Q1 2022 Ardmore Shipping Corp Earnings Call
Good morning, ladies and gentlemen, and welcome to the Ardmore shipping first quarter 2022 earnings conference call.
Today's call is being recorded and an audio webcast and presentation are available on the Investor Relations section of the company's website.
Ardmore shipping dot com.
We will conduct a question and answer session. After the opening remarks instructions will follow at that time.
A replay of the conference call will be accessible anytime during the next two weeks by dialing 187734475 to nine or 1412.
170088.
Entering pass code 1055748.
At this time I will turn the call over to Anthony Gurnee, Chief Executive Officer of Ardmore shipping.
Thank you good morning, and welcome everyone to Ardmore shipping first quarter 2022 earnings call. Let me first ask our CFO , Paul Timna and to describe the format for the call and forward looking statements.
Thanks, Tony and welcome everyone before we begin our conference call I would like to direct all participants to our website at Ardmore shipping Dot com, where you'll find a link to this morning's first quarter earnings release and presentation Tony.
Tony and I will take about 15 minutes to go through the presentation and then open up the call to questions.
Turning to slide two please allow me to remind you that our discussion today contains forward looking statements additional results may differ materially from the results projected from those forward looking statements and additional information concerning factors that could cause the actual results to differ materially from those in the Florida understatement.
And for the first quarter earnings release, which is available on our website.
And now I'll turn the call back over to Tony.
Thanks, Paul.
In terms of the format for today's call to begin with I'll discuss highlights and recent market developments after which Paul will provide an update on product and chemical tanker fundamentals and financial performance and then we will conclude the presentation and open up the call for questions.
So turning first to slide four.
Over the past two months of the product and chemical tanker markets have changed completely the first quarter was only partially impacted by these conditions for the second quarter will show the full effect.
Ardmore is M. Our TCE for the first quarter averaged 15600 per day, whereas for the second quarter with a 50% fixed so far the result is $25500 and actually rising as evidenced by last few weeks fixtures now averaging 34400 per day.
In anticipation of an improving market based on strong fundamentals, we had already gone to full spot exposure as of February thus, we're well positioned to capture the benefits of a strong market for our shareholders.
The impact on our financial performance is significantly using the second quarter TCE to date with 50% complete our net income would be 22 million or <unk> 63 per share.
For the quarter of an annualized 30% return on book equity with every additional $1000 per day generating another 28 cents per share or three 4% incremental Roe.
Asset values are also rising with five year old MRO is now valued at $32 5 million, representing a year on year increase of 18%.
Taking advantage of rising values Ardmore has sold its three 2008 built M ours with time charter back for two years plus options at attractive rates, which maintains our commercial scale and earnings power.
Ardmore has not undertaken any voyages from Russia since the outbreak of the conflict in the current market. Our focus is on optimizing our commercial performance elsewhere, we're making every effort to support our seafarers and engaging in other measures to assist those in need.
Moving next to slide five.
On our last call, we discussed improving fundamentals offset by adverse oil market dynamics. Since then the oil market has changed completely and as the factor about charged the product tanker sector and M ours in particular given their versatility.
The oil market is now characterized by dislocation of physical supply and demand.
Record high refining margins wide price arbs, and a shift in sentiment regarding inventories destock.
These factors are driving up the volume shift in distance traveled thus, resulting in a significant boost to product tanker ton mile demand.
The chemical tanker market is being driven by similar factors exacerbated by urgent binding of liquid fertilizer and various types of Dutch oils to substitute for volumes washed out of Russia and the Ukraine.
As a result, the commodity end of the chemical tanker sector is also experiencing very high spot rates, which are clearly reflected in our own fleet performance.
How high rates can go and for how long, it's unclear, but with Emaar transport costs still only around 5% of the value of the cargo on board, we don't see rates alone capable of destroying demand and thus there's no practical upper limit.
Similarly, with the dislocation of cargo flows and a steady stream of oil market events continuing to disrupt there is a sense of these conditions could persist for quite some time, even after cessation of hostilities.
Meanwhile, although fundamentals have taken a backseat to the oil market. We believe there is still improving and are providing underlying strengths of our sectors, which Paul will discuss later in more detail.
Next onto slide six the next two slides are normally further back in the deck. However, we thought it would be useful to discuss them now as they highlight what's currently happening in the market and the impact on Ardmore is earnings.
On this slide slide six you can see the progression of rates over the past six quarters, which covers the depth of pent up the pandemic last year to this new market environment that we're in.
We had a slight uptick in rates in the first quarter. However, as you can see clearly with the green bars are theres, a dramatic impact the market is having on our charter rate performance for the second quarter to date.
Moving next to slide seven on this slide we show the resulting annualized earnings and EPS for the full range of market conditions, we've seen over the past six quarters and where at least some people think rates could go towards the upper end.
Looking at the Red dotted box you can see that at current levels, our annualized earnings would be $88 million or $2 52 per share.
On that note I'll hand, the call over to Paul.
Thanks, Tony and I will take a look at the fundamentals and then move to review of our financial performance. So starting with slide nine for demand fundamentals all of the focus in recent weeks has been on the current market activity and volatility at.
At the same time. The fact remains that fundamentals are solid despite pretty evident crosscurrents in the global economy.
The demand side, the alka for product and chemical tankers is very positive driven by increased refinery throughput and oil market disruption in the near term and continued on demand growth in refiner dislocation over the medium term.
Oil demand growth has not gone away.
Based on the most recent estimates from right that on the IAA overall global oil demand is expected to increase by $1 9 million barrels a day this year, surpassing pre COVID-19 levels in the third quarter.
Looking to the medium term as you can see on the graph on the upper right demand outlook remains firm.
Another refinery activity continues to be a significant driver of product tanker tonne mile demand.
Refining through important third quarter is expected to be 5% higher year on year, notably there were significant increases in throughput in the U S Gulf and the middle East with corresponding reductions in Russia in surplus.
At the same time, the ongoing trend of refiner dislocation, which we've been talking about for some time will continue to have a positive impact on product tanker demand for providing an additional layer of growth.
Over the next few years there are significant increases in capacity in the middle East and Asia, while at the same time closures of refineries in the U S Europe , China, Australia.
Increasing seaborne volumes of refined products.
Significantly the ASEAN refinery in Kuwait is expected to open in the next few weeks approximately two years behind the original schedule.
Overall product tanker ton mile demand is expected to be 3% to 4% annually through 2026, which is well above supply growth.
Based on recent market activity ton mile demand for product tankers is potentially much higher this year.
Kevin can tanker demand, but there's also positive driven by GDP growth petrochemical outposts and supported by an improving prototyping market, resulting in these vessels staying more on their core keep the Patriots.
And April global GDP was revised down by <unk>, 8%.
But from by the IMF from Juniors estimates.
But it's still expected to be three 6% in 2022 and 2023.
Chemical tanker demand is highly correlated to global GDP chemical tanker trade expected to grow by 3% this year and 5% year on year in 2023 and 2024.
Moving to slide 10, we'll take a closer look at the supply fundamentals.
The product and chemical tankers is very favorable driven by a low order book and increased scrapping levels net fleet growth would your deliveries less scrapping is expected to be well below demand growth for the coming years and 2022 estimated net fleet growth for product tankers is one 2% for chemical tankers. It is 1%.
Scrapping has increased significantly in 2021, and we expect scrapping to be similarly elevated levels in the years ahead, with an aging fleet and increasing pressure on efficiency and carbon reduction.
And finally, consistent with our comments on prior calls the order book for product and chemical tankers remains low and this is expected to remain the case for the foreseeable future for two reasons.
There continues to be a lack of clarity on future ship designs to meet the industry's emission targets and secondly, there's very limited parts availability for mr's because of significant ordering in other sectors, particularly container ships.
Turning to slide 12 for financial highlights we reported an adjusted loss of 900000 or three cents per share representing a significant improvement year on year and.
<unk> averaged 15600, a day for the first quarter versus 11400 per day in the prior quarter.
Kevin can talk to there in D C and 13600 per day in the first quarter compared to 11300 per day in the fourth quarter of 'twenty one.
As Tony noted these rates up.
Uh huh.
Subsequently increased a great team.
Charter rate improvements reflect the ongoing recovery in our demand post COVID-19 on the outside of the Ukraine, Russia complex towards the end of the first quarter.
Next we'll take a closer look at our cost line items and provide some guidance for the coming quarter.
Wage cost increase significantly quarter on quarter due to higher bunker costs.
And operating expenses were $16 4 million in the quarter slight increase mostly related to timing of crew changes.
And if he had opex for the second quarter, we expected to be approximately $15 6 million.
Charter in expense was $2 1 million for the quarter and we expect it to be at nine in the second quarter.
Depreciation and amortization totaled 9 million for the first quarter, and we expect depreciation and amortization for the second quarter to Vietnam.
Total overhead costs were $4 8 million for the first quarter in line with prior periods and for the second quarter, we expect overhead incorporating corporate and commercial to be approximately $5 million.
Interest expense was $4 1 million for the first quarter and we expect it to be in line in the second quarter.
We're currently benefiting from float to fixed interest rate swaps entered into in May 2020, currently $250 million of our cash is fixed at a margin that plus 32 basis points through June 23, and overall, 88% of our debt is fixed.
Our interest rate swaps entered into in 2020 are currently in the money by 5 million at the end of March.
And overall, we believe our cost structure is amongst the lowest of our peer group and in particular in terms of commercial overhead costs are approximately 50% of prevailing market rate trophies.
Moving to slide 13 for fleet and operational highlights were continuing to invest in the fleet to optimize performance. We expect to complete two dry dockings in two ballast water system installations in the fourth quarter of this year with Capex of $3 2 million.
Some flexibility in terms of the precise timing of these dry dockings, depending on market conditions at the time.
Our forecasted revenue days for 2022, or approximately 9500 chemical tankers, representing 23% of total fleet days.
And for the second quarter to 96% of total days are spot or 105% on an ownership basis.
Overall operationally the team continues to perform very well.
And finally from even turn to slide 14 for capital allocation and balance sheet will continue to prioritize financial strength as a means to build value and cash that I was really starts to improve in the past few weeks at sustained strong charter market at current levels, we'll provide more options for capital allocation over time.
Our focus remains unchanged on the priorities that we've been highlighting for some time.
In the meantime, we're maintaining a strong balance sheet and healthy liquidity levels and relatively low leverage working capital last year. We had five shifts employed on time charter out at competitive rates, which supported earnings.
And we've since returned all of our one shift to spot trading and chicken to more shifting on time charter and it tastes in anticipation of strong charter market conditions.
As a result, working capital increased in the first quarter, partially related to more ships trading spot and also higher bunker prices.
Chimpanzees increasingly boosting net asset value volumes are up 18% year on year on the back of rising labor costs, namely new supply and a positive outlook.
And on the back of a strong recipe market. We agreed terms for the sale of three shifts I mean in a separate transaction on more time chartered in the ships at market rates for two years plus options, maintaining our scale and earnings power.
Consistent with our policy on capital allocation and fleet renewal and it will generate net cash proceeds of $15 million after prepayment of debt.
These vessels were financed through a fixed rate lease structure and our overall cost of debt reduced following the transaction.
And with that I'd like to turn the call over to Tony.
Thank you Paul so to sum up then the market environment has changed completely as a consequence of the war.
In fact on the oil market for which there is no clear end in sight.
Even after the cessation of hostilities, we believe the resulting dislocations will persist until sanctions were lifted and any repairs required.
<unk>.
While the disrupted oil market has taken center stage for now fundamentals shouldn't be ignored overall the world is continuing its post COVID-19 recovery. Despite some crosscurrents at the moment.
Well, it's unclear how far this market can go it is clear that there is a renewed appreciation for the role that oil products plain energy security and to providing a bridge to a full energy transition. So there is logic to the view that we have reached a turning point in the product and chemical tanker sectors.
The impact on hard words financial performance is clear assuming the second half performance continues we would earn 22 million or <unk> 63 per share in the second quarter.
And each incremental pounds and dollars per day is another 28 cents per share.
As a final point, our capital allocation policy as Paul just described still prioritizes financial strength.
But our targets can be met rapidly in this new market, which could allow us to pursue other means to build value building.
Build and deliver value to our shareholders, including well timed growth opportunities and return of capital to shareholders.
And with that we'll 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 your 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 will come from Jon Chappell with Evercore you May now go ahead.
Thank you and good morning, or good afternoon.
Tony My two questions are going to be and two of the points you made in your summary, one company specific one industry specific.
I think we've been talking for a long time about this market hopefully recovering based on fundamentals and it seemed like things got really tight really fast I think theres just misinformed view that this is strictly a war outcome and you've talked about even after the cessation of hostilities using your term.
Do you believe these dislocations could last a little bit to that.
Can you talk a little bit about what has exactly transpired in your markets since the invasion, that's kind of been the catalyst to these tightening fundamentals and I know this is really hard to answer, but even post a a piece environment hopefully sooner rather than later, but what are some of the long lasting effects on tray.
Good flows on our of opportunities, maybe even the impact of commodity trading houses that you're thinking.
Much longer tail to this cycle than just the war related impact.
Goodwill and start with that I think you had another question. We can answer that so that's a very thoughtful questions.
We do really believe that the fundamentals are slightly diminished because of the you know the.
Evident.
Slowdown in global economic growth.
And also the Covid situation in China.
But you know overall I mean for any let's say the travel we're seeing.
Yeah.
Seems like air travel is coming back strong and in particular long haul international.
It was really the big chunk of it was missing.
So.
So I think I think that's.
Just as important to you know kind of underway, if you will to what's happening and so while we're going through this kind of very disruptive period, we think that's continuing to build underneath.
That's a really good question in terms of you know what we'll have changed permanently.
Once once we get out of this.
I do think that that I think there's a view that the inventories got got to very low levels and I think that it restocking process can actually take a very long time.
And so I think that's something that would persist.
I think the.
Especially in the chemical sector.
A lot of you know you a N or liquid fertilizer in veg oils.
Sunflower oil that moves out of the Black Sea.
And.
You know that.
You know those crops and that that production has certainly been disruptive and how long it takes for that to come back on is unclear, but then that has to be replaced by other other substitute products are farther away.
In terms of.
Trillium flows.
I think you know.
We're seeing them in the U S right now.
I spend most of my time in Europe , and we're very close to what's happening.
And there's a real sense of alarm around the dependence that Europe has allowed itself to finds itself in today these be Russia for energy supply, whether it's gas or oil and I think that that's that's going to change there's no doubt that the EU is not going to you know its going to take a while.
It'll be a messy process to get consensus within the EU, but I don't think there's any going back to that level of dependence and of course that directly gene substitute product coming in from further away.
Got it.
Okay, that's very helpful and I understand that was a difficult.
Somewhat hypothetical question to answer so thank you for that the other one is hopefully a bit easier. It's amazing during your last conference call. We were still facing investor questions about liquidity and measures you can take this market stayed poor for even longer than anyone expected and now the tone of questions has shifted to use of capital.
What you've touched on a little bit there but.
Are you in the.
This may be early stage of the recovery is it strictly a focus on getting the balance sheet to a position of strength.
So maybe you know further sale and leasebacks are off the table or because of the formulaic nature of your dividend policy does it kind of become a capital return story immediately like as soon as the second quarter, just given the strength in the quarter to date rates that you pointed out.
Mhm.
Yeah.
I think I think it's important.
It's amazing how quickly things can change in this business.
It's also amazing how quickly people can forget the fact that last year was a really really tough year, we lost $38 million, we weren't alone others lost a lot more so you know I think for for most companies I think the priority has to remain as it is for us and essentially balance sheet repair.
For a period of time, we've been very clear with our capital allocation policy what are our financial strength targets are.
Happy to talk about that more but the fact is that with rates where they are today that can happen very quickly.
And then you know then we have to see what's.
What the opportunities are at the time and we've always we've had granted we haven't had a dividend policy in place for the past two two and a half years, but prior to that we were.
We're very very focused on shareholder value and high quality corporate governance, and we understand that investors.
Expect a return of return of capital from there from their investment.
Investees.
Got it thank you Tony.
Our next question will come from Ben Nolan with Stifel. You May now go ahead.
Yeah. Thanks, I'm actually just if I could follow on where John was there.
Maybe Paul or China either.
You you didn't mention sort of here as part of that capital allocation policy that you do have targets can be an end and then Tony you just mentioned there that you could elaborate on this could you elaborate on those what.
Do you think you're shooting for with respect to leverage.
Yeah, I'll I'll ask Paul to comment on that.
Yes sure.
Our capital allocation policy has been I've been trying to cure that we wanted to get to a target stuff, but no 40% debt to capital.
We're currently around 50%. So we have ways to go on that but it's as Tony mentioned given the current rate environment, we could we could get there very very quickly at these levels.
Okay.
Helpful.
And then just for my for my second question and you know you've talked about you talked a little bit about this.
But the low order book and how incrementally Chris can be somewhat limited.
You know one of the things that we've seen a little bit more on the larger ship classes, although not pervasive yet as you know oil majors generally.
<unk> shipping companies to go out and build it.
Away typically LNG fueled but other types of propel.
Propulsion systems.
On new ships and that has sort of been.
Seemingly where most of the incremental new buildings are coming.
Two questions first is is that happening at all in the EMR market isn't doesn't seem like it.
And is that something that you guys would consider if xyz Big company came to you and said Hey, we want you to build some chips.
Do you do it.
Yes, I think that it's a it is.
There have been projects in the past involving oil majors for construction of Mr's. They usually go out on long term time charter at very low rates. So that's not something that we've ever been very excited about.
But we do as part of our energy transition plan.
Tend to engage in conversations and really develop a collaborative dialogue and relationship with customers where we.
We can help them meet their own energy transition needs on the back of long term charter business, but with acceptable returns on capital capital I don't think I don't imagine that anything like that is going to result in a meaningful boost and in shipbuilding and our sectors anytime soon.
I think.
The real transition is still quite quite far ahead.
And we're also dealing with the reality that yards are very full at the moment.
So you know I think.
If we if we worry about over oversupply in the near term I think that's kind of off the table.
Because of the long lead to ordering new ships and the low order book and the fact that you know.
Mainly container ships, but also gas carriers et cetera have taken up all those lumps.
And youre not seeing oil majors pushing for.
Or subsidizing, it and EMR market in a way that theres been a little bit and these are all or two sooner.
Yeah, I take exception to the word subsidize because if you can ask any of the people who've done this deals they probably don't feel like they're being subsidized [laughter] very attractive rates, you know and that's our prerogative of an oil major.
But.
It's not something that's evident in our sectors at the moment, Okay perfect all right I appreciate it thanks guys.
Sure.
Our next question will come from Magnus <unk> with H C. Wainwright you May now go ahead.
Yes, Hi, Tony Paul.
Thanks for the presentation just a question on.
You know on your chartering strategy going forward you you went spots ahead of the recovery.
Do you see that changing I mean, you'd pay a very positive.
Picture, where do you see securing tonnage or staying spots for the remainder of the year or do you have ongoing discussions now.
Some of the trading houses looking to secure tonnage for the second half of the year.
Yes, I think there's probably a scramble at the moment, but I think you know I think like a one year MLR eco design rate might be up to around 20000, a day now.
That's an appealing given the spot market performance.
But I think it's you know we always keep a close eye on what's happening in the time charter market both chartering in in chartering out.
And we kind of got you know we've got.
Lucky or smart last year with our timing on both.
At the moment, we have two ships time chartered in at a little under 12000, a day and we have one remaining time chartered out at 15, five so we like the spread there and we like we like the incremental spot exposure, but we're not we're not we're not averse to put in more ships, having T C gender.
Generally either one year deals and its really just a.
A position you take against the view you have on the spot market.
And kind of just managed managing exposure in and looking for relative relative value chartering in and out so that's kind of a rambling answer to.
A good question, which is yes, we are keeping an eye on the on the time charter market and.
It probably begins to look attractive into the kind of the mid twenties.
And that would be longer term 24, 36 months or.
That gets pretty thin that into the market unless here's a really hot hot market. So we haven't really seen that yet I know that's been some discussion and other other forums.
And then maybe maybe we're not aware of it that that's happening but it.
It does feel like it's building in that direction that this is a very typical kind of cyclical trend that we're experiencing right now with spot rates, leading than time charter rates and asset values.
Alright, thank you.
Just one more question.
The chemical tanker market you know what.
We're very familiar with emaar market, but maybe.
The chemical tanker market very levered to global GDP I mean from looking at the market now it looks like GDP, it's gonna be a revised further down can you kind of talk a little bit about some points, where there's the resilience on the chemical demand versus GDP.
Well I think typically under normal circumstances, there is a very tight correlation and thats good.
At the moment, it's being heavily affected by disruption from the conflict just like the MRO sector is so you see really interesting trades going on for example, we put a ship on one of our 20 fives on a voyage from Trinidad to the U K with U a N, which is liquid fertilizer at $32000 a day.
And that's essentially you can almost call it panic buying to cover.
Springtime fertilizer needs that were expected to be covered out of their out of Russia.
Another interesting one as a voyage with styrene monomer, which is used to make polystyrene from China, all the way to the Rotterdam at a very very high rate and obviously, that's based on price arbs.
So I think there is I think that market is also very disrupted at the moment and rates are very very spiky, there as well so so I think that.
Yeah.
When we get completely past the disruptive phase of what we're dealing with here, we'll have to see what you know what the what the nature of GDP growth is at that time.
To kind of have any view on how you know what the effect will be on the on the chemical market, but at the moment. It feels the chemical market is never quite a spiky.
As products, but you know, but we've heard of wages up to 50000, a day, we haven't seen that yet and ours and we did one voyage.
With an M R at 95000.
So the averages are what we described on the call.
Alright, very good that's it for me thank you.
Our next question will come from Chris Robertson with Jefferies You May not go.
Hey, good morning, Tony and Paul Thanks for taking my questions.
With your view.
Tony.
Given the low product inventory levels, how long do you think seaborne transport will simply meet immediate demand versus when inventories will actually begin to be restocked, given kind of the key theme here for energy and National security.
So there has been outright panic buying of diesel and that's had a knock on effect. So we wouldn't do go into much detail, but you know the south American countries who've had to go very very far afield to cover their requirements.
We've done some very back of the envelope analysis. It seems like you could add.
At least a few percent MLR demand over upwards of a year as people kind of like reset their stocks too.
A little bit higher not not back to high levels.
So we think it's additive we don't think it's transformative, but we think it's additive I think another thing if I could just throw in it's important to just mention that LR twos have begun to trade out of clean into dirty.
And so far I think about 15 ships.
This year has done that transition in that dialogue, that's taking supply out so I just.
I forgot to mention that earlier on and just throw it in there.
For the record.
But.
We think that it's unclear today, whether theres any any meaningful restocking taking place or if it's all just covering immediate requirements.
But we think restocking will come.
Okay. Thank you I guess the second question here. So you mentioned last year, it's pretty tough in terms of rates I think that's reflected in the scrapping that took place in 2021, so how might rising rates. During this year impact. The scrapping thesis do you think it pushes at least a few of those shifts at the tail end of the age spectrum out even further or.
Have they come to kind of at the end of the road here.
So the average age of scrapping for MRV is typically around 25 years.
And.
You know that we saw a big run in scrapping last year if.
If you go back to earlier strong markets definitely does drop off we would expect that to happen to be honest with you.
But but because.
No there is not a big swing in age and so the ships are you know they're.
We're going to have to go pretty immediately anyway.
So, yes, I think it will probably negatively impact scrapping, but it's not like it'll disappear.
And it's not it's not it's not the kind of dynamic that you find in the vlccs at the moment.
Okay, and if I could sneak one last question how are the current lockdowns in China impacting refined product tanker demand and do you think it'll be a tailwind into <unk> once the lockdowns end.
I hesitate to say because it sounds like were just positive on everything but the fact is that slower could be lower consumption levels in China in that area has resulted in more exports.
So.
Alright. Thanks.
Okay.
Do you have a question. Please press Star then one on.
Our next question will come from climate mom and with value Investor Edge. You May now go ahead.
Good morning, gentlemen, thank you for taking my questions.
Following up on the capital allocation question, you have higher generally young fleet and I was wondering how do you currently see mostly through new loan you provided some commentary regarding potential new indoor doing but how do you see most middle aged traditional values, especially after the recent running rates.
Well I think.
Yes.
I'll start and then maybe if anything with Paul wants to add to that it's a good question I look into inherently middle aged shifts.
Are usually very good investments.
The the.
Especially you know before they get to a certain age there.
And it sounds like I'm talking about people, but I'm not talking about ships.
But so you know when chips are kind of between 10 and 15 years of age it's in.
In many respects it's there in terms of current returns on investment that's there that's their best point.
Because there's a lower amount of capital invested but.
But the earnings were about the same so we're not I don't think we have a hyper modern fleet anymore. That's also okay. Because it's a written down fleet and provides us good returns on investment.
We were gonna seller awaits anyway.
Really pleased we could find a high quality partner to charter them back from because that keeps our earnings power.
And tax on a commercial scale and the charter back right I think gives them a decent return on investment, but but it's an attractive level.
So I don't see anything Paul you want to add to that.
No I think that's pretty well pretty well covered.
That's helpful regarding the four vessels, we agreed to sell and turned their back for meaning you just three years.
The purchase option one of those charters come to an end.
No we have a we have options to extend but not repurchase options.
That's helpful and final question for me even offer recently emerged as a significant shareholder in <unk> and I was wondering if you could provide any commentary regarding whether its because the approach you over the past few months.
Good question.
The filing they made was the 13G facet finally.
We're very pleased to have quantum.
As in Ardmore, Investor and I imagine they were pretty pleased with the returns that we've gotten so far on the investment.
We have a regular investor outreach program, and we talked to all of our shareholders.
Big and small and there are no different.
That's very helpful. Thanks for taking my questions.
Youre welcome.
This concludes our question and answer session.
France has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Yeah.