Eneti Inc (NETI) 2017 Q3 法說會逐字稿

Hello, and welcome to the Scorpio Bulkers Inc. Third Quarter 2017 Conference Call.

I would now like to turn the call over to Hugh Baker, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Thank you for joining us today. On the call with me are Emanuele Lauro, Chairman and Chief Executive Officer; Robert Bugbee, our President; and Cameron MacKey, our Chief Operating Officer.

The information discussed on this call is based on information as of today, October 23, 2017, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements.

For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release that we issued today as well as Scorpio Bulkers' SEC filings, which are available at www.scorpiobulkers.com.

Call participants are advised that the audio of this conference call is being broadcast live on the web and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days.

Now I'd like to introduce Emanuele Lauro.

Thank you, Hugh, and good morning, everybody. Thanks for joining us today.

Back in July, we have announced we were reinstating principal repayments to their original form. We were describing that step as significant because it would have allowed us to really have all options in hand including, but not limited to, the restoration of the ability to pay dividends.

Today, 3 months down the line, the dry cargo market has improved further, the rate environment is strong and the BDI is at its 3-year rise. Demand is growing, and supply is in check. Our company is generating positive cash flows, and we're seeing profitability being a realistic short-term goal.

Because of this, today, we have announced a dividend distribution of $0.02 a share. We are looking at making this distribution a sustainable one. We have started doing baby steps as far as the shareholders' returns are concerned. This market stability has allowed management to take positive structural measures to improve the status of our company. We believe that the company steps are providing financial flexibility as well as greater potential for shareholder returns and value creation going forward.

In general, we remain optimistic for the dry cargo market recovery and look forward to further strengthening our position in the market in what is an improving rate environment.

With this, I'd like to turn the call back to Hugh.

Thank you, Emanuele. I'd like to refer you all to the supplementary presentation we put on our website in respect to today's earnings release, which provides -- which supplements the information provided by the earnings press release.

The third quarter was a positive and eventful quarter for the company. We made a net loss of $10.7 million, a loss per share of $0.15. But earnings before interest, tax and depreciation and amortization, EBITDA, was $12.4 million, and we made positive cash flow from operations.

We initiated a quarterly dividend of $0.02 per share. And I can advise you that in terms of cash, that it's approximately $1.5 million per quarter, $6 million per year. Our pro forma liquidity position, and that is pro forma for the acquisition of the 6 Ultramax vessels, is $90.8 million.

During the quarter, we agreed to loan financing for -- to finance up to 60% of the market value of 6 Ultramax vessels, a loan of $85.5 million. And we also performed the Japanese lease financing of one of our vessels, SBI Rumba, with a 10-year term and expected fixed interest rate of 4.24%, which raises an additional $6 million of liquidity for the company.

During the quarter, we purchased 6 Ultramax bulk carriers for $142.5 million and we took delivery of a time-chartered-in Ultramax vessel. We also -- our board also authorized us or provided authorization for us to repurchase up to $50 million of stock should we choose to do so.

During the third quarter, we saw the company benefit from rates, which remains strong in Q4, and we are now benefiting from the further improving rate environment right now. We've now brought 52% of our Kamsarmax days for Q4 at an average of an $11,180 per day and 53% of our Ultramax days at approximately $10,495 per day. As Emanuele has explained, current rates are higher than that, and the market has strengthened as the quarter has progressed.

In respect of cash flow and profitability, I'd like to explain the math behind our cash flows. If rates increased by $1,000 per day, then our annual cash flow is improved by -- for 52 ships times 365 days per year times $1,000 a day gives us an additional $18.98 million per year. As a result of our improved cash flows and strong liquidity position, we're comfortable with the cash flow generation and the affordability to our dividend.

With that, I'd like to pass the call to Robert Bugbee.

Hi. I think I'd just like to emphasize 2 things. First of all, Emanuele's comments to the guidance of the present booked days for this quarter really understates the strength of the present market. The present market is significantly stronger not just in its actual rates for the spot market, but also for its future rates you can fix forward, meaning you can fix the ship for 3, 5, 6 months at a much higher rate, and the paper markets are higher than our trail position. And this is a very positive sign. If anything, since we last spoke in July, we, ourselves, despite being bullish and confident then, have underestimated the strength of the market in each of the months that have gone through that time. The other part is the significance of that movement is that if we take Hugh's figure here, that $1,000 a day translates to $0.02 a month in change. And so when you go through your calculations, and some of you analysts have already done that, you can see the -- we're gaining confidence not just by the macro side of the world where GDP's fairly strong, the diversity of our cargo, which means that we're not really -- we're not China dependent or we're not dependent upon just one commodity like iron ore. It's really diverse. But we're also seeing that confirmed across the time charter markets and our present markets and in our cash flows itself.

And with that, I've got nothing more to add, I'd just like to open it up for questions now.

(Operator Instructions) Our first question is from Gregory Lewis of Credit Suisse.

Just wanted to touch base -- I guess, congrats on getting the dividend reinstated as part of the plan that you -- when you made the decision kind of changing of the covenants with the banks to other paybacks. Just as we think about going forward, as you think about capital allocation, I mean, we recently saw the acquisition of the 6 vessels. Just as you think about future uses of cash, as we hopefully see a recovery in 2018, how should we think about SALT balancing the decision to position the balance sheet, take on more vessels, return cash to shareholders? Just curious on your thoughts around that.

Well, I think that we have a progressive view, first, to the dividend. And as we've indicated, we have a very constructive view of the market going forward over the next months. We also have a very constructive view as to assets and markets right now. We think that the assets -- haven't really yet reflected the underlying strength in the recent market. We sort of have a little bit of a plateauing in price structures. And certainly, as cash flow becomes more secure and companies themselves about generating cash and the tightness of the supply side as we look forward over the next 12, 24 months, we would expect that there's room for prices to go up. And we have a reasonable amount of liquidity, so we can look at that. As to stock or anything like that, that's a lot dependent upon really on 2 things: it's most to the price as well as the liquidity. You can have a theoretical idea of what you'd do. And in practice, you may not be able to do it. But in general, we are working in an environment where we believe there's a long way to go in dry bulk here. We certainly haven't got -- we haven't even got halfway through the gain yet. We've -- it was only a year, 1.25 years ago that the entire industry was in a 50 -- midst of a 50-year low. We've had great sequential quartering, and yes...

Okay. Okay, great. And then just as following up on the theme, you added vessels. Typically, since Scorpio has been pretty good at trying to opportunistically time the market with in-charters. I just need you to provide us any color on how that market is, how that's -- are there further opportunities. Are shipowners that have kind of seen rates low for the last 2, 3 years, are they willing to out-charter their vessels? Just any...

Yes, I get that. I think that -- look, we took 1 ship in a few weeks ago that we announced. And I think that, as I said, we were not bullish enough. In hindsight, we should have been taking more at that point. At this point, we're not actually looking to time charter in vessels. That market -- those vessels that we were taking in, those sort of high -- at the high 10 levels, you're now having to pay $14,000, $15,000 a day for 5, 7 months, too. So the market has now changed to it is better to -- on map, it is better to acquire vessels right now than it would be for us to charter in vessels.

Our next question is from Jon Chappell of Evercore.

I think the dividend kind of speaks for itself that you guys are dealing from a much better position of strength than even 6 months ago. But I had a question about the other announcement from Friday that was reiterated this morning on the Japanese financing. It seems like sale-leaseback transactions were a thing from maybe a year ago or maybe for different segments right now, where balance sheets aren't where they need to be right now and they're freeing up liquidity and it's a little bit more expensive capital. Can you just speak to why you decided to go forward with that transaction and if there's others like them that you see possible.

Well, I think that we'll just ask Hugh what he thinks the cost of capital is.

Jon, I mean, I think the starting point is that it was a favorable cost of capital for us. I think a 10-year money at 4.25% is good -- seems pretty good...

Although when we look at that, 10-year money at 4.25% is pretty cheap, especially when you can swap that out and especially -- you could -- for us a lot of -- a bunch of things. You could take that money there and you could buy your -- start buying your baby bond back on just a straight debt-for-debt basis at virtually almost twice the cost of that capital. So this is a very opportunistic view. It's obviously -- correct, it's a strong balance sheet and the strength of the balance sheet enables you to do sale-leaseback efficiently in terms of price -- actual pricing, as you can see.

So is the plan then to do something like buyback the baby bonds with it? Or are there other transactions like this available for you?

We would go through these one at a time. And we're certainly not going to tip our hand either way. I think it's just evidence of the different pricing that when someone is looking at the real underlying security, you've seen that people -- the lenders are willing to lower their margins. They've being willing to give us good advanced rates. And now you've got a Japanese lease company that's been willing to also lend at pretty effective levels.

Okay. That kind of leads to my second question, too, then. As you do look at other opportunities out there, you mentioned yourself just now, Robert, that purchases probably make a heck of a lot more sense than charter-ins at the current levels. You're able to get the 60% financing on these last 6 ships, which I think obviously kind of went hand in hand with your willingness or ability to return to normalized amortization schedules. Two parts. One, is that 60% kind of how you think about transactions going forward? And two, given the $90-ish million of liquidity today, that's probably maybe a handful of vessels. How do you think about kind of sizing the fleet in the early innings of this cycle?

I think you want to -- it's not so much sizing of the fleet. It's maintaining the balance sheet. I mean, I think we will -- you all learn from experiences. And I think the -- our thinking ourselves, I think that investors and I think the shipping markets themselves are changing in that I think that -- first of all, we're not there as investors ourselves looking to leverage up the balance sheet to the maximum point, where we're expecting now shipping companies to carry much less leverage than they did in past cycles that they have to be aware that on the rainy days, if they have dividends, the dividend needs to be paid. And it's -- you're going to be carrying less overall leverage in the company. So you might do this deal at 60%, but you're still going to keep your overall leverage in the company on an LTV basis at -- considerably lower.

Our next question is from Fotis Giannakoulis of Morgan Stanley.

Robert, I just want to follow up on -- or Hugh, I want to follow up on Greg's question and try to understand how are you going to think that dividend payment going forward. Is there going to be some sort of a formula? Or as the market turns profitable -- it has already turned profitable actually in the spot market. And when you start showing stronger earnings on your income statement, shall we see this dividend being linked in some way?

Well, I think that beauty of the situation now is we've signaled a couple of things. We signal that we think we can afford a dividend. We think that the market is going up. And as we alluded to on the last call, we hope we'd be in a position where we're in that situation. And I think that we will spend a -- your exact type of dividend will depend a little bit on the next 3, 4, 5 months, the next quarter or 2 and to discuss it. And we'd love to hear the opinions of yourself and other analysts and other shareholders over that period.

And can I ask you regarding the size of your fleet? When you started, you made an effort to be in the largest sizes of dry bulk vessels. Is the size of the fleet right now, the 52 vessels that you have sufficient size, is the size that you envision or you are going to try to expand the fleet with larger ships?

I don't think we're going to -- I don't think there's any appetite, any desire for the company to buy Capesize vessels. I think that we get a lot of the benefits off of the Capes in our overall trade. The Capesize itself has actually moved up more than any of the other classes. So I think in terms of value in the market related to newbuild and replacement or just what's happened, I think that the Ultramaxes and the Kamsarmaxes, which we're in, have lagged the case. So -- and then there is the -- the Capesize market is pretty dependent upon iron ore and China, where as we'd like the fact that the Ultramaxes and the Kamsarmaxes are so much more diverse. We really like the features of that as we see a whole world -- one of the big things is the whole other world is growing, et cetera, we're able to triangulate more effectively, we're able to put a commercial stamp on that. So I think you can be very confident that to the extent that we will do acquisitions, we will keep it to the Kamsarmaxes or smaller.

One more for me. If you can comment, why we haven't seen vessel values keeping up with charter rates. Usually, there was a pretty good correlation, but it seems that the NAVs and the vessel values have been stuck the last couple of months despite the fact that the chartering market has gone much higher. Do you expect that this is going to change? Or is it a period that the owners are not willing to pay more?

Well, I think it would take a little bit of time. That's why, I think, there's an opportunity right now. And that's because, first of all, lending is much more constricted. I mean, there aren't really many companies that are in compliance. I think the second one that went into full compliance was the -- or normalized was Golden Ocean, and they only did that this week. If you looked at the private markets, people have really been taking a beating in dry cargo. I mean, they're literally recovering and the cash flow that they're taking in is being used to pay bills. So -- and there haven't been many equity deals. So the market itself hasn't had the capital infusion in there, and it has blown through all of its capital reserves to immediately react to pricing. And then I think it's going to -- as the next months proceed with a continued stronger market, I think that yes, more buyers will emerge and prices will be forced upwards. And then you're going to have a really interesting thing because we didn't expect it. Obviously, a lot of ships -- just to purchase the 6, we inspected a lot of ships around that. And I can tell you that there are ships that are built '15, '16, '17, '14 that are in a mess, that the owners were scrimping and cutting back on their operating costs that it's going to turn pretty quickly from insufficient buyers to insufficient vessels that are modern vessels that are available to buy of quality.

Our next question is from Amit Mehrotra of Deutsche Bank.

So Robert, maybe a question out of left field. I just want to get your thoughts on this point in the cycle when the balance sheet is in a good position and you guys are turning cash flow positive and hopefully increasingly so and asset values are increasing. I wanted to get your sense on what you think the value is for shipping company and Scorpio Bulkers, particularly, to remain a publicly traded company.

Not sort of really a discussion I want to have in public considering that insiders own nearly 25% of this company.

Okay. But with respect to sort of where the balance sheet is today, the question is, is that you could kind of create more value by owning this company privately as opposed to remaining a public entity. I mean, any thoughts in terms of the strategic value of the company being public, whether it's equity -- access to equity capital...

If I argue from the public side only, okay, then the company is pretty high up there in its peer group. It's got a fairly open, fairly open shareholder risk and lift comparing to positions. It hasn't got any sort of real overhang in private equity sponsors. Its access to the debt side and to leasing is pretty good because of its access to the public markets. So it creates a lot -- it has a lot of advantages to shareholders being in the public market.

Okay. And then I just wanted to ask another maybe higher-level question as it relates to your comment. You mentioned before, I think earlier in the call, about the instances of learning from your experiences. And I think that's an interesting comment because you could argue that with the experiences in the past, I guess, could make the company a little bit more cautious as opposed to being a little bit more aggressive at the low point in the cycle. So I totally get that you want a right -- a nice balance sheet. I think that's the right strategy. But I guess, there's a tipping point in terms of the balance sheet being over equitized versus maybe optimally leveraged. And so I just wanted to understand maybe from the perspective of LTV at a different point of the cycle, how high are you willing to go given your outlook for the market?

Yes. I mean, that's -- we have a philosophical bait whether it's actually possible to have a shipping company to be over-equitized. I think what we're saying is, I think it's -- we are in a different environment than we were in the last cycle. We have investors, we have shareholders, we have potential future shareholders that are first looking to make sure that they have some consistency or visibility in their investment, some consistency, visibility in the dividends. You have the lending community that is not going to be as free with their lending as it's been in other cycles. And so yes, I think that shipping itself is going to -- we're seeing it every single day, that the available debt side is going to be much less than it's been in the cycles previously.

Yes. But you guys have, I would say, disproportionate access to capital, obviously, given the history and the size of the fleet. And so could you put a little bit more tangible sense around would you be comfortable in taking the net leverage -- or the LTV up to closer to 60% from kind of the mid-40s today? Or just -- or do you want...

These are all hypothetical positions. They're all weird things, okay, because where do you stop? I mean, part of the reason our LTV is 40% today is not just the cash generated. It's because our values have gone up, right? So where does the argument stop? Does the value of -- does it mean that if a value of an Ultramax is $100 million instead of 24 or 25, we should have $60 million of debt on that? And if you don't want to chase your leverage upwards, consistency is going to be about -- there's a point where you just must not take your leverage up on a book -- on your book basis and you actually have to take your overall LTV, keep your overall LTV under control. Right now, yes, I think there's room to go. We're still below the halfway mark in the dry bulk recovery. And sure, I wouldn't mind if we took on a little bit more leverage. But we expect the asset prices to move up at least 30% here. Does that mean that you should move your lever -- keep your leverage up correspondingly? Probably not, if you're going to give yourself as a shareholder, give your lenders and your constituent shareholders the feeling of able to weather any storm.

Right. I respect those comments. That makes a lot of sense. One quick one for me, for Hugh, I guess, maybe. You talked about the cash balance as of October 20. I was wondering if you could just offer what the gross debt balance was and what the pushback to newbuildings -- how they would be financed between debt and existing cash? And then Hugh, also, you talked about the all-in breakeven, I guess, being $75,000 a day. Could you just update that number in terms of what it may go up to once the debt amortization kicks in? I think it was $11,000, but I'm not exactly sure.

I mean, just talking a little bit about the liquidity. I mean, we have $48.8 million of cash. We have $79 million of undrawn debt under our $409 million credit facility, which is freely available, and we can draw on that at any time. And we have $128.5 million due under the 6 Ultramax vessels. We have a little bit of -- $6 million of extra liquidity coming from this Japanese lease financing that we're doing. And then we have $85.5 million of debt on the new ships that we haven't drawn down yet. So that's where we come up with this pro forma liquidity position of $100 million. In terms of our overall breakeven, you can work this number out. It is very subject to the length of -- the timescale in which you choose to amortize your debt. So we look at -- we tend not to look at overall breakevens as being that significant. We provide the OpEx plus interest plus G&A as a better metric because, obviously, the debt compartment can be, I should say, adjusted depending on what results you want to get. In terms of net debt, the company has around $600 million, $606 million of gross debt. And obviously, that netting out of that, you're going to come up with somewhere around $520 million. I can take a look at the numbers and we can discuss them offline if you want.

Our next question is from Magnus Fyhr of Seaport Global.

Just one question on kind of the chartering strategy going forward. You fixed 1 vessel. Spot rates have improved. What's your thoughts -- how much of this is seasonal? And how much can you kind of capitalize on the 4 to 6 months market being very strong and fix some ships away?

Well, the difficulty is this is how think, that the market itself is overall getting stronger and will move stronger. So we're not too bothered. Maybe we're happy to work 1 or 2 ships. We're working 1 ship right now in the mid-14s that is for 5 months. Now that's going to be November, December, January, February, March, covering the fourth and first quarter. That's obviously a highly profitable number. That's $4,000, $3,000 above the guidance for the first part of this quarter. And you don't have a problem, and that's a ship that is in a weak chartering position. That ship is delivering in the Far East. But if you are sitting with a ship in the Atlantic or in the Northern Europe right now, your first voyage can be 25, maybe even 30 in a week's time for the frontal voyage. So it's an interesting position. You don't have to -- the luxury is that our balance sheet is such that we don't have to fix out-tonnage in defense. We can fix out tonnage like the one we're working where, look, it makes sense to fix a ship in a weak position for 5 months, and that's okay. So we have no real desire to start fixing our ships for long terms here.

And you fixed 1 out for 24 months. How long do you think it will take until the longer-term market will pick up? I mean, you see strength near term but the interest rates are still pretty low for next year. I mean, do you see charters getting more interested [in your thinking] long term?

Well, the charters are more interested. We've seen that on the fixtures that have been given out on the physical market as a warning to those people whose their first time in dry cargo investing and looking at the FFAs. They should understand that in the whole of the dry cargo rally from 2003 to 2008, the market was virtually in backwardization on the FFAs. It took a long time for the FFAs to do it because, obviously, there was -- the paper players themselves just didn't want to engage on that position. So I wouldn't take the FFA as a, especially the first and second quarter, which people are now just starting to get interested in, as a -- and remember, they're seasonal. So don't look at these FFAs, compare fourth quarter to first quarter. Compare first quarter 2018 to first quarter 2017.

Okay. And with the -- I mean, you mentioned the short-term market, about $14,000 a day, maybe for Kamsarmax maybe a little higher. What do you see the 1-year charter right there? Where could you fix it if you wanted to fix the ship?

I don't know. All I know is that it's past the -- be around that number, right? It's past -- that's my reference to weeping, not looking to charter out for a year. We've previously been looking to charter in for a year or 2. That market has moved away now. And there are not many people out there right now. If you think what owners have done, if you've lived through the pain of 2015, '16 and '17, year-to-date, you'd be doing everything you could not to be forced into fixing a ship out for 1 or 2 years.

Your next question is from Noah Parquette of JPMorgan.

Yes. I just had a quick one on the market. Just going back to end of summer, where the announcement that China was banning the imports of coal into the kind of smaller ports. I was just curious if you guys have seen anything with your vessels that maybe a change in trade flows or port congestion, anything that you could share.

You're just seeing generally more activity. I mean, you -- as I said, it's very, very diversified. So for us, whether it's India, whether it's steel into the Med, whether it's grain out of the U.S., it doesn't matter, whether it's the softwood commodities or the basic commodities, it's just getting stronger. And obviously, there is more -- on the margin, there's congestion because the fleet itself across dry cargo is working better. And you'd expect that congestion to rise over the next year or 2 as -- again, as demand gets tighter.

Okay. And then just a quick one on the sale-leaseback. Is that going to be accounted for as a capital lease or an operating lease? Or did I miss that?

It's -- you missed it. It's a capitalized lease. It's definitely debt. And you should look at it as debt, and it's on our balance sheet as debt.

Our next question is from Herman Hildan of Clarksons Platou.

I have 2 questions. The first one is, obviously, over the last, call it, months or quarters, you've been spending a lot of time creating flexibility. And obviously, you have a lot of different types of flexibility now with buybacks and releveraging the fleet and then wrapping up dividends and so on. I'm just curious, you kind of -- with so many options open, it's hard to pin down what direction we think, the company will go. And obviously, you've not been willing to give any more indications on that. But I'm just curious if you have kind of one direction that you want the company to take going forward. Or if it's kind of just we try to create optionality and we'll see how things develop?

I think the direction we want to go is up, right? I mean, I think it's pretty clear. And that's what's been happening for the last couple of years, whether it's measured in EBITDA, whether it's being measured in share, liquidity, whether it's being measured in price. And every now and again, it will go down a little bit. And the path isn't straight from bottom left to top right, but the direction that we want to take the company to me is painfully clear. And we'd like to pay the dividend up over time, too. So I'm sorry if we've been a little bit up-pace on that.

Yes, but that's kind of -- if I could ask the question differently. If you look at your company today, what would you not want to change? Would that be kind of the breakeven level?

There's so many things that you wouldn't want to change. You would not want to change the fleet. The fleet is fantastic. It's very good quality. It's very new. You would not want to change that asset base. Many of the shareholders you certainly wouldn't want to change. They are long term. They've been in cyclicals before. They have overall targets much higher than where we are. The bank group we put together is really, really fantastic. They were so supportive of this company in the tough times. And they've been immediately -- immediately recognize the change to put together this recent financing at 60% LTV to break the 3% margin level. Wow. I mean, what a fantastic group. The analyst group is pretty good too, Herman. One or 2 sessions that we wouldn't mind on changing, but I guess, you don't want me to go into details.

Well, that's -- well, you have to value your shareholders, and that includes yourselves. But kind of on a serious note, Robert, it's actually quite interesting with this report that you show for the first time where, on black and white, you can see that the Japanese sale-leaseback is more competitive than the traditional funding source. And that's my second question is, do you see, call it, the traditional lenders less relevant in kind of financial planning going forward?

I see the traditional lenders in shipping, with -- those people with strong shipping experience, strong dedication, strong corporate experience in shipping, I think they're even more important to shipping companies going forward than before. I think that your -- I think our financing that we've just done in terms of the sale-leaseback was made easier by the overall strength of the debt balance sheet. So I think you're going to find that the -- all of those top traditional lenders are cutting back on the people, literally going through lists of people and they're just saying, "Right, we don't want to do business with these people. We do want to do business with these people." And it's going to be even more advantageous going forward for those companies that have access and good working relationships with the traditional lenders.

And just finally, I guess, the bonus question. Do you feel that the workout situation in dry bulk is more or less done and kind of put in behind us? Or do you still see opportunities where banks are kind of working out the opportunities on the dry side, which may come as an opportunity for you?

I thought you're going to ask whether we're going to get bonuses this year. That's disappointing. Anyway, I don't think there's so much distress out in the dry cargo market than it was before, obviously. But where I think that opportunities will come is that there are a number of fleets out there where the shareholders aren't necessarily in distress, but they're certainly wanting avenues of liquidity, such as the private equity-controlled fleets. Whether they're public or private, ultimately, these guys are going to need to have to open up their ability to achieve liquidity.

And how important is it for you that it fits your current fleet to kind of...

I think it's really important. I think it's really important. That's where we started from. We have a great fleet, a fleet that's built not just for today's opportunity, but for tomorrow and many years to come that if we get a -- I mean, we haven't even talked about so many things that are positive here. But we if we start to see this continued bid on the oil price, if we see that OPEC is successful in its rationalization and we have a higher general oil pricing structure than we had in the trailing -- in the forward 12 months than the trailing 12 months and then we put the sulfur regulations on top, it's going to really matter that your fleet is -- it is a new, eco, efficient fleet. That's been lost a little bit in the crisis 2 years ago, but it's coming back every day. Especially -- I mean, that's why it's so great. I mean, that's why you can distribute cash back to shareholders or to yourself or reinvest because if you have a great new fleet, by definition, your CapEx required to maintain it is just so much lower. And you don't have any guillotine over your head. There's a ballast water treatment system in some of the fleet test. Anyway, we digressed. The goal of the company is up.

At this time, I see no other questions in queue. I'll turn it to Mr. Baker for closing remarks.

We have no closing remarks. Thank you very much for participating in the call, and we look forward to speaking to you all soon. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your program. You may now disconnect. Everyone, have a great day.