Cool Company Ltd. (CLCO) Q3 2023 Earnings Call Transcript

Cool Company Ltd. (NYSE:CLCO) Q3 2023 Earnings Conference Call November 28, 2023 8:00 AM ET

Company Participants

Richard Tyrrell – Chief Executive Officer

John Boots – Chief Financial Officer

Conference Call Participants

Frode Morkedal – Clarksons Securities

Liam Burke – B. Riley

Peter Hogan – ABG

Richard Diamond – Castlewood Capital

Operator

Good morning, ladies and gentlemen, and welcome to the CoolCo Q3 2023 Business Update Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, November 28, 2023.

I would now like to turn the conference over to Mr. Richard Tyrrell. Please go ahead, sir.

Richard Tyrrell

Good afternoon to those in Europe or the East, and good morning to those in the West, and thank you, Laura. Welcome to CoolCo’s third quarter results presentation. Well, I’ll take you through the highlights and comment on how we see the current market before handing over to John, who will go through the numbers in more detail.

Please take note of the forward-looking statements on page two, before turning to page three, which provides a snapshot of the quarter and we’ll get into what’s behind these numbers as we move through the presentation.

Please note that the net income of $39.2 million for the quarter includes a mark-to-market gain on our interest rate swaps. It equates to an adjusted EPS of $0.52. And on this basis, I’m pleased to confirm another $0.41 per share dividend for the quarter and an outlook that continues to be positive even though winter has come late, and we’re not expecting to see the exceptional conditions of last year.

Both CoolCo’s backlog of almost $1.5 billion and the upside from chartering vessels on low legacy rates are in focus. As I mentioned, while winter was late in coming, the price of gas has held firm in the third quarter of this year, because of strikes and geopolitical events. This reduced the opportunity for contango trades going into the winter. And we’ve seen our ships being used less for storage than this time last year.

High gas prices also reduced the opportunity for East-West arbitrage and the number of long-haul cargoes. While these factors will likely stop the market reaching last year’s peak, the value of cargoes holding at the 50 million mark is positive for shipping and Panama Canal limitations are starting to soak up capacity. Such logistical challenges create tailwinds for shipping with longer voyage times and the need for more vessels.

The liquidity of the charter market has been on the low side in the run-up to the winter, but that is now starting to change. While the reported rates have been strong, spot vessels have needed to be modern and well-positioned to secure employment. CoolCo has had success at attracting — attractive employment for the one vessel it currently has in the spot market, often at the expense of older steam turbine vessels that are increasingly struggling for employment once off contract. CoolCo doesn’t own any steam vessels, and we see their departure from the market is helping to balance the shipping demand and supply going forward.

Now if you may turn to page four. In the third quarter, we benefited from strong operational performance, a seasonal uplift on our variable rate contract and the fleet’s fixed rate, medium and long-term charter coverage. Additionally, we took measured exposure to the charter market in the form of one vessel that we chose to deploy directly in the spot market, while waiting for the right term opportunity.

The net result was a sequentially higher time charter equivalent level of $82,400 per day for the quarter, which compares with $81,100 per day in the second quarter. EBITDA also increased to $62.8 million from $59.9 million in the second quarter. The average term on our backlog of almost 1.4 million — 1.5 million is around four years with our longest charter extending out to 2033.

Page number five is titled TFDE rates are leveling off at profitable levels, if below those reached at the height of the Ukraine conflict’s impact on LNG markets. While not currently reaching the levels seen in the months following the Russian invasion of the Ukraine, rates in the early fourth quarter have settled at levels above historic norms for both the industry and for the CoolCo fleet.

The Kool Husky, a vessel that is trading in the spot market and the Kool Blizzard, a variable rate vessel are set to benefit from seasonal rates in the fourth quarter, while we actively seek long-term employment for these vessels. As you see from the 12-month TFDE rates, in the right-hand chart, the Husky won’t make the $140,000 a day it made previously. But with the market leveling out, it should achieve a reasonable rate by historic standards.

If the Husky achieves today’s reported rates, the lower level will be mostly offset by higher rates on Kelvin, a vessel that was forward fixed earlier this year. Such upside on legacy contracts provide scope to maintain TCE performance as they renew. It is important to keep in mind that current levels, while off their peaks, are highly profitable versus our cash breakeven of just over $60,000 per day.

Page number six shows the trends that we see influencing LNG shipping in 2024. We’re closely watching these factors in particular, and we believe that they will have a strong bearing on the demand for shipping and that bearing will be positive. Firstly, price elasticity of demand, especially with respect to new LNG supply should see more LNG heading to the more distant East. While Japan and Korea are large mature markets where the use of nuclear has the biggest impact on demand, China is a real growth market where there’s a high potential for coal to gas substitution.

Chinese demand is set to increase by 8% in 2023 after falling last year and the scope for the higher levels of growth seen historically. India has the capacity to take large volumes of LNG and the same can be said of other markets such as those elsewhere on the subcontinent and in Southeast Asia that now have LNG infrastructure and the ability to take more volumes. Europe is set to take slightly more LNG in 2023 than 2022, but the increase is relatively small when you consider the additional Regas capacity that has been installed.

The second point that I’d highlight is that the Panama Canal has severe water shortages that’s starting to make it a real bottleneck and cargoes are being sent around the Cape of Good Hope as a result and you can see what that means in terms of number of charter days in the diagram. Limits on the transit through the Canal are expected to remain in place until the start of the rainy season in May at the earliest. And the El Nino effect could interfere with that timing still further.

Voyages from the U.S. to the Northern China around the Cape of Good Hope take around 41 days, compared to 28 days via Panama. That requires an additional ship per million tons of LNG from the U.S. to Asia, and that’s a route that already requires an additional ship, compared to deliveries to Europe. And if you remember back to what I started off this section with, more volumes are going to be heading in that direction, which require additional shipping.

The last factor that we’re looking at is Russian LNG, and it’s expected to have an impact in 2024, because of the new volumes from Arctic LNG 2. These volumes are likely to mirror shipments of oil, which if so, would be positive for shipping because of the distances involved. CoolCo isn’t carrying Russian volumes, but they soak up ships from the markets nonetheless.

Now let me turn to steam turbine vessels on page seven. This shows how many vessels we’ll deliver over the next few years. And it shows how steam turbines are expected to help balance the market, having provided extra capacity during the Ukraine war and bridged the arrival of new builds. The growth in LNG supply and shipping distances are expected to partly absorb new vessel deliveries. Steam turbine vessels are set to balance the market as they struggle for employment on both commercial and regulatory grounds after reaching the end of their charters. And added catalysts for the steam turbines leaving the market is expensive drydocks at 20 — at 25 years of age. These can cost up to $10 million and little if any of that can be funded with debt on a vessel of such age.

While I’ve concentrated on the existing fleet so far, slide eight turns its attention to new builds. It’s been a quiet quarter for new builds fixtures, but I’m pleased to say that the last two new builds in the market from independent owners that deliver ahead of CoolCo’s 2024 deliveries have now secured long-term employment. This positions on new builds as both the next in line and some of the only uncommitted new builds currently available before 2026. We were beaten on price at $95,000 a day for 15-years at the start of the quarter. And more recently by a vessel that delivered earlier than ours and had better timing for the requirement. That particular requirement was a five-year charter said to have been secured at just over $100,000 per day. And these prices are where we see the market today and it’s what we expect to achieve on our vessels.

What is setting these prices? Well, at today’s average new build price of over $260 million, and assuming financing costs in the 7% plus range and a skinny 10% cost in equity — cost of equity, skinny for us at least, the industry needs rates approaching $100,000 per day. CoolCo paid less for its new builds and financed them at competitive rates below 6%. These resulted in a $69,000 per day cash break even that provides ample scope to fix them at attractive returns.

We continue to face competition from sublets on these vessels in that they allow charterers to relax and put off making longer-term commitments, but remain confident that they will be fixed well in advance of their deliveries at the end of the third quarter and fourth quarter 2024 respectively.

I’m now going to hand over to John on page nine. John, please take it from here.

John Boots

Thank you, Richard. Good morning, and good afternoon. Today, I will present an overview of our third quarter financial performance followed by some insights into our expectations for the fourth quarter.

So turning to slide nine. This slide highlights our contracted backlog through the end of ‘24, which corresponds to 20% — 22% of available days as being open days, increasing to 34% by the end of ‘25. While this open day percentage will obviously increase over time, the time charter equivalent rate from our backlog is approximately $77,000 per day. And on average, we maintain roughly 4.8 years of backlog per vessel. This includes all our options exercised to their maximum extent, but excludes our new builds.

I would also note that some vessels that will be coming open in the coming years are typically those currently on rates agreed before the invasion of Ukraine and as such would represent opportunities for us to reprice at improved rates. Of particular significance on the chart to the right is that the cash flow generated by our backlog, calculated as contractual revenue backlog minus direct operating expenses, surpasses our net debt. This underscores a robust level of coverage.

Turning to slide 10, where I will recap our third quarter income statement results. In our press release earlier today, we reported another robust quarter with time and voyage charter revenues reaching approximately $84.5 million resulting in an average TCE rate of $82,400 per day across our fleet for the quarter.

This improvement over the last quarter is primarily attributed to a higher floating rate on one of our vessels. When comparing our results to the previous quarters in 2023, it’s important to consider the opportunistic sale of the Seal towards the end of the first quarter. Therefore, the second and third quarters in 2023 are more comparable.

Third quarter revenues, inclusive of non-cash amortization of net intangible liabilities, amounting to $4.5 million and approximately $3.9 million from the third-party vessel management revenues, generated $92.9 million. This is above the guidance range provided during our second quarter earnings call in late August.

Year-to-date revenues for ‘23 nearly doubled, compared to the same period in the prior year, mainly due to the higher renewal rates and the additional four acquired vessels to our fleet in November ‘22.

Operating income for the quarter reached $48.3 million, inclusive of $18.5 million in vessel operating expenses, similar to our OpEx level in the second quarter. Operating income also included $18.9 million in depreciation and amortization, along with $5.9 million in administrative expenses, which is a combination of third-party vessel management expenses and routine corporate overhead.

Adjusted EBITDA for the third quarter of ‘23 as a result was $62.8 million, compared to $59.9 million for the second quarter. Reported net income in the third quarter was $39.2 million, compared to $44.6 million in the second quarter, a decrease mainly due to lower unrealized mark-to-market gains on our interest rate swaps, driven by lower interest rates in the market at the end of the third quarter. This was somewhat offset by higher revenues in the third quarter.

Turning to slide 11 with the net income bridge. This net income bridge illustrates the transition from Q2 to Q3. The difference being mainly a reduction in the unrealized swap gains. Moving to the chart on the right. Adjusted for recurring non-cash elements, our third quarter net income equals $21 — sorry, $28.1 million. The non-cash amortization of net intangible assets and liabilities is associated with the revaluation of the charter agreements due to the purchase price adjustments related to the ex-Golar vessels and the subsequent four acquired vessels in November last year. Excluding such non-cash items, the dividend of $0.41 per share represents approximately a 78% payout of third quarter net income.

Turning to Slide 12, the cash flow bridge. The cash flow bridge for the third quarter represents a starting and ending cash resulting in a net use of $157 million. This is primarily driven by the payments for the exercise of the newbuild option, $114 million, plus the subsequent milestone payment to the shipyard for $22 million which equals to $136 million on the chart and advance payments for the previously announced LNG upgrades of $10 million and the payment of the second quarter dividend.

The free cash flow to equity generation was approximately 25 — sorry $28 million in the circled area. This was somewhat offset by negative working capital, mainly the result of certain customer collections that were received prior to June 30 instead of July 1. Excluding working capital area, the circled area in the first-half represents the free cash flow to equity.

So looking ahead, the ex-dividend date is set for December 6 with the record date set for December 7. The dividend will be distributed to DTC-registered shareholders on or around December 15 followed by Norwegian-registered shareholders approximately three trading days later on — sorry, on or around December 20.

Turning to slide 13. As previously reported, our debt maturities are well spread out. And with the recent addition of newbuild financing, we now have an average debt maturity of around 5.5 years. Our first debt maturities in the first quarter of 2025 for which we’re actively pursuing steps to refinance this debt with delayed drawdown terms. We’ve also successfully secured attractive fixed interest rates for about 85% of our net debt. Proactively managing these debt maturities and fixing interest rates at favorable levels aligns well with our robust fixed rate revenue backlog and our dividends.

The table at the bottom shows the split between realized and unrealized mark-to-market gains and losses, which on our income statement are combined in one line item. The cumulative realized swap results since inception of our swap program in July ’22 were well in the money with $8 million in net gains. The unrealized gains as of September 30 were approximately $21 million. Obviously, it’s dependent on the interest rate environment, where it is unrealized swap gains can be converted in realized gains over time.

So for those of you modeling CoolCo’s net income quarter-to-quarter, be aware of this significant and largely unrealized mark-to-market element in our earnings reporting. Our dual listing in both Oslo and New York has facilitated share transfers to the U.S. with 72% now listed in the U.S. and the remainder in Oslo. We reiterate that for Oslo shareholders aiming to shift their shares to the U.S., a process is outlined in the FAQ section on our website under the Investors tab. We also like to reiterate and request our investors to subscribe to our email alerts for earnings calls et cetera.

Turning to the next slide, slide 14, where we highlight some other relevant information. We announced the closing of our newbuild financing in mid-October. In this slide, we share a little bit more detail on the financing arrangements. The base loan to value advance rate is 80% of the shipyard price, but there is an opportunity to increase this percentage to 92.5% which is contingent upon a minimum TCE rate, charter duration and counterparty credit risk.

Upon delivery in September and December 2024, we’ll have a tenor of 10-years, while the sale and leaseback financing also includes pre-delivery debt funding for these two new builds. The implied interest rate is just under 6%.

The chart on the right shows our current cash breakeven for the existing 11 vessels, taking into account OpEx, G&A and debt service adjusted for interest income. This compares very favorably with our recently reported average TCE rates.

Then turning to slide 15, some selected guidance for the fourth quarter. Here we provide some insights in the fourth quarter revenue, which is guided to be slightly higher than Q3. Among our fleet of 11 vessels, 10 are secured under medium to long-term charters, of which one vessel is under the floating rate. The remaining vessel is engaged in spot voyages for now.

For 2024, we plan three drydocks, one in Q2 and two in Q3, resulting in some unpaid drydocking time. In addition, the Kool Husky will also undergo upgrades with a sub-cooler and an air lubrication system to enhance performance and reduce emissions.

So with the financial overview concluded, I’ll hand the call back to Richard.

Richard Tyrrell

Thanks, John. And that takes us to page 16. We’re quite excited about CoolCo and its potential. And I think this page summarizes it nicely. I won’t go through it in detail, because it’s more targeted at people, who are new to the company and it will be well-known to those who have listened through this call.

So I’ll stop here and hand over to Q&A. Thank you for listening.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Frode Morkedal from Clarksons Securities. Please go ahead.

Frode Morkedal

Thank you. Hi guys.

Richard Tyrrell

Hi, Frode.

Frode Morkedal

Maybe first question, could you provide an update on the, let’s say, recent trading performance for the Kool Husky in the spot market in the quarter to-date?

Richard Tyrrell

The trading of the Husky has been broadly in line with where you see brokers for the quarter. And of course, you fix a vessel on one day. And that rate applies for the length of the voyage, which can be anything from 10-days through to a month. But I think if you add everything in, the levels that have been reported will give you a good guide further. Does that answer the question?

Frode Morkedal

Yes. So we can look at the benchmarks basically. Yes, sounds good. Yes, looking at next year 2024, you have a few other ships coming open, and you also had it in the chart that one-year time charter rates have come down to around $80,000 per day. Is that a level you would look favorable upon basically for those open ships? Or are you more optimistic about the spot market going forward?

Richard Tyrrell

It depends very much on the kind of term you’re talking. If someone is willing to enter into a, call it, a three-year at those kinds of levels. I think that is interesting. I think for shorter-term business, the market has, in fact, come off rather than a lot and has upside.

Frode Morkedal

Okay. Maybe you could talk about your expectations for next year then in terms of supply and demand. You mentioned the Panama Canal and Cape of Good Hope. Just curious if you know given the price differentials between Asia and Europe on natural gas. Are those price differentials wide enough to, let’s say, go the long haul?

Richard Tyrrell

I would look at it more in terms of the volume of LNG that needs to find a home, Frode. So I think if you look at Europe now, it is adequately served between the pipeline gas that it still gets from places like Norway and Algeria and the LNG that it can source on the global markets. So if you take that as Europe being adequately supplied, then the natural question is, well, okay, where do the next incremental volumes of LNG go, of which there’s quite a big forecast growth next year. And, yes, the natural home for that will be in Asia. And of course, as more supply comes online, you’ll see pressure on LNG price. I’m sure there’ll be quite some elasticity to demand that we’ll see Asia pull in those volumes. And hence, my points around the high likelihood of the market as a whole, requiring quite considerably more shipping next year.

Frode Morkedal

Okay. Sounds good. Final question I had is on the newbuild financing. Could you provide more detail on, let’s say, the tender or the length of the contracts that give you the 92.5% loan-to-value?

John Boots

So the minimum rate is $80,000. The tenor that the finance years ideally, you are looking for is a minimum of 10-years, and then there’s certain counterparty that are specific — counterparties that are specifically named. But as you know how these things work or may work and this is not any different. If we get a seven-year deal at a rate, obviously, well above 80%, then there’s a high chance that we’ll certainly we’re going to go back to [Huaxia] (ph) and I think there would be a high chance that will look at a higher leverage if we want that.

Frode Morkedal

Okay, that’s pretty clear. Thank you.

Richard Tyrrell

Thank you, Frode.

Operator

Thank you. We have our next question coming from the line of Liam Burke from B. Riley. Please go ahead.

Liam Burke

Thank you. Hi, Richard, how are you?

Richard Tyrrell

Good, thanks. Hi, Liam

Liam Burke

Richard, how do you factor in the possibility that some of these larger LNG projects not come online on time. I’m not suggesting they’ll be canceled, but delayed. And how does that fit into your overall supply equation of the global fleet? And when you’re looking at chartering your two new builds?

Richard Tyrrell

Sure. It’s definitely one of the factors. And I think if you look at the levers, you’ve got where the volumes are going to go to. That will be a big driver of the number of ships. You, of course, then got the amount of supply that’s coming, which is sensitive to delays on these projects. So we absolutely do look at that, and we factor that into our thinking. My view is that there is a lot of volume coming, which will soak up these new builds which are coming into the market because of the extra distances involved. I think to the extent that things are delayed, we may see some continued competition from sublets, which that’s not new. We’ve seen that in the past year or so also. And ultimately, the — it will be the steam turbines that balance things out.

Liam Burke

Okay. On the steam turbines, though, I mean, there — a few of them are coming off recharter now. How do they factor in? And I would figure the smaller, less efficient, they would be coming off the fleet as we have a fair amount of new builds coming online.

Richard Tyrrell

Yes, this is exactly the point. The steam turbine vessels they’re coming off contract. So they’re not a sunk cost from a charter’s point of view. They try and compete in the market. And of course, in a very robust market where all capacity finds employment, they find employment. But in a market where there isn’t such a need, it’s those vessels that sort of fall down the merit order to the point that they don’t find employment anymore.

Liam Burke

Great. Thanks, Richard.

Richard Tyrrell

Thank you, Liam.

Operator

We have our next question coming from the line of Peter Hogan from ABG. Please go ahead.

Peter Hogan

Yes, good afternoon, guys. Going back to the [Multiple Speakers] years of the new builds. And we — at least myself, speaking for myself, I was expecting those to be fixed by now. And now there are not. So I’m wondering to what extent is it now becomes an opportunity to fix them short term and probably then with the fixture not to be expected until sort of the summer of 2024. Is that an option at all? Or are you still more or less solely looking at the opportunity to fix long-term?

Richard Tyrrell

No. I mean we’d look at short term and long term. It’s sort of a matter of rates. I mean the nice thing that about CoolCo is that we have some flexibility there. We’re not dependent on long-term contracts in the same way that certain infrastructure players are. And that can enable us to do something a little bit shorter term at better levels. So we’re absolutely looking at both.

As I commented on, there was a short-term deal, a five-year deal that didn’t quite fit our delivery schedule. But we could end up quite easily doing that kind of deal. But equally, there are still longer-term deals out there. It has been a bit quieter than I might have expected. But as I said, we are next up for anyone needing a ship basically between now and the end of 2025.

Peter Hogan

Understood. But my question was not so much thinking about five years as short term and more thinking that you could now — or perhaps you could wait until the summer of 2024 and then takes it to one year. So I’m trying to understand to what extent we should now expect the ships to be fixed sort of this winter season or not?

Richard Tyrrell

Yes. I think that would be a very viable plan B. It’s — the only thing I’d say though about that market is that you would be competing against sublets potentially that are allocated to projects that are a little bit delayed. And you might not get the sort of premium you might expect for the shorter-term charter in that market.

Peter Hogan

Okay, okay. So the plan still would be to fix them sooner rather than later, Understood. And finally on the Panama Canal. I’m trying to get my head around what will actually happen if it goes as low as 18 transits per day as the Canal authorities has guided for. So in the case of coming into February with less than 20 transits per day, I presume that some of the LNG ships that would normally do the Panama routes would need to find alternatives. Do you see yourself concrete examples of voyages planned for the start of next year, which could end up doing that? And in any case, do you have any view on how that, in particular, is going to impact quantitatively the market as such?

Richard Tyrrell

Sure. We are seeing examples of ships going around the Cape of Good Hope, when they’re looking to go from the Atlantic Basin into the Pacific Basin, I’d go as far as saying that is the norm today. However, we are still seeing a market where you have a lot of the U.S. volumes going to Europe, call it, 70% or so. And then the Pacific volumes obviously stay in the Pacific Basin. So the number of long hauls is relatively limited. But for those people who want to go from the Atlantic Basin to Pacific Basin, they are, as of now, getting around the Cape of Good Hope as Plan A.

And what does that mean in terms of shipping? Well, it effectively means you need an extra ship per million tons of LNG. If you can go through Panama, you maybe need two ships per million tonnes, if you want to go around or have to go around the Cape, you need to three.

Peter Hogan

Okay. Yes, understood. But to my knowledge, there are still substantial amounts of LNG going through the Canal. So my thinking was, well, if it’s already so that all ships that would need to go around Cape already do that. So that would mean less, sort of, upside than for the scenario in which we would need to reduce the transits through Panama even more. But well, yes, I totally follow you that this is currently already in effect, but the question is from my side, to what extent we should expect the next, say, two to three months to accelerate the number of long hauls from the fact that it’s only container ships left in the Panama Canal?

Richard Tyrrell

It is quite a recent phenomenon. It’s not like we’ve seen this all the way through the quarter. This is something we’ve started to see over the last few weeks.

Peter Hogan

Okay, thank you. That was all from me.

Richard Tyrrell

Thank you, Peter.

Operator

[Operator Instructions] We have our next question coming from the line of Richard Diamond from Castlewood Capital. Please go ahead.

Richard Diamond

Good morning, Richard. I’d like you to help me…

Richard Tyrrell

Hi, Richard.

Richard Diamond

…with my math. If I order a new ship today, it would cost roughly $268 million, and it would deliver in ‘27, ‘28. This is a little bit long, but I’d ask your patience. Based on analyst opinions, CoolCo’s NAV is $1,850, and at today’s premarket price, I can buy a share of CoolCo at a 35% discount to the steel with a sustainable dividend of over 12%. And — do you think my math is correct? And do you think I’m missing anything?

Richard Tyrrell

I think your math is correct, Richard. I mean, of course, you have to make a few adjustments for the generation of ship and so on and so forth. However, if you’re starting off with a ship, which costs well over $260 million you need $100,000 a day to cover your cost of capital. Fundamentally, that’s what the page in the presentation shows. And that’s if you have a relatively low cost of capital. And you can then deduct from that number, the delta that you typically see between a new two stroke and our TFDEs, if you’re talking about those vessels, we do have some two strikes as well, but the TFDEs, you have to adjust. But the delta is about $20,000 a day. So that gets you to 80%. If you look at the contracts we have on these vessels and take a number like that in the tail you get to an NAV which is substantially above what we’re trading.

Richard Diamond

Thank you very much, because the NAV is projecting a very negative outlook. The discount to NAV is projecting a very negative outlook based on everything that I’ve read, it’s not warranted. Thank you.

Richard Tyrrell

Thank you for the question, Richard.

Operator

Thank you. [Operator Instructions] There seems to be no further questions at this time. I’d now like to turn the call back over to Mr. Tyrrell for any final closing comments.

Richard Tyrrell

Thank you, Laura, and thank you, everybody, for joining the call. I’m sure we’ll be in touch with updates before the next quarterly call. But if you miss those or if not, I wish everybody a happy holidays and we’ll be looking to get these ships fixed and reporting back as soon as they are. Many thanks.

Operator

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.