Q4 2023 Genco Shipping & Trading Ltd Earnings Call

Participants

Peter Allen; Chief Financial Officer; Genco Shipping & Trading Ltd

John Wobensmith; CEO; Genco Shipping & Trading Ltd

Michael Orr; Assistant VP, Finance; Genco Shipping & Trading Ltd

Omar Nokta; Analyst; Jefferies

Liam Burke; Analyst; B. Riley Securities

Ben Nolan; Analyst; Stifel Nicolaus and Company, Incorporated

Sherif Elmaghrabi; Analyst; BTIG

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the Janco Shipping & Trading Limited Fourth Quarter 2023 earnings conference call and presentation.
Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from the Janco website at www.gencoshipping.com. We inform everyone that this conference is being recorded and is now being webcast at the Company's website, www.gencoshipping.com. We will conduct a question and answer session. After the opening remarks, instructions will follow at that time.
A replay of the conference will be accessible anytime during the next two weeks by dialing one eight seven seven six seven four seven zero seven zero and entering the passcode three seven three nine six six.
At this time, I will now turn the conference over to the company. Please go ahead.

Peter Allen

Good morning. Before we begin our presentation, I note that in this conference call, we'll be making certain forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe, and other words and terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the Company's press release that was issued yesterday. The materials relating to this call posted on the Company's website and the Company's filings with the Securities and Exchange Commission, including, without limitation, the Company's annual report on Form 10 K for the year ended December 31st, 2022, and the Company's reports on Form 10 Q and Form eight K subsequently filed with the SEC.
At this time, I would like to introduce John Wobensmith, Chief Executive Officer of Branco Shipping & Trading Limited.

John Wobensmith

Morning, everyone. Welcome to Genco's Fourth Quarter 2023 conference call. In addition to reviewing our Q4 2023 and year-to-date highlights, we want to use this opportunity to provide an update on the progress we are making three years into our comprehensive value strategy as well as on the industry's current fundamentals. We will then open up the call for questions for additional information. Please also refer to our earnings presentation posted on our website.
Starting on page 5, 2023 marked another strong year for Janco. We took concrete steps to drive sustainable long-term value while achieving the top corporate governance rating across 64 public shipping companies for the third consecutive year. We also made progress enhancing the Company's ability to thrive through all industry cycles as we executed across the three pillars of our comprehensive value strategy, focused on dividends, deleveraging and growth. We ended 2023 with our strongest quarter of the year, as outlined on Slide 6. For the fourth quarter, we achieved adjusted net income of $0.43 per share and declared a $0.41 per share dividend, representing 173% quarter over quarter increase through the dividend, complementing the sizable returns we provided shareholders during the quarter. We also continued to delever while executing several key strategic growth initiatives. This included increasing our earnings capacity by implementing implementing the next phase of our fleet renewal program. Additionally, we closed on a $500 million revolving credit facility. It meaningfully increased our borrowing capacity, reduced margin, extended maturities and enhanced our ability to take advantage of opportunistic growth.
Turning to the fleet. Performance was strong in the fourth quarter and underscores the meaningful operating leverage of Gen co's asset base and the importance of our bulk barbell approach to fleet composition during the quarter, our operating leverage was evident as Capesize rates spiked to multiyear highs in December, enabling us to increase Q four TCE. by 44% and achieve our highest TC of the year at over $17,000 per day. We also generated our lowest cash flow breakeven rate for the year, resulting in significant margin expansion and an increased Q4 dividend, which I mentioned a moment ago. Notably in the fourth quarter, we once again achieved the time charter equivalent benchmark outperformance and are pleased pleased to have seeded our internal benchmarks for the year by $1,300 per day, while generating adjusted EBITDA of over $100 million. Looking ahead, we expect the positive momentum and our strong performance to continue in the first quarter. For Q1, 81% of our available days are fixed at over $18,700 per day, an increase of 34% versus Q4 levels. This strong performance is notable, especially considering that Q1 has historically in the seasonal low point in the drybulk freight market.
On page 7 we look back on the development of our comprehensive value strategy based on our ongoing progress in 2023. In April 2021, management and the Board laid out a clear path and related objectives to transform Janco into a low leverage, high dividend yielding company with significant financial flexibility to provide shareholders with returns and opportunistically for the grow through the drybulk shipping cycles. Since that time, we have made significant progress towards these goals and importantly, have balanced our capital allocation priorities. Having paid $170 million in dividends acquired $236 million of vessels and paid down $249 million in debt.
Moving to slide 8, we have declared compelling dividends over the last 4.5 years, including nine since the announcement of our value strategy over this 18 quarter period, cumulative dividends to shareholders amounted to $5 and $0.155 per share or 29% of the current share price.
Further supporting our ability to pay sustainable dividends is our recent success executing the next steps of our fleet renewable strategy as displayed on Slide 9. In November 2023, we purchased two 2016 built scrubber-fitted Capesize vessels for $86 million, while divesting three, 29 and 2010 Capesize vessels. This trade further modernized our Capesize fleet and reduce the risk profile while also increasing 2024 earnings and cash flow capacity.
Following the sales of the three older Capes We expect 2020 for drydock savings of approximately $10 million as we avoided the expensive third special surveys for these shifts in line with our barbell approach to fleet composition noted on slide 10, we'll continue to evaluate further opportunities in the sale and purchase market to renew our fleet.
Turning to Slide 11. We believe Janco is in a highly advantageous position going forward. Specifically, based on our success lowering our debt outstanding by 55% over the last three years, we have an industry low net loan to value an industry low cash flow breakeven rate and nearly $300 million in undrawn revolver availability. This provides significant financial flexibility and optionality for the company going forward.
In a cyclical and capital intensive business. As such, we believe the Janco is well positioned to operate in both up and down markets, as shown on slide 12, with approximately $1 billion in fleet value and taking into consideration our scale and operating leverage, we expect Genta's fleet to significantly benefit from a rising market. With that said, and given our access to capital, we are also able to take advantage of countercyclical opportunities to buy vessels to increase our earnings power, much like we did prior to the recent Capesize rally in early Q4.
Going forward, a key priority for Jinko is continuing to be good stewards of capital for shareholders and continuously evaluating capital allocation priorities.
On Slide 13, we summarize the key tenets of our approach to capital allocation first, maintain low financial leverage to lower cash flow breakeven levels based on the significant operating leverage inherent in the business. Second, paid compelling quarterly dividends consistently to shareholders. Third, opportunistically grow the asset base. And the fourth is to employ a barbell approach to fleet composition by maintaining a fleet of Capesize vessels for upside potential while owning Ultramax and Supramax Supramax vessels with a more stable earnings stream. We believe our low leverage, high dividend payout model executed in scale is industry leading in the drybulk shipping public markets. Given the volatility and the cyclicality of the drybulk shipping. We also believe it creates the optimal risk reward balance to provide sizable returns to shareholders, opportunistically grow the fleet and enhance our earnings power through the cycles.
I will now turn the call over to Peter Allen, our Chief Financial Officer.

Peter Allen

Thank you, John. On slides 15 through 17, we highlight key financial metrics of the Company, specifically for Q4 2023, Janco recorded net income of $4.9 million or $0.12 and $0.11 basic and diluted earnings per share, respectively, which includes a noncash special impairment charge of $13.6 million relating to the agreed-upon sale of three older, less fuel-efficient Capesize vessels. Excluding this noncash charge, adjusted net income was $18.6 million or $0.43 basic and diluted earnings per share. Adjusted EBITDA for Q4 totaled $37.1 million, bringing the full year 2023 total to $101.5 million. During Q4, our net revenues increased by 50% as compared to Q3, while our recurring cost structure remained approximately flat over the period, illustrating a high degree of operating leverage leverage inherent in the business. This operating leverage is best displayed by our Capesize vessels, specifically those on index-linked contracts. These ships achieved an average TCE of over $33,000 per day in Q4, 91% higher than in Q three, directly benefiting from the rapid rise in the Capesize market at year end. With such operating leverage, there is less of a need for financial leverage to achieve strong returns.
On Slide 18, we highlight the trajectory of our debt outstanding over the last three years and our continued voluntary debt repayments. Through the end of 2023, we've paid down nearly $250 million of debt, meaningfully reducing our leverage, given our 100% revolving credit facility. We will continue to actively manage our debt balances save on interest expense while opportunistically drawing down for vessel purchases. Given our nearly $300 million of undrawn capacity during the fourth quarter, we closed on a $500 million revolving credit facility, which is a key step in the continued development of our capital allocation approach. This facility increased our borrowing capacity by over $150 million, lower pricing on margin by 30 to 60 basis points from the previous facility and extended maturity to the end of 2028 is 100% revolving credit facility structure provides further flexibility and aligns well with our value strategy as the RCF structures enables Genco to continue to voluntary pay down debt in line with our medium term goal of zero net debt without losing the capacity to draw down to fund growth. To this point, we took advantage of the Company's meaningful liquidity position to opportunistically acquire two modern high-specification Capesize vessels will continue to assess additional sale and purchase transactions in the market in line with our fleet renewal strategy. As of December 31st, 2023, our cash position was about $47 million and our debt outstanding was $200 million, bringing our net debt level to $153 million and net loan to value ratio to 15% with $295 million of undrawn revolver availability. Our total liquidity position at the end of the year was $342 million. Following the completion of the agreed-upon vessel sales in the first quarter, we anticipate our net loan to value ratio to reduce to 10% Moving to slide 19, we highlight our transparent dividend policy, which targets a distribution based on 100% of excess quarterly cash flow, excluding maintenance and withholding for future investments. The nature of our variable quarterly dividend and our fleet operating leverage enables shareholders to directly benefit from freight rate increases as our Q4 dividend increased by 173% to $0.41 per share. Our Q4 2023 dividend represents an annualized yield of approximately 9% on the current share price, nearly double the two-year U.S. Treasury rate of approximately 4.7%.
Looking ahead to Q1 2024.
On slide 20, we anticipate our cash flow breakeven rate, excluding extraordinary Annual Meeting related expenses to be $9,752 per vessel per day, well below our Q1 TCE estimates to date of $18,724 per day for 81% fixed pointing to another strong quarter.
I will now turn the call over to Michael or our drybulk market analyst to discuss industry fundamentals.

Michael Orr

Thank you, Peter.
And as depicted on Slide 22. After an atypically soft third quarter, the drybulk market increased meaningfully in the fourth quarter with Capesize vessels reaching multiyear highs or $50,000 per day in December. These strong rates continued into the historically softer period, leading up to Lunar New Year in February. Capesize rates reached a 15-year high for this time of year, driven by continued tightness in the Atlantic Basin. Currently, Capesize and Supramax rates remain at current levels of approximately $23,013 per day, respectively.
Slides 23 and 24 highlight the aforementioned seasonality of the drybulk freight market, which has historically seen a reduction of cargo availability, particularly from Brazil due to poor weather conditions and scheduled maintenance, coupled with the timing of newbuilding deliveries and the Lunar New Year. However, various geopolitical events continued to impact the drybulk freight market. As highlighted on slides 25 and 26 in October, low water levels in the Panama Canal impacted the number of ships that could transit resulting in delays in rerouting of vessels. One of these options was to divert vessels through the Suez Canal. However, in December attacks and commercial vessels in the region left many shipping companies to no longer transit. The Southern Red Sea and Gulf of Aden area further disrupting the efficiency of the global drybulk fleet, approximately 7% of drybulk trade transit through the Suez Canal larger-scale tonnage rerouting over an extended period of time could increase ton-mile demand for dry bulk shipping all else equal.
Regarding the Chinese steel complex on slide 27 and 28, China's iron ore inventories have been building over the last several months from very low levels but still remain well off of 2022.
China's iron ore imports rose by 7% in 2023 year over year, supporting iron ore prices, which remained firm at approximately $120 per ton. China's steel production was flat year over year in 2023. However, India grew substantially at 12%, but ex China output increased on a on a year-over-year basis for the last six months.
Looking ahead to 2024, the World Steel Association forecast Chinese production to remain at 2023 levels for the rest of the world is expectancy growth of 4%, potentially signaling an increase in demand from developed countries and support from the secondary trade routes outside of Asia.
In terms of the grain trade. The end of Q1 represents the start of the South American grain season, which typically sees an increase in Brazilian soybean and corn, which is supportive to modern bulk rates, as shown on slide 29, USDA is forecasting another strong crop out of Brazil regarding the supply side outlined on slides 30 to 32 net fleet growth in 2023 was 3%. Historically low order book as a percentage of the fleet as well as near term and longer-term environmental regulations are expected to keep net fleet growth low in the coming years. While we expect volatility in the freight market, the foundation of a low supply growth picture provides a solid basis for our constructive view of the drybulk market going forward.
I will now turn the call back over to John for closing remarks.

John Wobensmith

Thank you, Michael. Before we turn to Q&A, there are a few key points that I'd like to highlight. First, we are executing a clear plan in doing so with a commitment to strong corporate governance. We've made demonstrable progress executing across the three pillars of our comprehensive value strategy.
Second, our strong operating and financial results for the fourth quarter and full year demonstrate the strength of our industry-leading commercial platform and our significant operating leverage. We are pleased to outperform benchmarks and increase the TCE by 44% from third quarter levels.
Finally, we believe the key steps we are taking are positioning us to create value both today and for the long term.
This concludes our presentation and we would now be happy. Take your question.

Question and Answer Session

Operator

(Operator Instructions) Omar Nokta, Jefferies.

Omar Nokta

Thank you. Hey, guys. Good morning.
Thanks for the thanks for the update, and yes, thanks for outlining. Obviously, the strategy, as you've been has been ongoing now for three plus years or so.
I wanted to ask just about the drybulk market overall. Clearly, things have been as you were touching on just now in the presentation, I think have been much healthier than expected. Definitely going into 4Q. There were not expectation for rates to jump as they did. And so far here in the first quarter things have been much, much healthier as well.
And just wanted to dive a bit deeper. Just kind of maybe from your perspective, if you could just give us a sense of what do you think is really behind this market? Is it demand is demand really the driver here? Have you obviously talked about the Red Sea, the Panama Canal. Is that also having an issue on the margin or how would you characterize this market, say today versus last year?

John Wobensmith

I mean things are looking fairly small, so obviously, great question, Omar, I think you have to start with the supply side, which is, again, continues to be very well in terms of percentage of the fleet on order, we're going to have even lower deliveries this year versus last. And then as we get into 2025, deliveries slow down even further. And again, they're from very low levels to begin with. So we have a very good supply demand balance this first quarter though, and we really started to see it towards the middle of the fourth quarter. We've seen actually increased volumes on iron ore bauxite coal. I think the certainly the El Nino effect that has created dry weather in the iron ore areas in Brazil have enabled Valley to increase production from what would normally be a seasonal low because it would typically be the rainy season when in fact, it's been pretty dry. So we've seen increased iron ore. We've seen increased bauxite out of West Africa coal shipments have been strong. We are out we are about to come into peak grain season for the for the southern hemisphere. Things looked very, very good there. And both Brazil and Argentina. Argentinean corn had a pretty bad year last year. This year looks like it's going to be close to up to a record on the corn side. So that all looks positive, but then you're talking about some of the inefficiencies on. I think the Panamax to now is probably causing greater inefficiencies than than the Red Sea, though, certainly there the Nestles, avoiding the Red Sea on our part as a part of the story as well.
When I look at it fundamentally, I believe that the market is being driven by low supply demand has been up, volumes have been up. And then we do have some inefficiencies that have been created around the Panama Canal and the Red Sea area, Southern Red Sea area.
Thanks, Dan.

Omar Nokta

That's helpful context, kind of broadly on the market and then just maybe a follow up. I wanted to ask you, though, on your fleet renewal strategy, you sold the three older kids to acquire the two newer ones. Obviously, we've seen asset values fairly firm. It looks like and they continue to push higher.
Just wanted to ask if you can maybe touch a bit on what we're seeing or what you're seeing in the sale and purchase market? And also, is that influencing in any way how you're looking at fleet renewal today versus, say, two months ago.

John Wobensmith

And I would tell you there is a flurry of activity, particularly in the in the Capesize sector, but the smaller midsized vessels, some are it's moving off the shelf, so to speak as well. But what's happening in Capes is on it's a little I would call it a little bit of a frenzy to be quite honest with you in the S&P market, the the two ships that that we bought as 20 sixteen's, which we paid $43 million, and they're probably easily worth $50 million today, and that's a very short period of time. That's up 16, 70% in a month and a half. And it's very difficult to find eco vessels as well. And we've also seen a lot of Newcastlemax is being sold. I think it's some I think as that on the shipbuilding side, we all appreciate and I'm not so sure if it's filtered on down to the rest of the world yet in terms of what values are being paid on ships, but it's definitely moved up significantly over the last, you know, 30 to 60 days. I would also tell you, just in general, the sentiment in particular, the Capesize Capesize markets moved up those again, going back to the two ships that that we just bought, we were able to fix those vessels on index linked deals at 128% of the DCI. And so very firm percentage numbers over and above the benchmark index and then plus scrubber economics, obviously, on the on top of. So it's some there's a lot of positivity right now on the fleet renewal side is as long as we can trade out of older ships for similar relative values as as newer ships will continue to do that, though, I would tell you again for taking the Capesize sector. It's very difficult to find highly, yes, CO. high fuel efficient vessels, which is what we're focused on.
Very good.

Operator

Liam Burke, B. Riley.

Liam Burke

Thank you. Good morning, John. The index-linked charters for the five Capes have worked out pretty well for you. They run about a year. How are you looking? Do you see opportunities to add more Capes to the to those fixtures? Or do you just prefer to keep the rest of the Cape fleet in the spot market?

John Wobensmith

Yes. So look, I know the index deals are effectively in the spot market, right? Because they're earning a daily rate basis. The DCIM., right? We do have we do have three vessels. The Endeavor Resolute and at the end are rolling off somewhere around April, May be a little bit later from their index deal. So I think we'll look to do probably renew a couple of those in general, you know, we like being direct with our with our customers, but we also believe in a portfolio approach, particularly in the Capesize sector.
And when you can earn 128% of the BCI. plus scrubber. That is awesome. Those are very firm numbers. So yes, I think we'll do a little renewal. I don't see us expanding much beyond what we've done today to those more of a macro question.

Liam Burke

But in the presentation, you discussed the replenishment of inventories on the iron ore side in China with the production being flat, the rest of the world picking up the slack in terms of iron ore demand, are you seeing that this early in the year or are you just seeing your iron ore trade replenishing Chinese inventories?

John Wobensmith

I would say for them for the most part, it's replenishing Chinese inventories, but we do expect, you know, as the as we have a recovery on. Yes, ex China, on the steel side, we'll see more iron ore flow. You're correct that production levels are projected to be flat this year. You'll start to see production growth again next year. So I think that's positive, but don't lose sight of the fact, particularly for the Capes, the odd, the growth that's coming this year in the bauxite trade and most likely a continued strong coal market.

Operator

Ben Nolan, Stifel.

Ben Nolan

And then I guess on circling back to asset values and whatnot. And John, you're talking about a frenzy market. It seems like usually when you have a market to frenzy, it's better to be a seller than a buyer, although you did say the appetite is especially true for the more modern eco-ships, which are harder to find, do you think I mean, is this the kind of environment where you can look at some of your maybe older assets and maybe 90 match them up yet with a new asset to compare against, but take advantage of me and I was just strong appetite or is the appetite maybe not quite as strong for some of the go 15 year old type assets?

John Wobensmith

Yes. Look, I think the appetite is strong across the board. And I just think it's a lot more challenging to find the newer ships. And yes, that would be something that and we would look at though, I would tell you we don't we don't have an interest per se in shrinking the fleet from from these numbers. You know it. We're very constructive on on not just asset values, but the overall markets because of the low supply situation yet for the next few years.
In terms of what we can see, we hit we like being in drybulk shipping. So in terms of shrinking the fleet, as I as a rule, I don't see us doing that. But of course, we're going to take advantage of opportunities, even if it may mean short term selling some older ships and then medium, longer term replacing them.

Ben Nolan

Got it. Okay.
That's helpful. And then from a from a macro perspective, I'm curious, especially given all of the grain coming out of Brazil, which tends to be a very long haul grain voyage anyway, um, with the issues in Panama Canal with issues in the Red Sea, are you are we starting to see any shift in sort of the appetite of chip type? Is there a growing preference maybe to move some of that grain on. Yes, I don't know on a cancer max as opposed to a Supramax or are you seeing anything along that front? Just to take advantage of the scale for the longer distances.

John Wobensmith

I wouldn't say there's a shift, but no Panamaxes and camps or MAXes have traditionally carry grain out of that area. But I wouldn't say there's actually a shift I mean, I think the camps this time a year in that area, the camps from axis and the Ultramax market Supramax market are fairly well length. They're using all types of vessels to move that grain.
And again, in terms of Brazil, you're talking about a another record crop off of last year. Projected on soybeans from corn is down but very slightly. And then again, the Argentinean corn is up is going to move up. I mean, I think we only made it maybe about 27 million tonnes last year, but it's going to be 45 million, 46 million tonnes this year. So again, that's some it's going to be a record crop stuff is I was actually down there last week. I saw it for myself. It is some there's a lot of corn coming out of Argentina over the next few months are well, I appreciate it.

Operator

Sherif Elmaghrabi, BTIG.

Sherif Elmaghrabi

Hey, good morning. Thanks for taking my question morning. First, regarding the leverage on the Ranger and the Reliance is the thought to pay that down over time? I realize you have some cash from vessel sales coming in Q1? Or could we see those ships secured under a new facility as Sri?

Peter Allen

Thanks for your question. Yes. So like John mentioned earlier, we paid $86 million for those two ships. In aggregate, we tap the revolver and drew down $65 million. So in a in a bucket that was, you know, 75% loan to value. But obviously, the leverage position of the Company is very significantly lower than that, a pro forma 10% as we're as we're getting the sale proceeds from those three ships. We're going to actively manage our debt position to to reduce interest expense on flow through the bottom line.
The great thing about our new revolver is that there's no term loan component to it. So we can pay down debt, not lose borrowing capacity. And then if we do see an opportunity like the Company saw in in Q4, we can then tap the revolver to draw down. So I think to your point, there of there will be some active management of our debt from the current level of $200 million as those proceeds come in.

Sherif Elmaghrabi

Thanks, Peter. That's helpful. And then you highlighted a handful of demand drivers for the recent market strength. And I think Omar's question touched on this but a chunk of it seems to be the impact of canals displays on fleet supply. So do you think a full year of Canal disruptions or maybe the better part of the year has been pricing to vessel values. Sounds like the positive impact of El Nino in Brazil could also be a drag in the Panama Canal, for example, again, I need that the Panama Canal is real in terms of trading fleet inefficiencies.

John Wobensmith

It's hard to it's hard to put a percentage of the fleet that's necessarily being taken out. But but as I said it's real. But again, I go back to the cargo flows. I mean, we've seen iron ore and bauxite up 10% over over last year's levels. And those are real meaningful numbers, particularly when you have such a low order book and such a load of delivery schedule, it creates a tremendous amount of leverage by just moving up incrementally on the on the demand side.

Operator

[Ben, Clarksons Securities].

Thank you. Just wanted to touch upon the K-12 as well. I guess building on the questions of what some of the other guys are. You talked about the lower than normal seasonal factors and the trends in the secondhand market? And how do you view potentially locking in some of your Capes on with current FFA values at around $27,000 for the remainder of the year.

John Wobensmith

So in the past, we have definitely locked ships away for one to two years, even three years at a time, particularly as you brought up in the Capesize sector. We think that is a good way to manage risk. We are we're still relatively on we're still bullish on the Capesize market. So I would say it's a little too early to want to lock in on, but it is certainly something that Tom, that we're looking at. And as I said, we've done it in the past and from time to time, we think it's we think it's the right move to take.
Yes, some risk off the table indicates. And the other thing I would point out is the the index deals that we've recently done as well as the past index deals have options for us to fix periods of time within which within those transactions sell and we've done that. We actually did that a little bit in for the month of February in the first quarter. But obviously that was very short-term in it. And it was just to sort of get through the month of February, but we have we have that option, though. So a lot longer term, but that's great.

Great color. And also, if I could just touch upon the in fleet renewal as well. You've been quite active on the Capesize, but when should we expect to see some of the same for Supramaxes or if at all, but you will we know where we're focused on some of the 58 on. It's hard to put a definitive timeframe on it, except that I would say I expect that to happen this year. Keep in mind that we have bought 11 Altera's since 2018. So this has been an ongoing process. But now with where vessel values are, they seem to be firming that the momentum from the Capes are moving down into the into the midsize vessels. So it's starting to make sense on the valuation front for that for our some of our older 58. So it's definitely definitely on the table. Just a little hard to give you the exact timing, but dumb, I I certainly believe this year Okay. Perfect. Thank you, and I'll return to the queue.

Operator

As there are no further questions at this time, this concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.

John Wobensmith

Thank you.