SFL Corporation Ltd (SFL) 2018 Q1 法說會逐字稿

Good day, and welcome to the Q1 2018 Ship Finance International Limited Earnings Conference Call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Ole Hjertaker.

Please go ahead, sir.

Thank you, and welcome to Ship Finance International and our first quarter conference call.

With me here today, I have our CFO, Harald Gurvin; and Senior Vice President, André Reppen.

Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements.

These statements are based on our current plans and expectations and involve risks and uncertainties that could cause future actives and results of operations to be materially different from those set forth in the forward-looking statements.

Important factors that could cause actual results to differ include conditions in the shipping, offshore and credit markets.

For further information, please refer to Ship Finance's reports and filings with the Securities and Exchange Commission.

The board has declared a quarterly dividend of $0.35 per share.

The dividend represents $1.40 per share on an annualized basis or just below 10% dividend yield based on closing price of $14.40 yesterday.

This is our 57th consecutive dividend, and we have now paid more than $24 per share in dividends or more than $2 billion in aggregate since 2004.

The reported net income for the quarter was approximately $25 million or $0.24 per share.

This is after a couple of nonrecurring and one-off items, and our CFO, Harald Gurvin, will comment on it later.

Aggregate charter revenues recorded in the quarter, including 100% owned subsidiaries accounted for as investment in associate, was approximately $133 million, and the EBITDA equivalent cash flow in the quarter was approximately $100 million.

The last 12 months, the EBITDA equivalent has been approximately $449 million.

During the first quarter, we redeemed the remaining $63 million principal outstanding of what was originally a $350 million convertible note issued in 2013.

We settled this amount in cash plus approximately 650,000 newly issued shares.

Subsequent to quarter-end, we successfully issued a new $164 million convertible note.

This new note has a maturity in 2023 and has a cash coupon of 4.875%.

This -- the initial conversion price is $18.93 per share or around 33% above current share price, and the strike will be adjusted for dividends paid going forward.

The amounts raised will be used for new investments, and as you may have noted, we have already put some of it to work.

Following the recent acquisitions, we have now grown our backlog to -- by nearly $600 million or around 20%, and the liner segment is now the largest part of our backlog with 38%.

Earlier today, we were pleased to announce the acquisition of 4 modern eco-designed containerships with a carrying capacity of 13,800 to 14,500 TEU carrying capacity depending on trade route.

Three of these vessels have already been delivered to us, and the last vessel is pending in the next few hours.

So we will have full cash flow effect from these vessels starting already in June.

The sellers are affiliate of the Lemos Group.

And as they have several sister vessels, we intend to continue with their high-quality technical management of these vessels where we will do the commercial management ourselves in the near term.

The vessels are chartered long-term to a leading Asia-based container line until mid-2024, with options to extend another 1.5 years, and the transaction is adding more than $440 million to our charter backlog.

EBITDA contribution is estimated to approximately $60 million per year during the period.

The purchase price is confidential, but -- and settlement will be a combination of cash and the issuance of approximately 4 million shares to the seller.

The shares will be delivered as freely tradable shares, subject to normal filing requirements with the SEC.

And the guiding from the Lemos Group is that they will remain a long-term shareholder in our company, and we hope to continue building on that relationship going forward.

While shares are a valuable currency, and in this transaction, we effectively added an accretive transaction and still retained more investment capacity than we otherwise would as we see several new opportunities in the market.

As the charterer is a well-known Asian liner company, our plan is to find a long-term financing solution in the Asian market.

These processes always take some time to complete.

So in order to facilitate a quick closing and benefit from the cash flow generated, we have secured a $320 million bridge loan from an affiliate of our largest shareholder, Hemen Holding.

This loan has a maturity of more than a year, is unsecured and with no amortization.

In addition, the bridge financing is effectively preserving a significant investment capacity for us in the near term.

At the beginning of April, we took delivery of a fleet of 15 feeder size container vessels ranging from 1,100 TEU to 4,400 TEU in combination with long-term bareboat charters to a leading container line.

The purchase price is confidential, but close to recycling value of these vessels.

The charter term is until 2025, and the charter has purchase options during the term of the charter, and we have a put option to the charter at the end of the period, eliminating residual risk.

Aggregate EBITDA contribution is approximately $20 million per year.

And while we paid, therefore, the acquisition in cash on delivery, we are in the process of securing long-term financing for these vessels at attractive terms.

With these new acquisitions, we have a fleet of 87 vessels and rigs.

And with such large fleet, we, of course, continue our fleet renewal process.

And we, therefore, sold the last of our pre-2000 build VLCC during the first quarter.

We did record a book loss of approximately $1.4 million in the quarter after the sale.

Subsequent to quarter-end, we also sold the SFL Avon, which was the only 700 TEU (sic - see slide 4, "1,700 TEU") feeder size vessel in the fleet that traded in the short-term charter market.

This transaction is expected to generate a minor gain in the second quarter.

In terms of number of vessels and also backlog, we now have more vessels operating in the liner market than any other segment.

Our focus has primarily been on new design container vessels between 9,000 and 19,000 TEU, and we continue to see opportunities in this segment.

After the sale of the 1,700 TEU vessel, SFL Avon, all these vessels are now employed on long-term charters.

Our business model does allow us to be flexible with respect to deal structuring where we can also invest in older vessels from time to time if risk-reward is deemed attractive.

We have done that in the past and may also look at it going forward.

But our main focus remains on the modern eco-design vessels in combination with long-term employments.

We also have 2 car carriers, the Glovis Conductor and the Glovis Composer, which were in long-term charters until the third quarter of 2017 and, thereafter, rechartered until mid-2018 to the same counterparty.

In May, the Glovis Conductor has been chartered out for a period of 1 year to Mitsui O.S.K.

Line.

Mitsui O.S.K.

Line is a leading car carrier operator and a new customer for Ship Finance, and we hope to build on that relationship going forward.

The current charter for the sister vessel, Glovis Composer, will expire later this year, and we intend to recharter it in due course.

After the sale of the Front Circassia in the first quarter, we are now down to 8 crude oil carriers on charter to Frontline Shipping Limited.

These assets are the only remaining from the company's inception 14 years ago, after selling more than 40 older vessels, profitable over the years.

The spot crude oil market has remained soft for several quarters as a result of high fleet growth, cuts in OPEC volume and significant oil inventory draws.

The charterer, which is Frontline Shipping Limited or FSL, is a nonrecourse subsidiary of Frontline Limited, and so far FSL has been able to pay the base rate by drawing on a previously built up cash buffer in the company.

In the first quarter, the vessels earned approximately $12,300 on average per day in the market, which was well below the base charter rate of $20,000 per day.

We did receive the full charter rate for the full quarter, but according to Frontline, the charterer does not currently have sufficient funds to continue supporting the full charter hire going forward.

Until the spot market recovers above the base rate, the revenues from these vessels will, therefore, be linked to the actual earnings generated in the spot market.

But if the full base rate is -- if and when the full base rate is paid, the difference will, of course, be generated to us as we continue to have a claim for the cash flows up to the base rate also going forward.

So we are not giving up anything here.

It's just a matter of timing for when we will get the revenues.

Over the last few months, we have seen increasing scrapping in the segment and more than 20 older VLCCs have been removed from the market so far this year.

According to some analysts, there are encouraging signs that seaborne crude volumes may soon increase as a result of changes by OPEC and a slowing trend of inventory draws, but the market remains at a relatively low level currently.

The vessels are built between 2001 and 2004, and the company's average cash breakeven rate is approximately $11,500 per day after financing cost.

These assets are the only vessels remaining from the company's inception 14 years ago, and we have over the years focused on significant repayment of debt, and the remaining vessels are financed with $133 million in debt which is in line with the current recycling values.

Frontline Limited remains responsible for tactical and operational management of the vessels at a fixed cost of $9,000 per day.

This also includes dry docking in connection with vessel surveys and potential required upgrades such as ballast water treatment systems, et cetera.

The vessels continue trading as crude oil tankers, but we are exploring alternative uses for some of the vessels, such as conversion projects, long-term storage or other alternative employment options with a focus on improving long-term value for us.

In addition to the Frontline vessels, we also have exposure to the crude oil tanker market through 2 modern Suezmax tankers with are traded in a pool with sister vessels owned by Frontline.

For these vessels, the average charter rate in the first quarter was approximately $15,100 per day, down from $20,400 per day in the previous quarter.

And in addition to 2 112,000 deadweight ton and our 2 product tankers on charter to Philips 66, we also have 2 2008-built chemical carriers chartered to Sinochem (inaudible).

In April, we agreed to extend the charters by another 3 years with a purchase option at the end.

The vessels contribute approximately $3 million of EBITDA per year in the extension period.

We have 22 dry bulk vessels in the fleet, with 15 larger vessels chartered out on long-term basis and 7 Handysize vessels traded in the spot market.

One of our long-term objectives is to combine stability and predictability in cash flows with optionality as we have seen over time that market volatility can generate super returns from time-to-time.

And the charters to Golden Ocean is an example of this.

As discussed on previous calls, we have a 33% profit split on top of the base rate of $17,600 per day plus interest adjustment or $18,600 per day currently.

Based on broker reports, the Capesize market is currently below the profit share threshold level and no excess higher risk recorded in the first quarter.

But there is positive guidance for some analysts for the remainder of the year.

The profit split will be based on actual performance by these specific vessels.

So we cannot give any guidance on when a profit share will materialize.

But as the profit share is calculated and payable on a quarterly basis, we believe there is good probability for profit shares over the remaining 8-year charter period.

The Kamsarmaxes and Supramaxes are all on long-term fixed-rate time charters, while the 7 Handysize dry bulk carriers continue to trade in the spot market.

The rates achieved in this quarter were approximately $9,500 per trading day, which is up from approximately $9,000 per day in the previous quarter.

We have just finalized the 5-year special service cycle for these vessels.

And from an employment perspective, we intend to continue trading these vessels in the spot market in the near future.

After the Seadrill restructuring plan was finally approved by the courts in April, we are now in the process of finalizing the implementation of the restructuring.

As part of the restructuring, we have agreed to reduce the contractual charter hire for the 3 rigs by approximately 29% for a period of 5 years beginning January 2018, with the reduced amounts added back in the period thereafter.

The term of the leases for West Hercules and West Taurus will also be extended by 13 months until December 2024.

We have concurrently agreed with our financing banks that the loan term will be extended by 4 years starting from the original maturity date of each of the 3 separate loan facilities with reduced amortization during the extension period compared to the current level.

Assuming the restructuring plan is approved, the cash flow from the 3 rigs during the expansion period, net of interest and amortization, is estimated to be approximately $29 million per year.

Seadrill will continue to pay the full original charter hire until the restructuring plan is fully implemented with an adjusting effect for the remaining of the year in order to come to the new agreed average rates.

As Mr. Gurvin will discuss later, we have only recognized a portion of the charter hire received in our accounts.

So only the post-restructuring hire is effectively reflected in the first quarter numbers despite us receiving the full original hire in this period.

Seadrill has subchartered the harsh environment jack-up rig, West Linus, to ConocoPhillips until the end of 2028.

The harsh environment semisubmersible rig, West Hercules, has recently been awarded 2 consecutive subcharters in the North Sea and is now working for Siccar Point Energy and will thereafter commence drilling for Norwegian oil major, Equinor, previously known as Statoil.

The semisubmersible rig, West Taurus, remains in lay up in Spain.

Including the West Linus, we have reduced the debt from $1.9 billion initially on the Seadrill rigs to less than $750 million currently.

And of this aggregate outstanding loan balance, only $266 million is currently guaranteed by Ship Finance.

In addition to the 3 rigs to Seadrill, we also have the 2007-built drilling rig, Soehanah, which is employed under a drilling contract with Pertamina in Indonesia until June 2019.

This is through Apexindo in Indonesia, and the net bareboat revenues to us are approximately $10,000 per day or around $900,000 per quarter.

This rig is debt-free so there are no financing expenses associated with it.

Ship Finance also owns 5 offshore support vessels on long-term charters to a nonrecourse subsidiary of Warsaw Stock Exchange-listed Solstad Farstad ASA.

The market for offshore support vessels remains challenging, and the vessels are currently not employed on subcharters.

In light of that depressed market, our chartering counterparty has engaged in discussions for a potential restructuring of the capital structure, and the outcome of these discussions is still pending.

The company and other financial stakeholders have agreed to defer payments on any amounts owed to the respective parties until early June 2018, while these discussions are ongoing.

These charters represent approximately $94 million of our backlog or less than 3% of our total backlog at the end of March 31, including adjustments for recent transactions.

And we have provided a limited corporate guarantee of approximately $30 million under related financing of the 5 vessels.

If we then switch to our performance last 12 months, the normalized contribution from our projects, including vessels accounted for as investment in associates, the EBITDA -- defined as charter hire plus profit share, less OpEx and general and administrative expenses -- was $449 million in the period.

Net interest was $120 million or approximately $1.22 per share.

And our normalized ordinary debt installments relating to the company's projects was $176 million or approximately $1.80 per share in the 12-month period.

This is excluding prepayments relating to sale of other assets or refinancing.

Net contribution after this was $152 million or $100 -- $1.55 per share over the last 12 months.

For the same period, we have declared dividends of $1.40 per share in aggregate.

From our inception more than 14 years ago, we have paid out approximately $0.80 of net income in dividends, which illustrate the moderate dividend policy, and it has allowed us to significantly grow our business organically.

And with that, I will give the word over to our CFO, Harald Gurvin, who will take us through the numbers for the first quarter.

Thank you, Ole.

On this slide, we have shown our pro forma illustration of cash flows for the first quarter compared to the fourth quarter.

Please note that this is only a guideline to assess the company's performance and is not in accordance with U.S. GAAP.

Total charter revenues for the first quarter were $129.4 million, down from $147.7 million in the previous quarter.

The main reason for the reduction is the reduced income from the 3 rigs on charter to Seadrill, where the agreed rate reduction of approximately 30% became economically effective from the first quarter.

Although we continue receiving full charter hire until the restructuring plan is implemented, which is expected within July, the reduced charter rates are already reflected in our accounts and in the revenues in the table.

Revenues from tankers was slightly down in the quarter due to the sale of 1 VLCC in the first quarter and lower earnings on the 2 Suezmaxes trading in the pool, while liner revenues were in line with the previous quarter.

Dry bulk revenues were slightly down in the quarter.

Most of the vessels are on long-term charters, but we have 7 Handysize dry bulk carriers trading in the spot market.

These 7 vessels achieved higher revenues per trading day, but overall revenues were down due to dry-docking and fewer days trading.

So overall, this summarizes to an adjusted EBITDA of $99.5 million for the quarter or $0.96 per share, down from $116.8 million in the previous quarter.

Going forward, we will get the benefit from our recent acquisitions.

In the beginning of April, through delivery of the 15 container vessels employed under 7-year bareboat charters, which are estimated to contribute approximately $5 million of EBITDA per quarter.

In addition, the four 14,000 TEU vessels announced today are estimated to contribute on average approximately $60 million of EBITDA per quarter under our long-term charters.

The vessels on charter to Frontline contributed approximately $8 million of EBITDA in the first quarter.

But until the market recovers above the base charter rates, the contribution from these vessels going forward will be based on actual performance.

We then move on to the profit and loss statement as reported under U.S. GAAP.

As we have described in previous earnings calls, our accounting statements are slightly different than those of a traditional shipping company.

As our business strategy focuses on long-term charter contracts, a large part of our activities are classified as capital leasing.

As a result, a significant portion of our charter revenues are excluded from U.S. GAAP operating revenues and is then booked as revenues classified as repayment of investment and finance leases, results in associates and long-term investments and interest income from associates.

If you wish to gain more understanding of our accounts, a separate webcast, which explains the finance lease accounting and the investment in associates in more detail, it can be viewed on our website, shipfinance.bm, under Investor Relations and Webcasts.

Overall, for the quarter, we reported total operating revenues according to U.S. GAAP of $93 million.

We recorded a loss of $1.4 million on the sale and termination of the charter for Front Circassia.

The compensation from Frontline for the termination of the charter is by way of an interest-bearing loan note, which has been recorded as 50% in our books resulting in a loss.

Total operating expenses were $55.6 million, resulting in an operating income of $35.4 million.

We recorded a positive mark-to-market of derivatives of $5.6 million during the quarter, included under income related to nondesignated derivatives.

From the first quarter, U.S. GAAP also requires us to include the mark-to-market of equity securities in our income statement, which was negative with approximately $1 million.

This mainly relates to our 11 million shares in Frontline.

So overall and according to U.S. GAAP, the company reported net income of $24.7 million or $0.24 per share.

Moving on to the balance sheet.

We showed $140 million of consolidated cash at the end of the quarter.

This is after settlement of the remaining outstanding principal of $63 million under the senior unsecured convertible notes at maturity in February.

Stockholders' equity was approximately $1.2 billion, giving a book equity ratio of approximately 41% at the end of the quarter.

Then looking at our liquidity and financing status.

As mentioned, we had total available liquidity of $140 million at the end of the quarter, following settlement of the remaining outstanding on the convertible notes in February.

In addition, we had available-for-sale securities of $95 million, which includes investments in the senior secured bonds and other securities with a fair value of $46 million at quarter-end and also our 11 million shares in Frontline with a market value of approximately $58 million based on the closing share price yesterday.

We had a total of 6 debt-free assets at quarter-end, including the 2 car carriers, the jack-up drilling rig, Soehanah, and three 1,700 TEU container vessels.

The combined charter-free value of these assets is approximately $174 million, based on average broker appraisals and we may potentially enter into financings on these assets in the future.

On the financing side, we issued $164 million senior unsecured convertible notes in April.

The 5-year notes bear an interest of 4.875% per annum and a convertible into the company's common stock at an initial conversion price of approximately $18.93 per share.

The 15 container vessels with long-term charters we acquired in April have initially been funded from our cash position.

We have now received a firm commitment for a $50 million financing of the vessels with the tenor matching the terms of the charters and with an annuity-style repayment profile.

The financing remains subject to documentation and customary closing conditions and is expected to be drawn in the second quarter of 2018.

The cash considerations for the four 14,000 TEU container vessels acquired in May will be funded by a combination of cash on the balance sheet and a $320 million unsecured loan facility provided by an affiliate of Hemen Holding, our largest shareholder.

The loan facility is nonamortizing and with a term of more than 1 year.

As Ole mentioned, we are exploring long-term financing alternatives for these vessels in the Asian capital market based on the long-term charters to a leading Asia-based container line.

Then to summarize.

The board has declared a cash dividend of $0.35 per share for the quarter.

This represents a dividend yield of 9.7% based on the closing share price yesterday.

Net income for the quarter was $25 million or $0.24 per share.

We have strengthened the balance sheet with the issuance of $164 million convertible notes in April.

We have over the last months acquired a total of 19 vessels, adding nearly $600 million to the charter backlog, and we see multiple additional investment opportunities across the different sectors.

And with that, I give the word back to the operator, who will open the line for any questions.

(Operator Instructions) We will now take our first question from Christopher Robertson of Jefferies.

Congratulations on the recent acquisitions.

Thank you.

As part of the fleet renewal and kind of the diversification strategy, are there any particular subsectors that interest you more than others?

Or is that entirely driven by the details of the deal?

Well, of course, it's all down to the details of the deal.

It's down to where we see also optionality value is also interesting for us.

I would say generally, our preference is larger vessels over smaller vessels.

So in the container space, we typically focus on 9,000 TEU vessels and up.

Tankers, we have more vessels that are, I would say, from Aframax size and up.

And are also on the bulker side, it's really Panamax, and it's our key focus area.

But all is down to an individual deal and how we can structure it and how we also manage the residual value in it.

So we don't have anything set in stone, and it's all about creating long-term value.

Sure, okay.

And I guess on the flip side of that, are there any ideal age or type of vessels that you would consider for divestment?

Or again, is that purely just driven off of the details someone approaches you with?

It's more of the details.

Like when we sold the 1,700 TEU container ship, it was the only vessel we had trading in the short-term market in that segment.

And we found out that it was better to reinvest that capital in other assets instead of keeping focused on that segment and being at a relative disadvantage not having a lot of vessels there to trade.

For the 7 Handysize bulkers, it's a little different.

Again, we have more vessels, and therefore, you have a more active, call it, setting in the market.

Same thing with the 2 Suezmax tankers that we are trading in the spot market in a pool with some sister vessels owned by Frontline.

Again, we have several vessels and you're not so dependent on that one single point when you charter your vessel ops.

Okay.

And one last question for me.

If you can, on that acquisition of the 4 larger container vessels, was that maybe closer to 6x the annual EBITDA or closer to a 10x EBITDA?

I would say, you would probably be closer to somewhere -- I would rather say around midpoint there, maybe on the low side, hopefully.

But it's certainly, as we see it, very accretive to our business, not least that because we have very strong cash flow from a well-known liner company with good financials and we think there is very good appetite in the financing market for -- to finance that deal.

We have received some indications already at attractive terms.

But as we've mentioned, we wanted to close the deal first.

And -- because then you can go out and source financing, I would say, more with force instead of doing it on a hypothetical basis.

So again, hopefully, that transaction shows our ability to lift significant transactions on short notice and also the support we have from our largest shareholder, affiliates of Hemen Holding, who were willing to extend that bridge facility to us on short notice.

We also had banks approaching us with similar structures, but we got better terms here.

And also, it was an unsecured structure.

So we thought that was very beneficial for our stakeholders.

(Operator Instructions) We will now move to our next question from Magnus Fyhr of Seaport Global.

Just a follow-up question on the Frontline vessels as they are running short on cash.

Is the contribution at the $12,300 per day?

Or any other cost that are getting reduced from that?

I mean because that's about $5.5 million below that $20,000 threshold.

Well, the $12,300, that was in the first quarter.

They paid the full charter hire for the full first quarter.

So the comments on not being able to subsidize effectively the charter rate, it's really from here going forward.

So it has not affected the first quarter numbers.

Right now, all depending on which broker you're looking at, we see sort of spot rates in the -- I would say, in the $10,000 to $11,000 per day range right now.

But of course, these vary a lot.

And as we all know, I mean, if you just look at, in 2017, I mean, they varied with -- there was a huge swing in the revenues.

So going forward, if they do not pay us the full $20,000 base rate, of course, the balance there is a claim we have.

So whenever they make more than that, we, of course, get that paid back immediately.

So it's -- I would say, it's more a postponement of hire in light of that unusual long period of lower rates.

When we did negotiate this overall structure with Frontline back in 2015, we did look at historic averages over time and how many periods the markets had on average been below the threshold in the segment, and that's how we sort of tuned that the minimum cash buffer we thought was appropriate.

We have now seen that the market has been lower for longer, not least due to the cut in OPEC volumes and also drawn in stock.

So there has been, I would say, maybe the market has proven to be softer than many expected, even in last year.

But at least now there are some signs that things may turn, certainly on the stock draw side, also in OPEC.

So fingers crossed that the market may recover.

But as I said, right now, it's still well below the base rate level for our vessels.

All right.

Hopefully, we'll see those rates pick up here after OPEC steps up.

So anyway, moving on, looking at the payout ratio on your Slide 9, it looks like that's been increasing here.

And given that, I mean, you've been very busy here in the last 2 years dealing with the Seadrill restructuring, and I guess, you can quantify 2018 as a transition year with the payout ratio maybe temporarily increasing above the dividend level.

But I guess, with these acquisitions that you now announced, I guess, we should see some of the positive impact on that further down the road.

At what point in time --?

Well, I would say tomorrow already.

At what point in time, I mean, do you, I mean, the $1.40 dividend seems sustainable in the long run with the new acquisitions you've made.

But what's kind of the targeted payout ratio that you would feel comfortable?

I mean, you have a pretty big cash position on the balance sheet.

So --

Well, yes, I think, it's important to stress that the dividend is not a percentage of earnings specifically.

The dividend is typically set quarter-by-quarter by the board, and the board looks at the long-term picture and not necessarily on short-term developments.

You're absolutely correct.

We have been quite careful and we have been holding back on investments and -- over the last 2 years, I would say, particularly in light of the Seadrill restructuring.

So we were very happy to see the Seadrill, call it restructuring, being approved by the courts.

And after that, we have put more than $500 million of capital to work and added around 20% decrease to our charter backlog.

So I think we -- and we continue to see opportunities out there.

So I think, we are definitely active in the market now.

If you look at the distributable cash flow, as we indicate on Slide 9 in the presentation, that's, of course, after the continued steep loan amortization on our financings.

So you can say that the distributable cash flow after interest is much, much higher than the $152 million last 12 months compared to the dividend payout.

So -- and I think we still have decent investment capacity.

So I cannot give any sort of specific guiding, but I would say that the board generally is quite conservative in their assessment.

And hopefully, the dividend can potentially grow going forward.

But no promises.

Again, dividend is set every quarter, but over time, we've seen that the dividend has very rarely been adjusted downwards.

It's usually been stable or increasing.

Okay.

And just one final question.

You mentioned a little bit -- I mean, most of the focus has been on the container sector here with longer-term contracts.

You didn't mention the LNG segment.

I mean, I know we've been talking about that in the past, but I guess, there's some changes there in the technology that was keeping you on the sideline.

What's your view currently as putting some money to work in that sector?

And are there returns there that would satisfy your criteria?

Well, So far, we haven't done anything there.

So -- then I think the assumption would be that we haven't seen the returns we would like to see.

Typically, what we prefer, our assets, we want the modern assets.

We don't want old technology assets.

And as we all know, the difference between a container vessel built say, 10 to 12 years ago, and a modern LNG vessel now could be up to 100 tons per day in fuel consumption difference.

That's a huge difference.

So our focus has always been on newer assets and the more efficient assets for our customers.

But of course, you have to match that also with a charter that not only, call it, covers the operating expenses but also -- and financing, but also gives us a reasonably decent yield to the equity we put in.

So it's a balance here; and not the least, which is equally important in our minds, is what kind of residual exposure do you take, i.e., what's your -- you can have a base case, but we also run a risk case, and we want also to have a conservative portfolio overall.

So so far, we haven't done anything.

Hopefully, it's a segment that would fit spot on with our long-term strategy, which is large vessels to -- typically to oil major with long-term charter coverage.

So we'll see what we can develop going forward in that segment.

There are no further questions at this time.

I'd now like to turn the conference back to your host for any additional or closing remarks.

Thank you.

Then I would like to thank everyone for participating in our first quarter conference call.

And if you have any follow-up questions, there are contact details in the press release where you can get in touch with us through the content pages on our web page, which are www.shipfinance.bm.

Thank you.

That concludes today's call.

Thank you for your participation.

You may now disconnect.