Q3 2021 Overseas Shipholding Group Inc Earnings Call
Improvement quarter to quarter EBITDA performance.
And the increased cash levels available at quarter end vessels.
Vessels in operation performed well during the third quarter, providing solid cash flow and.
And as the third quarter has transitioned into the for US. We are encouraged by signs that what has been the weakest segment of our portfolio of our conventional tankers demand has been gaining momentum.
In recent weeks to OSC tankers have been reactivated and rejoined the operating fleet was a third preparing to begin work again in early December.
Laid up OSD vessels will thus be reduced from 7% to four by year end.
Further tightening market fundamentals have resulted in all of <unk> active vessels, having been committed under time charters into at least the first quarter of 2022.
As such current conditions provide optimism that continuing sequential quarter to quarter EBITDA improvement is attainable over the next six months.
As has been the case all year, our Atvs Alaskan tankers in niche market activities achieved results during the past quarter approaching or exceeding historical norms, highlighting the benefit of having a diversified asset portfolio.
Whereas the prior quarter saw us achieve a number of business initiatives that fall outside of the core MLR petroleum transport trades.
Recent successes have occurred within the conventional tanker sector.
Since our last communication, we have activated the overseas key west from layout and completed or intermediate survey and dry dock, allowing the vessel to enter into a 27 month charter contract transporting renewable diesel commencing mid November.
We have secured a two year time charter extension for one of our vessels operating on the West coast given the vessel committed time charter business through the end of 2023.
We have activated the overseas and the kids ski from lay up and following a series of spot voyages in October and November fixture on a three month time charter.
Tomorrow, with whom we have no previous time charter history, an interesting indication of new entrants, becoming active in the Jones Act tanker space.
We have obtained time charter commitments of three to six month duration for two other vessels.
Third on subjects to be declared within this week.
The duration of these fixtures, it's shorter than what we would optimally prefer our customers' willingness to start making longer time charter commitments suggests improving marketing conditions into next year.
As we have been activating ships. So to have changes has been seen in the broader Jones Act tanker market.
Accordingly, two older Jones Act tankers have been sold for demolition in recent weeks, reducing the available tanker supply by roughly 5%.
A competitor MLR tanker is also coming out of lay up to enter into a long term charter and.
And two larger atvs that had been inactive for more than a year have been restored to service and committed on time charter.
Favorable uncommitted vessel supply has thus been quickly reducing in recent weeks.
It bears remembering that no additional supply is currently on order.
Any new capacity likely to be available for delivery at any time for the next several years.
The latest energy information agency data indicate that demand patterns for transportation fuels consistent with historical levels for these products have largely recovered in the U S.
With gasoline and diesel inventories below the lower band of five year running historical levels. At this time of year. This normalization of consumption pattern should stimulate more domestic marine transportation demand as we move through what is historically the seasonal high demand winter months.
Increased chartering demand the supply constrained environment is supportive of a belief in better days ahead.
I will now turn the call over to <expletive> to provide you with further details on our third quarter results for 2021.
Thanks Sam.
Please turn to slide seven.
We completed a refinancing of significant elements of our debt during the third quarter.
This resulted in a lengthening of our debt maturities a reduction in annual cash debt service requirements and an increase in our liquidity. Additionally.
Additionally, we were successful environment.
Covenants across all of our loans.
Specifically, we used proceeds from our $325 million new borrowings to repay in full our term loans with scheduled maturities in 2023 and 2026.
And Additionally, maybe $60 million payment on our Alaskan tanker loan due in 2025.
The remaining proceeds increased our liquidity.
This provides <unk> with a natural flexibility to continue to make the post COVID-19 transition to a normal market.
In September we have returned the overseas key west and the overseas Nick as speed of service.
Each vessel performed spot voyages during the violence.
We are performing a survey in ballast water treatment system installation on the key west the permitted it to fulfill for 27 month time charter without interruption for scheduled maintenance.
Domestically transportation fuel consumption levels continued to increase in comparison to the prior year.
We continue continuing disruption in international tanker markets with resulting low transportation rates, coupled with the continuing COVID-19 impact on.
International demand for transportation fuel.
<unk> and the continuation of higher than normal clean product flows in the United States.
Spot market activity increased again during the third quarter.
We performed more than half of the voyages executed by tankers.
The overseas Houston continued to operate in the spot market and was employed for approximately half of the quarter.
The overseas Boston operated under a short term time charter during the second half of the quarter.
The remaining spot voyages during the quarter were smaller in size generally satisfied with atvs.
Please turn to slide eight.
The third quarter historically, the slowest quarter of the year continued to show a gradually improving market.
The results, we achieved reflect a sequential improvement over each of the prior 2021 quarters.
TCE revenues increased 5% to $75 4 million.
Adjusted EBITDA increased 20% to $12 2 million, both compared to the second quarter.
Please turn to slide nine.
Alaskan tanker revenues increased $2 6 million as the Alaskan legend completed or 45 day dry dock period in June and was fully in service during the third quarter.
Jones Act handy size tanker revenues increased $2 2 billion.
Due to the return to service or at the <unk> West coupled with increased utilization of the Boston.
Offsetting this was an off hire dry dock period for the New York.
Our ATV revenue increased as the OSC tool or commenced or new time charter contract at a highly daily higher daily rate during July.
Lighting revenues decreased from the second quarter due to a seasonal decline in volumes.
The Beacon Santorini continued to dissipate in the Maritime security program and provide services to the government of Israel.
During the quarter, we perform to Gol voyages and three voyages for the military Sealift command.
All being in a $600000 increase in TCE revenues.
We had five vessels in lay up at the end of the third quarter down from 7% at the beginning of the quarter.
Please turn to slide 10.
Niche business TCE revenues declined slightly from the second quarter was lighter than revenues decreased due to the lower summer time volumes.
Shuttle tanker and non Jones Act product tanker revenues both increased.
Please turn to slide 11.
Vessel operating contribution defined as TCE revenues less vessel operating expenses and charter hire expenses increased $1 $5 million from Q2, 2021% to $16 6 million in the current quarter.
Niche market activities declined $1 4 million due to the lower summer volume some are wider and volumes.
The ATB contribution increase due to the new charter for the OSC too of course starting in July.
The Alaskan tanker contribution increased to $9 million due to the completion of the legend drydock during the second quarter.
The Jones Act tanker loss increased to $12 billion from $11 5 million.
The change principally resulted from an increase in costs as two tankers returned to service late in the quarter.
Number of lay up days decreased slightly between the two quarters.
Combined vessel operating contribution of our niche markets Atvs, new Alaskan crude oil tankers.
<unk> the vessel operating contribution in the current quarter of $28 5 million compared to $26 7 million in the second quarter.
Please turn to slide 12.
Third quarter 2021, adjusted EBITDA increased $2 million from the second quarter of 2021.
This resulted from increased contribution from our Alaskan tankers and ATP.
Adjusted EBITDA continued to be negatively impacted by the four Jones Act tankers in lay up for the full quarter two vessels in lay up for two thirds of the quarter.
Lower spot market utilization also contributed.
Please turn to slide 13.
Okay.
Net loss for the third quarter of 2021 $16 million compared to a net loss of $10 7 million in the second quarter of 2021.
During the third quarter, we recognized a $7 $9 million pre tax loss associated with the refinancing resulting from prepayment fees and the write off of previously deferred financing costs.
Additionally, we recognized a $1 million impairment charge related to the right of use assets associated with two of our bareboat charter tankers.
Our assessment of these vessels indicated that estimated future employment would not fully recover the right of use assets.
Please turn to slide 14.
By early in Q3, 2021 reason completed all scheduled dry dock work for 2021.
The total 2021 investment to date, including amounts extended in early July was approximately $24 million.
We have activated the overseas key west to enter a new time charter.
And in order to make <unk> available without interruption to her charter were during the 2007 months charter period, we accelerated her drydock that would've been due in the second quarter of 2022 to occur prior to the commencement of the charter in November 2021.
We anticipate that that expenditure will be approximately $6 million, which includes the installation of the ballast water treatment system.
Additionally, we accelerated the dry dock of the overseas Boston, So that she will be available for the entire charter period without the need to conduct scheduled maintenance.
At June 32021, we had total cash of $62 million, including $100000 in restricted cash.
During the third quarter, we generated $12 million of adjusted EBITDA, and we entered into a $325 million term loan and used $274 million to pay off two loans and partially prepay another.
We incurred $6 million of loan issuance prepayment fees.
Working capital consumed $11 million in cash.
We extended $1 billion on dry docking and improvements to our vessels and we invested $1 billion in vessel and other capex.
Further we incurred $8 million of interest expense and repaid $10 million of debt through scheduled amortization.
The result was we ended the quarter with $85 million of cash, including 100000 restricted.
Please turn to slide 15.
Continuing our discussion of cash and liquidity as we mentioned on the previous slide we had $85 million of cash at June 30.
100000 of restricted cash.
That would be September 30, alright.
Total debt was 458 million. This represents an increase of $41 million in outstanding indebtedness since June.
We will amortize, an additional $4 $4 million of our loans over the remainder of 'twenty one.
With $339 million of equity our net debt to equity ratio was one one times.
This concludes my comments on the financial statements I would like to turn the call back to Sam. Thank.
Thank you Doug.
Clearly the refinancing efforts completed at the end of the last quarter and improved employment visibility for all of our active vessels through the early months of next year provide some relief from the elevated business uncertainty we have experienced for much of the past two years.
We believe these developments are important in creating a longer runway to allow for the markets to heal and for the anticipated restoration of normalized trading conditions for many of our core assets to emerge.
Having bolstered our liquidity position with the completion of our refinancing at the end of the third quarter OSB is now well positioned to pursue opportunities in what we continue to see is an improving market environment.
Global energy markets are on track to regain pre COVID-19 consumption levels by early next year with demand signals, indicating a rising need for transportation capacity increased international air travel in the months ahead in particular should add to firming market demand.
Revisiting points made in the comments last quarter, we are optimistic that the following catalysts should serve to drive improved operating conditions in 2022.
First as noted earlier low domestic inventory levels of key refined products and a steady normalization of fuel demand patterns consistent with historical levels of consumption should encourage continued improvement in refinery utilization rates and create strong underlying conditions accumulate more domestic marine transportation demand.
Second as we know the state of international economic conditions significantly impacts the domestic market for demand for oil.
As the international markets progressively heal from live the lingering effects of the pandemic should be expected that the U S will experience a reduction in significant input volumes that we've seen this year in particular international tanker rates increase on the back of higher product demand outside the U S.
When this occurs we should see a rise in demand for our services.
Third if crude price spreads in domestic versus international crude oil increased more favorable conditions for coastwise domestic crude oil movements should occur in particular shifting availability of Nigerian crude oil once the new Nigerian domestic refineries against operational next year bears watching this con.
Taxes.
The final catalyst that would drive improved operating conditions is the emerging demand for transporting renewable diesel.
Both new and expanding production facilities in the U S. Gulf Coast will move renewable diesel to the consuming markets on the U S West coast, which should generate both more and longer voyage demand for Jones Act tankers.
With availability of acceptable vessels of the town's ecstatic incremental demand from these emerging product flows of renewable diesel and other alternative fuels should add progressively to the domestic baseload transport needs for crude oil and refined products.
Some medium term caution may still be warranted when considering the full emergence of the recovery that we await.
Graders remain reluctant to commit vessels on time charter for more than a few months and there is still a lot of uncertainty around what comes next with rising Covid case loads and continuing chaos in the natural gas and crude oil markets, where prices continue to rise due to lack of prompt available supply.
Nonetheless.
Certainly good news the two Jones Act tankers have been scrapped and that the overhang of the laid up large atvs has been removed.
Our recent chartering activity for our vessels is also a sign of a significant shift in at least.
At the very least short term market sentiment.
We believe these factors continued to build momentum for achieving a better operating environment, and we remain patient and awaiting a full recovery in the <unk>.
Meantime, continuing strong contributions expected from our ATC vessels and the anticipated revenue streams from our niche businesses should act as continuing cash flow stabilizer supporting what we consider to be fundamentally promising medium and long term future for our business overall.
Anthony we can now open up the call for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our first question comes from Ryan Vaughan.
With need him you May go ahead.
Thanks, Operator, Hi, Sam Hi, Derek good to hear from you guys again.
Encouraging.
Like things are starting to get better, especially internationally, which seems to be what's been holding things up on your recovery.
I think just taking a step back I'm curious as we start to get into 2022 business starts to normalize Sam your words, which I agree with.
For shareholders today should we think about this business and potentially how the stock's going to really start to work.
That once.
Youre in a normalized environment. This is a $100 million free cash flow business are you guys thinking again, just kind of high level are you thinking using some of those proceeds those free cash flow to pay off some of the debt and kind of.
Switch up the heavy debt load more of an equity focus in other words fast forward one year I don't think the value of your vessels your business, it's going to be it's going to deteriorate in fact with cash flow going much higher is that how you envision today. If you were at 375 net debt in a couple of hundred million dollars.
Our market cap that you will use those proceeds.
Just to kind of invert this capital structure.
I think that's that's.
That's a very real possibility Ryan we've talked about this before.
Of the of the options that are available to us in an environment, where we're generating surplus cash flow.
Repurchasing shares to my mind is probably the least effective way to deploy cash doesn't really likely do much for our stock price.
And it does.
Provide a bit of a.
Returning to our shareholders, but.
I think the principal shareholders that we have maybe have longer term expectations not just trying to get a short term stock boost.
So in that environment and dividends are tax inefficient for our large shareholders. So that's sort of in the same boat.
In that environment, taking surplus cash flow to reduce debt reduce leverage seems to be.
Our likely direction that we would seek to pursue I would.
To add to that.
We continue to think there are opportunities to.
To invest in this business.
Both in the sort of conventional trades that were in right now but progressing.
Progressively over time, and the transitioning energy markets that are likely to come and particularly.
Adaptations to emerging regulations to respond to climate.
Carbon emissions and climate change.
It's early yet for us to be talking in some detail about what those opportunities might be but I just want to I want to throw out there as a placeholder that.
We think there are opportunities for us to benefit from the premier position that OSC has in the liquid bulk transportation market.
To avail ourselves of some potentially interesting opportunities in the emerging trained for alternative fuels.
Alternatives to carbon based transportation fuels.
You kind of took my next question I was going to ask you about offshore wind renewable you mentioned you have a new customer that has no previous history.
And along the same lines why were talking about the.
Tanker side of the business.
What what <expletive> maybe this one is better for you, but how should we think about.
First Sam definitely one here just as far as how you think dose tankers, where the business comes from from the remaining that you expect to get back into the business into into next year, but also <expletive> just how should we think about.
The trajectory of that contribution from that Jones Act I think about that line item.
It's quite interesting because if you just zeroed that out for right. Now this isn't 85 something million dollar EBITDA business and given everything Thats happened here, it's quite remarkable how stable and steady that part of the business has been so just just a question for you Sam on just where you think those tankers what kind of customers you have there.
Especially what we're hearing that offshore wind is starting to pick up obviously, you've got the the key west going and then <expletive> just on the how to think about that trajectory as more of these vessels are getting the water.
So.
I did mention that there were a couple of tankers that were scrapped and the overhang of sort of available tankers has been diminishing.
No.
The key missing ingredient from our markets at the moment is transportation of crude oil domestically.
It was a larger feature pre COVID-19 than it is today.
Some of that in my mind is reflective of changing.
Refinery ownership landscape in the United States, there's been.
Suitable turnover of refinery assets shell has broadly exited the market BP is scaled back.
Others have shut down the refineries urban transforming them into renewable diesel facilities.
I think some of that is is this transitional I think some of that maybe gives rise in the future due to changing crude oil demand patterns.
But thats a visibly absent part of the.
The market mix right now.
As I referred to in my remarks.
We're looking at the Nigerian refinery, which is scheduled to open next year its been significantly delayed but once it opens it hasnt nameplate refining capacity of 600000 barrels a day.
That would take a huge.
Percentage of Nigerian crude oil protect production off of the available international market and diverted to domestic refining.
That could have an interesting impact on price differentials between Atlantic basin crudes in domestic crudes.
The.
That's something we're watching there is some talk about the renewed excuse me the.
The strategic petroleum reserves.
And there was even news commentary this morning that.
The government is looking at the EIA report that's due out today.
I'm trying to figure out whether there is there is need or.
Warrants.
Moves.
Police strategic drilling reserve that could give over a short term could give some boost to the crude oil market.
If those things happen.
We will tighten very quickly in my view, there's not a lot of excess capacity left.
Still think.
Notwithstanding the fixtures that have been done in recent weeks.
Our customers are largely speaking is still short transportation capacity.
And that as the market tightens and it becomes clear that availability is diminishing.
We think the trading desk will move to trying to square up the short positions and that creates a little bit more demand.
That's our view.
As I said Theres a lot of uncertainty a lot of.
Up and down in the markets that we see right now.
We're encouraged by the trends that we're seeing and steady progress as is the byword for us right now.
Not trying to I was saying I use in the office all the time as you know we're trying to eat one meal at a time.
And get ourselves back into a healthy state.
Yeah.
I think that kind of covers it really sound.
As you think about I think your question is as you think about as we bring vessels back into operation what is the kind of contribution.
If you go from.
Let's just use a number that.
The vessels that we have on long term lease.
It's about $30000 a day of cash burned per vessel for vessels in lay up.
We've turned that around.
And put it in the market currently.
Current rates are in the mid fifties.
Let's just say operating operating costs would drop that to sort of a $30000 a day plus.
Plus contribution so.
Go from negative, 30% plus 30.
Per day, that's the impact of bringing a ship out of layup.
They are clearly highly leveraged assets and so when they are not employed.
There is a significant burden and where they are employed then you have 100% the opposite effect.
Understood. Thank you guys.
Again, if you have a question. Please press Star then one our next question comes from Jay Meier with value Investor's edge you May go ahead.
Hey, good morning, Sam Good morning, <expletive> Congrats first of all on the excellent term loan you guys closed.
Yes, it helps a lot.
Yes significantly took a lot of risk off the table very happy to see that also very happy to see some of these shifts coming off a lay up.
Great commentary before which Brian I don't want to believe without too much I did want to ask a little bit about renewable diesel out of California, and some of those new initiatives first of all how do you see that market progressing right now and then secondly is there anything that you've seen in this infrastructure bill that that might change your market or might impact you in any sort of way.
We'll take the renewable diesel one first.
D B.
Current state of the renewable diesel.
Market in the United States is simply stated, California is the market. It provides.
Significant subsidies or economic incentives for switching.
<unk>.
Conventional diesel to renewable diesel.
In the order of magnitude of $1 50 per gallon and benefits that would be shared between.
Finer distributor a retailer.
That mix gets gets split up various from from customer to customer, but it's that's a lot of money to be.
Be spread.
If you look at.
The announced.
Increase announced installation, including the existing installation of renewable diesel capacity, that's going to be installed in the Gulf coast in Louisiana, and Texas over the next couple of years.
The number of suggests reaching 100000 or more than 100000 barrels per day of renewable diesel.
Sure.
If all of that were to go on tankers two.
To California.
That would create incremental demand for some of that 10 to 12 tankers.
My opinion the alternatives.
Two ascending vessels.
Soon extending that renewable product in shifts it to send it by rail.
Rail costs is about 60% more expensive than the marine cost.
So that's not preferable.
So as long as there is marine.
It has to be available at rates that are sort of let's call. It $60000, a day plus or minus for the tankers.
I think you can expect to see increased demand.
And increased capacity taken out of the market to.
To serve that renewable diesel trade.
I have to say that 10 or 12 ships are going to go into that trade.
Not going to happen there is obviously dynamic forces at work here.
One of them is.
Other states could conceivably adapt similar red.
Regulations are incentives to California to try and incentivize the use of renewable diesel.
Diesel is really interesting because it's basically the same as diesel it can run through the same pipelines that can be mixed in.
Same quantities.
Unlimited quantities with standard diesel you don't need to prepare your tanks or storage tanks or tanks for rail for marine in any different way than you would from from diesel. So if there is a market that emerges for renewable diesel outside of California than some of that production.
On the east coast or in the Gulf coast could be diverted to those and those might not be marine trades.
There is also in northern Europe. There is in Scandinavia, there is demand for some of that product move.
Some of that product might move into those markets, but those markets are pretty small so I think the general view is a.
A significant percentage of the oncoming renewable diesel production in Louisiana, and Texas is going to move to California over the foreseeable future.
The.
The timeline for.
Those plants coming on line of Valero and Darling energy have a new plant that's starting up this month.
That's where the key west is going there's another vessel has been taken on time chartered.
<unk> met the key west.
There is a.
Planned expansion by Valero and Darling, which is slated I believe for 2023 and the early part first half of 2023 that try to accelerate that.
That will add another couple of vessels that theyre shipping to the west coast.
Hum.
There are.
Two other.
The company called renewable energy group that is expanding their facility in Louisiana.
And then PBF has indicated they want to take one of their.
Units in Chalmette, Louisiana and convert that into.
And the renewable diesel facility as I said I think that the current levels of renewable diesel production of around 25000 barrels per day in the Gulf of Mexico, and if over between now and the end of 2023 that will probably increase to over 100000 barrels per day.
So thats all pretty interesting over the medium term.
The short term impact is probably already in.
In the market the vessels would have been taken to serve Valero and Darling energies Darling Green energy facility those are already fixed.
But there is more to come.
We're watching that very carefully.
There is also I would add is if theres plans for some <unk>.
Kris capacity on the West coast.
The Martinez refinery.
Marathons Martinez refinery will be converting to part of the hydrocracker unit to renewable diesel.
Phillips 66, where Dale refinery there's also.
Greenfield refinery in Oregon Company.
Company called next NXT.
So renewable diesel is also going to be produced on the west coast Theres likely to be demand for moving that production up and down the coast that create some incremental demand as well.
It's in that space very very carefully we think it's pretty interesting for our business.
The second question that you had.
Escapes me at the moment.
Thanks for that yeah looking at the infrastructure Bill is there anything in there that's been a benefit you're going to sort of way or not really.
It's hard to say most of what I've seen in the infrastructure Bill is kind of deepening ports and directed towards the sort of container trade.
I haven't seen anything specifically that would.
That would show that it's going to benefit the liquid bulk transportation trades.
I referenced in my comments to Ryan's question that.
We think there is there is interesting ideas about.
Changes that will occur in an effort to try and supplant carbon based fuel.
Transportation.
Whether that's in one of the things that I'm interested in and looking at as is transportation of liquids liquid cotwo.
There's already a number of.
Of larger <unk> tankers have been contracted and designed and are being built in Korea for some of the North Sea.
Trades.
<unk> offshore oil platforms are collecting for capturing cotwo and they're re injecting cotwo into older wells.
Were they capture the Cotwo and where it gets sequestered or in two different places and that has to be moved and as you move up in scale liquid bulk transport by marine assets is always it's always usually a more effective cost effective way of doing things over distances, even in the Jones Act.
So that's something that I'm looking at.
There is also emerging hydrogen economies that are likely to come out in the next five to 10 years, our hydrogen is produced and where it has moved and how it's consumed.
That opens up opportunities.
For transportation.
And potentially marine transportation. So those are things that we're thinking about.
But theres nothing specific interest infrastructure bills that would that would.
Promote those although there is there is theres lip service given to climate change and enabling a transition to a post carbon future how those details play out yet to be seen.
Yes, certainly certainly Sam thanks for all the commentary on that is definitely a lot of moving pieces in some interesting markets I want to turn real quick back to valuation and kind of big picture here on the company.
Ryan already touched on it a little bit, but if you normalize your enterprise value. Dod you just go back I mean, it doesn't take a lot of imagination can you just go back to 2019 type levels and what you were expecting for 2020 before COVID-19.
You see evaluation.
That makes sense and if you would talk yourself to any other U S company at the time <unk> heard me that sort of thing.
$678 a share right install Chuck had an opportunistic than they came after you guys last summer at the worst of the worst and it came after you before you've done the term loan when liquidity was terrible before the market started turning up the worst possible situation could be in and they offered you guys $3 a share right. I mean, you are in a way better positioned today.
Clearly turned down that offer but here we are the shares are at $2.
50% or 40% lower than they werent, the takeover offer which was in a worse position.
Mentioned earlier on the call that you don't see repurchases as a path forward.
Closing that value gap, you're not really sold on future dividends. So I guess, what I'm getting at here Sam as we turned down $3 laboratory on $3 just wasn't good enough, which makes sense.
It was an opportunistic bed is a terrible time.
But how do we justify that now right the shares or $2.
How do we close that gap I mean, what is the possible way for them to justify turning down that $3 takeover.
I am not in a position to comment on your conclusions as to why they offer.
May or may not have been accepted.
Just to make that point.
You've made some assumptions that's fine those are your assumptions, but I'm, neither confirming or denying that.
Are the case.
I think I think <unk>.
Directionally.
Your instincts are correct that we feel.
That the.
Medium term prospects for this business are solid and that in an environment where.
You remove the <unk>.
Volatility that's been created by Covid and other factors.
In a constrained demand assuming a constrained supply environment, we should have a have a good business to be able to extract.
Good returns over the medium term from the assets that we have.
And that we need to get there we need to demonstrate that.
That we've been able to restore normalization in our business profile and generate the cash flows that are late in the assets that we have.
I'm going to repeat what I said earlier round here I'd say, we eat one meal at a time.
We're just trying to get through to.
That <unk>.
Promised land so to speak to.
Have a.
High quality problem of having more cash than we need and what we're going to do with that cash and how we.
Satisfy both to the demands of our shareholders as he is a higher stock price, but also how do we how do we perpetuate the franchise value of this business.
Given the opportunity spread that we see is as I've talked about in some of the other type.
Markets that may emerge in the next three years to four years.
No.
I promised myself I wasn't going to say this but I'm going to anyway.
There is a columnist who writes for Bloomberg, whose name is Matt Lavigne and if you don't read them you should he has got a really funny way of thinking about <unk>.
Markets work, but.
T Rowe to comment I think two days ago, or so about how a public company CEO.
Potentially.
Being.
Fiduciary.
That is not meeting its fiduciary responsibilities as he has a conference call and doesn't mentioned the words EV in crypto.
Apparently that's the way to have your stock price go up 300%.
Which was.
Of course, what happened to Hertz last week.
Isn't it.
And when I think about it.
Some extent, where we're an analog business in the digital world.
And that's not really sexy and it's not really.
Catching the attention of people in the current climate.
But the current climate can change and Europe euro value investor from what I've read in the way that you approach things.
Okay.
It's <unk>.
Like skirts and ties.
It's fashions and trends tend to change over time and.
Im a big believer that ultimately the cash flow generation capacity of the business as it is the single most important determinant of its value and whether it's expressed in the stock price or through return of cash to shareholders through pivoting to higher multiple type businesses that might be available in time.
Those are the those are the questions that we and the board trying to think about on a regular basis and.
And we try not to get lost in the short term price whatever price signals.
That you referred to.
Last couple of months, let's say.
We think the business is good business, we think it's going to over time it will.
It will prove itself out and where we're focused in sustaining the necessary liquidity to be able to avail ourselves of the optionality that exists in our business portfolio.
And that's that's what we're going to continue to do and have confidence that that eventually will be recognized by others.
Yourself.
Yeah. Thanks, Dan So it sounds like the launch of the an FTE or the OSC point is canceled.
Too bad.
I was going to say, we're going to accept that we are going to accept bitcoin.
Bitcoin for charter hire payments beginning in 2022.
Sure Yes.
That might help look I mean <unk> been investors in your company for a long time, so it's coming from traditional off so I hope I still get the annual Christmas card and such but yes if.
There is a lack of.
You look at your shares in the last three or four years, and it's a dead money situation and I know that a lot of that has been out of your control, but investors have to pick right. They have to take between are they going to invest in OSC or are they going to go somewhere else with shipping and.
It's hard for them to justify that when the price goes sideways for four years and takeover offer which looked low but it wasn't it didn't seem like there was any fluidity on that the last little follow up I have I know, it's a touchy subject.
The board was doing like alternative value assessment or strategic review.
Is there any sort of conclusion out of that it just seems like the whole thing has been a big black box and not a lot of communication there.
Hi.
The board has a responsibility to.
Consider offers that are presented to it.
And to do so in the context of.
Of what's best for the shareholder.
That's the that's the shorthand legal obligation that the board has and I think that the board has.
<unk> has carried out its duties in recent months with that primary objective in mind.
And they will continue to do so.
I think.
You kind of touched on it over the summer we were kind of in the worst position that we could have been we had issues about liquidity, we had issues about whether the market was ever going to turnaround issues about.
Maturing debt.
Potential covenant breaches, all those sorts of things.
We've cleared the decks of most if not all of those issues.
So I think.
I think the board has adapted a posture of.
Allowing.
More time too.
Established a clearer.
Understanding of what the real potential of this business is in.
We as a management team.
Pretty relaxed that we've got sufficient liquidity.
To allow us to be able to not work on what comes next.
That may not satisfy you if youre looking for a 30% increase in the stock price in the next few months.
But for US we're building for that longer term value. We think this is this is a unique and valuable franchise.
And our responsibility as a management team is to is to sustain and expand that franchise, where we think best.
And we think we have the board's support and pursuing that objective.
Alright, Thanks, Dan appreciate it Jeff.
Our next question comes from Rick <unk> with Avatar Securities You May go ahead.
Hey, good morning.
Sorry, if you guys addressed this already but I think I heard a question about the $3 did clarify for us.
The bid or walked right.
Okay.
The bidder amended its 13D filing too.
Uh huh.
To say that it was.
I can't remember the exact wording that duty uncertainties of the COVID-19 environment on the table.
They were.
They were suspending their discussions I would note that they are still 17% shareholders of the business. So I think walking is not.
Characterization.
Okay.
Did he.
Did he passed or delay I guess, whatever you want to call. It because you guys gave your sniff farmer did he just changed his mind and it was truly a macro call because.
There's a lot of questions on the call about the strategic alternatives process is it is it ongoing is it is it is it over with.
As color there.
I'm not in a position to two to comment on what salt Chuck may or may not have been thinking other than that I read what you can read in their filing on their 13D that they felt that COVID-19 environment was creating heightened uncertainty beyond what they had expected and that they are hitting the <unk>.
Was button.
Okay.
There is still a 70% shareholder I don't know what their plans are for the future. This is as I said in my recent.
Carl This is really this is a committee that was established on the board deal with this.
Four four.
Sort of administrative as well as legal legal reasons.
I was not included in that committee, which was the right structure.
View.
My job our job here as a management team is to run the business and the board's job is to consider.
The shareholders' interests.
Some of it comes exclusively from the Delaware a legal perspective.
The board.
We considered a number of different.
Paths forward.
The outcome that has that has been disclosed as we refinanced our business and gave ourselves runway to be able to build this business and get it back to a better better shape on that.
And by implication I think you can understand that.
That strategic alternative was the one that the board settled on is the most appropriate given the market environment at the time.
So is.
Is it is.
Strategic alternative process over I don't I don't think it ever ends I think the board has a responsibility for looking after the shareholders' best interest and they will as and when appropriate they will.
They will revisit that issue.
And carry out their fiduciary responsibilities, we as the management team will continue to focus on building the value of the business.
And each of US will we will do what we do best and hopefully that leads to the right outcome.
Okay. So it sounds like we are in like a tier two.
Strategic alternatives process I think I heard you say that were considered right. So when you. When you go out of your way to put strategic alternatives in the press release there was some.
Window defined window, it sounds like that first tier window has.
Spire and now we're sort of.
And that yeah, we're always looking at strategic.
Waste to boost the value of the.
The equity last question. Thank you for your time as the bidder reached out since the last 13D.
No no.
Have a good day. Thank you.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Sam Norton for any closing remarks.
Thank you Anthony and thanks again to everyone for participating on today's call and we look forward to speaking with you again early next year again.
Anticipation that we'll bring you improving and better results.
Good day to you all.
Yeah.
Yeah.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.