Universal Display Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 8, 2023

There are 6 speakers on the call.

Operator

Welcome to SFL's Third Quarter 2023 Conference Call. My name is Sande Borigli and I'm an analyst in SFL. Our CEO, Ole Hakkarke, will start the call by briefly going through the highlights of the quarter. Following that, our Chief Operating Officer, Trim Schirli will comment on vessel performance matters before our CFO, Aksel Orosen, will take us through the financials. The call will be concluded by opening up for questions, and I will explain the procedure to do so before the Q and A session.

Operator

Before we begin our presentation, I would like to note that this conference call will contain forward looking statements within the meaning of the U. S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these Forward looking statements. Forward looking statements are not guarantees of future performance.

Operator

These statements are based on our current plans and expectations and are inherently subject to risk and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward looking statements. Important factors that could cause actual results to differ include but are not limited to Condition is in the shipping, offshore and credit markets. You should therefore not place undue reliance on these forward looking statements. Please refer to our filings within the Securities and Exchange Commission for a more detailed discussion of risks and uncertainties, which may have a direct bearing on our operating results and our financial condition. Then I will leave the word over To our CEO, Ole Hakkar, with highlights for the Q3.

Speaker 1

Thank you, Sande. The charter revenues were $214,000,000 in the quarter, Which is up 23% from the previous quarter primarily due to the drilling rig Hercules now back in service. The EBITDA equivalent cash flow in the quarter was approximately $130,000,000 which was also higher than the 2nd quarter. And over the last 12 months, the EBITDA equivalent cash flow has been $485,000,000 in total. The net income came in at around $29,000,000 in the quarter or $0.23 per share.

Speaker 1

SSL. The net income was impacted by some one off items in the quarter including gains on a vessel sale in the Q3 and some mark to market effects. This was offset by 2 tankers that were drydocked in the quarter and an on schedule off fire of around 14 days on the jackup rig liners Due to repair works on the top drive with associated higher OpEx in the quarter. In line with the improved results and commitment to return value To our shareholders, we are also increasing our quarterly dividend to $0.25 per share. We have not paid dividends every quarter since the reception in 2004 And this has accumulated to $30 per share or more than $2,600,000,000 in total.

Speaker 1

And we have a robust Charter backlog supporting continued dividend capacity going forward. Our fixed rate backlog stands at approximately $3,400,000,000 And importantly, the backlog is concentrated around long term charters to very strong end users. This transition has been gradual As we have changed the business model from a maritime leasing company to maritime infrastructure provider over the last 10 years. This includes switching from primarily bareboat charters or financing arrangements to long term time charters to end users. And I would note that the backlog figure excludes revenues from the vessels traded in the short term market and also excludes future profit share optionality, Which we have seen can contribute significantly to our net income.

Speaker 1

In September, We took delivery of the first of our 4 dual fuel car carrier new builds. The vessel named Emden will go on charter to Volkswagen Group for 10 years Together with a sister vessel and we will deliver the vessels to Volkswagen in Europe. The short term market is red piping hot right now And we have secured a very attractive interim charter from the shipyard in Asia to Europe generating around $8,500,000 in EBITDA per vessel Over a period of only 2 months. In addition to the new builds, we also have 2 existing vessels on charter to Volkswagen That have been extended for approximately 3 years firm plus extension options, generating approximately 23 point $5,000,000 in EBITDA per vessel per year. We have a very close business relationship with Maersk Line SSATL.

Speaker 1

With 17 vessels on long term charters. Maersk Line recently exercised an option to extend a time charter For a 9,500 TEU vessel until mid-twenty 25. This is at a higher rate than the current charter rate Adding $13,000,000 to the charter backlog. In addition, we have a profit share relating to scrubber benefits on that vessel Where our share currently is 70%. In the Q3, we also fully repaid a Norwegian kroner denominated bond loan Issued in 2018 where there was $48,000,000 remaining at maturity.

Speaker 1

This was paid down from our cash balance. This loan was originally the equivalent of approximately $85,000,000 and the rest had already been repurchased opportunistically in the market. We have recently raised significant amounts in the new debt funding at very attractive terms in Asia and don't see a need to refinance the recently repaid bond loan With new financing in the near term. And after the extensive SPS and upgrade works SSL. To our harsh environment, semisubmersible Hercules, in the first half of twenty twenty three, the rig has been in Canada and drilled a well for ExxonMobil.

Speaker 1

This was finalized in September. And since then, the rig has mobilized to Namibia with a stopover in Las Palmas And it's scheduled to start drilling for Gulf and Ejia in Namibia next week. This is for 2 wells plus an optional well testing Estimated to take around 4 months including mobilization. When we calculate average day rates, we include mobilization of the rig from Las Palmas and back again And this is compensated by the customer. This started in early October and the estimated contract value is approximately $50,000,000 Implying a day rate of approximately 435,000 per day for the period.

Speaker 1

After Namibia, the rig will move back to Canada To commence a contract with Equinor. The contract is for 1 well plus 1 optional well. And the duration for the firm contract period is 6 to 7 months, Including transit to and from Canada, implying a day rate of approximately $520,000 per day for the period. The rig will then be open for new contracts from the Q4 2024 onwards. This rig is one of only a handful harsh environment ultra deepwater SSL.

Speaker 1

Submersible rigs available and market analysts are positive to long term market prospects based on recent tender activity and a tighter supply demand balance. And with that, I will give the word over to our Chief Operating Officer, Trim Schirley.

Speaker 2

Thank you, Ole. Over the years, we have changed both our fleet composition and structure and we are now a maritime infrastructure company with 73 maritime assets in our portfolio and Our backlog from omden managed shipping assets stands at $3,400,000,000 The current fleet is made up of 15 drybulk vessels, 36 container ships, 13 tankers, 2 drilling rigs and 7 car carriers where 4 are on the water and 3 are under construction in China. The remaining new buildings are scheduled for delivery over the next 7 months starting in November. We have evolved from having a single asset class chartered to 1 single customer to a diversified fleet and multiple counterparties. And the fleet composition has varied from originally 100% tankers via majority offshore assets 10 years ago to container vessels now being the largest segment With just under 50% of the backlog.

Speaker 2

Most of our vessels are in long term charters, but we have over the last 10 years completely transformed the company's operating model and have moved away from financing type bareboat charters and instead assumed full operating exposure. This makes us relevant for large industrial end users like Volkswagen, Maersk, Apag Lloyd and others. In the Q3, 94% of charter revenues from all assets came from time charter contracts and only 6% From bareboats or dry leases. In addition to fixed rate charter revenues, we've had significant contribution

Operator

SSR. The cash flow from profit share arrangements

Speaker 2

over time, both relating to charter rates and cost savings on fuel. Last 12 months, the aggregate SSATR. Profit share has been more than $16,000,000 Out of the current 73 vessels, We have 13 on bareboat type contracts and 60 on time charter and spot. Our operation is quite complex with vessels across multiple sectors And we have our own commercial operation out of Oslo as well as operational management out of Singapore and Stavanger. Our OpEx philosophy is to continuously invest in our fleet to optimize the vessel's performance and maintain a high level of service to our customers.

Speaker 2

This includes investing to minimize off hire as well as investments to increase cargo carrying capacity and reducing energy consumption. This has become increasingly important with the implementation of IMO Carbon Intensity Indicator, which will impact vessels operational profile including routing and speed. EU ETS is also another hot issue becoming live from next year. In Q3, we had a total of over 6,300 operating days defined as calendar days less technical or fire and dry dockings. 3 vessels have been drydocked in the quarter and our overall utilization across the shipping fleet was 99% in Q3 And 80.5% for the drilling rigs.

Speaker 2

For the rigs, as Ulla explained, operating days are days on rate or in transit Covered by mobilization fees, less days off hire and days spent in port not on drilling rates. One of the key ESG targets for SFL is the reduction of carbon emissions on our fleet. Such reduction can either be met by fleet renewal in more efficient ships and with greener fuels, increased efficiency of existing fleet or a combination of both. And as part of our fleet renewal program, we have 4 LNG dual fuel carriers under construction in China of which one Was delivered during the quarter, so 3 left. These vessels are among the most modern and efficient ships in the car carrier market.

Speaker 2

The haul has been improved and optimized with the new haul form with an SPAU as can be seen in the picture. And the LNG fuel system is of a high pressure type And the vessels are adapted for both ship to ship and port to ship LNG bunkering. In LNG mode, we expect SSL. 25% lower carbon footprint per vehicle carried compared to a standard 6,500 CEU conventional PCTC. The vessels are also fitted with the shore connection for 0 emissions operation in port.

Speaker 2

And in addition to being able to carry EVs, They will the ships will also be able to carry hydrogen fuel cell vehicles. The first ship Emden is on her first voyage from Asia to Europe under Hyundai Glovis and she will be delivered to Volkswagen in about 1 week's time. And with that, I will give the word over to our CFO, Aksel Oresund, who will take us through the financial highlights of the quarter.

Speaker 3

Thank you, Trim. In this slide, we are shown our pro form a illustration of cash flows for the Q3. Please note that this is only A guideline to assess the company's performance and is not in accordance with U. S. GAAP and also net of extraordinary and non cash items.

Speaker 3

The company generated gross charter hire of approximately SEK 214,000,000 in the 3rd quarter, including approximately SEK2,600,000 of profit share with approximately 94% of the revenue coming from our fixed charter rate backlog, which currently stands at SEK 3,400,000,000, Providing us with strong visibility on the cash flows going forward. In the Q3, the container fleet generated gross charter hire For approximately SEK91 1,000,000, including approximately SEK2.6 million in profit share related to fuel savings on 7 of our large container vessels. During the quarter, we took delivery of the first of our 4 dual fuel LNG car carriers. With 4 car carriers on charter at the end of the quarter, Our gross charter hire increased approximately $9,000,000 in the 3rd quarter compared to approximately $6,000,000 in the 2nd quarter. Our tanker fleet generated approximately $30,000,000 in gross charter hire during the Q3 compared to approximately $35,000,000 in the previous quarter.

Speaker 3

During the quarter, 2 Suezmax tankers were off hire for a total of 46 days in connection with scheduled periodic dry dockings. These costs are expensed directly for our shipping fleet. And OpEx for the tankers in the quarters was therefore higher than normal. The company has 15 dry bulk car carriers bulk carriers, of which 8 were employed on long term charters during the quarter. The vessels generated approximately $20,000,000 in gross charter hire in the Q3.

Speaker 3

7 of these vessels were employed in the spot and short term market And contributed approximately $6,200,000 in net charter hire during the quarter compared to approximately $7,200,000 in the previous quarter. SFL owns 2 harsh environment driven rigs, the Jacob Rig Linus and the semisubmersible rig, Hercules. During the Q3, the rigs generated approximately $64,000,000 in contract revenues compared to approximately $90,000,000 in the second quarter. The lioness is currently under long term contract to Comco Philips Scandinavia until the end of 2028. In the Q3, the rig generated approximately $16,600,000 in contract revenues, which is down from the approximately $90,000,000 in the 2nd quarter As the rig was off hire for approximately 16 days relating to an unscheduled repair of the top drive.

Speaker 3

Due to the repair works, the OpEx for the rig was also $2,000,000 higher than budgeted for during the quarter. Hercules completed the drilling contract for ExxonMobil in Canada in September and has now been mobilized to Namibia, It is expected to commence a contract with GALP Energia shortly. During the quarter, the rig recorded approximately $48,000,000 in contract revenues As the mobilization fees paid by ExxonMobil and associated costs is recognized over the actual drilling period Pursuant to U. S. GAAP.

Speaker 3

The same principle has been applied for demobilization fees due after the drilling contract was completed. Our operating and G and A expenses for the quarter was $86,000,000 compared to $68,000,000 in the previous quarter, Primarily due to Hercules being back in operation, scheduled dry dockings and downtime and repair on the lines. This summarizes to adjusted EBITDA for approximately $130,000,000 in the Q3 compared to $109,000,000 in the previous quarter. We then move on to the profit and loss statement as reported on the U. S.

Speaker 3

GAAP. As we have described in previous earnings calls, our accounting statements are different from those of a traditional shipping company. And as our business strategy focuses on long term charter contracts, A large part of our activities are classified as capital leasing. Therefore, a significant portion of our charter revenues are excluded from US GAAP operating revenues. This includes repayment of investment in sales type, direct financing leases and leaseback assets and revenues from entities Classified as investment in associates for accounting purposes.

Speaker 3

The 3rd quarter report total operating revenues according to U. S. GAAP For approximately $205,000,000 this is less than approximately $214,000,000 of charter hire actually received for reasons just mentioned. During the quarter, the company recorded profit share income of approximately $2,600,000 from fuel savings on some of our large container vessels and a car carrier. As previously mentioned, the Hercules was back in operation during the Q3 and contributed with $48,000,000 in contract revenue.

Speaker 3

Furthermore, this net result was impacted by nonrecurring and noncash items, including a gain from sale of the VLCC in the Ambridge business system Approximately SEK 2,000,000. A net positive mark to market effect from swaps of approximately SEK 2,300,000, A positive mark to market effect from equity investments of SEK 300,000 and a decrease of SEK 300,000 on credit loss provisions. With the corporate taxes and the tolling taxes in Canada, the company also recorded approximately $2,300,000 of taxes in the 3rd quarter Related to the Hercules. SSL also expects to pay similar types of customer taxes in Namibia. So overall and according to US GAAP, the company reported a net profit of approximately 29 €300,000 or 0 point 23 dollars per share compared to approximately €17,000,000 or €0.13 per share in the previous quarter.

Speaker 3

In terms of near term outlook, we expect lower revenues for Hercules in Q4 due to a long mobilization period from Canada to Namibia, The rig is due to commence the contract to Galpin Energia shortly. As mentioned previously, revenue from the Hercules But due to U. S. GAAP accounting standards, we recognize only from the drilling commencement date and hence mobilization fees We'll be allocated throughout and respective quarters ofcluding operations. For car carriers, revenues are set to increase as we had 3 newbuildings Delivering from Q4 to Q2 with the 2nd vessel being delivered from the R in China second half of November.

Speaker 3

Following the handover to Volkswagen of the first and second newbuilding during Q4 and Q2, The SFL conductor and SFL composer will continue the charter to Volkswagen for another 2 years plus optional years With an estimated EBITA contribution of SEK 23,500,000 per vessel per year. Moving on to the balance sheet. At quarter end, SFL had approximately SEK 180,000,000 of cash and cash equivalents. Furthermore, the company had market loss securities of approximately $6,200,000 based on market prices at the end of the quarter. During the quarter, the company Fully redeemed unlock bond, of which SEK 49,000,000 was outstanding with cash on balance sheet.

Speaker 3

The outstanding capital expenditure of approximately SEK 100 and SSR. $36,000,000 of my 3 car carriers under construction has been fully financed by $194,000,000 of net senior Yalco financing Yet to be drawn. During the quarter, the company redelivered the VHCC Le Ambus Wisdom following a declaration of a purchase option. The sale had a SEK 10,000,000 positive cash effect after repayment of secured debt relating to the vessel and the corresponding book gain of approximately 2,000,000 has been recorded in the Q3. So based on Q3 numbers, the company has a book equity ratio of approximately 28.4%.

Speaker 3

Then to conclude, the company has delivered another strong quarter with growth in both revenues and EBITDA. Board has declared a 79 consecutive cash dividend to increase the dividend to $0.25 per share. This represents a dividend yield of approximately 9% Based on the closing share price last Friday. The company has a strong balance sheet and liquidity position. So far in 2023, the company secured new financing arrangements of more than $1,000,000,000 and we recently repaid A NOK bond with cash on balance sheet.

Speaker 3

Furthermore, our 3 new buildings are fully financed with attractive long term financing, which will free up additional liquidity upon delivery. Our fixed short rate backlog currently stands at 3,400,000,000 which provides us with strong visibility on our cash flow going forward. And finally, with the Hercules now back in operation and delivery of Newbuilding car carriers together with new contracts for existing vessels is a strong revenue generation in the quarters to come as vessels are delivered and new charters And with that, let me conclude the presentation and move on to the Q and A session.

Operator

Thank you, Aksel. We will now open up for our Q and A session. For those of you who are following this presentation through Zoom, please use the raise hand function to ask a question. When your name is called out, please unmute your speaker to ask your question. Thank you.

Speaker 4

Hey, guys. Can you hear me?

Operator

Absolutely. Thank you.

Speaker 4

Yes. I couldn't find the raised hand function, so I figured I'd just hop in. This is Greg from Greg Lewis. Hey, Ola. How are you?

Speaker 1

Yeah. Hi, Greg.

Speaker 4

I had a few questions I was hoping we could walk It was good to see the dividend increase. And Yes. I guess two things. One is, as you think about managing the trajectory of the dividend over the next, I don't know, 1 to 2 years. How should we think about balancing potential dividend growth Sure.

Speaker 4

We're clearly in a strong part of the cycle. And those assets look like they're going to probable the Hercules looks like it's going to be able to generate a lot of cash here SSO. Over the next 2 to 3 years, but maybe not as it's definitely a more volatile asset than, say, your car carriers or container ships. So just trying to And how you think about uses of cash from the Hercules as we re contract this over the next couple of years?

Speaker 1

Yeah, I appreciate that. I mean the Hercules as you mentioned, we just spent quite a bit of money on that rig in the 1st and second quarter of the year And when it was out of service, and now it's really only got started. So the charter rate in Canada, that was fixed More than a year ago, so it was at a lower rate. So that charter rate should be mounting now As it is expected to start drilling in Namibia already next week. And the charter rate in Namibia is on based on the SSL.

Speaker 1

If we include both mobilization to and from Namibia under drilling rate should be well above the drilling rate we had or the rate we had in Canada. And that is going back to Canada later next year for an even higher rate. And in fact, the drilling rate we have on Hercules, it's the highest Drilling rate I would say in this cycle to date. So this rig is a very capable unit and customers are clearly willing to pay for the services. Of nature, that market is a shorter term charter market.

Speaker 1

So it's not this is not a market where you normally get SSL. Sort of 10, 8, 10, 15 year charters. It's typically shorter charters and we have deliberately not Been so keen on fixing it long term because we see this market really building. And you don't really want to fix something at the low end Of the cycle, we think this is a cycle that has legs. And therefore, we're holding back a little bit before we want to, what we say, look for Really long term charters on that unit.

Speaker 1

I think if we were to look at long term charters for the unit, you would have to accept lower rates And what we are fixing it at currently. So that's one asset. Of course, it's a big asset. But also if you look at the history of that drilling rig, I mean this is a drilling that used to be on charter to Seadrill. SEDL ended up in 2 Chapter 11s.

Speaker 1

We were offered in the last round a very in our minds a very Or call it treatment in the restructuring, we decided to take it back. And I think we can be honest and say it's been a really good decision From the company side to do that because returns we've had on this rate now with the rates we see is spectacularly better than the alternative would have been. But that is the history and the setting around that rate. If you look at some of the other assets, look at the car carriers That I think it's sort of a segment. We used to have 2 vessels.

Speaker 1

Then we ordered the 4 vessels. Then we bought another vessel. And then we have this quite spectacular both the transportation lag, if you could call it that, on 2 Of these vessels, where we make more than 10% of construction costs just moving the vessel from Asia to Europe. So you have a lot of other bits and pieces here that's also generating a lot of cash flow. And then we have the re chartering of the 2 older vessels So Volkswagen, where we increased the dividend by times 5 compared to where it was originally, You know, simply because we own those assets and we negotiated it.

Speaker 1

And Volkswagen seem to be quite happy with the service we provide them. So There is not the rig is 1 piece, but there are also other elements in our portfolio that is also adding. And of course, our mindset is, yes, Our principal objective in SFL is to return cash to shareholders. I mean, that's why we're here. Otherwise, there wouldn't be any point And having a company like SFL, if we don't really do that over time.

Speaker 1

And It's been 79 quarters now and we've been always made money operationally every single quarter based on our distribution. So I think, yes, we are I think that we are really just at the starting point in our minds of where we In terms of cash flow from some of these assets. So hopefully, there is more More dividend potential also going forward.

Speaker 4

Yes. The event is super helpful. Thank you for that. I did want to ask kind of a bigger picture question. Clearly across the more conventional shipping space where it's definitely a market that you continue to look at And I have assets in.

Speaker 4

As SOFR has gone up, spreads have gone up, How has that changed the potential opportunities for SFL, I. E, I'm talking to some Ship owners and they're looking at 8%, 9% or even higher borrowing costs. Has that Created more opportunities for SFL I. E. Is the transactions team SSATL.

Speaker 4

Busy here as we sit here in November relative to maybe where they were earlier this year? Or is it, hey, the market's been good for a couple of years and It's kind of steady as she goes.

Speaker 1

Yes, it's a good question. I mean, if you go back to 2022, we screened or did really work on more than $20,000,000,000 of deal potential deal flow and we ended up doing 1 in the end for various reasons. I think this year has been the volume has been lower in aggregate. And I think with the rising interest rate market, it's also I would say the way we see it, it's a little it's a time lag SSL. From where the underlying metrics and interest rates is 1, asset replacement cost is another, Maybe to a certain degree operating expenses to the extent there has been call it a little inflation in those metrics.

Speaker 1

It takes a little time for that to filter through in a customer's willingness to pay off for those services. SSL. So that's why I think you know in so you know 2023 has been I would say the more interesting deal flow opportunities Has been I would say on a gross number a little lower than 22, but I think this is going to pick up again. But I think the ones I mean if you look at the ones who offer more financing structures Maybe for them there is more deal flow opportunity right now simply because funding cost is higher And therefore, the alternative cost of doing like a bareboat type lease is relatively smaller. But we have strategically moved a little away from the bareboat type offering.

Speaker 1

Because what we have seen is that for those kind of deals, you typically do that with intermediaries. You don't do a bareboat deal with an end user. And therefore, there is a risk element here that I think is underappreciated. Right now, most of the shipping segments are booming, strong markets, nobody talks about it. But we've been through this over 20 years now.

Speaker 1

We've seen some cycle over the cycles over the years. So our focus is We do deals with strong counterparties, end users, focus on getting the right deals done and don't be nervous if there is a quarter when you do that Many deals. The deal flow is out there. There is a continued need for transportation assets and logistics solutions on the water. But just don't be desperate to do a deal because that's when you do the wrong deals.

Speaker 1

Maybe that's the short answer to that. We are constantly screening deal opportunities. We are looking at opportunities. We cannot communicate specifically what we look at But there are deals that could potentially be done. But we try to be disciplined.

Speaker 1

It's got to be the right type of asset. We have to focus on the right as we call it residual value exposure I. E. What kind of residual risk are we willing to take on after a deal? What's the financing structure?

Speaker 1

And maybe importantly, who's the counterparty? Is this counterparty strong enough? And And then underlying volatile market, is this counterparty someone who can honor their obligation also in a down cycle? Because that's what we've seen over the years is that anybody can do a deal in an upcycle market, you just pay a little more than the next guy. The problem is how do you manage the down cycles?

Speaker 1

And that's I think that's something that We hope our history brings along is that yes markets are volatile but we managed through some pretty rough cycles. And hopefully we're set up SSL. To deal even better with cycles going forward.

Speaker 4

Okay, great. And then I did just have one other SSO. On the balance sheet, I noticed we saw I guess sequentially Some of the long term lease liability went into short term lease liability. Is that just going to unwind? Or should we think about that being either renewed or extended Over the next call, I don't know.

Speaker 4

Couple

Speaker 3

of questions. Thanks, Craig. Saxel here. So I think you should look at that as All our like our ordinary traditional debt on the vessels that there are opportunities to basically roll this going Forward as well. We haven't finally concluded if we kind of do a new Yoco or do that with traditional bank financing, but both options are Likely.

Speaker 3

So I could just assume rolling that on the same level, yes.

Speaker 4

Okay, perfect. Thank you for that. Thanks, everybody.

Operator

Thank you. Thank you. What else are you following this presentation presume? The raise hand function can be found on the reactions in the toolbar. And the next question will come from Richard Diamond.

Operator

Please unmute your speaker. Yeah.

Speaker 5

Great quarter, great job building cash flow. Ole, you and the team have incredible deal flow at SFL. What do you think are the most interesting areas looking out to the Q4 and next year?

Speaker 1

Yeah. Thanks for that, Richard. And thanks for the kind words. We are focusing across Board, our preference are for deals that are I would say logistics sort of oriented I. E.

Speaker 1

Where we go into a logistics Shane with counterparties. So car carriers, for instance, is a segment that we've been spending quite a bit of time on. We've grown a lot in that segment. We still think there could be interesting opportunities on the container side. Yes, the market is volatile.

Speaker 1

And yes, SSL. You know, because it's not the super cycle we saw a year or 2 ago, but there's still underlying demand for transportation capacity. And certainly With the modern high end assets, the more fuel efficient that is reducing both call it And the energy footprint or emissions footprint per loaded box where that matters. SSL. And that's also where we have concentrated our investments.

Speaker 1

We've also seen some opportunities on the tanker side. So I would say there are opportunities across the board here. We the only segment you can say we don't have in our portfolio that would be natural Would be LNG in particular. But our dilemma there has been one, it's sort of The investment level in that segment and the charter rates where you don't really amortize down so much of the investment, Which means that we have been a little conservative in our willingness to take on residual exposure in that segment. So but otherwise we are active across the board and looking opportunities and I think we have quite good access to deal flow.

Operator

Thank you.

Speaker 1

Yes. Thank you.

Operator

Thank you. As there are no further questions from the audience, I would like to thank everyone for participating in this conference call. If you have any follow-up questions to management, There are contact details in the press release, or you can get in touch with us through the contact pages on our web page, www.sflcorp.com. Thank you very much.

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Universal Display Q3 2023
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