Jul 23, 2018
Executives
Hugh Baker - CFO Emanuele Lauro - Chairman and CEO Robert Bugbee - President Cameron Mackey - COO
Analysts
Jon Chappell - Evercore ISI Randy Giveans - Jefferies Amit Mehrotra - Deutsche Bank Magnus Fyhr - Seaport Global Noah Parquette - JP Morgan Fotis Giannakoulis - Morgan Stanley Ben Nolan - Stifel Nicolaus
Operator
Hello, and welcome to the Scorpio Bulkers Inc. Second Quarter 2018 Conference Call.
I would now like to turn the call over to Hugh Baker, Chief Financial Officer. Sir, go ahead.
Hugh Baker
Thank you, Operator. Thank you for joining us today.
On the call with me are Emanuele Lauro, our Chairman and Chief Executive Officer; Robert Bugbee, our President; and Cameron Mackey, our Chief Operating Officer. The information discussed on this call is based on information as of today, July 23, 2018 and may contain forward-looking statements that involve risk and uncertainty.
Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release that we issued today, as well as Scorpio Bulkers' SEC filings, which are available at www.scorpiobulkers.com.
Call participants are advised that the audio of this conference call is being broadcast live on the web and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our Web site for approximately 14 days.
Now, I'd like to introduce Emanuele Lauro.
Emanuele Lauro
Thank you, Hugh. Welcome to our second quarter earnings call everybody.
Thank you for your time today. I will keep my comments brief here as it is pleasing to report that the company is making good progress on all its key operational and financial fronts.
Supply side factors in our industry remain benign, and as such, fundamentals continue to work in our favor. Although we acknowledge the macroeconomic factors could actually put the market recovery in jeopardy.
We must respect the tone of negative macro commentary and the risk of a global trade war leading to a broader policy-driven slowdown. I have little to add to this noise except that we are vigilant and watchful.
Near-term, notwithstanding the escalating trade tensions, we have not seen any direct evidence of trade tensions decelerating Chinese economic activity or demand on our trade routes. We are pleased with the quarterly performance and the forward bookings that we are announcing today.
Should weakness occur, even if we don't expect it, we are well-suited to withstand more volatile markets. Through a combination of positive cash flows, the closing of recently announced sale leasebacks and refinancing of existing commercial loans, we intend to increase or have intended to increase SALT's liquidity over the coming weeks.
Our balance sheet is well-positioned, and we continue to bring our cost of debt finance lower. The company took delivery of its last new big vessel [ph] in the quarter, the SBI Lynx, a Kamsarmax vessel.
With our modern Echo spot fleet, we retain the operational and financial gearing to the steady recovery which is so attractive to those of you who hold our shares. With that, I will hand the call back to Hugh Baker.
Hugh Baker
Thank you, Emanuele. I am pleased to announce a positive net income of $800,000 and EBITDA of $28.1 million for the second quarter.
The company also announced a dividend of $0.02 for the quarter, and I can confirm that no stock has been purchased since Q1. During the quarter, our Ultramax vessels earned $11,569 per day, and our Kamsarmax vessels $12,283 per day.
As of today, I can guide you that our Ultramaxes have earned $10,963 for 46% of the days of the third quarter, and our Kamsarmaxes have earned $13,374 per day for 47% of the days of the third quarter. Also as Emanuele mentioned, we're also pleased to announce that we took delivery of our only remaining new building vessel, SBI Lynx, which is a Kamsarmax, in June.
As of now, we have no vessels in order. Emanuele also mentioned that our balance sheet is well-positioned.
During the quarter, we drew down on our previously announced $12.8 million credit facility for SBI Lynx; we closed two previously announced lease financings for $36 million in aggregate, and announced a new $30 million credit facility to refinance two vessels. Our cash position today is $80.5 million, and we will continue to strengthen our balance sheet through a program of refinancing existing debt through new higher advance but lower cost loans and leases.
We're very pleased with the support we have received from our key lenders, and expect this to continue with refinancing -- and we expect to continue this refinancing process in a thoughtful and methodical way. I can guide you that we do expect to announce additional refinancing during August which will substantially increase our liquidity position and financial flexibility going into the fourth quarter.
With that, I'd like to open the call to questions.
Operator
Thank you. [Operator Instructions] Our first question comes from Jon Chappell with Evercore.
Your line is now open.
Jon Chappell
Thank you. Good morning.
Hugh, on the last point on the refinancings, it's interesting to see you're still doing sale and leaseback transactions. Obviously from the Scorpio Tankers side that seems to be from -- a little bit forced to do that to kind of repair the balance sheet, but from a Scorpio Bulkers standpoint, you already have a pretty robust balance sheet.
So why are you still choosing sale and leasebacks, is that just another arrow in the quiver, does that address some of the macro risks that Emanuele is talking about, or how do you view sale and leasebacks versus just normal course refinancing?
Hugh Baker
Jon, that's a very good question, and I'm going to give you a very sensitive answer that the sale and leasebacks that we have engaged in at Scorpio Bulkers are slightly different from the sale and leasebacks that we've engaged in with Scorpio Tankers. The primary reason for these sales and leasebacks is because of the competitive terms that they offer.
The Scorpio Tankers sale and leasebacks are principally from Chinese leasing companies, and they display very favorable terms, but the Scorpio Bulkers sale and leasebacks are different. They are with different counterparties.
They are not with Chinese leasing companies. And what we're seeing is very competitive terms on a single-ship financing basis.
And we are opportunistically taking advantage of these single-ship financings to execute the sale and leasebacks that we have. To give you an idea, they tend to have high advance rates, much higher than the sort of 60% advance rates you would normally see in bank finance, but the margin and pricing for these sale and leasebacks is actually lower than in our -- normal bank financing.
So what you're seeing is -- and I think that we're seeing five-year fixed financings at a floating rate of LIBOR that is below 2%, and we feel that's very competitive, and on an opportunistic and individual basis, we may continue to do that.
Jon Chappell
Okay, that's helpful. And just one follow-up, I'm sure regulations are going to dominate this earnings season.
You guys are first and you get to address it first. I'll let other people use the S-word, but maybe let me ask it a little differently.
Your fleet is incredibly modern. I think there's two 2014s, everything else is '15 or newer, which would mean normally your first dry dockings wouldn't really come until 2020.
But do you expect any off-hire time ahead of 2020 associated with balance water treatment installation or any other installations to meet upcoming regulations?
Emanuele Lauro
Cameron.
Cameron Mackey
Yes, Jon, maybe I can take that. We continue to evaluate scrubbers.
I think most in the community admit now or agree that the case for scrubbers is more compelling the larger the ship size, whether it's containers wet or dry. We continue to look at them but we haven't yet gotten to the point where we feel that's a good use of capital for Scorpio Bulkers.
That has to do both with the technology and technological risks, regulatory risks, and most importantly for smaller vessel sizes the availability of HFO in, call them secondary or tertiary bunkering ports post 2020. There may be a point where it becomes compelling but it isn't to us today.
But as and when we get closer to 2020 we'll see how the facts on the ground change.
Jon Chappell
Okay. Thank you, Cam.
Thanks, Hugh.
Operator
Thank you. Our next question comes from Randy Giveans with Jefferies.
Your line is now open.
Randy Giveans
Thanks, and good morning, guys. First and foremost, congrats on the first ever quarterly positive EPS, so hopefully more to come there.
A few quick questions, currently manageable leverage, over $8 million in cash, as you said. We're expecting pretty significant free cash in the back half of 2018 and beyond.
So as such, when looking at the dividend how and when do you decide to increase it or should we expect on the dividend to stay at that $0.02 per quarter for the foreseeable future?
Robert Bugbee
Randy, it's Robert. I think we're going to take things one step at a time in that we went through -- if we take it from the fourth quarter last year we did some very significant investments, grew the fleet by 20%-25%.
We're actually using all cash. Then in the first quarter we did another couple of things.
In the first and second quarter basically we're consolidating the balance sheet, keeping everything steady. And now that you're hearing from Hugh at the beginning of the third quarter, the end of the second, we're starting to really get the benefits of this through our financing.
I mean Hugh was being pretty modest about what he's achieved in these sale leasebacks, they really are incredibly good financings for the company. Very high leverage against the extremely low fixed cost, so they do a number of things in terms of balance things out in a, perhaps, increasing interest rate curve.
And the next thing that we're doing is we are taking the next benefit to a stronger balance sheet and refinancing at much lower cost and rate and so longer tenure. And taking advantage not only the increased strength in the balance sheet and cash flows, but increase in the value of the company to refinance the other parts of the balance sheet in terms of some of the commercial loans that are either a little bit older or were put in place when the company's balance sheet was weaker when the dry cargo market and the company wasn't strong enough.
And that's really what we're going to be focusing on. And at this point we haven't had any other discussions other than accomplishing that.
And that we hope to pretty well have done by the next time we talk on the third quarter.
Randy Giveans
All right, so $0.02 for the foreseeable future; got it. Going -- I guess you answered part of it with that question, but looking at share repurchases, you did that 1.2 million shares at an average price of like $7.39 during 1Q '18.
But as you mentioned in the call, or Hugh did, during 2Q no share repurchases despite the share price dipping below $7 for a few days there, and now it's still at $7.30, well below NAV. So should we expect either share repurchases or debt repurchases here in 3Q '18.
I know you're focusing on the balance sheet, but that aside.
Robert Bugbee
Yes, we're going to focus on the balance sheet. We're not going to -- the only comment I'll make to share repurchases is that we were locked up or we were in a blackout period when you can't always, as a company, unfortunately come in on those sort of days where the stock is under pressure.
In those period you were talking about, where the stock traded in the sixes. I think the fair thing to do is to create a -- we're right alongside shareholders as management and insiders here, and we're [technical difficulty] the strongest value we can.
And the strongest value that we think at the moment is to spend this time taking the dividend, as it were, of the improved position of the company and refinancing for much cheaper and better terms structurally going forward. And that will then give us an amazing ability.
I mean if you imagine, there's a dollar worth of cash on the company at the moment, but it's not unreasonable to think that we would have at least $2 of cash on the balance sheet come the next time we talk on the earnings. And as you know, every sort of $10 million above your free cash or freedom cash is incrementally more and more valuable.
So for us I think it's a question of being patient. Obviously becomes a little bit more tempting just to take advantage if you have those really weak days and you're not blacked out and are restricted on windows and there's volume there.
But otherwise the company is just going to focus on its mission to create a position between its modern fleet that really is very well-prepared for IMO 20; the fact that the fleet is on the spot market, so it's very well-prepared for what we see as improving fundaments. A balance sheet that if the world is good is extremely well-prepared at that side of buybacks and/or dividends.
And also, if over this next two or three months something unfortunate does happen in the world's macro outlook; the company is extremely prepared for that. That I think is the thing that's worth concentrating on.
Randy Giveans
All right. Good to hear from you Robert.
All right, thank you all very much. I'll pass it on.
Operator
Thank you. Our next question comes from Amit Mehrotra with Deutsche Bank.
Your line is now open.
Amit Mehrotra
Okay, thank you. Hi, everybody.
So the cash breakeven, I guess obviously in the second and third quarter, you're running above cash flow breakeven, cash flows are accruing to book equity and equity holders for the first time I think ever, to Randy's point. If that trend continues just related to all these questions around focusing on the balance sheet, but you're already at 50% net LTV, there's obviously a lot of opportunities out there from a growth perspective.
If surplus cash flow over and above debt amortization kind of starts to inflect higher are you more inclined to de-lever the balance sheet further or are you more inclined to maybe return to growing the fleet in kind of a prudent way?
Robert Bugbee
Well, I think we've spent the last two quarters and doing third, we are halfway through the third quarter where we've pretty well shown the inclination, which has been to de-lever the balance sheet to increase liquidity so as we can either take advantage of, let's say, any dislocation between what is the best fleet we should buy out there, which is our own fleet through buybacks or distributing value to shareholders. So we haven't really shown a stronger inclination to grow the fleet further, which is think is substantial on an operating position.
The other thing is that we left ourselves the opening in the last conference call which we would restate. That if there is the -- if there's something, if the stars aligned and you've got something that is particularly special out there, a unique situation with modern ships at the right structure and order of course you would look at it.
So far -- it's fairly rare to get that at the moment.
Amit Mehrotra
Well, if I could just maybe ask the question in reverse with Robert and Emanuele, if you look at SALT. In addition to SALT you obviously also own the world's largest product tanker company.
I would say SALT is clearly -- if would say, if it's fair to say, a different company than when you envisioned it first back in 2013 when you floated it, or a little earlier than that. We're also in environment where many other dry bulk companies whether it's Genco or Eagle are sort of in growth mode and looking to add high value kind of young tonnage like what you have.
So in that context, would you ever thing about rolling the equity of SALT into another dry bulk company? And then maybe allowing yourself to give more attention to the product tanker side where you are the biggest, and maybe there is more opportunity from a regulatory stand?
I know the question is little bit of left field, but just trying to think about how you think about that.
Robert Bugbee
Well, I think they are individual positions to start with. It's a public company regardless of how much the insider zone, it's a public company.
So it's a hypothetical question, and tell somebody actually makes a worthwhile offer, and -- or and tell the company itself like in the case of previous company called [indiscernible] the management manage where the company felt that the upside was there to just you know, what the right time to actually put the company on the market for sale.
Amit Mehrotra
Right.
Robert Bugbee
So, tell that time you know, it's whatever. The roll in is like -– yes, I mean you have to keep them separate, there is not…
Amit Mehrotra
Yes. It's maybe also an unfair question on a public call, so I fully understand that.
Just one quick one for Cam if I could, just on Jonathan's question on IMO 2020, which I think that was the question he maybe didn't want to mention IMO 2020 for some reason, but I think related to IMO 2020 outside of scrubbers, could you just update us on your thoughts in terms of expectations around just based on your conversations with some of your fuel suppliers and things like that, what is your latest thoughts on where the spread between low and high sulphur fuel could go, because that seems to be kind of a big question mark. And then related to that just on the operation side, if we do see -- is there like some formula or help or rule of thumb that we can think of to try to understand the relationship between the cost of fuel or bunkers versus the kind of the speed of the vessel.
I have heard numerous things out there in terms of exponential relationships between speed and propulsion. And so just any help there to help understand what the opportunity could be in terms of slow steaming of the dry bulk fleet?
Cameron Mackey
Sure, no problem. Let me take the second one first.
So as you may know, whether it's cars, airplanes, buses or ships, conventional engines follow exponential power curve. So it is correct that like it depends on the design rating of the engine, but in most circumstances by cutting your speed by 20% or 30%, you can save maybe 50% on your fuel consumption.
That rule of thumb may not apply to all ship types and all transportation type, but if you look very quickly at where a nominal rating lies on that exponential curve, you can see that there is an outside benefit in consumption by reducing your speed just a little bit. So slow steaming indisputably provides great savings.
The question really is at what cost, at what cost of the charterer and at what opportunity cost to the vessel. So it depends on the state of the market and obviously what the customer wants.
Going back to your first question, it is a very mixed bag on what the availability of different fuels will be and what their relative pricing will be post 2020. Many believe that the spread, which comes somewhere in the high 300s will expand materially as we get towards 2020.
I would caution, however, that there are a number of blended products coming to market, which in certain circumstances could be quite useful substitute for distil it, post 2020 -- post regulatory rollout. And then how the market adjusts both in terms of pricing, but as importantly in terms of availability and physical supply, it's still very, very much in question.
I think the early adoption of larger ship types -- the big container ships, the larger bulk carriers, the large tankers obviously give us a good feeling about availability in some key global ports. There is sort of a positive exponentially that is developing around fuel availability.
It looks quite good. But when you get into smaller ships that have to bunker in areas way off that those main trade routes, it's still very, very unknown and uncertain whether the benefit of a scrubber can be realized because you won't be able to find any fuel.
That is in doubt, the environment is changing rapidly and we're watching it.
Amit Mehrotra
Yes. Very one -- very, very quick one and then I'll leave, on just your comment about blending down high sulphur fuel into more compliant fuel, is it just a weighted average, i.e., if in order to blend down high sulphur fuel into 0.5 or lower compliant fuel, you just need two to three times as much low sulphur fuel to bring that down, is that how we should think about it?
Cameron Mackey
No. Well, first of all, I won't purport special expertise here.
You should really talk to a refining analyst, but my understanding is it's a combination of desulphurization, so, additional steps in the refining process and blending down fuel…
Amit Mehrotra
Got it.
Cameron Mackey
- with other kind of stocks, so it's not quite so simple. But -- and there in lies the question on where those blend lie in the spectrum between in specification and pricing between distil and heavy.
Amit Mehrotra
Got it. Okay, thank you very much for answering my question guys.
Good quarter. Appreciate it.
Operator
Thank you. Our next question comes from Magnus Fyhr with Seaport Global.
Your line is now open.
Magnus Fyhr
Yes, hi, good morning. Just two questions left.
First, is to just follow-up on the capital allocation. I mean your stock trade pretty signification discount vis-à-vis the peer group, it sounds like debt reduction remains a focus for SALT, can you elaborate on any targets over the next 12 months as far as debt to cap ratios?
Hugh Baker
No. I think that we elaborated enough by saying that we are spending this quarter and we would expect to put ourselves in a position where we would have around $2 a share or whatever tax on the balance sheet.
And I didn't say that we were having a priority going forward on debt reduction. I said our priority was to trade liquidity and refinancing in terms of a beneficial way to our improved position.
In fact what I have said is that that's where we will concentrate, take advantage of doing that. Get the liquidity to $2 a share or so, which will then give up various options at that point which would include dividend, stock buyback other things.
When it comes to buying ships, we already said to previous questioner that except for a rare opportunity which we don't necessarily foresee, we think we have a large enough fleet. So you should be able to triangulate from that point so that where we would go from there.
Magnus Fyhr
Okay, well, thanks for clarifying. Just a follow-up or a question on the rates in the quarter, I know it's kind of seasonally weak part of the year.
It looks like the spread between the Kamsarmaxes and Ultramaxes increased during the third quarter. I mean is it -- can you explain that?
Or is it just kind of in the seasonally weaker period where the bigger ships may get little better bid?
Hugh Baker
I think you've got -- I think it's more positive than that. I would say that the Ultramaxes has been doing fine for these last two quarters.
If you put the second and the third as it is together, that's a great improvement over the last year in what you correctly identify is a seasonally week period. I think the oddity in this and I think you are going to -- is that the Capes in Kamsarmaxes are just strong for a weak quarter which is much more positive.
I think it's really interesting that ahead of the seasonally normally stronger quarter, the fourth quarter for the Capes in Kamsarmaxes you've just got this sort of early start coming right now. I think it is a very very good thing.
And I think is going to be echoed by other owners as they -- the way the Kamsarmaxes in Capes is they come their earnings call. So I wouldn't say that it is negative.
And the Ultramaxes, the Ultramaxes is on year on year is a very positive, great development. It's just simply rather a big positive to the Kamsarmaxes in the Capes.
Magnus Fyhr
Okay. Thank you.
I mean is there anything fundamentally -- I mean you are carrying a lot of coal, anything you can tell us about what's going on both in India and China as far as their purchases here?
Hugh Baker
I think that Emanuele alluded to in the first part of the call and the earnings we're going further than that, so far we are only seeing positive development in demand out of China or out of India in terms of the commodities. And have not yet seen any negatives as a result of economic or tariff or trade threats.
Magnus Fyhr
All right. Thanks.
That's it from me.
Operator
Thank you. Our next question comes from Noah Parquette with JP Morgan.
Your line is now open.
Noah Parquette
Hi, thanks. We have heard that some exporters in the U.S.
are thinking about sending soybeans down to South America before they exported to China. Have you heard anything regarding that?
Or have you seen anything like that to support that in your fleet movements? And on the soybean issue, would you guys think that U.S.
exports could go to China?
Hugh Baker
Yes, it's a difficult one. It's a -- Down in Pennsylvania this week we were talking to a soybean farmer.
He had 1700 acres of soybean. He was putting a brave face on it and saying, oh, well, I have got the ability to store.
I don't have to sell at these really distressed prices. But probably has to start selling.
So I think it's a difficult dynamic because -- simply because the price of soybean themselves have fallen now in the U.S. more than the 25% of the tariff.
So you could just have the Chinese buying. Their all in cost shipping is fairly cheap.
So to the Chinese, it's almost like so what? They are still buying net to them delivered at the same prices as before the tariffs were put in.
You could have that. So it's a hard one to handicap.
And as you pointed out if the tariff do holding pricing, people find ways around. So it wouldn't surprise me at all if they were to send ships to send soybeans to South America.
I mean we have seen this kind of aberrations. When free trade is interrupted, we see this in the product market.
You had U.S. clean petroleum product shipped because you can't do the [indiscernible] ways to avoiding that legally.
So we did have to wait and see on the pricing day to day.
Noah Parquette
Okay. Thanks.
I just have one another, on 2020, obviously you need to define new uses for fuel oil, and one of them is power generation. Have you guys given any thought to how that could impact coal electricity generation?
Thanks.
Robert Bugbee
You know what, [indiscernible], we worked briefly at a BTU comparison between the two. And even at $100 a ton for coal, coal is still more efficient, but yes, there are possibilities that some of that that could be used.
But from a BTU standpoint, the coal either at a $100 a ton is still more efficient probably at least by two times as much.
Noah Parquette
Okay, that's great. Thanks.
That's all I have.
Operator
Thank you. Our next question comes from Fotis Giannakoulis with Morgan Stanley.
Your line is now open.
Fotis Giannakoulis
Yes. Hi, guys.
Hugh, I was very pleasantly surprised to see this very competitive sale and leaseback [indiscernible], I am trying to understand who are these providers of this type of capital and how much availability there is for the broader market this kind of deal? So is this new pocket of money that can replace the European bank lenders that they are they shrinking?
Hugh Baker
Fotis, as I said earlier, it's not Chinese leasing companies. But I don't really want go into too much detail beyond that.
What I can say is that it is generally done on a one or two vessel discreet basis. So it's generally not done in the same kind of quantity to say for instance Chinese leasing which generally -- the sweet spot for Chinese lease transaction is generally north of $100 million, between a $100 million to $150 million.
So it is opportunistic one to two ship leasing transactions. But again are very competitive on the fix rate pricing that they offer.
Fotis Giannakoulis
Can you give us some sense of how much capacity this provider have? Is this one-off deal with one of the some source of capital has some specific, or it's a group of potential lenders that they can provide widespread financing to the market?
Hugh Baker
I think it's…
Emanuele Lauro
Let's put it this way, Fotis, we hope to absorb most of the capacity ourselves. So I wouldn't get excited and consider this as alternative sources of financing going forward.
Fotis Giannakoulis
That's very helpful, Emanuele. Thank you.
And more about the market if you can, but people asked earlier about grains and the impact of the tariffs. I want to ask the different type of commodities.
As you are transporting a very wide range of cargos, how they have been performing? Obviously, iron ore seems very strong.
I am wondering more about coal given the fact that China has said that they will increase domestic production, and if you can give us other sort of changes that you have seen in the trade among the smaller commodities?
Robert Bugbee
Hey, Fotis. On the coal side for China, it's hard to determine really what their approach will be.
In terms of their imports relative to their consumption, I think they import something like a 180 billion metric tons. But they consume over 3 billion.
So we have seen demand from both India and China for a higher quality coal that was pulled off. In terms of the smaller commodities, bauxite, cement, logs, a lot of fertilizer coming from the U.S.
going to Europe have all been quite strong; grains as well as quarter over quarter. I would say that there hasn't been necessarily one that has stood out relative to others because you are still pretty much renting the same space at the same price.
But I think the global synchronized GDP growth has really benefited most segments. I don't think we have seen anything yet in terms of different grain movement, soybean movement.
But it will really depend on kind of the announcements that come.
Fotis Giannakoulis
And last about the Atlantic market in the pervious quarter showed some unusual weakness. Has the Atlantic normalized based on what we have seen from the Kamsarmaxes rate?
And any impact -- lasting impact from the situation with bauxite with the Russian [indiscernible] earlier? Has this trade been normalized now?
Cameron Mackey
I would say that the Atlantic market has recovered and is probably more normalized. In terms of the bauxite, I haven't seen anything.
We haven't had any situations where our vessels were affected by that directly obviously the market as a whole. But other than that I would say more normalized.
I would say that Kamsarmaxes has definitely benefited when you had Capes last weeks at $25000 a day whereas the Ultramaxes, as Robert mentioned, year-over-year are stronger, but there is about 25 to 30 different cargos that are carried on those Ultramaxes. So and we have got yes, 30 ships or something.
So it's not one commodity I would say.
Fotis Giannakoulis
Thank you very much gentlemen.
Operator
Thank you. Our next question comes from Ben Nolan with Stifel.
Your line is now open.
Ben Nolan
Yes, thanks. So a few questions I guess related to where you are, say, as a company.
It seems as though -- and Robert, you alluded it, it kind of being a plateau. You have now delivered all the ships and don't necessarily have aspirations of needing to grow further.
And the financing is largely done, although it sounds like there could be a little bit more to do. But is this now an opportunity to look a little introspectively and see if maybe there are some opportunities or belt tightening or anything else?
Do you think that there is capacity to maybe squeeze more blood from the rock from a cost perspective here?
Robert Bugbee
I think that -- look, we're doing -- clearly there's capacity to make the financing more efficient as it were. In a weird way you may not see in absolute dollars or percentages, but you're going to be and we already are in an inflationary environment related to costs, that's not necessarily potentially as we go forward.
And you're always doing what you can to be efficient, but you're not going to compromise on your standards. And I don't think that you're going to be able to improve your -- we're not going to give up.
We're not going to flow other owners into non-ITF crews and other examples. I don't know, Cameron, Emanuele, if you'd like to add to that.
Cameron Mackey
Well, naturally then there are places where we should continue to see some efficiency, to Robert's point. And that just comes as a function of maturity and also the vessels being properly run in after a year or two on the water.
But apart from gradual improvement quarter-over-quarter, we're not inclined to make any sudden changes in our operating set.
Ben Nolan
Okay, that's helpful. And then maybe for Hugh, kind of along those same lines, particularly after, assuming there's a few more of these sale leasebacks, is there any color or guidance that you might be able to give us as to what the spread relative to LIBOR should look like when you're sort of done?
Hugh Baker
Yes, Ben, I mean what we're seeing is that the company, and as per our recent announcements, generally speaking we would expect to secure financing in the sort of low LIBOR plus 200 range. The last two financings were at LIBOR plus 225 and LIBOR plus 240.
I wouldn't say that the LIBOR plus 240 financing had a very low fee, whereas the LIBOR plus 225 had a more normalized fee. So I think we're very comfortable that we're going to be financing in this sort of mid to low 200s over LIBOR.
And again the lease financing we're securing it is generally marginally below 200 over LIBOR if it's converted into a floating rate finance. So we don't see that changing too much.
I think the market for spreads from banks does change over time. But as a general point I think it's -- we are where we are.
Ben Nolan
All right, sounds good. I appreciate it.
Thanks.
Operator
Thank you. We have no further questions at this time.
I would now like to turn the call back to Hugh Baker for any further remarks.
Hugh Baker
We have no further remarks. Thank you all for joining us today.
And we look forward to speaking with you all soon. Thank you.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program.
You may all disconnect. Everyone had a great day.