Seanergy Maritime Holdings Corp.
Q4 2019 Earnings Call Transcript

Published: 14 Feb 2020

[Operator:]

Thank you for standing by ladies and gentlemen and welcome to the Seanergy Maritime Conference Call on the Fourth Quarter 2019 Financial Results. We have with us Mr. Stamatis Tsantanis, Chairman and Chief Executive Officer; and Mr. Stavros Gyftakis, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session [Operator Instructions] I must advice you that this conference is being recorded today.Please be reminded that the company publicly released its financial results, which are available to download on the Seanergy website at seanergymaritime.com. If you do not have a copy of the press release, you may contact Capital Link at [phone] and they will be happy to send it to you.Before turning the call over to Mr. Tsantanis, we would like to remind you that this conference call contains forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events and the company's growth strategy and measures to implement such strategies. Words such as expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements.These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company.Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to; competitive factors in the market in which the company operates, risks associated with operations outside the United States; changing rules and regulations applicable to the shipping industry; and other risk factors included from time to time in the company's Annual Report on Form 20-F and other filings with the Securities and Exchange Commission -- the SEC. The company's filings can be obtained free of charge on the SEC's website at www.sec.gov.The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.Now, I will pass the floor to Mr. Tsantanis. Please go ahead, sir.

[Stamatis Tsantanis:]

Thank you, Jody. Good morning, everyone and thank you for joining us today to discuss our results for the quarter and 12-month period ending December 31, 2019. Over the course of the fourth quarter of 2019, Seanergy's fleet benefited from the continuation of a strong Capesize market allowing the company to enjoy another consecutive quarter of profitability.Our daily time charter equivalent rate of almost $23,000 in Q4 of our fleet was about 50% higher than the $15,300 recorded in the same quarter 2018. Our second half daily times averaged approximately $21,600 which is 158% higher than the $8,400 almost per day and in the first half of 2019.Similarly in the full year 2019 our daily time charter equivalent rate of about $14,700 was improved by 12% compared to the one of 2018. At the same time, as our CFO will discuss later, our operating costs were reduced year-on-year.Overall in 2019, the Capesize market experienced a third consecutive year of steady improvement despite the severe impact of various negative events that were encountered in the beginning of the year as the performance of the freight market in the second part of 2019 proved enough to overcome the weak performance during the first six months.Currently, the Capesize market is going through the lowest part of its usual seasonality driven mostly by the following factors. First, we have the repricing or actually the aggressive mispricing of the Baltic Exchange indices in an unfortunate attempt to reflect the fuel transition of the IMO 2020. For example, in January 2020, we had the highest freight levels on a dollar per ton basis over the last five years. However, the quoted Baltic index indicated exactly the opposite. As the fuel spread is now reducing and the Baltic said that we already examined that assessment, we should expect the mispricing to decrease.In addition, the heavy flooding in Brazil and the adverse weather phenomena in Australia, have temporarily reduced the cargo availability from the two main sources. We also expect this temporary seasonal effect to be reversed soon. Finally, the effect of the recent coronavirus outbreak in combination with the seasonal weakness of the Chinese New Year celebration has created a temporary uncertainty about the state of the Chinese economy.However, we expect the government commitments to be successful not only in containing the epidemic, but also boosting the economy in such a way in order to meet their growth targets. In Q1 2020 so far, our vessels are earning a daily time charter equivalent of about $10,000 for 90% of the operating days of the quarter, which compares favorably with the current levels of the BCI, which ranges between $2,000 and $3,000 a day.Let's now review the most important developments of the quarter. First of all scrubber installations and time charters. I'm pleased to report, that the retrofitting of our vessels with scrubbers was completed on time. In total five vessels have been successfully delivered to their long-term time charter contracts. Despite the significant delays faced by many owners through the scrubber retrofittings, we were able to deliver all five vessels timely with fully certified equipment prior to January 1, 2020.This final milestone of our ambitious scrubber installation program attached to our reliability and good track record with first-class counterparties. The time charters attached to these vessels are index-linked and despite a temporary mispricing of the index, the underlying earnings are better than those of certain spot routes.In addition, three out of the five ships, we received fixed premiums ranging between $2,000 and $3,500 a day, which in combination with the profit-sharing agreements on the fuel spread improves our earnings levels of the fleet. We should also note that the -- we dry docked seven out of the 10 vessels in our fleet in 2019, which temporarily reduced our utilization levels. Nevertheless, I'm optimistic that the increased utilization resulting from minimal dry docks in 2020 will further boost our operational performance.Compliant fuel procurement for non-scrubber fitted vessels. Regarding the five non-scrubber fitted vessels, we procured sufficient quantity of compliant fuel MGO at competitive pricing early in the second half of 2019 in order to cover their bunkering needs for the majority of the first quarter of 2020. Hence, we ensured the seamless compliance of the company's non-scrubber fitted vessels with the IMO 220 regulation, while providing a natural hedge against the adverse movements in the price of compliant fuel oil.ESG practices. Looking beyond scrubbers, we are committed in acting to reduce the emissions of our fleet in a cost-effective way as part of our environmental, social and governance practices. We are confident that investing in the necessary improvements on the vessels will pay off. It is important to note that Seanergy views the improvements of the existing global fleet's environmental efficiency as a net positive for both the environment and the shipping market.In this respect, Seanergy in cooperation with one of its long-term charterers, invested in upgrading the EVDI which is the Existing Vessel Design Index of one of our vessels and in addition, we installed various energy-saving devices in partnership with this charter on this ship, resulting in additional energy savings of 5% to 7%. The above additions and modifications are expected to reduce significantly the carbon footprint of the ship.I would like to update the number of shares issued and outstanding now. As of today, the company has 26.9 million shares outstanding. On November 13, 2019, the Class C Warrants six-month exercise period expired and the few remaining Class C Warrants were canceled. On that basis, we do not envision any changes in the outstanding number of shares going forward from the Class C Warrants, no additional dilution.NASDAQ Capital Markets Notice. Finally, we recently received from NASDAQ an additional extension of six months in relation to the bid price deficiency, thus moving the curing period to mid-July 2020.I will now pass the call to our CFO, Stavros Gyftakis, who will review our financial performance for the reporting period.

[Stavros Gyftakis:]

Thank you, Stamatis. Good morning everyone and thank you for participating in our call. I will now discuss our financial results for the fourth quarter of 2019. Our fleet earned healthy charter rates in continuation of the positive trend established since July 2019.We are very pleased to announce a second consecutive profitable quarter as this attests to the company's ability to generate profits under mid-cycle market conditions. It is also important to note that the company remained profitable over two quarters while completing five dry dockings over the same period, which obviously impaired our fleet's earnings capacity.In the fourth quarter of 2019, our fleet achieved a time charter equivalent rate of $22,900, an improvement of 50% compared to $15,300 in the fourth quarter of 2018. This was also the second consecutive quarter with an average time charter equivalent above $20,000 for our vessels.The sharp improvement in the time charter equivalent was partially offset by the fact that the company recorded 9%, less operating days compared to the fourth quarter of 2018, yet the improvement in our financial performance is notable.Net operating revenues in the fourth quarter of 2019 defined as revenues after deducting all voyage expenses and commissions stood at $19.2 million, marking an increase of 37% when compared to the fourth quarter of last year.Similar to what we saw in the third quarter and nine-month period of 2019, the three scrub installations that took place in the fourth quarter along with the concurrent special surveys led to the aforementioned reduction of available days.Going forward only three dry-dockings are scheduled for the full year period of 2020 while certain of our time charters as Stamatis said, include fixed daily premiums paid in addition to the Capesize index as a reimbursement of scrub installation costs. These factors are expected to act as tailwinds for our revenues in 2020, all else being equal.During the fourth quarter of 2019, we recorded vessel operating expenses of $5.1 million, a decrease of 6% compared to $5.5 million in the fourth quarter of 2018. Given that seven out of our 10 vessels underwent dry-dockings during 2019, we are satisfied with the fleet performance and expect to see further improvements going forward.General and administrative expenses were $1.8 million in the fourth quarter of 2019, reduced by 8% compared to approximately $2 million in the same quarter of 2018. EBITDA in the fourth quarter of 2019 was $11.9 million, up by 100% compared to an EBITDA of $5.9 million in the same period of 2018.Interest and finance costs in the fourth quarter of 2019 amounted to $5.6 million, a decrease of 11% from $6.4 million in the fourth quarter of 2018. Furthermore, actual cash interest came in at $3 million, marking a reduction of 38% compared to $4.9 million in the same quarter of last year.As a reminder, non-cash expenses are comprised of items that relate to the amortization of the beneficial conversion feature of the convertible notes held by Jelco Delta, an entity affiliated with our major shareholder and deferred finance and other charges mainly related to the private placement of sales to Jelco in May. Net income for the fourth quarter of 2019 was $3.1 million as compared to a net loss of $3.2 million in the same period last year.Moving on to the full year period that ended December 31, 2019, the time charter equivalent of the fleet stood at approximately $14,700, an improvement of 12% compared to $13,200 in the full year period of 2018.Net revenues decreased by 45% to $86.5 million as available days in 2019 declined by 13% from the available days in 2018 due to seven dry-dockings that took place last year and the replacement of two Supramax vessels and one Capesize unit in the fourth quarter of 2018.Nonetheless, net operating revenues i.e. net revenues after deducting voyage expenses declined by a mere 3%, which reflects the increased time charter coverage of the fleet in 2019 compared to mainly voyage-based income for 2018.As regards to vessel operating expenses, we recorded an 8% decrease year-over-year roughly in line with the 7% decrease in our ownership base after the sale of the two Supramax vessels while daily OpEx were largely in line with those of 2018.General and administrative expenses for the full year amounted to $6 million, a reduction of 8% when compared to $6.5 million in the previous year. Excluding non-cash items, G&A expenses for the year stood at $4.7 million.On EBITDA, the full year period figure rose by 52% to $23.8 million, compared to $15.7 million in 2018. Although, the EBITDA for 2018 includes a large one-off non-cash impairment on the sale of the two Supramax vessels the EBITDA for 2019, still came in 4% higher.Again, the EBITDA figure in 2019 was negatively impacted by the heavy dry docking schedule of our fleet, which incurred 233 dry docking days last year, compared to only 13 dry docking days in 2018.It should also be noted, that the large part of these dry docking days fell in the second half of 2019 when rates were even stronger, meaning that the effect on our results was larger than what is suggested by the number of days.We are particularly pleased to see that the charter rates normalized moving steadily to mid-cycle levels, supported by healthy market fundamentals. Our company generates significant EBITDA, especially compared to our current market capitalization.Interest and financial expenses for 2019 was equal to $23.6 million, reduced by 6% in comparison to 2018. Cash interest expenses however, amounted to $13.9 million as compared to $19.7 million, in 2018, reflecting an impressive 30% decrease year-over-year, following settlement of part of our cash interest through the private placement of shares, in May.Net loss for the period was approximately $11.7 million which was mainly driven by a loss of $15.5 million in the first six months of the year, whereas the second half was profitable.Turning to our balance sheet, as of the end of the quarter, Seanergy has $14.6 million in cash and cash equivalents, which is comprised of $13.7 million in free liquidity and $0.9 million in restricted cash.When including undrawn commitments under our convertible notes, the company's total liquidity as of December 31 2019 was $18.1 million. Shareholders' equity as of December 31 2019 was equal to $29.9 million increased from $21.3 million at the end of 2018.Concerning our debt, senior secured loans owed to lending institutions and leasing terms were equal to $183 million or approximately $18 million per vessel, while the subordinated debt held by Jelco amounts to $24 million or approximately $2.4 million per vessel.Based on cash and cash equivalents of $14.6 million and certain off-balance sheet deposits held as cash collaterals by our lenders, net debt per vessel is approximately $19 million.Regarding our upcoming debt maturities, we have approximately $65 million of third-party debt that expires within 2020. $5 million matures in March. And we have already reached an in principle agreement with the lender which is subject to the bank's credit committee approval.$28.8 million matures in June and $31.6 million in December. We are progressing, the discussions for the extension of the underlying maturities with the current lenders of these vessels, as well as with other financial institutions including the leading Far Eastern and Western Resource.This concludes my review of the financials. I will now turn the call back to Stamatis, who will discuss the market and industry fundamentals, before concluding with his final remarks. Stamatis?

[Stamatis Tsantanis:]

Thank you, Stavros. As mentioned in the beginning of the call, 2019 was overall a good year for the Capesize market, resulting in its third year of consecutive improvement.Despite the severe impact of various negative incidents in the beginning of the year, the market was able to recover in the second half of 2019. It is notable to mention, that despite the reduction of approximately 120 million tons of seaborne iron ore, due to these factors, the average freight rates of the year surpassed the levels of 2018.Consequently in 2020, we believe the macro fundamentals for the Capesize market remain positive. At the moment we're experiencing a combination of negative factors contributing to a very weak spot market, in the first quarter of 2020.First as discussed, we have the mispricing of the Baltic Exchange indices that has technically reduced the level of the quoted time charter equivalent rates. We expect the simulated event to smoothen out as the fuel spread is now reducing.The seasonally heavy rain season in Brazil has reduced iron ore exports as the country experienced some of the worst rainfall of the past century. In Australia, Cyclone Damien has also obstructed operations in major iron ore and loading ports.Finally, the recent outbreak of the coronavirus in China has added a layer of significant near-term uncertainty. Yet, it should be noted, that the economic slowdown caused by the effort to contain the virus will prove transitionary and should be reversed as the situation unwinds. We therefore expect the government commitments to be successful, not only in containing the epidemic, but also boosting the economy in such a way in order to meet their original growth targets.High volatility and seasonality are normal features of the Capesize market and should not detract from the positive overall fundamentals. Furthermore, in 2020, total iron ore volumes are expected to rise by about 2%, 2.5% compared to contraction of about 1.5% to 2% in 2019. Iron ore ton-mile demand is expected to grow by 4.2%, as Brazil iron ore shipments are likely to continue to rise due to the replacement of volumes lost during 2019.Moreover, JP Morgan and Morgan Stanley estimates that Chinese infrastructure growth will be 7% for 2020 as well as Indian national infrastructure pipeline is expected to represent about $1.4 trillion of investments in the period from 2020 to 2025, which is roughly double the levels seen in the previous five years. In addition, bauxite and alumina volumes which rose by more than 10% in 2019 are expected to continue to support demand for larger vessels.Looking beyond 2020, there's good reason to be optimistic about the future vessel supply in the drybulk sector. Vessel supply growth is likely to remain low as the overall Cape and ore targets order book fell to 8% in February 2020 from 10% in January 2019. The International Maritime Organization is currently aiming for a reduction in shipping CO2 emissions by 40% from 2008 levels by 2030 and by 50% of total greenhouse gas emissions by 2050.The official emissions guidance is expected to be revised in 2023, which creates a fair amount of uncertainty when it comes to new building orders and choosing the right vessel and engine design. At the moment, there's no specific engine technology that would allow owners to comply with these targets and therefore it's hard to envision a large rise in vessel orders at least until we have some clarity in the future of marine technology.Despite the seasonality of the Capesize sector, we strongly believe that the fundamentals are in place for the market to continue its steady growth. High volatility from quarter-to-quarter is only natural in the Capesize market and may be driven by a number of unexpected factors as we have historically experienced. Overall, the demand and supply fundamentals continue to be positive.Our emphasis on the improvement of our vessels' environmental efficiency and our established long-term partnerships with world-renowned charters will ensure our fleet's continued commercial benefit. Seanergy has one of the most advantageous positions to capture the expected rebound of the market. On that note, I would like to turn the call over to the operator and we will answer any questions you may have. Jody?

[Operator:]

Thank you very much, sir. [Operator Instructions] We will now take our first question. Caller please go ahead, your line is open.

[Tate Sullivan:]

Hi. Thank you, good day. I'm Tate Sullivan from Maxim Group. You gave some figures during your remarks for the fixed daily premiums to the index. Can you repeat those? Did you say on average $2,000 to $3,000? And is that on how many of your vessels please?

[Stamatis Tsantanis:]

Hi, Tate. Well basically we have one ship running about $2,000 to $2,500 depending and the other one is at $3,500. So it's a range between $2,000 and $3,500 of the premium that we get on those ships.

[Stavros Gyftakis:]

It's also quite substantial there, yes, to such thing.

[Stamatis Tsantanis:]

Yes. And on top of that we are also getting a small profit-sharing element from the fuel spread. As per the agreement of the particular charters, we are entitled to get a fuel premium at certain levels of the fuel premium. Since in December and January, the fuel spread widened significantly, we had a profit-sharing element of that. We cannot quantify it yet on a dollars per day basis, but it was substantial in the beginning. We don't know whether it's going to continue to be substantial in the future as the fuel spread has reduced significantly.

[Tate Sullivan:]

Okay. Thank you. Thank you for repeating that figure out. And then you mentioned, you ended the quarter with about $15 million in cash and it was a good EBITDA quarter. I mean, maybe one of your highest at least in the last two, three years. But then did I hear you say a total liquidity number of about $18 million? Is that considering capacity on existing convertible lines? Is that what you said?

[Stavros Gyftakis:]

Yes. Hi, Tate. This is Stavros. This includes certain commitments that we have under our convertible notes, which amount to around $3.5 million to $4 million, which remain undrawn.

[Tate Sullivan:]

Okay, great. And then you answered my question on debt maturities in 2020 in your prepared remarks and you’re in discussions to extent. What was the number of the nearest term maturity, please?

[Stamatis Tsantanis:]

The nearest term on maturity is $5 million, but we have reached an in principle agreement with this bank and we are expecting credit committee approval on that further to which we will be able to announce the financing formally.

[Tate Sullivan:]

Okay. Great. That's all I had. Thank you for that detail. Have a good rest of the day.

[Stamatis Tsantanis:]

Thank you, Tate.

[Operator:]

[Operator Instructions] We'll now take our next question. Please go ahead.

[Poe Fratt:]

Hi, Stavros and Stamatis. This is Poe Fratt from Noble Capital Markets. You had broken up when you were giving the maturity dates or the maturities and the dates. I heard the $5 million in March. Can you go through the remaining debt that matures this year Stavros?

[Stavros Gyftakis:]

Of course. We have $5 million in March as you well said. We have $28.8 million in June -- at the end of June, and $31.5 million at the end of December.

[Poe Fratt:]

Okay. Great. And I assume that you're already in discussions with the banks on the June potential refinancing?

[Stavros Gyftakis:]

We are. We are Poe. I mean, we have 4.5 months -- we are 4.5 months away from June -- from the June maturities and timing is not an issue. We have sufficient time to complete successfully the refinancing and the wide group of committed lenders who are looking at growth, right?We want however to ensure that the time of the refinancings will be optimal so that we get the best terms for our company and our shareholders. But rest assured that we are fully focused on the refinancing and in getting the best possible terms for our company.

[Poe Fratt:]

And in that context Stavros, can you -- is there any pushback from the banks as far as any concerns given where rates have gone and what the Capesize market is doing right now?And then secondly, any change in terms like the $5 million that you have that's being refinanced already that's up for credit committee approval. Any change in the terms one way or another?

[Stavros Gyftakis:]

No. Actually the terms of the refinancing of the first one which is coming up in March are similar on the pricing side and improved on the overall covenant restriction side. Now, I mean, there are no pushbacks. Of course, the market is a market. But that's why we always time our refinancing on an optimal basis.The banks that are following us, that are with us for many years they have an ethical performance and we have seen the cyclicality of the market and the seasonality of the market. So a temporary drawback on the freight market is not causing concerns.Looking at the greater picture, Stamatis said before, in the last three years, our average earnings and the average earnings adding to the Capesize market are improving steadily. So this is also something that the banks are looking at.

[Poe Fratt:]

Great. That's helpful. And then can you highlight the energy savings on Champion? You had talked about 5% to 7% energy savings. Is that mainly fuel? Or is it others?And then secondly, how much did it cost to do those modifications? And would you consider doing modifications on the remainder of the fleet?

[Stamatis Tsantanis:]

Well, Poe, that's actually a great question and we strongly believe that the existing fleet not just Seanergy's, but the global fleet can be improved with a minimal investment. When I say minimal, I mean, minimal to the advantages associated with this kind of improvement.We did this investment on that ship in combination and in partnership with the charterer of the vessel that fully paid for all these improvements to be made. And the investment consists of various elements including the newest duct on the propeller advanced paints, some advanced pumps in the engine room, and the change of all the lighting of the ship. So, it all translates down to fuel because this is what it is required to move the ship and light the ship and do all that. So, to give you an answer I mean I think that about $1 million to $1.5 million for existing fleet is what it entails to increase their efficiency by 5% to 7% and reduce their overall carbon footprint accordingly. And just to give you an idea when a ship is actually consuming about 10,000 tons of fuel per year, 7% is actually a very significant amount in order for this investment to pay off in the short-term.

[Poe Fratt:]

So, it's mainly fuel, Stamatis?

[Stamatis Tsantanis:]

Yes.

[Poe Fratt:]

And then you have -- and then similar to the scrubber strategy, would you need customers' support or customer funding in order to do the rest of those? And then can you -- I think at one point in time in the past you've talked about potentially looking at scrubbers for the rest of your fleet. Can you just highlight where that potentially stands?

[Stamatis Tsantanis:]

Yes. We are in active discussions to expand the scrubber arrangements for some more of the ships. I don't know if it's going to be one or two more, but we are in active discussions. We haven't really concluded that plan yet because let me remind you that the shipyard capacity in China is currently blocked.So, even if we wanted, we couldn't basically go to China and install the scrubbers as all the shipyards are not working. So, we are discussing a plan with one of our biggest clients in order to see how we can deliver such an investment in the first half of the year. When we have these discussions finalized, we will announce it, but there are certainly a lot of discussions in place.Seizing the opportunity, I would like to tell you -- and since we touched the subject, that we estimate -- not just us, but also brokers that about 50 Capesizes and all carriers are currently in China blocked waiting to do dry docks and install scrubbers. So, about 10 million deadweight tons of the global Capesize capacity is now in China waiting to do all these things and all these yards are not operating.

[Poe Fratt:]

Great. And then if you could talk about -- Stamatis if you could talk about the indexed -- the indexed -- the contracts that are under-indexed, you talked about how the fuel adjustments have actually pushed down the index. Is that something you foresaw when you signed the contracts that are indexed? Or -- how are you trying to manage through that because it seems like overly punitive and it doesn't seem to be designed -- it doesn't seem to be working the way it was designed. Can you just comment on your BCI-linked contracts?

[Stamatis Tsantanis:]

Yes, that's a good point. First of all, as I mentioned during the call, especially in December and also in January, we saw an actual rise of the actual dollars per ton earned off the ships in certain of the key routes of the Cape sizes, while the quoted levels of the Baltic was providing on a daily basis was reducing.The Baltic went out and adjusted the indices in a way where they changed the underlying fuel from hi-sulfur to low-sulfur. That is the first time in history that we're seeing this kind of an adjustment. Because previously, the Baltic, when there was any material change that needed to -- for them to make adjustments, instead of making the change on the particular index, they issued a second index until the first one was phased out.So, basically, when you have billions of dollars of open interest in derivatives and all that, you don't really change the definition as it comes -- shoot in any particular case. For us, given the fact that the investment in scrubbers was fully covered by the charterers and we also have the premium on these charters, it hasn't really worked so bad.But what we believe as a company is the fact that the way that the Baltic Indices have been adjusted, has overly penalized the market. Because at the time when the adjustment took place, we were not sure about the actual quoted prices of the relevant factors.And there were a lot of other unknown and uncertain elements that in the previous years, it took a longer period of time in order for them to be adjusted. So I think that Baltic went ahead and did something which caught the industry by surprise. So, as a company, we are not so affected by that. But I think that the adjustment at the Baltic indices were made, created a longer -- a bigger effect, down effect into the market.

[Poe Fratt:]

Great. Thank you so much.

[Stamatis Tsantanis:]

You're welcome, Poe.

[Operator:]

Okay. And we do have a follow-up question from Tate. Please go ahead. Your line is open.

[Tate Sullivan:]

Thank you. Tate Sullivan from Maxim with a follow up. Thank you. Yes, in the paragraph in your press release about the scrubber installations, is there a potential based on a timing of the actual completion for the other two ships? Will there be a use of cash for those ships in 1Q 2020, please? Or was that accounted for in 4Q, 2019?

[Stamatis Tsantanis:]

We don't have anything scheduled for Q1, 2020. There's no such -- we might have some dry docks in 2020, but we will try to time them and allocate them when we believe that the circumstances are right to expedite the process as much as we can. So we might have one or two dry docks in 2020, but we haven't really made any firm planning, given the fact that the Chinese shipyards are now closed for the coronavirus epidemic.

[Tate Sullivan:]

Okay. And the five vessels that completed the scrubber installations, all the cash requirement, even though you're -- I mean, customer -- you have customer funding for most of those. That has been accounted for? Or was accounted for in 2019, is that correct?

[Stamatis Tsantanis:]

Yes. That is correct. It's pretty much a pass-through for us.

[Tate Sullivan:]

Okay. Great. Thank you for that clarification.

[Stamatis Tsantanis:]

You're welcome, Tate.

[Operator:]

There are no further questions at this time. I'll hand back to you, sir.

[Stamatis Tsantanis:]

Okay, Jody. Thank you very much and thanks everyone for participating in our call today.

[Operator:]

Thank you very much, sir. Ladies and gentlemen, that does conclude our conference for today. Thank you all for joining. You may now disconnect.