Frontline Ltd. (FRO) Q4 2022 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Fourth Quarter 2022 Frontline PLC Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Lars Barstad. Please go ahead.

Thank you. Dear all, thank you for tuning into Frontline's fourth quarter earnings call. I know it's been a busy day for at least, those of you who are analysts. It's quite a few companies reporting today. I have feeling some of the questions in the upcoming Q&A will be focused on the termination of the combination agreement with Euronav, but let's for now, focus on Frontline and the small key markets we've had in the fourth quarter. Although the implications of Russia's invasion of Ukraine caused most of the headlines, we believe, from a tanker market perspective, China was the catalyst to Frontline posting the best quarterly result in over 14 years. We finally fired on all cylinders throughout the quarter and our lean and mean business model [indiscernible]. Let's quickly look at our TCE numbers on Slide 3 in the deck. In the third quarter Frontline achieved $63,200 per day on our VLCC fleet, $57,900 per day on our Suezmax fleet and $58,800 per day from our LR2/Aframax fleet. And finally, the inverted earnings relationship between our segments, we're at least temporarily reversed. So far in the first quarter of 2022, we have booked 87% of our VLCC days at $58,300 per day, 77% of our Suezmax days at the cool $72,400 per day and 68% of our LR2/Aframax days at a solid $63,900 per day. Again, all these numbers in the table are on the load to discharge basis and they will be affected by the amount of ballast days we end up having at the end of Q1. Before I give the word to Inger, let's just quickly jump to slide four in the deck. I'll repeat a few key points from the Frontline fleet composition. Frontline continues to hold one of the most efficient fleets in the industry and our diversification has proven profitable for all our shareholders during 2022. Scrubber spreads continue to incentivize investments hovering north of $200 per metric ton, and we are installing scrubbers on two additional wheels [technical difficulty] only two of these left without a scrubber. The average age of our fleet is a comfortable five years Frontline is well positioned in CRI terms and also for the upcoming EU ETS considerations. I will now let Inger take you through the financial highlights.

Thank you, Lars. And good morning and good afternoon, ladies and gentlemen. Then, let's turn to Slide 5. In the fourth quarter, we achieved total operating revenues of $353 million and we had an adjusted EBITDA of $287 million. We came in at the net income of $240 million, which is the highest quarterly net income we have had since 2008, then we had an adjusted net income of $215.5 million, the adjusted net income in the fourth quarter increased by $133 million compared with the previous quarter and that was mainly driven by an increase in our time charter equivalent earnings due to the higher TCE rates that Lars went through earlier in the presentation. This was partially offset by a general increase in expenses. We declared a cash dividend for the third quarter of $0.30 and for the fourth quarter of $0.77, and the fourth quarter dividend gives a direct return of 17% on the share. As of December 31, 2022, we have revised the estimated useful life for our vessels from 25 years to 20 years, which is expected to increase depreciation expense by approximately $59 million 2023. Then, let's take a look at Slide 6, the balance sheet. Total balance sheet numbers have increased with $227 million in this quarter, and the main drivers are delivery of Front Gaula, revaluation gain on the Euronav shares, increase in working capital and also the net income that we earned in the fourth quarter. As of December 31, 2022, Frontline had $556 million in cash and cash equivalents, including undrawn amounts under our senior unsecured loan facility, marketable securities and minimum cash requirements. Then, let's move to Slide 7. And let's take a look at cash flow potential. We estimate average cash cost breakeven rates for 2023 of approximately $27,000 for VLCC, $21,500 for Suezmaxes, and $17,600 per day for LR2 tankers, with a fleet average estimate of about $22,300 per day. This average estimate includes start-up of two vessels and one LR2 tanker in 2023 all in the first quarter. With respect to operating expenses, we recorded $8,800 per day for VLCC, $17,600 for Suezmax and $8,700 for LR2 tankers and we dry-docked two vessels in the fourth quarter that was one VLCC and one LR2 tanker. Looking at the right-hand side, on the side, we showed free cash growth in millions and per share after debt service basis currently and [indiscernible] a day. If we look at assumed CTC rates of $75,000 per day with five-year historic spread to be received for Suezmax and LR2 tankers, the annual fee cash potential will be more than $1.4 billion or $6.46 per share. And with that, I think I'll leave the word to you again, Lars.

Thank you, Inger. We are in kind of a market where the potential is substantial. If you move to Slide 8 and its recap what happened in Q4 in the tanker markets have the title here sneak peek of what's to come. I think it's probably not a secret that we are tremendously bullish for the next couple of years. And during the quarter, all segments from fund operates performed. it was finally the turn for the VLCCs to shine. The average weighted market earnings for tankers are actually flirting with 2004 highs. So you see in this -- in the chart below on the left hand side with the yellow column. And I think kind of in general, the market hasn't recognized how substantial Q4 ended up being and why -- this is the average weighted earnings for all tankers and obviously what's happening on MRs, on LR1s, LR2s, FRS and VLCCs together, has made this possible. We are in the market conditions where it's not only the VLCC outperforming is basically all segments performing. Chinese imports are back above pre-COVID levels hovering around 10 million barrels per day and the VLCC shipments to China are actually at all time high. And I would like to say the big ships are back. During Q4, we saw the G7 crude oil price cap come into effect on December 6, we have seen already a lot of crude oil and fuel oil being redirected to -- around Europe to Asia and Middle East predominantly. So the effect of the 5 December cap was somewhat muted. We also need to keep in the back of our head that during to a mild winter in the northern hemisphere, oil prices were also hovering below or around $80 per day, making Russian crude comfortably price below the price cap. Let's move to Slide 9 and look at what we believe is the three major themes as we embark on again upcycle. First is oil demand. As long as we have oil prices in the area where we are now hovering $80 to $90 per barrel, we believe oil demand will continue to be fairly strong. If you look at the chart at the bottom left, this is from EIA is kind of confused -- it's not a confusing shot, it goes in one direction, but it shows a lot of volatility going forward. But by the end of 2024, EIA expects global oil consumption to be more than 4 million barrels per day higher than where we are now. Asia, in particular, China, is expected to be the key driver as China is returning from COVID lockdowns. The second big part of this equation is obviously fleet supply. Total tanker fleet growth is set to turn negative during 2024. This has not been seen since 2002 and if you look at the middle chart below, you'll see the columns for the various years of growth. And as we kind of go through 2023, we expect to have about 3% growth in the total fleet of tankers globally that will be reduced to 1% in 2024 and it will actually turn negative during the year. And in 2025, the overall fleet is expected to reduce by 1%. A change in trade dynamics may actually accelerate this. Right now, 12% of the tanker fleet is above 20 years. We've had very limited scrapping and ships are in fact trading kind of beyond their expected lifespan. So obviously, any regulatory changes or any initiatives in this respect could accelerate the fleet reduction. World Seaborne Trade, this is the bottom right-hand graph is expected to grow by 6% to 7% annually over the next two years. This is a function of the key demand centers being in Asia and key production growth coming out of US and Latin America, predominantly. The overall order book stands at 5% or actually slightly below and now we're looking at delivery windows in 2026. Let's move to Slide 10 and look at a bit further on the order books. During last year, we have the lowest contracting activity in decades. If you look at the graph on the top left-hand side, you will not find one column since 1996 and this is the history I actually have available that is lower than the sum of around 7 million deadweight tonnes that was contracted in 2022. And as we go into 2023, the activity continues to be limited. If you look at our VLCC fleet isolated, there are now during 2023 will have a 112 VLCCs passing 20 years. That will be 13.2% of the entire fleet. The order book stands at 28 units and that represents 3.3% of the existing fleet. If we look at the Suezmaxes, this is even more pronounced. By the end of 2023, 85 vessels will be above 20 years. That's -- it represents 14.5% of the fleet. The order book is at a modest 10 vessels and that represents 1.7% of the fleet. The LR2 market, it's a bit more balanced, there's a few more ships on order but they have the same age profile. So about 400 LR2s in the world, 25 will turn 20 during 2023, that represents about 6% of the fleet. The order book is currently at 51, that represent 12.8% of the fleet. A point that I made before on the LR2 is that effective kind of age of an LR2 start to or the effectiveness of trading an LR2 starts to be reduced after it 15 years due to quite a few charters limiting their chartering activity for vessels that go beyond the 15-year threshold. If we then move to Slide 11 and we're going to look at some of the key exporting regions and what the states -- what kind of the market is. I mentioned earlier that the three major themes are with the oil demand fleet supply and distances. But in order for demand to be kind of sufficient supply we need production as well. World crude oil exports are now back to pre-COVID levels finally. We're hovering about 42 million barrels per day of ocean-going volumes. That's just north of 40% of global oil production. West Africa continues to struggle but saw a modest improvement in the fourth quarter. Latin America is becoming an increasingly important export region in particular Brazil and recently Guyana are the keys for growth. Russian exports are surprisingly resilient and exports are back to pre-invasion levels. I think some of the statistics there may be colored by kind of increased exports ahead of the 5 December price cap, but still Russia still seems to find a home for its Crude. U.S. exports continue to be firm and we're particularly surprised after the SPR release stopped during November in or more or less stopped during November last year. US continues to be the region where we will see production increases and over the next couple of years you as the loan will actually represents close to 80% of new foil coming online globally. Then if we move to Slide 12 and go through the summary. So Frontline reported the highest quarterly net income since 2008, a cool $240 million. Our cash dividend, which is obviously the combination of Q3 and Q4 is the $1.07. We took delivery of the three remaining VLCC new buildings from Hyundai and sold one VLCC and one Suezmaxes both 2009 builds. As far as we see it, China took center stage in the fourth quarter and imports in China -- to China are back to pre-COVID levels. Oil demand continued to recover. There is a limited fleet supply and an increasing ton-mile demand are the key drivers for the years to come. We continue to believe that Frontline's efficient and transparent business model will generate shareholder returns. And with that, I would like to open up for questions.

[Operator Instructions] Now we're going to take our first question and it comes from the line of Omar Nokta from Jefferies. Your line is open. Please ask your question.

Thank you. Thanks, Lars. Thanks, Inger, for the update. Clearly, a lot of positive themes developing here, you touched here on the last slide Lars about the new building for our brand now being officially complete with the delivery of these final 3 VLCCs, you did sell a couple of older tankers the Suez and the APRA, what are you thinking about Frontline's fleet here strategically as we move forward Asset large scale M&A. How do you think about the fleet from here, the first time in many years. I would say that you don't have an order book. If you look to sell more ships in this market, do you replace the ones you sold? How are you thinking about that?

It's a very good and timely question. What we have -- are observing is that asset prices are moving a bit ahead of the markets to defend investing in say, a new build look at the VLCCs you need closer to $50,000 per day of earnings consistently for the next 20 years to make 15% to 20% return on the investment. So we feel that asset prices have moved maybe ahead of time charter rates and spot rates. So we don't really have -- we're not comfortable and also secondly, due to the lead time to receive a new building, you probably wouldn't get it until 2026. We have 2.5 years there of substantial kind of asset-price risk should something happen to this market. On the retail side, the prices continue to be elevated. And again, the spot TC market doesn't give us the returns we're looking for. So it's -- and then again, we have some assets in our portfolio, but they're probably we should consider selling due to the high kind of asset prices. The thing is that the earnings potential remains so high on this kind of more mature assets to call it -- that's -- we are a bit split the mines. Are we just going to continue and harvest and keep these units on as long as they make a lot of money or are we going to take kind of use opportunity here at elevated asset prices and take your profit on these assets. All our assets are actually fairly okay from a CRM perspective. So we're not too nervous about that, but I think kind of the question you raising here is probably the question most ship owners are asking themselves.

Yes, that's an interesting one. Yes. Lots of different ways to look at this. But expensive as you mentioned, the return profile needed. So on new buildings at least. So then maybe as you kind of hinted at early on in the call about the discussion of the combination with Euronav to the extent you can say anything about this. But clearly there are a lot changed here over the past several months. When it comes to Euronav, for instance, can you envision revisiting that combination or that merger if for somehow CMB were no longer either involved or are no longer an obstacle? Just simply wanted to know as you think about the termination of the agreement with Euronav, is that just simply specifically because of the CMB situation or is there something else?

Okay. The last part first, which basically are probably answers the first question or first part of your question. So it was not only the CMB blocking position that triggered the termination, there were also certain legal requirements that were in place. So, I think kind of the blocking position was one of the major reasons our Board decided to terminate, but there were other factors -- legal factors in play as well. As it is right now, a combination of Euronav is off the table. But obviously, there could be a scenario in the future where that discussion comes up again. But as it is right now, there has been absolutely no discussions with Euronav since the termination in this respect. It is firmly off the table.

Got it. Well, thanks for that color, Lars. I appreciate the time. I'll turn it over.

Thank you.

Thank you. Now, I'm going to take our next question. And the question comes from the line of Jon Chappell from Evercore ISI. Your line is open, please ask your question.

Thank you. Good afternoon. Apologies for the miniature of this question, but it's pretty important. So your dividend policy were back to paying dividends. And I think with the ruling on February 7 kind of all-in costs are off, you can do whatever you want to do with your cash. If we look at the third quarter and the fourth quarter distribution based on adjusted earnings, it looks like about an 80% payout ratio. So the first thing I wanted to do was confirm if there is a -- an actual payout policy that we can model to 70% -- 80% of adjusted earnings. And then the second part of it is this depreciation reset that you're doing when you're adding $59 million in annual depreciation. That's not cash but it is earnings. So does that mean that the payout would be potentially pegged to cash as opposed to EPS going forward because of this DNA reset?

Let's take the first, first. There is actually an offset payout policy install -- if that's what you mean. But I guess you can use 80% that we have been paying now for the last quarter, that's a good guesstimate. But obviously, it will be the Board that will decide that's going forward. With respect to the depreciation policy, I wasn't sure I got your question but could you please repeat?

Yes, sure. So if your payout policy is based off of net income, adding $59 million of depreciation, it's pretty meaningful. It's over 50.

It means that probably $0.05, $0.06 a quarter NOI, it's not more than that. Hello?

I think we lost you there, Jon.

We believe so.

Thank you. Now we'll go and take our next question. And the next question comes from the line of Amit Mehrotra from Deutsche Bank. Your line is open, please ask your question.

Hi, everyone, this is Chris Robertson on for Amit. Thanks for taking our questions.

Hello.

Hi, Chris.

Hi. You spent quite a bit of time here in the presentation talking about the older and the fleet. And I think it's an important question moving forward. So in your minds, the owners with vessels over 20 years of age, do you think that they're simply going to ride out this current cycle and then exit the market or do you think these owners will engage in fleet replacement ordering at some point in the future. So I guess in other words, how much of the older end of the fleet is likely to get replaced at some point versus simply just going away forever?

Yes, that's again a very good question. I think if we start with the older portion of the fleet, we have two brackets of fleets. We have the absolute dark fleet, the one who have gone completely wrong and the trade Benecel and an Iranian crude, that's basically is a fairly large portion of the 20-year-plus fleet, they are probably not going to reinvest in modern tonnage at any point in time. They're probably just going to ride these assets as long as they float. Then we have the more kind of mature ships if you probably hovering around 17.5 years, which we now tend to call the gray fleet. A large portion of this fleet is currently being engaged in trading of Russian crude and products. Again, I think the same goes for this fleet as well. I -- in the future, where hopefully there's peace in Ukraine and the trading patterns normalize, I would envision some of these owners just exiting the market altogether and probably not doing much of replacements. So I think kind of where you're going to see the replacement activity is with normal comply and shipowners as ourselves as assets come to age and we are in the industry for the long run meaning that we're actually going to be here for the next 20 years as well. And so it's going to be active like ourselves that are probably going to make us the order book at some point. But again back to Omar's question in the beginning here, we need the economics to work to make that financial decision and you could say that we've had inflation on asset prices where the inflation on wages actually certain countries struggle to even get workers into the yards. So -- but what we really need now is inflation on rates because the rates are simply not high enough to defend that investment at this point.

Okay. That leads them to have an important follow-up question I think. You mentioned the yards here and the labor shortages. So my understanding and correct me if I'm wrong, is that the limitations on shipbuilding capacity at the moment is more to do with the lack of specialized labor then it has to do with a lack of infrastructure. So, in your mind, what is the likelihood that certain governments either engage in stimulus or try to revitalize their shipbuilding industries or try to incentivize training of labor as that could help kind of offset that in the future?

I think that's very likely. And particularly in China, it's net short hydrocarbons. In general, they have a huge incentive kind of from a government side to try and revitalize the shipbuilding industry. And actually we're already seeing that a couple of yards in China that are kind of getting back online again to obviously to a modest degree at this stage. But if you look at orders that can be placed in 2025, these are predominantly Chinese yards. For Japan, it's a structural issue, I just learned that the average age of Japanese shipyard worker is 67 years. I'm only 62 myself, but I want to know how much steel you want to cut when you reached 60. So on Korea, extremely efficient high technology, they actually have a higher margin building LNG carriers for VLCCs or even container ships,so it's a difficult -- I can't really give you a straight answer, just the color I just gave.

That's a really interesting color. Thanks for that. Lars. I'll turn it over.

Thank you. Now I'm going to take our next question. And the next question comes the line of Greg Lewis from BTIG. Your line is open. Please ask your question.

Hi, thank you. And good afternoon and good morning, everybody. Lars, I was hoping you could talk a little bit about the market. And really, I guess some of the questions that we've been having and we've been hearing from investors is -- the market is -- the VLCC market is strong and really some of that strength in the market more recently has come in the face of really lower crude exports out of the Middle East, Saudi Arabia and we can appreciate that China is absolutely importing more crude oil. But I guess we're kind of wondering. Is there a little bit of a zero-sum game in there where if China is importing more just means another Asian producer or Asian consumer is consuming less and really just kind of any color you have around the strength in the market despite OPEC slowly ratcheting down production?

Of course, Greg. Basically what we witnessed during 2022 was obviously it was a smaller segment that started to perform in the MR Segment first, then LR1s, then LR2s, LR2s that were trading there typically end up to trade products that first Aframax demand up. And then Suezmax has started to have a field day on Aframax stem and the VLCC started trading Suezmax stems. You are right in the way that a lot of the demand for VLCCs currently is actually what you typically would call a Suezmax trade US Gulf to UK conference. We've seen large activity and high amount of fixtures where VLCCs are actually stepping in. We also saw at the briefly in Q1 as soon as the West African market for VLCCs started to become a bit shaky the VLCCs were quickly to cap the Suezmax earnings. So to try and make sense of it, I think the situation around boiler being redirected from Russia to -- from going into Europe being redirected to Middle East and Asia, you're basically seeing both Aframaxes and Suezmaxes getting drawn into that trade, limiting the amount of macro ships in those markets in a compliant markets that has given the VLCCs opportunities to enter that market and basically have good returns in that market, too. So it is a bit of the various asset classes eating into each other's business segments. And you're right in saying that for pure kind of traditional VLCC trade that probably isn't enough oil to engage the fleet fully at this point. But it's -- this is going to move back and forth in cycles I believe as we proceed. And I think it was quite encouraging to see where everything bottomed out in the first quarter where we're still very solidly in North of at least our cash breakevens when the market turned.

Okay, great. That's super helpful. And then another question that I think people are wondering around, and I know there's not an easy answer here is around the dark fleet. I mean, clearly, everywhere you read, I guess sanction cargoes are still moving. I guess I'll ask it this way, do we have any sense for how many vessels obviously excluding the Russian flag fleet or the Russian-owned fleet could be -- could potentially be in that market. And really as vessels are in that market, is there any way to kind of gauge what the utilization of those vessels would be in say if I'm trading and I guess dark type fleet, I'm assuming that's less efficient, but kind of any color you have around there. I think would be helpful.

Yes, regretfully, it's going to be a bit of guesswork.

Your guesses are better than mine.

But first I'd like to say that, just with the gray fleet and the fleet trading on Russia, that is still a good quality fleet trading in accordance with IMO rules well-maintained ships and so forth although there may be a bit challenged by age. So I'll kind of leave that aside. On the dark fleet, I've seen estimations of 5% to 6% of the VLCC and Suezmax fleet being engaged in that trade. If you look at efficiency, if you call a compliant modern VLCC 100% I would say these ships are probably a 30%. We've previously modeled the overall VLCC fleet in that manner. Where we would say that over 20-year vessel that as an owner you've never heard off, you would attach to the 30% efficiency to that ship compared to say a dark -- gray fleet Russian trader, who'll probably only get 50%, 60% efficiency out of the ship basically due to the limitations in the compliant market a ship with Russian history have. And thirdly, the modern compliant normal VSCs as we own will then be 100%. And if you do that exercise, you would even see how the fleet growth is -- or rather the fleet is not growing anymore and it's actually the capacity to freight oil globally is being reduced as we go forward. On the Dark fleet, the ones trading listed barrels, I don't think that fleet is growing as much as it did for the last couple of years that is obviously good. The fact that it's also, Gary, it is growing bolder and these are ships that are not being properly maintained. So we're probably getting closer to an environmental disaster at some point here.

Okay. Well, hi, thank you very much for the time and have a great rest of the day.

Thank you.

Thank you. Dear Mr. Jon Chappell from Evercore. [Operator Instructions] I'm going to open the next line. And the question comes from the line of Jon Chappell from Evercore. Your line is open, please ask your questions.

Thank you. Sorry, I don't know what happened there.

We lost you.

Yes, it's probably my fault. Just to revisit that topic again. And I'm sorry. I know it's only $0.07 a share. But I just wanted to know, with the depreciation going up so much, it's going to have an impact on earnings. So Frontline has historically been a dividend payer based off of net income. I was just wondering if that may shift to from free cash flow given the fact that the depreciations changing by so much.

Now, going back to why we have done this, Jon. I mean what we have done in a way is to just re-assess the useful life of our vessels and we believe in a way that 20 years is a more realistic estimate of useful lives than 25 years, so that is why we have done this change. And if you look at many of our peers, they already have 20 years. So this is not only us, in a way, it's a kind of common thing. And what I've said with respect to numbering, if you just divide it by four quarters, you obviously get to that you the number you are using a payout policy of 80% would be about $0.05 per share. So that's what you're talking about.

Okay. Thank you. And then you paid down $60 million of the Hammond facility. I think there is some use of proceeds from those vessels sales. With the cash that you're generating illustratively based off of this year, do you foresee a more aggressive pay down of debt and especially that have a facility just with cash from operations or do you think you need to sell more older tonnage to kind of accelerate that deleveraging?

So we have not made any specific plans of the -- for the repayment of the Hemen facility or the Sterna facility, which is actually it's called. It matures in May 2024 and that's it in a way so, no.

Okay. Well, thanks for letting me back in. Have a great day, guys.

Thank you.

Thank you. Now we're going to take our next question. And the next question comes from the line of Amit Mehrotra from Deutsche Bank. Your line is open. Please ask your question.

Hi, this is Chris Robertson, again, I'm just going to try to sneak in one last question here, it relates to Chinese demand. So there's been impressive demand recovery so far. I guess how much further do you think this can go, just based on post-COVID recovery? And then in the coming years with the new refinery additions that are being added, where do you think that overall Chinese import demand can shake out over the coming 12 months.

I'm not that sure about employee Analysts. I must admit. But we have seen China quite aggressive in periods where they feel that the oil price is discounted and they're preparing kind of for increased demand domestic demand. It's, I believe, the highest we've seen from China is around 13 million barrels per day of imports in a sustained period of time. It's difficult to say what I'm hearing a little bit is that I did allude to some of the oil production growth for oil export growth that we've seen and we're back to pre-COVID levels. China is not back to pre-COVID levels in terms of domestic demand. They actually have a very big and high consuming airline market internally in China. And as we kind of go towards the summer where Europe is going to recover, we're going to go on holiday to store the Americans and so our than the Chinese. I think that's going to be quite exciting considering the fact that the oil production levels are not really higher than what we had and we're missing a couple of years of more and more demand growth, which historically at least has been between 1% and 2% per year. So I do subscribe to those that are quite bullish oil prices in the second half of the year. And I'm a bit worried about how the supply and demand picture is going to look once it's fully up and running again. Obviously, OPEC has spare capacity, so they can still supply China with more barrels. But, yes, I'm looking forward to see how that story evolves. We also need to keep in mind here that although China has imported a lot of volume, they're also exporting a significant amount of products that will obviously stop when domestic demand catches up. So, yes, it's going to be interesting.

Yes, definitely, very interesting. Thank you for that. That's it from me.

Thanks, Steve.

Thank you, Chris.

[Operator Instructions] There are no further questions at this time. And I would like now to hand the conference over to our speaker, Mr. Lars Barstad for closing remarks.

Yes. Thank you very much for -- again for dialing in and listening to our Q4 presentation. Frontline management is always available should you have further questions over the coming weeks. And I would like to obviously thank the Frontline organization for a fantastic result on a fantastic quarter. Thank you.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.