Q1 2022 Safe Bulkers Inc Earnings Call
[music].
Okay.
Thank you for standing by ladies and gentlemen, and welcome to the state brokers conference call to discuss the first quarter 2022 financial results today, we have with us from safe Volcker's, Chairman and Chief Executive Officer, Mr. Polish How're, you all know President Doctor Lucas Barbassa and Chi.
Financial Officer, Mr. Konstantinos Anemophilous.
At this time all participants are in a listen only mode. There will be a presentation followed by a question and answer session at which time if you wish to ask a question. Please press star one on your telephone keypad and wait for the message advising your line is open.
Following this conference call if you need any further information on the conference call or the presentation. Please contact capital link at 2126617566, I must advise you that this conference is being recorded today.
Before we begin please note that this presentation contains forward looking statements as defined in section 27 day of the Securities Act of 1933.
And section 21 E of the Securities Exchange Act of 1934 as amended concerning future events, the companys growth strategy and measures to implement such strategy.
Including expected vessel acquisitions and entering into further time charters words, such as expects intends plans believes anticipates hopes estimates.
And variations of such words and similar expressions are intended to identify forward looking statements. Although the company believes that the expectations reflected in such forward looking statements are reasonable no assurance can be given that such expectations will prove to have been correct.
Statements involved known and unknown risk and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies many of which are beyond the control of the company actuarial actual results may differ materially from those expressed or implied by such forward looking statements factors that could cause.
Actual results could differ materially include but are not limited to changes in the demand for dry bulk vessels competitive factors in the market in which the company operates.
Risks associated with operations outside the United States and other factors listed from time to time in the company's filings with the Securities and Exchange Commission.
The company expressly disclaims any obligations or undertaking.
To release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the company's expectations with respect thereto or any change in events.
Conditions or circumstances on which any statement is based.
And now I pass the floor to Doctor Bourne partners. Please.
Please go ahead Sir.
Good morning, Lucas, but each regional flu bug is welcome to our conference call and webcast to discuss the financial results for the first quarter of 2022.
Our presentation in slide three shifting Daniel Coleman, our 2022 first quarter profitability.
Third quarter.
Oh yeah.
2021, COVID-19 ability by 50 million, reaching net revenues of GBP seven 7 million net income of $56 4 million.
We delivered total balance sheet year over year by more than $200 million did you should note that the comparable level of slow bleed stepped up baidu.
We used to and at least at a one 7 million euros, five P&C could known amortize and boom with a fixed coupon of 295.
<unk> maintained significant liquidity and capital resources.
98 million.
Redeemed in April 2022, more than a quarter about 8% preferred shares improving our weighted average cost of capital.
Furthermore, we have a significant cash flow visibility with over $400 million.
Okay.
At the same time, we continue to focus on fleet renewal and expansion with eight phase three Newton on order and 42 vessels on the water with an average fleet age of 10 four years.
We took delivery of our face to face the dumpster much glass empty boxes and have also expanded the capesize fleet seven divisions.
Our financial strength enables us to declare a dividend five cents per common share northern done at the same time, we are renewing our fleet with second son and facing you build ahead of the competition.
Allow me now to guide you through the company key investment highlights a speech I didn't slides four and five.
Steve Marcus is a top 10, two dry bulk vessel owner and Panamax segments, we say <unk> to <unk> plus.
And a track record experience in central monitoring led by bullish.
Are you on.
With a strong company balance sheet fundamentals ample liquidity limited at comparable levels to fleet up value in the secured cash flows from reliable Counterparties, we have secured a week eight phase threes get renewables.
I'll repeat expansion in Europe .
Competition and ahead of the expected impact of environmental regulations for 2023 onward.
The EBIT of our first phase III acute.
To go with a 460 team you don't see tooth consensus driven 25, 25% of our fleet is contracted for more than one year.
Fleet either at certain periods duration is about one two years and you do have an additional revenue capacity of about $20 million less from our 17th scrubber fitted vessels due to the inherited field face to face.
Our 42 vessels fleet is 85% comprised of stuff on these vessels with superior modifications in commercial and operational update which caused a substantial premium both in starting and achieved volume.
Order book remains at a 20 year low and market to them and it's unfortunate for the remaining of 2022, we believe that the company is well positioned for the long run we say enviromental based on abundant.
Moving to slide five we highlight shut in the <unk> market.
All numbers presented at Astro quarter, Inc.
Most specifically.
And capital is closer to 359 million consisting of 166 million tonne at 193 million in Undrawn available as one of the institutions with Pacific into two commitments.
Furthermore, we have contracted revenue of 426 million net of commissions from our non consent controllable potent built in southern content.
Capex were 242 million in relation to this.
<unk> nine stage three newbuild.
Which we took delivery of few days ago.
And we had 409 million upon signing consolidated debt, including 100 million Euro unsecured bonds issued in February 2022.
Our feedstock value because of the $95 million has to be done in the last column over there.
Alright.
Got it on the base of about aggregate like we've done in.
In the script, but agency 62.
That was down again as of quarter end.
When talk about liquidity and depth of resources.
As reported <unk> and additional borrowing capacity in relation to fiber lasers.
Business instead of new builds upon the delivery moving.
Moving on to slide seven and the dry bulk market.
We present the development of the CIP commodity index, which currently stands at the five year high with further upside potential the industry basically mortgage.
Enterprises for example, LNG as it does.
Increases in maintenance and industrial materials.
We can represent a liberty to give us for shipping.
As a result of the ongoing erosion clean water, we have witnessed the rapid charging prices during phase two.
The updated forecast of I am missing here following the Ocean, who create war fits the global GDP growth at three six.
Shen from 'twenty to equal 2022, which is lowered by <unk>.
From a 4.4% previously and that three 6% for 2023, which again lowered from three 8% previously in addition to the global predictions for inflation started at five 7% in advanced economies and eight 7% in payments and EBIT marketing development.
Economy.
Chinese GDP growth over the first quarter of 'twenty 'twenty do was four 8%. Despite the new domestic COVID-19, lockdowns and the roadshow clean water.
Forecasted global dry bulk ton mile demand is expected to increase by two 2% in 2022 supported by the industrial materials like iron ore coal and zinc.
Why is the explicit dry bulk net fleet growth stands at two 1% for 2022, which means that the squeezing the supply of vessels to meet meet will be.
Can I do.
Let's go to slide number eight.
Two other quick look on patient catheter market conditions.
As shown on the top graph the Cape market will be here to date continues to be healthy.
Capes lately, something volatile driven by the commodity dynamic which analyzed.
The forward freight agreement present in Red Cola is about 50 to 55000 for 2022.
Natalie for Panamaxes and the lower part of the graph.
If he gave us about 25.
<unk> thousand to 50000 for 2022.
Prevailing commodities market, coupled with strong supply fundamentals are likely to support the faith market throughout 2022.
And slide nine will be sent out scheduled deliveries.
Deliveries.
In this post incentive market environment, one more delivery in 2022, following the delivery of our first phase.
Oh pushed up that much single division in a few days ago.
Five and going to 'twenty, three and during the first quarter of 2022.
The same slide in the bottom graph, we also present a record low order book for the forward year for Capes and Panamax vessels.
The supply fundamentals are strong as weakness in historically low order book and in the shorter to give capacity, which is mainly covered by other sectors or dentist, mainly container ships and tankers.
Turning to slide number 10, we focused on in visits by Novo carbon neutral appreciation of our investment which is about 150 million.
Before this business cycle part of our fleet renewal strategy, which we have invested nine new builds.
Okay awesome.
The newest design combined with adding more regulation for Q2 and Nox emissions.
We have acquired three Panamax and Tecate second convergence between companies.
The average acquisition price of about 90, new builds.
About $32 5 million as compared with the guidance that its market value of about $42 5 million for.
For the second son.
The vessels they are at a spread was $25 9 million as compared with it.
But it's market by new 50 190.
<unk> the timing of it.
Investment has appreciated by about a 125 million center most of the governments are still building vessels scrubber technology to 17.
For 17 of each visit.
Fuel prices the last month, which is more evident in todays market has put a very low sulfur fuel oil high sulfur fuel oil differential high limit, which has translated to increased revenues for the pizza business presently.
<unk> is a high five and Singapore subtle about $280 fatone and according to the future markets. The balance of 2022 sponsored a Muslim country $90 per tonne.
It's can I visited post Panamax fleet is about 7000, 5000 metric tons per year, pushing being flat stomach gain potential to about $24 million per annum in aggregate for our company for 17, but I must be decisions.
I say it is a different issue combined with the gunman is calculated.
50 million approximately.
Let somebody as company shift in market ticket take out waste in slide 11.
<unk> has it drove upside with new building program and Triple Crown acquisition.
And upsize the closest with stable post municipally expansion and strong balance sheet with limited compatible to fleet scrap value.
The ability of contracted cash flows we reward our shareholders with a sustainable dividend policy, coupled with our fleet renewal strategy.
At the same time the market has strong fundamentals with limited dry bulk fleet expansions for the next couple of years and new and forthcoming environmental legislation that set new standards for shipping we believe that <unk> bundles will be in the forefront of environmental based competitiveness with Newbuild schedule competition abate.
Upgrades in it didn't.
We complete use of Biofuels and the additions for alternative fuels.
Now lets me post the close to <unk> 12, sheer focus as much on a mobile app for our financial overview.
Thank you Luca and good morning to everyone.
Let me start with our quarterly financial highlights on slide 15 during.
During the first quarter of 2022, we operated in an improved charter market environment compared to the same period of 2021.
With lower interest expense and increased revenues, which also include earnings from scrubber fitted vessels.
Our quarterly net revenues.
So the 7% to seven $7 million vessels, 62, and a half million dollars last year.
Net revenues increased by 24% compared to the same period in 2021, mainly due to the increased D. C. Because it is all the way both markets.
It was also assisted by the additional revenues and by a scrubber fitted vessels.
The TCE of 20, <unk> $382 compared to a TCE of $15567.
During the same period in 2021.
The net income for the first quarter of 2022, $76 $4 million compared to where do you want one 3 million during the same period of 2021.
Our daily Opex stood up.
$5722.
Compared to the $4702 last year and our daily Opex, excluding dry docking is good delivery expenses stood at 4090.
$923 vessels $4350 last year.
Vessel operating expenses increased mainly affected by increased dry docking expenses, which include norfleet Champagne.
Obligation for upgrading the vessels and environmental performance.
Increased provision of technical services and increased crude operation expenses.
Due to the COVID-19 pandemic.
The aggregate figure for our Opex and G&A for the first quarter of 2022 were $7242.
This includes a dry docking of pre delivery expenses, and all director and officers compensation.
Our adjusted EBITDA for the first quarter of 2022 increased to $46 $9 million compared to $74 6 million for the same period of 2021.
Our adjusted EPS for the first quarter of 2020 towards beforehand.
It's related to on a weighted average number of 100.
21 6 million shares.
Compared to 14% during the same period in 2021 calculated in a weighted average number of 103 4 million shares.
This concludes our presentation on slide 14, with our quarterly operational highlights for the first quarter of 2022 compared to the same periods of 2021.
We were able to enter into server several favorable time charters.
<unk> delivered our fleet and improve our liquidity.
I'd say, there's underwater, but foremost the Companys board of directors decided to declare the 5% dividend per common share.
In 'twenty in February 22, we successfully issued a five year unsecured non amortizing bond in the amount of 100 million euros.
Device markets, which carries a coupon of 295%.
On a semiannual basis.
We would like to emphasize that the company is maintaining its capital position.
Position cash position.
Around 41, $141 $5 million as of May 22, and an additional $156 $6 million in Akshay essentially <unk> commitments.
Combined liquidity of less than $300 million.
That provides us with significant firepower.
Furthermore, we have contracted revenue from our non cancer not the spot and period time charter contracts of around 460 feet.
Net of commissions.
And additional borrowing capacity in relation to seven youll be supported delivery in six existing.
Existing debt free vessels.
Basically presenting more detailed financial and a very small assumption not we're ready to take your questions.
Thank you as a reminder, task a question you will need to press star one on your telephone to withdraw your question press the pound key.
Our first question comes from Chris Wetherbee with Citigroup you May proceed.
Hey, Thanks, guys. This is Ely wenski on for Chris.
If we could talk about the updated outlook on the bulk market given some of the geopolitical issues going on here. So just a couple of things. Obviously, you guys spoke a little bit about the Russia train side, but maybe you could talk about how your business specifically is changing too.
Account for that for the changes in the market right now and what you think obviously understand you don't have a crystal ball, but what the market could look like towards the end of the year and maybe into the following year.
Yes.
Good morning, Vince alone are the updated market conditions is that we have.
I went out of the second quarter with a healthier market than we had in the first quarter, which underperformed because we huddled shortly after the Chinese new year, we had to play.
The break of the war in February and February between our last.
Right.
Ukraine.
Which had a negative effect and also the prolonged COVID-19 lockdowns in Shanghai area in China, while this has muted the market.
Marshall for Q1.
So the recovery started in may a bit later than other gifts and the market is improving.
It's improving from that point on.
Now the Ukraine.
What will change the dynamics of the market and that we all lose the extra bushel grain.
Cranes from Ukraine, which are around 50 million a year.
At least for the foreseeable at least for the foreseeable future and then we wouldnt, we wouldnt have that problem with.
Functional cargo from ourselves people law.
Cannot.
Lode.
On their ships. So the joined the effect of losing these two countries will be around 100 million tons.
And this in part can be replaced by other countries, but without that.
Whole amount would be replaced by the rest of the world.
Of course, the ton mile effect will be covering part of this loss because so whatever is substantive from other countries will come from longer distances. We're seeing cargoes now from Australia being carried too bearish on golf or pool, we dripped onto places quite a way that they used to be soft.
Slides from Black Sea. So initially there is a benefit on a ton miles, but later on I think will be shortage on on all especially on grains.
To the contrary, we see increased movement of coal because of the conflict all the environmental law.
So it wouldn't be postponed and outperforming countries, especially in Europe have to rely more on coal supplies for the foreseeable future. So.
The sanctions.
In a way.
Delaying the decarbonization of the market.
Indirectly of course, and there is some benefit from an extra coal demand on all countries like.
Our euro so overall the picture is unclear how it will develop.
That are plus or minus from this equation.
If we add on these.
Covid Fiato void in China.
With the recent lockdown of about seven weeks.
And we believe that.
Chinese government when the falloff stimulus packages for their economy in the months to come to recover this loss shortfall local productivity in local production slowed down.
Because of Covid. So this should be.
Positive for iron ore trade.
And trading to China.
Got it so just a quick clarification, you said out of Ukraine, and the philosophy of 50 million tons. A year is that what you were saying 50 million tons more 40 to 50 million tons.
It's the amount, but every year, we were expecting to see.
More and more you create you plenty on.
Excellent.
Total net effect of 100 million tonnes, given the sanctions in Russia.
Yes.
Russia is around $100 million, yes. This of Cushing in other countries will cover a good part of it but not a whole lot.
All four miles will increase because other companies are further away from the from the receiving countries like North Africa, Egypt, the middle East.
So in part will be covered by the top minds and local hull for cargo, but the quantities won't be there in this I think we will see this.
Got it.
Or shortages in the second half of the year.
Got it and then so on a on a time charter basis.
I understand that you guys were up year over year, but it's down sequentially. Now obviously you have the typical seasonality in that but it's lower than what typical seasonality has historically been so so was that just because of some of the headwinds that were that hit <unk>, specifically or was there. Another reason there that we should be thank you what you'll want always slow always a slow.
It's a we achieved in Q1 are still satisfactory you know over $21000.
Of course, the bulk you have to remember that also we have a number of dry docks during this quarter.
Yeah.
Reasonably optimistic for the next few quarters, but you know there will be a lot of headwinds from various social we may have one more.
We may have a very strong market in one basin and very low market in the different basins. So it's all we wait received a new tranche and the new rules, so that will be created for.
So long this war or lost.
Got it one more from me so what is your contracting strategy here for the rest of the year.
2023, I think you guys are 78% for the full year what are what does that look like to increase that number throughout the rest of this year.
For the rest of the 2022 we prefer to work mainly in the spot market. If we can.
Can find charters that they could take us well into 2023, we would go for one year charters.
As part of the first quarter was 123.
The biggest ships the capesize bulk carriers.
At the right time.
In the market.
Refer to try and fix to fall towards the charters as the lot easier to find the two or three year charter on the Cape sizes.
One on the come from Oxford because.
Of the four Wolfcamp as.
Always undervalued.
On on all comes amongst us once these sometimes is more fair.
On the bigger ships, so where possible the biggest ships will be going towards the charters and the smaller ones up to one year charters.
Got it thank you all.
Thank you.
Thank you. Our next question comes from Ben Nolan with Stifel. You May proceed.
Yeah. Thanks.
As you were talking about or as you discussed.
Your outlook for the dry bulk market and just how you see things playing out I'm curious, how you'd think about maybe where you envision the company in the next three years, you've been pretty active ordering new vessels and upgrading the fleet.
And you know I have a dividend, but based on sort of how you see the dry bulk market playing out.
What how would the company maybe look differently three years from now if things were to go the way that you'd hope they would.
Yes look I believe that the.
They're more than shipping company has to be in the in the gay marketing around the all cycles.
The hub.
Competitive vessels modern vessels.
To be able to.
Compete in the market for example, we recently took delivery of our first phase III, the new building the last month, which we fixed a good seven or $8000 above the spot market at the.
Time will more than come from axis or the Super cheap 35942, latent legs triple awful lot on duration of four months.
Once at the time that modern comes amongst as we're running at $28000 per day is on being that it's a very economic shipper burdening very low.
The amount of fuel per day now with this shapes up.
Getting delivery.
Started taking delivery and by in the next thing to see.
And the next 18 months.
We have nine new ships in the fleet.
We are reducing the average age of our fleet by two years. So in two years' time, the others visuals that fleet will still be 10 years old.
The same time, we will.
Try and buy a few younger ships more than several hundred ships and no.
Not older than 10 years old say 10 years old.
Recently, we bought we bought.
Three capesize bulk carriers that we're working on something more.
We believe that these are ships that.
Good.
Still to be fixed in the next.
18 months.
Charter rates for two three year charters with very minimal.
Downside risk on the residual value. So we will combine the order book with with the with the <unk>.
Some selective acquisition, especially on the on the bigger ships.
And I.
I believe that the.
That the engines of the future is not yet decided and the type of fuel that we would burn in the next decade is not decided and we cannot predict now whether they are this is.
Methanol or LNG or anything.
Anything and so for the time being we go for the best ships, we can get from more reliable with shipyards.
Offering us.
Low consumption. This vessels are burdening, our six seven times.
<unk> of <unk> per day less.
Comparable no modern ships.
At the time when they have here of course is approaching a $1000 at fall.
This is a price of 900 to $1000 as appraisal realists support today in their bodies.
No.
By keep renewing our fleet in the near ships joining.
Sure.
The company, we shall remain.
Yes.
Modern company in the next three years.
Three or four years and by that time I believe.
We will decide.
Where would where it would be wise to invest the liquidity would create from generated from the from the revenues of the company toward two which.
Type of engine type of vessels will be able to invest.
This money, what new type of ranging in type of fuel.
We will decide to invest at the moment, we don't have we don't have a clear picture we have an idea, but all of these things are changing every every every month.
So to be honest with you we want to have all of the options open before we commit ourselves into into the long term plan shovel will stay with whatever best design win.
Having front of US now and we will wait to see what happens with the on the on the technology front on the environmental front.
And try with in between investments in.
In an environment on features like.
Uh huh.
Pain like maybe wrote off may be that may be other things that the technology, the sulfur and to us to try and become even more environmental friendly company.
Okay.
Do you you do still expect.
You're in growth.
To take advantage of the market and to.
To be able to continue to grow the company as it.
Compared to you know maybe using this as an opportunity to really.
Increased dividends substantially or something like that.
That dividend increases as part of this.
You can always tweak the difficult pump. This is for the dividend sustained in the long run and and to.
Grow it in the long run not go up and down and give it out in one go when you don't know know how much money, we spend on the new technologies and how much investment you would do so with selected the growth plan. The renewal plan the deleverage path and the way we are.
And as stated last quarter a dividend.
It's not of course, the largest in the market before to combine it with other actions, but we want to believe that what we're doing here is creating value for our shareholders in the long run. So we're not where we are focusing on what creates value for for shareholders in the long run.
Yeah, Yeah, that's right.
All right and then lastly for me I know you guys have historically been primarily Panamax class Panamax came to Max post Panamax sort of midsized focused.
Although there is you know recently, you've been adding some to the to the Capesize business.
Yeah.
Is that an area, where you see you know.
At a level of focus such that you can get some of that.
I don't know critical mass.
Be able to grow that side of the business, maybe not as much as you are in the other area but.
Yeah.
Maybe weighted a little bit more equally.
Yes, Ed I'll look at I mean, since all our new ships are.
Come somewhat and post panamaxes.
It's logical to try and do on the second hand, something about this on a different sector to spread out where it can and have more diversification we selected.
The biggest shift because we believe that there are opportunities from time to time that ups and downs in the market, which is affecting prices as well. So you can have it.
So two or three months. These may get you may get that deal.
From all that.
No.
The Capesize bulk carriers and then the marketing made a comment after six months and I believe that with the COVID-19 restrictions of China, but that would be.
And not for stimulus so action taken by the Chinese government to increase increase.
Production in China and to do investments subscale to their economy. So.
What are the reason, we say, we don't need to reach more than.
And then invest in the same sector.
The order book on the Cape sizes are very low we have seen that.
Stockpiles of this uplift.
So the six to 7000.
Dean.
Rich.
We supply only by scrap value has been increased by $405 million in the last 12 months.
Yes.
It gives the company also an extra nave water of that market.
When all of our investments are on the medium la septal come so much the postponement. So that's why that isn't a positions have been all know capesize bulk carriers, we don't intend to go towards smaller ships. Despite looking at these levels.
Okay.
Trade days, because I think already the prices in that sector.
Sometimes they are more expensive than even the capesize.
Alright, very clear I appreciate the color. Thank you.
Thank you.
Thank you. Our next question comes from Chris Robertson with Jefferies. You May proceed.
Good morning, and thanks for taking my questions.
Yes.
So you talked a lot about the younger ended the fleet here with the new buildings as well as some of the latest secondhand acquisitions, but could you talk a little bit about the older ended the fleet in terms of kind of sales and divestment strategy here.
Or any incremental upgrades necessary ahead of the new IMO regulation this year that would require.
Some dry docking or off hire in the remaining quarters.
As far as we're concerned out of the bulk of the fleet, which as we.
We have six vessels built between 2000 important 2006 hours up on these shipyards.
Yes.
We will ensure they are pretty much there for the next few years of course.
We're not we're not a very very much.
Much interested to trade issue something will be scrapped.
Our our historic has shown.
In the past, we used to be settling ships.
Around 10 year Mark.
And these days.
16, 17, yes, mark, but I believe overall, the aging of the fleet and the and the average.
Stifled, where all the vessels are ships that they cannot comply with the with the regulation on substance 'twenty 'twenty four and this should they need to make big investments become viral mental investments and big improvement to saying that in the in business, but I think all of it.
This will be very positive for the market not because the ships will be delayed in making their pace, but because many charters would not prefer to fix these vessels.
Most of the penalties that will be phasing in various ports in the world with all the with all the emission charges and all.
All of these things up.
Will it hit.
The industry in the next few years. So I think all of this provides a far better.
Uh huh.
Uh huh.
Let's say horizon for the much younger ships.
Especially those that consume more.
Well no.
Wanted to <unk>.
We have seen a certain part of the fleet will need to slow down to achieve emissions up there are acceptable.
<unk> levels.
I think overall, whilst we all ships. The older ships are all built in Japan, We believe in general the market will have a problem in that respect.
Maybe look us.
You will make what she did it about I mean.
We have worked with 92 already with our phase III and we have up from our previous ordering from the previous cycle of boat.
11 eco ships.
Altogether this a new state.
The relatively younger segment now fleet about 50% of our vision.
The other let's say 50%.
Mostly includes.
Jump on these vessels, which are related to signed leases not ear.
I think the more efficient and can easily comply.
<unk> always said and what we should expect is that the.
A problem relation that can't get our vessels.
Atlanta the vessels.
Not that bullish.
Paul You said just before.
The pace of competition.
From an intermodal strategy, we continue to upgrade our fleet continues bleeding during dry docking.
Doing what is necessary and monitoring also very carefully the environmental performance from our fleet.
To achieve a better environmental rating as we go I can't show I think this is a very successful at.
Not so low relative to the courtyard fleet is as we said before each by <unk>.
Nathan there relatively more efficient and they think that are at the end of the cancer and we ended up with a.
Very good performance in the next few years.
Of course any discussion of a.
Sure.
Equation of let's say the next generation I mean, after I think 2025 or 2027, probably because we don't have even today Amy Wilson.
And.
With tableau has been proven that is suitable for such extensive and global.
A cooling of the of the feet.
Yes, there's certainly a lot of technological uncertainty here. Thanks for the thorough explanation on that my second question is related to the series C. Preferreds that you redeemed so it looks like around 35% is still outstanding.
You had mentioned fleet renewal, some deleveraging focus and things like that but how are you thinking about the remaining series C preferreds.
Look it's not our priority after such a big payment that we had in the first quarter I think it's not our first priority.
To redeem more.
Deferred shares.
Good cloud Foldable of chefs will clouding the on the balance sheet. So we've done our box you know he's very strong market.
<unk> continues for another couple of years, we may consider again that at the appropriate time, but as you know we have the expansion is when we have the deleverage.
Often our planned spend that we have dividends social and our plans. So I mean, we've done the preferred path for this year that then we'll see what happens.
Later on and how strong the market will be in 'twenty, three and 'twenty four.
If that is.
Excessive liquidity to redeem some more of those shows.
Although the company is working very closely.
The leverage.
That part not the equity pumped into it you can see that.
Right now.
We have reached the level, where the limit is comparable to ours.
That the two.
Due to our scrap value. This is one of the most important characteristics that we would like to maintain in the future. So we don't want to see.
Our leverage increasing substantially more compared to disconnect. The vessels. So this is the level that we feel quite a.
We are comfortable at the same time.
I mean to the extent that we are unable to do additional that BDO time charter contracts that gives us the visibility of our cash flows.
And as we said the this exceeds 400 million at this stage I think this makes it very good.
Company for anyone who would like to invest because we invest in in the low limit its company with substantial contracted revenue with the dividend and of course, which is sometimes we tend to ignore we said.
New vessels.
Coming much earlier compared to 2025, the phase three vessels in two hours.
<unk> 2024 also we tried.
Any given time to utilize the reserves of the company as best as we can for the benefit of all the shareholders.
In the first quarter of this year, we have also the opportunity today to draw.
Our bonds in the Greek market with a coupon of less than 3%, which is a very attractive coupon and with this we use part of it to redeem our preferred 12, 8% so.
Whenever we have settled all opportunities and we can save money and create value for shareholders.
We wouldn't be investing in things like that so.
You say that what we paid around 40 million in savings.
Is.
5% is down 2 million a year, it's only the differential of the two instead of trade.
All prefer them.
<unk>.
Bob.
Sure.
Pardon me.
Got it yeah I appreciate the time, thank you very much.
Thank you.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Magnus <unk> with <unk>.
Wainwright you May proceed.
Thank you.
My questions are related to Ohio, chartering strategy and financing strategy may have changed with the recent events in Ukraine and in generic pressures building I think you answered the first question.
Earlier, but just on the financing side, you did the $100 million eurobond.
And I'm just curious you know what.
With interest rates moving up or have you taken any proactive approach to fix some of that debt or.
You know most of your debt is fixed or significant portion of the space. So just curious if you have changed anything with inflationary pressures building.
Yes look I mean, as we reduce the debt we have less worried about inflation, but.
Just keeping us at the end when we when we raise the debt that we fixed our coupon uptime.
Up to 95 would default we decided to pass.
The benefits we've had on the preferred on the on the swaps of uptime because at the same time, it's one of our priorities to deleverage so that fleet already that the loans that we have is down two 1% of all of our assets and we intend to reduce it even more so there will be appointed.
We will be delivering.
Taking delivery of new buildings without adding financial some of them. So we will be using you know liquidity to pay the yes. So we don't feel we need to catch because already now the anchor is at eight.
Have risen to a level that.
You'll see a flat curve you'll see of.
Closer to three five years.
And I don't think that.
This will keep going up maybe in the next 12 months, we see some increase in some potential.
But thereafter I think.
Pismo won this work to keep going forever and the.
The rest of the world as well as Russia will realize that.
We don't pay the penalty for disease.
Warren These sanctions that we have now a platform the huge humanitarian Lawson that people who are losing their lives in the in the in Ukraine. So as soon as things are.
Stabilize understood things back to normality in May.
It may be.
So normalize that better would be for all of us I believe.
And.
I don't see in Canada today, it's going to 5% or 6%.
You know in the next one with CBS I see them going of course poultry person, but.
<unk> you have to deliver it is not at the same time there is minimal.
On the effect of the company's soul.
With our reduced needs for financing and with the issuance of this bond I think where we'll cover tool.
Cool.
To fight that.
<unk>.
For me that is one stone if there is a storm, Indiana, so within Venezuela is more.
Supporting us the effect of raising interest rates to do once the economy into a recession hitting at a special.
The western economies.
The actual interest costs.
While water activities.
So we're more worried about.
About the net effect to want economies out of these symptoms lives onto our company.
Alright. Thank you Paul just one last I mean, you have one of the.
Lowest operating cost in the industry.
Is there anything you can do there to maintain that and you know with inflationary pressures building as well or.
Is that kind of a small cost of your overall.
Operationally splits.
Is not a small call center to be honest with you I'm not very happy at all with the with the numbers because all we are ship owners. When we do these drove the loss may I do it the last 75 years in the company the last 60 years.
I don't remember.
We have so many things are hitting us at the same time.
In slot on inflation.
But it's mostly the rise of all energy the cost of fuel the coastal ball producing Samsung coupled with the wall with the side effects of the wall.
This increase in the cost of transporting spare parts from Europe to the bodies.
Especially in launches will have some heavy lifting spell pops up to wager usual ekati.
For dry dockings, and we have been using on four eight.
Sure.
Mainly heavy lift out aircraft got aircraft.
Online networks like multiple of them belonging to to rush on sleep.
Sleep.
This big.
Airlines So all this has.
Double or treble the cost of transportation on spare parts at the same time, we will have been hit by extended Covid in China with all the friction of making crude changes in Chinese ports showed another four.
Which is getting us also from that effect.
And they increased dry docking post the close of environmental improvements on low friction painful are using on all our ships.
Which is in effect that it has a huge effect on the opex, but on the other one the other one.
The other carnival.
Huge benefit from more from increased revenues, because we reduced consumption by using lawsuit campaigns.
It means that the.
The ships will be saving fuel and we will get these asics are revenue.
Time charter rates of the ships all these symptoms.
Pay now to receive later, but he can fill.
It appears from the Opex now.
Because we're finding even there even the older ships with this type of pain, which is costing a lot to apply them and also the cost of painted sense.
And the benefit will be shown in the following quarters. Finally, just looking a little bit off of the moment, but I can assure you that we monitor every every detail of it then.
Is this extra investment.
As for the cost.
So indeed.
Specced out opex to come down in the next.
But not by a huge margin because all this investments will continue to be taking place I mean, we basically we expense to certain investments and a great environmental upgrades have been expensive not appreciate it's too.
This will increase.
As you increase the.
The operating expenses.
Alright, great. Thanks for that additional color.
Thank you.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to management for any further remarks.
Yes, we would like to thank you for attending this conference call.
We'll be happy to discuss again with you next.
Quarter financially gotcha. Thank you very much and have a nice day.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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