Algoma Central Corporation (ALC) Earnings Call Transcript & Summary

I hereby nominate the following persons as directors in accordance with the corporation's bylaws: Richard Carty, Blake Hutcheson, Paul Gurtler, Duncan Jackman, Mark McQueen, Clive Rowe, Harold Stephen and Eric Stevenson.

If there are no further nominations, I hereby declare nominations closed. I direct the secretary to cast a single ballot for the election of those nominated.

I hereby cast a single ballot.

I hereby declare those nominated to be duly elected to hold office until the next annual meeting. Is there any other business to come before this meeting? I will now entertain a motion from the floor to terminate the meeting.

I move the meeting be terminated.

Thank you very much. All those in favor, signify by raising your hands. [Voting]

Contrary, if any? [Voting]

I declare the motion carried, and this meeting is hereby terminated. This concludes the formal part of the meeting. Gregg, I'm going to turn it over to you. Thank you very much.

Duncan, you can turn off your video if you want. All right. We got you. Okay. Sorry for the delay there. For those of you watching this live webinar, I appreciate your patience. We're doing our best with the new technology. Well, thank you, Mr. Chairman, for -- and thank you for joining us all for the live webinar. I turn your attention to the cautionary note regarding forward-looking statements. Please keep this in mind as Peter and I comment on and present these slides. I'm going to pause for a moment. There it is, the forward-looking statements. So you could read that quickly and then I'll continue. All right. Later last year, Algoma's senior management team decided on a new vision statement for the company, Marine Carrier of Choice. When you hear this in the context of Algoma, you should think of shippers choosing a marine carrier to deliver their iron ore or their aggregates, their gypsum, their cement, their salt, their grain, their petroleum products. Our vision statement is a reminder that we have a continually -- we have to continually strive to earn our customers' choice. But we also need many other stakeholders to choose Algoma, and that's not lost on us. Employees, for example, we want to be the employer of choice in the marine industry. Suppliers, we want to be their customer of choice. Business partners, regulators and society in general, we want marine to be the mode of choice. And of course, in today's context, our vision statement refers to shareholders. We aim to be your marine carrier of choice when you are deciding where to invest. Our senior team also identified core values that represent the way we do business. These have been especially helpful during these challenging times. Our vision and values are our guiding light. In our business, lights are used both to know where to steer towards and where to steer away. I'm very pleased with how our entire employee base has rallied around these important foundational values of teamwork, passion, integrity, ownership and sustainability. Our new vision and values have given us a plan for the present and a strategy for the future. As for the past, last year, Algoma celebrated 120 years of history. This is a rich history, from a small railroad to one of the largest shipping companies in Canada and a leader in our industry. Especially of note for today's discussion, Algoma has a strong foundation, has not lost money in nearly 60 years. And this includes navigating our way through the Great Recession in 2009. I'm pleased to announce that earlier today, our Board of Directors approved a second quarter dividend of $0.12 per share, which is equal to the dividend we paid in Q1 of this year. This is a clear confirmation that this management team and Board are focused on rewarding shareholders. I'd now like to spend a few minutes highlighting 2019 performance. Although Peter will go into further detail on the financial results during his portion of the presentation, I will kind of do an overview of the highlights now. So you can see the slides in full screen. I'm going to go ahead and turn my webcam off, so you could see a little bit more of the detail and a little bit less of me for a while. I'll come back later. In 2019, the Algoma Conveyor, our eighth new Equinox vessel, arrived in Canada and began operations. We also completed the integration of the Algonorth to our product tanker fleet and acquired the Algoterra in April of last year. These ships met all our expectations and were solid contributors to our 2019 results. We also completed a successful acquisition of 3 ocean self-unloaders in June of last year, increasing our share of the self-unloader pool to 8 out of 18 vessels from 5 previously. These ships trade primarily on the East and West Coast of North and South America. Finally, we grew our fleet of pneumatic cement carriers from 16 to 18 and improved performance of the Canadian vessels. We have confirmed our commitment to sustainability by identifying it as one of our 5 core values. Waiting for the slide to adjust here. Did it adjust in your screen? We'll pause for a second where we can see if we can get these slides to advance. There we go. Okay. You can see on this slide that we continue to progress towards many of our long-term goals and remain especially focused on our commitment to the environment and the safety and resilience of our people. It's an added bonus that many of these initiatives, for example, our investment in ocean scrubbers and reduction in greenhouse gas emissions also are tied to attractive reductions in fuel costs. 2019 highlights include a revenue increase of 12%, EBITDA increase of 22% and a return on equity of 3.5%. Although without the impairment on our global short sea division that Peter will discuss a bit later, our return on equity would have been 5.8%. Outside of Canada, we increased our revenue by 46% and our assets by 61%, confirming our continued commitment to grow this business. We have now established platforms throughout the world that will bring us opportunities well into the future. Regarding our 2019 objectives, we were successful in bolstering our talented pool of Canadian seafarers, integrating our 2 new product tankers, as I mentioned earlier, as well as acquiring and taking over technical management of 3 ocean self-unloaders. We also navigated the transition to IMO 2020 in our ocean fleet. We faced a number of challenging mechanical failures in 2019 in our dry bulk fleet, which kind of got in the way of achieving our goal of increased vessel availability. That's why you don't see that one checked off quite yet. As part of our new vision and values initiative, we are also identifying key targets and objectives and rolling out a robust program of identifying and tracking projects that will yield positive results. One of our key goals has been to improve the return of our Global Short Sea Shipping segment. Peter will provide further detail later, but let me say that our senior management team, especially Wes Newton whom you met earlier very briefly, waving to you on the screen, has been intimately involved in key decisions in this segment. For example, our influence on the commercial and operating performance of the Canadian cement business has been very fruitful. Our strategy and our strategic focus for 2020 again includes optimizing fleet availability and ensuring long-term availability of qualified seafarers, especially with respect to Canadian piloted training and certification. I have -- I'll have further comment on sustainability at the end of the presentation. That's #3. And I'll move to #4, which is our new vessels under construction. We have 2 new equity Equinox Class vessels currently under construction, one in Croatia and one in China. These ships are scheduled for completion in time to enter service early in the 2021 Great Lakes shipping season. These are important strategic investments in our Canadian dry bulk business. And I'm pleased that on the strength of our balance sheet, we can continue these long-term investments. About a month ago, steel cutting began in China. And to provide maximum flexibility during these uncertain times, we were successful in renegotiating the installment payments so that 51% of the cost of that ship will be paid on delivery. We may also -- you may also recall that we are not required to make any installment payments on the ship being completed in Croatia until we take delivery. As a remainder -- as a reminder, our business case is based on replacing 2 of our older ships with these 2 new ships, both the one that's coming from China, the bulker and the self-unloader being finished in Croatia. We will likely though be keeping one of our older bulkers as somewhat of an option vessel available for service to meet potential demand surges in 2021 or after. In 2020, we will continue to focus on improving our Global Short Sea segment by reducing operating costs. Thus far, we have been successful in reducing manning levels and making meaningful reductions in cost of supplies. The NACC Napoli, the largest pneumatic cement carrier in the world, has been modified and renamed the NACC New Yorker. And it's well on its way toward the East Coast of North America to serve a long-term charter with improved earnings. I'll be back to discuss our 2020 outlook. But for now, I'll turn it over to our Chief Financial Officer, Peter Winkley.

Pardon me. Here, I've been talking to myself. So I'm going to review the highlights of our business segments, starting with domestic dry bulk. So 2019 revenues for domestic dry bulk were down approximately 5%. That's reflective of a decrease in volume. And it's a result of the fact that we were sailing one less ship in 2019 compared to the prior year. Freight rates, however, were actually higher in the year, and that's as a result of some improved contract terms that we've negotiated over the last several years. In fact, our earnings on a ship-for-ship basis were actually higher as a result of that. We had a drop in revenue days, again, relating to the decreased count of ships in the fleet and higher utilization, over 100%. We measure utilization in the domestic fleet against the standard shipping season, which is from late March until the end of December. So to the extent that we sail vessels during what we would consider to be the nonoperating season, January, February and the early part of March, those effectively become extra days. So that's why we often have more than 100% utilization on the domestic dry bulk fleet. Some of the extra utilization was actually a result of some of the mechanical problems that Gregg referred to earlier. So we did make up for some of the lost days on those ships with mechanical problems by getting better utilization out of the ships that we're sailing. The decrease in EBITDA for the year was about 8%. And again, that reflects the decrease in volumes, but also some higher maintenance costs in 2019. Moving on to 20 -- or to product tankers rather. In 2019, Product Tankers had a 34% increase in revenues compared to the prior year. And that includes about 600 days on our 2 new ships. We bought a ship called the Algonorth right at the end of 2018. And then we added another ship, the Algoterra, in April. So the combined days on those 2 ships during the year were about 600 days. And that -- those are days that otherwise would have gone out on to chartered vessels on which we would not have made much more than a commission rate. So we added those ships, the first tankers that we've added in a decade. We added those ships because what we had seen over the last couple of years was a steady increase in demand from our main customer. And our charter days in prior years had gone up as a result. And when we were in discussion with our customer about that and about the sustainability of that increased volume, we both had enough confidence to invest in those additional ships and on our customers' part to commit to operating those ships. So it was a win-win, I think, for both of us. And yet, despite the addition of those 2 ships, we still had nearly as many charter days in 2019 as had been the case in the prior year. However, those extra charter days in 2019 were not felt to be sustainable. And therefore, they didn't warrant adding additional -- another ship, a third ship on top of that. But nevertheless, those 2 additional ships resulted in basically a doubling of EBITDA. And our utilization in the tankers -- our tanker season does run, for the most part, 12 months of the year. So you see our utilization nearly 100%, a little bit down from 2018. But when we've added, in effect, 40% additional capacity, I think the fact that we came to a very nearly the same utilization rate as we did in the prior year speaks to the fact that this business has been very stable. So those ships delivered a significant growth in EBITDA. The one thing I would point out, and I'll get to this one and get to the Q1 results, is that there is a little bit of a honeymoon period whenever you bring in new ships. Even if they're secondhand vessels, as those 2 were, you do get away for the first year without any major dry-docking or maintenance costs. And so some of that improvement in 2019 is a little bit of that honeymoon period. And again, I'll get to that when we talk about Q1. We also invested significantly in our ocean self-unloaders business in 2019. In June, we acquired 3 vessels that were owned by the third partner in the ocean pool that we operate in. So we bought out their vessels and their interest in the pool. There are now 2 owners. 18 ships in total in the pool, of which, we own 18. This business has traditionally been one of our most stable and best performing businesses. So the opportunity to buy out the partner was certainly very attractive to us. We added their 3 ships to the 5 that we already had in the pool, and that drove an increase in revenue of 46% and a decrease -- or an increase rather in EBITDA of about 40 -- 52% rather. This business generates very good cash flow for us over a 5-year cycle, taking into account dry-dockings. But the one difference in this business compared to, particularly our domestic dry-dock business, is we don't have the advantage of doing our dry-docking at times when the business is otherwise shut down in the winter. This business does operate 12 months a year. So the dry-docking cycle has an impact on the volatility from quarter to quarter, and to a certain extent, from year-over-year. And as is the case with our tankers, there is a bit of a honeymoon period on those 3 new ships for us in 2019. So we do have a -- all 3 of those ships actually are dry-docking during 2020. So to some degree, the 2019 improvement is not directly reflective of kind of the reported increase that we would expect to see going forward. One area of disappointment was our Global Short Sea business. As we've discussed in our filings, we have lost a significant piece of our commercial management business in the mini-bulker fleet or the NASC business. That business comprises a fleet of owned vessels as well as the management of vessels for other parties. We earn kind of full ship earnings on the ship -- on the owned vessels, but we earned a commission on the third-party vessels that we manage. And so those dollars tend to go straight to the bottom line when we lose those contracts. And so that drove a decrease in revenue as well as having an impact on the overall earnings. It was offset somewhat by gains on sales of vessels. So when you look at joint venture earnings, it looks like it actually improved. But there are gains on sales of vessels that offset the impact of the decrease in the business itself. The number of vessels decreased from 2020 to 2018 as we sold some vessels in the mini-bulker fleet, whereas on the cement fleet, we actually added a couple of vessels this year. We saw some good improvements in the Canadian market, where we've actually added near the end of the year, a third vessel into that market. So we currently have 3 ships that are flagged in Canada. And in fact, in 2019 -- or 2020 rather, we will be bringing a fourth ship, not into the Canadian market, but into the U.S. East Coast market. So a somewhat more domestic business than the balance of that fleet, which is spread around the world. And in fact, this business has vessels in almost all major markets. And so the Global Short Sea from that perspective is truly global. Our priority in this business, in light of the fact that we have lost, as commercial management revenue is improving operational efficiency, which really means getting our operating costs down, and that's been our focus. However, in looking at this at the end of the year, the commercial management of third-party ships was a big part of what we valued when we invested in the mini-bulker NASC business. So the loss of that business acquired from an IFRS accounting standpoint that we look at the recoverability of our investment. And in doing so, we determined, given the market conditions today, that recoverability of the full value of that investment was likely impacted. And as a result, we booked an impairment provision during the fourth quarter or in the fourth quarter earnings, reflecting the write-down of that portion of the business. In terms of the first quarter of 2020, we released our first quarter results just before the meeting. And I'm -- we're very happy with the overall results. One thing I would say is that our Q1 results are very limitedly impacted by COVID-19. That, of course, really began to develop as an issue in North America late in March. And so there was really very little impact on our first quarter as a result of that. And Gregg will get into some outlook comments later on in terms of how we see that impacting the balance of the year. Our Q1 revenues though are up 18% year-over-year. That's being driven by oceans as well as by our domestic dry bulk business. In the ocean's case, of course, it's the additional ships. And in the domestic dry bulk business, it's a combination of factors. But that growth caused an improvement in our EBITDA. Now our Q1 EBITDA is traditionally a loss. And that's because of the fact that the DBB business is in -- to all intents and purposes, shut down in the first quarter and we do a lot of maintenance spending. And that amount traditionally has offset the profits that we've earned in our other businesses in Q1. However, the EBITDA loss has been reduced from a little over $6 million to around $5 million. It's a 19% reduction. In DDB, revenues are up. And that's really related to 2 things. One is the Welland Canal season. The closing of the Welland Canal has typically occurred right around Christmas time. There's always a last minute scramble in late December to get cargoes through the Welland Canal. And when we've operated in the winter in the past going into January, it's always been in either Lake Erie, Lake Huron markets or closed markets. We've not been able to use the Welland Canal. Well, this year, that closing date was extended into the first week of January. And what that meant was that we were able to book some additional cargoes for our customers late in the year, and some of those transited into that first week of January. So although the contracts were signed in 2019, the actual service was performed in 2020, and they became revenues in the first quarter. In addition, as most of you in this part of the world would know, this weather -- this winter rather was a relatively mild winter. That meant less ice cover. It meant we were able to operate longer and better on the lakes where we do operate in the winter. So we had an increase in the number of days in total in the quarter, partly from that extension of the well, but partly as well from the improved weather conditions or slightly more moderate weather conditions. Despite that increase in revenues for DDB, EBITDA was relatively flat, but that's because we have a fairly high maintenance budget for winter this year. So it offsets some of the improvement that we saw from the revenues. Moving on to Product Tankers. The revenue is down. On an as reported basis, however, it's a little bit deceptive because the 2019 Q1 revenue actually included a fair amount of outside charter business, whereas the 2020 number is revenue on our own ships. And so if we look at the revenue of our own ships compared to what we carried ourselves in 2019, our own revenue is actually up 7%. So although it shows a decrease, it's all because of that charter. I mentioned when I was talking about tankers earlier the year 1 honeymoon, and you see this, there's an impact on our EBITDA in Q1. Both the Algonorth and Algoterra were out of service in the quarter for dry-docking. So that has an impact in terms of reduction in business while the ships are on the dock, but it also has a cost impact as about half of the costs that we incurred during the dry-docking are treated as an expense. There are some items that we do to get capitalized, but a good chunk of it does get treated as maintenance expense, and so you see that impact on EBITDA in the first quarter. Our oceans business, on the other hand, revenues were up 55% in the quarter. And this is essentially all due to the additional revenue days from the new ships. We bought those ships in early June last year. So you'll see an impact in part of Q2 as well, which is kind of the annualization of those vessels being in service. And then EBITDA, which is actually up about 70%, is again reflective of those ships. And this is despite the fact that we actually had one of our original vessels out on dry-docking for most of the first quarter. And the first of the new ships to go on dry-dock actually departed the pool in early March. And it's just returned from its dry-docking in the last 10 days or so. So those new ships drive a fairly significant EBITDA contribution for the quarter. Global Short Sea. The revenue is down compared to last year. Again, a continued reflection of that loss of managed ships, but also reflective of a fairly tough rate environment. It is fair to say that the COVID-19 impact outside of North America occurred earlier. So there was a tough rate environment in many of the markets in which our ships operate beginning earlier in the year. And that drop also drove a fairly significant drop in EBITDA. But I would point out, part of that drop in EBITDA compared to 2019 relates to the 2 ships that are being moved into domestic service. So the NACC Capri, which is the vessel that has moved into Canada, would have operated for the full first quarter in 2019, whereas this year, as a domestic vessel, it is laid up from January to March. So there's a comparison -- comparative difference there. As well a ship that used to be called the NACC Napoli, which is now going to be renamed, or I guess, has been renamed the NACC Newyorker, and is the vessel that is moving into service on the East Coast of the U.S. That vessel was dry-docked prior to that move as well as incurred some repositioning costs related to the move. And so that also had an impact on EBITDA in the first quarter. So we are expecting -- we are certainly expecting the Newyorker to be in North America shortly and to return to service. In terms of our financial position at the end of the quarter, we ended the quarter with about $21 million in cash. We've drawn about CAD 108 million from our total CAD 240 million revolver. That -- those amounts are both in Canadian dollars. So our balance sheet is strong. We have no 2020 debt maturities in the sense of debt instruments or debt facilities rather than that are maturing, although we do have some borrowing instruments that will roll over during the year. So that's why you see a fairly significant current portion on our balance sheet. That's because those pieces of the debt are in shorter-term instruments. The debt underlying them though is maturing in 2020. So we have a very strong balance sheet. And we're quite comfortable for the balance of the year. So with that, I'll turn it back to Gregg, and he will go into some outlook.

Thank you, Peter. I have purposefully avoided saying the words, coronavirus or COVID-19 so far in this presentation. But let me say that, that is not reflective at all on our focus and the attention the virus has received from the Algoma team in these past few months. Early on, marine transportation was deemed an essential service and -- in all the jurisdictions that we operate. So while it has been a challenge to overcome many obstacles, we continue to operate all ships required to meet our customers' demand. And let me repeat that in the different words. We have not laid up a ship, either short-term or long-term, due to our inability to operate in this environment. To our knowledge, we have had no cases of the virus on our vessels. This was a goal of our COVID-19 task force at the onset: protect employees, maintain operations and serve our customers. I'm very pleased and proud of the entire Algoma team, both shoreside and shipboard, for this accomplishment. I'm going to turn my video off, so you can see this next slide a little bit better. Go ahead and click twice, I think, Peter. Here we go. We've been using this diagram for years at Algoma to depict how to reduce injuries, how to eliminate environmental incidences and reduce damage to property. The same process worked very well as we were developing our COVID-19 mitigation measures. We've used the same methodology. And our goal is, what we have coined COVID-free bubbles on our ships. To briefly describe what you're seeing on the screen. Each disk represents an opportunity to block the virus from reaching our employees. On its own, no one disk or action is 100% effective. But by layering on pre-conditions systems, procedures and behaviors, we have been successful thus far. For example, if you think about the disks on the left, the kind of the earliest precautions you could take. We prescreen employees prior to joining the ship. We've eliminated any unnecessary visits to a shift by outside vendors or even by Algoma management. We have temporarily eliminated short leave. We are beginning to take temperatures as part of our preboarding process. We're monitoring employee health onboard. We engaged a third-party health consultant with experience in the marine industry to evaluate symptoms, and we contact them regularly. We're practicing social distancing, of course. And we've helped create a trusted partners initiative to coordinate protocols with ports and docks and shippers and other marine carriers. And of course, if you look over towards the right, and the last resort is sanitary supplies and masks as needed. But these all -- if we do these things diligently and work diligently to improve the efficacy of each of these mitigation measures, in other words, if you could use the analogy here or the figure, we reduced the number of holes and the size of the holes in each disk. If the virus sneaks through the first or the second mitigation measure, we expect it will be caught by one of the many others that are battling in concert to keep our ships free from this disease. And again, I'll say so far, so good. Now some other comments on our 2020 outlook. Notwithstanding our designation as an essential service and similar designations for many, but not all of our customers, and some, but not all of their customers, we will see reduced volumes in our domestic dry bulk business unit. As Peter mentioned, we haven't seen these effects in the first quarter yet. I mean, not yet, but we haven't seen a period in the first quarter, but we will see them obviously through the remainder of the year. So I'll take domestic dry bulk first. North American steel production is way down. One of their primary markets is automotive, and I'm sure many of you have been following that story. Of the 19 dry bulk vessels available for operation, 2 are in lay-up status and are likely to remain out of service for the foreseeable future. Construction, especially in Québec, has been disappointing, but we are shipping aggregates and cement, just not at levels we had forecast for 2020. Although not part of this business unit, 1 of our 3 Canadian flag NovaAlgoma cement carriers is also currently in lay-up status in Canada. On the positive side, our major salt customers, as part of this domestic dry bulk unit are -- they're mining salt. They're shipping salt at a steady pace. And we may see some increases in this segment. Grain consumption, again, another light, is up worldwide. With a near record Canadian harvest and the backlog created by a rail strike and blockades, there is an abundant supply of Canadian wheat. The weak Canadian dollar provides further support for Canadian grain sales. We have already booked additional grain cargoes and expect further opportunities as the shipping season progresses. The strong grain market will not fully offset, of course, steel and construction weakness in this segment, but it's a welcome tailwind and a weather pattern with full of lots of headwinds. Let's talk about Product Tankers. That's the middle column on this slide. With full demands -- with fuel demand severely impacted by this COVID-19 crisis, you might expect this division to see corresponding severe weakness. Thankfully for Algoma at least, our customers have modified their typical supply chains and are using our ships to transport product longer distances, both to replace imported supply and to place product in storage. Currently, all our tankers are operating, and we are hopeful this division will perform well in 2020. The final column on the right, our ocean self-unloader loader business is driven primarily by U.S. construction activity, and to a lesser degree, power generation. While the impact of COVID-19 on power generation is expected to be limited, construction markets will be impacted. Unlike our Canadian vessels, which can be laid up when not needed to serve their markets, this is much more difficult with international vessels. So it's more challenging to reduce costs in proportion with reductions in cargo volumes. We're hopeful that infrastructure spending will be supported by policymakers in the U.S. But admittedly, the depth and duration of this recession will determine the performance of this business unit. I think you have one to many. Yes. There we go. Finally, I'd like to highlight some of our sustainability targets. We have not lost sight of our core values. And for sustainability, that means we believe in our people. We care for our planet. And we work to ensure the prosperity of our stakeholders. We continue to progress toward our goal of 25% reduction in greenhouse gas emissions by 2025. We're continuing with our 2 Equinox newbuilds currently under construction, and that's a big step in this direction. We also have other projects on the goal to conserve energy and reduce fuel consumption. Safety, of course, on the far right of this slide, it remains a key priority. We're also -- at the bottom there, you see well conservation. We're also participating in wildlife conservation efforts, especially with respect to the protection of whales in the Gulf of St. Lawrence. While we're on the sustainability slide, let me conclude my remarks -- my formal remarks by saying that part of being sustainable including -- includes structuring our business to withstand difficult times. Without fully knowing it, we have prepared for such a time as this. We have designed our fleet profile with a mix of new ships. And by saying -- I'm sorry, a mix of new ships and older ships. So we have flexibility to deploy assets in a disciplined manner. What I mean by that is, when business goes down, you take out less efficient vessels while keeping your most profitable, modern efficient ships trading. We have healthy customers, who, if they were listed in this year's high school year book, would likely be voted most likely to survive a global pandemic. We have positive in construction -- constructive relationships with employees and their labor unions. And this is stemming from a large and focused investment in our people over the last few years. We have collaborative partnerships with government and industry partners. And last but not least, as Peter said, we have a strong balance sheet. As I mentioned earlier, Algoma has made it through many economic cycles, including 2009. And for the last 60 years, we've managed to make money every year. We are calm. We are steady. We have a strong foundation. And we expect to succeed. Hanna, I'll turn it over to you to moderate the Q&A.

[Operator Instructions]

Yes. I'm going to figure out. There's a series of questions, Gregg. Rather than going through all of them, I'm going to try my best to summarize the theme and get you to comment on it. But the general gist of the questions is, how does Algoma make its decisions in respect of deploying capital, particularly with an eye to getting a return on equity target? And is there any concern that we have in respect of the longer-term kind of fallout of COVID-19 on intrinsic value in our sector?

Okay. Thank you, Peter and Hanna. So let me take the first part. We're a shipping company. And we've -- now as I mentioned in my remarks, we have platforms all around the world. We have obviously strategic long-term investments in international shipping. But we've grown those in the last few years, and we have a great foundation. So we're looking for opportunities. We continue to look for opportunities to grow this business. But as a management team, we are very well aware that we have to compete for capital with other options. So when we bring the opportunity to our Board, we have to be confident that it will be better than some other options that we have for capital, whether that's returning it to shareholders through dividends or even buying back shares. So we're well aware of that. But that doesn't mean we don't have opportunities. And certainly, in the last few years, we've invested heavily in relationship just probably the previous year. So we may take a -- this year, we're investing heavily in 2 new ships, one in China and one in Croatia. So I don't see us pushing the pause button. But the current environment certainly causes a person to be especially diligent and disciplined in their cash allocation. COVID-19, it certainly has an effect. I am glad to work for Algoma. I'm glad to report the kind of things we've reported today, which is that we believe we have a good balance of business, somewhat -- some diversity that will help us navigate through this and continue to perform. So do I think that COVID-19 will have a long-term impact on who we are as a company and what we can accomplish? I would say the answer to that is pretty close to no. Will COVID-19 have a long-term impact on some of our customers' customers business? Absolutely. But again, with the structure of our fleet, I think we can perform well. And the economy, the returns after whether it's a V or a U or a hockey stick, we're going to be here and we're going to make it through. And it won't be exactly the same when we get out of it, but I think we have a good plan. So thank you for the questions.

Another related question is, would Algoma ever consider an asset sale or a company sale if it were offered a big premium to intrinsic value? I think the answer to that, I mean, ultimately, that's a Board decision, not necessarily a management decision. I would point out, we are -- or we have sold off a significant portion of our real estate. We did run into problems selling our ball. But so we have sold assets in the past, but we are a marine business. So at this point, there's nothing that we would say would be motivating us to sell assets. There's also a question about a -- do we have a view on the intrinsic value of the shares? I would say we would not comment on that question. Another question for you, Gregg, is not a couple of years where there's been issues with engine problems resulting in out-of-service time on the ships. Can we comment on that?

Yes. Good question, and it's been disappointing. Some of that's even with our newer ships. But the good news is we're -- we believe we're -- we found all the kinks, I shouldn't say all the kinks. But I think we found most of the kinks, and we've learned a lot. And it was unfortunate that we didn't have kind of a new car with perfect operation, but ships are complicated. They're floating factories with thousands and thousands and thousands of parts and equipment. And yes, so we're disappointed. But I will tell you, one of our goals and objectives for this year as part of this new vision and values structure we've set up is to improve vessel availability. We've set a specific target. And we've got back to 10 projects, all focused on vessel availability, making sure the ship is available to the commercial department to serve a customer and to book cargoes. So we will improve that. We're working very hard on it. Very focused on it. And it does make a difference. Those extra days are all kind of variable revenue at a variable cost structure because we've already got your fixed costs covered. So it's a focus area, and we're working on it.

Another question. In light of the fact that you've got 2 vessels under construction, are there concerns with overseas shipyards with respect to their sustainability given the COVID virus and their ability to manage these ships? Impressed with Algoma's protocols, but what are we doing as far as our shipyard suppliers are concerned?

So the ship in China is -- steel was cut like a month ago, but the shipyard is progressing at a fairly good clip. They -- what -- could we lose a week or 2 on delivery? I suppose it's possible, but we're pushing for on-time delivery. And the shipyard is doing a great job in China at their own protocols, which are very strict. So I'm not -- we're expecting that ship in our fleet next year. So Croatia is actually doing quite well. They're progressing well on the ship. A lot of key -- the ship is already -- the whole of the ship was completed. And the self-promoting equipment had been installed. But now they're proceeding with a lot of equipment and wiring and electrical and controls and things like that. And we're pleased with the progress so far. So again, to say there's no effect from this virus anywhere around the world is silly. But we're optimistic we'll have these ships as planned for our fleet next year.

Any other questions?

Thank you for your time and attention today and for your interest in Algoma. We very much appreciate it. And we take our responsibility for our shareholders extremely seriously. So thank you for your time and attention today. Appreciate it. Thank you.