Q1 2024 ZIM Integrated Shipping Services Ltd Earnings Call

Operator: Thank you for standing by, and welcome to the ZIM Integrated Shipping Services first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by and welcome to the Zim integrated shipping services first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and session if you'd like to ask a question. During this time simply press star followed.

Speaker Change: The number one on your telephone keypad, if you would like to withdraw your question again prestige Star one. Thank you I'd now like to turn the conference over to line of Holtzman head of Investor Relations you may begin.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press the star one. Thank you. I'd now like to turn the conference over to Eliana Holzman, Head of Investor Relations. You may begin.

Elana Holzman: Thank you, operator, and welcome to ZIM's first quarter 2024 financial results conference call. Joining me on the call today are Eli Glickman, ZIM's President and CEO, and Xavier Destriau, ZIM's CFO. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements regarding expectations, predictions, projections, or future events or results. We believe that our expectations and assumptions are reasonable. We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ, including materially.

Speaker Change: Thank you operator, and welcome to <unk> first quarter 2024 financial results Conference call Joy.

Speaker Change: Joining me on the call today are illegally come on Zen as president and CEO and Sylvia just C O M CFO before.

Speaker Change: Before we begin I would like to remind you that during the course of this call. We will make forward looking statements regarding expectations predictions projections or future events or results, we believe that our expectations and assumptions are reasonable.

Speaker Change: We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ including materially.

Elana Holzman: You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2023 annual report on Form 20-F filed with the SEC in March 2024. We undertake no obligation to update these forward-looking statements.

Speaker Change: You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2023 annual report on form 20-F filed with the SEC in March 2024, we undertake no obligation to.

Speaker Change: Update these forward looking statements at this time I would like to turn the call over to Jim CEO illegal Aikman Ellie.

Elana Holzman: At this time, I would like to turn the call over to ZIM CEO Eli Glickman. Eli? Thank you, Elana.

Eliyahu Glickman: Thank you, Elana, and welcome, everyone. Slide number two. ZIM began 2024 with positive momentum. Leveraging market conditions, and coupled with the strong execution of the ZIM team globally, we deliver solid Q1 results based on current market conditions. Our outlook for the remainder of the year has improved, and as such, we now expect our full year 24 financial performance to be better than our full year 23 results. Our strategic plan to upscale our fleet and operate larger vessels to improve our coast structure is paying off, and we believe that in 2024 we will achieve our volume growth expectation. Outperforming the market, ZIM earnings in the first quarter reflect stronger spot rates which resulted from disruption in the global logistics supply chain. Slide number four.

Speaker Change: Thank you Linda and welcome everyone.

Speaker Change: Slide number two.

Speaker Change: Then began 2024 with positive momentum.

Speaker Change: We leverage market conditions, and coupled with the stronger execution the.

Speaker Change: Globally, we delivered solid Q1 results.

Speaker Change: Based on current market conditions.

Speaker Change: Outlook for the remainder of the U S in pool and as such we now expect full year 'twenty for financial performance to be better than the 23 results.

Although digit plan to upskill openly and operate larger vessels to improve our cost structure.

Speaker Change: Tango and we believe this is plentiful we will achieve volume growth expectations.

Speaker Change: Outperforming the market.

Speaker Change: The Maryland in the first quarter reflects stronger spot rates, which resulted from disruption in the global logistics supply chain.

Speaker Change: Slide number four.

Speaker Change: Yeah.

Eliyahu Glickman: We deliver revenue of 1.56 billion dollars and net income of $92 million. Adjusted EBDA was $427 million, and adjusted EB... was 167 million dollars. Reflecting, an Adjusted EBITDA Margin of 27% and Adjusted EBITDA Margin of 11%. Our total cash position of $2.25 billion at quarter end remains strong. Argument Resolved!

Speaker Change: We delivered revenue of 1.56 billion.

Speaker Change: And net income.

Speaker Change: $92 million.

Speaker Change: Adjusted EBITDA was $427 million.

Speaker Change: Adjusted EBIT.

Speaker Change: It was $167 million.

Speaker Change: Reflecting reflecting adjusted EBITDA margin of 27% and adjusted EBIT margin of 11%.

Speaker Change: Oh gosh.

Speaker Change: Cash position of 2.25 billion dollar at quarter end remains strong.

Speaker Change: Oh do you want results reflect the dynamic nature of the container shipping industry today.

Eliyahu Glickman: the dynamic nature of the container shipping industry. Today, tensions in the Red Sea have not eased and continue to disrupt global trade. We've seen freight rates significantly increase on November 23 lows as overcapacity in the market is being absorbed. As we look forward, we expect freight rates to remain higher for longer than originally anticipated. Why?

Speaker Change: To date tensions in the Red Sea if not.

Speaker Change: We continue to disrupt global three well.

Speaker Change: We've seen great rate significantly increased on November 23 loss, there's overcapacity in the market is being absorbed.

Speaker Change: As we look forward, we expect freight rates to remain higher for longer than originally anticipated.

Speaker Change: While we cannot predict.

Eliyahu Glickman: We cannot predict when this disruption will end, and there does not seem to be a solution in sight. Moreover, in recent weeks, we have seen spot rate increases spreading to additional traits which are not directly impacted by the Red Sea disruption and which previously did not experience rate increases. Certain indications of increased demand and constraints on equipment added to the supply pressure may be the cause of this recent threat. I'm going to slide number five.

Speaker Change: This disruption we land there does not seem to be a solution in sight.

Speaker Change: Well one of them in recent weeks, we've seen spot rate increases we're adding to.

Speaker Change: Two additional trades, which are not directly impacted by the Red Sea disruption.

Speaker Change: And which previously did not experience rate increases.

Speaker Change: Certain indication of increased demand and constrained on equipment.

Speaker Change: Two the supply pressure, maybe the cause of this recent thread.

Going to slide number four.

Eliyahu Glickman: Given this stronger rate environment, now impacting more trades, our output for the year is more positive. Therefore, we are raising our full Year 24 guidance and now expect to generate adjusted EBITDA in the range of $1.15 billion to $1.55 billion and adjusted EBIT between $0 to $400 million. First of all, dividend policy, which provides for a payout of 30% of quarterly net income, our Board of Directors has declared a dividend of $0.23 per share, or a total of $28 million on account of Q1 results. Therefore, the bear case scenario from a financial perspective has likely been avoided in 24.

Given the stronger rate environment now impacting mode right now.

Speaker Change: Outlook for the year is more positive.

Speaker Change: Therefore, we are raising our full year 'twenty full guidance and now expect to generate adjusted EBITDA in the range of 1.15 billion dollar too.

Speaker Change: 1.55 billion dollar and adjusted EBIT between zero to $400 million.

Speaker Change: First of all our dividend policy, which provides for a payout of 30% of quarterly net income.

Speaker Change: Board of director.

Speaker Change: Declared a dividend of 23 cents per share.

Speaker Change: A total of $28 million on account of Q1 results.

Speaker Change: Why the bear case scenario.

Speaker Change: Form a financial perspective.

Speaker Change: Likely been avoided in plentiful, we'd like to remind you.

Eliyahu Glickman: We'd like to remind you that our market is extremely volatile and that until recently, the disruptions which drove rates up were primarily supply driven. It remains to be seen whether the improved demand we are currently witnessing is sustainable and whether it will support freight rates for the remainder of 2024. Overall market dynamics still point to supply growth significantly outpacing demand growth with significant deliveries this year and to a lesser extent next year as well.

Speaker Change: The total market is extremely volatile.

Speaker Change: Until recently.

Speaker Change: Options, which drove rates up.

Speaker Change: Elyse supply driven.

Speaker Change: It remains to be seen whether it be improved demand. We are currently witnessing is sustainable and whether it would support freight rates for the remainder of 'twenty four.

Speaker Change: Overall market dynamics pinpoint to supply growth significantly outpacing demand growth with significant deliveries.

Speaker Change: And to a lesser extent next year as well.

Eliyahu Glickman: As such, our longer-term expectations for the market have not changed. It remains our view that once the Red Sea crisis is resolved, we will likely revert to the supply-demand scenario that has begun to play out in 2023. We maintain the view that the industry will face a more challenging second half of this year, regardless of the duration of the Red Sea crisis, as more new builds, particularly large-capacity vessels, are delivered. This will likely adversely affect our results in the third and fourth quarters.

Speaker Change: As such our.

Speaker Change: Our longer term expectation for the market has not changed.

Speaker Change: It remains our view the one the Red Sea crisis as a result, we will likely revert to the supply demand scenario. If it began to play out in 'twenty three.

Speaker Change: We maintain the view.

Speaker Change: The industry will face a more challenging second half of this year.

Speaker Change: Irrespective of the duration of the Red Sea crises as more new builds, particularly large capacity versus our dividend.

Speaker Change: This will likely adversely affect our results in the third and fourth quarters.

Eliyahu Glickman: We continue to assume that the second half of 24 might be weaker than the first half. Xavier, our CFO, will discuss additional factors driving our 24 guidance in his prepared comments. Before I turn the call over to him, I would like to provide an operational and commercial update and highlight ZIM's progress in execution, achieving strategic objectives thus far in 2020. I'm going to use slides.

Speaker Change: We continue to assume that the second half of 'twenty four might be weaker than the first half.

Speaker Change: So I.

Speaker Change: Our CFO will discuss additional factors driving our 24 gardens he needs to be filled.

Speaker Change: <unk>.

Speaker Change: Before I turn the call over to him I would like to provide an operational and commercial update and highlight zim focus execution executing strategic objectives, thus far in 2000.

Going to slide number six.

Eliyahu Glickman: Our transformation is well underway and has begun to produce tangible results. We are very pleased with our progress and are confident that, with respect to our fleet and co-structure, ZIM will emerge in a stronger position in 2025 and beyond, as our transformation continues to deliver incremental benefits. The primary pillar of ZIM transformation is our fleet renewal progress, with our Fleet Renewal Program executed to enable more efficient and competitive operations. We secured a total of 46 new container ships, of which 28 are LNG powered.

Speaker Change: I would also mention is well underway and has begun to produce tangible results. We're very pleased we saw progress and are confident that with respect to fleet and cost structure, they will emerge even stronger position and 25 and beyond.

Speaker Change: Our transformation continues to deliver incremental benefits.

Speaker Change: The final pillar of zinc transformation result fleet renewal program.

Speaker Change: As our fleet renewal program executed to enable more efficient and competitive operations.

Speaker Change: We secured a total of 46, new build container ship.

Speaker Change: Which 28 are LNG Pablo <unk>.

Eliyahu Glickman: Today, 30 new built vessels have already been delivered to us, including all 10 15,000 CU LNG vessels and 9 out of 18, 8,000 TU LNG-powered vessels, which we are deploying on the strategic Asia to the U.S. East Coast trade. Our new fleet improves our cost structure and supports long-term profitable growth. These new vessels are more modern, fuel efficient, larger, and better suited to the trade in which we operate. This continues to reduce our cost per TU, and these cost-effective new-built vessels are replacing older, less efficient, and more expensive charter capacity. Moving forward, we expect to continue seeing gradual cost-per-TU improvement as we meet our volume growth target.

Today Sir.

Speaker Change: The new built vessels have already been delivered to us, including all 10, 15000 Teu LNG vessels.

Speaker Change: And nine out of eight.

<unk> 8000, Teu LNG both vessels.

Speaker Change: We are deploying on the strategic Asia to the U S East coast.

Speaker Change: Our new lithium pool or cost structure and support long term profitable growth.

Potently.

Speaker Change: This new versus our more modern fuel efficient larger and better suited to the trade in which we operate.

Speaker Change: This continues to reduce our cost per teu at this cost effective new built vessels are replacing older less efficient and more expense extensive charter capacity.

Speaker Change: Moving forward, we expect to continue seeing gradual cost per Teu improvement as we meet our volume growth targets.

Eliyahu Glickman: In addition to improving our cost structure and enabling long-term sustainable growth, our Fleet Renewal Program addresses a central objective of our ESG roadmap, which is to reduce the environmental impact of our operations and help fight climate change. The benefits of our new fleet from an environmental perspective are worth mentioning again. Next year, once we receive all our new builds and re-deliver existing charter tonnage, over 50% of our operated capacity is expected to be new builds.

Speaker Change: In addition to improving our cost structure and then a building long term sustainable growth.

Speaker Change: Renewal program.

Speaker Change: Central objective of full ESG roadmap reduce the environmental input.

Speaker Change: Operations and help fight climate change.

Speaker Change: The benefit of our new fleet from an environmental perspective Ah was mentioning again.

Next year once we receive all our new builds and we deliver existing charter tonnage over 50% of our operated capacity is expected to be new build.

Eliyahu Glickman: Approximately 40% of our operated capacity is expected to be LNG powered, making ZIM among the lowest carbon intensity cells in the world. Already today, 30% of our capacity is LNG powered, and we operate the greenest fleet in terms of the use of alternative fuels. Sustainability is a core value for ZIM, and we are pleased to have recently published our 6th Annual ESG Report, Italian Housing, which addresses increasing demand from our various stakeholders for a more proactive ESG approach.

Speaker Change: Approximately 40% of our operated capacity is expected to be LNG powered.

Speaker Change: Making zim among the lowest carbon intensity kids in the world.

Speaker Change: OLED today, 30% of our capacity LNG poll.

Speaker Change: And we operate the greenest fleet in terms of use of alternative fuels.

Speaker Change: Sustainability is a core value for <unk> and we are pleased to have recently published our sixth annual ESG report.

Speaker Change: All lines housing.

Speaker Change: Increasing demand from our wild stakeholders.

Speaker Change: More active ESG approach.

Eliyahu Glickman: In 2023, ZIM achieved a 23% drop in the carbon intensity of our operation compared to pre-awareness. This was driven in part by our new LNG vessel, which replaces other vessels and significantly cuts our carbon emissions. We also decreased vessel speed and added vessel-to-routes to comply with emerging regulations.

Speaker Change: And then in 'twenty, three zoom achieved a 23% dope and carbon intensity of our operations compared to the prior view this.

Speaker Change: This was driven in part by our new LNG vessels, which replace older vessels and significantly cut the carbon emissions.

Speaker Change: We also decreased versus speed and as those vessels two votes to comply with the emerging regulation.

Eliyahu Glickman: We are proud of the progress we made in 2023 and are well on our way to reaching our target of reducing carbon intensity by 30% by 2025 compared to our 21 basements. We remain committed to reducing our GHG emissions to net zero by 2050, a more ambitious target than the one set by the IMO. We recognize that the implementation of ESG-focused strategies is an ongoing process and will continue to prioritize promoting responsible corporate practice to create long-term sustainable value for all our stakeholders.

Speaker Change: Well well of the progress we made in 'twenty, three and are well on our way to reaching our target of reducing carbon intensity.

Speaker Change: By 30% by 'twenty five versus those.

Versus our 'twenty one baseline.

We remain committed to reducing our <unk> emissions to net zero by 'twenty.

Speaker Change: And more ambitious targets the one set by valuable.

Speaker Change: We recognize the implementation of ESG focused strategy is an ongoing process and we'll continue to put pressure toward promoting responsible corporate practice to create long term sustainable value for all our stakeholders.

Eliyahu Glickman: Operationally, we also remain focused on aligning our fleet size with demand levels and rationalizing our fleet to minimize cash burn. At the beginning of this year, we had a total of 32 vessels up for renewal in 2024. Thus far, we have re-delivered 11 vessels and anticipate the remainder will be re-delivered over the course of the year. Standing next to a network of services.

Speaker Change: Operationally, we also remain focused on aligning our fleet size with demand levels and rationalizing our fleet to minimize cash burn.

Speaker Change: At the beginning of this year with a total of 32 vessels up for renewal in 'twenty four.

Paul: It's Paul.

Paul: The 11 vessels and anticipate the remainder will be relieved and we deliver over the course of the year.

Paul: Turning next to our network of services.

Eliyahu Glickman: The agile nature of our commercial strategy has continued to serve ZIM well. During the first quarter, we continued to adapt our network to changes in customer demand. In Q1, we grew our volume on the Trans-Pacific, leveraging our larger capacity vessels and new lines open to LA and Vancouver. We maintain our unique commercial position on this strategic trade for ZIM as the only carrier to call the U.S. East Coast with energy-fueled vessels. In fact, we operate LNG vessels on two different services in this trade.

Speaker Change: Joe nature of our commercial strategy has continued to serve the world.

Speaker Change: During the first quarter, we continued to adapt our network to changing customer demand.

Q1, we grew our volume on Trans Pacific leveraging a larger capacity vessels and new lines open to M&A and Vancouver.

Speaker Change: We maintain our unique commercial position on this strategic storage for Zim.

Speaker Change: As the only carrier to call the U S East coast, we send in <unk> versus <unk>.

Speaker Change: In fact, we operate LNG vessels on two different services reduced rate.

Eliyahu Glickman: As the only carrier able to offer shippers a pathway to significantly reduce carbon emissions on this trade, we believe that our differentiated offering enhances our competitive position and supports our volume growth target. We are also pleased with our growing volume in Latin America. We opened several new lines in this trade and continue to expand our network in Q1. As we have discussed previously, Latin America has been a focal point for us, where we see long-term growth and profitability potential. On this note, I will turn the call over to Xavier, our CFO, for a more detailed discussion of our financial results, our revised 24-month guidance, as well as additional comments on the market environment. Xavier, please.

Speaker Change: As the only able to offer shippers with possible to significantly reduce carbon emissions on this trade, we believe that our differentiated offering enhances our competitive position and supports our volume goes Douglas.

Speaker Change: We are also pleased with slow growing volume in Latin America, we opened several new lines at <unk> display and continue to expand our network in Q1.

Speaker Change: We have discussed previously Latin America has been a focal point for us, where we see long term growth and profitability potential.

Speaker Change: On this note I will turn the call over to <unk>.

Speaker Change: <unk> CFO for a more detailed discussion.

Speaker Change: Our financial results, our revised <unk> guidance as well as additional comments on the market environment.

Speaker Change: Sylvia please.

Xavier Destriau: Thank you, and again, welcome everyone. On slide 7, we present key financial and operational highlights, and, as Eliyahu mentioned, our first quarter financial results reflect the improved freight rates that mostly ensued from the Red Sea disruption. Team generated revenue of $1.6 billion in the first quarter of 2024, a 14% increase compared to the first quarter of last year. Our average freight rate per T.U. was $1,452, a year-over-year increase of 4% and a 32% increase from the prior quarter.

Sylvia: Thank you and again welcome everyone.

Sylvia: On the slide seven we present key financial and operational highlights and as Lee mentioned, our first quarter financial results reflect the improved freight rates that mostly in suite from the recipe disruptions.

Speaker Change: <unk> generated revenue of $1 $6 billion in the first quarter of 2024.

A 14% increase compared to the first quarter of last year.

Speaker Change: Our average freight rate per Teu was $1452 a year over year increase of 4%.

Speaker Change: And a 32% increase from the prior quarter.

Xavier Destriau: Total revenue from non-containerized cargo, which reflects mostly our car carrier services, totaled $111 million for the quarter, compared to $106 million in the first quarter of 2023. While we operated more vessels in the current quarter, revenues are only slightly higher due to the longer voyages around the Cape of Good Hope in the current quarter. Our free cash flow in the first quarter totaled $303 million, compared to $142 million in the first quarter of 2023.

Speaker Change: Total revenue from non containerized cargo, which reflects mostly I'll call cargo services totaled $111 million for the quarter compared to $106 million in the first quarter of 2023.

Speaker Change: Why do we operated more vessels in the current quarter revenues are only slightly up due to the longer voyage is around the Cape of good hope in the current quarter.

Speaker Change: Our free cash flow in the first quarter totaled $303 million compared to $142 million in the first quarter of 2023.

Xavier Destriau: Turning to the balance sheet, total debt increased by $359 million since the prior year-end, mainly due to the net effect of the incoming larger vessels with longer-term charter duration. Regarding our fleet, we currently operate 147 vessels, out of which 16 are car carriers, compared to 150 vessels as of our Q4 earnings call in mid-March. The slight decrease from March resulted from the delivery of 6 new vessels and the scheduled re-delivery of 9 vessels.

Speaker Change: Turning to the balance sheet total debt increased by $359 million in prior year end, mainly due to the net effect of the incoming larger vessels with longer term charter durations.

Speaker Change: Regarding our fleet. We currently operate having done 47 vessels out of which 16 are car carriers.

Speaker Change: As compared to 150 vessels as of our Q4 earnings call in mid March.

Speaker Change: The slight decrease from March resulted from the delivery of six new builds and the scheduled re delivery of nine vessels.

Xavier Destriau: We would like to remind you that while we may continue to operate a similar number of vessels or even fewer vessels, our operating capacity has grown in 2023 and will continue to grow this year. We are replacing smaller vessels, less cost-effective tonnage, with larger, more cost-efficient, new-built vessels, thereby contributing to a lower unit cost per TU. Moreover, these vessels are also better suited to the trade in which they are being deployed, again enhancing our strategic position.

Speaker Change: We'd like to remind you that while we may continue to operate a similar number of vessels or even fewer vessels are operated capacity is growth in 2023 and will continue to grow. This year, we are replacing smaller vessels less cost effective tonnage with larger more cost.

Speaker Change: Efficient newbuild tonnage.

Speaker Change: Thereby contributing to lowered unit cost per Teu.

Speaker Change: Moreover, these vessels also better suited to the trade in which they are being deployed again enhancing our strategic positioning.

Xavier Destriau: As of today's call, 30 of the 46 new-build vessels ZIM has committed to have joined our fleet, including 10 15,000 TEU LNG vessels, 4 12,000 TEU vessels, 9 8,000 TEU LNG vessels, and 7 of the smaller wide-beam 5,500 and 5,300 TEU ships.

Speaker Change: As of today's call 30 of the 46, new built vessels Zain has committed to have joined our fleet, including <unk> 15000, Teu LNG vessels for 12000 Teu vessels nine 8000, Teu LNG vessels and seven of the smaller whitebeam five.

Speaker Change: 505300 Teu ships.

Xavier Destriau: Excluding the new build capacity, the average remaining duration of our chartered tonnage continues to trend down and is now 19.7 months compared to 20.4 months in mid-March. We have a total of 21 vessels up for charter renewal in the remainder of 2024, as compared to the expected delivery of 16 new builds during this period. In addition, we have another 37 vessels up for renewal in 2025. And, as we previously highlighted, this gives us ample flexibility to ensure our fleet size matches market opportunities.

Speaker Change: Excluding the Newbuild capacity the average remaining duration of our charter tonnage continues to trend down and is now $19 seven months compared to 24 months in mid March.

Speaker Change: We have a total of 21 vessels up for charter renewal in the reminder of 2024 at.

Speaker Change: As compared to the expected delivery of 16 Newbuild during this period.

Speaker Change: In addition, we have another 37 vessels up for renewal in 2025.

Speaker Change: And as we previously highlighted this gives us ample flexibility to ensure our fleet size matches the market opportunities.

Xavier Destriau: Turning now to additional Q1 financial metrics on slide 9. Adjusted EBITDA in the first quarter was $427 million compared to $373 million in Q1 2023, reflecting an adjusted EBITDA margin of 27% in both periods. Adjusted EBIT was $167 million, or 11% margin, compared to an EBIT loss of $14 million in the same quarter of last year.

Speaker Change: Turning now to additional our Q1 financial metrics on slide nine adjusted EBITDA in the first quarter was $427 million compared to $373 million in Q1 2023.

Speaker Change: Reflecting an adjusted EBITDA margin of 27, 27% in levels periods.

Speaker Change: Adjusted EBITDA was $157 million or 11% margin compared to an EBITDA loss of $14 million in the same quarter of last year.

Xavier Destriau: Net income for the first quarter was $92 million compared to a net loss of $58 million in Q1 2023. We do remain committed to returning capital to shareholders, and as such, our Board of Directors declared a dividend to shareholders of $0.23 per share, or a total of $28 million, which reflects a payout of 30% of Q1 net income as per our current dividend policy. Turning now to slide 10, we carried 846,000 TEUs in the first quarter compared to 769,000 TEUs during the same period last year.

Speaker Change: Net income for the first quarter was $92 million compared to a net loss of $58 million in Q1 2023.

Speaker Change: We do remain committed to returning capital to shareholders and as such our board of directors declared a dividend to shareholders of 23 cents per share or a total of $28 million.

Speaker Change: Which reflects a payout of 30% of Q1 net income as per our current dividend policy.

Speaker Change: Turning now to slide 10, we carried 846000 teus in the first quarter compared to 769000 Teus during the same period last year.

Xavier Destriau: There was an increase of 10%, slightly ahead of market growth of 9%. As already discussed, we grew our volume on the Trans-Pacific in Q1, attributable to our larger capacity vessels and also new lines. Trans-Pacific volume grew 27% year-over-year.

Speaker Change: That is an increase of 10%.

Speaker Change: Are you ahead of market growth of 9%.

Speaker Change: As Andy discussed we grew our volume on the transpacific in Q1 attributable to our larger capacity vessels and also new lines.

Speaker Change: Transpacific volume grew 27% year over year.

Xavier Destriau: And we expect to see continued volume growth during the remainder of 2024 as we continue to upsize our capacity. Significant growth in Latin America volumes of 129% year-over-year was driven by our expanded presence in this trade. We see additional opportunities to participate in the growth of that trade. Next, we present our cash flow bridge. For the quarter, our adjusted EBITDA of $427 million converted into $326 million of cash flow generated from operating activities.

Speaker Change: And we expect to see continued volume growth during the remainder of 2024 as we continue to upsize our capacity.

Speaker Change: Significant growth in Latin America volumes of Halloween and 29% year over year was driven by our expanded presence industry.

Speaker Change: We see additional opportunities to participate in the growth of that trade.

Speaker Change: Next we present, our cash flow bridge for the quarter, our adjusted EBITDA of $427 million converted into $326 million of cash flow generated from operating activities.

Xavier Destriau: Other cash flow significant items for the quarter are obviously $740 million of debt service, mostly related to our lease liability repayment. It is important, however, to remember that the lease liability repayments in Q1 included $235 million reflecting down payments for six LNG vessels that we received during the quarter and also payments for the five vessels following an early notice for the exercise of purchase options we held on these vessels, as we had previously mentioned on our March call.

Speaker Change: Although cash flow a significant item for the quarter is obviously $740 million of debt service, mostly related to our lease liability repayments.

Speaker Change: It is important however to remember that the lease liability repayments in Q1 included $235 million.

Speaker Change: Reflecting downpayment from <unk> LNG vessels that we received during the quarter and also payments for the five vessels. Following an early notice for the exercise of purchase options. We have on these vessels as we already previously mentioned.

Speaker Change: March call.

Xavier Destriau: Moving now to our 2024 guidance. As you heard from Eli, our outlook for the remainder of 2024 is stronger than previously assumed based on the evolving market, and as a result, our financial performance in 2024 is now expected to be better than our 2023 results. We are raising our full-year guidance and now expect to generate adjusted EBITDA between $1.15 billion and $1.55 billion in 2024 and adjusted EBIT between $0 and $400 million.

Speaker Change: Moving now to our 2024 guidance as you heard familiar our outlook for the remainder of 2024, it's stronger than previously assumed based on the evolving market and as a result, our financial performance. In 2024 is now expected to be better than our 2023 results.

Speaker Change: We are raising our full year guidance.

Speaker Change: And now expect to generate adjusted EBITDA between $1 15 billion.

Speaker Change: And $155 billion in 2024.

Speaker Change: And adjusted EBITDA between zero at $400 million.

Xavier Destriau: Our improved guidance is driven primarily by the strengths we are seeing in spot rates. This, in turn, contributed to higher freight rate assumptions incorporated into our current guidance as compared to the freight rate assumptions we incorporated into the guidance we provided back in March. Before touching on the volume and bunker cost assumptions,

Speaker Change: Our improved guidance is driven primarily by the strength, we're seeing in spot rates.

Speaker Change: This in turn contributed to a higher freight rate assumptions incorporated into our current guidance as compared to the freight rate assumptions, we incorporated into the guidance we provided back in March.

Speaker Change: Before touching on the volume and bunker cost assumptions I would like to briefly discuss the contract season and how it plays out it plays into our outlook for the remainder of the year.

Xavier Destriau: I'd like to briefly discuss the contract season and how it plays into our outlook for the remainder of the year. For the year ahead, our spot exposure in the trans-Pacific trade will remain relatively high as the new annual trans-Pacific contract, which went into effect on May 1st, represents approximately 35% of our expected trans-Pacific volume. We chose to revisit our commercial approach of roughly a 50-500% split between spot and contract volume given our expectation that the average spot rate for Trans-Pacific for the next 12 months will likely outperform the prevailing contract rates, which were only slightly better than last year's rates. We believe that our value proposition to customers operating LNG vessels on this trade will help us achieve our volume growth objectives while leveraging the strongest spot rate environment. Our volume assumptions for our 2024 guidance remain

Speaker Change: So for the year ahead, our spot exposure in the Transpacific trade will remain relatively high has the new annual transpacific contract, which went into effect on may the first represents approximately 75% of our expected transpacific volume.

Speaker Change: We chose to revisit our commercial approach of roughly a 50, 50% split between spot and contract volume given our expectation that the average spot rates for transpacific for the next 12 months will likely outperform the prevailing contract rates, which were only slightly better.

Speaker Change: Last year's rates.

Speaker Change: Believe that our value proposition to customers operating LNG vessels in this trade will help us achieve our volume growth objectives, while leveraging the stronger spot rate environment spot rate environment.

Speaker Change: Our volume assumptions for our 2024 guidance remain unchanged and.

Xavier Destriau: We expect our volume growth this year to outpace market growth as we continue to upsize our fleet and increase operating capacity. But the costs, on the other hand, are slightly higher as compared to the underlying assumptions for the guidance we provided in March. Moving to our market discussion with some data points on our commentary so far, market evolution since November 2023 has demonstrated the volatile nature of our industry. The underlying supply-demand balance for 2024 has been, and remains, one of significant oversupply, as you can see in the graph on the left.

Speaker Change: And we expect our volume growth this year to outpace market growth as we continue to upsize, our fleet and increase operating capacity.

Speaker Change: Corporate costs on the other hand, our slightly higher as compared to the underlying assumptions for the guidance we provided in March.

Speaker Change: Moving to our market discussion with some data points on our commentary so far.

Speaker Change: Market evolution since November 2023 has demonstrated the volatile nature of our industry.

The underlying supply demand balance for 2024 has been and remains one of significant oversupply as you can see in the graph on the left.

Xavier Destriau: Events external to our industry, namely the security concerns in the Red Sea, have caused most global carriers to re-direct their ships around the Cape of Good Hope. This has extended voyage durations to North Europe, the Mediterranean, and to a certain extent to the U.S. East Coast, absorbing significant capacity, bringing the supply-demand balance to a certain equilibrium. Yet the strength in spot rates of recent weeks extends beyond these trades, which were directly impacted by the Red Sea Diversion.

Speaker Change: Events external to our industry, namely the security concerns in the Red Sea have caused most global carriers to re divert the shifts around the Cape of good hope.

Speaker Change: This has extended voyage durations to north Europe, the med vegetarian the British Army NAND, sorry, and to a certain extent to the U S East coast absorbing significant capacity.

Speaker Change: The supply demand balance to a certain equilibrium.

Speaker Change: Yet the strength in spot rates of recent weeks extends beyond these trades, which were directly impacted by the Red Sea diversions.

Xavier Destriau: As you can see, the improvement in spot rates in Asia to the U.S. East Coast, which we saw from December until mid-January, eased when the initial impact of the extended rotations was normalized. But, as we mentioned earlier, we now see a second wave of spot rate hikes, with the improvement in freight rates also speeding over to additional trades. We show here SCFI rates for regional trades including Africa, Latin America, and Oceani

Speaker Change: As you can see the improvement in spot rates in Asia to U S East Coast, which we saw from December until mid January eased, while the initial impact of the extended rotations was normalized.

Speaker Change: But as I mentioned earlier, we now see a second wave of our spot rate hikes with the improvement in freight rates also spilling over to additional trades.

Speaker Change: We show here as CFO rates for regional trades, including Africa, Latin America and Oceania.

Operator: This recent, more widespread strength in rates is attributable to indications of equipment constraints coupled with improved demand. TTS Data for Q1 2024 shows a healthy start of the year. As already mentioned, global volume for Q1 2024 is up 9% compared to Q1 last year and tracking similar volumes to Q1 2022 and Q1 2021. This suggests that the destocking cycle which started in the second half of 2022 may have ended. However, on the right, you can see the recent increase in the ocean timeliness indicator.

Speaker Change: This reset more widespread strength in rates is attributable to indications of equipment constraints, coupled with improved demand.

Speaker Change: Cts desktop for Q1 2024 shows a healthy start of the year.

Speaker Change: As already mentioned global volume for Q1, 2024 is up 9% compared to Q1 last year.

Speaker Change: And tracking similar volume to Q1 in 2022 and Q1 2021.

Speaker Change: This suggests that the destocking cycle, which started in the second half of 2022 may have ended.

Speaker Change: However on the right you can see the recent increase in the Ocean Fabulous indicator.

Operator: The OTI measures the journey of a container from the time it is set to leave a factory to the time it is picked up from its destination port. This increase suggests some stress in the global supply chain. Therefore, it remains to be seen if the current uptick in demand is, in fact, the beginning of a restocking cycle that would translate into a more prolonged and sustainable improvement in demand and that could continue to support freight rates, or whether this increase is simply shippers erring on the side of caution and ordering peak season cargo early to ensure they have it available for the holiday season, signaling only a shift in the timing of peak season demand. Thank you.

Speaker Change: OTI measures the journey of a container from the time. It is set to leave a factory to the time. It is picked up from its destination ports.

Speaker Change: This increase suggest some stress in the global supply chain.

Speaker Change: Therefore, it remains to be seen if the permits uptick in demand is in fact, the beginning of a restocking cycle that would translate into a more prolonged and sustainable improvement in demand and that could continue to support freight rates.

Speaker Change: Or whether this increase is simply schepers erring on the side of caution and ordinary ordering peak season cargo early to ensure they have it available for the holiday season signaling only a shift in the timing of peak season demand.

Speaker Change: Please note we will open the call for questions. Thank you.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question today comes from the line of Omar Nokta from Jeffreys. Your line is open. Thank you. Hi Eileen and Xavier

Speaker Change: Thank you we will now be in the <unk>.

Speaker Change: Question and answer session, if you'd like to ask a question. Please press star one on your telephone to raise your hand and joined the queue. If you will.

Speaker Change: To withdraw your question simply press Star one again.

Speaker Change: You are called upon to ask your question are in our listening via loud speaker on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Your first question today comes from the lineup Omar <unk> from Jefferies. Your line is open.

Omar Mostafa Nokta: Just three questions from me, and maybe the first one: just wanted to ask, you know, clearly, the market's taken off, and it seems much more broad-stroked than what we saw earlier this year, as you were just highlighting, Xavier. And on slide 14, we've got multiple geographies that are now seeing higher rates, and it's not just Asia, Europe, and a little bit of the Trans-Pacific, like we saw at the beginning of the year. How would you characterize what's really behind this?

Omar Mostafa Nokta: Thank you. Hi Eli and Xavier. Good afternoon.

Omar Mostafa Nokta: Thank you.

Speaker Change: <unk> good afternoon.

Speaker Change: I just have three.

Speaker Change: Three questions from me and maybe the first one just wanted to ask you know clearly the market has taken off and it seems much more broad stroked than what we saw earlier. This year as you were just highlighting Xavier and on slide 14.

Speaker Change: We've got multiple geographies that are now seeing higher rates and it's not just Asia, Europe, and a little bit of a trans Pacific like we saw at the beginning of the year.

Omar Mostafa Nokta: Is this a supply-driven dynamic or demand? You mentioned just now that it's due to a shortage of equipment. I guess, from your perspective and your lens, you know, what has caused this equipment shortage to take place? And is it a sudden occurrence, or is it something that's been gradually building up since the beginning of the year?

Speaker Change: How would you characterize what's really behind this is this a supply driven dynamic or demand you mentioned just now that it's due to a shortage in equipment I guess from your perspective and your lens. What has caused this equipment shortage to take place and is it.

Sudden occurrence or is it something thats been gradually building up since the beginning of the year.

Speaker Change: Uh huh.

Speaker Change: Sure.

Eliyahu Glickman: We see both. As for the supply side, as a result of the Hootis crisis and Babel Monday. Suetzkamal versus going through the Cape of Good Hope.

Speaker Change: Okay.

Speaker Change: We see both.

Speaker Change: Supply side effect in demand side effects.

Speaker Change: As for the supply side as a result of the <unk> classes and bubble Monday, So, let's come model versus going through the Cape of good though.

Eliyahu Glickman: Africa, much longer, many more days. In order to keep our weekly services, we need about 50% more vessels to keep them. Weekly Service.

Speaker Change: Africa.

Speaker Change: Much longer.

Speaker Change: Many more days.

Speaker Change: In order to keep.

Equally services.

Speaker Change: Need about 50% more vessels to clip.

Speaker Change: The weekly service.

Eliyahu Glickman: As said, this affects the supply side. In order to keep the service because we spend more time on the way, we need more containers. And because of that... Not in ZIM.

Ed: Ed said this effect the supply side.

Ed: Order to keep.

Ed: The service.

Ed: We spend more time on.

Ed: The way, we need more containers.

Ed: And because of that not.

Eliyahu Glickman: In the industry, we feel... There is a shortage in the container. We seem to be full capacity, and we plan it in advance, and we're ready to serve this Thai.

Ed: <unk> in the industry, we feel very.

Speaker Change: Is there a shortage in the container.

Speaker Change: We assume full capacity and we plan.

Speaker Change: Advance.

Speaker Change: And we are ready to serve these high.

Eliyahu Glickman: The Effect of the Supply Side. On top of that, there is the demand side. We see, in the last few weeks, earlier than we expected, high demand sites, mainly from the U.S. This time, compared to the beginning of the Houthis' crisis...

Effect of the supply side.

Speaker Change: On top of that there is the demand side.

Speaker Change: We see in the last few weeks.

Speaker Change: Early than we expected.

Speaker Change: High demand site, mainly from the U S.

Speaker Change: This time compared to the beginning of the <unk> crisis.

Eliyahu Glickman: The high rates and the high demand are not coming from the US or the services from Asia to the US only. All the agents go to the Mediterranean, but we see it all over. Asia Tewes, Coast Africa, Asia to India, Asia to Oceania. We see it in Asia to South America. We see it from Asia to the West Coast of Central America, Mexico, and the West Coast of South America. And, as we said, Asia to the U.S., both the East Coast and the West Coast. So, this is a real question.

Speaker Change: The high grades and the high demand.

Speaker Change: Not.

Speaker Change: Coming from the U S or the services from Asia to the U S. Only.

Speaker Change: Oh, there are just too Jay Mediterranean.

Speaker Change: But we see it all over.

Speaker Change: <unk> two with <unk>.

Speaker Change: Africa is.

Speaker Change: Two India has yet to Oceania.

Speaker Change: We see it as just in Asia to South America.

Speaker Change: We see it from Asia to the West Coast.

Speaker Change: Central America, Mexico, and West Coast of South America.

Speaker Change: And as I said Asia to the U S. Both east coast and West Coast.

Speaker Change: So this is a live question.

Eliyahu Glickman: In the past, Let's say, speaking about the U.S. market, we see a very interesting case. [inaudible] at a historical level.

In the past.

Speaker Change: Let's say just thinking about the U S market.

We see it.

Speaker Change: Very interesting case.

Speaker Change: See unemployment.

Speaker Change: Very low.

Speaker Change: Historical level.

Eliyahu Glickman: We see high inflation. In the past, these two, high inflation and low unemployment, do not click together because... Lower Demand for Employees, and we see the effect of low inflation. Here we see both low unemployment and high inflation. Probably, there are more companies trying to attract employees, really to pay them high salaries, and the people, the consumers in the U.S., have more money to spend. We really don't know if this early demand is coming because of the early demand for the season, the Thanksgiving, and Christmas holidays.

Speaker Change: We see high inflation.

Speaker Change: In the past.

Speaker Change: This too high inflation and lower employment not look too good because.

Speaker Change: Low unemployment.

Speaker Change: <unk>.

Speaker Change: Lower demand for employees and we see the effect of low inflation.

Speaker Change: Here, we see.

Speaker Change: Both low unemployment and inflation probably.

Speaker Change: More.

Speaker Change: Companies plan to attract employees really to pay them high salaries.

Speaker Change: The people the consumer in the U S have more money to spend.

Speaker Change: We really don't know if this early demand coming as I said because of the early demand for the season tends to Gibson and Christmas holidays.

Eliyahu Glickman: All this is because of low inventory. As you remember, after COVID, the inventory level in the U.S. was on the high side, and companies... As of today, as far as we understand it, the inventory level in the U.S. is on the low side. And because of that, we see high demand. The real question is, is this demand going to stay with us until after the holiday season, or is it short term? Season I demand because of what I deserve. Xavier, if you would like to add anything,

Speaker Change: This is because of low inventory.

Speaker Change: Do you remember after the Covid the.

Speaker Change: The inventory level in the U S was on the high side and.

Speaker Change: And companies.

Reduce.

Speaker Change: The orders because of it.

Speaker Change: As of today, and what we understand the inventories in the world in the U S and the low side.

Speaker Change: And because of that to see high demand.

Speaker Change: Good question.

Speaker Change: This demand is going to stay with us.

After the holiday season.

Speaker Change: As shown.

Speaker Change: Susan.

Speaker Change: One because of what I described.

Speaker Change: The VA, if you would like to it.

Xavier Destriau: No, no, I guess that addresses your question, Omar, unless it doesn't, let me know. But clearly, the vessel shortage triggered an equipment shortage. And now, as Eliyahu mentioned, we also see an uptick in demand in the US, which is providing further support at the end of the day to the rate environment.

Speaker Change: No no I guess.

Speaker Change: That addresses your question Omar, let's say doesn't let me know, but clearly.

Speaker Change: The vessel shortage triggered equipment shortage and now as Eddie mentioned, we also see the uptick in demand in the U S.

Speaker Change: She has.

Speaker Change: Providing further support that the debt to the rate environment.

Speaker Change: Yeah makes sense. Thank you for the detail.

Speaker Change: And maybe as a kind of a second question follow up perhaps.

Omar Mostafa Nokta: Perhaps, to that dynamic is, you know, there's a shortage of vessel capacity. We've seen a big jump in appetite on the part of other ocean carriers to secure ships on charter. You know, ZIM's been focused on returning ships back to their owners. You highlighted the 21 that remain for this year and 37 that roll off in 25. What's your plan, you think, with those? Has your thought changed at all about returning all of them? Or do you look to retain some given the change in market dynamics?

Speaker Change: Dynamic is there is a shortage in vessel capacity, we've seen a big jump and appetite on the part of other ocean carriers to secure ships on charter.

Speaker Change: Jim has been focused on returning ships back to their owners you highlighted the 21 that remain for this year and then 37 net roll off in 'twenty five.

Speaker Change: What's your plan you think with those as your thoughts changed at all about returning all of them.

Speaker Change: Or do you look to retain some given the change in market dynamics.

Xavier Destriau: Look, I would say first, unlike other shipping lines, as far as we are concerned, we had already or we expected a significant increase in our operated tonnage throughout 2024 by simply taking delivery of all the new builds that we ordered back in 21-22, pointing out that our operating capacity is expected to increase more than a double digit compared to the end of 2023. If we look at what our capacity will be by the end of 2024 and compare it with what it was at the end of 2023, by just taking all the 46 ships that we ordered and re-delivering all the vessels that came up for renewal, we would, de facto, increase our operated tonnage meaningfully and significantly.

Speaker Change: Look I would say our first unlike other shipping line as far as we're concerned we had already.

Speaker Change: We expected a significant increase in our operated tonnage throughout 2024 by just simply taking delivery of all the new builds that we ordered back in 'twenty, one 'twenty, two and you'll be reminding that our operating capacity is expected to increase more than the double digit.

Speaker Change: Compared to end of 2023, if you look at what our capacity will be by the end of 2024, and we compare it with what it was at the end of 2023 by just taking all the 46 ships that we ordered and with delivery all the vessels that came up for renewal.

Speaker Change: Would de facto increase our operated tonnage a meaningful year significantly.

Xavier Destriau: I think, by and large, as we speak today, our long-term view or mid-term view has not changed. So we are re-delivering the vessels that come up for renewal, you know, to make room for the, you know, still 16 ships that we are awaiting between now and the end of the year. On a case-by-case basis, we will reassess, and we always, you know, reassess on every single occasion, whether we might want to keep or renew for a short period some of the ships. But by and large, the objective and the strategy, I think, remain unchanged.

Speaker Change: I think by and large as of as we speak today, our long term. Your midterm view has not changed so we are re delivery of the vessels that come up for renewal in order to take to make room for the <unk>.

Omar Mostafa Nokta: Got it. Thank you.

Steve: Steve 16 ships that we are awaiting between now and the end of <unk> and the end of the year on a case by case basis that we will reassess and we always are.

Steve: Reassess.

Steve: Every single location, whether we might want to keep or renew for a short period some of the ship with higher last year.

Steve: The strategy I think remain unchanged.

Omar Mostafa Nokta: And final one for me, and you discussed this a bit in the cash bridge in your slides, the $235 million of upfront payments that you made during a quarter. If I recall correctly, there's maybe $340 million in total for those C-SPAN leases due this year. Is that roughly the math? And how much should we expect to be spent in the next quarter or over the next three quarters?

Got it thank you and final one for me and you discussed this a bit.

The cash bridge in your slides the.

Speaker Change: The $235 million of upfront payments that you made during the quarter, if I recall, there's maybe $340 million in total for Seaspan.

Speaker Change: Seaspan leases do this year is that roughly the math and how how much should we expect will be spent in lets say next quarter or over the next three quarters.

Xavier Destriau: Yes, you have the numbers more or less right, with one maybe clarification I should give. So for the full 2024, so from the 1st of January up until the 31st of December, yes, the expectation is or is going to be an overall total payment of $339 million for the delivery of all those new buildings. In the first quarter, so looking at the cash flow statement in Q1, we incurred $106 million in down payment as we took delivery of two 15,000TU ships and four 8,000TU ships.

Speaker Change: Yes, you have the numbers more or less right is one maybe a clarification I should give it so for the full 2024th of them first of January <unk> 30, <unk> of December yes.

Speaker Change: Expectation is always going to be an overall total payments of $339 million for the delivery of orders that new building.

Speaker Change: In the first quarter, so looking at the cash the cash flow statement in Q1, we incurred a $106 million of.

Speaker Change: Downpayment as we took delivery of two <unk>.

Speaker Change: 15000, Teu ships and for 8000 Teu ships. So that's four times 22 times 13, after having done six and then having a 30 million dollar we paid as well as we exercise the right to acquire the option that we had on the five large capacity vessels suites in solvency II.

Xavier Destriau: So that's four times 20 plus two times 13, that's 106. And then $130 million we paid as well as we exercised the right to acquire, you know, the option that we had on the five large capacity vessels, three 10,000TU and two 8,500 that we acquired in Q1. So the 235 is not, this quarter is the combination of both, 106 down payment and $129 million of exercising the option on the five vessels.

Speaker Change: <unk> thousand 500 that we that.

Speaker Change: We.

Speaker Change: So quite in Q1. So the 235 is not this quarter is a combination of both Hollywood and six down payments and $129 million of exercising the option on the five vessels.

Omar Mostafa Nokta: Okay, I got it. So the remaining $233,000 is, I would assume, just evenly split for the rest of the year.

Speaker Change: Okay got it so the remaining 233.

I would assume just evenly split for the rest of the rest of the year.

Omar Mostafa Nokta: Give or take, yes. Okay.

Speaker Change: Give or take yes.

Omar Mostafa Nokta: Okay, very good. Thank you very much for the time. I'll turn it over.

Speaker Change: Okay very good. Thank you very much for the time I'll turn it over.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Muneeba Kayani from Bank of America. Your line is open.

Speaker Change: Your next question comes from the line of money by Kiani from Bank of America, Jeremy to open.

Muneeba Kayani: Thank you for taking my questions. So firstly, I just wanted to understand your EBITDA guidance and the phasing of it. As we've heard from some of the other lines that 2Q EBITDA could be better than the first quarter, so firstly, is that your expectation given what you've seen so far in the second quarter? And then if that's the case, I guess that would imply you're assuming fairly low profitability in the third quarter and fourth quarter. So can you please help us understand how you've thought about the phasing this year?

Speaker Change: Thank you for taking my questions. So firstly I just wanted to understand your EBITDA guidance and the phasing of it.

Ed: As we've heard from some of the other liners that that to Q EBITDA could be better than the first quarter. So firstly is that your expectation given what you've seen so far in the second quarter Ed.

Ed: And then if that's the case I guess that would imply.

Ed: You are assuming fairly low profitability in the third quarter and fourth quarter.

Speaker Change: Can you please help us understand how you talked about the fee.

Yes.

Eliyahu Glickman: Yes, I will begin, and Xavier will follow. First, we are very positive, and as we said, we are in positive momentum. As we said, 24 results are going to be better than 23 results, as we see in the forecast today. That's all your questions for the quarter.

Speaker Change: Yes, I will began Sylvia will follow first we are very positive and as we said we are in positive momentum.

Speaker Change: As we said 24 result is going to be better than 'twenty result, as we see the focus today.

Speaker Change: As for your question for quarter.

Speaker Change: We don't.

Eliyahu Glickman: We try to stick, not to go to quarterly results, but we are speaking about guidance for the year, not for the quarter. You can understand, and I give you the credit for understanding and coming to the conclusion that we believe, and we have said it in the past, that the first half is going to be stronger than the second half. And this is because we are trying to be cautious, as we don't know yet when the Houthis crisis is going to be ended.

Speaker Change: We try to keep not to go to quarterly results, but we'll speak in guidance for the year not for the quarters.

Speaker Change: You can understand and give you the credit to understand and to take the conclusion that.

Speaker Change: But we believe that and we said it in the in the past season.

Speaker Change: The first test is going to be stronger than the second.

Speaker Change: And this is because we are trying to be cautious as we don't know yet.

Speaker Change: When the could discuss this is going to be ended.

Eliyahu Glickman: And in order to be conservative, and we don't know in advance what will happen with the Hutis and the supply side effect, we are trying to be conservative for the second half. As a result, what we can see today, as I said before, the first half is going to be strong. And 24 results are going to be stronger than 26.

Speaker Change: In order to be conservative and we don't know what to expect in advance what will be.

Speaker Change: With the hotel and the supply side effect.

Speaker Change: We're trying to be conservative for the second half as a result.

Speaker Change: And what we can see today as I said before the first half is going to be strong.

Speaker Change: And 'twenty four result are going to be stronger in 'twenty three.

Xavier Destriau: I believe I just indeed add that it is, I'm sure everybody understands, very difficult to forecast and predict what's going to happen and how the situation will unfold in the coming quarters as there are a lot of events that, at the end of the day, drive the current uptick in the market that are potentially also the result of geopolitical events that nobody has a clear control over. So clearly what we can say at this stage is that, as Eli just said, the beginning of the year is much better than what we initially anticipated, but if we look at the fundamental dynamics of our industry, if we leave aside for a second the disruptions that we just talked about just now, but if we look at the fundamental supply-demand dynamic of our industry, we are still in a situation whereby the threat of overcapacity is still around there, around us.

Speaker Change: Okay.

I believe I just indeed.

Speaker Change: It is.

Speaker Change: Sure everybody understands very difficult.

To forecast and predict what's going to happen and how the situation will unfold in the coming in the coming quarters as the there are a lot of events that.

Speaker Change: At the end of the day a drive.

Current uptick in the market that are potentially also the result of a.

Speaker Change: Geopolitical events that nobody has a clear control control over so clearly what we can say at this stage is that as he just said that the.

Speaker Change: The beginning of the year is much better than what we initially anticipated, but if we look at the fundamental dynamics of our industry.

Speaker Change: We leave aside for a second the disruptions that we just talked about just now but if we look at the fundamentals are supply demand dynamics of our industry and we are still in a situation whereby the threat of overcapacity still around there around us I mean, there is a lot of new build tonnage that is.

Xavier Destriau: I mean, there is a lot of new built tonnage that is expected to be delivered towards the second half of the year, and vessel sizes that are precisely designed to get into the east-west trade, which is today a very strong performer in terms of earnings generation. So that supply risk is there, and there is, I think, a good and positive sign today when it comes to demand. But whether the demand will be good enough to absorb that extra capacity is where we need to be, I think, a little bit more cautious. Hence why today we still feel that it is a likely scenario that the second half of 2024 might be a bit weaker than the first. Thank you. I totally understand that.

Speaker Change: Expected to be delivered towards the second half of the year.

Speaker Change: The vessel size desktop precisely designed to get into the east West trades that are today very strong performer in terms of earnings generation so that.

Speaker Change: Supply risk is there and there is I think a good positive signs today when it comes to the demand whether the demand will be good enough to absorb that extra capacity is where we need to.

Speaker Change: I think a little bit more cautious hence why today.

Speaker Change: We still feel that it is a likely scenario that the second half of 2024 might be weaker.

Speaker Change: Weaker than the first.

Muneeba Kayani: Thank you. I totally understand that. And given what you've seen so far in 2Q and the spot rates we've seen, and just looking at your working capital and the trade receivables, is it fair to assume that 2Q could be higher than 1Q? Ah, it could be. And just then, if I may ask another question following up from the previous questions around lease payments. So, thank you for the explanation there. Just in terms of overall lease payments for 2024 and 2025, can you remind us what the cash outflows for that and just other CAPEX this year and next year would be, please?

Speaker Change: Thank you I I totally understand that and given what you've seen so far into Q and spot rates we've seen.

Speaker Change: Just looking at your working capital in the trade receivable. It's a is it fair to assume that to Q could be higher than one Keith.

Speaker Change: It could.

Speaker Change: Okay.

Speaker Change: And just then if I may ask another question on following up on the previous questions around.

Speaker Change: The statement. So thank you for the explanation that just in terms of overall lease payments for 2024 and 22 five can you remind us what could be the cash outflows for that and just other capex. This year to next year. Please.

Xavier Destriau: In terms of lease payments, we are, and we have always said indeed that 2024 is going to be a challenging year for us, mostly because we continue to pay the charters that we secured during the COVID era days, which were more expensive than the ones that could be secured today to some extent. And so for that purpose, 2024, just like 2023 was, is quite heavy on that front.

Speaker Change: So in terms of their lease payments. So we are and we always said indeed that 2024 is going to be a challenging year for us mostly because we continue to pay the charter that we secured during the Covid era. It is that.

Speaker Change: Were more expensive than the one that could be secured debt today to some extent and so.

Speaker Change: For that purpose 2024 are just like 2023 was by the way.

Speaker Change: Is quite heavy on that front, but as we are.

Xavier Destriau: But as we are re-delivering those more expensive ships and bringing in the ones that we've ordered, the new build that we've ordered for which we have a clear view, there is no debate, no question, no variability here. We have a fixed agreed rate that we're going to be paying for the foreseeable future, which again was priced as per the shipyard's new build price at the time we ordered the ship, so completely de-correlated from what the charter market prevailing during those days.

Speaker Change: We delivering those are more expensive ships and bringing in the ones that we've ordered a new build that we have orders for which we have a clear view there is no debate no question.

Variable here, we have a fixed agreed upon.

Speaker Change: That we're going to be paying for the foreseeable future, which again was a price as per the newbuild. The shipping the shipyards newbuild price at the time, we ordered the ships so completely de correlated.

Speaker Change: Correlated from what was the charter bucket.

Speaker Change: Prevailing on doing those days. So we are going to go back to a far more reasonable.

Xavier Destriau: So we are going to go back to a far more reasonable charter payment if we bring that down to per operated TEU. So that's for the charter payment. When it comes to CAPEX, in terms of vessel CAPEX, we should not have, today we don't anticipate any of those in 2024, unless you consider the down payment that we are making at delivery of the ship as CAPEX related. Just to be clear, in our cash flow statement, it is not, it is a prepayment of rental, so it goes in the lease liability repayment line, but, as I think we previously said, we still have $230 million of cash payment in 2024 that we relate to the delivery of those new ships.

Speaker Change: Charter payment, if we bring that down to per operated.

Speaker Change: So thats for the charter the charter payments when it comes to.

Speaker Change: When it comes to Capex.

Speaker Change: In terms of the vessel Capex that we should not have a today, we don't anticipate.

Speaker Change: Any of those in the in 2024, unless you consider the down payments that we are making at delivery of the ship.

Speaker Change: Capex related just to be clear in our cash flow statement. It is not it is prepayment of rentals. So it goes in the lease liability repayment line, but so.

Speaker Change: I think we previously said that we still have $230 million of cash payments in 2024 that we relate to the delivery of those new ships and what they are.

Xavier Destriau: And what may change a little bit is us having to maybe continue to invest a bit more in equipment. We just talked about the equipment shortages that resulted from the current market dynamics, and we want to anticipate and make sure that we are not taken short on our equipment requirements in order to meet our customers' expectations. We might invest a little bit on that front and bring in new boxes, mostly dry 40-foot high cubes, which are the hot commodity right now when we talk about equipment.

Speaker Change: <unk> changed a little bit.

Speaker Change: Having to May.

Speaker Change: <unk> continued to invest a bit more on the equipment. We just talked about the equipment shortages that resulted from the parent.

Speaker Change: Market dynamics, and we want to anticipate and make sure that we are not taking that short on our equipment requirement in order to meet our customers' expectations. So we might.

Speaker Change: Invest a little bit.

Speaker Change: On that front, and bringing new new boxes, mostly dry.

Speaker Change: 40 foot high cubes, which are the hot commodity right nobody that when we took a doctor about equipment.

Xavier Destriau: And if I may ask a third question on dividends, please, how did you think about the kind of the quarterly dividend for 1Q? I understand the payout ratio, but I think, if I remember correctly, it was subject to board review. And kind of what has made the board comfortable with paying the dividend, given your comments around the threat of oversupply in the industry? Thank you. Look, I mean, I think on this one...

Speaker Change: And if I may ask a third question on dividends. Please how did you think about kind of the quarterly dividend for one you I understand that the payout ratio, but I think if I remember correctly. It was subject to board take you and kind of what has made the board comfortable with paying.

Speaker Change: The dividend given your comments around kind of the threat of oversupply in the industry. Thank you.

Xavier Destriau: Look, I mean, I think this answer you're right. We have a dividend policy, which we intend to adhere to, unless there are good reasons for us to deviate from that dividend policy. And the board, looking at this question, felt confident that by adhering to the dividend policy, we were not putting the company at risk in terms of its outlook. What do we see going forward? From a corporate law perspective in Israel, we have to meet and satisfy several criteria and tests that we have already satisfied. And as a result, the board felt comfortable in agreeing to this dividend distribution. Keep our policy, yep, to adhere by the policy.

Speaker Change: So look I mean, I think this answer.

Speaker Change: Youre right, we have a dividend policy, which we intend to adhere to unless there are good reasons for us to deviate from that dividend policy and the board looking at quest.

Speaker Change: Question felt confident that.

Speaker Change: Bye.

During to the dividend policy, we were not putting the.

The company at risk in terms of outlook, what do we see going and going and looking ahead going forward.

Speaker Change: From a corporate LOE perspective in Israel, we have to meet and satisfy.

Speaker Change: Several several criteria is a test that we did are satisfied and as a result the board.

Speaker Change: Comfortable in the in agreeing to this dividend distribution.

Speaker Change: Keep our policy.

Speaker Change: To adhere by the policy.

Thank you.

Operator: Your next question comes in the line of Sathish Sivakumar from Citigroup. Your line is open.

Speaker Change: Your next question comes from the line of <unk> Kumar from Citigroup. Your line is open.

Speaker Change: Thanks for the presentation I've got three questions here, so firstly on the Bulks shortages.

Sathish Babu Sivakumar: slash equipment shortages; if you could just color, like, which lanes are you seeing this? Is it mainly on the back all or on the front all? And then, like, Asia to Europe, any color on that or not south would be helpful.

Speaker Change: Classic coupon shortages, if you could just colo.

Speaker Change: Which trends are you seeing there.

Speaker Change: Maybe on the backhaul or Glenn look.

Speaker Change: Al.

Speaker Change #100: What gives you the euro any color on that thought not salt would be of scale.

Sathish Babu Sivakumar: And then, last year in Q3, you took an impairment on your lease liabilities based on Assuming the rates would be depressed for longer, given the recent rebound in rates, how would that impairment provision work? Would you see that being unwind, or is it like done for now? You're not going to go back and revisit that.

Speaker Change #101: And then last year in Q3, you took an impairment.

Speaker Change #102: On your right.

Speaker Change #102: Loose liabilities.

Tom: It's Tom.

Speaker Change #104: Assuming the rates would be depressed for longer given the recent rebound in rates all of those that empowerment provisional look good you will see that unwind.

Speaker Change #105: Or is it done for now I'm going to go we'll go and revisit that.

Sathish Babu Sivakumar: And then the contract rates, uh, like... In your Q1, have you had any contract rates coming in? Or is it all like 35% contracted, you're just starting off only in May? And how should we think about the exit rate on your freight rates versus March versus what you're seeing in April and May? That will be helpful. Thank you.

And then the contract great Mike.

Speaker Change #105: In Q1.

Speaker Change #105: Like any contract periods coming in or does it all like that you're focused on contract.

Speaker Change #106: Just talking about only me.

Should we think about the exit rate on your freight.

Speaker Change #107: This march versus what you're seeing in April and May that would be helpful. Thank you.

Xavier Destriau: Okay, on your first question, when it comes to equipment constraints or shortages, we clearly see the pressure rising in Asia for us to be able to get the equipment positioned on time to bring the cargo to the U.S. So for us, it's really Asia to the U.S. trade, which is the intention. And by the way, I mean, when we say Asia to the U.S., because it's our most significant trade, but from all the places of origin in Asia to destinations elsewhere, for as long as, for example, Ningbo is a place where we have a shortage of equipment, and we need to make sure that we reposition the equipment as timely as possible.

Speaker Change #107: Okay.

Speaker Change #108: On your first question when it comes to equipment.

Speaker Change #109: Constraint or shortages, we clearly see the.

Speaker Change #109: The pressure of rising in the <unk> in Asia.

Speaker Change #109: To be able to get.

Speaker Change #109: Equivalent position on time to bring the cargo to the U S. So for US It is really is.

Speaker Change #109: Asia to the U S trade, which is which is the intention and by the way I mean, when we say Asia to the U S. Because it's our most significant trade but.

Speaker Change #109: Or the place of <unk>.

Speaker Change #109: Already in Asia to destination elsewhere for as long as for example in Ningbo is a place where we have a shortage of equipment.

Speaker Change #109: And we need to make sure that we reposition that equipment as timely as possible and as I mentioned earlier and potentially also envisage acquiring and increasing our our fleets of equipment, which by the way.

Xavier Destriau: And as I mentioned earlier, potentially also at this age, acquiring and increasing our fleet of equipment, which, by the way, doesn't come as a surprise. And this is why I think Eddie mentioned that we were prepared for that. We need maybe to add a little bit more due to the increase in our operating tonnage. The more we operate capacity from a vessel perspective, the more de facto we need also additional equipment. So here we still see some pressure.

Speaker Change #109: It doesn't come also was a surprise and this is why I think Eddie mentioned that we got prepared for that but need maybe to add a little bit more due to the.

Speaker Change #109: Increase in our operating tonnage the more we operate capacity from a vessel perspective, the more the factor we need.

Speaker Change #109: Additional equipment. So here, we see we see still a sublet some pressure, but mostly this is a shortage of equipment availability in.

Xavier Destriau: But mostly, this is a shortage of equipment availability in Asia, China more specifically, that we need to monitor very closely. The second question, I think, on impairment, the impairment is on the asset side, not on the lease liability side, but the rationale for the impairment, again, what is it? It is us looking at our long-term forecast, and we say long-term here, it's not one quarter or even one year; we're looking at four to five years ahead and trying to come up with a fair assessment as to what could be the cash generation of the company.

Speaker Change #109: Asia, China more specifically.

Speaker Change #109: We need to we need to monitor very closely.

Speaker Change #109: The second question I think on the impairment the impairment is on the on the asset side and not on the liability side, but the rationale for the impairment again what is it it is looking.

Speaker Change #109: Looking at our long term forecast and we say long term here its not one quarter or even one year. We're looking at four to five years ahead and try to come with <unk>.

Speaker Change #109: Fair assessment as to what could be the cash generation of the company that we use discounting rate which is there.

Xavier Destriau: Then we use the discounting rate, which is our weighted average cost of capital, and then we come up with a number, which is the future discounted cash flow that we think we might be generating, and then we compare that to the book value of our asset.

Speaker Change #109: Our weighted average cost of capital and then come to a number which is the future discounted cash flow that we think we might be generating and then we compare that to the book value of our assets and Thats when we did that exercise.

Xavier Destriau: And that's when we did that exercise last year in Q3. This is where we saw the correlation between those two numbers and allocated and accounted for this large impairment amount. So now, every quarter, we ask ourselves the same question and need to consider whether there are impairment indicators in both directions, by the way, a worsening of our forecast or an improvement that is material and meaningful that could or should lead us to revisiting that impairment analysis.

Speaker Change #109: Last year in Q3, this is where we saw that the correlation between those two numbers and allocated and accounted for this large impairment impairment amount. So now every quarter.

Speaker Change #109: To ask ourselves the same question in and need to consider without whether they are impairment indicators in both directions by the way a worsening of out of our forecast for an improvement.

Speaker Change #109: It is material and meaningful debt accrued or should.

Lead us to where we are.

Xavier Destriau: Up until today, we felt that the recent changes in the market, which are still, From a timing perspective, we cannot safely say that this is a new normal. We are still, I think, in a very volatile environment. So the long-term view for us is still today pretty much unchanged when we look ahead into future use. But again, if we were to see or think at some point in time that we had to revisit those assumptions, we would. And it could lead to a reassessment of the impairment. Again, both potential directions either add to it or write back some of it.

Speaker Change #109: <unk> visiting that impair.

Speaker Change #109: Impairment analysis efforts you today, we felt that.

Speaker Change #110: The recent change in the market, which after you.

Speaker Change #110: From a timing perspective, we cannot safely say that the new this is a new normal we are still thinking that.

Speaker Change #110: A volatile environment. So the long term view for US is as dealer today are pretty much unchanged. When we look ahead into into future years, but again.

Speaker Change #110: We ought to see ought to think at some point in time that we had to revisit those assumptions, we would add it could lead to.

Speaker Change #110: Reassessment of the impairment again, both potential directions, either afterwards right back some of it.

Xavier Destriau: And lastly, your question relating to the contract rates. Clearly, for us, when we refer to the 35% rate or percentage that we secured for the next contract season, so we talk here about us from the 1st of May 2024 up until the 30th of April 2025, we anticipate or expect that out of our volume objective on the Trans-Pacific, 35%, give or take, of that volume objective will come from contract cargo, and de facto, 65% of the difference will come from sport.

Speaker Change #111: And lastly, your question I think relating to the.

The contract rates clearly for us.

Speaker Change #111: When we referred to the 35%.

Speaker Change #111: Rates are a percentage that we secured for the next contract season. So we talked here about as from the first of May of 2024 tier. The series of April 2025, we anticipate or expect that out of our volume objective on the transfer.

Speaker Change #112: Pacific 30.

75% give or take of that volume objective will come from the contract a cargo and de facto 65%. The difference will come that will come from the spot and that is I think.

Xavier Destriau: And that is, I think, very much, as we tried to explain, driven by the fact that, yes, we see the sports market today, but the contract rates that we managed to agree with our customers were not meaningfully different from what they were during the past season. So for the first quarter, in the way of 2024, slightly higher, but not meaningfully higher. And we felt that, on average, if we look at what we think will happen in our market environment for the next 12 months, on average, we think that we will earn a better income per TAU in the sports market than we will on contract cargo.

Speaker Change #112: Very much as we tried to explain driven by the fact that yes, we see the spot market today the contract rates.

Speaker Change #112: We.

Speaker Change #112: Managed to agree with with our customers we are not meaningfully different from what they were doing the past season. So so for the first quarter in the way of 2024.

Speaker Change #112: Slightly higher but not meaningfully.

Speaker Change #113: Earnings will be higher and we felt that on average if we look at what we think will happen in our market environment for the next 12 months on average we think that we will.

Speaker Change #113: Income per Teu on the spot market that we would.

Speaker Change #113: That we were on the.

Speaker Change #113: Of the contract contractor Thiago.

Sathish Babu Sivakumar: Okay, I got it. Thanks, Xavier. Just maybe one more, if I could.

Speaker Change #114: Okay got it. Thanks, So just maybe one more if I could.

Sathish Babu Sivakumar: In terms of the cost, obviously, you do have a higher proportion of LNG now with the additional voyage length. But does it put you at a disadvantage versus, say, the liners who operate on traditional bunkers?

Speaker Change #115: And control the cost obviously, you do a higher proportion of LNG.

Speaker Change #115: Additional voyage length.

Speaker Change #116: Is it put you in a disadvantage.

Speaker Change #116: The lineup so I'll pick on traditional bunker.

Xavier Destriau: I would say quite the opposite. Today, we feel the benefit of switching and gradually transitioning more and more towards LNG bankering, which is, both from a consumption perspective and from a cost per tonne perspective, cheaper for us to run the vessels on LNG than it is to run those ships or similar ships on traditional diesel fuel. So, as you know, I mean, all of our LNG vessels are dual fuel.

Speaker Change #117: I would say quite the opposite today, where we feel the benefit of switching and gradually.

Speaker Change #117: Transitioning more and more towards LNG, Bunkering, which is for both from a consumption perspective and from a cost per ton perspective cheaper for us to read the vessels on LNG that it is to render those ship or a similar shift on the traditional diesel diesel fuel so as you know.

Speaker Change #117: All of our LNG vessels are dwell fuel, we could decide to read them on the NSF or if you wanted to.

Xavier Destriau: We could decide to run them on LSFO if we wanted to, but first, we don't want to because they are meant to achieve an ESG objective, a decarbonization objective and trajectory. But even beyond that, one reason from a pure cost of operation perspective, it is cheaper for us to run those ships on LNG than it would be to run them on LSFO.

Speaker Change #117: First with <unk>, because they are meant to achieve.

Speaker Change #117: ESG objectives decarbonization.

Speaker Change #117: Objective and trajectory, but even.

Speaker Change #117: Beyond that one reason from a pure cost of operation perspective, It is cheaper for us to read those ships on LNG that it would be to win them on <unk>.

Operator: Your next question comes from the line of Marco Lemaitre from Barclays. The line is open.

Marc <unk>: Our next question from the line of Marc <unk> from Barclays. Your line is open.

Marco Lemaitre: Hi, good morning; thanks for taking my question. My first question is on leverage. So, as you state, you have 2.8 times NetDev EBDA as of Q1. Just wondering what your level of comfortability around leverage and if there are covenants going forward that we should think about. My second question is on cost. So clearly, you do have some... So, in your view, how more expensive are these LNG vessels compared to, let's say, standard fuel power vessels? Thank you.

Speaker Change #119: Hi, Good morning, Thanks for taking my question. My first question is on leverage.

Speaker Change #120: As you state you have two eight times net debt EBITDA as of Q1.

Speaker Change #121: Wondering what's your sort of level off.

Speaker Change #121: What's your.

Speaker Change #122: A level of comfort ability or our leverage and if there are covenants.

Speaker Change #122: Going forward that we should think of.

Speaker Change #123: My second question is on cost. So clearly you do have some.

Speaker Change #123: Charters that they come up for renewal this year and my question is to what extent chartering cost are now take into effect. The IC disruption, so our chartering costs, becoming more expensive than what they were a couple of months ago for example.

Speaker Change #123: By how much and my third question just a follow up to the previous question, but on the let's say capex side. So.

Do you view, all more expensive <unk> LNG vessels compared to what I say.

Speaker Change #123: Fuel.

Speaker Change #124: Power vessels. Thank you.

Xavier Destriau: Okay, so maybe I'll start with the last one. You know, those vessels that we ordered; we ordered them via a third party in the middle. So it's a long-term charter commitment, although those vessels were ordered for us on a back-to-back charter. So if we take about the LNG-fueled vessels, all of them, the 15,000 TEUs, were secured with C-SPAN as a vessel owner, and then on the back-to-back charter with us, the 8,000 TEU ships, 15 of them were also secured with C-SPAN, and the three remaining with another vessel owner.

Speaker Change #125: And okay. So maybe starting with the last one.

Speaker Change #126: Those vessels that we ordered reorder.

Speaker Change #125: Yeah.

Speaker Change #127: Party in the middle So it's a long term charter commitments, although those vessels were ordered for us with a back to back charter. So if we think about the LNG.

Speaker Change #128: Fueled the vessels all of them.

Speaker Change #128: 15000, Teu with secured with Seaspan as vessel owner and then on the back to back charter with us.

Speaker Change #128: 8000, Teu ships 15 of them were also secured with Seaspan.

Speaker Change #128: And the three remaining with another.

Speaker Change #128: As I said on there so.

Xavier Destriau: So at the time, what we did was we knew what the shipyard price for those new buildings would be. And if you were to ask me, let's take the example of the 15,000 TEU ships back in 2021, the average value of those ships was maybe around $140 million apiece. Today, it would be closer to $200 million.

Speaker Change #129: At the time, what we did was we knew what was the shipyard price for those new buildings and if you were to ask me, let's take the example of the 15000 Teu shifts back in 2021, the average value of those ships was maybe around $140 million a piece.

Speaker Change #129: It is it would be closer to $200 million.

Xavier Destriau: And what we got was a charter rate, so C-SPAN is acting as a financial lessor, ultimately, to us. And so the charter rates that we secured for those ships are to be looked at as a finance lease provided by a financial obligor, in this instance, C-SPAN. So we feel that we got a very good deal from a timing perspective, that we went out to secure those efficient tonnage at the exact right time. So that's why we are saying with absolute confidence that our cost per TEU is going to improve as a simple result of us replacing the older tonnage that we chartered via Vessel Owners and that we return to make room for this new build, which is far more cost-friendly to us.

Speaker Change #129: And what we got was a charter rates. So the seaspan is acting as the as the financial lessor intimacy to us and so the charter rates that we secured for those ships is to be looked at.

Speaker Change #129: Our finance lease provided by.

Speaker Change #129: Financial of the Gore in this instance in this instance, this vessel so we feel that we got a very.

Speaker Change #129: Good.

Speaker Change #129: From a timing perspective that we went out to secure those efficient tonnage at the exact right time, where the where the shipyard price, whereas is still not at the level.

Speaker Change #129: What we see today. So that's why we are saying with absolute confidence that our cost per teu is going to improve as a simple result of replacing.

Speaker Change #129: All the tonnage that we charted.

Speaker Change #129: Vessel owners and that we return to make room for these new Bill, which is a far more cost a friendly to us which leads to your second question today. The company is not exposed to the charter market whatsoever, we are not.

Xavier Destriau: Which leads to your second question today; the company is not exposed to the charter market whatsoever. We are not discussing renewing a charter contract because, by the contrary, like I said, we make room for the new buildings that are coming our way for which we negotiated already three years ago what the rates would be. And what we do is that we deliver all the vessels that we have secured before and that come up for renewal at the end of the charter period. We don't renew, we give back, and we re-deliver to the Vessel Owner.

Speaker Change #129: We are not discussing the new wing.

Speaker Change #129: Charter contract because quite the contrary like I said, we make room for the new buildings that are coming our way for which we negotiated already three years ago, what would be the rates that we will be paid and what we do is that we deliver all the vessels that we secured before and that covered for renewal.

Speaker Change #129: At the end of the charter periods, we don't renew we give back we will deliver to the vessel owner. So this is why youre clearly and we can say safely that as far as our cost structure is concerned there is no exposure to the current charter market environment.

Xavier Destriau: So this is why clearly, we can say safely that as far as our cost structure is concerned, there is no exposure to the current charter market environment. And then to your first question in terms of leverage and covenant. First, there is no financial covenant or EBITDA-related covenant in any of our financing facilities. We only have one financial covenant in a small facility, a container facility, which has a minimum cash requirement of $250 million. So we don't have any leverage or coverage or gearing type of covenant obligation vis-à-vis any of our financial counterparts.

Speaker Change #129: And then to your first question in terms of a leverage covenant first there is no financial covenants or EBITDA related covenants.

Speaker Change #129: <unk> of our financing facility, we only have one financial covenant in our.

Speaker Change #129: A small facility a container facility, which is a minimum cash over $250 million.

Speaker Change #129: So we don't have any leverage or coverage or gearing type of type of covenant obligations.

Speaker Change #129: Our financial debt.

Initial counterparts.

Marco Lemaitre: Okay, thank you. And if I could add one more, just wondering, as you have just said that you expect, let's say, the spot rate, uh, to be, you know, throughout the year a bit stronger compared to the contract rate on the trans pack on average, just wondering whether the higher percentage of the spot rate on the trans-specific versus contract is already in the guidance and therefore, you have been cautious in the second half just because you are anticipating Look, I will let you be.

Speaker Change #130: Okay. Thank you and if I could add one more just wondering as you have just said that you expect let's say spot rates.

Speaker Change #130: To be.

Speaker Change #131: Throughout the year would be stronger compared to the contract rate on the transpac on average.

Speaker Change #131: Just wondering.

Speaker Change #131: Whether that.

Speaker Change #132: The higher percentage of spot rates as portrayed on the Trans Pacific versus contract is already in the guidance.

Speaker Change #132: And therefore.

Speaker Change #132: Yes.

Speaker Change #133: <unk> been cautious in the second half.

Speaker Change #134: Just because you're anticipating the possibility of a steep correction in spot rates. Thank you.

Xavier Destriau: Look, I mean, I will let you be the judge of whether we are, you know, conservative or not. But the short answer to your question is that, when we provided our guidance, we took into consideration where we ended up from a contract discussion perspective and the outcome that we discussed of us being willing to take a larger exposure to the spot market, which is us taking a risk. But we think it's the right risk for us to take, as opposed to locking in at a low rate a significant amount of cargo. So we take the more difficult avenue on that front.

Speaker Change #135: Look I mean, I will let you be the judge of whether we are.

Speaker Change #135: Conservative or not but.

Speaker Change #136: Yes sure.

Speaker Change #136: Short answer to your question when we provided our guidance we took into consideration where we as a deduct from a contract discussion perspective, and the outcome that we discussed.

Speaker Change #137: As willing to take a larger exposure to the spot market, which is taking a risk, but we think it's the right risk for us to take as opposed to as opposed to Lockheed at low rates a significant amount of Av.

Speaker Change #137: Cargo so we take the more difficult Avenue on that front.

Speaker Change #137: And but we have to be also mindful of the fact that the.

Marco Lemaitre: But we have to be mindful of the fact that the spot rates that we see today might not prevail for the whole of the year. And it is indeed factored in our guidance that we anticipate a likely scenario that the spot rate will trend downwards. Then the slope of the trend is to be determined. Then we will monitor the situation, obviously, quarter after quarter.

Speaker Change #137: Spot rates.

Speaker Change #137: We see today it might not prevail for the for the whole of the year and it is.

Speaker Change #137: Indeed factored in our guidance that we anticipate.

Speaker Change #137: A likely scenario.

Speaker Change #137: Spot rate will trend downwards, then the scope of the trend is to be is to be determined and we will monitor the situation, obviously a quarter after quarter.

Speaker Change #138: Thank you.

Operator: And that concludes our question and answer session. I will now turn the call back over to Eli Glickman for closing remarks.

Speaker Change #139: And this concludes our question and answer session I will now turn the call back over to Ali for closing remarks.

Speaker Change #138: Yes.

Eliyahu Glickman: We are pleased with our progress thus far in 2024, both advancing ZIM transformation through fleet renewal and capitalizing on stronger-than-anticipated market conditions to deliver a profit in the first quarter. Our co-structure continues to improve, in tandem with the delivery of our highly competitive fuel-efficient new-built tonnage, which will include 28 LNG-powered vessels. Once our Fleet Renewal Program is complete, as we transform our fleet profile and maintain a robust network backed by exceptional customer service.

Ali: We are pleased with our progress thus far in 2004, both advancing zinc transformation to fleet renewal and capitalizing on stronger than anticipated.

Market conditions to deliver a profit in the first quarter.

Ali: Our cost structure continues to improve.

Ali: With the delivery of our highly competitive.

Ali: Fuel efficient new build tonnage, which will include 28 LNG powered versus once our fleet renewal program.

Is complete.

Ali: As we transform our fleet profile maintain our boost network backed by exceptional customer service.

Eliyahu Glickman: We are on track to drive long-term sustainable growth. In light of improved market conditions, we've increased our fully 24 gardens. While the house remains and market conditions are constantly evolving, we are confident in the exceptional team we have in place and our strategic position as an agile container shipping player with a revamped. We look forward to continuing to capitalize on positive near-term market dynamics and further implement our differentiated strategy to best serve our customers and generate human value for shareholders. Thank you very much to all of you.

Speaker Change #141: We are on track to drive long term sustainable growth.

Speaker Change #141: In light of improving market conditions, we have increased our full year 'twenty for guidance.

Speaker Change #141: <unk> remains and market conditions are constantly evolving.

Speaker Change #141: Our confidence in the.

Speaker Change #141: Exceptional team.

Speaker Change #142: And our strategic position.

Speaker Change #142: <unk> container shipping player.

Speaker Change #142: Okay.

Speaker Change #142: We look forward to continuing to capitalize on positive near term market dynamics.

Speaker Change #142: And further implement our differentiated strategy to best serve our customers and generate value.

Speaker Change #142: Value for shareholders.

Speaker Change #143: <unk> very much.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change #143: This.

Speaker Change #144: Thank you.

Speaker Change #145: Prince call. Thank you for your participation you may now disconnect.

Speaker Change #145: [music].

Speaker Change #145: Sure.

Speaker Change #145: [music].

Speaker Change #145: Sure.

[music].

Speaker Change #145: Okay.