Star Bulk Carriers Corp. (SBLK) Q1 2019 Earnings Report, Transcript and Summary

Thank you for standing by ladies and gentlemen, and welcome to the Star Bulk Carriers Conference Call on the First Quarter 2019 Financial Results. We have with us Mr. Petros Pappas, Chief Executive Officer; Mr. Hamish Norton, President; Mr. Simos Spyrou and Mr. Christos Begleris, Co-Chief Financial Officers of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise the conference is being recorded today. And we now pass the floor to one of your speakers, Mr. Simos Spyrou. Please go ahead, sir.

Thank you, Operator. I am Simos Spyrou, Co-Chief Financial Officer of Star Bulk Carriers, and I would like to welcome you to the Star Bulk Carriers' conference call regarding our financial results for the first quarter of 2019. Before we begin, I kindly ask you to take a moment to read the Safe Harbor statement on slide number two of our presentation. Let us now turn to slide number three of the presentation for a summary of our first quarter 2019 financial highlights. In the three months ending March 31, 2019, TCE revenues amounted to $99 million, 21.3% higher than the $81.6 million for the same period in 2018. Adjusted EBITDA for the first quarter 2019 was $43.9 million versus $46.4 million in the first quarter of 2018. Adjusted net loss for the first quarter amounted to $8.5 million or $0.09 loss per share versus $11.9 million adjusted net income or $0.18 gain per share in Q1 2018. Our time charter equivalent rate during this quarter was $10,624 per day, and if we include the realized profit from freight and bunker hedging, our time charter equivalent rate in Q1 2019 amounted to $11,192 per vessel per day. During the first quarter of 2019, our average daily operating expenses were $4,015 per vessel per day. Since the beginning of the year, we have drawn and agreed to refinance approximately $329 million of debt, reducing the average margin of these facilities by 217 basis points. Over the past nine months, we have agreed to refinance approximately $0.04 billion of debt, creating savings of about $10 million annually in interest expenses, or $250 per vessel per day. Following the share repurchase program announced last November, the company has purchased during 2019, 1,535,322 shares at an average of $7.45 per share, all of which were cancelled and removed from our share capital. In total, we have bought back since November, 1,876,685 shares, and we have spent $14.6 million so far. Currently, we have 91.75 million common shares outstanding. During 2019, we have drawn $22.4 million of scrubber debt with another $112.2 million in place to be drawn at a later stage during the rollout of the program. Pro forma total cash to-date stands at $170 million with zero remaining equity CapEx at this stage. Slide four graphically illustrates the changes in the company's cash balance during the first quarter. There was negative free cash of $20.1 million during the quarter. After including debt proceeds and repayments from our refinancing activities, CapEx payments for our acquisition and scrubber installments, sale proceeds and sale repurchase expenses we arrived at a cash balance of $160.2 million at the end of Q1. Please turn now to slide five, where we summarize our operational performance. Operating expenses were at $4,015 per vessel per day for the quarter. Net cash G&A expenses were at $971 per vessel per day versus $1,101 per vessel per day in the first quarter of 2018, a decrease of 12% year-over-year, primarily attributed to synergies from the increase in the size of our fleet. The combination of our in-house management and the scale of the group enabled us to provide our services at very competitive costs complemented by excellent ship management capabilities with Star Bulk consistently ranked among the top five managers evaluated by Rightship. Slide six highlights that Star Bulk is the lowest-cost operators among our U.S. listed dry bulk peers based on latest publicly available information. Star Bulk's operating expenses are approximately 17% below the industry average. In slide seven and eight, we're providing an update on our scrubber program, which is proceeding as scheduled. Our early decision to equip our fleet with scrubbers enabled Star Bulk to acquire them from experience, high quality European manufacturers, as well as secure best [ph] at major shipyards creating a no lean scrubber packet at competitive costs. 101 of our vessels will be scrubber-fitted during 2019, and we expect to have 40 scrubber towers installed by the end of this month. We expect to have 60 scrubber towers fitted by the end of next month with installations taking place in China and Europe. In order to reduce retrofitting time at the shipyard, we employed 120 specialized technicians that are deployed on both our vessels and complete installations at sea. Total remaining CapEx to date is at approximately $100 million, which will be covered entirely from secured financing. The graph in slide eight illustrates the estimated breakdown of the payments by quarter based on carried forward FX rate and expected milestones. It is important to note that we have secured approximately $135 million of debt financing for the program, which we will be drawing down gradually within 2019. As of today, we have drawn $22.4 million of scrubber debt and have no remaining equity that needs to be invested [ph]. Slide nine illustrates Star Bulk's employment coverage for the second quarter of 2019. We have fixed employment for approximately 76% of the days in the second quarter at average TCE rates slightly above $10,000 per day. I will now pass the floor to our CEO, Petros Pappas, for a market update and his closing remarks.

Thank you, Simos. Please turn to slide 10 for a brief update of supply. During the first quarter of 2019, a total of 8.9 million deadweight was delivered and 2.50 million deadweight were sent to demolition for a $6.4 million net inflow. Demolition activity has now reached 4.8 deadweight, and already stands above the full 2018 scrubbing figure. A total of 9.1 million deadweight has been reported by Clarksons as firm orders this year and up an additional 3 million deadweight have been identified as LOIs or options. The order book currently stands between 11.4% and 12.6% of the fleet depending on how many LOI and options will be exercised, and is approximately 1% below last year's levels. The geared order book stands at just 6.8% of the fleet. The average steaming speed of the dry bulk fleet is at 11.4 knots down 0.3 knots to last year due to combination of relatively low freight rates and the higher HFO price environment. During 2019 and 2020 the fleet is projected to expand at the pace of approximately 2.4%. However due to off-hires related to scrubber installations and tanks cleaning during 2019 as well as slow steaming during 2020 effective supply is unlikely expand by more than 1.5% per annum. Let's now turn to slide 11 for a brief update of demand. During Q1 2019, the dry bulk market was negatively affected by a series of disruptions in iron ore exports owing to Vale's iron ore mine accident and cyclone Veronica in Australia which came on top of additionally weak seasonality during this period. China's coal import restrictions from Australia creates further uncertainty in February and although overall Q1 show Australian coal exports up by 2.6% year-on-year shorter distance coal exports from Indonesia increased by 10.6% year-on-year, mostly to the benefit of smaller sizes and to the detriment of ton miles. During Q1 iron ore exports from Brazil came almost flat compared to last year with March volumes however contracting heavily by 26% year-on-year. Brazil exports continue to under-perform during April down 29.1% and recorded the lowest monthly export figures since January 2012, Australian iron ore exports during Q1 declined by 5.6% year-on-year with March volumes also contracting by 17% year-on-year, nevertheless steel industry fundamentals stand healthy, conforming that the decline experienced are not demand driven, more specifically China's crude steel production increased by 9.1% year-on-year during Q1 and accelerated in April to 11% year-on-year which combined with a slowdown in imports has led to a sharp stocking of iron ore efforts. With steel consumption standing at healthy levels as indicated by the pace of decline of steel inventories further iron ore stocking in Chinese ports might push stock piles at much lower levels over the next month, overall iron ore trade in 2019 is expected to decline with Clarkson projecting minus 1% and minus 2.3% in tons and ton-miles respectively. Coal imports in China during Q1 2019 decreased by 1% year-on-year, February and March underperformed the most after China imposed coal import restrictions, Australia thermal coal prices received strong downward pressures as a result which made them competitive to other destinations. China's total electricity generation during Q1 increased by 6% year-on-year as thermal coal increased by 4% and hydropower accelerated by 11%, nevertheless China's domestic coal output has remained largely flat during the first four months of the year on a series of mine safety inspections which we view as a positive. At the same time, Indian coal imports are estimated to have increased by approximately 20% during Q1 and are projected to remain strong during this fiscal year, Clarkson project coal growth of 1.7% and 1.8% in tons and ton-miles respectively. The U.S. China trade dispute and the imposition of 25% tariffs on U.S. imports by China is taking its toll on soybean trades since Q4 2018. Brazil has partly picked up its slack with its exports increasing by 30.8% and year-on-year during Q1, and while some pressures from the U.S. have been observed, U.S. cargos underperformed compared to last year as indicated by weekly export volumes. Chinese soybean imports declined by 14.4% year-on-year in Q1 with demand having also being affected by the African swine flu outbreak, total grain trade including soybean is projected to increase by 1.7% and 2.7% in tons and ton-miles terms in 2019 after contracting in 2018, according to Clarkson total dry bulk trade is projected to expand by approximately 1.2% during full-year 2019 and to rebound above 3% during 2020. Finally as a general comment, potential inflationary pressures relate to IMO 2020 in our opinion will stimulate early restocking across all dry bulk cargos during the second-half of 2019 as a result we remain optimistic for the end of the year and expect that the combination of lower supply and recovering demand is likely to surprise us to the upside, without taking any more of your time. I will now pass the floor over to the operator to answer any questions you may have.

[Operator Instructions] Your first question is from Ben Nolan from Stifel. Your line is open.

Yes, great. Thanks, guys. My first question relates to -- well, I have a few questions and [indiscernible], so as it relates to the buyback program, obviously you guys are pretty active in the quarter, and quarter with the shares below, now I would suspect that's probably certainly a better use of capital than buying ships, but how do you weigh in sort of preservation of balance sheet making sure that in case the market is slower to recover that you are not overextended, at what point are you -- do you slowdown that buyback program or even close to that?

Well, Ben, it's Hamish Norton. We do not want to debt finance a buyback program, and frankly, we don't want to finance a buyback program with financial on the balance sheet as it exist today. And the buybacks earlier this year were largely financed with the effective proceeds from not buying the Rickmers ships, where we had a quick call arrangement, where we were assuming that Rickmers would either put the ships to us would the commercially compelling to exercise the call option, which would have reduced our cash balances. And in the event, Rickmers choose not to exercise the put option, and we chose not to exercise the call option. And that left us with more cash than we had forecast, and it's essentially equivalent to selling those ships to the put price.

Okay. Okay, so reading through into where we are now, given kind of the state of the market we shouldn't expect you at least in the immediate term to be aggressively buying back shares based on current…

Not unless we finance it with the sale of ships.

Got you. Okay, that's very clear, appreciate that Hamish. And then my next question, I will turn it over, relates to the logistics business, I was just counting that the operating days in the quarter relative to the last quarter, it seem like they were up almost 17% quarter-on-quarter, is that something was opportunistic, or is that logistic side of the business something that you are purposefully growing and expect to continue to grow?

Ben, this business basically is expanding. That's why you saw a higher movement around with six more vessels and that was -- that's all, that's it.

Okay. So that -- then that sort of leads me to the next part of the question I guess, when thinking through that business, are you -- do you have to take that long or short positions, or maybe another way to think about that does this logistics part of the business, does it tend to for you guys and the way you envision it, should it smooth the results, or amplify the results?

Well, the reason we started this is because we want to get into the voyage business. So basically, up to now -- now I think we are already a year -- more than a year and a half doing this business. So, up to now we try to keep a balance -- a balance sheet so that we are not too long or too short. We are basically practicing. And the only time we were not balanced basically was the first quarter of this year where we went short on FFAs because that was partly a hedging tool for us. As I have said in the past, between August and December of every year, we try to hedge the first three to six months of the next year because as we all know, these are the low -- the lower activity quarters. So, through Star Bulk itself through Star Logistics and by fixing physically our vessels on certain periods, we actually went short. So at that time Star Logistics was short. And the result actually you can see from the fact that on average the spot market was something like 7,300 on the three types of vessels that we operated -- operate, but our time charter equivalent was 11,200. So, that is partly due to the hedging that we did including Star Logistics. And it was also partly due to the fact that we over performed also because the market fell obviously.

Right. Okay. And going forward, obviously you hope that this will be added to your earnings, but do you think that it will smooth that curve as it sort of did in the first quarter that's part of the objective I suppose?

Well, it depends. I mean as I said before 2020, we are basically going to be balanced. So, it won't have a major affect on the curve. After 2020, we want to do voyage business, so [technical difficulty].

Hello, I think I might have cut out. Okay, well, if you can still hear me, I appreciate. Thanks guys.

Okay. And your next question is from Noah Parquette from JPMorgan. Your line is now open.

Thanks. I want to ask -- [indiscernible] came and went, and it doesn't look like there will be much development, but I would like hear your thought like the proposal for regulation of speed or speed limits or average speed or what have you, or you think there is a prospect like potential of actually happening, and what timeframe just I would like to hear your thoughts on that proposal?

Ladies and gentlemen, I think we have lost the speaker line of Petros. Please standby whilst I reconnect him. Thank you.

Sorry, Ben. Hello. Operator, can you hear?

You are now back in the room, Petros. Thank you.

Thank you, Ben. Yes. Okay, so…

Yes, hey, it's Noah. I think Ben, we lost you. So -- but yes, I don't know if you heard my question, I was asking about the IMO proposal for the speed regulations and speed limits. What do you thought about that, whether that has any chance of happening?

Well, I'm in favor -- our company is in favor of that proposal, and actually, if you guys remember, we were vocal about it even on the investor calls about two years ago. We're talking about a situation where, if vessels, for example, reduce the speed by 15%, emissions would be reduced by about 30%. And the IMO regulation is talking about a 40% reduction in emissions by 2030. Now, if we could have 30%, within a day, why wouldn't we do it, this would be good, of course, for the environment, and it will be good for shipping as well. And it is very easy to implement. I understand, though, that there were differences of opinion as to how to attain this goal and every country came in with our own view. So I do not think this is something that will happen immediately. But I think that at some point, religion will prevail, and it will, it will pass in one form or another.

And then, I want to ask about the soybean trade, obviously, went to detail on that, and the tariffs have affected it, we've seen a bit of a bounce back from U.S. cargos, I guess what I want to know is what chance is there that normalizes without the tariffs going away, I mean, can China continue this for a good period of time, in terms of, guys from running from Brazil or whatever, but or it's going, we have to wait till the tariffs are reversed?

Well, last year, they did. Of course, this year, we also have the swine flu problem, which puts less pressure on China, because I think that like, between 10% and 20%, of the swine population was called and therefore, there's going to be less need for imports. The soybean, China's soybean inputs are about 1.7% of world trade. So if that was reduced by 10% it would be like 0.17% the World Trade, which would be like 7 million or 8 million tons, every ton counts today. I think that is a trade war continues. China will continue to try to get 3, 4 soybeans from other countries like Brazil and Argentina. The distance there is somewhat longer than it is from the U.S., but I think it will have a slight negative effect overall.

Okay. And then, I just want to ask, I guess modeling question, does it increase in tracking expenses? I know you guys expenses are not amortized, but I think expenses. And I don't think this is the case but just remind me the scrubber expenses will not show up on this line. Right and I guess what caused the increase, is there going to be an increase this year as normal drydocking is incurred along with the scrubbers or just wanting to get an understanding on that?

No, the scrubber expenses basically are capitalized, and will be amortized as of January 1, 2020. We will start amortizing them. The drydock expenses are expensed as we are doing up to now anyhow. So, basically, we will have as an indication about 52 drydocks this year, spread primarily -- mainly during the second and the third quarter of the year. Now, as far as installation of scrubbers are concerned, we have 52 installations during drydocks. And we have 50 installations this year I'm talking about alongside in combination with doing it at sea. So, the ones that we do during drydock basically, they're finished during the date of the normal date of time, the ones we do alongside, they are half of the time is alongside and half of the time is at sea. So we actually operate whilst we're installing them. So we are trying that way to minimize the loss of time that we have. One thing that we've done is that we post all, we brought forward all our drydocks for 2020. And we're doing them in 2019. That way, we don't have to stop our vessels twice. For once for drydock, and once for scrubber installation, that's one thing. And we really don't lose anything because on drydocks they are 5-year cycles. So whatever is due into 2020 would have been done the right upon the third year, we can do the drydock, instead on the second year of the cycle, and we still -- the next drydock will be after 3 years. So we remain within the cycle, we do them earlier, which means of course more expenses this year and more hires. But next year, we have zero drydocks, and hopefully zero scrubber installations, if we stick to a program, which we're doing right now. And we will be able to trade unobstructed for the whole year during the year that we expect to make them much better profits.

Okay. That's helpful. That's all I have. Thanks.

Thank you.

Your next question is from Amit Mehrotra from Deutsche Bank. Your line is open.

Hey, this is Chris on for Amit. So just following up on the IMO meeting, the language was not super clear. But it seems like they're going to evaluate these open scrubbers over the next 2 years and make a decision in 2020. So I guess 1, am I interpreting this correctly and 2 what do you guys think, is the real risk of seeing a potential open scrubber ban in international waters. And then if it is mainly 2021, I'm assuming there would be a grace period before any potential ban would even go into effect?

First of all, we think there is a likelihood of an open loop scrubber ban is very small in international waters. A large majority of the countries that express their opinion on the subject agreed that more research was needed but wanted to make sure that the conclusion of the IMO was based on science and not politics. And the science here is coming out pretty strongly that open loop scrubbers are not in fact a source of pollution of any significance at all. In fact, there was a recent sea Dallas [Ph] study that just came out that concluded that even if you ran an open loop scrubber in port and they did an accumulation study after a year, the level of pollutants would be between zero and 15000 of the European Union limits. So it doesn't appear to be something that is likely due to end up being concerning, but regardless of what happens two things, we think are going to be very helpful. One is the IMO is very slow to move. And it is going to be quite difficult for the IMO to change any substantial regulations around open new scrubbers before 2022. And the second thing is that there does seem to be a very substantial support for brand fathering of scrubbers that were putting in good faith before any change in regulation. So we're pretty optimistic that this is not going to be a serious problem for us.

Okay. Thanks for the color, really helpful. And then just kind of staying on topic of scrubbers, it seems like scrubber penetration for the Capes fleet is wind-up in the 25%, 30% range still the minority of the fleet but definitely a meaningful amount, what level of penetration would you start to worry about maybe other like chip owners competing away some of the fields?

Well, I mean the more scrubbers that are installed the more the savings is in effect competed away, but you may have 25% to 30% scrubber penetration essentially in the Capesize fleet, we don't think that that is going to exist in January of 2020. And I don't know if Nicos Rescos is there, but I think he had some views Chief Operating Officer has some views on the percentage of the safe fleets that are likely to be scrubber-equipped as of January.

Well, we are monitoring carefully what is happening with installations in the Far East mainly, our count is about 800 retrofits on the dry bulk sector, with the way things are growing we believe less than half would be rated by January 1, 2020 and with the remainder coming in throughout the year, so that's our view and we try to update it regularly but we see significant bottlenecks both on the equipment side and on the shipyard side.

Yes, but also one other thing is that even if 50% of the Capes had scrubbers the other 50 would not. So when the charters are looking for a vessel that can do the job as simple as possible, I suppose they would go first for the 50% of the scrubbers Capes and then for the rest. Therefore, we think there is going to be two tiers market. Well, having said that we don't expect there is going to be more than 10% or 15% of the Capes with Scrubbers on the 1st of January and that's even a high number.

Yes, thank you for that. And then I guess just lastly a modeling question, I think you guys said there is 52 dry docks in 2019 mainly in Q2 and Q3. So just for modeling, is it safe to assume that the dry dock expected in these quarters was going to come in above the Q1 level?

Yes. As we said before, we are expecting to have 52 dry docks throughout the year, the cost that we are budgeting overall is about $50 million for the entire year, we have covered about nine to 10 in the first quarter and we have the vast majority of the remaining during Q2 and Q3.

Okay, thank you. That's it from me. Appreciate the time guys.

Thank you.

Your next question is from Eric Cowen from Clarkson [ph]. Your line is open.

Hi guys. So from what we can see guiding on the second part of HD data looks fairly good the market considered. So on the $10,160 per day average rate for the larger vessels, what kind of rates do you guys see on the Newcastlemax compared to the Capes?

Well, today's example is that we have an offer on one new customer of ours, it's still forward today, so $17,500 net on Newcastlemax.

Hello, do we have Eric on line?

It sounds like Eric may have dropped off.

No further questions at this time.

Okay. And with that the operator…

Okay. Our next question is from Randy Giveans from Jefferies. Your line is now open.

Hey, how are you gentlemen. How is it going?

Good, how are you?

Very good, all right. So, few quick questions following up on the scrubbers strategy, you had the 40 vessels that are going to have scrubbers like you said by May, I guess this month, what are you going to kind of do with those in the next few months, are you going to test the technology, are you going to be running the scrubbers so that you maybe don't have to, are you going to test the different high sulfur fuel oils in the coming months. What are your plans for those 40 and then for the remainder, 52 dry docks, 50 SE installations what have you, what's the difference in terms of time and cost savings between those two kind of retrofit options?

The vessels that have already scrubbers installed, we basically run continuously and this is good because that way we see whether there are any small problems that need to be rectified and therefore they are being run. Actually we had installed a scrubber in April 2018, that was our first scrubber and I think it's been running since then. Yes, it's been running since then. What was the second question?

Before I get to the second question, [indiscernible] working good, you are scrubbing it below the 0.5%, no problems there?

Yes, no problems whatsoever.

All right, cool. Follow-up is the dry docks versus at sea installations, what's the difference in terms of time and cost savings between those two retrofit options?

Okay, so the dry docks actually up to now have upgrades taking us 23 days and within those 23 days, we're able to install the scrubbers as well and we've done it every time. On the alternative, where we do preparations and we do it two ways, either we install the scrubber and then we sail and we do all the other works at sea, or we do the works first, the auxiliary works and then we go to port and we install the scrubbers. On average this takes us up to now 16 days. So it's not a matter of economics that much, it is matter where availability of yards. We have booked yards from year and half ago to do that. So we have accessibility but the yards slow pressure right now by everybody that you may go there and have to wait for a few days. So in a way by doing that, we secured the 16 days which 16 days of hire and not more than that and we make the life of the shipyards easier, cost wise it is about the same whether we install the shipyard or we install, we do part of installation at sea, the cost is about the same.

And then for the remaining Newcastlemax's are those coming out of the shipyard with scrubbers and then what's the timing for those last two deliveries?

The last two –- hi, this is Christos. Basically the last two Newcastlemax's, one is coming end of June and the other is coming by July. So the one that is coming out end of June is going directly to shipyard to have the scrubber installed in store, the one is coming out in July we'll have the scrubber installed.

Perfect, all right. And then kind of lastly, obviously news regarding Vale, it's been pretty much all over the place with mines restarting and shutting and other dams possibly on the brink of failure. So all that being said, just trying to get your in-house view on how many million tons of I guess decrease, Vale production or exports is Star Bulk, the guys in that room expecting this year relative to 2018. I know you've quoted card since in their estimate but trying to get your in-house view on that?

Okay. Well, last year's Brazil exported 390 million tons of iron ore or so. Out of that 365 million was Vale and 25 million were other companies. If you remember the Anglo American who was producing between 17 million and 20 million tons of iron ore gets some problems with some pipeline, so they stopped exports at the time. Now Anglo American is back, so let's say that 80 million tons of Vale 365 have been affected, we expect to see the broker do back, the 30 million of broker do back in the next very few months and therefore we expect that there is probably going to be about 45 million to 50 million tons of loss of exports from Vale. However, we will have to add the 20 million of Anglo American, the 10 million of plastic guiro that came into the market this year, and if you look at SB-11 they are going to be increasing Vale as the 11 mine, they will be increasing by about 15 million to 20 million tons. So overall, we expect that the loss is not going to be more than 15 million to 20 million for the whole year but we think that exports will accelerate in the second-half of the year because the demand is there. You can see that from where the price is today, one or two per ton. And one other thing which is interesting is I read that SB-11 which will be producing, which is presently producing about 75 million tons per annum is going to double their export capacity in 2020. So if that happens, I think we're back on the road with Brazil. At the same time, of course Australia is which was affected by the cyclone is now exporting as normal and one good thing has happened with the Vale problems for the market is that they are about 50 VLOCs stuck in Brazil waiting for Vale to load them. And therefore this assists the market.

Well, okay. Well, kind of summing it all up. It seems like supply slowing, lot of vessels coming up for scrapping, retrofits or scrubbers demand and your dimensional strength pretty strong in the back half of the year especially 2020, obviously spot rate is still pretty depressed, capsizes I don't know 12,000 a day, although the four freight agreements in 4Q are closer to 18 and then the time charter rates are still in the mid to high teens. So all that being said, we should have fully equipped scrubbers by the end of this year, for 2020 or maybe even sorry 4Q 2019, do you expect almost full spot exposure or do you want to kind of hedge your beds and lockaways and long-term charters on some of the scrubber equipped vessels?

There are two things we have to think about. First we have to think what the rates are going to be on this scrubber less vessel and second, we have to think of what the differential between heavy fuel oil and gas oil is going to be. So before we start talking about hedging because we could hedge one thing like we could hedge the FFAs for example and we could leave the bunker differential of them or we could do the other –- or we could hedge the bunkers and leave the charter, the FFA, the chartering of vessels often or do a little bit of both. That will depend, I mean, it's still too early to take this decision. Our view is that we're going into a strong market in the second-half of the year and into next year. And depending on what rates we see, we will take our decision. As things are today, I would not hedge for 2020, yes.

Got it. All right, well, hey thank you for the time and that's it from me.

Thank you.

With no further questions at this time, please continue.

No further comments on our side either. Thank you, Operator.

Thank you. That does conclude the conference for today. Thank you all for participating and you may now disconnect.