Atlas Corp. (ATCO) Q2 2021 Earnings Call Transcript

Welcome to the Atlas Corp Second Quarter 2021 Earnings Conference Call. I would like to remind everyone this conference call is being recorded today, 8/10/2021. I would now like to turn the call over to Robert Weiner, Head of Investor Relations at Atlas Corp. You may begin.

Thank you, Kevin(ph), and good morning, everyone. Thank you for joining us today to discuss Atlas Corp's Second Quarter 2021 Earnings. We issued our earnings release last evening after market close. We will refer to our quarterly earnings release accompanying Earnings presentation and Earnings supplemental workbook today in this conference, which all can be found on the Investor Relations tab on our website, atlascorporation.com. I would like to remind you that our discussion today contains Forward-looking statements, and I draw your attention to the disclaimer on Page 2 in the accompanying Earnings presentation. With this quarterly report, you will note that we continue to report non-GAAP measures, which we believe provide investors a clearer understanding of the performance of our businesses. The Earnings release contains supplemental financial tables and information pertaining to our quarterly earnings report and includes a definition of non-GAAP financial measures and reconciliations of such non-GAAP measures to the most closely comfortable U.S. GAAP measures. These definitions may also be found in the appendices at the back of the Earnings presentation, which we will refer to in our call discussion and can also be found on our website. In addition, we have provided historical financial information through 2018, which is available in the supplemental earnings workbook on our website. Please turn to Slide 3. On the call with me, today are Bing Chen, President and Chief Executive Officer of Atlas Corp, and Graham Talbot, Chief Financial Officer of Atlas Corp. Joining us on the call during the Q&A session are Seaspan's Chief Commercial Officer, Peter Curtis, and Seaspan's Chief Operational Officer, Torsten Pedersen. Following our prepared remarks, we will open up the forum to a question-and-answer session. Please turn to Slide Number 4. I am pleased to now turn the call over to Atlas Corp CEO Bing Chen.

Thank you, Rob. And good morning, everyone. Thank you for joining our call today. I will present our Q2 2021 results and share the key characteristics regarding our business model and quality growth, which are central to our value proposition. First, let's look at our Q2 results. Please turn to Slide 5. I'm pleased to report a strong Q2 financial performance, which was at the high-end of our expected range. We are raising our 2021 financial guidance due to our strong first-half performance and our exciting momentum for the rest of the year. Today, 100% of our forecasted gross contract cash flows are secured for 2021. Together with our relentless focus on operational excellence, we are confident in delivering our targets. During Q2, Atlas achieved revenue growth of 8.3% to 393.9 million, adjusted EBITDA growth of 14.1% to 272.5 million, FFO growth of 20% to 193.5 million, and FFO per share growth of 14.1% to $0.73 per share, and we paid our 64th consecutive quarterly dividend. We have also completed several major projects and achieved significant milestones within a very short time. We continued delivering quality growth through Q2 with18 additional newbuilds, 45 forward-fixing charters, and deliveries of three second-hand vessels. We secured additional funding for our newbuilds, restructured our Fairfax notes, raised unsecured capital, secured favorable credit ratings, and simplified our balance sheet while lowering our cost of capital. At APR, we successfully deployed 13 turbines across two key projects. We are excited to serve peaking power and grid stabilization to our customers. I'm proud of our team's continued high performance and resiliency. We are well-positioned to finish 2021 strong and already executing our Growth in 2022. Now, I would like to explain how we create and deliver value through our differentiated and resilient business model. Our business model firmly sets us apart from our peers through our unique combination of attributes, and it is important that this is well understood by the investment community. Please turn to Slide 6. We are a global multi-platform investment franchise, and we consistently generate value through our business model and quality growth. Our resilient and differentiated business model sets us apart significantly from our peers. While Linus focused on flexibility and generally kept short-term charters with our peers, we have been consistently winning our line of customers' long-term commitments and growing our long-term cash flow through operational excellence and creative customer solutions. These solutions are delivered through our scalable, flexible, and reliable integrated platform. Through industry and economic cycles, we generate predictable long-term Growth contracted cash flows with industry-leading customers. Currently, we have $16.2 billion in gross contracted cash flow and an average charter duration of 7.2 years. We do not focus on short-term zero-sum game relationships. Rather, we focus on long-term win-win partnership through our integrated platform and solutions we create. Our revenues do not fluctuate with short-term market movements but provide stable returns throughout the industry and economic cycles. All of our new builds are fixed in costs and backed by long-term fixed charter with industry leaders. We do not speculate, and we're not exposed to inflation risks are new boats. Our business model differentiates us from our peers through our solutions, platform, and ability to execute, which cannot be easily replicated. I would like to explain what quality growth means and why it is important to our stakeholders. Over the past eight months, we have dramatically enhanced our fleet composition and achieved a greater customer diversification through 55 newbuilds and the four second-hand acquisitions, all with high-single-digits on leverage returns, and all are backed by long-term fixed charter with leading liner customers. No one else in the industry nor in the container lessors history has achieved this before. This is a testament to our world-class execution and deep partnerships with shipyards and liners. No peers can match our business scale, operational excellence, customer flexibility, fleet versatility, financial strength, and creative solutions. We have forward-fixing 45 operating vessels in Q2 and 58 year-to-date to meet our customers' demand and growing our long-term cash flows. We built partnerships that are sustainable, meaning when times are good for Linus, they do not take advantage of us and vice versa. Our line of customers treats along-terming term preferred and trusted partner. Now, let's look at our fully integrated platform and how it makes Atlas ' differentiation possible. Slide 7 depicts the Portfolio of integrated services we provide for our customers. Investors often ask how does Seaspan consistently delivers quality growth and continue its leadership in the market. The answer is that we always provide turnkey solutions to our customers by leveraging our integrated platform, which we have been investing in our people, process, and systems over the past 20 years. Our full lifecycle expertise from initial design, construction through operations, commercial management, environmental technology all the way to the demolition, enables us to develop a Creative Solutions. We facilitate Linus Growth by delivering our solutions, which in turn facilitates greater scalability, reliability, and flexibility for our platform. Resulting in a win-win outcomes for our customers through all market cycles. Our integrated platform is underpinned by this management team and our people. Our 5 core competencies determines how we create value, and again, our customers' trust and commitment. We have an industry-leading safety record of 0.4 LTIF and 98.5% of utilization in Q2, which is a result of our committed team. Seaspan's long-term fleet utilization since our IPO in 2005 average above 98%. This is what we mean by operational excellence. The focus on operational excellence extended through the entire organization. Our business model integrated platform, our team's focus on 5 core competencies, and the value-added services, positions us for sustainable Growth and Shareholder value creation, through all market cycles. Please turn to Slide 8. While the container shipping market remains highly competitive for liner companies and owner operators, Seaspan has been a leader in transforming our sector through consistent advancing in our market, creating quality growth, and delivering sustainable Shareholder value. We are acquiring and building strategic assets, focusing on fleet optimization with larger and more efficient vessels. Our 10,000 TEU and greater segment comprises 78% of our total TEU. We are focused on cleaner fuel and applying industry-leading technical solutions in designing, building, and modifying our fleet. The additions of 7,000, 12,000, and a larger TEU vessels to our fleet, positions Seaspan competitively and strategically for the future global feed evolution. We have also diversified our customer base of the topliner companies with a 22% decrease in concentration of Seaspan's top 3 customers. Despite the market challenges over the last few years, we have been continuously optimizing our assets and customer portfolio while delivering creative solutions. Please turn to Slide 9. Seaspan has been a market leader in vessel efficiency with our hallmark of Saver program, which has produced 40 innovative newbuild vessels since the program's inception 10 years ago. We make these investment based on customer-driven demand and a lead in the industry -size category expansion through increased the TU efficiencies. Today, LNG is the only commercially viable alternative to traditional bunker fuel with no definitive single - pass forward to the next generation of fuels. We actively participate in an industry forums working on viable energy transition pathways for the future and ensure that we do not develop stranded assets. Our orders for the 20 dual-fuel LNG newbuild place us at the leading edge of innovation, building upon Seaspan's history of adopting greater efficiencies. We have taken a prudent approach towards the type of fuel we're using for newbuilds, with some dual-fuel based and some conventional. This approach positions Seaspan well for the future evolution of the fuels as both vessel types can be retrofitted to adapt to the new technologies. We see the de-carbonization of the shipping as an opportunity for Seaspan to support our customers' de-carbonization journey and to provide a leadership through this energy transition. We are continuously focused on newbuild design improvements, and environmental enhancements, as well as evaluating and modifying Seaspan and APR operating fleet to see greater efficiencies. As an example of Creative Solutions, we recently partnered with Zin to install innovative fuel tanks to accept conversions to ammonia base to fuel for 5 of the newbuild LNG vessels on order. Slide 10 illustrates our commercial agility, as well as our trusted and creative customer solutions. We secured 58 forward-fixing charters year-to-date. Forward-fixing is entering into new charter agreements with customers well in advance of the current charter agreement expiry. The new charters of forward-fixing agreements extend the terms which begin after the current charter terms expires. We now have no redeliveries in 2021, 6 in 2022 or 4.8% of our delivered fleet, and 19 in 2023 or 13.4% of our delivered fleet as measured by the number of vessels. Our ability of forward-fixing 58 vessels is a testament to the trust that we have built with our customers while we continuously focus on creative solutions to facilitate their success. Not only does this provide our customer with reliability and certainty, it also strengthens our resilient business model by growing our contracted cash flow and average charter duration. Seaspan and APR now both have 100% anticipated gross contracted cash flow secured for 2021. Please turn to Slide 11. As we have mentioned previously, we do not grow for the sake of growing. We are only interested in quality growth driven by our customers. We have a comprehensive set of quantitative and qualitative criterias which we implement to allocate capital. This is embedded in our operating model. And as a result, we do screening out many opportunities that do not meet our criteria. This management team has been consistently executing quality growth in our strategic and daily business decisions. Please turn to Slide 12. Shareholders should be pleased that our strategies and execution have led to consistent quality growth through market cycles, and has solidified Seaspan as the leader in the containership owned and operated markets. We have strategically grown our business through a thoughtful and innovative approach. Newbuild vessels has been the predominant focus throughout Seaspan's history. In Seaspan's 20 years' history, we have built 109 vessels and now we've added 55 newbuilds for a total of 164 newbuilds, which is nearly 90% of our fully delivered fleet. By TEU and by number of vessels, our fleet is nearly 3 times the size of our nearest competitor on a fully delivered basis. And we have consistently maintained 98% fleet utilization since our IPO in 2005, while at the same time improving our safety records. Over the past 3 years, the industry has gone through challenging times with the trade war and global pandemic. And we have still managed to consistently deliver quality growth, and operational excellence through these market cycles. Our expertise, execution, and solutions, have attracted to customers to Seaspan as their preferred long - term partner. Slide 13 never gets old for me, as these sets of metrics are self-explanatory. It is the payoff for all of our stakeholders. A quick review of our year-to-date progress as of Q2. Gross contracted cash flow increased by 218% to $16.2 billion. These are long - term, high visible cash flow s secured by high creditworthy counterparties. Fully delivered fleet grew by 46%, adding 59 newbuilds and second-hand vessels. We increased TEU capacity by 73% to nearly 1.9 million TEU in total for the fully delivered fleet. Average fleet age decreased by 2.8 years to 4.8 years. And the remaining lease term increased to 7.2 years from 3.8 years. By all measures, these are impressive results and viewed by many as industry record setting achievements. This significant progress did not happen by accident. It is our team's thoughtful execution on an unwavering discipline and determination. They are a direct reflection of our team's high-performance execution, analysis, integrated platform, and the resilient business model. Please turn to Slide 14. I will conclude my formal remarks by summarizing my points today, centered around our business model and quality growth. First, our business model is resilient and differentiated from peers in our industry. We're proud of our broad and deep partnership with strategic customers, which are underpinned by long-term contract cash flow. The strength of our business model, that the breadth of our integrated platform, the excellence of our operation results in the long - term commitment by our customers. The second. Our creative customer partnership drives our quarterly Growth through all market cycles. For Seaspan, we delivered the right solution at the right time. No one can match our capabilities. We have 55 newbuild s under construction, which contributes $9.1 billion of gross contracted cash flow. And we have this financial and operational capacity to continue our Growth. The strength of our service offering, and operational excellence is demonstrated by our customers forward-fixing charter for 58 vessels well ahead of the current charter expirations. We took the same approach with APR customers as the current Mexicali project is our third consecutive annual contracts, while we are working to develop opportunities in new markets. Our partnership have resulted in total gross contracted cash flow, rising to $16.2 billion, along with consistent and increasing high single-digit unlevered returns. And this is the quality growth. Atlas ' long-term financial guidance is based on our confidence in the team's ability to continue high-performance execution. Year-to-date, we have continued our drive, records, achievements for Atlas, and particularly at Seaspan. It has been a great first half for 2021. We're confident to raise our 2021 financial guidance and provide a long-term financial guidance that reflects the achievement that this team has accomplished to date. In summary, Atlas is a dynamic, market-leading, and quality growth -oriented Company determined to consistently create value for our shareholders. Please turn to Slide 15, and I will now turn the call over to our CFO, Graham Talbot.

SYY And good morning, everyone. Thanks for joining us today. Could you please turn to Slide 16? As highlighted by Bing we've delivered a strong year-to-date performance and the outlook for the balance of the year has enabled us to increase our financial guidance, which I'll get to later in the presentation. Bing has already highlighted the key financial metrics for the second quarter. So I won't repeat them here. However, I would like to highlight that a quarter-end, our adjusted earnings per share, excluding the non-cash debt extinguishment charge, which I'll detail a later, was $0.39 per diluted share compared to $0.26 in the second quarter of 2020. Closing liquidity was up 231% to 1.27 billion compared to the second quarter of 2020, which does not include the proceeds from our recent U.S. high-yield rise. The entire organization has been working hard on Growth delivery, Capital structure optimization, and of course, continued operational excellence resulting in our strong year-to-date performance. Please turn to Slide 17. This page highlights this management team's relentless focus on continuous improvement. Where we are today is the culmination of 20 years of operational excellence, coupled with strong execution and a resilient business model. Management is pleased with these results, but of course, never satisfied. We have still got more work to do, but we also recognize the significant achievements that have been delivered. Atlas is being consistently growing its asset base, improving the quality of the Seaspan fleet, increasing the duration of charters, and improving the diversification of our customer base. This results in improved service to our customers, increased stability and profitability in our financial performance, and increased competitive advantage in the market. At the same time, delivering consistent quality growth of our key financial metrics, with revenue growing over 80% and Adjusted EBITDA and cash flow from operations, growing over 100% since year-end 2017. Our credit metrics, unencumbered assets, and capital structure have all improved materially, and we'll continue to do so as we execute our plan to achieve an investment grade credit rating and improved capital efficiency. Now I'd like to discuss our newbuild program in greater detail. Please turn to Slide 18. It's been hard to miss the news of our newbuild program, which commenced last December. While we're agnostic to the method of Growth, new build, second-hand or both, our strict financial discipline is one of the most prominent guides in our decision-making. As Bing mentioned, we partner with our customers to optimize fleet capacity, roll-offs, renewals, forward-fixing, and the timing thereof to increase the amount and duration of our cash flows. This slide outlines our newbuild program with some vessels currently in the construction phase as we speak. We will be providing regular updates on the status of this program, as we progress through financing, construction, and deliveries. This slide outlines details on the vessel's gross contracted cash flows, Capital expenditure, and charter durations by vessel package and by year for all 55 newbuild vessels. You can also see the scheduled delivery times for each of the vessel packages. The 55 newbuild s will generate gross contracted cash flows of 9.1 billion, with fixed investments of 6.3 billion. Now please turn to Slide 19, and I'll update you on the financing status of the Growth program. This slide details funding progress for the 55 newbuild vessels under construction. We're leveraging our extensive banking relationships to finance these vessels on a secured basis. We have identified specific financing sources for all of our needs, all of which are progressing well, and expected to be finalized well in advance of delivery dates. With closed 1.9 billion of funding, an additional 1.4 billion of funding commitments have been received, and we have approximately 800 million of funding that is progressing and on track to close in Q3 2021. This funding covers 37 of the newbuild vessels and we are actively assessing optimal financing avenues for the 18 newbuilds that were announced in June and July of 2021. This amounts to 1.7 billion of unfinanced cash outlay shown in the chart. We're very confident in our ability to complete financing for all of our newbuilds. And as we've had ample liquidity and received strong interest from our financing partners. And as discussed previously, the challenge is not to obtain funding, but to secure the best funding for our Portfolio and financial structure. Please turn to Slide 20. We've presented this slide in the past, yet it's worth repeating this quarter as it highlights the power of long-term charters, and provides stability and dependability through industry and economic cycles. This chart has been updated to reflect the gross contracted cash flows delivered from our current growth program layered on top of the cash flows we received from our current operating fleet under existing charter and power agreements. As of Q2, 2021, this equates to $16.2 billion of gross contracted cash flow with an average contract duration of 7.2 years. Bing had said this, and I'll repeat it. We purposely build this business to be a long - term unpredictable business. We are not driven by speculative short-term Growth. And it's noteworthy that this slide does not include any future growth or rechartering activity to areas where we have proven our expertise, as evidenced by our consistent track record of delivering quality growth. We're an active growth -oriented Company, and I would expect that to continue as we move forward. Now, let's move to the balance sheet as I'd like to highlight several initiatives we have recently completed to strengthen our business and simplify our capital structure. Please turn to slide 21. During the second quarter, we completed several key initiatives that have significantly strengthened our balance sheet, and created increased financial flexibility to continue to pursue quality growth opportunities. I'll center my comments around three key points. Our pathway to investment grade credit, the continuous improvement to our Capital structure, and finish with comments on the recent news surrounding our supportive strategic investor, Fairfax Financial. A key element to our progress is strengthening our relationships with a global base of institutional investors. In this regard, we closed 2 tranches of debt, including a 500 million U.S. sustainability linked to private placement of non-amortizing notes. With approximately 12 year weighted average maturity, and a 4.1% weighted average fixed interest rate. We recently closed our initial entry into the U.S. high-yield market with our senior unsecured 2029 blue transition sustainability-linked notes. The offering was oversubscribed by 5 times, and as a result, we upsized from 500 million to 750 million, and closed at the tight end of our price range at 5.5%. During Q2, we further optimized our capital structure with the redemption of 335 million of 8.22% average cost-preferred shares, and the early termination of several smaller higher-cost debt facilities. This has lead to both a reduction in overall cost and simplification of our capital structure. Atlas is being fortunate to enjoy the support of our strategic partner, Fairfax Financial, who recognizes the maturation of Atlas ' financial strength. During the quarter, we entered into an agreement to restructure the 600 million of Fairfax notes on our balance sheet. 300 million of the notes were exchanged for Series J preference shares at 7%. And in conjunction with this transaction, we issued 1 million warrants to Fairfax with a strike price of $13.71. The remaining 300 million of notes were restructured to be pari passu with our existing unsecured debt holders, and are callable at any time. And we're planning to redeem these notes in Q3, 2021. At this time, I would like to explain some specific accounting implications of these transactions. When the Fairfax notes were issued, warrants were granted concurrently. Under accounting rules, we are required to recognize the difference to fair market value of these warrants on the balance sheet. This results in a discount on debt issuance of a 163 million being booked at the time of the original transaction. The amount is then amortized over the term of the notes and has resulted in an annual charge to interest of approximately $20 million. As highlighted during the quarter, we exchanged 300 million of the notes and therefore have written off the issuance discount associated with these notes of 51 million. This is a non-cash charge and represents the accelerated amortization of the debt discount and is reflected in our Q2 2021 financial statements. As stated, we do plan to redeem the remaining 300 million of Fairfax notes in due course. This will result in the remaining discount to be charged to our P&L at the time of repayment. The remaining debt discount is approximately 69.5 million as of June 30, 2021. Once again, this is a non-cash amount and removes a significant over hang from our future Capital costs. Please turn to Slide 22. On this slide, you see the ratings we recently received from three of the top rating agencies: Standard and Poor's, Fitch and Kroll. We received a BB rating from both Fitch and Kroll, and a BB - rating from S&P. This puts us ahead of our expected trajectory towards achieving the investment-grade corporate rating. To get there, we're focused on increasing our level of liquidity, our proportion of unsecured debt, increasing our Portfolio of unencumbered vessels, and prudently managing our debt profile and leverage metrics, and of course, managing our Growth and risk profile. Now let's turn to financial guidance. Please turn to Slide 23. Today, we are providing one-time, long-term financial guidance for Atlas due to 3 primary reasons. Firstly, the extraordinary markets conditions in our industry. Secondly, we are in a significant Capital delivery phase and actively forward-fixing existing contracts. And last but certainly not least, we have made significant progress on the execution of our Capital plan and our journey to an investment-grade credit rating. The amount of progress and change that we have implemented has been unprecedented in our industry. Therefore, we feel it's important to provide additional disclosures to the investment community to assist in understanding the cumulative impact of all of these elements. Due to the rapidly changing energy environment, which continues to be impacted by the pandemic. We've chosen not to include any growth for APR energy in the financial guidance. While we do not believe this will be what transpires over the period, APR's businesses are contract-driven, and the visibility as to timing and size of expected new contract wins is indeterminable. And it'd not be prudent for us to make commitments that we cannot credibly forecast. Taking these assumptions into account, Atlas is expected to increase adjusted net earnings from 311 million in 2020 to 695 million in 2024, representing a compound annual growth rate of approximately 22% over the guidance period. This forecast incorporates our existing fleet and all Growth announced up until this point in time. Or, put another way, it doesn't include any further growth other than what we've already announced in the market. Therefore, this represents a relatively conservative forecast based on known activities underpinned by a high proportion of contracted cash flows. In addition, we have expanded our fleet disclosures this quarter to add detailed information for short-term rates, which we previously classified as market rates, and we have also added data and visibility in our Q2 financial workbook surrounding forward-fixing contracts. Providing greater transparency for our investors reflects confidence in our highly predictable business model and our proven track record of execution. This information provides investors with greater clarity and appreciation of the compelling investment Atlas represents. Please turn to Slide 24. I'll wrap up my remarks by outlining why we believe Atlas represents an excellent investment. After I joined earlier this year, I closed my first conference call with investors with this slide. And it remains as relevant today as then. I hope investors will come to see the clear competitive differentiation of our model, quality growth through cycles, and the ability for this team to consistently deliver performance. These are key investment attributes which are unique to Atlas and offer investors significant confidence to partner with an industry leader. Thank you for your interest. Operator, we would now like to open the line to questions. Thank you.

Our first question comes from Randy Giveans with Jefferies.

Hi, gentlemen. How's it going?

Good morning, Randy.

Morning. I guess couple of questions starting with those vessels that you chartered out or you extended charters or you're assigning new charters, 45 vessels during the second quarter. I guess on average what is the new duration and maybe rate of these charters?

Yes. Randy, I'll try to answer that question. The number of the vessels as you correctly point out is 45 for the Q2 and 58 for the year-to-date. The average duration is about between the 3 to 5 years. That is the duration and the rate is pretty much reflect of the respective -- the class of to ask -- that the vessels at the market rate, we actually will disclose those rates in our 6-K. And for example, the 42, 50s, I think if it's on 3 years or 5 years, the rate could be ranging from $28,000 to $34,000 a day, and it's really a pretty much reflect of the current spot market rate, taking to consideration of the longer term.

Got it. Okay. Yeah. I appreciate that color. It seems like you only have a handful of vessels still to come in 2022. So I'm assuming you'll look to forward-fix those before this year ends; is that the strategy?

Yes, to be exact, we have 6 vessels to be fixed in 2022. We are actually right now evaluating the alternatives as these vessels are highly in demand. And we are evaluating different alternatives to the customer needs. We will be evaluating as the situation and as the market continue to evolve. But at this point, we want to take the different request from the customer and make the final decisions at the latest stage.

Okay. Fair. And then second question for me. Just looking at your Capital structure and Capital allocation. You've raised some very attractive debt here, long-term, very low rates. Looking at that unsecured debt, 5.5% coupon through 2029, I believe. You still have some more expensive preferred outstanding. So any thoughts on repurchasing or maybe calling in those higher-priced preferred, redeeming those and then maybe issuing cheaper ones? And then second part of that question, and it comes to Capital allocation. For your dividend, is the plan now to collect the vessels, deliver, and then start looking to increase the common dividend, or what is your plan for that?

Graham, you want to comment on the preferred and I'll comment on the dividends?

Sure. Look, I think progressively, of course, we're going to continue to optimize the structure and take out any higher-cost debt, and that's going to be an ongoing process. I think at the moment, as you are well aware, our focus is to reduce the cost of capital, simplify the balance sheet, but also to achieve an investment grade. So that sort of comes into the second question around how we allocate capital through the dividends. Obviously, it's key that we have to continue to grow the business, that's part of who we are, but at the same time, we need to allocate funds back to the balance sheet to get to investment grade. So we still got quite a way to go in terms of delivering all that. I think we've made an excellent start over the last couple of years we're getting to where we are now, but you rightly point out we've still got some more expensive tranches in there, which we can remove over time. And we've now demonstrated that we have good access to deep liquidity and the right markets to do so.

Okay. Yup.

And with regarding to the dividend, the dividend distribution are evaluated by us on a regular basis, and determined by our Board. We view the current dividend policy to be appropriate. We're constantly evaluating our best use of capital. In addition to, as you mentioned, the increase, the return of capital to our shareholders and where there's -- when that happened is there's no better opportunity to deploy the Capital. As what Graham just mentioned that we can have a variety of options to deploy these Capital. The quality growth that we have highlighted today is a testament of this management team and this business platform that is able to create value. And we are confident to continue to identify and executing on these Capital allocation opportunities. We are always being thoughtful on how we allocate our Capital. Our key focus is on preserve liquidity and also want to continue to deliver the debt to facilitate our investment-grade goal, as Graham just mentioned. At the same time, we also want to be prepared for any investment opportunities. Therefore, we're very carefully considering all options. That being said, we do believe that our share price has been undervalued. We're a long-term-oriented business as we shared with you today, and believe that as we continue to deliver results, improve the transparency, that the market will recognize the value. For us today, the share price has not reflected our business for a variety of reasons. Now with Graham as our CFO, we have started to better present our business to improve the transparency and better present our business. And the other reason is just that we're likely still today being compared with the cyclical and capital incentives -- intensive peers. Looking at, for example, the container shipping space today, I don't think that we really have the real comparable to compare. So as we continue to create long-term value, we are confident that long-term investors will come to that conclusion and come to the fair value of the business. But it is our fiduciary duty to evaluate the options and the tools that typically are available to make sure that we address the fair value of our business in the context of Capital allocation. We want to make sure that we will take whatever is necessary to make sure that those options and tools at typically that is available for us to make sure that the business is fairly valued. So, from our perspective, I think we've got our dividend s -- to increase the dividend s at this point, it's not in a game.

Okay. That's fair. Well thank you so much for the color.

Thank you.

Our next question comes from Omar Nokta with Clarkson.

Thank you. Hey, guys, good morning.

Hi, Omar.

Hi there. Good early morning. Thanks for the detail in the supplemental pack, obviously, very helpful and just shows really just how deep your market position really is in the shipping market. And I guess now from your updated guidance, you've got consistent earnings growth built-in here for the next few years. And with that, you've got a pretty sizable cash flow stream that you can count on. I guess just wanted to ask, where do you see Atlas now investing free cash flow going forward here? Do you still see opportunities in the container ship space on the new building front? Are there any adjacent sectors you're looking that are of interest? Or do you focus a bit more, or pivot towards APR and on the energy side? Any color you can give there?

Sure. In container shipping space, as we have demonstrated, I think today as the market leader, we've continued to see the customer-driven demand for us to provide the support for their business growth, which is why we were able to have this number for the newbuild in the short period of time. Pulling forward, of course, I think we continue to see the growth opportunities. Of course, we've been very selective to make sure that any of those opportunities is meeting our investment criteria. But at the same time, I think that we see there are other types of growth opportunities, particularly in areas for example environmental, and also in areas of recycling of the Capital. Which I think this is an area that we are looking at as the next opportunity for us to support our business needs. In terms of APR, we acquired the business about a year ago, it's just a little bit over a year ago. This is a business, obviously, when we are acquired, we know what we bought. And we know what we intend to transform that business going forward. That we have been spending the last year in really realigning the organization and really make sure the business continue to focusing on doing what is the best, which is the short-term, fast-power solutions to our customer. At the same time, we've also looking at adjacent opportunities within the fast power space. As you know, that energy, power value chain is quite long starting from energy production, transportation to application. And today, the APIs is only at the application, and with a very specific segment, which is the fast - power. As we announced in Q1, that we have we have formulated joint venture with the ZE Energy to look at jointly developing both the maritime and also energy opportunities. Recently, about two weeks ago, we also signed MoU with China Kuantan Energy in developing solar opportunities in China. And this is an opportunity where Kuantan is one of the 5 top SOE power groups in China. This is a solar project that is 25 years duration, and that is in the northern part of the China, where we are going to be a joint investment with this strategic partner, and that's just only the Phase I and it is in the renewable space. And this has both the commercial and also strategic value for us to team up with such a state-owned enterprise, major energy power players in China. This is a different partners, than the ZE which is a provincial power energy Company. In terms of the growth opportunities for APR, we have a lot of exciting opportunities. As our Chairman stated in the previous last quarter's Earnings Call, that our ambition is to transform and build this business to the equal or bigger business as we have in Seaspan. So there are plenty of immediate Capital allocation opportunities. The key for this management team, is to really focusing on the discipline, to make sure that we consistently stick to those investment of Capital allocation criteria, to have the best allocation alternatives. We do not necessarily, discriminate -- prefer one business to the other. Rather, we are very agnostic in terms of the investment opportunities. The key is to looking at them from the customer perspective, from economic return perspective, and also from a business rationale standpoint. So, currently we have two platforms which is container shipping and energy. But as we also previously announced that we also -- within the container shipping space, they are vertical and along the value chain, the opportunities that we could also be potentially looking at. And in the energy space, as I mentioned, that is a quite broader value chain and the industry itself currently is in transformation. So there's a lot of uncertainty which in a way also explains why APR's transition will take some time, and part of it because the current COVID, which slow down the demand from the market. The other part is that the industry itself is going through the transition. But we see this as an opportunity where we can find those kind of Creative Solutions as we have done in Seaspan. We're quite excited to develop the both business and allocating those capitals.

Thanks Bing. That's very helpful, and thorough. So it definitely sounds like it's not just -- you don't have trust your eyes on different opportunities, your hands are there as well. I wanted to maybe just follow up on sort of the conversation you had with Randy just about chartering some of the vessels and wanted to get a sense of Liner appetite. Clearly, you've been able to fix ships that are rolling off contract out as far out as 24. We've seen a lot of chatter here recently where there has been some interest on the part of ship owners and to take a vessel and put it on a 1 or 2 spot voyage-type charter that pays astronomical rates relative to anything we've seen. My question, I guess is, you mentioned, Bing kind of looking at various opportunities. One is that an opportunity you're looking at? And then two, from that dynamic, do you think that that is something that -- the idea of putting a vessel on a very quick money-making voyage before deploying it on a contract longer-term. Is that dynamic something that is being pushed for by the ship owners you think or the liners really kind of pushing for that as well? Any color you can give on that?

Sure. I don't know specifically. I believe that each situation has its own context and background. As we stated that from Seaspan's perspective, we are focusing on long-term, because we don't believe in short-term opportunistic taking advantage of the market situation. Because ultimately, I think that we know that market will eventually, sooner or later, revert back to normality. And it is important, I think today for the relationship between the owner and Operator and the Liners to have that kind of sustainable long-term, trusted, win-win partnership. What you are referring to in the market, yes, we've been asked or been heard about these type of a situation, but I think that is really -- sometimes, is custom -- Liner customer decided to use for 1 voyage. Sometimes it's because the -- I think the owner would like to take advantage of that situation but I believe that these still is the minority. But I think, from our perspective, we really believe in long-term partnership, and we believe in building that kind of a trust. And over the time -- and I think it's very important, this industry actually, is being characterized by the boom and bust characteristics. And this is exactly for situation as what you mentioned, which I call is a zero-sum game. Because sometimes you get me, and then when time's not good, the liners will get you. And let's not forget, for example, a year ago in March 2020, in the market there were the prevailing terms, which are 1 month's firm, 12 months' option, okay? So I believe that if you are in the business for long run that you will average out. And also, I think for this kind of zero-sum game relationship is not something that we would like to pursue in. Rather, we believe in building sustainable, win-win situation, as a partnership. That's what we've been focusing on. And this is why in the current market, we actually take the benefit off the current market through forward-fixing, through the newbuild, and also through the second hand, which is all driven by our customers because they come to us and asking for support. And also one thing, even today, I think we've been asked by our customers and some third parties for potentially considering selling some of our assets and this is something we are also in consideration and evaluation of that. So for us, this is very important that we're focusing on these specific market condition and how we can best support our customers' needs long-term, and therefore, building that kind of a trust preferred partnership. And when times comes to the difficult times that we will be also the one that will be there for our customer, and this is a long-term business model which we have been purposely building. And today, I think we've seen the benefit in a good time. We definitely will also see the benefit in the market when it's not too good.

Thanks Bing. That's very thorough again, and really sounds like a very sound strategy. Thank you. I'll turn it over.

Thank you.

The next question comes from Liam Burke with B. Riley.

Good morning Bing. Good morning Graham.

Good morning.

Bing, you've got the vessel orders and you've been moving up on the capacity side of the individual vessels. Is there any thought as to looking at the fleet? Is there any -- are there any assets that you prefer to divest or are you happy with the makeup of your fleet right now?

In general, we are very proud of the fleet that we have, and particularly with these newbuilds as we highlighted, over 70% of our fleet above 10,000 TEU, which are the very versatile fleet and is highly in demand. So in general, I think we are very pleased with our fleet composition and this is also been built purposely together with the demand of our customer. I mean, one thing is important is that we work -- we develop our fleet composition based on our customers' needs. That being said, as I mentioned earlier, we did and we have been received, requested interest from the Liner companies and also some third-party financial institutions asking us if we're being open to sell us some of assets because I think they have needs for their business or for their investments. This is something that currently our team are evaluating with the several considerations because on one hand, we have such a composition for a reason. On the other hand, we would also be open-minded in considering the request from the customers and from the financial institutions. One of the potential areas of fleet that we will be considering if, for example, is the 4250 wherewith our continued fleet optimization, and we will have the extra capacities that allows us to be able to consider strategically divest some of these vessels at the criteria’s which we set up within ourselves. So, I would say the most Mike will be the blow tank 10,000 TEU category, and specifically, maybe around 2,500 to 42 50 segment.

Great. And understanding that all of your vessels come with long-term charters associated with it, so -- but how do you look at capacity rolling out over the next several years?

Yeah. Sure. That's a great question. For our capacity rolling out, which we have shared in our presentation, most of our new build is going to be delivered between 2022, 2023, and 2024. This is also corresponding to the industry's overall order book release over that period of time. Today, we have about 4.9 million TEU of newbuild. Out of this 4.9, about 45% are 3rd party, meaning that 55% are built by the liner themselves. Out of this 45% about we -- our newbuilds accounts for about 1/3, and the other 1/3 is about the leasing Company, and then the other 1/3 is the other owners' operators. From the release perspective, we're very confident because as we shared earlier from our existing fleet, we are forward-fixing majority of our capacity all the way up to 2023 and this is as of today, which is 2021. And we believe that we will continue to forward-fixing these capacities from on existing fleet side. From these newbuild perspective, as we mentioned earlier, each every of these newbuild are backed by long-term charter. The shortest is 5 years and the longest is 18 years. Majority of them is between I would say 10 to 18 years. So therefore, these newbuild, actually they come each every one of them, come with the long-term charter attached to it, and they also stacking out over the period from 2022, 2023, 2024. So overall, I think from our perspective, both the existing fleet and also the new build are being fully chartered. From a industry perspective, I think today supply and demand in general are still fundamentally balanced. Even though we're looking at, let's say, with this $4.9 million -- million TEU of newbuilt, that translates into the supply side of the release of -- for example, 2021 is about 4.5%, 2022 is 3%, 2023 is about 6.5%. And that is assuming there's no scrapping. And in the past year or two, as we all know this year, for example, there's no scrapping, probably or minimal. So therefore, if you taking out the scrapping, you taking out addition and also you're considering the growth in the marketplace today. The demand I think is still according to the industry forecast, is still very solid and with growth in the coming years. And on top of that, we have this a pandemic, which adds to the burden of the logistics that makes the situation even make -- the demand is even stronger. But overall, even without the COVID, I think demand continues to be strong and the supply continue to be measured. The industry has consolidated on the Liner side which we see the significant efficiencies in both the COVID situation last year and also this year. And I think from the owners space today with our newbuild, I think we are in a position to consolidate the market, and we will continue to work with our customers to further fulfill their needs as -- at the same time, I believe, that we will continue to consolidate the market as well. Overall, I think the market from a demand and supply perspective, is fundamentally balanced.

Great. Thank you, Bing.

You're welcome. Thank you.

Our next question comes from Ben Nolan with Stifel.

Hi. This is Frank Galanti on for Ben. I wanted to second I think that Omar said in regards to increase disclosure. It's very helpful. So thank you for that. But I wanted to ask about the fixed forwarding strategy. In the presentation, you mentioned that there were 6 vessels coming off in '22, in '19, and '23. Do you see any incremental demand for those types of contracts, putting them on term contracts today?

Yes. In today's market, the reason we have not fixed the 6, is because as I said earlier, we try to balance the different request from the different customers. In today's market, these 6 vessels could be very easily fixed. Rather, we are right now at this point, and trying to balance in the different interest. The same thing with some of these 2023 vessels. I mean, the way we working with our customers is obviously to take a strategic view in considering what their short-term needs as well as what their long-term needs. And that's how we allocating our fleet capacity. Similar to that is we -- in a way, similar to that we allocating our Capital because we all believe in long-term and also believe in optimizing our strategic partnership with our customer. So from a forward-fixing perspective, we continue working with our customer on evaluating their business needs and also taking, as I mentioned earlier, Creative Solutions. There's some other ways that we are considering in fulfilling our customers' needs. For example, in a couple of years ago, we developed those floating rates, which today we have about 15% of our fleet is on this floating rate, which has the exposure to the current high spot rate. So even though our business model is a long - term, but out of our long-term committed capacity, about 15% of our capacity is exposed to the short-term current market higher rate. So in looking at the future growth opportunities as I mentioned earlier, we continue to be ahead of the market, anticipating our customer needs, and develop the kind of solutions. In this case, specifically it's the capacity. How do we develop that kind of capacity solutions to our customer? And that is something we're actively working with our customer. And these are the vessels which is the base material for us to working with our customers.

Okay. That's helpful. On the floating-rate contracts, I guess there are two parts. Were any of the forward-fixed contracts -- do they have a component of floating in them? And then I guess how does that floating rate, how is that calculated?

Majority of our forward-fixing contracts on a fixed basis and some of them on a forwards -- on floating basis. For example, we have some vessels that we forward-fixing starting from 2023 or 2024, going forward for another 5 years. So you are talking about 2028 to 2029. In those situations, mutually that we have agreed with our customer to have 1 or 2 years of those 5-year term on a floating basis. Those floating basis are basically based on that particular segment's market index. You can think about it's like, in financing the LIBOR rate. So whatever the prevailing market rate at that time. And this is what I mean by today, we have roughly about 15% of our long-term contract in our existing fleet. Under these type of floating rate structure, which in today's market, we actually enjoy this high spot rate. But just to clarify, for all our newbuild, the 55 newbuild, is 0, none of those vessels are under floating, they are all under fixed charter rate. And also the costs are fixed. Also, we're not subject to any commodity or shipyard price fluctuation.

Okay. Great. Very helpful. Thank you very much.

Thank you, Frank.

Our next question comes from Sanjay Ramaswamy with Bank of America.

Hey guys, this has been really helpful. Thanks for taking my question. Just a question, Bing. Can you give us any sense on potentially what the normalized size of these fleet could be maybe over the next 12 months? Maybe some color just on the split between where you see second-hand vessel acquisitions ahead of newbuilds and investments, putting that all together, what the number from a normalized basis would potentially look like in 12 months?

Yeah, that's a good question, Sanjay, thank you. We actually don't specifically set up a hard target as to how -- what our size should be. Rather, we're really working with our customer. It is our customer's demand that drives our fleet composition and fleet growth. Currently, I think because of the environmental requirements and I think with the EEDX, EEIX which is energy efficiency designed for the new vessel, energy efficiency for the existing fleet, these requirements, I think our customer has a need and also from our perspective, we want to be in the forefront of the environmental and technology, that's why we have been able to capture such a great opportunity in these newbuild. And if we're looking back about 2 years ago, I believe I was asked that why Seaspan did not have any new build, because back then, we don't think the market is ready for that. This is just an example, as to our fleet composition of growth is really driven by our customer. Of course, we take into consideration of our own views on what the segment is and what kind of return that we would require. For example, if we're looking at the fleet composition of what we have built of these 55 newbuilds, large portion of that is 12,000 and above. The reason being that these are the most versatile assets and that could be used for a variety of trading routes versus those bigger ones that it's very limited for specific routes. So these assets has a lot of value versus flexibility. At the same time, we actually build these vessels locked in the price, and also the delivery slots at the very favorable term. And in today's market, for example, if you build -- rebuild these vessels, the value-wise for those conventional will be somewhere between $15 to $20 million market-to-market gain on the no-contract and attached basis. So this is on the newbuild side and also on the segment side, we still believe in the above 10,000, segment is an area where, from the global fleet perspective, that has been underbuilt. For example, I believe that the 15,000 TEU segment today only represents about 7% of the global fleet. Meanwhile, looking at from an efficiency standpoint, looking at from the infrastructure standpoint, I think 15,000 TEU vessels is very well fitted for that purpose. That being said, for example, we also have built a 7K TEU vessels. And that is another segment where today, if you're looking at from 3,000 to 7,000 or -- 4,000 to 9,000 TEU segment, they combine to represent about 42% of the global capacity, at the same time, this segment has very little newbuild over the past years. So with the 7K vessels which is in that particular sub 10,000 TEU segment, it's very versatile, could be used for variety of trades that today has been serviced by the 3,000 to 9,000 TEU vessels. In looking at these newbuilds, as I mentioned, that it really is looking at what customer needs and also what our views in terms of the market. For the second-hand vessels, we have strategically, at the same time very selectively looking at the second vessels, particularly in the current market. Now, in 2019 and 2020, we actually acquired 15 of those vessels. Those are very strategically timed in a way that those vessels was acquired at a good time with a very competitive value. At the same time, once again, and they've been attached for the long-term charter. So those are the second vessels we've been focusing on when the market at that time, warrant such a growth opportunity. In today's market, we see the value has been quite competitive in that sense that we've been very, very selective. And the 4 vessels we have acquired are really, again, requested by our customer, and these vessels have been attached with a long-term contract. And most of those investments could be returned within that charter period of time. And in looking at going forward, I think of both, in terms of secondhand or newbuild, I would think that would from our perspective, will be very selective and very disciplined, and working with our customer, if those criteria from a market, customer, and our fleet composition perspective, they all meet our criteria, and we will make those investments and continue to grow. But we will never grow for the sake of growth and also speculatively growing in thinking which segment is going to be. So ultimately, it's going to be customer-driven.

Very helpful. That's a great thing. And maybe just one on -- just a follow-up there. Just in terms of where steel prices are right now and just hypothetically saying that steel prices were to go up, let's just say at 15%, 20% from here, I mean, what kind of impact did that have on how you look at the return hurdles of some of these newbuilds? Maybe just talk through how that would impact you in looking probably towards the secondary market for vessels.

Yes. The steel price actually have 0. Again, 0 impact to our newbuilds because our price is already fixed at no impact to our newbuilds. As I said, and I would want to re-highlight that. For all of our 55 newbuilds and also potentially, if and when we have some newbuilds going forward, we will not be exposing to that ship-building cost. We always have a fixed cost, and that's the cost that contractually, the shipyard is binded to, and we're not exposed to that. The high-steel price actually is beneficial for us should and if, when we decide, for example, to sell the vessels, those value will go up because the scrap value will go up. But other than that, from our perspective, there's no exposure to any commodity or equipment price volatility because that's all been fixed. In other words, we have no inflation risk.

Right. That makes sense. And just more so, when you decide to then build newbuilds maybe over the next 24 months. Does that then obviously factor into the price that you lock-in?

Yeah. Let's say if we will be building new vessels going forward, and I believe I would assume, that shipyard will take that into consideration and price into the shipbuilding price. And in turn, when we taking on the shipbuilding price, we will have to also reflect that price into the charter rate. So effectively, if and when there is such a adjustment, that will be reflected in the charter rate. Yes.

Sure. Okay. Yeah. Thanks, guys. it's been great.

Thank you.

Our next question comes from Michael Goldie with BMO Capital Markets.

Hi, guys. Thank you for taking my question.

Hi, Michael.

Hey, Michael.

So a large, large part of your new build program is delivered through 2024 and won't be fully appreciated until 2025. So how should we think about 2024 EBITDA guidance and how well it reflects that fully delivered fleet, or rather how much upside is there to that 2025 burn rate?

Yes. I think, Mike, we touched on this briefly, but we had provided the schedule of the timing of coming to market of the new build for each of the packages. So you can see in the information that we've released that the window, which makes a progressive delivery of all of those vessels flows through. You're correct that we do have a big chunk of our deliveries come through in 2023, and then there's another 17 in '24. But of course they're not for the full year. But we have disclosed all of that information and it's certainly available for you to model using those delivery dates that have been provided.

Okay. And then is it too early to be thinking about forward fixtures for 2024?

I don't think it's ever too early. Sorry, I'll let Bing answer.

Yes. We are, as Graham said, it's not necessarily too early. From the timing perspective, yes, it is about three years away from here. So it is hard for a liner customers to make that full anticipation. But, I think the only possibility for the Liner s to consider is because they value our services. And if it's a reliable service, they know they will always need certain capacity and they would -- they come to those kind of owner-operators to secure those type of tonnage way ahead, 3 years ahead. Which is -- also explains why in today, we were able to fix 58 vessels, which is 50%, roughly about 50% of our existing operating fleet. This is because our customers really value Seaspan's service, and they want to lock in the base capacity from the operators like ourselves. In looking at 2024, 2023, we continue to engage with our customers in exploring both using the conventional ways of forward-fixing and also some other creative ways which we're working with our customer. So the long answer to your question is, it is possible, and we are working with our customers, leveraging our platform, our services, and our flexibility to create those type of forward-fixing opportunities.

Perfect. Thank you very much, guys.

Thank you.

Thanks, Mike.

Our next question comes from J Mintzmyer with Value Investor-Edge.

Good morning, Bing. Good morning, Graham. Thanks for taking the questions.

Hello, J. How are you?

I'm doing well, thanks. I'd like to turn to Slide 19 and talk a little bit about the remaining CapEx. You've mentioned 4.1 billion is secured or in progress. It's about 1.7 that's unfinanced. What are the aspiration -- I mean, I realize there's a couple more years to go, but what are the aspirations for that 1.7 billion? How much of that do you think can be in some sort of debt? And how much of that needs to be either organic cash flow or new equity?

That's a great question, Jay. So at the moment, this 1.7, specifically refers to the 18 newbuilds that were announced in June, July. The reason that this chart is broken up that way is that we did make a commitment in the Q1 results around financing for the newbuilds that we announced at that time. And we are ahead of that schedule in terms of delivery of that financing. This traunch that's coming over June, July, the 1.7 billion. We're working through that at the moment. When I say working through it, we've got multiple different opportunities that we're discussing as to how to structure that. We've also got material liquidity at the moment. So for example, a number of the financing structures that we've already locked in do include the pre-delivery installments on the vessels. But given that we've got liquidity available, we're negotiating with some of the financiers to allow us to pay that utilizing out cash, and then on delivery, where you can take that debt back, if we need it. So we're looking at ways to optimize utilization of our cash at the moment, but also retaining the secured facilities that we have agreed. My view is this 1.7, probably in the next month or so, we'll have agreed what structures we'll use for it. And like I said, we've discussed it before, that there's a range of different opportunities we have. There's certain depths in different marketplaces, whether it's in the lease code market, the car market, the ECA market. And we're actively working through all of those to work out the best deal that fits our structure. So that's where we are on the 1.7.

Okay. That's helpful, Graham. Thank you. It seems to me, if I am backing up the calculations correct, that you're pushing nearly 90% leverage there on those newbuilds. Is that fairly accurate? And then second of all, it seems judging by your stock price, which is down since March, it seems like the market is fearing some sort of common equity issuances. Can you confirm that that you don't foresee a need for any common equity?

Yes. So certainly equity issuances not on the table at the moment. And I think we've made it very clear that at our current stock levels, that's just not something that we would consider. It's too value decretive to issue stock when we are trading at these levels. So I think what's more important for us is to get our financing locked in and to demonstrate delivery against the new build program and de-risk it. And I think that is why we are so focused on getting this financing structured correctly. As to LTV, some of it stand around the 75% level and some of it's up around a 100% level. So, it's a real mix. But on average, you're looking at 85, 90% range across that Portfolio.

Wow. That's phenomenal levels. Congrats on getting that done. Final question related to all this. You have a significant new build program going through mid-2024, how much additional capacity do you have to grow if your clients come to you and want to add more, say 24, 25, 26 tonnage. How much, in terms of maybe billions, do you think you could grow from here?

It's a very good question. It does come down a bit to timing, Jay, because then you do enter a point eventually, where you do need to probably do an equity raise. But we've got to make sure that that's done at the right time. I'm not going back on my previous comment to say that it's not on the cards. But there will be a growth point if it happens. It's just going to be careful balancing out of the profile because as you're well aware, we've got this delivery profile coming through '23, '24. Then you have rapid cash flow coming in very quickly which allows us to de-lever and allocate Capital back to where we wanted to, and the balance sheet to get back to ambition around investment grade. Barring any other activities, for me, that's the timeframe I'd be looking at to get to investment grade, based on the plans we have today.

Yes and also just to add to what Graham says is that from a business perspective, I think we definitely have the capacity to continue to operate and to continue to grow our business from a fleet perspective. As Graham mentioned that as our newbuild comes to delivery starting from, for example, 2021, we have 1 vessel, 2022, 2023 all the way to 2024, for example, we have Adjusted EBITDA of $1.5 billion. And by then, you will -- the business is actually generating sufficient cash flows at the same time. And I think from a business perspective, we get the scale, we got the economy's scales of operations. And also, our customers will be able to meet their business requirement through the kind of partnership that they have with us in providing those kinds of solutions. In particularly in this case if and when they are the newbuild request. But most importantly, from our perspective, the evaluation or the criteria is the quality of growth. The quality growth, as we said, is the long-term contract attached to it, it's the good assets, it's coming from the customer. And also, the return of those investments that meet our requirement. As we said, any of these returns on these newbuild, to the matter of any investments we make, is at high single-digit unlevered return. And that has been and will continue to be that. So, therefore, I think in our case, it's not so much of the constraints of the Capital, or the capacity of managing and operating these vessels. Rather is to have that kind of opportunities that meets our investment and growth criteria, which is why we, we consistently highlight the quality growth and long-term business model. That's the -- basically the trademark of Atlas.

Certainly makes sense. Thank you, Bing and thank you, Graham and congrats again on a great quarter.

Thanks, Jay.

Thanks.

And I'm not showing any further questions at this time.

Thank you all very much for taking the time to join our call today and asking great questions. We're pleased to share our results and also very exciting future with you. And I hope you all stay safe and healthy. So have a great day and speak to you soon. Thank you, all.

Thank you, all, very much.

Ladies and gentlemen, this conclude today's presentation. You may now disconnect and have a wonderful day.

Thank you.

You're welcome.

Thanks everyone.