Genco Shipping & Trading - Earnings Call - Q4 2021

Transcript

Speaker 0

Good morning, ladies and gentlemen, and welcome to the Genco Shipping and Trading Limited Fourth Quarter twenty twenty one Earnings Conference Call and Presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.gencoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the company's website, www.gencochipping.com. We will conduct a question and answer session after the opening remarks.

Instructions will follow at that time. A replay of the conference will be accessible anytime during the next two weeks by dialing (888) 203-1112 or (719) 457-0820 and entering the passcode nine million six ten eight and sixty nine. At this time, I will turn the conference over to the company. Please go ahead.

Speaker 1

Good morning. Before we begin our presentation, I note that in this conference call, will be making certain forward looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the company's press release that was issued this morning, the materials relating to the call posted on the company's website and the company's filings with the Securities and Exchange Commission, including without limitation, the company's annual report on Form 10 ks for the year ended 12/31/2020, and the company's reports on Form 10 Q and Form eight ks subsequently filed with the SEC.

At this time, I would like to introduce John Wovensmith, Chief Executive Officer of Genco Shipping and Trading Limited.

Speaker 2

Good morning, everyone. Welcome to Genco's fourth quarter twenty twenty one conference call. I will begin today's call by reviewing our 2021 and year to date highlights, providing an update on our implemented comprehensive value strategy, financial results for the quarter and the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. Looking back at 2021, it was truly a transformational year for Genco across the board, capped off by a Q4 that was the best since 02/2008.

Nearly a year ago, we proactively pivoted our capital allocation strategy towards a low leverage compelling dividend model. We spent the balance of 2021 laser focused on the implementation of this strategy following the blueprint we laid out back in April 2021. After completing initiatives centered around financial deleveraging and growth, we are now in a position to distribute meaningful quarterly dividends commencing in the 2021 to be paid this March. As we stand here today, we are pleased to have developed a unique drybulk vehicle that offers an attractive riskreward profile for the benefit of shareholders. We believe our platform represents a differentiated drybulk offering given our industry low cash flow breakeven rate and low financial leverage combined with high operating leverage through the scale of our balanced fleet, a best in class commercial team and a strong liquidity position.

A company that can check all of these boxes has not been previously in place in the drybulk public markets, which is why we are so excited to roll out our fourth quarter results that have capped off a year of not only significant cash flows for the company, but also significant financial discipline. Over the course of last year, we paid down $2.00 $3,000,000 of debt, representing 45% of our debt balance at the start of 2021. Importantly, we are now in a position in which the current scrap value of our fleet is nearly 2x our debt outstanding. These paydowns, together with a global refinancing completed mid last year, have ensured that Genco has no mandatory debt repayments until 2026. In addition, this has resulted in lower overall cash flow breakeven rates, which we believe will enable Genco to pay dividends across diverse rate environments.

Continuing to pay down debt during a time with no mandatory debt repayments is consistent with our medium term goal to reduce our net debt position to zero. In the near term, we are focused on rewarding shareholders through compelling dividends while continuing to delever to be in a position to reward shareholders over the longer term and support sustainable dividends. We view this as prudent to further improve our financial standing over time to put Genco in an even stronger position to take advantage of attractive growth opportunities as markets develop. Furthermore, in early twenty twenty one, we opportunistically grew our core minor bulk fleet capitalizing on a disconnect between freight rates and ship values to augment our earnings power. Specifically, we purchased six high quality fuel efficient Ultramax vessels for an aggregate of $150,000,000 In January 2022, we took delivery of the final two of those vessels, the Genco Mary and the Genco Laddie, both built in 2022 at Dax Shipyard.

Throughout the course of the year, on a parallel path to our deleveraging and taking advantage of growth opportunities, we also steadily ramped up our quarterly dividend from $02 per share in Q4 twenty twenty up to $0.15 per share in Q3 twenty twenty one. For the fourth quarter twenty twenty one, we declared a quarterly dividend of $0.67 per share, representing a nearly 350% increase versus the previous quarter and marking our first dividend under our value strategy methodology. This substantial dividend represents an annualized yield of 14% based on Genco's closing share price as of 02/23/2022. Interestingly, if we pay down our targeted quarterly run rate of $8,750,000 of debt in q four twenty twenty one instead of the $59,000,000 of debt we actually paid, our quarterly dividend would have been $1.85 per share, nearly 3x higher than the actual payout. This highlights the dividend capacity leverage combined with our industry low breakeven rate.

Management maintained its disciplined approach towards capital allocation, which we believe will well position the company both now and going forward. We have now declared dividends for ten consecutive quarters for cumulative dividends totaling 1.725 per share or approximately 9% of yesterday's closing share price. In addition to the measures taken to execute on our value strategy, from an earnings perspective, the fourth quarter was our strongest in over a decade, led by net income of $90,900,000 and a time charter equivalent rate of $35,200 per day. Looking ahead to the first quarter, our estimates point to continued strong results with a time charter equivalent of approximately $24,215 per day based on fixtures to date across the fleet for 87% of our owned available days. This firm number highlights our proactive approach to securing revenue ahead of a seasonally softer market period as well as incremental earnings generated through our opportunistic container fixtures.

In addition, the container fixtures demonstrates Genco's innovative approach towards developing niche trades, and they have proven to be highly beneficial for the company by generating premium rates above the typical drybulk specific backhaul route while further insulating Genco from the softer January market and providing premium paying positions upon redelivery. In line with our portfolio approach to fixture activity, which consists mostly of spot trading, opportunistic period charters and forward cargo coverage last year, we fixed seven vessels on period time charters for one to two years at rates ranging from $23,375 to $32,000 per day. To illustrate this, our earnings release contains our estimated TCE to date for the 2022, broken out by vessel class and spot and fixed rate time charter equivalent rates. Our scrubber fitted Capesize vessels are also benefiting from the widening fuel spreads, which currently stand at over $200 per ton. This provides us with a competitive advantage in a high fuel price environment in two ways.

First, we can purchase less expensive fuel while completing a voyage. And second, it reduces the investment of ballasting vessels to the Atlantic Basin to capture developing trends in cargo flows. From a market perspective, we continue to have a positive outlook for drybulk rates due to the low order book. We are starting to see timing and weather related disruptions that impacted the market early in the year subside. Overall, we believe we are in a cyclical drybulk market upturn and have solid visibility, as I mentioned, particularly on the supply side given the historically low newbuilding order book that we believe will support the market over the coming years.

At this point, I will now turn the call over to Apostolos Sifolias, our chief financial officer.

Speaker 3

Thank you, John. During 02/2021, we maintained our focus on improving our balance sheet, taking steps to further reduce our leverage and breakeven levels and enhance our earnings power and dividend potential. For the 2021, the company recorded net income of $90,900,000 or $2.16 basic and $2.13 diluted earnings per share, our highest earnings per share since 02/2008. Adjusted for the gain of vessels, earnings per share were $2.02 and $1.99 basic and diluted, respectively. Our fourth quarter EBITDA adjusted EBITDA was $102,200,000 which to put in perspective is higher than adjusted EBITDA for all of 2020.

Our full year adjusted EBITDA of $253,000,000 was also greater than 2019 and 2020 combined and doubled out of 2018. During the quarter, we continued to further strengthen our balance sheet through increasing operating cash flows by taking advantage of firm market conditions. Our cash position as of 12/31/2021, was 120,500,000 following $2.00 $3,000,000 of debt repayments through the year, together with $109,000,000 paid to acquire vessels over the same period. Pro form a for the acquisition of two Ultramax vessels in January 2022, our cash balance is approximately $80,000,000 Following substantial deleveraging, our debt outstanding is $246,000,000 as of the end of the year, which after considering our pro form a cash position, results in net debt of a $166,000,000 or 16% net LTV. Importantly, while we have no mandatory debt amortization payments until 2026, we plan to continue to voluntarily pay down debt with a medium term objective of reducing our net debt to zero, which we believe is consistent with our focus on paying consistent dividends through the cycle.

Looking ahead, we plan to voluntarily pay down $8,750,000 of debt during the first quarter, representing an annualized run rate of of voluntary debt repayments over a year to further strengthen our balance sheet. As John mentioned, our board of directors declared a dividend of $0.67 per share for the 2021, in line with our value strategy calculation. Walking down our dividend formula, this consisted of operating cash flow of $101,000,000 plus debt repayments of $59,000,000 drydocking ballast water treatment system and energy saving device costs of $2,900,000 and the previously announced reserve of $10,750,000 Going forward, we will be disclosing estimates on both the revenue as well as expense side in order to provide visibility of the dividend framework. Specifically, we plan to communicate our TCE estimates for the fixed portion of our fleet's available days, estimates on the expense side and the anticipated level of the reserve. Earlier in the presentation on Slide 11, we provided an illustration of the expenses estimates for the 2022.

Specifically, operating expenses are estimated to be $31,600,000 debt repayments $8,750,000 and drydock related expenses $5,900,000 The reserve is expected to be $10,750,000 which is based on the $8,750,000 of voluntary debt repayments expected to be made in the 2022 as well as estimated cash interest expense. In total, the expense side of the equation would be $57,000,000 for Q1 twenty twenty two. Moreover, in an effort to provide perspective on the significant operating leverage of a fleet and sensitivity of our dividend framework, we have included an illustrative representation of our dividend per share on Slide 23. Subject to the assumptions in our presentation, our current dividend framework would produce an annual dividend of $1.69 in a $20,000 a day fleet wide TCE rate environment and as high as $7.21 per share in a $35,000 a day fleet wide TCE rate environment. Our estimate for 87 percent of the first quarter's available days is $24,215 per vessel per day, similar to the levels on the third bar in the chart, which would indicate an annual dividend of $3.53 or 18% yield.

Our first quarter twenty twenty two estimated breakeven rate, excluding any voluntary debt repayments is approximately $9,500 per vessel per day. Our total ownership days for the first quarter are estimated to be 3,948, and we anticipate five vessels to drydock resulting in approximately $6,000,000 of costs and ninety nine days of estimated off hire time during the quarter. I will now turn the call over to Peter Allen, our SVP of Strategy to discuss the industry fundamentals.

Speaker 1

Thank you, Apostolos. During the 2021, freight rates remained firm following a strong Q3 driven by augmented demand for raw materials and an improving coal trade, solid iron ore volumes and a continued fleet wide reduction in productivity. Spot freight rates remained on the uptrend in early October with Capesize rates exceeding $85,000 per day and Supramax earnings approaching $40,000 per day. Towards the 2021 and into early twenty twenty two, Capesize and Supramax rates pulled back from these decade plus highs due to various seasonal factors. These include weather related cargo disruptions impacting Brazilian iron ore volumes, which were down 13% year over year in January, and front loaded new building deliveries as we saw annualized net fleet growth of nearly 6% in January.

Additionally, the timing of the Lunar New Year in China together with the Beijing Olympics resulted in steel mill utilization declining by approximately 5%. These seasonal factors are beginning to subside, which are being reflected in spot earnings as Capesize and Supramax rates are up approximately 20050% respectively versus earlier year lows. On the demand side in 2022, we anticipate China to continue to shift towards more accommodative policies to support economic growth.

Speaker 3

We have seen

Speaker 1

the shifts commence last December through a series of interest rate cuts and continue into early this year with increasing lending growth following a year of contraction. The trajectory of lending growth tends to be a leading indicator of metals demand. The timing of policy accommodation and its potential impact is expected to coincide with improving dry bulk trade flows in the coming months and a ramp up of China's steel production driven by spring construction season. We've already seen an uptick in work on construction projects in many parts of China that have restarted sooner after this year's Lunar New Year than in years past, partly as a response to the central government calling for quick progress on new infrastructure projects to help boost the domestic economy. We believe these developments are positive for iron ore trade, particularly as seaborne volumes rise in Q2 and Q3.

Regarding other trade flows, anticipate coal demand to remain firm given tightness in energy markets. On the grain side, South American grain season has had an early start, which has been supportive of minor bulk earnings. Overall, we believe we are in a cyclical uptrending market. Our positive go forward thesis for the dry bulk market is underpinned by the historically low order book. The order book as a percentage of the fleet is 6.6%, which compares to 7% of the fleet, which is greater than or equal to twenty years old, implying fleet renewal rather than material net fleet growth in the coming years.

Encouragingly, newbuilding vessel orders have been relatively low despite the strong market conditions in part due to uncertainty around go forward future propulsion and tightness in shipyard capacity. Overall, we believe these positive supply side dynamics provide a solid foundation for the dry bulk market and lead to a low threshold for demand growth to have to exceed in order to improve fleet wide utilization of freight rates. This concludes our presentation. We'd now be happy to take

Speaker 0

questions. We will take our first question from Randy Giveans with Jefferies. Please go ahead.

Speaker 4

Howdy, gentlemen. How's it going?

Speaker 2

Good, Randy. How are you doing?

Speaker 4

All is well. Thanks. Few questions So starting with the charter backlog, I think you mentioned around eight vessels on that. Clearly, the FFA curve is is rising in this environment. Time charter rates are picking up as well.

Any plans to maybe lock away some additional tonnage for the rest of the year, or do you expect kind of spot rates to keep outperforming that SFA curve? And then briefly, can you give the percentage of days fixed so far for the full year?

Speaker 2

Sure. So a couple things. You know, as we've said in the past, we we we do like the idea of, a portfolio approach, particularly in the Capesize sector with the volatility. So, I could see us doing, one to two cut some more one to two year charters in the Capesize, sector. You know, as rates continue to move up, I don't I don't think we're at the point yet where we're where we're comfortable locking them away, but we do expect rates to continue to improve overall.

You know, the the one thing I'll point out is the the two index deals that we just did in the Capesize sector. Right? Those are pretty pretty neat deals, because we did them at the, really the low point of the, of the Capesize market. So we're able to get very premium, percentages over the index, particularly for the the one we did at a 121%. So and and we also have the option in those index deals to to fix or lock those in at any time.

So you could see us take advantage of that as well. So short answer is, yep. We're gonna continue to look at longer term charters, though we don't think the market is quite there yet, but it's moving in the right direction. In terms of fixtures, I'll let Peter Allen answer that question as a percentage.

Speaker 1

Hi, Randy. For the full year, we have about 30% of full year days fixed at approximately $24,000 a day.

Speaker 2

Perfect.

Speaker 4

Good deal. Alright. Thank you for that. Second question, final one for me. You mentioned the dividend, 67¢, you know, well ahead of our expectations.

So nicely done there. And you also said it could have been, I believe, a dollar 85 using that kind of go forward run rate reserve. So using your quarter to date rates, you know, assuming rates stay at least at that 24, 25,000 for the rest of the quarter, Slide on, using the table on slide 11, the chart on slide 23, just in terms of direction, is it pretty fair to assume the next dividend should be higher than this current dividend of 67¢?

Speaker 2

So, look, we we still have 15% of of the overall fleet to fix, so it's a little tough for me to nail it exactly. But but, but, you know, Randy, the the numbers that are in there in terms of the $35,000,000 debt repayment target run rate for 2022 is in there. Obviously, the reserve that goes along with that are in there, dry docking. So I I guess I would leave it to you to put that extra 15% of of freight rates in there and come up with with the dividend. But so that I'm only a little hesitant just because we haven't booked the the entire fleet yet.

Speaker 4

Got it. Alright.

Speaker 2

And just the math on the boat doing Obvious Obvious It's a very small piece that that still has not been fixed.

Speaker 4

Yep. Chart 23, 25,000 a day divide by four, you know, you're getting 80 plus cents. So, I'll take that as a highly likely. That's it for me. Congrats again on the best quarter since, 02/2008.

Good to see the market in an upswing.

Speaker 2

Great. Thanks, Randy.

Speaker 0

We'll take our next question from Magnus Fair with H. C. Wainwright. Please go ahead.

Speaker 5

Yes. Good morning, and congrats to a great quarter. You clearly laid out your dividend strategy here and use of cash, mean, use for dividends and debt repayments. How should we think about potential acquisitions going forward? And what part of

Speaker 3

the cycle do you kind of

Speaker 5

just stop doing acquisitions and just focus on dividends?

Speaker 2

So first of all, I think dividends are the are a major focus, Magnus. I do think you'll still see us do some fleet renewal, most likely, particularly in the in the 55,000 tonners that we have that are certainly earning very good returns. But the values of those have have increased significantly. So the opportunity to maybe trade those out, swap those out or redeploy the capital into newer, more fuel efficient vessels, I I could see us doing that this year. But so it's I I would say right now, it's really dividends, fleet renewal.

We obviously are always looking at larger m and a transactions. But but as a whole, you know, I I still think it's interesting. I'm changing gears here a little bit, but I still think values have not caught up with freight rates. So I do think there are good opportunities for return on capital type transactions. But as you've seen in the past, whenever we do those, we tend to derisk them and put them away on a two year charter.

And we've been hitting anywhere from paying off 40% to 50% of the ship in the first two years. So those types of deals still look attractive. But I'll just go back to what I said. We're very focused on the dividend model. We're focused on keeping leverage low.

Net debt was 16%, loan to value at the end of the year, and we're focused on fleet renewal.

Speaker 5

Okay, great. Thanks for that answer. And just one more question. You laid out the sensitivity to the fuel spread. Any chance you could highlight what the fourth quarter actuals were as far as realized fuel spread or just the million dollars that you made out of the fuel?

Speaker 2

I don't have that number in front of us per se. I I will give you another number that that's pretty compelling, and that is if you you look at our actuals sort of through the February from when we first installed the the scrubbers in 02/2019, and you look at the forward curve for 02/2022, and we're running at about a 35 IRR by the time we get to

Speaker 1

the 2022. So that's a pretty compelling number, but I don't have the specific fourth quarter number. Yes. So so yeah. Hi, Magnus.

This is Peter. So if you just look at the average spot spread in Singapore in q four, it was about $150 per ton. So, you know, obviously, now we're over $200 per ton, so it's a significant increase. And it's obviously been rising with rising fuel prices, a high correlation between the spread and the price of oil historically. So yes, I think that's and if you look at the Page 15 in our presentation, dollars 150 fuel spread is approximately $28,000,000 in incremental revenue on an annualized basis.

So that's probably a decent barometer of the fourth quarter number.

Speaker 2

Great. Yes, That's for me. Thank

Speaker 6

was just going

Speaker 2

to finish up. The great thing is the equipment and installation costs were paid off at the at the 2021. So everything we're making now is just straight return on investment. Alright. Great.

Thank you. Thank you.

Speaker 0

We will take our next question from Greg Lewis with BTIG. Please go ahead.

Speaker 6

Hey. So thank you, and good morning, everybody, and and congrats on a on a good quarter, everybody.

Speaker 2

Good morning, Chris.

Speaker 6

John, just we've seen cycles. I think you've seen probably a couple more than me. Realizing before you became the CEO, you're the you were the CFO. How do you think about cash? Right?

I mean, you know, obviously, we have the dividend payout model, you know, the dividend strategy, which we're laying out. You know, clearly, there's gonna be opportunities at at a certain point to buy ships and and and and do a lot of different things with with the cash we're making. Just kinda curious how you kind of view cash as you think about having it on the balance sheet.

Speaker 2

Well, let me go back to our value strategy. Right? It's we're clearly, dividends are a major focus right now. As I said before, fleet renewal is continuing to delever. You know, we're looking at that target run rate of $35,000,000 in debt repayment for 02/2022.

We'll be building up the reserve, and that reserve has a lot of optionality in terms of what we can do with it. We we can use it to to buy ships. We can use it for share buybacks if if we feel that's the right thing to do. We can use it to smooth out quarterly dividends again if we feel that that's the right thing to do. You know, in in general, we really want to get to a place where our dividend is seasoned, and our stock begins to trade off of a free cash flow or dividend yield in excess of NAV so that so that our shares can be used as as currency, for further acquisitions when the timing is right.

So I you know, look. The the other thing is, you know, postal has put into place a very large revolving credit facility. There that was very purposeful, in terms of being able to move on an acquisition if it made sense at the time. So I I I think the company is, well, it's certainly set up than it ever has been, from a from a leverage dividend and and potential growth profile at this point. But I I hopefully, that answer your question.

It was a little longer answer.

Speaker 6

Yeah. That that that that yeah. That was helpful. Thank you. And then just, you know, bigger picture on on the market, realizing that, you know, that that it's it's a fluid situation, and and there's a lot more important things going on than than how it pertains to the drybulk market.

But as as, you know, as we look at what's going on in Eastern Europe and and Russia and Ukraine, you know, I guess Ukraine is is a pretty big, you know, grain exporter. I believe Russia is a large coal exporter. Probably not seen anything just yet, but but, I mean, like, how should we I mean, like, how are what what type of in I mean, do do we have any sense for where these where where these exports generally go and where those replacements could be and and and really just trying to understand could you know, there's big issues here, but, like, is that gonna be supportive of ton miles? I I think it might be. Just kind of curious, you know, if you guys have any view on on on what's happening over there and how that's gonna impact the market.

Speaker 2

So, look, as you said, it it's it's fluid. It's evolving. If we look at, you know, I guess, some of the some of the facts before opinion, You're really talking about out of the Ukraine grains, which is which is corn and wheat as a major commodity that comes out of Ukraine. Iron ore to some degree, though, obviously, Brazil and Australia are the big exporters, but there there is some iron ore that comes out of Ukraine, and then there's

Speaker 1

some coal that comes out of out of

Speaker 2

the Ukraine. I think, overall, as a macro view, you know, with with the low supply and the low order book in dry bulk shipping, you know, you you just don't need much demand growth overall to continue to, you know, to build on 02/2021. So we still believe in in the cyclical upturn. I think as it gets to grains, I think, which is obviously the largest commodity, you need to keep in mind that you're really talking about a very slow period right now for Ukraine in general on exports. The the height of the grain season is is really August.

So we're quite some time away from that. We do believe that The U. S. Could make up. If there were significant cutbacks on the grain side, we do believe The U.

S. Could make up some of that slack. So there could be a ton mile increase there. As I mentioned, iron ore, it's it's out of the Ukraine, very small part of global trade. Some of that could be made up probably by Brazil and and Australia and even India.

But I think, you know, just to to round this out a little bit, you know, there there's, unfortunately, always geopolitical risk in in dry bulk. Obviously, the the Ukrainian situation is, you

Speaker 5

know,

Speaker 2

unusual. But I I just I still emphasize the low order book. We don't need much demand growth. If you look at Genco in in in as a company, you were really set up for volatility with this low leverage model, low breakeven rate, creating a very good risk reward model. We've got q one, mostly fixed at $24,000 a day, so that that risk is, is off the table.

But, you know, Greg, honestly, I it's as you said, this is all sort of hit this you know, really late last night and and this morning. And, you know, there there are there's a very large group of Ukrainian seafarers around the world. And as far as we're concerned, you know, the the focus should should really be on them, and and, you know, our hearts go out to them and and their families, we hope they stay safe. So it's I think it's a little early, I guess, to to to see exactly what's going to go on here. But, again, I I just go back to how Genco is set up and and the low low supply situation.

Speaker 6

Okay, great. Yes. No, I agree. Thank you for that. Have a great day.

Speaker 2

Thanks, Greg.

Speaker 0

We will now take our last question from Liam Burke with Braley. Please go ahead.

Speaker 7

Yes. Thank you. Good morning, John. Good morning, Postalos.

Speaker 2

Good morning. Good morning.

Speaker 7

John, I know this is a high class problem, but where along the capital allocation strategy would a buyback make sense in terms of your alternatives, understanding your objective is to pay a dividend and to become debt free?

Speaker 2

Look, I again, I think we want to give the dividend model a few quarters to be seasoned and see how that reacts. We do believe it takes a few quarters. I think I've said before, we've gone back and we've looked historically at companies when they start declaring big dividends and how long it takes to be seasoned and get down into that single digit dividend yield. And and it does take two to three quarters, so we'd we'd like to see that pass first. And then if there are opportunities on share buybacks, we're going to look at them.

That's again, that's one of the reasons why the reserve is in place.

Speaker 7

Fair enough. And I think you said that the you didn't think that fleet assets have caught up with rates. How does potential acquisitions in terms of, this year look to you?

Speaker 2

Again, it's I think right now, we're focused more on the fleet renewal side. But as I said, you can right now, you're talking about in the Ultramax sector cash on cash returns for one year charters in sort of the 40% range. So so may yeah. So let's let's actually call it around thirty five percent one year cash on cash returns. I think that's pretty attractive still, but you've gotta find the right transaction.

And I and, again, I think the first thing you're gonna see us do is more fleet renewal, you know, swapping out the older ships for for newer tonnage and redeploying the capital.

Speaker 7

Great. Thank you, John.

Speaker 2

Thanks, Liam.

Speaker 0

And there are no further questions at this time. And this concludes today's call. Thank you for your participation.

Speaker 2

Thank you.