StealthGas Inc (GASS) 2014 Q2 法說會逐字稿

Good day and welcome to the StealthGas second-quarter 2014 results conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Harry Vafias, CEO and President of StealthGas. Please go ahead, sir.

Thank you. Good morning, everyone, welcome to our conference call and webcast to discuss the results for the second quarter 2014. I am Harry Vafias, the CEO of StealthGas and would like to remind you, please, that we will be discussing forward-looking statements in today's conference call and presentation.

Regarding the Safe Harbor language, I would like to refer you to slide number 1 of this presentation as well to our press release on our second-quarter results. With me today is Mr. Stavros Papantonopoulos and if you need any further information on the call or the presentation please contact Stavros or myself.

Let me begin by saying it has been a very busy period for us lately. Overall, the second quarter was another quarter of healthy profits even though we just see a reduction in our net income. The majority of the vessels produced revenues in line with our expectations. However, our performance was affected because of a few of the older ships in our fleet of that were trading in the spot market and faced increased idle days.

Taking advantage of these days we perform concentrated maintenance routine operations such of our costs a bit higher. At the same time we took delivery of our second newbuilding eco-vessel, the Eco Chios, and we increased our new building order book by two larger semi-refrigerated 22,000 cubic meter LPG ships, bringing the total number of eco LPG vessels under construction remaining to be acquired to a total of 17. These larger vessels are capable of carrying a wider variety of LPG gases and some with high ethane content.

Finally, just three weeks ago we concluded the third and final offering within the last 10 months with institutional investors including members of my family that brought the total amount raised for the period to a total of $150 million.

Let's begin our presentation with slide number 2. You can see we are the leading company in the LPG Handy segment. We own 40 LPG ships and four tankers, and with the additional vessels to be added to the fleet we intend to solidify this position and gain market share by capturing about a quarter of the global pressurized market by September 2015.

Due to the increased interest in our sector we have seen some consolidations lately and that brings our second largest competitor to about half our size. While overall the sector still remains largely fragmented we favor opportunities for consolidation.

We continue to focus on a young fleet that will give us operational and commercial advantages. While the current average age of our fleet is 11.3 years below the industry average, we aim to lower it at 10.2 years with the additional new vessels that will enter our fleet soon.

We continue to keep moderate leverage of only 30%, and we intend to finance the new vessels at leverage around 60% to 65% loan to value.

We continue to maintain the conservative chartering strategy that has made this Company so successful in securing a visible revenue stream with a predictable cash flow whenever it is profitable to do so. At the moment fixed employment for our fleet stands 72% for 2014, 52% for 2015, and 27% for 2016 with an increasing number of charters extending until 2022.

Finally, I believe we continue to manage these vessels more efficiently than any other public or private competitor and that by growing our fleet we will be able to take advantage of additional economies of scale. Our net income breakeven level per ship per day for the second quarter was $6250 per day, which but does comfortably in the profit making territory. In addition, modern eco vessels can achieve significant savings in operating expenses and fuel consumption.

Slide number 3, this slide demonstrates our fleet employment profile and provides you with the earning visibility of our fleet. In terms of charter types out of a fleet of 44 ships we have 14 of them on bareboat, 22 on time charters, and eight on the spot market.

What we did experience and the current period is a two-tier market whereby the demand for modern vessels is healthy, whereas there was a slackening of demand for the older tonnage. We had a few older vessels in the spot market, and we got mixed results with some showing steady performance while a couple of others facing increased idle time.

This is also typical of the season, and we would expect the market for older vessels to improve during the wintertime, while overall our aim is to add to the fleet modern vessels for which there is more stable demand.

The Company's policy is defined period charters in order to secure its cash flow and positive uses, but we recently secure long-term charters for three of our newbuilding ships that will enter our fleet within the third quarter of 2014 and second quarter of 2015. The fixing of the recent three very long charters only amplifies our belief that the good times are ahead. We also recently extended for one year charters the following ships -- the Gas Emperor, the Gas Cerberus, the Gas Ethereal, the Gas Legacy and the Sakura Symphony.

For 2014 72% of voyage days are fixed, 52% for 2015, and 27% of 2016 with a number of charters extending, as we discussed, until 2022. We will continue to seek opportunities to employ our vessels and medium long-term charters and we try to keep the same levels of charter coverage going forward.

Our relationships with the world's largest and most stable energy companies, energy traders, and industrial companies with the highest credit worthiness minimizes our [counterpart] to risk. It is very possible to have secured contracted revenues of about $240 million after 2022.

Slide 4. As previously mentioned, we intend to grow the fleet significantly over the next 2 1/2 years as we believe the market fundamental justify a more aggressive growth strategy than we had in the past few years. We now count 44 vessels in our fleet including our four oil tankers. By the end of 2014 we will have added three more newbuildings going to 47 vessels. 10 more newbuildings will be joining our fleet in 2015 and by the end of the expansion program will be adding another four ships going to 61 in total, 57 of which will be LPG vessels.

We thus expect to cement our number one position in our segment. In two years time StealthGas will have 24 gas carriers that will be under five years of age, something total exception in the industry as we know it. In this time we will have almost doubled our fleet, and in 2015 that the LPG industry is expecting a pickup in demand, we will have in our disposal a large high spec eco fleet that would command a premium in the chartering market versus its peers.

In this time the LPG industry as a whole is heading towards a new direction since the [ample level ideality] of the product is transforming it from a niche energy alternative to a mainstream energy source. For the whole [user] industry exciting times are ahead.

Slide number 5. It explains what LPG is. Basically a byproduct of natural gas production and of crude oil refining. This slide illustrates StealthGas hub-and-spoke trade model. In the backdrop of a growing export capacity in terminals that is held by Enterprise and Targa, we have seen a concentration of interest on the VLGCs to carry large LPG cargoes on long-haul trade. However, this has excluded the fact that there will also be a need for a bigger fleet of smaller gas ships to serve those customers in the regional market and final destinations in the Caribbean, Latin America, Atlantic Basin, Europe, and, of course, the Far East.

While the US is still a developing story we believe that our fleet could benefit from increasing product supply, especially if the market at the time are already very tight.

Slide number 6. The chart below highlights the steady growth of total shipping demand for LPG since 2000. In terms of demand per miles are expected to improve between 11% and 17% annually and will increase to very high levels by 2016. The main key driver behind the steady growth is, firstly, the appetite from emerging countries, especially for commercial or domestic use and the increasing distance between LPG production, feedstock supplies, and the end-users.

Currently residential market usage is mainly concentrated India, China, and South America, whereas the Middle East and Russia mainly use LPG for their petrochemical industries. Over the past 10 years the total LPG market, including ammonia and petrochemical gases, grew by an average of 4% annually. North America led with a 10% growth, but on absolute basis the Middle East dominating position meant that it contributed 60% of global growth over this period.

On the right-hand side chart, US is depicted to account for 7% share of global LPG exports in 2013, although this figure is expected to more than triple by 2017. Mainly because LPG needs to be shipped due to the limited domestic US demand, high storage costs, and the Kyoto Protocol's prohibition of gas venting and flaring. On the import side Asia dominates, accounting for almost half the growth in global imports from 2002 to 2012.

Slide 7. The US is shipping more LPG than ever as a byproduct of record natural gas output. US market share of global seaborne LPG export is steadily increasing and forecasted to more than triple by 2017. The US LPG exports are primarily going to Mexico and South America. As a result, we have increased the number of vessels deployed to the region to a total of five.

An increase in demand is also likely to come from the Far East and Europe. The right-hand chart uses the US Energy Information Administration data to illustrate the direction of the US exports. We added two vertical lines to the graph to show the timing of the two milestone events that contributed to this development.

The first is the US shale gas revolution that drove the US exports increase mainly because of the continued increases in natural gas and oil production. The second vertical line shows the start up of the buildup of the Chinese PDH plants that will need LPG as a feedstock to produce propylene.

Note that US exports have not yet been shipped to China for the usage, and once they do they will create significant tailwinds in the rates. They will ensure that the US will play a dominant role as an LPG exporter and will be a net exporter of LPG through to 2040 according to the EIA.

The US hit a milestone of 431,000 barrels a day in LPG exports at the end of last year, but the record was masked in the second quarter of this year when exports rose to 544,000 barrels per day in May mostly from the US Gulf Coast.

The left-hand chart shows the currently planned expansion of LPG export terminal capacity in the US. According to brokers that closely following timetable of the export terminal deliveries from companies Enterprise, Phillips 66, Targa, Sunoco and Sage Midstream confirmed that the projects were progressing as originally planned. This is a welcome development for us since more supply will be coming in the market and as it is known LPG shipping is a supply driven industry.

Slide 8. As we mentioned in the previous slide, the main key driver that will fuel the direction of the US export is the growth in the construction of propane dehydrogenation plants to ease the ongoing shortage of propylene in China. The plants use propane to produce propylene that is undersupplied and has created a highly profitable market in China. Around 13 PDH plants are expected to start operation over the next four years and could require up to $8 million of propane per year as feedstock.

The Tianjin Bohua chemical PDH plant was announced in 2010 and completed last year. By then Sinopec has already built a vessel in Tianjin region in 2012. In 2014 several others are following. Chinese imports have risen significantly during the first quarter of 2014, partly to meet the demand generated by these units.

As a PDH plant typically has a rather long planning and construction period, a real surge in LPG demand is expected to emerge in 2015. That is about the time of that 10 of our newbuilding vessels will deliver.

The Asian and US propane prices differential that are shown in the right-hand graph support these exports. Cheap US propane keeps inquiry for exports rather high, and this is a welcome development for us since the supply that will be coming in the market will need to be transported for longer distances and vessel would be utilized for longer periods.

I will now hand you over to Stavros Papantonopoulos for some brief comments on our quarter results, our financial position, and I will later discuss the industry outlook and take your questions.

Thank you, Harry. Good morning, everyone. So, let me continue the presentation was slide number 9, the financial highlights for the second quarter of 2014. With an average of 43 vessels owned and operated in the second quarter compared to 38 last year, our revenues came in at the $31.9 million, higher than last year, $30.3 million.

This increase was primarily due to the increased number of vessels in our fleet. Our voyage cost decreased to $3.5 million by $1.1 million, because we had fewer vessels on these spot charters in the 2014 period.

Our running costs increased to $10.7 million from $8.7 million last year. It was primarily the result of an increase in the number of vessels operated in 2014 period and some concentrated maintenance operations in the idle days of the older vessels.

We did not have any vessels drydocked during the quarter and the $100,000 figure is mainly an expense relating to a vessel that was drydocked during the previous quarter.

Looking at the operating income, that marginally increased in the second quarter to $7.1 million compared to $6.9 million of the same period last year, while for the six-month period of 2014 the operating income has increased by 10% compared to the same period of last year.

Interest and finance costs were $2.6 million compared to $2 million for the same period last year. The increase was due to the combination of an increase in the commitment cost and higher outstanding loan balances. Total debt at the end of the quarter was $367 million compared to $327 million in the second quarter of 2013.

Our net income for the quarter was $4.6 million and compared to $5.1 million last year. Compared to the same quarter last year, the average number of shares outstanding increased by 35% for the period to 38.2 million shares compared to 28.3 million shares for the same period of last year due to the offering of 7.9 million shares in February and May of 2014.

Earnings per share for the three months ended June 30, 2014, amounted to $0.12 per share compared to $0.18 per share for the second quarter of 2013.

Looking at slide number 10, our balance sheet, we can see significant changes in the last year mostly due to the net proceeds received from the following offerings in February and May. As of June 30, we maintain a healthy cash balance of $139.2 million including restricted cash, compared to $92 million at the end of 2013.

As of June 30, we had $94.8 million in advance for vessels under construction for 17 new eco vessels delivering by 2017 and $711 million in vessel book values. Our total assets therefore increased from $851 million to $956 million at the end of the quarter.

In terms of liabilities, the current portion of our long-term debt that is what loan repayments are scheduled over the next 12 months marginally increased to $45.1 million from $41.2 million at the end of the last year. During the six-month ended June 30, 2014, debt repayments amounted to $20.7 million and our long-term debt steadily increased to $322 million.

As a result of -- our total debt stands at $367 million versus $353 million at the end of last year. We will continue to maintain a moderate leverage over the next couple of years, so that by the end of 2014 we expect to have a total debt below [$380 million] and by early 2017 when all 17 of our new eco LPG contract vessels will have been delivered we expect to have around $500 million of total debt. By the next quarter our total assets will hit the $1 billion mark.

Regarding the 17 eco LPG vessels that we have contracted, I am pleased to say that we saw a lot of interest from our existing lenders and new ones to finance them. The levels we envision is 60% to 65% finance. We have already committed 13 out of 17 and are making progress in this [cash] for the remaining ones.

Please turn to slide number 11. This is our operating highlights for the second quarter of 2014. In terms of fleet data, our fleet consists today of 44 vessels. We had an average of 43.3 vessels in the first quarter of 2014 compared to 38 vessels for the same period of last year. Total number of voyage days increased to 3,902 from 3,404 days last year. From the 3,902 voyage days for the fleet in the second quarter of 2014, 548 were spot market days, so we have had a considerable decrease the number of spot days compared to last year's.

In terms of our operational utilization ratio it was 92.3%, an increase from 91.7% last year and is mainly due to the longer fixed employment for vessels compared to last year. In terms of average daily results, our average time charter equivalent rates were $8856 per day compared to $9022 per day for the same period of last year. The decrease in the time charter equivalent rates was again due to the softer spot markets during the quarter.

Our daily operating expenses marginally increased at $4426 per vessel per day compared to $4141 per vessel per day for the same period last year. Our total vessels operating expenses were $4637 per vessel per day (sic - see slide 11, "$4687") compared to $4687 per vessel per day last year (sic - see slide 11, "$4302") and 9% increase. That is mainly due to the vessels deployed in Latin American region where running costs are considerably higher. We still operate comfortably above breakeven levels in terms of income and cash flow.

I will now hand to over to Harry Vafias, who will now discuss the markets industry outlook.

Slide number 12, please. This is an important slide as it shows what differentiates our LPG subsegment from overall LPG sizes. We can see how the picture changes favorably in the smaller LPG segment where the order book is relatively much smaller for the existing fleet.

The Handysize segment as defined by 1,000 to 13,000 cubic meter LPG order book that is highlighted in this bar chart is about 10.4% of the existing fleet and the majority part of it is constructed by us, which we are dominant player in this market.

Additionally, in the adjacent pie chart we see the age distribution of the small LPG fleet. A key characteristic in the fleet distribution is that older vessels are a significant part of the total tonnage. A lot of these older vessels cannot compete for employment with our new newer fleet as they do not meet the appropriate vetting requirements and many charterers are reluctant to fix on period ships over 18 years of age.

About 25% of the fleet is older than 25 years of age, and 17% of the fleet is older than 31 years of age, so there is a substantial amount of scrapping capacity in the event of a meaningful decrease in rates. The fleet profile of the smaller vessels segment that we operate has better fundamentals overall then bigger vessel segments.

Slide 13. What we can say about the LPG shipping market that we operate in comparison to other shipping sectors is that it has a small dayrate volatility and few serious pure play established companies. The rates do not fluctuate wildly and that gives us downside protection. Historically rates range between $7,000 a day during the bottom of the market and $13,000 per day during the peak.

Another positive characteristic is that when the markets are becoming hot we should not expect a rush in new orders from speculative players since Japanese yards that built those ships are now fully booked until early 2017 and Chinese yards that normally have ample capacity don't build these vessels, because of those design complexities and small profit margins.

Slide 14. In this slide we are showing you our remaining newbuilding program, the sizes of the expected ships, and the capital requirements. We now count 44 vessels in our fleet including our four oil tankers. By the end of 2014 we will have added three more newbuildings going to 47 ships. 10 more newbuildings will be added in 2015 and by the end of the program we will be adding another for ships, reaching a total of 61 ships, 57 of which will be LPG vessels.

This means that we have committed about $400 million in capital expenditures, and we have already spent $90 million for these. That leaves us with approximately $310 million to be paid, of which $40 million is earmarked for this year and $150 million before 2015 and $120 million thereafter.

Out of this $310 million in total CapEx remaining we expect received from finance proceeds of about $270 million. That leaves us with about $40 million of remaining equity. We already have committed finance for 13 out of the 17 vessels.

As you can see, with a cash balance of over $150 million today, including the latest proceeds, we can comfortably meet these requirements and in fact we are looking for additional acquisitions. Lately we have been ordering semi-refrigerated ships that are more versatile than pressurized ships as they can cool cargo down to minus 48 degrees Celsius, and, so, they can carry a bigger variety of gases and add more commercial versatility to our fleet. We should have some more news for you soon.

Slide 15. When large-scale US projects materialize rates are expected to increase. We cannot predict the exact development of the future time charter rates, but they can present different scenarios with the following sensitivity table.

This slide demonstrates our fleet development over time and how our Company results are affected when the time charter rates increase. 2016 will be the first full year that we will operate with our full fleet of 60 ships including newbuildings on order. In this year our Company's EBITDA results will potentially grow to $150 million if the average daily time charter rates increase to our medium case scenario.

Since our Company has over $150 million in cash, we expect to invest further in our core LPG segment given the sense of the market. In the second table we have shown there that we have added 10 additional LPG ships, gradually delivering and 2016, pushing the total fleet to 70 ships. In this case under a strong case scenario our Company's EBITDA results could potentially grow to $240 million for the full year of 2016.

Slide number [15]. I would like to conclude this presentation by saying that we remain optimistic about the core strategy of our Company that is investing in modern new generation vessels from only the top builders in Japan and Korea to grow and renew the fleet. Expectations around the LPG market and its future evolution has drawn the attention of significant investor interest.

While we offer an attractive pricing trading on a steep discount to our peers we still offer one of the best ways to take advantage of the future expected growth in the LPG market with our fast-expanding, quality focused newbuilding program.

As the CEO of StealthGas, the first pure LPG shipping company to be listed in any US stock market, I would like to take a moment to say how proud I am that our assets have grown from a small base in 2005 to over $1 billion when all our newbuildings delivered to the Company.

But at the same time our debt has remained very low and most of our ships are medium-term, profitable charters. At this point the industry fundamentals remain positive and depict an increase in LPG trade over the next two years and longer.

Since my family and myself have co-invested side-by-side with our shareholders in buying StealthGas shares in the last two offerings, it shows that we are optimistic for the next two, three years, and with the largest of the highest quality LPG fleet worldwide, we look forward to the future.

We have now reached the end of our presentation. We would like to open the floor for your questions. So, operator, please open the floor.

(Operator Instructions). Jon Chappell, Evercore.

The first question about the growth prospects. Without saying too much, if we look at the remaining equity component of your CapEx of around $40 million, you have $140 million on your balance sheet. That means you potentially have liquidity of $100 million, maybe $200 million if you lever that at 50%.

You mentioned two things. One, your recent investments in the semi-ref, and then, two, investing more in the core fleet. How do you look at comparing and contrasting those two, especially given all the favorable things you mentioned about your core business and how you are so small in semi-ref right now?

Yes, very good question. First of all, we cannot spend all our $150 million, because to run conservatively a shipping company you must, as a basic rule, have about cash always $1 million per ship. So if we are ending up with a fleet of 60 ships, then let's say $60 million will be kept at the side for a rainy day. The rest, of course, can be invested if we find attractive opportunities.

Now going to your specific question, as we have said before, we think that having four to six larger, versatile eco similar ships is a very good complement to our existing fleet. We do not intend to become huge in that segment. We don't intend to be number one and the larger LPG segment, not now, anyway. So, I guess if we expand more into the combination of a couple of larger ships with a couple of smaller ships as we have done recently.

Is there any available tonnage on the water today or does it have to go the newbuild route?

To buy modern Japanese I consider it close to none. Because we cannot guess, we have seen a few sellers, but they knew are asking for very, very, very high prices due to the, of course, expected good times. So, if we see the sellers maintaining those price ideas, I guess we have no other choice but to continue the newbuilding route.

Okay. And then given your commentary about the yards, you are probably looking at 2017 delivery for any orders placed today?

For bigger ships, yes. For smaller ships maybe end 2016 if we're lucky. Third-quarter 2016 if we're lucky, but otherwise, yes, 2017 onwards.

Okay. When you talked about the rate environment in the slide that had the $7,000 to $13,000 peak to trough kind of levels, you said the rates today for modern vessels are around $9,000 a day. If I go back to the slide in last quarter it said $9,500 and $10,000 a day. Can you just talk about the dynamics of how rates in this segment have fallen about 10% while rates in the other segments of LPG have been strengthening?

Yes, as you know, Jonathan, very well, every summer we see minimum 10% reduction in the spot rates. Sometimes also in the period -- in the short period rates. Of course, that is amplified in the older ships, but now talking for the modern ships that's why we see a small reduction from the winter, because unfortunately Q2 and Q3 are always softer. There is a softer rate environment than Q1 and Q4.

Okay. And then just thinking about that seasonality, we are two months into the third quarter already. How similar is it to the weakness in the second quarter? Has it carried over through almost into September now?

Up to now, the Q3 develops similarly to Q2.

Okay. Final thing, you had no drydocks in the second quarter. What is the outlook for drydocks in third and fourth?

We have zero scheduled drydockings.

Okay, so, then if I just think about it and then I will turn it over, you did $0.12 in the second quarter. As you mentioned in the press release pretty emphatically, higher share count in the third quarter. It would be a stretch to think that the third quarter could be significantly better than the second quarter as you sit here two-thirds of the way in.

Every year we say the same thing, Jonathan. Every single year. Every single year we miss Q2/Q3's results, and we slightly beat Q4 and Q1 results. Exactly the same thing happened in this year. Q3 and Q2, unless something spectacular happen to going to be similar quarters.

Completely understood. All right, thank you, Harry.

Keith Mori, Barclays.

Thanks for taking my questions. I just want to follow up on Jon's earlier question around rates coming down for the smaller ship classes. That was a really good question. I had a follow-up relating to, Harry, we don't see that happening on the [$30,000], the larger LPG ships. Is this a seasonal factor that is just targeted at the smaller ship classes, or is this something going on in the marketplace that pricing is coming down to get the spot moving and keeping ships being utilized?

I think it's the former.

Okay. And then I guess we think -- you laid out a pretty bullish case on the LPG market. When we think about rates longer-term you think they're going to go back to mid-levels for the next few years. What's the thought process around locking in long-term rates on these new ships of five to 10 years relative to letting them operate in the spot market given the differentials between spot and new ships that operators are looking at?

At the moment we are about at the midpoint of the cycle. I personally don't make any predictions about the future. That's why in the sensitivity analysis we have all kinds of rates from relatively low to high rates. All our internal predictions are with current rates.

We never use high rates for our internal cash flows -- just to clarify that. And to be honest may very conservative meaning that if rates stay as they are, if there are newbuildings in the water, we still, as you see in the sensitivity analysis, we still deliver a very, very strong EBITDA number.

Now on the question about fixing the ships, this business is generally a period business. 65% of the business is period oriented and only the rest, only 35% is spot. We generally don't want to have all our ships fixed, as you have seen, but if we see a good rate from a good name and for a medium- to long-term period we will take it.

Don't forget that we have some initiatives on short to medium-term charters that if we see an upside in the charter market, we're going to have at any given point some 15 ships to take advantage of this firmness.

So even if we have fixed already seven ships on eight-year charters, with all our newbuildings coming and the ships they already have either spot or short-term charters we have ample capacity to accept and take higher rates that they do come in 2015 or 2016.

Okay, that's helpful. And I guess the last one for me, I know you are pretty adamant that there will be no more equity raises over the near-term here. You feel comfortable with the liquidity of the cash flow projections. I know in the past we have spoken about potentially opening up the dividend, maybe share repurchases or what have you. Is that still on the table or are you looking at more utilizing that cash to fund growth opportunities?

On your first question about the equity raises, we are done. Whatever we raised we raised. Whoever came in as a major shareholder came in. Now there won't be any other raises until the medium-term at least.

And on the matter of the dividends, as we have said in the Q1 call, we will be discussing this with the Board in Q1 2015. If our projections and the charters we have done on the newbuildings as projected to the Board, the Board will allow us to reinstate the dividend. If, of course, we do worse than we have said and promise, of course they will not allow us to restart the dividends.

So, I guess we will have to wait for another five months.

Okay, if I could ask one last one. The contract rates that you have been receiving, are they close to what you anticipated or are they stronger? Is there any direction you can give us on those rates?

Yes, on the newbuildings on these very long charters we did announce recently they were close to what I had projected for the Board.

Okay. Thank you. I will pass it along.

(Operator Instructions). Josh Nahas, Foxhill Capital.

Thanks for taking my call. I just wanted to touch on that last question, because maybe I didn't get it about the long-term charters that you just did, like the rates at near where you fixed them. Maybe I didn't quite understand what you said. It was what you had projected to the Board. Is that something that is publicly disclosed or --?

No, it's not publicly disclosed, but we had made certain projections for the Board for these newbuildings, and I'm happy to say that the rate we achieved was what was projected, but the period we achieved was much longer that what we had projected to the Board.

So, you are comfortable that those rates compensate you over that period based on where the spot market is depressed right now, so you are able to -- I am assuming then you are comfortable enough to lock in at that rate that it compensates you for what potential upside could come over the next few years where you can lock it in higher?

As I said, with 61 ships that we are going to have very soon, fixing five or six on long charters doesn't make in the end of the day any difference. We have at every given quarter 10 to 15 ships up for rechartering, so as I said before if we see a hotter market we have plenty of ships to take advantage of that.

Okay, and just quickly, I know I could figure this out if I compared the slide with the ships on three, but I don't have it all in front of me. The ships that are on the long-term charter, are those the 3,000 to 5,000 or the 5,000 to 10,000? I know I could go back and figure it out, but I figure I have you right here.

All of them. All of the sizes are on long charters.

Okay, so, it's not skewed towards any -- it's not skewed towards any of the size ranges?

Correct.

Okay. And then just -- to clarify, so, you are done, at least in the near-term for equity raises, but you would be looking at -- you said there's not really anything attractive on the water and it would be only another newbuild, which if you are fortunate to get in late 2016. So that we just have to come from cash on hand and whatever financing if you get, which would seem to, based on your $60 million minimum working capital number, limit it to the smaller end of the segment unless you --?

No, we have plenty of money to do -- we have plenty of money to order whatever size of newbuildings we want.

Without raising equity?

Without raising a single cent.

Okay. Okay, those are my questions. Thanks.

Robert Alpert, Atlas Capital Management.

Harry, would you clarify -- you said in response to Keith's question that you thought that the rates were down for the smaller ships and not the larger ships on a seasonal basis, and it was really just specific to those smaller ships. Why is that? To understand how rates are moving.

The rates of the small ships do not follow the rates of the big ships. To give you an example, three years ago the rates of the small ships were extremely strong and the rates of the big ships were extremely weak. They were highly lossmaking. So, the rates of the big ships do not follow the rates of the small ships and vice versa.

For us, if you look at results over the last three or four years, every single summer we have experienced spot softness and about 10% lower spot rates. So, again, this summer we are experiencing the same kind of softness, which is understandable and it was expected as well. It is not something which is a surprise.

We hope, like last year again, from October onwards we are going to see significant firming of the rates, which means that our older ships won't have a problem being employed and at the same time we will fix more of the modern ships on period.

Okay, thank you. When you get the seasonal downturns and then you start contracting longer-term charters, you are not -- it is not based off of where the spot is on a seasonal basis.

Yes, plus we tried to fix the charters not during the weak quarters, but during the strong quarters, i.e. Q4 and Q1.

Great, thank you.

There are no further questions at this time. As there are no further questions, I would like to turn the call back to Mr. Harry Vafias for any additional closing remarks.

We would like to thank you for joining us at our conference call today and for your interest and trust in our Company. We look forward to having you with us again at our next conference call for our third-quarter results in November. Thank you very much.

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