Eagle Bulk Shipping (EGLE) Q3 2021 Earnings Call Transcript

Eagle Bulk Shipping (EGLE)
Q3 2021 Earnings Call
Nov 05, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Eagle Bulk Shipping third-quarter 2021 result conference call. [Operator instructions] I will now turn the call over to Gary Vogel, chief executive officer; and Frank De Costanzo, chief financial officer, of Eagle Bulk Shipping. Mr. Vogel, you may begin.

Gary Vogel -- Chief Executive Officer

Thank you, and good morning. I'd like to welcome everyone to Eagle Bulk's third-quarter 2021 earnings call. To supplement our remarks today, I would encourage participants to access the slide presentation that is available on our website at eagleships.com. Please note that part of our discussion today will include forward-looking statements.

These statements are not guarantees of future performance and are inherently subject to risk and uncertainties. You should not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance, and our financial condition. Our discussion today also includes certain non-GAAP financial measures, including adjusted net income, EBITDA, adjusted EBITDA, and TCE.

Please refer to the appendix in the presentation and our earnings release filed with the Securities and Exchange Commission for more information concerning non-GAAP financial measures and reconciliation to the most comparable GAAP financial measures. Please not turn to Slide 6. Drybulk freight rates continue to strengthen during the third quarter on the back of robust commodity demand, which was further supported by the ongoing container spillover trade, as well as elevated congestion due to the ongoing supply chain bottlenecks and COVID-related court restrictions around the world, but in particular, in and around China. The Baltic Supramax Index rose by almost 34% during the quarter to average approximately 34,000, representing a 13-year high.

Given our active management approach to trading the fleet and our significant operating leverage, we generated record earnings for the quarter with net income totaling $78 million or $6.12 per share. Not only does this represent the highest net income we have achieved in a single quarter, it also eclipses the company's best-ever annual result. Following our recent announcement on the institution of a cash dividend policy equal to a minimum of 30% of Eagle's net income, our board of directors declared a cash dividend based on the third quarter's result of $2 per share. Separately, and as previously reported, we executed on a comprehensive refinancing on October 1st, which has allowed us to significantly simplify our capital structure, lower our interest cost, and extend our bank debt maturity to 2026.

Please turn to Slide 7. Our record financial results were driven by our ability to improve TCE performance by 35% quarter on quarter, resulting in a net TCE achieved of $29,088. As we have discussed previously, given the rapidly rising market environment we experienced through the third quarter, there's an inherent lag effect between our TCE performance and the BSI, as the majority of our fleet is employed on voyages lasting anywhere from 30 to 60 days, and sometimes longer. Looking ahead into Q4, freight rates have come off, with the BSI currently trading under 30,000, which is still very conducive to cash generation.

For Eagle, as of today, we have fixed about 75% of our available days for the fourth quarter and a net TCE of $32,400 per day. Bear in mind that our cash breakeven level through the first nine months of the year is at around 11,000. On this basis, notwithstanding the recent pullback in rates, we are on track for exceeding this quarter's performance in Q4. Please turn to Slide 8.

In terms of operating performance, we produced a record $91 million of EBITDA or $19,400 per ship per day for the three months ending September 30. This represents an increase of 45% compared to the prior quarter. Given the fixed cost nature of our business, we maintained significant operating leverage with essentially all incremental net revenue generated flowing to the bottom line. Please turn to Slide 9.

Asset prices have also continued to increase in recent months, with values for 10-year-old Supramax up around 17% on the quarter and approximately 115% year to date. It's interesting to note that this price strength has occurred on the back of a record number of transactions. Year to date, almost 840 drybulk vessels have been bought and sold, totaling 14 billion in volume. Please turn to Slide 10.

In terms of sale and purchase, we took delivery of our final pending acquisition last week, the M/V Valencia Eagle. We estimate that the nine vessels which we acquired between November of last year and May of this year have increased in value by over $80 million. Separately, we sold and delivered the M/V Tern, a 2003-built Supramax and our oldest vessel in the fleet, just ahead of her statutory drydock. Our fleet currently totals 53 ships, averaging 9 years of age, with 89% being fitted with exhaust gas cleaning systems or scrubbers.

As a result of the growth and renewal of the fleet, our fuel efficiency has also increased significantly over the last five years. As always, we will continue to evaluate vessel S&P and remaining deals and look to execute on an opportunistic basis. With that, I would like to turn the call over to Frank, who will review our financial performance. 

Frank De Costanzo -- Chief Financial Officer

Thank you, Gary. Please turn to Slide 12 for a summary of our third-quarter financial results. The continued significant improvement in the charter rate environment drove our top-line growth in Q3, with revenue, net of both voyage and charter hire expenses, totaling 142.4 million and net income coming in at 78.3 million, representing a more than eight-fold increase as compared to the prior quarter. Earnings per share for the third quarter was $6.12 on a basic basis and $4.92 on a diluted basis.

Please note the diluted share count now includes 2.9 million shares from the convertible bond. Adjusted net income, which excludes noncash unrealized gains and derivatives of 6.3 million, came in at 72.1 million for the third quarter, or $5.63 per share on a basic basis. As Gary mentioned earlier, adjusted EBITDA came in at 91 million for the third quarter. Let's now turn to Slide 13 for an overview of our balance sheet and liquidity.

Total cash, which includes 25.6 million of restricted cash, was 125.6 million at the end of Q3, representing an increase of 41.8 million as compared to the end of the second quarter and an increase of 36.8 million from year-end. The change in cash versus prior quarter in year-end was driven by cash generated from our strong operating results, offset in part by the $25 million RCF pay down, vessel acquisitions, and debt service. I will cover the movements in greater detail on the cash walk slide. Total liquidity improved by 51.8 million from the prior quarter to 191.6 million.

Total liquidity is comprised of total cash of 125.6 million and 66 million of undrawn revolving credit facilities. Total gross debt, excluding debt issuance costs, at the end of Q3 was 472.8 million. As previously reported, we executed a new $400 million credit facility on October 1st, replacing our Norwegian Bond Ultraco bank credit facility in the Holdco RCF. The new facility includes a $300 million term loan and a $100 million revolver, of which $50 million was drawn on closing.

However, as reported yesterday, we have now fully paid down the revolver and have $100 million of undrawn availability. Please now turn to Slide 14 for an overview of our cash flow from operations for the third quarter. Net cash flows provided by operating activities was 90.3 million in Q3. The chart highlights the timing-driven variability that working capital introduces to cash from operations as depicted by the difference between the dark blue bars, which are the reported cash from ops numbers, and the light blue bars with strip-out changes in operating assets and liabilities, primarily working capital.

Although, as the chart demonstrates, the volatility caused by working capital largely evens out over time. The difference between the two bars in this quarter can be explained by a significant amount of cash collections in late September. Please turn to Slide 15 for our Q3 cash walk. Let's focus on the top chart, which covers the cash movements in Q3.

The revenue and operating expenditure bars are a simple look at the operations, with the net of these two bars coming in at 91 million, the same as our adjusted EBITDA. Moving to the right, the 18 million for vessel S&P bar represents the 26.9 million cost for the acquisition of two vessels, in part offset by the proceeds of 9.2 million on the sale of one vessel. You can also see that we pay 25 million on our RCF and 12 million in debt service in the quarter. The bottom chart covers cash movements year to date.

Please note, in the appendix of this presentation, we include information on the cash and debt movements for the October 1st global refinancing. Let's now review Slide 16 for our cash breakeven per ship per day. Vessel expenses, or opex, was $5,401 per ship per day, excluding one-time nonrecurring expenses related to vessel acquisitions and sales, the termination of our relationship with the crewing agency. We are consuming additional lubes, given vessels are steaming at faster speeds.

And the prices have increased on the back of the rising base oils. In addition, due to the COVID-19 pandemic, we continue to face higher operating expenses across several areas, including lodging and transportation costs related to crew changes, along with the costs related to the procurement of stores and spares. Finally, we have increased our spending on spares to pre-emptively limit off-hire as much as possible in what is a very strong rate environment. Drydocking came in at $917 per ship per day in Q3, $560 higher than prior quarter, as we completed two dry docks with an additional two in progress.

It is worth noting that there are significant challenges regarding COVID protocols and quarantine requirements for ships going into facilities for drydocks and the installation of ballast water systems. We do not see this abating in the near term and therefore will likely increase off-hire times for these events for the foreseeable future. Cash G&A came in at $1,527 per ship per day in Q3, marginally lower as compared to Q2. It is worth noting that our G&A per ship calculation is based on our own vessels, whereas we operate a larger fleet, including our chartered-in tonnage.

If we were to include the chartered-in days in our calculation, G&A per ship per day would decrease to about $1,363. Cash interest expense came in at $1,387 per ship per day in Q3, which was marginally lower quarter over quarter, driven by an increase in ownership days and a decrease in interest expense. Finally, cash debt principal payments came in at $1,780 per ship per day in Q3. This concludes my comments.

I will now turn the call back to Gary. 

Gary Vogel -- Chief Executive Officer

Thank you, Frank. Please turn to Slide 18. As indicated earlier on the call, the BSI posted a significant increase during Q3 to average approximately $34,000 during the quarter. Both the Atlantic and Pacific markets pushed up simultaneously, which speaks to the broad demand backdrop.

In the Atlantic, rates increased by 51% to average 34,128. And in the Pacific, rates increased 24% to average 32,414. Relative strengthening in the Atlantic during the third quarter can be attributed to the factors we discussed on our last earnings call, specifically increased grain exports out of east coast South America and a strong market [Inaudible] which was driven by elevated minor bulk exports such as slag cement, gypsum, salt, and steel products. The container spillover trade continued to positively impact our markets, more specifically intra-Pacific and backhaul rates with cargoes, such as semi-finished steel parcels, fertilizer in bags, bag cement, dry chemicals in bags, and lumber moving on small and mid-sized conventional bulk carriers.

Congestion remained elevated during the period, with the number of ships at port reaching a new record of 36% as compared to around 30% pre-COVID. Congestion is primarily attributed to COVID-related restrictions and general supply chain issues and bottlenecks caused by increased trade flows and exacerbated by shortsighted labor issues. As we look ahead into Q4, we've experienced an increase in market volatility with freight rates trading off at recent multi-year highs. We believe this downtrend is due to a number of reasons, including an easing of congestion, increased tonnage availability, and a decrease of cargo flows.

The increase in tonnage availability appears to be primarily driven from Chinese-flagged vessels entering the international market. Many of these ships typically operate in the local cabotage trade, which is dominated by China's large domestic seaborne coal trade between North and South China. Decrease in cargo flows within the Pacific has come about from what appears to be a short-term pause in Chinese seaborne coal purchases, as well as a seasonal decrease in nickel on our cargoes, as the Philippines has entered its rainy season. Looking ahead, there's been no official announcement or indication that China will increase their coal imports in the short term.

However, this recent decrease in Chinese seaborne coal buying may end up being a short-term strategic maneuver to help coal pricing. Year to date, the BSI has averaged roughly 26,900. Although we expect to see elevated volatility in the near term, we remain constructive on freight rates given the positive underlying fundamentals. Please turn to Slide 19.

Fuel prices continue their upward momentum as demand for oil products increased across the spectrum. HSFO and VLSFO are now trading around 450 and 590 hours per ton, respectively. The fuel price spread between HSFO and VLSFO took a dip in Q3 on the back of elevated relative demand for HSFO, as aging power generation plants switch from consuming higher-priced gas to cheaper residual oil. However, we've recently seen a normalization in relative prices, with spot fuel spreads now trading around $140 per ton, a new high since the crude oil collapse in mid-2020.

With eighty 89% of our fleet fitted with scrubbers, the price differential between HSFO and VLSFO is an important value driver for our business. At current fuel spread levels, we generate around $1,700 per ship per day in incremental value across our fleet, equating to about $32 million of value per annum. Please turn to Slide 20. Net fleet supply growth increased slightly in Q3.

A total of 100 drybulk new building vessels were delivered during the period, down about 20% quarter on quarter and 5% year on year. Partially offsetting this, a total of just nine vessels were scrapped during the same period, more or less unchanged as compared to the prior quarter. This low level of scrapping is not surprising, given the strength in the underlying spot market. In terms of forward supply growth, the overall order book stands at just 6.5%, and it's even lower for the Supramax/Ultramax segment.

For 2021, drybulk net fleet growth is expected to come in at 3.5%. This assumes scrapping of roughly 5.8 million deadweight tons, down about 2 million deadweight tons from previous guidance, and only about one-third of last year's amount. Again, this is primarily as a result of a stronger rate environment. For 2022, drybulk net fleet growth is expected to be just 1.5%, given the rapidly depleting order book and somewhat higher scrapping.

A total of 92 drybulk ships were ordered during Q3, the same as the prior quarter and largely in line with the quarterly average over the last five years. Although we expect some level of ordering to continue, we still believe it will be somewhat muted, given new building price levels both on an absolute basis and on a relative basis to secondhand pricing, the prolonged delivery time given the lack of yard slots, and the ever-increasing uncertainty around future carbon pricing and regulations regarding emissions. Please turn to Slide 21. As we've spoken about before, and you can denote from this slide, drybulk demand is inextricably linked to global GDP.

Global growth expectations for 2021 were slightly lowered to 5.9%, down 10 basis points since our last earnings call. For 2022, the IMF is estimating global GDP growth of 4.9%. Please turn to Slide 22. Drybulk demand growth has been revised downwards slightly since our last earnings call, with 2021 growth now estimated at 4.1%.

This has been driven by downward revisions in iron ore and grains, but offset in part by increases in coal and minor bulks, such as steel, cement, scrap, and nickel ore. It's worth noting that minor bulks, where Eagle derives about two-thirds of its demand from, is expected to come in at 5% this year. For 2022, demand is forecast at 1.8% for dry bulk overall and 2.4% for minor bulks. It's important to look at this in concert with the expected low fleet growth numbers I mentioned a few moments ago.

Notwithstanding near-term volatility, we're optimistic about the prospects for continued global growth which is being supported by massive amounts of stimulus. This positive demand picture, combined with our record low order book, supports our constructive view on market developments looking ahead. In closing, we are energized about Eagle's strong position following our multi-year fleet renewal and growth initiative, as well as our new comprehensive financing. And on the back of these, we're looking forward to continuing to execute for the benefit of our shareholders.

With that, I'd like now to turn the call over to the operator and answer any questions you may have. Operator?

Questions & Answers:

Operator

With the prepared remarks completed, we will now open the line for questions. [Operator instructions] Our first question comes from Randy Giveans with Jefferies. Your line is open.

Randy Giveans -- Jefferies -- Analyst

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

Gary Vogel -- Chief Executive Officer

Good.

Frank De Costanzo -- Chief Financial Officer

Good morning. 

Randy Giveans -- Jefferies -- Analyst

Morning. So yeah, congrats, obviously, on the record quarter. Very strong rates there. Looking at your 4Q '21 quarter-to-date rates, 32,000 plus, very strong again.

Now, looking at the BSI, that's averaged closer to, you know, 38-plus thousand a day for the last six weeks. One of your peers, without scrubbers, I think they've booked around 65% at 37,000 a day. So I know it's hard to beat a rising market, right? But was the rest of the underperformance due to lower hedges via your FFA book? And I guess, with that recent drop here in the last week in the FFAs, have you been more active trading those for 4Q '21 and even 2022?

Gary Vogel -- Chief Executive Officer

Yeah. So a bit to unpack there, first of all. I'm not sure who you're referring to, but I think it's important when you compare TCEs between companies, you look at the fleet makeup and whether you're talking about a fleet of, you know, strictly Supramax and Ultramax or a blended fleet included in capes. You know, we definitely have a hedge position which we've disclosed in our Q, our FFAs and cargoes, but -- you know, which impacted us.

That's part of our risk management. You know, as we look forward, and you'll see it in our Q, this quarter as well, we've felt a bit more of a hedge book going into next year using FFAs as well. You know, having said that, it's dynamic and we take advantage of the volatility around it. So you know, we think it's also important to look at the look at TCE quarter on quarter.

And I think we're quite comfortable with our TCE performance relative to our peers on a normalized basis, as I said, especially when you take up the fleet makeup. But beyond that, I can't speak unless I know specifically, you know, what you're speaking about -- you know, who you're speaking about.

Randy Giveans -- Jefferies -- Analyst

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

Gary Vogel -- Chief Executive Officer

Well, look, I think the volatility, there's always a question there. Was the tail wagging the dog or the other way around? But I mean, if you look at the physical market, there's been extreme volatility on the physical market as well. You know, we take advantage of that, and, I mean it gives me an opportunity to talk about it, you know. You know we prefer to use derivatives to hedge our book.

And, you know, even after the quarter, you know, we sold the derivative contract as a hedge for next year. The highest one we did was at 26,000. You know, we bought that back this week. We unwound the hedge, if you will.

We call it dynamic hedging. We unwound that hedge at $10,000 less, and that benefit accrues to the benefit of our shareholders. It doesn't mean that, you know, we want to unwind our whole hedge book, but dynamically, we can go in and out of that market always with having a physical ship as a hedge against it. All with the view to creating value, you know, and adding to the TCE for the fleet.

So we're building a hedge book as we go forward, but it's not a straight line up because, as I said, we take advantage of the volatility in the market.

Randy Giveans -- Jefferies -- Analyst

Got it. OK. Just a last question from me. Your debt now, extremely low.

Congrats on that recent refinancing and everything. Your shares have fallen from 55 to, I guess, under 40. No, it looks like that we're back above that in an hour here. But over the past month, right, trading well below NAV.

So with your ample free cash in the coming months, how will you decide on either further debt repayments, share repurchases, or maybe doing something with converts?

Gary Vogel -- Chief Executive Officer

Yeah, I think you're right. You know, we come in every day and look at what we can do and what the best use of capital is. If we go back, you know, five weeks ago when we announced the board authorization for a share buyback. we've actually been in a blackout very the entire time, you know, up to earnings here. 

Randy Giveans -- Jefferies -- Analyst

Yup.

Gary Vogel -- Chief Executive Officer

Having said that, just to be clear, there's not a specific, you know, authorization to go buy a certain number of shares, but clearly, we're aware of where we're trading. You know, so it's a decision as we go forward. You know, the last focus has been to pay down the revolver, you know, to zero. And obviously, that's now done.

So, you know, looking at whether its share buyback, or as you said, possibly something on a convert, or putting cash on the balance sheet, or further debt repayment, is something that, you know, we need to -- we will need to look at. You know, having said that, I think, you know, I'll use the opportunity to say, I think, you know, capital allocation is vitally important. You know, I think the real exciting thing here is what's behind it. You know, the business that supports it.

And you know, whether we pay out 30% or even more, or pay down 50 million or buy back shares, you know, it's that every dollar that we generate is for the benefit of our shareholders. And the real story here, in my mind, if you'll allow me, is that we generated 91 million of EBITDA with 53 midsize ships, you know. 

Randy Giveans -- Jefferies -- Analyst

Right.

Gary Vogel -- Chief Executive Officer

And that's almost 30,000 TCE with a fleet with no capes. You know, those are ships that cost twice as much as [Inaudible]. you know, ships that really have averaged just 8,000 more than the midsized fleet this year. And as we talk about volatility, although we've experienced significant volatility for our market on a relative basis, you know, it's significantly less.

So you know, I think it speaks to the, I think, the segment that we're in within drybulk, the midsize segment, and the strength that that's leading, and, you know, I'll leave it at that.

Randy Giveans -- Jefferies -- Analyst

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

Gary Vogel -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Magnus Fyhr with H.C. Wainwright. Your line is open.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Hey, good morning, Gary, Costa, and Frank. Just a question on -- like a follow-up question on the capital allocation. You didn't mention any vessel, you know, acquisitions. You've been very active in the last five years renewing the fleet.

What your view on buybacks versus buying ships? I mean, based on our estimates, stock is now trading at a 30% discount to NAV. Just curious, you know, if you have any desire to expand or looking at fleet acquisitions, given where the stock is.

Gary Vogel -- Chief Executive Officer

Yeah. Thanks, Magnus. You know, I think we're always looking at opportunities. Having said that, asset values have moved up pretty significantly.

And as I said in the prepared remarks, the nine ships that we acquired, you know, we -- they've appreciated by over $80 million. You know, we feel we're in a fortunate position. We've been able to not only renew the fleet but grow it by about 20%. So we don't feel pressure to participate in further, you know, growth at this point and clearly don't have a need to -- for further renewal.

You know, having said that, if there are opportunities where, you know, we can better accretive and/or the long-term period market, which as of today it doesn't do, but the long-term FFA markets or period market justify, you know, being able to write down that asset significantly, then we would be interested. But as I said, at the moment, you know, it's not a priority for us. We just don't feel a need there. So you know, given the choice between the two at the moment, we would think that a buyback of securities, whether shares or convert, is more attractive than assets, you know, all things being equal at the moment.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Good. Good to hear. The second question I have is related to the opex. So a big jump there in the third quarter.

I guess you explained it with the buying inventory lubes and also COVID-related expenses. What should we expect going forward as a normalized opex? It's, you know, around 5,000. I mean, I guess the first nine months was about 5,100. Will it have a five in front of it? Or you still think you can be below 5,000 going forward on a normalized basis?

Gary Vogel -- Chief Executive Officer

I would say for the fourth quarter, it's going to have a five in front of it. You know, I'd love to underpromise and overdeliver, but it's not just one thing here. You know, it's repatriation of the crews is costing more money. Everything we talked about.

And you know, the more expense for routes is a good story, right? The ships are moving faster because the rates are in the 30s. And you know, so that's just really an effect of when you run an engine faster, you need higher lubes. In addition, as I've said, the base oils are higher so pricing is up. And that's true across, you know, the entire industry.

So for now, I think it's going to have a five in front of it. And obviously, over time, we expect things will normalize. But you know, it's an extraordinary environment, you know, globally that we're in, and there are a lot of benefits for drybulk at the moment. But you know, opex is clearly one of the negatives.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Right now. Just last question on chartering strategy. The -- you know, it's tough to beat the index in the rising market, but the recent pullback created opportunities for your active chartering strategy. You know, maybe you can elaborate a little bit on that because I know in a falling market, I think, historically, you've done better.

Gary Vogel -- Chief Executive Officer

Yeah, absolutely. Look, we think in a normal market, I think our active management platform will show its true colors. I mean, the market's really gone vertical here. And no question, we had some FFA hedges in place to -- as the market, you know, rose to protect.

And we didn't expect the congestion factor, if you will, to really propel rates to where they went in the last months. So, you know, those hedges, you know, had an impact. But having said that, volatility, we welcome it. And I talked about it on, you know, just a hedge, and unwinding a hedge, and the value we can create around that.

But it's also true around the ships that we charter in and the cargo. So you know, we welcome volatility. It's a little extreme at the moment. But it's something that we think we're able to create value for.

And, you know, obviously, the proof will be in the pudding. So I have to see how we -- you know, how it develops over the next quarter or two.

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

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

Gary Vogel -- Chief Executive Officer

Thanks very much.

Operator

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

Omar Nokta -- Clarkson Securities -- Analyst

Hi guys. Thank you. Good morning. 

Gary Vogel -- Chief Executive Officer

Morning. 

Omar Nokta -- Clarkson Securities -- Analyst

Just maybe wanted to follow up on the discussion, you know, about capital deployment. Obviously, you guys have had a pretty solid quarter, and this upcoming one is looking good too, and a pretty good dividend right off the bat here. But how are you guys thinking strategically as we wind down this year and as we look ahead into '22. You know, over the past year, it's been pretty transformative.

You acquired ships, obviously, at well-timed prices. You've refinanced debt stack. And now, you've gotten to this point at the dividend. How are you guys thinking about priorities now? Have you -- do you have a series of strategic priorities as you look into next year about what to do? Or is it now more about just hunkering down? You have the 53 ships, you've got the dividend, then it's just moving forward. 

Gary Vogel -- Chief Executive Officer

Yeah. So I wouldn't say it's hunkering down, but it's delivering for our shareholders. And so if that means, you know, keeping -- you know, staying at 53 ships, or as I've talked about in the past, we're likely to sell our two older ships, so -- you know, and go forward with 51, you know, owned ships and obviously charter in around that and deliver real value for our shareholders, then that's an outcome we'd be really happy with. But having said that, it's not to hunker down and say, "We're not looking for opportunities." We just don't feel pressure that we need to do more in terms of, you know, growing or renewing the fleet.

So we feel we're in a pretty privileged position at the moment. Obviously, this market has helped us, you know, to deliver, you know, both the, you know, the debt pay-down and this dividend. And we intend to take advantage of that and continue to maximize it as we go forward.

Omar Nokta -- Clarkson Securities -- Analyst

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

Gary Vogel -- Chief Executive Officer

Yeah, sure. I mean, you know, one benefit of buying a convert is it doesn't take float out of the current market in terms of, you know, share liquidity. And that's something that we're clearly cognizant of, given the daily share volume. You know, having said that, you know, the convert is far less liquid.

And it's a lot easier to buy back shares in the open market. So those are probably the two biggest things. Otherwise, you know, there's definitely, you know, a high correlation between the two obviously, given the nature of the convert instrument. And -- you know, but as we go forward, we're clearly going to look at the pros and cons of both of those.

And it's not necessarily a one or the other even.

Omar Nokta -- Clarkson Securities -- Analyst

Got it. OK. Thanks, Gary. I'll turn it over 

Gary Vogel -- Chief Executive Officer

Thank you.

Operator

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

Greg Lewis -- BTIG -- Analyst

Yeah. Hey, thank you, and good morning, everybody. 

Gary Vogel -- Chief Executive Officer

Good morning.

Greg Lewis -- BTIG -- Analyst

Gary, you know, it seems like capital allocation has been picked over pretty well. I guess I would just ask, you know, you did highlight the two older vessels that you're thinking about potentially selling. How should we think about the use of those proceeds?

Gary Vogel -- Chief Executive Officer

Yeah, I wouldn't see the use of those proceeds any differently than cash from operations, frankly. Those ships are worth kind of mid-upper teens, I'd say, at the moment. And, you know, they're unencumbered as well. When we did the financing, we purposely kept them out with a view that they'll likely be monetized before their next special survey drydock.

One is in mid-'22 and one in very early '23. But at the end of the day, you know, cash is fungible. And we don't see a difference there or a need to recirculate it into buying assets. Having said that, you know, just like cash from ops, if we see an opportunity, you know, then we'll use it for that.

Greg Lewis -- BTIG -- Analyst

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

So I'm just surprised that that number is not higher.

Gary Vogel -- Chief Executive Officer

Yeah, well, if 2021 has taught us anything, if that is, is that, you know, trying to project, you know, demand, especially coal demand, where we've seen the -- the changes in velocity this year are pretty extreme. You know, in terms of supply, you know, even with the, you know, growth this year, the significant growth this year and next year, the next year still is a number below where we were in 2019 pre-COVID on a global, you know, coal basis. Marginally below. So in terms of supply, I don't think that's the issue.

We're seeing significant change in those coal trade flows, you know, this year especially because of obviously the China-Australia issue around coal. But you know, there's still significant growth in intra-Asia coal from Indonesia, China, and Indonesia, you know, Vietnam, and India. And those are trades that we're particularly in. So I think from a midsize drybulk segment, I think it's more positive in terms of volumes for next year.

But in terms of, you know, trying to, you know, project it exactly, I think there is upside in that. But, you know, I think there's also downside in it, and that it's very hard seeing the, you know, fuel mix and price mix, and what we've seen this year.

Greg Lewis -- BTIG -- Analyst

Understood. Hey, thank you all very much.

Gary Vogel -- Chief Executive Officer

All right. Thank you.

Operator

Thank you. And our next question comes from J. Mintzmyer, Value Investor's Edge. Your line is open.

J. Mintzmyer -- Value Investor's Edge -- Analyst

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

Gary Vogel -- Chief Executive Officer

Thank you. Good morning.

J. Mintzmyer -- Value Investor's Edge -- Analyst

Great questions so far, not a whole lot to add. Just want to do a little bit of housekeeping on the FFAs. Just to clarify, I think you said you're going to include those in the 10-Q, which should help a lot. It looks like you added about 10 or 11 ships at a quarter, about a thousand days quarter over quarter.

Is that fair? And is that kind of the rate you expect to do going forward, always doing about 10 to 11 ships per quarter?

Gary Vogel -- Chief Executive Officer

Yeah, I don't have a specific number. I mean, we took a number -- delivery of a number of acquisition ships, you know, over the last few quarters. And some were fully in the quarter, some toward the end. And we just took delivery of Valencia Eagle last week.

So that was the only ship that delivered, you know, post-third quarter. But, you know, we don't see significant -- you know, we don't see any more -- there's no more ships that we've acquired from an S&P basis to add. Obviously, the number of days that we -- from a chartering basis is slightly -- you know, is -- excuse me, the number of, you know, charter-in ships has been fairly static lately. But you know, otherwise, we don't expect things to change very much.

J. Mintzmyer -- Value Investor's Edge -- Analyst

OK. Certainly makes sense. And when you say 75% fixed at 32,400, getting to what Randy was talking about. Are you already incorporating the FFA loss for Q4 into that? Or do you need to add that additionally on top?

Gary Vogel -- Chief Executive Officer

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

J. Mintzmyer -- Value Investor's Edge -- Analyst

Got it. So there's a little bit, obviously, a spot left. And then, there's going to be a little bit more drag from the final FFAs. And I'm sure we'll see that obviously in the 10-Q.

Turning real quick to the convertibles. I think everybody is pegged on this. Everyone sees that there's this enormous opportunity. You know, your NAV is -- depends on what analyst and what data source, but, I mean, $70 a share is a number that seems reasonable.

You're trading at a 45% discount, you have a great balance sheet. So not only is it priced  at NAV, you're also looking at enterprise value, the gross asset value. Massive discount, right? So the convertibles are out there, but you don't have a call provision, right? So there's nothing you can do to force those in. How would you go about -- mechanically, if you were trying to do a repurchase via that route, do you just have to reach out directly to the holders and work something out? Is there some sort of formal tender process you could do? What would that potentially look like?

Gary Vogel -- Chief Executive Officer

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

J. Mintzmyer -- Value Investor's Edge -- Analyst

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

Gary Vogel -- Chief Executive Officer

Thanks, J. I appreciate it.

Operator

Thank you. [Operator instructions] Our next question comes from Liam Burke with B. Riley. Your line is open.

Liam Burke -- B, Riley -- Analyst

Thank you. Good morning, Gary. Good morning, Frank. 

Gary Vogel -- Chief Executive Officer

Hey, Liam.

Liam Burke -- B, Riley -- Analyst

Gary, could I go back to the macro? You have a versatile fleet. We see you carry major bulks, as well as the minors. How do you look at the volatility in the iron ore trade affecting the fleet and how you look at the business going forward?

Gary Vogel -- Chief Executive Officer

Yeah, I mean, if there's one cargo that doesn't directly impact us, of all, you know, the major bulks, it's iron ore. Right? It's a fairly small part. It was about 10% of our cargo mix. But frankly, it's not -- from the major trades, it's not Brazil, China, it's not Australia, China.

So it's really not as significant for us. Having said that, as iron ore prices come off, then the ships, the smaller cargoes, and the trade that we tend to do become less attractive. So you'll likely see, as iron ore prices come off, us doing less iron ore going forward. But again, it's a relatively small part of our cargo mix.

So, you know, directionally, negative with lower pricing, but not significant impact for us.

Liam Burke -- B, Riley -- Analyst

OK. And then you talked about selling the older vessels. How does adding new assets fit into the mix? Or are just asset values too high here?

Gary Vogel -- Chief Executive Officer

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

And I don't think you'll see us doing that just in the immediate basis, just where rates are relative to where asset prices are.

Liam Burke -- B, Riley -- Analyst

Great. Thank you, Gary.

Gary Vogel -- Chief Executive Officer

All right. Thank you.

Operator

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

Gary Vogel -- Chief Executive Officer

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

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Gary Vogel -- Chief Executive Officer

Frank De Costanzo -- Chief Financial Officer

Randy Giveans -- Jefferies -- Analyst

Magnus Fyhr -- H.C. Wainwright and Company -- Analyst

Omar Nokta -- Clarkson Securities -- Analyst

Greg Lewis -- BTIG -- Analyst

J. Mintzmyer -- Value Investor's Edge -- Analyst

Liam Burke -- B, Riley -- Analyst

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