Grindrod Shipping Holdings Ltd.
Q3 2021 Earnings Call Transcript

Published: 18 Nov 2021

[Operator:]

Thank you for standing by, ladies and gentlemen and welcome to the Grindrod Shipping Holdings Ltd. Conference Call on the Third Quarter 2021 Financial Results. We have with us Mr. Martyn Wade, Chief Executive Officer and Mr. Stephen Griffiths, Chief Financial Officer of the company. I must advise you that this conference is being recorded today. We now pass the floor to one of your speakers today, Mr. Wade. Please go ahead, sir.

[Martyn Wade:]

Thank you, operator. Welcome everyone and thank you for joining our call on the third quarter and nine months 2021 financial results. Now, if you can turn to Slide 2. Let me please refer you to the forward-looking statement disclaimer. On this call, we will make certain forward-looking statements, including statements regarding our future financial and operating performance. These statements include information regarding future time charter contracts, outlooks for the drybulk market and other operating matters. These statements are based on the beliefs and expectations of management as of today. Our actual results may differ materially from our expectations. Investors should read carefully the risks and uncertainties described in this slide presentation and in yesterday’s press release, as well as the risk factors included in our annual reports and our other filings with the SEC. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, during this call, we will be discussing certain non-GAAP financial measures. For additional disclosures relating to these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP measures, please see yesterday’s press release and Pages 24 to 26 of this slide deck, which is posted on our website and our filings with the SEC. Now can I please ask you to turn to Slide 4 for an overview of our third quarter and nine months 2021 financial highlights. During the third quarter and first nine months of 2021, Grindrod Shipping achieved stronger results when compared to the same period in 2020, taking full advantage of the robust market conditions and the earnings path of our expanded owned fleet following the acquisition of the remaining portion of our IVS Bulk subsidiary. For the third quarter 2021, we generated record gross profit, adjusted EBITDA and adjusted net income of $62 million, 69 and $45.8 million or $2.38 per ordinary share, respectively. Respective figures for the nine-month period of 2021 were $110.2 million, 131.5 and $68.5 million or $3.56 per ordinary share. Our CFO Steve Griffiths will go into more details on our financials later on in this presentation. Executing under our share repurchase program, we acquired a combined total of 91,871 ordinary shares in the open market on NASDAQ and the JSE during the third quarter at an average price per share of $14.87. During the first nine months of 2021, we repurchased a total of 125,338 ordinary shares at an average price of $13.16 per share. As of September 30, 2021, we had cash and equivalents of $78.5 million and restricted cash of $6.6 million. Now please turn to Slide 5 to look at our operational highlights for the third quarter of this year. As announced on September 1st, we exercised our option to extend the charter-in period of the 2015-built Supramax drybulk vessel, IVS Pinehurst, for further 11 to 13 months at $10,000 per day, starting from approximately January 3rd, 2022. In addition, on September 1st, 2021, we announced the acquisition of the remaining 31.14% equity stake in IVS Bulk joint venture and concurrent redemption of the IVS Bulk preference shares. Subsequently, on September 15th, 2021, we amended one of our existing credit facilities to draw down an additional $23 million to partially fund the IVS Bulk acquisition. Subsequently, on September 16th, 2021, we closed the acquisition and concurrent financing of the 2019 Japanese-built Ultramax bulk carrier IVS Phoenix. The vessel was already in the Grindrod Shipping core fleet and originally chartered-in for a minimum period of three years from delivery with two one-year extensions and no purchase option. We acquired the vessel for $23.5 million, which we believe reflects a significantly reduced price relative to the fair market value of the vessel due to the early termination of the prevailing charter agreement. Financing arrangement was with a separate third-party in Japan on attractive terms for a net amount of $25 million. Now turning to Slide 6 to discuss our recent developments, we are particularly pleased to announce the declaration of our first quarterly cash dividend of $0.72 per ordinary share, reflecting our new dividend policy and a capital return policy of returning approximately 30% of our adjusted net income to our shareholders through a combination of share repurchases and/or quarterly dividends. The dividend is payable on or about December 13th, 2021, to all shareholders of record as of the 3rd of December 2021. Our key focus with the capital return policy is to create a simple, transparent, sustainable capital return policy that allows the company to retain significant cash flow to further strengthen the balance sheet and pursue growth by rewarding shareholders with material dividends and/or share repurchases in times of market strength. Lastly, we recently exercised our option to extend the charter-in period of the 2014-built Ultramax bulk carrier, IVS Naruo, for a further 11 to 13 months at $13,000 per day, starting from approximately January 21st, 2022. Now I’ll pass the floor over to Steve Griffiths, our Chief Financial Officer, who will go over the financial highlights and performance for the third quarter of 2021. Steve?

[Stephen Griffiths:]

Thank you, Martyn. Turning to Slide 8, as Martyn said earlier, during the third quarter of 2021, we achieved stronger results, taking full advantage of the robust market conditions and the earnings power of our expanded owned fleet following the acquisition of the remaining portion of our IVS Bulk subsidiary. In this context, revenue increased to $135.1 million in Q3 2021 compared to $53.9 million in Q3 2020. Gross profit increased to $62 million in Q3 2021 compared to $1.6 million in Q3 2020. Net profit attributable to owners of the company increased to $44 million or $2.29 per ordinary share in Q3 2021 from a loss of $14.3 million or a loss of $0.75 per ordinary share in Q3 2020. On the right-hand slide of Slide 8, we go over the first nine months of 2021. Revenue increased to $366.4 million compared to $221.1 million during the same period of 2020. Gross profit increased to $110.2 million compared to $10.5 million in 2020. Net profit attributable to owners of the company increased to $66.1 million or $3.44 per ordinary share in 2021 from a loss of $24.8 million or a loss of $1.31 per ordinary share in 2020. Turning to Slide 9, the strong operational and financial performance of the first nine months of 2021 has allowed the company to strengthen its cash liquidity and reduce its net debt to $167.1 million from $227.2 million at year-end 2020, while simultaneously pursuing growth initiatives such as the IVS Bulk transaction. We believe Grindrod is well-positioned to further pursue its expected growth and capital return strategies. On Slide 10, we provide our bank loans and other borrowings repayment profiles at September 30, 2021. Limited debt maturities until 2025, combined with a conservative amortization profile, provide us with balance sheet flexibility going forward. Please turn to Slide 11. We will now briefly discuss results in the drybulk business for the third quarter of 2021. Handysize TCE per day was $25,919 from the three months ended September 30th, 2021 versus $6,713 per day for the same period in 2020. Supramax/Ultramax TCE per day was $29,934 for the three months ended September 30, 2021 compared to $10,831 per day for the same period in 2020. As of November 15, 2021, we have contracted approximately 1,274 operating days at an average TCE of $30,220 per day for our Handysizes and approximately 1,704 operating days at an average TCE of $33,341 per day for our Supramax/Ultramax. The average long-term charter-in costs per day for the Supramax/Ultramax fleet for the fourth quarter of 2021 is expected to be approximately $12,890 per day. Now turning to Slide 12. All of the rise in the drybulk freight rates thus far in 2021 is easily demonstrated versus our historical results. During the first 9 months of 2021, approximately 90% of the fleet was predominantly trading either on index-linked cargo contracts, short-term time charters or in the spot market, leaving us exceptionally well-positioned to take advantage of the strong freight rate environment. To put this into context, with every $1,000 change in TCE per day equated to approximately $2.7 million of TCE revenue during the third quarter of 2021, and that’s sort of core fleet. Now turning to Slide 13. It shows the core fleet cash breakeven analysis for the first 9 months of 2021. Our owned fleet breakeven was $10,953 per vessel per day. Our long-term charter-in breakeven was $14,171 per vessel per day and core drybulk breakeven was $11,743 per vessel per day. The cash breakeven rate per day includes operational expenses, net G&A, interest expense and debt repayments. Turning to Slide 14 for a breakdown of our fleet. With an average age of approximately 7 years, our core fleet consists predominantly of eco vessels built in Japan, which is among the youngest and most efficient in the industry with distinct commercial and operational advantages. Turning to Slide 15. We want to provide our shareholders with more clarity on the value of our long-term charter-in vessels and associated purchase options. And on this slide, we provide additional financial information on these contracts. Our dynamic and flexible commercial strategy of opportunistically chartering-in vessels on both long and short-term time charters with extension options, optimizes our ability to service our cargo contracts, and it enables us to maximize earnings and profitability as all of these have been contracted at levels significantly below current charter market rates. Furthermore, we hold purchase options for five of our long-term chartered-in vessels, all of which are now well in the money and below their prevailing market values, thereby presenting us with highly attractive options to grow our own fleet. The recent acquisition and financing of the IVS Phoenix during the quarter is a prime example of the advantages and benefits of this strategy. With that, I would like to turn the call back over to Martyn.

[Martyn Wade:]

Thanks, Steve. Now please turn to Slide 17 to look at the fundamentals of the drybulk sector and how they have been developing against the new market environment. The drybulk cargo is hit hardest by the global pandemic with coal and minor bulks, while iron ore and grains were far more resilient. Thus far in 2021, we’ve seen a material pickup in coal and minor bulk demand, which is closely correlated to global GDP. Global energy shortages, in particular, natural gas, have caused thermal coal demand to increase materially for power generation. Handysizes and Supramaxes have been further helped by congestion in the container shipping business, which is leading to certain bagged cargoes and break bulk like steel scrap returning to bulk carriers. Turning to Slide 18. As the slide depicts, the iron ore trade rebounded faster than expected in the first half of 2021 before starting to slow at the end of the third quarter due to Chinese steel production restrictions. Coal demand has exceeded expectation but remains below 2019 levels. Grain flows remain healthy in 2021 after a very strong 2020. Minor bulk demand has rebounded significantly, driven partly by the steel, forestry, cement, nickel ore and alumina trades. Now to Slide 19. The chart on the left indicates Handysize/Supramax charter rates rose over the course of Q3 2021, reaching levels last seen in 2008. Asset prices have increased considerably since the lows of late 2020 but remain below levels reached in 2010 despite higher comparative charter rates. Now turning to Slide 20, and the drybulk order book continues to shrink to multi-decade lows and is estimated at only 6.8% of the fleet with approximately 16% of the drybulk fleet 15 years or older and a further approximately 7% of the drybulk fleet 20 years or older, measured by deadweight. Despite strong market conditions, new ordering remains constrained by uncertainty relating to engine technology and emissions. 2021 and 2022 supply growth is forecasted to be 3.5% and 1.5%, respectively, while Handysize and Supramax order books are the smallest in the dry bulk fleet at 4.5% and 5.9%, respectively. Finally, let’s turn to Slide 22 for our conclusions and strategy. Let’s start with our achievements since the beginning of 2021. The strong drybulk market conditions led to our best financial results in Q3 since our spin-off and listing in 2018 with the sale of all our remaining spot trading product tankers, allowing us to focus on drybulk at an optimal time. As mentioned, our acquisition of the remainder of IVS Bulk was an attractive valuation. On the commercial side, the dynamic approach of the company that includes opportunistically chartering of vessels on both long and short-term charters in order to service our cargo contracts is bearing significant fruit. Our long-term charter-in vessels were contracted at well below current spot – current market charter rates and all contain favorable extension options and/or fixed price purchase options that are now notably below their current market values. This allows us the option to pursue growth at prices considerably below pervading levels in the secondhand and charter markets as evidenced in the IVS Phoenix acquisition. In addition, we’ve been able to complement our core fleet with a number of short-term charter-in vessels, in which we hold a series of charter extension options at commercially favorable levels. Together with our owned fleet, predominantly Japanese-built vessels, these options demonstrate the flexibility of our operating model. On the corporate side, having concluded a string of strategic and transformational transactions, we transitioned to quarterly financial reporting. In addition, we are pleased to reward our shareholders with the initiation of a quarterly dividend and capital return policy. Also important to add here, that in the third quarter, we completed our first secondary offering, which has benefited shareholders through increased daily trading liquidity, a strong U.S. institutional shareholder base and increased market float in the U.S., which has now reached over 30% of shares outstanding as of October 2021. Now looking ahead, drybulk freight rates continued to increase in the fourth quarter of 2021 though have cooled moderately in the last few weeks. Freight rates have been supported by rebounding commodity demand and pricing in 2021 across a wide swathe of commodities, including grains, iron ore, coal and minor bulks. The smallest newbuilding order book in decades supports market recovery due to constriction in vessel supply growth as demand continues to recover. Due to record amounts of new container ship orders thus far in 2021, even if drybulk orders were to pick up materially, limited shipyard spare capacity means that most of the orders could not hit the water until 2024 at the earliest. To the extent that demand continues to grow even moderately, the lack of available supply growth leads to an attractive potential multiyear window for the drybulk market. In this environment, with stronger market fundamentals, we are confident that Grindrod Shipping can reinforce its market position and create significant value for our shareholders. With this, I thank you all for joining our call today and looking forward to reporting further progress on Grindrod Shipping. With that, we’d like to open up to questions. Operator?

[Operator:]

Thank you. And your first question comes from the line of Poe Fratt from Noble Capital Markets.

[Poe Fratt:]

Good morning, I was just wondering if you could highlight on what’s going on currently, Martyn. And if you would highlight any changes that you have seen in the cargo book from either a volume or pricing perspective. And then sort of give us an idea of what your – where you are booking right now, so we can sort of get an idea of what the rest of the quarter looks like?

[Martyn Wade:]

Hi Poe. Happy times. It’s interesting because, obviously, the market has been great all year and basically hasn’t really paused. And then what happened, there is no doubting that with China’s announcement, it was going to try and cool the steel industry and to a degree, coal prices. We saw a slight easing of demand from China. Although then when you look at the year as a whole and especially the last couple of quarters, China hasn’t had a stellar year with iron ore down, coal flat. What has actually happened is it’s the rest of the world that’s picked up the slack. And let’s say, with record steel production outside of China, it’s been very positive. Now obviously, China, they are cooling off a little bit, taking some of the heat out of the market, and there is talk about blue skies for the Beijing Winter Olympics. Yes, it has come off, as usual, with shipping, but also what’s happened is that a lot of charters have taken the opportunity to pull back from the market and delayed cargo or delayed nominations. And we are starting to see this. We had a ship open last night in South Africa area. And someone came open – well, perhaps to fix a ship and needed a prompt nomination and we had a ship for it. And the rate we got was what we would have got a month ago. So, it’s still very tight. There has been an easing. But I think a little bit of a game is being played, which I have no problem what charter is doing. I mean, it’s been a bit of a one-way street all year. The FFAs have come off. But fundamentally, at levels beginning with a two, we are only back to where we were in May, which was glorious. So yes, in some ways, it’s healthy. But what we are enjoying is that the demand outside of China throughout the world is there, and is increasing. And U.S. infrastructure gets going. It was quite amusing when it was announced that all the infrastructure ETFs and certain companies in America, that all this will benefit up 10%, 14%. But of course, if America is going to do infrastructure, it needs steel and cement. And a lot of that’s going to have to be imported. That’s going to come on ships. So, this is really very exciting going forward.

[Poe Fratt:]

And then to follow-up with that, Martyn, over the last couple of months, you have said that the 2022 calendar FFAs were undervalued. They are down a little bit from when those comments were made. Would you still stand by those comments and think that 2022, there is – the outlook looks still pretty good?

[Martyn Wade:]

Very much so. I mean, if we could pick up, say, 58,000 tons to get out deadweight ships, the FFA rates for next year, well, I don’t think it would only be asked, there will be a whole load of people doing that. It’s physically impossible and if we are seeing period rates now, I mean, the handy for 33 – if you want to take a 33 on one-year charter. It’s in the low-20s and for supras, it’s mid to high-20s. So, it has cooled off, but the FFAs, as usual, I think they are underestimating. Is it sentiment, I don’t think it’s got anything really to do with the fundamentals as we see that the paper comes off x thousand in a couple of days, then picks up again. And remember, there is a whole industry of day trading this, the masters of the universe and certain of the mining houses and grain traders to play this. So, it’s there. I mean, yes, it’s a useful benchmark. Obviously, we watch it. But it looks very oversold at the moment. And I would say that’s the other alternative. If we can’t take physical trips, not that we are doing, because we don’t speculate, but you can just buy the paper and it’s vastly below, even now, what spot levels are.

[Poe Fratt:]

I appreciate that it’s a pretty thin market too. But can we – I really appreciate the additional disclosure on the purchase options for your chartered-ins. It looks like the nearest one would be the Pinehurst on roughly the first quarter of 2023. Can you talk about the Pinehurst, Nauro and sort of how you are viewing that? And then also maybe talk about how you potentially might replace the Crimson Creek, which comes off long-term charter in the second quarter 2022?

[Martyn Wade:]

Well, the Pinehurst and Nauro, the actual purchase options, we already have them. They – we have had the right to buy them for the last couple of years or 2 years on one-on-one. So, they exist there. So, now it is up to us when we declare those options and either take them in as core ships, which is what we will be doing, or of course, we could just sell them into the open market and pocket the money. So, both those ships now rest with us, and we can more or less do it anytime during 2022, if we want. Likewise, the next two coming up will be in the second half of 2023. So, we have flexibility as whether we – we have a couple of a number of older handys with very, very low leverage. So, if you can sell a 11-year, 12-year-old handysize and by exercising purchase option on a 5-year, 6-year-old ultramax for the same amount of money, it’s very interesting. It’s nice to have. IVS Crimson Creek has been with us from our friends Marubeni for a long time. And as usual, with our friends in Japan, there will be discussions, do we want to extend it or not, that will be a discussion. And the thing with all our relationships and friends in Japan is once you have ships on charter, unless the actual owner wants to sell them, there is always a discussion, would you like to extend at whatever the market levels are, and we go forward from there. So hopefully, we will not lose the Crimson Creek just yet. But my colleague Carl will be having that discussion in due course when Marubeni want to discuss and likewise.

[Poe Fratt:]

And if you wouldn’t mind, I just have one last one. The – I was interested on Slide 9 when you are talking about the asset values versus the current rates, and you said that in 2010, asset prices were higher, but rates were lower and that’s in contrast to today. Do you have a reasonable explanation for that contrast, Martyn?

[Martyn Wade:]

Well, of course, in the 2000, it was almost unknown levels, whereby I think the previous market equivalent of that, so I am reliably informed, was maybe in the 1950s. So, I don’t think there is anyone alive. And what happened in the 2000 is, it kept on going up and up, was never going to end. But I think people forgot a little bit that shipyard capacity was being added on at a rapid rate of knots in China with all the greenfield yards. So, there was always a big push to get ships on the water now. Now obviously, we have seen a big appreciation in secondhand values this year with the value being, can buyers get the ship now on the water and immediately began earning a lot of cash. But I don’t think people have got carried away on that basis. And if you can – let’s go back even a month, and you could fix a supramax out for a couple of years, somewhere in the high-$20 millions, you will find that same ship for somewhere in the low-$20 millions, you are writing that ship down pretty quickly. So, this is – asset prices can go a lot higher. But even at today’s levels, they are undervalued to anything beginning with the two in terms of earnings and going forward. So, I think this is it, you just do the cash flow, and you have got – obviously, there are people floated in London. It’s the same thing. If you actually look at secondhand values, put them out for a couple of years, if that’s your model, you pay down your debt pretty quickly. So, I think a lot more can happen in asset values, especially with basically no newbuildings coming. And as we said, the yards are full and who knows what you order in terms of technology and with ESG. So, there is a lot more upside there to come, yet. So, we are very excited by that.

[Poe Fratt:]

Alright. Thank you very much.

[Martyn Wade:]

Thanks, Poe.

[Operator:]

Thank you. Your next question comes from the line of Randy Giveans from Jefferies. Please go ahead. Your line is open.

[Randy Giveans:]

How are you doing Martyn and Steve, how is it going?

[Martyn Wade:]

Hi Randy.

[Stephen Griffiths:]

Hi Randy, great.

[Randy Giveans:]

Longtime listener, first time caller, congrats on the record quarter, the large dividend. I guess a couple of questions. Following up on those options on the charter-in vessels all of them clearly deep in the money, likely going to remain profitable in the coming years. For the chartering options, how far in advance do you have to exercise those? It seems like just two months or three months before expiration, is that correct? And then for the purchase options, when do you have to make a decision on those?

[Martyn Wade:]

It’s – I mean in terms of the charter options, it’s generally three months. And the purchase options, we have a window and basically, we have got to give the owner three months or six months notice. So, there is a lot of flexibility there. So very, very flexible model now. Now that a lot of these ships, the fixed rate periods have ended, and now we are in optional years, but this is where we have the – obviously, talking to the owners a lot, whereby when we cash the option. And with our Japanese friends, we want to give them enough notice because, obviously, most of them have financed. But yes, it’s literally in our option with very limited time ahead to do it.

[Randy Giveans:]

Got it. Perfect. Okay. And then in terms of the split between share repurchases, dividend payments, how did you and kind of will you maybe determine that with the new dividend policy? Clearly, based on your guidance here, on the quarter-to-date rates, 4Q will almost certainly exceed 3Q results, right? You have plenty of cash and net income to distribute, and your shares are trading at pretty steep discount to NAV here.

[Martyn Wade:]

Yes. It’s interesting. But obviously, we appreciate when you took up the research and you came out with an NAV of ‘22 without any insight, obviously, into which is one of the reasons we have gone into our Japanese trial to book and what goes on there because obviously, there is quite a lot of value. And it is frustrating, to be honest, when you look at our EBITDA or earnings per share and the multiple we trade on is, what, if you take an annualized EBITDA, we are barely more than 1, 1.2, 1.3. I mean, it is strange – and the dividend payouts and everything. So, we perceive our shares, yes, and obviously, as we have done in the previous two open periods, we have the mandate to do share repurchases. And obviously, without saying too much, it’s, let’s say, something we are looking at because the disconnect between value and where we should be is huge.

[Randy Giveans:]

Yes. No, we clearly agree. Alright. And then I guess the last question, just in terms of guidance for short-term charter-in days for the fourth quarter and maybe if you have it for 2022. Maybe that’s a little too far in advance, but any guidance, at least, for the fourth quarter number? I know third quarter kind of came down a little bit from the second quarter.

[Stephen Griffiths:]

Yes, Randy...

[Martyn Wade:]

Yes, Steve, if you take that, yes?

[Stephen Griffiths:]

Yes, I will take that. Obviously, due to the short-term vessels, it’s difficult to provide an exact number as to exactly what percentage we have got. But if we use Q3 days as a guide, we roughly are 78% of the handys covered at that rate for Q4 and about 70% on the supra/ultras. And it’s just using the Q3 days as a guide. We have been fairly consistent in the number of days through each of the quarters. So, yes, that’s the guide.

[Randy Giveans:]

Alright. That works.

[Stephen Griffiths:]

For 2022, no, we don’t give any guidance on that.

[Randy Giveans:]

Alright. Go ahead. Thanks again and keep up the great work.

[Martyn Wade:]

Thanks Randy.

[Operator:]

We have Poe Fratt from Noble Capital Markets next. Please go ahead. Your line is open.

[Poe Fratt:]

Yes. Just a quick one on the – Steve, if you could give us an idea of sort of the charter higher costs for the quarter, from my perspective, were a little lower than expected. Can you give us an idea at this point in time what the fourth quarter charter higher costs look like?

[Stephen Griffiths:]

We have given – yes, there is – in the high-$12,000 for our long-term fleet. Again, pretty much – it’s pretty much been constant in the $12,000s, I mean from all the time we reported it. It’s been a bit higher at some stages because of the Crimson Creek that’s index-linked. And obviously, if the rate goes up, then net charter rates goes up as well. So yes, still in the $12,000s going forward.

[Poe Fratt:]

And I think you are looking at like $14,000 for 2022?

[Stephen Griffiths:]

No. So, that includes the G&A. So, on the actual charter rates, we are in the high-$12,000 and that on the breakeven – on the breakeven graph, that includes the G&A expenses per day added to that.

[Poe Fratt:]

Okay. Great. And then, Martyn, 2021 was a year, as you highlighted, huge achievements, whether it’s buying in the joint venture, whether it’s buying assets, everything else, it’s been a significant year. It’s really transitioned to a much more – much stronger, more investable company. Can you highlight your strategic goals for 2022? How are you going to follow-up on this?

[Martyn Wade:]

Interesting. Well, obviously, a reduction in debt. I mean, that goes without saying I think all of the listed companies. And I always like the great model of, you have no debt, you survive irrespective. And maybe we can’t quite get there. But to reduce, I mean Steve will talk – we have financing cost of $4,000 if we can file that, it then makes us a very, very competitive player going forward. And obviously, we have these purchase options at attractive levels. We have some – a number of older handys with very, very little debt and a sharp rise in secondhand values where, as I said to Randy previously, if we can sell some older handys and literally cash them in immediately with brand new or 5-year-old ships, ultras, that would be one way of maintaining a very modern fleet, and which is also – is key with EXI coming in, but also the flexibility. And we still – I mean, the way the markets come off recently, are there going to be some interesting charter deals out there, you talked about the paper, I mean physical ships. It will be interesting because there is always people looking for cover. Obviously, we are a cargo operator as well. And we are managing to – those contracts are now coming up for renewal at far higher levels, and we always want to keep – there has to be some short-term period ships against it. We still have the benefit of the ships we – the half a dozen ships we took last year with options. So, they are very, very cheap. But it will be dependent on the market to a degree. Now isn’t the time to do anything stupid. We are now set and look to maximize, as we are doing, taking cover maybe at some point, but that’s the beauty of having cargo. We can kind of, excuse me, make that call. But at the moment, no, we are confident about the market going forward. And I think more of what we are doing, which, dare I say, is working quite well.

[Poe Fratt:]

Yes. You are really well-positioned for 2022. Congratulations.

[Martyn Wade:]

Thank you.

[Operator:]

Thank you. I will now hand the call back for closing remarks.

[Martyn Wade:]

Well, thanks, everyone. Much appreciated. And we look forward to publishing our Q4 figures in February. Steve?

[Stephen Griffiths:]

Yes. Thanks, everyone, for joining and diving into our results. Thank you.

[Martyn Wade:]

Thank you.

[Operator:]

Thank you very much. Thank you for participating. You may all disconnect.