Title

Presentation

International Seaways, Inc. beats earnings expectations. Reported EPS is $3.12, expectations were $2.7.

Operator: Hello, everyone and welcome to International Seaways Second Quarter 2023 Results Call and thank you for standing by. My name is Daisy and I’ll be coordinating your call today. [Operator Instructions]. I would now like to hand the call over to your host, James Small, General Counsel to begin. So James, please go ahead.

James Small: Thank you, Daisy. Good morning, everyone. And welcome to International Seaways earnings calls for the second quarter of 2023. Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call, management may make forward-looking statements regarding the company or the industry in which it operates. Those statements may address, without limitation, the following topics: outlooks for the crude and product tanker markets and changes in trading patterns; forecasts of world and regional economic activity and of the demand for and production of oil and other petroleum products; the effects of the ongoing conflict between Russia and Ukraine; the company strategy; our business prospects; expectations regarding revenues and expenses including vessel, charter hire and G&A expenses; estimated bookings, TCE rates and/or capital expenditures during 2023 or in any other period; projected scheduled drydock and off-hire days; purchases and sales of vessels, construction of newbuild vessels and other investments; the company’s consideration of strategic alternatives; anticipated and recent financing transactions and any plans to issue dividends; the company’s relationship with its stakeholders; the company’s ability to achieve its financing and other objectives; and other economic, political, and regulatory developments globally.

Any such forward-looking statements take into account various assumptions made by management based on a number of factors, including management’s experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances. Forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond the company’s control, which could cause actual results to differ materially from those implied or expressed by the statements. Factors, risks and uncertainties that could cause International Seaways’ actual results to differ from expectations, include those described in our annual report on Form 10-K for 2022, our quarterly reports on Form 10-Q for the first and second quarter for 2023 and in other filings that we have made or in the future may make, with the U.S. Securities and Exchange Commission.

Now, let me turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky. Lois?

Lois Zabrocky: Thanks very much, James. Good morning, everyone. Thank you very much for joining International Seaways’ earnings call for the second quarter of 2023. Going to Slide 4 of the presentation found on the Investor Relations section of our website. Net income for the second quarter was $154 million, $3.11 per diluted share, bringing our cumulative earnings over the last 12 months to over $615 million. Adjusted EBITDA was $205 million. Based on our strong results in the second quarter, and strong spot rates thus far in the third quarter, we have declared a combined dividend of $1.42 per share. Following the dividend payment in September, returns to shareholders over the last 12 months include a cumulative $6.16 in combined dividends, as well as $14 million in buybacks.

This equates to approximately $360 million, which represents a 17% yield on our average market cap over the period. We have returned to shareholders an average of about half of our net income. We have enhanced our capital structure. We have liquidity of nearly $500 million comprised of $236 million in cash and an undrawn revolver of nearly $260 million. Our strong liquidity is net of our returns to shareholders and of our deleveraging initiatives. In the second quarter, we prepaid $75 million of our debt portfolio. Two loans on sale leaseback financing $46 million that had an interest margin of 390 basis points above bank borrowing rates and $29 million under our largest senior secured facility. This unencumbered in modern Suezmax. Overall, in the last 12 months, we have prepaid nearly $390 million in debt, and unencumbered 30 vessels 40% of our fleet.

Our net loan to value is about 22% today, and our cash breakeven for the next 12 months is under $16,000 per day. This includes about $3,500 per day from our fixed contracted revenue that in aggregate amounts to over $350 million through charter expiry. It excludes profit sharing on applicable charters. As we continue to pull all the levers with our capital allocation approach, our third and final dual-fuel VLCCs delivered in May. Each 3 VLCCs are on time charters for the next seven years with a fixed base rate of earnings, but the profit share over the industry. On the route for the Middle East to China TD3. In the second quarter, the TCEs [indiscernible] with the profit share was about $43,000 per day, providing a nice premium on the $96 million per vessel invested.

We just signed two new building commitment with two options for LR1 with K Shipbuilding for delivery in the second half of 2025. These ships will be scrubber fitted, and class certified for LNG conversion. The aggregate price of $115 million for the two vessels includes strength index, oversize generators, and equipment considerations. Upon delivery, these ships will deliver into our niche Panamax international joint venture, which has consistently under premium to the LR1 broader market. The average age of the LR1 in our fleet is about 14 years old and our overall LR1 Panamax sector has a very aged fleet profile. Even our vessels at this age, they have earned $67,000 per day year-to-date. We are supporting our presence in this critical strategic joint venture.

On Slide 5, recent highlights. Oil demand is expected to surpass 102 million barrels per day on average for the second half of the year, increasing by 2 million barrels per day year-on-year. Growth in oil supply mostly comes from the West in North America, Guyana and Brazil. In the chart on the lower left of the slide, the average of the EIA, the IEA and OPEC forecasts for oil supply and demand align projecting a supply deficit in the second half of 2023. On the lower right chart, oil inventories, we are showing commercial stocks in the OECD have increased in the first half of the year as expected. We now expect that these inventories will rapidly draw early in the second half of the year, as OPEC plus cuts are felt. Sentiment to these expected cuts have largely been priced into the spot tanker rates.

It will be interesting to watch now in the tanker markets as the impact due to the tightening of euros crude to Brent pricing, which may impact the price cap part of the fleet that has been trading in accordance with sanctions rules. These ships may come back into the commercial fleet and affect daily earnings. It is still very early to tell how this will unfold, and we remain observant. On Slide 6, the tanker supply side, despite some new ordering activity. This remains a compelling component to the story of our fundamentals. As you can see on the lower left hand chart, vessels on order make up less than 15% of the fleet that is over 15 years old and should be replaced over the next few years. And it represents less than 5% of the overall fleet.

These orders are also spread over the – next three to four years. Owners’ cannot easily rush to start replacing tonnage today, because lead times are longer and yards continue to build in other shipping sectors. As you can see in the lower right hand chart. Environmental regulations continue to evolve, creating uncertainty towards building new vessels and selecting engine types. Flipping the presentation to Slide 7. Since the IEA recently updated their oil output through 2028. We reiterate our stance, that near term fundamentals in this map of the world, we wanted to simply show that oil supply growth is coming largely from the Americas. As you see on the blue bars, where oil demand growth, shown in the green bars is mostly driven by Asia. These dynamics create an incredible investment case for seaborne transportation in the near term.

Layer on top of this geographical changes a constrained supply side that is ageing, compounded with trade flow inefficiencies as a result of the Russian invasion and subsequent sanctions accepts the stage for a solid tanker environment. At Seaways, we continue capturing the strength of the tanker markets today and we are building our future as the leading tanker owner listed on the New York Stock Exchange. With our comprehensive capital allocation approach, we are utilizing all the possible letters that builds upon our track record of returning shareholders, cash to shareholders, maintaining healthy balance sheet and growing the company. Now, I’ll turn it over to our CFO, Jeff Pribor for the financial review. Jeff?

Jeff Pribor: Thanks, Lois. And good morning, everyone. On Slide 9, net income for the second quarter was $154 million or $3.11 per share. On the upper right chart, adjusted EBITDA for the second quarter 2023 was $205 million. In the Appendix we provided a reconciliation from reported earnings to adjusted earnings. While our expense guidance for the second quarter multi balance and range of expectations, I’d like to point out a few items of note with our income statement. Vessels expenses were higher than our prior guidance for the quarter. The majority of the increase spend is due to the timing of purchases of spares, which is unavoidably lumpy as it relates – is related to when a ship and the drydock are off-hiring. Charter hire including the profit share is in line with expectations given elevated rates.

Other income for the quarter was over $3 million was consisted largely of interest income on our significant cash balances, and we’ve been working hard to maximize this income. On the revenue side, our lightering business has another strong quarter earning $11 million revenue with $2 million in vessel expenses, $4 million in charter hire and $1 million of G&A the lightering business contributed about $4 million in EBITDA in the second quarter and almost $10 million of EBITDA year-to-date. Now turning to our cash bridge on Slide 10. We began the quarter with liquidity of $519 million and composed of $261 million in cash and $257 million in undrawn revolving capacity. Following along the chart from left to right on the cash bridge, we added $205 million in adjusted EBITDA for the second quarter, less $56 million in debt service, which is composed of scheduled debt repayments and cash interest expense, less our drydock and capital expenditures of $14 million in the quarter and working capital benefit of $49 million.

We therefore achieved free cash flows of about $146 million for the second quarter. The remaining bars in the cash bridge demonstrates the execution of the capital allocation that we announced on the first quarter earnings call. As a reminder, in Q1 we had $169 million of free cash flow. And here you can see exactly how we used it. First, as we committed to at the time of the call, we repaid $75 million of debt in this quarter, of which $29 million went to unencumbered a modern Suezmax vessel and $46 million was to terminate to sale-leaseback that had an interest margin of 390 basis points over bank borrowing rates. Secondly, we paid $79 million in combined dividends of $1.62 per share. And finally, we repurchase approximately 366,000 shares of our stock for $14 million.

These components then led us to any liquidity of over $493 million, but $236 million in cash and short-term investments and $257 million in undrawn revolving capacity. Now moving to Slide 11, we have a strong financial position detailed by the balance sheet on the left hand side of the page. Cash remains strong at $236 million, that’s a lot of books standard, approximately $2 billion book value versus current market values of over $3 billion. And with about $947 million in gross debt, that equates to a net loan to value of about 22% also illustrated in the bottom right hand chart. I want to point out one last element of the balance sheet that is more of a timing issue. In the third line down from the top, under assets, you see that we separated advanced payment of debt of $46 million, which is related to the prepayment of the two sale-leaseback I just mentioned.

There is a corresponding $46 million of debt embedded in the current portion of debt. Both of these are eliminated all the label transaction when it closed, July 3, just after the quarter closed. On the upper right hand side, we have recapped debt details to reflect these payments – these prepayments. Because 73% of debt portfolio is hedged or fixed our weighted average all in interest rate using current bank borrowing rates is 6.36%, which at current rates is effectively margin about 1.25 basis points above today’s SOFR and LIBR reference rates. As we mentioned in our press release this morning, we expect to continue on this trajectory of a balanced capital allocation approach. We intend to use some of our cash to repay existing debt. Currently, we’re exploring options on which facilities in the portfolio, we would do, but we expect total repayment maybe around $50 million.

We also have announced our combined dividend of $1.42 per share, which consists of a regular dividend of $0.12 and $1.30 of a supplemental dividend. These payments were made in the third quarter as they continue to build on our track record executing our capital allocation strategy. Turning now to the last slide that I’ll cover Slide 12, reflects our forward-looking guidance and book to date TCE aligned with our cash breakeven levels. Starting with TCE fixtures for the third quarter of 2023, which I’ll remind you as I always do, that actual TCEs which we are referring to next earnings call may be different. But here you see we have a blended average of TCE across all the sectors of $38,000 a day so far this quarter. On the right hand side of the slide, you can see our cash break-evens which we have shown through next 12 months reflective of the delivery of the last vessel in our newbuilding program and related payments on principal and interest, as well as the new fixed revenues, excluding any profit share on our increased long-term time charters.

Overall, we’ve reduced our break-evens by $1,000 a day in the second quarter of last year. When you compare this breakeven to our fixtures to-date. It certainly looks like the third quarter can be another strong quarter for International Seaways. On the bottom left hand chart for the modelers out there, we provide some updated guidance for expenses in Q3 and a total of the year. We also included in the appendix, our quarterly expected off hire and CapEx schedule for 2023. I now plan to read each item line-by-line, I encourage you to use these for modelling purposes. That concludes my remarks. I’d now like to turn the call back to Lois for closing comments.

Lois Zabrocky: Thanks a lot, Jeff. I’ll now summarize the details laid out on Slide 13, where you can see our investment highlights. For the last six and a half years International Seaways has a track record of returning to shareholders constantly improving our healthy balance sheet and growing our company. Our total shareholder return over this time is over 290% and surpasses our peers. Over the last 12 months through regular quarterly dividend, supplemental dividends and opportunistic share repurchasing, we have returned $316 million in cash returns with earnings of $658 million. This very consistent payout represents a 17% yield. We have improved our balance sheet over this time, with 75 vessels in the crude and product tanker markets.

We have $2 billion in assets on the books that are worth over $3 billion in the market today. We prepaid debt and unencumbered 30 vessels representing 40% of our fleet. Importantly, our cash breakeven level is now below $16,000 per day. We have strategically positioned this company for a sustained robust tanker market with a growing need for seaborne transportation created by regional imbalances. We’re focused on safe, reliability with our transportation in an industry that will have evolving environmental regulations. And we remain focused on being a leader in ESG. Collectively, we strive to continue to evolve these principles and provide meaningful platform for all of our stakeholders. Thank you very much. Operator Daisy, if you would, please open it up for questions.

Operator: Of course. [Operator Instructions] Our question today comes from Chris Robertson from Deutsche Bank. Chris, please go ahead. Your line is open.

Chris Robertson: Hi, good morning, Lois and Jeff, thanks for taking the time to take our questions. This is around the 2023 off hire day guidance for Q3, it looks like it ticked up just slightly. Since the last update, I was wondering if this is due to pulling forward any drydocking into the third quarter. Or if this is due to just some delays that are out there?

Lois Zabrocky: Some of our drydocking, from the second quarter got pushed into the third quarter. That I think is our only change, isn’t it Jeff?

Jeff Pribor: I have to go back and look for it. But we haven’t – looked and we’re doing some forwards. And we’ve looked also from ’22 to end of ’23. And then also some will begin later in the year, so we’ve got a bit of both.

Lois Zabrocky: And the third quarter, we anticipate and hopefully, this will mark the low point of the year. And we expect pick up the rates in the fourth quarter. So that the bit of the concentration there.

Chris Robertson: Yes, that makes sense. Thanks for that. My second question is just around the Corpus Christi ship channel dredging project. Do you think this will have any impact on the lightering business? Or could it be offset by maybe some more positive impact on VLCC demand?

Lois Zabrocky: I think, the project has moved forward, very successfully, it is still the case that, you can now load a Suezmax, and then top up to a VLCC. That has been the case for the last couple of years, you still need an under feel clearance – the channel dredging, allows for, nice safety levels. So, we don’t really see a big impact on the lightering business, except for the fact that Corpus Christi is just increasingly busier. And that actually increases, the amount of exports from that port, and consequently, some of the lighterings.

Chris Robertson: Yes seems like, it’s good all-around for all segments. Okay. Yes. Thank you very much. I’ll turn it over.

Lois Zabrocky: Thank you, Chris.

Operator: Thank you very much. Our next question today comes from Omar Nokta from Jefferies. Omar, please go ahead. Your line is open.

Omar Nokta: Hello, and just good morning. Wanted to ask about. I feel like a lot of times I’m asking you about the Panamaxes but you clearly you’ve ordered the two LR1s that got a pretty attractive delivery schedule, I’d say for 2025. Clearly that piece of your business has done really well and doesn’t really seem to be feeling the effects of seasonality or the OPEC cuts and just looking at your averages so far this year at 68,000 in the first half. That seems like that’s probably at least perhaps double with the broad LR1 market average has been. So across your fleet that’s a $50 million. If we calculate that or just over $1 a share. So pretty meaningful outperformance especially for you guys. My question is, are there risks that owners start to bring vessels into this niche market and crowd out the premium, you’ve been able to consistently achieve here over the past several quarters?

Lois Zabrocky: Well, I would say Omar, that I think the base trade in the Americas on these vessels and in this class as you know, also benefited from, what the overall tanker market especially the mid sector of the fleet enhance ton-miles with all of the sanctions and the trade that has benefited us. But there are lots of Panamaxes engaged in this trade. It’s an ageing sector, the overall trade is strong. And we’re supporting our joint venture, and we’re making sure that she was going forward. We’re nearly 20 years in 2025, it’ll be 20 years that we’ve been in this joint venture, and it’s been very successful. And we look forward to supporting that trade, our customer base and our partners.

Omar Nokta: Thanks Lois. And it sounds like you clearly you’re ordering those two ships to perhaps maybe get deeper into that trade. In terms of say, looking at a broader fleet renewal in general, I guess, where we’ve seen a bit more of your activity recently, in terms of adding or tonnage has been in the LR1s how are you thinking about the MRs, as it is right now? Any plans to reinvest in that segment? And as you think about that due newbuildings similar to the LR1s make sense? Are there opportunities that you think are maybe more appropriate in the second hand market? Any color you can give there?

Lois Zabrocky: I mean, Omar what I would say is that, we have been highly selected, so you’re really looking for, in an environment where we do feel that cyclically asset level, value levels are high. We’re looking for those opportunities where it’s strategic. And overall, fundamentals are very strong, what the VLCCs that we just took delivery of, and the Panamaxes or LR1s that we just ordered, those two sectors have in common, their order book is 2%. And I think that’s very strong. I think that as we look at our broader sectors, one of the beauties of being diversified, and being present in all of these different markets is having more in depth knowledge about, all of those fundamentals. And we’re looking for the opportunities to provide a strong return. And that may be an MR is going forward. It’s something that we will continue to study, but it’s not something that will repeat up for today.

Omar Nokta: Thanks Lois. Thank you. And just one final, just quick follow-up, you’re just highlighting the profit share on the on those three VLCCs. You know, based there based off of the TD3, is that basis, just general bunker fillers is that LNG price, LNG fuel component?

Lois Zabrocky: Derek Solon, our Chief Commercial Officer is going to handle that.

Derek Solon: Hi Omar. It’s Derek. Yes, it’s based on VLSFO pricing, not LNG pricing, but in the negotiation with the charter, we were able to work some advantages to that VLSFO pricing.

Omar Nokta: Got it. Okay. Thanks, Derek. And thanks Lois.

Lois Zabrocky: Thank you.

Operator: Thank you. Our next question comes from Liam Burke from B. Riley. Liam. Please go ahead. Your line is open.

Liam Burke: Thank you. Good morning, Lois. Good morning, Jeff.

Lois Zabrocky: Good morning, Liam.

Liam Burke: Lois the Suezmax are out earning the VLCCs. Is that a function of the redistribution of crude supply? And do you think that will continue?

Lois Zabrocky: Yes, Derek, we’ll take that.

Derek Solon: Hi Liam, it’s Derek Solon here. Yes, that’s a function. That’s a function of changing trading patterns around the Russian invasion in Ukraine, where we’ve seen a mid-sector Suez as to why and the answer is, and as long as it adopted LR1s so it outperformed the larger crude. So expect that to continue while we have these continued hostilities in Europe.

Liam Burke: Great. And, Jeff, on the capital allocation side? How much does newbuilds after you’ve ordered two new LR2s how do newbuilds come in and balancing your allocation of capital now?

Jeff Pribor: Well, I think Lois touched on it, you know, if we look assets today, they’re generally at the high end as of this cyclical of pricing, as we know. So when there’s going to be a newbuilding, if there has to be a newbuilding allocation is going to be a specific value proposition. And that’s what we found with respect to these LR1s is that they work out well, taking into account the financial metrics of making them conversion ready, and even considering it a conversion in the future in the DCFs. So that’s a specific value proposition. So I don’t as low – as that I will evaluate that in other sectors, but we’re not expecting anything at this time.

Liam Burke: Great. Thank you, Jeff. Thank you, Derek.

Operator: Thank you. Our next question comes from Ben Nolan from Stifel. Ben, please go ahead. Your line is open.

Ben Nolan: Yes, thanks. Yes. Good quarter. Actually, if I could just follow up to your just talking about on the LR1s that you ordered. The LNG raise you’re curious. You can just trade those in a pretty distinct pattern. Was there any thought about actually making them LNG equipped and why not just go ahead and go full tilt on that?

Derek Solon: Let me ask what my colleagues to answer that question.

Lois Zabrocky: Yes, our Chief Operational Officer and Head of Sustainability, Bill Nugent, you just highlight if you would, how you preparing us with this order for multi-fuel future.

Bill Nugent: So thank you. My responsibility to Lois and Derek is to provide them with safe reliable quality ships to trade. And as we look forward as to how those ships may trade, right, and as the rules evolve, and the regulations change, and we kind of consider IMO latest announcements and tightening of restrictions. We want to make sure that we’re prepared for a multitude of different scenarios. So these ships can operate on biofuel as a drop in fuel, we have made considerations in the design for the potential for carbon capture, if that becomes the viable logistical technology, you know, viable technology. And then we have the ability to also considered LNG as a fuel. So, you know, what I’ve tried to do is make the ships as flexible as possible. So the Derek has the ability to trade them, in whatever way he wishes to do so. So I have realized that sort of answered all the questions there.

Jeff Pribor: Yes, so Ben is Jeff again. So as people talk about, whatever, something future already. And that can be not bought you back it can be a fully flushed out program. And what you hear what we got this case is to have a lot of optionality built into these ships, and we factored in the future costs of that into our decision making table. Hope that answers your question.

Ben Nolan: No, it’s helpful. And actually, if I could just, I assume even price that for something like now one, what’s the incremental cost of having it be LNG equipped versus just ready any framework around that?

Lois Zabrocky: Okay, yes, I mean, maybe what I would say is – one of the distinctions that Bill led the team to achieve is that we have a classification. Right, go ahead Bill that we’re certified for to carry LNG with the conversion.

Bill Nugent: Yes. I mean, it’s important that dual fuel ready is not just lip service.

Lois Zabrocky: Correct, that exactly.

Bill Nugent: So yes I mean, but even beyond that, right. So the actual equipment is certified has been on other ships converting provided or operates on dual fuel. So the boilers, the engine, main engine generators can all do that, and are sized for that future service. Right, so that’s a key distinction, specifically that the adder for it to deliver that ship in the market today is dual fuel, somewhere that $12 million to $13 million range.

Lois Zabrocky: We estimate would be the cost, but again, then we prepared for that in the future. We are not undertaking that today.

Ben Nolan: Understand, just trying to frame in the value proposition a little bit, but appreciate that. My last question. Again, maybe a little bit more on the West Coast with the LRs in particular with EMRs, all over both the Gulf and the Pacific Coast and a lot of noise about Panama and congestion and low waters and everything. Is that having any specific impact on the business that you guys do and have you thought at all about sort of it or if not then be curious to hear that. But if it is in any sense of how you would quantify if that impact is?

Lois Zabrocky: The Panama Canal for the trading of, within the joint venture of Panamaxes International, is an integral piece of the trade routes. We are constantly calling there. And Derek, do you want to talk about the delays I mean.

Derek Solon: I think to Ben’s point has been I think you’re speaking specifically about the most recent building delays at the Panama Canal area.

Ben Nolan: Yes. Well, yes I mean, it’s months now, but it’s just getting worse and worse right?

Derek Solon: Right. So in some instances, yes we have seen increasing delays for both EMRs and the Panamax is, I think the delays at the Neo canal have grown larger than at the old being restricted canal. So you know, that’s why longer term we’ve built the LR1s with the 32.2 meter beam so they can continue to use the older Panama Canal. But some of the delays have had an impact on the TCEs as we picked up longer waited delays to go through. So, we’ve seen that in one instance, we sent a ship from Argentina over to the West Coast, and didn’t utilize the canal. We went around Cape Horn. So yes, I think that determined interpretive play that play that game of delay versus cost in each and every voyage, and you’ve seen it impact us.

Ben Nolan: Interesting. Okay. All right. That does it for me again, thanks and good quarter guy.

Lois Zabrocky: Thank you.

Operator: Thank you. Our last question is from [indiscernible]. Please go ahead. Your line is open.

Unidentified Analyst: Good morning. Thanks for taking my question. I realize it’s a bit early to see the full impact, but on the dark pool trading Russian crude? Are you seeing tankers leave that pool and return to the regular trade as East Asia started buying more Middle Eastern crude? Is that something that can happen quickly? Or will you have a lot of visibility as though unfold?

Derek Solon: Sharif hi, it’s Derek Solon. Again, maybe I can I can answer this one. As Lois touched on in her remarks, I think as crude has increased overall, U.S. crude has increased and we’re starting to see U.S. crude above the set. You know, there’s a there’s a differentiation within the Russian trading fleet. There’s the great fleet, who are more comfortable sanctions busting, if you will, will carry crude it at any cost. And then there’s the compliant group of voters who are willing to load Russia, unlike us, but we’re willing to load Russia provided it’s in accordance with the price cap that set. So as the price goes up for – some of those ships come back. They don’t come back necessarily completely efficient, though because when they come back, there’s a lot of customers, a lot of charters who are not keen to take shifts that have called Russia.

So they’ll have to take – they’ll have to take disadvantaged business to sort of clean up their cargo history. So I think to your point I will take a little bit of time to see how that impacts the market.

Unidentified Analyst: That’s helpful. Thanks, really, I’m just trying to kind of gauge the volatility there. And then you exercised two repurchase options during the quarter. Going forward, how are we thinking about exercising more sale leaseback repurchases versus other parts of the capital allocation strategy?

Jeff Pribor: Hi. It’s Jeff. I think that is probably the last of the repurchases you might see for a while just based on the terms of the other sale leasebacks that are out there. So nothing imminent. And as we said in our March, we will look at the whole portfolio of other debt instruments we have in terms of this incremental debt, prepayment that we’re – we’ve been doing and we’ll continue to do as nicely brings down our cash breakeven. So it will probably be spread somewhere else in the debt portfolio.

Unidentified Analyst: Okay. Thanks for taking my question.

Jeff Pribor: Thank you.

Operator: Thank you. [Operator Instructions] We have no further questions. So I’d like to hand back to Lois for any closing remarks.

Lois Zabrocky: Thank you very much. I want to thank everyone for joining us today on our second quarter conference call and a very strong quarter. Thank you very much.

Operator: Thank you, everyone, for joining today’s call. You may now disconnect your lines. And have a lovely day.