FLEX LNG Ltd. (FLNG) Q3 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Flex LNG Q3 2021 Earnings Presentation. [Operator Instructions] Please be advised today's conference is being recorded at Tuesday, 16th of November 2021. I'd now like to hand the conference over to CEO, Mr. Oystein Kalleklev. Mr. Oystein Kalleklev, please go ahead, sir.

Hi, thanks, thank you. And hi, everyone and welcome to the Flex LNG's third quarter 2021 webcast, I am Oystein Kalleklev, the CEO of Flex LNG management. And I'll be joined today by our CFO, Knut Traaholt who will walk into our Q3 numbers a bit later in the presentation before we conclude with our Q&A session. If you like to ask a question in Q&A session you can either ask a question through your teleconference or you can use the chat function in this webcast. It is getting cold here in Norway so I have a bit of sore throat today. However, it is not COVID but please bear with me. Slide 2 disclaimer we before start the presentation, I will remind you of the disclaimer with regards from among others forward-looking statements, non-GAAP measures and completeness of details. We also recommend that the presentation is held together with the earnings report which we are also releasing today. Okay, so let's begin with the summary the recent highlights. As we noted in our second quarter presentation in August, the LNG market was very tight with elevated prices, and we therefore highlighted the possibility of a blow-out in the market. Even though we are just at the start of the winter season, the market has nevertheless already blow-out with both LNG prices and freight rates booming. We all hear that tight LNG public markets with very high cargo economics should create ample room for Charters to pay premium rates. At the same time, we have argued that there's been disconnect between spot rates and term rates, and that the buoyant share market should create spillover effects for the spot market sentiment. This has certainly played out as we expected, with spot rates are not here since end of September and now hovering around at the all time high levels. We have to [Indiscernible] out this and maintain 30% exposure to the spot market. And thus we are awarded handsomely for in the fourth quarter. At the same time, we have also continued to build a premium backlog with the recent announcement of two new time charters, which start up early next year, which I will cover shortly. All together we have thus fixed eight ships on term charters since April most likely the tally will be nine ships as we expect Cheniere to also declare its fifth optional ship. This means that we are today very well position with 13 state of the art LNG carriers on the water after taking delivery of the last three ships during the first half of the year. Third quarter is thus the first quarter with all ships in field operation. All LNG carrier fleet are fitted with the latest fuel efficient engines, MEGI/XDF and average age of a fleet is only two years. COVID-19 issues are getting less attention in the news media these days but continue to be a challenge in shipping. Approximately three out of four LNG cargoes are ending up in Asia, where restrictions are more prevalent, particularly when it comes to fuel changes. Not withstanding these challenges, we have continued to operate our ships with excellent performance. So once again, thanks to our sea fellow and technical team for a great job. In terms of financials, we are once again delivering according to our guidance; revenues for the quarter were $82 million in line with guidance of approximately $80 million. Our quarterly earnings were $33 million or $32 million if you adjust out approximately $1 million derivative gain which we booked in the quarter. This translates into earnings per share of $0.62 or adjusted earnings of $0.60 per share. We are today also announcing a very attractive sale and leaseback for Flex Volunteer, the vessel was originally financed in the midst of the COVID-19 crisis last year, and we are now taking advantage of better credit markets and improved credit profile of Flex LNG in order to optimize our financing. Knut will cover the details of this financing in the finance section. But the long and short is that we raise $160 million of long-term financing for the ship as an all-in-cost of about 4%. And this will add on more than $38 million to our cash pile, which already stood at $138 million. This will not be our last refinancing as we aim to continue to optimize our balance sheet by opportunistically refinancing some of our existing loans at even better terms than we have today, with the aim of paying $100 million which Knut will also explain in more details. With a very comfortable liquidity situation, healthy earnings, strong outlook and improved earnings visibility. The board had thus decided to lift our dividend level from $0.40 per share to $0.75 per share. This gives all investors our yield of about 14%, which we think should be compelling in this low interest rate environment. Talking about strong outlook, with 30% spot exposure, we all benefiting from improved earnings in the spot market, and are therefore revising our revenue guidance for the fourth quarter from $85 million to $100 million to approximately $110 million. This means we are estimating about $30 million higher revenues in fourth quarter. And given our fixed costs based a dollar increase in revenues are therefore expected to translate into a similar increase in earnings. Hence, we think it makes sense to significantly lift our dividend level given our charter coverage and the positive outlook I mentioned. Lastly, we do see that the new decarbonization rules for shipping are creating business opportunities for us. In 2023, the energy efficiency existing ship index or EEXI and the carbon intensity indicator will come into force. And we do see that more charters are focused on chartering in the new ships when it comes to fleet renewal or growth project. Our theses that new ships will replace old ships are there for coming to fruition. And this we think will create additional opportunity for us to lock in further attractive contract for ships. Yes, so let's touch upon our recent Charter announcement on slide 4. On November 1, we announced two new time charter contract for Flex Courageous and Flex Resolute for a period of minimum three years, with option for two additional two year periods bringing the total to seven years. If both options are declared, the end user as the energy major and the ships will be the level to the Charter in direct continuation of the existing time Charter, which is expected to end in February and March next year. Having worldwide delivery and direct continuation is a variable benefit, particularly at this time of the year as the spot market tends to soften around this time of the year. Week 11 i.e. middle of March has historically been the low point of the spot market. This might result in idle time if you have ships redelivered in this period, as there are also usually a lot of ships coming out of the odd at the start of the year. However, we avoid this risk altogether. With these two new charters we just have three ships going from shorter term time shorter to longer time charters in the end of Q1 next year, with Flex fleet being on the third ships, which will commence a minimum five year charter at about the same time. The right under the two new time charter reflects that the term market has continued to be strong and we are therefore adding additional high margin backlog to our fleet. So with these reason fixtures, we have to bring back the flexecute slide. Since the middle of April, we have just announced a new term contract for ships. As mentioned we expect Cheniere to declare the fifth ship increasing this number to a total of nine ships. In April, we announced the big deal with Cheniere where they have already taken Flex Vigilant, Flex Endeavor and Flex Ranger on time charter with duration of 3 to 3.8 years. Flex Endeavor was originally 3.5 years, but will later again early delivery of the ship which with us longer term period. In the third quarter next year we will take one ship with the option for our fifth ship as mentioned. We are now planning that the fourth and the fifth ship will be Flex Aurora and Flex Volunteer as we have the option of nominating before forming ships for this contract, which have given us some flexibility in pursuing our charter. In May, we booked two ships, Flex Constellation for pumps deliver it to a big trading house for a period of three years with option for another three years and Flex Freedom as I mentioned going to our portfolio player for a minimum five year period during first quarter next year. And lastly, Flex Courageous, Fled Resolute which we recently announced being fixed with energy major for a minimum period of three years. Another slide, which we had to bring back, was the sold out slide. This we previously used three years ago when we booked our fourth quarter at TCE of about $95,000. This is on the level where we also expect the TCE number to be for the fourth quarter this year. But we now managed to do so with 30% spot exposure versus 50% in Q4, 2018. As you can see, the backlog is solid when we started the year we only had one ship on time charter with a longer duration than one year. But we have as mentioned on previous slide, utilize a strong market to add significant backlog during the year. The contracts for the first eight ship sales from Flex Freedom to Flex Resolute already covered in the previous slide. What I would highlight is that several of the ships are coming of shorter time charters and are commencing longer term charters with higher earnings. So we are thus revising our portfolio at better levels for longer periods i.e. stronger for longer. Flex Rainbow is currently nearing the end of 12 months time charter and the charter has the option to extend for another 12 months at a rate substantially higher than the initial 12 months term period. As highlighted already, we have kept 30% exposure to the spot market with four of our ships. This is Flex Volunteer which is trading in the spot market and which is now book to end of December or early January. We are now planning for Flex Volunteer to be the fifth ship under the Cheniere contract. So we will pay during the spot or potentially lay on a multimode compact in the interim period. Additionally, we have three ships on variable hire contracts. This means the earnings are linked to the general spot market earnings. We have Flex Artemis, which is on a long term variable hire contract with -- until third quarter of 2025 with options for another five years. Flex Artemis was the only ship that we are fixed on longer term charter prior to the contract presented on the previous slide and she was fixed on a variable hire contract. While all long term contracts on this year have been on fixed hire contract. Finally, we have Flex Enterprise and Flex Amber which are also on variable hire contracts. In the past we have received a lot of questions about how all variable hire contracts have been structured. But we do hope that the fourth quarter guidance demonstrate that we get substantial upside on earnings under these contracts when the freight market is as hot as today. Slide 6 earnings visibility, I have already covered our backlog extensively. The slide 6 just illustrate how this looks the next couple of years with as mentioned 75% cover next year and not far off that level in 2023. Most of the backlog is not fixed hire but we also have some variable hire backlog despite of their earnings. The residual areas options or vessels which we can trade in the spot market. All-in-all, a balanced and comfortable mix. We think and our backlog stretches well beyond this three year period. So we might have to override this slide next time with a longer period. Dividend, we covered our dividend philosophy in great detail during our second quarter presentation. So I will not repeat all the factors and considerations. However, what I would like to point out is that we use a balanced and measured approach to conclude on appropriate and sustainability of this level with the aim of distributing the free cash flow over the cycle to owners. Such distribution will primarily be through dividends. But we have also utilized share buybacks with about 1 million shares bought back during the last year at very acquisitive levels. As we mentioned in our second quarter presentation, we are chasing green lights and we expect more of the traffic light and we expected more of the traffic lights to turn dark green by third quarter given the improved guidance. The only parameter not being dark green is order considerations. Despite recent progress on vaccine all out in rich economies and successful trials of COVID-19 antiviral pills by Merck and Pfizer, the lockdown which has a proven 89% successful in preventing serious illnesses, there remains some uncertainty which leaves us with a light green color for this factor for the time being. With that upbeat message, I think it's a convenient time for Knut to provide you with some upbeat financial numbers before I will return with market update afterwards.

Thank you, Oystein. And let's turn to slide 9 for the financial highlights. As already mentioned, our TCE earnings for the quarter was $68,300 per day. The $10,500 per day increase is mainly driven by seasonal improvement in the market rates, and the effect of placing in some of the long-term contracts announced in the first half of the year. On operating expenses, we are less impacted by COVID costs this quarter, and OpEx per day came in at $13,000 for the quarter and $13,400 per day for the nine months. That means year-to-date, it's about $500 per day directly related to COVID cost, and we expect to maintain OpEx per day around the year-to-date level. We have then pleased to see that the underlying operating expenses, not the COVID cost remains below the guided level of $13,000 per day. Gross revenues for the quarter came in at $82 million slightly above our guided level of $80 million and revenue increase year-on-year demonstrate the earnings potential of the 13 vessels fleet now fully operational. Adjusted EBITDA was $65 million and adjusted net income $32 million and adjusted earnings per share came in at $0.60 per share. The numbers are adjusted for about $1 million gain on interest rate derivatives which includes unrealized gains of $2.7 million. On the financing, interest expenses are slightly up reflecting third quarter on interest on the debt drawn for Flex Vigilant earlier in Q2. Then moving to a balance sheet which is now plain and straightforward. On the asset side, we have cash of $138 million, and vessels books just shy of $2.4 billion. The quarter-on-quarter cash development will be explained on the next slide. And the only material change since last quarter is the normal depreciation of the vessels. The increase in current assets is related to charter payment of $2.5 million received on the 30th of September, however, recorded on our account and first of October consequently was not qualified at cash on account but working capital. On the liability side we have $1.6 billion of long-term debt from international banks and financial institution. And as a reminder in times of increasing interest rates, we have an interest rate portfolio of $720 million, with a rate that average interests of 1.13% including the existing fixed rate leases, the hedge ratio is 67. And adding the announced fixed rate refinancing for Volunteer the hedge tradeshow will during Q4 increase to 69%, net of termination of interest rate swaps related to the existing Volunteer financing. We, therefore well hedged against possibly higher long-term interest rates. Book equity is $861 million which gives a solid book equity ratio of 34%. Then let's turn to slide 10 and cash flow for the quarter; during the quarter, we are generating about $50 million of free cash flow from operations working capital tend to fluctuate up and down depending on timing of charter hire and all-in-all however we have a negative working capital, although $5.4 million less negative this quarter. During the quarter, we had $27 million in schedule amortizations. And please note that amortizations are higher in Q1 and Q3 due to our Korea export loan that has semi annual installments. We also distributed $23.4 million to shareholders where $2.2 million as share buybacks and $21 million in cash dividend payments. That left us with the comfortable cash position of $138 million at the end of the quarter. Of the closing of the refinancing of the Volunteer, which is expected mid-December, we will further boost our cash balance by approximately $38 million. So let's have a look at the Volunteer refinancing. We announced today that we have signed the agreement for $160 million silent charter back transaction with an Asian base lease provider. The lease has duration of 10 years and further adding length to a depth maturity profile. The transaction is based on market value from brokers of $215 million for Volunteer, and the net amount of $160 million will be booked as long term debt. Of the repayment of the existing financing the transaction frees up $38 million in cash as mentioned. At the maturity and year term, the balloon is $80 million. And that reflects a 20 years repayment profile. And that results in an age adjusted repayment profile of 21 years. They're all in fixed interest rate is for 10 year transaction is attractive at 4%. We have signed the MOA and the Bareboat charter agreement and the remaining is certain customer clauses and conditions. And as mentioned, we expect to conclude this by mid-December. And that takes us to the next slide and our $100 million balance sheet optimization program. The Flex Volunteer is the first transaction under this program. And this is based on our solid backlog of attractive long-term contracts secure during the last nine months, which has increased earnings visibility and derisks the company. We therefore aim to optimize the debt funding with a series of refinancing to reflect the improved credit profile. The original debt funding of the company was done with the purpose of having a flexibility to try vessels in the spot market until the long-term contracts were secured. As now eight vessels possibly nine have been fixed on long- term contracts and three on variable air contract. There is room to further optimize the debt both in terms of size and cost of debt. The target is to free up $100 million, reduce the cost of debt and maintain our industry leading test breakeven level. We have a number of debt facilities that will be considered under the program and looking at the debt profile on the rise, it is likely that the debt maturities for 2024 will be addressed and therefore pushed even further out. The 2025 maturity is related to the commercial tranche under the $629 million ECA facility with KEXIM, where ECI tranches matures later. Hence, we envision that this facility will remain and the commercial file to be refinanced due to the attractive long-term ECI commitment. All-in-all we have a solid funding platform with a supportive lending group with no immediate maturities. And this gives us a room of flexibility to optimize the debt funding which we aim to utilize under this program. So with that, back to you Oystein.

Thank you, Knut. Slide 13, at the start of our market section in our last presentation, the headline was Chimerica dominate in the first half and goal set to accelerate in the second half. Chimerica will set lessons to the two superpowers China and America. That is very much still the case. Particularly on the export side, with more than 60% growth in US exports in 2021 compared to last year. We don't expect US to export close to full nameplate capacity this year without with around 70 million of tons exports. This is 5 million tons higher than the EIA estimate a year ago as they expected about 6 million tons lost due to cancellations while the actual number is about 0.5 million tons. This means US is now on solid base line Australia and Qatar. The reasons for such staggering growth in US exports are two folded. First, the most obvious reason due to the outbreak of the COVID-19 pandemic last year, global gas prices has plummeted, and this made it uneconomically to export US flexible volumes and were therefore for the first time ever also a wave of commercial called cancellation outside of the winter season, with a total of approximately 180 cargoes being cancelled. This year there have been no commercial cancellations, all route have been reported a total of seven cargoes cancel five due to the Big Freeze in Texas and two cargoes in January due to lack of available ships given the tight market at the time. Avoidance of cancellation does add about 13 million tons in US exports. The second reason is a ramp up of new exports capacity, which was commissioned last year or during 2021 which adds about 9 million tons. In our Q2 presentation in August, we showed that export growth in the first half of the year was 4%. But we estimated that export growth in the second half would accelerate to about 10%, thus resulting in our overall goal of about 7%. We all know spot on the 7% estimate with two months to go. Although growth for the remaining two months will normalize at a slower pace, as there were very few cargo cancellations in these two months last year. Australia is on track to surpass Qatar this year as the biggest exporter for the first time. Australia has a higher nameplate capacity than Qatar with about 86 million tons capacity versus 77 million tonne in Qatar. That supply outages at facilities like Gorgon and Toulouse have in the past assaulted in Australia trenching below its rate. Eventually, however, Qatar will rise to the top again with a huge 49 million ton expansion project. In our Q3, 2020 presentation a year ago, we presented what was then an extremely bullish forecast for 2021 export goals with estimates of 24 million ton goal, I say extremely bullish as -- estimate at the time were 8 million tons in 2021. While furnace base case was 15 million ton. We all know on in fact about 20 million tons in 2021. The main reason for the shortfall versus our estimate is feed gas issues in Trinidad, Tobago and Nigeria, which is knocking off 3 million tons of export for both countries. Extended out to just for the Melkoya LNG plant in Norway is also contributing negatively. Egypt has however, bounced back strongly as we forecast a year ago with 5 million tonne gold so far this year. So let's then have a look at the other side of the export equation, imports. As I alluded to in the previous slide, China is the biggest growth market by end of October; China has grown their imports by 10 million tons compared to October last year. This is a growth factor of 18% in a company with still quite a lot of COVID-19 restriction given the zero tolerance policy. This means that China has now surpassed Japan as the world's largest LNG importer. LNG demand in South Korea has also been strong with an impressive 19% Gold, adding 6 million tons compared to October 2020. There are two other outliers, the first being Brazil, which has grown its imports by a staggering 350% going from just 1.4 million tonnes to 6.2 million tonnes. The high import growth in Brazil is caused by drought affecting hydro balances adversely due to --. The other outlier is Europe, where imports have declined by 12%. This is not due to energy demand being soft in Europe, as evidenced by the energy crisis and core for Putin to encase Russian pipeline exports. The reason is, firstly, that European imports were very high in 2020 as European buyers were able to take advantage of low gas prices and buy gas at rock bottom prices for storage. The second reason is that there has been fierce global competition for scarce LNG and all the companies have been willing to pay a higher price and thus value of thing LNG from Europe. An example of this is China on September 30, ordering the state owned energy companies to do whatever it takes to secure fuel. This brought back memories to the euro crisis in 2012 when Mario Draghi coned the European bond markets with the three famous word and similar words, whatever it takes, the result of Europe not being able to source enough LNG cargo is that inventories in Europe are well below the normal levels, with inventory levels of around 75% versus 94% last year. Another cold winter in Europe can thus result in rapid depletion of gas inventories, high volatility in gas prices and very low gas inventories at the end of the heating season, which will take a big drive for restocking over the summer of 2022. We do see this bang out today, with European gas prices surging due to delay in approval process of -- hence the gas markets will remain tight. And this is reflected in high gas prices both spot and future prices as I recover on the next few slides. So before diving into gas prices, let's step back and digest how elevated prices have become. Spot LNG prices in Asia have come down from the peaks in October but remained at high level with the current price per million Btu of around $30, as there are 5.8 million Btu in a barrel of oil. This means that spot LNG is at approximately $180 per barrel, more than twice the price of oil despite oil prices also being at such elevated prices that President Biden is urging OPEC and particularly the Saudis to increase exports in order to get petrol prices down in the US. However, it's fair to say that the price of natural gas varies greatly depending on location, as I will show on the next slide. As mentioned, the price of gas depends on where you are. This simplistic was illustrating this fact. Today, the price of natural gas in US, measured by Henry Hub is about $5. A large LNG cargo does have a value of about $20 million in the US or $23 million if we add 15% on top of Henry Hub for liquefaction. In addition, there is also a tolling cost of $2 to $3 per MMBtu. These are however, in the short term same cost for buyers. In Europe, which imports about 20% of all cargoes, natural gas prices are at about $25, giving a value of a large cargo of about $100 million. In Asia, which is the main import region with about 75% market share, the LNG price is as mentioned about $30 giving a cargo value of $120 million. The average cost spend are thus very attractive, and the trader would prefer shipping the cargoes to Asia, where the cargo values and arbitrage profits are the highest. As you can see, the farther you need to ship the cargo from the US, the higher the LNG price, shipping distance is longer and shipping is today high costly, particularly with the Panama congestion. Please note that these prices are from Friday, November 12. And given the uproar in the gas market this week with regards to North -- prices are no even higher. Slide 15 with the Python mix I explained it might not come as a surprise that inter base in trade I export from the Atlantic basin to the Pacific basin is up by a lot this year. By end of October, it's up by a whopping 48% as cargoes has to be shipped longer, ton mileage is therefore also up by an impressive 18% ton mile goal has been very supportive of freight demand so no wonder that the shipping market is tight. This happened despite most industry expert this year, predicting a big surplus of ships given the approximately 55 new building deliveries this year, which is a lot compared to recent years, but also when we look into 2022 and 2023 when we have on average about 30 ships set for delivery. Slide 18 gas prices. And this graph shows the gas prices measured by the local US gas price, Henry Hub, the Northwest European gas price TTF, the Asian spot price JKM and the dotted line representing LNG applies towards oil with about 25% discount, which is typical contract price for LNG and the long term oil link contracts. Since our second quarter presentation in August, the gas prices have been on -- with the Asian spot price JKM hitting an all time high of $56 on October 6, before falling back to $36 the next day after President of Putin of Russia talks on the European gas prices with promises of increased Russian pipeline flows. However, so far the supplies response from Russia has been muted, so gas prices continue to stay at very elevated levels, also reflecting the fact that the cold winter can result in a quick rundown of inventories. So the market is definitely balancing on a tightrope. Looking forward, we do see that the futures markets continue to supply gas at very high levels throughout 2022, which makes sense given the restocking which will probably be needed next year. However, we do see a slow and gradual normalization of prices by middle of 2023 when they are converging towards the typical oil link, LNG price, so while gas prices are now a bit too hot for comfort, which cave some demand destruction, we are converging towards more normalized levels. Slide 19, turning to slide 19 and finally, we can talk about the spot market for freight. As you can see from the slide, the spot market is booming. Vessel availability remains very tight with Clarksons quoting just one ship available pump and this is a steam turbine. Next 14 days they have no ships coming open, and then they have one time fuel ships available within the window 15 to 28 days. And then finally to stock of MEGI/XDF being flexible and they're opening the window after 29 days with the cargo economics we are seeing and the arbitrage spread, we are therefore seeing our varied term spot market. The rate presented here is the freight assessment for alternative routes by Baltic Exchange and Spark on November 12. Both Baltic and Spark have released fresh numbers today, which are even higher. Spark is work by an average of $19,000 while the Baltic LNG rates are up by an average of about $15,000. Please note that these rates are time charter equivalent earnings or TCE numbers, which includes positioning and ballad bonus. As I have explained in the past ballad bonus can vary greatly depending on the market. Today bylaws bonus is considerably more favorable than just on the basis. This means earnings are typically higher than headlines --. As LNG is more expensive than fuel oil, as I previously shown you the Baltic LNG rates of around $280,000 to $340,000 depending on route for high fuel in fuel mode. In LNG mode, Baltic LNG rates are assessed to $235,000 to $290,000 per day. The Spark rates are in line with this, but you should be aware that Spark add an approximately $60,000 premium for MEGI/XDF ships as these are more fuel efficient, and can transport a larger cargo than a standard 160,000 cubic high fuel ships. Okay, slide 20. And let's have a look at the forward spot earnings expectations. The forward facing agreement market or just FFA is a forward market for freight. And this is becoming more liquid and mature also in LNG shipping. The benchmark ship for this contract is also 160,000 cubic hydrogen. As we can see from this graph, we do expect the freight markets continue to act seasonally as in the past. Right now the freight market is hot, but we do expect it to calm down during Q1 next year. All out, it's fair to say that the Q1 FFA at $125,000 per day is a pretty good level. Second quarter which is usually the softest quarter is at $70,000 while third quarter is slightly higher at $75,000. Fourth quarter is as we know from the past anybody's guess, but at least the market is pricing this at $110,000 today. Altogether, this averaged out at $95,000 and keep in mind, these rates are for high fuel ship, which is typically about 10 years old. So if there were FFA market for new MEGI/XDF ships, these rates would certainly be at a substantial premium to this level, which is also evident from the term market, which I will cover on the next slide. So last slide before we conclude, the long term market, one year time charter rate which is the best proxy for future earnings in the spot market has also been not here for the last 4,5, 6 months. For most of transit, the one year TC rate were hovering around $60,000 per day And this was also the case at the start of 2021. That was until the market sentiment abruptly turned more positive in April. This is also the reason why we did not lock in any ships on term contracts prior to the market shifting except for Flex Artemis but this was as mentioned, a ship we fixed on a variable contract link to the spot market. Since April, the one year time charter rate has doubled. The one year time charter rate for more than tonnage -- is currently $125,000 per day. The firm one year time shorter rate is also pushing up longer term chart rate with Affinity quoting three year time charter rates at close to $100,000 per day, which is maybe not too surprising as the odds are running low on 2025 delivery slots. At the same time, new billing prices have been moving steadily upwards closer to $210 million, which means new building also new buildings are also requiring higher rates than was the case 12 months ago. We have a minimum of pay ships for redelivery within the end of 2024 with two ships possibly coming open depending on option. So we think we will be well positioned to fix the ships on attractive employment given the lack of available modern ships in this window. So that's all let's briefly summarize today's presentation; revenues for the third quarter, $82 million in line with guidance, we have hiked our Q4 revenue guidance from $85 million to $100 million to about $110 million reflecting super strong spot earnings on all four ships exposed to the spot market. We have successfully continued to build high quality effective backlog, but maintaining spot exposure to spice up our earnings. And this enables us to almost double our dividends from $0.40 to $0.75, which provides all investors an attractive 14% annualized yield and this is also a dividend level we are comfortable with. As you are probably already picked up, outlook remains positive both shorter and longer term and finally, our balance sheet just keeps getting better with an attractive newer sale and leaseback which will grow our already big cash pile to new heights. So that's it from us. I'm happy to take some questions. So let's open for questions from the operator. Thank you.

[Operator Instructions] : :

No questions that came in over the phone, sir. Please continue.

Okay, thank you. I guess you are all just kind to me since I have this sore throat. And not dragging out to me on long Q&A session. So I appreciate that. Thank you for listening in and we will be back with our Q4 numbers in the middle of February. I expect. So thank you everybody and have a good day.

Thank you. This concludes our conference today. Thank you all for participating. You may all disconnect. Have a good day everyone and stay safe.