Q4 2020 Eagle Bulk Shipping Inc Earnings Call
Ladies and gentlemen, please standby your Eagle bulk shipping fourth quarter of 2020 results conference call will begin momentarily. Thank you for your patience and please standby.
[music].
Greetings and welcome to the Eagle bulk shipping fourth quarter 2020 results conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session on it.
Structures will follow at that time to ask a question. During the session you will need to press star one on your telephone you require any further assistance. Please press star zero either.
As a reminder of this conference call is being recorded I would now like to hand, the call over to Gary Vogel, Chief Executive Officer, and Frank de Costanzo, Chief Financial Officer of Eagle bulk shipping Mr. Vogel you may begin.
Thank you and good morning, I'd like to welcome everyone to Eagle Bulks fourth quarter 2020 earnings call.
To supplement our remarks today I would encourage participants to access the slide presentation and is available on our website at Eagle ships Dot com.
Please note the part of our discussion today will include forward looking statements. These statements are not guarantees of future performance and are inherently subject to risks and uncertainties.
Should not place undue reliance on these forward looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results our performance and our financial condition.
Our discussion today also includes certain non-GAAP financial measures, including EBITDA adjusted EBITDA and TCE. Please refer to the appendix in the presentation and our earnings release filed with the Securities and Exchange Commission for more information concerning non-GAAP financial measures and a reconciliation to the most comp.
Parable GAAP financial measures.
Before we begin our presentation I would like to take this opportunity to once again, thank our crews for going above and beyond and dealing with all of the challenges. They have faced has the result of the restrictions and disruptions caused by the outbreak of COVID-19 last year.
We're pleased to see the water community paying attention to see fair of welfare and understanding their importance to global commerce, where strong advocates for all seafarers and our proud signatories to the net tune declaration, which seeks to improve their standing we have and will continue to make see fair of welfare priority at Eagle with the constant goal of continuing to.
Maintain zero seafarers working beyond their contractual employment periods.
Please turn to slide five.
On the back of an improving macroeconomic landscape freight environment and overall capital markets I'm pleased to report that we raised $25 million and growth equity of this past December.
We immediately put this money to work and acquired a total of seven vessels at what we consider to be very attractive levels the toe.
<unk> purchase price consideration is about $86 million in cash and 542000 Eagle shares the.
Acquisitions are comprised of four modern high spec scrubber fitted sundar of 64 ultra matches, the OPEC change the shipyard and three 2011 bulk Crown 58, Supermac says felt the Dayang shipyard, we've taken delivery of two of the vessels, thus far with the remaining expected to deliver between March and May.
Please turn to slide six.
Pro forma for our acquisitions are free currently totals 52 ships all of them the Supermac social Max segment <unk>.
<unk> 45 of our vessels or <unk> 87 per cent of our fleet are fitted with scrubbers, giving us exposure to the recently widening fuel spreads since starting to execute on our fleet renewal on growth initiative. We've now turned over more than half of our fleet acquiring 27 vessels and selling 19.
The sale and purchase transactions have vastly improved our fleet makeup in terms of age size and emissions.
Please turn to slide seven.
Our markets continue to trade up during the fourth quarter with the BSI ending December at $11424 per day, and averaging 10749 for the full period, representing an 8% increase as compared to the prior quarter.
We believe the improving trend in markets is reflective of the continued recovery in global GDP post the economic shocks caused by COVID-19, as well as of normalization in certain dry bulk flows in particular, the fourth quarter was supported by a number of factors, including increased demand for agricultural products as China continues.
To build back the pig population increased purchase of construction materials, such as steel cement clinker and other minor bulks.
And increased thermal coal shipments as China increased purchases of Indonesian coal on the back of the greater domestic demand and restrictions on Australia on imports and finally, India also saw a normalization of coal demand to pre COVID-19 levels.
As depicted in the chart Eagle generated a net TCE for the fourth quarter of $11190 per day up 16% quarter on quarter, representing of beat of roughly $1000 compared to market.
As we've discussed in previous calls it's challenging to catch them beat of rapidly rising market as a percentage of days are fixed in advance and where voyage is average about 45 days in duration. In addition, given the weakness in the markets back in early 2020 and lack of visibility due to COVID-19, we increased our hedge.
<unk> for the second half of 2020 in order to provide us with appropriate downside protection. While this negatively affected our performance for the quarter. We believe it was the prudent thing to do and was more than offset by the positive contribution from our platform methodology as well as operating scrubbers on the majority of our fleet.
It's also worth noting that as of the end of 2020, those defense of hedges were completely closed.
For the full year 2020, our TCE outperformance was $1964 per ship per day, equating to approximately $37 million in incremental annual cash flow based on current fleet size.
We entered Q1, well positioned with roughly 70% of our fleet next open in the Atlantic where the market has been particularly strong the BSI, which was around 11400 at the start of the year has rallied since as of today, we have fixed about 93% of our available days for the first quarter had a net TCE of.
<unk> thousand $85 per day.
Please turn to slide eight.
Turning back to the fourth quarter. The top line growth, we experienced contributed to an improved operating performance for the period reflected by $22 million of EBITDA the highest level in two years with that hydro I would like to turn the call over to Frank who will review our financial performance.
Thank you Gary.
Please turn to slide 10 for a summary of our fourth quarter and full year 2020 financial results.
The improvement in the chartering market drove top line growth in Q4 with revenue net of both voyage and charter hire expenses totaling $51 million.
An increase of 15% from the prior quarter.
In Q4, our TCE came in at $11190, which is $961 above the adjusted net BSI.
For the year revenue net of both voyage and charter hire expenses was $164 3 million remaining relatively flat as compared to 2019.
For the full year 2020, our TCE came in at 9000, and $710, which is $1964 above the adjusted net BSI.
And $675 a day lower than prior year.
We reported a net income of $115000 for the fourth quarter versus the net loss of $11 2 million in the third quarter.
Basic and diluted earnings per share for the fourth quarter were one cent versus a loss per share of $1.09 for the third quarter of 2020.
Adjusted EBITDA improved in Q4 coming out of $22 million as compared to $11 5 million in the prior quarter.
And the $9 8 million in the fourth quarter of 2019.
Adjusted EBITDA for the full year 2020 came in at $54 1 million as compared to $48 7 million in 2019.
Let's now turn to slide 11 for an overview of our balance sheet and liquidity.
Okay.
Throughout the course of the pandemic, we maintain the strong liquidity position.
Total cash inclusive of the $18 9 million of restricted cash was $88 8 million at December 31, 2020, representing an increase of $3 6 million as compared to the end of the third quarter.
The increase in cash was primarily a result of proceeds from the sale of three vessels.
Proceeds raised from the equity issuance in December 2020, and cash provided by operating activities of <unk>.
Net in part by the principal payments on the Norwegian bond and the ultra coat debt along with the repayment of the ultra low debt facility revolver, capex spending and deposits paid on the Oslo Eagle in Helsinki Eagle acquisitions.
Total liquidity increased to $143 8 million at the end of Q4.
Liquidity is comprised of total cash of $88 8 million.
And $55 million of the Undrawn availability on the ultra cold revolving credit facility.
Yeah.
Total gross debt excluding debt issuance costs at the end of Q4 were $475 6 million a decrease of $46 8 million from the prior quarter.
The decrease was due to the $35 billion, we repaid on the ultra co revolving credit facility at principal repayment of $7 8 million on the ultra low debt facility and the principal payment of 4 million on on Norwegian bond.
As Gary mentioned earlier, we have acquired seven ships of the past couple of months.
So eagle, which we took delivery of in January was slotted into the shipyard of silo and was fully funded by restricted cash on hand.
The remaining six vessels are to be funded by a combination of equity issued to the sellers cash on hand.
Keeping in mind, we had $25 million of which we raised in December.
Looking ahead, we may add debt at some point in the future.
Please now turn to slide 12 for an overview of our cash flow from operations for the fourth quarter of 2020.
Net cash provided by operating activities was $14 9 million in Q4 of $2 $1 million increase from $12 8 million in net cash provided by operating activities in Q3 2020.
Cash flow was strong in the quarter on improving charter hire rates industrial on commercial platform performance.
For the full year 2020 cash flows provided by operating activities were $12 6 million.
Please now turn to slide 13 for the Q4 and year to day 2020 cash walk.
The charter of the top of the slide lays out the changes of the company's cash balances during Q4.
Revenue and operating expenditures are a simple look at the operations did that as these two large borrowers at the left is positive $21 million, which is very close to our adjusted EBITDA number.
We incurred $3 million of dry docking expenses and $3 million of Capex expenses in the quarter.
The $60 million of vessel of S&P represents the proceeds from the sale of four vessels less deposits paid for two of acquired vessels.
We repaid the remaining $35 million drawn from our ultra cold revolving credit facility raised $24 million of net proceeds.
From the issuance of equity in December and the.
A total of 21 million represents the debt principal and interest paid in the quarter.
The charter at the bottom half of slide displays the changes in the company's cash for the full year 2020.
Let's now review slide 14 for our cash breakeven per ship per day.
Cash breakeven per ship per day came in at $11553 for the fourth quarter.
Vessel expenses or Opex came in at 4718 per ship per day in Q4.
$66 lower than prior quarter the.
The decrease in Opex per day was primarily the result of the decrease in the number of crew changes in the quarter.
Dry docking came in at $784 per ship per day in Q4, $152 lower than prior quarter the decree.
<unk> was a result of a decrease in the number of dry docks.
Cash G&A came in at $1824 per ship per day in Q4 up $228 from Q3.
The increase was in part caused by a decrease of non days due to the sale of four vessels.
It is worth noting there of G&A per ship calculation is based on our owned vessels, whereas.
We operate a larger fleet, including our charter in tonnage.
If we were to include the chartered in days in our calculation G&A per ship per day would decrease by about $200.
Cash interest expense came in at $1555 per ship per day in Q4, which was slightly lower quarter over quarter driven by decreases in the total outstanding debt and interest and lower interest rates.
Cash debt principal payments came in at 2000 and $673 per ship per day in Q4 $955 higher than the prior quarter. The increase is attributable to amortization repayments on our Norwegian bond debt.
Which are paid semi annually in Q2 and Q4.
This concludes my comments I will now turn the call back to Gary.
Thank you Frank Please turn to slide 16.
Here, we depict the BSI for the last five calendar years, plus 2021 year to date, which is represented by the dark Blue line.
I believe of picture's worth a thousand words and the velocity of the recent increase as well as the levels are quite demonstrative.
Year to date, the BSI is averaging approximately 13800 with current spot above 20000.
Its particularly noteworthy that the market has exhibited such strength during Q1 period, which typically represents a seasonal low due to among other things elevated new building deliveries that tend to occur in January and the lunar new year holiday in February.
In recent weeks, we've been able to book strong fixtures across most regions to transport of diverse mix of cargos, including fertilizer from the Baltic sugar on grains from Brazil, pet Coke from the U S golf and manganese ore from West Africa, among others all at levels not seen for many years, Please turn to slide 17.
Looking at rates from a more historical perspective, the BSI is now trading at a 10 year high although 2020 demand and rates were severely impacted by COVID-19, We believe we may be back on track in terms of of long term cyclical recovery, which began to take shape back in 2016.
Even improving supply side fundamentals and an expected further recovery in global GDP and dry bulk demand notwithstanding inherent volatility. We believe rates can continue to remain strong for the foreseeable future.
We typically don't discuss asset prices, but I think it's worthwhile to note that if rates remain strong or increase even further we could see of material upswing to values to put this into context of five year old Ultra Max today is worth of around $17 million, while in 2010 of five year old Supermac was valued at over 27.
Please turn to slide 18.
Fuel prices as well as spreads between high sulfur fuel oil and very low sulfur fuel oil came under significant pressure last year due to the demand shocks caused by COVID-19, as well as the OPEC Russian oil price War.
Notwithstanding extreme volatility market fuel spreads average roughly $100 per ton for calendar 2020.
And for Eagle given the hedges we put in place in early 2020, we were able to realize an average fuel spread of approximately of $150 per the year, helping us to generate over $26 million in savings from operating scrubbers basis. The first 12 months of operation.
It's also worth noting that we closed out all of our 2021 fuel spread hedges totaling 72000 tons during last year at a weighted average price of around $105. This low.
Level is now well below 2021 current quoted spread of approximately of 120.
We did so with the view that with the world coming back on line and oil demand normalizing there will be continued upward pressure to underlying fuel prices and spreads both of which will be supportive towards our earnings capability on a go forward basis.
Please turn to slide 19.
On the supply side, given the visibility not much has changed since our last update in November and fundamentals remain positive.
Net supply growth decreased in Q4, a total of 88 dry bulk new building vessels were delivered during the period down 15% quarter on quarter and offsetting this a total of 38 vessels were scrapped during the same period.
In terms of forward supply growth. The overall Drybulk order book stands at just 6% of 25 year low and when looking at ultra Max vessels as a percentage of the broader handy Max fleet. The order book is even lower at just around 5%.
For 2021 dry bulk net fleet growth is expected to come in at two 6% assuming scrap of roughly 10 million deadweight tons, which is down about one third compared to last year, primarily as a result of of stronger rate environment.
The total of 221 dry bulk ships were ordered in 2020, it's interesting to note that over the past 25 years, there have only been three years, which saw a lower ordering 1998 2001 and 2016.
If the freight market stays at elevated levels, we would expect the ordering to pick up somewhat however, we do not believe it will be material given relative pricing for secondhand tonnage as well as uncertainties surrounding de carbonization regulations as well as more restrictive access to financing.
Please turn to slide 20.
Global growth expectations have been revised upwards since our last earnings call, reflecting a normalization of activity. Thanks to the expected impact of vaccines and increased stimulus. The IMF is now estimating global GDP contracted by three 5% in 2020 and is projecting a recovery of five five.
Percentage in 2021 please.
Please turn to slide 21.
Dry bulk demand growth has been revised significantly upward as well with 2020 now estimated to have contracted by one 9% as compared to a decrease of four 5%, which was being forecast back in July for 2021 forecasts are indicating trade demand growth of of positive three 7%.
As compared to last year.
Notwithstanding uncertainty we remain optimistic for the continued normalization of trade demand and CRM market being a beneficiary from stimulus measures, which are already being put in place around the globe.
With that I would now like to turn the call over to the operator and answer any questions you may have on.
Operator.
Thank you with the prepared remarks are completed we will now open the lines of your questions. As a reminder, it's asking the question you will need the press star one on your telephone to withdraw your question press the balance sheets. Please standby, while we compile the Q&A roster.
Our first question comes from Omar Knockdown with Clarksons Plateau Securities. You May proceed with your question.
Thank you Hi, Gary and Frank.
Good day.
The commentary I think on the market and then some of the macro factors underlying things and clearly rates are quite strong.
I wanted to ask you how do you feel about where your fleet is today and that's the question that you get.
The constantly.
It's seven shifts at what we when we look back in hindsight of very well timed and you also monetize some of your older ships and keeping with your fleet renewal plans whats your appetite today. When you think about the outlook for further purchases do you feel the returns still makes sense and also when it comes to selling older ships do you still have it.
Interest in doing that.
Yeah. Thanks Omar.
The answer is we still have an appetite I think we while we have a general goal of fleet renewal on growth. Each acquisition is has to be.
Measured and evaluated given market dynamics ability to raise capital or cash on the balance sheet and also the same sandwich divesting of assets. So we now have three vessels that are over 15 years old I mean, they clearly are or are on the sales potential southwest for us.
Ben.
But.
Fair value for those ships in our opinion is higher than where the market is today given the given the increase I mean I can tell you that just this morning, we trade in Q2 to four on the Baltic Supermax index. The BSI at 16250, that's up $6000 for those three quarters.
Im just January and so that's meaningful cash flow on it on.
Given share relative to the index and so that has to be taken into account for the asset value in terms of selling so while while our goal ultimately will be or we will sell of those ships. It has to be at the right time, given given the economics and if we can garner the cash flow by operating on them for longer and then sell them on that.
That's what we'll do and same in terms of acquisitions.
Thanks, Gary.
The kind.
Kind of maybe with sort of that theme I guess with.
On the Super Max Ultra Max rates being over 20000 today, especially this early as you mentioned in your opening remarks that things look pretty solid have you been have you been approached into entering at the time charters of say a year has gone there yet do you see yourselves wanting to put vessels on contract or.
Or with your freight trading day do you see yourself being more of the guys chartering in.
So first of all.
I may just a slight correction, we just got the index.
During the call. So we're now just over 21000 or.
So the alright.
All right no worries no worries tongue in cheek, but on the answer is we have been approached and we always value of that relative to the curve all things being equal we prefer to keep control of our assets and trade them for the reasons you mentioned the goal to outperform and we're able to hedge cash flows using using derivatives.
<unk> said that.
Given the dynamics in the market.
There are operators and who have positions they need to cover and given the velocity of the change in the market are there to pay up significantly for the vessel on period, whether it's three to five or or seven to nine months and even longer and if we can get significant premium to what we call par value on the curve we.
Will reroute ships, but you've heard me talk about it before when you rerun of vessel.
Giveaway on option at the end, even if it's just a two or three months of option in terms of re delivery window and so given that we can trade the ship ourselves we need to be paid for that when we do our internal calculations in order to reroute of vessels. So the answer is yes, but we have multiple ways to lock in cash flows as we go forward in <unk>.
The wedding ships is not the number one for us.
Got it thanks, that's pretty clear thanks, Gary.
And maybe just sorry, one final one.
Maybe for Frank.
The you talked a bit about the financing of the of the acquisitions you guys have done I wanted to ask.
How do you think the appetite for the for the Supermax since you acquired the 2011.
Non eco design, but they are sister ships to what you have.
You see that being financed with traditional bank debt or.
Our other means of do you prefer to keep them as I sort of unencumbered cash purchases.
Hey, Omar.
Thanks for the question on.
Yeah, the appetite for those ships in the bank market is good and we are considering putting on modest leverage similar to what we've done in the past.
On the ultra co facility, so good appetite and we're looking at doing something.
Okay, Alright, thanks, Frank and thanks, Gary.
Thank you.
Thank you. Our next question comes from Randy gives me into the Jefferies. You May proceed with your question.
Oh, the gentlemen, how's it going.
Good morning.
Good morning, Bonnie.
So yeah, obviously appreciate the quarter to date rate guidance, which as you mentioned well above benchmarks likely at a nine year high I think you said in your press release. So can you break this out by ultra Max and Super Max and then also is there something maybe unique about this quarter and your operations that somehow increase.
In the first quarter numbers, but might result in lower second quarter numbers or is this purely a reflection of the state of the market and kind of your normal trading operations.
Thanks for that so so let me take care of first of all we don't breakout of ultra Max from Super Max.
And the reason is is that we trade our fleet.
One of homogeneous an arbitrage between the vessels and cargoes and we think it kind of gives us the wrong picture if theres more if there is volatility.
The two so in the back of our earnings deck, we provided in the appendix a guide to relative earnings values of of <unk>.
Different size ships and so you can break it out into yourself in terms of what our overall fleet is with our recent acquisitions, we've actually now gotten to a point, where it's just over 50% of our ships pro forma for the deliveries will be ultra matches. So thats a huge milestone for us given that four years ago, we were a 100% supermac supplier.
In terms of this quarter in terms of this quarter.
The answer is there's always going to be volatility are our market is such that backhaul trades are ships don't typically balance from let's say the far east to Brazil, and back and because of that there is considerable.
Between our backhaul trade on let's say four of $5000 of day and today outbound wise can be 35, even 40000, so because of that you can get volatility depending on how many ships are backhaul and front haul having said that I can tell you that are on a quarter is not the numbers in the guidance.
Based on all of.
The predominant amount of front haul business. So I would say this is more about the business methodology, but having the majority of our fleet in the Atlantic for this upturn in the market has definitely been helpful and we've been able to capture it but it hasnt been done by sending all of the ships out at the.
At the moment are our balance remained similar to where we entered the quarter.
Got it okay, Yeah, just making sure there wasn't like a huge surge now and then you have no more availability for the next month or so but it sounds like not the case and then you ended fourth quarter with like you said $89 million in cash and other whatever it was 50 million in your Undrawn 55, and your Undrawn availability.
Obviously, the cash flow positive here in the coming quarters pretty manageable debt are more chairs trading close to NAV. So all of the thing said what are your plans for this free cash assuming rates stay relatively firm here in the coming quarters is it just keeping the cash on the balance sheet repaying debt I know you paid down your revolver in the past.
I'm kind of repurchases of secondhand acquisitions, how do you get a balance of these.
Plethora of options.
I appreciate the question on I appreciate that we're in a situation where you have the ability of asked the question given rates, but having said that we just acquired seven ships as you point out and it's early days into the quarter. So I think we'd like to get deliveries on the ships as Frank mentioned, we're looking at.
The potential putting debt on on summer some or all of the acquisitions and then see how things play out in.
What the intention will be given opportunities in the market paying down debt things like that so it's still early days, but it's definitely on our on our radar and we intend to turn to it given given hopefully that this market continues to show strength as the forward curve indicates it to us.
Sounds good that's it from me Thanks again, alright. Thank you.
Thank you. Our next question comes from Greg Lewis of BTG proceeded on your question.
Yes, Thank you and good morning, good afternoon everybody.
Gary I wanted to touch a little bit on on some of your comments you made around the strength in the curve and maintaining flexibility.
Yes.
At least for us from our point of view of the end of the market has been much stronger than we expected.
And that has helped the <unk>.
Next few quarters of the curve.
While I understand why you want to maintain exposure.
To your vessels on not just turn over the keys to other operators. How do you think about the strength in the curve in say the back half of the year of $13 $14000 I get it's not as high as today, but it's still not being the slouch out.
Yes.
Should we think about the potential for the company to take advantage of that in the.
Just lock in a little better coverage around the derivatives market realizing.
Not really sure how you can talk about that but any kind of color around that I think would be helpful.
Yeah, absolutely I mean.
First of all the the answer is yes, you can expect us to take advantage of opportunities and the fact that the the strip as we call. It is trading over 16 and I mentioned we.
We traded that this morning, so locking in certain cash flow as we've said on.
Until further notice consider as the spot player and our goal is to outperform the spot index, but as we said last year for defensive reasons, we communicated that we put on a significant number of hedges.
Downside protection, given the uncertainty around Covid and similarly, if we get to a point, where we want to communicate that we've done something substantial in terms of locking in cash flow. So even though at this point, we're not we're not going to say that rest assured we are.
Managing the fleet in such a way that we think we can take advantage of strength and then volatility as well so.
We're quite aware of what <unk>.
16000 means over the back three quarters of this year from from a company standpoint on cash flow and.
And we're going to act accordingly.
Okay, great great. Thank you for that and then just another one around the scrubbers and it's kind of the same question Anthony of different way I mean, we're bullish on the outlook for scrubbers in the press release last night, you kind of I think on Frank's comments you touched on it.
I mean, we're well up off the bottom in spreads between the high sulfur low sulfur fuel I guess of.
A couple of questions.
And you mentioned the.
The fleet is.
I guess I'll ask it this way.
Different markets, where scrubber utilization would just be better I E is there something around whether its the Atlantic or the Pacific where vessels in certain markets just have a better chance to run the utilization whether it's because of the distances are because of as we think about.
Some ports.
On letting.
Scrubbers be used is there any way to think about.
Is that ideal better locations than others for scrubber vessels.
Yeah, absolutely. So so first thing I would do is for the most part you can discount where the ports of allows scrubbers to be used because our vessels have low consumption when import the the vast majority of consumption of that C and so the way to look at it as really the percentage of sea days as compared to a total voyage.
Or pulling back how many days.
Of the year can you spend at sea so ships with scrubbers.
Gaining that benefit are better off spending time at sea, which typically is actually cross training Atlantic to Pacific and Pacific to Atlanta.
All things being equal load and discharge number of days per load and discharge of ship. The morning as you put in the middle it see the better it is for scrubbers. So we find our.
Our ships tend with scrubbers tend to be doing those long haul trades.
Of course, there are other dynamics involved but that's the main driver of trying to maximize the days of seeing its really no different than when you have of ship which is.
The heavy on consumption and not very economical you do the.
The opposite you find the business.
Business, where the shift of spend more time in port in and it's not as noticeable the consumption of <unk>.
Yes.
Okay, great. Thank you very much thank.
Thank you.
Thank you and as a reminder to ask the question you'll need the press star one on your telephone. Our next question comes from Liam Burke with B. Riley. Please proceed with your question. Thank.
Thank you and good morning, Gary Good morning, Frank.
Good morning.
Gary you talked about the strong seasonally slow first seasonally strong see traditionally seasonally slow first quarter.
And then do you anticipate the traditional patterns of the subsequent quarters to continue at the macro even though you've had an unusually strong first quarter.
Yes, I think I think I would separate it out in the sense that there's a number of reasons. The first quarter has started off strong we had the fourth quarter China.
100 million tons of soybeans, but the but the real interest the standout here, especially compared to the last few years with the trade war on tariffs is that the U S doubled its exports.
From 18 to 36 million tons in the majority of that moves on the U S harvest, which is fourth quarter and carrying into the first quarter, we're still loading beans to.
The China now and then you've had a cold winter and more coal moving.
And the into China. So that's been helpful and also the.
The lunar new year, there was much less travel so so China really kind of pushed through it as opposed to the normal slowdown having said that we don't really see a change to its typically the strength coming into the second quarter is really on the Brazilian soybean.
Movements in although the harvest has started a bit late it's ramped up pretty significantly and expectation as well.
We're already loading in and Thats going to be strong as well as China is continues to rebuild the pig population. So we don't see anything on the horizon that would indicate that things are on.
Out of whack for Q2 because of our strong Q1.
Great and Frank.
You'll have time on the senior secured 2020 twos, but.
Are you looking now possibly of reducing your interest rate.
Understanding it's not due for a bit here.
Hey, Liam Yes, sure we are looking and.
As the market improves our options.
Improve also so we're looking across a broad spectrum of options bank debt of new.
Norwegian bond.
And in other instruments to see.
And find the ideal mix and we do expect debt it will improve.
Our picture going forward once we do refi.
Great. Thank you Frank Thank you Gary.
Thank you.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Gary Vogel for any further remarks.
Thank you operator, we have nothing further so I'd just like to thank everyone for joining us today and wish everyone. A good day. Thank you.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Yes.
Okay.