Eagle Bulk Shipping Inc.

Greetings and welcome to the Eagle Bulk Shipping Third Quarter 2021 Results Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question at that time, please put star then one on your touch-tone telephone. As a reminder, today's conference call is being recorded. I will now turn the call over to Gary Vogel, Chief Executive Officer, and Frank DiCosanzo, Chief Financial Officer of Eagle Bulk Shipping. Mr. Volvo, you may begin.

Thank you, and good morning. I'd like to welcome everyone to Eagle Folks' third quarter 2021 earnings call. To supplement our remarks today, I would encourage participants to access a slide presentation that is available on our website at eagleships.com. Please note that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance are inherently subject to risk and uncertainties. You should not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance, and our financial condition. Our discussion today also includes certain non-GAAP financial measures, including adjusted net income EBITDA, adjusted EBITDA, and TCE. Please refer to the appendix in the presentation and our earnings release filed with the Securities and Exchange Commission for more information concerning non-GAAP financial measures and reconciliation to the most comparable GAAP financial measures. Please now turn to slide six. Tribal freight rates continued to strengthen during the third quarter on the back of robust commodity demand, which was further supported by the ongoing container spillover trade as well as elevated congestion due to the ongoing supply chain bottlenecks and COVID-related port restrictions around the world, but in particular in and around China. The Baltic Supermax Index rose by almost 34% during the quarter to average approximately 34,000, representing a 13-year high. Given our active management approach to trading the fleet and our significant operating leverage, we generated record earnings for the quarter with net income totaling $78 million for $6.12 per share. Not only does this represent the highest net income we have achieved in a single quarter, it also eclipses the company's best ever annual result. Following our recent announcement on the institution of a cash dividend policy equal to a minimum of 30% of EGLE's net income, our board of directors declared a cash dividend based on the third quarter's result of $2 per share. Separately, and as previously reported, we executed on a comprehensive refinancing on October 1st, which has allowed us to significantly simplify our capital structure, lower our interest costs, and extend our bank debt maturity to 2026. Please turn to slide seven. Our record financial results were driven by our ability to improve TCE performance by 35% quarter on quarter, resulting in a net TCE achieved of $29,088. As we've discussed previously, given the rapidly rising market environment we experienced through the third quarter is an inherent lag effect between our TC performance and the BSI as the majority of our fleet is employed on voyages lasting anywhere from 30 to 60 days and sometimes longer. Looking ahead into Q4, freight rates have come off with the BSI currently trading under 30,000, which is still very conducive to cash generation. For Eagle, As of today, we have fixed about 75% of our available days for the fourth quarter at a net TCE of $32,400 per day. Bear in mind that our cash break-even level through the first nine months of the year is at around $11,000. On this basis, notwithstanding the recent pullback in rates, we are on track for exceeding this quarter's performance in Q4. Please turn to slide eight. In terms of operating performance, we produced a record $91 million of EBITDA, or $19,400 per ship per day for the three months ending September 30. This represents an increase of 45% compared to the prior quarter. Given the fixed cost nature of our business, we maintain significant operating leverage with essentially all incremental net revenue generated flowing to the bottom line. Please turn to slide nine. Asset prices have also continued to increase in recent months, with values for 10-year-old supermaxes up around 17% on the quarter and approximately 115% year-to-date. It's interesting to note that this price strength has occurred on the back of a record number of transactions. Year-to-date, almost 840 dry bulk vessels have been bought and sold, totaling $14 billion in volume. Please turn to slide 10. In terms of sale and purchase, we took delivery of our final pending acquisition last week, the motor vessel Valencia Eagle. We estimate that the nine vessels which we acquired between November of last year and May of this year have increased in value by over $80 million. Separately, we sold and delivered the motor vessel Turn, a 2003-built Supermax, and our oldest vessel in the fleet just ahead of our statutory dry dock. Our fleet currently totals 53 ships averaging nine years of age with 89% being fitted with exhaust gas cleaning systems or scrubbers. As a result of the growth and renewal of the fleet, our fuel efficiency has also increased significantly over the last five years. As always, we will continue to evaluate vessel S&P and M&E deals and look to execute on an opportunistic basis. With that, I would like to turn the call over to Frank, who will review our financial performance.

Thank you, Gary. Please turn to slide 12 for a summary of our third quarter financial results. The continued significant improvement in the charter rate environment drove our top-line growth in Q3, with revenue net of both voyage and charter hire expenses totaling $142.4 million, and net income coming in at $78.3 million, representing a more than eight-fold increase as compared to the prior quarter. Earnings per share for the third quarter was $6.12 on a basic basis and $4.92 on a diluted basis. Please note the diluted share count now includes 2.9 million shares from the convertible bond. Adjusted net income, which excludes non-cash unrealized gains on derivatives of 6.3 million, came in at 72.1 million for the third quarter, or $5.63 per share on a basic basis. As Gary mentioned earlier, adjusted EBITDA came in at 91 million for the third quarter. Let's now turn to slide 13 for an overview of our balance sheet and liquidity. Total cash, which includes 25.6 million of restricted cash, was 125.6 million at the end of Q3, representing an increase of 41.8 million as compared to the end of the second quarter, and an increase of 36.8 million from year end. The change in cash versus prior quarter in year end was driven by cash generated from our strong operating results, offset in part by the $25 million RCF pay down, vessel acquisitions, and debt service. I will cover the movements in greater detail on the cash walk slide. Total liquidity improved by 51.8 million from the prior quarter to 191.6 million. Total liquidity is comprised of total cash of 125.6 million and 66 million of undrawn revolving credit facilities. Total gross debt, excluding debt issuance costs at the end of Q3, was $472.8 million. As previously reported, we executed a new $400 million credit facility on October 1st, replacing our Norwegian Bond UltraCo Bank credit facility in the Holdco RCF. The new facility includes a $300 million term loan and a $100 million revolver, of which $50 million was drawn on closing. However, as reported yesterday, we have now fully paid down the revolver and have $100 million of undrawn availability. Please now turn to slide 14 for an overview of our cash flow from operations for the third quarter. Net cash flows provided by operating activities was $90.3 million in Q3. The chart highlights the timing-driven variability that working capital introduces to cash from operations. as depicted by the difference between the dark blue bars, which are the reported cash from ops numbers, and the light blue bars, which strip out changes in operating assets and liabilities, primarily working capital. Although, as the chart demonstrates, the volatility caused by working capital largely evens out over time. The difference between the two bars in this quarter can be explained by a significant amount of cash collections in late September. Please turn to slide 15 for a Q3 cash walk. Let's focus on the top chart, which covers the cash movements in Q3. The revenue and operating expenditure bars are a simple look at the operations, with the net of these two bars coming in at $91 million, the same as our adjusted EBITDA. Moving to the right, the $18 million for vessel S&P bar represents the $26.9 million cost for the acquisition of two vessels, in part offset by the proceeds of $9.2 million on the sale of one vessel. You can also see that we paid $25 million on our RCF and $12 million in debt service in the quarter. The bottom chart covers cash movements year-to-date. Please note, in the appendix of this presentation, we include information on the cash and debt movements for the October 1st global refinancing. Let's now review slide 16 for our cash breakeven per ship per day. Vessel expenses, or OPEX, was $5,401 per ship per day, excluding one-time non-recurring expenses related to vessel acquisitions and sales, the termination of our relationship with the crewing agency. We are consuming additional lubes given vessels are steaming at faster speeds. and the prices have increased on the back of the rise in base oils. In addition, due to the COVID-19 pandemic, we continue to face higher operating expenses across several areas, including lodging and transportation costs related to crew changes, along with the costs related to the procurement of stores and spares. Finally, we have increased our spending on spares to preemptively limit off-hire as much as possible in what is a very strong rate environment. Dry docking came in at $917 per ship per day in Q3, $560 higher than prior quarter as we completed two dry docks with an additional two in progress. It is worth noting that there are significant challenges regarding COVID protocols and quarantine requirements for ships going into facilities for dry docks and the installation of ballast water systems. We do not see this abating in the near term and therefore will likely increase off-hire times for these events for the foreseeable future. Cash G&A came in at $1,527 per ship per day in Q3, marginally lower as compared to Q2. It is worth noting that our G&A per ship calculation is based on our own vessels, whereas we operate a larger fleet, including our chartered-in tonnage. If we were to include the chartered-in days in our calculation, G&A per ship per day would decrease to about $1,363. Cash interest expense came in at $1,387 per ship per day in Q3, which was marginally lower quarter over quarter, driven by an increase in ownership days and a decrease in interest expense. Finally, cash debt principal payments came in at $1,780 per ship per day in Q3. This concludes my comments. I will now turn the call back to Gary.

Thank you, Frank. Please turn to slide 18. As indicated earlier on the call, the BSI posted a significant increase during Q3 to average approximately $34,000 during the quarter. Both the Atlantic and Pacific markets pushed up simultaneously, which speaks to the broad demand backdrop. In the Atlantic, rates increased by 51% to average $34,128, and in the Pacific, rates increased 24% to average $32,414. Relative strengthening in Atlantic during the third quarter can be attributed to the factors we discussed on our last earnings call, specifically increased grain exports out of east to south America and a strong market in the Med, which was driven by elevated minor bulk exports such as slag, cement, gypsum, salt, and steel products. The container spillover trade continued to positively impact our markets, more specifically, intrapacific and backhaul rates. with cargoes such as semi-finished steel parcels, fertilizer and bags, bagged cement, dry chemicals in bags, and lumber moving on small and mid-sized conventional bulk carriers. Congestion remained elevated during the period, with the number of ships at port reaching a new record of 36% as compared to around 30% pre-COVID. Congestion is primarily attributed to COVID-related restrictions and general supply chain issues and bottlenecks caused by increased trade flows and exacerbated by shoreside labor issues. As we look ahead into Q4, we've experienced an increase in market volatility with freight rates trading off their recent multi-year highs. We believe this downtrend is due to a number of reasons, including an easing of congestion, increased tonnage availability, and a decrease of cargo flows. The increase in tonnage availability appears to be primarily driven from Chinese flag vessels entering the international market. Many of these ships typically operate in the local cabotage trade, which is dominated by China's large domestic seaborne coal trade between North and South China. Decrease in cargo flows within the Pacific has come about from what appears to be a short-term pause in Chinese seaborne coal purchases, as well as seasonal decrease in nickel ore cargoes as the Philippines has entered its rainy season. Looking ahead, there's been no official announcement or indication that China will increase their coal imports in the short term. However, this recent decrease in Chinese seaborne coal buying may end up being a short-term strategic maneuver to help cool pricing. Year-to-date, the BSI has averaged roughly 26,900. Although we expect to see elevated volatility in the near term, we remain constructive on freight rates given the positive underlying fundamentals. Please turn to slide 19. Fuel prices continue their upward momentum as demand for oil products increase across the spectrum. HSFO and BLSFO are now trading around $450 and $590 per ton, respectively. The fuel price spread between HSFO and BLSFO took a dip in Q3 on the back of elevated relative demand for HSFO as Asian power generation plants switched from consuming higher-priced gas to cheaper residual oil. However, we've recently seen a normalization in relative prices, with spot fuel spreads now trading around $140 per ton, a new high since the crude oil collapse in mid-2020. With 89% of our fleet fitted with scrubbers, the price differential between HSFO and VLSFO is an important value driver for our business. At current fuel spread levels, we generate around $1,700 per ship per day in incremental value across our fleet. equating to about $32 million of value per annum. Please turn to slide 20. Net fleet supply growth increased slightly in Q3. A total of 100 dry bulk new building vessels were delivered during the period, down about 20 percent quarter on quarter and 5 percent year on year. Partially offsetting this, a total of just nine vessels were scrapped during the same period, more or less unchanged as compared to the prior quarter. This low level of scrapping is not surprising given the strength in the underlying spot market. In terms of forward supply growth, the overall order book stands at just 6.5%, and it's even lower for the Supermax Ultramax segment. For 2021, dry bulk net fleet growth is expected to come in at 3.5%. This assumes scrapping of roughly 5.8 million deadweight tons, down about 2 million deadweight tons from previous guidance, and only about one third of last year's amount. Again, this is primarily as a result of a stronger rate environment. For 2022, dry bulk net fleet growth is expected to be just 1.5% given the rapidly depleting order book and somewhat higher scrapping. A total of 92 dry bulk ships were ordered during Q3, the same as the prior quarter and largely in line with the quarterly average over the last five years. Although we expect some level of ordering to continue, we still believe it will be somewhat muted, giving new building price levels both on an absolute basis and on a relative basis to secondhand pricing, the prolonged delivery time given the lack of yard slots, and the ever-increasing uncertainty around future carbon pricing and regulations regarding emissions. Please turn to slide 21. As we've spoken about before, and you can denote from this slide, dry bulk demand is inextricably linked to global GDP. Global growth expectations for 2021 were slightly lowered to 5.9%, down 10 basis points since our last earnings call. For 2022, the IMF is estimating global GDP growth of 4.9%. Please turn to slide 22. Tribal demand growth has been revised downward slightly since our last earnings call with 2021 growth now estimated at 4.1%. This has been driven by downward revisions in iron ore and grains, but offset in part by increases in coal and minor bolts, such as steel, cement, scrap, and nickel ore. It's worth noting that minor bolts where Eagle derives about two thirds of its demand from is expected to come in at 5% this year. For 2022, Demand is forecast at 1.8% for dry bulk overall and 2.4% for minor bulk. It's important to look at this in concert with the expected low fleet growth numbers I mentioned a few moments ago. Notwithstanding near-term volatility, we're optimistic about the prospects for continued global growth, which is being supported by massive amounts of stimulus. This positive demand picture, combined with a record low order book, supports our constructive view on market developments looking ahead. In closing, we are energized about EGLE's strong position following our multi-year fleet renewal and growth initiative, as well as our new comprehensive financing. And on the back of these, we're looking forward to continuing to execute for the benefit of our shareholders. With that, I'd like now to turn the call over to the operator and answer any questions you may have. Operator?

With the prepared remarks completed, we will now open the line for questions. If you would like to ask a question, press the star, then the one key on your touchtone telephone. To withdraw your question, press the pound key. Our first question comes from Randy Givens with Jeffries. Your line is open.

Howdy, Gary, Frank, and Costa. How's it going?

Good. Good morning.

Morning. So, yeah, congrats, obviously, on the record quarter. Very strong rates there. Looking at your 4Q, 21 quarter-to-date rates. $32,000 plus, very strong again. Now, looking at the BSI, that's averaged closer to $38,000 plus a day for the last six weeks. One of your peers without scrubbers, I think they booked around 65% at $37,000 a day. So I know it's hard to beat a rising market, right? But was the rest of the underperformance due to lower hedges via your FFA book? And I guess with that recent drop here in the last week in the FFAs, have you been more active trading those for 4Q21 and even 2022? Yeah.

So a bit to unpack there. First of all, I'm not sure who you're referring to, but I think it's important when you compare TCEs between companies, you look at the fleet makeup and whether you're talking about a fleet of, you know, strictly supermax and ultramax or a blended fleet included in CAPES. You know, we definitely have a hedge position, which we disclose in our queue of FFAs and cargoes, but, you know, which impacted us, that's part of our risk management. You know, as we look forward, and you'll see it in our queue this quarter as well, we've built a bit more of a hedge book going into next year using FFAs as well. You know, having said that, it's dynamic and we take advantage of the or the volatility around it. So, you know, we think it's also important to look at the TCE quarter on quarter. And I think we're quite comfortable with our TCE performance relative to our peers on a normalized basis, as I said, especially when you take up the fleet makeup. But, you know, beyond that, I can't speak unless I know specifically, you know, what you're speaking about, you know, who you're speaking about.

Sure, no problem. And then I guess with that FFA, it seems like there's been some extreme volatility here in recent weeks. Is that a lot of physical paper trading or just kind of financial trading around that to increase that volatility?

Well, look, I think the volatility, there's always a question, you know, is it a tail wagging the dog or the other way around? But I mean, if you look at the physical market, there's been extreme volatility on the physical market as well. You know, we take advantage of that. I mean, it gives me an opportunity to talk about it. You know, we prefer to use derivatives to hedge our book. And, you know, even after the quarter, you know, we sold the derivative contract as a hedge for next year. The highest one we did was at $26,000. You know, we bought that back this week. We unwound the hedge, if you will. We call it dynamic hedging. We unwound that hedge at $10,000 less. And that benefit accrues to the benefit of our shareholders. It doesn't mean that, you know, we won't unwind our whole hedge book, but dynamically we can go in and out of that market, always with having a physical ship, you know, as a hedge against it, all with a view to creating value, you know, and adding to the TCE for the fleet. So we're building a hedge book as we go forward, but it's not a straight line up because, as I said, we take advantage of the volatility in the market.

Got it. Okay. This last question for me, your debt now extremely low. Congrats on that recent refinancing and everything. Your shares have fallen from 55 to, I guess, under 40. Now it looks like they'll be back above that in an hour here. But over the past month, trading well below NAV. So with your ample free cash in the coming months, how will you decide on either further debt repayments, share repurchases, or maybe doing something with converts?

Yeah, I think you're right. We come in every day and look at what we can do and what the best use of capital is. If we go back five weeks ago when we announced the forward authorization for a share buyback, we've actually been in a blackout period the entire time and up to earnings here. Having said that, just to be clear, there's not a specific authorization to go buy a certain number of shares, but clearly we're aware of where we're trading. So It's a decision as we go forward. The last focus has been to pay down the revolver to zero, and obviously that's now done. So looking at whether it's share buyback, as you said, possibly something on a convert or putting cash on the balance sheet or further debt repayment is something that we will need to look at. Having said that, I think I'll use the opportunity to say I think capital allocation is vitally important. I think the real exciting thing here is what's behind it. you know, the business that supports it. And, you know, whether we pay out 30% or even more or pay down 50 million or buy back shares, you know, it's that every dollar that we generate is for the benefit of our shareholders. And the real story here, in my mind, if you'll allow me, is that we generated 91 million of EBITDA with 53 midsize ships, you know, and that's almost 30,000 TC with a fleet with no capes. You know, those are ships that cost twice as much as alters, you know, ships that really have averaged just 8,000 more than, the midsize fleet this year. And as we talk about volatility, although we've experienced significant volatility for our market on a relative basis, you know, it's significantly less. So, you know, I think it's, it's, it speaks to the, I think the segment that we're in within dry bulk, the midsize segment and the strength that that's leading. And, and, you know, I'll leave it at that.

Okay. Makes sense. And good options to have here with the, with the ample free cash. So thanks again.

Thank you.

Thank you. Our next question comes from Magnus Feier with HC Wainwright. Your line is open.

Good morning, Gary Costa and Frank. Just a follow-up question on the capital allocation. You didn't mention any vessel acquisitions. You've been very active in the last five years renewing the fleet. What's your view on buybacks versus buying ships? Based on our estimates, stock is now trading at a 30% discount to NAV. Just curious if you have any desire to expand or looking at fleet acquisitions given where the stock is. Yeah, thanks, Magnus.

You know, I think we're always looking at opportunities, having said that, asset values have moved up pretty significantly. And as I said in the prepared remarks, the nine ships that we acquired, you know, they've appreciated by over $80 million. You know, we feel we're in a fortunate position. We've been able to not only renew the fleet, but grow it by about 20%. So we don't feel pressure to participate in further, you know, growth at this point and clearly don't have a need for further renewal. Having said that, if there are opportunities that are accretive and or the long-term period market, which as of today it doesn't do, but the long-term FFA markets or period market justify being able to write down that asset significantly, then we would be interested. But as I said, at the moment, it's not a priority for us. We just don't feel a need there. So given the choice between the two at the moment, we would think that a buyback of whether shares or convert, is more attractive than assets, you know, all things being bought at the moment.

Good. Good to hear. The second question I have is related to the OpEx. So a big jump there in the third quarter. I guess you explained it with buying inventory lubes and also COVID-related expenses. What should we expect going forward as a normalized economy? It's, you know, around 5,000. I guess the first nine months was about 5,100. Will it have a five in front of it, or do you still think it's going to be below 5,000 going forward on the normalized basis?

I would say for the fourth quarter, it's going to have a five in front of it. You know, I'd love to under-promise and over-deliver, but it's not just one thing here. You know, it's repatriation of the cruises costing more money, everything we talked about. And, you know, the more expense for lubes is a good story, right? The ships are moving faster because the rates are in the 30s. And, you know, so that's just really an effect of when you run an engine faster, you need higher lubes. In addition, as I said, the base oils are higher, so pricing is up. And that's true across, you know, the entire industry. So for now, I think it's going to have a five in front of it. And obviously, over time, we expect things will normalize. But, you know, it's an extraordinary –

uh environment you know globally that we're we're in and there are a lot of benefits for dry bulk at the moment but you know opex is clearly one of the negatives right uh just last question on a chartering strategy the um you know it's tough to to beat uh the index in the rising market but that's the the recent pullback create opportunities for your active uh chartering strategy uh you know Maybe you can elaborate a little bit on that, because I know in the falling market, I think historically you've done better.

Yeah, absolutely. Look, we think in a normal market, I think our active management platform will show its true colors. I mean, the market's really gone vertical here. And no question, we had some FFA hedges in place as the market rose to protect, and we didn't expect the congestion factor, if you will, to really propel rates to where they went in the last month. So, you know, those hedges, you know, had an impact. But having said that, volatility, we welcome it. And I talked about it on, you know, just a hedge and aligning a hedge and the value you can create around that. But it's also true around the ships that we charter in and the cargo. So, you know, we welcome volatility. It's a little extreme at the moment, but it's something that we think we're able to create value for. And, you know, obviously the proof will be in the pudding. So you'll have to see how it develops over the next quarter or two.

Great. Well, that's it from me, and congrats again on a great quarter.

Thanks very much.

Our next question comes from Omar Nocta with Clarkson Securities. Your line is open.

Hi, guys. Thank you. Good morning. Yeah, just maybe one. I wanted to follow up on the discussion about capital deployment. Obviously, you guys have had a pretty solid quarter, and this upcoming one's looking good, too, and a pretty good dividend right off the bat here. But how are you guys thinking strategically as we wind down this year and as we look ahead into 2022? Over the past year, it's been pretty transformative. You acquired chips, obviously, at well-timed prices. You've refinanced your debt stack, and now you've gotten to this point of dividends. How are you guys thinking about priorities now? Do you have a series of strategic priorities as you look into next year about what to do, or is it now more about just hunkering down? You have the 53 ships, you've got the dividend, and it's just moving forward.

Yeah, so I wouldn't say it's hunkering down, but it's delivering for our shareholders. And so if that means staying at 53 ships, or as I've talked about in the past, we're likely to sell our two oldest ships and go forward with 51 owned ships and obviously charter in around that and deliver real value for our shareholders, then that's an outcome we'd be really happy with. But having said that, it's not to hunker down and say, We're not looking for opportunities. We just don't feel pressure that we need to do more in terms of, you know, growing or renewing the fleet. So we feel we're in a pretty privileged position at the moment. Obviously, this market has helped us, you know, to deliver, you know, both the, you know, the debt pay down and this dividend. And we intend to take advantage of that and continue to continue to maximize it as we go forward.

Thanks, Gary. And maybe just kind of switching towards capital repayment, regarding the converts versus the shares, is there something that stands out between both of those that would be more appealing, buying the converts versus the shares? Any thoughts on that?

Yeah, sure. I mean, you know, one benefit of buying the convert is it doesn't take float out of the current market in terms of, you know, share liquidity. And that's something that we're clearly cognizant of, given the daily share volume. You know, having said that, you know, the convert is far less liquid and it's a lot easier to buy back shares in the open market. So, Those are probably the two biggest things. Otherwise, you know, there's definitely, you know, high correlation between the two, obviously, given the nature of the convert instrument. And, you know, but as we go forward, we're clearly going to look at the pros and cons of both of those. And it's not necessarily a one or the other either. Got it.

Okay, thanks, Gary. I'll turn it over.

Thank you.

Thank you. Our next question comes from Greg Lewis with BTIG. Your line is open.

Thank you and good morning everybody. It seems like capital allocation has been picked over pretty well. I guess I would just ask, you did highlight the two alder vessels that you're thinking about potentially selling. How should we think about the use of those proceeds

Yeah, I wouldn't see the use of those proceeds any differently than cash from operations, frankly. Those ships are worth kind of mid-upper teams, I'd say, at the moment. And, you know, they're unencumbered as well. When we did the financing, we purposely kept them out with a view that they'll likely be monetized before their next special survey dry dock. One is in mid-22 and one in very early 23. But at the end of the day, you know, cash is fungible, and we don't see a difference there or a need to recirculate it into buying assets. Having said that, you know, just like cash from ops, if we see an opportunity, then, you know, then we'll use it for that.

Okay, great. And then just – I did have more of a big-picture macro question. As I'm looking at slide – 22, you know, I guess the coal growth forecast for 22 is, you know, I guess it's between 1% and 2%. Are you seeing things in the market that potentially lead you to believe that that number could be higher or following kind of the rebound in 21, you know, whether it's, you know, is... the supply capabilities from the miners just not there? And the reason I ask is because as we think about coal prices, which are firm as is other commodity prices, on a relative basis, coal still seems an attractive energy source relative to the other ones. I'm just surprised that that number is not higher.

Yeah, well, if 2021 has taught us anything, if that is, is that, you know, trying to project the, you know, demand, especially coal demand, what we've seen, the changes in velocity this year are pretty extreme. You know, in terms of supply, you know, even with the growth this year, the significant growth this year and next year, the next year still is a number below where we were in 2019 pre-COVID on a global, you know, coal basis, marginally below. So in terms of supply, I don't think that's, that's the issue. Uh, we're seeing significant change in those coal trade flows. Um, you know, this year, especially because of obviously the, the, um, you know, China, Australia, uh, issue around coal, but you know, there's still significant growth in, in, in Asia, uh, coal from Indonesia, China and Indonesia, uh, you know, Vietnam and India. And those are trades that we're particularly in. So I think from a, From a midsize dry bulk segment, I think it's more positive in terms of volumes for next year. But in terms of, you know, trying to, you know, project it exactly, I think there is upside in that. But, you know, I think there's also a downside in it in that it's very hard seeing the fuel mix and price mix and what we've seen this year.

Understood. Thank you all very much.

All right. Thank you.

Thank you. And our next question comes from J. Mintzmeier, Value Investors Edge. Your line is open.

Good morning, everyone. Congrats on a fantastic quarter all around.

Thank you. Good morning.

So, great questions so far. Not a whole lot to add. I just want to do a little bit of housekeeping on the FFAs. Just to clarify, I think you said you're going to include those in the 10-Q, which would help a lot. It looks like You added about 10 or 11 ships at a quarter, about 1,000 days, quarter over quarter. Is that fair? And is that kind of the rate you expect to do going forward, always doing about 10 to 11 ships per quarter?

Yeah, I don't have a specific number. I mean, we took a number, delivery of a number of acquisition ships, you know, over the last few quarters. And some were fully in the quarter, some towards the end. And we just took delivery of the Lency Eagle ship. last week so that was the only ship that delivered you know post third quarter um but you know we don't see significant you know we don't see any more there's no more ships that we've acquired from an s p basis to add obviously the number of days that we from a chartering basis is um is slightly um you know is uh excuse me the number of you know chartering ships has been fairly static lately uh but you know otherwise we don't expect things to change very much

Okay, certainly makes sense. And when you say 75% fixed at $32,400, I didn't get into what Randy was talking about. Are you already incorporating the FFA loss for Q4 into that, or do you need to add that additionally on top?

So that's a pro rata basis, the number of ships that we have fixed. So if you think about it, if you're 50% into the quarter, then it would be 50% of the FFA days that we've done, plus all the physical, you know, fixing of ships and cargos and things like that.

Got it. So there's a little bit, obviously, of spot left, and then there's going to be a little bit more drag from the final FFAs, and I'm sure we'll see that, obviously, in the 10Q. Turning real quick to the convertibles, I think everybody's pegged on this. Everyone sees that there's this enormous opportunity. You know, your NAV is, it depends on what analyst and what data source, but, I mean, $70 a share is a number that seems reasonable. You're trading at a 45% discount. You have a great balance sheet. So not only is it price to NAV, you're also looking at enterprise value to gross asset value, massive discount, right? So the convertibles are out there, but you don't have a call provision, right? So there's nothing you can do to force those in. How would you go about mechanically if you were trying to do a repurchase via that route? Do you just have to reach out directly to the holders and work something out? Is there some sort of formal tender process you could do? What would that potentially look like?

Yeah, well, we could buy them in the open market. Alternatively, we could make a proposal to holders, a more formal and certain amount type of proposal, but we are able to buy converts in the open market as well.

I look forward to seeing what you do there, Gary. I know Anytime you talk to me, you know, I want to talk about repurchases and, you know, with a 45% discount to NAV, it's just, it's screaming. So I'm really, really happy to see the 50 million program and I look forward to next quarter's results.

Thanks, Chad. Appreciate it.

Thank you. And as a reminder, if you would like to ask a question, press the star, then the one key on your touchtone telephone. Our next question comes from Liam Burke with B Riley. Your line is open.

Thank you. Good morning, Gary. Good morning, Frank. Hey, Liam. Gary, could I go back to the macro? You have a versatile fleet. Obviously, you carry major bulks as well as the miners. How do you look at the volatility in the iron ore trade affecting the fleet and how you look at the business going forward?

Yeah, I mean, if there's one cargo that doesn't directly impact us of all the major bolts, it's iron ore, right? It's a fairly small part. It was about 10% of our cargo mix. But frankly, it's not from the major trades. It's not Brazil, China. It's not Australia, China. So it's really not as significant for us. Having said that, as iron ore prices come off, then the ships, the smaller cargoes and and the trade that we tend to do become less attractive. So you'll likely see as iron ore prices come off us doing less iron ore going forward. But again, it's a relatively small part of our cargo mix. So, you know, directionally negative with lower pricing, but not significant impact for us.

Okay. And then you talked about selling the older vessels. How does adding new assets fit into the mix or is, or just asset value is too high here?

Yeah. I mean, you know, I, I touched upon it before, you know, they're, they're quite high and we feel quite satisfied where we are. You know, having said that if the forward markets, whether it's the derivative markets or the long-term period markets are supportive of to write down asset prices to levels we believe are attractive in terms of long-term depreciation, and we'd be interested. But just to go out and buy assets at this point, we don't feel the pressure to do so, and I don't think you'll see us doing that in the immediate basis, just where rates are relative to where asset prices are.

Great. Thank you, Gary.

All right. Thank you.

Thank you, and I'm showing no further questions at this time. I'd like to turn the call back to Gary Vogel for any closing remarks.

Thanks, operator. We don't have anything further, so I'd like to thank everyone for their time today. I wish everyone a good day.

This concludes today's conference call. Thank you for participating. You may now disconnect.