Scorpio Tankers Inc (STNG) 2017 Q3 法說會逐字稿

Hello, and welcome to the Scorpio Tankers Inc. Third Quarter 2017 Conference Call. I would now like to turn the call over to Brian Lee, Chief Financial Officer. Please go ahead, sir.

Thank you for joining us today. On the call with me are Emanuele Lauro, our Chief Executive Officer; Robert Bugbee, President; Cameron MacKey, Chief Operating Officer. The information discussed on this call is based on information as of today, November 16, 2017, and may contain forward-looking statements that involve risk and uncertainty. The 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 our earnings press release that will be issued today as well as Scorpio Tankers' SEC filings, which are available at scorpiotankers.com and sec.gov. Call participants are advised that the audio of this conference is being broadcast live on the Internet 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. Before I begin, if anybody has any modeling questions, not to get tied down on the call, just contact me later and we'll discuss it offline.

Now I'd like to introduce Emanuele Lauro.

Thanks, Brian. Good morning or afternoon to everybody. So despite the market fundamentals pointing in the right direction, the rate environment has remained rather unsatisfactory during the third quarter and this should not be much of a surprise as we had guided on rates pretty late in the quarter. A very similar rate environment is persisting during the fourth quarter as per the guidance released today in our press release. Predictions are difficult to make and we must admit we would've expected to be in a stronger market by now. However, rates in the past week or so have started to give positive signs. Global product inventories continue to fall. MR ton miles demand growth is estimated to be around 5% due to a stronger-than-expected oil consumption growth. Net fleet growth was below 2% in 2017 or is expected to close at just below 2% in 2017 and is anticipated to be actually around 1% in 2018.

In addition to this, in 2018, more than 50 MRs will turn 15 years old and we'll be forced to stop trading into a so-called second-tier market. In 2019, nearly 90 MRs will turn 15 years old, and these are numbers that are further improving the fleet growth dynamics for modern tonnage. So with demand growth actually overtaking supply growth, we remain positive on the medium- and long-term outlook for product tankers. We believe the conditions for return to a stronger charter rate environment could be around the corner and show themselves starting from the upcoming winter.

And with this, I'd like to turn the call to Robert.

Yes. I haven't really got anything further to add. I think that it's very encouraging, the -- as Emanuele says, as we come into the end of this year and the inventory discipline is there. We're also seeing, from the customer's side in these last 2 weeks, the customers reengage and taking a number of ships on 1-year charters across the market, and it looks very encouraging for the future. But as Emanuele said, it's still pretty difficult to work out that exact inflection point.

I think we're happy to go to questions now.

(Operator Instructions) Our first question comes from Gregory Lewis with Crédit Suisse.

Robert, could you talk a little bit about -- clearly, rates have seemed to disappoint. But you did mention that customers are starting to, it sounds like, reengage a little bit. As we think about that, are those customers primarily traders? And what I'm trying to get at is, is part of the weakness in product rates that we're experiencing right now, is it a lack of arbitrage opportunities across the globe?

No. I think there's a change. I mean, I think the weakness we've had up until the last couple of weeks really has been a lot to do with what happened with the hurricanes and all the changes there combined with the weakest point of the year on a seasonal basis. And now you're getting the exports coming back up out of the U.S. Gulf, and those are really very strong exports now in the U.S. Gulf, which has reignited the U.S. Gulf MR market. You could argue on a factual basis as we sit today, the triangulated rates are higher than where they were at this time last year, but it's holding back the whole market in products. It's just simply this destocking of the -- the destocking you've had from the inventory side of life as a result of the OPEC positions. That is coming to an end. As Emanuele said, you're normalizing positions. The people who've taken in time charters across the scope of your customer range, they are oil companies. They are trader oil companies, and they're pure traders on speculation who would be anticipating the arbitrage opportunities to come as you've got a generally -- the other thing that's constructive is you've got a generally more constructive energy tape.

Okay, great. And then just, you mentioned the -- an increase in exports from the U.S. Gulf. And just as we think about shale oil, it looks like that's a trend that's going to probably have some legs here over the next, I don't know, call it, 12, 24, 36 months. The end markets for the U.S. exported products, is that changing? Or any sort of color you could provide us around where the bulk of those volumes are going?

Well, the predominant growth there is Latin America for that. Very, very strong exports and export growth into Latin America. You could also expect over time that you're going to see -- for example, you'll see cargoes also drift towards Asia as well, which will be very beneficial, but the predominant amount is diesel. 60% of those exports go to Latin America. The rest of it is Europe, West Africa and Asia.

Okay. And then just on the Latin America trade. Is that primarily an MR trade? Handy has pretty much a mix of both?

Predominantly MRs.

Our next question comes from Jon Chappell with Evercore.

So I agree with Emanuele's assessment on kind of where things are looking right now. But I think maybe 12 months ago, we all thought kind of the same thing. So can you just kind of refresh our memories, kind of what happened this year that was surprising to the downside? I know we've talked about the inventories ad nauseam. Anything else besides that? And if we're sitting here 6 to 9 months from today and things haven't gotten much better despite the fact that inventories have somewhat normalized, the order book is down to 20-year lows. Where could it possibly go wrong? What are we missing on the downside?

We'd take -- this time last year, we were just at that start of that -- the OPEC cuts, et cetera, et cetera. And I think probably what would surprise anybody is actually they've been pretty disciplined. It's actually for the first time -- this time last year, I would not have expected on previous history that they could've kept their act together and they could have disciplined and kept those cuts going. So that, I think, is, let's say, the predominant surprise because the headline growth in product demand or the world economy is actually surprised to the upside. We're seeing that in the container business to dry business. It's much, much better than anyone would've expected this time last year, as is the headline growth in demand for petroleum products and vegetable fuels. If we're looking out this time 9 months now, we've got a very strong undercurrent in demand right now headline. The dry cargo market's indicating -- container markets, the gas markets, everything in shipping is showing you that the world is growing hard. So on the basis that the supply is really fixed for not just the 9 months but the next 2 years or so, I guess, what could go wrong would be some geopolitical event that cripples headline demand.

Okay. That's certainly impossible to try to predict. The other thing I want to ask about is I've looked back at seasonality for the last 15 years or so at the request of some investors. And obviously, every single year is different. Sometimes, there is really no "seasonality." But if we kind of took the average of the last 15 years or so, you really start to see an uptick in the MR rates around second or third week of November and it's been something we've been saying for a couple of months now. And here we are, it's happening in the second week of November essentially. Do you think this is the kind of the beginning now, the transition to...

I would -- yes. I would argue that in a normal year, it happens plus 1 week -- plus or minus 1 week at Thanksgiving in most of the [viscal] dispersion. I think what's different is, in this year, is yes, of course, right now, this week, you're seeing those numbers, those improvements really show up. But I'll tell you what's encouraging is that this has been going on since, I don't know, we had this pickup since right at the beginning of October, 2, 3 weeks ago. And it dragged itself all the way from very low numbers now to something. So that's good. That's something that you would take as a confirmatory data point for optimism that the market is now acting, I guess, as we would expect it in terms of the season.

Great. Last one. I don't know if this is for Brian or maybe even Cam. You beat our estimates every single asset class, LR2s down to Handys, but the revenue is a little light. I'm just wondering, was there some repositioning of Navig8 ships as they were released from the Navig8 pools and tiers that maybe resulted in some off-hire time? And if so, has that carried out into the fourth quarter at all and we shouldn't be addressing?

Hey, John. It's Brian. Yes, there was some repositioning of those vessels. So -- and that did drag over into the fourth quarter for about 4 or 5 vessels. So yes.

Okay. But 4 or 5 vessels a couple of weeks is not pretty meaningful or is it more than that?

It's 4 or 5 vessels, it's going to take some time, right? So -- but overall, the way integration has gone, it's gone very well. So we're very happy with what the results were.

Our next question comes from Doug Mavrinac with Jefferies.

Just have a few follow-ups for you guys as well. First, Robert, as we're kind of peeling back that onion and John mentioned some of the seasonality that you normally see at this time of the year in terms of maybe a reason why you've seen an improvement in activity and earnings. And then also if you kind of look at the WTI-Brent spread going back to early, late August, but it became more pronounced in September, so supportive of declining margins. So you peel kind of each of those things back. When you look at the chartering activities, so we see charter rates and people view that as an indication of kind of how tight the market is, but I argue that it's kind of a scoreboard. I mean, things could be happening underneath. So when you look at chartering activity maybe outside of the U.S., especially given some of your increased LR exposure, do you see any signs of changes in chartering activity over the last few weeks, the last couple of months, that would suggest that it's more than just seasonality but it's more than just a bump in the refining margins that you are seeing tightness across that refined products inventory spectrum?

Yes. I think your biggest clue to that is actually in our third -- in our guidance so far quarter-to-date because the area that is performing the best is your big LR2s. So your big LR2s has nothing to do with arbitrage, nothing to do with weather. And then the one that is for -- the LR2s to have gone through that period in those 16, 16.5 levels is a fundamental sign that your fundamental demand as you're talking about underneath the -- that that we can't view is very healthy and...

That's kind of what happened.

If you look at it on a year-on-year basis, I mean, this time, a year ago, the LR2 market, I think was -- I don't think it was just about in double figures. I mean, the clocks and index has it at 6,400. But obviously, we always -- we beat that one. But I mean, it was substantially lower from where it is today.

Right, right. And isn't that, Robert, kind of what happened back in '13 and '14 where in '13, you started seeing U.S. exports picking up because of shale oil? MR rates were going into the mid-teens but the LRs were lagging. But then in '14, the LRs started taking over, then that...

Sure. Yes. But I mean, when we look at the LR2s, it's in fact, I mean, what's happening in it? Middle East exports to the U.K. and the Far East have been really strong. These are -- this is not arbitrage. This is just the top line curve showing. Even backhaul U.K. count to the Middle East have been strong. So, so far, cross fingers, we just don't want to jinx anything ourselves. As Brian said, we're really pleased with the integration of the Navig8 deal and we are -- really like the way that this LR2 market is set up and structured. And yes, we're disappointed generally, as with Jon Chappell, about the year. But to have that opportunity to grab that fleet and be the key player in those big ships is very exciting for us.

Got you. Very helpful. And then, Robert, as a follow-up to that, and thinking about the LR2s and LR1s and given their longer-haul nature, but within the context, crude is strengthening. Bunker fuel prices are rising in that type of environment, so not just with what's happening specifically in products but the broader crude market, you guys have some ECO ships. And when you think about kind of the ECO premium that you guys receive relative to the market, is that an environment where you could see that really start to show the fruits of the labor over the last few months with the acquisition but also kind of the way you guys have been positioned?

Sure. But it's been more than that, too. I mean, if we look -- if you start looking at the thing itself, you talk about the labor, is that -- come February, we have no more CapEx, in terms of growth going out. We have very little CapEx in turn because of the newness of our fleet and maintenance going out. We have -- we are very prepared with the new ECO fleet in terms of the regulations, which are going to lower our capital cost compared to competitors going forward. And then, yes, the fact that you consume much less fuel is really good if you have a rising fuel environment against your competition, and that's fantastic. But we've already -- yes -- we're -- yes, I would say we are -- we're quietly looking forward to the future as we see it.

Got you, very helpful. And then just third and final question for me. You mentioned it, Brian mentioned it, the integration of the Navig8 fleet. Just anecdotally, any positive or negative surprises you guys have encountered as that fleet has become Scorpio's?

No negative surprises. One positive surprise, I'd say, is the repositioning the vessels and actually getting some of the Aframaxes cleaned up. We got very fortunate with some condensate cargoes, and therefore, have been able to put those in the LR2 trade sooner than perhaps we expected. So that's a nice positive surprise, if there's one.

Our next question comes from Magnus Fyhr with Seaport Global.

Just one question. On the chartered-in fleet, kind of get your thoughts there. I mean, you have a pretty extensive fleet already but we continue to see it taking in more ships here at rates that are below current spot. Can you kind of just review your thinking there? Obviously, you must be pretty bullish on the market going forward. But do you need more operating leverage? Or how do you think about it?

Well, I'm not sure that the rates are below the current spot. They may be below the guidance for the trailing fixtures that have been done. But I think you should be -- I think it's fair to say that the current spot markets are stronger than the guidance we've given for the fourth quarter, and therefore, the charter-ins are hopefully well timed. I mean, it's no secret that we're bullish on the market. We would not have endeavored to go to the efforts of acquiring that Navig8 fleet without being bullish.

So I mean, going forward -- yes, go ahead. Sorry, Emanuele. Go ahead.

Well just adding to Robert's that it's not that we went out and chartered a bunch of fleet -- or a bunch of ships. We just maybe extended or renewed the existing ones rather than adding, just a comment to this.

All right. So you're pretty comfortable with the current mix? Or would your chartered-in be more on an opportunistic basis going forward?

I don't think we will -- I think we're pretty happy with where we are, especially now that the Navig8 fleet is there. I don't see it as really adding much to the charter fleet. In fact, on the margin, I would see the charter fleet going downwards because as the market improves, we're not going to -- we often renegotiated options with people in a weak market. But as the market improves, those ships that are coming off charter, we don't -- the risk-reward changes. We don't want to step up into a rising market. It's one thing taking a ship in at 14, 14.5. But then when the market moves to 18, 19 and the person wants 17 to renew, your risk-reward changes. So it's fine. With the fleet we have, you just let that go.

Our next question comes from Spiro Dounis with UBS Securities.

Just wanted to maybe hear your views on China's potential impact next year for the product tanker fleet. They recently lifted the crude import quotas by about 55% for next year which is, obviously, a positive for the crude fleet. But I'm just trying to get a sense of if you think a lot of that crude ultimately gets refined and put on a product tanker. And if so, is that better for a long-haul trade? Or do you think there could be a big benefit for the MRs locally?

I think that China is only, at the moment, ever a positive for the product market. I mean, China is like still almost nonexistent as a trade. So what's great with China is that as they develop their own refineries, you are going to see more interregional trade for products. So regardless of where they -- and it's great if they take in more crude to refine then you're going to have more interregional trade, you're going to exports, you're going to release cargo from Singapore to trade to the U.K., it -- there hasn't been a time in history where you've created a -- you've improved the refining capacity of a geographic area that hasn't stimulated product tanker ton miles demand. And because China is a nonfactor in the product market up until very recently, it's really all positive whatever happens there.

Encouraging. Second one maybe for Brian. Just now you sort of stand back and you look at the integrated or combined balance sheet of the 2 companies. I guess, what are the next steps as you see it, if any? Just from a leverage position or liquidity position, are you basically at where you want to be given that you see this improvement in rates? Or do you feel like you've got some more to do there?

Yes. Happy where we are, but we do see the improvement in rates and that's only going to strengthen the balance sheet going forward. So I think everything is looking pretty good right now.

Okay. And then last one for me, just curious about any comments around vessel values here. Directionally, how do you think that plays out? You, obviously, opted for sale-leasebacks recently to raise liquidity. But if, I don't know, vessel sales ever come back on the horizon here, would you expect some upside here? Or is it even on the table?

Well, I don't think we want to sell anything. I mean, it's a -- I think that your ship values in products are theoretical, academic at best. I mean, if you -- there is such a desire out there for the modern ships with not actually in many hands. And as soon as you get any right movement that crosses -- as soon as you get LR2s up in, whatever, 19, 20, you get MRs just for a month at -- with the rates where they are now. You're going to have values move upwards. I mean, just because the great thing in a product market, and this includes our competitors too, is that, yes, it's been disappointing. Of course, it's been disappointing, been very disappointing on a return aspect. But it's not like the product tanker market has traded for any significant period below large -- big numbers below operating cash breakeven. It's never crossed operating cash breakeven to the downside. Most companies, it's been hanging around total operating cash breakeven. I don't see any of our competitors now as forced sellers. Navig8 was the weakest on the block and that was partly because of their ownership structure, okay?

Our next question comes from Fotis Giannakoulis with Morgan Stanley.

I want to ask you about how do you see your capital structure going forward. You have a positive and I think that all of us have a positive outlook for the next couple of years. What kind of loan-to-value or leverage ratios you have? And how do you view utilizing the free cash flow when this comes with the market improvement between acquiring additional vessels, paying back dividends or buying back some of these sale and leasebacks?

I think the first thing -- well, your sale and leasebacks are pretty low interest rate costs, certainly that's not your highest cost of capital at the moment. In the long term, it's fixed. So that -- your sale and leasebacks have been pretty efficient in terms of that. I think the first step would be simply to pay down debt, I mean, to strengthen the balance sheet. I don't think that you -- there's no anxiety to go get more ships. It's a -- you have a company that's massively leveraged to -- massive leverage, operating leverage to the upside. And you've had a company that is -- you've been waiting and waiting for the market improvement. So I think the first thing you do is you have a quarter or 2 or whatever of just taking -- improving your balance sheet that way and then you take it from there. I think that when this improves, we're not going to see this improve for a year. We're going to see this improve for multiyears because you've got the regulations to follow. You've got the dynamic in the other markets. I mean, in total shipping, I can't remember a time when the newbuilding order books, since the 1985, have been in such good shape from a shipowner's point of view across many sectors of shipping. So to the degree this turns, I think you can easily sit there, pay down debt for a quarter or 2 and then take life from there and then really see how you're going to return money to shareholders.

So I assume when you're talking about paying down the debt and the reason why you're accumulating cash rate now is with an eye on the convert in 2019. How do you think about buying back or financing this convert?

At the moment, it's to finance. But yes, as you get cash, you have all different options. It's cheap in the sense that it's -- the coupon's fairly cheap. It's not that -- buying it back at the moment, yes, maybe, maybe not. It depends what prices are available.

One last question about the market, and obviously, the supply fundamental for product tankers are very favorable, order book at record low levels, and then we do not see a lot of shipowners looking to place new orders. This is a striking difference compared to the crude tanker market. Can you explain why while we have seen VLCC orders, we do not see more product tanker orders? And how different these 2 segments are? There are some investors...

I think, firstly, we could see differences anyway. The demand structures are very different on products and crude. I mean, the demand side of the products or all the things you talked about before are looking very good. The environment restrictions are higher with the fleet. The fleet ages than there are in products. But you actually got more disciplined owners in the product side. I mean, the -- if we look at the owners themselves, none of them are -- they have different structures. Some of them are like ourselves and ourselves are more -- some of them have been the PE-sponsored or the quasi-public-private ownership companies like the TORMs. But all of the shareholder and boards have been pretty focused on maintaining discipline and looking at consolidation opportunities. I mean, we've clearly done one with Navig8. But behind the scenes, without going into details, we are not in -- we're not sort of directly involved, but we know of other similar types of consolidation talks that are going on with other product owners that would result in rationalization without adding to the fleet supply, whereas in the crude oil, I don't understand it. They've just kind of -- each one is -- there've been -- every kind of consolidation talk is broken down in one form or another and each party just decided to go out and order new ships. They're just different markets.

Our next question comes from Ken Hoexter with Merrill Lynch.

Robert, maybe just a moment on your thoughts on the market. What drove the LR2 rates down so much or further over the past 2 quarters versus the uptake instability in the LR1s and MRs?

I don't think we saw any instability in the LR1s or the MRs. I think they're just 2. The -- I'm not quite sure I understand the question.

Well, if I look at the LR2 rates on an average daily base or your TC rates, right, you've gone from 16 to 15 to 13 on the LR2s, whereas kind of the MRs are staying at 13s across the board. So just wondering why you're seeing that much more of a downtick on the LR2 market.

Okay. I mean, one of the factors that provides something of a floor to MR rates and Handy rates is the demurrage that they earn while they're waiting. So naturally, the elasticity to -- of rates of the larger ships looks much greater than those in the smaller ships because they're not waiting on the meter as much over these long-haul voyages that they're doing.

The second aspect, Ken, is there's just generally a higher base around the LR2s than anything else. So in periods of weakness, they're a little bit like looking at VLCCs or Capes in the LR market. They're going to go down harder. And in periods of restrengthening, they go up harder, just like you're seeing in our fourth quarter guidance. The LR2s have accelerated out and already had a greater change from 3Q to guiding 4Q than the MRs have.

Okay. And then similarly, on your pool capabilities as the Navig8 vessels have moved over or mostly moved over to your pools, can you talk about your premium to market rates? Do you see that accelerating, kind of holding firm? Maybe just talk about the pool typical gap that you see versus the market?

Well, naturally, with scale, with greater scale, you become the source for your customers of every additional move or cargo. So your information advantage and your ability to serve on backhauls triangulation expand with scale. And so that's what we're seeing both in terms of repositioning these ships. LR2s, as we've covered in previous calls, are not an A.G. East dedicated animal anymore. They're doing backhauls from the Far East. They're coming into Northern Europe. They're even coming across the West Africa and the U.S. Gulf. And so with scale, your -- on a global basis, your customers turn to you for a solution that they simply will not think of when you're the owner of fewer assets or operator of fewer assets. And similarly, third-party owners look to us as good and aligned managers of quality assets. So we find partners wanting to team up with us for the same reason, it's the scale and the access to information.

And we would expect that now that the 2 fleets have been put together and we've been able to start to talk to customers now the fleets have been put together and clearly the biggest and the highest quality on the block, we would expect those dynamics that Cameron's talking about to increase and create a chance for us to widen further our gap between what we're able to earn and what the -- what the general spot market indexes would be.

Great. Exactly what I was asking. And then last, I guess, to follow up on those. I think the last 2 questions were kind of hitting on this. But Robert, you said you were happy with the size of the fleet unless you aren't going to place new orders and then obviously you decided to acquire Navig8 and scale significantly. Maybe your thoughts on it today. I guess, previously throughout, we're fine no more ordering. But if -- as Emanuele said, there's a 1% order book, do you see others starting to look at the yards to order? Is that something you'd want to do if you start seeing rates improve?

No. I think you've got a long way to do. We've really, really got a super modern fleet. And your -- so we are not in the yards discussing anything. I think that we -- our shareholders, ourselves, it would be great to actually have a period where our lack of CapEx in both dynamics is enabling us to get -- I know it's a bit of a crude phrase, but it would be great to get actually paid for the trade, both as management and, more importantly, for our shareholders. For our competitors, it's a little bit difficult to see where they go. I mean, hopefully, their companies will take the consolidation route. Some of their fleets are a little trapped because they haven't got any new ships. But I think -- so you're always going to have some new ordering somewhere. So far, though, people have remained disciplined. But I think with the likes of STNG, STNG should at some point start paying at a premium to those type of companies because some of those companies with old fleets are definitely going to have an increase in their operating costs and their CapEx for operating. And they might have an increase in outflow going out for CapEx growth by placing orders that obviously wouldn't get any income on -- in a strong market for 2, 2.5 years.

Our next question comes from Herman Hildan with Clarksons.

So my first question, looking into the multiyear recovery, as you called it, ahead of us, I think most of us agree as someone else said, what do you think is the key difference in the years ahead compared to when we started off the last, call it, market upturn in 2013 and '14?

I would tell you 2 differences that exist right now across shipping that have never existed since the war, okay? The first is that we are going into increasing regulatory environment that will put pressure on cost of vessels, running your vessels, age of existing vessels, that is a definite. The next thing is that in the 1960s rally, so there's some classic rallies in shipping, in the 1960s, that rally was also met by a huge expansion of new building capacity in the United States and Europe. The 1970s was met by a huge expansion capacity in Japan. The 1980s rally was met with huge expansion and the birth of Korean shipbuilding. And the 2000s, the last rally in shipping was met by the huge expansion of China. Right now, for the first time ever since the war, if we look at shipping, there is no geographical or continental or country new area that you can look at that is going to move to the world -- leapfrog and become the world's #1 shipbuilder. That's what's so significant. Japan became the world #1 over Europe in the '70s. Korea became the world #1 over Japan from the '80s. China became the world #1 in the 2000s over Korea. There's nothing that could even become world #3 or 4 out there. That is what could set shipping in its entirety out for a very good run if the world economy continues to go through a period of expansion and predominant peace. That's the biggest difference.

I think that's a very interesting point. I mean, we start this recovery, I guess, with the lowest, for example, MR order book this millennium really. And kind of where -- do you have a sense of kind of what kind of prices do you think will be needed, for example, on the MR to get meaningful to -- or SPP, for example, to start building ships or MRs again or kind of...

No, I don't know. I don't know. We generally have lost contact with the everyday prices and structures of the shipyards, having not looked at them for a reasonable while. So I wouldn't like to speculate on that. It's quite clear, though, that we are going -- that those prices are getting higher anyway just simply because those countries, their economies are generally improving. Lifestyles are improving. There are different job opportunities. Land itself is becoming more expensive. The commodity inputs are becoming more expensive. There is some form of inflationary tendencies that goes above and beyond whatever they needed to -- whatever they need to breakeven to. And then more importantly than that is put the MR order book, put the MR order book in the context of the container market, the LNG market, the crude market growth, the dry cargo market growth, the gas market growth and the general position. That's what I think makes it pretty exciting.

Okay. And then just the final, I guess, the cash flow question, which would be to Brian. Proceeds from this possible vessel increased by $27 million compared to Q2, which I assume is the STI Sapphire which closed in July. I'm just curious where in your cash flow I can find the closing of the first 3 sale-leasebacks that you've done in the third quarter.

You can -- I'll go over that later on.

He can go over that later on.

I'll show it to you in the cash flow statement.

All right. Thank you very much. I think we appreciate all your time this morning. I know it's near the open, and thank you again. See you next quarter.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day.