FLEX LNG Ltd. Q1 2023 Earnings Call

Speaker 1: and FEX enterprise both according to schedule and budget.

Speaker 1: During Q2, we will do another two dockings. So in total three dry dockings for Q2, and this result in revenues for this quarter being guided at 85 to 90 million. Once we are completed the dry docking program in June , our quarterly revenues will pick up in Q3 and Q4.

Speaker 1: with a short-lead revenue of around 90 to 100 million for these two quarters. So we are also reaffirming our revenue guidance of 370 million for the year, which should translate into an expected adjuster the BTA of around 290 to 295 million. So...

Speaker 1: With our very strong financial position and minimum 57 years of contractual backlog our board has decided to once again pay out our quarterly ordinary dividend of 75 cents per share.

Speaker 1: During the last three months, we have just paid out $3.75 per share in dividends, and this has given our investors an attractive yield of around 11%.

Speaker 1: paid out $3.75 per share in dividends and this has given our investors an attractive yield of around 11%.

Speaker 1: That's the highlight, let's continue. So, as I mentioned, we are reaffirming our revenue guidance of 370 million for the full year 2023. As you can see here in the graph, Q1 revenue this year was significantly stronger than last year as we had spot exposure to one.

Speaker 1: the one ship we have on. Variable T-C, once we have done with June and getting into Q3 and Q4, all the third in ships will be in operations and usually we will see the seasonal uptick in charter rates during Q3 and Q4, which is also evident from the forward prices and thus revenues will grow to...

Speaker 1: close to 100 million for those quarters. So, as I mentioned, dry docking. We have been doing our first dry docking, the two four ships, like the Enterprise and the Avow was delivered early 2018, and now we are now due for the five-year special service.

Speaker 1: Flex enterprise carried out this in March, while assistantships Flex and Ever carried out a five-year special docking in April , both in Singapore. In all of our presentation, we guided that in total these four dry dockings would take out

Speaker 1: 80 to 90 days of operations or 20 to 22 and a half days. On average, we have managed to do this within 18 days. So we are slightly below time and we are also on the low side of the budget.

Speaker 1: CapEx in total for each ship four and a half million dollars. We are so skydived Half to five million so in in a culture as I mentioned Ranger and rainbow will also be docked and these are to be completed within June And the ships will then be in operation for the full Q3 and Q4

Speaker 1: So, as I mentioned, high contract coverage, 57 years of minimum contractual backlog. This slide is the same as we had in our Q4 presentation. During last year we did extend the contractual backlog on several ships, as you can see here with the rainbow being extended 10 years.

Speaker 1: and other vigilant amber and the price and range. All these ships were extended for longer duration and the first fully open ships we have today is Flex Ranger Early Possible 2027 and Flex Constellation Middle 2027 is the charter is electing to extend her for the three years which they have an option to do.

Speaker 1: So I think in terms of these durations, we have a good coverage now in their term when export growth is to be expected to be muted and then we have open shifts from 2027 once a lot of new LNG is coming on screen and where we are also competing against new buildings at very high prices as I will...

Speaker 1: come back to in the market section of the presentation.

Speaker 1: And once again our dividend decision factor as you can see here for this quarter we are paying out the 75 cents of ordinary dividend per share. We have paid out two special dividends the last year, 50 cents for Q2, 25 cents for Q4.

Speaker 1: So in total the last 12 months we have paid out $3.75 of dividend, which gives a yield of 11-12% depending on where the share price is. So we think this should give our investors an attractive yield. All the parameters here are green. We have good earnings, market outlook is good. We have this.

Speaker 1: Big contractual coverage. Liquidity at 475 million is super strong. And then we don't really have any debt maturities before 2028 as the earliest.

Speaker 1: all the considerations right now I think most people are

Speaker 1: a bit focused on the aggressive fed, ramping up interest rate on the short-term side, where we do have a very inverted yield curve, and Knut will discuss a bit what kind of opportunity this has given us in the swap market.

Speaker 1: So with that, Knut, I hand it over to you too. Thank you.

Speaker 2: Thank-you again.

Speaker 2: As I already mentioned, revenues for the quarter came in at 92.5 million. That gives us a time-tratter earnings average for the fleet of close to 80,200.

Speaker 2: OPEX, another strong quarter where we maintain the OPEX control, where we have OPEX per day of 13,400.

Speaker 2: If we look more into the details, on the revenues we have 5.5 million lower than last quarter and that is driven by lower seasonal earnings on the variable higher contract and the off-hiredays related to dry docking of the Flex Enterprise.

Speaker 2: Then we have some more non-cash item on the income statement. The net loss on derivatives is 2.8 million as you can see in the notes on the side. It's 7.8 million in unrealized market market loss.

Speaker 2: from the derivatives and then we have realised gains of 5 million from the swap bill portfolio which is sort of our carry cost.

Speaker 2: With the completion of the balance sheet optimization program, we have exit cost of our debt, it's 8.8 million of write-off of debt issuance cost, and then a termination fee of 1.4 million. That gives us net income for the quarter of 16.5 million.

Speaker 2: per share. So let's have a look at the details on the adjustments that we have made to arrive at the adjusted net income. If we look at the quarter and quarter differences on the net income.

Operating income is 6 million dollars lower, driven by the off-fire in connection with dry docking of flex enterprise and the seasonal lower revenues under the variable higher contract for the flex automis.

Quater and Quater, Daptitions Cost is 8.5 million, which is basically driven by the completion of the refinancing under the balance sheet optimization program. And then derivatives where we had the marked market loss were here on the Quater and Quater basis, 7.7 million.

With the smaller order effects we arrive at the net income of 16.5 million and one with them reconciled to adjusted net income.

and then a smaller FX effect on our NOC portfolio. So in total, we adjust them back and arrive at an adjusted net income of 35,200,000. The balance sheet remains robust and clean, with an all-time high cash position of 475,000,000. And we have an equity of 871,000,000. That gives us an equity ratio of 31%. If you look at the cash movements...

The market when the interest rate have been high to lock in the market value on some of our shops here we have a for those who recall we had a

two and a half year, 181 million dollar swap at where we are paying fixed 0.9%. When the market rate was high at here at 4.8 we locked in that market value by doing a so-called mirror swap.

where we will receive 4.8 fixed and pay the 0.9% to the bank. And that locks in 15 million market value, which will be distributed back to us over the remaining period of that swap.

We have also increased our hedging portfolio. When the short-term interest rate dropped in total we increased with $260 million and then we also added $50 million of Tanya swaps. That gives us a total swap portfolio of $820 million.

and as you see at very attractive rates. And in combination with the fixed rate elements of our leases, in total here at $205 million, we have a net hedge ratio of 62%.

and remaining there around 60 to 65 percent for the coming quarters. So this is net of the 400 million dollar RCF capacity we have. So by increasing the RCF capacity we have also effectively increased our hedge ratio. So if we look at our financings

And we have the RCF of 400 million, which is bullets for the full tenure of the loans.

mentioned by ASTEM, first maturity is in 2028 and if we utilize a extension option at no cost for two-hour leases, the latest ones are then to be refinanced in 2035.

So with that, I hand it back to Aistem.

Okay, let's have a look at the market.

LNG export change in the first four months of the year, the period January to end of April , we saw about 5% growth in the market. For the first time in a long time, actually the biggest driver was not America because of the...

The outage on the free-post export terminal in the US or the growth came from Qatar and Australia, the two big other players in the LNG export market. And then actually Norway as well, where we had the Hammerfest plant running off for the full quarter. All the countries contributed by about two and a half million tons. On the import side, we do see the same.

during January and February . And then we did see that growth in the Chinese market started to fire up from auction onwards as they have been lessing the, or basically scrapping the COVID policies they've had in place for some time now.

If we look at the gas prices, it's been a very volatile ride. During the summer of COVID, European gas prices were as low as $1 per million BTU, translating it to let's call it $6 per barrel of oil. After...

The Russian invasion of Ukraine, we saw a big rally in the global LNG prices, where Europe bought up a lot of spot cargos. And we saw a peak of European gas prices at about $100. So we had a run from $1 to $100 on the gas prices. This equates to about $600 per million.

for a barrel of oil. But now we have had our big slump in gas prices. We have had our mild winter here in Europe and we have also seen the high prices have really incentivized people to cut down consumption and prices have no balance down to around $10, $11 per million BTO. We are actually...

L&D becomes competitive towards oil. Basically we are now being traded that let's call it $60 per barrel of oil equivalent and that is also feeding up demand from Asia where we have seen more interest with us now to buy L&D in the spot market as prices have come down.

Henry Herb is basically flat lined, it's also been quite volatile, but the prices have really come down in America, which means that it's still worth $10, $11 for the spot prices, and it's immensely profitable to sell these cargos into the global market from the US market.

So in terms of America, we do see here the growth in exports. We had during COVID, of course, we had a lot of voluntary cancellations. We had some cancellations during the big freeze in February 2021.

And now last summer when you had the explosion at the Fipot terminal in the US, we have had significant downtime on the plant. It's no bounce back, but in total 128 cargos assumed by S&P Global that has been cancelled or nine and a half million tons.

But now exports are ramping up again. And we do see and expect that the US will become the biggest exporter of LNG in 2023 with pretty healthy growth, 14% according to EIA for the year.

The other big player in the LNG market is of course China. So China became the biggest importer in 2021, surpassing Japan at about 80 million tons, the equivalent of imports which is

basically the production of US last year. So far, we are, you know, this is something we follow closely to see how the reopening of China is affecting demand. And I guess it's a big million dollar question for most investors these days. We saw a flat, great January and February as I mentioned, but then...

We saw LNG demand picking up March and April , which have on average 17% growth for those two months. So it's a bit too early to conclude, but there are some positive sentiments towards Chinese imports, and especially when prices are at these kind of levels. EIA and energy aspect expect.

Chinese LNG demand to grow 10-15% this year, which will then result in China going from about 64 million tons of exports last year to about 70 million tons. But this is still 10 million tons below the imports of 2021. So we do expect to see continued growth of the Chinese market and

the Chinese buyers are signing up to a lot of SPAs. China has contracted LNG volumes of around 70 million tons, but they are big buyers of new volumes as well. So the story about the Chinese LNG import growth is far from over.

As I mentioned, European gas market has had a lot of focus with the situation in Ukraine and with Russian pipeline gas flows tapering off. We have in Europe this year been in Kadoblylokki. It's been a very mild winter and this together with the high prices.

have resulted in a lot less gas demand in Europe , which have then resulted in storage levels, keeping up at pretty good level. We have seen storage levels above historical range. The injection system now is a bit slow, so we are getting into the customer range.

for development of the gas storage level. So, you know, the big question this year is how strong will the import demand be from Asia? How fierce will the competition be in terms of prices? Will Europe then be able to get these inventories levels up to...

satisfactory level before winter. And as I mentioned, again, the driver in the market is the competition between Asian and European gas demand.

Let's see, spot rate or the freight market, we are not really that exposed to the spot freight market any longer. 12 or 13 ships are on long-term charters with a fixed rate. We have one ship which has been on a variable higher TC or which is on a variable higher TC, Fax Optimus.

Q1, pretty good level there. You can see on the light blue line on the left hand side that the market during Q1 was pretty good. Abbott has followed the seasonal norm where usually rates come down to earth during the spring. Right now we are basically on average level for the last couple of years.

And then this dotted line is where the future market is. So as I mentioned when we have been guiding our revenues for Q3 and Q4, we do expect to do that. Reality will follow this path where rates are expected to be in the $200,000 plus at the end of the year.

Another thing to note, we have mentioned this also in the past, is the fact that a lot of the big players here, they have chartered in ships on longer-term contracts and there are really few independent owners left in the spot market, which means that most of the fixtures, which there are fewer of, but the ones being concluded is mostly of relays, whereas …

people with players, traders, portfolio players with the gap in the program are subletting out ships for shorter duration voyages while independent owners are very limited involvement in the spot market these days.

or players, traders, portfolio players with the gap in the program are subletting out ships for shorter duration voyages, while independent owners are very limited involvement in the spot market these days. So.

Another reason why we are a bit about the long term outlook is new building prices which have just kept on moving upwards. We are at around 260 million dollars for new building prices for LNG carrier today. You are quite lucky if you manage to get still a ship for 2027. The window is now closing in on 2028 deliveries.

So these ships that have this price tag for delivery 2027-28, those are the ones we are competing with. And in order to get a reasonable return on your capital when making such a big investment, you need higher rates. And that's where rates have gone. The five-year time-chatter rate has stabilized at a very attractive level of around $135,000.

But actually, to be fair, most people who are ordering ships at 260 million, they are not looking for five-year time charters, they are looking for time charters of 10 years plus. So that's the one we are competing with and that makes us a bit about being able to extend our ships for longer duration.

at higher rates eventually when they come open. As we have demonstrated our ability to do also in the past. So if we look at the older book, it's huge. And it's been kept on growing. We have seen homes lower activity in our one ordering, given the lack of available slots and given where prices have been going.

But a positive sign is that there are not a lot of speculative orders. Most of the ships, about 90% of the ships under construction, are committed to long-term contracts.

And as I mentioned here, you can see that the order book for 2028 now is already filling up.

So, if we look at the product markets, the install capacity of LNG exports at the end of March was about 465 million tons. We are not utilizing the full capacity. We do expect total export for 2023 to be around...

415 to 420 million tons. So there are some downtime on installed capacity. There is also a lot of capacity being constructed, especially in North America and then of course in Qatar where they have a huge expansion.

So if you look at the project being under construction and coming on stream near term with this volume goes up to 621 million and we do expect more projects still to be Sanctioned so we are looking at at the market of let's call it around 770 million tons

in 2030 and this growth of liquefaction capacity together with the phase out of all the steam tonnage is what is attracting demand for modern ships like we have in our portfolio.

So that's it. I think we can then conclude by going through the highlights just shortly. Mention revenues in line with our guidance 92,5 million. We had average time chart equivalent earnings of about 80,000 also in line with our guidance. This resulted in...

adjusted net income of 35.2 million or 66 cents per share.

We have completed the balance sheet optimization program. It's been a process now going on for about one half year, where we refinanced all the 13 ships and boosting our cash balance, as I mentioned at 475 million of cash at hand, a quarter of a grand or nine dollars per ship.

We have started our dry docking schedule. Everything is going well. Both two forced ships have been completed according to schedule and budget. And we are now planning for the two last dry dockings for the year, which are expected to take place in June . We are reaffirming our revenue guidance for the year 370 million.

Revenues next quarter will be a bit softer because of the dry docking, but all ships will be in operation again, full capacity from Q3 where revenues are expected to pick up again. So with good financial position and our big charter backlog, we are pleased to once again pay out 75 cents per share.

dividend or three point seventy five dollars per share the last 12 months which I hope give our investors an attractive yield investing in flex so with that I think we take a short break before we come back with our Q&A session where as I mentioned you can win all

Flex on the Beach, Summer Kit. Thank you. Okay Knut, I think before we start with the questions.

Maybe we can show off the gift we have this time at this time. We have a summer team as I mentioned flex on the beads, beads towel

Together of course you need some protection with the flex on the beach, sunscreen or cap of course. We have to include the Isle of Dividends t-shirt this time as well. So, again the

or sun glasses. So let's see who will win this nice summer package.

And I think we have a lot of questions today. Yes. Thanks a lot for the questions coming in. There's a lot of questions and we'll try to take them in order and sequence. But maybe we can start off a question forwarded from the investor, Janne Harrington. She was on CNBC and put up a couple of questions and they've been forwarded.

Okay. So, and that starts off with how does the low natural gas prices in the US impact FlexLNG?

Yeah, it's a complex question. There's more answer than just one. It's short term and long term. Of course, in the long term, if prices for natural gas stays very low in the US, of course, this will incentivize new drilling activity, which is of course crucial in order to hold production up.

This has not been a problem so far. We set new records all the time on US gas production and one of the reasons is that wells are becoming more gaseous as you are drilling. But you know, you need to have a sustainable return on equity, on our capital in these projects. So we don't really like that prices are this low. Of course, short term wise that means that...

exporting cargos out of US is very profitable because the price difference between US gas prices and international gas prices are bigger, which means that those people exporting cargos are making more money on LNG and this is also the case actually on LPG. So it's a bit like this story about Goldilocks.

Well, you know, you don't want it to be too hot. You don't want it to be too cold So you need to find some kind of sweet spot. I Think luckily, of course most a lot of the wells. You're not really drilling for gas some Wells you're also drilling for oil and and and the gas is just associated gas So you also have to see it in connection with the oil prices, which have been pretty firm

So as long as oil price is pretty firm, you will be drilling for oil and usually then you will find associated gas. But where you are looking for dry gas, you need probably to have higher prices in the US than what you have had today. But keep in mind, gas prices in the US has also been quite volatile, where there have been periods of time where people have been raking in also.

companies. What's the difference with flex? Does the charter agreements make it different than other shipping companies?

Yeah, of course shipping has always been volatile. So it's it's a derivative of the global GDP and usually

trade, historically at least, have been growing quicker than GDP, but this was also the problem on the downside when GDP growth slows less shipping activity. I think what makes flex difference from most commodity shipping segments.

is of course the fact that we have taken out a lot of this commercial risk by fixing our ships on long term charters where we have very high level of earnings visibility. And this you can also see in our earnings and revenues. If you look at the revenue graph we're showing.

for the guidance for this year. There are very small changes in the revenues from one quarter to the next because of this stability we have through long-term charters and also actually revenues are quite stable over the years, not only the quarters. So I think we are different in that regard because we have a bit different commercial strategy than most commodity shipping.

it pretty bad the last four years or so because interest rates have been going down and the yield you are getting on your savings has become less and less, more or less every year. Now the last year or so it's been picking up but real interest rates have still been pretty low because of the high level of inflation.

Yes, 5% is the short-term interest rate today. But markets don't really think that yields will stay at this elevated level short-term, while one-year treasury yields is 4.8% today, two-year is 4%, and then if you go all the way to 10 years, you're back to 3.5%.

I think if you're investing for income investing, what you're getting is a safe asset today. Let's see, we have a debt ceiling coming up there, but it's a fairly safe investment, 10-year government bonds in the US. That gives you 300%. We are giving a much better return. As I mentioned, about 11% yield here.

the last 12 months based on the dividend. Of course, this dividend is also safe in the fact that we have no ships open this year. The earliest possible ship is next year where we have this 95% coverage if you assume options will not be exercised. We think it's more probable than not.

And actually then the first open ship is 2027. So that gives us a very visible cash flow of income, which as we have also said in the presentation, this earnings belong to the shareholder and we are motivated to pay that out as dividend and that should give you a much better yield than what you are getting on government bonds.

these days. So then let's turn to the questions on the market. What's your outlook for your LNG transport out of US for 2023-24?

I think last quarter and Q4 report we had a graph from projected supply situation for 2023. We are assuming 16 million tons of growth, growing, global exports growing from 400 to 416.

And this might be a bit low when we see the EIA numbers, but half of that is US. So kind of the free port coming back on stream is most of this effect. But then, and then the remaining growth is from the rest of the world. 2024 will be a year where we will have very muted export growth. But then from 2025 and onwards, there will be more exports.

That's why we feel it's been a good strategy for us to fix our ship in this window where global growth in exports will be low Before this growth takes off again from 25 26 27 onwards when our ships are coming open I mean then look at the import regions Last year and this year has been a lot of imports to Europe

Is Europe and EU an important market for flex?

It's not really we who decide where the cargos will be flowing. We charter all the ships on time charter so the charter will then have the opportunity to trade the ship worldwide including Europe and they actually instruct us.

where the ship will be going. So we don't really have an impact on that. They are deciding where they find the best price for the cargos. But of course, with all the Russian gas coming through pipelines which has been shut down, this means that Europe has a large...

deficit of gas and basically what they have been doing now for the last year or so is to replace some of that Russian pipeline gas with LNG. Of course there are not enough LNG to fill the whole gap and that's why Europe needs to be a bit patient there until new LNG is coming on stream.

And until that, you will have a pretty tight market where we have seen prices at a level which has been demand-destructing. Right now, prices come down to more fairly normal levels, but expectations are for higher prices when we're coming into the peak winter season.

And now with LNG pricing being more moderated, have you seen Asia return to the import? Yeah, we've shown in a couple graphs that we see some more growth from Asia. We do see this also in the routing of our ships. We see more ships going to Asia than...

have been the case recently. And of course, suddenly then when LNG in our way, let's call it 20-25% this going to oil and coal prices are pretty elevated as well. That is stimulating demand and I think it's stimulating demand at a good time also because...

Inflation has been high in Europe because of the high gas prices with the energy prices coming down now. That will put less pressure on the inflation. And of course with China reflating their economy, having actually cheaper energy prices will probably help in the recovery of the Chinese economy as well.

Then we have a question for Mike Otten, which goes more on the fleet and the steam tankers. It's a topic you've covered over the years, but it's been mentioned that these will be uncompetitive and scrapped, and that has not materialised that.

There's been some scrapping but it's been very low and of course the reason for that is that the shipping market has been tight. In Paris there's been a total lack of ships available in the market. So when we have such high rates...

People are trading their ships longer because still even our steamship which has a lot of disadvantages compared to modern ships They can still make a decent return and I think as long as that is the case People have been trading them and also keep in mind

A lot of new regulation came in force from 2023 and onwards. So eventually as this regulation is tightened in terms of the CIA requirements, also the European carbon taxation, which is becoming increasingly more expensive to comply with.

that will reduce the fleet of steamships going forward. So it's taken maybe a bit more time than some people expected, but this is mostly due to the very favorable freight economics, which then results in those ships leaving a bit longer than maybe some people anticipated.

Then we have questions on the open vessels in 2027. So if we start off with more timing of securing a contract.

Is it more realistic that these charters will be signed in 12, 24, 36 months? Oh, yeah. I think we evidenced it last year when I went to our fleet list. We showed several of our ships. We extended quite a lot of ships.

Last year, most recently in November , we extended ships which were not coming open before 26 for longer durations all the way possibly to 2033. So we do see people now looking for ships for 27, even people looking for ships for 28. There are 10 of them.

discussions in the market. So I think we are well positioned to participate in those discussions. And as I mentioned, we are competing against very expensive ships that need a high charter rate and probably a duration in order to defend that investment.

So I think I wouldn't rule out that we will be able to also this year add more backlog to the fleet. Let's say we have 13 ships in operation, so every year we are losing 13 years of backlog. Hopefully we will be able to add more than 13 years of backlog, so that actually we are not eating off that backlog, but rather...

expanding our backlog that I would say would be the aim and I don't rule out that happening within 12 months rather than the 24 or 36 months. And a question from Min Nguyen, considering the age in technology gap between the 2027 new building and the two strokes in the flex fleet.

Will the vessels achieve the same market rates as the new building?

Yeah, I think so because kind of the change in technology that has happened has of course happened abruptly. We had from steam to four-stroke medium speed diesel electric ships and then eventually to the direct drive slow speed two-stroke ships.

As you can see from the pictures here, we have both on the front page and on the docking slide, these ships are in prime condition. When they come out of the yard, they look brand new. And the propulsion system is actually the same you have in the new builds. It's a slow-speed two-stroke engine. There might be some more gadgets on our new ship for delivery 27, 28.

Maybe they have air lubrication system, but so far the effect of the air lubrication systems have been, you know...

Not everybody is as happy with it as the poster promised. Some ships might have a shaft generator, but that doesn't really affect much on the fuel consumption. It really more affects on the opex cost or the maintenance cost. So there's not really any changes.

in fuel, in fuel cost in that sense. So, you know, three of our ships have full reliks systems, four of them have partial reliks systems. So I think these are comparable to the new modern ships that are being built now to 260 mil.

And also actually there is some benefit to the fact that most of our ships are sister ships. They have been trading on most import and export terminals and they are already cleared. So every time you go to a new terminal you need to do a ship shore compatibility study. We have done quite a lot of them. So all our ships more or less are already vetted and approved for most.

terminals around the world. So maybe there might be a small discount given the fact they are not as brand new but the technology is basically the same.

And then we have moving on to the more on the balance sheet and the financing and Scott McFadden been looking at our long-term debt and total liabilities. It's been rising over the past quarters.

He would like us to discuss our attitude towards the total debt levels and if we have any plans to reduce that.

Maybe you should answer the time. Yes. So we've completed this balance sheet optimization program, basically refinancing the full 13-vessel fleet. The background for that was the transition for flex both on the...

backload of contracts that's been building up and increasing over time. That gives us access to new capital or to new debt at better terms. So we have increased our repayment profiles, reduced our credit margins.

improved the maturity profile. So that's the argument for us for refinancing the fuel fleet. And then we have not really pushed for higher leverage, but we have released nearly $400 million dollars of cash and that has been structured as a bullet RCF.

So if we have access cash, we can reduce the RCF and thereby also implicit the debt level as long as we don't need the cash. But it gives us the flexibility to act and support the business going forward. So bullet means it's non-armatizing for those who are not into the finance industry. And I mean, really, we have like

time we utilize it at quarter ends to show that we have this cash available but it's low cost of having and also another factor is that we have had the best financing market I would say since 2007 I was

doing ship financing back then. Last time we had something similar, good financing market, I would say, was 2014. I was CFO then and I did about $2 billion of financing that year. I think actually 2022's been a better financing market for us. So Knuth's been doing then, yeah, basically $2 billion of financing and then we have secured that.

the Taliban, the Swiss First Republic. So I think we are in good shape. You should finance, get financing when it's cheap and lock it in. And that's exactly what we've done. And on the graph we have on the, or the slide we have on the balance sheet, you see there W

The book values on our balance sheet is based on nearly all-time low vessel values when they were acquired. So if you look at the leverage levels on the book values they are rather conservative compared to the market values and also considering the contract backlog that we have.

And that comes back to the recurring question about how to spend it.

What's the plan for growth? How do you plan to spend a large pile of cash?

Is it reduction of death, acquisitions, buyback, fleet growth?

I think we of course the biggest item here is dividends we paid out 200 million dollars of dividend the last 12 months or the last four quarters So that is of course the main source of spending money We think new buildings are pricey these days

If we ordered I'm not sure whether we get a 27 slot, maybe it would be 28 You know, we have two ships coming open in 27 two ships early 28 We do think it's better business for us to to fix those ships on longer-term Contracts rather than building new ships and try to compete with those ships with our existing fit. So we try to be disciplined

So we just try to be disciplined when new billing prices are high. And then we have access to capital where it's cheaply where we can act on opportunities. If we see opportunities. If not, we will just keep on doing what we're doing, fixing ships and paying dividends. And I hope that is appreciated by most investors.

I think we'll round off then. Here's a contender for the Bath Towers. Do you ever get tired of winning? Well... You don't have to answer, but I think we rounded off and now is the time to disclose... Let's talk about the...

on the topic so congratulations to you you will have the full summer kit

And then before we adjourn I just think I want to say thank you to all our seafarers, to all the people in the docks who have done a fantastic job on Flex Endeavor and the Flex Enterprise dockings which has been perfect in terms of budget and timing and the ships are back with our charters who are happy to trade them again.

We have two more to go this year. Next year we will only have two drydocking. So with that I also would like to thank or or I would like to extend to our Norwegian viewers that I hope you all have a happy constitution day tomorrow May 17th is the biggest day in Norway.

where it's a lot of celebration. So with that, thank you everybody and we will be back in August with our second quarter presentation. We will also be in New York on June 20th and onwards for presentations. So for those who are interested, maybe

you can join the Marine Morning Conference and we will do some presentation there as well. Okay, thank you.