Q3 2021 FLEX LNG Ltd Earnings Call
Good day, and thank you for standing by and welcome to the Flex LNG Q3, 2021 earnings presentation. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. Drastic question. During the session you will need to press star and the number one on your telephone please be advised.
Today's conference is being recorded two state of 16th of November 2021 require any Proto assistance. Please press star zero I would like to hand, the conference over to CEO for today.
I find that is the ice tank Telecom. Please go ahead Sir.
Alright, Thanks, Thank you and hi, everyone and welcome to the Flex LNG is third quarter trying to try to do on the webcast on I think I'll, let loved the CEO of flex LNG management and I will be joined today by our CFO Knut cohort, who will walk and talk to you through the numbers a bit later in the presentation before we conclude with a Q&A session.
If you'd like to ask a question in Q&A session. You can either ask a question through all kept teleconference or you can use the chat function in this webcast.
It's getting cold out in Norway, So I have a bit of a sore throat today, although that's not COVID-19, but please bear with me.
Slide two disclaimer before we start the presentation I will remind you of the disclaimer with regards to among all those forward looking statements non-GAAP measures and compete for missiles defense. We also recommend that the presentation is that together with the earnings at both which we all also releasing today.
Okay.
Let's begin.
With the summary of the recent highlights.
As we noted in our second quarter presentation in August the LNG market dwarfs, where Hittite with elevated prices and were therefore highlighted the possibility of a blowout in the market. Even though we are just at the start of the winter season. The market has nevertheless, all had a blowout with both LNG prices.
Freight rates booming.
We argue that the tide LNG public market with very high cargo economics should trade ample room for charters to pay premium rates at the same time. We have argued that there's been a disconnect between spot rates and term rates and that's a buoyant market should create spillover effects for the spot.
Market sentiment.
They played out as we expected with both redzone tests since end of September and now hovering around at the all time high levels.
We have boots I'm only aware of them all this and maintain 30% exposure to the spot market and this we boarded the handsome LIFO in the fourth quarter at the same time. We have also continued to build premium backlog with the recent announcement of two new time charters with start up early next year.
Which I will cover shortly altogether, we have does fixed eight ships on term charter since April most likely there will be nine ships us we expect Cheniere. Two also declared its fifth additional ship.
This means that we are today, we're well positioned with 30 instead of LNG carriers on the water also taking delivery of the last three ships during the first half of the year.
Third quarter is just the first quarter with all ships in operation.
LNG carrier fleet outfitted with the latest fuel efficient engines Mega all access and the average age of our fleet is only two yes.
With 19 issues are getting less attention in the news media. These days, but continues to be a challenge in shipping approximately three out of four LNG cargos are and they're going to be in Asia, whereas restrictions are more prevalent, particularly when it comes to crude changes notwithstanding these challenges we have continued to offset those.
<unk> with excellent performance. So once again, thanks to all CFO and technical team.
Good job.
In terms of financials, we are once again delivering according to our guidance.
<unk> for the quarter, we had $82 million in line with guidance of approximately $80 million.
Quarterly earnings were up $33 million or $22 million, if you adjust out approximately $1 million.
The gain which we booked in the quarter.
This translate into earnings per share of 62 cents all adjusted earnings of <unk> 60 per share.
We are today also announcing a very effective sale and leaseback for flex volunteer.
The vessel was originally financed in the midst of the COVID-19 crisis last year, and we all know taking advantage of better credit markets and improved credit profile of flex LNG in order to optimize our financing needs will cover the details of this financing in the finance section, but the long and short is that we raised 160 million.
Of long term financing for the ship as an all in cost of about 4% and this will add another $38 million.
Two our cash pile.
Which of all of that has stood at $138 million.
This will not be our last refinancing as we aim to continue to optimize our balance sheet by opportunistically refinancing some of our existing loans that even better terms than we have today with the aim of being $100 million.
Which <unk> will also explain in more detail.
With a very comfortable liquidity situations has the earnings strong outlook and improved earnings visibility the border, thus decided to lift our dividend level from <unk> 40 per share to <unk> 75 per share. This gives our investors a yield of about 14%, which we think should be compelling in this low interest rate.
<unk>.
Talking about strong outlook with 30% spot exposure, we are benefiting from improved earnings in the spot market and are therefore, revising up our revenue guidance for the fourth quarter from 80 $500 million to approximately $110 million. This means we are estimating about 30 million.
Higher revenues in fourth quarter, and given our fixed cost base. Our dollar increase in revenues are therefore expected to translate into a similar increase in the oil <unk>.
Hence, we think it makes sense to significantly lift our dividend level, given our chocolate college and the positive outlook I mentioned lastly, we do see that the new Dot de carbonization rules for shipping is creating business opportunities for us in.
In 2023, the energy efficiency of existing ship index or E X I and the carbon intensity indicator will come into force and we do see that more charters are focused on charting in the newer ships. When it comes to fleet renewal or growth projects. Our thesis that new ships will replace old ships are therefore.
For coming to fruition and this we think will create additional opportunities for us to lock in further attractive complex for our ships.
Yes, so let's touch upon our recent charter announcement on slide four in.
On November 4th we announced two new time charter contracts for flex courageous in flex resolute for a period of minimum PFS, which option with options for two additional two year period, bringing the total to seven yes.
Both options are declared.
The end user Harris and the demerger and the ships will be delivered to the charter in direct continuation of their existing time charters, which is expected to end in February and March next year.
Having worldwide delivery in direct continuation is is a valuable benefit, particularly at this time of the air at the spot market tends to soften around this time of the week 11 Middle of March has historically been the low point of the spot market. This might result in idle time, if you have ships.
It delivered in this period.
Ill also usually a lot of ships coming out of the at the start of their however, we are avoiding risk altogether with these two new charters with us have three ships going from shorter term time charter to longer time charters in the end of Q1 next year with flex fade on being the third ship.
Which will commence a minimum five year charter at about the same time.
Right under two new time charter reflects that the term market has continued to be strong and we are therefore, adding additional high margin backlog to our fleet.
So with this recent fixtures that we have to bring back the flex acute slide.
Since the middle of April we have announced eight new <unk>.
Contracts for our ships.
As mentioned, we expect Jennie after declared a <unk> chip increasing this number to a total of nine ships in April we announced a big deal with <unk>, where they have already taken flex vigilant flex endeavour and flex Ranger on time charters with a duration of three to $3 eight yes.
Flex endeavor was originally three and half year, but related to early delivery of the ship, which with us longer firm period in the third quarter next year, we will take one ship with the option for a fifth chip as mentioned.
We are now planning that the fourth and the fifth chip will be flex and flex volunteer as we have the option of nominating before forming ships for this contract, which we have which have given us some flexibility in pursuing our chops.
In May we booked two ships flex constellation for pump delivery through a big trading house for a period of three years with option farnell, the PFS and flex freedom as I mentioned going through our portfolio payoff or a minimum five year period during first quarter next year, and lastly, flex courageous spectrum absolute which.
We recently announced being fixed with an energy major for a minimum period of three years.
Our model slide, which we had to bring back was the sold out slide. This we previously used three years ago. When we book Brookdale fourth quarter at TCE of about $95000. This is around the level, where we also expect the TCE number to be for the fourth quarter. This year.
But we now manage to do so with 30% spot exposure versus 50% in Q4 2018.
As you can see the backlog is solid when we started the year. We only had one ship on time charter with a longer duration than one year, but we have as mentioned on previous slides utilize the strong market to add significant backlog during the end of the.
Contracts for the first eight chips test from flex freedom to flex resolute already covered in the previous slide what I would highlight is that several of the ships are coming off shorter time charters and are commencing long term charters with higher earnings. So we are revising our portfolio.
At better levels for longer periods.
Stronger for longer.
Actually I am always currently nearing end of a 12 month time charter and the charter has the option to extend for another 12 months at a rate substantially higher than the initial 12 months fell imperative.
As highlighted already we have kept 30% exposure to the spot market with four of our ships. This is flex volunteer which is trading in the spot market and which is now booked through end of December or early January we all know planning for flex volunteer hours to be the fifth chip on the Chinese contract. So we will tell you though in the spot.
Pension.
On a multimodal contact in the interim period.
Additionally, we have three ships on valuable higher context. This means the earnings are linked to the general spot market earnings we have flex Artemis, which is on a long term viable higher contact with gumbo until third quarter of 2020 with options for another five years Flex Artemis was the only ships that we had fixed on long.
Time charter hire through the contract.
Centered on the previous slide and she was fixed on a valuable higher contact while all long term contracts don't this year have been on fixed higher context.
Finally, we have flex enterprise and flex Amba, which are also available higher complex in the past we have received a lot of questions about how valuable higher complex have been structure, but we do hope that the fourth quarter guidance demonstrates that we get substantial upside on our earnings under these contracts when the freight market.
As of today.
Slide six earnings visibility I have already covered our backlog extensively but slide six just illustrate how this looks the next couple of years with as mentioned, 75% covered for next year and not fall off that level in 2023, most of the backlog is all fixed.
But where we also have some valuable higher backlog despite soft below earnings the residual areas options all vessels, which we can trade in the spot market all in all a balanced and comfortable mix we think.
Backlog stretches well beyond this two year period. So we might have to arrive to this slide next time with a longer period.
Dividend, we covered our dividend philosophy in great detail during our second quarter presentation. So I will not repeat all the factors and considerations. However, what I would like to point out is that we use a balanced and measured approach to conclude on appropriate and sustainability.
And level with the aim of distributing the free cash flow over the cycle to owners such distribution will primarily be through dividends, but we have also utilized share buybacks with about 1 million shares bought back during the last year at very accretive levels.
As we mentioned in our second quarter presentation, we are chasing green light and we expect more of the traffic light and we expected more of the traffic lights to term the Austrian by third quarter, given the improved guidance the only pattern at all not being doctrine is all the considerations. Despite recent progress on vaccine all.
And rich economies and successful trials of COVID-19, antiviral pills by Merck and Pfizer, the Lotto, which has to approve an 18, 9% successful in financing serious illnesses. There remains some uncertainty which leaves us with the light Green Colo for this factor for the time being.
With that update message I think it's a convenient time for <unk> to provide you with some update financial numbers before I will revert with a market update afterwards.
Thank you <unk>, let's.
Let's turn to slide nine for the financial highlights.
I already mentioned, our TCE earnings for the quarter was $68300 per day.
The $10500 per day increase is mainly driven by seasonal improvement in the market rates and FX are facing in some of the long term contracts announced in the first half of the year.
On the operating expenses, we are less impacted by Covid cost this quarter.
Opex per day came in at $13000 for the quarter and 13400 per day for the nine months.
That means a year to date about $500 per day directly related to COVID-19 costs, and we expect to maintain opex per day around that yet to date level.
We have done in place to see that the underlying operating expenses net of Covid costs remains below the guided level of $13000 per day.
Gross revenues for the quarter came in at $82 million slightly above our guided level of $80 million and.
Revenue increase year on year demonstrates the earnings potential of the 13 vessels fleet now fully operational.
Adjusted EBITDA was $65 million adjusted net income $32 million and adjusting earnings per share came in at.
60 cents per share.
The numbers are adjusted for about $1 million gain on interest rate derivatives, which includes unrealized gains of $2 7 million.
On the financing interest expenses are slightly up reflecting a third quarter in interest on the debt drawn.
Flex vigilant.
Q2.
Then moving to our balance sheet, which is now plain and straightforward on the asset side, we have cash of $138 million in vessels book.
Shy of $2 4 billion.
The quarter on quarter.
The cash development will be explained on the next slide and the only material change since last quarter is the normal depreciation of the vessels.
The increase in current assets related to charter payment of $2 $5 million received on the 30th.
September however, recorded on our accounts on first of October. Consequently, it was not quantify that cash on account with working capital.
On the liability side, we have $1 6 billion of long term debt from international banks and financial institution.
As a reminder, in times of increasing interest rates, we have interest rate portfolio of $770 million with a weighted average interest of 113%.
Including the existing fixed rate leases the hedge ratio is 67.
And I think they announced fixed rate finance.
Refinancing for volunteer the hedge side show well during Q4 increased to 69%.
Termination of interest rate swaps related to the existing volunteer financing.
We are therefore, well hedged against possibly higher long term interest rates.
Book equity.
861 million, which gives a solid book equity ratio of 34%.
Let's turn to <unk>.
Slide number 10.
Cash flow for the quarter during the quarter, we generated about $50 million of free cash flow from operations working capital.
Tend to fluctuate up and down depending on timing of charter higher and all in all however, we have a negative working capital, although $5 4 million less negative this quarter.
During the quarter, we had $27 million in scheduled Amortizations and please note that the Amortizations are higher in Q1 and Q3 due to our Korea export law that has some semi annual installments.
We also distribute the $23 4 million to shareholders were $2 2 million share buybacks.
$91 million.
The cash dividend payments.
That left us with a comfortable cash position of $138 million at the end of the quarter.
After closing of the refinancing of the volunteer which is expected mid December we will further boost our cash balance by approximately $38 million.
So let's have a look at the volunteer refinancing.
We announced today that we have signed the agreement for $160 million sale and charter back transaction with an Asian based lease provide them.
The lease has a duration of 10 years and further adding length to a debt maturity profile.
The transaction is based on a market value from brokers of $215 million for volunteer and the net amount of $160 million.
Will it be booked as long term debt.
After repayment of the existing financing the transaction fees up $38 million in cash as mentioned.
As the maturity and.
<unk> the balloon is $80 million and that reflects a 20 year repayment profile.
That results in an H adjusted.
Repayment profile of 21 years.
The all in fixed interest rate is for a 10 year transaction is attractive at 4%.
We have signed.
The more.
The bareboat charter agreements and the remaining is certain customary closing conditions.
As mentioned, we expect to conclude this by mid this up.
And that takes us to the next slide and our 100 million dollar balance sheet optimization program.
The flex volunteer.
First transaction under this program.
And this is based on our solid backlog of attractive long term contracts secured during the last nine months.
Which has increased the earnings visibility.
Risk the company.
We therefore aim to optimize the debt funding with the serious of refinancing to reflect the improved credit profile.
The original debt funding of the company. It was done with the purpose of having a flexibility to trade the vessels in.
In the spot market until the long term contracts with secure.
Now eight vessels, possibly nine have been fixed on long term contracts and three on variable higher context. There is room to further optimize the depth both in terms of size and cost of debt.
The target is to free up $100 million.
Reduce the cost of debt and maintain our industry, leading cash breakeven level.
We have a number of that facility that will be considered under the program and looking at our desk profile.
On the right. It is likely that the debt maturities for 2024 will be addressed and therefore pushed even further out.
The 2025 maturity is related to the commercial tranche under the 629 million ECA facility with Korea exit.
Well the ECA tranches matures later.
We envisioned that this facility will remain on the commercial side to be refinance due to the attractive long term commitments.
All in all we have a solid funding platform with a supportive lending group.
With no immediate maturities and this gives us a room and flexibility to optimize the debt funding, which we aim to utilize under this program.
So with that thanks to us now.
Thank you.
Slide 13 at the start of our market section in our last press presentation. The headline was China Erika dominates in the first half and goals set to accelerate in the second half <unk> Center of excellence to the two superpowers, China and America.
That is very much still the case, particularly on the export side with more than 60% growth in U S exports in 2021 compared to last year.
We don't expect U S exports close to full nameplate capacity this year with all with their own 70 million tons of export.
This is 5 million tons higher than the E. I, a estimate a year ago as they expected about 6 million tons lost due to cancellations, while the actual number is about half a million dollars.
This means U S is now on a solid third place behind Australia and Qatar.
The reason for such staggering growth in U S exports are two folded.
First the most obvious reason due to the outbreak of COVID-19 pandemic last year global gas prices plummeted and this made uneconomic led to export U S. Flexible volumes and were therefore for the first time I have also a wave of commercial Cogs cancellation outside of the winter season with a total of <unk>.
Ultimately on the other than 80 cargoes being canceled this year.
Yes, there has been no commercial cargo cancellation, all order being posted a total of seven cargoes canceled five due to the big freeze and text us and two cargoes in genre OLED due to lack of available ships given the tight market at the time.
Avoidance of cancellation does add about 13 million tonnes and U S exports. The secondaries in this ramp up of new export capacity, which was commissioned last year or.
During 2021, which adds about $9 million.
In our Q2 presentation in August we showed that the export growth in the first half there was 12%, but we estimated that export growth in the second half would accelerate to about 10%, thus, resulting in an overall growth of about 7%.
We all know spot on the 7% estimate with two months to go although growth for the remaining two months will normalize at a slower pace as there were very few cargo cancellation in the these two lost too.
These two months last year.
Australia is on track to surpass Qatar this year the biggest export.
With time, the Australia as a higher name plate capacity is in Qatar with about $8 6 million tonne capacity versus 77 million tonne in Qatar that supply outages at facilities like Gorgon and prelude have in the past that resulted in Australia punching below its rates.
In Chile, However, Qatar will rise to the top again with a huge $49 million on expansion projects.
Q3, 'twenty 'twenty presentation, a year ago. We presented what was then an extremely bullish forecast will 2021 export growth with estimate of 24 million tonne gold I'd say extremely bullish as potent estimate at the time were 8 million tons of growth in 2021.
From this base case was $15 million on World. We all know on track for about $20 million on growth in 2021. The main reason for the shortfall versus our estimate is feed gas issues in Canada to boggle, and Nigeria, which is knocking off 3 million tons of export for both countries.
Extended outages for the Melco LNG plant in Norway is also contributing negatively.
It has however bounced back strongly as we had forecasted a year ago with 5 million ton growth. So far this year.
So, let's then have a look at the other side of the export equation imports.
I alluded to in the previous slide China is the biggest wealth market by end of October China has grown their imports at 10 million tonnes compared to October last year. This is a growth factor of 18% in our country with still quite a lot of COVID-19 restriction given the Aussie autologous policy.
This means that China has now surpassed Japan as the world's largest LNG imports.
LNG demand in South Korea has also been strong with an impressive 19% growth, adding 6 million tonnes compared to October 2020.
There are two other outliers, the first being Brazil, which has grown as imports by a staggering 350% going from just $1 4 million tonnes to $6 2 million.
The high input cost in Brazil is caused by a drop affecting hydropower lenses adversely due to linear.
The order out.
The other outlier as Europe, while imports have declined by 12%.
This is not due to energy demand being soft in Europe, as evidenced by the energy crisis and call for Putin to increase Russian pipeline exports. The reason is firstly that European imports were very high in 2020 as European buyers were able to take advantage of low gas prices and buy gas at rock bottom.
Prices for storage. The second reason is that theres been fierce global competition for scale LNG and other companies have been willing to pay a higher price and thus diverting LNG from Europe.
An example of this is China on September 30th Oiling, There state owned energy companies to do whatever it takes to secure fueled this brought back memories due to <unk> in 2000 22012, when <unk> the European bond markets with three famous world and similar words whatever it takes.
The result of Europe, not being able to source and of LNG cargo is that inventories in Europe are well below the normal levels with inventory levels of around 75% versus 94% last year. Another cold winter in Europe can thus, resulting in a rapid depletion of gas.
Though is high volatility in gas prices and very low gas inventories at the end of the heating season, which will create a big rifle restocking over the summer of 'twenty to 'twenty two.
We do see this paying out today with European gas prices surging due to delay in the approval process of north sea them too.
Hence the gas market will remain tight and this is reflected in high gas prices, both spot and future passes as I'll cover on the next few slides.
Before.
Diving into gas prices, let's step back and digest, how elevated prices have become.
Spot LNG prices in Asia have come down from the peaks in October both remain at high levels with the current price per million btu of around $30 as that all five 8 million btu in a barrel of oil. This means that spot LNG is approximately hundred $80.
Basel more than twice the price of oil despite oil prices also being at such elevated prices that precedent Biogen is urging OPEC and particularly the solid base to increase exports in order to get petrol prices.
The U S.
It's fair to say that the price of natural gas varies greatly depending on location.
I will show on the next slide.
As mentioned the price of gas depends on where you all this.
Implicit graph illustrates this fact.
Today, the price of natural gas in U S measured by Henry hub is about $5.
Large LNG cargo does have a value of about $20 million in the U S or $23 million, if we add 15% on top of handling for liquefaction.
In addition that is also our totaling cost of two to $3 per million Btu. This all however in the short term some costs for bias in Europe, which imports about 20% of all cargos natural gas prices all of that about $25, giving a value of our large cargo of about 100 million.
In Asia, which is the main import regions with about 75% market share. The LNG price is as mentioned about $30, giving a cargo value of $120 million.
Cause bad I'll, just very attractive and they'll pay the wood preferred shipping cargoes to Asia, where the cargo values and arbitrage profits are the highest as you can see the farther you need to ship the cargo from the U S. The higher the LNG price shipping distance is longer and shipping is today.
Hey, hi, costly, particularly with the Panama congestion.
Note that these prices are from heightened November 12, and given the applause and the gas market. This week with regards to the Nord stream II prices all know even higher.
Slide 15, with the price dynamics I explained it might not come as a surprise that inter basin trade.
Exports from the Atlantic Basin to the Pacific Basin is up by a lot. This year by end of October.
A whopping, 48% as cargoes have has to be shipped longer ton miles is therefore also by an impressive 18% ton mile growth has been very supportive of freight demand. So no wonder that the shipping market is tight.
This happened despite most industry X <unk> this year, but are they getting a big surplus of shifts given the approximately 55, new building delivery. This year, which is a lot compared to recent yes, but also when we look into 2022 and 2023 when we have on average about 30 ships set for delivery.
So slide 18 gas prices.
And.
This golf shows the gas prices measured by the local U S gas price Henry hub, the northwest European gas price TTS, the Asian spot prices JDM and the dotted line, representing LNG price towards oil with about 25% discount which is typical.
As typical contact bias for LNG in the long term oil linked contracts.
Since our second quarter presentation in August the gas prices have been on our test with the Asian spot biased Jae Kim hitting an all time high of $56 on October six before falling back to $36. The next day off the precedent boosting of Russia talked on European gas prices with <unk>.
<unk> of increased Russian pipeline flows. However, so far the supply response from Russia has been muted so gas prices continue to stay at very elevated levels also reflecting the fact that the cold winter chemical salt in quick rundown of inventories. So the market is definitely balancing on the tightrope.
Looking forward, we do see that the futures markets continued to pipe gas at very high levels throughout 2022, which makes sense, given the restocking, which will probably be needed next year.
We do see a slow and gradual normalization of prices by middle of 2023, when they are converging towards the typical oil linked LNG price. So while gas prices are now a bit too hot for Commvault, which case some demand destruction, we are converging towards more normalized levels.
Slide 19, turning to slide 19, and finally, we can talk about the spot market for freight as you can see from the slide the spot market is booming vessel availability remains very tight with Clarkson quoting just won't ship available pumps and this is a steam turbine next 14 days.
We have no ships coming open then they have one time fueled ships available within that window 15 to 28 days and then finally, our two stock Omega XD F being flexible in their opening the window. After 2009 days with the cargo economics, we are seeing and the arbitrage spreads we are therefore seeing a van.
Films.
<unk> market.
The hedge percentage if the freight assessment for alternative routes by both to get changed and Sparks on November 12, both Baltic <unk> Balk half circle East fresh numbers today, which are even higher spark lights out by an average of $19000, while the Baltic LNG rates.
By on average of about $15000. Please note that this rate or time charter equivalent earnings or TCE numbers, which includes positioning and ballast bonus.
I have explained in the past ballast bonus can vary greatly depending on the market today ballast bonus is considerably more favorable than just one trip basis. This means earnings are typically higher than headline spot rates.
Okay.
As LNG is more expensive than fuel oil as I previously previously shown here the Baltic LNG rates of around 280 to 340000, depending on Ruth for Typhoon in fuel mode in LNG mode, Baltic LNG rates I'll ask Seth to 235 to two.
$190000 per day.
This bulk rates are in line with this but you should be aware of that's box at <unk>.
Approximately $60000 premium for Mega X DF ships as these are more fuel efficient and can transport a larger cargo than our standard 160000 cubic HIFU ships.
Slides 20, and let's have a look at the forward spot earnings expectations.
Therefore was credit agreement market or just SFA is a forward market for freight and this is becoming more liquid and mature also in LNG shipping the benchmark shape for this contract is also a 160000 cubic hydro chip as we can see from this cough, we do expect the freight markets continue.
<unk> seasonally as in the past right now the freight market as we had thought but we do expect it to calm down during Q1 next year, although it's fair to say that the Q1 FFA at $125000 per day is a pretty good level second quarter, which is usually the softest quarter.
Is it $70000, while third quarter is slightly higher at $75000.
Fourth quarter is as we know from the past antibodies guess, but at least the market is pricing this at $110000 today.
Altogether this average out at $95000 and keep in mind. These.
Rates of high fuel ships, which is typically about 10 years old. So if that were the FFA market for new Mega X DF ships.
So that would certainly be at a substantial premium to this level, which is also evident from the term market, which I will cover on the next slide So last slide before we conclude slide long term market one year time charter rate, which is the best proxy for future earnings in the spot market has also been on our tier four.
The last 456 months.
But most of transit transit the one year Tc rate.
Hovering around $60000 per day and this was also the case at the start of 2021.
That was until the market sentiment abruptly turned more positive in April.
This is also the reason why we did not lock in any ships on term contracts prior to the market shifting except for flex estimate, but this was as mentioned our ships were fixed on a valuable contract linked to the spot market. Since April the one year time charter rate has doubled.
The one year time charter rate for modern tall in this quarter by families is currently $125000 per day.
One year time charter rate is also pushing up longer term charter rates with affinity quoting.
Time charter rates are close to $101000 per day, which is maybe not too surprising as they also are running low on 2025 delivery slots.
At the same time, new building prices have been moving steadily upwards closer to $210 million, which means new building also new buildings are also requiring higher rate than was the case.
Nine months ago, we have a minimum of pre ships for delivery within the end of 2024 with two ships, possibly coming open depending on option. So we think we will be well positioned to fix these ships on attractive employment given the lack of available modern ships in this window.
So.
That's all let's briefly summarize today's presentation revenues for the third quarter.
$82 million in line with guidance, we have heightened our Q4 revenue guidance from $85 million to $100 million to about $110 million <unk> flat.
Selecting super falling spot earnings on our pool ships exposed to the spot.
We have successfully continued to build high quality affect the backlog, but maintaining spot exposure to spice up the onyx.
And SaaS.
And this enable us to almost double our dividend from 42, 70, <unk>, which provides investors an attractive 14% annualized yield and this is also our dividend level, we are comfortable with.
As you are probably already picked up outlook remains positive both shorter and longer term and finally, our balance sheet, just keep getting better with attractive new sale and leaseback, which will go all of it a big cash pile to new heights. So that's it from us I am happy to take some questions. So let's open for.
Questions.
Operator, thank you.
Thank you to ask a question you will need to press star one on your telephone keypad.
Cancel their request you may press, the pound or Heskey once again to ask a question. Please press star and one.
No questions that came in over the phone Sir please continue.
Okay. Thank you I guess you all just kind to me since I have this all flows not dragging out.
Long Q&A session. So.
I appreciate that.
Thank you for listening in and we will be back with the Q4 numbers in the middle of tableau.
So thank you everybody and have a good day.
Thank you discontinue the conference for today. Thank you all for participating May all disconnect have a good day, everyone and stay safe.
Okay.
Thanks.
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