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spk05: Good morning, ladies and gentlemen, and welcome to the Ardmore Shipping's first quarter 2022 earnings conference call. Today's call is being recorded, and an audio webcast and presentation are available in the investor relations section of the company's website at ardmoreshipping.com. We will conduct a question and answer session after the opening remarks. Instructions will follow at that time. A replay of the conference call will be accessible anytime during the next two weeks by dialing one eight seven seven three four four seven five two nine or one four one two three one seven zero zero eight eight and entering passcode one zero five five seven four eight at this time i will turn the call over to anthony gurney chief executive officer of ardmore shipping
spk01: Thank you. Good morning and welcome everyone to Ardmore Shipping's first quarter 2022 earnings call. Let me first ask our CFO, Paul Tidman, to describe the format for the call and forward-looking statements.
spk06: Thanks, Tony, and welcome everyone. Before we begin our conference call, I would like to direct all participants to our website at ardmoreshipping.com, where you'll find a link to this morning's first quarter earnings release and presentation. Tony and I will take about 15 minutes to go through the presentation and then open up the call to questions. Turning to slide two, please allow me to remind you that our discussion today contains forward-looking statements. Additional results may differ materially from the results projected from those forward-looking statements. And additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the first quarter earnings release, which is available on our website. And now I'll turn the call back over to Tony.
spk01: Thanks, Paul. So in terms of the format for today's call, to begin with, I'll discuss highlights and recent market developments, after which Paul will provide an update on product and chemical tanker fundamentals and financial performance, and then we'll conclude the presentation and open up the call for questions. So turning first to slide four, over the past two months, the product and chemical tanker markets have changed completely. The first quarter was only partially impacted by these conditions, but the second quarter will show the full effect. Ardmore's MRTCE for the first quarter averaged $15,600 per day, whereas for the second quarter, with a 50% fix so far, the result is $25,500, and actually rising as evidenced by the last two weeks' fixtures, now averaging $34,400 per day. In anticipation of an improving market based on strong fundamentals, we had already gone to full spot exposure as of February, thus are well positioned to capture the benefits of a strong market for our shareholders. The impact on our financial performance is significant. Using the second quarter TCE to date, with 50% complete, our net income would be $22 million, or $0.63 per share, for the quarter, an annualized 30% return on book equity, with every additional $1,000 per day generating another $0.28 per share, or 3.4% incremental ROE. Asset values are also rising, with five-year-old MRs now valued at $32.5 million, representing a year-on-year increase of 18%. Taking advantage of rising values, Ardmore has sold its three 2008-built MRs with fund charter back for two years plus options at attractive rates, which maintains our commercial scale and earnings power. Hardmore has not undertaken any voyages from Russia since the outbreak of the conflict. In the current market, our focus is on optimizing our commercial performance elsewhere, while making every effort to support our seafarers and engaging in other measures to assist those in need. Moving next to slide five. On our last call, we discussed improving fundamentals offset by adverse oil market dynamics. Since then, the oil market has changed completely and is, in fact, turbocharged the product tanker sector and MRs in particular, given their versatility. The oil market is now characterized by dislocation of physical supply and demand, record high refining margins, wide price ARBs, and a shift in sentiment regarding inventories. These factors are driving up both volume shift and distance traveled, thus resulting in a significant boost to product tanker ton-mile demand. The chemical tanker market is being driven by similar factors, exacerbated by urgent buying of liquid fertilizer and various types of veg oils to substitute for volumes lost out of Russia and the Ukraine. As a result, the commodity end of the chemical tanker sector is also experiencing very high spot rates, which are clearly reflected in our own fleet performance. How high rates can go and for how long is unclear. but with MR transport costs still only around 5% of the value of the cargo on board, we don't see rates alone capable of destroying demand, and thus there's no practical upper limit. Similarly, with the dislocation of cargo flows and a steady stream of oil market events continuing to disrupt, there is a sense that these conditions could persist for quite some time, even after a cessation of hostilities. Meanwhile, all the fundamentals have taken a backseat to the oil market. We believe they're still improving and are providing underlying strength to our sectors, which Paul will discuss later in more detail. Next on to slide six, the next two slides are normally further back in the deck. However, we thought it would be useful to discuss them now as they highlight what's currently happening in the market and the impact on Ardmore's earnings. On this slide, slide six, you can see the progression of rates over the past six quarters, which covers the depth of the pandemic last year to this new market environment that we're in. We had a slight uptick in rates in the first quarter. However, as you can see clearly with the green bars, there's a dramatic impact the market is having on our charter rate performance for the second quarter to date. Moving next to slide 7, on this slide we show the resulting annualized earnings in EPS for the full range of market conditions we've seen over the past six quarters and where at least some people think rates could go toward the upper end. Looking at the red dotted box, you can see that at current levels our annualized earnings would be $88 million or $2.52 per share. On that note, I'll hand the call over to Paul.
spk06: Thanks, Tony. I will take a look at the fundamentals and then move to a review of our financial performance. So starting with slide nine for demand fundamentals, all of the focus in recent weeks has been on the current market activity and volatility. At the same time, the fact remains that fundamentals are solid, despite pretty evident cross-currents in the global economy. On the demand side, the outlook for product and chemical tankers is very positive, driven by increased refinery throughput and oil market disruption in the near term and continued oil demand growth and refinery dislocation over the medium term. Oil demand growth has not gone away, and based on the most recent estimates from RISDAT and the IEA, overall global oil demand is expected to increase by 1.9 million bars a day this year, surpassing pre-COVID levels in the third quarter. Looking to the medium term, as you can see on the graph on the upper right, the demand outlook remains firm. Global refinery activity continues to be a significant driver of product-type or ton-mile demand. Global refinery throughput in the third quarter is expected to be 5% higher year-on-year, Notably, there are significant increases in throughput in the U.S. Gulf and the Middle East, with corresponding reductions in Russian throughput. At the same time, the ongoing trend of refinery dislocation, which we've been talking about for some time, will continue to have a positive impact on powder tanker demand, providing an additional layer of growth. Over the next few years, there are significant increases in capacity in the Middle East and Asia, while at the same time, closures of refineries in the U.S., Europe, China, Australia, which is increasing seaborne volumes of refined products. And significantly, the Alzeor refinery in Kuwait is expected to open in the next few weeks, approximately two years behind the original schedule. Overall, product tanker 10-mile demand is expected to be 3% to 4% annually to 2026, which is well above supply growth. And based on recent market activity, 10-mile demand for product tankers is potentially much higher this year. Chemical tanker demand outlook is also positive, driven by GDP growth, petrochemical output, and supported by an improving product tanker market, resulting in these vessels staying more on their core EPP trades. In April, global GDP was revised down by 0.8% by the IMF from January's estimates, but it's still expected to be 3.6% in 2022 and 2023. Chemical tanker demand is highly correlated to global GDP, with chemical tanker trade expected to grow by 3% this year and 5% year-on-year in 2023 and 2024. Moving to slide 10, we'll take a closer look at the supply fundamentals. The supply outlook for product and chemical tankers is very favorable, driven by a lower order book and increased scrapping levels. Net fleet growth, which is deliveries less scrapping, is expected to be well below demand growth for the coming years. In 2022, estimated net fleet growth for product tankers is 1.2%, and for chemical tankers, it is 1%. Scrapping levels increased significantly in 2021, and we expect scrapping to be at similarly elevated levels in the years ahead, with an aging fleet and increasing pressure on efficiency and carbon reduction. And finally, consistent with our comments and prior calls, the order book for product and chemical tankers remains low, and this is expected to remain the case for the foreseeable future for two reasons. Firstly, there continues to be a lack of clarity on future shift designs to meet the industry's emissions targets. And secondly, there's very limited breadth availability for MRs. because of significant ordering in other sectors, particularly container ships. Turning to slide 12 for financial highlights. We're reporting an adjusted loss of $900,000, $0.03 per share, representing a significant improvement year on year. MRs average $15,600 a day for the first quarter versus $11,400 per day in the prior quarter, while chemical tankers earned TCE of $13,600 per day in the first quarter compared to $11,300 per day in the fourth quarter of 2021. As Tony noted, these rates have subsided subsequently increased a great deal. Starter rate improvements reflect the ongoing recovery in oil demand post-COVID and the onset of the Ukraine-Russia conflict towards the end of the first quarter. Next, we will take a closer look at our cost line items and provide some guidance for the coming quarter. Voyage costs increased significantly quarter on quarter due to higher bunker costs, and operating expenses were 16.4 million in the quarter, a slight increase mostly related to timing and crew changes. And if you had OPEX for the second quarter, we expect it to be approximately $15.6 million. Starter-in expense was $2.1 million for the quarter, and we expect it to be in line with the second quarter. Appreciation amortization totaled $9 million for the first quarter, and we expect appreciation amortization for the second quarter to be $8.5 million. Total overhead costs are $4.8 million for the first quarter in line with prior periods, and for the second quarter, we expect overhead incorporating corporate and commercial to be approximately $5 million. Interest expense was $4.1 million for the first quarter, and we expect it to be in line in the second quarter. And we're currently benefiting from float to fixed interest rate swaps entered into in mid-2020. Currently, $250 million of our debt is fixed at a margin of plus 32 basis points through June 23. And overall, 88% of our debt is fixed. Our interest rate swaps entered into in 2020 are currently in the money by $5 million at the end of March. And overall, we believe our cost structure is amongst the lowest of our peer groups. And in particular, internal commercial overhead costs are approximately 60% of prevailing market rate pool fees. Moving to slide 13 for fleet and operational highlights, we're continuing to invest in the fleet to optimize performance. We expect to complete two dry dockings and two ballast water system installations in the fourth quarter of this year, with capex of 3.2 million. We have some flexibility in terms of the precise timing of these dry dockings, depending on market conditions at the time. Our forecasted revenue days for 2022 are approximately 9,500, with chemical attackers representing 23% of total fleet days. And for the second quarter, 96% of total days are spot, or 105% on an ownership basis. Overall, operationally, the fleet continues to perform very well. And finally, for me, we'll turn to slide 14 for capital allocation and balance sheet. We're continuing to prioritize financial strength as a means to build value, and cash flow has really started to improve in the past few weeks. A sustained strong charter market at current levels will provide more options for capital allocation over time. And for now, our focus remains unchanged on the priorities that we've been highlighting for some time. In the meantime, we're maintaining a strong balance sheet and healthy liquidity levels and relatively low leverage. Looking at working capital, last year we had five shifts employed on time charter out at competitive rates, which supported earnings. And we've since returned all of our one shift to spot trading and taken two more shifts in on time charter in anticipation of strong charter market conditions. As a result, working capital increased in the first quarter, partially related to more ships trading spot and also higher bunker prices. Ship values are increasing and boosting net asset value. Values are up 18% year-on-year on the back of rising new build costs, limited new supply, and a positive outlook. And on the back of a stronger S&P market, we agree terms for the sale of three ships and in a separate transaction are more time-chartered in the ships at market rates for two years plus options, maintaining our scale and earnings power. The sale is consistent with our policy on capital allocation and fleet renewal, and it will generate net cash proceeds of $15 million after prepayment of debt. These lessons were financed through a fixed-rate lease structure, and the overall cost of debt will reduce following the transaction. And with that, I'd like to turn the call over to Tony. Thank you.
spk01: Thank you, Paul. So to sum up then, the market environment has changed completely as a consequence of the war and its impact on the oil market, for which there is no clear end in sight. Even after the cessation of hostilities, we believe the resulting dislocations will persist until sanctions have been lifted and any repairs required are completed. While the disrupted oil market has taken center stage for now, fundamentals shouldn't be ignored. Overall, the world is continuing its post-COVID recovery, despite some cross-currents at the While it's unclear how far this market can go, it is clear that there is a renewed appreciation for the role that oil products play in energy security and in providing a bridge to a full energy transition. So there is logic to the view that we've reached a turning point in the product and chemical tanker sectors. The impact on Ardmore's financial performance is clear. Assuming the second half performance continues, we would earn $22 million or $0.63 per share in the second quarter, and each incremental $1,000 per day is another $0.28 per share. As a final point, our capital allocation policy, as Paul just described, still prioritizes financial strength, but our targets could be met rapidly in this new market, which could allow us to pursue other means to build value, build and deliver value to our shareholders, including well-timed growth opportunities and return of capital to shareholders. And with that, we'll open up the call for questions.
spk05: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from John Chappell with Evercore. You may now go ahead.
spk07: Thank you. Good morning or good afternoon. Tony, my two questions are going to be on two of the points you made in your summary, one company specific, one industry specific. You know, I think we've been talking for a long time about this market hopefully recovering based on fundamentals, and it seemed like things got really tight really fast. I think there's this misinformed view that this is strictly a war outcome. And you've talked about even after the cessation of hostilities, using your term, you believe these dislocations could last a little bit. To that regard, can you talk a little bit about what has exactly transpired in your markets since the invasion that's kind of been the catalyst to these tightening fundamentals? And I know this is really hard to answer, but even post a peace environment, hopefully sooner rather than later, what are some of the long-lasting effects on trade flows, on ARB opportunities, on maybe even the impact of commodity trading houses that you think can have a much longer tail to this cycle than just a war-related impact.
spk01: Good. We'll start with that. I think you had another question. We can answer that. So those are very thoughtful questions. And we do really believe that the fundamentals are slightly diminished because of the evident slowdown in global economic growth and also the COVID situation in China. But, you know, overall, I mean, for any of us that travel, we're seeing, you know, it seems like air travel is coming back strong, and in particular long-haul international. And that was really the big chunk that was missing. So I think that's just an important, you know, kind of underlay, if you will, to what's happening. And so while we're going through this, you know, kind of very disrupted period, we think that's continuing to build underneath. That's a really good question in terms of what will have changed permanently once we get out of this. I do think that there's a view that inventories got to very low levels, and I think that a restocking process could actually take a very long time. And so I think that's something that would persist. I think especially in the chemical sector, you have a lot of UAN or liquid fertilizer and veg oils, sunflower oil that moves out of the Black Sea. And those crops and that production has certainly been disrupted, and how long it takes for that to come back on is unclear. But then that has to be replaced by other substitute products farther away. In terms of petroleum flows, I think it's interesting. I'm in the US right now, but I spend most of my time in Europe, and we're very close to what's happening. And there's a real sense of alarm around the dependence that Europe has allowed itself to find itself in today vis-a-vis Russia for energy supply, whether it's gas or oil. And I think that's going to change. You know, there's no doubt that the EU is not going to – you know, it's going to take a while. You know, it'll be a messy process to get consensus within the EU, but I don't think there's any going back to that level of dependence. And, of course, that directly means substitute product coming in from further away.
spk07: Got it. Okay, that's very helpful, and I understand that was a difficult, somewhat hypothetical question to answer, so thank you for that. The other ones will be a bit easier. You know, it's amazing, during your last conference call, we were still facing investor questions about liquidity and measures you can take if this market stayed poor for even longer than anyone expected, and now the tone of questions has shifted to uses of capital, which you've touched on a little bit there, but are you in the At this maybe early stage of the recovery, is it strictly a focus on getting the balance sheet to a position of strength, so maybe further sale and leasebacks are off the table? Or because of the formulaic nature of your dividend policy, does it kind of become a capital return story immediately, like as soon as the second quarter, just given the strength in the quarter-to-date rates that you pointed out?
spk01: Yeah. I think it's amazing how quickly things have changed in this business. It's also amazing how quickly people can forget the fact that last year was a really, really tough year. We lost $38 million. We weren't alone. Others lost a lot more. So I think for most companies, I think the priority has to remain, and it is for us, in essentially balance sheet repair. For a period of time, you know, we've been very clear with our capital allocation policy, what our. Our financial strength targets are happy to talk about that more. But but the fact is that, you know, with rates where they are today. That could happen very quickly and then, you know, then we have to see what's. What the opportunities are at the time and, you know, we've always, you know, we've had. You know, granted, we haven't had a dividend policy in place for the past two, two and a half years. But, you know, prior to that, we were, you know, it's, you know, we, you know, we're very, very focused on shareholder value and, you know, high-quality corporate governance. And we understand that investors, you know, expect a return of capital from their investees.
spk07: Got it. Thank you, Tony.
spk05: Our next question will come from Ben Nolan with T4. You may now go ahead.
spk00: Yeah, thanks. Actually, just if I could follow on where John was there, maybe Paul or Tony either, you did mention sort of your as part of that capital allocation policy that you do have targets. And then, Tony, you just mentioned that you could elaborate on this. Could you elaborate on those? What do you think you're shooting for with respect to leverage?
spk01: Yeah, I'll ask Paul to comment on that.
spk06: Yeah, sure. I mean, Ben, our capital allocation policy has been pretty clear that we wanted to get to a target below 40% debt to capital. We're currently around 50%, so we have ways to go on that. But as Tony mentioned, given the current rate environment, we could get there very, very quickly at these levels.
spk00: Okay. Helpful. And then just for my second question, and you talked a little bit about this, the low order book and how incremental fleet growth is going to be somewhat limited. One of the things that we've seen a little bit more on the larger ship classes, although not pervasive yet, is oil majors generally subsidizing shipping companies to go out and build typically LNG-fueled but other types of propulsion systems on new ships. And that has sort of been seemingly where most of the incremental new buildings are coming. Sort of two questions. First is, is that happening at all in the MR market? Doesn't seem like it. And then is that something that you guys would consider if XYZ big company came to you and said, hey, we want you to build some ships? Will you do it?
spk01: Yeah, I think that there have been projects in the past involving oil majors for construction of MRs. They usually go out on long-term time charter at very low rates, so that's not something that we've ever been very excited about. But we do, as part of our energy transition plan, intend to engage in conversations and really develop a collaborative dialogue and relationship with customers where We can help them meet their own energy transition needs on the back of long-term charter business, but with acceptable returns on capital. I don't imagine that anything like that is going to result in a meaningful boost in shipbuilding in our sectors anytime soon. I think the real transition is still quite far ahead, and we're also dealing with the reality that yards are very full at the moment. So, you know, I think, you know, if we worry about oversupply in the near term, I think that's kind of off the table because of the long lead for ordering new ships and the low order book and the fact that, you know, mainly container ships but also gas carriers, et cetera, have taken up all the slots.
spk00: And you're not seeing oil majors pushing for, you know, or subsidizing it in the MR market the way that there's been a little bit in these or LR2s or whatever?
spk01: Yeah, I take exception to the word subsidized because if you can ask any of the people that have done those deals, they probably don't feel like they're being subsidized. They're probably very attractive rates, you know, and that's a prerogative of an oil major. But it's not something that's evident in our sectors at the moment.
spk00: Okay, perfect. All right, I appreciate it. Thanks, guys.
spk05: Our next question will come from Magnus Speer with HC Wainwright. You may now go ahead.
spk04: Yes. Hi, Tony, Paul. Thanks for the presentation. Just a question on your chartering strategy going forward. You went spots ahead of the recovery. Do you see that changing? I mean, you paint a very positive forward picture. Do you see, you know, securing tonnage or staying spots for the remainder of the year? Do you have ongoing discussions now? I mean, how are the some of the trading houses looking to secure tonnage for the second half of the year?
spk01: Yeah, I think there's probably a scramble at the moment. But I think, you know, I think, you know, like a one-year MR eco-design rate might be up to around 20,000 a day now. That's unappealing given the spot market performance. But I think it's, you know, we always keep a close eye on what's happening in the time charter market, both chartering in and chartering out. And, you know, we kind of, you know, got, you know, we got... lucky or smart last year with our timing on both. At the moment, we have two ships time-chartered in at a little under 12,000 a day, and we have one remaining time-chartered out at 15,500. So we like the spread there, and we like the incremental spot exposure. But we're not averse to putting more ships out in TC. Generally, they're one-year deals, and it's really just a a position you take against a view you have on the spot market, you know, and kind of just managing exposure and looking for relative value chartering in and out. So that's kind of a rambling answer to a good question, which is, yes, we are keeping an eye on the time charter market, and, you know, it probably begins to look attractive into the kind of mid-20s.
spk04: And that would be, you know, longer term, 24, 36 months, or?
spk01: That gets pretty thin, that end of the market, unless you're in a really hot, hot market. So, you know, we haven't really seen that yet. I know that's been some discussion in other forums, and maybe we're not aware of it, that that's happening. But it does feel like it's building in that direction. This is a very typical kind of cyclical trend that we're experiencing right now with spot rates leading, then time charter rates, and asset values.
spk04: All right, thank you. Just one more question. You know, the chemical tanker market, you know, we're very familiar with the MR market, but maybe, you know, the chemical tanker market is very levered to global GDP. I mean, from looking at the market now, it looks like GDP is going to be revised further down. Can you kind of talk a little bit about some points where there's a resilience on the chemical demand versus GDP?
spk01: I think, you know, typically under normal circumstances. There's a very tight correlation and that's good. At the moment, it's being heavily affected by disruption from the conflict, just like the MR sector is. So you see really interesting trades going on. For example, we put a ship on one of our 25s on a voyage from Trinidad to the UK with UAN, which is liquid fertilizer, at $32,000 a day. And that's essentially, you could almost call that panic buying to cover springtime fertilizer needs that were expected to be covered out of Russia. Another interesting one is a voyage with styrene monomer, which is used to make polystyrene from China all the way to Rotterdam at a very, very high rate. And obviously, that's based on price ARBs. So I think that market is also very disrupted at the moment, and rates are very, very spiky there as well. So I think that when we get completely past the disruptive phase of what we're dealing with here, we'll have to see what the nature of GDP growth is at that time to kind of have any view on what the effect will be on the chemical market. But at the moment, it feels... The chemical market is never quite as spiky as products, but we've heard of voyages up to 50,000 a day. We haven't seen that yet in ours. We did one voyage with an MR at 95,000, but the averages are what we described on the call.
spk04: All right. Very good. That's it for me. Thank you.
spk05: Our next question will come from Chris Robertson with Jefferies. You may now go ahead.
spk03: Hey, good morning, Tony and Paul. Thanks for taking my questions.
spk01: Good to hear from you.
spk03: Tony, I guess given the low product inventory levels, how long do you think seaborne transport will simply meet immediate demand versus when inventories will actually begin to be restocked given kind of the key theme here for energy and national security? Mm-hmm.
spk01: So there has been outright panic buying of diesel, and that's had a knock-on effect. So we wouldn't go into much detail, but South American countries have had to go very, very far afield to cover their requirements. We've done some very back-of-the-envelope analysis, and it seems like you could add at least a few percent to MR demand over upwards of a year as people kind of reset their stocks to a little bit higher, not back to high levels. So, you know, we think it's additive. We don't think it's transformative, but we think it's additive. I think another thing, if I could just throw in, it's important to just mention that LR2s have begun to trade out of clean into dirty. And so far, I think about 15 ships, you know, this year have done that transition, and that's taking supply out. So I just... I forgot to mention that earlier on. I'll just throw it in there for the record. But we think that it's unclear today whether there's any meaningful restocking taking place or if it's all just covering immediate requirements. But we think restocking will come.
spk03: Okay. Thank you. I guess the second question here, so you mentioned last year is pretty tough in terms of rates. I think that's reflected in the scrapping that took place in 2021. So how might rising rates during this year impact the scrapping thesis? Do you think it pushes at least a few of those shifts at the tail end of the age spectrum out even further, or have they come to kind of the end of the road here?
spk01: So the average age of scrapping for MR is typically around 25 years. And, you know, that, you know, we saw a big run in scrapping last year. If you go back to, you know, earlier, you know, strong markets, you know, definitely does drop off. We would expect that to happen, to be honest with you. But because, you know, there's not a big swing in age, and so, you know, these ships are, you know, they're going to have to go pretty immediately anyway. So, you know, yes, I think it will probably negatively impact scrapping, but it's not like it will disappear. And it's not the kind of dynamic that you find in the VLCCs at the moment.
spk03: Okay, fair. And if I could sneak one last question in, how are the current lockdowns in China impacting refined product tanker demand? And do you think it'll be a tailwind into 3Q once the lockdowns end?
spk01: Yeah, I hesitate to say because it always sounds like we're just positive on everything, but the fact is that slower, lower consumption levels in China in that area has resulted in more exports.
spk03: All right, thanks.
spk05: Again, If you have a question, please press start and 1. Our next question will come from Climent Marmond with Value Investor Edge. You may now go ahead.
spk02: Good morning, gentlemen. Thank you for taking my questions. Following up on the capital allocation question, you have a generally young fleet and I was wondering how do you currently think of fleet renewal? You provided some commentary regarding potential new yield ordering. But how do you think of middle-aged vessel values, especially after the recent running rates?
spk01: Well, I think I'll start, and then maybe if there's anything that Paul wants to add to that, that's a good question. You know, look, inherently, middle-aged ships are usually very good investments. You know, they especially, you know, before they get to a certain age, they're It sounds like I'm talking about people, but I'm not talking about chips. But, you know, so, you know, when chips are kind of between 10 and 15 years of age, it's in many respects, it's their, you know, in terms of current returns on investment, that's their, you know, that's their best point. You know, because there's a lower amount of capital invested, but the earnings are about the same. So, you know, I don't think we have a hyper-modern fleet anymore. That's also okay, because it's a written-down fleet and provides us good returns on investment. We were going to sell our 08s anyway. Really pleased we could find a high-quality partner to charter them back from because that keeps our earnings power intact in our commercial scale. And the charter back rate, I think, gives them a decent return on investment, but it's an attractive level. So I don't know if there's anything, Paul, you want to add to that.
spk06: Yeah, I think that's pretty well covered.
spk02: That's helpful. Regarding the four vessels agreed to sell and charter back for a minimum period of two years, will you hold a purchase option once those charters come to an end?
spk01: No, we have options to extend, but not repurchase options.
spk02: That's helpful. And final question from me. even offer recently emerged as a significant shareholder in Ardmore. And I was wondering if you could provide any commentary regarding whether he has approached you over the past few months.
spk01: Good question. Look, you know, the filing they made was a 13G passive filing. You know, we're very pleased to have Quantum as an Ardmore investor, and I imagine they're pretty pleased with the returns they've gotten so far on the investment. You know, we have a regular investor outreach program, and we talk to all of our shareholders, you know, big and small, and they're no different.
spk02: That's very helpful. Thanks for taking my questions. You're welcome.
spk05: This concludes our question and answer session. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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