Q3 2021 Star Bulk Carriers Corp Earnings Call
Well couldn't P. O conference calls please continue to stand by your conference will begin shortly.
[music].
Thank you for standing by ladies and gentlemen, and welcome to the Star bulk carriers conference call on the third quarter 2021 and nine months financial results, we have with US Mr. Petros Papas.
Chief Executive Officer, Mr. Hamish Norton President Mr. Nicos, <unk>, Chief operating officer, Mr. Cmos Spiro and Mr. Christoph Clarus co Chief financial officers of the company at this time all participants are in a listen only mode there'll be a presentation followed by.
Shannon on session at which time, if you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced I must advise you that this conference is being recorded today.
Now I'll pass the floor to one of your speakers today. Mr. Spyros. Please go ahead Sir.
Thank you operator.
My question I'm Cmos Theater co Chief Financial Officer of Star bulk carriers, and I would like to welcome you to our conference call regarding our financial results for the third quarter of 2021.
Before we begin I kindly ask you to take a moment to read the safe Harbor statement on slide number two of our presentation.
Sure.
Yes.
In today's presentation, we will go through our Q3 results cost evolution during the quarter a walk through of our dividend policy and nowhere view of our balance sheet and operational and ESG update and the latest industry fundamentals before opening.
Today's questions.
Let us now turn to slide number three of the presentation for a summary of our third quarter 2021 highlights.
The company reported a record for four months this border.
Net income for the third quarter amounted to 224 million.
And adjusted net income of $224 7 million or $2.20.
Earnings per share.
Adjusted EBITDA was 277 8 million for the quarter.
On the bottom of the page you can see the evolution.
Of our adjusted net income and adjusted EBITDA performance.
For the third quarter, we declared a dividend per share of $1 25 payable on or about December 22nd.
2021.
During Q3 2021.
Our company prepaid in full the 50 million outstanding eight 3% senior notes, which were due in November 2022.
In addition, as part of the authorized share buyback program, we repurchased 466268.
Eight of our shares in open market transactions at an average price of 22 point or $1 per share for aggregate consideration of $10 $3 million.
In November 2021 we hedged 75000 tons for Q1 'twenty.
2022 of the BLS F O H S F O spread at an average price of 34.8 dollars per tonne.
In November 2021, we released our third annual environmental social and government report.
Its records our ongoing efforts to further strengthen the company's environmental stewardship, social contribution and corporate governance and provides a transparent account of our ESG strategy and performance.
On the top right of the page you will see our daily figures per vessel for the quarter.
Our.
Our TCE rate was $30626 per vessel per day.
Our combined daily Opex and net cash G&A expenses per vessel per day amounted to $5291 per day per vessel.
Therefore, our DC.
Well, that's opex and G&A.
He is a $25375 per day per vessel.
Finally for the fourth quarter of 2021, we have covered 71% of our fleets available days I said daily rate of 38250.
$50 for vessels.
Slide number four graphically illustrates the changes in the company's cash balance during the third quarter.
We started the quarter with $242 8 million in costs and generated meaningful positive cash flow from operating activities.
Of 251 million due to the strong freight market.
After including debt proceeds and repayments all noticed prepayment capex payments for ballast water treatment installation as well as the second quarter dividend payment.
Is that the cash balance of 370.
One 7 million at the end of the third quarter.
Slide five has a walk through of our dividend policy with an example for the dividend calculation for third quarter 2021.
As of September 30th 2021 we owned 102.
28 vessels and our total cash balance was 33.
$371 7 million.
With a minimum cash balance per vessel as of September 30th of one 9 million.
On November 16th 2021 pursuant to our dividend policy.
Our board of directors declared a quarterly dividend of $1 25 per share payable on or about December 22nd 2021 to all shareholders of record as of December 10th and.
And the ex dividend date is expected to be on December 9th 2021.
Please turn now to slide number six where we highlight the continued strength of our balance sheet.
Our total cash today stands at 571 7 million, including a $30 million revolving facility, which is currently undrawn.
Meanwhile, our total.
Total debt stands at approximately $1 6 billion.
Our working capital stands at approximately 80 million.
We have completed four refinancings, which will raise 400 million in senior debt and result in there a saving of about $5 million bet on.
Yeah.
Our annual amortization is $207 million per annum, and our pro forma average margin.
Proximately two 4%.
Finally by the end of the year, we will have five unlevered vessels and no debt maturities until.
Until the third quarter of 2023.
In slide number seven we demonstrate the inherent operating leverage and cash flow potential of the company and they looked at the free cash flow per share as well as the potential cash flow yield.
For example, with approximately 46000.
700 fleet available days per year.
Based on the current 2022 FFA curve.
Bulk will produce three $8 of free cash flow and yield of approximately 20%.
I will now pass the floor to our CFO Nicos <unk> for an update on our operation.
Operational performance.
Thank you Cmos.
Turn to slide eight where we provide the operational update.
Operating expenses, excluding nonrecurring expenses was $4288 per day per vessel for the nine months ending in 2021.
Net cash G&A.
<unk> expenses were $1053 per vessel per day for the same period.
Despite continued adverse COVID-19 related restrictions, which have a direct operating expenses the.
The combination of our in house management and scale of the group enable us to maintain very competitive costs being the lowest of our later.
As possible.
It was almost couple of years and continued to rank number one among our peers within the logic right.
Slide number nine.
<unk> snapshot and some guidance around our future dry dock and ballast water system installation expenses over the next 15 months and the relevance of.
For five days.
Star bulk operates one of the largest drybulk fleets with 128 vessels geared towards larger sizes.
Our expected Drydock expense over the next 15 months is estimated at $32 $9 million.
Dry docking of 31 vessels with another $36 $3 million towards.
<unk> wasn't installation capex.
In total we expect approximately 950 off hire days for their forward 15 months period.
We anticipate of 97% of our fleet.
Seated with ballast water systems by the end of 2022.
The above numbers our base.
The bond estimates around dry docking retrofit planning vessel employment and yard capacity.
These figures incorporate our current understanding of present and future shipyard congestion.
On the scrubber from Hi Fi fuel spreads have recently been increasing due to an upward momentum on fuel prices a pickup in jet fuel.
Based on an increased production of Hs approach.
If anything like the wrangler consumption of 800000 installed debate just a thought process on our fleet, we expect recovery console scrubber investment by the end of Q2, 'twenty 'twenty tubes.
Given the 94% of our vessels are fitted with scrubbers.
The increase in the high five spread.
Spread.
Significant value generation for the call.
Okay.
I'll now ask our chief strategy Officer.
Actually I got the Nike to provide an update on the latest development.
Thank you Nicole.
Please turn to slide 10, where we provide an update on Starbucks.
The amount of activities.
The third Dan will start with environmental social and governance report has been published and it's available on the company's website.
And reports has been developed following <unk> global reporting standards and disclosures of weeks have been assured by white climate change and sustainability.
Services.
During Q3 2021.
John the maritime on <unk> network, and global business network with more than 160 companies, which works with governments, Ngos and civil society to eliminate maritime corruption.
On the Carbonite.
He has been front, we have participated actively and sponsored the next wave to encourage those reports presented at the Cop 26 last week.
Multi stakeholder projects, which analyzes the feasibility of specific trade routes between the major fourth hubs, whereas your emission solutions could be demonstrated.
We have participated in the development of the Poseidon principles for Marine insurance and initiative by the global Maritime Forum, which serve as the framework to better align hull and machinery portfolios with responsible environmental impacts.
Starbucks has become a signatory to the call to action for seeking decarbonization.
And initiative by they get zero coalition with publicly calls on governments and international regulators to take action in support of seeking the carbonization.
Within the scope of the call Starbucks has made specific climate commitments on greenhouse gas transparency on international collaborations.
Nation and in pilot and demonstration R&D projects on Green energy.
I will now pass the floor to our CEO <unk> <unk>.
Market update and his closing remarks.
Thank you Harris.
Please turn to slide 11 for a brief update of supply.
During the first 10 months of 2021 a total of $32 9 million deadweight was delivered.
And $4 9 million deadweight was sent to demolition for a net fleet growth of 28 million deadweight or three 1% since the beginning of the year.
So advisory have switched to the backhaul.
Yeah.
Yeah.
Got it.
Yeah.
Despite the $31 4 million deadweight orders reported year to date compared to $15 8 million deadweight.
Corresponding period of 2020.
The order book still stands at a historical low level of six 8% of the fleets.
Including options that have been declared the strong increase in container ship orders during the last year has filled up shipyard capacity until the end of 'twenty to 'twenty three.
Of the consultant future propulsion.
Salt of upcoming environmental regulations.
Bind with increased shipbuilding costs has helped to keep new orders on their relative control.
Furthermore.
Global steel prices.
Scrap prices to record levels.
And may make demolition of overnights donuts and attractive option during seasonal downturns.
Albert steaming speed of the dry bulk fleet currently stands at 11 nine notes and despite the improved freight rate environment, just only increased by <unk>.
And year over year.
Quarantines related to COVID-19 pushed port congestion to record levels.
The third quarter and helped rates to hit 14 year highs.
Justin that Pacific ports is corrected during the last month, but still remains at inflated levels.
5% combined with political tensions between China, and Australia create strong efficiencies portrait.
With a positive effect on vessel utilization.
As a result of the bulk trends net fleet growth is projected to end up at approximately 10% during 2020.
One.
And average out at 2% per annum during 'twenty to 'twenty, two and 'twenty to 'twenty three.
Let's now turn to slide 12 for a brief update of demand.
According to Clarksons total dry bulk trade during 2021 is projected to expand by four 8%.
20 miles.
During the first three quarters of the year dry bulk volumes have experienced a strong recovery following the synchronized global economic stimulus and the gradual reopening of economies supported by vaccination programs against COVID-19.
Record.
We don't model the process. During 2021 have provided a strong incentive to major producers of dry bulk cargos expand output and exports during 2022 having said that China has experienced a strong slowdown during the third quarter 2021 and their response to high energy.
Raw material costs, and stricter lending requirements affecting the real estate market.
We're still at the early stages of the global recovery from COVID-19, with the IMF projected global GDP growth of four nine.
9% in 'twenty to 'twenty two.
According to Clarksons.
Hi completed.
Projected to expand two 4% during 2022, while increased Atlantic exports and political tensions between China, and Australia are expected to support ton mile growth in vessel requirements over the next years.
Iron ore trade.
Dry bulk expected to expand by two 2% during 2021 and one 5% in 2022 during the first half of 'twenty, one Chinese steel production expanded by 11, 5%, but since July the government imposed strict production curves, resulting in a 13 point.
<unk> is the same year on year decline during the third quarter the Chinese restrictions.
Is energy shortages and I'd expect it to last until the end of the Winter Olympics.
On the other hand still make us from the rest of the world have increased production by 16, 6%.
Year to date, and I'm still unable to meet regional demand.
Brazil iron ore exports are slowly recovering from the 2019 disaster and have increased by 7% year on year.
Coal trade is expected to expand by seven 8% during 2021 and two.
Two pads in 2022.
The first three quarters of 'twenty, 'twenty, one, China, and India thermal electricity output increased at a higher pace than domestic coal production and the combination created a shortage of supply push talk slower and prices to record record highs during the third quarter.
And then India have increased domestic production during the last months in an effort to increase stocks ahead of this winter.
Nevertheless, nuclear la Nina phenomenon, a colder than average winter is expected to boost power demand from households, and so.
Domestic production of coal.
Wherever.
2% is bang on Australian coal has forced power utilities, and steelmakers to diversify and Chicago's.
Coal cargos from longer distance sources, such as South Africa, Colombia, the U S and Canada, but also increased imports from Indonesia that explains long delays due to quarantine measures.
The trend rate is expected to expand by two 9% during 'twenty, one and 3% in 'twenty to 'twenty two.
As demands.
For grains is projected to remain strong due to the five year plan focusing on food security.
Corn exports have experienced a record high precision while cells for the carriers.
Current market in a year's time that elevated levels.
The U S. Soybean exports season started with delays, but is catching up and its protective remained strong over the next months in the wake of the phase one trade deal Lew.
Looking into the next marketing a year, Brazil, coarse grain and soybean exports are projected.
We experienced record high shipments and generate significant ton miles for smaller sized vessels.
Minor bulk trade is expected to expand by six 4% during 'twenty, one 2021 and three 1% in 'twenty to 'twenty two.
Minor bulk trade has the strongest correlation to global.
GDP growth in smaller geared vessels will continue to benefit significantly from where synchronized consumption recovery.
Sorted use of steel products and positive price arbitrage. She continued to incentivize Pacific expert to the Atlantic while the container sector strength has had the positive.
The spillover effect for dry bulk.
Morever West Africa bauxite exports are projected to generate strong ton miles for capesize vessels. During the next few years.
Finally, our outlook for the market during 2022 and 'twenty 'twenty three remains positive the way.
Hello.
Order book combined with a lack of yard space uncertainty on future vessel propulsion and increasing efficiencies create a favorable supply side picture for our industry and support our optimistic view on the future prospects of the dry bulk markets.
Back to you operator.
Thank you as a reminder, if you wish to ask a question. Please press star one on your telephone keypad away fill named three an ounce. If you wish to cancel your request. Please press star two once again, if you'd like to ask a question. Please press star one.
Your first question today comes from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.
Yeah, hi, thanks, so, let's see where to start.
First of all I guess, just the easy when could could you maybe is it possible to break down the 71% of.
Of days fixed by segment at all.
Yes, Hi, Hi, Ben.
We have covered.
2.5% of our Cape.
Charters and 46600.
74.
Our panamax at 35100 <unk>.
77% of our supermarkets have 35000.
Perfect.
Hum.
50.
Alright perfect.
Okay.
No.
And my next question was.
Related to just a few things that were.
A little different than I expected first of all the the Drydocking days for the fourth quarter were a lot higher than they looked like they were in the or projected to be.
<unk> percent and an AR went when you reported last quarter. It was curious where that stands and also the G&A was a little bit higher too and I know that in the release you called out.
The stock based comp, but how should we think what's the right run rate for G&A going forward.
Yeah.
Ben.
You can Cmos.
The increase of the GNL for the cash G&A expenses for the third quarter versus the third quarter of 2020 was entirely due to the.
A euro USD effect, so basically.
Uh huh.
But you know on an absolute.
Hi number.
We should expect that basically are the chains and the strengthening of the dollar in the fourth quarter is going to have ceased.
But.
After you subtract basically the noncash item, which was on the third quarter.
Share based compensation, which is not nonrecurring.
On the dry dock days I will pass it.
Two nicos.
For Q3 five out of the six drivers was carried out also in gold ballast water installations, which take a bit longer and of course, we have the additional costs. So that's where you see the <unk>.
In the days and costs.
Okay. So those were those were pushed back from the third quarter or something that would happen.
Well these are the ones that that took place during the third quarter.
Oh yeah.
Well it was just in the in the last release.
Difference you had said that you expected 46 days in the fourth quarter and now it's a 194.
Well, that's that's basically we have six ships in Q4, we have also.
Water installations. So that's why you see more days than previously expected that were supposed to happen earlier in.
Lisa will put all kind of work.
Okay, and then last for me and I'll turn it over has seen a little noise about you guys putting vessels on.
A handful of vessels on time charter just curious where that stands in terms of how much maybe of the Oh. The fleet is contracted for next.
Next year, as well and how youre thinking about the combination of spot versus contract.
Well or coverage for Q1 basically is.
Iran.
17% basically web.
And he gave.
Gapes worse.
Nine panamax, whereas in nine Super amongst were covered for Q1.
It's just below $32000.
Wow.
And that's pretty good.
Nah and nice work.
Work on that I appreciate the color. Thanks.
Thanks Al.
Thank you Ben.
Titan Keys and your next question comes from the line of how much Nova trial from Deutsche Bank. Please go ahead. Your line is open.
Thanks, operator.
Hi, everyone and hopefully you can hear me I wanted.
I had a couple of questions.
First maybe just a market related question.
We've obviously seen a pretty significant step down in spot rates I think Petros you mentioned the congestion.
I was wondering if you could give us a little bit of an overview of what you're seeing on end market demand growth in China.
Is there some emission mandates.
There's the Olympics coming up Oh, what are you seeing in terms of risks associated with demand. There and then also just talk about how the psychology of the market is changing whether nurse or charterers perspective, because clearly were very hot market earlier. This.
I mean things have cooled down I wonder if theres any psychological impact that may be driving it or could drive it even further if you could talk about that as well.
Thank you Amit.
It may take me a little bit longer to answer your question.
First of all the market is down for three reasons.
Year, He's our China, China in China.
And.
To explain further than that.
We had a strong student steelmaking reduction to the tune of a 20.
20% almost in the last couple of months, which is obvious.
Negative for imports and of course, it also affects our congestion reduces congestion.
We saw China.
<unk> increased the local coal coal production.
Because and capping our prices.
Lee Airport less imports accurately.
Imported coal is more expensive than local coal.
We saw.
Before that higher commodity prices.
Basically led to.
So there's been demand destruction at least in the short term.
And China.
Basically wanted clear skies for the Olympic games. So I mean, it's a combination of clear skies and reduction of commodity prices.
From China, that's what Theyre Golar was but let me make a side comment here, which I think is important.
I was going through the imports of China earlier today.
And I realize that in 'twenty 'twenty to China.
It's probably a 2021 and the last.
10 months of 2021.
China actually imported.
2 million tons less than last year.
And you remember, what we always used to say that they've.
China's sneezes.
We will catch pneumonia the market will catch pneumonia.
Well say that China's sneezed, and we didn't get exactly pneumonia.
So I think that that happens because the rest of the world came up.
And where.
When we're talking about 4% increase in imports in a in trade in.
2021 actually.
That's about how 90 million tons of additional trade.
All of it came from countries other than China I consider this.
Is extremely important and.
And especially for the future.
Now talking about the future.
We are very positive actually we remain very positive, we think theres going to be a slow down.
During the Q1.
There is.
As already explained.
We think that the market will start moving after or in the Winter Olympics, we we foresee very strong grain trade.
Coming from Brazil, and and the lesser degree from Argentina.
We think that coal.
Our prospects are pretty good, especially from India, but China will also China, having achieved their goal will probably turn to more imports.
As I said before international prices are cheaper.
Iron ore.
You know.
China imported 38 million tons less of iron ore. This this year in total.
We think that will change going forwards.
And we think that most a lot of it is going to come from Brazil. So we expect more ton miles, which is going to be.
Positive very positive actually.
Sales are more important than firms.
Uh huh.
Airports I'm sorry go ahead Petro sorry.
Another couple of minutes, then China, where we're positive about China, we think that after our February March.
It will have to start the new easing cycle and will stimulate the economy and infrastructure.
Let's not also not forget supply.
I mean supply went up in the next year, we have 28 million tons of orders.
If we if we have 8 million scrap.
That's the 0.2% increase in supply in 2023 with 20 million tons orders, if there's 6 million scrap that's gonna be 1.5% supply. So the supply situation is very positive.
We also believe that the strong Chinese currency is going to help.
Imports and it will make our freight cheaper for them.
We think that the inefficiencies will continue to exist. We don't think that China will change their COVID-19 rules for for a long while and finally, we also think that oil prices.
Rice's will remain strong and that will be a disincentive towards.
Engraving speed not to mention environmental regulations that will kick in later on in time and they will help us as well. So you know I tried to make a general comment let me just say very quickly.
That specific vessels.
We think the shoe press will do very well next year as well because we think container market is going to be good and there will be an overflow cargoes from the containers through the bulk side and we also believe that there's going to be a strong minor bulk.
<unk> market.
On the Panamax side, we think grants are going to be very strong and never forget that the grants are long distance cargos and the call will be relatively strong as well as a privilege to slip.
And capes Capes, we see a weak.
During Q1.
But then we count on our Brazilian imports and West African bauxite imports to increase and we think that the market is going to do it.
To improve after Q1, so I hope I retire you but.
Right.
[laughter].
No that was a that was very comprehensive and I and I apologize for interrupting prematurely earlier.
If I could my follow up question is less macro and more micro focused.
Star bulk has a breakeven or a little bit under $11000 per day, which means given that you guys are at your cash.
Special levels anything above even that level will translate into dividend year to date. We've had about 23000 per day average time charter equivalent which is not a wonderful number. It's an okay number as kind of a mid cycle number and you've still been able to pay out over $2 per dividend.
Cash per share in dividends for the first nine months of the year, which I think speaks to the micro aspects of the capital structure and the model. My question is after that Big Preamble. My question is is that you know I assume you guys are just incredibly frustrated by the way the equity value of the company has reacted to these payments.
Payments.
Which is something like 15% yield maybe annually.
Just really the outcome so far at least it's not clearly the intended outcome of this strategy and the question I have is is that you know how committed are you.
Through this strategy in the context of how the.
It is taking it now now keep in mind, we've got 10 years of a bad market. So it might take more than nine months of a good market to change People's minds, but talk about how patient you guys because I can imagine the level of frustration is it's pretty high at the moment.
First of all.
I will turn part of the question.
Through our two haynesville, but let me say that we don't get really frustrated to begin with.
Let me also say the following I was doing another calculation earlier today I I I like Matt.
And I was looking at it the FFA rates.
And average day.
We're at around 17, and a half thousand dollars.
And if you calculate that.
17000, less our let's our less than 11000, a cost as you mentioned.
That would actually give us.
And 15%.
The rate yield.
Over over next year and every $1000 dollars above 11.
It would give us about two 4% yield.
Like if we made $1000 it would be for two 4%, we made $13000 would be.
Nate etcetera.
I consider actually pretty good in Europe, or or a very low cost, but I'll turn the rest to our haynesville yeah. Yeah. So I am at a you know basically it gives us a warm and fuzzy feeling to distribute cash to nee shareholders around Christmas.
Matt.
And our you know our dividend policy remains in effect.
Yeah, but that's that's not really the answer to my question. The question was really around you have many options for distributing excess cash you certainly have.
<unk> pointed it backs, which I had been very much against but there are a lot of other people that are not against that and certainly on paper and it makes sense, there's vessel acquisitions, which certainly don't make sense with where the equity for sure, but maybe makes sense with cash, but just talk about at what point do you guys say that listen this strategy is not giving us the intended consequence of the.
Sure about outcome and so your pivot to something else. I mean are you are you close to that point do you want to give it another year.
Where's your collective thinking on that.
We we you know I am at R. R.
No other thoughts in our head at this point, we're not planning on.
Intended ships in the near term.
We are planning on finishing up a you know the authorized number amount.
Amount of share buybacks probably financed.
By selling a couple of vessels.
As long as we can do that without too.
Buying disruption in the market and we would hope to finish that up and you know in the next in the next quarter or so.
But.
You know where we're continuing on this path.
Alright, Okay very good. Thank you very much congrats on the results and hope you guys have.
Two months okay. Thank you.
Thank you Amy.
<unk>.
Thank you. Your next question comes from the line of Randy given from Jefferies. Please go ahead. Your line is open.
How would he teen Starbucks how's it going.
Great Great grandmother.
Oh, that's great to see the dividend, obviously above expectations at $1 25, clearly, making some steps with the accretive share purchases are you kind of answered the question a little bit there heimish in terms of the remaining $40 million. So I guess glad to hear that is gonna be finished here in the next few months.
I was just looking at the the dividend obviously, it <unk> quarter to date rate guidance is very strong you already have some bookings into the first quarter. So just kind of sequentially from here.
Obviously, theres changes in working capital and others, but how should we think about the <unk> dividend compared to the dollar twenty-five announced.
So thank you.
Well I, you know I mean, you're right.
As I've told you in the past Randy you're the securities analysts, we just run the shipping company.
You know.
Yeah.
We don't try to.
Oh, I get forecasts about the future, especially not in public.
Yeah, I'm sure I'm sure you will.
We'll be pretty accurate.
I was just saying if there was any nuance to changes to working capital or debt repayment.
That we need to factor in for the fourth quarter that maybe you werent there in the third quarter, but that's fine I'll ask you offline for that and then I guess looking into the first quarter for the hedge of the fuel 75000 metric tons is the quarterly fuel burn of about 250000 tons still so how how meaningful.
Is that hedge.
For the first quarter.
This is Chris those hi, Randy essentially we have around 200000 tonnes approximately per quarter, and we have hedged 75000 or 38%.
If we see the spread dumping its northern.
I assume that we may increase the age, but so far the hedge has proven to be.
Yep.
And then just following up on that what does that translate to on a on a Cape size for example in a dollar per day.
Sorry can you repeat the question.
Yep.
Right.
$30 a ton spread what is the savings or premium however, or whatever term you want to use for a capesize.
We're a capesize vessel.
Levels of around 35 each of.
Approximately a three and a half thousand doors.
The city being that we will generate three other half to $4000 per day.
Perfect Alright, that's what are we're having as well.
Right that's it for me Thanks Fellas.
Thank you Randy.
Thank you.
Your next question comes from the line of aim on knocked.
<unk> from Clarksons Securities.
Please go ahead your line is open.
Hi, guys. Good afternoon, you've you've addressed pretty much most of the questions I had but I did want to ask the same issue you brought it up.
You know the.
Sure the way you're kind of viewing the secondhand market today.
Every day in terms of valuations. This is probably I would say, perhaps a good test to gauge the overall resilience of a vet.
Esol values since they've shot up so much this year with all the volatility we're seeing in the spot market now just wanted to ask kind of how you from from your from your perspective or are seeing the secondhand market shaping up here has there been any.
Today any indication that values are softening as a result of what we're seeing or are things still fairly firm.
Hi, Omar it's Petros.
But we think that secondly, secondhand values have gone down by about 10%.
<unk>.
That's our estimate at this point in time.
Okay. Thank you and that would be I guess Petrus for typical five to 10 year old secondhand ships.
Yeah, Yeah, yes.
Okay and then.
I know its probably.
Notably sensitive to an extent, but.
In terms of those you said financing the buyback with with some vessel sales in any particular sort of par.
Part of the fleet you would look to monetize in this environment today.
I you know I I think will will.
Perhaps equally look at our you know what what we get good value for what what you know easy to sell without disturbing the market you know.
I mean, I I think it will.
It will change from day to day, and and we'll be we'll be very careful about it.
Got it.
Thanks.
What's the market down.
That's what the name is a means I think yeah.
Yeah I understand.
Well, thank you and thanks for that Joe.
Yeah. Thank you Omar.
Thank you. Your next question comes.
Baseline of Magnus <unk> from H C. Wainwright. Please go ahead your line is open.
Thank you good afternoon.
Just one question to follow up on you.
Bookings for first quarter I know you were talking a few months ago about securing more days for the first half there was some.
Uncertainty, there with China slowing down would rates.
Are you booking you know very attractive rates for 17% of the fleet do you would you book at a lower rate as well or do you think you're going to stay spot for the rest of this weakness.
From there we actually didn't expect the market to go down that has to be honest between mid October because this is.
Is hedging with did a two or three weeks ago.
Up to two or three weeks ago, we didnt expect to go down that quickly.
We are expecting.
Hum it rebounds.
Somewhere in the next two weeks or so.
If that happens then we will increase our our coverage for Q1.
Okay.
Your example, there of 50% yield at our current FSA rates.
Is that something that you guys start thinking about just to kind of provide some visibility of the dividend.
Oh, sorry, Magnus I'm not sure I completely understood the question.
No I was just up you know theres a lot of talks about you know.
Sustainability and visibility of dividend.
Would you consider booking more you know ships at these lower rates I mean since the the returns would be very attractive or would you.
No.
Just stay spot.
Well.
Excuse.
We're positive about next year it is only.
Only Q1 and mainly on on Capes up we are.
We think it wouldn't be a slower.
So if we fix wynwood fixed for Q1, mostly in the but that's it.
No that's great.
Like your chartering strategy, so keep it up thank you.
Thank you Mike.
Thank you I will now hand, the call back for closing remarks.
Thank you operator just to two.
Two quick reminders.
The 15% yield at present.
Say at the low market.
And.
That's this market that we've seen during 2021 has been without <unk>.
China being in the picture.
And that in our view means that once China.
Renters are at some point next year it will it will show a much stronger market.
So thank you very much and.
Uh huh.
America is once again happy new year, and we'll talk to you.
And we'll talk to you again in the wet in February.
Thank you that does conclude today's conference. Thank you for participating you may all disconnect.
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