Q1 2021 Grindrod Shipping Holdings Ltd Earnings Call
Previously disclosed tax dispute with her Majesty's revenue and customs.
HMO SEC.
H M. I'll see you decided not to appeal the decision will come to the release of $2.4 million in tax provisions that had been recorded in respect of such dispute in prior periods.
On the nights in May we repaid the approximate $25.8 million remaining outstanding amounts on our senior secured credit facility with an affiliate of Bain capital credit.
Yes.
On June 28, 2021, we announced our transition to a quarterly financial reporting.
Semi annual reporting.
During the second quarter. We also purchased a combination a combined total of 38467 ordinary shares in the open market on the NASDAQ and the chassis, that's an average price of $8.46 per share.
Now can we please turn to slide six to discuss recent developments.
On July 21st the group entered into an agreement to acquire the remainder of Ibs Belk held by pain for total consideration of $46.3 million.
Pricing of $37.2 million for the ordinary equity shares of $9.1 billion for the preference shares.
The purchase price was based on appraised values as of May 13th 2021, and the Ips both balance sheet as of April 32021 agreement.
The agreement with Bain is subject to customary closing conditions the closing to occur no later than September the 30th.
'twenty one.
On the 17th of August Glen Roane shipping entered into an agreement to purchase the 2019 Japanese built ultra ultra heartfelt carrier Ibs, Ibs, Phoenix, which we currently charter income earners for price of $23.5 million, which we believe reflects a significantly reduced.
Relative to management's estimate of the fair market value of the vessel due to the early termination of the prevailing charter agreements.
In order to finance the acquisition, we have simultaneously entered into a financing arrangement.
Separate Japanese owners on attractive terms progressed amounts of $25 million, whereby the company will bareboat charter the vessel back prepare at up to 15 years and has the right, but not the obligation to them.
Quad the vessel after the first two years of the charter.
Transaction expected to close by the end of September 2021, while the vessel will remain chartered in from the original terms until closing.
Now can we please turn to slide seven where we will go over our new dividend and capital return policy.
Messaging from the quarter ending September 30th the company intends subject to oil pricing needs in other circumstances to return approximately 30% with adjusted net income.
This will be adjusted for extraordinary items to shareholders through a combination of quarterly dividends and share repurchases.
Company intends to pay a minimum quarterly.
Base dividend of three U S cents per share and an additional variable component that will consist of additional dividends <unk> share repurchases.
The timing and amounts dividend payments will be determined by our board of directors and could be affected by various factors, including our financial results.
And earnings restrictions in our debt agreements required capital expenditures and the provision of Singapore law affecting the payment of dividend to shareholders and other factors.
I would like to reiterate that I keep policy focus it's great to have simple transparent sustainable capital return policy.
How's the company to retain significant cash flow to further strengthen the balance sheet and pursue growth while rewarding shareholders with material dividends <unk> share repurchases in times of market strength.
Now I'll pass the floor over to Steve Griffiths, Chief Financial Officer, who will go over the financial highlights performance for the second quarter of 2021, Steve.
Thank you Martin.
In fact, you've seen on some key metrics for the second quarter compared to the first quarter gross profit increased to $34.3 million.
The three months ended June <unk> 2021.
$13.8 million for the three months ended March 31st 2000 <unk>.
Anyone.
Profit attributable to add into the company for the three months ended June.
21 increased to $19.8 million or $1 <unk> per share.
From $2.4 million or 12 cents per share for the three months ended March 31st 2021.
Now looking into the first half against gross profit was $48.2 million for the six months ended June 30 of 2021, while profit attributable to owners of the company for the six months ended June 30 of 2021.
With $22.1 million or $1.15 per shape.
And now turning to slide 10.
The company was able to materially enhance our cash and liquidity during the first half while simultaneously repaying over $66 million debt.
With net debt reduced to $144 million as of June <unk> 2020 run we believe the company is well positioned to pursue its expected growth and capital return strategies.
On slide 11.
The company has spent considerable effort over the last 12 months to refinance or redeemed all of App coming maturities, partly through the timely sales about tankers.
Now limited debt maturities until 2025, combined with a conservative amortization profile.
The company with balance sheet flexibility going forward.
Let's turn to slide 12.
I'll now briefly discuss results in the <unk> business for the second quarter 2021 and the drop off business Antitheft TCE per day was $18104 per day for the three months ended June 30 of 507873 per day for the same period in 2020.
Chicken Max Ultra Max TCE per day was $21916 per day.
For the three months ended June <unk>.
2021 compared to $7676 per day for the same period in 2020.
As of August 16, 2021, we have contracted approximately 1326 operating days at an average TCE of $25205 per day.
Our handy sizes and approximately 1686 operating days at an average TCE of $50666 per day or a super matches.
Yeah.
The average long term chartering cost per day for the Suezmax Ultra Max fleet for the second half of 2021 is expected to be approximately.
$12883 pay day.
This slide also provides figures for Q1 and the first half of 2021.
Now turning to slide 18.
This kind of a rise in the drybulk freight rates, thus far in 2020. One is easily demonstrate that this is a historical results.
During the first half approximately 90% of our fleet was predominantly trading either on index linked profit contracts sure Tim John Tom Charlie.
Short term time charters or in the spot market, leaving the company exceptionally well positioned to take advantage of the strong.
Rate environment.
Every $1000 change in TCE per day.
Equated to $5.4 million of TCE revenue.
During half one 2021 and that's for the core fleet.
Now turning to slide 14, this slide shows that.
And fleet cash breakeven analysis for the first half 2021.
Long term charter and breakeven with $13850 per vessel per day and core dry bulk breakeven.
11652 vessel per day.
Cash breakeven rate per day, and Pes operational expenses.
Interest expense and debt repayment.
With that I would like to turn the call back over to Martin.
Thanks, Dave.
Please can I ask you to turn to slide 16.
Let's look at the fundamentals of the dry bulk sector and how they have been developing against the new market environment.
The dry bulk cargoes hit hardest by the global pandemic with KOL to mine about demand on iron ore and grains were far more resilient thus.
Thus far in 2021, we have seen a material rebound in coal the minor bulk demand, which is closely correlated to global GDP.
And demand has led to a more robust robust recovery in 2021, and both raw trade figures and shipping demand I E. Some models.
And you saw some supermaxilla has been further helped by congestion in the container shipping business.
Leading to certain back cargoes in break bulk light scrap steel returning two bulk carriers.
Now can we turn to slide 17.
As the slide depicts iron ore trade rebounded faster than expected from early 2020.
Declines with healthy demand continuing in 2021 coal trade has exceeded expectations, but still remains below 2019 levels.
Grain flows remain healthy in 2021 after a very strong 2020.
Looking at the minor Bulks, which were a key business segment for grid and road tripping.
The demand has rebounded strongly driven partly by the steel forestry forestry blocks cement niccolo and alumina trades.
Now to slide 18.
The chart on the left indicates how do you size Supermac TCE rates have steadily increased over the course of 2021, reaching levels last seen in 2008.
Asset prices have also rebounded since the lows of late 2020.
Remain below levels reached in 2002 of them in 2010, despite higher comparative charter rates.
Turning to slide 19.
The dry bulk order book continues to shrink to multi decade lows and is estimated at only 6% of the current fleet.
And besides the Super Max Order books are the smallest in the dry bulk fleet, four 7% and five 8% respectively.
20% of the dry bulk fleet is 15 years or older or 10% of the dry bulk fleet is 20 years or older.
Strong market conditions, new ordering remains constrained.
Uncertainty relating to engine technology and emissions.
Finally, let's turn to slide 21 for our conclusions and strategically.
Let's start with our treatments at the beginning of 2021.
The strong drybulk market conditions led to our highest financial result, since our spinoff in listing.
Decided what our remaining spot trading product tankers that has allowed us to focus on dry bulk at an optimal time.
Accordingly, we announced an agreement to acquire the remainder of Ibs bulk that's an attractive valuation.
On the commercial side the dynamic approach of the company that includes Opportunistically chartering in vessels on both long and short time charters in order to service all cargo contracts is bearing significant fruit.
Our long term chartering vessels contracted what we believe to be well below current market charter.
He also writes a most contained favorable extension options and or fixed price purchase options that are now notably below the current market value.
This allows us the option to pursue growth price is considerably below prevailing levels and the secondhand and charter markets as evidenced in our announcement of the obvious bolt obvious Phoenix acquisition sorry.
Additionally, we have been able to complement our core fleet. The number of short term chartering vessels, which we hold a series of charter extension options commercially favorable levels.
Together with our own fleet, but don't do Japanese built vessels. These options demonstrate the flexibility of our operating model.
On the corporate side, having concluded a series of strategic and transformational transactions, we have announced our transition to a quarterly financial reporting.
Additionally, we are pleased to reward our shareholders with the initiation of a quarterly dividend and capital return policy beginning with the third quarter.
Now looking ahead drybulk freight rates have continued to increase to levels last achieved before the 2008 financial crisis.
Right right, so being supported by rebounded commodity demand and pricing in 2021 across a wide swathe of commodities, including grains iron ore coal the minor bulks.
While we are seeing the smartest new building order book into Capes supporting market recovery due to construction and vessel supply growth as demand continues to recover.
Due to record amounts of new container ship orders, thus far in 2021, even if drybulk orders were to pick up materially limited shipyard capacity means that most new orders could not hit the water in 2024 at the earliest.
Extend that demand continues to grow moderately the lack of available supply growth leads to an attractive potential multi year window for the dry bulk market.
In this environment with stronger market fundamentals will conquer the Greenville shipping can reinforce its market position and create significant value for our shareholders.
With this I. Thank you all for joining our call today.
I'm looking forward to reporting further progress on grant road shipping.
That we'd like to open up for questions operator.
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Thank you we will now take our first question. Please go ahead. Your line is now open.
Hey, gentlemen, it's Randy given some Jefferies how's it going.
All right Randy.
Thanks, very much as you can imagine.
I can imagine and for sure we have long time listener first time caller. So thanks for having me on here you.
You mentioned on one of the slides that you have 1326 days booked at a little above 25000 for the handy.
About 1700 days booked about 30000 per the supers I guess two questions are all of those days entirely three Q or do some slip into <unk> and then should we expect the same number of operating days and <unk> 21, compared to <unk> 21, I'm trying to just break that down to a percentage of <unk>.
Yeah.
Yeah.
Randy I'll take the CBR.
Your first question, yes, that's the cover that we have for Q4 Q3 only.
And then yeah expectation is for a subtle days, including the short term operating to be pretty much the same as what we had in Q2.
Okay. So I guess that works out to around 80% of Andy's entity.
60, and Alex deeply Super SEC.
Okay Yeah.
And then any coverage into <unk> 'twenty, one or into 'twenty 'twenty two with some longer term time charters at these levels.
Not at the moment.
To be honest.
I had a discussion some weeks ago, we all running spot to the market, we will be looking looking forward, but at the moment, where we're happy to take the market and.
It is something we will concentrate on but little bit levels still are still moving up we feel that our Q3 into Q4 is developing very nicely.
We're not convinced there will be a Chinese new year.
So we suspect that to the market, maybe it will ease a bit but we think it's gonna be continuing strong. So yes, we will be taking some cover limit to cover at some point, but at the moment, we're very happy around spoke to the market.
Got it and then last question for me.
Yeah like you said a few weeks ago in terms of dividends I see here your dividend policy kind of has a base level of three and.
30% net income for additional payout I guess two questions. How did you kind of come up with that 30% number instead of 10% or 60% or any other number.
And then second question, how do you determine the.
The split between dividends and share repurchases is it based on our NAV calculation or liquidity so here.
And kind of touch on those two components of the dividend policy.
Uh huh.
Yeah.
Yes.
Yes. It is.
This will be a split between dividends and share back share buybacks is obviously about it.
In fact share price is trading.
It crashed Niv, then there's not a need for us to do any any share buybacks and then obviously the whole the whole ocean will be allocated against them.
Allocated against the dividend.
In terms of you know.
Coming up with a 30% margin you have been coming to Texas.
100%.
Yeah in terms of in terms of the.
30% do you not I mean, we.
Allocation of cash I mean, there's a whole lot of options that guidance allocation of cash.
Initially, we're looking to strengthen our balance sheet and improve liquidity.
Cid is Adam we ran on the way with that because of the recent strong earnings.
And then we're looking to return cash to shareholders by way of dividends and or shape Opex estimate its policy.
But then in the future.
We need to keep something of thought to.
Right.
We'd be looking to exercise them about our purchase options on.
On the long term chartered fleet.
Not all at once.
But at the Companys cash becomes available and then paying down some debt.
I am in Korea, and about 46, 46% leverage against that fleet and I guess, we'd like to be a bit lower.
Yeah all of those things.
Taking into account.
Thought that the 30% was a sweet spot for us.
And obviously erratic and I'd just add as this market develops.
So ongoing I mean as the cash gets generated obviously, we can be flexible our guidance, but I think it is conservative for the first time in many many years.
Well I payers of generating cash it has to be kind of bullet proof balance sheet and then move forward from there. It's a very it's a great position to be in let's say you have said for years. He was wondering where the cash is coming from and I was wondering what to do with it so it's exciting times.
Yeah, Yeah, clearly, especially.
This forward bookings for the third quarter. It seems like your net income will be substantially higher than <unk>. That's your your payout either return of capital or our dividend and share repurchases will be pretty robust. There. So we'll be looking forward to that <unk> really.
Again, and keep up the great work alright.
Alright, Thanks, Brian Thanks, Thanks, Matt.
Thanks Randy.
Thank you we will now take our next question. Please go ahead. Your line is now open.
Can't tell for sure, but can you hear me Martin and Steve.
Yes.
Sorry, it's a little odd.
The way the moderators doing this but it's.
<unk> Poprad from noble capital markets.
Just a couple a couple of questions. Martin first of all can you just talk about the macro environment and you know you just said that.
You expect some easing seasonally but can you just sort of give us a little more color on if theres anything that concerns you right now as far as the state of the dry bulk market what would be the surprise would it be China really clamping down on say steel production that ripples through the market or what.
What would what do you what are you concerned about as you look towards the end of the year and into 2022.
Yeah. Good question I actually got to cut our chairman our board yesterday.
What can possibly go wrong and you never want attempt at it.
What's your shipping.
Unfortunately, now it's interesting what's going on in China actually for them from a COVID-19 perspective at the moment. We heard reports today that are that on the Yangtze River, which.
Now when you think of about 22% of the world's fleet trades coastal in China.
Okay biopsy over the pilots having to do compulsory quarantine the congestion.
It is staggering how much congestion with another figure at 7% of the world's hand is it basically tied up in congestion in China. So that's all very positive.
On the steel industry, yes, it might slow down although demand in the world is Sasha and if that looks very positive for the first time since.
The two thousands is that our world steel production outside of China is at record levels. So demand is there. So when we actually looked at all the Q2 commodity figures what was very pleasing was that.
Well it has rebounded a lot of it still hasn't reached 2019 levels. So despite its very healthy. Despite you know you'd expected gangbusters for every commodity.
What shouldn't change with ships steam here a lot longer.
Crossing oceans, and it's all feet again, along with the container side. So it's a very positive and I caution end of the year I mean, the <unk> Supermac sees what 'twenty three 'twenty four for Q1 of our guidance Q4, a 33 traditionally that comes off because I think as we found this year can we realistically expect trying it to allow it.
100 million people to go home so how.
Our feeling is it might be a little stronger, but something we should be kind of second quarter by quarter in the demand.
Demand is there and there's nothing in the figures at the moment suggest.
If anything it's going away anytime soon and overall with an order book.
The lowest in many decades, that's always positive as the order book suddenly started picking up.
We always know what happens next but that could be years away now so all in all.
I think its quietly optimistic.
Great.
Yeah. When you look at the order book, you know that May temper any.
Potential seasonality or or other factors that hit the market. When can you talk about in your recent presentation.
You talked about how you thought the FSA market wasn't properly discounting what potentially could happen in 2022.
And it sounded like you might be buying at that pace for 2022 and can you just clarify that statement and if it's true if you could give us some.
Order of magnitude of what kind of commitments you might have made for 2022.
Very very little.
Only use <unk>, if if we feel the need to need to hedge at any point that we've done to the moment, we have put a couple because we we have a index linked contracts but.
One of them, particularly could actually switched to a fixed rate. So the people are counterparties have the option to just.
Trying to do a fixed rate so when we've gone and done it.
As both a very small amount of cut into 'twenty, two paper asset level below what the fixed days just to hedge ourselves in that respect, but otherwise no.
We failed yes. The paper is still undervalued, but our ships are our core fleet is a lot less than that with the with the options. We have on a lot of our charter trips were very happy so.
If we do any type of it is purely specifically to hedge a particular piece of business. So at the moment not in a way where we're not heavily involved in the paper.
We prefer to I tried to physical.
Okay, and then you talked about the purchase options.
I was a little bit surprised because the Phoenix wasn't one that you had a purchase option yet you were able to acquire it and can you give us an idea of how that came about and then secondly, you talk about a discount to what potential do you think it's worth right now and can you quantify that difference discount or would you.
<unk> been willing to quantify that discount.
Yes.
Great.
It's all so I'll just say that this is where the yard.
The older ships in Japan.
And we've had a licensure for well over 10 years taken a number of their ships on.
And this was basically the flagship we took a number of several years ago and what happened is that the yards is now consolidated with another yard and theyre getting out to a ship owner.
They they came to us and this was really that the ownership they have going on into the future. Because obviously, we had a fixed period them with options and they asked whether we the whether we'd like to buy the ship or could they sell it to another owner and we maintain the charter.
Looked at it and obviously that there was value in the existing charter. So we came to a very amicable arrangement with them.
The what we could have made would it be making on the charter.
No not as much as maybe we would've liked but then it has relationships with our Japanese friends.
Agree to set us to ship after price.
How you compare that to the market. These days, but all I can say is.
Our new building ship type in Japan.
Every 2024 was $35 million.
So we're now talking a two year old ship.
At $32 million to $33 million conservatively value. So it's a pretty crackerjack there we've got a great price, we maintain a cost base of the charter.
And as we said we have the.
Right. If we wanted to buy it back after two years. So I think it's a win win where we have and ultra modern ship in our fleet.
Very competitive price and where it would be generating a lot of cash out of it. So it is a good day.
People with relationships.
It's the trust here you get to this position you'd never renege on anything and then when things change they come at all she they'd like a favorite we said, yes, that's a price and it was agreed.
Great that's helpful and then.
I'm sorry, Steve did you want to add something there.
Just to add to what Martin said, there's been a bit of confusion about buying at the ship at 23, and often getting finance it at 25, but obviously with the vessel value.
That's what Martin said, he went to $32 million.
We secured the financing the Japanese financing similar to what we've done until the other vessels that theyre, not king magpie and particularly China.
25.
Lighting is again against the valuation that you wanted to.
Great and I.
I'm asking about the purchase options because you have one without a purchase option thats on charter that's coming up next year. The Crimson charter is that potentially something to watch as floors, maybe a similar transaction.
And then if you could discuss the actual options that you have on <unk>.
Like the Pinehurst that comes up next year.
How should we be looking at as you know.
Those options are the purchase options on the five that you have.
On.
The chartered in capacity are those set or those market based or subject to negotiation.
Well the Crimson Creek, we don't have a purchase option on its with our friends from <unk>, but we we've had a role now for six seven years and we keep on extending as to whether we would want to buy I'm sure everybody would love to sell to.
Auto prices, probably won't be able to afford it to be honest, so and so that is a charter.
On our other ones, we have a number of ships where the.
We've been able to declare the purchase options for the last couple of years one of them is it fixed price that's the pinehurst.
On the other one is the Ibs no rules, which is a mixture of a dollar and yen.
That depreciates every year.
At the moment, obviously that the charter is very attractive.
We're doing very well that but we would hope that that option guidance. It's another rather not talk about actually saying, we know incredibly well, we're discussing with him on at some point.
We will be able to declare that option in either clipper or take it back into the fleet.
And there'll be another couple of where we have the options next year and it's just a matter of looking at it and gauging when is the right time to declare the option. We have a number of older hand is we have five ultra high end is there's going to be at some point, we could be selling them and that renewing from those proceeds.
Some of these purchase options, it's a it's a great position to be in and we're just going to monitor the market and decide when the timing is right at the moment, it's nice options to have and it will sit there and.
With a lot of value in.
Understood and frankly, it's you have more.
Looking back a year to 18 months ago, you had a lot of Batesville gross.
That was pretty.
You had a little more control over whether the JV interests, you're sort of at the end of that road now you have to purchase options on the chartered in vessels are you looking beyond those Martin at this point in time, and how would you characterize that.
S&P market right now.
Well I think that that's starting with the S&P market I still think it's undervalued.
When you if.
If you take a one year right on an ultra Max which is probably not a million miles of 30000 to year right.
In the mid twenties.
Cash generating properties.
The S&P market I think it has the capability of at least another 50%.
To go with how much cash which is why all of our friends in Greece are being so aggressive in one or two friends in London.
That's interesting for us.
It's interesting because it's usually a shipping no one knows how long it's got a law. So this is set.
Never want to chase, a market, where we could be opportune, but with the amount of purchase options. We have there they're.
A very nice way youre declaring options many many millions below the market so immediately.
Improving the the age of your fleet the quality of your fleet with cheap ships, but.
Yeah. It does usually shipping I mean that used to come.
Very quickly we don't want to chase it there is still value there.
This kind of cash being generated we will assess what the use of funds is full but it is a good position to be and yeah. We are we have an open mind I think Oh 44 years in the business has taught me you don't do stupid things. So when the markets are taking off it's going to be calculated.
We will look at it the necessity coding.
Understood and then Steve maybe we could talk about just the Ibs bulk JV you know.
Are there any closing conditions that you need.
We need to be fine tuned door anything concerning FERC.
For closing by the end of the third quarter and then secondly, if you could talk about how from an accounting standpoint, you have.
The results that weren't included in the second quarter.
You are economically benefiting from what is it April 30th from a standpoint of the.
The financial statements. So can you talk about how that's going to be rolled into the fleet and world into the financials.
Sure sure.
Right.
Just in terms of the September deadline.
We are in a position now we were going to close the deal well in advance of that so there's no issues around.
The September not meeting in September that target date suite.
And in terms of closing not no issues that I can foresee.
In terms of how we how we at Christmas, obviously, the cash or the <unk>.
On the cash from the end of April accrete to that but it doesn't go through the income statement that.
That'll be a sort of balance sheet goodwill.
It'll it'll go through Dec when it when it closes. So that's also why we came to finalize this because as soon as possible because.
All of the unions will then go through the income statement from data transferred the ownership.
Which as I say it will be well in advance of September.
And any.
Any idea of how the cash balance.
The financial Ah.
She has changed since April 30th can you update us on that or is it.
Well, it's something.
Let's look at the moment, we'd rather not to surprise anybody the income this until the transaction is completed so we were happy to share that and hopefully going to tail off.
Okay sounds good and then just.
For you and micro question from standpoint of Opex.
Opex looking at the third quarter, and maybe the fourth quarter or maybe even to 'twenty two should there be any material change in what your opex numbers.
We're the first out there.
Opex. This year you know, we havent thought of do we like we like to be under <unk>.
The $5000 a day and we have we have to take with some issues.
On the Opex, we've had some somehow repatriated repatriation costs arising from COVID-19 issues.
It has been expensive flat types El Corte <unk>.
So we feel we can improve.
On that figure and then also our interest in our cash breakeven.
Because I think if you're buying land and we expect that to come off come off the charter cost as you've seen for the second half for the second half is slightly higher but you.
We believe that we can more than offset the increase in the charter cost by.
Decreases on the on the Opex and the interest cost side.
Now targeted to be slightly lower than the 11, six III on cash breakeven costs in the second half of the year.
Can I just add that.
I apologize on the Opex, yes, it's permanent because when the quarantine is what I've mentioned earlier about China, It's an ongoing battle in making sure that.
If if you do end up with a ship with a crew man go to change the crew where it can be done at times, we're having to pilot several weeks to do it but we're not the only owner out there I mean, everybody is being caught up.
And it does flow through to the Opex. So it is something we're striving on but you've got this every now and then.
Coming out of the Blue you have all your protocols and funding you got hit so is it is the God positive false positive it doesn't matter you're going to have to make a plan so and at that point on this market you spend whatever money you need to repatriate flawed people. So it has impacted our opex, but it is something that so yeah. We're hope.
Thing two to improve.
Yes, maybe yes downtime expenses, Randy disruptions expensive do you have any unplanned.
Maintenance or dry docking over the second half of the year oriented to 2022.
Okay.
Great.
Reality is absolutely the program every two and a half years I should shifts guidance that is a constant constant drydocking.
Vessels, and we try and spread it over time, so there's nothing there's nothing unusual I would say in the second half of the year.
Okay, great and.
Just to follow up on the purchase option I think Martin you said Theyre Pinehurst you had a fixed option, they're fixed price option would you be willing to share that price with us.
No no no no no no no no not at the moment.
So it's attractive.
But it's not very attractive.
Had to ask great. Thank you so much thanks, Paul I appreciate it thank.
Thank you.
Thank you we will now take our next question. Please go ahead. Your line is now open.
Hi, good morning, gentlemen, Jim inspires some value investor's edge.
Hi, John very well thank you Jackie.
Good to be on the call and congrats on shifting to a quarterly format. I think that's gonna open things up a lot in the gentleman in front of me you had some excellent questions. So I think most of the things I think what's left is mostly just small modeling questions.
Looking at your Q1 and Q2 breakdown you report like adjusted EBITDA and you report a regular income, but the way you have your sales proceeds it seems a little confusing to me and maybe I'm, just missing something obvious, but what was the actual gain on sale or loss on sales from those transactions.
Sorry, what are the sales transactions of ships.
Because the guidance yes.
Correct.
No there was nothing no gains on there I mean, all of that does with tankers and we wrote down the vessels. The two selling process. There was not a net profit or loss in those figures all the impairments have been done in previous periods towards the end of last year.
Okay, I understand about the interesting and the revenue line it has positive shifts to airlines.
Right.
It's a legacy issue do Youll Pip is reported inside of the ships and.
In fleet revenue.
Okay, just trying to strip out.
Happy to take you through it.
At some point yeah, Yeah, that's fine it just kind of a modeling question and then the other question on this being transaction taken out the rest of the Ibs block I understand that's closing later this quarter into next but when does the actual revenue share switching back over to his pain like enjoying the profit from.
July August September or did that already closed a few months ago.
So that's why that guidance at the end of April.
As I stated earlier, we get the cash, but we cannot take it through the income statement once we signed the deal.
<unk> got a balance sheet instead of the negative goodwill.
The value of the assets, but yeah. So.
That's why we are keen to get the get the deal done as soon as possible. So we can we can.
Go out our bottom line.
Understandable, yeah, there'll be a massive catch up whenever that deal closes and then finally.
<unk> talked about wanting to bring your leverage down a little bit. It's about 46% is the number you stated do you have any sort of target in mind is it like 30% or 40 or do you have any range.
But where should we shall we say that.
Steven.
I'm very old school I.
I do I'm on my Great friends zero leverage now I appreciate that she was very difficult.
It's somewhere between where we are at zero obviously.
It was a couple of years of the market, but it's yeah, Steve what is what do we I mean 2025, 30% I mean, yeah I mean.
Just trying to get a lot of obviously the market value of the fleet goes up then that gets better but I think our current current market values.
Hitting towards the 30%, but again difficult to get a fix them.
Fixed percentage in mind.
Yes, certainly certainly makes sense I mean, you're one zero percent at the very top going down at 199%.
Right So I.
I think I think youre doing fine Randy alluded to this in his earlier question, but just looking at the way the days available flows through on your sheets is that 4100 number roughly combining the two segments is that a valid reasonable expectation for Q3 and Q4.
So can I, just say that again I didn't I didn't get that you're talking about the kind of a week or so.
Yeah.
Amounts at that no no.
You see in India. It is a short term operating and obviously that we have some short term shifts that site.
Longer than just 30 days, you know that go into onto.
11, some of them at 11 to 13 months that are not part of that whole fleet that they're in short term upgrading its very difficult to estimate at 100%.
At the start of each quarter, but.
What's happened in the last call and.
And the patients have been on the ships and and and what Randy was trying to do is estimate that percentage and I think with the way we are being halfway through the 80% on the handy.
Just under 70% on the on the soup is probably fit.
Okay. Yeah. That's helpful. Yeah, we're asking the same question different directions. So that's great.
And I congrats on getting this quarterly thing done and I look forward to next quarter.
Thanks, very much guidance, it's actually out of it.
Thank you we will now take our next question. Please go ahead. Your line is now open.
Hi, guys its Kevin from PSG.
I Gotta Kevin.
Yes.
Congrats with the results just a quick copper physical question on your dividend policy.
If we look at a sort of a full year run rate at spot rates I guess, we could look at something north of $150 million a year in terms of your bottom line.
If you are at 30% out Youre still left in excess of 100 million.
And if you chip away on the day to day type of $20 million and purchase on vessels 20 million you started lyft with quite a substantial amount of excess cash in this business and my question is how should I be thinking about special dividends.
Of that excess cash that's going to be.
In your hand.
Yeah Yeah.
It's a good question and obviously, if we have these type of profit for a sustained run.
There's every chance of us looking at the dividend.
Vintage it and improving it we started off with 30% because we've got other things that we need to do.
As I mentioned daily in terms of allocation of cash but this is this can be changed at any time.
Hypothetical question I would I would think.
If we'd probably be looking at if the.
If we were having that much free cash lift at the 70% of $150 million.
So it's flexible it's there for now.
And we'll obviously look at it.
But I can't answer your question directly give you.
A different answer, but just decided this is adam.
Flexible policies.
But but but but Kevin you have done the simple math, so my 70.
It's quite easy to translate through what could happen for another six to 12 months of this market.
Yes.
Maybe just a follow up would be should I think about.
Ed do payments in baseball purchases as a gradual strategy.
Would there be bulk prioritization of those above special dividends.
Well the purchase options.
Uh huh.
They still go to run over the next two.
234 years, depending on.
Yeah.
Yeah, the length of the charters and why we have them and also it's also got to factor in but that's obviously we have these five older hand is and we will be setting them at some point and making sure that we have a modern fleet with ESG and all the restrictions and taking as many boxes so would that be.
I'm not sure who to sell some of our older ships with very little debt on them using that are in the best possible way to exercise some of the options. So.
It's gonna be done I mean, we have the options depending on where the market is and the other.
The smart thing to do is actually you just say well, let's flip the shirt pocket God knows how much money.
As happened in the buyback in 2007, eight with companies with purchase option that 10 million, we're flipping them for $50 million to $60 million. So it's something we will always look at it will depend where we are on the market.
We all think conservative and yes, do we dream of course, where we could end up with this cash and yes. We appreciate it we will as Steve said, we will have to adapt our dividend policy because there's no point in time, where you might be sort of a target that you have that much cash sitting around doing nothing so we will be looking at it but let's get there first.
Or at least be well on the way, it's a great start and we're heading in the right direction.
Thank you we'll now take our next question. Please go ahead. Your line is now open.
Steve Martin I'm sure you have from Sundance.
Sure Glenn.
How does your guidance Cleveland.
Ron your shareholders, but 10% stake and obviously vanguard, which I think has publicly said, they're not long term holders of Greenwood shipping I mean, Mr. Ron.
All indications going forward and the potential to acquire some shares from them.
Have you got any thoughts about that and to be discussions around the possibility of picking up some of those shares.
Shortly I'll I'll take that obviously, I mean shareholders, what they want to do that.
They own decision yet.
Yes, I think long term, we have we have seen.
You know that at some point that would be wanting to get out, but it's just specific Tommy.
You know it is really it.
It's a decision.
In terms of the Singapore law, we cant we cant bathroom an insider.
So we would have to do whatever whatever buybacks. We do it is to do it on the market.
Yeah.
Certainly not from them.
We did three other brokers.
Alright, thank you.
Thanks, good job.
Thank you David No further questions at this time I would now like to hand back to management for closing remarks.
Thanks, very much all price so thanks, everyone.
Yeah, well, we look forward to.
Voting on Q3 in due course, so thank you everyone.
Thank you.
That does conclude our conference for today. Thank you for participating you may all disconnect.
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Yes.
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