DHT Holdings Inc. Q1 2023 Earnings Call
Yeah.
Good day, and thank you for standing by and welcome to the Q1 2023, DHT Holdings earnings Conference call.
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I'd now like to hand, the conference over to your first speaker today Laila Halvorsen CFO . Please go ahead.
Thank you.
Good morning, and good afternoon, everyone welcome and thank you for joining DHT holdings first quarter 'twenty, two 'twenty three earnings call.
I'm joined by Dht's, President and CEO , Mark Snell culture.
As usual, we will go through financials and some highlights before we open up for your questions.
The link to the slide deck can be found on our web site D edge tankers dot com.
Before we get started with todays call I would like to make the following remarks.
A replay of this conference call will be available at our website th tankers dot com until May 11.
In addition, our earnings press release will be available on our website and on the accuracy of course as Jonathan extended to our form 6K.
As a reminder, on this conference call, we will discuss matters that are forward looking in nature.
Forward looking statements are based on our current expectations about future events, such detail and our financial reports.
Actual results may differ materially from the expectations reflected in these forward looking statements.
We urge you to read our periodic reports available on our website and on the Sofia of course system, including the risk factors in these reports for more information regarding risks that we face.
We have a rock solid balance sheet represented by local ever shown significant liquidity.
Financial leverage is about 18% based on market values for the ships and not debt per vessel was $12 million.
The quarter ended with total liquidity of 346 million consisting of 117 in cash and 229 available under our revolving credit facility.
You should also note that we have no new building capex commitments.
We achieved revenues on TCE basis of $93 9 million during the quarter and <unk> 71 9 million.
Net income was 38 million equal to 23 cents per share.
We continue our good cost control with Opex for the quarter at $18 4 million and G&A up four 6 million.
The vessels in the spot market earned $54600 per day on the vessels, sometimes doctors made certified.
Right.
The weighted average TCE achieved for the quarter was $49100 per day.
Earnings were impacted by 112 scheduled off hire days in connection with the installation of <unk>.
Gas cleanup system.
And unscheduled off hire mainly related to one of our vessels switching counted but wasn't damaged.
Our first adjustment for the quarter amounted to 5.4 million equal to 3900 per day Huh suggested T C for the vessels in the spot market.
$50500 per day.
My first 15 adjustment it simply due to the timing of when revenue is recognized and it's impacted by low taste.
These earnings will be transferred into the second quarter.
We started the quarter with hundred down $25 9 million on cash and we generated $71 9 million and EBITA.
Ordinary debt repayments and cash interest amounted to $5 4 million I'm $61 9 million was allocated to shareholders through the cash dividend pertaining to the fourth quarter of 2022.
We invested $14 8 million in our fleet with 2 million in maintenance Capex and $12 8 million for installation of exhaust gas cleaning systems.
In January we terminated certain interest rate swaps and received $3 3 million in connection with the termination.
In addition, we refinanced one of our large credit facilities with our net zero effect on the quarter ended with hunger in 17, and a half million noncash.
In January we entered into.
405 million secured credit facility, including 100 million accordion.
That's where you can finance the outside.
Turning them out on the ABN Amro facility and are secured by 10 of the company's muscles.
That is repayable in quarterly installments of $6 25 million.
Two 625000 per vessel with maturity in January of 'twenty to 'twenty nine.
The new loan bear interest at a rate equal to sulfur plus one 9%, which is equivalent to LIBOR plus 164%.
As I mentioned refinancing that's in line with DHT style financing, which includes a 20 year repayment profile and a six year tenor.
In connection with the refinancing and as mentioned on the previous slide we terminated certain interest rate swaps that would have matured in the second and third quarter of 2020 three.
We received $3 3 million in cash in connection with the termination.
Switching now to capital allocation.
Our dividend policy was updated last year.
Our key thought behind this but the combination of our strong balance sheet and no new building Capex mix distributing 100% nothing come good business.
According to the new dividend policy, we will pay <unk> 23 per share for the quarter, returning 27, and a half million quarterly cash dividend.
Dividend will be payable on may 26th to shareholders of record as of May 18.
And this marks the 50 <unk> consecutive quarterly cash dividend.
The shares will trade ex dividend from May 17th.
In March our board of directors approved a renewed share repurchase program of up to 200 million of the company Securities.
The repurchase program has a 12 month duration and replace the prior $50 million program.
We have no immediate plans to deploy this program but.
I like to have our tool box equipped shouldn't the capital market present, the right opportunity.
With that I will turn the call over to swing.
Thanks, a lot.
Our time charter book currently consists of seven contracts.
Three of them are coming off during the third quarter and it is our intention and ambition to rebuilt the time charter portfolio to the right opportunities with the right customers.
We have recently secured a three year time charter for the DHT tumor.
The contract has a profit sharing structure that includes the fixed base rates of over $3500 per day.
The profit sharing structure is based on certain indexes with the ships actual economics as such including the benefits of being an eco vessels fitted with scrubbers.
The first here on the earnings from the base rate to $40000 per day will be allocated 100% to us.
Earnings for both this level will be equally shared between the customers the customer loss.
We had good experience with these structures from first time charters.
And that's an example of reference these time charter earned about $62800 per day during March.
We expect 620 days.
We expect 600 tenant base would be covered by our term contracts at an average rate of $34800 per day.
We further expect to have one cost me three under the line at this pace for the quarter of which about 65% has been booked at an average rate of 70300 per day.
Combined the lesser today this indicates bookings of 75% of the total base at weighted average earnings of 55800 per day.
Yeah.
And the last line, we are estimating the spot P&L breakeven.
Oh 24900 per day for the second quarter, allowing you to model our net income contribution based on your own assumptions for the Unfixed spoke to base.
The bookings for the second quarter to date is a healthy start to the quarter with good prospects for the quarterly cash dividend.
We have ive ever seen a drop in freight rates since the beginning of the quarter.
Current rates for an equal scrubber fitted vessels starts with a four handle the current sentiments suggest softening in rates.
We discussed this on our prior calls and in order to avoid that maybe some of the standing would take the Liberty to show this slide again.
The estimated P&L breakeven for the fleet as a whole it's about 27500 per day for the remaining three quarters of the year.
When adjusted for the fixed income that we have the P&L breakeven for the spot fleet is about 24600 per day.
For the remaining three quarters of the year, we estimate the cash breakeven for the fleet as a whole to be 18500 per day with a spot ships requiring to make 12800 per day for the company to be cash neutral.
Keep in mind that our cash breakeven numbers include all true cash costs Opex.
Opex G&A maintenance capex cash interest and debt amortization.
This illustrates the headroom of about $9000 per day between the cash breakeven net income breakeven for the fleets.
With the potential annualized cash flow or some 70 million that will be allocated to general corporate purposes.
This cash flow combined with the capacity in our balance sheet will enable us to invest when the time is right and the opportunities offered rewarding prospects.
Okay.
David will provide you with an update on our project to retrofit the remainder of our fleet with exhaust gas cleaning systems.
We have to date completed six or eight of the retrofits and does have two remaining.
We have not fixed the time for these two with the intent to use air pockets in the freight market to execute to them.
The project execution, thus far has been according to plan both from a cost perspective and in terms of ground off hire days for the ships.
The fuel spreads have alongside weakening refining margins come off but they are still offering premium earnings for the ships with systems installed.
We now have 21 or 23 ships operational systems and plan to be 100% fatal within this year.
As we have mentioned earlier. These ships are the focal point of our clients working to pursue term charters.
On this slide illustrates developments the seaborne crude transportation over the past three years or so on top of mine development over at the same time period.
As you're all aware the conflict between Russia, and Ukraine disrupted trade patterns, which drove premium earnings for our smaller siblings.
With a slightly longer retrospect folding the COVID-19 setback it has been a fairly steady all positive developments.
Importantly for DHT in particular, the graph on the left shows the Vlccs have been close to 50% of seaborne crude oil on a nominal basis.
Unsurprisingly.
Its size and competitive cost of transportation it represents about 70% when measured on a per mile basis.
The VLCC is a true workhorse of the crude oil transportation markets and you think is reasonable to expect this to prevail going forward.
Okay.
These are extraordinary times from a geopolitical perspective, and our businesses as one would expect impacted.
We shall not offer you any geopolitical analysis or excess in the oil market Pittsburgh.
It would be beyond our capacity.
However, it lifting the beams the three basic pillars for our business are positive.
We have a growing demand for oil.
The both increasing transportation distances, and basically no new supply coming on.
We think we are in the early innings of experiencing the benefits of these pillars in it.
It would likely continue to be volatile and seasonal.
OPEC plus surprised the market with its announcements a month ago.
War sticky inflation and increased interest rates falling refining margins raising concerns about demand uncertainty philosophy terminal are all temporary near term expectations.
Maybe off the press was ahead of the curve, but trying to reduce the impact on oil price now.
And targeting a higher price for the full cost recovery later this year.
Our two cents all of it.
China is whoever opening up an increase in consumption.
And we do have a sense that non OPEC supply will step up to compensate at least for parts of this impact and that will mean longer transportation distances.
The tanker market has historically been promo further disruptions.
As we speak there are <unk> involved in seizures in the middle East Gulf.
As certain significant flag States Institute the security alerts to its members.
I understand some owners selling under these flags or concerns about entering the area.
If this plays out it can abruptly decreased supply of ships in this highly important loading area.
This certainly has risks to the upside in the freight market.
Yes.
Unrelated there was recently, Alex <unk>, who followed by a significant fire and fatalities and an older tanker anchored in southeast Asia.
We are seeing incidents and no accidents related to ships in the shuttle fleet.
If this trend evolves it could make users of these ships are therapies controlling turtle territorial waters.
Transit and terminals accepting these ships.
Think twice about accepting and using them.
If this price plays out it could remove capacity and again it certainly has risks to the upside.
Okay.
One on your telephone and wait for your name to be announced.
You want to withdraw your question. Please press star one on one again.
I will now take our first question.
Please stop by.
Just from the line of Chris sung from Weber Research. Please go ahead.
Hey, good afternoon, good morning.
<unk>.
Well thank you.
Good on that time.
Just to confirm if if Richard 50000.
He gets 40, plus notifies the 50 per cent.
Upside over 40 is that is that right.
Yes, great so above $40000 a day on the on the calculator is a 50 50 share of income.
Okay.
There is that there is a pre agreed calculator using this ship's specific economics. There is not a standard index ship. So the equal benefits. So the ship I'll describe a benefit of the ship is in depth calculations.
C N N for the for the increases the option at the year and is that you will that increase for the base alone or is that for both the basic profit share.
The base and the threshold for the appropriate sure.
Will increase.
Alright, great.
One question and <unk> on the second one on your casual Steven I noticed it investments in Vietnam vessels are a little bit higher than expected is that just one shrubbery.
And how should I think about what.
Feature a message to look like.
Reply to that.
Yeah.
That's not just from Scarborough now, Sir so that relates to discovers installed during the corner.
But it's also worth mentioning that the cash flow in fact.
Not timed exactly at the time of the installation so.
I hope that Claire Okay alright.
Sure and maybe just one final one before I pass it on.
Just hearing about that vessel that was damaged by bad weather, how long will that that'll be out for.
The rest of us back in service, but she was also services for awhile in the first quarter. So so you know that we have some.
Rough weather damage. So that's been repaired took a little while so so and the ship is sit back to classify them servicing its customers.
Perfect. Thank you guys will turn it over.
Thank you.
I'll take our next question.
Please stop by.
And this is Jonathan Chapple from Africa police Cowboy hats.
Thank you good afternoon, so I'm going back to the Puma contract that's a.
Terms that we haven't seen really in some time across the industry maybe from.
The last boom cycle pretty global financial crisis are those the types of contracts now are becoming more prevalent given some of the volatility in the market and some of the longterm Tailwinds that you mentioned the presentation.
I'd say no.
You know this is a customer with some people you know well and.
Sort of a typical structure that this although for I think.
But that has been developed between the both the customer the results and it sort of worked well for both parties.
I'd say liquidity and sort of term business is it's in there now than it was.
In the fall or late in the winter.
But very few things scope execute to them then the bid ask spread was quite significant.
The first quarter has to basically nothing got though so.
But you know we we try to have in class discussions with all our customers and we do have a sense that there is.
January and concern about supply ships over the longer term as the order book is a good example.
And also the closest significant portion of the fleet has migrated into sort all the shadow trace the compliant fleet has shrunk quite meaningful. It. So it's also means that there are less or operators of clothes service providers that they would like to engage in term businesses. So we expect it.
To be more opportunities to develop you know good cash flows with longer terms and we've had some brief discussions on both three four and five year opportunities even longer but you know it takes a bit of time to develop and there's always a little bit will spread and what the two parties want with them.
We have a sort of a clear focus on ambition in developing these so I think over the next two steak with six to 12 months you should expect <unk> T. Two per cent more opportunities in different shapes and forms but to get a get better visibility of earning some becoming hopefully in the long run a more investable business office a trading business.
Mmm, Okay. That's really helpful. Thank you My second question, you mentioned, the China demand reopening hopefully tail.
Hoping maybe you can explain a little bit on how you seen that transpires. So far as you noted the market is weekend of late OPEC cats really haven't kicked in yet I mean, we're just in the early part of it maybe a couple of weeks is.
The bookings so that is a V as being a good proxy for kind of long haul Chinese demand.
And maybe some other industries raising some yellow flags about the China reopening has it been what you expected it to be and what gives you the confidence that at all.
The country also include extra wrong.
Screwed imports.
I think as we said in the press release right well you have to sort of really see the details for all these cuts will play out, but I think one for a reasonable.
Is there or is it also a lot of sentimental psychology in this market right. So so just a few weeks back in the a G east market, the or middle East to the parties market traded at the premium to the Atlantic markets and now sort of that this visceral if not reversed is probably leveled out so so that's what I.
And a reflection on the sentiments of expected oil coming out of the middle East.
China is for sure reopening and we've seen the latest numbers that the that the refinery runs are higher than what they were on prime on some prior quarters.
But we do think that these runs are.
Primarily tune to increase in domestic consumption.
So.
You know in the in the Golden week now this mobility in China.
Huge increase in flights and driving and what not.
Suggesting this as a proxy for everything going forward, but it is an example that said society is moving in the more normal fashion.
Old movies, a week, it's an annual event right then the attempts to move people in the same way as maybe Thanksgiving in in the old country. So that that is happening and then.
Again, it's a bit too early to say how it plays out will all the caps be implemented the you know by the meter or you know.
I don't know frankly.
Some some level of impact we think it will have its own price for has not really been able to hold up right. So so you know I think we need to see it really happening in practice at least for the oil price to respond.
So, let's see what happens on that I think I've got it might be a good indication on how this will.
Hello.
Uh-huh.
Alright, Thank you for the <unk>.
Thank you.
I'll take our next question.
Okay standby.
Okay Sir.
Jeffrey Please go ahead.
Thank you.
Good afternoon, <unk> definitely some good color you gave in your opening comments and then just now talking with with John about the you know the sort of the way the market is set up.
Martha ask obviously, the OPEC cuts or are they just started.
And we've seen the impact on VLCC Richardson and you'll have the headwinds in the near term off of that.
How do you think over the next several maybe maybe call. It three to six months, how the potential to replace those barrels are are shaping up do you think there's an opportunity for the card was not the Atlantic basin to potentially replace what <unk>, what we're not seeing from from OPEC.
I think the Brazil.
Increase their consumption.
February over quite a while now and they're up to 3.1 3.2 million barrels a day, so and they are supplying the parties market in particular and.
We still have one shipped on the term contract to the biggest producer Brazil. They do a lot of business and they're still a little inquiries. So that so so that's sort of I think the most obvious area.
West Africa in general is still lagging a little bit behind and I haven't been able to.
Step up production, while some for a variety of reasons, but.
But the they have the opportunity to sort of step aside for these civil Libertarian cush right because they have older operational leases.
This year and then Europe has been an increasing.
An important market for 40 U S barrels and we have the number of shipments on the <unk> to Europe , which is sort of a new business.
They're still sort of steady exports going to to to China and in particular from the U S. So so there might be some there.
North of C is now basically all Europe . So we don't really expect that to go to the parties to the extensive use to do it unless you get sort of willingness to pay for it.
Are you sort of the highest rate post in particular, so so it's predominantly Brazil and secondary maybe the U S.
Something to deliver.
Got it. Thank thanks for that color and then maybe just sort of you know there's been a lot of discussion here over the past few weeks about refining margins hasn't come off from the very high levels earlier this year.
How do you see that translating into the market are we seeing an effect of that you know lower cracksman does that impacting.
Tussle demand and and how do you see that going forward, if if crack spread to my roommate at these sort of levels does that impacted VLCC trade or is it somewhat insulated from that.
I think it's worth noting that the refining expensive so positive so the refined those are making money.
Long as they are profitable they tend to keep the keep the round going right. So it's more in the in the event that they turn a neutral or even even if they're theoretical negative then of course then rumsfeld.
Voltaire back and that will impact the.
Very crude seedstock immediately so so I think for now it's still it's still okay. But of course this is an indication or maybe you know <unk>.
Maybe I should apply for a refund projects was to type at some point lifting these margin maybe knowledge sort of getting into a more balanced market.
But so whether it started fullback and the man or whether it was just lack of supply that created those otherwise.
Spreads I'm also an expert on that but of course, there's something we have to follow because if they get too close to settle that will impact the transportation of feedstock.
Yeah. It makes sense, thanks for that and maybe just one one final one just to follow up to your your answer to John about the the the time charter and you mentioned you know for US to see you go first expected you to do a few things later this year customer wise.
Is that just specific time charters.
Or do you see an opportunity to take me the advantage of this potential soft patch that's ahead and acquire assets.
So far there is no signal over at least estimate the best value is 2222 vs. Softening if they do in our book for Us to make these sort of attractive opportunities that has to be a quite meaningful correction involved is so but you know.
There's different ways for us to to to invest in this laila Coleman alone we have extended our share buyback program, but not only extended it could also increase the concise.
And the reflection a reason for this is the number one of course the exit the value of the company has increased US we have delevered. So we wanted to have more muscle, but also you know this is a period that's E for some other recent locked just so specific in the tanker market for the four capital market doing phenomenal <unk> things.
Re price negatively.
Buying our own ships through buying back stock is maybe the most interesting investments I supposed to buy a hard efforts. So you wanted to have our toolbox ready and if these opportunities.
You know comment on not that we necessarily wish for it to happen, but if it happens to be one to be ready.
Great Oh very good.
Just as an example, right. So between December 20 woman <unk>, we both packed approximately six per cent of the company at.
At that time.
Very attractive share prices, but from an investor perspective. So so so we have been able to do this in the past and you know it.
What will happen in the future as well.
Awesome. Thank you.
Okay.
Why not take our next question.
From the line of <unk>.
Please go ahead.
I don't feel it.
I have a question on the VLCC order book, which is now approaching the record loss.
And so you have seen I guess, there's been some new orders for two product actors recently.
<unk> could you just talk about.
What do you think he's holding back can you order some of them being able to see.
And secondly, what needs to change for people to start ordering muscles again.
Oh, I guess you know some of the interest in the <unk>. This may be a reflection all the phenomenal performance.
Why is this happening over the last year or so right. So they really delivered you know tremendous earnings.
And of course that might suggest to some people that this time is different things are changing I can't say, whether they are not that I would suspect that that is the sort of.
Good reason why people feel confident about that that's a classic stuff.
Studying that and indeed, there. So I think older people are probably a better place to comment on that.
Also bill contracts of the solar masses.
Uhm.
There's some simple reasons to this is that prices now nominally auto search significant value.
It is a little money to fork out right and the.
The reasonably Sue Smith, but it's only in the seventies.
Some down in the low eighties from maybe some other videotape yards comp.
Compared to Austin prices in Korea are between the other than 25 and under the 44 is sort of a needs to see it. So just the ticket itself.
It is significant.
Edible to people at the at the smaller at the smaller the ship class.
You could probably do things in China on the needs to see a lower price, but I think another key consideration for many people with also with this amount of money being of old as such investments is that.
You know the ships will only deliver in the second half of 2006, probably today, so you're looking at having dead capital for three and a half years before you're going to earn any money.
And Ah. This these forward deliveries are not offering any opportunities defense and secure fixed cash flow, reflecting on the on the value of investments.
Whereas you have another market LNG, which is also significant order book.
A lot of it is being built against long term contracts and other things that maybe some of the private owners that have typically been engaged in tankers. They find the LNG sector very attractive.
And they won't LNG carrier cost about twice as much <unk> and you'll get delivery forward. Okay, but you also get to a long term contract five 710 15 years. So it's sort of a different business proposition depth, attracting capital away from maybe large tank is providing them.
We think that this just bolts running vote for our space. So we welcome it but I think those sorts of reasonable and rational reasons why you haven't seen the ordering in in North Texas yet.
Yeah.
So in order to.
That's the change I guess.
What needs to change messing values.
<unk>, you've been just prices none of that.
I think you know it.
If that happens settlements because they needed cash flow.
Significant fight them justifying those investments.
If you if the delivery time shortness meaningful in so it is certainly tools.
18 to 24 months for delivery that might change the picture of it.
And also that's the alternative investments are are fewer.
Maybe not as attracted and so I think it will take them at a time and then if we move forward you know.
Maybe prices will adjust but of course, if you had the also information on equipment and labor costs et cetera, et cetera. So it doesn't mean that sort of new building prices will fall back to where they were two or three years ago.
So I I didn't I don't think there's gonna be a lot of ordering actually in in in in D. C. For a good time to come in so and then we will take it for sure.
Uh Huh that's encouraging.
We think my.
<unk> yeah. So.
My second question is already answered.
And you mentioned in D C.
Find financing can you just.
Elaborate on that product needs.
Yeah. So that's laila mention of you said on the two calls the two sort of key elements Smith woman is that compared to what is the normal Norman the market as opposed to doing it five year turning on the longer you do is 60 or 10 at home alone.
And a key reason for that is that we typically like to refinance before that to become short term, which is it will <unk> will be you know.
The last 12 months alone. So if you want to refinance in a fiver all alone you need to do it at the end of the fourth years. So it becomes from all the short project.
Compared to the team that you have to pay up front et cetera. So so we managed to negotiate these for the banks to to get it into a six year period. So essentially we look at the refinancing latest at the end of the <unk>.
So it makes more sense to us.
Secondly is that the amortization of the loan is based on the twin Thier economic life on the ship, assuming it's a new building and it's just a 10 year old ship. It's a tenure remaining life right, whereas most of the loans that you will see in a coma shifting like package, they have tennis or or a repayment profile for <unk>.
15, 16, 17 may be 18 years, meaning higher.
Yeah, right those deeper slightly speece deeper profile.
And we'd like this because 20 years has supported the cashback even levels for us.
We paid probably you know a little bit like southern margin to achieve this but we think that there has been a meaningful tradeoff you mean, how we want to run the run the company.
So there are also a number of older features inside this step is not disclosed and you know.
But that's what makes us manage it just our balance sheet that side the very efficiently. We think so so this is now is not set in stone. It's at least the good practice when the Deuce and I'm seeing that it's a it's a repeat radio R turns every time the digits with these features.
Perfect that's very <unk>.
Thank you.
Thank you.
I'll take our next question.
Okay.
Perfect so far away from.
Alright.
Please go ahead.
Hi, Thank you very much taking.
Taking my questions.
One of the things I wanted to compliment you on as a few years ago two to three years ago, we were at 900 million plus in depth.
And now your <unk>.
Down.
Significantly to $369 million and in that interim period of time.
For whatever reasons I think one of the greatest ones is the tremendous reduction in that the way you ran the company and the price of the shares has more than doubled in that interim period of time. So.
Reflects.
Good management and.
And I think significantly the reduction of that.
Now.
One of the things you've talked about as far as the new order book could you mention what you see as having happened in the scrap right do.
Do you see the scrap rate staying steady increasing because of time on ships et cetera could you give us a picture of that.
Yeah. That's a good question. So you know now that essentially seeing <unk> scrapping or large tankers.
Brokers estimate that you could get about $520 per light shipped home for a banker or we used to see in the visa fees are typically they have a wait between call. It's 42 and 48000 tonnes, depending on the decided on the art and science and so forth.
But there's nothing going on and I think a key reason for that is that.
The Ah operate in the Shadows markets Gray or Blackburn sanction trades call. It whatever you like.
They've had their willingness and ability to pay a significant premium for old tank is way above the Ah.
Theoretical scrap price so it's sort of been an alternative market their alternative use or to to to get rid of these ships.
You know the.
These ships they serve a purpose if you like much less productivity than the than they are in compliance fleet, so, but it's a bit of a nuisance mm.
As we've said earlier, we think this could be sort of the news scrapping at some point that these ships are essentially disappearing from from the trade eventually.
And some of them are getting very very old so and in the near term it doesn't seem to be a willingness to from the selling side to sell into scrapping because the price who gets his lower than selling it for further training to sanction business or for the scrap yard. They don't have the ability to pay the price that the competition is.
Willing to pay so it's sort of a very big it'd be that's that that is just putting that market to compete hawks.
So you'd say net nah nah the fleet is staying pretty much the same size then.
Yes in the for the foreseeable future I would think so maybe next year, maybe two but you know that some of these ships are getting very long in the tooth.
And many of them will have to go out to dry dock and you know spend money. Some of them will have to install maybe a balance of water systems to be able to trade depending on the trader do so there's there's going to be capex for some of these ships.
Then the remaining life is so short so maybe some of them will just say you know bite the bullet and say, okay, let's get rid of this Lady now and they will move on but I think also this is the reason why the operators and that way the bolts older ships, because they know that that market hasn't got long legs. It's a period for 123 years. They can they can.
Laying around with this and then it's a risk of that market disappearing.
You understand what I'm, saying.
Thank you very good Hey, how you talk about share buybacks is.
As a shareholder thousands of shares I'd like to.
Put my input in from the standpoint of we would like to see you not do share buybacks at all but rather accelerate further debt reduction, let's say take the over $100 million of cash and apply 25 million too in depth and that brings me to.
The idea of.
What would be your breakeven if you've got down to in a theoretical way and if you got down to zero desk, where with our Breakevens go to from where they are today.
Yep.
So if you look at our past sort of practice number one of course, we are committed to the cash dividend and the formula. We have on that is hundred per cent net income. So that's gonna be in place and if at all we were to consider buybacks given the current environment. It will not be ethics expense of cash dividend. It's would be in addition, if we did.
To do it.
And what we have done in the past when it comes to buybacks, we've been quite opportunistic. So it's been in pockets, where the share price had been you know really dislocated from the prospects on the general market.
Whereby we felt that that was like buying a ship in the market just at the very big discounts. So it was so adding earnings growth to the company to like by reducing the Dallas have insurance, so it's sort of a third priority.
We will still like to continue to deliver and so I think the you know with the with the cash flow. We are generating if we are stay up even if we were at a funeral net income we still generate cash that will enable us to do maybe a bit of both or with priority potentially towards delevering. So.
An order of priority sort of cash dividends Delevering and then buybacks.
Well, we as shareholders in our group, particularly favor the reduction of leverage.
One of my last question would be this over this past year.
The.
Number of shares increased by over 333000.
Are we to expect that this year that we're in now and we can expect the same kind of increase again.
So the company has.
Long term incentive program in place for a board of management that involves the stocks. It's predominant there is always restricted stock units.
They are mostly you know they have some investing criteria, there's different structures and sanchez. So it depends on whether the only some or all of them well versed on all so so we you know when the and then the presents our annual 20th then you will see what that's haskins on in the prior to your rights.
So we are not printing shares to raise money on selling stock in in the market. It's only related to the long term incentive program for border management.
That's pretty much.
It for me you just wanted to compliment you guys I think you've done a tremendous job over the last few years.
Doing debt reduction and just running the company you're in a difficult sit.
Situation so.
Thank you very much and we'll look forward to being in on the next call. Thank.
I appreciate that.
Thank you.
Further questions at this time, so I had to <unk>.
Well. Thank you very much to all for listening in on D. C. In solving our company. Most appreciate that and then we are wishing you all a continued good day bye bye.
Thank you.
The conference for today, Thank you for participating.
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