Navios Maritime Holdings Inc (NM) 2012 Q4 法說會逐字稿

Thank you for joining us for this morning's Navios Maritime Holdings fourth-quarter and full-year 2012 earnings conference call. With us today from the Company are Chairman and CEO Ms. Angeliki Frangou, President Mr. Ted Petrone, SVP of Strategic Planning Mr. Ioannis Karyotis, and Chief Financial Officer Mr. George Achniotis.

As a reminder, this conference call is also being webcast. To access the webcast, please go to the Investors section of Navios Holdings' website at www.navios.com.

Before I review the structure of this morning's call, I would like to read the safe harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios. Forward-looking statements are statements that are not historical facts.

Such forward-looking statements are based upon current beliefs and expectations of Navios Holdings' management and are subject to risks and uncertainties which could cause actual results to differ from forward-looking statements. Such risks are more fully discussed in Navios Holdings' filings with the Securities and Exchange Commission.

The information set forth in this conference call should be understood in light of such risks. Navios Holdings does not assume any obligation to update the information contained in this call. Thank you.

The agenda for today's call is as follows. First, Ms. Frangou will offer opening remarks; next, Mr. Petrone will provide an operational update and an industry overview; Mr. Karyotis will go through an overview including recent financials for Navios South American Logistics; then Mr. Achniotis will review Navios Holdings' financial results. Lastly, we'll open the call to take your questions.

I would now like to turn the call over to Navios Holdings' Chairman and CEO, Ms. Angeliki Frangou. Angeliki?

Thank you, Laura, and good morning to all of you joining us on today's call. We are pleased to report our results for the fourth quarter and full year of 2012.

We had a solid quarter in a challenging market environment. We reported $206 million of EBITDA, which includes a number of one-off items. George will be discussing this later in some detail.

I believe that Navios Holdings is poised to capture any upturn in the market. During the past few years, as the maritime industry experienced distress, we focused our energy on controlling that which we could. Today, we not only have an excellent cost control and superb technical management capabilities, we also have a strong balance sheet.

As a result we are continually returning capital to our shareholders through dividend payment and declared a $0.06 dividend for the fourth quarter to shareholders of record on March 20, 2013.

Slide 2 shows our current corporate structure. The value of Navios Holdings primarily derives from four areas -- the drybulk (technical difficulty) fleet (technical difficulty) and three principal operating subsidiaries.

The whole continues to be valued at less than the sum of its parts. As of the close in business last Friday, Navios Holdings' common share was valued at $3.84 per share. This means the market is valuing Navios Holdings' core fleet of 48 vessels and Navios Logistics at less than $95 million. This seems to miss the mark, as we believe the value of our interest in Navios Logistics alone is greater than that.

For 2012 Navios Logistics reported almost $50 million of EBITDA. As Ioannis Karyotis, the CFO, will address shortly, EBITDA for Navios Logistics has grown at a 21.7% compounded annual growth rate for the past few years. Navios Logistics' experienced management team is addressing the market opportunity and has transformed Navios Logistics into a key provider in the Hidrovia region of South America.

In our view, if you apply any reasonable multiple, you can see that Navios Logistics is worth way more than $95 million. And this analysis does not include the 48 vessels that are owned directly by Navios Holdings.

Slide 3 gives you the results of our strategy from 2012. We begin 2013 with a conservative balance sheet. We have only 42% leverage ratio with $352.6 million of liquidity. Of this, $282.6 million is in cash. Give our focus on controlling costs during the past few years, we have managed to substantially reduce our cash breakeven.

For example, if you compare 2012 to 2010, you will see that we have reduced average breakeven cost by 16%. We have also reduced our breakeven cost by 8% comparing 2012 to 2011.

Controlling costs is an ongoing process. It is something that we have developed as a core value of Navios Holdings. It is part of our DNA, a very important [partner after a] long period of difficulty.

At the peak of the market, during the period of 2006 through 2008, we focused on long-term charter revenue from quality counterparties. This proved to be the right strategy in light of the subsequent market collapse. Now, five years after the market correction, we have 46.8% fixed for 2013, and 8.6% for 2014.

We believe that the increasing open base is occurring as the cycle is turning. We know that we will not capture this turn perfectly, but the open days [analogous] of our strategy to fix long-term charters when the market rates justify it, and be patient when the market is less robust. If our estimates are correct, then we should be able to fix vessels into an improving chartered market.

We are also pleased to say that we have reduced our G&A by 12% or $6 million annually as a result of terminating our credit insurers' premium charters. These savings will drop right down to our bottom line without an adverse impact on our operations. We have no unfunded acquisition commitments and no material debt maturities until 2017.

Perhaps as a result we have continued access to financing. In 2012 we successfully accessed the debt capital markets by adding $88 million over [a piecement] 8 7/8% ship mortgage notes due in 2017. Additionally we obtained further bank financing as we financed the acquisition of Navios Serenity and refinanced existing debt for Navios Astra.

Slide 4 summarizes our credit default insurance. Navios Holdings restructured its credit default insurance at the request of their insurer, which has independently determined to stop providing credit default insurance to the maritime space. The net result is that today Navios Holdings is stronger. Navios Holdings received a large upfront cash payment and continues to benefit from the insurance.

As a result of the restructuring, Navios received $242.1 million in compensation. This was composed by $175.4 million cash payment, and $25.5 million of net present value cash benefit and a $41.2 million of continued credit default insurance.

In sum, under the old insurance policy we had about $207 million of credit default insurance coverage. To date we received value of $242.1 million, and it represented, net of the $20 million supplemental coverage to Navios Partners, more than 107% of [maturities in net] coverage.

In the existing low-charter-rate environment, credit default insurance for the new charters is not commercially viable, so we will carefully monitor the credit risk. The biggest benefit to Navios Holdings is that we now have the upside market potential from the defaulted charters.

Given current market conditions, we want this upside potential. Previously the insurer received any upside from the chartering of vessels emanating from the default. Now all such access will be retained by the Navios Holdings. Navios Holdings estimate that we'll earn annually $3.3 million for every $1000 per day and above the mitigating rate.

Slide 5 shows our strong liquidity position. Our net debt to book capitalization is 42% at the end of 2012, reflecting an 880-basis-point reduction from the end of 2011. In addition, we have the liquidity of $352.6 million, of which $282.6 million was cash.

Slide 6 sets forth the Navios cash breakeven after the restructured credit default insurance. Turning first to the cost side, we have a cash breakeven of $13,600 per day in 2013. Our revenue per day, adjusted for the $175 million payment, accelerated to 2012, is $13,411 per day in 2013, and $25,595 for 2014.

The material difference between the two years is the number of open days. Navios Holdings has 46.8% of our available days for 2013, versus 8.6% in 2014. This analysis includes all operating expenses -- drydocking expenses, charter-in expenses for our charter-in fleet, G&A including credit default insurance fees, as well as interest expense and capital repayment. I also wanted to say that we provided this conservative analysis to demonstrate that we are confident of our future. The sum of our competitive position is as follows.

We believe that we are the preferred commercial partner for industry participants. Our balance sheet is strong, and we have demonstrated a historical ability and willingness to honor our obligations.

Consequently, potential commercial partners understand that they can engage with us with the comfort that we will provide reliable service. Charterers can secure long-term contracts will the security that we will not be blocked by either technical nor commercial issues. Suppliers can provide equipment and [learn together] with the understanding that we will be provided fair compensation.

And with this, I would like to turn the call over to Mr. Ted Petrone, Navios' President, who will take you through Navios' operations [in marine just retrospect]. Ted?

Thank you, Angeliki, and good morning, all. Please turn to slide 7. Our long-term core fleet consists of 48 vessels totaling 5.1 million deadweight. We have 44 vessels in the water with an average age of six years.

Please turn to slide 8. Post the restructuring agreement with our credit default insurer, Navios' average charter-out rate for its core fleet is $13,411 a day for 2013, and $25,595 a day for 2014. 46.8% of Navios' fleet is chartered out for 2013 and 8.6% for 2014.

As depicted on the left side of slide 8, the white portion of the bars represent pre-insurance restructuring levels. The differentials in the charter-out rate and contracted days reflect the changes as a result of the acceleration of charter payments through the $175.4 million lump-sum payment from the credit default insurer. This payment enhances our balance sheet and cash on hand.

Please turn to slide 9. We enjoy vessel operating expenses about 24% below the industry average in all asset classes. Navios' current daily OpEx is $4335 a day. This $1337-a-day savings per vessel in operating expenses aggregate to over $14 million in annual savings, which goes directly to our bottom line.

The right-hand chart reflects the changes in the daily charter-out rates for the ships we have on long-term charter, before and after the lump sum payment from the credit default insurer. We continue to enjoy good relations with these owners, which allows Navios to expand the fleet without capital expense.

Please turn to slide 10. An oversupply of tonnage and continued economic weakness in 2012 contributed to the BDI ending the year below 700 while also reaching the lowest yearly average since 1986. In the early part of this year, a combination of seasonal weather-related disruptions and industrial actions brought about a steady decline in drybulk trade.

This, accompanied by a temporary acceleration of newbuilding deliveries, pushed the BDI to its lowest January on record of 771 points. As a result, scrapping so far in 2013 has been about the same pace as 2012.

Going forward, China seems to have returned to growth, meeting or exceeding their stated 7.5% goal. Steel prices are showing signs of recovery, and power generation is up year on year. China is expected to deemphasize domestic iron ore production in favor of iron ore imports, which should support the Capesize vessels.

Please turn to slide 11. World GDP continues to be driven by developing economies. Developing economies now contribute a higher percentage of total world growth than the developed economies, representing over half of the global consumption of most commodities. Emerging economies are projected to grow at 5.5% in 2013 and 5.9% in 2014. Chinese economic growth is projected at 8.2% in 2013 and 8.5% in 2014.

Turning to slide 12, the primary engines of trade growth continue to be China and India, with other emerging countries adding strong growth. Drybulk trade expanded by an average of 5.4% per year in the last decade since China joined the WTO.

Consensus forecasts for 2013 are for global drybulk trade to grow approximately 5% and ton-mile growth of about 7%. A similar growth rate is estimated for net fleet growth, leading to balanced supply and demand dynamics.

Turning to slide 13, currently just over 50% of the world's population resides in urban areas. That figure is expected to grow by 67% by 2015, adding approximately 2.8 billion urban residents, with a large portion of urbanization occurring in the Asia-Pacific region.

The US National Intelligence Council said in the December report that due to this rapid urbanization in the developing world, the volume of construction for housing, offices, and transport over the next 40 years could roughly equal the entire volume of such construction to date in world history. This will drive raw material demand over that period.

As you can see on the right-hand graph, growth in incomes supports increased metal demand. The rising global incomes and the shift in the global economy towards Asia should support world load trade by increasing movements of raw materials, as shipping patterns adjust to the new global model.

Moving to slide 14, the development and urbanization of the western and central parts of China will continue to -- significantly to steel consumption in 2013 and onwards. In construction, housing construction and consumer spending growth will underpin development in 2013 and beyond. Underlying this trend is the continued expansion of the Yangtze River cargo traffic, which reached another record of 1.8 billion tons carried in 2012.

Crude steel production in China in 2012 was about 5% more than 2011. In order to support this growth, China imported 745 million tons of iron ore, 9% more than 2011.

Of particular note is that the imports increased 9% in 2012 while domestic ore production was stagnant at about a 1% increase year on year. This trend seems to be continuing in 2013.

The current substitution of imported iron ore for low-quality domestic production is expected to continue and will increase the tons carried and ton-miles. The chart on the upper right shows the estimated new iron ore mining capacity from Australia and Brazil graphed against the expected decline of domestic Chinese iron ore mining.

Turning to slide 15, low freight rates, expensive fuel and high ship scrap prices led to record scrapping of 33.7 million deadweight tons in 2012. Scrapping rates for older, less fuel-efficient vessels have continued at very high rates this year.

At February 15th about 3.7 million deadweight tons have been scrapped, similar to last year's pace. If this trend continues, scrapping should once again reach over 30 million deadweight tons in 2013.

The current rate environment should continue to encourage scrapping, as over 6.4% of the fleet is 25 years of age or older, and over 12% of the fleet is over 20 years of age, providing about 86 million deadweight tons of scrapping potential. Demolition prices appear to depend on fuel prices, not on vessel supplies.

Moving to slide 16, 2012 newbuilding deliveries totaled a record 98 million deadweight tons against an expected 139 million deadweight tons. As was the case in 2011, non-deliveries amounted to 30%, bringing 2012 net fleet growth to about 10.3%. Very early indications for 2013 show non-delivery rates higher than 2012.

Net fleet additions this year are expected to be lower than last year with over 60% of the deliveries expected in the first half. This means that net fleet growth should balance with the expected ton-mile increase in demand during the second half of this year. The order book declined dramatically 2014 and beyond and is expected to remain that way as banks continue severe restrictions on newbuilding loans.

Turning to slide 17, slide 17 provides a retrospective of the rate environment and considers the impact of supply/demand equilibrium on rate recovery for 2013. As we all know, for any rate recovery to be meaningful and lasting, the supply and demand factors must be such that fleet growth rates fall below trade growth rates.

As we all can now see, global GDP is projected to increase in 2013 and 2014, to 3.5% and 4.1%, respectively, from the more subdued rates in 2011 and 2012. To date, the improvement has been moderate. However, the rate of change suggests that the drybulk trade will expand in 2013 for the following reasons.

First, newbuilding deliveries continue to decelerate, and non-deliveries have been about 30% or greater for the past four years. For 2013, newbuilding deliveries are projected to be about 70 million deadweight tons, assuming that non-deliveries remain at 30%.

Second, we are witnessing continued high scrapping rates. For 2012 -- to 2012, 4.2% and 5.5% of the fleet scrapped. Indeed, the projections for the supply/demand balance of the fleet for 2013 revolve around the projections for scrapping. As you can see from the bar on the right, we note that the net demand may be positive 30 basis points -- the first positive indication we've had in five years.

However, others note that it may be a minus 1.3%. It seems that the projectionists cannot agree on the level of scrapping, with the projection ranging from 24 million deadweight to 40 million deadweight.

In sum, we note that for the first time in four years, there is the possibility that net demand will exceed supply. Consequently, rate levels should pick up during the course of 2013. We note this as these conditions are not evident over the past few years.

Turning to slide 18, we currently own 23.4% of Navios Partners, including a 2% GP interest. Navios Partners operates a fleet of 21 vessels equaling 2.3 million deadweight with an average age of 6.2 years. Since its inception in 2007, Navios Partners' fleet has grown by 261%.

Please turn to slide 19. Navios Partners provides significant cash flow to Navios Holdings. Since its start of operations, Navios Partners has grown distributions by almost 27%, and we received about $106 million in distributions from partners.

In 2013, we expect to receive about $29.4 million in distributions. This is about 119% of Holdings' expected annual dividend. Including Navios Maritime Acquisition dividends, Navios Holdings receives about 140% of its expected annual dividend from its ownership in these two companies.

Please turn to slide 20. We have an approximate 55% economic interest in Navios Maritime Acquisition. Navios Acquisition's current fleet consists of 29 tanker vessels totaling 3.3 million deadweight. Navios Acquisition currently has 21 vessels in the water with an average age of 4.9 years.

We anticipate that Navios Acquisition's newbuilding program for product tankers positions itself to take advantage of favorable long-term industry dynamics.

Please turn to slide 21. Navios Acquisition is summarized on slide 21. It has a large, moderate and diverse tanker fleet worth more than $1 billion. Navios Acquisition has long-term contracted revenue that is well above the Company's low operating breakeven. This cash flow can sustain Navios Acquisition for a long period in uncertain market conditions.

Navios Acquisition has profit-sharing arrangements in many contracts. These agreements limit the downside risk to the base rate and allow Navios Acquisition to enjoy the upside volatility. For example, in 2012, profit-sharing has been triggered in all asset classes. These conditions and the growth of the fleet have led to a 31% increase in EBITDA in 2012.

Please turn to slide 22. Navios Acquisition is positioned to capture any strength in the tanker market. 80% of the entire fleet has profit-sharing, while over 83% of Navios Acquisition's product tanker fleet has profit-sharing.

During 2012, these profit-sharing mechanisms provided significant cash flow. Navios Acquisition earned $2 million incremental cash flow from profit-sharing in 2012, or $0.05 per share. More than half of this amount, or $1.1 million, was earned from profit-sharing in Q4.

Consequently, as a matter of policy, absent unusual circumstances, Navios Acquisition required profit-sharing in their charter agreements. As a result of this policy, for every $1000 of profit share above the base rate, Navios Acquisition earns $5.4 million in free cash flow, which equates to about $0.13 per common share on an annualized basis.

Please turn to slide 23. This slide demonstrates how Navios Acquisition's newbuild deliveries are increasing EBITDA and building cash flow. Since 2011, available dates have grown by 43% and the fleet has grown by 36%. EBITDA has grown by 26% in 2012 over 2011 and will continue to grow as NMA takes delivery of new vessels (technical difficulty) and two vessels delivered in Q4 2012, and the two vessels in 2013 will add about $8.2 million of EBITDA to Navios Acquisition's run rate on an annualized basis.

This concludes my presentation. I would now like to turn the call over to Ioannis Karyotis, Senior VP of Strategic Planning. Ioannis?

Thank you, Ted. Slides 24 and 25 provide an overview of Navios Logistics. Navios Holdings owns 63.8% stake in Navios South American Logistics. Navios Logistics has three segments, all enjoying significant growth prospects.

As you can see on slide 26, for the past three years revenues have grown at a 14.6% compounded annual growth rate. At the same time, EBITDA has grown at 21.7% compounded annual growth rate from $32.5 million in 2010 to $48.1 million in 2012. In 2012, our Port Terminal generated 49% of EBITDA, while Barge and Cabotage businesses contributed 27% and 24%, respectively.

Our dry port in Uruguay has total storage capacity of 460,000 metric tons, 99% of which has been contracted for a period of five years. The construction of a second conveyor belt, expected to double our vessel loading capacity, is in progress, and the new conveyor belt is expected to be completed in Q3 this year.

We see strong demand for [transceiver] services in our Port Terminal in Uruguay. Accordingly, we recently agreed to acquire an Uruguayan company that controls approximately 12 hectares of undeveloped land located in the Nueva Palmira free zone near our existing ports. The agreed purchase price is $2 million, and we plan on developing this land in expanding further our port operations.

Please turn to slide 27 to discuss the results for the fourth quarter and the year end 2012. We had a solid fourth quarter. While revenue decreased by 12% compared to the same period last year to $58.6 million, EBITDA increased by 8% compared to Q4 of 2011 to $10.9 million.

Looking into the segment, EBITDA port terminals in the fourth quarter increased by 71% to $5 million, attributed to higher profitability of both our ports in Uruguay and Paraguay. The 16% decrease in revenue of Port Terminals is attributed to lower sales of liquid products in our port in Paraguay, a low-margin activity that has relatively low impact on EBITDA but can affect revenue.

Revenue in the Barge business decreased 15% and EBITDA decreased by 48% in the fourth quarter of 2012 compared to the same period last year. While our time charters and contracts of affreightment with minimum volume [of franga and bad] guarantees for iron ore transportation continued to fund well, profitability was adversely affected by a decline in liquid cargo volumes.

Cabotage business reported a 5% increase in revenue, while EBITDA increased by 304% to $2.5 million in the fourth quarter of 2012 from $0.6 million in the same period of 2011, mainly due to improved efficiency in fleet operations. Interest expense and finance costs, net, were $4.6 million in the fourth quarter of 2012 compared to $5.1 million in the same period last year. Depreciation and amortization expense increased to $6.9 million as compared to $6 million in Q4 of 2011. Our net result for the quarter was a net loss of $0.7 million compared to a net loss of $1.2 million in the respective period last year.

Turning to the full year of 2012, revenue increased by 5% to $247 million. EBITDA grew 23% to $48.1 million, driven by the Port Terminals and the Barge business segments. Interest expense and finance costs, net, were $20.1 million compared to $17.1 million in 2011 due to the full-year impact of interest expense generated by the senior notes issued in April 2011.

Depreciation and amortization expense increased to $26.9 million from $22.6 million in 2011. As a result, net income was $0.2 million compared to net loss of $0.2 million last year.

Please turn to slide 28. Slide 28 provides select balance sheet data as of year-end 2012. Navios Logistics had a strong balance sheet. At the end of 2012, cash and cash equivalents were $45.5 million compared to $40.5 million at the end of 2011. Net debt to book capitalization was 33%, down from 35% at the end of 2011.

Now I would like to turn the call over to George Achniotis, Navios Holdings' Chief Financial Officer. George?

Thank you, Ioannis, and good morning, all. Please turn to slide 29 for a review of the full-year and fourth-quarter 2012 financial highlights. I would like to draw your attention to the fact that for comparability purposes we are presenting the consolidated results of 2011 on a pro forma basis to exclude the effect of Navios Acquisition, which was deconsolidated at the end of Q1 2011.

Revenue for the quarter decreased to approximately $128 million compared to $168 million in Q4 2011. The reduction is mainly attributable to the accounting for the settlement of the credit default insurance, whereby revenues attributable to defaulted charters that were previously being allocated over the duration of those charters are now shown as one-off in other income.

Paradoxically, these amounts are included in EBITDA, so we have the strange result of an accounting treatment where EBITDA for the quarter is higher than revenue. As Ioannis explained earlier, revenue from the Logistics business also reduced compared to Q4 last year, mainly due to a reduction in the volume of oil products sold at the port in Paraguay.

EBITDA for the quarter increased from $64 million in Q4 2011 to $206 million in 2012. The increase is mainly attributable to the $161 million net gain shown in other income from restructuring the credit default insurance. As Ioannis just mentioned, Navios Logistics also contributed higher EBITDA in Q4 2012 compared to Q4 2011.

Net income for the fourth quarter of 2012 was $147 million compared to $12 million in 2011. The increase is mainly attributable to the increase in EBITDA during the period, and it was mitigated by an increase in interest expense due to the $88 million add-on to the Navios Holdings bond issued in July of 2012, higher depreciation due to additions in the assets of both Navios Holdings and Logistics, and a one-off charge of $4 million representing accelerated amortization of intangibles due to the earlier delivery of three long-term charter-in vessels.

Turning to the full-year results, EBITDA increased from $246 million in the year ended December 31, 2011, to $390 million in 2012. This has also been positively affected by the restructuring of the credit default issuance in Q4 of 2012. EBITDA was also positively affected by the significant increase in the results of Navios Logistics, whose EBITDA increased by over 23% from $39 million in 2011 to $48 million in 2012.

Net income for the year ended December 31, 2012, increased to $166 million from $42 million the previous year. The main reason for the increase was the restructuring of the insurance. The increase was mitigated by a $9 million increase in interest expense due to $88 million additional bonds issued by Navios Holdings in 2012 and the full-year impact of the two bonds issued in 2011 by Navios Holdings and Navios Logistics.

Net income was also negatively affected by higher depreciation due to the addition of assets in both Navios Holdings and Logistics, and the accelerated amortization of intangibles.

Please turn now to slide 30, where the key balance sheet highlights are presented. The cash balance as of December 31, 2012, increased to over $283 million compared to $177 million at the end of December 2011. The substantial increase is due to the lump sum cash received for restructuring the credit default insurance.

The majority of the cash received reflects undiscounted future cash flows from defaulted charters. The balance on deposits for vessel acquisitions was eliminated and sold newbuilding vessels delivered during the year, and there are no outstanding CapEx commitments.

Long-term debt, including the carrying portion but excluding senior notes, reduced significantly from $508 million at the end of December 2011 to $324 million at the end of December 2012. The reductions, in line with our steady strategy to delever, have strengthened the balance sheet in order to be able to weather the current distressed market and take advantage of distressed transactions that may become available.

Senior notes increased by $88 million during the year following the issuance of the add-on to the 2017 secured senior notes in July of 2012. Despite the prolonged period of depressed rates in vessel values in the drybulk market, our net debt to book capitalization ratio reduced significantly to 42% from 51% at the end of December 2011.

Finally, I would like to note that we were in compliance with oral debt covenants at the end of the year.

Turning to slide 31, the Company continues to pay its dividend uninterrupted by market conditions. A dividend for the fourth quarter of 2012 of $0.06 per share was declared to shareholders of record on March 20 to be paid on March 27. This represents a dividend yield of 6.3% based on Friday's share price.

I would also like to point out that the total annualized cash dividend inflows from our ownership in Navios Partners and Navios Acquisition is approximately $34 million. This exceeds the annual dividend paid out by Navios Holdings to shareholders by $9 million.

This concludes my review of the financials. At this point I will turn the call back over to Angeliki for any closing remarks. Angeliki?

Thank you, George. This concludes the formal presentation. We'll open the call to questions.

(Operator Instructions). Chris Wetherbee, Citigroup.

Thanks, everyone. Good morning. I guess I wanted to start on the strategy. You mentioned a lot about the potential for some rate recovery as you move out into 2014. You obviously have a lot of open days.

When do you start the fixing process? Assuming that we don't see much move in rates through the better part of 2013, is it something where you just keep on kind of shorter -- call it six month or so type of agreements until you start to see some inflection? I guess I just wanted to get a sense of how you think about the strategy of approaching all of those open days for 2014.

First of all, Chris, the reality is that you should not see the world with a Q1 BDI in the market, the Chinese New Year's market. I think that is always seasonally low. Most of our days are open [dates, half-on] days in the second half of the year. About 5000 days are in Handymaxes, which is the most stable of the sizes, with about 1500 on the Panamax and 1300 for Capes.

So with these days, and the Capes being only on the Q4, so seasonally a strong quarter, if we have on these days -- 2012 was a weak market. If we have the same market this year that we had last year, the Company will not burn cash and actually be in very good shape.

So you realize that we can -- if you see the averages and where we are, we feel very comfortable. And at the same time, we are sitting on $285 million of cash. That gives us ability to withstand any market conditions, and secondly to invest and grow our Company in an environment that we see very opportune.

I don't know if you noticed the slide that Ted was mentioning on page 17. If you take the net fleet growth and the drybulk demand growth, within the estimate of those analysts, we are at a turning point this year. So we believe that, okay, you may have more of the new deliveries lopsided, about 60% coming in the first half and 40% in the second half, so rebalancing on the second half, but we see that this market is ripe for a reversion. And now the indicator to that is volume of vessel sales, and even in low levels we have seen a quite significant pickup of the volume. That indicates that we are maybe in a reflection point.

Okay, that certainly is helpful. It gives us some sense of how to think about it. And then you mentioned the cash balance. How do you think about uses for cash as the kind of thing that you might want to hold onto for a quarter or two and see how the market develops before you make any real decisions there, or is there anything of particular interest that maybe could come up before that time?

As I mentioned, there's two major sources of vessels, except the open market that exists, is the banks that we see that are also right. But also I think a very important market that is opening up is the Japanese market. As the yen has substantially moved up -- down, so is weakest, that will free up vessels and we will be able to transact.

When the yen was JPY80, they could not do any transaction. They will have booked [demand as an option]. With again moving at JPY94 last night, you know that this is a market that will also become open for transaction and is an area where Navios has traditionally very strong relationships, and also it provides a very quality [donut].

Okay, so that could be where you might see some activity. Great, well, thank you very much. I appreciate the time.

At this time, we have no further questions. I'd now like to turn the floor back over to Ms. Frangou for any closing remarks.

Thank you very much. This concludes our Q4 results.

Thank you. This concludes today's conference call. You may now disconnect.