which time issue do you wish to ask a question you would need to press star one on your telephone keypad and wait for your name to be a nice <unk>.
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Two one to 6617 its high six six I must advise she's a conference is being recorded today.
I when I read the forward looking statement.
Before we begin please note that this presentation contains forward looking statements as defined by section 27 eight of the Securities Act 1933, as amended and section 21 E of the Securities Exchange Act just 1934.
I would imagine that.
Concerning future events, the Companys growth strategy, Jay and measures to implement such strategy, including expected vessel acquisitions and entering into further time charters.
Words, such as expects intends plans believes anticipates hopes.
Tonight, So variations of such words and similar expressions are intended to identify forward looking statements.
Although the company believes that the X, but expectations reflected in such forward looking statements are reasonable no assurance can be given that set checks but.
Patients will prove to have been correct Steve.
These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant insertion says.
Contingencies, many of which are beyond the control of the company.
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Actual results may differ materially from those expressed or implied by such forward looking statements factors that could cause actual results to differ materially include but are not limited to changes in the demand of dry bulk vessels.
Competitive factors in the market in which the company operates risk associated with operations outside the United States.
Other factors listen from time to time in the Companys filings with the Securities and Exchange Commission.
The company expressly disclaims any.
<unk> locations or undertaking to release publicly any updates or revisions to any forward looking statements contained therein to reflect any change in the companys expectations with respect there to or any change in events conditions or circumstances on.
Which any statement is based I would now like to pass the floor to Dr. bump Harris. Please go ahead Sir.
Good morning America split about inspiration look see Bulkers welcome to our children in school and the webcast to discuss the financial results for the third quarter of 2020.
Before I start the presentation I would like to express our gratitude to all our sheepherders hoping.
That was implemented during Q1, we will reach a point that on April from the global community to produce treatments in vaccines, we conclude and deposit pandemic will be controlled.
There has been a negative.
Fix on the call with 19 pandemic on the Companys results of operations and financial condition year to date due to lower demand, which resulted in relatively lower charter rates as well as higher crew and related costs.
We are happy to return to profitable operations the last quarter embodied.
The company's maintaining strong liquidity position that provides us with flexibility and following that plan, which in the first place is based on our high quality Japanese fleet 32 out of what to do with big advantage of weather environmental footprint compared to the global dry bulk.
Our fleet had.
I'd say, there is aiming to gradually renewal and leverage our fleet targeting to be the leading quality dry bulk company and create value for our shareholders.
Management alignment and due to share holding stake and performance and trash build over the years.
Oh Paramount importance in DC indexes success of this plan.
Let's move to slide four.
We present this year.
For much of the gain income from southern market footprint in 19 and year to date as published by the Baltic Exchange.
The comic effect has been the major drive in both sides.
The first wave of Q1, the chartering market traded at very low levels, but after Q1 and they disruption of economic activities.
We have begun healthy volumes of iron ore coal and grain, especially on the capes.
The market Big life, it seems the level of over 35000 the U.S.B.
Well done so much your markets has been trading higher than the 10000 since may and big during the summer months exceeding 50000 per day.
Looking forward, we are monitoring closely the trade then sensitive.
Settle between China, and Australia, and we remain cautious on how a second wave of coal we may negatively affect that rate.
However, recent covered vaccine announcements broad optimism in the global markets.
Turning to slide five we provide more input in relation to the Chinese.
The economic recovery.
Which remains the driving force of Drybulk.
As shown in the graph after a significant contraction in Q1 by almost 7% the Chinese GDP has grown for two consecutive quarters.
Ultimately National Bureau of statistics of China, The Chinese GDP grew by.
3.2% in Q2 and by 4.9% in Q3.
Aviation is stable recovery controlling the pandemic.
Maybe assumption of trading activity is evidenced by the Chinese import there has been a substantial drop on imports during April and May.
The gradual recovery of the Chinese economy during the summer months in combination with a muted trading activity of Q1.
Led to an aggressive imports free resulting to a year on year increase over 13.2% and debit and 4.7% in October.
Turning to slide six.
We give more color on Chinese imports the imports developments.
September iron ore imports increased by 8.2% Muslim Bob 9.3% year on year, we use for the period gendered September there was an annual increase of 10.6%.
Our thermal coal and lignite imports have dropped by 9.6% in September month on month and 16.3%.
Year.
However, the total increase from Saturday September stands at 18.4%.
This mix outlook can be attributed fashion to seasonality.
And second due to the ongoing tension into the China, Australia trading relationship.
The lower graph represents the Chinese imports of soybeans.
The September figure being imports increased by 1.9% month on month and by 19.4% year on year, we use for the beautiful ads.
Generally to some debit imports increased by 15.4% as compared to the same period in 2019.
Going to slide seven we present the current status of the order of the order book in the two shelters, where we operate the gates and the Panamax to post Panamax.
It is.
From time after many years that the order book is so meaningful.
The contracted orders for capes amount for 4.6% of that.
Total capes fleet and from our 2022 and onwards.
The orders have minimal.
Similarly for Panamax and post Panamax the orders.
Apparently print one depletions growth of the fleet of about 3.4% and going forward less than 1%.
The aging of the fleet.
Due to environmental capital expenditure requirements for complying for example, with ballast water treatment system regulations main countries.
Clipping activity, especially the environment of low freight rates.
English scrapping may lead to lower net growth of the fleet as discussed above.
Furthermore, the ongoing environmental discussions for emissions are beyond the ability of most of the shipyard to cope.
We are technological.
Transmission introduced designs, which comply with them.
In particular for the phase three of the energy efficiency design index only very few Cvs can provide highly efficient designs that can comply with such emission requirements.
Under these circumstances, we order book and essentially addition, dry bulk fleet.
It will not to inflate anytime soon.
Furthermore, the ambiguity of the future.
Getting how does measures and the lack of technological solutions in relation to new environmental friendly Qs.
Enhance the uncertainty and food court on new designs or new orders.
[noise] are disappointing let me first of all focused on developing and plan for renewing our fleet.
With modern design that adhere to the new environmental regulations and the initially got it to point out our recent order or the Japanese build dry bulk eight to 2000 deadweight.
Don't stems from a classification we.
We have scheduled delivery in the.
Yes couple of Twentytwenty two divisions designed to meet the latest requirements of energy efficiency design index.
Two two greenhouse patches.
And indeed.
Phase three it will also comply with the latest an option.
Emissions regulations, they nox tier three.
Turning to next slide number eight we make a brief presentation on the status of that fuels market.
Global the global downturn mobility. This region has reduced the demand for fuels and distillate products.
But inventories the price of 0.5.
8% at very low sulfur fuel oil.
I am more 2020 fuel you see relatively weak in comparison to have share for fuel oil prices and fish theyve spread differential the show called high five using the region over 65% might be.
Dollar.
Yes.
The graph in the left we present the future market prices for very low shows a few alloy high sales of fuel oil and high five in Rotterdam in Singapore.
Futures market indicated a gathering the 0.5 per cent, a very low sales actually Lloyd and the high five.
It's trading today.
Higher levels in the region of 80 to $90 footwear integrate you are and.
Set that up in our back to about $100 for 2023.
The recovery of global economies, the restoration of more BP and the recovery of crude oil.
Prices may increase the demand of distillate products and will likely boost the high five differential driven higher levels.
Let's now are summarized on slide nine the key take away.
The markets.
We see a resumption of economic activity up there no downside.
Assign a GDP indication if we see a V shape recovery witnessing sales the volumes of iron ore coal and grain trade.
At the same time, the second wave of COVID-19 remains a threat.
But there isn't going to vaccine news bring activism in global markets. Despite.
By Division trade tensions between China and Australia.
The global look down such adversely affected demand for oil and distillate fuels. We may have a slow oil demand rebound as global Dropdowns ease with restoration of mobility, which will eventually lead to recovery of the Brent prices into why there.
H by a high five spread differential.
We have declining order book Twentytwenty, one world and the ongoing legal battle Decarbonization discussions do not favor new orders.
And finally, the aging of the fleet the low freight rates and the increased environmental Capex.
We enhanced the scrapping activity.
Turning to slide 10.
We show our fleet growth over the last years, having added a new order recently.
It is important to note that all growth is gradual.
The company has never entered in several orders of sub distort.
Not at the supply side.
At the same time the company has kept the rate of growth even at launch making markets and such investment always at the forefront of the technology.
Turning to slide 11.
In the context of our environmental and social responsibility policies will undertake significant event.
Nine idle investments by retrofitting scrubbers, and ballast water treatment systems on our fleet.
We have already invested 66.7 million as of September 30, 2020, and have retrofitted all 22 of our scheduled Scrabulous and 30 ballast water treatment systems so far.
On the sales.
Also provides an estimation of the expected downtime days for Q4, 20, Plenti and Q1 Twentytwenty one in order to assist analysts with Dave projection.
Turning to slide 12, we have the would have bloated the PPI index ash market performance indicator and.
Our stock price.
The correlation historically was very strong in 2019, the correlation because due to the trade war enduring 2020.
We have seen further decoupling and due to global pandemic.
Presently our stock is trading at levels, which we believe do not qualify for.
Sales with a market performance.
This could potentially be a good entry points.
Turning to slide 13, we focus on a strategic plan by gradually renewing our fleet investing in new technologies and basis with an environment of footprints at adhere to new greenhouse gas.
Regulations.
So far our environmental investments include ballast water treatment system installation of scrubbers. The project that has been completed.
Until now we have invested 66.7 million as Ive already discussed.
Furthermore, we show the improvements of the new designs brink, which I later.
To discuss other dynamics improved efficiency of propulsion systems and amount idea actions, which focused on environmental Corporation.
Concluding in slide 14, let's summarize sales bogusky takeout weights.
It should be stock east and attract.
Active entry point.
Exposure to the spot market allows weekly tend to profits whenever the market conditions improve.
BD and advantage in an environment that footprint due to Japan, each donuts 52 out of 42 vessels.
Management with about 50% stake is aligned.
And with shareholders.
We developed it.
We have developed a plan over the following year, which includes in summary, lean operations operational excellence and technical expertise.
Maintain strong liquidity, which provides fuel for fleet flexibility.
And in this a stable environment and the crucial for opportunistic mobs.
Good agile fleet renewal with the greenhouse gas E D phase three Nox tier three vessels in parallel with financing arrangements.
De leveraging in pilot with southern markets.
Diving to be the leading quality dry bulk company ended value for all our shareholders.
Now I will pass the floor to our chief financial Officer for Sandino's. Furthermore, pollution.
Who will present, our quarterly financials.
Thank you Lucas.
Good morning, everyone.
Let me start with our chartering performance in slide 16, where we will present, our quarterly time charter equivalent was which was 12700 and $575.
We expect our quarterly Opex, which stood at 4008.
Okay $96.
Moving onto to our debt profile as seen in slide 17 represent the repayment schedule as of September Thirtyth rapid ramp.
As of November six rapid ramping our liquidity stood at $156 million or spacing of cost.
Content Bank Bank deposits. This ticket gas funds available under our unsecured revolving credit facility as well as the sale and leaseback arrangement for the Newbuilds got Kamsarmax class vessels.
Let me continue to slide 18, and focus on our debt amortization schedule lesser described.
If I knew of our fleet.
We'll have a sport debt repayment profile for the coming two years.
Gradually the where the leveraging our conference.
Moving on to slide 19, we present, our quarterly daily Opex.
Which stood at $4896.
Right, Yeah ventures, our quarterly daily DNA, which stood at $1418.
The aggregate figure for both Opex and DNA for the third quarter of Twentytwenty was $6314.
Demonstrating our focus on lean operations.
We believe that this amount for both.
Opex mdna when comparing apples to apples is one of the industry's lower.
If not the lowest.
We included this figure all our dry docking expenses and in our DNA, our executive officers compensation and all expenses related to the administration of our company.
Let's now move to slide 20, with our quarterly financial highlights for the third quarter of 220 compared to the same period of last year.
Net revenues increased by 2% to 50 $51.9 billion from $50.7 million.
During the third quarter Randy.
Both venti, our time charter equivalent of one 3007.
Seven $575 for the third quarter of 220 compared to $13311. During the same period invented 19.
Net revenues were supported by the benefits from Scottrade treated vessels.
Despite that did you.
And the price differential between heavy if you are lowering their compliance which.
Which was caused by the oil price war and also by revenue contributed by our Newbuilding delivery, we took delivery back in April.
Mortgage expenses increased due to increased resin repositioning expenses higher loss on bankers sales.
Scan dude due to the oil price war and consumption of course for scrubber fitted vessels.
Daily vessel operating expenses increased by 10%.
Two $4896 compared to $4448.
For the same period in 2019.
Again, the vessel running expenses, excluding like docking and pre delivery expenses.
Okay, great by 10% to $4459 for the third quarter of 220.
Compared to $4053 for the same period last year.
Our adjusted EBITDA for the third quarter of 220 degrees.
[noise] to $22.3 million compared to $25.1 million for the Q3 of 2019.
Our adjusted earnings per share for the third quarter of 220 was almost zero cents calculated on a weighted average number of 102.
Right and 2 million shares.
Compared to three cents during the same period on Mtwenty 19 calculated on a weighted average number of one off.
How did the 1.3 million shares.
Closing our presentation in slide 21, we.
We show, our quarterly Flint data and diverted.
Finally indicators compared to the same period last year.
We would like to emphasize that in this period, we have worked extensively despite the tough market conditions.
And we have completed installation of all 20 scrubbers.
We have concluded the order of a Japanese modern design is technologically advanced vessels.
With delivery in the best capital Twentytwenty tool with limited limited impact on our liquidity as we agreed at the same time, 90% financed through a sale and leaseback arrangement, adding.
We have a strong balance sheet with comparable EBITDA, it's a small set refined for the next two years and the like.
Liquidity position of $156 million.
And finally, we took measures to protect our seafarers and store employees health and well being and kept all of our vessels sailing selling continuously servicing our charters.
Once again, we would like to thank our seafarers for their commitment.
The indication and therefore, just a wildly stuff.
Our press release presented more detail out of financial and operational results we.
We are now ready to take your questions.
Thank you.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question.
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We will now take our first question. Please go ahead. Your line is now open.
Okay.
Hey, guys, Chris Wetherbee from Citi. Thanks for taking the question.
Hi, good I guess, though.
Hi, guys I.
I guess a couple of questions here first just wanted to think about.
The.
Vessel the fleet as it stands right now just kind of taking a look at some of the older panamaxes pushing towards that sort.
A 20 year Mark over the course of the next couple of years.
How do you think about those can you talk a little bit about.
The the leverage that are on those vessels, specifically, if any and would you consider potentially.
Some some sales here as you look to refresh and renew the fleet and move continue to move in sort of more.
More of an eco fashion, just kind of curious how you're thinking about fleet management over the course of the next several quarters.
Yes, the I.
Yes, Hello, guys.
Congrats on the new the fleet. So we order the new technology service and footprint expansion tool.
And so the idea is by about time to sell.
You know one of the older vessels.
Of course, as we understand that I time, ER should be next year.
Simply because right now you have the problem solve all their pandemic and before we restricted there.
I think that the.
Visit those people on board ships because of the traveling in a six homes you know.
Buyers to buy it and all the shape he asked in spec.
And this is not.
Oh easy easily yeah operationally blood.
Achieving that two days or less threeq something in their various parts of the world. So I guess the idea is for next year to try and sell a couple of the older ships and doesn't really knew our fleet going forward to continue with sending a those ships I believe that it went 21 would be it.
The market will.
We will be more.
Operationally flexible and ER and ER.
Market conditions should be improved so we could all materialize such as sales.
Okay, Okay that makes sense and that's helpful. I appreciate that.
You know, we have a little bit of a pick up in your order book in 2021, I mean, you know depending on the vessel side you know maybe it's in line with 20, but there's still some deliveries there there's not a lot of thought you know vessels in the book beyond 2021, you have there been or sort of whats the tone of.
Conversations with shippers are getting but what sort of the discussion around it.
The charter terms the duration is there any I guess, maybe the question I'm asking is is there any improvement in the discussions with your customers about getting you know maybe rates potentially moving in the right direction, and maybe getting a little bit of duration.
And on charters or just kind of get a sense of maybe.
How your customers are setting up for the next sort of 18 to 2021.
Yeah up until last week, I think that the views well Oh very skeptical in the markets we the way.
The what was going on with the American elections, and the oldest stores with the cyclone roundup.
COVID-19.
And their announcement on Monday by Pfizer about the.
Like seen a bubble gum line.
So in total availability.
By the start of the new year change or change a little bit the sentiment and this will take a few months to work into the into the system. So I believe about ER as people.
Stuff getting clearer picture about economic recovery.
And their prospects all of wall all by a full recovery as we run into 2021.
Are they said is so small shop that has really come back for all video business and the trial.
Aim to two do some shopping so at the moment is very little activity in that and stays better for an owner to stay in the spot market because a peter what activities are below breakeven levels. So it's absolutely no. He's on a healthy company should look.
In.
Paleo chart, the sub two days of todays market.
We overall I'm fairly optimistic if we find a solution on the.
On the COVID-19 situation that demand will be boosted while supply is controllable. So this.
Should be we should be entering into a good year.
A short this announcement the sales or their vaccine and materializes into an effective tool for all humanity.
I.
Thank God I guess.
Last question on Spi units, but specifically around the expenses. So you know we've seen decent growth on a year over year basis, and I know kind of a it's a seasonally theres. Some some variations and your Threeq you. It's been a been a bit of an elevated opex quarter, historically, but when I think about opex and DNA, we're both looking at sort of.
It'll elevated levels on a year over year basis, what can you do to bring those numbers down sustainably I know you operate relatively well compared to the broader industry, but I'm thinking specifically about your fleet are there things you can do from on the cost side. They continue to try to work into a better profitability scenario.
Yeah look at this.
Well, the GMI expenses quite a stabilized.
And Ah Onez and also dig deep into it.
A little bit on the change in age.
We didn't euro and the dollar show the only parameter that that would substantially changed at least.
Let it is a change in age.
Into I would like to be cut in DC.
Ginny expenses, which include management fees, and the and the audit fees and.
Good on as a public company.
Into it.
In the management fees. We include also the compensation of the offices.
On the Oh in on on the other side of the Cup the operating expenses and have a great influential of a dry.
But I don't think and ER.
Oh quite often I mean this this year, we said about the 12 15 dry dockings.
Yeah.
Which was.
For several reasons one of the reasons. So we're sure that we have also described bus and the bus would there be things that we were freaking instead of fashion. So.
The program was quite intense and when you go into a shipyard and look see sometimes a little bit heavier a Hugh you have the time to do some more some additional work and some additional.
It checks on your equipment, which increased the course I think.
I think that the A.O. Smith move along next year would cover substantially lower number of dry dockings I tend to say I believe it would be about a.
Fight scheduled Drydockings that will reach you should it be yet and this is because.
It was helped onshore mainly here without five next year.
So we have lot of course are actually up this year compared to next year and the second point to is that.
The company is.
He continues to operate and two we have both the internal programs that it to to control.
Thrown a lot of folks that are operating expenses and I think that.
With the combination of that it uses a docking and the problem that we have a we this this.
This number we substantially beauty Jewish so let me see maybe.
Well sure we could target something between 4.2.
To four point.
Three or four and for next year.
Okay. Okay that makes sense, there's some up something I look forward to their okay.
Okay fantastic listen thanks, very much for the time I appreciate it.
Thank you we will now take our next question.
Please go ahead. Your line is now open.
Okay.
Hi, gentlemen, it's Randy given from Jefferies. How are you.
Right right right.
All right well I on the Kamsarmax, the 2022, newbuilding or what was the purchase price of that.
And then secondly, following that you know why purchase this vessel instead of maybe repurchase common or preferred shares here.
And then following up on the larger or the vessel acquisitions in the fleet renewal any interest in en bloc purchase of modern second hand, ultramaxes or kamsarmaxes.
Yes first of all the way.
Good morning company and the.
And we have to stop from somewhere closer to getting the renewal of the fleet.
And me.
Start adjusting ourselves to the you want a volatile equal pickup will NYSE April.
It wouldn't be the name of the game for the next five years so.
By going into this a design we go out that the all time low for Newbuilding prices.
Like a jump on these new building prices are.
In the in the high Twentys for the new technology to ship full of EPS.
Plus informal Oh, all the new regulations are included in the in the business.
We want to buy install we combine sort out anytime we work on my previous Jonathan insights right.
Right now we have a plan to stop renewing the fleet, but as I said earlier.
Very selectively.
Buying.
New technology shaves.
Hopefully next year of the REIT market conditions to sell our when maintained all done.
And all the sheets.
And.
Yeah, hopefully as the world gets out of the pandemic. So this is not this is not though oh some.
Something that has to be done in a big scale can be done I never had a small scale one or two ships during the next two years.
And at the same time, selling a three or four.
The older ships.
Investors in value, so times and enduring deep into one so we have to renew the fleet that would keep the age of the of the fleet the add ons younger as possible. So this was the idea behind it I don't know what the where the prices of the ships we.
Maybe when the market recovers could be said before $55 million.
And Oh, we will not do it in any big scale like in previous times and because these wonderful do we.
We will do it very gradually and outdoor pool.
Hopefully that the results of.
So the market improves what is very important to remember that is up.
You have a company that.
We demonstrated that even during the the worse yeah.
Oh in memory since.
They meet debuts in 2016.
Ah different is it was she hadn't minimally yeah.
And with a pandemic, we'd look down from all over the world, We know, but it will not live shows with little change problems without increasing the course, we monetized in the first quarter of the the one stop moving we demonstrated that we can then back to the store.
The stock will in the end that is out of the quarter into blocks.
I don't know that I think this demonstration in a very difficult all year.
We cannot just show weekly, but to put off its event small profits.
Like we did.
In this quarter demonstrates that the company.
Is a they are and come to think symptoms deliver results and thing of course, we need to normalize once and then normalize or.
Transitioning to achieve better numbers.
If I may go for something about the question.
No I'm not a the column on the Stoke Andina computing, and they're pretty huge yes into for each quarter and that we record the always there and the number of stocks. If you notice some I mean at least not that has at least 106 million above 10 six media.
New York and present lease that set up stands at about 100 and ER to me on this.
He said he says yes. This is shows that the vein get us over the camp I mean, it's not the dilution, but sometimes we will have you should see Saudi cleaned up by some says we've.
Boats and bought some shares all ways to maximize the benefit of the company and the right now we're standing in almost the same number of shares that we should a few years failure shows. These shows the performance of our anti dilute.
We can barely seen any of them.
Okay and not a it does show a tipping point of time in the future you may see us buying some shares but the important thing or are you seeing some sales, but the important thing is.
That said we want it.
Our accessories I don't wish anti day, you will differ because.
Lucia the management to here.
About 50% of the company and it was never that you are in such a way that it will not create value for all the shareholders.
Got it okay.
And then you mentioned about turning a profit you know obviously in a in a tough third.
Water you know your T.C.E. rates increased pretty meaningfully from around 8000, a day in the second quarter to almost 13000, a day or so in the third quarter now how big of an increase you're expecting in the fourth quarter.
I look for that for <unk> that is lumped all developing.
According to a lot differently from the from the third quarter your knowledge to the the first month or it or something similar levels.
Yeah, No. There is one more headwinds not do we have to face.
Which I believe pencils out they do result in.
Little stronger I'll tell you we've got the end, but right now. He said he is a headwind is a trade war between not played award is like a saying it trade the trade the dispute between <unk> and China and Australia on the on the import of.
Well certainly on coking coal, we know about though [laughter].
[laughter] or racial Splenetic operations room know Chinese government dual listed.
Well certainly on a exporters.
Todd examples to another blow molded these oh no.
Because they have the same issues about the blame game.
In terms of the funding mix. So this is a headwind we have at the moment, but at the same time I believe that this will create a.
The benefit on people, bringing their cool, which they desperately needed in China for that still means the coking coal to bring it from further than our way we already.
Im not see God bless from USAA from years gone through your schools.
From Colombia, which is a direct link the two mines, which is it is a very very it wouldn't be very very healthy for the market. So as.
As the as the Chinese will will start sourcing.
Some coal from kind of in a way I think about the program will become an opportunity so.
We may see a lot better Q1 than we expect.
So the answer to your question is that Q4 will be pretty similar to Q3.
The way depend not wear out in the middle or.
Before but I'm more optimistic that Q1 will be nowhere near where they lost a couple of two lunch where.
If things are also with COVID-19, a stock too.
Not to the backlog a little bit more positively.
Or with the.
With the with the New news announced a this money.
Yeah, we are cautiously optimistic of course, if you're maybe more not with every time, saying not to kind of cautiously optimistic but.
Indeed, now we believe that.
This will deliver into positive models.
Good for 2021.
Got it all.
All right I guess last question for me can you give some kind of guidance on the ballast water treatment capex here for the remaining 12, I guess in the fourth quarter and 2021.
Yes, I was look I said.
Five drydockings remaining Ah.
ER Flunk for 2021, so it's nowhere near the center field, we had for 20.
And Steve.
And the animals that I've seen out of this five where we have a three bundles will just 333 bottled water three.
He wants to install choices will be looking a lot better than the you know I mean, we want to.
To believe that there's will show a lot in a in our Opex, let you want it to be about a.
Let's see half a million or so.
About <unk> billion capital expenditure for the city.
Oh, yes.
What was that number.
About half a million [laughter] Oh got.
Got it Okay and then so the remaining the remaining BW T. S systems will be 2022 and 2020.
To get to your 12 remaining gets settled on maybe the other two mainly because we have already reached therapy will go I mean next year at about 53.
Hey, yes, the remaining will be 2020 to enter into a new three let's say, 75%. This already done and then we have three years for the last 25% rule we've done.
The investment into you know I mean.
Of course, given all the investments never spoken for in this world do we have to focus on new projects over energy efficiency improvements and things like that but at least we will we will concentrate two goals and we will not have.
Much of the rest Uh huh.
Moving over to the company.
Got it.
Well that's it for me thanks, so much.
Thank you Andy.
Thank you [noise].
[noise]. Please go ahead your line.
Hi, Mike.
Hi, This is Frank Galante on for Ben I think so.
For taking a question.
How do you think about adding to the fleet kind of above and beyond the cameras that cancer, Max Newbuilds with where current asset values are <unk>, obviously that the fleet renewal.
Not being able to sell those new vessels now.
Now or started the older vessels now <unk> are you guys limited and been able to potentially take advantage of these asset values and then how do you weigh that against protecting the balance sheet.
Yes, we don't would come up for a while but ER from skate and do what we would have done and then he said.
Then before did you have to do it very gradually and the other very very.
Calculated basis, or if we monitor sales to send a three or four ships next year. This will open the door for more investments right now we cannot we have done one.
Maybe we do one more in the next few months you know I mean, what we have our eyes open because you know they are or at the very low prices say in all five 6 million below.
Previews designs previews, so might get levinson and older design stuff the stuff that we used to.
Complement the I believe we should do something and when does that I had the opportunity, but always from mall balancing together with the liquidity, we want to maintain in the company.
And ER and the National we have we don't have a bank said to be you know something about this.
And not stretching the balance sheet then the is not increasing the burden on the on the company. That's why it will be if we do newbuilding it will be new building coupled with financing.
Either in the form of while sales in this park or some other form but.
I will not be shifting the cash position of the.
Of the company.
So we will be very careful of how we will do that and next year hopefully I believe will be the market will help us.
So sell.
A couple knows all three or four of the older units Asps.
Little bit the bet.
The 11 to Sun is yes, I'll say explain this.
It is yeah, that's impossible for a buyer of older ships.
To go inspect the ships you know we have to respect that stop that buyer will only pay a very low price if he cannot inspect the ship and take his chances and allow you know.
All the extra million or doing the price differential.
Or any unpleasant surprises so in our case, we want the buyer to go on board and see the condition of the ships and not.
Just a you know often at very low price and.
You know buying buying the vessel.
Without inspecting.
Okay, and then again, let's talk any case, we make we make money out of this business. So.
It's okay for us.
Okay.
And switching gears, a little bit I wanted to ask about the scrubber.
Ration, obviously, there's been a lot less emphasis with the fuel spread compressing, but has there been any issues operating the scrubbers.
[laughter] have you guys been able to run them at near 100% utilization and is there. It's just the FFO available everywhere kind of end up.
Cobot World.
Well, but I think the scrubbers or no since may 29th enjoy 18 months since we started.
We haven't space the single aisle Wattyl Korea.
We are very happy with the quality all the equipment we have received.
From.
Oh that either to double no manufacturer that I know you know three then I'll follow up so.
ER, we are getting ER and book value for their money, we invested as we enter next year and the expectation is a I don't know that cotton market expectation as Shacey don't.
From the spread between the.
To finish the heavy feel knowing them the readmission pool.
Or is this or what do you mean or revenue that took for the company or an extra 10 million.
So it's and it's it Evan you don't want the sheets on it.
So we expect we think this is very good and.
It's a lot better than 2020.
Which is of course at the start of Twentytwenty without the 200 bond spreads.
[music].
Later in the year after the coffee then after the oil price.
Collapse, the spread went down to 40 or $50 switches.
Costs are very low for them for the investment so I take it told US it starts looking interesting again, and therefore careful for the us shows that it should be going higher.
For the company's an extra isn't.
Oh boy move to sort of shape when the U.S. GAAP or as I said is a very very important ER.
The quality of all the scrapping and ER and so far so good 18 months for more operational EPS two into scrubbers.
Yeah.
Hi, Sean Plaza, a they're drunk husband has been done successfully gotten things. They opened up really feel nature for my Oh, Yes, Oh, absolutely don't find any issue.
Oh longer they want to secure rule heavy fuel oil.
And to be honest with you we have.
Oh, we have a symptom ports around the world that we help people Oh.
Oh, who spoke stop or H, a fall to give especially our deal is better than the market.
Dave Spille by maybe a triple show.
This is on.
So something that.
She helps a lot but.
I have not experienced any board any.
Any major airport, but with all that the they understand they show up in absolute dollars here. If you are going.
Only in some very minor reports you may not find but you know I mean the.
The operational.
Oh.
So Mike Sison post Panamaxes, so standardized to you know.
Every two or three months you pass from certain key points not the EPS availability of all grades of shouldn't I mean, the bank at trade that sounds very smart people and the bank EPS suppliers and the oil majors.
Very smart smart people to position they are products of the places where the ships are passing from so I'm [laughter] for a house is absolutely no problem to secure the.
Our products are now than in the one point of course, you know when you bunch from day, one of 'em boots.
You must have a sometimes you're all.
Operational people are allowed to take maximum benefit of the availability of you and show you don't take on the 500 tons.
We are passing on Singapore, you take 2000 tones, you know and you have the the product on board to be used in the next.
A couple of trips you know and if you find cheap.
HM food in a chip off to take advantage of it.
All right great. Thanks for the color that's all I had I appreciate it.
Thank you.
You have to remember about yeah.
If I may add Saudi on the last question, though.
We are not we are not all managers of shoes are such where ship on this you know and I'll drop we make a living out of both situations you know trying to maximize their potential both issues on doing.
And try to.
Too so oh.
Oh plan I Kid.
And ER and ER, we didn't know how we haven't been markets and because you have homogeneous fleet.
To try and maximize or when such opportunities are.
ER.
Exist you know so.
What we you know in which supports you face difficulty securing a for example, low soufun Andrew you take advantage on previous calls you spoke up and you may sales to chapter sounds more attractive prices when they go to and not a convenient but all these things you know you have to be a ship owner to.
Two.
Romney efficiently and.
Probably if you are just that.
Manager and you are running or ships for third parties yours.
You will find that at a certain point up the whole equation cannot be executed perfectly.
Thanks.
A question.
Please continue.
Thank you, ladies and gentlemen that does conclude our conference for today.
Thank you for participating you may now disconnect.
[noise] this saying thank you to all into we're looking forward to discuss again, we do.
For our sales next quarter. Thank you. Thank you [noise].
[noise].