GasLog Management Discusses Q3 2013 Results - Earnings Call Transcript

Nov.14.13 | About: GasLog (GLOG)

GasLog (NYSE:GLOG)

Q3 2013 Earnings Call

November 14, 2013 8:30 am ET

Executives

Jamie Buckland - Head of Investor Relations

Paul Wogan - Chief Executive Officer

Simon Crowe - Chief Financial Officer

Analysts

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Christian Wetherbee - Citigroup Inc, Research Division

Nishant Mani - JP Morgan Chase & Co, Research Division

Operator

Good morning. My name is Deirdre, and I will be your conference operator today. At this time, I'd like to welcome everyone to GasLog's Third Quarter 2013 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Today's speakers are Paul Wogan, Chief Executive Officer; Simon Crowe, Chief Financial Officer; and to commence the call, Jamie Buckland, Head of Investor Relations at GasLog. Mr. Buckland, you may begin your conference.

Jamie Buckland

Good morning and -- good afternoon, good morning to those of you in the U.S. Thank you for joining us on our third quarter 2013 results conference call. As a reminder, this conference call, webcast and the presentation we're using this afternoon are available on the Investor Relations section of our website, gaslogltd.com. A replay will also be available from 12:30 p.m. Eastern Time, 5:30 p.m. London time today until 6:00 p.m. Eastern Time, 11:00 p.m. London time on Wednesday, 20th of November 2013.

As shown on Page 2 of the presentation, many of our remarks this afternoon contain forward-looking statements. Let me refer you to our Q3 results press release and our reports filed with the SEC, where you will find factors that could cause actual results to differ materially from these forward-looking statements.

In addition, some of our remarks this afternoon contain non-GAAP financial measures as defined by the SEC. A reconciliation of the non-GAAP financial measures to the most comparable GAAP measures is attached as an annex to the presentation. Today's call is set to end at around 2:30 p.m. London time, and 9:30 a.m. Eastern Time.

If we now turn to Slide 3, the agenda for the presentation, I'll hand over to Paul Wogan, GasLog's Chief Executive.

Paul Wogan

Thank you, Jamie. Good afternoon, and good morning, and thank you to everyone for joining us. On today's call, I will provide you with an overview of our third quarter 2013 highlights and performance. Simon will then review the third quarter 2013 financial results and provide a summary of our forward committed revenue. I will then give a brief update on the LNG market in Q3, followed by an overview of our fleet and charter information, including an update on the GasLog Chelsea that we acquired in the quarter.

So please turn to Slide 4 of the presentation. It's been an excellent quarter for GasLog and we are very pleased to announce today that due to our growing fleet and continued strong performance we have raised our quarterly dividend to $0.12 per share and we remain committed to rewarding our shareholders in the future. We continued to execute well on our existing business plan with the delivery of the GasLog Skagen on-time and on budget. The vessel has now commenced a multi-year charter to a subsidiary at BG Group. We are also very pleased to have opportunistically acquired the GasLog Chelsea at a price that we think provides good value for GasLog. We drew down on the finance for the vessel at the end of the third quarter, and took delivery early in Q4. This acquisition shows that we're not only focused on executing the plan that we set out at the time of the IPO, but we're also committed to continue growing the business as and when new attractive opportunities present themselves.

With the inclusion of the GasLog Chelsea, we now have 7 fully-owned ships on the water, with 6 earning revenues in their multi-year charters. The GasLog Chelsea is currently fixed for its second spot charter. The GasLog Skagen has so far performed well, and along with our other on-the-water vessels, achieved 100% utilization during the third quarter.

I'll now hand you over to Simon, who will take you through the third quarter financial results in more detail.

Simon Crowe

Thank you, Paul. Good afternoon and good morning to those listening in the U.S. Firstly, I'd like to echo Paul's thoughts that we have again performed strongly through the quarter, as we continued to execute on the business plan that we set out at the time of the IPO. We're not only delivering on the plans we set out back then, we are also to looking to further build on those plans to expand the business. I think the acquisition and the subsequent delivery and charter of the GasLog Chelsea shows that we're doing just that.

I'll now take you through the financial highlights. And please turn to Slide 5 of the presentation. Revenues for the quarter increased significantly by over $26 million to approximately $43 million compared with the same period in 2012. The increase is mainly attributable to the delivery of the GasLog Shanghai, GasLog Santiago, the GasLog Sydney during the first half of the year, and the GasLog Skagen in Q3. Upon delivery, they immediately commenced their charters. Solid revenue figure is underpinned by the 100% utilization of all the ships in our fleet.

EBITDA was $27.9 million for the quarter compared to $8.6 million for the same period last year, with profit for the quarter of $9.2 million. The Q3 profit figure was an increase of $6.2 million on the same period in Q3 2012. This increase in profit is mainly due to the delivery of the new ships, and could be summarized as follows: firstly, a $26.2 million increase in revenues offset by a $4.7 million increase in vessel operating and supervision costs; secondly, a $5.1 million increase in the depreciation of fixed assets; thirdly, a $1.6 million increase in G&A expenses compared to Q3 2012. This increase is mainly attributable to an increase in employee-related expenses in line with GasLog's planned growth; and finally, an increase of $8.7 million in net loss on financial costs and swaps. The breakdown was a $1.1 million increase in net unrealized losses on swaps, and an increase of $7.6 million on other financial costs. And this, of course, is mainly related to the interest expense and amortization of the loan fees from the facilities we drew in 2013.

If we look at adjusted profit of $11.4 million, the increase of $7.4 million compared to $4 million in Q3 in the previous year excludes the effects of the unrealized losses on swaps and foreign exchange impacts. For the third quarter this year, adjusted EPS is $0.18 compared to $0.06 in the same quarter last year.

Please now turn to Slide 6 of the presentation. Here, we set out the growth in revenue, EBITDA, total assets and average number of owned ships in the same format as our last quarterly presentation. You can see a significant increase across all metrics, which mainly arises from the delivery of the new vessels and the continued solid execution of the business plan. We took delivery of the GasLog Skagen in the quarter, giving an average fleet of 5.7 ships. These numbers do not include the GasLog Chelsea, which was acquired after the end of the quarter.

Please now turn to Slide 7 of the presentation. If we concentrate on some of the key items on this page, you can see a significant increase in the fixed asset line, which reflects the increase in ships over the period, the September 30, 2013, which now collectively have a book value well in the excess of $1 billion. This figure includes the 6 ships that we currently have on the water, but does not include any of the new buildings or options we have outstanding or the GasLog Chelsea, which was acquired after the period end. In current assets, with 2 line items are the short-term investments and the cash and cash equivalents. The movements in the short-term investments is due to the decrease in outstanding time deposits with initial duration of more than 3 months, and cash and cash equivalents has increased significantly since December 31, 2012, mainly as a result of cash from operating activities and receiving the $100 million from the loan facility for the GasLog Chelsea in Q3 with the subsequent purchase in Q4.

Please now turn to Slide 8 of the presentation. Major items on the liabilities side of the balance sheet relate to our 5 loan facilities on the delivered fleet, and the GasLog Chelsea as of September 30, as well as the bond agreement signed at the end of the second quarter.

Please now turn to Slide 9 of the presentation, where we look at the debt facilities in place. Whilst many of you will have seen this slide before, there are a couple of notable changes since the last quarter. The third quarter saw us drawdown on the facility for the GasLog Skagen. We also drew down on the facility with Citibank and DBB for the GasLog Chelsea in the third quarter, but only took delivery at the beginning of the fourth quarter. It also includes the Norwegian bond that we issued near the end of the second quarter. Our interest fixing stands at approximately 65% of our portfolio as we fixed the GasLog Singapore facility, which comes effective in February, 2014. Our total investments as of September 30, 2013 was approximately $1 billion. We have, as of September 30, 2013, an undrawn amount of $10.5 million from the revolving credit facility signed in Q2 2013, and undrawn loan facilities with an aggregate amount of $579 million will be used to partially finance the delivery of 4 of our new buildings. Borrowings under these loans facilities will be drawn upon the delivery of the ships, which is scheduled for various dates between 2013 and 2015.

Please now turn to Slide 10 of the presentation where we look at the contracted revenue looking forward. Table here illustrates our contracted revenue position out to 2026. The figures for 2013 exclude the first 9 months of the year. Contracted revenue for each ship begins in the year that, that vessel enters the fleet. Before the acquisition of the GasLog Chelsea, we had a 100% cover across our ships for 2013 and '14. The GasLog Chelsea is currently on a time charter, and the 97% you can see for 2013 reflects the 19 days where she's not on contract. This figure falls to 88% in 2014 as the GasLog Chelsea again becomes available for charter. And no charter days have yet been assumed for 2014. We have around 70% of total days contracted on average for 2015 and 2016. And you can also see in the total column that we have 39% of our available days contracted in the period to 2026, inclusive. The contracted revenues going forward are now around $2.1 billion and please note that these revenue estimates do not include any earnings for our 2 uncommitted ships, all from the GasLog Chelsea once she becomes available for charter again, and similarly there's no revenue included for likely earnings from the ships following the completion of their initial charters.

Turning now to the full year for 2013. Based on our current business plan, full year EBITDA remains in line with our expectations. Once again, we expect our operating costs and net interest costs to reflect the delivery of remaining vessels scheduled for the rest of '13, and the drawing down of associated debt. We remain on track and on plan. We've been busy this year expanding and enhancing our capital structure. We refinanced GasLog Singapore, raised our debt-to-capital covenant from 65% to 75%, executed on our first Norwegian bond, very quickly raised $100 million for the GasLog Chelsea purchase, and introduced DVB into our banking group. I expect this enhancement and expansion of our catalog structure to further continue going forward as we respond to the growth we see in the market.

On the dividend, I'm delighted that today, we were able to announce for the third quarter a dividend of $0.12 per share. This dividend will be payable on December 9, 2013 to stockholders of record as of November 25, 2013. Going forwards, we will look to maintain sufficient liquidity in the business to fund our existing business plans and to fund profitable growth. As I've said in previous presentations, where we see there's excess cash in the business, we remain committed to returning it to shareholders as and when appropriate.

That concludes the financial highlights of the presentation. And so now, please turn to Slide 11 of the presentation, and I'll hand you back over to Paul.

Paul Wogan

Thank you, Simon. So Slide 11, market update. While we remain optimistic on the global LNG markets and think that strong industry fundamentals will continue to support multi-year forward rates, in the spot market, LNG shipping rates remain high when compared to average historical levels. In Q3, we saw a number of further developments in the LNG industry, which should provide future demand for additional LNG carriers. These developments include, in the U.S., BG's 15 million tons per annum Lake Charles project became the third project to receive U.S. Department of Energy approval to export to non-free trade agreement countries. And that was followed shortly after by Dominion's 5.2 million tons per annum Cove Point project, which became the fourth project to receive the DOE approval. And also in the U.S., Freeport signed tolling agreements with Far Eastern buyers for 2.2 million tons per annum from a planned third production train at Freeport.

Elsewhere in the world, in Australia, the project partners in a proposed browse LNG liquefaction project have agreed to consider developing that project with our Floating Liquefaction solution. In East Africa, ENI has discovered another 5 trillion to 7 trillion cubic feet of natural gas offshore Mozambique, adding to the already significant discoveries in that region. And to round off this global theme, we also saw a Chinese company committing to buy volumes from the Yamal project in Russia.

Please now turn to Slide 12 of the presentation, where I'd like to spend a couple of minutes talking in more detail about the recent acquisition of the GasLog Chelsea. Whilst we've talked in some detail at the Investor Day, for those listening today who weren't able to attend or dial in, the GasLog Chelsea is a 2010 built 153,600 cubic meter tri-fuel diesel electric LNG carrier. We bought the ship as STX Frontier from STX Pan Ocean who were in financial difficulties at the time. We paid around $160 million for ship, and in short order, were able to secure $100 million financing package as a result of the strong relationships we have with our lending banks. The strength of our underlying business allied with these close banking relationships allowed us to move quickly to secure the purchase at what we believe was a very competitive price.

The price also reflected the ability of GasLog to acquire the ship at short notice and without a committed charter. Furthermore, our technical expertise allowed us to take delivery of the ship in early October, and quickly integrate the ship into our fleet before placing her very quickly on her maiden voyage. And then regarding the first spot charter, whilst we do not divulge individuals charter rates, we can advise that the charter rate is in line with the current spot market. And we're also pleased to report that we have subsequently secured a second charter for the ship at similar rates. In summary, we are very pleased with the purchase of the GasLog Chelsea. Adding this vessel to our existing portfolio of ships with long-term fixed-rate contracts provides us with opportunity to capture additional value from this vessel from what we believe will be a long-term LNG growth market.

We also continue to be excited about further potential consolidation and flee growth opportunities. And as we have demonstrated, we feel we are well placed to take advantage of these opportunities if and when they arise. But as always, we will only do so if the potential deal looks attractive, financially, operationally and from a risk management perspective. In addition to the GasLog Chelsea acquisition, we continue to hold 6 options with Samsung, which were due to expire in the fourth quarter. But due to our strong relationships with Samsung, these options have now been extended into Q1, 2014.

Please now turn to Slide 13 of the presentation to review the GasLog owned fleet. The slide shows the build-out of our modern fleet with multi-year charters to leading industry participants such as Shell and BG. As Simon mentioned earlier, the $2.1 billion of contract cover provides us with a solid foundation for the business. This, in turn, gives us the flexibility to be more opportunistic in the charters we're considering for Hulls 2043 and 2044, with a view to capturing the potential upside we see in the market in the future. We're constantly evaluating the possible opportunities for these vessels when they are delivered in 2014 and 2015.

Please now turn to Slide 14 for the summary. So as I said earlier, this has been another strong quarter for GasLog in which we continue to execute well on our existing business plans. Adding further fleet growth through both the delivery of the GasLog Skagen and the acquisition of the GasLog Chelsea. Looking forward, we remain optimistic about the future opportunities, and we are pleased to announce the increase of our dividend to $0.12 per share, which will be paid in December. With our existing ships and the new buildings that are to be delivered up to 2016, we remain focused on operational excellence and managing our fleet to maximize its potential. We believe that the forecast expansion of the LNG industry, combined with GasLog's experienced technical platform, our proven track record of project execution and our strong industry relationships mean that we are confident that we will continue to see attractive growth opportunities for our company.

And that brings an end to the presentation. Operator, could you please open up the call for questions?

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Jonathan Chappell of Evercore.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Paul, my first question is about the options. Looks like it's pretty good to get them pushed out 1 more quarter to give you some more flexibility. But just what are you looking for before you make the decision to pull the trigger on the options? And there's, I guess, 2 areas. Are you looking have a charter beforehand? Or and are you looking to have some bank financing, not necessary finalized, but discussions with your banks, so you're confident in the ability to finance the ships if you move forward with the options?

Paul Wogan

Yes. Thanks for the question, John. In terms of the options, I think the great thing about options is they have a lot of option value. So as we can roll those options forward, we will do. Those are still price options with Samsung. I think it speaks to our relationship with them that we're able to push those forward. And as we look at that, the timeframe those vessels that are coming out, we seem to be a very strong period. But whilst we can keep pushing those options out and keep that optionality, I think that's attractive for us. In terms of the -- taking a charter against those or against the financing, I think if we see the right deal for those ships, we're pretty confident to move quickly on the ships. Even if we don't see the right deal, I think we're pretty confident in terms of our financing. I think you've seen what we've been able to do so far and our financing and how quickly we could move on the GasLog Chelsea. So I don't think for us that's a gating item, but I'll turn that over to Simon as well.

Simon Crowe

Yes. In terms of the bank financing, we've got extremely good relationships. And as Paul said, it's not really a gating item. We feel confident we're able to source that funding as and when we decide to exercise those options.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Okay. Makes sense. And based on – let's just say you exercise them in 1Q '14, would the delivery date be pushed out to 2017 right now?

Paul Wogan

Yes. We -- those delivery dates will be sort of end 2016 into 2017 the way it stands at the moment.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Okay. And then, Simon, you made mention in your presentation, it's also in the press release as well, ongoing development of your capital structure. You've obviously done a lot of things with refinancings in the Norwegian bond. As you look forward and with a lot of the deliveries kind of behind you but still a bunch ahead and a lot of the newbuildings already financed, what are some of the other arrows in your quiver that you're looking for to kind of get the capital structure in your most efficient place?

Simon Crowe

Well, as you say, we've been busy. We've been very busy on the financing side and we've grown the fleet by 50%, backlog's at $2.1 billion now. So we've been pretty busy, we've clearly tapped new sources of financing within the Norwegian bond. We've done all of this growth without any equity, so we're quite sort of pleased with where we are. I mean, going forward, I'm just -- we are evaluating a number of different funding alternatives, as you'd expect. And we keep evaluating that. We've been, as I say, pretty busy. We've achieved a lot in going forward, that we're looking to look at those options very seriously as we grow the fleet. So it's all of the different -- the capital markets is performing well, and all the different tools and arrows are in the quiver as you put it.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Okay. Last one, Paul. Kind of quick 2-parter. The Chelsea, you've been fortunate to get a couple timely ship spot or short-term voyages for that one. Probably a good time of year for that as well. What are your long-term plans for the Chelsea? Do you want to keep some variability, or leave some market exposure? Or would you like to sign that one kind of medium to longer term? And then the second part is, are there other opportunities for you like the Chelsea to move kind of quickly and to get a modern asset in a short period of time?

Paul Wogan

Yes. So I think the main thing for us, I think, John, is when we look at the Chelsea is to remain opportunistic. I think as you said, I've been very pleased with the kind of the ability of our platform to take the ship and technically get the ship running well, and to fix the ship out well and in very short order and turn the ship into 2 contracts. I think that all speaks the power of our platform. In terms of -- and then, that gives us the optionality to say, do we -- is that something where we would want to keep the ship open to the spot market and potentially have the value from there? Or do we want to look also at the longer-term market? And I think what we'll do is because we’re trying to -- we believe we can extract value from the ship by keeping that open and saying, where do we see the real value in that? Is it in the long term, is it in the short term? If we see it in a long term, then we're very happy to take charters in against the ship, but it has to stack up against how we see the shorter-term market. And so as we're looking at it, we're constantly evaluating sort of the risk-adjusted returns on that vessel. And then to your second point, we talked I think at the Investor Day, about being a consolidator in the industry. We would definitely feel that we're able to do that. We proved it with the GasLog Chelsea. I think by their very nature, those opportunities come up probably when you're least expecting them, so you've got to be ready for them. So when they come up and how many of them come up, I think it's difficult for us to say. But what we need to do and what we are doing as a company is putting ourselves in a position with the sort of very strong underlying business that we have that we can move quickly and take advantage of those opportunities. Because I think there is real value for our shareholders in us being able to do that.

Operator

And your next question comes from Chris Wetherbee of Citi.

Christian Wetherbee - Citigroup Inc, Research Division

Wanted to just circle back on some of the comments about the capital structure. Simon, when you think about the opportunity for MLP, I think at the Analyst Day you had suggested that maybe there'll be some decisions around sort of alternatives and capital structure adjustments as you move towards year end. Is that still sort of the appropriate timeline to think about? And is a MLP sort of still squarely on the table as a list of your options?

Simon Crowe

Well, look, as we discussed at the Investor Day, we're still -- and as I said earlier, we're still evaluating many different alternatives. And as we see the growth and the opportunities come up, it's very much -- that's on our radar. So it's on our radar. It's a number -- one of the number of things that are on our radar. We've been very successful so far, as I said tapping the bond markets, raising finance very quickly for the Chelsea. So there are multiple opportunities and alternatives out there, and an MLP is one of the things that we are evaluating and we'll continue to evaluating amongst other things.

Christian Wetherbee - Citigroup Inc, Research Division

Sure. And from a timing perspective, I guess, how do we think about sort of the evolution? Is it going to be gradual? Are there any sort of upcoming milestones that you're thinking about such as year-end or forward planning for '14? I'm just trying to get a rough sense of sort of how you -- where you are in the process and how that evolves.

Simon Crowe

I mean as I said, we continued to evaluate, there's no real key milestones here. We just continue to evaluate and look out for the growth and the opportunities that are presenting themselves and respond accordingly. So we're sort of -- as I said at the Investor Day, the fuel for the platform that we're providing is to have as much fuel ready as we can to enhance that platform. And so far, we've done that very, very well, I think. I would say that. But we've done that quite well. And we continue to look at the range of alternatives and believe you, the finance team and the whole team is working really hard to make sure that we look at everything in a lot of detail. So work goes on, work goes on.

Christian Wetherbee - Citigroup Inc, Research Division

Sure. Sounds good. A follow-up would just be on the -- your thoughts around sort of, where the opportunities present themselves for new vessel acquisitions. I think in the past, you've talked a little bit about the idea that you might see a move from the majors to potentially divest some of the existing fleets. Is that something that we should be thinking about in the next 12 or 18 or 24 months? Is it more sort of a 3- to 5-year option? I just also sort of want to kind of frame that up and how I should be thinking about that.

Simon Crowe

Yes. I mean, we laid a bit of that out at the Investor Day and I think you're absolutely right. We see these opportunities popping up, whether they be from the majors or from distress or further consolidation elsewhere. And as Paul had said earlier, it's difficult to predict the timing of that. They come up when you least expect it to. But I'll just hand over to Paul to get some comment from him.

Paul Wogan

Yes. I think that's right, Simon. I mean, it is sort of by its very nature, sort of opportunistic. These things pop up when you least expect them. But I think as we look at over the next couple of years, my guess is, and it is a guess, that we will see some further opportunities coming down the pipe.

Simon Crowe

Yes.

Operator

[Operator Instructions] And our next question comes from Christopher Combe of JPMorgan.

Nishant Mani - JP Morgan Chase & Co, Research Division

It's actually Nish Mani on for Chris. I wanted to talk a little bit about the spot market rates and what you're seeing kind of develop. And if there's any bifurcation between the newer tonnage like the Chelsea, and perhaps older tonnage on the water? Because it seems like a lot of spot market tonnage is skewed towards older. And so I wanted to see what kind of premium you guys are earning in that market?

Paul Wogan

Yes. I don't really want to talk about kind of our individual rates, but I can give you -- probably the best way to do it is a couple of anecdotal things. One of the brokers who is issuing their reports on a weekly basis recently changed over to a steamship rate and a TFDE rate. So he took the -- bifurcated the 2 and reported in a different way because they're starting to see, I think, this difference in rates between the 2 ships. We've also had an example recently where we've seen sort of potential charters where the steamships have not really been considered, and it's just been the TFDE ships. So I think as we're seeing the TFDE vessels entering the market and giving more optionality to the charters, I think you're starting to see them taking that opportunity to take the modern vessels, and we are starting to see I think a differentiation between those and the steamships.

Nishant Mani - JP Morgan Chase & Co, Research Division

Okay. And in thinking about utilization rates, I know we've had this conversation before, kind of the tradeoffs of lower utilization in the spot market versus near 100% in the long-term charters. I kind of wanted to get a sense of what kind of internally you guys are benchmarking for spot market utilization if, in fact, the Chelsea remains on shorter-term or spot voyages in the next quarter or 2?

Paul Wogan

Yes. I mean, we're not -- in terms of the actual utilization is, first, really what you'll need to focus on is what is the overall returns on the vessel? Because it's a little bit dangerous if you target utilization because you then do things which mean that you trying to keep the utilization up without necessarily getting the return. So obviously, it's all about the TCE that you get per day on the ship. And so when we look at it, what we're trying to do is say, okay, given the trading of the vessel, can we get those -- can we keep those TCEs up at a high return, which gives us a return -- risk-adjusted return on being in the spot market? So we focus on that more than necessarily just on the straightforward utilization. But utilization, obviously, plays a part in that.

Nishant Mani - JP Morgan Chase & Co, Research Division

Okay. And I guess in looking -- I know we're still a year out from kind of market exposure for the unfixed vessels. But just wanted to get a sense, anecdotally or quantitatively how the long-term charter rates have moved over the past, maybe couple of quarters? And then in relation to pre-IPO, when you guys had booked a kind of package of rates there?

Paul Wogan

Yes. I think if we look over the last couple of quarters, from what I can see, there's been very little change in the long-term charter rates. I think if you look at what we've done ourselves pre-IPO and post-IPO, then we have -- there has been a gradual increase in those longer-term charter rates on what we've done. But that's been sort of a fairly gradual increase. And so when looking out at those, I would say that those rates are still kind of in the 80s, not much change over the longer term.

Nishant Mani - JP Morgan Chase & Co, Research Division

Okay. And then my final question is just about the dividend. Just wanted to circle back. I mean, obviously, congratulations on increasing the dividend and bringing the yield up. But just wanted to get a sense of longer term, how you think about -- I know we mentioned the MLP structure, but how we think about kind of the trade-offs between keeping capital internally for growth prospects and returning it back to shareholders? I mean, this increase was relatively small, but if we begin to see bigger increases over the coming quarters and years, is that -- do we imply then that there are fewer growth prospects in the market?

Simon Crowe

I'm not sure I can answer this question. Either way I'm -- but the -- it's interesting I think at the Investor Day, we said, as the CapEx base is finished, we'd obviously see significant upside in the earnings. That's what we said at the Investor Day, and I think we constantly evaluate it. It's a tension, it's a good tension that we have in the business with preserving our capital and reinvesting it in the growth opportunities versus paying that out to reward our shareholders. So really delighted today that we're able to raise it by the $0.01. But I think we've got this tension here, we've got this balance. I think that Paul and I are absolutely convinced of the growth going forward, in the next few years in terms of the supply and demand curves for LNG with the capacity forecasted to be coming online. So there's a balance here that we try to strike. And again, we're delighted that we were able to increase the first increase post-IPO.

Paul Wogan

Yes. And I think one of the great things about this company is we have major shareholders who are very focused on shareholder value. And I think the last thing that they would allow us to do is to invest in future projects, which didn't look as though they're going to be very accretive for the shareholders. So if we do not have great use for the cash, then we would definitely return it to the shareholders. But also, we'll be looking, as we fill out this business, as we take delivery of the ships and grow the earnings, we will, of course, be looking to give a good return to shareholders in terms of the dividend. Yes. We're very focused on making sure the shareholder returns are good for investing in this company.

Simon Crowe

Absolutely.

Operator

That will conclude today's question-and-answer session. I would now like to turn the call back to Mr. Paul Wogan for any additional or closing remarks. Thank you.

Paul Wogan

Okay. Well, just thank you very much, everybody, for attending. Thank you for the questions, and we look forward to speaking to you again, in the near future. Thank you. Bye-bye.

Simon Crowe

Yes. Thanks.

Operator

That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.

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